Friday, February 3, 2012

Investor and Chief and the European Social Model

When George Washington gave his farewell address he asked the nation, "Why, by interweaving our destiny with that of any part of Europe, entangle our peace and prosperity in the toils of European ambition, rival-ship, interest, humor or caprice?" While speaking primarily against permanent alliances and war we can argue today that his wise counsel included the caprice and humor of European economic practices. We are more than happy to take Europe's tired, poor, and huddled masses but we can't take their economic policies and entitlement philosophies. Remember we came yearning for freedom not heavy taxation for the expansion of social welfare and executive agendas.

Not only is the welfare state debilitating for those that partake of the forbidden fruit but it's simply too costly at present levels. President Obama and the democrats want us to believe that our debt and budget crisis can be solved by taxing the most financially successful members of our society at a higher rate but fails to recognize that the growth of the welfare state outpaces even their great wealth. The UK Daily Mail recently published an article entitled, "IRS: Not enough rich to cover the debt." According to the IRS there are 8,274 people with incomes over 10 million per year or more in the US and they earned a combined total of $240 billion in 2009. Even if the government sequestered all their combined wealth that would only cover government spending for 18 days. According to the IRS there are an additional 227,000 citizens earning $1 million dollars or more per year. They are currently taxed on average at 24.4%. Unfortunately for the President's argument all their wealth falls short of covering the annual $1.5 trillion dollar deficit let alone the staggering $15 trillion dollar debt. Currently the richest 25% account for 86% of federal tax revenue and the top 50% of income earners account for 96% of tax revenue. To heap more of the burden on the most productive part of our country is outrageous and an egregious attack on all our freedoms. If they do it to one of us they can and will do it to all of us.

We need a broader middle income base not a larger welfare state. More investment equals more work opportunities and more work creates more taxable income. Reagan and Bush cut taxes and broadened the taxable base while creating millions of jobs and a healthy middle class. Our middle class is the American dream. President Obama believes in investing in America's future. He takes from the job creators and risk takers and decides himself, with the help of Czars and congress, where to invest the capital of America. He has let ideology govern his investment strategy. He awards contracts to supporters and donors. He lends hundreds of millions of tax dollars to Solindra which promptly declares bankruptcy at the tax payers expense. He denies the Keystone Pipeline to appease his base at the cost of thousands of jobs and much needed strategic energy. The President wants to be the Investor and Chief when it comes to this economy. Arrogance and ideology makes for a poor investment perspective.

Mitt has the decency to bet HIS money. The President is betting and loosing OUR money and OUR CHILDREN'S money.

The facts are clear. We can't bridge the deficit or shrink the debt by over taxing the wealthy. The numbers just don't support the Presidents assumptions and he knows that. For the President it is a game of populist politics which plays to our deepest prejudices and misconceptions of fairness and entitlement. We have to make the hard cuts in the budget now to preserve the future. We have to create a business friendly environment to save the middle class from drifting into poverty and help the poorest in our society attain the American dream of the middle class and a job. Deepening dependency only encourages mediocrity and complacency. Capitalism is the great equalizer. Those that put forth great effort reap great rewards in our country as long as we allow markets to steer the ship and not a President or his "Jobs Czar". It is cruel and debilitating to remove failure from the equation. The fear of failure is what drives capitalism.

Will Cain gave a CNN interview recently in which he eloquently demonstrated the importance of failure in America. Below is some of the transcript.

Michael Lewis wrote a book called "Money Ball". In it he describes a scene where the manager of the Oakland A's, Billy Bean, says, "I have always despised and feared failure more than I've enjoyed success". You've heard Bill Parcells, Troy Aikman talk about this. Failure is key to success. That happens in America, but today under President Obama we pursue policies like "too big to fail" and entitlements to deny the repercussions of failure. But Americans have never been debilitated by fear.

There's another scene in "Money Ball" where Billy Bean is sitting on a bench watching Mitch Williams's fastball pitches and he's wondering, "How am I going to ever hit this guy?" Lenny Dystra sitting down an aisle, looks down and goes, "Screw it! I'll stick him". He walks up there and he does. That is America. We are never afraid to fail. But we will allow people to fail. If you allow people to fail and celebrate those that risk failure, you'll be exceptional and we have it.

Mitt Romney understands the values and principals of capitalism. Right now the President wants to prolong the stagnation and decline in the housing market with short-term bandaids and tax funded programs. Mitt Romney has the strength of leadership to say that we should let the market clear the foreclosures so that they can effectively rebound. The President wants to take from some to give to others and "fundamentally" change the way America became the greatest nation on God's green earth. Mitt Romney wants to "restore" American exceptionalism and economic prosperity. Income equality isn't the answer. Capitalism and free markets create more wealth and prosperity than thousands of years of government run top to bottom economies. In the past we were all equally poor. Under American capitalism we are all equally free and we are all richer and wealthier than all other nations. Let's unite to reverse the European socialist leanings and bring back the American dream of wealth, economic freedom, and meritocracy.

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