congress

In looking at a number of things that the Democrat-led Congress and Obama are eyeing as policy they would like to implement, there are eight things that Obama cannot sign in to law or else he could make the Republican takeover of Congress in 1994 look like a blip on the radar screen by 2012, if not 2010. Here are the nine policy changes Obama and the Democrats cannot pursue if they hope to expand their majorities or hold on to them over the next two to four years:

 

 

Everyone knows that the economy is in a slowdown. Despite Obama’s calls for “trickle-up” economic policy, reducing taxes on the highest of income groups always appears to lead to greater economic expansion. John F. Kennedy took the top from 90 percent to 70 percent and Ronald Reagan took the top rate from 70 to 20. The end result both times was an economic expansion and greater tax revenues. However, Obama might tempt his fate by going against this approach.

 

The three areas where Obama would want to raise taxes would be on the so-called “rich” by raising income tax rates to the Clinton-era top brackets of 36 and 39.6 percent, eliminating the cap on FICA taxes, and to raise the capital gains tax rate. Any of these three would turn this current recession in to a full-blown depression. As I mentioned in an earlier post, tax increases were the last of the four things that pushed the economy of the 1930’s in to the Great Depression.

 

One of the reasons that the stock market has shed anywhere from 11.7 percent to 14.8 percent of its value in the eight trading days since the Presidential election came to a close (depending on which market you’re evaluating) is that Obama has not addressed his plans on taxes for the foreseeable future. Even the Wall Street Journal has called on Obama to hold a press conference, give a speech, or issue a press release that says he will not increase taxes for the “foreseeable future”. If this does not happen, the stock market will continue to shed its value while waiting with baited breath as to what Obama intends to do as President.

 

If a tax increase comes, it would not be felt until at least the next year. However, the effects of the tax increase would be long lasting in that it would take a potential economic recovery in 2010 in to a second recession that would likely come before the Congressional midterm elections. If the economy is still an issue, 2010 could go for the Democrats the same way it went for Republicans in the middle of economic woes in 1970 and 1982 and Democrats in 1978.

 

 

If anyone has been paying close attention, there have been calls for President-elect Obama to increase deficit spending once he takes office. It appears all but certain that unless strict budget discipline is imposed by Congress and Obama, the deficit could hit $1 trillion by the end of the year. All of a sudden, a party that had promised to restore fiscal responsibility and budget discipline by way of PAYGO budgeting would be well on their way to losing all credibility on the matter.

 

It was one thing for Obama to slam President Bush on doubling the size of the deficit during the Presidential Debates against John McCain, but it would be another to not practice what he preaches. By the time of the midterms in 2010, there is no more George W. Bush to blame for unbalanced budgets. Either the deficit is reducing in size as Obama said he would like to do or it is increasing in size as Congressional Democrats would be willing to let happen.

 

When it comes to a budget battle, the home-field advantage belongs to Congress because of the ability it has to draft its own budget and to get members to vote for it based on a number of pork-barrel projects and other giveaways. It also makes it harder for the President if he decides to wage a budget battle with Congress as it will trickle in to other areas on matters of public policy.

 

About the only way out for Obama would be to severely cut military spending. Doing so in a time of two-theater military engagements would cause a great deal of harm to the military. Even the blue-dog Democrats will attempt to stop him (until they get pork or tax cuts they desire). In the end, reducing military spending by increasing runaway earmarks could actually accelerate the size of the deficit at an even faster pace.

 

Chances are that if spending is increased and tax revenues start to run dry thanks to a faltering economy, Obama will have no choice but to become the first President to sign a trillion-dollar budget in to law. If it happens, there will be wrath from the voting public who had expected better from the Democrats on budget matters.

 

 

Speaking of bolstering the unions, the biggest thing that Obama and the Congressional Democrats can do to help their base is to pass the Employee Free Choice Act. What this bill intends to do is to boost union membership by automatically creating a union shop thanks to more than 50 percent of a company’s employees signing a union card.

