Nov 2, 2009

Cause and effect

 Cause and effect

Have you been thinking about all the proposed legislation pending in Washington? You have got healthcare reform, climate change legislation and clean water legislation that will give the federal government authority over all water.

Last week, the Environmental Protection Agency (EPA) said they were going to beef up water and drainage enforcement of concentrated animal feeding operations in the U.S. All these operations are already monitored and managed very closely. It’s hard to figure out just how they can manage them any more. Perhaps they want to include feedlots under 1,000 head because they are mostly unregulated.

EPA appears to be ruling the roost in this current administration and has become a very punitive organization. Something has to be done to limit this agency’s impact on industry. I can certainly see them forcing many businesses to relocate outside the U.S. This cause-and-effect relationship isn’t very good for economy building.

Speaking of economy building, it is going to take economic growth to bring back the cattle markets. Jobs, lots of jobs, will get consumers buying better cuts of beef.

Last week, while browsing through the Internet, I noticed a couple of stories about businesses avoiding expansion because they have no idea what is in store for them with the legislation being debated. Nearly everything Congress is talking about will add more costs. I think the fear of not knowing what the rules are going to be is holding industry back.

Ironically, Nebraska Cattlemen noticed the same thing and will be holding a summit on the issue. In their press release, they said “within the last year, many uncertainties have sprouted in the beef industry. Two major areas important to the future survival and success of the beef industry are potential governmental policy changes affecting beef production systems and beef pricing.”

The fourth annual Nebraska Cattlemen Beef Industry Issues Summit is set for Nov. 17 and will aim to inform producers in these areas.

Big business is getting in bed with Congress in Washington, D.C., to help guide much of this pending legislation. Doesn’t seem that concept would be good for America. Big business only employs 17 percent of the population whereas small business employs more that 55 percent of the U.S. workforce.

The National Federation of Independent Business (NFIB), which I support, said that the unknown is affecting business growth.

“The economic contraction is, of course, the prime force driving companies to lay off workers. But a healthcare overhaul grinding through Congress could bring unknown new obligations to insure employees. Bush-era tax cuts are set to end next year, and their fate is unclear. Legislation aimed at tackling climate change might raise businesses’ energy costs. Meanwhile, a bill aimed at increasing transportation spending is stalled,” the NFIB states.

Many companies say they have responded by freezing hiring, cutting benefits, and delaying expansion plans. With at least 60 percent of job growth historically coming out of the small business sector, according to the government’s Small Business Administration, that kind of inertia could impede an economic recovery.

Business groups, including NFIB, the Associated General Contractors of America, and the National Small Business Association, say political uncertainty is a substantial factor, alongside other more typical problems such as availability of credit.

“No question, this is a tough issue for a lot of these companies,” said David Wyss, chief economist at ratings firm Standard & Poor’s. “It’s all anecdotal, and it affects everybody differently, but the one common factor is people postpone decisions, and I’m afraid that’s going to slow us down coming out of the recession.”

Even those at the very top of our government, the ones making the decisions that affect small business in the U.S., understand that the path they are on could destroy future growth. Federal Reserve Chairman Ben Bernanke, in his 1979 Ph.D. thesis, wrote “increased uncertainty provides an incentive to defer ... investments in order to wait for new information.”

So, how is all this going to affect your operation?

This government isn’t going to be able to turn the economy around until the ground rules are set and everyone can go back to producing, which creates jobs and commerce. And, of course, they will have to get EPA out of responsible resource users’ way. — PETE CROW