This hasn’t been what you would call a gentle election. Neither candidate has flinched from hitting the other where it hurts the most. Where President Obama is most vulnerable is his track record on the economy, which leads me to the
question: why doesn’t Romney talk about the worst thing Barack Obama has done to
keep our economy sluggish and the recovery slow? No, it’s not the federal
government’s credit downgrade, it’s not trillion-dollar deficits; it’s not even
Obamacare. Obama’s biggest blunder has been creating the same thing that, eighty years
ago, transformed a stock-market slump and would-be correction into the Great
Depression itself: uncertainty.
Hardly a word to frighten children or old ladies. In a knock-down race like this one, it sounds like a very
mild accusation for a candidate to focus on
—almost like bringing a knife to a
gunfight. Maybe that’s why we hear so little about it. Its effects, however, are as sure as the wind-driven tide that last week rolled into New York and New Jersey, burying everything under a deep
layer of cold and slowly rising water. Uncertainty carries an influence that stifles the self-correcting nature of the economy and quells recovery before it can start.
To understand why, put yourself in the place of a job
creator. You might be the head of a huge company deciding whether (or where) to
expand, or you might be a one-person operation contemplating your first hire.
You’re about to make decisions that will affect others’ lives for years to come—where
they’ll live, how satisfied they’ll be, whether their kids have insurance, etc.
You want to know that you won’t have to turn around and fire them. The main question you’ll be
trying to answer is “are these people going to make me more money than it costs
me to employ them?” If you can’t answer that question to your satisfaction, you
won’t create the jobs, or you’ll do it in a more certain environment—perhaps
another country.
The same principle works in investment. When people send
their money into the market, they don’t expect the government to give them
guarantees, they just want to know the rules will be fair and that no one’s
fiddling with the value of the money itself. If you suspect that the field is
slanted against you, you’re going to sit on your money or seek greener
pastures. You’d be a fool to do otherwise. Perhaps Jesus said it
best: “For which of you, intending to build a tower, sitteth not down first,
and counteth the cost, whether he have sufficient to finish it?” Without dependable measures of what might happen, nothing can be built.
No one disputes Obama inherited an economy in crisis, and
everyone, if they think about it, has to admit that it’s not government that
will get us out. Government employment and salaries have risen frightfully during this recession, but it can’t employ everyone, and government jobs don't create wealth. It can force people to invest (by spending tax money on businesses),
but it can’t force investors to enter
the market. Employment and investment are the engines that drive the economy,
and government can exert only very limited control to speed up either one. Far more often, it slows them down.
So we agree uncertainty is bad, and the economy was in
crisis. How did Obama make it worse?
First, his economic message showed no understanding of the
real cause of the crisis. In an economy first brought to its knees by a housing
crisis, then knocked out by criminal banking mismanagement, he announced his
three top priorities for his first term: dealing with health care, education,
and energy. Really?
Health care reform wouldn’t have been a bad idea for a secondary focus. It represents
roughly 15% of the economy and is the cause of a disproportionate number of
personal bankruptcies. As a minor part of an overall plan, fixing health care
could truly have helped. Obama’s “solution,” however, wasn’t what any of the
experts recommended. He did nothing to take health insurance out of the
workplace, which would have protected workers’ coverage from the whims of their bosses. There was no initiative to remove barriers to competition across state lines which would let market forces
lower prices (Obamacare creates 50 in-state exchanges), and he didn’t breathe a word about what could have been the real game-changer—tort reform.
Instead, he engineered a program represented by a 2,000-page bill which has
since expanded to sixty thousand pages
of new regulations, which, instead of lowering the economic burden of health
care, vastly expands it. Hospitals have no idea whether they’ll be able to obey the provisions of Obamacare, even if they want to, because there’s just too much to understand. Doctors are leaving the industry in droves, driven
away by the prospect of being forced to do business Obama’s way. Health care: uncertainty
number one.
Obama’s energy policy is even worse. Prevented from enacting
industry-killing cap-and-trade legislation by Congress, he instead authorized
his EPA to bring about similar regulations by its will alone. There has been no
coal power plant built since Obama took office—he didn’t make it illegal for
power companies to build them, he just said (proudly) that doing so “will
bankrupt them.” In the world of oil, Obama opposed the construction of the Keystone pipeline, which would have created 10,000 jobs and increased domestic supply. Election pressures forced him to partially change his tune, but who knows how long his “evolving” stance will last? He imposed a
moratorium on drilling permits, then consistently lied about when it would end.
He bragged about keeping his “foot on the throat” of BP as punishment for their oil spill (I looked in vain for the “foot on the throat” section in
Article II). In natural gas, He has opposed new production, favoring the
repeatedly discredited narrative that fracking leads to contaminated water
supply. In every case, the uncertainty faced by energy companies has increased
to the point where electricity and natural gas prices have sharply increased,
and gasoline prices have more than doubled in four years. There is one sector of the energy industry that is far more
secure than four years ago: green energy companies with high levels of donation to Obama’s campaigns.
Solyndra, Tesla, Fisker, A123—the list goes on and on—collectively representing
billions of dollars of grants and loan guarantees. Unfortunately for the President, these companies lacked
the common courtesy to wait until their benefactor was out of office before
looting the till and going belly up. Obama said, under his plan, that energy
prices would “necessarily skyrocket.” He has been as good as his word. Energy:
uncertainty number two.
