by Victor Davis Hanson<\/p>\n
PJ Media<\/em><\/p>\n Why is Wall Street worried? \u2014 Let us count the ways.<\/strong><\/p>\n 1) The proverbial Wall Street capitalists believe that, with new federal income tax rates, the removal of FICA ceilings, increases in capital gains rates, decreases in deductions, and simultaneous tax raises, not only will Obama remove incentives for innovation and productivity, but that he does not seem to care about \u2014 or perhaps appreciate \u2014 the consequences?<\/p>\n 2) On the spending side, investors see too many subsidies and entitlements that may Europeanize the populace and erode incentives, while creating so much debt that in the next decade, should interest rates rise, the federal budget will be consumed with servicing borrowing and entitlement obligations. A redistributive economy in which government ensures an equality of result is Wall Street\u2019s worst nightmare. Debt can only be paid back by floating more foreign debt, issuing more U.S. bonds at home, raising taxes, or printing money \u2014 all bad options in the mind of the investor.<\/p>\n 3) Too many are beginning to think Obama is, well, a na\u00eff \u2014 and hence dangerous. He chest-thumps speeches Geithner cannot deliver. He says we are near the Great Depression \u2014 but then, after the stimulus package passes, suddenly hypes future growth rates to suggest that we will be out a recession, soon after all? Add in all the talk of high-tax, Al-Gorist cap-in-trade, wind and solar, socialized medicine in the midst of a financial crisis, and at best Obama comes across as confused and herky-jerky, and at worse, clueless on the economy \u2014 as if a Chicago organizer is organizing a multi-trillion-dollar economy. Talking about \u2018gyrations\u2019 and confusion about profits and earnings, and offering ad hoc advice about investing do not restore authority.<\/p>\n 4) Given the amount of debt the US is incurring (and the decades needed to pay it off), given the loose talk about the \u2018rich\u2019, and given the rumors about nationalization, investors are unsure whether the United States will remain a safe haven for investment, or even offer a climate for profit-making, since it would either be taxed to the point of seizure, or its beneficiaries would be culturally and socially demonized. Ultimately perhaps some will accept that as the price of doing business in a socialist U.S., but for now it creates doubt. This is not a defense of Wall Street (a year ago Richard Fuld and Robert Rubin were our Zeuses on Olympus who strutted like gods), simply a warning that we are going from excess to stasis, and the cure will be as bad as or worse than the disease.<\/p>\n 5) Uncertainty. Who is now our Commerce Secretary? Which cowards is the Attorney General talking about? What did Geithner mean about pernicious oil and gas companies? What is with this Solis, and card check? How hard is it to ensure a Richardson or Daschle is clean? In other words, market watchers see after five weeks chaos, and think there is no sure and steady paradigm in which they can make careful business decisions and anticipate with some surety future risk.<\/p>\n So the perfect storm forms, and millions of individuals come to millions of identical conclusions: \u201cCut your losses with these guys, and get your cash out before it gets worse\u201d rather than \u201cWow, what bargains! I gotta get in before the window of profit opportunity closes.\u201d<\/p>\n But is there an alternative?<\/strong><\/p>\n Do Republicans offer an antithesis? Can they explain the Bush deficits and take responsibility for them, as well as the Republican congressional creepiness from 2002-06 (Craig, Stevens, Cunningham, Foley, etc)? And most importantly, will they offer counterproposals \u2014 a stimulus much smaller, mixtures of loan guarantees, tax cuts, and (some) public works alone, coupled with spending caps as soon as GDP growth returns? Can they articulate how the market corrected, say, in 1980-3, without our government going socialist? Can we get a plan not merely to balance the budget, but to pay off the debt? If not, legitimate criticisms of Obama fall on deaf ears without some positive alternative.