The recent dismal federal unemployment report showing the private sector created only 83,000 jobs in June – the U.S. needs at least 100,000 new jobs a month to keep up with new entrants to the workplace – demonstrated once again that employers are on a hiring strike.
And no wonder: The private sector is under an unprecedented assault by government from banking to autos to student loans to housing to, of course, health care and energy.
The end result is that, unless you are a Wall Street bank, too much uncertainty hangs over the economy and businesses.
The federal government has made significant incursions into running banking, autos, health care and insurance and has snatched up the entire student loan industry from private hands.
The Federal Reserve has taken onto its balance sheet $1 trillion in toxic Fannie Mae and Freddie Mac mortgage loans, giving it a significant role in the private housing market.
The Fed has maintained an easy-money policy that favors government borrowing and big banks over prudent savers, many of them seniors who rely on interest earnings to live on.
Meanwhile, Congress extends incentives on what is politically popular – “cash for clunkers,’’ the housing tax credit and SBA incentives to business borrowers only to withdraw them. The cruelest example of this is the recent failure to extend unemployment benefits to those hurt most by the government’s own economic policy decisions.
And federal policy makers talk incessantly about clean energy and greenhouse gases and encourage efforts like the Sonoma County Energy Independence Program. Similar programs across the nation were given $150 million in stimulus funding.
SCEIP finances energy improvements on the property owner’s property tax assessment. But first Freddie Mac and now the Federal Housing Finance Administration have said the programs could present a threat to government mortgage holders. SCEIP, which has financed 1,000 projects totaling $30 million and kept at least some people at work in construction, has stopped taking new applications.
Where will this government assault on the private economy end? The simple answer is it won’t until government pulls back and allows the entrepreneurial juices to flow in a way that employers feel confident to invest and hire.
On that score, there is a long way to go.
Brad Bollinger is associate publisher and editor in chief of the Business Journal. He can be reached at 707-521-5241 or email@example.com. You can find his blog and other commentary at NorthBayBusinessJournal.com.