Smith Faculty Opinion Article

John Haslem By Dr. John A. Haslem, Professor Emeritus of Finance
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The 30 Seconds Outlook
September 15, 2010

“The epic government stimulus has failed to produce the robust expansion the White House promised, and the prospect of higher taxes and more regulation is inhibiting the private animal spirits needed for growth to accelerate.”
— “The 2.4% Recovery,” Wall Street Journal, July 31, 2010

In the August 15 Outlook, it is stated that “[b]usinesses are not going to invest in people or productive assets if their perceived costs of capital are inflated beyond any reasonable hope of profitable use of capital and people. Businesses cannot rationally invest in a current and future environment that features too much politically based UNCERTAINTY.”

The Obama administration has contributed to the uncertainty surrounding new business investment. Following are several examples that illustrate these failures:

  1. The continuing call for more stimulus based on a failed Old Keynesian model.
  2.  Sound empirical analysis by leading economists has declared the stimulus a failure.
  3.  The successful use of tax reductions to stimulate growth in the Reagan and Kennedy administrations has been ignored.
  4.  Temporary tax rebates have been documented to be a waste of money.
  5.  The use of stimulus to bail out state budget deficits to keep union employees and teachers employed just transfers the bill to federal taxpayers and adds to the deficit.
  6.  Higher business costs and taxes are greater than actual costs of hiring employees with proper economic policies.
  7.  Export earnings that provide for servicing the huge amounts of Treasury securities held by China and others have been largely ignored.
  8.  Increased Medicare costs have been charged to states facing deficits and unfunded pensions.
  9.  The violation of federal bankruptcy law when Obama wiped out Chrysler bondholders to protect auto unions.
  10.  Congressional legislation, especially ObamaCare and White House political actions have ignored Constitutional protections of individual liberties.
  11.  Obama continues to blame Bush and business for administration failures—a lack of personal responsibility for his actions.

John A. Haslem