As most of you are aware, the President has a new proposal on the table in an attempt to put Americans back to work and even reduce the deficit along the way. Currently, the cost is estimated at about $1/2 trillion. We all know how they never quite get the numbers right, but lets take them at their word.
I listened to his speech he gave to congress, and it was more of the same stuff. Construction this, upgrade that, finance teacher’s jobs, …….. wait what? Teacher’s jobs? Oh, I almost forgot the they’re stuffing Obama’s pockets. That’s payback. And probably for another post. I just couldn’t help it.
At any rate, Obama has 2 parts of the problem worked out, almost. He’s spending money to create jobs. But, as we all know, we’re in debt up to our grandchildren’s eyeballs and beyond. Keynes at his best. So, he’s got to pay for it. How? By raising taxes, of course. Well, just for some of us. Not me, to be sure. But, we’re going to manage to punish our more successful citizens. Obama is calling it the Buffett tax. As we recall, Warren Buffett openly lamented not paying enough taxes and asked them to be raised. Later, it was found out that the company he runs hasn’t paid their taxes. What is lost by most people, is that these taxes on investment returns are already taxed. Publicly own businesses are taxed at about 35%. It is the money left over, in forms of dividends or increase in stock value that gets taxed again at 15%. This shouldn’t be confused with a payroll tax. Which, even a CEO pays already.
Now, we’ve already covered what a fair share is. And how altruistic Warren Buffett is. So, I won’t beleaguer the point. But, what Buffett was talking about is increasing the taxes on the return of investment. What Obama is talking about is taxing the wealthy, that happened to have the money for investment. So, what happens to investment if you take $500 billion out of the economy and put it in federal coffers? What happens is a further depression of the economy. But, what if he didn’t have to withdraw the money from the open market? What if he could just spend the money? Well, he did already. He’s thrown $ 1 trillion at job growth already. Did it work then? Why do we believe it would work now? It won’t. Until the environment for job growth changes, no amount of money spent will change our employment situation.
What needs changed? I’m glad you asked. Not much, really. Mostly what needs to happen is the federal government to get out of the way. With the laws and regulatory restrictions placed on the energy sector, we can’t grow out of this mess. There is no additional capacity in our typical growth areas. Texas, for instance, has barely managed to keep the lights on, and in some cases they failed to do even that. Is there room for exceptional industrial growth there? Not until they increase peak load capacity. The same for California, and the north east with that idiotic carbon alliance. Here in Kansas, we’ve been trying to build a generation plant for years and it keeps getting blocked, either by court or regulatory agencies. If we feel we must spend and guarantee loans, we should guarantee loans for real energy companies that will produce reliable energy. We should address our nuclear generation, too. We need to stop with this asinine spent fuel storage and start letting them reuse it! France has done this for decades without difficulty. We could also ensure upgrades for the hydro turbines. We’ve some still in operation 50 years old. If we want to invest in the future, we need to start digging our own REE. The feds need to encourage these things, as opposed to standing in the way. While we’re at it, it wouldn’t hurt to expand our oil drilling and increase the fuel supply of this nation. There are many more simple painless ways to increase the jobs situation here. At some point, we’ll have to address the trade imbalance and we’ll have to address the off-shoring of our jobs, but for now, I believe if we did just those simple things listed, jobs would increase, and so would the revenues for the federal government.
A note: The deficit has increased by a $Trillion/yr since Obama took office. I’m not talking about those one time give away programs, I’m talking about the financing of our day to day operations. We’ve nothing to show for this madness.
Food for thought,