Nothing but a Political Ploy
October 19, 2011
This column by ACRU General Counsel and Senior Fellow for the Carleson Center for Public Policy (CCPP) Peter Ferrara was published October 19, 2011 on The American Spectator website.
President Obama’s so-called Jobs Plan has nothing to do with jobs and economics. On that score, it is already a proven failure. Rather, the plan is pure politics: a ploy to make Republicans bear the responsibility for the President’s economic fiasco, with proven to fail policies he knows the Republicans were elected to stop and can’t support. The political calculation is that the public is too stupid to figure out both the economic fallacies in the plan, and the dishonesties in the political attack, which accuses Republicans of the exact political cynicism in which the President is engaged.
That is a Saul Alinsky strategy: accuse your opponents of doing what you are doing. Recall that the President previously served as a tutor of Saul Alinsky political tactics.
In the present economic crisis, such cynical political manipulation is a disgraceful abdication of the responsibilities of his office. This is why Congress, rather than pass Obama’s phony jobs plan, should be asking him to resign.
Answering the President
In last Saturday’s weekly radio address, the President reiterated the political ploy of his jobs plan. If Republicans insist on opposing his jobs plan, Obama demanded an explanation to the public as to why. Then he taunted, if they don’t support his plan, where is their plan?
This is where the assumption that the public is stupid begins. The obvious fallacies in Obama’s so-called jobs plan have been reiterated over and over, and Republicans have long been advocating far better, more effective job plans.
Obama’s jobs plan is about half the size of his nearly one trillion-dollar 2009 so-called stimulus plan, but otherwise contains the same policies. That 2009 stimulus didn’t stimulate anything except runaway government spending, deficits, and debt. Unemployment has soared since then, and remained stubbornly high, as Obamanomics, including the so-called stimulus, has short-circuited the traditional American recovery. That recovery is now long overdue, as has been explained in this column numerous times.
Part of the jobs plan is devoted to increased government spending on supposed infrastructure. That recalls the laughable “shovel ready” jobs of Obama’s 2009 stimulus. Another part is increased spending to bailout spendthrift Democrat states, which Obama calls hiring more teachers, firemen, and cops (which is a state and local government function).
But economic growth is not based on increased government spending, a fallacy which Wall Street Journal senior economics writer Steve Moore has rightly labeled “tooth fairy” economics. That is because the money for such spending needs to come from somewhere, and so drains the private sector to the extent of such increased government spending, leaving no net effect in any event.
What drives economic growth and prosperity is incentives for increased production, as Reaganomics proved. Obama’s assault on such incentives is why trillions are sitting on corporate and bank balance sheets, and America is suffering a capital strike and capital flight. The Occupy Wall Street protestors in threatening property and profits are just further undermining incentives and contributing to that capital strike and capital flight, which only contributes further to extended and increased unemployment.
The other half of the jobs plan includes temporary payroll tax cuts, which are a continuation and expansion of supposed temporary payroll tax cuts already in place. But such temporary tax reductions do not stimulate economic growth and jobs either, as permanent cuts and incentives are necessary for permanent jobs. That was just proved by the previous temporary tax cut that Obama already put in place, which failed to promote the long overdue recovery.
Moreover, as I have previously explained, continuing and expanding that failed temporary payroll tax cut on Obama’s grounds that expiration of the “temporary” cut would be a tax increase on the middle class is dangerous because long term it would eviscerate the financing for Social Security. This is why Republicans should not support this component of the “jobs plan” either. Notice that the phony AARP is once again in the tank for Obama and the Democrats, not uttering a peep about this growing fundamental assault on Social Security.
But even worse than the 2009 stimulus is that this current half stimulus echo is accompanied by Obama’s proposal for $1.5 trillion in permanent tax increases. That now includes Obama’s support for a 5% millionaires’ surtax. Those permanent increases only further reduce incentives for increased production, and only contribute further to economic downturn and stagnation under any economic theory.
Those tax increases, moreover, would come on top of all the tax increases Obama has already enacted under current law for 2013, of which major media institutions as well as most of the public are unaware. In that year, again, the Obamacare tax increases go into effect, and the Bush tax cuts expire, which Obama has refused to renew for the nation’s job creators, investors, and more significant small businesses. Under those tax increases, the top tax rates for almost every major federal tax will soar, as I explain in a new Encounter Books publication coming out next week, Obama and the Crash of 2013. All except the corporate income tax, which is already virtually the highest in the industrialized world, with no relief in sight under Obama.
That plus another $1.5 trillion tax increase, including a 5 percent millionaires surtax, is just what put the “Great” in the “Great Depression” in the phraseology of Amity Shlaes in her book The Forgotten Man. The Republicans are supposed to support this to create jobs?
