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In the past two years, the Left has been able to increase public dependence on government while decreasing self-reliance. This is a core difference between socialism and capitalism. For entrepreneurs, investors, and industrialists, their wealth is undeserved in the eyes of the socialist. Instead of providing incentives to the job–makers, they are verbally lashed for what they do. Austrian economist Ludwig von Mises said in the minds of progressives, “the wealth of the rich is the cause of the poverty of the poor.” This idea seems to steer Obama’s thinking.
The Keynesian wishful thinking about how an economy works will still be the guide for many Democrats in Congress in spite of the manifest failure of the American Recovery and Reinvestment Act (ARRA), known as the stimulus bill that wasn’t economically stimulating.
Data covering the year and three quarters of the Recovery Act show the despite the $862 billion approved, the effect has been negligible, as noted by John Cogan and John Taylor, senior fellows at the Hoover Institution in a Wall Street Journal op-ed piece. From the fist quarter of 2009 through the third quarter of 2010, “government purchases have increased by only 3 percent of the $862 billion ($24 billion).” Infrastructure spending increased by an even smaller amount: $4 billion. The notion that spending tax money can stimulate the economy is combined with another tenet of the Left—that only government can do it right. Although Obama went along reluctantly with the Bush tax cut extension agreement, he has never given up on stimulus through spending.
Keith Hennessey, national economic adviser to George W. Bush (Sperling’s counterpart), wrote in the Nov. 29 issue of National Review Online, “The goals of an ideal economic-growth agenda are simple and well known: a large and thriving private sector and a small government; reduced government spending; lower taxes; smaller deficits; open trade and investment; regulations that don’t distort decisions, discourage capital formation or work; deep and flexible labor markets; a reformed financial sector that channels savings to where they can do the most good[.]” This philosophy doesn’t sound like Obama guidelines to economic success. It would be foolish to expect this fiscally conservative route to be taken under Sperling’s watch. But it just may be a new economic day for Obama—forced on him by the November election reality. He needs to indicate he is shifting toward the political middle.
Meanwhile, our neighbor to the north cut corporate tax rates the fist of the year to 16.5 percent. This contrasts with the relatively punishing U.S. corporate tax rate of 35 percent. The corporate tax cut is part of Canada’s decade-long campaign to make the country a cost-effective place to do business. “Canada’s government says the cuts and other business-attracting measures” said a Wall Street Journal Dec. 30 story “should bring more investment to the country.” Also, Finance Minister Jim Flaherty said, “We have our deficit and debt situations under control.” The Canadians seem to have gotten the message. Let’s hope the Obama economic team has as well.
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