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March 1, 2009
Obama's War on Investors and Business
President Obama has revealed himself to be every bit as left-wing as we had feared he would be. Those conservatives who assured us that he would govern from the center have been proven completely wrong, and he has barely been in office a month and a half.
Economist Larry Kudlow lays it out:
He is declaring war on investors, entrepreneurs, small businesses, large corporations, and private-equity and venture-capital funds.That is the meaning of his anti-growth tax-hike proposals, which make absolutely no sense at all -- either for this recession or from the standpoint of expanding our economy's long-run potential to grow.
Raising the marginal tax rate on successful earners, capital, dividends, and all the private funds is a function of Obama's left-wing social vision, and a repudiation of his economic-recovery statements. Ditto for his sweeping government-planning-and-spending program, which will wind up raising federal outlays as a share of GDP to at least 30 percent, if not more, over the next 10 years.
This is nearly double the government-spending low-point reached during the late 1990s by the Gingrich Congress and the Clinton administration. While not quite as high as spending levels in Western Europe, we regrettably will be gaining on this statist-planning approach.
Study after study over the past several decades has shown how countries that spend more produce less, while nations that tax less produce more. Obama is doing it wrong on both counts.
Actually, he's doing it right, but by his definition. Obama, you see, isn't really interested in fixing the economy, at least not in the traditional sense.
His real purpose is what he said it would be during the campaign:
I think that Obama's real purpose is what he said to "Joe the Plumber" during the campaign; "I think when you spread the wealth around, it's good for everybody."
He also admitted to Charlie Gibson during a debate with the other Democrat candidates that "I would look at raising the capital gains tax for purposes of fairness."
And of course his 2001 interview with Chicago Public Radio station WBEZ in which he complained that "the Supreme Court never ventured into the issues of redistribution of wealth, and of more basic issues such as political and economic justice in society."
Some will object that President Obama's economic plan must be good because he enjoys high poll numbers. And indeed he does. The Real Clear Politics average has him at a 64% approval rating, which is quite respectable.
The markets, however, see it differently.
Here's the NYSE composite for the past 2 months
And here is the Dow Jones for the past 2 months
Certainly the markets have been going down for the better part of a year before Obama took office. But if Obama's plan is so good, the markets should have stabilized or moved up by now. Remember, the stock market is a leading indicator, not a lagging one.
Obama's True Purpose
Mona Charen summed up where this is taking us
President Obama has made it abundantly clear that he intends to hustle this country into European nanny-state socialism if he can (and just as fast as he can).
That's one. Obama's other purpose is to enlarge the bloc of permanent Democrat voters by increasing the number of people whose jobs are dependent on government spending.
In an earlier post I listed program after program in the "stimulus" that had nothing to do with economic stimulus. It's all just a giant liberal wish-list enacted into law. One even overturns the 1996 welfare reform It was simply one liberal program after another designed to increase the size of government and create a permanent class of Democrat voters.
If you want to accuse President Bush of using 9/11 to "take away our civil liberties" with the Patriot Act, I disagree but if you want to make that argument, fine (nevermind that the Patriot Act can and probably will be overturned with the stroke of a pen while Obama's program will be next to impossible to roll back). Can't we then accuse President Obama of using the fiscal crisis to push the largest expansion of the government and transformation of our relationship to it since LBJ's Great Society?
Fifty years ago Eisenhower warned us about a military-industrial complex. He had a point, though with the looming threat of the Soviet Union and now of jihadism it's hard to see how we could have done things much differently. Nevertheless, I will certainly agree that our defense establishment should wax and wane with regard to the actual threat out there. Perhaps at times we contract it too much, but certainly we do not need to spend what we did during the height of the Cold War.
While we're at it, I will also say for the record that spending on defense matters to boost the economy or employ people is also wrong. Defense spending should not be justified for these reasons. We have a military to kill people and break things (or to provide a credible threat that they can do so, which is the same thing if you know your Clausewitz), not to provide employment opportunities.
But the non-defense "liberal-industrial complex" never wanes. Once started, it is almost impossible to eliminate programs and positions.
