Yes, Obama is to Blame

August 5th, 2011 at 2:00 pm | 60 Comments |

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David Frum has challenged conservatives to identify which of President Obama’s policies have prolonged and worsened the recession. David focuses on what has happened, sildenafil or not happened, buy without considering that people in the real economy (beyond the federal government and Washington punditry) base their decisions on what they expect to happen.

Take President Obama’s tax policies, for example. David correctly points out that corporate and individual income tax rates under President Obama remain unchanged from the last decade. Indeed, when President Bush’s 2003 tax rates were due to expire at the end of 2010, President Obama agreed to extend them, but only after a game of brinksmanship not unlike the recent debt-ceiling increase debate, and only until the end of 2012.

Taxpayers, especially investors and business owners looking to allocate capital, understand there is a significant probability that those rates will expire and taxes will increase. President Obama has made clear that he believes millionaires and billionaires are not paying their fair share of taxes. He has also proposed spending priorities that will require tax increases on not just millionaires and billionaires to pay for.

In those circumstances, it is not unexpected that taxpayers are making economic decisions based on President Obama’s articulation of a policy preference for higher taxes, which creates a disincentive to invest in capital and employees in the medium-to-long term. No one can blame investors and business owners for taking at face value what President Obama says about what he intends to do.

Regulation is a similar matter. David points out that pages in the Federal Register have only increased 5% since President Obama took office. But this ignores the pages President Obama and Congress have added to the U.S. Code, especially the Affordable Care Act and Dodd-Frank, which will require thousands of new regulations in healthcare, banking, finance, consumer protection and other areas of the economy. Especially since those statutes grant broad powers of interpretation and discretion to federal agencies, the regulatory effects on individuals and businesses may be transformative. Investors and business owners see this and react accordingly to the uncertainty.

And these are in addition to the activist bent of President Obama’s appointees at other federal agencies. The Environmental Protection Agency is liberally re-interpreting its regulatory authority, and the Department of Labor and the National Labor Relations Board have proposed numerous changes welcomed by President Obama’s union allies but likely to harm businesses. Federal officials challenging the right of a company to relocate production facilities to a lower-cost, right-to-work state, as the NLRB has done with Boeing Co., creates a negative business climate and discourages economic recovery and growth.

President Obama’s spending initiatives also create a drag on the economy. Only in Washington could a failed $787-billion stimulus package be regarded merely as something that could have been done differently. Taxpayers recognize that the wasted $787 billion is gone for good, and it will come out of their pockets and the pockets of their children and grandchildren. This is $787 billion in wealth that the nation will have to create, and pay in taxes, with little if anything to show for it.

David may be optimistic that the record postwar spending levels during the first two years of President Obama’s presidency are temporary as a result of the recession, but the size and scope of the stimulus package, as well as the Affordable Care Act and other legislation President Obama favors, indicate an inclination to permanently expand federal outlays, and particularly transfer payments. The people who have to pay for all this, the taxpayers, see the writing on the wall. To them, this is not just a political game. It affects their real-world return on investment and how much of the fruits of their labor they give to the government and how much they get to keep. It is irrational to assume this has no bearing on economic recovery and growth.

There is also the opportunity cost of the $787 billion. It could have stayed in private hands and been spent by businesses on new capital and employees. It could have been spent by consumers on whatever they thought best. Or it even could have been put into David’s preferred policies for combating unemployment, such as a payroll tax holiday, income support and infrastructure. Simply saying that maybe President Obama could have spent it better is ignoring the real economic of results of it not having been spent better, or not spent at all.

There is also the most direct cause of the recession, which is the housing and financial crisis. The housing boom that led to the housing crisis was awash in government subsidies in the form of artificially low interest rates, government-backed mortgage guarantees and policies that encouraged home ownership even among borrowers with high-risk profiles. Private parties took advantage of these subsidies and in many cases disregarded prudent risk management practices, common sense and even the law.

But neither President Bush nor President Obama nor the Congresses they have worked with have allowed the housing market to reach its natural bottom. Indeed, there are still federal government programs keeping people in their homes who cannot pay their mortgages and continuing to encourage risky lending with government-backed mortgage guarantees. Until the bad loans are finally written off and the books cleaned up, the housing depression will persist, and the recovery will continue to be weak.

Many of President Obama’s mistakes are related to or are extensions of President Bush’s mistakes. President Bush and the GOP-controlled Congress were foolish to enact tax cuts that automatically expired, rather than making them permanent, and they spent carelessly through much of the decade. They also failed to propose meaningful healthcare and financial reform when they had the chance, leaving it to the Democrats and their heavy-handed approach. The Republicans were in charge during much of the housing boom that led to the crisis.

