Obama’s last chance on eco­nomic pol­icy?

The Washington Times Weekly - - Commentary - Tony Blankley

Pres­i­dent Obama’s post­La­bor Day “jobs” speech will be his last chance to launch an eco­nomic pol­icy with any chance of man­i­fest­ing its ef­fect — both eco­nomic and po­lit­i­cal — be­fore the Novem­ber 2012 elec­tions. He has three options. In or­der of de­scend­ing like­li­hood, they are: a timid hodge­podge of pre­vi­ous pro­pos­als, a bold left-of-cen­ter ini­tia­tive or a turn to a free-mar­ket “nu­clear op­tion.”

It’s that nu­clear op­tion that is the most fas­ci­nat­ing (and most un­likely).

He could de­cide to em­brace all the ma­jor Repub­li­can, Tea Party free-mar­ket ideas — mar­ginal busi­ness and per­sonal taxrate cuts (lead­ing to a net tax cut); big dis­cre­tionary spend­ing cuts to be im­ple­mented be­fore the 2012 elec­tion; gen­uine longterm re­duc­tions in Medi­care, Med­i­caid and So­cial Se­cu­rity costs writ­ten into law now; ma­jor dereg­u­la­tion, in­clud­ing En­vi­ron­men­tal Pro­tec­tion Agency rules, Dodd-Frank fi­nan­cial bur­dens and nan­nys­tate con­sumer reg­u­la­tions; un­lim­ited oil-and gas-drilling and shale-frack­ing au­tho­riza­tion; per­ma­nent ex­ten­sion of the George W. Bush tax cuts; re­peal of the dou­ble tax on Amer­i­can cor­po­ra­tions’ for­eign prof­its; lim­its on un­em­ploy­ment insurance ex­ten­sions; and with­drawal of his big union ini­tia­tives, such as the Na­tional La­bor Re­la­tions Board’s op­po­si­tion to the Boe­ing Co. build­ing a fac­tory in South Carolina.

Repub­li­cans, of course, would vote for all of them, as they are Repub­li­can po­si­tions.

The Repub­li­can can­di­date for pres­i­dent as well as GOP con­gres­sional can­di­dates would be left with al­most noth­ing (ex­cept op­po­si­tion to Oba­macare) on the eco­nomic front to op­pose in the pres­i­dent’s poli­cies.

Here’s the kicker: If all those pro­pos­als were passed into law with over­whelm­ing bi­par­ti­san sup­port, it might well trig­ger an ex­plo­sion in busi­ness in­vest­ment, con­sumer con­fi­dence and, thus, eco­nomic growth and job cre­ation at an in­vig­o­rat­ing level.

In fact, some­thing like that is prob­a­bly the only thing — short of elect­ing a free-mar­ket Repub­li­can pres­i­dent and Congress in 2012 — that can break the cur­rent paral­y­sis of busi- ness in­vest­ment and con­sumer spend­ing that is nec­es­sary be­fore a real eco­nomic re­cov­ery can be­gin.

What Repub­li­cans and other free-mar­ket an­a­lysts have been call­ing the over­hang of “un­cer­tainty” re­gard­ing busi­ness fears of new fed­eral in­ter­ven­tions, reg­u­la­tory bur­dens and fed­er­ally man­dated em­ployee costs to busi­ness has — after three years of the Obama ad­min­is­tra­tion — ac­tu­ally turned into a “cer­tainty.”

It has be­come sadly ob­vi­ous that even if the cur­rent ad­min­is­tra­tion veers into an oc­ca­sional pro-busi­ness pol­icy (such as the lame-duck ex­ten­sion of the Bush tax cuts), in­vestors and busi­nesses cor­rectly have be­come con­vinced that the ad­min­is­tra­tion’s de­fault pol­icy po­si­tion is a so­cial-jus­tice-based ide­o­log­i­cal hos­til­ity to free mar­kets, busi­ness and prof­its.

Thus, it has be­come not only a po­lit­i­cal fact, but prob­a­bly an eco­nomic fact as well that the “un­cer­tainty” will only dis­si­pate — and thus re­cov­ery be­gin — with the de­par­ture of the cur­rent ad­min­is­tra­tion after the 2012 elec­tion.

If a siz­able per­cent of the vot­ing pub­lic comes to the same con­clu­sion to which in­vestors and busi­nesses clearly have come, even cur­rent sup­port­ers of the pres­i­dent may well con- clude that his pres­i­dency has be­come an ob­sta­cle to eco­nomic re­cov­ery.

With the cur­rent Gallup polling data, among many oth­ers, show­ing that only about a quar­ter of the pub­lic has con­fi­dence in the pres­i­dent’s eco­nomic pol­icy, it is a fair guess that the pub­lic may be mov­ing to the busi­ness and in­vestor view of the mat­ter.

Thus, only by a leg­isla­tive em­brace and re­sult­ing statu­tory law of such free-mar­ket poli­cies could Mr. Obama con­vert his pres­i­dency from be­ing seen as an ob­sta­cle to re­cov­ery into a force for re­cov­ery.

But here is the point about the pres­i­dent’s up­com­ing speech: A speech — any speech — will no longer do it for the pub­lic on the mat­ter of the econ­omy. If he pro­poses a timid hodge­podge of pre­vi­ous pro­pos­als, in­clud­ing some ref­er­ence to $4 tril­lion in deficit re­duc­tion over the next 12 years, it is un­likely to change the eco­nomic fact that in­vestors, busi­nesses and the pub­lic have lost con­fi­dence in the pres­i­dent.

If he pro­poses new “shov­el­ready” spend­ing, the var­i­ous cham­bers of com­merce, un­der­stand­ably, will sup­port that be­cause it means dol­lars for their mem­bers.

But while they will take the money with smiles, they will not change their view of the larger dan­ger of Mr. Obama’s eco­nomic pol­icy.

And, if he pro­poses a Paul Krug­manesque left-wing, an­tibank, huge statist ini­tia­tive, though he will thrill his de­flated base, he will not gain en­act­ment of his pro­posal, he will not change the eco­nomic facts, and he will not re­gain the pub­lic con­fi­dence in his pres­i­den­tial stew­ard­ship of the econ­omy.

Of course, it is al­ways pos­si­ble for the econ­omy spon­ta­neously to ex­plode with growth and jobs — half a mil­lion jobs a month for the next year, say. But few economists of any stripe any longer be­lieve that.

I con­cede it is ex­traor­di­nar­ily un­likely that the pres­i­dent will take up my free-mar­ket eco­nomic pol­icy pro­posal. Sadly, many pres­i­dents, both Repub­li­can and Demo­cratic, fail be­cause they re­main en­thralled to their early pol­icy po­si­tions — in­ef­fec­tive as they may have proved to be — and find them­selves emo­tion­ally un­able to di­vorce them­selves from those early mis­takes.

Tony Blankley is the au­thor of “Amer­i­can Grit: What It Will Take to Sur­vive and Win in the 21st Cen­tury” (Reg­n­ery, 2009) and vice pres­i­dent of the Edelman pub­lic re­la­tions firm in Wash­ing­ton.

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