 

By doing this, it forces an already harmonious relationship between owners and workers in to a more tension-fuelled environment by forcing upon big and small business alike in to pro-union collective bargaining agreements with the government as an arbiter. The problem with this is that workers will get more benefits and wages and job protection while hurting any company’s bottom line with pro-union bureaucrats fighting business at the same time.

 

Also, this would end secret-ballot elections in union elections. Instead, all union elections could be open-ballot votes with union bosses seeing how particular members of their membership voted. In effect, it would turn a union election in to the equivalent of a Saddam Hussein-era Iraqi election with members ostracized and ridiculed for not voting the union line. In a sense, it makes “employee free choice” sound Orwellian.

 

President Bush was smart to veto this bill in 2006, but it will take the filibuster efforts of 41-plus Republicans (which could be in doubt) to stop this bill dead in its tracks. If Obama is all about jobs, he will reject this bill because it will actually kill jobs instead of creating them.

 

Already, there are economists predicting an unemployment rate of as much as 7.3 percent by May 2009 and 9 percent by the end of 2010. If this bill becomes law, we will be talking depression-level unemployment by the time the midterms arrive.

 

 

Rasmussen Reports released the results of a poll showing that 73 percent of Americans fear the United States Government running out of money. If the automaker bailout goes in to effect, Obama will increase that number further thanks to the bailout itself and the number of failing companies in the business community also calling for a bailout.

 

The airlines, cities, and states are all getting ready to get in to line to see how much money the government will give them in the form of a bailout. If this goes through, then Congress will be hard pressed to find a way out of telling all of them “no” directly to their faces.

 

If nothing else, the bailout isn’t for General Motors, Ford, or Chrysler, but it’s for the establishment of the United Auto Workers union to an effort to keep their negotiating leverage. If a Chapter 11 bankruptcy (which is needed) were to ever come about for any of the big three, then it would zap the UAW’s power away thanks to a conservator who would dramatically scale back their pay and benefits.

 

Chances are good (and I’ll be the first to make this prediction) that if the automakers are bailed out now, they will be back for more cash before the Presidential election in 2012 because of the unions and their bad business models. If bankruptcy happens, it could actually save an entire sector of the economy from an even bigger calamity.

 

 

To the best of my (or anyone else’s) knowledge, there is not a single state that has successfully restricted abortion by way of a constitutional amendment. If the Freedom of Choice Act ever becomes law, it would result in abortion on demand sans restrictions and even allow for the federal government to directly pay for as many abortions as possible.

 

One of the ways in which Obama and the Democrats succeeded in winning elections was by neutralizing the values-based voters of the conservative persuasion. This was done by their rhetoric of sounding like Reagan on issues such as abortion, faith, and gay marriage (more on this later) and sounding genuine about it. Even President-elect Obama did this in his run for President.

 

What also helped was the complicity of the mainstream media in not probing Obama or other Democrats on social issues. If this one flies under the radar (the media hopes), this will all be forgotten by the midterms and 2012. Instead, there are a number of voting groups that would know better.

 

For one, the Catholic voters went for Obama by the margin of 53 percent to 45 percent while Protestants only went for McCain by a 53 to 45 percent margin. What could be important is the Catholic vote, which made up 26 percent of the electorate versus the Protestant vote (55 percent). For years, Catholics were a reliable part of the Democrat Party base until Roe v. Wade when the Democrats took up the feminazi’s struggle on abortion and kicked Catholics to the curb on the matter. Despite this, Catholic voters went for Obama this year.

 

However, what Obama could not afford to do would be to legislate against abortion bans and encourage more abortion. Catholic clergy (priests and nuns) would not stand for it and would relay their message from their lecterns. If the Catholic vote were to go 75 percent to a Republican, that would be more than 25 million votes, or a projected increase of 10 million votes for the GOP. This switch alone would be enough to defeat Obama in his reelection bid unless he could get some 1.5 million votes elsewhere.

