In the early 1980s, Ronald Reagan’s popularity and policies moved American politics firmly to the right. In only 100 days, Barack Obama’s politics and policies have shifted America way to the left.
The president is seeking to change the whole relationship between the government and the free-enterprise private sector. He is steering the country away from democratic capitalism and toward his big-government command-and-control vision. We are witnessing a triumph of government bureaucrats over entrepreneurs, investors, and small businesses.
And with Sen. Arlen Specter switching from Republican to Democrat, Obama can now move the nation even further to the left. A filibuster-proof Senate will mean even greater economic restructuring with expanded government control of health care and energy and increased unionization.
This looks very much like a war against investors, businesses, and entrepreneurs. Shareholder rights are being eviscerated. Political decisions are replacing the rule of law, the rule of bankruptcy courts, and free-market principles.
We are witnessing more spending, deficits, and debt-creation than anyone ever imagined. Bailout Nation has run amok. This started under Bush, but Obama is raising the stakes exponentially.
The latest federal budget would double the debt in five years and triple it in ten. For some perspective, that debt level is higher than the combined debt levels generated under every president from George Washington to George W. Bush. According to the CBO, federal debt held by the public as a percentage of GDP under Obama is projected to rise to 82 percent in ten years. The budget deficit itself never drops below $670 billion and closes the period at $1.2 trillion. That’s nearly a 6 percent share of the economy.
All of this will certainly lead to large tax-rate hikes that will rob incentive power from entrepreneurs, investors, and small-business owners. Just look at Britain, where the top tax rate has been raised to 50 percent from 40 percent. The Thatcher Revolution is being repealed over there. Unless current trends are reversed, the Reagan Revolution will be repealed over here.
The Obama budget already will raise taxes on overseas corporate earnings and oil-and-gas companies at home. It will elevate taxes on capital gains and dividends for investors and will lift the top tax rate for successful earners. And more is coming.
But this is the wrong direction for economic growth. Instead, business tax rates should be slashed -- which, by the way, would repatriate corporate earnings for domestic investment. We need a capital-gains tax holiday. We should be flattening individual tax rates across-the-board. And all manner of loopholes and special-interest deductions should be repealed to broaden the taxable-income base.
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