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The Obama-Clinton-Sanders program for a mediocre America

Written By | May 1, 2016

WASHINGTON, May 1, 2016 — President Obama as well as Democratic candidates Hillary Clinton and Bernie Sanders offer economic policies that are geared toward making America mediocre. This differs considerably from the historical perspective in which America was always considered exceptional.

America’s success, in fact, has been stunning. Our nation was created in the late 1700s. By the early 1900s, we were the dominant force in the world. We innovated more, produced more and fought harder in battle than any other country on Earth.

We showed the world that having a freedom-oriented society with a freely elected democratic system of government and a free-market economy would lead to tremendous growth and a higher standard of living for all citizens.

Part of the reason for the American success story was our unique economic system, in which all Americans had the freedom to follow their dreams and would reap the rewards of their efforts. As an American would become successful other Americans wanted to follow. Eventually, there were countless success stories which led to a high-growth economy.

For this country’s first 230 years, Americans were encouraged to excel. Then, in 2008, things changed.  Instead of concentrating economic policy on growing the economy and encouraging Americans to take chances, Federal government policies caused a radical change of course. President Obama said that he wanted to fundamentally change America because some Americans had reaped too many rewards while others received too few.

There was, the president declared, an income inequality problem since those at that top were earning much more than those at the bottom and the gap was growing larger. The solution was to raise taxes and take income away from the highest achievers and use this money to fund free health care, food stamps and welfare payments to the lowest achievers.

Not only did this make income inequality worse. It destroyed incentives for Americans to take risks in order to eventually achieve success. The administration’s higher tax rates meant that if an individual was very successful, the government would take a large chunk his or her earnings, sometimes more than 50 percent, as taxes.

It seems the goal of reducing income inequality by pulling down the people at the top rather than pushing up the people at the bottom is really to make America mediocre rather than keep it exceptional.

The Obama/Clinton/Sanders (OCS) desire is to raise taxes on the highest contributors even more. The maximum federal income tax rate was 36 percent when Obama entered office. He raised it to 39.6 percent.  Clinton wants to raise it to 45 percent and Sanders has said the top rate should be higher than 50 percent.  While they believe this higher rate of taxation will reduce income inequality, it will, in fact, make it worse and it will help make America more mediocre than the country has become over the past eight years.

OCS spends the extra tax revenue (and more) by “investing” in education and infrastructure. They say this extra spending will stimulate growth in the economy. The reality is that the extra spending will do nothing to stimulate the economy. That’s because what is spent on economic activity will come from those higher taxes, which in turn tend to reduce economic activity, nullifying much of the spending’s effects.

While economists will point to periods of time where high levels of government spending and large deficits did stimulate the economy, that simply hasn’t worked for the past seven or eight years. All that has happened is that the public debt (the total of all deficits) which was $10.6 trillion when Obama entered office will be about $19.6 trillion when he leaves.

In spite of this huge increase in indebtedness, President Obama will be the first president in recorded history to serve a term in office without having at least one year where economic growth exceeded 3 percent. His best year was 2.5 percent, decidedly sub-par in terms of the historical averages.

The long term effect of the current administration’s policies is that Americans themselves are becoming mediocre. We have lost the incentive and much of the desire to excel. High taxes and mountains of unnecessary regulations result in businesses that are not willing to take chances and find new, innovative ways to grow.

American exceptionalism should be encouraged. We still have an economic and political system that is unique in all of the world. Historically, ours is a system that encouraged Americans to excel and to set goals higher than they believed possible. Then Americans reached those goals and set even higher ones, believing that almost anything is possible.

Mediocre was the description of those who just wanted to settle. Exceptionalism was for Americans. It time to return to being exceptional once again.

Michael Busler

Michael Busler, Ph.D. is a public policy analyst and a Professor of Finance at Stockton University where he teaches undergraduate and graduate courses in Finance and Economics. He has written Op-ed columns in major newspapers for more than 35 years.