Tag Archives: cap and trade

Chris Banescu “The Assault on American Business”

The message from Washington is clear and getting louder by the day. If you run a successful business you face excessive government regulations and higher levels of taxation for years to come. The more productive and profitable you become, the more you will be forced to pay for the privilege of operating in this country. This threat is real and it appears that many companies and business owners are taking steps to protect themselves.

President Obama’s anti-business and anti-competitive campaign messages made executives and business owners apprehensive ahead of the January 2009 presidential inauguration and the Democrats obtaining control of Congress. Coming in the midst of one of the worst financial crisis and economic recessions in recent memory these promises had predictable results: businesses aggressively cut expenses, decreased their capital expenditures, drastically reduced their payrolls, and hunkered down to weather the current crisis and deal with the long-term consequences of punitive government actions.

What are the messages that businesses have been receiving from Obama and a vast majority of the Democrats in Washington even before the November 2008 elections?

  • We will raise your income taxes.
  • We will raise your capital gains and dividends taxes.
  • We will increase regulations and impose further restrictions on your economic activities and personal freedoms.
  • We will take over the private heath care system, dictate coverage and prices, and add a permanent surtax on upper-income individuals and businesses to pay for it all.
  • We will tax your carbon dioxide emissions and force you to justify your energy consumption.
  • We will dramatically increase energy and raw material prices via a convoluted and oppressive cap and trade tax and regulate scheme.
  • We will radically expand government deficit spending and bureaucracy.
  • We will add trillions of dollars to the national debt and virtually guarantee very high inflation, drastic weakening of the US dollar, diminished prospects of new jobs creation, and reduced economic activity for the foreseeable future.

Five Threats

There are at least five different specific promises and initiatives from the current administration that threaten the future competitiveness and success of American businesses and the prosperity of individuals who dare to succeed and earn more. These combined threats have played an important part in further depressing economic activity in the US and signaling to all company owners to remain defensive and cautious in the face of a business unfriendly political environment at least through the end of Obama’s term (only one, we hope) in office.

Threat #1 – Higher Income Taxes
Beginning with 2011 the Obama administration promises to raise income taxes on married couples earning more than $250,000/year and singles earning more than $200,000/year. This would mean that the two highest federal income tax rates will rise from 33% and 35%, to 36% and 39.6%, respectively. Furthermore, the White House seeks to phase out the personal exemptions and limit deductions allowed for these taxpayers. Many businesses are usually started and run by families and individuals with gross incomes in those ranges. This guaranteed 9% to 13% tax increase (likely much higher due to tax exemptions limits and planned healthcare surtaxes) on their yearly incomes will reduce cash flowing into the economy (via investments or purchases) and seriously hinder economic growth.

Threat #2 – Higher Capital Gains Taxes
President Obama also pledged to raise capital gains and dividends taxes from the current 15% to 20% starting in 2011. This represents a 33% tax increase on all businesses and individuals who realize a capital gain on the sale of stock, real estate, or other assets, and those that receive qualified dividends from stocks in their personal portfolios, retirement accounts, or pension funds. This enormous tax increase will punish not only the highest income earners, but all hard-working taxpayers and retirees.

Threat #3 – Government-Run Health Care/Socialized Medicine
The current administration is actively working to create a government-run health care system that will cost approximately $1.6 trillion over 10 years, as reported by the Congressional Budget Office, and will only remove “16 million from the 46 million uninsured.”

The Wall Street Journal reports that House Democrats want to implement a package of surtaxes from 1% to 3% on all families making $350,000 or more in order to raise an additional $540 billion in taxes over the next decade. So any small to medium-sized business earning at least $250,000 or more will see its tax rate increase from 35% now, to 39.6% to 42.6% come 2011, and possibly as high as 44.6% in 2013 when these health-care surtax rates are scheduled to rise to 2-5%. These business owners can now look forward to a massive 13.1% to 27.4% tax increase on their earnings.

Furthermore, Investor’s Business Daily details that the latest Senate version of this plan would include “a $750-per-worker ‘annual fee,’ $375 for part-time workers on companies with more than 25 employees that do not offer coverage to employees.” This represents yet another additional tax on small businesses. As the IBD article correctly points out, “if you’re a small business seeking to expand beyond 25 workers, you have quite a bit to think about. That’s sure going to help job growth.”

Threat #4 – Cap and Trade, Significantly Higher Energy Prices
Another fiasco in the making is President Obama’s obsession with reducing and regulating carbon dioxide emissions by businesses and individuals, despite the solid research and objections of thousands of scientists that attest that carbon dioxide (CO2 is only 0.037% of the earth’s atmosphere) is not a pollutant and does not contribute to global warming or “climate change” of any kind. Dubbed “Cap and Trade” this legislation threatens to bring about enormous government regulation and taxation of energy production and usage across every single industry in the US.

