Fri, 27 Feb 2009 21:00:08 +0000 – By Liz PeekFinancial Columnist
As a candidate, Obama sought to portray himself as a pragmatist and centrist. That electability cloak vanished with the release of the 2010 fiscal budget.
Consider: in this country there are too many houses for sale, driving down prices, wealth, confidence and, finally, the economy.
One of the few bright lights on the horizon is a drop in mortgage rates and home prices, which together are beginning to entice buyers into the stricken industry and draw down inventories of unsold houses. Now imagine that the government decides to reverse this positive trend, and raise the price of homes. Does that seem like a good idea?
Similarly, President Obama is considering taxing employer-provided health care coverage -- a concept he repudiated during the campaign -- presumably to make health care more affordable. Does that make sense?
What about stemming the deductions available to those making charitable contributions? Americans gave over $300 billionto organizations helping the needy in 2007 (latest available) -- a mighty buttress against hardship for many families. Without a doubt those gifts will fall if the after-tax cost of donations is increased. Are we sure that such aid is better managed by bureaucrats?
The budget also sets forth a complicated program to fine corporations that emit pollutants into the air, which will raise utility (and all other) charges to low income (and all other) Americans, whom the government will then compensate by refunding the monies through tax credits. All these notions, and many more, ranging from the federal government taking over student lending to exerting more control over the healthcare industry, stem from President Obama's child-like confidence in Big Government.
Unlike someone who has worked in industry, and who has come to view Government as a source of obstacles and frustration, Obama's early career as a community organizer has led him to believe that only Government is capable of solving the country's problems. The truth lies somewhere in between, which has been the approach taken by recent administrations -- or those run by people old enough to remember the disappointments and inefficiencies of the Welfare State experiment.
President Obama is completely correct that the United States faces some serious challenges. We need to reduce the amount of imported oil we consume, we must raise the quality of our public schools and we have to create more jobs. These goals can be met by channeling the resources of this incredible nation into innovative solutions. Our corporate sector stands ready to respond to tax credits and incentives; instead, they will now be sucked dry to fund government-run programs.
The president's budget is long on ambition and short on details, which are largely left to Congress to sort out. Judging from the ruckus over the Stimulus Bill, we can only imagine the wrangling that will emerge when Congress has a shot at the trillions of dollars expected to flow into healthcare and education.
Like many Americans, I naively hoped that President Obama would bring a new, less combative tone to our government. I was optimistic that a more civilized Beltway could work on solving our biggest problems. I gave him the benefit of the doubt on the dreadful mess that became the Stimulus Bill, assuming that the pressing needs of the transition required him to relinquish the writing of that bill to his most partisan colleagues.
The budget squashes any lingering hope that Republicans and Democrats will find common ground. If anything, it lays the groundwork for even harsher political discord. What a shame.