If you don't believe me take a look at your local county, town, or city budget. Most are on line and you can access it fairly easily. If not, hard copies are available by law.
Point is, because they're smaller, it's easier to dig though them. Do so, and you'll be amazed at some of the things that your locality spends money on. We have a "master gardener" program to provide residents of one of the wealthiest counties in the country with landscape management tips. We have guidance counselors in our elementary schools. Yet suggest that either should be eliminated during a time of recession and you'll face a firestorm of protest; from the master gardeners and elementary school guidance counselors.
Go to a public hearing on budgets at your local county, town, or city. Suggestions to cut anything are met with proclamations of dire consequences.
Anyone who has observed these processes knows that is very easy to increase the size of government, but almost impossible to shrink it. By creating more and more whose livelihoods are dependent on government, Obama has assured the Democrat party of more voters.
Obama aims to resurrect not so much FDR's New Deal, as LBJ's Great Society. His programs are not to fix the economy, but to move us towards a European model, perhaps especially the French dirigiste one. He wants to change the very nature of America, who we are and what we think about ourselves. He wants to change us from a nation of entrepreneurs into a nation of dependents. He's likely to succeed unless we on the right get our act together. Time is of the essence, and we must keep him from getting a second term.
Posted by Tom at March 1, 2009 9:45 PM
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Comments
Tom, you have it soooooooooo right. I can tell. I know a thing or two about creating an electorate.
Posted by: Outlaw Mike at March 2, 2009 5:12 PM
So Obama's dastardly plan to keep Democrats in control of the government is to make sure that government works correctly? That wicked, wicked person. Imagine people getting together and electing representatives to do commie things like provide for the common defense, promote the general welfare, and all that. To arms!
Posted by: bolo at March 2, 2009 10:57 PM
Historically, most Presidents have moved center once elected -- or have "flipped" nearly altogether.
Obviously, BHO hasn't. He's doing exactly what he said he would do on the campaign trail.
And, as mentioned here, local governments are also following BHO's spend-spend-spend meme.
Maybe government does "work better" when it's bigger. But the average citizens are serfs, enslaved to government policies and high tax rates.
Posted by: Always On Watch at March 3, 2009 8:10 AM
Darn you Obama and your plan to provide investors and business with capital! Darn you!!!111
Posted by: Paul -V- at March 3, 2009 9:04 AM
I love leftie comments like these from Bolo and Paul V. They both make use the exact same talking point and neither can make a coherent economic argument. How revealing.
The idea that Obama is providing investors and capitalists with capital is laughable. Taxing A to pay B gives no money to anyone. All you're doing is shifting water around in the same pool. Whether this occurs because of immediate or future taxation(deficit spending) is not relevant. Further, Obama is taking capital from them by raising taxes.
Investors and business people know all this, which is why the markets are headed downwards. If what Obama is doing is so great why aren't they going up? As I pointed out in my piece, the stock market is a leading indicator.
What a pair of idiots.
Posted by: Tom the Redhunter at March 3, 2009 5:37 PM
Sooner rather than later he'll assume full ownership of this financial mess. Heck with all the money he has spent he might as have bought the thing. They know the bottom is falling out and they know they don't have the answers. So he has an option of pulling a Hugo Chavez and create class warfare while his ax men create a smoke screen called Rush Limbaugh...A private citizen who has never been elected to anything. This is what we are stuck with unless the majority can read the writing on the wall.
BHO policies are a mess and obviously are not doing anything to ease the fall and promote recovery. Instead, he is creating more debt in an effort to buy more patronage.
To Arms! Is Right!
Posted by: Jason at March 3, 2009 10:48 PM
Agreed that nobody in reality has any clue what to do about the financial mess. It amuses and pains me though that the deluded like Jason think that bashing Obama for doing something is somehow the right path. George Bush showed tax cuts and deregulation are failures. It's either attack all out as Obama is doing or do nothing and see what happens. Now hurry bck Jason and tell us once again how bad you think Obama is without offering anything of substance as an alternative.
