President Obama ignores our real economic problems. He has actually made things worse. America’s borrowing ability is great but not unlimited, and the longer we postpone defusing the entitlement spending bomb, the harder it gets. This will ultimately blow up our economy.

Obama talked of ending partisan bickering, but never walked the walk. Our situation cries out for his leadership on a “grand bargain” – Democrats finally agreeing to major entitlement reform, along the lines of Simpson-Bowles, in exchange for Republicans accepting higher revenues. This at least would constitute a serious long-range economic plan, and a broad spectrum of responsible opinion would strongly support it. If Republicans refuse, Obama could attack them from high ground.

Instead he takes the low road: cheap shots like the Bain Capital ads, and small-beer feel-good proposals, while offering no comprehensive economic plan. It’s remarkably irresponsible; fiddling while Rome burns.

Obama’s campaign harping on fairness is simply a distraction. This isn’t our big economic problem. Nor is it that the rich don’t pay enough. Even raising their taxes as Obama wants would only be a drop in the bucket. We spend way more than taxes can ever sustain.*

 Instead of quibbling about dividing up the pie (the perennial obsession of liberals), we need to make it bigger. Then more people can get bigger slices without reducing the slices of others. Such economic growth would also ease our debt problem.

Democrats act like all the economy needs is to be goosed back to normal humming, by government stimulus. But massive stimulus so far (repeated trillion dollar deficits) hasn’t done the trick. Obama’s economic proposals, all together, boil down to borrowing $1.2 trillion annually instead of $1.1 trillion. Could that really make the difference?

 Of course not — because we have deep structural economic problems that government stimulus can temporarily mask but doesn’t cure. Industry grows increasingly high-tech and productive, and the good old blue collar jobs that have in consequence disappeared are not coming back. Highly skilled people thrive, but a majority of American workers lack a college degree, and a quarter or more don’t even finish high school. Hello: this is the chief cause of chronic unemployment (and of inequality, too).**

Stimulus can’t fix this, it’s a band-aid under which the infection festers. Borrowing ever more from China to finance deficits to prop up the economy makes a phony prosperity that only digs our debt hole deeper. Again, Obama is a man without a plan.

The Democrats’ whole economic mentality is reliance on the public sector; they never seem to grasp that wealth creation only ultimately comes from the private sector. Borrowing money, or printing it, to pump into the economy, or boosting government payrolls, does not add to national wealth. Only production of saleable goods and services does.

Thus Obama’s remark about the private (versus public) sector “doing fine” was no mere gaffe. Democrats consistently talk as though more government employment (and debt) can fix the economy. They are besotted with government and hate business; love “jobs” but hate “profits.” They don’t get that companies not making healthy profits can’t hire and keep workers. Same for their demagoguery about “shipping jobs overseas” – if businesses don’t stay competitive by keeping costs down, they can’t employ anybody.

Government regulating the economy

Over-regulation doesn’t help. This may sound daft after 2008. But liberals always overrate government’s ability to do it right and underestimate downsides. It’s debatable whether 2002’s Sarbanes-Oxley law, to curb Enron-like abuses, does much good. But it does create massive red tape for businesses, particularly harmful for small ones, impeding their growth. The number of new companies going public annually has plummeted sharply since Sarbanes-Oxley. Dodd-Frank vastly compounds the problem.

Hate me for this: we’d be better off with zero regulation. Because the undoubted abuses would be more than compensated by greater business expansion, wealth and job creation, and enlarging the economic pie for everyone. (Just look here, at China.) The most effective regulatory regime is a free competitive market with no government protection. The Democrats’ regulation lust makes them the anti-growth party.

And they’re not the education party. They are the party of the teachers’ unions, avatars of the status quo, resistant to reform, and especially to competition. Again, America’s education level is no longer good enough – a key reason for economic underperformance.

This election will be close. Even if Obama squeaks through, Dems will not sweep back into the House of Representatives, and may well lose the Senate besides. To re-elect Obama would lock in four more years of partisan war, ensuring inaction on the nation’s real problems. After four years, they will be considerably worse, and harder yet for the political system to deal with.

