Tuesday, November 4, 2008

Obama Wins--But Will the Economy Lose?

As I walked back in the nip and chill of the evening,far too early and dejected, from the hotel where Republicans celebrate with their candidates, I looked at the tony stores lining the boulevard--and feared for their survival.

I'd just watched on a huge projected TV Sen. McCain's gracious and generous concession speech. Our nation lost the leadership of one who is temperate, dedicated and moral. And my mind turned to the likely consequences of that loss.

Stocks tomorrow and the rest of the week are likely to tumble, at the prospect of serious taxes on businesses already jabbed by the credit squeeze and weak economy. Many will have to contract. I looked at the swanky shops in the newly-expanded shopping corridor: Ex Officio offers "performance" wear for "enhanced comfort," and enhanced price. Nearby, 7 for All Mankind, Eileen Fischer, Rag ("Men's Style"), LaCoste and Free People just opened up. Blue jeans for $200? Not likely this year if taxes skyrocket among the more affluent who are the entire customer base of these stores.

How about the chi-chi eateries offering 3-D dinners--referring to the stacked presentation of items on the plate, as well as the triple-digit charge. A dozen bistros offer lovely ambiance, luscious cuisines of every kind--but they're likely to lose even more profit (restauranteurs report a 10-20% decline since the gas crunch a couple months ago) if gas goes back up, taxes restrict patrons' disposible income and they, as employers, have to kick in for their workers' health plans.

It's not a pretty picture.

Why did Americans let themselves in for all this tsuris (that's Yiddish for trouble)? Easy: emotion trumps logic. I've said it before, and it never fails. Obama's entire strategy, his encompassing approach, and indeed the typical pull of liberals is--well, that famous bleeding heart. "Taking care of you; taking care of others," the sad anecdotes featured on Obama's pre-World Series Infomercial, the dying Grandma whose only wish is to see her grandson become president...compassion, caring, hope and change! It was irresistible.

Sure, the Iraq war had dragged on, and we got used to feeling safe again. And George Bush had acted like a Democrat, expanding federal intrusion into education, and spending up a storm. It was a climate ripe for emotions to dominate.

Enter the economic crisis. The tired pun is that Americans felt over the barrel when it came to filling their tanks to drive to work, at $4 a gallon. Higher gas prices reverberated to everything that required transporting--and that would be everything. Spaghetti that used to cost $1 a pound now is 50% more. Lettuce and flour and pickles and juice all went up. It was a squeeze. Blame Bush! It hurts! Blame Bush! He's an old white guy...we want a young black guy!

By the time the election got close, Obama's policies were immaterial. When you look at him, you see--change. "Ninety-five percent of you are going to get a tax cut!" How? From the rich guys. Relief.

What can solve the economic crisis? First off, it's already easing--but this would instantly revive the economy: Flat tax of 18% across the board on incomes above $25,000, no deductions. Slash business taxes, slash taxes on capital gains and profits. Reward entrepreneureal risk-taking, and more businesses will re-invest what they earn from those risks, hiring more employees, and taking further risks. Our productivity and innovation grow.

But this is not about logic, remember. This is about caring, and caring is important. The question is--what kind of caring is most effective in stemming social problems? Dems don't like the term "trickle down," and yet they want help and aid to trickle down from huge governmental programs. Better is compassion on the personal and local level (which is much more responsive): Extended family, churches, civic groups, communities exemplifying values that encourage personal responsibility--for oneself and for others--and pride in one's daily performance. These are motivators for productivity.

Lots of Americans still champion these qualities. But when the government becomes the teat from which the little helpless ones suckle, only a very compelling factor can wean them from that free, intoxicating nectar of dependence.

And that's why the cold autumn air matched my dampened mood. Who's going to buy all the designer jeans and fancy purses and layered scallop dinners when the wealth is redistributed and the free market is fraught with expense? Who will be left to shop when all the well-to-do must flee? Our nation will survive, but we may be in for some tough times first. Hold on (to the ones you love) and keep praying.


  1. I have to admit I'm feeling pretty down today. My only hope is that he actually finds good people to surround himself with, people who will give him good advice, not people to whom he owes alleigence.

    My state is not so conservative anymore, and we will have to bid goodbye to an excellent Senator in John Sununu. I will look to you for brightness during the next four years.

  2. Thanks, Lynn...just remember that Dems/GOP, liberal-conservative goes in cycles. Also, Obama is starting out with a more moderate approach. My fear is that he'll build confidence and then...wham!

  3. Diane, loved your post...and clearly we need a GENUINE economic stimulus in the form of tax overhaul.

    I prefer the FairTax consumption tax (fairtax.org) over your proposed flat tax on income for many reasons.

    Perhaps the most important are 1) simplicity, 2)elimination of ALL Federal taxes, and 3) separating the the monkey business from the monkeys; in other words, preventing Congress from mucking about with deductions, rate increases, and the system of rewards and punishments that allows them to favor certain groups over others.

    I urge you and your readers to look into the FairTax, if only to come up with objections and flaws; after all, that's the only way they'll know how to fix them.

    Carry on with your good work!

  4. I loved this article. So many people who voted for Obama have no idea what he stands for - or what he truly believes in. I honestly hope he will do good, but nothing in his past leads me to believe he will support the America in which I believe. We can only look to the future and hope that as a nation we learn to be responsible for ourselves again, and in doing so, take care of each other.

  5. I enjoy this blog. But the thought of a blanket tax of 18% starting a floor of only $25,000 seems quite out of touch with reality. For a family of four that is barely above the federal poverty level. Floor for your proposal is...out of touch is all I can think of. I voted McCain and I'm concerned about the effects of the Obama policies but this type of thinking is what makes the party seem out of touch to a large part of the electorate.

  6. Thanks, auvox. Fairtax is good but I'm not sure we can eliminate all Fed taxes. The bible, btw, says 20% is the fair amount of taxation.

    Thanks, Karla, I fear you could be right.

    Samantha, you could be right that $25,000 is too low, but I feel everyone should pay something rather than 40% paying nothing and the top 25% paying for everyone. Also, I was thinking $25,000 per individual, not per family.