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Government Work Cannot Restore Lasting Prosperity

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By BOB RAYNER

Media General News Service

Published: March 20, 2009

The financial crisis and the recession it spawned have created much confusion and uncertainty across the land. The causes of the downturn are hotly debated — and spun for political advantage. Solutions have, so far, remained elusive.

Perhaps we can gain a bit of clarity by identifying what did not cause the downturn.

We can, for instance, say with absolute certainty global warming did not spark the recession.

We also know that it was not triggered by problems in our health care system.

The economy did not falter because taxes on investors and businesses are too low.

The recession is not a result of too little federal spending. Nor was it caused by excessive production of oil and gas within our borders.

So at least a few Americans — especially those who have spent most of their careers creating jobs in the private sector — are wondering why President Barack Obama has responded to our immediate economic troubles with proposals to raise the cost of living for all consumers and businesses by capping carbon-based sources of energy.

A scheme that ultimately will destroy private-sector health care.

Massive tax increases that will hobble business owners and investors, who take risks, pay for innovation and create all the jobs — including the ones funded by taxes.

Unprecedented federal spending increases for everything, with the exception of national defense.

Reduced incentives to drill for oil and gas in the United States.

Seems more like a plan to keep economic growth low or nonexistent for a long time. Unless, of course, one buys into the dogma that free markets have been utterly discredited — pardon the pun — by the turmoil of the past year and that America's only hope lies with a handful of brilliant Washington insiders deciding what's best for us all.

That gets expensive and requires the federal government to take lots of money away from those famously greedy and foolish people who own businesses and buy stocks. Their era has passed, apparently.

The news media have been busy the past few weeks extolling the wonders of Obama's "stimulus" package. But a lot of people who have to make a payroll every week are starting to wonder why that bill offered almost nothing for entrepreneurs. And many of them are even more concerned about the president's long-term budget plans, which seem to treat businesses primarily as a source of government revenue.

One local entrepreneur, who wrote to me recently, said, "As I prepare to sign over a giant check to be largely wasted by the federal government, I'm thinking instead I should send a proposal to Obama's gang telling them how I would invest the money in building my own business — if I could be given permission to do so. Successful small businesses are always 'shovel ready.' It would put the most amount of money directly in the hands of those who have demonstrated — by the size of their tax bill — that they know how to build a business and create jobs."

Another Richmond, Va., business owner wrote, "It is mind-boggling that such profound seismic changes in America's economic system can be advanced and adopted without meaningful debate. As a society, we are asleep at the wheel. This is especially true of the news media. As 99 percent of the news is so shallow, few reporters are pointing out that we are dismantling our country's economic engine — the very system that created all the wealth we enjoy, the system that made us the world's leader, the system that has attracted so many people to America and inspired them to be American."

My brother, who is a local sales manager for a national company, reacted sharply to Treasury Secretary Timothy Geithner's description of the Obama budget as "a deep moral imperative to make our society more just" that will create "a fairer, more equitably shared tax burden on the vast majority of Americans."

He noted that "I don't cheat on my taxes. I work really hard in an incredibly competitive field that washes out people on a daily basis. I haven't figured out who I am screwing over. I think Obama believes that jobs, value creation and, therefore, tax revenue, just magically happen. He is getting ready to kill the golden goose. The president of the United States has never held a real job — and it shows."

Anecdotal evidence? Sure. But it suggests Obama's economic policies are meeting at least severe skepticism — and often fierce opposition — from business decision-makers who, contrary to stereotype, are not always lock-step Republicans.

Mostly, these are people who like to tend to business — and to the people who work for them. Obama may be convincing this influential and highly independent group that political action must become an essential part of the business model — which could create the first effective and organized opposition to the president outside of the increasingly energized Republican base.

Business owners who are concerned about global warming are probably more worried right now about staying in business. Those who believe the health care system needs serious reform — and I haven't met any who do not — must nevertheless be puzzled that the president has chosen this uncertain moment to inject even more uncertainty into a sector that accounts for nearly one-sixth of the economy.

Entrepreneurs and investors who remember the economic growth and roaring bull markets that followed cuts in capital gains taxes in 1981, 1997 and 2003 must wonder why President Obama does not.

We all recall the high gasoline prices that accompanied the beginning of this recession — as they have most recessions — so some of us are curious as to why the president wants to make it more expensive for Americans to produce more American energy.

Those who were paying close attention have not forgotten the huge increases in federal domestic spending that George W. Bush presided over. We're surprised President Obama wants to accelerate that failed policy.

But many of us, including stock market investors around the world, are mainly worried about the president's inability to focus on the principal task at hand — restoring growth to the American economy. It will take more than government work.

Contact Bob Rayner at 804- 649-6073 or brayner@timesdispatch.com.

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