If you thought the presidential election would lead to an early break in the fiscal gridlock that now divides our government, think again.
President Obama’s postelection news conference on Wednesday signaled he is digging in for a lengthy political battle to raise tax rates amid new evidence the economy is still very weak and will likely remain so for the foreseeable future, if not throughout his second term.
If anything, he’s taking a tougher tone with Republicans in Congress as he prepares for negotiations with House Speaker John A. Boehner and other House and Senate leaders on Friday. Despite Mr. Boehner’s olive-branch offer that he’s open to new tax revenues, Mr. Obama is not countering with specific concessions of his own.
He reminded Republican leaders that he had received a “mandate” from the voters for his plan to raise taxes on higher-income Americans, that “elections matter,” and that he’s not going to back away from the higher tax rates he’s been fighting to put in place for the past four years.
That attitude sent tremors throughout the economy and its financial markets in anticipation of him playing hardball this time to raise tax rates on the top two income brackets, investors and small businesses.
“Investors are looking at the world in the wake of President Obama’s re-election victory. And they don’t like what they see,” Washington Post economics writer Neil Irwin wrote earlier this week. Wall Street agreed.
The stock markets had already plunged since Election Day and tumbled deeper during and after Mr. Obama’s news conference. The Dow Jones industrial average fell more than 1,000 points since Nov. 7, and the sell-off continued through Wednesday with the Dow falling to a three-month low.
America runs on capital investment, but Mr. Obama wants to hike George W. Bush’s 15 percent capital-gains and stock-dividend tax rates to more than 20 percent.
This would hit ordinary middle-class retirees who live off their dividends, but it would also kill capital formation and venture risk-taking needed for business expansion. That would worsen deficits, economists say.
Mr. Obama insists he wants to grow the economy, but also protect the middle class from having to shoulder the burden of higher taxes needed to pay off the mounting, unprecedented $5 trillion debt he has piled up in his first term.
He reluctantly agreed to extend the Bush tax cuts at the end of 2010 because the economy was too weak. Now he says things are getting better and that the economy will be able to withstand higher taxes.
However, his unshakable belief, against all reality, that we’re moving “forward,” going “in the right direction,” or “making progress” does not hold water. It’s as if he continues to live in a parallel universe of his own imagination.
Median household income, after adjusting for inflation, has been falling in each year of his presidency. Poverty is now at the highest level in decades. The jobless rate went up last month, not down, and it’s expected to go up again this month. The Federal Reserve said job growth, as well as economic growth, will remain weak under his current policies.
The problems that Mr. Obama listed Wednesday in his news conference and that will make up his agenda for the next four years are the same problems he has unsuccessfully dealt with in the past four years: an anemic, sluggish economy that’s slowed to a 1.7 percent crawl, weak job creation and high unemployment skirting 8 percent, poor educational-testing scores, costly energy prices that are taxing the people whose lives he wants to improve, and an unbroken line of unprecedented annual $1 trillion-plus deficits that threaten to engulf our country and bury every American under a mountain of crushing debt.
The U.S. Treasury Department reported Tuesday that the Obama administration began the 2013 fiscal year last month with a $120 billion deficit, saying he was on a path to his fifth consecutive trillion-dollar-plus deficit.