The final boondoggle of Obama’s first term plan was
education. In spite of overwhelming evidence showing that dollars spent per
child has had little correlation with performance, Obama fought to raise
bloated federal spending even more, expanding the size and scope of the Department of Education. This
new money largely goes to teachers’ unions, which people are increasingly coming to recognize as the real problem. By feeding this beast, Obama is
guaranteeing himself the support of millions of deluded Americans, while
denying them the choices they deserve and that their children so
desperately need. Education: uncertainty number three.
So, Obama’s first term priorities were poorly chosen and poorly handled, but this alone wouldn’t have prolonged the recession. Education,
health care, and energy weren’t the most urgent economic issues, and their economic
effects, while real, are felt in the long term. Even if well handled, they wouldn’t have been the pathway
to a quick recovery. What did Obama do about the breakdowns at the root of the crisis—housing and
finance? Not much. He did pass the Dodd-Frank bill, which has been a mixed bag
at best. It’s not that everything in it is destructive, but it does more to reward big banks than to protect consumers. For proof of this, just look at the list of Wall Street investment banks endorsing (and even contributing to) the legislation.
As for housing, Obama’s solution is to reinflate the bubble. That’s right: after complaining that banking interests, in bed with government, destroyed our economy, Obama has doubled down on more of the same. Fed chairman Ben
Bernanke is buying mortgage-backed securities with printed money. Home
loan rates are even lower now than they were in the record-breaking troughs of the last decade. The difference is, this time, everyone recognizes the danger of too much government intervention, and
home prices have failed to recover. Housing bubble reinflation: uncertainty
number four.
Speaking of the Fed, it’s worth noting that we are now in
our third round of what has been euphemistically dubbed “quantitative easing,”
a monicker which helps the Obama-friendly media avoid uttering the hurtful phrase “printing money.” The money is loaned directly to the Treasury at a faster and faster
rate. This is all in service of the stated goal of the Fed—to keep rates around zero percent for the foreseeable future. Sure, low rates can help arrest the freefall of housing prices (they can also be great if we want record deficits). But, when you’re picking investments, are you tempted by rates of less than half of 1%? Where does all this printed money go? Where it always goes—into the pockets of those with the best lobbyists, who were able to help draft the 2009 stimulus bill or other pork projects. When will all of this inflation catch up with us? Impossible to say. Currency manipulation: uncertainty number five.
Obama, and the Democratic Congress over which he has presided, have never once
passed a budget, certainly a government’s first financial
responsibility. The budgets the White House has proposed are so
unrealistic, no one—not even a single Democrat—votes for them. Without a budget, no one can attack his economic priorities, because he literally has none. At the same time, no one who deals with government can reliably plan for the future. No federal budget: uncertainty number six.
The final insult of Obama has been on the institution that
has historically been the greatest safeguard against uncertainty: the rule of
law. Obama has flouted laws on several occasions, showing that they could be
ignored when it suited him, and always in service of his donors.
He brags about “saving” the auto companies, but what did he do except rewrite
bankruptcy law on the fly? In a normal bankruptcy (such as that advocated by
Mitt Romney) bondholders would have been first in line for satisfaction, and other creditors, like unions, would be forced to renegotiate certain liabilities.
Instead, Obama substituted workers’ pensions as the first priority (as long as they were part of the
Democrat-supporting United Auto Workers union). This sounds charitable on the
surface. However, as Romney said at the time, a bankruptcy would have allowed
the car companies to move forward without the business-shattering burden of
generations of unrealistic concessions to the unions. Instead, it was the
bondholders that took a bath, forced to accept a distasteful deal by the
President himself. Now, GM and Chrysler have to work much harder to borrow
money—who would trust them?—and when they finally do succumb to the
liabilities that they no longer have the chance to shed, what will then become of the union pensions he broke the law to save? Obama can rest easy—when the auto-bailout piper finally has to be paid, it won’t be his problem anymore.
Also against the law: the “settlement fund” obtained by holding BP’s feet to
the fire after their oil spill. Rather than let the normal legal processes take
their course, he personally oversaw the transfer of 20 billion dollars into the supervision of his administration, to avoid troubling a judge or jury to determine damages or awards. This isn’t the act of
someone who sees himself as the President of America. It’s the act of a king,
dispensing justice and favors with equal alacrity, according to his personal wisdom and unquestioned power. The same thing happened with his own signature law: the Obama administration has granted hundreds of Obamacare waivers to business—a tacit admission that the law’s onerous provisions are killing jobs, but also that knowing the right people in Washington is a principle higher than law. There are many other examples, but these should suffice to show the vanity and hubris of this administration. Undermining the rule of law: uncertainty number seven.
Mitt Romney has a simple plan to fix the economy:
simplify the tax code, removing deductions and lowering rates, so that people pay the same amount while doing less guesswork and complex math. Repeal Obamacare, end energy subsidies
and simplify regulations, replace Ben Bernanke as soon as possible,
and turn educational priorities away from teachers’ unions and towards children. Enact reasonable and timely budgets. Above all, renew
the profound and necessary respect that our chief law enforcement official has
for the rule of law.
Obama says Romney’s ideas will create greater deficits, but Obama’s figures are carefully crafted to ignore both economic and human
reality. President Romney will cut the uncertainty caused by overreaching government. If Romney wins on Nov. 7th, the economy will breathe a collective sigh of relief, which, after his inauguration,
will lead to rapidly increasing growth. Of course it will—the American
economy has always rewarded certainty with prosperity. This will result in our
government collecting more revenue even as it charges lower tax rates, an
outcome well supported by history, mathematics, and common sense.
We’ve borne the costs of uncertainty long enough. It’s the most dispensable government policy there is. Let’s
bring back an environment where the engines of our economy, employment and
investment, can reliably “count the cost,” and get America back to work.
