So let me get this right. Team Obama taxes millionaires who create jobs, while Obamacare creates incentives not to work at those jobs. No wonder recovery is so anemic. The policy here is to create fewer jobs and induce people to work less at those jobs. If my logic is correct, this runs counter to the most basic principles of our economy and our country.
I thought the American Idea (see Jack Kemp and Paul Ryan) had at least something to do with the virtues of work, family, and opportunity. But what I see from the Obama administration is policies that undermine these ideals.
Here’s a contrasting vision. Last week I interviewed the great entrepreneur Harold Hamm, the CEO of Continental Resources, who has harnessed the technologies of horizontal drilling and hydraulic fracturing to completely revolutionize the energy sector of our economy. He has turned North Dakota into Saudi Arabia. Energy independence is in sight.
Now, the energy sector is responsible for roughly 10 percent of our growth. And tens of thousands of energy jobs are now being created at very high wages, all while our trade deficit is evaporating and our entire Middle East foreign policy may be changing.
Of course, the Obama administration is taking credit for the oil-and-gas revolution. But they initially opposed it and in fact had nothing to do with it. And if they opened up federal lands and offshore drilling, the energy success would be even greater. But that’s not happening.
The fact is, the energy revolution is a perfect down-home example of free-market economics at work, not government planning.
One of the things that caught my eye about the Harold Hamm story is that roughly 10 million oil-and-gas royalty owners now exist across the country. I am going to bet the energy revolution has created thousands of new millionaires. This reminds me of Bill Gates, Steve Jobs, and Mark Zuckerman, whose wildly successful entrepreneurial ventures also created thousands of new millionaires. Not just investors, but low-level staffers who got just a little bit of stock when Microsoft or Apple or Facebook was started. They became millionaires.
And that money didn’t go under mattresses. One way or the other it circulated through our economic system, creating thousands of new companies, vastly more jobs, and even more millionaires.
In other words, wealth creates businesses that create jobs that create a rising tide that lifts all boats.
I say this because President Obama doesn’t seem to get this. He is hung up on inequality. But why is wealth- and income-inequality bad? If the oil-royalty owner makes $1 million, while the roustabout in the field in North Dakota or Texas or Ohio or Pennsylvania makes $100,000, there is greater inequality, but everybody benefits. What Obama doesn’t get is that the creation of successful millionaires is not a zero-sum game. The millionaire’s success does not come at the expense of everyone else. In fact, that success makes everyone better off.
Free-market capitalism should make us all equal at the starting line, and that should lead to better though unequal outcomes at the finish line. The point here is opportunity, freedom, and economic dynamism. More millionaires create healthier economies with more jobs, stronger families, and better lives than our parents and grandparents had.
But now comes a new CBO study of Obamacare, which exposes a perverse incentive system that will cause the equivalent loss of 2.5 million jobs over the next decade as people work less, not more.
In the Obama scheme, an industrious person climbing the ladder of opportunity is penalized heavily for his or her success. Health-care subsidies are reduced as a result of her higher income, while marginal tax rates go up as she shifts into a higher tax bracket. So she loses the government benefit and her effective federal tax climbs higher.
There is no ladder of opportunity here. It’s really a work trap that becomes a poverty trap. It’s similar to the other traps found in welfare, food stamps, unemployment compensation, and the marriage penalty.
Democrats defend this work trap as providing more leisure time. But they forget to tell you that the perverse health-care incentives that lead to less work also lead to less income, less wealth, less opportunity, and less economic freedom to prosper.
So step back for a moment and look at the contrasting visions of Harold Hamm and Obamacare. Mr. Hamm’s roustabouts and millionaires create huge incentives to work and prosper. President Obama’s health-care plan creates huge incentives not to work, not to supply labor, not to work harder, and not to create the opportunity for a rosier future.
The former is an optimistic vision. The latter is profoundly pessimistic. This whole central-planning rigmarole called Obamacare runs counter to the great traditions and values of America.
– Larry Kudlow, NRO’s economics editor, is host of CNBC’s The Kudlow Report and author of the daily web log, Kudlow’s Money Politic$.