But it is denying reality to pretend that President Obama’s policy preferences for higher taxes, expansive regulation and greater spending are not having a drag on expectations of taxpayers in the real economy and therefore a dampening effect on economic recovery and growth.

Recent Posts by Jeff Burk



60 Comments so far ↓

  • Smargalicious

    Jeff, one point you left out: an important driver of the dismal employment situation has been the President’s “signature achievement,” the ironically named Patient Protection and Affordable Care Act (Obamacare). The law’s numerous new taxes and other disincentives for job creation, combined with the uncertainty over its ultimate fate in courts, began dragging the economy back down almost immediately after Obama signed it in March of 2010. During the first 16 months of Obama’s presidency, the economy was creating jobs at a reasonably healthy rate: “Between the recession’s low point in January 2009 and April 2010, net private sector job creation improved by 67,600 jobs a month.” Almost immediately following passage of Obamacare, however, monthly job creation flattened to less than 10 percent of that amount.

    Bottom line, yes, Obama is to blame.

    • nitpicker

      Well, Smarg, we can all read silly Heritage Foundation reports too, but the facts speak for themselves. Heritage clipped a very small piece of data and left out the context around it to argue that ACA killed job growth. It’s just silly and beneath anyone who takes economic thought seriously. Good job keeping up with the talking points, though.

    • jnail

      This silly Heritage stat is simply made up nonsense.

      One simple question to start:

      How do we measure job growth every month?

      The new jobs report that every media outlet publishes!

      Since job growth turned positive over 3M jobs have been created.

      Your stat is the average CHANGE, month to month of growth – NOT the total growth – by the periods it established to try and make a point.

      So if on month 1 100K jobs were created then the change from the prior month were zero were created would be 1ook.

      If month 2 101K were created the change is – 1K and so on.
      So what does this chart mean? NOTHING.

      There is no correlation with the passage of PPACA and the idea that there could be stretches credulity to its breaking point.

      To believe that there is a connection all of a sudden in April 2010 every business owner in America, regardless of industry, region, P&L, size et would have had to fallen into a trance magically making business decisions on a law that wouldn’t take full effect for nearly 4 years.

      In fact in April 2010 unemployment was 9.8% and now it is 9.1% so have things improved or gotten worse?

  • nitpicker

    So…if “uncertainty” and “doubt” are such big bogeymen that they frighten the bulls away, do you think playing chicken with the global economy over the debt ceiling increased or decreased those fears? Does Mitch McConnell’s promise of future line-in-the-sand style negotiations make businessfolk feel better or worse about market stability?

    Also, do you have an “expectations of taxpayers” dipstick or something? I’m not really seeing how you can prove Obama’s policies are creating “drag” and to suggest you can is, well, denying reality.

  • Codyak1984

    “There is also the opportunity cost of the $787 billion. It could have stayed in private hands and been spent by businesses on new capital and employees. It could have been spent by consumers on whatever they thought best.”

    The stimulus wasn’t funded with tax increases, it was deficit spending. In other words, the U.S. borrowed $787 billion dollars and paid construction workers to fix roads; construction workers that could then use the money “on whatever they thought best.” It also went to state and local governments that, instead of slashing budgets and firing employees, managed to keep teachers, police officers, fire fighters, and other local and state civil servants employed, allowing them to spend their income “on whatever they thought best.” Now that the stimulus has run out, those same state and local civil servants that were spared the chopping black in 2009 and 2010 are being let go, as anyone that has followed public employment rates the last 6 months can see.

    “They also failed to propose meaningful healthcare and financial reform when they had the chance, leaving it to the Democrats and their heavy-handed approach.”

    As Mr. Frum pointed out in the past, the Republicans refused to engage Democrats in the crafting of healthcare and financial reform in 2009. They didn’t leave it to Democrats’ “heavy-handed approach,” they voluntarily refused to sit at the table. How can someone be “heavy-handed” when there’s no one to even negotiate with?

    • sublime33

      ““There is also the opportunity cost of the $787 billion. It could have stayed in private hands and been spent by businesses on new capital and employees.”

      If businesses were handed $787 billion in cash, it is a fallacy that they would reflexively plow this windfall into capital equipment, plant expansions and new hires. Businesses will invest in plant, equipment or personnel if they think they can get an adequate return on the investment. Otherwise they will either sit on the cash like Apple, buy out another company (which will cost jobs with the new “right sizing”), or purchase their own stock on the open market which will drive up the value of the remaining shares along with the value of the stock options held by management.

