Why won’t Obama’s plan work?

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,

James

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22 Responses to Why won’t Obama’s plan work?

  1. Mike Davis says:

    I have not heard anything that would be productive in the job creation market! Obambi can only talk about doing things, he can not do them!

  2. You guys in USA are making same mistakes as here in Australia. They all talk about the federal deficit; but forget about the deficits made by individual states + big cities, on the top of that. Obama’s panic button is signal for liberal governors to borrow money = puling the rabbit out of the hat. Don’t concentrate only on Obama; they can pull the wool over the Urban Sheep’s eyes, on many different ways. Simplify the question: how much money USA paid last year as interest on the whole foreign deficit ? That is the top secret here and in USA. Otherwise, even their best supporters wouldn’t let them borrow one extra $. Ask the Greeks.

    Demonstrating after you squander the borrowed money, doesn’t help. Australia is trying to be a ‘’virgin prostitute’’ also… spending billions, to prevent the phony GLOBAL warming, instead of investing in products that can be packaged and exported. Used car dealers work under rules and regulations; not economist and climatologist. They make their own rules, lots of numbers and theories, as fodder for the Urban Sheep.

    • suyts says:

      No, Stefan, we brag about our stupidity here in the States. As far as the individual states, they can go screw themselves. My state is fine. Its the ones with their own set of entitlements and job killing laws that are having a problem. But, yes, with the low interest rates of today, many are borrowing beyond their means. I blame Keynes. for this garbage. His economics have never worked nor will they ever, but the socialists cling to ever word he ever wrote. And, yes, the parallels between the U.S. and Australia are remarkable. I’m not sure which one of us have the worse liar?

      Total interest on our national debt in fiscal 2010 was $434,131,324,866.27. http://www.treasurydirect.gov/govt/reports/ir/ir_expense.htm

      Of course, this is a bit misleading, in that 1/3 of that is paid to ourselves, in that we borrow from one pot of money (Social Security) that has no money and then we pay it interest with money we don’t have.

      I believe the only greater expense now is to provide for our military.

  3. Traitor in Chief says:

    I read also that Warren is collecting his Social Security. After all his whining about not paying enough tax, He’s not worried enough to forgoe his SSI.

    • suyts says:

      That’s deplorable if that’s true. Which would be consistent with my estimation of him.

    • Mike Davis says:

      I guess that 2K a month and his medicare will make a difference in his life style!
      I spent to much of my life observing the lifestyles of those who became “Rich and Famous” from a technical point of view. It was part of my job to interact with them to provide technical advice!

  4. Latitude says:

    You know……
    …..if they had just divided that money up and handed it out to each household

    • Mike Davis says:

      WHAT MONEY? Government is a Ponzi Scheme!
      The Pyramid Business model was based on government practices!

    • suyts says:

      Yes, Obama’s stance, be it his own thoughts or someone else’, clearly isn’t about fixing anything. It’s about embracing a failed school of thought …… believing the government can cure economic ills. It can only create a fostering environment. Beyond that, it is woefully inadequate.

  5. Mike Davis says:

    Think about this: Tourism, entertainment, and sporting events were start of the end of the advancement of civilization. It has been down hill and accelerating since the introduction of free time. We are all slaves to the system and most in worse shape than the slaves of times past.
    What was true when this was written is even more true now:

    • suyts says:

      That’s a great song! The problem with the “industries” you listed, is the thought was they could contribute to our economy. They can’t. None of them generate wealth, they just move wealth from the populous’ pocket to theirs. Unless we’re talking about tourism from foreign nations. Which, would be a horrible sign of our economy if we became reliant upon such commerce. At least the miner in Tennessee’s song was contributing to the nations wealth.

      • Mike Davis says:

        We are now worse off that the miner that was indebted to the store. We are either funding the trough of taking from it! It seems there are now more people taking from the trough.

      • Mike Davis says:

        So many people and states depend on tourism to maintain their way of life and it is just moving money from one pocket to another. I grew up in that environment and worked at a couple of major hotels. I was training to advance in the Hospitality Business and had picked up a couple of “Sponsors”, Mentors to guide my way. A wise man saw the future of the industry and agreed that taking employment with a public utility was a better option, when that opportunity surfaced. In the late 60s tourism was transitioning into an assembly line, quantity over quality business plan with Public relations to make it appear as if quality was more than the illusion it became.

  6. Mike Davis says:

    A cousin played the “trading collectables game” by buying low and trading for things of greater value or selling high. He acquired a considerable amount of trading material to support him in later years because the value kept rising as more people were becoming interested in collecting. His mind began to go and they can not find anyone to liquidate the inventory. Because the illusion was kept alive so long he was able to make a decent living trading “Junk” Collectables and homes.

    • suyts says:

      Collectables used to be a hobby of mine. When the economy is moving along, the prices of such rise, when the economy tanks, the prices tank. Sure, people will still tell you this antique is worth this or this baseball card is worth that, but finding someone to pay you that price is almost impossible. Currently, if one had the disposable cash laying about, now would be a good time to pick up some collectables at bottom dollar. When the economy picks back up, then one can make some money……….. assuming inflation doesn’t take the lion’s share.

      • Mike Davis says:

        To many ifs! I went for possible sustainability by acquiring land that people raised their families on in ages past and people could survive off the land if they have to.
        I do not actually live the “Simple Life” but the tools are here to do the job if it becomes necessary and there are others in this valley that prepared as well.

      • suyts says:

        Smart move. In that they don’t make land anymore, the real value can only increase. Though, today, the pricing is overinflated.

      • Mike Davis says:

        If the economy picks back up the land can be subdivided. There is 3500 acres of land behind mine on the lake and the best access is over my land. By selling the owners a right of way for a road I can sell of lots on both sides of the road after improvements are made. Otherwise is has a value if the economy tanks for raising crops and live stock!

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