Obamanomics: Failed Theory in Practice
Tax. Subsidize. Tax. Train. Tax. Repeat.
For those who followed then-Senator Barack Obama’s campaign for the presidency, this economic plan should sound familiar. After months of depressing economic news – 9.1% unemployment, depressed home prices, weak consumer confidence and inflated rising food prices – the bankruptcy and resulting scandal from the government-backed solar company Solyndra provides an illustrative anecdote as to how President Obama’s economic policies work in the real world.
Candidate Obama: As President, I’ll invest in renewable energies like wind power, solar power…not through short-term gimmicks…
And boy did he (in both renewable energies AND short-term gimmicks)! The now-infamous stimulus earmarked more than $80 billion toward federal clean energy funding. At the time, he proclaimed the stimulus was “laying the groundwork for a new green energy economy that can create countless well-paying jobs.” The stimulus planners thought they could “double the amount of renewable energy produced over the next three years” by providing “tax credits and loan guarantees” to companies like Solyndra.
The White House praised Solyndra. President Obama said it was “the true engine of economic growth” and Vice President Joe Biden said it was “exactly what the recovery act is all about.” Yet, despite the White House proclamations and more than half a billion in stimulus funding, Solyndra declared bankruptcy earlier this month. So, in this administration’s worldview, the stimulus is really about injecting massive amounts of money into an industry that fails.
Why didn’t the loan guarantees work? Because, like all other subsidies, they divert capital from worthy investment and create a climate of uncertainty in a market weary of future government manipulation. Despite President Jimmy Carter’s massive investment in, and the subsequent failure of, the Synfuels program, the federal government still believes it is capable of picking winners and losers.
Americans understand the government cannot create, by fiat, the jobs of the future. But don’t tell candidate Obama that.
Candidate Obama: Your old job is not coming back, but a new job will be there because we’re going to seriously retrain you and there’s life-long education that’s waiting for you — the sorts of opportunities that Knox has created with the Strong Futures scholarship program.
What are you going to be retrained for? President Obama proclaimed it was renewable energy. Of solar panels, he said, we “can take pride as the technologies, and discoveries, and industries of the future flourish in the United States of America.”
Solyndra was supposed to create “as many as 1,000” permanent jobs, but as the San Jose Mercury News reported in August, the company laid off 1,100 employees. So much for the stimulus and jobs of the future, huh?
Many of those employees are now applying for Trade Adjustment Assistance (TAA), an ineffective program that provides generous benefits to workers who have lost their jobs to changes in trade rules that result in increased foreign competition.
Of course, President Obama’s top ally in the Senate, Majority Leader Harry Reid (D-NV) claimed that TAA was essential if we want to “keep our workforce competitive by re-training workers whose jobs have been shipped overseas.” Just this week, the Senate passed an extension of TAA – at stimulus levels – despite significant evidence that the program is ineffective.
Well, in President Obama’s economic philosophy, companies like Solyndra are the poster child of the future. Again, how did that work out? Perhaps the better question is how in the world is the government going to pay for all of this.
Again, candidate Obama: “It’s not that I want to punish your success; I just want to make sure that everybody who is behind you that they’ve got a chance to success [sic], too. I think when you spread the wealth around, it’s good for everybody.”
Earlier this month, in a nationally televised speech, President Obama outlined his plan to raise taxes on employers and job creators. As a candidate, he said he would never raise taxes during a recession. Although the Bureau of Labor Statistics has not certified it, most Americans believe we are in a recession.
Then again, how could it be otherwise? Subsidizing unsuccessful companies and training workers to work at those companies will not pay for itself. The solution, in the mind of President Obama, is to tax those Americans who have been successful in creating jobs in the past.
In a nutshell: Obamanomics consists of subsidizing failed industry, training workers for those failed industries and taxing successful industry to pay for it all. No wonder President Obama has an upside-down approval rating.