I don’t know whether to laugh or cry to see the dynamic trio, Obama-Reid-Pelosi, ramming Obamacare down our throats at the small price tag of $950 Billion, oh yes and price controls on private insurers, expensive mandates on employers, and the government take over of 16% of the U.S. economy. Employers are not hiring, not investing, and not borrowing. At the very time jobs are needed businesses face health care uncertainty, higher taxes, falling consumer sentiment and high unemployment. Why invest if there aren’t going to be any consumers around to consume? Consumption is three quarters of the economy!
The only jobs the non-stimulus stimulus has created are government jobs–that would be the non-productive jobs that are a drag rather than a stimulus to the economy.
Speaking of economy, Robert Robb pens a dynamite article in Real Clear Politics today, The Chief Economic Worry About Democrats. With syllogistic logic he points out the elites lack of appreciation of investment capital and its function in the economy. Liberals assume a given level of economic output, a dangerously false assumption. Output doesn’t just happen it depends on investment capital. The government cannot supply that capital but can only redistribute what it takes by way of taxes. What it takes in taxes is withdrawn from private productive investment.
“Producers have to produce before consumers can consume. But producers cannot produce ex nihilo. Investment capital provides the financial bridge between production and consumption….In reality, however, the affluent provide most of the country’s investment capital. They are the ones with discretionary income. What the rich do with their money is very important economically.
“The Democrats want to raise taxes on the affluent and on corporations (which are repositories of investment capital). The numbers, and their effect on investment capital, are staggering..So, between Obama’s budget and the health care plan, that’s a shrinkage in the nation’s investment capital pool of up to $1.9 trillion over the next decade. But that’s only the beginning of the effects. Between Obama’s increased income tax rates, the income tax surcharge in the House health care plan, and state income taxes, the highest marginal income tax rate in most states will approach or exceed 50 percent. That will hugely discourage savings and investment by the affluent.”
“This tax-the-rich approach is justified as a matter of social justice. The government needs money, goes Democratic thinking, and it is fairer to get it from the rich than the middle class or the poor. Democrats also tend to believe that large disparities in income and large accumulations of wealth are evils to be ameliorated in their own right. The rich already pay a higher percentage of federal income taxes than they make in income. And the true social justice question shouldn’t be whether income or wealth disparities are increasing, but whether the lot of the poor is improving. Concentrating on the latter question leads to entirely different policy choices than concentrating on disparities.” (emphasis added)
Robb’s back to Adam Smith basics is brilliant, thus I’ve perhaps over quoted in this post. What I suggest is a read of the whole article and selected comments following the article which are displayed by clicking on “COMMENTS” at the end of the article.
Tom Motherway