Perpetual increases in government spending is all that he has on his agenda.
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Obama said in Cleveland, “Over the last three years, I’ve cut taxes for the typical working family by $3,600. I’ve cut taxes for small businesses 18 times.” But Obama’s “tax cuts” have almost all involved tax credits and other loopholes, not reductions in rates, which he is increasing at a historic pace. It is reductions in rates that promote economic growth and prosperity, because the rate determines how much the producer can keep out of what he produces. Tax credits are really no different than welfare checks, particularly the refundable tax credits Obama has favored, which pay the beneficiary the full amount of the credit regardless of tax liability. But welfare does not promote economic growth and prosperity, Nancy Pelosi to the contrary notwithstanding.
No. 2: Increase Regulatory
A second component of Obama’s plan is a blizzard of increased regulatory costs and barriers. The chief rainmaker here is the EPA, which is effectively imposing through regulation the cap and trade legislation that even an overwhelmingly Democrat Congress refused to pass. That is just brewing up, but will effectively be another tax increase of trillions on the economy through higher electricity, gasoline, and other energy costs. Further EPA regulatory storms are forcing the shutdown of coal fired power plants all across the country, and preventing the construction of new ones, exactly the opposite of China. Interior and other regulatory authorities have set over 90% of available federal onshore and offshore jurisdictions off limits for oil and gas exploration and production. Obama’s regulatory minions have also refused to allow construction of the Keystone XL pipeline to bring Canadian oil to Gulf refineries.
Another storm front is building through hundreds of new regulations in process under the Dodd-Frank legislation. Those added costs and barriers threaten the availability of business and consumer credit essential for economic recovery and new jobs. Further storm clouds arise from the Obamacare takeover of the entire health care sector, just starting to increase the costs of health insurance and care. The Obamacare employer mandate is already killing jobs before it even becomes effective, as potential employers know they will be required to buy the most expensive health coverage for each of their employees.
These added regulatory costs are all effective additional tax increases on the economy. How are these soaring regulatory burdens going to produce strong sustained growth and generate good middle class jobs? Again, they are going to do just the opposite.
But in his Cleveland speech, Obama just derided the idea of regulatory relief as a Romney GOP policy to “eliminate most regulations.” He characterized such relief as the “promise to roll back regulations on banks and polluters, on insurance companies and oil companies” and decried that “They’ll roll back regulations designed to protect consumers and workers.”
Indeed, Obama argued once again that it was regulatory relief that caused the recession: “During the last decade, there was a specific theory in Washington about how to meet this challenge…. We were told that fewer regulations — especially for big financial institutions and corporations — would bring about widespread prosperity. [But] how did this economic theory work out?”
So don’t expect any regulatory relief in any second Obama term. Instead expect even more draconian regulatory burdens, as EPAs implementation of effective cap and trade really ramps up, Obamacare is fully implemented (raising health costs still further, still another effective tax increase), and Obama’s promise to make “climate change” a top priority in a second term (what happened to the laserlike focus on jobs?) promises to skyrocket energy costs further (still another effective tax increase, if I need to repeat myself).
No. 3: Increase Government Spending
In his Cleveland speech, President Obama continued to propound his fundamental economic theory that what drives economic recovery, jobs, and growth is increased government spending. That is why his 2013 budget proposes the highest government spending in world history, following an $800 billion, 27% increase in federal spending from 2008 to 2012, with a proposed 53% increase in annual federal spending from $3.8 trillion today to a record shattering $5.8 trillion by 2022. This President Obama budget proposes a very grand total of $47 trillion in spending over the next 10 years, another all-time world record.
Is draining all of that money out of the private sector really going to create strong sustained growth, pay down our long term debt, and generate good, middle-class jobs? Or is it going to bring the chaos of Greece and Western Europe to America?
Just as Obama avoids any real tax reform, his budget also fails to propose any significant entitlement reform. As a result, CBO projects that under current policies, with that Obama budget, federal spending soars to 30% of GDP by 2027, 40% by 2040, 50% by 2060, and 80% by 2080. That compares to the long term, postwar, stable, historical average of 20% of GDP that prevailed for 60 years from 1948 to 2008, under which America prospered as the strongest economy in world history. Obama’s Huge Government spending breakout from that stable, long term level is just the perfect Grecian formula for America, as it would undoubtedly create the same spending, deficit and debt crisis here that we see in Greece and Western Europe more generally.
Indeed, in his Cleveland speech, Obama criticizes spending cuts, deriding Ryan’s proposed budget to restore federal spending to its long term, historical, postwar average of 20% of GDP as a plan “to strip down government to national security and a few other basic functions.”
The Causes of the Financial Crisis and Obama’s Perpetual
Rather than tax cuts and deregulation causing the financial crisis, it was more nearly the opposite. It was Bill Clinton’s overregulation that forced financial institutions to abandon traditional mortgage lending standards, in the name of homeownership for minorities and the poor. Once those standards were demolished for lower incomes, they could not be maintained for higher income speculators. The government’s sponsored enterprises Fannie Mae and Freddie Mac, with effective government guarantees, were able to pump trillions into the subprime housing bubble, and spread trillions in toxic mortgage securities based on non-traditional subprime mortgages throughout the global financial community. President Bush then supported a cheap dollar monetary policy following Keynesian doctrine that a cheap dollar boosts the economy by promoting exports. That just pumped up the housing bubble even further, and held back the economy as compared to the earlier Reagan boom built on anti-inflation, strong dollar policies that promote job-creating, wage-increasing investment.
But in his Cleveland speech, Obama used the financial crisis as an excuse for his own failure to achieve a traditional recovery from the recession. He said, “Throughout history, it has typically taken countries up to 10 years to recover from financial crises of this magnitude.” Obama is telling us the standard of recovery he wants to be judged by, 10 years to get back on our feet, like during the Great Depression.
But that is not based on the history of American recessions and recoveries. That history is fully recounted at the website of the National Bureau of Economic Research (NBER). That history shows that since the Great Depression, and before this last recession, recessions in America have lasted an average of 10 months, with the longest previously being 16 months. But here we are 54 months after the last recession started in December, 2007, and there has been no real recovery
Moreover, the American historical record is the deeper the recession the stronger the recovery. Based on that historical precedent, we should be in the third year of a booming economic recovery by now. Instead what Obama has produced is the worst economic recovery since the Great Depression, as I have recounted previously.
Obama always wants to measure his performance from the trough, or worst point of the recession. But every recovery is always better than the worst point of the recession. Obama’s recovery is to be measured as compared to previous recoveries from prior recessions in the American economy. By that standard, Obama’s recovery has been pitiful, again the worst economic recovery since the Great Depression, especially as compared to the all-time record Reagan recovery.
Indeed, if Obama’s perverse policies are not reversed, his soaring tax rate increases next year on top of his skyrocketing regulatory burdens and runaway federal spending, deficits, and debt will just throw America back into recession, before there was even any real recovery from the last recession. Then unemployment will soar back into double digits, the deficit will soar to new records over $2 trillion, and President Obama will have added more to the national debt than all prior U.S. Presidents combined, from George Washington to George Bush. The entire period will then look just like a historical reenactment of the 1930s. That should be no surprise that Obama in modeling his Administration after FDR is getting the same results as FDR. That is not fighting for the middle class, that is trashing the middle class.
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?
H/T to National Review Online