 

 

From what has been taking place in California in regards to the passage of the gay marriage ban in that state might set the stage for this action taking place. In order to throw the far-left base of Obama’s supporters a bone, there might be a move to repeal the Defense of Marriage Act (DOMA) that was signed in to law by President Clinton in 1996. Should this happen, it could galvanize a majority of voters who oppose gay marriage.

 

Again, this goes back to the plans of Obama and the Democrats to sound like moderates or conservatives on social issues, but their rhetoric ultimately becoming lip service. Far-left politicians on social issues have a hard time being elected when they become an issue in a campaign and when they proclaim left-of-center social policy approaches.

 

In districts where conservatives outnumber liberals by substantial margins, this would not play well at all. If the issues of gay marriage and abortion become the forefront in these campaigns, it almost always favors the Republicans. It would be wise to back off this for quite some time until at least what Obama would hope to be his second term. If not, there will be major electoral losses and Obama would have to reinstate a gay marriage ban in order to save himself from being attacked along social policy lines.

 

 

This was tried back in 2007 by John McCain and Ted Kennedy and we all know how it turned out. In the end, there were not enough votes to break the filibuster and bring “comprehensive” immigration reform to the floor of the United States Senate. One of its supporters who tried to break the filibuster was then-Illinois Senator Barack Obama who supported this bill.

 

The major point at which the American public and most Senators began to oppose the bill was that amnesty would be granted to all illegal immigrants currently here in the United States and to their immediate families living outside the country. It also drew opposition because of the reduction in the length of the border fence.

 

Obama, who also expressed his support to give driver’s licenses to illegal immigrants during the Democrat primaries, has said he wants to sign it in to law. If there are not enough votes to sustain the filibuster, it will likely pass and another 20 million illegal immigrants and their immediate family members will be put on a “path to citizenship”.

 

Amnesty was tried in 1986 when Ronald Reagan made it happen with his idea that it was the “right thing to do”. Sadly, we have come to the realization that amnesty is not the answer, but a band-aid for a gaping wound.

 

 

Later this month, OPEC will meet to discuss further cuts in oil production in an effort to raise prices. This comes as there was the expiration of the off-shore drilling ban and George W. Bush’s executive order ending a ban on the practice. However, as any economist will tell you, when you cut supply, you increase the price.

 

The same would likely take place here as OPEC will almost certainly cut production dramatically in order to start making money the same way they were back in the summer. Iran alone has called for a cut of up to 1.5 million barrels per day. Of course, the Democrats and Obama will become useful idiots by attempting to restrict domestic oil exploration.

 

All of this will actually increase energy prices as the calls for more oil exploration become louder and louder by the day. In the end, it could prove to be fatal as Obama tries to make plays to extreme environmentalists and sacrifices the pocketbooks of average Americans to make a play to his base.

 

 

There’s an old expression of “if you can’t beat them, join them”. However, in the liberal lexicon, the expression goes “if you can’t beat them, silence them.” Sadly, liberals support free speech only when it appeals to liberalism. The return of the Fairness Doctrine (aptly called the Censorship Doctrine by Sean Hannity) would only impose on AM and FM radio so-called balance as determined by government bureaucrats.

 

Former Clinton advisor Dick Morris has predicted that it will happen, but will be overturned by the Supreme Court “in two years”, but talk radio is effectively dead if this happens. Their targets are the successful conservative talk radio programs because of the failure of liberal talk radio programs. In other words, they are going to destroy success in order to prevent failure which is a long way of saying the attempt is an equal outcome.

 

This will put the United States on par with Venezuela and Russia in terms of restricting free speech on the radio. Meanwhile, television, newspapers, and the internet will not fall under this kind of regulation. In other words, one might call it the Hush Rush Act of 2009. All of this would be designed to end any voice of opposition even as Obama and the Democrats put the United States in the fast lane on the highway to hell.

