The No. 1 issue (in contrast to personality) in the presidential campaign, according to every poll of voter opinion, is the economy. More than the wars in Iraq and Afghanistan, more than the concerns about health care, the public's negative view of the economy is unambiguously driving the historically unprecedented 80 percent of the public who believe the country is on the wrong track.
As a result, Sen. Barack Obama is in a powerful position. He merely needs to state that the current economy is unacceptable and that we must change the policies that have caused it. In national politics, the side that can make its point with a slogan usually beats the side that needs two paragraphs to rationally refute (or at least plausibly rebut) the slogan.
That is why, for instance, President Clinton capitulated to Newt Gingrich's Republican Congress in 1996 and signed the Republican welfare reform bill (after vetoing it twice in 1995). As slick-talking as Clinton was (and is), he simply could not communicate effectively against the slogan of welfare reform having a work requirement.
In the remainder of this campaign, the Republicans have to avoid two traps. The first trap is to defend the current economy. Even though as of now, the economy is not in recession but in fact is growing slightly, it would be electorally lethal for Republicans to deny what at least two-thirds of the country feels: The economy stinks, and they want it fixed.
The second trap is to permit McCain and the Republicans' message on the economy to sound like merely a continuation of Bush's policy. The obvious problem is that the continuation of Bush's tax cut policy is a necessary part of any economic recovery policy. Indeed, the most important step that can be taken to protect American jobs and keep American-based companies from moving offshore is to reduce our corporate tax rates sharply.
Currently, the United States has the second-highest corporate tax rate of all industrial societies, after economically anemic Japan. The U.S. federal rate of taxation is 35 percent, and when the average state and local corporate tax rates are added, American corporations pay, on average, a 39.27 percent tax on their incomes. China is at 25 percent; Mexico is at 28 percent; socialist Sweden is at 28 percent; and prosperous Ireland is at a mere 12.5 percent.
If these comparative rates continue for much longer, the United States economy will mortally bleed jobs and prosperity to a world -- both nominally socialist and free market -- that has learned the low corporate tax lesson from Reagan's America that current Washington has forgotten.
Obama's solution to the problem of jobs and industry going offshore is to lean toward protectionist policies (renegotiate NAFTA, oppose new free trade treaties, etc.). When one combines Obama's plans to tighten international trade, create carbon trading regulations that will be the equivalent of a further $100 billion corporate tax, raise taxes generally on business, as well as his mind-numbingly counterproductive "windfall" profit taxes on petroleum product companies (full disclosure: as a rational person, I support and provide professional advice to the petroleum industry), one has a formula for economic catastrophe not seen since Herbert Hoover's similar Depression-inducing policy in 1929.
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