Uncertainty Slows Economic Rebound

Two months ago, President Barack Obama lamented that a "cloud of uncertainty" hampered economic recovery. He said Congress must agree on a debt ceiling so businesses will regain confidence to add workers. Congress did. Businesses didn't.

Nevertheless, we agree with the president that economic uncertainty discourages business and consumers. It's clear, however, that the government agreeing to raise the debt ceiling didn't eliminate uncertainty, as Mr. Obama hoped.

Economic uncertainty, we believe, is a principal reason consumers are saving more but spending less. Not knowing what the future holds probably also explains why businesses have stashed trillions, rather than investing, loaning or spending.

Business plans give entrepreneurs and investors reasonable expectation of profit.

"[Y]ou have to know what your expenses are, and you have to have some idea of what your revenues are going to be," explains CKE Restaurants CEO Andy Puzder. "Right now people are very concerned about taxes because the president keeps talking about raising taxes," Puzder adds.

Taxes are only the beginning. There is uncertainty about how many of the hundreds of potential new regulations the Environmental Protection Agency will impose and what form they will take, what new unionization changes may come from the National Labor Relations Board and myriad other government regulations that may — or may not — be imposed, increasing business costs. Then there's the 2,000-page Obamacare health care law's ambiguous mandates and countless regulations yet to be written by unaccountable bureaucrats.

"It's very difficult to model the costs because the bill was so complex, and it's very difficult to find people who understand it," Puzder says, no doubt echoing sentiments of CEOs across the nation.

This is an example of the magnitude of uncertainty: The potential increase in health care costs alone for a solitary company, CKE Restaurants, was estimated by experts to range from $7 million to $35 million a year.

(The final guess was about $18 million in added costs, or twice what CKE spent last year in adding new restaurants.)

Is it prudent for companies to expand or hire when facing such uncertainties, or for consumers to commit to large purchases not knowing their jobs are secure?

Republicans slam the Obama administration for creating uncertainty. But the sentiment long ago crossed political lines. Verizon Communication's CEO Ivan G. Seidenberg, an Obama ally, said last year that Democrats pursuing tax increases and policy and regulatory changes threaten to "harm our ability ... to grow private-sector jobs in the U.S."

"By reaching into virtually every sector of economic life, government is injecting uncertainty into the marketplace and making it harder to raise capital and create new businesses," Seidenberg complained.

The administration attempted to alleviate uncertainty by spending hundreds of billions of "stimulus" dollars. But such spending doesn't respond to genuine demand, so when bailouts and stimulus checks end, it's likely the jobs they created will too. The only certainty is that Washington can't keep sending checks.

One more thing seems certain: The more money siphoned out of the private sector for feckless attempts to prime the economic pump, coupled with innumerable new regulations and, perhaps, even higher taxes, the longer the economic recovery promises to be.

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