According to several key measures, the economy has begun, however slowly, to regain its legs. It still faces challenges from skittish consumers, tight credit and a reluctance among many businesses to begin hiring again, but the unemployment rate has inched down recently.
But a new round of government stimulus spending, which ultimately does little other than add to the debt burden shared by every American, is not the right way to go.
We agree with part of the program President Barack Obama outlined Tuesday in a major speech on the economy. He spoke of the need for a tax cut for small businesses that hire new people in 2010. That's a step in the right direction. Much more desirable would be a more general payroll tax cut for all businesses. That would help even those who may not now be considering hiring new people to contemplate it.
And the president's plan to impose a one-year moratorium on capital-gains taxes on small-businesses investment profits also is good. But why only a year? And why just small businesses? Granted, small businesses employ about two-thirds of the nation's work force, but large businesses employ a good share of the remaining third (government accounts for a large chunk, as well). Why not encourage investments and expansion all around, instead of trying to target it toward employers the White House feels are worthy?
As for the president's desire for tax breaks to retrofit homes so they are energy efficient, that would be little more than a feel-good measure with little, if any, real effect on the economy.
The truth is the government now could do best by simply getting out of the way as the economy regains its strength. Obama correctly identified last year's bank bailout as a necessary evil to keep the economy from total collapse. But the $787 billion stimulus package he signed this year was far less necessary, and the leftover money from that measure, as well as the billions in money being repaid from the bank bailout, would be best spent by paying down the deficit.
No doubt many Utah politicians, despite their professed conservatism, were happy to hear the president hint at new spending to help state and local governments. But Utah would be far better off in the long run to tackle its problems head on and tighten its belt for the future.
There is one thing Obama could do to help job creation. He could actively work to open global markets and negotiate more free-trade agreements so that American businesses have expanded opportunities to sell their products. Beyond that, it is a fantasy to believe any government can manage a recovery better than the collective wisdom of a free market.