Monday, October 27, 2008

A Year After Obama's Elected

By Alan Caruba

For all the joking about Sen. Barack Obama thinking of himself as “the Messiah” or even, as Minister Farrakhan of the Black Muslim movement declared, being the Messiah, the fact of the matter is that he is just a man.

Granted, he may be one of the most politically ambitious men to have attained high office, but a year after he has been elected President—and I suspect that will be the outcome of the election—people will be asking why he has not turned back the tide of the Recession, ended the job losses, dealt with deflation, responded more forcefully to our enemies, et cetera.

Much like Jimmy Carter was swept into office in response to the public’s anger against the Watergate scandal of the Nixon administration, it will not be until Sen. Obama has been in office a year or so that voters (and those who didn’t bother to vote) are likely to discover that his “solutions” for the vast economic problems the nation will encounter are no better and likely much worse than they anticipated.

A year into his term, Sen. Obama will not be able to lay all the blame on President Bush and the eight years of Republican profligacy. He will “own” the nation’s troubles and if he and Congress are not seen as solving them, he will be harshly judged. Jimmy Carter lasted one term and set the stage for the remarkable Reagan era. The Democrat Congress that came into power two years ago has accomplished nothing.

The fact is that presidents are as much at the mercy of events beyond their control as everyone else. No one was expecting much from George W. Bush in his first year in office. They were just satisfied that he was not Bill Clinton. Indeed, Clinton had benefited from a 1994 takeover of Congress by the Republicans. Many of the programs and successes he would later claim for himself were the result of that new Congress.

George W. Bush, however, was transformed on September 11, 2001 from merely the fortunate son of a former president to a war-time president and, though people tend to forget, Americans were eager to strike back at their enemy, al Qaeda, and happy to finish off Saddam Hussein, given that Bush 41 had failed to do the job.

If Obama is seen to be weak domestically and foolish with his foreign policy, the script for the midterm elections that will come two years into Sen. Obama’s first term has already been written. The initial euphoria will have disappeared by then.

Presumably the Republican Party will have been sobered by its defeats and will have restructured itself to some degree by then. If, however, it remains solely the anti-abortion party, the military intervention party, and deficit spending party, it will not see power again for a long time.

Likewise, if the Democrats do raise taxes on everyone and engage in welfare state behavior, a lot of Americans will decide that John McCain was right when he warned against a president who wanted to “redistribute the wealth.”

It’s one thing to draw enormous crowds while running for office, but those same crowds have been known to turn up in Washington, D.C. when things go terribly wrong. They march against what they see as policy failures and they are angry.

As Lincoln said, “You can fool some of the people some of the time and all of the people some of the time, but you cannot fool all of the people all of the time.” He also said, “Nearly all men can stand adversity, but if you want to test a man's character, give him power."


joe blowe said...

I have been trying to follow ‘a dollar’ through its journey in the economy. Some things seem stand out:

Who actually owns a corporation ?
o The majority of the corporations that are referred to in the media are publicly traded and therefore owned by the multitudes.
o It brings the question, who is ‘big oil’ ? A conglomerate of ‘teacher’s funds’, retirement funds, and millions of single investors etc.
o When we tax a corporation, we are reducing the dividends that would be paid to the investors, by itself a betrayal of trust because the investors had an expectation of profit in the first place. We are also reducing the corporation’s ability to improve its business processes through reinvestment which usually includes hiring more people.
o When we tax a corporation, we are making money more scarce in the money market, making it more difficult for it and other businesses to borrow. Interest rates tend to rise.
o The collected tax money is spent by the government in much less efficient ways than would otherwise be in a ‘profit seeking’ market function.
o In essence, the fundamental question: ‘Who pays in the end ?’ We all do.

One example, Sarah Palin claims to have imposed a ‘windfall profits’ tax on the oil companies in Alaska, and is proud of this record.
I consider it to be a bad move, even immoral to some extent. It is the breaking of a ‘covenant’. The investors expected ‘unchallenged’ return – once someone starts playing G-d deciding how much is too much profit, who knows where it will end…

When we tax ‘The rich’, there is a similar situation happening. The rich person uses some percent of their income for consumption but a lot of it ,in the case of the very rich especially, is reverted back into investment in the economy. Again, it makes the money in the economy more scarce and costly – we are really taxing everyone.

So, in conclusion, using taxation as a form of wealth redistribution also has the side effect of eroding the economy and making everyone poor.

Does that sound correct to you ?

Alan Caruba said...

Yes, your analysis does seem correct to me.

joe blowe said...

Please feel free to use the ideas and concepts to publish a note on this topic. Taxation is at the forefront of the political debate now.
Please write an article on this, people need to understand the rhetoric behind 'Big Oil' and 'Tax the Rich'.