November 4 is getting close, and unless something dramatic happens it looks like Barack Hussein Obama, Jr. will become the next President of the United States. It’s a certainty he will have both a Democrat House of Representatives and a Democrat Senate. In a worst-case scenario (at least for those who treasure individual liberty and economic freedom), the Democrats will not only control the Senate, they will have the 60 votes they need to prevent Republican filibusters. It will not be pretty.
An unbridled Obama-Pelosi-Reid triumvirate will render the Republicans essentially useless, at the same time they render most Americans helpless. The more liberal legislators on the Republican side of the aisle (such as John “Democrat-lite†McCain) will no doubt cross that aisle to cooperate on legislation that appears to them to be only semi-socialist. The conservative Republicans (that is, the real Republicans) will vote “Nay†and spend their spare time writing books about the America that once was.
Whatever Obama wants he may very well get. In fact, he may likely get a few things from Pelosi and Reid he hadn’t dreamt up on his own, but it’s a safe bet that he’ll be unlikely to turn them down, regardless of how unwise they may be. Obama can also safely start taking calls again from William Ayers, Bernadine Dohrn, and Khalid al-Mansour. But he probably won’t invite Larry Sinclair to the White House for a reunion.
It will be a long two years before the November, 2010 mid-term elections, the earliest point at which the American people will get a chance to throw out any or all of their beloved Congressmen and one-third of their esteemed Senators. The likelihood of significant Democrat losses in 2010 is high – unless of course one believes the Obama plan to raise income and business taxes is a good antidote for an economy that hasn’t been as bad since the Carter Administration.
Jimmy Carter Redux and the Misery Index
Because the term is likely to resurface during the Obama years, Americans should be reminded that the “misery index†is the combination of the unemployment rate and the inflation rate. Former President Carter takes high honors in this category, taking it to the level of 20.76 in 1980. It’s no wonder Ronald Reagan beat Carter in the 1980 election .
For the record, the misery index averaged 7.80 under Bill Clinton. It averaged 7.89 under George W. Bush. Also for the record, it’s certainly going up. If Obama manages to get most of his proposed legislation passed into law, the misery index will go way up.
The Federal Reserve Board has done a handsome job of keeping the inflation rate low. The Fed’s continued insistence on low interest rates has, however, contributed to the sub-prime mortgage mess that caused the Wall Street melt-down of 2008. Had rates been higher, a fair number of those ill-advised loans of the last few years would not have been made.
The federal printing presses must now be set to high speed, to come up with the hundreds of billions of dollars needed for the Wall Street “bail out†that was pawned off as a “ Main Street †bail out. The more money that is printed, the higher the inflation. That is inescapable.
Obama is planning on generating more federal revenue through the following:
- Raising the top individual income tax bracket to 39.6%.
- Raising the capital gains tax from 15% to as much as 28%.
- Raising the dividends tax from 15% to 39.6%.
- Eliminating the wage cap on Social Security withholding taxes. (This is and additional 15.3% tax on all income over $97,000, and would be the largest tax increase in American history. )
- Possibly adding a 2-to-4% Social Security “surtax†on the top wage earners.
- Raising import tariffs on selected products to “protect†American businesses.
- Imposing an “anti-global poverty tax,†based on taxes on the rental value of land and natural resources, a royalty on energy production, fees for the commercial use of the oceans, fees for the airplane use of the skies, fees for the use of the electromagnetic spectrum, fees on foreign exchange transactions, and a tax on the carbon content of fuels.
- Windfall profits tax on oil companies.
It is unclear exactly what these taxes will add up to, but it will certainly be in the hundreds of billions of dollars annually. Still, it won’t be enough to fund all of Obama’s new spending programs, but he has to start somewhere.
Where the additional tax burden falls on individuals, it will mean that much less money spent in the American economy. Taking an extra $200 billion from paychecks, for example, will mean having $200 billion less to spend on “stuff.†Businesses will be selling $200 billion less “stuff.†Businesses will then have a pronounced excess of employees, and many of them will get the axe – primarily because Obama is barely willing to use a scalpel (his words) on the federal budget, while McCain offered to use a hatchet.
Where the additional tax burden falls on businesses, it will certainly mean higher prices on goods and services. Businesses will do their best to hold the line on price increases as long as they can, because their competitors will all be trying to do the same, but at some point there is no room to absorb more costs without going out of business. When that point is reached, prices will be increased. If businesses have to come up with $300 billion in taxes and fees, for example, they will raise prices by $300 billion (or lay off enough employees to save that amount).
Something’s got to give. And when the rich fat guy with the cigar spends $60,000 on taxes instead of a new Cadillac, it’s the guys who make and sell and fix the Cadillacs who lose their jobs – not the cigar-smoking fat guy. (He’ll probably still buy cigars, so some workers may be safe.)
It is inordinately clear that an Obama Administration will mean higher prices, higher inflation, business failures, and job losses. How bad will it get? That’s anybody’s guess, but no one should be surprised if tar and feathers are seen near the White House by the end of 2009.
Copyright 2008, Don Fredrick
A longer version of this article is available at http://www.colony14.net/
