Monday, March 9, 2009

The New Era of Statism

I have a question that I believe is on the minds of a lot of people. Since when did statism become so attractive? I bring this up in light of of the recent economic policy of the Obama administration. The bailouts under the Bush administration were folly. The extended bailouts with pet projects that are entirely unrelated to boosting growth and employment signed into law by the Obama administration were folly. The mortgage plan to cover the collective buttocks of millions of Americans who can't afford their mortgages rewards bad behavior. The continued bailout mentality for the financial, auto, and mortgage industries is not just misplaced, but incredibly counter-productive and yes, statist. The government is very good at creating new dependents, and that is exactly what it is doing with the bailouts, attaching the money it lends to preferred stocks and huge chunks of the company. That kind of behavior frightens current stock holders and future investors. With the flight of new and old investment those companies continue to hemorrhage, forcing the government to bailout their bailouts. And, in the big picture, government becomes the de facto controller of a massive part of the private sector (ie: the banks).

Here is the definition of statism as defined by oh so reliable wikipedia (I corrected some spelling mistakes):

Statism (or Etatism) is a term that may refer to any of the following:

1. Government having a major role in the the direction of the economy, both through state-owned enterprises and indirectly through the central planning of overall economy.

2. The "concentration of economic controls and planning in the hands of a highly centralized government."

3. The Fascist concept of statism which holds that "basic concept that sovereignty is vested not in the people but in the national state, and that all individuals and associations exist only to enhance the power, the prestige, and the well-being of the state. The fascist concept of statism repudiates individualism and exalts the nation as an organic body headed by the Supreme Leader and nurtured by unity, force, and discipline."
However, if all of the statist-leaning policies were not enough for you, charitable tax deductions will be significantly reduced or disallowed and the President and his administration aim to raise taxes during a recession, creating more unbalance by putting the most burden on the wealthy. You might think, "Well that doesn't affect me." Yes it does. First off, the tax increases on the wealthy are not going to cover the administration's new drive to overhaul the entire healthcare system and foster green energy with a cap and trade systems, so you can count on tax hikes hitting people who make anywhere upwards of $75,000 a year. In fact, there will be tax hikes all around, but Geithner and the Obama administration seem to think that the economy will be out of its "funk" by the time they actually take effect, which will be 2010 and 2011. However, they seem to forget that people react to these events prior to them happening. So, the announcement alone of tax hikes during this economic malaise is only exacerbating the crisis, as is evidenced by the continued downturn of all markets. Oh, and lest I forget, we will soon enter an age where more people do not pay taxes than those who do. That means that more people will feel entitled to government services without paying a single dime. Under the current Obama tax plan, there are a lot of breaks and rebates for people who do not pay taxes, and the lower income tax brackets will become smaller.

Just had to get that off my chest. Some of Obama's projects might even be good, or at the very least well-intentioned, but he needs to wake up and realize that now is not the time to overhaul the health care system or put a cap and trade policy into effect. Just like any family or individual, the government should not spend money it does not have. We got into this economic predicament by spending more than was in our means and taking on bigger loans than we should have. Explain to me Tim Geithner, Ben Bernanke, and President Obama how we are going to get out of this problem by doing the same thing that got us into it. All of these trillion dollar pump-priming initiatives and this $3.6 trillion budget are going to do is increase debt and the size of government, cause rampant inflation, and prolong the recession, perhaps turning it into a depression. It is also important to remember that the money that is being spent now does not yet exist. The government is spending money on expected revenue. But, how is it going to have this money to spend if it negates the incentives to earn it with higher taxes and cutting deductions? If you have a problem with it, raise your hand.

But this stupidity really is not surprising. I mean, since when did the government do a good job of managing anything? Why do we seem to think that having the government take over the financial sector and the health care system is going to make things better? Just look at the SEC, FDA, SSA, TSA and the Department of Homeland Security. Are those good examples of administration? Do we truly want the government to take over our lives even more, with it's track record? I think not.

1 comment:

squirrelyearl said...

Agree completely. I just don't get how he thinks he can get rid of the deficit, lower taxes, and increase services collectively. If he can pull that off without increasing everybody's taxes, I'll proclaim him supreme emperor because he must be a freaking magician.