 

All of these in some way could be plays to the Democrat Party or liberal bases, but they would all begin to antagonize the center, center-right, and right-wing elements of the country to where they take it out on either Obama or on Democrats in Congress. If this becomes the case, it will take either a Republican majority in both houses of Congress to bring Obama to the center following the 2010 midterms or the complete overhaul of Democrat majorities and Obama in 2012.

 

If nothing else, the GOP needs to get to work to offer opposition and alternatives or to be prepared to electorally defeat the Democrats within the next four years.

Saturday morning, I turned on “Bulls and Bears” on the Fox News Channel and I heard one of the strangest stock investments to make for the next four years. Believe it or not, this guy said that the economy was going to be so bad that the best investment he could come up with was Molson Coors Brewing Company. In other words, his message was to keep plenty of booze handy because this is going to be an economy that will drive even the most ardent teetotalers to drinking.

Now, I will admit that like a lot of others, I do see a light at the end of the economic tunnel with Barack Obama being elected. However, I also hear the sounds of a locomotive coming from that general direction. For Obama’s sake and for our country’s sake, I would prefer that the economy be in a boom. Sadly, I don’t see it happening.

Last night, I was reading on the causes of the Great Depression and there is a real possibility that we could get a miniature version of a depression. In looking at the signs and the symptoms of the Great Depression, I couldn’t help but notice how each of the signs and symptoms are going to create an even worse economic crisis. All four of them adversely affected the business community and ultimately affected the American public. Consider them the four horsemen of the economic apocalypse: Tight credit (pestilence), stock market dives (war), price destabilization (famine), and tax increases (death).

The first thing that happened was a tightening in the credit market. Back in the 1920’s, lending was such a fast and loose practice that there was speculation on the part of investors to make money off of debt. The end result was a deflation in debt caused by liquidation that ultimately tightened the credit market.

Compared to today, we are now in a state where the economy is seeing a tightening credit market. It’s harder to get loans because the banks are trying to get their balance sheets in order after the collapse of the subprime loan market.

The second thing that happened was the fall of the stock market. In 1929, the Dow Jones Industrial Average dropped 68.90 points, or a drop of 23 percent. It wouldn’t be until 1954 until the full drop was recovered. This was the kind of equity crunch that firms had difficulties with for years.

Back on May 19 of this year, the market closed for the last time over 13,000. Since then, the market has dropped from 13,028.16 to 8,943.81 for a total percentage drop of 31.4 percent. Granted it was over a period of almost six months, but it’s been enough to drive down stock prices and create tightening of equity.

The reason that these first two items, debt and the stock market, is because of the importance the two of them have in the life of a business. In order for firms to expand, they need to have cash. To generate cash, aside from sales and profits, they need to be able to acquire loans or to generate a higher stock price. As this environment is now and may be for the next four years, it will be harder for firms to generate more money.

The first is the possible increased tightening of the credit market. President-elect Obama has proposed loan forgiveness and a freeze on foreclosures. This will create an environment where a loan officer may as well take his paid vacation time because the banks won’t lend unless under threat of the government to commit financial suicide.

The second is that the Democrats want to take over 401(k) funds from individuals who have them. By the government taking over the 401(k)’s, it will create less incentive to buy stock. Instead of allowing for your retirement to be the result of successful investing yielding in high rates of return, the rate of return is a fixed four percent per year before inflation. If inflation above four percent, you actually lose the inflation-adjusted value necessary to retire more comfortably.

By comparison, if someone had opened a 401(k) fund and invested in the Dow Jones Industrials Index Fund on October 20, 1987, your value would have increased by 314.3 percent. In other words, that would be an average gain of almost 15 percent per year or 3.75 times the rate of return of the government’s 401(k) rate of return. Sadly, the government is the only entity that can make bad business decisions and still stay in business all these years later.

The third of these problems was price destabilization. Because of the deflation of debt and the stock market crash, prices wildly deflated as a result of the United States loaning gold to Germany to industrialize in order to pay France who needed the money to pay debt to the United Kingdom and the United States. This was in response to the early 1920’s hyperinflation in the Weimar Republic.

