Obama's Minimum Wage Economy

Posted: Feb 26, 2014 12:01 AM
Obama's Minimum Wage Economy

WASHINGTON - Louisiana Gov. Bobby Jindal came up with the perfect name for the Obama economy that you'll be hearing a lot in this year's midterm election campaigns.      

"After more than five years under this administration, the Obama economy is now the minimum wage economy," the Republican governor told reporters after a meeting he and his gubernatorial colleagues held with Obama at the White House.    

With his anemic economy still unable to produce enough jobs to put millions of unemployed Americans back to work full-time, Obama is offering a old, threadbare idea to raise the nation's minimum hourly wage to over $10. Congress's budget analysts say it could result in the loss of at least a half million jobs, and possibly a million.      

The nonpartisan Congressional Budget Office said that forcing small businesses to raise their hourly wages would result in layoffs to keep their payroll costs down, or cause employers to hire fewer low- wage workers in the future.      

In a nation with a workforce of 160 million people, many of whom are jobless or can only find part-time work, this is a poor excuse for an economic recovery program. In fact, it is pathetic.      

Making struggling businesses in a weak economy pay higher wages is not a plan to get America growing again.      

"I think we can do better than that. I think America can do better than that," Jindal said. If this sounds vaguely familiar, it is almost word for word what John F. Kennedy told voters in the 1960 presidential election as he touted his plan for cutting income tax rates for everyone to boost economic growth and job creation.      

Surely we can do better than this, but don't hold your breath believing that this do-nothing president will put the American economy back to work anytime soon.      

What could we do right now to jump start the engine of a stalled economy? For starters, Jindal suggested that the president could approve the Keystone XL oil pipeline "if he was serious about growing the economy."      

That would create thousands of jobs and give the U.S. energy industry a booster shot that would send a signal to the economy that we're serious about boosting the growth rate beyond its anemic 2 percent range.      

But Obama has been dithering over this issue for the past two years because he fears his approval will anger his party's radical environmental allies in a critical election year that could put Republicans in charge of the Senate. His reluctance is holding back the economy and stronger job growth in the process.      

But that's not the only pro-growth initiative he has been blocking. Congress's tax-writing committees have been at work since 2011 on overhauling our costly, dysfunctional tax code that is also hurting our economy, slowing down job creation, and making us less competitive in global markets.    

House Republicans, led by Ways and Means Committee Chairman Dave Camp of Michigan, were expected to lay out their plan Wednesday. It would simplify the tax code by slashing its seven tax brackets down to two: 10 percent for lower income workers and 25 percent for the top rate.      

The plan would be revenue neutral because it calls for eliminating a number of tax loopholes and exemptions that now litter the tax code.      

This is what the co-chairmen of Obama's deficit-cutting commission proposed in his first term in a report that the White House has ignored ever since.      

But the idea took hold in Congress where Camp and his Senate Democratic counterpart, Finance Committee Chairman Max Baucus, were working together on a tax reduction bill.      

But as their work was bearing fruit, Baucus decided he would retire from the Senate at the end of of his term. Still, it appeared a deal between the two was possible. That is, until Obama suddenly offered Baucus the prestigious post of ambassador to China, getting rid of one of tax reforms' most enthusiastic supporters.      

It certainly wasn't because Obama decided that Baucus was head and shoulders the most qualified candidate for the post. Indeed, Baucus said at his nomination hearings that he knew next to nothing about China.      

The timing of Obama's offer to Baucus raised eyebrows in and out of Congress since it meant that any possibility of tax reform was dead in the Senate for this year. That's because the chairmanship of Baucus' committee fell to liberal Sen. Ron Wyden of Oregon who has since focused on other issues that he considers higher priority.      

It's unclear whether House GOP leaders will take up tax reform this year, though they haven't ruled out doing so in the months to come. Congressional reformers think that if Speaker Boehner puts it on a fast track, it would send a powerful political signal to voters that the GOP is serious about a pro-growth initiative that would strengthen our economy and put Americans back to work.      

And where's Obama in all of this? The Washington Post wrote Tuesday that "the White House continues to show little interest in a comprehensive tax overhaul."      

The newspaper went on to say that "administration officials have dismissed reform of the individual code, saying it would be mathematically impossible to lower the top rate paid by the wealthy, protect the middle class and achieve Democrats' goal of raising fresh cash to shrink chronic budget deficits."    

This was to a large extent what critics said of President Kennedy's across-the-board income tax cuts: They would worsen the deficits, endanger middle class programs, and benefit the rich. But in the end, his tax cuts led to business expansion, created jobs and it didn't worsen the deficit. By the end of 1960s, we had a budget surplus.      

Obama says he wants to lift the middle class as well as those below the poverty income line, but he's opposed to pro-growth, pro-job policies to do that. Instead, he and his party have become the champions of a jobless, minimum wage economy.      

What a contrast in economic policymaking. Kennedy defended his tax cuts for all incomes by saying, "A rising tide lifts all boats," while Obama and the Democrats say raising the minimum wage is the best we can do.