A recent Investor’s Business Daily article outlines the inevitable consequences of such an intrusive scheme:

A major reshaping of our nation’s energy policy will include massive new taxes, mostly on businesses, and cause our economy to crater. Most depressingly, despite taxing businesses and consumers to the hilt, the Waxman-Markey climate stabilization act will not remove one ounce of carbon from our atmosphere over the next decade.

Waxman-Markey is nothing but a huge scam that will bankrupt any business that relies heavily on energy, boosting fuel prices by 22 cents a gallon and socking the average family with an $1,800 a year tax hike.

Threat #5 – Runaway Government Spending, High Inflation and Weakened Dollar
The countless government bailouts of bankrupt financial institutions and many incompetently managed companies, runaway borrowing and spending by the federal government (currently running $1 trillion yearly deficits, for at least another 10 years), and warnings from China, Russia, and India who are rapidly losing confidence in the US dollar and are threatening to dump it, are setting the stage for future hyper-inflation; another potential tsunami of financial devastation for all Americans. Under such conditions companies will continue to be increasingly risk-adverse, be very stingy with their cash reserves, steer clear of US-based capital expenditures that require a long-term financial commitment, and remain guarded with any expansion and hiring plans that would unnecessarily endanger the enterprise in the event of high inflation rates.

Staying the Course on Anti-Business Initiatives
Obama’s current anti-free market initiatives have been consistent from the beginning of his candidacy and throughout his first six months in office, and he’s aggressively making good on his promises with legislation that’s implementing them. Businesses understand what is happening and have tried to make adjustments. Like a living organism that has been attacked (imagine an octopus that’s drawing its tentacles closer to its body to protect itself from an intruder or another predator) business has contracted and retreated to avoid disaster and survive. Company owners and managers have taken on a defensive stance to deal with the worsening economic downturn and the coming higher taxes, increased regulations, and future hostile economic environments they will face even when the current recession subsides.

Consequences for the US Economy
The consequences of business activities contraction worsened by Obama’s multiple threats are devastating. Economy activity reduction, as measured by GDP numbers, reached -6.3% in the fourth quarter of 2008 and -5.5 % for the first quarter of 2009. Our economy has shrunk significantly in the last 9 months and the US unemployment rate has peaked at 9.5% as of June 2009. Since January of this year 2.7 million private sectors jobs have been lost, despite the so-called $787 billion “stimulus” plan that was supposed to keep unemployment rates below 8%. To date only $43 billion of this “stimulus” act has actually been infused back into the $14 trillion US economy; a miniscule and insignificant drop in a huge bucket that most likely did little to help an economic recovery. Yet President Obama insists that it “has worked as intended.”

Investor’s Business Daily reveals yet more alarming statistics regarding the US economy:

Shrinking GDP has crushed investment. First quarter gross private domestic investment — a proxy for business investment — plunged 20%, or nearly $450 billion, annually. The outlook is grim.

Worse, the June jobs data mark a milestone of sorts: Our unemployment rate equals that of the no-growth Eurozone nations.

What the Future Holds
As far as the eye can see President Obama and the Democrats are preparing to implement multiple significant tax increases, layer upon layer of new government regulations and restrictions on business activities, and massive and wasteful government borrowing and spending for at least the next decade. There is nothing coming out of this White House that would signal to American businesses that it is willing to change course and let the private sector – the only real engine of value and job creation in a free-market economy – do its job and bring our country out of this recession. The assaults on American business and entrepreneurship continue unabated and the negative consequences of these actions are already rippling through our economy and impacting our lives. Things are getting worse not better! At a time when a normal recessionary cycle should be coming to an end and the economy should be stabilizing and begin recovering, US business activity continues to contract, with hundreds of thousands of jobs (467,000 lost in June 2009) still being lost every month. We’re heading down a dangerous path that will virtually guarantee reduced long-term economic growth, higher unemployment and inflation rates, lowered living standards, and an erosion of our individual freedoms and liberties for the foreseeable future.

Karl Rove article about the Health Reform

As some of you might know, Karl Rove was the senior adviser and deputy chief of staff to President George W. Bush from 2000–2007 and Deputy Chief of Staff from 2004–2007. At the White House he oversaw the Offices of Strategic Initiatives, Political Affairs, Public Liaison, and Intergovernmental Affairs and was Deputy Chief of Staff for Policy, coordinating the White House policy making process.