However, the current situation could be increased inflation due to higher energy prices from the proposals of Obama, a contraction of oil supply by OPEC, and the desire to implement cap-and-trade programs that have the goal of reducing global warming, but will have the effect of reducing industry.

Inflation will be further fueled by record-high deficit spending by the next Congress when it convenes in January. With the bailouts being proposed, a second stimulus package in the works, increases in government spending for programs, fighting two wars, and an economy that is providing less tax revenue, a deficit of $1 trillion will probably become a reality before the mid-term elections if not by this year.

The increases in regulations and the increases in wages that will result from the increase in the minimum wage from $7.25 to $9.50 (the inflation-adjusted figure of the original minimum wage is less than $4) that Obama and the Democrats want will result in increased job losses and reduced production. When you have fewer goods in the marketplace, the price has nowhere to go but up.

Finally, there is the last of these: increased taxes. Following the prior three things happening to the economy, Herbert Hoover and the Republican Congress in 1930 enacted the Smoot-Hawley Tariff Act that raised taxes on imported goods (tariffs) to record levels despite the pleas and protests of over 1,000 economists and a number of business executives including Henry Ford who called it “economic stupidity”.

Despite these pleas and protests, Hoover signed Smoot-Hawley in to law and the goods imported from Europe alone decreased by half of what they were before the act. Also, there was a backlash where a number of other nations increased their tariffs on American goods.

The other tax increase was in 1932 with a Democrat-led Congress and Hoover. This time, it raised the top marginal tax rate was raised from 25 percent on those making $100,000 or more to a top rate of 63 percent on those making $1,000,000 or more (by comparison, the rate on $100,000 to $149,999 was raised to 56 percent). On top of that, the corporate tax rate was increased from 12 to 13.75 percent (an increase of almost 15 percent).

The end result was a jump in the unemployment rate from 7.8 percent in 1930 to 25.1 percent in 1933. It would not be until 1943 when the unemployment rate dropped below 10 percent.

By comparison, President-elect Barack Obama is proposing an increase in the capital gains tax from 15 percent now to anywhere from 20-28 percent (which would make buying in to the stock market a less desirable proposition), closing corporate tax loopholes that will ultimately increase the tax burden on corporate America (a tax rate that is already the second highest in the world), and raising the top effective income tax rates from 33 and 35 percent now back to the Clinton-era levels of 36 and 39.6.

What makes matters worse is that high taxes at the state level have devastated the state of Michigan perhaps more so than any other economy. Along with Oregon, the state has one of the two highest unemployment rates of any state in the country because of high tax burdens.

I bring up Michigan because of the incompetence of Governor Jennifer “Jenny No Jobs” Granholm who was right behind Obama during his Friday press conference. Granholm has done more to drive jobs away from her home state as governor. It was because of a bad Republican year in 2006 that she was able to get reelected, but her political career will officially end when she leaves office because of how damaged she has left Michigan with tax increase after tax increase.

As it stands now, the unemployment rate under “Jenny No Jobs” rose to 8.7 percent in September, more than two full percentage points higher than the unemployment rate above the national unemployment rate for October. Overall, the Granholm administration in Michigan has cost the state 143,000 jobs since she took the helm in 2003 (an average of more than 21,000 jobs a year).

What’s scary is that Obama is embracing Granholm’s high tax, no jobs approach to economics. This is why Obama’s economic policies will fail Americans. It will not provide jobs, sustainable growth, or stable prices. Instead, it will provide unemployment, higher taxes, more regulations, and more big government.

I may be Chicken Little or Nostradamus depending on the outcome. For the time being, I will be monitoring not whether or not those who voted for Obama will have buyer’s remorse, but when.

The outcome of the election, as reported by the media, was one of a historic victory by Barack Obama and the Democrat Party. However, I want to put a look on this going forward as opposed to going backwards. My take on it is that Obama and the Democrats have swallowed the poison pill of a bad economy and John McCain and the Republicans were spared from a Pyrrhic victory.

