|From the 24 May 2010 Lockport Union Sun and Journal (Lockport, NY)|
THE REALITY OF OBAMA’S WNY VISIT
Like a majority of Western New Yorkers, I listened intently to President Obama’s visit as it was broadcast on the local media outlets. Being a small business owner, I was very interested in what he had to say about the private sector since it appeared to be the sole reason for his trip (well, besides throwing a bone to Senator Gillibrand and giving her some much-needed name recognition by accepting her invitation). I thought the speech might have turned into one of those few times when I actually agree with him.
But, alas, I was let down.
Unlike most star-struck locals I was able to digest the content of his speech and look past the highly-publicized hysteria over the crass "hottie" comment and his choice of Duff’s chicken wings. Only in WNY could the President’s lunch be the lead-in to news coverage. And, people wonder why our local economy has been a mess for decades: When it comes to government we focus on unimportant inanity.
It was about half-way through Obama’s monologue that I was thinking the tide might be turning. He said something that I’ve been saying for years: "…government is not the true engine of job creation and economic growth in this country. Businesses are. Especially small businesses..." He followed that up by saying, "Government can’t guarantee a company’s success, but it can knock down the barriers that prevent small business owners…" It was there that he inserted one of his patented pauses. For that second I was getting excited, thinking he might finish the sentence with, "...from growing their businesses", followed by a focus on taking down those government-made barriers that business owners find so oppressive (high taxes, over-regulation, etc.). But, instead, he burst my bubble and ended his thought with "…from getting loans or investing in the future." He proceeded to speak at length about the importance of federally-guaranteed SBA loans in helping companies manage their inventory, pay workers or expand their facilities.
Many would find fault in that emphasis, rightly assuming that the role of financing the private sector is solely the responsibility of the private sector. The federal government should not be in the business of helping to extend loans to new and growing businesses and having the taxpayers assume their risk. It’s up to banks to do that alone.
His speech might have been meaningful in California or Nevada where many banks folded due to the collapse of the housing markets in those states, thus creating some lending fear and causing more businesses to lean on the SBA. But, it was extremely odd (if not incredibly poor planning by his staff) to push his government loan message in WNY. Buffalo-Niagara is the cradle of M&T and First Niagara Banks, two lenders that weathered the recession like no other. First Niagara has been expanding like it’s going out of style and M&T has been a very strong performer, one that was literally forced by the feds to take TARP funds. With solid, major players like that in the Buffalo market the SBA message isn’t so important.
The speech made evident that Obama’s brand of economic theory has some holes in it. He went on and on about the importance of capital being available to businesses and that its easy access would allow the economy to flourish. That’s not the case. Sure, money helps, but having all the money in the world available for borrowing is no good if the entrepreneur has no reason to borrow it and/or no ability to pay it back. He or she will only borrow money if it is known that the economy is active enough to induce existing and potential customers to spend their income – or credit - on the products or services of the company in question. Based on what’s been happening in the local/national/global economies since the close of 2007 the consumer demand just isn’t there, whether the consumer is an individual or a business. Businesses aren’t being prevented from borrowing. They just haven’t had the need to do so. That’s something that my banker has said time and again since the Great Recession began. He’s said his bank has the money and nobody wants it.
Supply and demand (Economics 101) is something that Obama needs to understand and obviously doesn’t based on the message of this speech and others. If he actually walked the walk and dedicated his agenda to his thought that businesses are the engine of job creation he would trim our government and not expand it every chance he gets. Then and only then can our economy grow.
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