It's Worth Noting

You're right Mr. President, the election is over.

Of those gathered at the Blair House for Thursday’s healthcare summit, President Obama needed to be reminded more than any other that the election is over.  Obama has assumed since his victory that the same support he received on the campaign trail would carry over into his Presidency.  Obama forgot, however, that being a candidate for President and being President are not one in the same.  A candidate only needs to appeal to enough to win the majority of electoral college votes.  A President must appeal to the shifting will of the people as economic and political realities dictate.  Considering how Obama has dogmatically pursued his healthcare agenda in the face of the people’s rising opposition, it’s evident that Obama has failed to understand the important distinction between campaigning and governing.

Campaigning is easy compared to governing.  During a campaign, people can rally behind lofty ideas unhindered by political and economic constraints.  It’s a solutions utopia.  From how to handle North Korea, Iran and Afghanistan to closing Guantanamo and passing sweeping healthcare reform, Obama had the freedom to espouse idealistic solutions that differentiated himself from the competitors and lead to victory.  All of this happened during an election cycle that lacked dynamic political and economic constraints that are a reality today.  Afghanistan has proven more challenging than Obama thought.  Iran and North Korea are not as easy to deal with through diplomatic means as Obama assumed.  The promise of more and better healthcare for less money isn’t as appealing or convincing since Americans have had to grapple with the details.  Average Americans are looking for work and trying to avoid having their homes foreclosed, but our President is acting like it’s still 2008 and he’s at a rally energizing the base by saying the impossible can be done if we’re just willing to suspend belief and trust our elected representatives to do what’s best for us – like they always do.

When a President takes office, it’s imperative that he shift from campaigning to governing.  He must lead the whole nation, supporters and opposition alike.  He must adjust to the political and economic realities of the day, not bask in the utopia assumed during the election cycle.   Despite the quip to Senator McCain, Obama is the one who needs to acknowledge that the campaign is over and that the task before him is to govern.  The economy presents genuine constraints.  Americans are out of work, their wealth has been diminished and our national debts continue to mount.  Obama presses on, recommending a budget with a record deficit, new taxes and expansion of government programs.  The evolving political climate presents constraints too, which Obama must react to, not bulldoze through.  Average Americans are by every objective measure against sweeping healthcare reform.  Obama presses on.  Why?  The only conclusion one can draw is that Obama is committed to pursuing an agenda regardless of whether it’s still politically or economically feasible or desirable.  This is what you do when you’re trying to win, not trying to govern.

The country is in desperate need of a President who lives in reality, who is in touch with the lives and will of average Americans.  We do not need a President who assumes we’re ignorant if we disagree with him.  We do not need a President who is paternalistic, but one who is respectful.   Mr. President, the campaign debates, speeches and rallies are behind us.  This is 2010, not 2008, and the election is over.  Some of your ideas, which resonated with many on the campaign trail, are not tenable today.  When will you recognize this, adjust and truly govern?

Wealth redistribution - the second best option

Fresh off the State of Union address, I feel compelled to make a succinct argument against the Democrats' unwavering commitment to wealth redistribution.  Let's call wealth redistribution, via the tax system and the government spending that it affords, the second best option for improving the economic outlook for the lower and middle class.  I'm feeling generous.

So what's the best option?

Democrats continue to perpetuate an economic fallacy that supports their argument for wealth redistribution.  Put simply, they believe that the wealthy will only share their wealth with the lower and middle classes if forced to do so.  Therefore, the government must force them to share their wealth by taxing them more (through progressive business, income and inheritance taxes).  The government takes the tax money from the wealthy and redistributes it to the lower and middle classes through a combination of means including reduced taxes, government assistance and government jobs (whether directly or via contract).  This is wealth redistribution at work. 

Through observation, though not firsthand experience, I've found that the wealthy (let's just use Obama's threshold of $250k or more in income) have three options as to what they can do with their cash.  They're the same options all of us have: spend, give or save.  If the wealthy spend their money, even on private jets and outlandish third or forth homes, they create or maintain jobs for lower and middle income Americans (e.g. aircraft machinists and mechanics; framers and lawn care companies).  If they give it away, they redistribute wealth directly and voluntarily.  In either case, the wealthy put money into the hands of lower and middle classes but through means that are much more direct, efficient and productive, and have a greater multiplier effect, than comparable government spending or assistance.

Now let's tackle the slightly more difficult situation of when the wealthy save rather than spend or gift.  If they save, they either pump it into investments or stuff it into pillow cases.  If they invest, they create and maintain jobs for lower and middle income Americans by helping companies grow by providing access to additional capital (e.g. a start-up hires a sales team or a public company decides to open new stores).  Even if some of the wealthy only invest and never spend or gift during their lifetimes, at end of life they either leave their money to their family or give it away.  If they leave it to their family, second generations of wealthy people have proven very adept at spending all of their inheritance very quickly.  Problem solved.  If they gift it, while the benefit was admittedly postponed during their lifetime, assuming decent investment returns the impact may be even greater.

So, out of all of this we're left with one justification for the government forcing wealth redistribution via the tax system: a gripping fear that the wealthy will just hoard their cash in pillow cases and it will never get spent, gifted or invested because it gets lost or destroyed.  Seems ridiculous doesn't it?  Why not just make the system fair for everyone and let the spending, gifting and investing flow through the system naturally?  If you're scared of the pillow case scenario and believe it justifies wealth redistribution, I'd love to hear from you.