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  • Why Obama is Wrong for the Economy

    1 posts, 1 voices, 449 views, started Oct 31, 2008

    Posted on Friday, October 31, 2008


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      Mr. Obama is wrong for the economy in the near term and in the longer run. What do I mean?

      In the near term, we have a consensus view among economists that the national economy will slump through a deep recession. This means a slowdown in business output and the loss of jobs. The number one economic priority of the next president must be job creation. Jobs represent the national tax base. Jobs reduce welfare rolls and entitlement claims. High employment reduces crime and enhances individual health. Jobs are key.

      There are two means of job creation: public and private. I agree that the federal government can support job creation through infrastructure projects on roads and bridges, but this is too narrow ans shallow a job base to stimulate the economy.

      We need private market job creation. These jobs must be created by small businesses and large corporations. To do so, business must operate in a favorable environment for making money. This means reducing the costs of operating a business where possible.  

      Mr. Obama, however, proposes to raise the minimum wage by $2, to penalize businesses that do not subsidize employee health care plans, to increase the payroll tax and to increase the income tax on those earning over $250,000 - meaning a whole lot of business owners. These Obama initiatives will make business operation in America more expensive and more onerous at precisely the wrong time. I do not believe that Mr. Obama’s plan will survive past election day - at least it should not. Mr. Obama is selling the wrong economic curen though it sounds nice to working class voters on the stump. All the burden seems to fall on the wealthy. Oops - but it is these very business owners who create jobs!

      In the longer term, Mr. Obama is not speaking frankly about the need to cut our budget - not simply to find a way to pay for new programs or to hold the line. In ten years, the Baby Boomers will begin retiring in large numbers. The ratio of retirees to working Americans will fall and place Social Security into annual deficit. That is not all. The same workforce that will labor to meet Social Security needs also will have to shoulder the tax burden for rising Medicaid costs and the cost of financing all current federal programs from the military to homeland security to the courts.  

      You see the point. The demographic realities facing America place an enormous and unsustainable burden on future workers - that’s right, our kids. We must cut federal spending significantly in the next ten years to meet our responsibility to pass to our children a viable economy.

      Mr. Obama’s plans do not come close to addressing this very real challenge. Increased taxes are not the right answer. These taxes will both stunt short term job creation and make budget reduction more difficult. The Congress always finds a way to spend our tax dollars. Spending must be reigned in.

      When Senator McCain proposed a freeze on the growth of federal spending, he  was on the right track. America requires serious belt tightening. Even Mr. McCain is not going far enough.

      Ten years is a short time. Failure to act noe will leave massive fiscal problems for tomorrow’s workers and retirees.  

      Tax increases on the wealthy are not the answer in the short or long haul. As Baby Boomers retire, there will be smaller numbers of wealthy earners in the workforce to tax. Who is going to pick up the slack? We must cut spending
      .  Mr. McCain is right.


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