Friday, July 20, 2012
President Obama’s “you didn’t build it” gaffe just
defined the 2012 campaign. It succinctly encapsulates the president’s
prejudices about the public versus the private sector. Though the president has
frequently mouthed platitudes in praise of enterprise, his suspicion and
contempt for business has always percolated just beneath the surface.
Of course, the president is partially correct, in a banal
sort of way. Yes, roads, bridges, firefighters, and teachers are prerequisites
to establishing an environment in which business can operate. So are peace and
freedom (for which we must thank the military).
But the president doesn’t understand that a critical
aspect of good government — and an essential ingredient for stimulating
economic growth — is not just roads but rules of the road. As economist John
Taylor reminds us, steady, predictable, and permanent rules permit business
owners (and individuals) to plan for the future.
That is the opposite of what the Obama administration has
provided. Obama touts his small-business tax credits, but in his stimulus bill,
the proposed 2011 American Jobs Act, and other legislation, the tax incentives
are temporary while the tax increases are permanent.
The Heritage Foundation estimates that the burden of
regulations enacted during Obama’s first three years is five times the cost of
rules enacted during the first three years under George W. Bush. The yearly
cost of regulatory compliance for Bush’s policies was $8.1 billion. It’s $46
billion for Obama’s policies.
The regulatory drag goes beyond those compliance costs.
The uncertainty about what government will require in the future is inhibiting
expansion and risk-taking. The two marquee laws passed under this
administration — the ironically titled Affordable Care Act and Dodd-Frank — are
vast pools of dark matter. They vest federal bureaucrats with enormous
discretion — so that no one knows what to expect. Most of the rules regarding
insurance costs, penalties (i.e., taxes), and minimum standards for insurance
remain to be issued by the Department of Health and Human Services. Adding to
the sense of arbitrariness are the hundreds of waivers HHS has issued to
politically favored businesses and unions.
Testifying before the Financial Services Committee, the
owner of a small bank from Illinois noted about Dodd/Frank that “each new
regulation adds another layer of complexity and cost of doing business. [It] has
stimulated an environment of uncertainty, and has added new risks that will
inevitably translate into fewer loans to small businesses.”
The coming fiscal cliff is like a huge iron safe waiting
to fall on America’s head at the end of this year. Yet the president invites it
in the name of raising taxes on those who earn above $200,000.
The results are everywhere obvious — the economy scutters
along at the bottom of the growth chart. Millions cannot find jobs. The ranks
of food-stamp, welfare, and disability recipients swell. Trillion-dollar
deficits degrade our bond rating.
Mr. Obama would like to see all of the unemployed get
government jobs. That’s not an insult; it’s the truth. Repeatedly, the
president and Mrs. Obama have counseled young people to reject the “formulas
for success” that our culture “peddles” and to disdain the “brass ring” and the
“corner office.” Speaking to graduates at Arizona State in 2009, Mr. Obama
disdained this course, declaring that for “far too long” we’ve been told that
“through material possessions — through a ruthless competition pursued only on
your own behalf — that’s how you will measure success. . . . It displays a
poverty of ambition.”
That caricature of capitalism — “ruthless competition
pursued only on your own behalf” — is truly what Obama believes. It’s the sort
of juvenile critique that anyone who has taken Economics 101 or read a word of
Adam Smith has moved beyond. Even most liberal Democrats understand that the
private sector provides the money that government then redistributes. But Obama
doesn’t seem ever to consider where the money comes from. He just fervently believes
that everything noble, selfless, and worthy trickles down to ordinary people
from the beneficent hand of government. Striving to build and create on your
own is “ruthless.”
In 1993, former senator George McGovern, once considered
the most liberal of Democratic candidates for president, wrote a piece about
his experience attempting to run a small bed-and-breakfast in Connecticut. The
red tape required by government severely hampered his capacity to earn a
profit. He wished in retrospect that “I had known more firsthand about the
concerns and problems of American businesspeople while I was a U.S. senator and
later a presidential nominee. That knowledge would have made me a better
legislator and a more worthy aspirant to the White House.”
It took Obama to make George McGovern look like a
conservative.
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