The Wall Street Journal, known for having quite a bit more knowledge on financial issues than a community agitator, weighs in
The problem with fires is that they can blow in any direction. Consider the White House, which is seeing a backdraft from the anti-Wall-Street flame it has been dousing with gasoline.
His agenda on the ropes, President Obama made a calculated decision to pivot to populism. The Massachusetts Senate race highlighted a fed-up public. The White House strategy: Channel that anger away from itself and to easier targets. Its opening shots were a new tax on banks, new restrictions on banking activities, and Mr. Obama roaring, “We want our money back!”
The president fed the fire with his State of the Union address. Americans are angry at “bad behavior on Wall Street.” It is time to “slash the tax breaks for companies that ship our jobs overseas.” Lobbyists are trying to “kill” financial regulation. American “cynicism” is the result of “selfish” bankers, CEOs who “reward” themselves “for failure” and lobbyists who “game the system.” (No mention of Cornhusker Kickbacks or backroom union deals, but never mind.)
Of course, Obama doesn’t get that the anger from the majority of Americans is not at banks and Wall Street, but, at the fat cats spending money at historic, unprecedented record rates, as well as trying to jam unpopular legislation down the public’s throat.
For an administration that claims to know its political history, the White House appears to have misread at least one decade. FDR was re-elected in 1936 for many reasons, but among them was his fiery denunciations of “economic royalists,” “economic tyranny,” and “economic slavery.” Business knew it was in the president’s crosshairs and put its capital on strike. The economy didn’t recover until the war.
Team Obama is already witnessing a repeat. The U.S. economy ought to be flying out of recession. Yet bank lending is sluggish. Companies refuse to hire. Business is going elsewhere to raise capital: China last year outstripped the U.S. as a center for initial public offerings. The market gyrates on Washington’s latest political drama.
A venture capitalist recently remarked to me that the uncertainty the administration has created is “nothing short of paralyzing.” Nobody will invest in an industry that might be the next to be overtaxed, overregulated, or publicly disemboweled.
Companies are concerned and unsure. Will they be slammed? Will the words of Obama turn into actual policy? Cap and trade? Healthcare? Restrictions on banks and Wall Street? Will taxes go up? Will Congress allow the 2001/2003 tax cuts expire? Tax credits for hiring? Which segment of the economy will Obama go after next? If you are unsure about what legislation could come from Washington, but, know that if it does come, it will harm your business, you hold off on hiring and upgrading your business. You become careful with your money, and extremely cautious. You have no idea if your money will be degraded soon, and do not want to hire someone you may have to turn around and let go soon.
Words have consequences, Obama.
