Thursday, September 09, 2010

Obama's Last Ditch Economic Gimmick Before Election

President Obama rolls out a new spending bonanza in Ohio. Surprise! He's going to a swing state again. Unless there is a natural disaster somewhere else, the swing states are the only ones Obama is interested in visiting. Now it is to hawk his newest campaign gimmick in the lead-up to the mid-term elections, a spending bill to offer tax breaks to small businesses and lots of money for infrastructure work.

Why is it that only 2 months before a pivotal election for his political agenda does Obama decide that tax cuts are good for small business? It is because he sees the polls and is panicked? For all his GOP bashing and blaming the minority party for not jumping on board of his tragically flawed economic policies, the general public is not falling for his schtick. All of the traditional economic markers are down due to his failed original stimulus/spending legislation and yet now he continues to propose more money to throw down a hole.

Small business credits in the form of tax cuts should have been predominant in the original economic legislation of this administration. Instead, Team Obama failed to put two and two together, as they are all from the university and think tank worlds, not the job creating business world. Most small business owners pay taxes at the individual rate. Most small business owners are in the $250,000 and up range of tax brackets - the very ones denied a break by this administration, as they are pegged as "the rich". A small business owner filing taxes as an individual earning $250,000 or so is not going to take a leap of faith with this administration to hire more help or expand a business in inventory or equipment. This administration has shown its cards - they intend to tax and tax some more to continue class warfare and the small business owner be damned. Not to mention the uncertainty and unease that the upcoming costs of health care reform/scheme has produced for all businesses in this country.

From an article in The Washington Times which speaks to the blatant political gamesmanship of this spending bill proposal:

"He's just throwing it on the wall, hoping it will stick," said Sen. James M. Inhofe of Oklahoma, the ranking Republican on the Environment and Public Works Committee and generally a fan of road-building, who said Mr. Obama muffed this one. "The strongest supporter of infrastructure on the Republican side is me, and he's certainly not getting my vote."

The infrastructure re-vamping is a huge bone toss to the union members, a key faction of the Democratic base. He is hoping to get them excited enough to get out and vote for other Democrats in the mid-term elections. It's as simple as that. Why else wait so long into his first term for all this? His favorable numbers are in the tank, that is why, and Team Obama is concerned that Democrats will stay home in November. They are trying to fend off a complete tsunami by the GOP.

An article in USA Today points to a quote by an economist respected by both Democrats and Republican, Mark Zandi. Zandi was an advisor to the 2008 McCain presidential campaign and has advised Obama, too.

"I don't think they're game-changers," says Mark Zandi, chief economist at Moody's Analytics. "I don't think they're going to add up to a lot of new jobs."

Zandi says companies probably wouldn't ramp up spending to take advantage of the deduction until next year: "Most companies are going to sit back and make sure the business landscape is safe before they jump in."

No doubt Team Obama will pooh-pooh Zandi's prediction now.

And, one wonders what Team Obama, mostly Obama himself, thinks of former budget director Peter Orszag's opinion. He thinks the "Bush" tax cuts should remain in place, at least for the next two years. Perhaps there is a bit of tension between the two men. From The Wall Street Journal: In other words, Orszag would kick the problem down the road two years, so that at this time in 2012, Americans will again face the economic consequences of an imminent tax hike. Also in 2012, Obama will be seeking re-election. One begins to suspect Orszag would like to see his erstwhile boss lose.

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