U.S. Economy Ensnared in Government’s Budgeting Standoff

Although the first quarter U.S. economy seems to have kept its head above water, the constant threat of short term fiscal, regulatory and budgetary crises continue to hover over America’s hundreds of thousands of “small businesses” like a never ending black cloud.

There is no lessening in the suspension of these nervous business owners that the unresolved, and meaningless budgets issued by the House, and the Senate’s first in four years will cancel each other out. This will give the White House the convenient excuse of governing by an endless issuance of short-term decrees, at least until the November, 2014, mid-term elections.

If, at that point, the Democrats retain the Senate and take back the House, under the returned activist, Speaker Nancy Pelosi, the Obama Administration will have a clear field to jam through another boundless stimulus package, and leave uncontrolled agency and entitlement spending to continue its disorganized behavior pattern.

The near unanimous position of manufacturers, distributors, contractors, and retailers with whom I have ongoing contact are more than ever solid in their resolve to view the current economic status as repair, maintenance, and 100 percent consumer demand-oriented. It is also heightening general managers and owners in their resolve to cut back all personnel except those imperative for sustaining the current level of business, and that to which they are committed in the immediate future.

This has also impacted inventory commitments of finished products, components, and necessary raw materials. This in itself has a depressant effect on manufacturers’ capacity utilization, and end users’ limitations on how they view the immediate demand needs of existing customers.

This set of circumstances has a further inhibiting effect on the full context of distribution channels, which is reflected in consumer confidence, as shown in the latest professional surveys. Such a “stand-still psychology” is also reflected in the current “boom status” of energy, the one sector that holds the promise of stupendous expansion, limited only by the covert Administration’s promise to shift the current drive for “energy independence” into non-fossil fuel “renewables” which have proven to be abject failures, existing only by massive government subsidies. These, combined with failed crony capitalism, have already engendered horrendous losses, numbering in the billions.

However, if the Obama Administration is given a free hand after the 2014 mid-term congressional elections, rest assured that elimination of tax incentives for oil and natural gas will be totally eliminated, and solar, wind, geothermal, and biofuels will be redoubled. Such a likely turn of events would lead to an economic nightmare, whose long term consequences would be nothing short of disastrous.
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