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Obama’s Economy

December 4, 2009

Obama’s Economy

I’ve never seen a Democrat cut any federal program. Eva.

Obama, in tandem with Democrats in Congress pushed through $700 billion for TARP and a $787 billion dollar bill full of pork barrel spending, government waste, and massive borrowing cleverly called ‘stimulus.’ The Democrats promised you that if you paid for their stimulus, jobs would be created immediately and unemployment would stay under 8%. And Team Obama reports this week that roughly 640,000 jobs were created or retained with stimulus funding through September 2009. Don’t believe it. Obama’s stimulus has completely failed to create any jobs and instead has witnessed more than 3.3 million jobs lost under Obama in 2009.

Business owners won’t hire more workers until health care and climate legislation go away. With a tougher regulatory environment and lending restrictions, there is too much uncertainly in the marketplace. The single best jobs action Obama should undertake would be to reverse course on a dangerous agenda of debt-financed spending, crippling regulation, expensive mandates, and intrusive government expansion. Unemployment is 10.2 percent, with the actual rate closer to 18 percent, and will remain that way well into 2010 and beyond. Even a peak of unemployment by next November or 2010 Election Day will be too minimal for any job-seeker to notice.

Jobs are the measure of the economy for the vast majority of the American people. They don’t see GDP growth. This is a statistic collected by bureaucrats in the Bureau of Economic Analysis. Stock market movements too have little to do with the economy. Meaningful jobs are created by manufacturers, not by governments or unions. When bureaucracy is incorporated into the industry equation, market forces are inhibited from playing out. That is what is happening with the heavy influence of labor; union jobs and government jobs are without question one in the same.

Obama invited 130 academics and politicians to a forum on job creation in Washington December 3rd. What’s wrong with this picture? A jobs summit that doesn’t include small business representation? No US Chamber of Commerce? No NFIB? No NAM? Gingrich said it best; it’s like having a forum to discuss professional football and excluding the NFL from participation. Its plain laughable. In addition, Obama has no respect for free market capitalism; no fear of the scope of government; no balance between labor and business; no integrity in what the stimulus has actually accomplished. I’m finding it increasingly believable that this Democrat-controlled government is destroying this country on purpose. Since when has an “academic” ever created a job?

The fact that the market is up 10% for the year is wiped out by the dollar being far lower for the year. Especially in a country that has a trade deficit. Over-regulating business too is the same as overtaxing and destructive. Government intervention into the private sector and a downtrend USA economy is forcing companies to leave the USA. One of the country’s most important industrial companies recently said the United States is not a good place to manufacture and it will continue moving its assets offshore. David Farr, chairman and CEO of Emerson Electric Co., noted on November 17th in Manufacturing and Technology News:

“…that the federal government is damaging prospects for U.S. economic growth with a $1.41 trillion federal deficit (10 percent of GDP); $12 trillion in government debt that will grow to $20 trillion in 10 years; a policy of printing money; a “non-targeted $800-billion stimulus”; bailouts for Wall Street and the automobile companies; the prospect for cap and trade legislation; a “government takeover” of health care to the tune of more than $1 trillion; increasing taxes and regulations; and a “lack of U.S. $ support” for manufacturing. The global stimulus “soon will fade,” says Farr.

No free-market employer wants to add employees during times of the uncertainty – and they are not. Washington should stop its war on the middle class and reduce taxes. History show tax cuts improve the economy by giving the people greater spending power and produces higher consumer confidence which leads to more spending of their income which leads to more jobs, more business investment in more efficient technologies, and ultimately higher GDP growth. In a November 19th report, Rasmussen surveyed that 62% of Americans believe tax cuts are the best way to create jobs and fight unemployment. Only 21% believe that additional stimulus spending is a more effective tool.

Obama and the Democratic-controlled Congress of course, still has times to do right. He should cut the capital gains tax to zero for two years; by encouraging investment, lower capital gains taxes increase funding for technologies, businesses, ideas, and projects that make workers and the economy more productive. Return the stimulus funds that haven’t yet been spent and apply it to the deficit. This will show global investors that finance debt to America that the US is serious about restraining out-of-control spending and deficit reduction. Eliminate the cap-and-trade and health care legislation; renew the Bush tax cuts beyond 2010; freeze non-military, non-entitlement spending for two years; boost credit availability for small firms; open-up favored-trade status encouraging expanding exports and reduce payroll taxes. Positive economic growth comes from the private sector not government and unions.

