So says Investors Business Daily after yesterday’s steep market drop. In their lead editorial, IBD puts the onus for stagnation and the inexorable slide back into stagnation squarely at the feet of Barack Obama and his economic policies. In fact, they list seven areas in which Obama is not just passively inept but actively hostile to American business and capital:
• Failed Fed policy. For three years, we’ve kept interest rates at record lows, undergone two rounds of quantitative easing and created $2 trillion in new money. On Wednesday the Fed announced its next move: the $400 billion “Operation Twist” — modeled on a failed Fed bond-buying program from the ’60s to push down long-term interest rates. With so much Fed meddling, the markets can’t help but be confused.
• Growing federal debt. In the European Union, debt-to-GDP ratios have hit an economy-crippling 140%. Greece, Italy, Ireland, Portugal and Spain all verge on default. But we have nothing to be smug about. U.S. debt of $14.5 trillion already tops 100% of GDP, a level economists believe saps a nation’s economic vitality. At the rate we’re racking up deficits — $4 trillion in just three years — we’ll soon join the EU in perpetual economic stagnation.
• Unstimulating stimulus. Faced with the clear failure of his previous stimulus, which wasted $840 billion, the president’s new plan spends another $457 billion and imposes massive new taxes on the middle class, small businesses and entrepreneurs. Some 1.9 million new jobs will be created, the president reckons. In fact, jobs will be destroyed.
• Class warfare. The president relentlessly attacks “millionaires and billionaires,” aided by the mainstream media’s penchant for repeating his factually challenged assertions about who pays our taxes. In pushing the new “Buffett Rule” to raise taxes on the rich, the president absurdly claims that millionaires pay less in taxes than their secretaries.
But as blogger Noel Sheppard notes, IRS data disprove this canard: 99.6% of those earning above $1 million pay taxes at a higher tax rate than secretaries. And just over 200,000 wealthy taxpayers pay 20% of all federal income taxes. These are the very people who create new businesses and jobs.
• Anti-business bias. The president’s war on small business and entrepreneurs has devastated American job creation, once the envy of the world. A House committee estimates more than half the taxes under the new “stimulus” will be paid by small businesses.
Refusing to sign an already negotiated free-trade bill, proposing onerous new taxes and regulations, and pursuing a money-wasting and corrupt “green jobs” strategy are leaving a wake of economic destruction.
• Regulatory siege. Federal regulation costs America $1.8 trillion a year — or roughly 13% of all our output. Whether it’s the Environmental Protection Agency requiring power plants to shut down and others to be retrofitted with costly new equipment, or the National Labor Relations Board telling companies like Boeing where they can and cannot locate new facilities, or a moratorium on oil drilling in the Gulf of Mexico, or foot-dragging on the construction of a new pipeline from Canada that could boost U.S. energy security and lower prices, the government is a barrier to growth.
• ObamaCare. An estimated 4% of the U.S. chronically lacks health insurance — a serious, but manageable problem. Rather than address the real problem, the president and his allies in the Democrat-controlled Congress took over 17% of our economy. Now we’re stuck with a health care program that studies show will provide lower-quality care at a cost of as much as $1 trillion over the next decade.
I’d actually give Obama a pass on the first bullet point, and a share of the second. Obama didn’t appoint Ben Bernanke and doesn’t have any formal influence over the Fed’s actions. However, the Fed pursued the QE2 strategy and is now shifting to the “twist” in part because the Obama administration hasn’t offered any useful economic policies to propel growth. Bernanke can’t help by making money any cheaper — monetary policy is as loose as it can be short of a Weimar Republic approach. On debt, Obama has more culpability but has to share that with Congress, which actually writes and passes the budgets. We’ve been outspending our income for decades, and while the Democrats made the problem almost exponentially worse, Obama didn’t do that by himself.
The rest of this explains why Bernanke has to resort to gimmicky tricks to keep deflation at bay. Obama’s stimulus plan flopped so badly that apparently he feels the need for a do-over, and he’s attacking capital holders in deed and in rhetoric to pay for it. In what universe exactly does that promote investment and economic growth? (Answer: Harvard.) ObamaCare is part of a deliberate policy of regulatory adventurism intended on imposing the parts of the Obama agenda that don’t have a prayer in passing Congress, and all of this adds up to a deep hostility to private markets, capital, and economic freedom.
In short, when we most need a Hayek in the Oval Office, we have a hack instead.
IBD editorial cartoonist Michael Ramirez puts the issue in brilliant one-panel perspective:
Also, be sure to check out Ramirez’ terrific collection of his works: Everyone Has the Right to My Opinion, which covers the entire breadth of Ramirez’ career, and it gives fascinating look at political history. Read my review here, and watch my interviews with Ramirez here and here. And don’t forget to check out the entire Investors.com site, which has now incorporated all of the former IBD Editorials, while individual investors still exist.