President Obama’s Timidity and Policy Ignorance Reduced Size and Scope of November 2012 Election Victory

Looking back to when President Barack Obama had Democratic majorities in the U.S. House and Senate, actions not taken or taken unwisely very likely caused a reduction in the size and scope of the November 2012 Democratic election victory.

1) Immigration Reform – In the 2008 presidential campaign, Barack Obama promised to introduce an immigration reform bill in his first year in office. His explanatiuon that he didn’t have the votes was cold comfort to Hispanic groups. Along the same lines, he should have introduced the Dream Act bill, fought hard for it and if the GOP succeeded in killing it, he would have had a good campaign talking point.

2) Taxation Reform – When the Democrats had House and Senate majorities, they should have restructured the federal income tax by sharply raising the top marginal taxation rate. I previously proposed a 16 to 60 percent taxation rate schedule, which would have taxed the wealthy more in accordance with their share of the nation’s wealth and earned income. This tax rate proposal would have taxed capital gains, dividends and investment income at the same rate as Joe and Jane Sixpack’s earnings. The higher minimum tax rate and the progressive rate increases would also have increased the number of households paying federal income taxes. Had this action been taken, the Bush tax cuts would have been taken off the table.

3) FICA Tax Reductions – President Obama should not have proposed to reduce the FICA tax rate, as lowering tax rates is an indirect and less effective way of creating jobs. Lowering the FICA tax also emboldens those who see that as a way of weakening or even killing Social Security. Why lower the FICA rate when it drains the trust fund needed to pay future beneficiaries? A final note on this: reversion of the FICA tax rate to its pre-reduction levels is part of the “fiscal cliff” drama soon to play out.

4) Debt Ceiling Increase – Although it may be unfair to have expected Democratic lawmakers to have foreseen the upcoming debt ceiling crisis, they could have raised the debt ceiling when they had House and Senate majorities.

5) The Filibuster Rule – Senate Majority Leader Harry Reid belatedly confessed that he made a mistake in not revising the filibuster rule when the Democrats set the rules for the U.S. Senate. This is an act of political malfeasance which cannot be excused. The Senate Democratic leadership should not have allowed bills to be filibustered upon introduction, only on the final vote. Secondly, opponents of legislation should have been required to actually filibuster. Generally speaking, the U.S. public displays little interest nor involvement in legislative matters, yet it takes a dim view of a minority blocking all legislative action.

6) Health Insurance Reform – President Obama blew hot and cold on a public option for health insurance reform and eventually killed it. A strong public option would have greatly strengthened the Affordable Care Act by providing a way to lower future healthcare costs. A better way to go would have been to propose a single payer plan.

Financing a single payer plan through the federal income tax would have lifted a big cost burden from American business — especially small business — also, a major selling point would have been that millions upon millions of taxpayers would have received annual financial windfalls, because the increase in their federal income taxes would have been less than their annual health insurance premiums, plus deductibles and co-pays. As I illustrated previously in examples premised on a tax rate schedule progressively advanced from 16 to 60 percent, some households would have received an annual windfall of over $9,000.

7) A Bloated Pentagon – President Obama should have started educating the U.S. public about a bloated Pentagon in his 2008 presidential campaign. Some markers in this educational campaign should have been: a) the U.S., with about five percent of the world’s population, accounts for over 40 percent of the world’s military spending; b) the Pentagon gets 57 percent of the discretionary budget — discretionary spending is exclusive of trust fund spending and interest on the national debt. We neglect rebuilding our domestic infrastructure at our future peril; and c) our military command follows a full sprectrum dominance doctrine, whiuch means that we must be superior in all aspects of military warfare over all other nations.

Presient Obama may not fully appreciate these kinds of spending imbalances, or, at least, he doesn’t communicate them to the public. Notable in this failure in communication is that Obama let his newly appointed defense secretasry, Leon Panetta, make alarming statements about how sequestration of a little under a half trillion dollars would have a devastating effect on the military.

8) The Military as Job Creator – President Obama doesn’t appear to know how poor military spending is in job creation. In announcing an arms sale to the Middle East, Obama said the sale would create or maintain 55,000 jobs. Economists who study the relationship of government spending to job creation have found that spending $1 billion on education, healthcare, or other domestic spending creates a lot more jobs than spending $1 billion on the military.

9) Collective Bargaining Inaction – Although Obama said in the 2008 presidential campaign that if there was an attempt to reduce the rights of organized labor, he woule put on a pair of comfortable shoes and march in protest. In regard to Wisconsin, Obama made one speech in which he condemned efforts to diminish collective bargaining rights and he briefly mentioned the issue before the National Governors Association annual meeting.

President Obama would not have said a word about the Ohio referendum to overturn a law mangling collective bargaining rights if the talk show host, Bill Press, had not aggressively pressed the White House to support the referendum only four or five days before the election.

In the nest blog, I will focus on mistakes made by President Obama in the 2012 campaign. most of these points culd have been made in the first debate.


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