Kudlow: Obama's economic model a failure

Rick Moran
As the NRO sage points out, it isn't just his ideology, or philosophy, or even just his policies that have failed; it is Obama's entire view of economic reality that must be called into question:

The Keynesian government-spending model has proven a complete failure. It's the Obama model. And it has produced such an anemic recovery that, frankly, at 2 percent growth, we're back on the front end of a potential recession. If anything goes wrong -- like another blow-up in Europe -- there's no safety margin to stop a new recession.

[...]

Barack Obama doesn't get this, but businesses create jobs. And firms have to be profitable in order to hire. Yet the president is on the campaign trail criticizing Mitt Romney by degrading the importance of profits. Huh?

Without profits, businesses can't expand. And if they don't expand, they can't hire. And if they don't have profitable rates of return, they're not going to attract new capital for investment.

Which brings us to a couple of important reasons for the virtual freeze in hiring.

First, there's the fiscal tax cliff. If all the Bush tax rates go up, incentives will go down and liquidity will leave the system. You can't pick up a newspaper these days and not find a story about how the fiscal cliff is elevating uncertainty and slowing U.S. growth. House Speaker John Boehner asked Obama for help in extending the Bush tax cuts this summer. But Obama said no. Instead, he wants to raise marginal tax rates on successful upper-income earners, capital gains, dividends, estates and many successful corporations.

Where's the corporate tax reform that would lower rates and broaden the base and end the double-taxation of the overseas profits of American companies? A business tax cut would help enormously, but it's nowhere in sight.

There is also a deteriorating situation in Europe that could send us into another meltdown with little ability to address it. We are tapped out. And a shock to the system like the mass failure of Spanish banks or Greek exit from the euro could send our economy back into a deep recession.

Obama's schizophrenia regarding capitalism - he wants to create jobs but he also wants to soak businesses - is probably the clearest signal of the president's disconnect from reality and as Kudlow points out, an indication of failure for Obama's economic model.


As the NRO sage points out, it isn't just his ideology, or philosophy, or even just his policies that have failed; it is Obama's entire view of economic reality that must be called into question:

The Keynesian government-spending model has proven a complete failure. It's the Obama model. And it has produced such an anemic recovery that, frankly, at 2 percent growth, we're back on the front end of a potential recession. If anything goes wrong -- like another blow-up in Europe -- there's no safety margin to stop a new recession.

[...]

Barack Obama doesn't get this, but businesses create jobs. And firms have to be profitable in order to hire. Yet the president is on the campaign trail criticizing Mitt Romney by degrading the importance of profits. Huh?

Without profits, businesses can't expand. And if they don't expand, they can't hire. And if they don't have profitable rates of return, they're not going to attract new capital for investment.

Which brings us to a couple of important reasons for the virtual freeze in hiring.

First, there's the fiscal tax cliff. If all the Bush tax rates go up, incentives will go down and liquidity will leave the system. You can't pick up a newspaper these days and not find a story about how the fiscal cliff is elevating uncertainty and slowing U.S. growth. House Speaker John Boehner asked Obama for help in extending the Bush tax cuts this summer. But Obama said no. Instead, he wants to raise marginal tax rates on successful upper-income earners, capital gains, dividends, estates and many successful corporations.

Where's the corporate tax reform that would lower rates and broaden the base and end the double-taxation of the overseas profits of American companies? A business tax cut would help enormously, but it's nowhere in sight.

There is also a deteriorating situation in Europe that could send us into another meltdown with little ability to address it. We are tapped out. And a shock to the system like the mass failure of Spanish banks or Greek exit from the euro could send our economy back into a deep recession.

Obama's schizophrenia regarding capitalism - he wants to create jobs but he also wants to soak businesses - is probably the clearest signal of the president's disconnect from reality and as Kudlow points out, an indication of failure for Obama's economic model.