The Foolish Politics of the Jobs Plan
Obama said in his weekly radio address on Saturday,
But rather than listen to you and put folks back to work, Republicans in the House spent the past couple of days picking partisan ideological fights. They’re seeing if they can roll back clean air and water protections…. They’re not focused on the concrete actions that will put people back to work right now. Well, we’re going to give them another chance to spend more time worrying about your jobs rather than keeping theirs…. And if they vote no on that, they’ll have to tell you why.
But the people elected the historic, landslide Republican majorities of 2010 precisely to stop the sort of foolishness in the Obama jobs plan. And I just explained above the economics of why Republicans should vote no on that plan. That basic economics is why the people sent the Republicans to Washington to vote no on the plan.
Moreover, even most Congressional Democrats know this is true. That is why Obama’s Jobs Plan cannot pass even the Democrat-controlled Senate, and no House Democrat has even introduced the plan in legislation. They know what the people said in 2010, and fear what they will say in 2012. So Obama needs to get his own Democrats in order before blaming the Republicans. But Obama thinks the public is too stupid to notice that even Congressional Democrats have failed to support the obviously foolish Obama jobs plan.
But Obama has answered his own question as to why the Republicans oppose his plan. As quoted in the Washington Post on October 7, the President explains: “Each time, what we’ve seen is games-playing, a preference to try to score political points rather than actually get something done.” The Post helpfully elaborated on the President’s message as, “while he has worked to improve the economy, the Republican opposition has chosen a strategy focused on denying him a second term rather than putting the
country back to work.”
Note that Reagan never accused his Congressional opponents of opposing him in bad faith, rather than over disagreements of principle. But that accusation of bad faith opposition from the Republicans is the centerpiece of Obama’s desperate campaign now to avoid fatal political responsibility for the increasingly 1930s style results of Obamanomics. Instead of supporting what will work to get the country back to work, it is Obama who is pursuing a political strategy to blame the Republicans for the bad economy if they don’t support yet another warmed over version of his repeatedly failed, braindead, Keynesian economics, which the voters elected them to stop in 2010.
If Obama cannot understand the economic reasons why Republicans must oppose his wasteful and ineffective jobs plan, then he doesn’t have the smarts to lead the country after all, and all he could do to help end the misery is resign. And if Obama is just playacting that he cannot understand any reason for opposing his jobs plan other than political bad faith, then he should be asked to resign for that disgraceful political manipulation in the midst of this dramatic national crisis.
The smartest thing the Republicans could do is pass not the Obama Jobs Plan, but instead what will work to create jobs and get a real, way overdue, economic recovery underway. Then they can demand that if President Obama stands in the way, he must explain to the public why. Fortunately, Congressional Republicans have already proposed a great alternative of their own, which would create an economic boom. They just need to pass it out of the House now, and challenge the Democrats.
The Republican Alternative
Last week, Senate Republicans led by Senators John McCain (R-AZ), Rand Paul (R-KY), and Rob Portman (R-OH) introduced the Republican jobs plan, the Jobs Through Growth Act. House Republicans have already supported or even passed several components of that plan.
That plan includes both personal and corporate tax reform, closing loopholes in return for reducing rates. The top rate for both the personal and corporate tax would be reduced to 25 percent. The Ryan budget already passed by the House would apply that rate to family incomes over $100,000, with a 10 percent rate below that. These lower tax rates are crucial to incentives for increased production, because lower rates allow producers to keep a higher percentage of what they produce. That 25 percent corporate rate would restore international competitiveness for American companies, as most industrialized countries maintain rates at or below that.
The plan would also involve a Balanced Budget Amendment to the Constitution with firm caps on government spending, and a supermajority requirement for raising taxes. In addition, the plan would increase the President’s power to cut spending, with a line item veto. The plan would also cut future taxes and spending by trillions by repealing Obamacare.
The plan would also slash runaway federal regulation through the REINS (Regulation from the Executive In Need of Scrutiny) Act. That would require Congressional approval of any regulation costing $100 million or more, consistent with the framework of the Constitution, which grants the legislative power to Congress. The plan would also repeal Dodd-Frank and all of its new regulatory burdens on the finance industry, freeing it to provide essential credit to businesses and consumers. Those regulatory burdens are estimated to destroy nearly 5 million more jobs by 2015.
The EPA and other federal agencies are required to consider the impact on jobs and the economy before issuing any new regulation, with an estimate of the jobs to be lost. It also frees farmers from costly new dust regulations. In addition, the plan would require the Interior Department to allow offshore drilling exploration, and the entire Administration to expedite permits and leases for energy production. It also removes EPA’s authority for costly, economically destructive, and unnecessary greenhouse gas regulation.
The plan overall includes 28 components likely to create an overall economic boom if enacted. There’s your Republican alternative, President Obama.