Obama then went on the attack in his convention speech, saying, “Now our friends at the Republican convention were more than happy to talk about everything they think is wrong with America, but they don’t have much to say about how they’d make it right. They want your vote, but they don’t want you to know their plan.”
That couldn’t be more wrong. Romney has detailed a very specific tax plan based on a 20% across the board cut in income tax rates for everyone, perfectly analogous to Reagan’s 25% across the board tax rate cut in 1981 that precipitated the greatest economic boom in world history, what Steve Forbes rightly called “an economic golden age.” Cuts in tax rates promote economic growth by enabling producers to keep a higher percentage of their production, expanding incentives for increased productive activity, such as savings, investment, starting businesses, expanding businesses, creating jobs, entrepreneurship, and work. Tax rate cuts are the only tax cuts that promote growth. Reigniting economic growth is the foundation for reducing the deficit.
Those tax rate cuts would directly benefit the middle class by cutting the rates that apply to middle class incomes and below. Romney also proposes extending the Bush tax cuts for the middle class. Romney would in addition repeal all the middle class tax increases in Obamacare, including the individual mandate. He would repeal as well the death tax, which trashes successful small businesses at the death of their owners, and the Alternative Minimum Tax, which threatens the middle class in high tax states.
The middle class would also benefit indirectly from the tax rate cuts for higher income taxpayers, due to the resulting increased jobs, and the higher wages and incomes that arise from increased demand for labor and from higher productivity due to increased capital investment.
Moreover, the Romney/Ryan ticket offers the most detailed budget plan in any election campaign in American history in the Ryan budget, which merely restores federal spending to the long term, historical, postwar average over the last nearly 70 years of 20% of GDP. Romney’s economic plan would greatly benefit, however, from more specifics regarding monetary policy. Essential to stimulating booming economic growth is a stable dollar, which can only be achieved by tying monetary policy to real world guides like the price of gold and other precious metals. That would be accomplished by replacing discretionary monetary policy, which has only caused business cycles involving periodic troublesome recessions, with an established price rule focusing monetary policy on following the market prices of gold and other precious metals. Without a stable dollar, even tax rate cuts and other pro-growth policies will be ineffectual.
It was Obama, however, who only talked about his plans for the future with vague rhetoric in his convention speech. But his plans for a second term are part of the public record. He has already enacted increases in the top tax rates for virtually every major federal tax effective January 1, when the tax increases of Obamacare go into effect, and the Bush tax cuts expire, which Obama refuses to renew for the nation’s successful small businesses, job creators, and investors. As a result, the top two income tax rates would jump nearly 20%, the capital gains tax rate would soar by nearly 60%, the tax on dividends would nearly triple, the Medicare payroll tax rate would rocket up by 62% for these disfavored taxpayers, and the death tax would rise from the grave with a 57% increase. That is all on top of a corporate tax rate that is the highest in the world under Obama, except for the socialist one party state ofCameroon. This will drive tax rates well beyond the Clinton era tax rates, but Obama and his propagandists won’t stop using the outdated talking point that they are only bringing back those rates.
That is a prescription for renewed recession rather than restoration of the American Dream and the strongest economy the world has known. That would only reduce rather than increase federal revenue, sharply increasing rather than reducing deficits and debt.
Moreover, Obama’s budget policies for a second term and beyond were already specified in full detail in his own 2013 federal budget. That budget proposed $47 trillion in federal spending over the next 10 years, making him the biggest government spender in world history by far. By 2022, he would be spending $5.82 trillion in that one year alone, the most by any government in world history.
That budget also proposes $6.7 trillion in additional deficits over the next 10 years, on top of the $5.3 trillion over the four years of Obama’s reign of error so far, according to the Obama Adminstration’s own numbers. That would leave the national debt held by the public at nearly $20 trillion by 2022, up from $5.8 trillion in 2008, and gross federal debt at nearly $26 trillion, over 100% of projected GDP, again according to Obama’s own OMB.
In reality, those projected deficits and debt are grossly low balled. CBO projects that on our current course, under current policies, federal spending would soar to 30% of GDP by 2027, 40% by 2040, 50% by 2060, and 80% by 2080. President Obama’s policies would not take us off that course because he explicitly rejects entitlement reform to reduce spending, instead adding or expanding grossly underestimated new entitlements in Obamacare. Moreover, CBO projects that on our current course, under current policies, federal debt held by the public would rocket to 140% of GDP by 2030, 220% by 2040, and 320% by 2050, on its way to over 700% by 2080, a prescription for social collapse just like Greece. President Obama’s policies would not take us off that course, because his policies would not reduce spending, and his tax increases are more likely to reduce revenues rather than increase them.
Of course, Obama persisted in his convention speech, saying, “We’re offering a better path – a future where we keep investing in wind and solar and clean coal, where farmers and scientists harness new biofuels to power our cars and trucks….” That echoed his 2012 State of the Union Address, where he said, “I will not cede the wind or solar or battery industry to China…because we refuse to make the same commitment here.”