Defined, a poison pill is that of a strategic move in politics or business designed to increase the likelihood of negative results as opposed to positive ones during a takeover. By winning the 2008 Presidential and Congressional elections, President-elect Barack Obama and the Democrats have willfully swallowed a big poison pill left behind by George W. Bush.

Meanwhile, a Pyrrhic victory comes from King Pyrrhus, the ruler of Eprius, who won a series of battles that his army won in 280 and 279 BC against the Romans but the casualties they took on were devastating. Had John McCain been elected President, it would have been one such victory that would have been enough to strengthen Democrat majorities in the House and Senate while setting up the Democrats for a landslide win in 2012. For that, McCain and the Republicans spared themselves what would have been a costly victory.

The good news for the Republicans is that there are a number of ways that Obama can consume poison pills and do so happily while fooling himself by proclaiming it as an “engine of change”. Believe me, that the Republicans will be more than happy to keep supplying the poison pills. All of this with the GOP’s rise back to the top by 2012.

Had the roles been reversed with McCain winning and a Democrat-led Congress to work with, the Democrats would have blocked many of McCain’s economic policies and would force him to cross the aisle for the policies they wanted, which would have made McCain the second-comings of Herbert Hoover and Jimmy Carter.

In the end, it would have made John McCain’s Presidential win that very Pyrrhic victory that would have lengthened the minority of the Republicans in government and turned John McCain’s legacy from that of “Maverick” John McCain the war hero to John S. McCain the failed President. Instead, Obama and the Democrats took a tighter grip on power that could ultimately give the public one reason to vote Republican.

What Obama and the Democrats are proposing could be a prescription for an unmitigated economic disaster that could lead to GOP victories in 2010 and 2012. Those victories also assume that the Republican leadership in Congress and party back in working order.

If nothing else, it would be highly unlikely that Obama governs from the political center. Back in 1992, then-President-elect Bill Clinton was told by House Democrats that they would pull support for centrist positions of his if he tried to get Republicans to vote for his proposals. They told Clinton that if he stayed within the confines of the Democrat Congressional and Senatorial Caucuses, they would deliver other policy proposals. That ended in 1994 with a Republican landslide in the House and Senate elections.

Before that, Jimmy Carter decided that he was not going to govern from the left in the early stages of his presidency. The end result was a clear alienation of his own party that led to Carter vetoing in four years more than double the bills that George W. Bush did in eight years. By the time Carter tried to woo the liberal base of his party, it was too late. Thanks to not governing from the left and his ineptitude, Ronald Reagan defeated him in a 44-state landslide in 1980 in an election that was over one hour before the polls closed on the west coast.

President-elect Obama is now in a bad spot electorally. If the economy goes from bad to worse post-2009, Obama and the Democrats will not have Bush to blame. Instead, they will have to answer the question “What have you done for me lately?” If they’re not careful, the Republicans will start by making significant electoral gains in 2010 and could regain power back from the Democrats in 2012. That would be the final, fatal poison pill.

There was no secret by the Obama campaign about their desires to raise the capital gains tax from 15 percent to anywhere between 20 to 28 percent. The last time an increase in the capital gains tax was implemented was back in 1986 when the tax code was reformed under Ronald Reagan to make the capital gains rate the same as the top rate of 28 percent. When implemented, capital gains tax revenues dropped 44 percent because selling stock became less desirable.

What could make matters worse is the desire of Obama and the Democrats to raise the top marginal income tax rate from the current 35 percent rate to that of the 39.6 percent it was back in 2000. There are a number of serious consequences that would arise from a tax increase in an economic slowdown or an economic recovery. According to Obama’s proposals to repeal the Bush tax cuts for the top five percent of wage earners ($153,542 in adjusted gross income or more) and Obama’s proposed removal the income cap on FICA taxes could impose a federal tax rate of 54.9 percent.