Republicans (as I’ve blogged) do have their own meshugas. But on the direction of the economy, they’re still much nearer the right track than Obama and the Democrats. And at least if a single party controls both White House and Congress, they can’t evade accountability. They might, just conceivably, do something right.***

*And the messed up tax code itself is a major drag on the economy.

** See also David Brooks’s recent column about how affluent families do far more than lower income groups to prepare their children for success.

*** Romney could invoke a useful new guy’s wheeze: “When I got into office, I found our finances even worse than I thought . . . .”

8 Responses to “Nobama”

  1. Lee Says:

    Obama is like all the other politicians, extremely wary of making any hard decisions. All the other politicians are like Obama. Maybe one in a hundred can see it the way you do. Romney is not the one in a hundred either.

    China has poisoned milk and poisoned toys. Perhaps you could allow a little in the realm of regulations?

    [FSR comment: As I’ve said repeatedly, no free market advocate believes in zero regulation. Just like all citizens are subject to laws barring robbery, murder, etc., so too should businesses be subject to laws barring conduct that violates the rights of others. Of course nobody should be free to sell poisoned milk.
    But I did say we’d be better off with zero regulation vs. what exists now. Between an economy with U.S. style nanny-statism and 2-3% annual growth, and one with Chinese non-regulation paired with 8-10% growth, I’ll take the latter any day. (Just leave out the political repression.)]

  2. KISS Politics « The Rational Optimist Says:

    […] have a compelling straightforward case to make against Obama (see my “Nobama” post), so why crap it up with dubious stuff? Why give opponents a field day mocking Paul Ryan […]

  3. The Republican Party’s Future « The Rational Optimist Says:

    […] With all the true things that can be said against Obama’s re-election (See for example my 7/12 post), why twist facts in ways that are bound to bite you in the ass? And after all the nonsense about […]

  4. Greg Says:

    It constantly amazes me how people can pile all the blame on Obama for the gridlock in our federal government. The real problem is people like McConnell who said their only goal is to make sure Obama got only one term in office.

    The result of this ridiculous policy is Republican efforts to block any progress that would make it seem like Obama had a “win.” They could not agree to any program helpful to the country because it would make Obama look good. Even when Obama proposed programs originating from Republicans, it was blocked. Absolutely outrageous! Any congressperson who acts like that should be impeached.

    I demand a Congressional investigation of dereliction of duty and misuse of congressional powers by certain Republican congresspersons.

  5. rationaloptimist Says:

    Democrats adore banging on that McConnell quote, but what he actually said was that his P O L I T I C A L goal was denying Obama re-election. Seems to me it’s perfectly reasonable for a political party should have the main POLITICAL goal of winning the next election.

  6. Greg Says:

    I saw the video of McConnell when he said that. He specifically did not say it was his “political” goal to deny Obama a second term. What he did mean was that he would conspire with other Republicans to take any action, ethical or otherwise, to bring Obama down, regardless the consequences to the country. That is exactly what they tried to do.

    Republicans went beyond what is merely “political” by refusing to conduct the business of the Union in a forthright manner. It’s a sad reflection on what used to be a political party with much higher standards.

    If McConnell thought he could win the next election by tossing out his ethical standards, apparently he was wrong. Pandering to his political base, which has an irrational hatred of the Obama presidency, works in the gerrymandered primaries but not so well in the general. I think the Democrats will win the White House again this next go round largely because of this mistaken and repugnant Republican strategy.

  7. rationaloptimist Says:

    “What he did mean. . . “? That is — not what he actually said — but what you infer he MEANT? Indeed, inferring the bad motives you ascribe. American politics is being poisoned by this syndrome of ascribing bad motives to political opponents.

  8. Greg Says:

    Perhaps there is too much blame being slung around. But in this case, McConnell’s and other Republican’s actions speak volumes about what those words meant. Admittedly, I am ascribing a less than ethical motivation to some. But when they refuse to do their job to take care of State business and then blame Obama for the failures, all apparently in an effort to look good in front of their base voters, what is one supposed to make of that?

    All I want from our Congress (and both political parties for that matter) is intellectual honesty and negotiations that arrive at reasonable compromises on important policy decisions. Neither side is likely to get everything they want, but at least business will get done. And let’s not allow extremist ideologies on either side of the political spectrum to gain the upper hand.

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