Back in 2008, Democratic President hopeful Barack Obama fielded criticisms for the tax plans he proposed for the American people if he got elected. They were deemed ‘socialist’ by his Republican rivals. Today, President Obama faces stark criticism of the very same tax policies from not only his political rivals but also from various other sections of the society. In fact, America’s first black President has been given the dubious honor of deliberately orchestrating what may well be a second Great Depression, matching the devastating downturn of 1929.
The Need of the Hour
As America struggles to get back to its feet after the recession, what is required is a conducive environment to encourage industrial growth. At present, unemployment rate continues to hover at around 10%, housing and real estate segment activity continues to remain low key and the investors are choosing to display more caution than ever before.
The Democratic government has come under fire for its contribution to keeping the economic growth subdued. Many of President Obama’s policies have been criticized for exacerbating the bad economic conditions rather than improving things. Here are a few of his proposed and implemented economic policies and beliefs that have drawn the ire of many people.
**Update 11/7/12: If you think new items should be included in the list please post a reply below with your recommendations and I will update it accordingly.
Navigation Menu of the Top 6 Ways That Obama is Ruining Our Economy
1. More Government Spending Means More Growth
2. Increased Taxes
3. The American Public Will be Encouraged to Start Saving Once More by These Policies
4. Cap and Trade Policy will Make American Businesses More Eco Friendly and Sustainable
5. More Support from Employers Towards National Health Schemes to Help Employees
6. Increase Productivity by Diverting Capable Workers Out of Non Profit Work
The President is a firm believer that increased government spending is the panacea to America’s recession woes. This logic is flawed in two very obvious ways:
More spending means that the stakes are becoming higher in the economy and businesses will have to compete with the government for resources, which may just starve them out of business.
Greater government spending is facilitated by increased taxes from the general public and businesses. Additional tax burden can in no way contribute to growth, expansion or innovation in any economy.
The President has been taking great pains to reassure that it will be only the rich who will be affected by the higher tax policy. This means that the rich will be cushioning the poorer Americans from the worst of the economic crisis by means of providing the funds to lead America into prosperity.
However, critics argue that increasing taxes during recessive times is a sure shot way of ensuring that the economy takes a nosedive into a depressive state. What is really needed now is to alleviate the tax burden so that businesses and individuals alike can regain the ability to build up lost resources. It is this policy that can help rekindle business investment and allow small investors to begin saving again.
The President’s stand on increasing capital gains has also come under fire. Critics point to the obvious fact that the higher capital gains tax translates into less funds for entrepreneurs and business houses to invest in expansion. This will cause the businesses to stagnate and they will stop growing.
The President believes that his tax increases will boost economic growth, which in turn will improve the overall conditions and the standard of living of all Americans. However, the truth may well be quite the opposite. The increased payroll taxes, capital gains, re-establishment of estate taxes and other hikes will impose such heavy burden on the public that standard of living will see a steady decline in the coming years for the lack of spare cash to spend on comforts.
On the contrary, the savings capacity will dramatically reduce as a result of these policies. For instance, the rise in capital gains tax will discourage the people from investing in assets. This will deal a huge blow to the already subdued housing market.
Death taxes will result in people preferring to die ‘penniless’, in a manner of speaking, rather than have survivors pay up huge taxes on property and assets.
Greater payroll taxes will discourage two income families from continuing to earn more only to pay more to the government. Households that contribute more to the nation’s productivity with both husband and wife working will in effect be penalized with higher taxes.
Under this policy, companies that exceed the carbon emission limits will have to purchase permits. The President may have the right ideas on the environmental front but where financial sustainability or feasibility is concerned, the cap and trade policy is doomed to failure.
While companies may toe the line and buy the permits, they are not likely to allow the increased costs to dent their profits. The costs will be passed on to the consumers. Analysts predict a hike in price of gasoline and electricity, both of which will significantly affect the spending power of the common man. And contrary to the President’s euphemistic expectations, it is not just the ‘rich’ American who will bear the brunt of this policy.
As employers face increased burden from national health scheme contribution for their employees, the employment situation is far from likely to improve. The increased costs of expanding the employee base will need to be justified by the productivity that can be derived out of it.
If the increase in productivity does not justify costs, the current unemployment levels, which are already quite alarming, will at best, continue and at worst, the rate will go beyond the current 10% level. With a significant percentage of Americans continuing to be unemployed, any growth in the economy is bound to be severely restricted.
The President appears to have a special aversion to non profit or charitable institutions. His policy was made clear even in a much earlier speech. Back then he spoke of how capable workers must devote themselves to working in core businesses rather than diverting their capabilities and efforts towards non profit organizations. Working for production oriented concerns will help boost the industrial activity in the country and propel the economy, he had then stated.
Obama’s focus on cutting tax breaks on charity, social causes and making charitable spending more expensive appears to be in line with his earlier thought. However, this could be dangerous for the economy, as the onus of such expenditure will then fall on the government itself. When this happens, funds earmarked for other developmental activities will be diverted to these ‘non productive’ causes.
As America continues to reel under what critics are calling the ‘blinkered approach’ to fiscal policies, there are an increasing number of Americans who are beginning to think that Barack Obama may prove to be the leader who led the nation to the beginning of its end as a ‘super power’. With a shaky economy and weakening dollar, does America’s only hope for economic recovery lie in a change of governance?