Obama's No. 1 problem? He tried to redistribute the economic pie, not grow it.
President Obama and congressional Democrats could have pursued sensible policies that promote growth and fairness. They didn't. And now voters stand ready to support the Republicans' pro-growth agenda in midterm elections next week.
As congressional Democrats brace for an electoral shellacking next week, one question still seems to puzzle pundits: “Why didn’t President Obama do more to help the economy?” The short answer is that his goal has always been to redistribute the economic pie – not necessarily grow it. That’s a shame, because he could have pursued policies that achieve both.Skip to next paragraph
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“[W]hat people really want is fairness” Mr. Obama stated during the campaign. “They want people paying their fair share of taxes. They want that money allocated fairly.” After his victory, despite the economic crisis, he eschewed the Clinton mantra of “it’s the economy, stupid” and set out to make America more equitable.
Voters want economic growth
Voters, it turns out, are much more concerned about ensuring the economy grows than who gets what – especially during a deep recession. Unfortunately, the president seems locked into the mindset that greater equality of income must come at the expense of economic growth.
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Take the administration’s signature achievement: enactment of healthcare reform, aka Obamacare. This legislation subsidizes health insurance for low- and middle-income groups with taxes on high-earners, leveling material wealth but dampening economic growth by encouraging everyone to pare back on their work effort.
High-income workers have an incentive to work less since they get to keep less of what they earn. Low- and moderate-income workers face the same incentive because they can now maintain the same standard of living with even less effort.
Do high tax rates really harm the economy? Consider the countries of the European Union. Since the end of the Second World War, these nations have offered their citizens generous social benefits such as government provided health care and mandated lengthy vacations. Today per capita purchasing power in the EU is just two-thirds that of the US. More-equal slices maybe, but from a much smaller pie.