The Long Road to Recovery: Obama’s Miscues

To expect a strong recovery following this deep recession will be wishful thinking. Most likely the recovery will be slow and painful as we battle through harsh times and this is why. The way the situation is being handled does not shine a positive light. The massive tax hikes and inflation are only making this situation worse. America needs a more coherent policy to take us back to a strong free market economy not the European style social-welfare state Obama is enforcing. We don’t need permanent government lifelines or universal healthcare. What we need is our taxes cut not raised. History teaches us that permanent tax rate cuts are most effective. The last time we were in this same situation was in the late 1970s when Jimmy Carter was in power, and we all know how that turned out. Double-digit inflation, 11% unemployment, and an inflated stock market. So how did we prosper and lead the U.S. to a quarter-century of growth? Well Regan instilled a new policy consisting of lower taxes, free trade, slower spending growth, and less intrusive government regulation. Regan said it best during his inauguration speech

“Government is not the solution to our problems; government is the problem.”

These new policies pulled us out of the rut and led to the booming 80s and 90s of America. The problem with Obama I find is that he is on an agenda to strip the rich and feed the poor, however where does that leave the Middle Class? If Obama wanted to help the Middle Class he would cut income taxes and get rid of capital gains taxes. Why? Well it’s a long topic but if you read my past article on Obama’s Tax Slip-Up, it will explain why increased Capital Gains hurts no one more than the middle class.

Immediate Help is on its Way…NOT

During the election when Barack Obama promised “immediate help” we thought times would change quickly. Unfortunately, this is not the case as six months since the stimulus was passed and less than 10% of the funds have been disbursed. So far we can score the stimulus as an expensive, tragic bust. Yes we have seen the Financials stabilize but not due to the stimulus. As of July, less than 9% of the stimulus had been handed out. To add to this we still have major problems on hand. Rising unemployment and a depleted housing market are the major concerns holding us back from any long-term recovery. For Obama, the smart decision would be to shift this left over money to revamp the infrastructure in America and create a formidable new green energy that can carry us throughout the next century. The administration and Congress are taking advantage of this crisis to promote expense big-government spending agenda. The Universal Health Care is a perfect example however those who read my recent article on HealthCare can see that the idea is slowly becoming less appealing. These trillion dollar deficits will only result in much higher income and payroll taxes sending us closer and closer to European Socialism. All we are doing right now is delaying the process, back loading taxes for the next generation, my generation to pay for. Just look at long-term interest rates as an example. Despite the massive Fed purchases of long-term treasuries they still continually go up. I think that the government buying up assets is just crowding out other borrowers and adding greater risks of inflation. Is this really what we want?

Tune Back in next week for the second installment of this article, The Long Road to Recovery: Obama Needs a New Plan</strong>