Obamination: State of the Union: Investment?

In this installment on the STOTU we turn to growth and investment.  [Click this link for the Prepared Remarks.]

" To reduce barriers to growth and investment, I’ve ordered a review of government regulations. When we find rules that put an unnecessary burden on businesses, we will fix them. But I will not hesitate to create or enforce commonsense safeguards to protect the American people.  That’s what we’ve done in this country for more than a century. It’s why our food is safe to eat, our water is safe to drink, and our air is safe to breathe. It’s why we have speed limits and child labor laws.  It’s why last year, we put in place consumer protections against hidden fees and penalties by credit card companies, and new rules to prevent another financial crisis. And it’s why we passed reform that finally prevents the health insurance industry from exploiting patients."

    Common sense says that economic goods and services have prices, they are not free. Prices are set by the market; the balance of supply and demand, with fixed and variable costs as a lower limit.  Attempts to lower the price by fiat will result in reduced supply. Attempts to subsidize consumers who can't afford the goods will raise the price to everyone.  Third party payers are part of the problem, not part of the solution.   Reforming the insurance industry does not require 2700 pages of new legislation.  That is a power grab, not reform.

    Investment requires an economic surplus, and it involves risk. Everything that reduces real disposable income or artificially increases expenses reduces the potential for investment.  Increased taxation and inflation are counterproductive to investment. Everything that reduces consumer confidence or investor confidence or threatens economic stability and predictability decreases the potential for investment and risk taking. 

    A President who genuinely desires investment & growth would not seek to increase taxes, he would seek to make the "Bush tax cuts" permanent instead of extending them for two years.  He would not ban domestic oil exploration & production, instead he would increase leasing &  issuance of permits. He would not impose new costs on consumers by mandating purchase of health insurance.

"Now, the final step – a critical step – in winning the future is to make sure we aren’t buried under a mountain of debt.

We are living with a legacy of deficit-spending that began almost a decade ago. And in the wake of the financial crisis, some of that was necessary to keep credit flowing, save jobs, and put money in people’s pockets."

    Deficit spending did not originate by spontaneous generation nor did it begin in the last decade, it has been going on for much longer.  Money thrown down the stimulus & toxic asset toilets was wasted.  It was borrowed and must be repaid with interest.  We can not repay the principal, and when interest rates rise, we will drown in the interest burden which will rise like a flood.  Credit was not kept flowing, jobs were not saved and money was put in the wrong pockets.

"I recognize that some in this Chamber have already proposed deeper cuts, and I’m willing to eliminate whatever we can honestly afford to do without. But let’s make sure that we’re not doing it on the backs of our most vulnerable citizens.  And let’s make sure what we’re cutting is really excess weight. Cutting the deficit by gutting our investments in innovation and education is like lightening an overloaded airplane by removing its engine. It may feel like you’re flying high at first, but it won’t take long before you’ll feel the impact."

    A competent pilot does not take off with an overload. He knows the weight of his cargo & fuel, the capacity of his aircraft and the wind and weather conditions on his intended route; he calculates a margin of safety. 

"The bipartisan Fiscal Commission I created last year made this crystal clear. I don’t agree with all their proposals, but they made important progress. And their conclusion is that the only way to tackle our deficit is to cut excessive spending wherever we find it – in domestic spending, defense spending, health care spending, and spending through tax breaks and loopholes."

    "Excessive spending" can not be defined and measured. Social Security will soon be bankrupt. Obama Don't Care will drastically increase health care costs and  we are facing the threat of wars on three fronts at once. The first World War  was supposed to be the war to end all wars. We reduced our military capacity after it ended, so that the second Word War caught us unprepared.  In the age of missiles, we won't have time to make up the missing capacity.

"And if we truly care about our deficit, we simply cannot afford a permanent extension of the tax cuts for the wealthiest 2% of Americans. Before we take money away from our schools, or scholarships away from our students, we should ask millionaires to give up their tax break."

    That is class warfare at its worst. Obama is pandering to envy and greed. Investment does not come from strapped consumers who can barely meet their mortgage & utility obligations.  Investment comes from those who have more money than enough money to meet their basic needs. Punishing them with higher taxes will  result in decreased investment, the opposite of what Obama claims to want.

" So now is the time to act. Now is the time for both sides and both houses of Congress – Democrats and Republicans – to forge a principled compromise that gets the job done.  If we make the hard choices now to rein in our deficits, we can make the investments we need to win the future."

    Compromise does not get the job done. One side wants to administer poison, the other wants to administer therapy. Combining the two will not cure the patient.

" In the coming year, we will also work to rebuild people’s faith in the institution of government.  Because you deserve to know exactly how and where your tax dollars are being spent, you will be able to go to a website and get that information for the very first time in history. Because you deserve to know when your elected officials are meeting with lobbyists, I ask Congress to do what the White House has already done: put that information online.  And because the American people deserve to know that special interests aren’t larding up legislation with pet projects, both parties in Congress should know this: if a bill comes to my desk with earmarks inside, I will veto it."

    Anyone with any common sense knows that promise to be null & void. Free spending Democrats & RINOs are already conjuring up a clever replacement for earmarks.   In any case, they will find 'veto proof' or 'must pass' bills to hide them in.