WASHINGTON -- It should be painfully clear by now that President Obama's $1 trillion economic recovery agenda has failed to create a strong climate for growth and job creation.
If a mediocre economic growth rate in the 2 percent range and 10 percent unemployment -- with little improvement expected on either front -- doesn't prove that, then Obama's decision to try across-the-board tax-rate cuts clinches the case. It is a clear admission that his economic agenda isn't working and that he'd better change course to turn the economy around if he is to have any chance of getting re-elected in 2012.
Obama came roaring into office two years ago blaming George W. Bush's "tax cuts for the wealthy" for just about everything that was wrong with the economy. In fact, Bush's tax cuts for low-income people and the middle class weren't the problem, but tax cuts for so-called rich Americans in the top 2 percent of income earners were what held back the recovery, or so he claimed.
He was going to push their income tax rates to 40 percent, raise the capital gains and dividend tax rates on investors, and impose higher taxes on American corporations that made and sold products abroad in the global economy (just as Toyota and Honda do here).
For Obama, pulling the economy out of its recession was merely a question of providing enough stimulus in the form of increased federal spending that started at about $800 billion, but eventually reached the $1 trillion-plus level. The money went to hundreds of dubious federal agencies and programs to spend on make-work projects, to state and local governments to save or create public sector jobs, and to shovel-ready public works projects. Much of the money went into safety net programs, and to subsidies for "green jobs" that still have yet to be created.
So the money was spent, and is still being spent, but the result has been a feeble number of public jobs, fewer private sector jobs, while the unemployment rate climbs and the government debt soars to unprecedented levels.
Businesses and venture capital investors, fearing Obama would succeed in raising taxes on all of them and spark another recession, held on to their reserves and economic expansion slowed. The government reported that the private sector created virtually no new jobs in November. Uncertainty about the economy's future, and what the tax picture would look like next year and the year after that, was rampant throughout the business world.
Then the American people, whose patience had come to an end, went to the polls and slammed the White House and Democrats in Congress with the political equivalent of a sledgehammer.
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