Unfortunately, Washington, D.C. and many state legislatures seem determined to undermine any economic forward momentum for small business owners. And even though small business owners continue to plead their case for policies that will help foster economic growth, many lawmakers are unwilling to listen. Small business owners keep saying that poor sales (“It’s the consumer, stupid!”) is their most pressing problem and the reasons they aren’t interested in expanding are due to current economic conditions and the political climate. Unfortunately, Congress is fixated on credit and special favors for unionized firms, and that wont sustain or support faster growth.
As Avent says, “the problem is a lack of demand, not some imagined looming American debt crisis.”
Even Yglesias would agree not all demand is lacking, right now we are seeing a high demand for money and its close substitute, U.S. debt instruments.
His response (and that of DeLong, Avent, and Krugman) is for the federal government to engage in deficit spending to increase demand.
I'm extremely skeptical that spending by the federal government will give small business owners the confidence to invest in expansion, including hiring. This skepticism is not a fringe view and is held by many mainstream economists, much to the consternation of the Keynesian crowd.