      If this government use of cash crowded out corporate investment, why didn’t interest rates go up to 9 or 10%? They didn’t because there is a lack of viable investment alternatives for corporations. It wasn’t the interest rates that held back business investment.

      • Banty

        ‘xactly. With corporate $$$$ sitting by the wayside, other than buying up their own stocks, and doing a few acquisitions (no new enterprises, just cannibalizing existing ones), how does a statement like “There is also the opportunity cost of the $787 billion. It could have stayed in private hands and been spent by businesses on new capital and employees.” apply? Really, now – I mean, WHAT opportunity cost?

        So that just boils down to a statement of laissez faire free market religious faith.

    • Ripcord Jones

      Not to mention that a third of the stimulus was tax cuts. One eff’ing third. But Republicans label tax cuts “spending” when they’re passed by Democrats.

    • DirtyLibrul

      The belief that the %787B stimulus was actually %787B pumped duirectly into the economy is one of the biggest myths of the “recovery”, just under 40% of that was pissed away on tax breaks to lure Republicans to vote for it. What did Democrats get for that HUGE concession? 3 R votes: Snow, Collins and Specter (before he switched).

      Obama has been far from perfect, but this article doesn’t touch on any of his true failings. The biggest of which is his fetish for compromise, as if that alone makes good policy. (*and yes, I voted for him and I will again as the odds are the Republican nominee will be certifiable).

  • Oldskool

    Let me see if I’ve got this right:

    - That the auto industry was saved and then rebounded isn’t even worth mentioning.
    - No taxes should ever revert to their previous levels, even if the economy did great under the old rates.
    - The health care system works after all and never needed to be repaired. Even if those repairs were endorsed by Rs in the 1990s.

    I’m spent already. Someone tag me out.

  • D Furlano

    What an absolute pile of steaming crap. You must work for some right wing nut fringe group. Although, I would agree Obama is a tool.

    No one is sitting around worried about future tax rates. No one. It is all about lack of demand.

    No one is sitting around worried about future regulations. No one. It is all about lack of demand.

    The failed $787-billion stimulus (yes, it was predicted to fail) DID NOT take any money from anyone. I have no idea how it was taken out of the hands of anyone. That is total BS.

    NO! Taxes do not pay for federal spending. That is also total BS.

    So your thought is that it is much better to have a lot of houses sitting empty than trying to keep families in a property that would otherwise end up…? Please, we have seen what doing nothing does. Oh, and lets not forget that 30% of forecloses were from wealthy individuals that walked away from their mortgages, How about making them pay for their sins?

    Its a bigger denial of reality to think that some how government spending won’t help the economy and provide the need spending lower unemployment and get a real recovery underway.

  • PracticalGirl

    A list of the top ten US job-killing companies reveals that reasons abound for their decisions to shed workers: going out of business, lowered demand, poor stock performance-even one that is shedding 25,000 jobs (worldwide, a small fraction at home) to make sure they continue to make record-breaking profits.

    Uncertainty over personal tax rates has nothing to do with it. As well, I’m hard-pressed to find “Obama’s Fault” in this list. Unless, of course, he’s responsible for things like expiring patents on sexual disfunction drugs, Blackberry’s falling popularity, the failing printed book industry and the greed of a couple of investment firms.

    http://money.cnn.com/2011/08/03/news/economy/job_killing_companies/index.htm

    And crap, I realize that jobs growth as the GOPers top priority is so seven months ago, but it’s difficult for me to talk about economic recovery without noting which companies are whacking away at their workforce-and why.

  • sublime33

    Does anyone see the irony in an article analyzing business investment when the photo shows “Joe the Plumber”? Here is a guy who allegedly wants a loan to purchase a business that will earn him $250,000 per year. Any business that earns a decent profit should cost the investor at least six times the annual pretax earnings. So how is Joe going to get a $1.5 million loan by tweaking the tax policy or reducing Federal regulations? That whole schtick was a total fraud.

    • PracticalGirl

      :)

      Don’t forget that our friend Joe was also missing the stellar credit and assets-along with, well, any business plan or experience- that would make that a loan anybody would write.

      Good catch.

      • Banty

        Or even, as it turned out, a plumbing license.

        Now, before we hear squawks about how not every plumber is licensed, you need to know that a plumbing business owner should be licensed. Joe hadn’t been particularly busy lining up any of the bona fides for that plumbing business. This whole thing was a stunt.

