The President claims that he has some goodies for entrepreneurs in his four-volume budget proposal. However, his budget is heavy on spending and leaves us with a $901 billion federal deficit that entrepreneurs say will lead to higher taxes, lower profit margins and fewer jobs. Since many small business owners file their taxes individually, the President’s plan to bump taxes on anyone reporting income over $250,000 will hurt budding entrepreneurs.
The budget even targets specific industries, like the commercial real estate industry—eliminating the carried interest tax incentive (15 percent rate) and taxing real estate partnerships as ordinary income at the 35 percent rate. In a healthy, free-market economy, the commercial real estate sector accounts for nearly one third of U.S. GDP, creates 9 million jobs and U.S. Treasury data shows that over 46 percent of all partnerships are real estate partnerships. Instead of replacing the carried interest tax incentive with comprehensive tax reform, the President is effectively amputating up to one-third of U.S. GDP.
Instead of heeding Jobs and cutting regulations, Obama has added new layers of regulation to the economy (think the Consumer Financial Protection Bureau, the Office of Diversity and Inclusion, the National Defense Authorization Act and net neutrality regulations.)
And Obama chastises American companies for outsourcing? His policies are literally forcing tech companies like Apple to outsource to China.
Entrepreneur, venture capitalist and PayPal co-founder, Peter Thiel, also has job-creating advice. He says that while we have innovated in the realm of computers and the Internet, we still need a technology revolution in sectors like travel, medicine and energy.
Thiel writes in the National Review: “The technology slowdown threatens not just our financial markets, but the entire modern political order, which is predicated on easy and relentless growth. The give-and-take of Western democracies depends on the idea that we can craft political solutions that enable most people to win most of the time. But in a world without growth, we can expect a loser for every winner. Many will suspect that the winners are involved in some sort of racket, so we can expect an increasingly nasty edge to our politics.”
Thiel’s prediction is unfurling: President Obama embraces anti-innovation policies like the Buffett Rule and infuses his speeches with class rhetoric that pits wealthy, entrepreneurial risk-takers against everyone else.
Like Jobs, Thiel shuns the notion that a $100,000-plus four-year college degree is the universal key to success. The New Yorker’s George Packer profiles Thiel thus: “Thiel believes that education is the next bubble in the U.S. economy. He has compared university administrators to subprime-mortgage brokers, and called debt-saddled graduates the last indentured workers in the developed world, unable to free themselves even through bankruptcy. … Above all, a college education teaches nothing about entrepreneurship. Thiel thinks that young people—especially the most talented ones—should establish a plan for their lives early, and he favors one plan in particular: starting a technology company.”
Instead of listening to Thiel, President Obama is offering to bail out college students. By executive order, he recently rolled out his Pay As You Earn college student loan bailout program. The program stymies entrepreneurship and lets colleges get off the hook for rising costs and failing educational programs.
The President should be encouraging entrepreneurial youths to ditch college and pursue a private Peter Thiel-style fellowship rather than pushing them to spend four years of their life accruing needless information and burdensome debt. Extreme innovators like Jobs, Taylor Swift, Rush Limbaugh, Michael Dell, Bill Gates, and Ralph Lauren helped themselves and society by skipping overpriced, cookie-cutter experiences like college.
Step Three: Drill, Baby, Drill
We need to drill, frack and mine for our oil, gas, coal and rare-earth resources. For example, we could immediately create tens of thousands of jobs and produce 700,000 barrels of American crude a day by building TransCanada’s Keystone XL pipeline. The State Department has twice declared the pipeline to be environmentally safe and the Obama administration is still blocking it on environmental concerns.
Dr. Babyface also recommends eliminating the EPA because this agency routinely and unconstitutionally undercuts Congress. The EPA’s rules send energy jobs to China and raise the cost of energy at home. For example, “green tech” like electric, wind and solar is unaffordable because of the EPA. The U.S. once dominated the mining of rare-earth elements that are necessary to produce electric car batteries, wind turbines and solar panels. But EPA regulations essentially destroyed rare earth mining in the U.S. Today, China produces and controls the prices of about 97 percent of the world’s rare-earth supply.
The EPA also cut corners to regulate the coal industry in ways that will lead to higher energy costs and job losses. In September of 2010, the Associated Press revealed an internal government watchdog report: “The Obama administration cut corners…” because the EPA issued “controversial and expensive regulations to control greenhouse gases for the first time” despite the fact that the EPA did not conduct sufficient scientific studies to determine whether greenhouse gas emissions do in fact “pose dangers to human health and welfare.”
To summarize, America needs a radical facelift. It will be painful. But Dr. Babyface has a simple, three-step plan: First, convince President Obama to take a time-out from legislating. Second, listen to Steve Jobs and Peter Thiel and encourage innovation by cutting taxes, expelling regulations and abandoning the cultural push for universal four-year degrees. Third, exploit our natural resources and eliminate the EPA in order to lower energy costs and propel manufacturing.
I will see you in the surgery room, America.