The Guest Blog

Tony Fratto: Once Again, All Eyes on Washington

Uncertainty over the direction of economic policymaking in Washington was a troubling storyline of 2009, and 2010 is shaping up to be a repeat performance.

If you talk to business leaders -- all hopeful for a sustainable recovery -- and ask them what their most significant worry is when they consider decisions to invest, expand, and hire, uncertainty over Washington policies remains foremost in their minds.

* Will there be changes to the health care system?

* Will Congress pass an energy or climate change bill?

* Will financial regulatory reform pass?

* When will the Fed begin to move on interest rates?

* Will Congress pass the Administration's new spending plans?

* Will Congress agree to President Obama's proposed tax increases?

* Was that just lip service in the State of the Union address, or is the President really committed to fighting for the languishing Free Trade Agreements?

* What will a fiscal deficit reduction commission recommend?

* What will be the fate of Fannie Mae and Freddie Mac?

* What will be the impact of the Fed's decision to end its purchases of mortgage backed securities?

And then, maybe the three most critical questions:

* What will be the unintended consequences of these policies?

* Does the President have any more 'Crazy Ivan' moves up his sleeve like his recent punitive banking proposals, and the surprise foreign earnings tax?

* Can anything at all get done in an election year?

All of the policy decisions are taking place in a still fragile economic environment. The financial sector is still going through rehab. Housing remains a drag as the Administration's foreclosure mitigation programs have done little to stem the pace of defaults. And households, with elevated unemployment and deleveraging, cannot be counted on to resume previous levels of spending.

We have seen a small burst of economic growth fueled by very accommodative monetary policy, some fiscal stimulus, and a natural bounce off the bottom from the depths of the recession. Some limited job growth is also very likely to follow soon.

But few business leaders are confident of sustained GDP growth -- and sustained job creation -- while Washington continues to tinker with the nation's economic machinery.

As long as businesses are forced to keep their eyes focused on Washington, don't expect them to race ahead with confidence.

Tony Fratto is a CNBC on-air contributor and most recently served as Deputy Assistant to the President and Deputy Press Secretary for the Bush Administration.