  • Frumplestiltskin

    Beyond the obvious stupidities, this was laughably ignorant: “President Bush and the GOP-controlled Congress were foolish to enact tax cuts that automatically expired, rather than making them permanent”
    Oh my God, this shows a complete lack of understanding of our Government and how it works. Back when Bush was setting up the tax cuts Republicans shared the Senate at 50 to 50 with the Democrats with Cheney being the tie breaker. Under normal rules to reset rates Republicans would have had to overcome a Democratic filibuster, instead Republicans used reconciliation which only needed a simple majority. From wiki:
    “The sunset provision allowed EGTRRA( Economic Growth and Tax Relief Reconciliation Act) to sidestep the Byrd Rule, a Senate rule that amends the Congressional Budget Act to allow Senators to block a piece of legislation if it purports to significantly increase the federal deficit beyond a ten-year term. The sunset allowed the bill to stay within the letter of the PAYGO law while removing nearly $700 billion from amounts that would have triggered PAYGO sequestration.

    I mean, good lord, that line alone was an embarrassment. Hey Burk, the Germans did not bomb Pearl Harbor to start WW1 either. I figure if you can be this much a dumbass there is no limit to how low you can go.

  • seeker656

    Blaming is one of the least effective things we do particularly in Washington. It disempowers the blamer and tends to cause the one being blamed to become defensive and nothing of consequence is accomplished. The media profits from the conflict, the public learns nothing and the policy inertia continues.

    Rather than blaming, why not propose serious alternatives and engage in a meaningful debate?

  • Frumplestiltskin

    And seriously, I am offended that Frum actually paid someone who is that ignorant of our system. Good lord, there has to be some standards. He is just not some poster, if you are going to write get, at the very least, the minimum of basic historical facts straight. I would be embarrassed for Burk but something tells me this guy is beyond shame. History and reality is irrelevant to him so getting basic facts wrong is simply not important.

    • Jimbobaker

      Was Burk’s piece not a response to Frum’s challenge?

      I agree with your points, wholly. But don’t be offended. Frum invited the challenge and it appears we, the jury that surrounds him, have posted our verdict.

  • LawnBoy

    I’m curious about the conservative economic commentators who think that the “uncertainty” created by Obama is such a problem for the economy. Did they support the GOP/Tea Party approach on the debt limit?

    I can’t think of any uncertainty that would be more potentially disruptive for a business than the looming default of the American economy and the consequent loss of credit rating for the country and increase in interest rates.

    If they really cared about uncertainty, then they should have been pushing for a clean debt raise bill in. Or maybe uncertainty is just a bogeyman code word.

    • Banty

      The *real* uncertainty is the uncertainty families are now having regarding their income. And therefore aren’t buying. And they’re not worried about having to tell The Man three years from now that the division they head saw a pre-tax revenue impact of -2.5% due to having to update plans to install scrubbers in their chemical reactor stacks late in their planned implementation due to some missed new regulation. Rather, it’s uncertainty about putting breakfast on the table next month.

      But which scenario are we hearing about on Fox News all the time?

  • StevenDS

    Yes, this article is total garbage. It wouldn’t be worth responding to if it isn’t so widely believed. David Frum does an excellent job, but I would add a few things:

    1) The “wasted” stimulus included a lot of tax breaks for individuals, some for businesses, some for homebuyers, etc. The author says, “Taxpayers recognize that the wasted $787 billion is gone for good, and it will come out of their pockets and the pockets of their children and grandchildren.” In truth the stimulus tax cuts was the least effective, because much of it wasn’t spent, and in fact saved or used to pay down debt. And almost all economists have concluded that the stimulus boosted GDP and employment.

    2) The idea that business faces uncertainty is preposterous on its face. In our system of government we have congressional elections every 2 years, presidential elections every 4 years, etc. We’ve never lived in a world without uncertainty in the way these hack GOP commentators suggest we ultimately could/should/would if it wasn’t for democrats pushing for their policies.

  • tommybones

    Does this clown actually believe what he wrote, making him ignorant, or does he know he’s lying, making him a scumbag? It’s one or the other.

  • cryptozoologist

    this sort of analysis might fly on fox news, but this is a much more discerning audience (smargalicious not withstanding) how the right can claim that ‘uncertainty’ is the root cause of a lack of recovery and then play the games with the debt ceiling we just sweated out is as good an example of disingenuous (disingenouity?) as i can think of.

