Corporations Holding $1.8 Trillion In Profits?
Listen, if a public or private company makes money and wants to keep it close to their chest, that’s their right. But those same businesses can’t then go and collectively fault the White House’s policies for preventing them from hiring more people. And that’s exactly what they’re doing through the U.S. Chamber of Commerce and other business groups.
the U.S. Chamber of Commerce, which held a jobs summit Wednesday and accused the Obama administration of dumping onerous regulations on businesses. That has created an environment of “uncertainty,” which is causing firms to hold back on hiring as the unemployment rate has hovered near 10 percent, the Chamber said.
Onerous regulations? What they mean are ANY new regulations that make sure workers and consumers are protected from corporate mistakes.
So what did the White House say?
The White House countered that companies are wary of hiring not because of new regulations but because they’re still waiting for consumer demand to return. The administration also claimed credit for 3.5 million jobs created by the stimulus bill from last year.
Nonfinancial companies are sitting on $1.8 trillion in cash, roughly one-quarter more than at the beginning of the recession. And as several major firms report impressive earnings this week, the money continues to flow into firms’ coffers. […]
A survey last month of more than 1,000 chief financial officers by Duke University and CFO magazine showed that nearly 60 percent of those executives don’t expect to bring their employment back to pre-recession levels until 2012 or later — even though they’re projecting a 12 percent rise in earnings and a 9 percent boost in capital spending over the next year.
When asked why companies are holding back so much, many economists cite broader uncertainty that goes well beyond anything happening in Washington. Firms aren’t sure whether the economy can sustain a strong recovery. And as long as consumer spending remains low, there’s not much incentive for companies to ramp up.
I’m sure you’re spotting the inherent paradox here. Consumer spending won’t go up as long as firms aren’t hiring. It’s not secret that jobs stimulate far more consumer demand and spending, not the other way around. So what these businesses are essentially asking the American people is to spend money they don’t have so they might start hiring again.
Yeah, that’s a smart plan…
So, basically, there’s literally nothing anybody can do to make these companies hire, even though they’re starting to see record profits again.