In yesterday’s speech President Obama proudly came across as a New Deal anti-capitalist “moderate” convinced government has much to teach business.
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Obama spent minutes lecturing the CEOs that they should start spending the cash they’ve been hoarding due to regulatory and economic uncertainty that Obama has made much worse, not better. He jawboned them to hire more workers, implying that his efforts to rationalize America’s self-destructive corporate tax code would be conditioned on business acquiescence. After all, Obama knows that if the unemployment rate is 8% or higher in November 2012, our next president is very likely to be a Republican.
In speaking about lowering the corporate income tax rate, Obama specified that it would be in a deficit neutral way, meaning that many current loopholes would be closed. Eliminating the crony capitalism embedded in our tax code is a worthy goal. The problem is that the static modeling used by the CBO and all Democrats when discussing taxes means that they’ll ignore the economic growth — and thus the additional tax revenue — caused by lower corporate tax rates and thus not cut the rate as much as it should be cut. Given the power of each industry group’s lobby and the different treatment of each industry in our tax code, it will take a heroic effort to accomplish serious reform of the corporate tax system. It is, however, one of the few areas in which we should wish Obama success.
The president also spent time talking about “remov[ing] outdated and unnecessary regulations,” continuing his sad-if-it-weren’t-so-damaging missing the point that nobody has contributed more damaging regulation in such a short period of time as he has (not that George W. Bush has anything to be proud of in this area).
But continuing to prove that he is indeed “the same guy,” after giving a few examples of potential streamlining of regulation, Obama touted the virtue of regulation, from air and water rules to financial markets to “buying groceries” and essentially demonizing anyone who opposes regulation as ignorant child abusers. In other words, regulations should be simpler, but not that many fewer, and claimed good intentions trump all else.
A point that supporters of capitalism must keep in mind is that big business is not always, and perhaps not even most often, a champion of free markets. Unlike small businesses, which survive based on delivering a superior product or service for a given price — in other words, by competing — big businesses work hand in glove with government to crush competition (e.g. Net Neutrality) or funnel taxpayer money to themselves (e.g. the government’s ban on incandescent light bulbs, so that Obama’s friend Jeff Immelt of General Electric can sell us more overpriced, underperforming, toxic-if-they-break compact fluorescent bulbs). In short, do not assume that Chamber of Commerce or a major corporation’s approval of a government policy makes it a good idea — although it’s likely to be a better idea with their approval than without it if it originated in the Obama Administration.
Finally, as if to prove not only that he is economically clueless but that he idolizes such ignorance, the president closed his speech by lauding President Franklin D. Roosevelt’s “new partnership with business.” Roosevelt is the second-most anti-capitalist president in our nation’s history (second only to our current president). His willingness to experiment (an approach he took explicitly) with the nation’s economy is, according to many who study economic history, what made the Great Depression so “great.” Had Roosevelt not attacked corporations at every turn, the U.S. would likely have come out of the Depression much faster — as most of Europe did.
If Barack Obama’s economic role model is FDR, then we really are lost — for two more years. Given that Obama has said explicitly that he is not moving to the center, that he is “the same guy” he’s been all along, betting odds are strong that if the Administration does anything right in economic policy it will be despite, and over the objections of, the developed world’s most economically illiterate chief executive.
While Barack Obama probably intended his speech “to be seen over there [as] moderating,” instead he simply proved to everyone that his rhetoric is mostly insincere and completely uninformed by history or economic common sense.
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.
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It won’t take long for conservatives to scratch this presidential wannabe off their 2008 scorecard.
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Was the President done in by the economy, or by the politics of the economy?