The Campaign Spot

Can Obama Overcome Obamanomics?

USA Today: “Now, preparing for next year’s re-election campaign, Obama is moving to refurbish a political brand that has been defined for the worst by his Republican opponents, dented by the realities of governing and battered by a faltering economy. He is going on the road to Americans’ workplaces to argue he’s made tough decisions that will pay off over time.”

Pay off in the future… like the next Recovery Summer.

Since January 2009, American businesses have faced at least three big potential risks to their bottom line besides the lingering effects of the 2008 crash: A) the possibility of tax hikes B) the possibility of greater costs for health care to employees imposed by government and C) the possibility of much higher costs for energy use triggered by cap-and-trade legislation or some sort of tax aimed at reducing carbon emissions. A GOP-held House can obviously block most legislative efforts in this area, but as long as Obama is president, the threat of these policies being enacted, or similarly deleterious ones through the regulatory process, is nonzero.

Our current housing market crisis stems in large part from the jobless crisis. No matter how much you refinance, a homeowner with no income cannot pay his mortgage. The only thing that will create lots of jobs on the scale we need is a hiring spree by American businesses, who have spent the last two and a half years watching (and fighting) a group in Washington with little private sector experience push to impose these new costs. (The president’s defenders will probably be quick to argue he hasn’t raised taxes, or that he’s only raised a few here and there (tobacco, tanning beds). But 2009, as the recession raged, state and local governments enacted the highest tax increases ever, and 2010 wasn’t much better. When their constituents were struggling and could afford it least, state and local governments reached deeper in their pockets and took even more – which illuminates why so many Tea Party folks are furious about taxes even though Obama has not been able to repeal the Bush tax cuts yet.

While many of its rules have yet to take full effect, Obama health care plan’s impact on businesses can be seen in at least two ways right now. In the not-too-distant future, companies with more than 50 employees will face a penalty of at least $2000 per employee if any worker is collecting federally-subsided insurance through an exchange. If you have less than 50 employees, this rule is moot. If you’re a company with 40something employees, how eager are you to hire more, cross the threshold, and take on those additional potential costs?

Secondly, a business or union or other entity can avoid all of these mandates if the Secretary of Health and Human Services likes them and grants them a waiver. Somehow it is less than surprising to learn half the waivers are to unions and 20 percent have been given to Nancy Pelosi’s district in San Francisco. The lesson of this waiver system is that expensive regulatory burdens are waived for the politically well-connected – another element of risk and a diversion of business energy, attention and funds from their true job (serving their customers and shareholders) to somehow buttering up Kathleen Sebelius.

As long as voters ignore the impact of Obamanomics on their lives, his reelection is assured.

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