American Elephants

I came across a statistic the other day that startled me.  A poll determined that only 13% of Americans could distinguish between the political parties.  That is, they could not tell you what each party stands for correctly.  I listen to talk shows, and many callers claim that there is no difference between the parties, or they credit the wrong party with the wrong policy.  Anecdotal evidence, to be sure, but the poll is at least partly right.

Can we agree that Republicans agree that small government is desirable?  Yes, I know, they have many times been responsible for vast enlargement.  Can we agree that Democrats generally feel that things are better handled by the government than by the free market?

Can we agree that Republicans believe in individual responsibility and the freedom to make of yourself what you can?  Can we agree that Democrats believe in a caring government that makes things “fair”, taxing those who are rich to redistribute wealth more equally?

Can we then agree that the subprime crisis was the result of a well-intentioned desire to make the distribution of wealth more equal by helping minorities to own their own homes?

So, is Barack Obama the visionary figure who will bring America together as he claims to be?  Or is he the far-left candidate that his record suggests?

Economists are worried.  100 distinguished economists signed a statement released by the McCain campaign:

Barack Obama argues that his proposals to raise tax rates and halt international trade agreements would benefit the American economy.  They would do nothing of the sort.  Economic analysis and historical experience show that they would do the opposite.  They would reduce economic growth and decrease the number of jobs in America.  Moreover, with the credit crunch, the housing slump, and high energy prices weakening the U.S. economy, his proposals run a high risk of throwing the economy into a deep recession. It was exactly such misguided tax hikes and protectionism, enacted when the U.S. economy was weak in the early 1930s, that greatly increased the severity of the Great Depression.

We are very concerned with Barack Obama’s opposition to trade agreements such as the pending one with Colombia, the new one with Central America, or the established one with Canada and Mexico. Exports from the United States to other countries create jobs for Americans.  Imports make goods available to Americans at lower prices and are a particular benefit to families and individuals with low incomes.  International trade is also a powerful source of strength in a weak economy.  In the second quarter of this year, for example, increased international trade did far more to stimulate the U.S. economy than the federal government’s “stimulus” package.

Ironically, rather than supporting international trade, Barack Obama is now proposing yet another so-called stimulus package, which would do very little to grow the economy.  And his proposal to finance the package with higher taxes on oil would raise oil prices directly and by reducing exploration and production.

We are equally concerned with his proposals to increase tax rates on labor income and investment.  His dividend and capital gains tax increases would reduce investment and cut into the savings of millions of Americans.  His proposals to increase income and payroll tax rates would discourage the formation and expansion of small businesses and reduce employment and take-home pay, as would his mandates on firms to provide expensive health insurance.

After hearing such economic criticism of his proposals, Barack Obama has apparently suggested to some people that he might postpone his tax increases, perhaps to 2010. But it is a mistake to think that postponing such tax increases would prevent their harmful effect on the economy today.  The prospect  of such tax rate increases in 2010 is already a drag on the economy. Businesses considering whether to hire workers today and expand their operations have time horizons longer than a year or two, so the prospect of higher taxes starting in 2009 or 2010 reduces hiring and investment in 2008.

In sum, Barack Obama’s economic proposals are wrong for the American economy.  They defy both economic reason and economic experience.
(For the economists statement on John McCain’s economic program, continue reading:)

A new survey from Chief Executive magazine found that 74% of CEOs fear that “an Obama presidency would be disastrous for the country.” The survey found some CEOs worried that if implemented “[Obama’s] programs would bankrupt the country within three years”

The people who know something about creating jobs or creating problems for the economy have some important things to say.  It’s worthwhile listening to them.