WASHINGTON — No matter what President Obama said about the state of our union Tuesday night, the economy’s prognosis is not good.
Who says so? A hefty majority of the American people in a new Washington Post/ABC News poll that sought their opinion about the economy’s health. Roughly six in 10 said it was “not so good” or “poor.”
Six years into Obama’s painfully slow recovery, jobs are hard to come by in many parts of the country and wages remain flat. Hourly earnings actually fell last month, the U.S. Labor Department reported last week.
It’s gotten so bad that Obama’s own secretary of labor, Thomas Perez, publicly complained that the administration needed to get busy to “address the business of stubbornly low real wage growth.”
Life has gotten much worse under Obama’s presidency for many others we don’t hear much about on the nightly news. A recent study by the Southern Education Foundation said that for the first time in half a century, a majority (51 percent) of public school students are living beneath the poverty income line.
Forget those bogus employment rate numbers that the administration keeps pulling out of a hat. When you dig down deep into the state-by-state jobs data, nearly half the states, plus the District of Columbia, still have high jobless rates between 6 and 7.4 percent. We’re a long way from full employment in much of the country.
Which brings us to Obama’s incomprehensible solution to all of this: Raise taxes on business investors and other upper-income Americans, plus the banks and big financial institutions, who are, after all, employers and the people who provide the capital for new start-up businesses that in turn create the jobs.
He would boost the tax on capital gains and dividends to 28 percent, which would stymie job-creating investment in an economy that desperately needs a great deal more capital to bankroll new business expansion.
Obama also wants Congress to hike the tax rate on the estates of older, wealthier people when that tax is already at 40 percent.
In a nutshell, he’s proposing that we raise taxes on the job creators to the tune of $320 billion (about one-third of trillion dollars) in an anemic economy that isn’t out of the woods yet — not by a long shot.
He would use the money to finance a new bunch of big-spending giveaway programs for a beleaguered middle class and low-income people. Among his new entitlement proposals: free tuition at community colleges, and new federal requirements for employers to broaden retirement plans for full- and part-time workers.
Businesses are presently facing much higher employee costs under Obamacare that have forced them to reduce their payrolls. Now he wants to impose more regulations on them, in addition to a higher minimum wage, mandated health benefits, mandatory sick leave and six weeks of paid parental leave.
If this sounds like the socialist, cradle-to-grave, welfare-state economies of Europe, that’s precisely his dream. Of course, Europe, as a result, is in a recession and suffers from persistently high unemployment, but he doesn’t seem to make the connection.
Middle- to low-income Americans and struggling small businesses do not need more government programs. They need higher incomes and better-paying jobs, both of which have been in short supply under his administration.
“This is not a serious proposal,” says Brendan Buck, chief spokesman for the tax-writing House Ways and Means Committee, chaired by Wisconsin Rep. Paul Ryan, who is preparing legislation to overhaul the tax code and lower the rates to spur economic expansion, investment and job growth.
“We lift families up and grow the economy with a simpler, flatter tax code, not big tax increases to pay for more Washington spending,” says Buck.
Obama argues that America is rich enough to afford all of his programs and that the economy has recovered enough to pay for them.
“But that’s a fib,” says University of Maryland business economist Peter Morici. “Since the recovery began, GDP (the economy’s growth rate) has averaged a mere 2.3 percent a year — that’s about half what Ronald Reagan accomplished climbing out of a recession of comparable depth.”
Reagan cut tax rates across the board in his first term and the economy came soaring out of its recession in two years, with stunning quarterly growth rates between 5.4 and 8.5 percent in his fourth year. We had a referendum on his policies in the 1984 election. He carried 49 states.
None of Obama’s proposals are going anywhere in the Republican Congress, and for good reason. They would kill job creation and cripple economic growth.
GOP leaders are already at work on their own agenda, and economic growth and jobs are at the top of their list.
First and foremost is tax reform to cleanse the tax code of corporate welfare and loopholes — using the increased revenue to lower the tax rates for both corporations and individuals.
Obama has given lip service to tax reform, but hasn’t led on the issue, except to focus solely on corporate tax reform — demanding that some of the revenue be spent on infrastructure projects.
Utah Sen. Orrin Hatch, the Senate Finance Committee chairman, wants to cut both corporate and individual rates — building on the sweeping reforms being worked on in the House.
“Addressing both will allow America’s businesses to expand and create millions of new jobs,” says former Rep. David McIntosh, who is the new chairman of the politically influential Club For Growth.
But in a recent letter applauding the GOP’s House and Senate leaders, he urged that “tax reform should stand on its own and not include extraneous new spending.”
This, along with expanding trade and other pro-growth initiatives, will dominate the new Congress’ work this year. The only obstacle to getting the U.S. economy running at full throttle again is Barack Obama.