<\/p>\n Obamania<\/strong><\/p>\n The rants of Sec. Geithner about oil and gas companies and global warming were quite unusual. Does he grasp that the transition to his solar and wind nirvana requires some rather tough hombres working tonight on rigs in the Gulf, and some brave engineers driving a Jeep in a Libya or out in the Kuwaiti desert looking for more oil, or some poor fellow freezing out in the Arctic Circle so that Mr. Geithner can be driven in his government limo to the hearings? Solar panels do not power the President\u2019s chopper \u2014 yet. And Hillary flew to the Middle East on fossil fuel engines not via clipper ship.<\/p>\n Meanwhile, note that the campaign flip-flop positions of supporting off-shore drilling, nuclear, shale oil, and coal, are now insidiously back to the original positions of \u2018no \u2014 maybe\u2019.<\/p>\n The utopian ranters<\/strong><\/p>\n Energy Secretary Chu ranted that we warmed up the planet so Californians must pay the price by seeing their farms dry up and blow away. Attorney General Holder finger pointed and labeled us \u201ccowards.\u201d So why the attack on oil companies by Geithner \u2014 and why these lectures about our supposed racism and environmental crimes? What deep psychological need does it fulfill for a Holder, our first African-American AG, to blast us as cowardly racists, or why does an elite like Geithner think fossil fuels are not the linchpin that our economy still for a bit hinges upon? They all need to go back to work, ensure the debt is paid down, and quiet down the Harvard Yard sermons.<\/p>\n The worst of both worlds<\/strong><\/p>\n There is much talk about Obama merely returning to the tax rates of the Clinton administration. But that is misleading for two unfortunate reasons: (1) Clinton did not tamper with FICA ceilings and other deductions in addition to the income tax hikes; (2) he had spending limits imposed by the post 1994-Congress, so at least his income tax increases led to a balanced budget. But Obama is not only raising taxes far higher in aggregate than did Clinton with the present trillion-some spending hikes, but ensuring that we will still end up with astronomical deficits. So we get the tax hikes of Clinton \u2014 but without the balanced budgets; and we get far higher deficits than under Bush \u2014 butsans<\/em>\u00a0the tax cuts.<\/p>\n Fear of government \u2013 Part Two.<\/strong><\/p>\n Last week I wrote of my encounters with municipal garbage trucks spewing garbage, and city bus drivers doing rolling stops into the cross walk, one hand with cigarette, one hand with cell phone \u2014 as a reflection of the old Roman worry \u201cWho will police the police?\u201d<\/p>\n In a world of government employees there is no real redress of grievances, but real difficulty of accountability (what government employee fines the government-employed bus driver for violating state law concerning driving while on a cell phone?). My latest example was Thursday afternoon.<\/p>\n As I drove out of a parking lot of the San Jose airport, of the six exit pay stations, only one was open. But at the window, a city tractor and a city pick-up were parked and idled blocking the exit. The drivers were both out and talking to the parking attendant about their \u201clost\u201d ticket. After watching them all nonchalantly talk \u2014 joined by the other parking attendant with his booth closed on \u201cbreak\u201d \u2014 I got out and asked the four \u2018what\u2019s up\u2019?<\/p>\n You know what followed \u2014 abuse, yelling, \u2018how dare you question us!\u2019, etc. A number of backed-up drivers like me now got out and were yelling back, and finally the city employees moved through and unblocked the exit while the idle attendant ran back to open a second station to handle the irate idling cars. Total elapsed time? 24 minutes of waiting. Imagine four employees blocking the only way out the San Jose parking lot, while cars line up, their drivers watching the four josh around and apparently laugh at the fee-paying customers.<\/p>\n I had nightmares that this is what the new 40% government GDP USA will look like by 2012 \u2014 $20 trillion now in aggregate debt to ensure a nation of city-employees lounging around the toll booth, while cars line up and drivers cool their heels. No success, no failure, no stress, no calm \u2014 just endless existence.