Two years ago, in the wake of Barack Obama’s historic victory, I offered some unsolicited economic advice to our President-elect on the off-chance that he might be a reader of this august journal. Let’s see whether he’s listening:
Dear Mr. President-Elect,
In no particular order:
1. You want to raise the capital gains tax. Don’t. Do not. Not even a teensy tiny little bit. Ignore the hootin’ and hollerin’ about selling out to “Wall Street” or “Big Business” or “The Man” that would undoubtedly ensue from some of your backers. Higher capital taxes encourage capital flight, i.e., investment dollars would fly overseas.
Next year, the current capital gains tax rates are due to expire and return to their pre-2003 levels. That means they’re going up, on average. There’s still time to fix this (by which I mean “keep these tax rates where they are now”), but somehow I doubt that’ll happen. Capital will fly away.
2. You want to give 95% of “working families” a tax cut, and raise taxes on the other 5%. Don’t. I mean, do, and don’t. Do give the 95% the tax cut, but leave the other 5% alone—especially since you’re planning to go after their capital gains, too.
President Obama still intends to keep the Bush tax cuts for that bottom 95% and make the top 5% of income-earners (aside, of course, from members of his Cabinet) pay their “fair share.” It’s still a mistake, and there’s still time to fix it and extend the current income tax schedule.
3. I don’t know what your energy plan was, because by the time you got to it in the debates I flipped over to the cartoon channel. Anyways, permit more domestic oil drilling and fire up more nuclear reactors.
President Obama has called for more nuclear power plants, which is good, but not as good as, say, actually getting them built. Let’s get cracking.
Re oil. The BP oil spill has made President Obama hesitate to permit much offshore drilling (and perhaps to accept so much money from BP?)–even though the moratorium was lifted a few weeks ago, the administration has been slow-walking drilling permits in both deep and shallow waters. I realize that in the wake of the oil spill, it’s not exactly popular to say “Drill, baby, drill.” But I still think offshore drilling is a good idea and needs to be expanded–assuming we hold the oil companies responsible for damages, and allow the people with the ability to clean up any potential mess to get in there and get the job done instead of delaying them for weeks because (A) they can only make the water 99% clean instead of a bazillionty percent clean, or (B) they’re foreign.
4. Keep your promise of a “net spending cut.” There was some talk in your campaign of reducing federal tax revenues to around 18 percent of GDP. That’s fine, as long as the federal tax spending is around 18 percent of GDP also.
Um… 18% is downwards, Mr. President.
5. This one isn’t advice so much as it is a warning. Even if you try to make the tax code more “progressive” (i.e., the richer pay higher tax rates), some imbecile will nonetheless scream at you for being a shill for the rich. Why? Raising the marginalrates on the rich may increase the percentage of total tax revenues paid by the poor. Why? Because when the rich hear that the government intends to raise their income taxes and their capital gains taxes and their Social Security/Medicare taxes, they’ll become less productive, and there’s less income and wealth to tax. Atlas may very well shrug.
This warning still stands, especially in light of items 1 and 2 above. And since a few meek words of warning from this humble blog have failed to sway you (never having heard of me is no excuse), please allow next Tuesday’s election returns and Ayn Rand’s Amazon.com rankings to do so.
6. Maintain every free trade agreement we have, and sign as many more as possible.
Despite some anti-free-trade rhetoric during the campaign and earlier in his administration (before anybody starts to defend his “fair trade” stance, please stand warned that you may as well claim that the Earth is flat or that Santa Claus sired the Easter Bunny by the Tooth Fairy), President Obama has pushed for freer trade with Colombia, Panama, and South Korea. This is a promising start, and hopefully he won’t screw up NAFTA or our other FTAs.
7. Announce that pennies now count as nickels, and then slowly take them out of circulation, replacing them with real nickels. Put Lincoln on new dollar coins the size of the old Ike dollars. Also, start printing $500 bills again. I am not a crackpot.
My jar of pennies keeps getting fuller, I don’t see any Lincoln dollars, and I’m still waiting on the contest to replace McKinley on the $500. What’s the holdup?
8. Tell Bernanke to stop watching the Dow Jones and to do his damn job, which is to keep the dollar stable.
Erm… I’m not really sure that this is an improvement. A bit of deflation in 2009, a little inflation in 2010…
9. Abolish the concept of “off-budget” revenues and expenditures. Every dollar spent should appear in the budget, regardless of source and regardless of destination.
Still waiting on this one.
10. Push for my proposal to key congressional salaries to the size of the budget surplus (assuming you’ve implemented #9).
This’ll never happen. I think Congress would go for it, but voters probably wouldn’t because gosh darn it, congressmen should eliminate the deficit and reduce the national debt because it’s the right thing to do and not because of the seven- or eight-figure salary they’d get paid under my proposal.
There’s still time, Mr. President–maybe not to save your buddies in Congress, but to save your own hide in 2012. I had to pay twice as much for an Obama yard sign as I paid for one of McCain’s, the least you could do is everything I say.