Before Karl became known as “The Architect” of President Bush’s 2000 and 2004 campaigns, he was president of Karl Rove + Company, an Austin-based public affairs firm that worked for Republican candidates, nonpartisan causes, and nonprofit groups. His clients included over 75 Republican U.S. Senate, Congressional and gubernatorial candidates in 24 states, as well as the Moderate Party of Sweden.

Karl writes a weekly op-ed for The Wall Street Journal, is a Newsweek columnist and is now writing a book to be published by Simon & Schuster. Email the author at Karl@Rove.com or visit him on the web at Rove.com.

Or, you can send him a Tweet @karlrove.

Here is his article from August 5th, 2009:

Americans are now seeing the damage that polls and focus groups can inflict on White House decision-making. President Barack Obama is no longer shaping the public dialogue on health-care reform. Instead, he is losing control of his agenda and resorting to rhetorical tricks and evasions.

Every administration has to take into account public opinion. Without doing so, Abraham Lincoln said, little can be achieved. But too much polling doesn’t raise presidential vision. It narrows and pulls it down. Substituting a weekly dose of opinion surveys for thoughtful consideration is causing White House aides to find new scapegoats whenever administration policy initiatives get into trouble.

We see this on health-care reform, which the president’s pollsters told him—six months into the debate—he must instead call “health insurance reform,” a phrase he repeated five times in his prime-time news conference and at least 20 times in five days of appearances since.

The problem is many Americans remember Mr. Obama started his health-care push by focusing on covering the uninsured and reducing costs, not knocking insurance companies upside the head.

Public support for his plans shrank when Americans saw the trillion-dollar-plus price tag, recoiled from the intrusive expansion of government into patient-doctor decisions, and came to understand the plan was financed in part by huge cuts in Medicare and large tax increases.

So, after running into heavy opposition among Congressional Democrats and growing public hostility to his plan, Mr. Obama has now recast the debate as an attack on insurance companies, with the president serving as savager-in-chief. This would be more credible if he hadn’t surrounded himself with insurance CEOs and lobbyists when he kicked off his effort in March.

The corrosive effect of basing policy decisions on polls also could be seen in White House handling of the refusals on Sunday of Treasury Secretary Timothy Geithner and National Economic Council Director Larry Summers to rule out middle-class tax increases. They got disciplined Monday by Press Secretary Robert Gibbs, who said they’d “allowed themselves to get into a little bit of hypothetical back and forth.”

This dispute pits the economic team against the campaign team. The economic team awakens each day worried about reconciling two irreconcilable realities: The administration’s budget calls for huge, sustained new government spending, which threatens giant budget deficits. Being liberals, the economic team is inclined to raise taxes, not cut spending.

The campaign team is intent upon protecting a pledge driven by its 2008 campaign polls: Mr. Obama promised never to raise taxes on anyone making less than $250,000 a year to avoid being labeled a tax-and-spend liberal.

Even so, Mr. Obama has already broken his no-new-taxes pledge. On Feb. 4, Mr. Obama signed a $33 billion cigarette tax increase, which fell disproportionately on lower- and middle-income individuals. And the “cap and trade” energy bill, approved by the House on June 26, is a tax on anyone who owns a light switch, uses a car key, or has bought anything manufactured, shipped or sold in the U.S.

The House version of Mr. Obama’s health-care—excuse me, “health-insurance”—reform already has four taxes that will largely be paid by people making less than $250,000 a year. There’s $8.2 billion in taxes for using health savings accounts and other tax-free medical savings vehicles to purchase over-the-counter drugs. There’s an 8% tax on employers who don’t offer insurance: The Congressional Budget Office says workers in those businesses would pay the $163 billion cost via lost wages.

There’s a 2.5% “Tax on Individuals Without Acceptable Health Care Coverage” in the House bill that applies to people who either don’t have insurance or whose policies the government deems inadequate. Finally, there’s a $2 billion “Comparative Effectiveness Research Tax” on all private and “public option” insurance policies.

If some version of ObamaCare is passed, the president will break his tax pledge several more times while adding trillions to the deficit, dismantling the best elements of our health-care system and slashing Medicare by hundreds of billions of dollars.

There are no polling data or focus groups on earth that can help Mr. Obama out of this jam. He has set in motion events he appears unable to control and commitments he cannot keep. Great communicators succeed when the ideas they are communicating are sound. Tax-and-spend liberalism doesn’t work, no matter how pretty its package.

Every Wednesday night senior Obama aides gather for two hours to review the latest polling and focus-group data to develop that packaging. These White House sessions haven’t elevated the quality of Team Obama’s discourse. They have made it incoherent.