Posted by: truth101 at March 5, 2009 11:12 AM
Ah, the astute ´Economist Larry Kudlow´ definitively states:
---Study after study over the past several decades has shown how countries that spend more produce less, while nations that tax less produce more.----
This is the same guy who informed us that the recesion debate was over:
"The recession debate is over. It's not gonna happen. Time to move on. At a bare minimum, we are looking at Goldilocks 2.0. The Bush boom is alive and well. It's finishing up its sixth splendid year with many more years to come".
By this logic, stating the stock market reflects the succes of Obama´s un-implmented policies is about as accurate as saying the current ´dip´is part of a non-recession from the ´many more years to come´of the Bush boom.
Posted by: jason at March 13, 2009 12:39 PM
Neither Truth101 nor jason (small j) disputed or disproved the thesis of the post. Both throw dirt at Kudlow but achieve little else
Truth101 said "bashing Obama for doing something...without offering anything of substance as an alternative."
Well, if you followed the link to Jason's blog you'll find he's a thoughtful fellow, quite unlike the rantings I find at your place. And please don't say that the GOP doesn't offer alternatives, see here and here
jason - you really disappoint me. I thought you were smarter than to buy into Obama's crap. The guy has no intention of fixing the economy. To him, it's all about moving us towards a European style socialist economy and building a permanent majority bloc of Democrat voters.
As for the stock market, yes, I see that Obama blames Bush for everything. He even shows enough low class to bash Bush in his budget documents if you care to go read them. He'll do this for as long as it's convenient for him. Oh but you wait, he'll take credit as soon as (or if) it goes back up!
But you and Truth101 need to go back and read my post again, where I wrote
"Certainly the markets have been going down for the better part of a year before Obama took office. But if Obama's plan is so good, the markets should have stabilized or moved up by now. Remember, the stock market is a leading indicator, not a lagging one.
Repeat after me
The stock market is a leading indicator
It tells you where investors think the market is going, not where it has been. That it has continued to go down after Obama offered his "stimulus" plan tells you that investors have no confidence in it. Unemployment is a lagging indicator, so you can blame that one on Bush.
Yes, part of the stock market tanking is due to the banking crisis, which is just as much the fault of the Democrats as the Republicans. But if either Obama or his tax-cheat of a Treasury Secretary Geithner had a plan for that, the markets would have reacted in a positive manner there, too. As it is they don't have a clue as to what to do, and the markets are reacting.
jason - Kudlow may have been wrong in that he missed the current recession, but can you actually believe that Obama has not essentially declared war on business and investors? Can't you see that investors know this and are scared silly by Obama's policies?
Logically, if you say 1+1=2 and 2+2=5, being wrong on the latter does not make you wrong on the former. Kudlow is right that "Study after study over the past several decades has shown how countries that spend more produce less, while nations that tax less produce more" and this you have not disputed.
I understand about credibility, but please, none (or very few) of the Democrats or liberal economists predicted our current situation either.
Posted by: Tom the Redhunter at March 13, 2009 9:57 PM
Tom,
Investors are scared silly because we have all lost our shirts with this financial crisis, thanks to shifty financial dealings at AIG, Lehman Brothers, and the housing crisis. I could care less if my capital gains taxes increase from the current long term rate of 15%. At this point, I would just love to see any gains.
Last week the market went up, does that now mean that investors like Obama's policies? The causality just isn't there. There are way too many other factors (real and physiological) that move markets.
In relation to the debate over the stimulus of tax cuts compared to increase government spending, it is far from over (like which came first, the chicken or the egg). We'll never agree, and I would say that a recent paper (December, 2008) by New York Fed's Gauti Eggertsson leans in the favor of increased government spending over tax cuts in terms of overall stimulus impacts (including multiplier effects) and avoiding deflation.
People much more knowledgable than either of us haven't solved this question, and I doubt we'll definitly settle it here.
Posted by: jason at March 19, 2009 1:08 PM
As you say we'll have to agree to disagree.
Posted by: The Redhunter 
at March 19, 2009 9:21 PM
