President Obama will stop at nothing to win four more years in the White House – including cracking this fragile egg shell of a recovery and sending the U.S. into recession. With every sign that the economy is slowing, our Campaigner in Chief is creating even more anxiety by taking an unwavering stand -- he will not, he affirms proudly, extend current tax rates on all Americans. Instead, he demands the wealthy pay more. That’s it. That’s his grand plan for getting the country moving again. A more harmful and negative campaign has surely never been waged.
Nearly every day there are new signs that the country may topple into recession. Today we read that retail sales fell 0.5 percent in June – the third consecutive monthly downturn. That hasn’t occurred since the fall of 2008, when the country was paralyzed with fear over the financial crisis. Think of that; consumers are reacting today just as they did when it looked like the world was coming to an end. That says volumes – about the tone set by the White House, the confidence this president has inspired in our citizenry, and about his inability to lead the country forward.
President Obama is playing with fire – fire that can consume our economy and our well being. We are not going to be bailed out by China, or the other countries that have acted as stimulants over the past few years. The OECD recently reported that leading indicators worldwide point to “an easing of economic activity in most major OECD economies and a more marked slowdown in most major non-OECD economies.” That includes China, where in the second quarter GDP growth was 7.6 percent which compares to 9.6 percent a year earlier and 8.1 percent in the first three months of the year.
Though that seems high by our standards, it is a marked deceleration which looks likely to continue. Europe is a mess. As economic brain trust ISI reports, Peugeot deciding to close a plant in labor-protected France is a shocker, and of course leads to more unemployment. Brazil, India – there’s not a bright spot to be found.
Before President Obama casts blame for our economic weakness elsewhere, however, remember that the U.S. dominates global output. We have a $15 trillion economy, more than twice the size of China, which now ranks number two. It is extremely hard for the world to move forward without the U.S. taking the lead.
That’s why the IMF just warned Congress not to let the U.S. head over the so-called “fiscal cliff” – the combination of scheduled tax hikes and spending cuts that could rob next year’s economy of $500 billion.
We are on our own, which makes the president’s intransigence on the tax issue so dangerous. ISI reports that their company surveys indicate a slowdown that is intensifying and is broad based. They note the drop in the National Federation of Independent Business small business index and the University of Michigan’s consumer sentiment index as worrisome indicators. Americans are not feeling good about our prospects. That pessimism has a real cost – slower spending and growth. Is the president’s stance on taxes designed to help?
The truly frustrating aspect of President Obama’s tax campaign is that it isn’t even popular. A new McClatchy-Marist poll reports that 52 percent of Americans want all the Bush tax cuts extended, not just those on the middle class. What that tells us is that President Obama’s effort to incite class warfare is not working. Americans know that our economic outlook is perilous and that many small businesses might be caught up in the tax hike.
Unlike Mr. Obama, they remember that raising taxes in a recession is not sound policy. And, they are not deceived by Warren Buffett; they know the wealthy pay the lion’s share of the taxes collected in this country thanks to a steeply progressive tax regime. If people like Mitt Romney or Mr. Buffett enjoy a personal income tax rate that’s lower than the average, that’s because Congress has decided to encourage investment and savings – not because some evil rich person has crafted an unfair tax code.
If President Obama really wants the wealthy to pay more in taxes, he should champion the kind of tax reform that his long-discarded Simpson- Bowles Commission encouraged. That is a more complicated discussion, though, and would probably not play as well on the stump.
The people of the United States deserve better. We need a cheerleader and advocate. We do not need our president hoping to ignite anger and envy against our most productive citizens. We need to extend the Bush tax cuts, undertake serious tax reform and all the other issues – immigration, education, infrastructure investment, entitlements reform – that have been sidelined as President Obama focuses on being reelected.