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STOWE, Vermont
(Casey Research Advertorial) -- Unfortunately, the latter category
predominates. The new president didn’t actually say much on the
campaign trail, but he said it well. He invited Americans to dream, actually
to fantasize, about an unreal world in which their government will care for
them using its own unlimited supply of money – money that comes from
some mysterious place that too few people have even thought about, much less
understand.
Voters are said to
have turned to the left, to liberal candidates, in part out of a desire to
change the economy’s direction. Their choices at the polls are said to
reflect their concern over the economy’s descent into recession, loss
of jobs, and the collapse of their retirement accounts. These are legitimate
and understandable concerns. Unfortunately, voters have not done the hard
work of learning about and understanding basic economics. As a result, they
have set themselves up for their predicament to worsen exponentially.
I think it’s
safe to say that we don’t really expect politicians to keep their
campaign promises. We can only hope that the new president will conveniently
forget to raise taxes on capital gains and dividends, raise the top income
tax rates, impose a windfall profits tax on oil production, maintain or raise
high corporate tax rates, collect more social security taxes, mandate higher
ethanol production, expand regulation, and add new entitlements, just to
recall a few of the proposals bandied about during his campaign. We
can’t all ride in the wagon. Someone has to pull it.
The presumption seems to be that government has a big job to do in cleaning
up this mess and it will need more money to do so. Wrong! Government is still
the problem. Obama has promised to help the Blue Dogs (fiscally conservative
House Democrats) achieve fiscal discipline, including honoring
the pay-as-you-go (“PayGo”) rule
against adding to the budget deficit. There are only two ways to do that...
need I say more?
There are limits to how much tax you can extract from the populace before you
are faced with open revolt. While Obama’s tax increases are ostensibly
imposed on the rich, the pain of those tax increases will also be felt by the
poor. Moreover, there is no way that straightforward taxation will be enough.
Instead, we can count on more of the surreptitious, insidious, and brutally
regressive tax of inflation to fill the gap.
This should have been a contest focused on the real, underlying issue facing
Americans and the world: will we choose more or less government? Instead, the
contest was over more government or much more government. It appears voters
chose the latter. They know something is wrong, but like a drunk taking
“a hair of the dog that bit you” to ease the pain of a hangover,
Americans are hoping to cure their ills with another dose of the same poison
that made them ill.
I have heard the new president described as a fall guy. In a way it’s
too bad that he may mean well but will probably preside over economic
hardship that persists for many years. At first the continuing debacle will
be blamed on George Bush and a Congress with enough minority influence to
have thwarted the grand plans of a thin majority. Inevitably, however, the
inherent character of government and politics will be apparent in this new
administration as well. The nation’s chief executives and legislatures
of both parties have shared in contributing to today’s economic
meltdown all the way back to the creation of the central bank in 1913. The
Obama administration is backed by a now stronger congressional majority that
is very nearly filibuster proof and no longer needs to worry much about
mustering the supermajority required to override a presidential veto. Those
who sent Barack Obama to the White House are anxious to see their fantasies
made manifest. They may be patient for a little while, but not for long.
Hillary Clinton ultimately did a great job of helping to boost Senator Obama
into the White House. Some say she’s now a shoo-in for a White House
appointment, but she at least professes to be happy to continue being the
best senator from New York
that she can be. Probably a wise move.
Barack Obama came to office with the promise to deliver “Change We
Need,” but we know that, since Texas Congressman Ron Paul left the
race, no one has had the cojones to actually discuss the change we really
need.
I wish the new president well and hope he will, miraculously, do the right
thing. In my heart, however, I know he cannot. Leveling with Americans would
be political suicide. In their own way, the Obama administration and a
cooperative legislature may pave the way for a truth-telling politician in
the future – an honest, uncompromising man or woman whose message today
would be ignored and drowned out, even by the fading echoes of election night
euphoria.
Donald
Grove
Washington Correspondent
Caseyresearch.com
Donald Grove is a
Washington D.C.-based lawyer and Washington correspondent for Casey Research,
LLC., one of the nation’s oldest and most respected
newsletter publishers, providing unbiased investment guidance for individual
and institutional investors. You can now kick the tires on Casey
Research’s flagship publication, The Casey Report, risk-free -- learn more about our special
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