Friday, February 27, 2009

Kudlow: Obama declares war on growth

Larry Kudlow lays it out pretty clearly in his blog post entitled Obama declares war on investors, entrepreneurs, businesses, and more. Excerpts follow, but be sure to read the whole thing:

Let me be very clear on the economics of President Obama’s State of the Union speech and his budget. He is declaring war on investors, entrepreneurs, small businesses, large corporations, and private-equity and venture-capital funds.

Raising the marginal tax rate on successful earners, capital, dividends, and all the private funds is a function of Obama’s left-wing social vision, and a repudiation of his economic-recovery statements. Ditto for his sweeping government-planning-and-spending program, which will wind up raising federal outlays as a share of GDP to at least 30 percent, if not more, over the next 10 years.

Study after study over the past several decades has shown how countries that spend more produce less, while nations that tax less produce more. Obama is doing it wrong on both counts.

And as far as middle-class tax cuts are concerned, Obama’s cap-and-trade program will be a huge across-the-board tax increase on blue-collar workers, including unionized workers. While the country wants more fuel and power, cap-and-trade will deliver less.

The combination of easy money from the Fed and below-potential economic growth is a prescription for stagflation. That’s one of the messages of the falling stock market.

Essentially, the Obama economic policies represent a major Democratic party relapse into Great Society social spending and taxing.

A great many Obama supporters -- especially hedge-fund types who voted for “change” -- are becoming disillusioned with the performances of Obama and Treasury man Geithner. There is a growing sense of buyer’s remorse.


Paul said...

This is the part that really chafes me: "A great many Obama supporters -- especially hedge-fund types who voted for “change” -- are becoming disillusioned with the performances of Obama.."

Why are they surprised? Anyone paying attention to Obama's record and associations should have seen this coming.

Scott Grannis said...

As I said re Buffett, having a lot of money is no guarantee that you're smart when it comes to policies, politics or people. Obama has a unique ability to enthrall people. I know a lot of otherwise smart people who fell in love with him.

Donny Baseball said...

Because most of them live in NYC where you are a social pariah if you are not a crazed liberal.

Anyway, capital will flee, it simply will not stick around for higher taxes, higher energy prices, and higher healthcare costs for its workers. Right now CEOs are scrambling to reallocate $ to overseas projects from the US. Investors will do the same. This is a guarantee. What is still open to speculation is how big and how immediate of an impact this will have here at home and how the public and Washington react. We could see severe stagnation immediately and a sharp reaction by the electorate or we could muddle along somewhat painfully for four years.

Mark A. Sadowski said...

Buyers remorse over his first budget? I suppose there might be a few. But then they didn't hear his campaign promises, or else they didn't really think he would keep them (read his lips). Most Obama supporters I know are ecstatic, few more than Nobel Prize winning economist Paul Krugman:

Scott Grannis said...

Donny: I still think there is a decent chance that the market has priced all this in. I think the market would have been recovering by now if Obama hadn't veered so quickly and sharply to the left.

Mark: Krugman has so discredited himself over the past several years that I will not waste any more time on him. That he received a Nobel Prize says more about the degree to which the Nobel has lost credibility than anything else.

Jon S. said...

The big-name hedge fund guys who love to get their names in the paper or appear on CNBC may have thought Obama was the second coming, but the rank and file hedge fund guys I know all thought he was a fraud and a dangerous socialist posing as a centrist.

Mark, I love your appeal to authority. It's not Paul Krugman the columnist any more, it's now Nobel Prize-winning economist ... but you can add as many laurels to his brow as you want, and you still come up with a politically-motivated analyst whose operating principle is, to borrow from Lewis Carroll's 'Through the Looking Glass' -- first the verdict, then the trial!

Paul said...

I honestly don't get what's so enthralling about Obama. His hopey-changey schtick was transparent to me the first time I heard it.

dave said...

Al Gore won a Nobel prize for Global warming... I mean Climate change, and that's as phony as it gets...

Donny Baseball said...

Jon S-
I run a small hedge fund in NYC and I meet alot of Obama skeptics amongst the small strivers - guys who run small sums and want to grow. But let there be no mistake, the big players who have already made it, they love Obama and wrote big checks for him. You cannot be active in the NYC social scene and be anti-Obama. If you make your anti-Obama preferences known you are not invited to parties and nobody comes to yours. I do not care and I am not whining, but it is true. I made the horrible mistake of defending Sarah Palin from the book-banning charge (nothing more than that specific charge, I did not advocate that she was the perfect candidate for VP) and all but got drummed out of a regular dinner amongst business colleagues. Sitting at their desks all day, all these Goldman types talk capitalism, but they turn around talk like French communists at parties. This election they voted their cocktail party personas. If it weren't all tied together I'd wish for the gov't to come in and wipe Goldman out and give these limo liberal a taste of the very visible, heavy hand of liberal gov't.

Red River said...

All you hungry NY types move to Texas and lets make it the financial capital of the US.

Ditto for you Silicon Valley types.

Anonymous said...

I like your blog, because in the past it has been centered and avoided the extreme emotionalism that so much of the common press prevails upon us.

Please don't become yet another screaming voice. There are a far smaller number of politicians in Washington than there are smart, capable entrepreneurs and people with capital in the US. Those who control ideas and capital will overcome those who seek to control the ideas and capital. We are still free. There is still hope. Fight, don't give up.

brodero said...

On a non political note could you publish a new misery index that incorporated the drop in wealth...

Jon S. said...

Donny B -- good points, basically in line with what I've experienced. Worker bees were not for this guy, but senior level types more often than not were.

Glad to hear that your hedge fund is still in business! I know a few very sharp, now-out-of-work hedge fund guys if you're hiring!

Scott Grannis said...

Bob: Thanks for your encouragement. I certainly do not want to become another "screaming voice." I do hope to do what I can to make sure people are aware of the blunders that Obama is prepared to commit. "Eternal vigilance is the price of liberty." That's my motto too.

I have to believe that reasoned argument is the best way to fight those who would make the government bigger.

Slingblade9119 said...
This comment has been removed by the author.
Slingblade9119 said...

Psalm of Obama

Obama is my shepherd, I shall not want.

He leadeth me beside the still factories.

He restoreth my doubt in the democratic party.

He guideth me to the path of unemployment for the party's sake.

I do not fear evil for thou art against me.

Thou annointest my wages with taxes,
So that my expenses runneth over my income.

Surely poverty and hard living shall follow the democratic Party.

And he shall live to “spread the wealth” forever.

chaim said...

Dr. Sam Vaknin has posited that Obama may have a Narcissistic Personality Disorder (NPD), a narcissism way beyond your typical politician.

“Narcissistic leaders are nefarious and their effects pernicious. They are subtle, refined, socially-adept, manipulative, possessed of thespian skills, and convincing. Both types equally lack empathy and are ruthless and relentless or driven.”…

This usually ends in disaster for his followers. [ In Obama’s case, unfortunately we are all inadvertent followers].

Read more at:

Another analysis:

World renowned graphologist and New York State Supreme Court Certified Document Examiner, Dr. Ari Korenblit, states that the strange signature of America’s new president, which oddly contains the first letter of the Arabic alphabet, as well as a crescent and a cross; reveals that Obama is actually secretive, and does not reveal all his true plans.

Dr. Korenblit said: "Barack's signature, scared the daylights out of me"


As more of Obama’s economic details roll out (remember he states that the stimulus package and budget proposal are only a “down payment”, there is a fear of an Economic “Jones Town”.