The President’s Incoherent Economic ‘Philosophy’
Whatever he’s for, apparently it’s not a free-market economy.

The president campaigns in Dearborn, Mich., April 18, 2012.


James C. Capretta

It isn’t clear. For one thing, the president has chosen to define his “plan” (if it can be called that) mainly by saying what it isn’t: He wants it known that his approach to the economy most definitely bears no resemblance to the plan he claims his GOP adversaries favor. Indeed, the primary purpose of these speeches has quite clearly been to tear down the straw man of a plan the president says the GOP supports in the hopes that the public will look more favorably on the president’s miserable economic record.

And so we hear from the president that the GOP favors creating a “you’re-on-your-own economy,” wants to “end Medicare as we know it,” seeks to revert to “social Darwinism,” and plans to eviscerate the social safety net to pay for a tax cut for the rich. None of this is true. No matter. The president has decided that the only path to electoral victory is to become attack-dog-in-chief.

But what about the actual substance? Is there anything at all to what the president is saying?

When you strip out all of the excessive and grandiose rhetoric, what the president is attempting to argue in these speeches is that the keys to higher economic growth in the United States are higher marginal tax rates on the successful, no reforms to entitlement programs, and more government spending on selected “investments.” To say that this is a pathetic plan for growth would be to give it too much credit.

It is important to note here that the president is not arguing at this point that we need more government spending for stimulus reasons. His budget plan is to raise taxes sufficiently to cover additional spending, with only a modest increase in the deficit in 2013 compared to current law.

No, his argument at this point is that the government spending he has in mind is so essential that the American economy simply can’t live without it. This is absurd.

In a telling exchange, the president recently argued that, by gosh, even behemoths Google and Facebook wouldn’t exist today if it weren’t for “investments” that “we” made in basic science. Presumably, the president is referring to the early research the Defense Department conducted on an information network that morphed into the Internet. But there’s a little problem with this argument. The president’s budget cuts defense spending — drastically — and far below the levels called for in the GOP plan. If any budget plan is harming this kind of innovation, it’s the president’s plan, not the GOP’s.

Further, the president’s budget freezes funding for the National Institutes of Health. This is by far the largest source of resources that the federal government provides for basic scientific research. This freeze on NIH simply doesn’t square with the president’s contention that somehow his plan is far superior to the GOP budget with respect to research and development.

And it gets worse.