Let me be very clear on the economics of President Obama’s address to Congress and budget. 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.It's a start. After the election, I wrote about silly conservatives, like Bill Bennett and George Will, who seriously thought Obama would act as a moderating influence on the Dastardly Duo of Harry Reid and Nancy Pelosi> They thought that Obama was such a savvy pol that he'd refuse to rush to the left because he knew that it wouldn't work and it'd backfire on him. Nevermind that he was the most liberal Senator and steeped in socialist radicalism his whole life, he would triangulate like Clinton did.
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 ten 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.
And as far as middle-class tax cuts are concerned, Obama’s cap-and-trade program will be a huge tax increase on all blue-collar workers, including unionized workers. Industrial production is plunging, and new carbon taxes will prevent production from ever recovering. While the country wants more fuel and power, cap-and-trade will deliver less.
Obama’s tax hikes will generate fewer revenues and lower economic growth. Yes, the economy will recover. But Obama’s rosy scenario of 4 percent recovery growth in the out years of his budget is not likely to occur. The combination of easy money from the Fed and below-potential economic growth is a prescription for stagflation. That’s one of the messages of the falling stock market.
Essentially, the Obama economic policies represent a major Democratic party relapse into Great Society social spending and taxing. It is a return to the LBJ/Nixon era, and a move away from the Reagan/Clinton period. House Republicans, fortunately, are 90 days sober, as they are putting up a valiant fight to stop the big-government onslaught and move the GOP back to first principles.
Noteworthy up here on Wall Street, a great many Obama supporters — especially hedge-fund types who voted for “change” — are becoming disillusioned with the performances of Obama and Treasury man Geithner. There is a growing sense of buyer’s remorse. Well then, do conservatives dare say: We told you so?
Well, we see how all that worked out. Morons.
Obama is ruling like the fascist despot he is, but the real question is who is going to step up and admit that they were suckered by him? Will Oprah call The One onto the carpet for being a charlatan like that "Million Little Pieces" author she shilled onto the best-sellers chart or will she silently sit in approval as he turns America into Soviet Amerika? (I'm guessing "B".)