But in the Wall Street Journal on Wednesday, we learned from Professor Patrick Chovanec of the Tsinghua University School of Economics and Management in Beijing just how those wind, solar, and biofuels industries are doing in China. Chovanec writes,
“President Barack Obama has held up China’s investments in green energy and high speed rail as examples of the kind of state-led industrial policy that America should be emulating. The real lesson is precisely the opposite. State subsidies have spawned dozens of Chinese Solyndras that are now on the verge of collapse. Unveiled in 2010, Beijing’s 12th Five-Year Plan identified solar and wind power and electric automobiles as ‘strategic emerging industries’ that would receive substantial state support….Barely two years later, all three industries are in dire straits.”Notice that Obama is looking to the state-led industrial policy and Five Year Plans of Communist China as the model for America, rather than the traditional policies that have made America “the strongest economy the world has known.” Those traditional policies can be found in the Romney/Ryan platform, which he ridicules, following again the prescription in Alinsky’s Rules for Radicals. China was never building wind, and solar, and electric car batteries for its own use, but to sell to suicidal westerners in Europe and America. To power its own economy, it is feverishly building out coal.
Similarly, at the American Thinker website on September 12, Steve McCann recounts the story of Spain, which is just a few years ahead of us. McCann writes,
“In 1999 and 2000, when Spain adopted the euro as its currency, interest rates fell to historic lows as the European Central Bank…made money easily available. So Spain’s banks, its property developers, and the every day home-buyers…embarked on a frenzy of commercial and residential building and buying. From 1996 to 2007, Spanish property values tripled. Spain has a massive social safety net which accounts for a vast majority of its government spending [absorbing] nearly 46% of the country’s [GDP]….Despite this, the Spanish government embarked on one of the most ambitious green energy programs in Europe, pouring untold billions of euros into solar and wind energy.”McCann explains how this has all turned out for Spain, so parallel to where we have been in America:
“Their real estate bubble burst in 2007-2008. The construction industry collapsed, throwing hundreds of thousands out of work. Home prices have fallen by nearly 50%, leaving many homeowners owning property worth less than their mortgages. Spanish banks were left with a mounting pile of bad debts which have required major bailouts from the government and the European Central Bank….[T]he nation entered into a recession, causing many businesses and industries to cut back or close…Further, the green industry collapsed, as it turned out that each new job created cost nearly $800,000, while for every four jobs created, nine were lost [because of high energy costs and misallocation of capital].Obama’s favored alternative energy sources are inherently doomed to failure because their energy is so diffuse, while the energy in traditional fossil fuels is so concentrated. That is why the market has so rightly chosen those.
McCann reports that in just 4 years Spain has more than doubled its national debt, similarly to Obama. As a result, it has to pay 5 times the interest on its debt that Germany does, contributing to further economic decline. The European Central Bank now buys its bonds, in return for dictated spending cuts. McCann concludes,
“As it loses its sovereignty, Spain finds itself in a vortex from which it cannot escape. It has entered into a second recession” where Obama is taking us, with “no money to combat this dilemma, as the private sector is collapsing, and so, as a result, are tax revenues, while the government is stuck with massive social programs.” Following the same path as Obama’s jobs depression, Spain’s unemployment rate is now 24.6%, 52.9% for those 16-24. Spain thus follows Greece: “People are withdrawing and hoarding what cash they have, and many are moving to other countries. Tax revenues thus continue to decline, and few businesses will contemplate a start-up or move to Spain under these circumstances. The nation cannot cut spending beyond a certain point without fomenting a national upheaval, and it cannot promote programs to grow the economy. A financial and social collapse is thus inevitable.”
This is precisely the road Obama is offering to America, and worse. Just as Obamacare distracted Obama from jobs these past few years, he has said a focus in his second term will be global warming. He said in his convention speech, “And yes, my plan will continue to reduce the carbon pollution that is heating our planet – because climate change is not a hoax.” But global warming regulation is profoundly anti-jobs, sharply raising the cost of the fossil fuels that have powered the industrial revolution, to the point of phasing them out in favor of the much more costly, energy diffuse, alternative fuels, that have no prayer of maintaining the industrial revolution.
The science does not support the theory of catastrophic, man caused, global warming. Obama and his liberals believe in it because it justifies the big government, anti-business and anti- capitalism policies they want to pursue.
Obama in his convention speech went on to emphasize policies of increased government spending for education, community colleges, energy conservation, and infrastructure construction -- “roads, bridges and runways.” None of that is a new idea. Obamanomics has only proved that such increased government spending will not drive an economic recovery boom. The speech only further proved that Obama is out of ideas, and doesn’t know how to fix the economy.
Obama closed on the attack, saying “Over and over, we have been told by our opponents that bigger tax cuts and fewer regulations are the only way; that since government can’t do everything, it should do almost nothing….[But] a freedom which only asks what’s in it for me, a freedom without a commitment to others, a freedom without love or charity or duty or patriotism, is unworthy of our founding ideals.”
But Ryan’s budget proposes to spend $40 trillion over the next 10 years, and would only return America to the long term, postwar, historical average of federal spending at 20% of GDP. That is not a government that would do almost nothing. It does not involve promoting a freedom that asks only what’s in it for me, without a commitment to others, a freedom without love or charity or duty or patriotism. Obama’s rhetoric is just expressing how a Marxist sees capitalism.
Finally, the essential message of Obama’s convention speech was encapsulated in this: “And the truth is, it will take more than a few years for us to solve challenges that have built up for decades. It will require common effort, shared responsibility, and the kind of bold, persistent experimentation that Franklin Roosevelt pursued during the only crisis worse than this one.” What this means is that again, Obama is out of ideas, and doesn’t know how to fix the economy. Instead, he is offering us the bold, persistent experimentation of the Great Depression, whatever that means.
And if Obama is reelected to lead us back into recession next year, we will be enjoying an historical reenactment of the Depression, going back into a steep recession before coming out of the last one. That quote shows where Obama’s head us, back in the depression, and The Grapes of Wrath. And that is where he will take the rest of us if we are stupid enough to reelect him.