While the current meme is that corporations are 'sitting' on their cash because they’re greedy, the truth is that they’re holding off on investing and creating jobs because they don’t know what the economic environment will look like 12 to 24 months from now. To create an analogy that most people can understand, if you were an employee in a company that was losing money and laying-off employees but you received a substantial raise would you be likely to spend that money or are you going to save it?
The same basic rules apply to companies, and (after the crisis in 2008) many companies have realized that they have been operating with too small of reserves and have been too dependent on credit. Many people may not remember this, but in 2008/2009 there were many companies that were in significant trouble because they depended on short term credit to cover their payrolls, inventory and other expenses; and without access to this credit they were (effectively) insolvent. Without confidence in the banking system, which is hurt both by the 2008 crisis and the current crisis in Europe, companies are going to want to build up cash reserves in case they face similar circumstances.
Finally, while the supporters of the Democrat party love it, no one is certain what the impacts of Obamacare (or other reforms) are going to be. While supporters have faith that it will bring down costs, businesses are afraid that the costs per-user are going to continue to escalate and they will be forced to cover more employees resulting in their healthcare costs increasing much more rapidly than they were before the bill was passed. If you’re afraid that your labor costs are going to dramatically outpace your revenue growth you’re probably going to try to limit or reduce your labor.
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