Obama Declares War on Investors, Entrepreneurs, Businesses, And More

[OldNewby 27]

Obama Declares War on Investors, Entrepreneurs, Businesses, And More

by Larry Kudlow

Friday, 27 Feb 2009 | 4:39 PM ET

Let me be very clear on the economics of President Obama’s State of the Union speech and his 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.

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 10 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 across-the-board tax increase on blue-collar workers, including unionized workers. Industrial production is plunging, but new carbon taxes will prevent production from ever recovering. While the country wants more fuel and power, cap-and-trade will deliver less.

The tax hikes will generate lower growth and fewer revenues. 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?

© 2009 CNBC, Inc. All Rights Reserved

link: http://www.cnbc.com/id/29434104

[OldNewby 27]

Sounds familiar because it has been tried before, as during The New Deal.

From "The Revolution Was": http://www.rooseveltmyth.com/docs/The_Revolution_Was.html

PROBLEM FIVE

WHAT TO DO WITH BUSINESS — WHETHER TO LIQUIDATE OR SHACKLE IT

There was a Director of the Budget who was not at heart a New Dealer. One day he brought to the President the next annual budget — the one of which the President afterward said: "The country, and I think most of Congress, did not fully realize the large sums which would be expended by the government this year and next, nor did they realize the great amount the Treasury would have to borrow."

At the end of his work the Director of the Budget had written a paragraph saying simply and yet in a positive manner that notwithstanding the extraordinary activities indicated by the figures and by the appropriations that were going to be made, the government had really no thought of going into competition with private enterprise.

Having lingered for some time over this paragraph the President said: "I'm not so sure we ought to say that."

The Director of the Budget asked, "Why not, Mr. President?"

The President did not answer immediately, but one of his aides who had been listening said: "I'll tell you why. Who knows that we shall not want to take over all business?"

The Director of the Budget looked at the President, and the President said: "Let's leave it out." And of course it was left out. It may have been that at that time the choice was still in doubt. Under the laws of Delaware the government had already formed a group of corporations with charter powers so vague and extremely broad that they could have embraced ownership and management of all business. They were like private corporations, only that their officers were all officers of the government, and the capital stock was all government owned. The amount of capital stock was in each case nominal; it was of course expansible to any degree. Why they were formed or what they were for was never explained. In a little while they were forgotten.

Business is in itself a power. In a free economic system it is an autonomous power, and generally hostile to any extension of government power. That is why a revolutionary party has to do something with it. In Russia it was liquidated; and although that is the short and simple way, it may not turn out so well because business is a delicate and wonderful mechanism; moreover, if it wi11 consent to go along it can be very helpful Always in business there will be a number, indeed, an astonishing number, who would sooner conform than resist, and besides these there will be always a few more who may be called the Quislings of capitalism. Neither Hitler nor Mussolini ever attempted to liquidate business. They only deprived it of its power and made it serve.

How seriously the New Deal may have considered the possibility of liquidating business we do not know. Its decision, at any rate, was to embrace the alternative; and the alternative was to shackle it.

In his second annual message to Congress the President said: "In the past few months, as a result of our action, we have demanded of many citizens that they surrender certain licenses to do as they please in their business relationships; but we have asked this in exchange for the protection which the State can give against exploitation by their fellow men or by combinations of their fellow men."

Not even business would be asked to surrender its liberties for nothing. What was it going to receive in exchange? Protection against itself, under the eye of the Blue Eagle.

That did not last. The Blue Eagle came and went. Gen. Hugh Johnson, the stormy administrator of the NRA, said afterward that it was already dying when the Supreme Court cut off its head. Yet business was not unshackled. After all, one big shackle for all business was clumsy and unworkable. There were better ways.

Two years later the President was saying to Congress: "In thirty-four months we have built up new instruments of public power." Who had opposed this extension of government power? He asked the question and answered it. The unscrupulous, the incompetent, those who represented entrenched greed — only these had opposed it. Then he said: "In the hands of a people's government this power is wholesome and proper. But in the hands of political puppets, of an economic autocracy, such power would provide shackles for the liberties of the people."

There, unconsciously perhaps, is a complete statement of the revolutionary thesis. It is not a question of law. It is a question of power. There must be a transfer of power. The President speaks not of laws; he speaks of new instruments of power, such as would provide shackles for the liberties of the people if they should ever fall in other hands. What then has the government done? Instead of limiting by law the power of what it calls economic autocracy the government itself has seized the power.

[Grumps 3,706]

I fully expect the current administration to try to get business owners (job providers) to fund all of the bailout/stimulus/welfare programs. I think that they will be surprised at how we will respond. I have said it here before, but business owners can decide how big to make their businesses. The reason to increase the size of a business is usually to make more money. Increasing the size of a business usually means having more employees. More employees=more headaches. THE ONLY REASON TO PUT UP WITH THE HEADACHES IS MONEY. When the headaches caused by the numbers of employees is greater than the value of the money generated by these employees, then a downsizing will occur. Downsizing by business owners will result in increased unemployment.

I will be fascinated to see how the plans by the current adminstration will make the economy better. I don't get it, yet.

[autigeremt 7,551]

You could see the Unions raising cain in the future.

Obama is diggin' in for a heavy return volley, but he has his sites on a Chavez society.

[rexbo 104]

I fully expect the current administration to try to get business owners (job providers) to fund all of the bailout/stimulus/welfare programs.

This plan is already in the works, it is called cap and trade, and will result in huge indirect tax increases for ALL businesses; and especially your local utility company. Of course, the businesses (that survive) won't really pay it, you and I will.

Obama's carbon cap-and-trade plan bad for U.S., worse for Florida

[BamaGrad03 0]

Cap & Trade is bad for ALL americans. The costs will be passed on to anyone who buys energy, and anyone who buys products.

It's a regressive tax too. Global Warming gets disproven every day, but we are still going to have a widely sweeping regressive tax to "eliminate" it. I don't understand.

Capital Gains taxes are awful too.

What they are doing is the epitome of class warfare. They think they can tax and tax and tax, and that small business owners will continue to take it. It's pretty sad. I'm scared for America. We are abandoning the greatest economic model the world has ever seen, because people don't want to suck it up and live through a contraction. And we are moving to a model that has failed EVERYWHERE it's been tried.

Americans are stupid. They elected a guy because MTV told them to. Now they are getting what they deserved.

[Grumps 3,706]

Americans are stupid. They elected a guy because MTV told them to. Now they are getting what they deserved.

Unfortunately, you have hit the nail on the head. Your last sentence is wrong, though. WE are getting what THEY deserve.