The president's focus is equally myopic. He should go spend time with Fed chief Bernanke, who has a really good idea of how people get employed. They get jobs when demand is stimulated, and you get demand when you have a much larger employer set up near you. Otherwise, no one comes by. You don't get any customers. So all you do is figure out how few people you can hire, particularly because now you know that you have extensive healthcare costs that weren't even in the equation before.
You can only not
know these things if you haven't been hired, fired or created a job in the private sector.
Now, there's another side of all of this. If we are concerned that the U.S. government won't be able to pay its bills one day, then we know a time will come when we'll have to do what Spain did, and radically cut back all of our social programs. We will have to do what the rest of Europe will do over time, which is accepting a lower standard of living for all. That, in turn, is why the longer-term austerity plan is vital, because everyone knows we can't afford what the U.S. government provides to Americans.
That's why spending cuts are so important. They figure in the job creation of the next 25 to 30 years, and in the ability of people to stay out of poverty longer-term.
But, in the meantime, you can't get the growth for the government receipts to go higher, even in the near-term.
Take such companies as Honeywell (HON)
, Eaton (ETN)
or Celgene (CELG)
(the last of which is one of the principal employers in the town I live in). Put simply, if someone from one of these firms were in the room, explaining the impact of the delay in an agreement to avoid the fiscal cliff, the imperative would be to get this done before vacation -- or for there to be no vacation. That's because, the longer the delay, the fewer reasons there are to start a business and the more reasons there are to shrink, lay off, build fewer houses and cars -- and take your business off shore if you are big enough to do so.
Action Alerts PLUS, which Cramer co-manages as a charitable trust, is long ETN