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Wednesday, October 27, 2021

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In Financial Crisis, Obama is Gasoline on the Fire

Barack Obama and Joe Biden have set out their plan to help America out of its present, serious financial crisis:  Tax the daylights out of the "rich," Regulate the daylights out of Wall Street, and "change" Washington.  Yeah, right.  Elect this ticket and give the Democrat party complete control of Washington, send this country into severe depression and vote away the last of our rights to the nanny-state socialism that Mr. Obama and his terrorist / communist buddies so love.

Taxing the "rich" means taxing the productive.  Historically, every time you tax the productive, you depress government revenues.  When you cut the tax rates, two things happen: (i) Government revenues go up noticeably, because of the increased investment and productivity caused by the lax of punitive taxation, and (ii) the percentage of revenues paid by the wealthy increases.  The last thing we need to do is to set up taxes that cause the productive to stop investing in America.  To do this would have a devastating effect on a stressed economy.  Joe Biden said that Americans should be paying higher taxes as an act of patriotism.  Why on Earth should we give more of our money to a government that demonstrates colossal incompetence, except when it comes to the military?  We need less bureaucracy, not more.

Regulations and bailouts got us here.  Remember that the Democrat Congress bailed out New York in the 1970s, Chrysler in the 1980s, The S&L system in the 1990s.  The GOP, when it controlled the Congress, let Enron die.  The Democrats, with their bailouts, trained corporate managers to take insane risks, circumvent regulations (in the case of Fannie Mae and Freddie Mac).  Now, if we regulate more, we’ll reinforce the irresponsibility that the Democrats cultivated in the first instance.  The end result will be the same as when the Congress enacted Smoot-Hawley during the Great Depression -- we will make things much worse.

I think that we should have let AIG die.  Since that ship has sailed, we should unwind AIG’s assets and fold it up.  I think that we should figure out a process to unwind the assets of Fannie Mae and Freddie Mac, and close them down.  If the mortgage crisis continues to worsen, then we should take extreme action, but it should not be in the form of regulations, it should be a single-shot fix.  We take the bad medicine and get on with life.

Anything else, especially Mr. Obama’s borderline-Communist proposals, is gasoline on a big fire.