With Christina Romer, chairman of Barack Obama’s Council of Economic Advisers, resigning to serve as the latest presidential scapegoat for his mismanagement of the economy, it’s getting easier to understand why more Americans don’t believe Obama is honest and straightforward. Listen to him talk about tax cuts. When visiting a sandwich shop that earns an estimated $1 million in annual revenue, he talks about tax cuts for small business owners; but when speaking at Democratic fundraisers, Obama criticizes similar action passed by Congress and the previous administration as “tax cuts for millionaires.” 1
Failing to realize that President George W. Bush’s tax cuts stimulate hiring by small businesses more efficiently than spending on government programs, Obama wants to raise taxes with unemployment under his administration stuck near 10%, much higher than the 8% he promised and twice the natural rate expected in the United States caused by people voluntarily taking time off or searching for work, as Romer is now forced to do. Obama’s tax increase would also be counterproductive, with fiscal action working against interest rates approaching negative values, similar to those observed during Japan’s lost era of deflation. A president’s objectives for fiscal and monetary policy must be in agreement with one another.2
“American demagogues have arisen in leading the many to resent the greater goods enjoyed by the few,” said Herbert J. Storing, describing worries voiced by the founders. By Obama constantly calling for 95% of the American population to rise in a tyranny of the majority against a 5% minority in order to justify his spending and associated tax increases, it’s also getting easier to understand why an increasing number of Americans are very dissatisfied with Obama’s handling of the economy.3
1. David Wessel, “Romer to Resign as Obama Adviser,” The Wall Street Journal, August 6, 2010, Economy. Peter Hart and Bill McInturff, NBC News/Wall Street Journal Survey, http://online.wsj.com/public/resources/documents/wsjnbcpoll-06232010.pdf. Barack Obama, “Remarks by the President on Small Business Jobs Initiatives,” The White House, http://www.whitehouse.gov/the-press-office/remarks-president-small-business-jobs-initiatives-0. Manta, “Tastee Sub Shop LLC, Edison, NJ” http://www.manta.com/c/mm2rkf8/tastee-sub-shop-llc. Barack Obama, “Remarks by the President at a DNC Finance Event in Atlanta, Georgia,” The White House, http://www.whitehouse.gov/the-press-office/remarks-president-a-dnc-finance-event-atlanta-georgia.
2. Milton Friedman, Capitalism and Freedom, Fortieth Anniversary Edition (Chicago: University of Chicago Press, 2002), 75-84. Bureau of Labor Statistics, “Employment Situation Summary, July 2010” United States Department of Labor, http://www.bls.gov/news.release/empsit.nr0.htm. Paul Krugman, “The Feckless Fed,” The New York Times, July 12, 2010, Opinion. Van Doorn Ooms, Ronald S. Boster, and Robert L. Fleegler, “The Federal Budget and Economic Management,” in Handbook of Government Budgeting, ed. Roy T. Meyers (San Francisco: Jossey-Bass, 1999), 221-224.
3. Herbert J. Storing, What the Anti-Federalists Were For (Chicago: University of Chicago Press, 1981), 46. “Joe the Plumber: A Transcript,” St. Petersburg Times, http://www.tampabay.com/news/perspective/article858299.ece. Barack Obama, “Remarks by the President on Behalf of Alexi Giannoulias,” The White House, http://www.whitehouse.gov/the-press-office/2010/08/05/remarks-president-behalf-alexi-giannoulias . Peter Hart and Bill McInturff, NBC News/Wall Street Journal Survey.