Thursday, April 30, 2009

What Republicans Need to do for the Economy

I find I get so caught up in the specifics of Obama’s proposals that I have not been offering alternatives. That seems to be the Republican way. Republican positions boil down to “we don’t like anything Obama proposes and have we said we like tax cuts?”

One of the most detrimental things about Obama is his lack of clarity. The unique communications skills he has that enable him to be all things to all people where people see and hear what they want from him does not serve him well as he devises economic policy. In economics and business, it is essential that entrepreneurs and corporate decision-makers know what the rules are ahead of time. The rules with regard to taxation, costs related to employees, regulations particular to their industry need to be transparent. These stakeholders also need to feel the rules won’t change in mid-stream. With Obama, I don’t see how anything is transparent given that his policies from energy, healthcare, regulation, and in other areas have huge ramifications that he and his advisors have still not fully thought out. What the consequences of all this are for job creators is unclear. But it does make it hard to when thinking about strategic business decisions. Here are some specifics that Republicans should begin to think about:

1) Republicans need to emphasize the problems that a herky-jerky president who deliberates and says "uh" a lot causes. People need to be convinced that Obama is hurting their ability to make plans that might enable them to start employing people. He is a one man wrecking crew. To do this Republicans should cultivate and mobilize a small business and entrepreneur constituency. Start interviewing small business owners. Show what the impact of higher energy costs or healthcare regulations or tax code changes that phase-out deductions or an increase in the marginal corporate tax rate would be in their hiring practices. Let the guy cry as he explains how he had to lay off his best bud. If it works in soap operas and with independents who voted for Obama, than go for the emotional blather.

2) Republicans need to be budget hawks. This is what they failed at so miserably during the last 8 years. But they need to embrace fiscal restraint on spending and not just on domestic spending but also on defense. Republicans need to emphasize the cost to each and every American of the debt that the leader has gotten us into. The Congressional Budget Office (CBO) estimates that we may incur $10 Trillion in NEW debt over the next 10 years. That is basically the equivalent of giving 100 million Americans $100,000 each. There are about 135 million taxpayers in America with a widely varying distribution. Give about 75% a $100K refund over the next 10 years. There is a caveat, because their children will have to pay this amount back, with interest, in about 20 years. In addition, their children will have to pay for their Social Security and Medicare benefits as those two entitlements explode. Obama hasn’t really done anything more than to literally rob from my 3 kids.

3) Republicans need to move beyond just proposing tax cuts as the cornerstone of everything economy-related. It’s a part of what needs to be done, but it can’t be all there is. Republicans don’t fully appreciate that what Obama is doing is spending so much that Republicans can’t look responsible if the only thing they propose is tax cuts.

4) Republicans need to respect the legacy of Reagan but realize it's been over 20 years since he's been president. Republicans need to propose transparency, offer detailed specifics on healthcare, financial regulations, energy, education and respect voters. They can’t always resort to “What Would Reagan Do” at every turn.

Ultimately, Obama is going to sink the ship. But that doesn’t mean he will be blamed for it or that Republicans will swoop in and take over. As the Tories in Britain can probably tell you, it doesn’t work like that. Republicans still have to do the hard work of addressing these issues in a thoughtful way. Obama’s giving them every opportunity with his condescension when he makes remarks such as “they bicker” about spending trillions, as though opposition to that is just bickering! Or, “if they want to have a serious discussion about healthcare”, as though the only “serious” option is government managed healthcare.

Obama, via many a policy that is inevitably going to fail, is in the early stages of preparing a gift that he will deliver soon. Hopefully, Republicans will accept it.

No comments: