Last week, I discussed some basics regarding Obama’s position on economics. Since then, he’s pushed out some more information on what he wants to do economically, and it ain’t pretty.
Let’s review really quick: right now, employment is what’s considered full - hovering around 5% unemployment, may leap up a point between now and the election, which is still decent. The manufacturing sector has been decimated in a number of areas, specifically the Midwest, and we’re hampered in part due to a xenophobic economic policy that has fear of foriegn made goods and irrational hatred of foriegn-based companies and outsourcing. Our corporate tax rate is uncompetitive with other comparable nations, and is only getting worse. To say that the economy is the top issue in this campaign is not a bad thing to say, really.
The first big pitch is that he’s looking to create two new major public works initiatives - one for “green energy,” one for “Infrastructure Reinforcement.” Let’s put one thing out of the way - the idea that the government can create jobs in this way was tried during the Great Depression: it didn’t work. The unemployment rate at the height of the problems in the 1930s was at 25%, and the result before the war issues began to ramp up for the United States was at 17%. Hardly a vast improvement for what it meant to be, and, more importantly, did nothing to help economic prospects and possibly aided in stalling them. Beyond that, what’s “Infrastructure Reinforcement” outside of the same sort of bogus earmark spending that voters overwhelmingly rejected in 2006 and are still considered a big issue today? Obama wants to spend $500b on infrastructure when it’s all said and done - what?! And so he wants a “Green energy sector,” whatever that means - will it mean more food for fuel that only ends up hurting the environment as well as the same poor and middle class he claims to be all about? (The answer, by the way, is yes). To be fair, Obama’s not shutting the door on nuclear power, but he’s hardly willing to pioneer an easy, long-term, viable pitch to our energy woes, either. Instead, it’s more of the same regulation that doesn’t work and ends up hurting the middle class where they can’t afford to be hurt - at least according to Obama’s narrative.
His other big platform piece is health care. His plan is dicey at this point - sometimes he wants universal, sometimes he doesn’t, he doesn’t like the Clinton plan, but his plan will insure all kids, etc. Two things we do know - it won’t work, because we we can’t get people to enroll in the plans provided to them already, and that it’ll cost a lot. Obama himself claimed last year that it would cost up to $65b a year, but if the Massachusetts funding gap is any indication, that number will go way higher.
Of course, that’s not the only way he plans to help people, you know. Tax credits! Increase the Earned Income Tax Credit, refundable credits for college students, savings credits, mortgage credits, tripling the EITC for middle class earners! Of course, Obama wants to close what he considers tax havens and increasing taxes on the top 1% of earners to help pay for these things. The problem, of course, is that the Bush tax cuts, in full, only accounted for roughly $110b/year, and closing the so-called loopholes isn’t going to bridge the gap in his spending proposals any further. You like the deficit spending now? Just wait!
Granted, we all need a tax cut - the taxes we pay right now don’t make sense, and the code is extremely complicated. But when the answer is to get those who create the jobs, invest in companies who create the jobs, and the companies that provide jobs, to pay more taxes, and to knock trade advances (and they are advances) such as NAFTA along the way, that’s not the route to a healthy economy. If you want more jobs, you don’t tell people “I want you to incorporate here, but I’m going to make you pay more money to the government to do it, and, oh, force employers to set up an IRA for you. Oh, and did I mention raising the Social Security cap, which will raise taxes quite a bit more for a number of people in that $100k-500k bracket who aren’t exactly rich, but, depending on where they live, aren’t poor either?
This is a huge error, and, more importantly, contrary to the meme Obama wants to push out there - this is typical Washington politics. This is the same type of politics we’ve seen for 70 years running now - government can solve the problem (even though they can’t) and the way to prosperity is by fleecing those who create it (it’s not). Politics as usual. I’d love to hear some defenses of this, because this seems epic in its proposal stage. He may not get much of it passed, but is that even worth a risk to possibly give that opportunity? I sure don’t think so.