Obama and the Economy

© 2010 Rick Adamson

By Rick Adamson 9.22.10

I must admit that I am astonished at President Obama’s lack of understanding of economics and business. He seems to believe that he can (or should be able to) manage all things from the oval office.

His omnipotent personality causes him to get involved in things he has no business doing, e.g. his comments about not going to Las Vegas resulted in the cancellation of 400 conventions in the city according to Nevada Governor, what business is it of his whether a Mosque is built in Manhattan?, calling the police stupid for arresting a belligerent College professor, opposing Arizona’s new Immigration Law (before reading it), whereby people are just trying to protect themselves because the Feds will not.

He should just quit babbling and get out of the way.

He is currently acting out of desperation (due to the upcoming election) to do something (anything) to stimulate the economy. The problem is a lack of demand and he cannot do much about that domestic demand. He has proposed giving business additional write-offs for research and development and for purchased equipment. There is also a tax credit provision on the books for hiring employees.

These types of incentives will not work because businesses will not respond until there is a demand for their products or services. They will not hire people in order to get a tax credit if there is nothing for the employee to do. They will not buy equipment just to get the write-off if they do not need the equipment.

One way to stimulate demand is to encourage companies to export products. What about some incentives/tax breaks in this regard? This would allow business to be more competitive (reducing their selling prices) and result in more exports.

It should be noted that the countries with the best economies at the present time are exporting countries like China, India, Germany and Japan.

Stimulating demand domestically is very difficult and it probably will take a long time to recover because people have been so badly burned.

I think the best thing Mr. Obama could do is to reduce the uncertainly about government policy and let the private sector take care of itself. This could be done by making the Bush Tax cuts permanent, stop all talk about raising any taxes (cap and trade, taxes on companies operating outside of the country, eliminating the Bush Tax cuts and higher taxes on oil and gas companies).

Let’s eliminate as much uncertainly as possible and let the private sector move ahead.

Mr. Obama does not seem to understand that tax increases on companies do not hurt those companies because they just increase the price of their products. So, it forces the consumer to pay higher prices which further reduces demand. This is the opposite of what we now need.

I wish he would just get out of the way and let the economy recover naturally, because it cannot be done by Washington.