Wednesday, January 27, 2010

What Obama Should Do...


The President should declare a Congressional holiday (a holiyear actually) and then extend it to the decision makers in the executive branch too. Seriously, if the politicians in DC would just go home for about a year and let the American people (and the businesses too) go about their lives without fear of crippling legislation the economy would turn around in a big way.

Stanford economist John Cogan, a former Reagan administration fiscal adviser said recently... “We are presently in a dangerously risky economic environment, more risky than any in memory and that includes the 1970s. The primary sources of that risk come from uncertainty about U.S. government economic policy. In the area of taxation, personal income taxes, especially those on savings and capital formation, are set to rise substantially in a year. How high tax rates will rise and what activities will be hit hardest creates a sizeable risk this year for investors and businesses.”

No one likes uncertainty. The risk takers accept uncertainty in the course of doing business, but they rely on the ground being stable beneath them. No one builds a house (or a mall) during a hurricane.

What has everybody worried is the administration’s unprecedented peacetime deficits. No one is sure what will happen to the macro economy with this kind of debt burden. What we do know is that it won’t be good. With the Bush tax cuts of 2001 and 2003 set to expire in January 2011 any nascent recovery will stall. While the populists and the progressives will be cheering that the "rich" will finally be paying their fair share the economy will not be saved. Many businesses will act in 2010 in anticipation of massive tax changes in 2011, changes that include the tax cut expirations and Obama's promised tax increases on capital formation and capital gains. If any jobs are created in 2010 they will be offset by job losses in 2011.

It's obvious that the things the Administration has pushed for and committed us to are not working - at all. So what is Obama’s answer? The possibility of another spending “stimulus” bill of $200 billion or more. Add ill-advised regulations and tax hikes on the America’s troubled financial system, job-killing climate change hooey, as well as pushing ahead with a costly health care plan, and other legislation that will only drive up the government debt.

If Washington DC goes on vacation for a year the MSM may bark and a few people will be upset that no one is "fighting" for us, but the vast majority of us will be delighted. The odds of this happening are about as good as me winning the Powerball tonight.

Wish me luck!


CW

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