Freedom of BLEEP

Earlier this week, we discussed how president-elect Obama has played a central role in bringing the U.S. economy to its knees. Now let’s consider how his actions since the election have worsened the situation.

1.) For the incoming administration, economic advisers will be among the most consequential appointments. Yet even the New York Times disagrees with Mr. Obama’s decision, stating that two of his key advisers “have played central roles in policies that helped provoke today’s financial crisis. [...] unless they recognize their past mistakes, there is little hope that they can provide the sound judgment and leadership that the country needs to dig out of this desperate mess.”

2.) Obama has promised to raise capital gains taxes. Investing is risky - especially in today’s volatile market - and individuals will have less incentive to invest money if they are taxed more on their investments. This isn’t rocket science. Still, the president-elect has refused to say whether he will wait for the economy to improve before imposing his tax hike.

3.) Obama has promised to raise taxes on large corporations. Of course, the net result will be lower profit margins for the Fortune 500 and falling stock indexes. Again, Obama refuses to indicate whether he will delay the tax hike until conditions improve, which has created a great deal of unease among investors.

4.) Obama has promised more regulation for big business. Investors don’t get excited when they hear companies will have more hoops to jump through and additional regulatory penalties which can prevent businesses from expanding. 

5.) Obama endorses the Check Card bill, which will make it easier for unions to bully large and small businesses. This bill will eliminate the secret ballot, thus enabling union leaders to intimidate and coerce workers. Anyone who has taken American History is aware how overly-powerful unions can have an adverse effect on American business. Just look at what unions have done to the auto industry.

6.) Obama has promised to raise taxes on small businesses - the largest job producing segment of our economy. Sure, 95% of small businesses will fall below the tax threshold, but it’s the top 5% where a majority of new jobs are being created. Why would investors want to jump into the market when successful and growing companies are going to be punished?