The Obama administration prides itself on having saved Detroit’s auto industry with its proviso of bailout money. Of course, this wasn’t the case for prosperous Ford Motor company, which enjoyed substantial profits despite the downturn in the economy with the onset of the 2008 recession. Clearly, the demise of Chrysler and GM had its source elsewhere, or in mismanagement. While GM and Chrysler have largely repaid the government, the fact remains that such bailouts have resulted in a trillion dollars of new debt. Sooner or later, we will have to pay the piper as we approach the Eurozone’s present dilemma.
Both Republicans and Democrats have made matters worse by approving the Obama sponsored payroll tax cut, resulting in a diversion of 2% from Social Security funding, a vital program already in serious trouble. Republicans have further contributed to our economic malaise by holding out for no new income tax revenues. What is needed is a balance of stimulus money in programs that can work along with cuts in pork barrel spending and a provision for adequate tax revenue to pay for programs that do matter. Germany is today’s model in this regard, to the envy of its neighbors.
Ironically, Obama’s economic policies with their lavish spending, exacerbated by Republican intransigence on new tax revenue, threaten all of us. Unfortunately, this administration seems bent on rewarding incompetence, and frequently, even with regard to malfeasance on the part of banks, the auto industry, and even home owners.
I strongly believe that government does better when it encourages the private sector, reducing deficit spending, limiting tax subsidies, reforming tax laws to broaden the tax base, etc.
To our peril, in our rush to ever increasing Federal encroachment on the private sector, we have retreated from those principles set in motion by the founding fathers, rewarding diligence and industry, that has distinguished the American experiment from Europe’s welfare state and propelled its prosperity.
I would offer one final caution: implementing new tax revenue without corresponding spending discipline only encourages government to spend even more.
What I have written is encapsulated in Benjamin Franklin’s observation on the new American republic: “The expense of our civil government we have always borne, and can easily bear, because it is small. A virtuous and laborious people may be cheaply governed” (Letter to William Strahan, February 16, 1784).