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Be Careful What You Wish For

“Be Careful For What You Wish, Lest it Become True.” Anon.

By all accounts from our friends in the liberal media, we are facing one of those seldom experienced transcendental elections in which the world shakes beneath our feet to produce a transformational change in the state of our politics. If so, from the sidelines, we can tell you what the cost to produce such an outcome was. By all accounts, the liberal juggernaut propelling Senator Obama will have collected and deployed by Election Day well over 700 million dollars to buy this election. Poll workers and local get-out-the vote offices in the thousands across the land, yard signs by the millions, rental cars and airplane travel, surrogate expenses, unprecedented media purchases and around the clock free, fawning coverage for the candidate that the media elected long before we the people had a chance to have our say are what bought this election. McCain hasn’t run a good campaign, but in truth, he hasn’t stood a chance.

The Obama machine deserves admiration for its discipline and efficiency. Political scientists and politicians will be studying it for years to come. What I fear is that the change that the American public may have agreed to with their vote if the media are correct is the “pig with lipstick” that will erode the individualistic and free enterprise based economy that has characterized our society and propelled our preeminence in the world for more than a century. It is, in my opinion, also a threat to our pluralistic faith based society which it will replace with an emphasis on Godless humanism and slide toward socialism and decay.

So what is it we have bought? It is not all bad. In the immediate euphoria of victory, the country has achieved an immediate improvement in our image abroad. Countless millions abroad, watching a free election in our great land will marvel that we have elevated a black man to our ultimate seat of power. His ability with words will also captivate and energize those who now reject free markets and democracy as the preferred path for their people to re-think their decisions. That is truly wonderful, and all of us can be proud that we have advanced to that state of development that our society can produce such an outcome. In the months ahead, however, he and his new government will be tested in many ways where erudition will be of little use.

The first test is likely to come before his inauguration. In late November we are headed towards a Bretton –Woods style conference with our European allies. We joke that when our economy sneezes, theirs get pneumonia. Well, it is true and an unfortunate consequence of our financial shenanigans that have done so much damage to all. Though he will not yet be in office, I cannot imagine that conference proceeding without substantial participation by the new president’s economic team. The Europeans have an honest gripe, and their banks are even more fragile and slower to bounce back; thus the impact on their economies may be longer lasting.

They are already lobbying for an internationalization of financial oversight that is unprecedented and would require us to surrender a portion of our autonomy to this, as yet undefined, entity that would be super cop on the block and would have “world stability” as its goal. It remains to be seen what the new administration’s attitude would be towards this request. There is much in Obama’s rhetoric to suggest he would give it serious consideration.

Our economies are different, and unless we are willing to mesh our regulatory approach nationally to that of a more collectivist Europe, it would be a bad idea to adopt such an approach. Heightened coordination is one thing, one integrated regulatory scheme an entirely different matter. It would lead over time to slow the recovery of our more vital economy and infect it with some of the lassitude of Europe’s lack of productivity. This is one “merger” that we should take a pass on.

As Congress assembles in January, if the pundits are correct, there will be substantially more Democrats. As they organize Congress, it is almost certain that the committee ratios will change along with the new members to create iron control over the committee process. If the control is as substantial as predicted, there is no sense spending useless time in self justifying investigational hearings, instead they will likely get about creating the New, New Deal and altering the landscape of way more than U.S. finance. A recent issue of the Wall Street Journal listed surefire legislation that passed the House but failed to get through the Senate that is dead certain for passage in the new Congress.

Included in their list are prescription drug price controls, union card check off, voting representation in Congress for The District of Columbia, ability of bankruptcy courts to change mortgage terms, eliminate statute of limitations on workplace discrimination suits, windfall profit tax on oil companies. All but the DC vote will directly result in cost increases for American business, and the DC vote is a permanent grant to the Democratic Party of one additional vote in the House and two in the Senate. These will make worse the competitive situation for U.S. based business which will inevitably adversely affect employment. The drastic increase in government we all can expect may reach what one commentator in Fortune suggested will be 24% of GDP. If so it will be taken out of the hide of our productive capacity, for government produces nothing positive for the nation’s bottom line.

We are facing, if not now, in 2010, a massive tax increase that will further disadvantage capital formation as the Bush tax cuts expire, and we revert to the old rates. Social Security is likely to face a removal up to at least $250,000 of the ceiling on payroll taxability, and the Obama health security package will lead to a growing single payer system that will crowd out existing private insurance and set us on the road to a socialist future. The union check off mentioned above will lead to an unprecedented and, unwanted by the bulk of the electorate, unionization of the American workplace. Democratic control of the FCC is likely to bring about a renewal and expansion of The Fairness Doctrine to squelch Talk Radio and shows such as Hannity and Colmes and O’Reilly that fight against the tide of the vast left wing liberal media.

On immigration the previously offered amnesty based immigration proposal will likely be dusted off and passed early in the new administration, further cementing Democratic control of future elections. Our troops will be withdrawn from Iraq on the same schedule they would have under President Bush who has already started to deploy some troops to Afghanistan. I also expect the new president’s mettle to be tested early in his administration by a “hot spot” we previously have not heard about, and at home, I expect heavy media pressure towards the acceptance by all of a liberal humanist political correctness that will be encouraged to usher in even more big government solutions for problems we didn’t even know we had.

Not to be all negative, I do see thousands of new jobs in a revitalized energy sector, automobile reinvention and in major infrastructure public works. They would have come anyway, but with Democrats dictating the terms, they will come faster with a substantial push from Uncle Sam. ….So how do we pay for all this?

I strongly suspect that in connection with the expiration of the Bush tax cuts, we will see a major push for a VAT or consumption style tax to be introduced and pushed through before the midterm elections of 2010. With the top 5% of the population currently paying more than 55% of all personal taxes collected and one-third of our citizens already not paying taxes and “untouchable” there is little choice in the matter. Those who work will have been milked for all they can give and are disincentivized from working hard to earn more. They are, as well, unlikely to give to charity at the same rate that bestowed 307 Billion on U.S. charities in 2007.

Democrats are going to have to greatly broaden the tax base to collect more while disguising that it is just another tax on all of us that we will pay when we go to the store. it will be obviously inflationary, and they can blame the increase on a temporary effect that comes with the change to a VAT in order to take the public’s attention off of the runaway federal spending that is at the heart of devaluing our currency and impoverishing all of us. This, all in the name of avoiding the essential pain that will ultimately required to right our economic ship, is what I believe is just over the horizon.

Copyright © 2008 by Robert E. Freer, Jr. All rights reserved

About the author: Robert E. Freer, Jr. is President of The Free Enterprise Foundation. He is a Visiting Professor, at The Citadel and elected in 2005 to be their first John S. Grinalds Leader in Residence. A regular contributor to the Mercury, He can be reached by E-mail at The Citadel . Copies of his earlier columns can be found The Free Enterprise Foundation.

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