Sunday, November 16, 2008

Barack Obama - Economic Ignoramus

In contemplating Barack Obama's possible actions to address the economy there is one thing that he could immediately do to reassure and strengthen our financial markets. If he made a statement that the Obama Administration will make the 2001 and 2003 tax cuts permanent, it would provide significant economic stimulus. Tom Blumer wrote on the matter of Obama making the tax cuts permanent and abandoning his plans to destroy domestic oil production.

If Obama doesn’t currently signal and then carry through on forgetting about his punitive tax plans and/or foolishly locks up fuel resources, the fuel-price stimulus just noted will go away. Any other so-called stimulus coming out of Washington won’t be of much ongoing value to the long-term health of the overall economy. If fuel prices will head back up, or if Obama’s campaign tax promises are carried out, businessmen and entrepreneurs will continue to play it close to the vest by avoiding hiring and capital investment.

The new president and his party have worked tirelessly to talk down, and take down, the economy for years. They finally succeeded doing so sometime in June, creating the current POR (Pelosi-Obama-Reid) Economy — soon to be known, barring an unlikely fourth quarter turnaround, as the Pelosi-Obama-Reid Recession. Unlike them, I want the US to prosper no matter who’s in charge. Following the suggestions just outlined will bring prosperity back.

I believe, however, that Obama will continue with his plans to further manipulate the tax code to achieve his idea of redistributive tax nirvana. It is telling to watch Obama respond to Charlie Gibson after Gibson carefully explains how our economy previously responded to reduced capital gains tax rates by collecting a greater amount of total taxes.

Obama does not even acknowledge what Gibson explained for almost one minute. He instead goes directly to talking about fairness, punitive measures against hedge fund managers, and how he needs to raise capital gains tax rates to finance health care and other giveaways. Gibson and the compliant media never challenged Obama on this change of subject or pointed out his economic ignorance. It is crystal clear that Mr. Obama does not understand basic economic theory or the demonstrated effect of the Laffer Curve for over a quarter century.

This was not an isolated incident, as Obama reinforces the fact that he is economically ignorant in the famous dialog with Joe the Plumber.

"Spread the wealth around" is his response to Joe, showing that he believes that economics is a zero-sum game. He thinks he can simply take "wealth" (actually meaning income) from those earning more and give it to those earning little or nothing without affecting the economy or reducing the overall amount of taxes collected. For our next President, it is all about punishing those that do well and rewarding those who do not try.

The question that should have been asked by Charlie or by Joe was, "Mr. Obama, it has been repeatedly demonstrated that when taxes are raised on the affluent, not only do they end up with less money, but the government also receives less taxes to spread to the needy and the number of needy also increases. With these facts in mind, how is raising taxes on the affluent fair to anyone?"

This type of economic ignorance is not unusual for many who major in the arts or letters when in college. These individuals gravitate to these soft majors in part because they have little or no aptitude for math and science. Obama fits this profile, which could be one more reason he will not release his college transcripts. More evidence ...

This Obama gaffe was blamed on ad libbing or poor preparation. But I think his staff prepared him well with this talking point, but his brain could not process math and economics which led to his awful verbal stumble.

I worry that despite have a large group of informed economic advisers, many coming from Bill Clinton's pro-growth administration, Barack Obama will be unable to mentally process their arguments. He will govern based on his feelings, which may be appropriate for preschoolers, but is dangerous for an adult in the office of the President.


Colorado2993 said...

Obama clearly knows nothing about the economy. You can tell by how he won based on talking about American Idol and telling fart jokes.

Do you really think that you know more about the economy then the President Elect?

Headless Blogger said...