Catastrophe - Dick Morris [28]
What businessperson in his or her right mind would embark on a major investment without knowing what the tax consequences will be? And how many people would feel comfortable deciding to buy a home or making an investment without knowing whether they’ll be able to deduct the mortgage or depreciate the investment?
The price of Obama’s spasmodic efforts at reform will be paralysis of just the sort that prolonged the Great Depression in the 1930s.
The possibility of new rules about labor union organizing is another area that creates uncertainty. Later in this book we’ll discuss Obama’s card-check unionization proposal and his demand for compulsory arbitration to resolve impasses in labor contract negotiations. Any business contemplating expansion in the United States has to wonder whether Obama’s proposals will lead to unionization of its new factory or workplace. Just as the Wagner Act, passed by FDR in the mid-1930s, raised the likelihood of a new, unionized environment for business, so do the Obama proposals—another source of uncertainty that could lead to the postponement of business decisions and short-and intermediate-term stagnation.
Finally, who knows what the president will come up with tomorrow? What new proposals will he make, and what will their impact be? The president cannot expect to change every aspect of the regulatory environment and the relationship between the economy and the government without curtailing exactly the kind of spending and investing that he most needs to help the economy.
Obviously, Obama is motivated by political realities; he’s trying to act while he still has control over all the levers of power. But we must all realize that by indulging him and permitting these far-reaching changes, we are only lengthening and deepening the current crisis.
Some of Obama’s proposals are necessary. We do need to regulate non-bank financial institutions; it is absurd that we scrutinize (though inadequately) the activities of banks but not of brokerage houses. But to every government action there is a season. And this should be a time of stability, a time for business expansion and investment to be encouraged, not under-cut. There will be time for change once the crisis has passed.
Unless, like Rahm Emanuel, you believe that “no serious crisis should go to waste.”
THE EUROPEAN IDEA IN OBAMA’S HEAD
With his emphasis on principles such as income redistribution, increased spending, and heavy taxation of the rich, Barack Obama is marching to the beat of a different drummer—a European drummer. These are the concepts that animate the social democracies of the Continent; they are foreign to the American traditions of democracy, independence, and limited government.
The economist Jeremy Rifkin echoes many of Obama’s ideas in his new book, The European Dream. He tells us that the American Dream is defunct and that its natural successor is the new European model. Rifkin discusses the differences between American and European attitudes toward income redistribution.
Americans…are, for the most part, unwilling to commit our tax money to the task [of income redistribution]…. Europeans…are far more willing to entertain the idea of government intervening to redress [income] inequities.93
In Europe, Rifkin goes on to explain,
there is a belief that market forces, if left to their own devices, are often unfair and, therefore, need to be tamed. Government redistribution, in the form of transfers and payments to those less fortunate, is considered an appropriate antidote to unrestrained market capitalism. That is why, in Europe, the notion of creating social democracy—a mixed system that balances market forces with government assistance—has flourished since World War II.94
It is exactly this concept of a social democracy that seems to form the central element in President Obama’s thinking. Certainly his evocation of class consciousness clearly imitates the European model.
Europeans, for example, have no problem with taxing the rich. Their marginal