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 essential 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 jobs act and other legislation, the tax incentives are temporary, while the tax increases are permanent.
The Heritage Foundation estimates that the burden of regulation under Obama is five times what it was under George W. Bush. The yearly cost of regulatory compliance was $8.1 billion under Bush. It's $46 billion under Obama.
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 enormous discretion in federal bureaucrats 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, a small banker 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 a like a huge 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 obvious everywhere -- the economy scutters along at the bottom of the growth graph. Millions cannot find jobs. The ranks of food stamp, welfare and disability recipients swell. Trillion dollar deficits degrade our bond rating.
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 Michelle 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, 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 in. 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 hands of government. Striving to build and create on your own is "ruthless."
In 1993, former Sen. 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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