The working slogan in the current White House is "never waste a serious crisis." Everything, it seems, is an emergency. But it would be better if the Obama White House resurrected the 1992 Bill Clinton campaign slogan, "it's the economy, stupid."
Notwithstanding the Dow Jones Industrial Average's rise through 9,000 on Thursday, the U.S. economy - and California's in particular - remain very weak. Unemployment, at 9.5 percent nationally and 11.6 percent in the state, continues to rise. The Bureau of Labor Statistics reports that a broader measure of workplace misery, the "effective unemployment rate" that counts those working part-time who want full-time positions and people who have given up looking for a job, was 16.8 percent in June. There are places in California where the rate is 20 percent or more.
Meanwhile, less than 10 percent of the $787 billion federal stimulus has been disbursed, and much of it to one-time construction or community projects that will not spur lasting economic growth. The only way to accomplish that is to use tax and other incentives to spur business to invest in new ventures.
From automobiles to mortgage lending, sizeable swaths of the economy have been effectively nationalized. Massive borrowing to fund federal deficit spending at some point must crowd out private borrowing.
But that is not the end of it, not nearly.
Though the push for quick approval has been slowed in the U.S. Senate, cap-and-trade legislation rammed through the House of Representatives would impose significant new costs on energy production. Those costs would function as a major new tax on the economy and would directly impact the pocketbooks of businesses and consumers.
Finally, health care.
Though the numbers change by the hour, both House and Senate health care bills would mean new taxes on not just the wealthy, but small businesses. And who really believes that only the wealthiest Americans will end up paying more, if they pay anything at all?
One version of the House health care bill would increase the total federal and state marginal tax rate for California's top wage earners to 57 percent of income, one of the highest in the world. What is the incentive for a person to work harder, someone should ask, if nearly 60 cents of every dollar earned goes to government?
Or, let's say you own a small business with $400,000 in revenue. "Play-or-pay" provisions being considered would require that the company provide health insurance to employees or be taxed at 8 percent. Individuals who do not insure themselves would be subject to fines.
There is nothing here that would incentivize a business or individual to invest or hire. Quite the contrary, the logical response of any business would be to wait to do anything until there is some clarity about these potential new costs. And if the measures do come to pass, any recovery is almost certain to be weak.
Perhaps that will dawn on Congress and the White House, and the sooner the better.
Brad Bollinger is editor in chief of the Business Journal. See him online at northbaybusinessjournal.com. He can be reached at 707-521-4251 or email@example.com.