Tax policy can change the size of the future economy in either of two ways: by affecting the underlying growth rate or by creating a one-time permanent shift in the level of economic activity (without affecting the underlying growth rate). Reagan’s strategy was that if he increased military spending that the Democrats would have to decrease funding for entitlements while deregulation would allow business to police itself in free markets. Republicans did great at cutting spending under Clinton – but under Bush they failed. The Reagan tax cuts, showed that reducing excessive tax rates stimulated growth, reduced tax avoidance, and increased the amount of tax payments generated by the rich.

The four pillars of Reagan’s economic policy were to:

1. reduce government spending,
2. reduce income and capital gains marginal tax rates,
3. reduce government regulation of the economy,
4. control the money supply to reduce inflation.

Tax cuts have also shown positive results in other countries as well. Ireland’s recent tax cuts are believed to have improved living standards significantly. For years, the Irish were faced with high unemployment, budget deficits and high taxes. In 1986, Ireland faced a fiscal crisis. After reducing government spending, the government lowered taxes on both individuals and corporations. Over the next 13 years, Ireland’s per capita income went from only 63% of the United Kingdom’s average to besting it in 2000. Ireland now enjoys one of the highest standards of living in Europe and some of the lowest taxes.

Tax cutting is not the only long pole in the Republican tent. The GOP need spending restraint and a lax of the tax and spend mentality. Our country needs the precise opposite of what BO and Congress are doing; raising taxes, regulations and even creating new entitlement programs while government revenue is evaporating. The deficit is not just a problem of lack of income; it is a problem of lack of ability to budget. Most reasonable people know that there are huge cuts that could be made in spending, with no impact on services delivered.

When Bush was running up debt we actually had a decent growing economy, the debt ratio when he took office was 36%, and it was 37% when he left office due to economic (GDP) expansion. The deficits went up to $417 billion in 2004 after a recession, 911, two wars, Katrina, corporate scandals, etc. By 2007, the deficit dropped to $160 billion before Pelosi and Ried’s veto over-rides in 2008 gave us $450 billion. Federal revenue increased at the fastest pace in history after the 2003 tax cuts ($780 Billion). Bush’s increased spending was during good economic times; what we have happening now has never been done and has so far been proven disastrous.

We continue to lose jobs month over month. And, while the latest jobs statistics being released December 4th show a slow down, this is basically an accounting fabrication. There are thousands of people falling off of unemployment compensation rolls each week – none of them are reflected in the official numbers. Obama seeks a centrally controlled economy where HE sets the employment levels and pay wages. He cares about expanding the state; the best way to enact his socialist agenda is to drive down business because a desperate populace is easier to manipulate. In Obama’s world, businesses exist only to pay taxes and fund unions, who then fund Democrats.

Democracies always self-destruct when the non-productive majority realizes that it can vote itself handouts from the productive minority by electing the candidate promising the most benefits from the public treasury. Because of FDR’s disastrous deficit reduction experience that plunged the recovering economy back into the void in 1936-1937, we can reliably predict a worse outcome next year. And, as far as Main Street is concerned, our economy is still in critical condition. Almost overnight F.D.R., the most popular president of this century (elected 4 times) looted almost half of this nation’s wealth, while convincing the people that it was for their own good; much like Obama.

Obama is at his best when he:

1. Takes an issue and hypes it to biblical proportions.
2. Uses said issue to pontificate without saying anything.
3. Uses said issue to photo op.
4. Denounces anyone who doesn’t carry the hype water.

Almost all the growth we have seen to date is from government orders. I’ve always been dubious of the inventory rebuild scenario. No one ever seems to have solid numbers on it which makes it suspicious. Unless Obama stops his push to control business, unemployment will stay high. Investing $750 billion into small business expansion loans would have created 12 million jobs almost overnight. Instead, Obama keeps listening to those with no solutions that work. All we have to hope for is that many Democrats get the boot in 2010. Keep saving money because prosperity is not around the corner.

Less than 50% of American wage earners pay no Federal Income Tax and get back 100% sometimes more with rebates, in each year’s tax returns. There is very little reason for those people to vote against the insanity of progressive taxation that ultimately is ruining the American opportunity Reagan spoke so eloquently about as the “opportunity society”. Obama says that the private sector needs to help in stimulating the economy. Yet, Obama introduces government policies that hinder private sector expansion. People in states like NY and CA are going to see their marginal rates skyrocket next year, and voting for a charismatic charlatan who reads the teleprompter well but is way below his pay grade, will not seem so lovely. Hope is fast taking everything but their change. This is truly amazing times.

I’ve never seen a Democrat cut a federal program. Eva.

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