Sunday, October 9, 2016

What Does Obama’s 3rd Term Look Like?

No matter the candidate that wins the Presidency, the future of government is going to look more or less like President Obama’s third term.  This is not good for freedom and free markets.  Both Hillary Clinton and Donald Trump crow about government as a source of solutions when, beyond a modicum of involvement, government is more a source of problems, ineffectiveness and waste.

The economy is burdened to the tune of $2 trillion in regulations and, with corporate tax rates at 35%, expect $2 trillion of corporate cash to remain off-shore.  Without a moderate reduction in both, we predict continued anemic growth of GDP under Trump or Clinton.  With this back-drop, what does the future look like in a Clinton and Trump presidency?

ObamaCare: Trump says he will repeal ObamaCare but with what?  The Republicans will offer an “ObamaCare Light” and the Democrats will have a single payer government option to eventually replace private health insurance companies.  Both alternatives are based on more government intrusion and take-over of healthcare.  Expect accelerated premium increases and more subsidies.

Taxes:  Here there is a difference.  Clinton will go full-tilt to raise income taxes, ObamaCare taxes, and capital-gain taxes.  Whereas Trump will try, and probably fail, to lower corporate taxes, but probably succeed at keeping capital-gain taxes unchanged.  Since each party behind each candidate wants a “revenue neutral” tax plan, the result will be just squeezing a balloon. Clinton can take a populous stand to “tax the rich” because she know that even when the individual tax rates were 90%, the rich were paying 15%-25%.  This is because the rich have lawyers, accountants and lobbyists who are in league with politicians willing to manipulate the tax code.  However, do note that the top 10% of income earners pay 70% of total federal taxes.  Accordingly, cries from the left of the rich not paying their “fair-share” are without merit.

Regulations:  These will continue to increase and be a drag on the economy.  The only difference is Trump and Republicans might have a smaller growth than Clinton and Democrats – but both will grow regulations.  For example, in the first six years of George W Bush and Obama, major regulations grew by $30 billion and $80 billion, respectively.

Existing Entitlements: Expect no major changes here as both parties are not going to make the material structural modifications needed to blunt the $100 trillion of unfunded liabilities.  The Democrats see the path to "fixing" entitlements as more entitlements.  The Republicans are all talk and no action about entitlement reform as they lack the political backbone it will take.

Deficit & Debt:  These will only grow dangerously larger.  As government increases so will the gap in taxes collected and expenditures.  This will continue for the next Presidential term, after which, expect a discussion to begin on a Value Added Tax (VAT) as a new source of taxes will be needed to plug the hemorrhaging expenses.  What is more, as the debt continues to swell and interest rates eventually climb, the amount of money needed to service the debt will also grow, thus feeding an out of control debt spiral.

Immigration: Clinton has already proclaimed she will do more than Obama, so expect more open borders, sanctuary cities, and executive orders.  Trump talks tough, but Republicans have no stomach for what Trump wants.  Republicans politically need immigration reform but it will look more Democratic than Republican.  As such, there is a chance for an immigration policy, which includes amnesty – though it will not be called that.

Trade:  Both candidates are protectionists so expect more tariffs and protectionism.

National Security:  Here the choice is bleak and bleaker.  Trump has no intellectual interest in foreign policy and Clinton has a record of failure (being on the wrong side of history in all she has done).  The best we can say about Trump is he has not screwed-up foreign affairs only because he has not tried to do it.  Whereas the best we can say about Clinton is . . . nothing.

Global Warming:  The charade continues as Obama, Clinton, Kerry and the minions on the left flail unproven claims of man-made global warming to increase taxes and government control over the economy.  Trump has no interest in climate change and will go where the political winds (pun intended) take him.  Expect Clinton to push the Obama agenda with its requisite damage to the economy, while Trump will largely be on the sideline and let the bureaucrats go un-checked.

Supreme Court:  With Clinton the Court will certainly turn sharply left and the Bill of Rights will be under assault.  Trump is a wild card.  It is uncertain if he is ready and can fight what will be a cage match - a battle to put Scalia like justices on the Court. This is the most dangerous area to freedom we face.  Clinton is a clear enemy, but Trump is an uncertain friend.

Executive Orders: Both candidates will try to expand the dangerous Obama course of going around Congress with executive orders.  Clinton will be more aggressive.

Much of the above depends on which party controls Congress.  If Democrats, expect an explosion in government, taxes and regulations as seen under Obama.  If Republicans, expect the same only smaller.

But, you ask, Republicans are for business, limited government, and reduced taxes?  However, this is more marketing than reality.  George W Bush and the Republicans gave us expanded entitlements (Medicare Part D), Wall Street bailouts, bank bailouts, auto industry bailouts, stimulus, a tax reduction that expired, and two wars that, at least, kept America from another terrorist attack on its shores.  Obama gave us a bigger entitlement of ObamaCare, bigger bank bailouts, bigger Wall Street bailouts, bigger car industry bailouts, bigger stimulus, a tax hike, and rushed out of two wars that gave rise to ISIS, put the Middle East in turmoil and brought terrorism to American soil.

As such, we conclude that we have had the two worst successive Presidents in Bush and Obama that have given unrestrained growth of government.  So, more than a 3rd Obama term, we are potentially staring at a fifth failed term of whoever is elected.  The reason we have the abysmal choices for President is because the people have put them there.  The only shred of light is that 57% of people surveyed say they will be voting against a candidate rather than 39% voting for a candidate.  This means that either candidate elected may be a one term President and people may be more vigilant next time to vote for, rather than against, a candidate.

No comments:

Post a Comment