My Two Cents

What to do about the economy?

With unemployment already at 9.5 percent and likely to exceed 10 percent, much higher than White House officials predicted back in February, Mr. Obama has been facing attacks that his $787 billion stimulus program was either too timid or wrong-headed or both. Now, just five months after Congress agreed on the plan, with only a fraction of the money actually out the door, Washington is debating the need for a second round of stimulus amid economic and political crosscurrents.

I don't think an additional stimulus program is going to help. A lot of people are hunkered down right now and my feeling on why that is, based on what I've read and occasional discussions I've had with people, is that Obama's aggressive agenda is a big factor. Look at what is on the table right now:

Because its efforts have been broken into separate initiatives with different justifications, few people other than news junkies have noticed how extraordinary Barack Obama's agenda is. Perhaps a number will help: 35%. That is the aggregate percentage of United States GDP produced by the three industries that the Democrats hope to restructure from the top down: Health care (17% of GDP), energy (9.8% of GDP), and financial services (8% of GDP). Think about that.

Businesses large and small are scared to death of doing anything until they know how those things are going to shake out and how badly they may get hit with increased costs, mandates, and taxes. Then there are the enormous federal deficits and the possible consequences down the road from them.

The economy may have been able to handle debate on one of those issues this year, but not all three at the same time. It's just too much, regardless of what particular policies we are talking about. I think it's understandable that people are reluctant to hire or invest until they have a better handle on what the ground rules will be going forward. And depending on how those issues are resolved, many may not be in a position to hire until they have figured out how, or even if, they can absorb the increased costs that are almost a certainty.

Welcome to the Obama economy.