<\/p>\n \u00a92009 Victor Davis Hanson<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":" by Victor Davis Hanson PJ Media Why is Wall Street worried? \u2014 Let us count the ways. 1) The proverbial Wall Street capitalists believe that, with new federal income tax rates, the removal of FICA ceilings, increases in capital gains rates, decreases in deductions, and simultaneous tax raises, not only will Obama remove incentives for […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_newsletter_tier_id":0,"footnotes":"","jetpack_publicize_message":"","jetpack_is_tweetstorm":false,"jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false}}},"categories":[723],"tags":[],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/p466Sb-L0","jetpack_likes_enabled":true,"jetpack-related-posts":[{"id":6553,"url":"https:\/\/victorhanson.com\/wordpress\/the-late-great-middle-class\/","url_meta":{"origin":2914,"position":0},"title":"The Late, Great Middle Class","author":"victorhanson","date":"September 26, 2013","format":false,"excerpt":"It's never been harder to find a decent job making something real. by Victor Davis Hanson \/\/\u00a0National Review Online\u00a0 The American middle class, like the American economy in general, is ailing. Labor-force participation has hit a 35-year low. Median household income is lower than it was five years ago. Only\u2026","rel":"","context":"In "The Middle Class"","block_context":{"text":"The Middle Class","link":"https:\/\/victorhanson.com\/wordpress\/ahref=\/index.php\/categories\/angry-reader\/categorylink\/a\/politics\/the-middle-class\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/victorhanson.com\/wordpress\/wp-content\/uploads\/2013\/09\/Destitute_man_vacant_store-300x294.gif?resize=350%2C200","width":350,"height":200},"classes":[]},{"id":6621,"url":"https:\/\/victorhanson.com\/wordpress\/what-are-they-fighting-over\/","url_meta":{"origin":2914,"position":1},"title":"What Are They Fighting Over?","author":"victorhanson","date":"October 15, 2013","format":false,"excerpt":"by Victor Davis Hanson \/\/\u00a0NRO's The Corner\u00a0 The deficit this year may fall to below $700 billion, but that is still huge at a time of a record near $17 trillion in debt, and comes despite a supposedly recovering economy and more revenue, despite recent sequestration cuts, despite dramatic gains\u2026","rel":"","context":"In "Debt and Deficits"","block_context":{"text":"Debt and Deficits","link":"https:\/\/victorhanson.com\/wordpress\/ahref=\/index.php\/categories\/angry-reader\/categorylink\/a\/politics\/debt-and-deficits\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":2850,"url":"https:\/\/victorhanson.com\/wordpress\/the-politics-of-blame\/","url_meta":{"origin":2914,"position":2},"title":"The Politics of Blame","author":"victorhanson","date":"April 14, 2009","format":false,"excerpt":"by Victor Davis Hanson Tribune Media Services It should have been easy for Democrats to connect depleted 401(k) accounts and lost home equity with the buccaneers of Wall Street who supposedly prompted the panic. The public, after all, has been whipped up in furor at the masters of the universe\u2026","rel":"","context":"In "April 2009"","block_context":{"text":"April 2009","link":"https:\/\/victorhanson.com\/wordpress\/ahref=\/index.php\/categories\/angry-reader\/categorylink\/a\/archives\/2009\/april-2009\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":1960,"url":"https:\/\/victorhanson.com\/wordpress\/wall-streets-disgruntles-utopians\/","url_meta":{"origin":2914,"position":3},"title":"Wall Street’s Disgruntles Utopians","author":"victorhanson","date":"October 11, 2011","format":false,"excerpt":"by Bruce S. Thornton FrontPage Magazine The Occupy Wall Street protesters are looking more and more like the shock troops of the Democratic Party\u2019s electoral tactic of class warfare. Responding to a question about the protesters, the President gave an oblique endorsement when he said, \u201cThe American people understand that\u2026","rel":"","context":"In "Bruce S. Thornton"","block_context":{"text":"Bruce S. Thornton","link":"https:\/\/victorhanson.com\/wordpress\/ahref=\/index.php\/categories\/angry-reader\/categorylink\/a\/our-contributors\/bruce-s-thornton\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":2868,"url":"https:\/\/victorhanson.com\/wordpress\/american-mob-rule\/","url_meta":{"origin":2914,"position":4},"title":"American Mob Rule","author":"victorhanson","date":"March 30, 2009","format":false,"excerpt":"by Victor Davis Hanson Tribune Media Services In the last three months, we've been reduced to something like the ancient Athenian mob \u2014 with opportunistic politicians sometimes inciting, sometimes catering to an already angry public. 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