Deficits Don’t Matter

Who said that?
Dick Cheney and Barack Obama for two.

When Dick Cheney said it, it was temporarily true and he said it in another context than when Obama said it. To be clear, the it, is “deficits don’t matter.” Did you realize, the Obama budget submitted this year would double federal debt?

Cheney said it way before ALL regulators, BOTH political spectrums, most greedy individuals, fiefdoms, special interests and power blocks harmonized with a populist tune called “Home ownership da, da da, for everybody, yeah, yeah, yeah, regardless of their qualification, do wop, do wop, will get you votes and fabulous retirement packages ha, ha, ha.”

It was a blockbuster in towns all across the country, a sound to behold and it was on the top of the charts for too long.

This harmonic convergence started as well intentioned if politically motivated methods of trying to get financial flows into “under served” areas. That is code for an unswerving locked in the bedrock of anti Republican voters. Not that the Republicans necessarily deserve the votes, they are just undeserving for different reasons.

Obama said “Deficits Don’t Matter” when he submitted what should be his now well known embarrassing budget faux paux of 2011. The CBO said the Obama budget would double federal debt over the next 10 years.

Why would Obama submit such a budget, which was worth less than worthless? To cowardly avoid responsibility and avoid fallout from necessary leadership when we most need it. Nuance and deft leadership is needed to balance government spending as we begin our transition from a two thirds consumer driven economy to more of an export economy. The budget had no nuance.

According to Vincent Carroll (and a few others, altogether too few) columnist for the Denver Post, when writing about Mr Obama’s charming his way into the voting booth by making the Republicans look like rich meanies to most of our citizenry.

This is a president, don’t forget, who just five months ago submitted a budget that the CBO said would double federal debt over the next 10 years. It made no serious attempt to reform entitlements, adopted none of the ideas endorsed by the majority of his debt commission and relied “heavily on new taxes,” in the words of The Washington Post, in its feeble attempt to prevent the debt trajectory from being even worse.

In their defense, Republicans orthodoxy believes in encouraging more investment by the private sector into risky job producing ventures which they think will be suppressed with higher taxes.

I think Bush lowered taxes too much while he was engaging in two wars. No fiscal sense on his part. But like a teeter totter, higher taxes can backfire and create more deficits. Ultimately the consumer and worker pay for every hidden expense. They really are the source of all money and growth. Ha, and you thought the Fed created money and the government created jobs…silly you.

Mr Obama positions the Republicans as the protectorate of the nations top taxpayers from paying even more. But really, the nations top 10% of taxpayers pay for almost 50% of taxes collected and create most of the jobs. When was the last time you created a job? The answer to that says a lot about your risk profile. And your tax position. If you have created jobs you have probably also lost investment money other than owning or trading public stocks which creates no jobs.

Mr Obama positions himself as best he can as the protectorate of the little guy against the rich guy. Funny, Democrats raise as much or more money from the big guys than Republicans. The same ones too.

I would like that kind of protection myself but I know it not only does not work it backfires and costs me money somewhere and if I want to start a business and create jobs these vote buying protection racket activities and conflicting laws increases the costs of understanding unclear legal risks and complicated compliance further increasing the barrier to entry to me and others in any business.

Remember the next time you hear big business object to some new proposed reg or law. Understand that while they may have legitimate and sincere objections, they are sanguine in the knowledge that more laws keeps competition at bay. Why else are students flocking to laws schools creating embarrassing riches by the law department at universities?

Competition is the greatest friend of the consumer and of the worker, each in their own ways, ironically vote for the guy who suppresses competition. I forgive them for they know not what they do when they insist on new protections. “Enough is enough” - Obama (when he walked out on deficit discussions recently)

When is the last time you heard of a law that clarified, consolidated and reduced the number of pages of laws your attorney charges you by the hour to research and advise you on?

So the big continue to have advantages because of our lawmakers and regulators who always need a new law or more funding to do their jobs. The big are able to pay for more lawyers to game the laws lawyers by and large write. Despite political promises, Obama Care ensured big health operations of all kinds against more competition. Ditto Dodd-Frank. Same happens in most endeavors. More laws, more ostensible protection, less competition.

By all means increase taxes. It is good for big business too given the always present political slight of hand by lawmakers who give it back to those business they like.