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Obama has his own way of touting redistribution. Whenever he
uses the word “fair,” you can bet he’s fine exploring to redistribution. He
talks of everyone getting a “fair shake” and a “fair shot.” In his State of the
Union address in February, he insisted economic growth requires “everybody
doing their fair share.” In his inaugural speech in January, he said a free
market “only thrives when there are rules to ensure competition and fair play.”
When Dan Pfeiffer, a senior adviser to President Obama,
voiced at a Politico event last week, he was asked what would constitute
success in 2013 for the White House. One of his answers was making headway to
“rebalance our economy.” The goal, he said, is an economy that’s “not top
down.”
“He’s not a pro-saving, pro-wealth president,” says Douglas
Holtz-Eakin, the former director of the Congressional Budget Office. “So he can’t
be pro-growth.”
Like their boss, Obama aides often speak in euphemisms. So
here’s the translation: The Obama administration will continue to pursue
redistribution of wealth and income, taking from the well-to-do and giving to
the poor and middle class (at least to the lower middle class).
The most effective tool in spurring growth is private
investment. Obama may not like it, but major investors tend to be well off.
They have money to invest. Rather than encourage them to invest in growth and
jobs, Obama does the opposite. By raising their taxes and leaving a strong
impression he’d like to raise them even more, he discourages investment.
2014 or BustIn the fiscal cliff deal, Obama not only hiked
the top rate on individual income, he increased the tax rates on two incentives
to invest, capital gains and dividends. In addition, in Obama care, he imposed
a new tax specifically on investment income. In effect, Obama is waging a war
on investment.
The president has also endorsed entitlement reform. And at
the Politico gathering, Pfeiffer boasted about Obama’s endorsement of
“chained-CPI.” It would recalculate the rate of inflation and slightly restrain
annual cost-of-living adjustments in entitlements, notably Social Security.
“That is on the table and waiting for someone to come to take it,” Pfeiffer
said.
That deal might be worthwhile if chained-CPI would affect
entitlements significantly. It wouldn’t. Social Security and Medicare are
projected to spend more than $18 trillion over the next decade.
Obama’s own ideas for promoting growth indicate he’s a slow
learner. The recession ended in June 2009, yet the economy has struggled with
GDP growth averaging around 2 percent (only 0.4 percent in the fourth quarter
of 2012).
In the face of this, Obama is proposing to pour money into
roads, bridges, and other infrastructure. “There are few more important things
we can do to create jobs right now and strengthen our economy,” Sorry, but
there are many more important things. The roads and bridges panacea has never led
to robust growth. It didn’t when the president and Democrats made it part of
the $800 billion “stimulus” in 2009 and it’s unlikely to do so now. But it does
thrill a Democratic interest group, organized labour.