Despite Obamanomics, here’s how to fix the economy for all.
On Monday, at yet another campaign fundraiser, the part-time President, full-time campaigner Barack Obama told Democrat fat cats, with both hands in taxpayer pockets, that Republicans “have not come up with a single, solitary new idea to address the challenges of the American people.”
But where are Barack Obama’s new ideas? The Keynesian deficit spending of the 1970s, focused on the make-work jobs programs of the 1930s, is not exactly a new idea. Neither is socialized medicine. Neither is raising capital gains taxes, or restoring the death tax, or tripling the dividends tax rate, or raising the payroll tax. Taking us back to the failed economic policies of the 1970s, if not the disastrous economic policies of the 1930s, is not exactly bold new leadership for the future.
But Obama continued, saying that instead of offering new ideas, the Republicans are “betting on amnesia…. They’re counting on that you all forgot… that it was the Republican policies of the last decade that got the nation into such a deep hole. They think they can run the okey doke on you. They are trying to bamboozle you.”
But the all time champion of okey doke bamboozlement is Barack Obama himself, with his 2008 campaign theme that he would bring an era of post-partisanship to Washington. With no history of bipartisanship in his background, that phony, baloney campaign nonsense fooled a lot of gullible middle Americans into voting for him. Since he got the power of the Oval Office, however, it’s been a virtually unbroken record of the most partisan extremism, like his quoted comments above.
When President Obama has supported something Republicans can vote for, like Afghan war funding, they have not hesitated to support him, and that Obama funding request passed only because of Republican votes. But that brief departure from the neo-Marxist party line has been almost as rare as a Chicago Cubs World Series appearance.
The Obama “Recovery”: Way Too Little, Way Too Late
Obama continues to campaign as if his economic performance should be measured only from the last trough of the business cycle, apparently thinking he can put together a successful political coalition of the 51% dumbest Americans. But there isn’t a majority of Americans dumb enough to fall for that statistical trick. The total of the continuing willfully gullible only adds up to something less than the 26% who tell Rasmussen they “strongly approve” of President Obama’s performance. Most of those are liberals who affirmatively believe that the decline of America is a good thing for the world, and so it is logical that they approve of his performance.
But the “recovery” that Obamanomics has produced is way too little, way too late. As I have previously noted, while the average recession since World War II has been 10 months, and the longest previously has been 16 months, in June, 30 months after the start of the Bush/Obama recession, the economy was still losing jobs. Yet, the latest numbers show the “recovery,” which has barely nudged unemployment below 10% only because so many have left the work force in hopelessness, is already losing steam. Growth declined from 5% in last year’s fourth quarter, to 3.7% in this year’s first quarter, to 2.4% in the second quarter. This is less than half the growth in the first three quarters of the Reagan recovery starting in late 1982. That recovery came after Reagan slew a historic inflation to boot, and continued on to become the longest in U.S. peacetime history. Indeed, it continued effectively for 25 years, a generation, with only two short, shallow recessions over that entire time.
That historic Reagan economic boom, moreover, ended not because of “Republican policies over the last decade,” but, as previously discussed here, because of the eventual departure from every plank of Reaganomics, and the reembrace of Big Government liberalism instead. This was supported every step of the way by Obama himself.
How to Fix the Economy, For Real
As I discussed last week, we know, based on economic experience, theory, and logic, how to create another economic boom that will last 25 years, or a generation, into the future. Reagan showed us how. Why would we want to exchange what we know works, Reaganomics , for the opposite that has been proven to fail, Obamanomics?
Achieving a booming economy requires us to first adopt the tax code that will maximize long-term economic growth. That involves reducing tax rates as much as possible. Lower rates allow the productive to keep more of what they produce, which builds the incentives to engage in productive activities such as saving, investing, working, starting new businesses, expanding existing businesses, creating jobs, and taking on the risks and burdens of entrepreneurship. That results in more jobs and economic growth. Moreover, rate cuts affect the economy far more than through the amount of any tax cut. The lower rates affect every dollar and economic decision in America, including by those from elsewhere around the world.
If you understood that prior paragraph, you are smarter than President Obama, who has demonstrated repeatedly that he just cannot follow that logic. Indeed, he is out now arguing actually that lower tax rates cause recessions, a nutzoid proposition utterly devoid of economic logic. Maybe he knows that’s nuts, but thinks he can fool enough voters with it, again. Either way, it shows how much deep trouble America is in as long as this man is anywhere near the White House.
Instead of rate cuts, what Obama has adopted, and keeps calling tax cuts, are tax credits, which provide a specific amount of reduction in taxes for those who qualify by jumping through government-designated hoops. If the credit is “refundable,” then even for those who don’t owe any income taxes, the government sends a check for the amount of the credit. Such credits do not change the fundamental economic incentives driving the economy. In terms of economic effects, they are no different from welfare checks, particularly when they are refundable.
To maximize economic growth, we need to first reduce the federal corporate tax rate of 35%, which, along with state corporate taxes, burdens America with virtually the highest corporate tax rates in the industrialized world. A federal rate of 15%, abolishing in return costly, unnecessary loopholes, would restore the international competitiveness of American businesses and employers. We should adopt a 15% flat tax as well, abolishing costly loopholes and deductions, including the slew of Obama credits. We should also maintain the 15% rate for capital gains and dividends. Another key is immediate expensing instead of extended depreciation deductions for capital investment in plant and equipment.
A man of faith in a godless age is hitting Americans where it hurts.
Mr. and Mrs. American Spectator Reader, let P.J. O’Rourke talk sense to your kids.
In Britain, defending your property can get you life.
The debacle of this president’s administration is both a cause and a symptom of the decline of American values. Unless Congress impeaches him, that decline will go on unchecked. An eminent jurist surveys the damage and assesses the chances for the recovery of our culture.
It won’t take long for conservatives to scratch this presidential wannabe off their 2008 scorecard.
The American Christmas, like the songs that celebrate it, makes room for everybody under the rainbow. Is that why so many people seem to be hostile to it?
Was the President done in by the economy, or by the politics of the economy?