    • medinnus

      Smeggy is not “notwithstanding” – anything he agrees with is quite obviously a steaming pile of dung.

      Cue – Smeggy agreeing with my assessment.

  • rbottoms

    Waaaa. Won’t someone think about the uncertainty???

  • AKINR

    Can somebody please present the evidence that government spending took money out of the private sector? The stimulus, TARP, and most of the large programs over the past few years were all financed through Debt, not by tax renenue. Tax revenue has dropped since 2008, so the government is getting less money from the private sector. Also, the main buyers of our national debt over the past few years have been the FED, and foriegn central banks, including China and Japan. In a situation where there is not constraint on liquidity, there is no such thing as opportunity cost.

    If government borrowing was truely crowding out private sector borrowing, then interest rates on corporate bonds would be much higher than they are today. Hell, IBM was able to issue a 3 year bond at a 1% interest rate. That is NOT evidence of the private sector being crowded out.

  • TerryF98

    This piece is not worthy of being printed on toilet paper and is beneath comment.

  • rbottoms

    I’ve heard of The Heisenburg Uncertainty Princple.

    Its’ when a Republican named Heisenburg puts a cat in a box and starves it until its owner agrees to cut taxes on the rich, right?

  • valkayec

    Each of the comments, aside from Smeggy, is correct. I couldn’t even read the entire article because each of the assertions is blatantly false or misleading.

    Mr. Frum, surely you can do better than this author for counter arguments.

  • tommybones

    Kevin Drum:

    “Just to make sure that everyone is still clear about this, here’s the current trajectory of politics and the American economy stripped down to its bare essentials:

    2001-2008: Republicans run economy into ditch.

    2008: Obama elected.

    2009-2011: Republicans respond by doing everything possible to prevent him from fixing things.

    2012: Republicans use lousy economy as campaign cudgel against Obama.

    2012: Republican candidate wins presidency (maybe).”

  • mc419

    “In those circumstances, it is not unexpected that taxpayers are making economic decisions based on President Obama’s articulation of a policy preference for higher taxes, which creates a disincentive to invest in capital and employees in the medium-to-long term”

    This is an argument for getting rid of the income tax altogether (which is a legitimate idea) but is inconsistent with the fact that companies are currently growing their capital assets (They are holding onto cash so that it can be taxed away? Once the President gets around to it?)

    “Federal officials challenging the right of a company to relocate production facilities to a lower-cost, right-to-work state, as the NLRB has done with Boeing Co., creates a negative business climate and discourages economic recovery and growth”

    FOX News talking point. No evidence the Boeing case has negatively impacted growth. Again, Burk is not an argument for policy adjustment, he’s making a philosophical an argument that growth would be higher if their were no labor rules for business to follow (which is valid, if not taboo).

    “The people who have to pay for all this, the taxpayers, see the writing on the wall. To them, this is not just a political game. It affects their real-world return on investment and how much of the fruits of their labor they give to the government and how much they get to keep. It is irrational to assume this has no bearing on economic recovery and growth. ”

    Again, not an argument against the President’s policies, rather another philosophical justification for doing away with the income tax. If it is rational to consider that tax policy correlates strongly with consumer and business confidence (which it does), then it follows that the most confident environments would be those without tax considerations.

    In short, there is much here that is valid, but more importantly boring. Holding up a perfect world of no taxes, bullish growth, massive job creation, and no deficits against the President’s record is not legitimate criticism, it’s fantastical political posturing.

    I would just like to pose one question to Mr. Burk: Name me one government – out of any historical epoch – that has managed to simultaneously lower taxes, grow the economy, create jobs and reduce the deficit, without having to steal, rape and murder to do it?

  • talkradiosucks.com

    The people who are flaming this piece really should click the author’s name and check out his credentials. They show quite clearly that this gentleman has every bit the background you’d expect from someone offering first-rate politico-economic analysis.

  • DirtyLibrul

    More “confidence fairy” utter BULLSHIT.

    I thought actual demand drove how a business invested and hired? So if I have the demand for my good or service I’m not going to hire anyone to fulfill that need because my personal tax rate might go up 3%?

    BULLSHIT.

    And that’s only if my PERSONAL income is over $200K/yr, that’s NOT a business tax.

    DOUBLE BULLSHIT.

    When this actually happened under Clinton 23M jobs just happened to be created to what is everyone so worried about even if that was to happen?

    TRIPLE BULLSHIT.

  • baw1064

    “people in the real economy … base their decisions on what they expect to happen.”

