"Pass This Bill Now!"

Sydney M. Williams

Thought of the Day

“Pass This Bill Now!”

September 14, 2011

As promised, on Monday President Obama sent his jobs bill, the American Jobs Act of 2011, to Congress, including his proposals for tax increases. When some huckster comes by whispering, “Have I got a deal for you!” one’s hackles rise. Similarly, when a President who is a master of political divisiveness suggests Congress should put aside “political games” and pass his new $447 billion stimulus plan “now,” the unsurprising reaction from Congress is the same – suspicious.

As well it should be. Data from the U.S. Department of Census yesterday showed that income fell to its lowest level in more than a decade. In the two years of the Obama Presidency, household income declined 2.3% (despite the “recovery” beginning in May 2009) and the proportion of people living in poverty climbed to 15.1% from 14.3%. While all the blame cannot be attributed to Mr. Obama, those numbers certainly reflect the failure of his policies to counteract the recession. And now, with his Jobs Act, he wants to do more of the same?

Political partisanship is as old as the Republic. It ebbs and flows, but never disappears. Recent polarization dates back to the disputed 2000 Presidential election that elevated George W. Bush to the Presidency, despite his not having received as many popular votes as Al Gore. Democrats, like jackasses with the memories of an elephant, never forgave Mr. Bush. Those bad feelings later morphed into policy disputes regarding the conduct of the War on Terror and later the handling of the economy following the credit collapse.

The President’s proposal does borrow some ideas from previous Republican suggestions, but ignores others. A widened and flattened tax system, with fewer deductions, has long been part of Republican rhetoric. The President accepted the limiting of deductions, but said nothing about tax reform. His arbitrary elimination of certain tax deductions and an increase in taxes on carried interest without a concurrent overhaul of our cumbersome tax code appears designed to go down in defeat. There are those that suggest his bill was nothing more than a “dare,” populist political bait for the Republicans to not pass it, which one astute commentator assumes is what Mr. Obama really wants.

The President’s refusal to simplify the tax code is based on the spurious concept that to do so is too complicated; it would take too long and the need to act is “now.” Interestingly, however, the President never felt that his 2000+ page healthcare bill (we are still finding out what was in it) or his financial reform bill (of similar length) were too complicated.

The essential problem facing the country is a lack of confidence that individuals and small business have in the direction the country is moving. While politicians are concerned about the two-year election cycle and the shifting winds of the polls, the horizon for business people is measured in years. The duration of the President’s recommendations are the reverse of what they should be. The tax cuts the President has proposed are all temporary. His proposed tax increases are permanent, as will be his “investments,” a euphemism for spending.

Because of the recent dramatic increase in government debt, a function not only of the failed stimulus plan, but also due to the growing realization that entitlements supported by both parties over the past several decades are in serious jeopardy, government’s options are limited. In today’s Wall Street Journal, Peter Wallison writes: “There are only two ways for the U.S. to address the debt and entitlement obligations it has already assumed – inflating the currency and increasing the rate of growth.” The latter is the most optimum, but it is the former that is the most likely. Economic growth depends upon tax reform, including eliminating the penalty on repatriating foreign earnings, and passage of the three trade bills that have sat on the President’s desk, held hostage by unions. It also requires simplifying regulation, so that business can again begin the process of hiring.

An elemental concept the Administration has never seemed to grasp is that it takes five or six private sector jobs, at the minimum, to support one government job. Government workers do not manufacture products or generate services which are sold into the market place. They do not produce profits for shareholders or owners. It seems hard to believe, given the attitude of so many of them, but they actually work for us! It should be for us to decide how many people we want serving our needs.

All politicians when on the ropes resort to tried and proven declamations. Liberals offer populist slogans that demonize the rich, comments about “millionaires and billionaires”, when the tax increases necessary must be levied on “thousandaires.” The President’s plan does have the seeds to start a conversation, but then so did the Bowles-Simpson Plan, which he tabled and so did Paul Ryan’s, which he ignored. The President’s problem is that he has proven to be an ideologue, a trait that is out of sync with the American character. We see it in is his demand – mentioned seventeen times in his speech introducing the American Jobs Act – that the bill must be passed “now.”