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Tuesday, August 7, 2012


Yesterday I saw an ad with Presidope Obama. In this ad he was talking about Mitt Romney’s plan to get the economy back on track. As we all know, Obaminomics is working so well we would not want to change.

Mitt Romney’s plan is basically what we call supply side economics. That is, we make it easier and more profitable for businesses to be in business and the result is more money changing hands in the economy. Obama says that Mitt Romney’s kind of ideas are why we are here in the first place.

Let’s take a look at things. Do you remember Ronald Reagan? When he took over as President, things were almost as bad as they are now. Carter, bless his heart, had tried to get the economy going but congress just wasn’t cooperating. When he put programs in place, it seemed that all of America was waiting to see just how bad they could screw these programs up. People feeding at the government trough are never satisfied with what they get. They always want more and they try to find ways to work the system to get more.

When Reagan took office, he managed over time to get supply side economics, also known as trickle-down economics, going. Government started making it easier for businesses to be in business. Tax rates were reduced and government regulations were cut back. The result was that the economy took off. It took off too well, in fact, and people became greedy.
Obama says this type of economics got us where we are today, but did it really? After Reagan came Bush with his “Read my lips: no new taxes” sound bite that came back to haunt him when he finally gave in to tax increases. Had he stuck to his guns we would not have started down that slippery slope to where we are now.

Clinton took office and as much as it pains me to say so, he managed the economy pretty well. However, in order to do this he had to juggle the economy in some pretty strange ways. To avoid taxes and to make it look like he had decreased the deficit, he borrowed from the Social Security Trust Fund, among other places. More money was printed and put in circulation. In short, as long as Clinton was in office he could juggle all the balls and keep them in the air. But, this is sort of like check kiting. Eventually the whole structure collapses and the balls drop. No matter who became the next president, he was going to be a chump on the economy.
Son Bush took office and the balls began to drop. He did nothing to stop them and things continued to get worse. We had several different really large corporate fiascos like Enron, Tyco, Worldcom, and the banking and investment crisis with investment banks like Goldman Sachs, Bear Sterns and we also had Long Term Capital Management.

Here again, we talk about greed. All the investment banks were caught up in greed and that is what brought us to where we are today. We had a group of bankers that decided that they can create money by inventing “Mortgage-backed securities.” Here, mortgages were packaged, disassembled, and then repackaged several times over to where no one really knew what mortgage went with which security. Everyone one wanted to get in on the lucrative game, but there weren’t enough mortgages to go around.

We have always had sub-prime mortgages. But to get one in the past you had to have a good bit of money to pay down into the home and you had to show that you did have the income to make the payments. Companies got so desperate for mortgages that, in the end, all someone had to do was fog a mirror and they got a mortgage. These mortgages started defaulting in droves. The mortgage companies decided to take advantage of the homeowners. People were foreclosed on with the idea that their properties could be flipped for a handsome profit to some other poor person who really wanted to own their own home.

The Bush Administration decided to bail out companies like AIG, who insured the risk on these sub-prime mortgages. Then, they decided to bail out the auto industry even though Ford did not need or want the bailout. Ford was forced to take it. AIG threw lavish parties and paid huge bonuses to corporate leaders who were too stupid to survive without the government bailouts. The whole concept of “Too Big to Fail” entered into our world.

We can’t blame this all on the republicans. We can’t blame this all on democrats. It isn’t the fault of any one president or administration. Each one shares a part of the blame. No one is taking responsibility.

We have all heard of Obamacare. This law is about as anti-business as it gets. It does nothing to actually address the problem. What it does is make it harder for a person to get health care and outlaws most medical treatment for anyone over 65. Even private insurance will not be allowed to pay for things like dialysis for anyone over 65. In short, if you don’t have the cash to pay for your medical treatment over age 65, you won’t get treatment. And you want him to get four more years?

What we need is a president and congress that will make it easier for business to do business. We need for the government to relax some of the laws and make it easier to comply with those laws that remain by putting them in plain English and giving one and only one department control over a certain issue.

Let’s bring back Reaganomics. Let’s see a little trickle down going on.

Doesn’t it make sense that if we reduce the tax rate on the upper class that they have more incentive to make money? If they make more money that means they hire more people. If they hire more people that means more jobs. More jobs means less people on unemployment and less people on food stamps and other public assistance.
If we provide more people with jobs, then they have money to spend. If they spend money that means they are buying stuff. If they buy stuff then that means that someone has to make, ship, box, sell, etc., this stuff. That means more jobs. You see where I am going with this. How could an intelligent person like Obama not see this? I don’t think the man is stupid. He has surrounded himself with a literal dream team of economists. People like Paul Volker, Ben S. Bernanke, Alan Greenspan and others. Each one of these is a great economist. Surely at least one of these guys is saying “try supply-side economics.”

When you vote, remember what Reagan asked us back in 1984. “Are you better off than you were four years ago?”

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There is no one right answer to any business question that will cover all circumstances.
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