The Obama Watch

Chamber Music in the Key of Big G

In yesterday's speech President Obama proudly came across as a New Deal anti-capitalist "moderate" convinced government has much to teach business.

By 2.8.11

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President Barack Obama's speech to the Chamber of Commerce (video & transcript) on Monday morning offered the latest example of a man who wants to appear to be moderating while remaining "same guy" he's been for two years (or for his whole adult life), to support business while refusing to back away from Obamacare, the most job killing legislation in generations, and to want to cut government spending while offering reductions in discretionary spending that over the course of a decade save barely a quarter of this year's federal budget deficit.

It was a speech full of the internal contradictions necessary from a man whose mindset has always been anti-capitalist and anti-compromise, and who is trying to reconcile those traits with the "shellacking" his party took in November.

The president began by acknowledging his tense relationship with the Chamber: "Maybe we would have gotten off on a better foot if I had brought over a fruitcake when we first moved in." Polite but unimpressed laughter ensued, as if the attendees knew what was coming next.

After two years of leaving business out in the cold during every major policy discussion costing a few hundred billion dollars or more, Obama claimed to have "exchanged ideas" and "sought advice from many" of the Chamber's members. He claimed to have found "common cause" with the Chamber on the "Recovery Act" aka the "Stimulus" aka "Porkulous," but couldn't name any other legislation passed under his Administration that the nation's leading business organization supported, noting that "on other issues, we've had some pretty strong disagreements." You don't say.

Obama lapsed into a brief history of economic competition and globalization, noting that "these forces are as unstoppable as they are powerful" before injecting the first evidence that he was telling the truth to Bill O'Reilly when he said "I haven't" when asked whether he's "moving to the center": "[Americans] see a widening chasm of wealth and opportunity in this country, and they wonder if the American Dream is slipping away." While recent polls emphasize huge declines in public satisfaction with both government and major corporations, there is no evidence of the sort of class warfare jealousy regarding a "chasm of wealth" that Barack Obama himself has currently accepted (as demonstrated by his words to Joe the Plumber and a later statement that "at a certain point you've made enough money").

Obama's anti-capitalist view informs every policy preference and tinges even his most blatant attempt at economic "moderation" on his part.

It's also worth noting that the decline in satisfaction with government is down more than satisfaction with corporations, and that much of the current fad of bashing companies comes from the anti-business cheerleaders at the White House and within the Democratic caucus in Congress.

The president then lapsed into the primary theme of the speech: a bland rehashing of the State of the Union address with another call to "out-innovate, out-educate, and out-build our competitors" in order to "win the future" -- a phrase which Charles Krauthammer suggests will be Obama's 2012 campaign bookend to "Yes, we can!" and the acronym for which, WTF, Sarah Palin cleverly appropriated.

And here is where the real Obama comes through.

He claims that "winning the future" is "a job for all of us," completely missing the point that what most businesses really want is for government to get out of the way, not "help" as it did with, for example, the residential real estate market or with Obamacare's massive cost and impending regulatory burdens, or with his EPA's desire to control most of the economy through regulating carbon dioxide, a non-toxic substance almost entirely naturally occurring, the primary use of which is as plant food.

Strangely, for a man who just a few minutes earlier had said that "businesses can now open up shop, employ workers and produce their goods wherever there is Internet connection," Obama then proposed "connecting 80 percent of the country to high-speed rail," a boondoggle so large that it could dwarf even the massive money pit that is "green energy." He also wants to "make it possible for companies to put high-speed Internet coverage in reach of virtually all Americans." Perhaps he doesn't realize that that possibility already exists -- and that government had almost nothing to do with it (except for our undying gratitude to Algore for inventing the Internet). As always with Obama, the answer is government.

But the worst part of Barack Obama's speech was his attempt to channel President John F. Kennedy -- the man who gave America its single largest federal income tax cut as a percentage of GDP (1.9%) and as a percentage of the federal budget (8.8%).

Warning businesses that they "also have a responsibility to America," Obama patronized: "But ultimately, winning the future is not just about what the government can do to help you succeed. It's about what you can do to help America succeed."

It's a telling statement, so desperately wrong in its underlying premises that the assembled CEOs must have wondered whether an American president could actually be so clueless. Well, they might have wondered had they not lived through the past two years.

First, future success should be as little about government as possible; Obama's phrasing makes it clear that he believes government is at least as important as business in national economic success. Second -- and I know our liberal friends and even some conservatives won't like to hear this -- businesses have a responsibility to their shareholders and employees. They don't have a duty to the nation other than to abide by its laws. Instead, the actions of government should be such that they engender rational economic loyalty to the nation, much as Hong Kong and Singapore have among businesses domiciled there.

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.

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About the Author
Ross Kaminsky is a self-employed trader and investor and is a senior fellow of the Heartland Institute. He is the host of The Ross Kaminsky Show on Denver's NewsRadio 850 KOA on Saturday mornings from 6 AM to 9 AM. You can reach Ross by e-mail at rossputin(at)rossputin(dot)com.