Stimulating employment should be Obama's next goal

With record unemployment rates hovering near 10%, President Obama has decided to directly address the problem. A few months ago, he called for ideas to reduce unemployment, and now has announced his plan for a new employment stimulus. I believe he made the correct decision to continue small business tax cuts, which were set to expire at the end of this year.

Finally, the message to allow the free markets to operate with less tax burden has hit DC. Small businesses are the lifeblood of our economy, and tackling that direct source through strategic tax reform is important.

However, the pressure to spend seems so alluring to the leaders in DC that it casts a dark shadow over the positive proposals that I favored earlier. President Obama also calls forcontinued stimulus spending on infrastructure, community block grants, and of course, more health care expenditures. Now, he has created a new problem -- how will we afford this second big wave of government spending?

Tax reform is a more simple solution in terms of funding. The federal government just misses out on tax revenue, but holding out for a while in hopes that the free market will stimulate itself with fewer burdens could save taxpayers a lot of money. Of course, small business tax reform comes with a trade off, as does any economic policy decision. Convincing businesses to hire workers is similar to trying to increase bank lending by easing financial pressures. Some businesses might hold on to this extra cash because they know that these tax cuts are only temporary.

The goal is for small businesses to reinvest their money to create more jobs, and with regional banks holding on to cash, chances are small businesses will do the same. Unemployment is a difficult problem, but we have to find a way to get regional banks to lend, which will spur small business growth and create jobs. However, DC does not believe that these regional banks are too big to fail.

The main source of real market stimulus derives from banks. Lending money to small businesses will create growth and stability which will eventually employ more people. However, banks are too busy buying treasury bonds to hedge losses and ensure a return through interest rates. To control this, the Federal Reserve is buying treasury bonds to crowd out the market so that banks will be forced to lend. It's a complicated effect of the recession, and the American people have to bear the brunt while government and businesses try to rebound.