Sunday, August 23, 2009

Time for “Change We Can Believe In”?

by Gordon Cooper

From Broader View Weekly, July 17, 2009

As we receive another report of mounting job losses and declining stock indices, as well as continued consumer nervousness, our rookie leader calmly tells us that we need to exercise patience. As if he has been here before and as if he has some innate knowledge of markets and/or some valid examples from history that are hidden from the rest of the economists.
It’s almost like sitting in the back seat while a young, pimple-faced teen with a freshly minted driver’s permit and no road map in the glove box tells us to just trust him, we’ll get there. Meanwhile, the shortcut he assumed was the way home becomes more desolate and the road gets bumpier and bumpier.
The sorry facts are that his policy and the direction he is driving us is wrong, therefore, we are justified in our nervousness and we should be looking for change we can believe in. He has not been here before, this is his first real experience in an executive position; Obama has no experience in leading a company or even a community into a prosperous position. He has no examples in history to which he can point where a nation or any institution has ever spent its way into prosperity. Yet, we are to calmly relax in the back seat while he insists that this is the best way – because he said so.
Someone with maturity and intelligence needs to take the wheel. Now, I know that my fellow columnist will insist that I am being unfair in laying this economy at Obama’s feet. He will say that the initial stimulus bill was instituted during Bush’s term. I will concede that point. I was against it then, and I was even more against the second one – as I pointed out in a previous column. I believe that “governmental stimulus” is an oxymoron because history has shown that the best stimulus in any economy is less government involvement. The lessons learned from past recoveries indicate that tax relief and sound regulatory policies work to increase economic production and job creation.
But, before the nay-sayers blast me for my jaundiced view of Reaganomics, let us look at the current trends among our global competitors. While we raise our Capital Gains Tax rate and increase our control of our auto industry, our chief competitor, China, has seen rapid growth in its own manufacturing base and auto sales. Why? Could it be that they have learned from Reagan’s example? They have no Capital Gains Tax, and they have only a 15-20% corporate tax rate. Is it any wonder that their auto sales are up 36.5% from last year while ours are falling? Car sales last year from Chinese manufacturers registered 6.1 million compared to U.S. car sales of only 4.8 million.
“Just be patient”, Obama says.
Let’s also look to our European competitors, as one after another, their leaders are realizing that taxing and spending yield economic stagnation. Each day it seems more talk of lower tax rates and relaxed regulation comes from those nations who seek beleaguered and over-taxed corporations to relocate to their cities and to bring jobs to their citizens.
“Just be patient”, Obama says.
However, before my critics shout me down for being a whiney, back-seat child crying “Are we there yet?” without offering any suggestions, let me make a few suggestions for a solution to our dilemma.
First of all, let’s repeal the thousand-plus page stimulus bill that none of our representatives or senators read before signing. Let’s expose all the pork that our so-called representatives have slathered into it. Let’s call for “true transparency” – as was promised – by posting each expenditure with a solid cost/benefit projection including the actual “number of jobs created or saved”. In other words, let the American people look out the windshield, so we can at least see the bumps in the road before we hit them.
Secondly, we should restore confidence in our investors by calling for deep cuts in all Federal spending. It may be nice to have a new, shiny vehicle in our garage to call our own – such as a restructured healthcare policy or a new environmental policy – but if we can’t put food on our table, that car won’t fill our bellies. In other words, if we aren’t producing products the world wants, we aren’t creating jobs Americans need. And if we stifle American manufacturers with more taxes and more regulations they will take their operations across the pond to more business-friendly environs.
Thirdly, tax cuts do work to stimulate the economy, spending does not. Bush’s tax cuts did restore our economy after 9/11 left it paralyzed. Reagan’s tax cuts ushered in two solid decades of growth, prosperity and innovation.
I say it’s time for a change we can believe in again.

No comments: