The coming economic heart attack
It has already happened, and the proposed Porkulus Bill of almost $1.2 trillion hasn't even been passed (and that's just for this year). The mere threat of the economic policies championed by Obama has ruptured the stock market and turned a casual stroll of foreign investment pulling out of the country into a raging stampede.
Obama has proposed or will propose increases in every significant area of federal taxation, including investments, savings, employers, big business, entrepreneurs, and the engine that powers it all: small business.
Economic body blows
In a classic example of retrograde economics, Obama has earmarked pregnant spending increases for the nation's burgeoning entitlement programs. He also promises a massive increase in business and environmental regulatory controls, even though government bureaucracy is already estimated to cost America over $1 trillion per year, about $8,000 in lost output for every U.S. household (Laffer, 2008).
Then there is Obama's obsession with protectionist trade policies. He would have America turn its back on free trade even at a time when the federal budget is already spiraling out of control. It's almost as though this Democrat Party-controlled Congress and administration are working feverishly to produce a chronic decline in America's standard of living, especially for the middle class and hourly wage earners.
What could Obama and the Democrat Congress possibly hope to gain?
It doesn't add up
Just when the rest of the world has acutely shifted toward lowering tax rates and enhancing free markets, America is being positioned to be globally uncompetitive. In the past decade alone, income tax rates throughout the industrialized nations have been cut by more than one-third, corporate tax rates have been reduced by one-half, and a flat tax has been adopted in 24 countries. Yet we are being steered into a backward-looking, reactionary economic mode at a time when just the opposite is needed.
Before President Ronald Reagan's fiscal policies dug us out of the 1976-1982 economic quagmire and propelled us into the 1982-1997 boom -- the greatest peacetime economic expansion in the history of civilization -- there was President John F. Kennedy.
Kennedy adopted sweeping tax cuts to boost the economy. He realized that the only way to turn around inadequate federal revenues and a foundering economy was to invest in future growth by cutting taxes while limiting spending. Kennedy's reasoning proved to be as fiscally sound as it was rational:
"It is a paradoxical truth that tax rates are too high today, and tax revenues are too low and the soundest way to raise the revenues in the long run is to cut the tax rates ... [A]n economy constrained by high tax rates will never produce enough revenue to balance the budget, just as it will never create enough jobs or profits."
Yet here we are with American corporate tax rates the second-highest in the industrialized world, with prices already rising and the dollar declining.
Who benefits?
Why on Earth are we planning to choke the lifeblood out of domestic energy production, institute cap and trade global warming regulations that will shut the economy down, and promote legal requirements for the forced unionization of our industries?
We know that Reagan and Kennedy were right. Today it is obvious that lower tax rates increase incentives for economic growth, entrepreneurship, and consumption, and that higher tax rates reverse such incentives. Reagan and Kennedy taught us how to create a growing economy and what not to do to avoid economic disaster.
So again one must ask: What could Obama and the Democrat Congress possibly hope to gain?