Isakson says government uncertainty prolonging recession

By Charles Oliver, The Dalton Daily Citizen — Feb 16, 2010

U.S. Sen. Johnny Isakson said here Tuesday that America has never seen a more challenging and pervasive recession during his lifetime than the one it is currently facing.

And the Georgia Republican told the Dalton Rotary Club that uncertainty about government policy is prolonging the recession.

“There’s a lot of capital sitting on the sidelines, and it’s on the sidelines because every business man and woman, large and small, knows it is tough to risk that capital, without being somewhat certain about what the future might be,” he said.

Isakson pointed to several areas where the federal government is creating uncertainty in the market, from tax policy to regulation to health care.

“We need to give the American business community some clarity about what direction we are going,” he said.

Isakson said President Barack Obama’s decision to let former president George Bush’s tax cuts expire at the end of the year was a mistake. Isakson said the worst time to, in effect, raise taxes is during a recession.

Last year, Isakson authored legislation that expanded and extended tax credits for first-time home buyers. Those tax credits expire at the end of April, and Isakson said they would not be extended. But he said they were the sort of tax policy Washington needs to be looking at.

“That’s the type of tax policy we need, tax incentives for people to make decisions that are good for the economy, rather than escalating taxes,” he said.

Isakson said the uncertainty about what, if anything, the federal government will do to limit carbon emissions has also kept businesses from investing and expanding.

He noted that energy is one of the largest costs faced by many manufacturers, including the carpet industry. He said Georgia generates a large share of its energy by burning coal, so it would be hit hard by carbon restrictions.

“The (carbon) bill that failed in the Senate would have raised costs to rate payers in Georgia $8.2 billion more for energy between 2011 and 2020,” he said. “Businesses cannot expand and take risks and make investments if they think their taxes are going up, their electricity is going up and regulation is getting bigger.”

Isakson, who was scheduled to tour Shaw Industries’ waste-to-energy plant later in the day, said reliable energy at reliable rates is a key factor in keeping American manufacturing healthy.

Isakson spoke to The Daily Citizen after speaking to Rotary. He noted that nuclear power is key to the Southeast, since the region doesn’t have the opportunities for wind power or solar power that some other parts of the country have. But nuclear, unlike those other forms of energy, wasn’t counted as a renewable form of energy under the carbon legislation defeated in the Senate last year. Isakson said he does not think any “renewable portfolio” plan will pass Congress unless it includes nuclear.

“We’ve got to have nuclear on the East Coast and the Southeast or we can’t meet any renewable portfolio standards,” he said.

Brian Anderson, president of the Dalton-Whitfield Chamber of Commerce, said after the Rotary meeting he thought Isakson is correct that the government is creating instability in the economy.

“A lot of businesses are saying it’s safer to sit on the side and know what your return is than to get back into the market,” he said.