An estimated 52 million people watched the President address the nation on Tuesday night. It was an opportunity for the President to lay out his agenda, especially for the economy. Many people are anxious, and I’ve even heard concern from some of my left-leaning friends about the government’s response to the struggling economy. The message the President sent to the nation has exacerbated that concern by sending the wrong signals.
If TARP and the stimulus have you nervous, you probably won’t feel better about the massive budget proposal that President Obama introduced. If you believe that private enterprise and the free market are the best means to drive the economy and create jobs, let’s work together to achieve those policies. The President is surely not a believer in the free market, as he indicated Tuesday.
As Charles Krauthammer explains, President Obama seems to want to define his presidency by what he does, rather than who he is:
Reagan came to office to do something: shrink government, lower taxes, rebuild American defenses. Obama made clear Tuesday night that he intends to be equally transformative. His three goals: universal health care, universal education, and a new green energy economy highly funded and regulated by government.
Krauthammer also points out how the growth of our government is shrinking the gap between us and Europe:
In the European Union, government spending has declined slightly, from 48 percent to 47 percent of GDP during the last 10 years. In the U.S., it has shot up from 34 percent to 40 percent. Part of this explosive growth in U.S. government spending reflects the emergency private-sector interventions of a Republican administration. But the clear intent was to make the massive intrusion into the private sector temporary and to retreat as quickly as possible. Obama has radically different ambitions.
The spread between Europe and America in government-controlled GDP has already shrunk from 14 percent to 7 percent. Two terms of Obamaism and the difference will be zero.
The President has proposed $3.6 trillion in new spending, including $634 billion for health care reform. I’ve been writing here and at Rebuild the Party about health care reform and the dangers of some of the Democrats’ proposals, and Hugh Hewitt brought up the Consumer Product Safety Improvement Act as a recent example of how government attempts at regulation can have disastrous unintended consequences.
Economist and New York Times editorial columnist Paul Krugman, who is praising the budget, recognizes that such spending will require tax increases on the middle class:
According to the Obama administration’s budget projections, the ratio of federal debt to G.D.P., a widely used measure of the government’s financial position, will soar over the next few years, then more or less stabilize. But this stability will be achieved at a debt-to-G.D.P. ratio of around 60 percent. That wouldn’t be an extremely high debt level by international standards, but it would be the deepest in debt America has been since the years immediately following World War II. And it would leave us with considerably reduced room for maneuver if another crisis comes along.
Furthermore, the Obama budget only tells us about the next 10 years. That’s an improvement on Bush-era budgets, which looked only 5 years ahead. But America’s really big fiscal problems lurk over that budget horizon: sooner or later we’re going to have to come to grips with the forces driving up long-run spending — above all, the ever-rising cost of health care.
And even if fundamental health care reform brings costs under control, I at least find it hard to see how the federal government can meet its long-term obligations without some tax increases on the middle class. Whatever politicians may say now, there’s probably a value-added tax in our future.
It’s astonishing that the President can talk about decreasing the deficit while spending this kind of money. I listened to Mitt Romney’s speech at CPAC (watch CPAC 2009 here), and he called out the President by saying “No President should accept such a staggering deficit, much less hold it up as a national goal.”
But it’s not just the staggering amounts of money being discussed, and the prospect of higher taxes; the President has exhibited a hostile attitude towards the private sector. He demonized banks and their CEOs in his address. All of his economic policies, including tax increases on individuals and businesses, are based on a belief that the government is the fuel for the economy’s engine.
It’s no coincidence that the only market gains we’ve seen recently have followed Ben Bernanke’s promises to not nationalize our banks. Otherwise, we’ve seen a negative market response to most of these proposals. Look what happened to health insurer shares when the health care plans were announced.
President Obama has the wrong prescription for the ailing economy, and liberal Democrats in Congress aren’t going to slow spending. Fiscally conservative Democrats are going to be alienated by this President and this Congress, much like anti-Communist Democrats were turned off in ’72 by McGovern, and many economically and socially conservative Democrats defected to Nixon and Reagan. Anyone feeling like they might not be getting what they thought they signed up for should work with us to advance our common interests.
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