    Well, since several media outlets owned by Rupert Murdoch keep telling anyone who will listen that Obama is Karl Marx, Fidel Castro. and Louis Farrakhan all rolled into one, there’s also the question of whether those expectations have any basis in reality.

  • Polaris

    I realise that FrumForum has to maintain the political false equivalency but …really ? There’s opinions and lies. This tends heavily towards the latter

  • think4yourself

    Mr. Burk starts his piece by saying he’ll articulate which of Obama’s policies are to blame for the recession. He ends it by saying Obama merely continued many of Bush’s policies (which is what DF said), and that since Obama prefers increasing taxes and greater spending than that clearly must be having a drag on the economy.

    Those are facts not in evidence (and not facts). Yes, Obama wants to revert back to Clinton tax rates on those earning over $250K. Yes, he has enacted stimulus in the past, even though he is currently dismaying liberals by agreeing to large cuts. No, you cannot prove that any of those things that he desires to do are what has prolonged this economic situation.

    I own a business. I can guarantee you I am not making hiring decisions based on if my taxes might go up next year. That is the last thing on my mind. I’ll make that decision based on if I have or can find work for that person to do that will improve my top line revenue and bottom line profits. Period.

    Until you’ve actually run a business, you shouldn’t speak for how they make decisions. That makes you sound like Joe the Plumber. Another tool worrying about a possible tax hike for an income bracket he’ll never be in.

    • ChallengingFrum

      So you make decisions based on Before tax profit….you are an idiot.

      Spending IS the tax burden.

      • Lonewolf

        As a moderately successful small business owner, I must disagree with your overweening concern about tax rates.
        Wages are a pre-tax expense, so my effective tax rate has very little to do with hiring policy. I make staffing level decisions based on projected work load and perceived opportunity; almost all small business owners do, and we’re the only ones who are creating jobs right now. If there’s lots of work, you hire as many good people as the workload will require.
        Am I concerned with how much money I can take out of my company after taxes? Sure I am.
        But not as concerned as I am with my business collapsing due to an imploding economy, which is in turn caused by the national economic agenda being taken hostage by legislative terrorists and radicalized financial fundamentalists, who have never learned anything other than their Randian, neo-orthodox, fanatical economic dogma about how all government spending is intrinsically evil and wrong.
        The only companies concerned with tax levels right now are the transnationals, who are each trying to ship more jobs to Indonesia and China than the others.

      • tomc444

        You are clearly not a small business owner. And your rude ad hominum suggests your ignorance and mind set.

  • jamesj

    Small business owner here. I’m not making hiring decisions based on tax rates. I’m making hiring decisions based on consumer demand for my services. Tax rates are at historical lows in this country. Changes in tax rates have a much smaller net affect on my bottom line than changes in consumer demand. Businesses are sitting on historically high levels of cash and profit. American workers are outputting record high levels of productivity.

  • jamesj

    Which creates the greater sense of “uncertainty” among business owners?

    1) Obama’s middle of the road, right-of-Reagan stances on taxes, regulation, etc? The possibility that tax rates will return, in accordance with law, to rates that are still historically low? The possibility that perhaps Wall Street and Banks will have to put up with some minor regulation on their utterly outrageous behavior?

    2) Or the constant 24-7 drumbeat of fear and scaremongering by irresponsible right wing commentators and politicians since the day Obama entered office? The constant claims that the executive branch has been taken over by an unamerican marxist? The willingness to needlessly tarnish the credit of the United States of America and send investors running from US dollars?

    The answer is obvious. I am no liberal, but the answer is obvious.

    • pnwguy

      JamesJ:

      Another small business owner here, looking to hire my first employee in the next year. I could care less what the tax incentives or rates are. The employee’s ENTIRE expense is deductible. It only matter if I have THE DEMAND for services to bring another engineer into the mix.

      As for “Obamacare”, that’s a huge HELP to me, not a hindrance. The crap with healthcare delivery the way it stands now is the biggest obstacle to small entrepreneurs there is. I’d be screwed trying to hire someone who has any sort of chronic health issue, themselves or with their spouse or children. Pre-existing conditions can keep someone suitable from being able to leave their current employment. Even something like a kid with asthma could be a deal breaker.

      The only things that saves me personally is living in an area that Kaiser Permanente covers. They will write individual policies that aren’t outrageously more expensive than group plans.

      Look at this example if you want to understand how broken the pre-ACA system has been. http://www.nytimes.com/2011/02/20/opinion/20Dubinsky.html

      • tomc444

        It’s refreshing to read your comments about the problems that the current health insurance system cause small business owners. By all logic, small business owners in particular should strongly support the new plan. I suspect that far too many have reacted to the Republican disinformation and fear-mongering.

