Kudlow’s Money Politics

The Denver Dems Aren’t Making the Sale

There is no Biden bounce according to the latest Gallup tracking poll, as John McCain actually is taking a 46-44 lead over Barack Obama. Scott Rasmussen reports a 46-46 tie after the Democratic National Convention’s first night, which reverses a 3 percentage point Obama lead.

Meanwhile, another Gallup poll says 50 percent expect their taxes to be raised under Obama, despite the complaints of his economic advisors that they’re only raising taxes on the top few percent.

Make no mistake about it: There are many doubts and unanswered questions about the Illinois senator regarding his experience, his foreign policy, his economics, and his prior political and spiritual relationships. And despite some good moments last night, I don’t think Michelle Obama made the sale. At the end, only her husband can do it. Hillary can’t do it. If the badly split Democrats can be united at this late date, only Obama can do the job. No one else.

Reagan united a split GOP in 1980. George W. Bush united the McCain, Forbes, and cultural-conservative factions in 2000. Goldwater couldn’t do it in ’64. Neither could Humphrey in ’68. Of course, Jerry Ford couldn’t do it in ’76. And Carter failed dismally in 1980. But Bill Clinton succeeded in 1992.

Now it’s Obama’s task in 2008. That’s his job. No one else can do it for him.

And as the stock market looks on warily, falling slightly today after plunging yesterday, the lead story in this morning’s Wall Street Journal is a serious indictment of Obama’s economic program. “Senator Obama is proposing to use the government to remake economic policies in a way that hasn’t been seen in Washington in decades.” And if it’s a three-house Dem sweep, it will be Katy bar the door. Big-government spending programs, tax increases, trade restraints, a government health-care plan, cap-and-trade on climate change — all without any real deficit restraints, which are accorded a low priority.

Incidentally, while the public clamors for drill, drill, drill, Obama wants high-cost, cap-and-trade carbon regulation enforced by the Environmental Protection Agency. Now, McCain also wants cap-and-trade, but not if India and China don’t go along. Apparently Obama will not be constrained by the rest of the world.

Sure, the economy is languishing. But do we really want a big-government, high-tax solution? Do we really want higher investment taxes that would leave government bigger and private enterprise smaller? Do Americans really blame “rich” people? Or do they actually believe success is a good thing and should not be punished? Do rank-and-file working folks really want to do away with the secret ballot for unionization in the form of the so-called card check? And if there were a three-house Dem sweep, wouldn’t Obama’s middle-class tax credit be overturned in favor of even more government spending, just as Bill Clinton’s plans were subverted back in 1993? The National Taxpayers Union says Obama’s new spending would total $344 billion. That’s a big number. One has to wonder if that’s the opening bid or the final one.

The Obama economists sincerely believe that theirs is a growth program. His advisors are friends of mine — all of them terribly smart: Jason Furman, Austan Goolsbee, Robert Reich, Jarrod Bernstein. So this is surely not personal on my part. But I question their economic model. Raising marginal tax rates will minimize — not maximize — economic growth and jobs. Ditto for enlarging the size, scope, and sweep of government.

Business cycles come and go. Each has its own set of excesses and subsequent corrections. It is the nature of free-market capitalism. But heavy-handed government solutions are being rejected worldwide, and it seems foolhardy for the USA to move away from economic freedom when virtually the rest of the world is moving toward it.

One of the greatest tax reformers of all time was John F. Kennedy. He slashed marginal tax rates across the board for businesses and people of all income levels. The economy boomed in the 1960s. Reagan copied the JFK model in the 1980s. Are we turning back this supply-side model? I fear the Obama men are doing just that. I think that fear is worrying the stock market right now.

John McCain’s economic program is certainly not flawless. And his ad bashing business, oil, and others nearly reaches the class-warfare level of Obama-Biden. It’s a Big Mac mistake. Nor does McCain have a solid tax-cutting program for the middle class. More on all that later.

But as the Democrats discuss the economy tonight, I’m willing to bet they are not gonna make the sale. Obama’s task Thursday night will be a monumental challenge.

Larry Kudlow is the author of JFK and the Reagan Revolution: A Secret History of American Prosperity, written with Brian Domitrovic.

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