Excerpted from CNBC: How government is routing the recovery, January 11, 2010
Despite all the money spent on stimulus, the economy continues to lose jobs and unemployment remains at a staggering 10 percent.
The number-crunchers have been celebrating what appears to be the end of the Great Recession as told through rising GDP, higher business profits and a buoyant stock market.
But owners of small businesses — the usual engines of economic growth — are still refusing to hire back workers as they normally do when the economy turns up from a sharp decline.
How are companies surviving the recession?
By cutting costs and hoarding cash, not expanding their business and hiring more people, even as the economy now is starting to recover.
During other recoveries, firms would be hiring workers in droves as demand picks up for goods and services. This time around, they’re not — because “they don’t know what their costs are going to be.” And those costs are, of course, higher taxes.<p>
Talk to them, and they’ll gladly tell you why: Having weathered the recession, they now fear the administration will choke off the nascent recovery and increase their costs through higher taxes to pay for the myriad of programs , including the hyperexpensive health-care overhaul.
JP Morgan CEO Jamie Dimon explains that many businesses simply don’t want to borrow to expand their operations and hire more workers. The demand for loans is way down because businesses, particularly those that are making money and can qualify for loans, simply don’t want to borrow … because they don’t know just how high their tax bills will be.”
“Why logically would any businessman use this money to expand if he doesn’t know what all his costs will be because of the expansion of these government programs?”
Why risk expanding operations and hiring workers amid a wild boom in government that will lead to massive tax hikes when you can make money simply by doing nothing or laying people off?
All of which translates into a jobless recovery — the economy appearing to grow while unemployment remains unnaturally high — unless of course, you work in government
The Homa Files 
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