        Despite their rhetoric, the Bush Administration and the current GOP are not, and never have been, champions of small business. But they seem to have fooled quite a few people.

  • zephae

    Is it just me, or does the logic of this article simply make no sense at all? Leaving aside the fact that businesses follow demand much more closely than tax rates and regulation (unless you’re a member of the corpratocracy), who drives “expectations?” Mr. Burk alleges it’s the implications of Obama’s rhetoric and apparent policy positions, but that’s simply not true. It is the media, the people who distribute all this information to the public, who largely control these expections. As our media has grown more obsessed with conflict and sensationalism, expectations have followed suit. Is there really any doubt that the lies about “death panels” and a “government take over of healthcare” have driven whatever negative expectations there may be about the subject? Or that the denouncement of things that don’t go into effect until 2014 as though they are strangling choice today influence the way people see their problems with healthcare and health insurance?

    And then there’s the issue of the $787 billion. The first issue was the puzzling line:

    There is also the opportunity cost of the $787 billion. It could have stayed in private hands and been spent by businesses on new capital and employees. It could have been spent by consumers on whatever they thought best.

    With tax cuts and credits making up such a large portion of the bill, it would seem that this is exactly where so much of that money went. Further, with the large amounts of cash sitting on corporate balance sheets, it’s clear that money wouldn’t have been used in those ways, not when deflation makes hoarding cash a good investment.

    Overall, it seems to me that if uncertainty is the root cause of our problems it has been driven by misinformation and the combination of GOP doomsaying with perpetual obstructionism to prevent the issues from being hashed out. Would not a healthy and honest debate instead of “principled” “just say no” attitude solve this supposed problem of uncertainty? The internal logic of this post simply makes no sense.

    • tomc444

      Thank you for a cogent and, in my opinion, a very accurate post. Sadly, the GOP, the party to which I once belonged, has used disinformation and outright lies to drive their agenda since the beginning of the Bush Administration. The first egregious lies involved their push for “privatizing” Social Security. The outright lies and obfuscations became so outrageous that I realized this was no longer my GOP. The current GOP is, if anything, is worse.

  • Chris Balsz

    The first two years of this Administration didn’t work, because Obama didn’t have a filibuster proof Senate.

    The last two years are being broken by a Republican House.

    I hear this sort of crap from center-left Republicans, and I’ll ask you Obama fans the same question — If the only way you figure you can deliver the policy program is with the House, the White House, and 61 votes in the Senate for 4 years straight…why bother with you? Shouldn’t we be looking for a more pragmatic party?

    • ram6968

      if your looking for a more pragmatic party, I’m sure you don’t mean the republicans

    • Josh Crain

      Chris, I’m an independent so I don’t really have a dog in this fight. But in my lifetime I’ve never seen a party refuse to compromise or budge one inch in the way I’ve seen the GOP obstruct the legislation process over the last two years. They seem so hell-bent on reclaiming the White House that they are willing to stand in the way of any progress so they can blame Obama for the stalemate. I feel like we’ve gone through two years of the GOP playing political games instead of attempting even one ounce of compromise and bipartisanship.

      Democrats have a lot of problems and I was a pretty staunch conservative for many years. But I don’t see how I can cast a vote for a Republican candidate given their willingness to drive the U.S. off a cliff if it means they have a shot at regaining power.

  • Idle Resources

    What? BHO’s “Stimulus Package” was popular, in so far as it included long delayed “infrastructure” repairs.

    As for allowing the housing market to “bottom out”; what planet are you on? By now all the shouldn’t-have-gotten-loans cases have been dealt with. While I won’t directly quote Nazi economics, it is a fact that stabiilty followed that regime’s “no eviction” policy. In fact, many Americans sought implementation of that during the Great Depression. It was aired in “Gabriel Over the White House,” arguably the only Fascist product of Hollywood. No-eviction – which would require State co-operation – would could include requirements that marginals take in co-tenants, so that debt payments are not out of reach. As for legal remedies, at last count there is a 40 year New York court backlog in civil eviction cases. Even broader use of summary judgment couldn’t clear that backlog. Currently, bi-partisan support for No-Eviction is unthinkable, given GOP’ reverse finger-pointing. BHO could easily win the next election on “obstructionist” charges.

