One word: ObamaCare

ObamaCare requires businesses to purchase health insurance for all of their employees. While to many, health insurance coverage is an inalienable right, and providing employees with health insurance is considered a moral imperative, the simple fact of the matter is employers and business owners are going to use their capital as they see fit.

If the government is going to (attempt) force them to provide health insurance, then they aren’t going to hire additional employees…and they aren’t! Or, and they are doing this, they will hire elsewhere. Since Obama took office in 2009, fully $200 billion has found its way to other countries where lower taxes and less regulation takes place.

Since (domestic) hiring is slow and unemployment is high, individuals are not spending money; hence the weak spending recovery (called PCE or personal consumption expenditures in the chart).

Put simply, capital is very easily transferred to more favorable environments. Just like water seeks its own level, capital seeks its most efficient use – taxes and government mandates cause capital to seek more hospitable environments. In other words, until these nonsensical taxes and policies are rolled back, there will be no full recovery. Ironically, this is harming the very people (the middle class) this administration purports to help.