As for the rest of the Bush tax cuts, they will be set to expire on January 1, 2011. If there is now tax cut extension put in to place, an economy that could be poised for a recovery would instead suffer a contraction. George W. Bush will not anywhere close to the scene of the crime (he’ll probably be getting ready to go fishing in Texas by this time) to be blamed and Obama would take the hit. In other words, Obama will be the first President to run for reelection on the heels of a recession since George H.W. Bush lost to Bill Clinton in 1992.

Spending can also get out of hand with the Democrats wanting more money for more spending programs. John Kerry has called for a new New Deal and Barney Frank has called for more spending, deficit be damned. This, combined with Speaker Nancy Pelosi’s push for funding for embryonic stem cell research (which is more throwing good money after bad since embryonic stem cell research has produced no cures while over 80 cures have been found via adult stem cell research) and Ted Kennedy’s push for socialized health care will be enough to generate our first-ever trillion-dollar deficit.

Once the recession is over, the next monster the economy will become hyperinflation that has gone unseen since the 1970’s. The contributors will be record deficit spending, energy prices run amok, and artificially increasing wages.

Obama has proposed raising it from the $5.15 it was back in 2006 when the economy was actually good to the $7.25 per hour wage that it will be next summer to $9.50 by 2011. The dirty little secret about labor pricing in economics is that if you inflate wages against the will of employers, you actually create more unemployment—like what is happening right now.

If you look at the inflation-adjusted number of the original minimum wage when it was implemented in late 1938, today’s minimum wage would only be $3.64 an hour. The $9.50 an hour that Obama would attempt to implement would be the 1938 equivalent of 68 cents. In other words, when adjusted for inflation, non-skilled workers—mostly high school teenagers, people working for the first time, and those looking to start a business by learning a trade—are making more than 2.61 times more than what they were making 70 years ago.

In some ways, inflation was made worse by the Carter administration in the 1970’s by increasing the minimum wage every year he was in office. When Carter took office, the federal minimum wage was $2.30 an hour. That figure went up to $2.65 an hour in 1978, $2.90 an hour in 1979, $3.10 an hour in 1980 and to $3.35 an hour when he left office in January 1981. By comparison, the Reagan administration never passed a minimum wage increase and one would not take effect for more than nine years.

Why does the minimum wage matter? It is the only real way to create a trickle-up economic effect. It will increase wages across the board by an even bigger percentage than that of a minimum wage increase. Employers will respond to higher taxes and higher wages with higher job cuts. We will be longing for the days of a 6.5 percent unemployment rate.

Then there is the credit crisis as we are facing as banks are more reluctant to give loans for any reason. Obama wants to give selected homeowners the ability to refinance during a 90-day foreclosure freeze. That will lead to a freeze on lending for either the same length of time to one that’s even longer. That is, unless of course, Congress decides to force banks to lend (which is what got many of the banks in this mess in the first place).

With the shrinking equity from Wall Street and the reduced lending of the banks (barring mandatory lending against the better interests of the banks), businesses will be harder-pressed for cash which will lead to more layoffs and less production of goods. When inflation by contraction (stagflation) on this scale happens, more Congressional bailouts won’t be enough to save corporate and small-business America.

Speaking of bailouts, there will be a push to bailout the automotive industry to the tune of $250 billion. For once, I agree with Congressmen like Dennis Kucinich. It is only on the issue of equating this to corporate welfare. However, he and his fellow far-leftists in the Democrat Party will likely acquiesce thanks to all of the additional goodies thrown in the form of pork-barrel spending projects to win votes just like what Nancy Pelosi did with her first Iraq spending bill that George W. Bush promptly vetoed.

The end result is a Democrat Party and an Obama administration overwhelmed with political poison pills gladly accepted on their part from the Republicans. By 2012, Obama will likely go down as one of America’s worst presidents and could make Americans long for the days of—dare I say—George W. Bush. At that point, the American public will vote probably for Republicans…any Republican.