    Where else could BHO go with “obstruction”? Nevermind Clinton’s Dec. 2000 play with the Gramm-Leach-Bliley Bill – which is the real source of the “credit debt swap” lunacies, Enron, Madoff (etc) indulgences, “sub prime” loan fiascos, etc ad nauseum – at a bare minimum, $9 T can be directly attributed to GWB-GOP maladministration and malfeasance. As for the “red-tape” chimera, actual current regulator practise is to facilitate development. The you-might-find-evidence-if-you-look-but-i-am-not-looking mentality is infantile and pollutes public discourse.

    What about the subsidies to core industries, like Financials and the Auto industry? Those were started under GWB and paid back under BHO. Banks were allowed to write-off debt (“assets” on bank financial statements) while having almost zero costs (ie, they used savings – “liabilities” – for next to nothing; less than nothing if you include service charges). Again, this was done with bi-partisan/Federal-State facilitation, and with many of the Fed morons who championed zero-regulation.

    “High taxes”? Americans pay – by far – lower taxes than other developed countries. Tax Incidence is determined politically, because of pathological GOP deceit. At a bare minimum, deference to Karl Rove’s perma-campaign idiocy, led to $4 T in deficit accruals. Yet GOP benedictionaries still allow sanctification of that reckless bottom-feeder. There is absolutely nothing in the Economic-statistical database that reveals that a marginal tax increase would reduce investor confidence. Why are savings not being placed in investments? It is because of GOP obstruction of real-stabilization. Investors fear zero-regulation redux, and given the mentality of GOP myopics, they have every reason to so fear.

    How can the GOP lose? While I oppose BHO on his slavish deference to the Calipha-politics of those who have waged a 1400 year Genocidal-aggression against Western Civilization, he would have no problem deflecting a lead-with-your-nose campaign. BHO will run on stablization and balanced-development, and he will show why the GOP is in a rhetorical prison on same. The GOP obstruct on: effective-regulation, investor-confidence, labor-participation, environmental-protection, health care-rationalization. All they offer is zero-regulation, and Madoff-of-the-month practises. Try to admit to the monumental social-idiocy that operated under the oil-patch-brat-regime.

  • ggore

    I don’t understand. How can you blame the President for the economic doldrums we are in when it is the Congress that authors and passes all legislation and makes the budget and levies taxes? And since this Congress has opposed EVERYTHING the President has wanted to do or proposed, how can you then blame Obama for the continuing economic doldrums when he has no power to directly influence anything without action from Congress.

    What little action Congress has taken has only served to take us farther down towards more recession and depression, with the credit rating being dropped after their threat to destroy the U.S. and world economy if they didn’t get their way, so I am not accepting the speculation this author is putting out that it is totally Obama’s fault we’re in this mess.

  • Rabiner

    “Or it even could have been put into David’s preferred policies for combating unemployment, such as a payroll tax holiday, income support and infrastructure”

    Except that was the majority of the ARRA.

    “I hear this sort of crap from center-left Republicans, and I’ll ask you Obama fans the same question — If the only way you figure you can deliver the policy program is with the House, the White House, and 61 votes in the Senate for 4 years straight…why bother with you? Shouldn’t we be looking for a more pragmatic party?”

    Its kinda necessary if the opposition party is unwilling to compromise on any issue and filibusters every piece of legislation.

  • dubmod

    We have a huge problem in this country of giving forums to people with no qualifications on the topic they are writing about. Whether it is Joe The Plumber or this guy the simple fact is that business expenditure is tax deductible. Saying a profitable business cannnot hire somebody because the owner is a higher rate taxpayer is therefore rubbish. Wages are deductible and one can assume that the new employee would produce a return which would mean the businessowner would see a net return on his investment.

    Decrying the stimulus because the money would be better used in private hands is just plain ignorance. The $787m was borrowed to create infrastructure projects for mainly private construction companies. Just giving privatr business this money, when there is no demand for their product in a recession, would be pointless. We live in a mixed economy, where some of the argest companies are wholly or substantially dependent on government contracts. This has been the case for 70+ years. It is not going to change unless we again become a net manufacturing exporter again. Our infrastucure is now behind that of most of the developed world. The path to take is obvious.

  • svaz11

    It gives me some hope for the near future that virtually all of the comments posted here acknowledge the reality that Mr. Burk simply doesn’t know what the hell he is talking about!

  • wileedog

    This entire article should end with an “IMO.”

    You simply cannot prove in one way or any other that business owners are making decisions based on perceptions of what a President wants to do.

    And if you are a business owner making decisions based on perceptions of what you think a President may or may not do, you should probably get that resume shored up.