In this installment on the STOTU we turn to growth and investment. [Click this link for the Prepared Remarks.]
Investment requires an economic surplus, and it involves risk. Everything that reduces real disposable income or artificially increases expenses reduces the potential for investment. Increased taxation and inflation are counterproductive to investment. Everything that reduces consumer confidence or investor confidence or threatens economic stability and predictability decreases the potential for investment and risk taking. A President who genuinely desires investment & growth would not seek to increase taxes, he would seek to make the "Bush tax cuts" permanent instead of extending them for two years. He would not ban domestic oil exploration & production, instead he would increase leasing & issuance of permits. He would not impose new costs on consumers by mandating purchase of health insurance.
Common sense says that economic goods and services have prices, they are not free. Prices are set by the market; the balance of supply and demand, with fixed and variable costs as a lower limit. Attempts to lower the price by fiat will result in reduced supply. Attempts to subsidize consumers who can't afford the goods will raise the price to everyone. Third party payers are part of the problem, not part of the solution. Reforming the insurance industry does not require 2700 pages of new legislation. That is a power grab, not reform.
"Now, the final step – a critical step – in winning the future is to make sure we aren’t buried under a mountain of debt.
We are living with a legacy of deficit-spending that began almost a decade ago. And in the wake of the financial crisis, some of that was necessary to keep credit flowing, save jobs, and put money in people’s pockets."
Deficit spending did not originate by spontaneous generation nor did it begin in the last decade, it has been going on for much longer. Money thrown down the stimulus & toxic asset toilets was wasted. It was borrowed and must be repaid with interest. We can not repay the principal, and when interest rates rise, we will drown in the interest burden which will rise like a flood. Credit was not kept flowing, jobs were not saved and money was put in the wrong pockets.
A competent pilot does not take off with an overload. He knows the weight of his cargo & fuel, the capacity of his aircraft and the wind and weather conditions on his intended route; he calculates a margin of safety.
"Excessive spending" can not be defined and measured. Social Security will soon be bankrupt. Obama Don't Care will drastically increase health care costs and we are facing the threat of wars on three fronts at once. The first World War was supposed to be the war to end all wars. We reduced our military capacity after it ended, so that the second Word War caught us unprepared. In the age of missiles, we won't have time to make up the missing capacity.
That is class warfare at its worst. Obama is pandering to envy and greed. Investment does not come from strapped consumers who can barely meet their mortgage & utility obligations. Investment comes from those who have more money than enough money to meet their basic needs. Punishing them with higher taxes will result in decreased investment, the opposite of what Obama claims to want.
Compromise does not get the job done. One side wants to administer poison, the other wants to administer therapy. Combining the two will not cure the patient.
Anyone with any common sense knows that promise to be null & void. Free spending Democrats & RINOs are already conjuring up a clever replacement for earmarks. In any case, they will find 'veto proof' or 'must pass' bills to hide them in.