As I examine the probability and historic aspects of this Presidential election, it is evident it is Obama’s race to lose. John McCain continues to alienate himself from the Conservative base and sounds more like a Reagan Democrat than a Republican. The fact McCain will let the Bush tax cuts stand, is his only redeeming value to this point and that won’t be enough to defeat Obama.
If you accept my premise, there is a much larger question that is looming over this coming election. Will Obama Save America?
As we see American giant Anheuser Busch being sold to a Belgium company, it is only the beginning of the wholesale purchase of our country. The American dollar is on life support and perennial US powerhouses such as Ford and GM are listing, like a ship with a hole in the hull. Unemployment is steadily growing and the sudden flood of over qualified workers into the market is making it impossible for the average Joe/Jane to find suitable employment. Add to that the rising costs of gas, food, utilities and borrowing and you have the formula for disaster in our nation.
The Federal government has just announced their willingness to support mortgage juggernauts Freddie Mac and Fannie Mae in order to avert their demise due to the unbelievable default rate from the lending bust. This too is an indicator of the peril the US now find itself awashed in. I could definitely go on describing individual sectors of our economy that are in distress and how bleak the outlook is, but that isn’t the purpose of this post. Barack Obama built one of the strongest grassroots campaigns in history based on his messageof change, but will his brand of change get us back on the right track?
It doesn’t take a Wharton Business School Economist to realize what will put the brakes on our sliding economy and how America can get back on the path of being a world leader, but will our new leader be willing to travel that path at the risk of alienating the people who elected him. The simple truths of the matter is we need serious and deep reform in the areas of job creation, oil dependence, and goverment spending.
Job Creation
Whether you agree with outsourcing or not, you can’t deny the cause has more to do with the punitive nature of our corporate tax system, than some evil plan to cheat the American worker out of a decent wage. Doing business in the United States is increasingly becoming cost prohibitive; our corporate tax rate is the highest among industrialized nations (40%) and policies such as Sarbannes Oxley impose regulations that further deteriorate profitability through forced compliance.
Of course, there are those who think a company should pay higher wages for its employees, even to the detriment of investors. However, we in the real world understand the burden of corporate taxes makes it impossible to offer a competitive wage, product, and gain market share globally. Therefore, the simple solution is to partner with firms outside of the US who can produce products or offer services at a much more competitive rate or sell to a company where the tax burdens are less and reap an immediate reward.
What President Obama will have to do is argue for the elimination of corporate taxes and incentives and allow US companies to be more competitive in the world. In fact, if corporate taxes were eliminated in the US more countries would want to locate their manufacturing here. Imagine the concept of coming to the US to build a factory during a time when your currency is stronger and there are greatly reduced tax consequences. The problem is that kind of philosophy goes against the grain of the Liberal agenda. A stronger nation would insist on a decrease in the size of government, a balanced budget, less government spending and lower taxes…all of which are contrary to Obama’s most ardent supporters.
Oil dependence
There is no need to go into the long, drawn out argument of whether drilling off the coast of Florida and in Alaska would benefit us. The question is simply, is the so called "environmental impact" greater than the collapse of our infrastructure due to $6+ gas prices. It may take seven to ten years to reap the full benefits of drilling now, but the worldwide demand for oil is not going down. Also, with our innovative entreprenueral spirit, I’m certain it will not take seven to ten years to get the oil into our economy. Large companies and individual investors will work tirelessly to develop methods of finding, refining, and delivering our domestic oil to the American people.
A second area to decrease oil dependence is electric car technologies. We can discuss hydrofuels, ethanol, or wind and solar power, but nothing has as much immediate viability as battery cell technology. As I have researched the industry, I found there are several companies that produce electric cars, those who convert gas to electric cars and those who develop hybrids. The vehicles range in style from Scions to Porsche and range in price from $29,000 to $90,000. With the closing of many Ford and GM plants, President Obama could lobby Congress to offer tax incentives for Ford or GM to retool those plants for electric car conversions. The technology already exists so the largest expense would be expanding the techonology to a large scale operation. The benefit would be a cost reduction to the consumer as economy of scale brings down the cost of production. In the time it takes to retool and get the plants moving at capacity, private industry would begin to supply electric car charging stations. Venues such as malls an movie theaters will offer charging stations for consumers to use while they are using their facilities.
Government Spending
This issue is the cornerstone of the transition of the current system to what we will ultimately become. If we expand the size of government, we will begin the march toward a more Facist or Socialist form of governing. The government will supply needs such as healthcare, education, and housing and have partial ownership in businesses that supply jobs and manufacturing. Private industry will be replaced by a large cumbersome underperforming govenmental agency.
Social Security, Medicare, and other entitlement programs make up nearly 63% of the current years budget. Yet there is a strident reluctance to even suggest ways to bring it to managable levels. President Obama could remove all of the duplicate offices and ineffective departments such as the Department of Education, Interior, and the IRS. In turn, states would be given more power to decide what is best for them, which is the way it was intended. The federal government will oversee decisions to maintain rights given under the Constitution and to offer support in exreme cases of legislative empass. Obama could then set a goal of 10% of GDP as the operating budget for the federal government and term limits to remove the temptation of earmarks for the career politician.
In my opinion, Barack Obama is a very pragmatic person and will quickly see his place in history unfold in the coming administration. The question is will he go in the direction that will allow the country to continue faltering in order to gain more government power or will he opt for the historical perspective of the President who saved America? Only time will tell.