Our nation is deep into the longest post World War II recession in our history, prolonged by the uncertainty created by the policies of the Obama Administration and the Democratic controlled Congress.  Businesses, large and small, are holding on to an estimated $3 trillion in cash and are not going to invest and create jobs without a dependable view of future taxation, regulation and health care costs.  The taxation question is the most pressing at this point in time because of the scheduled expiration of the current tax rates less than eight weeks away.

Mr. Obama and the Democrats in Congress must have never read Thomas Paine’s words, do not fully understand their meaning or simply choose to ignore them.  They are also acting like the recent election was not the repudiation of their agenda that it clearly was. They continue to divide the American people with class warfare by demonizing those taxpayers who earn more than $200,000 per year.

Mr. Obama and his supporters actually believe that the American people will be satisfied with only a temporary extension of current tax rates for those higher earning citizens while most others would see their current tax rates made permanent.  They are sure the private sector will embrace that move and unlock their capital.  They could not be more wrong!

By not protecting the one group of citizens who are best positioned to spark an economic recovery, the Obama Administration risks stalling the recovery for years and actually subjecting the Democratic Party to greater losses in 2012.  Unfortunately, the real losers will be the American people who will continue to suffer from high levels of unemployment due to the lack of private sector investment.

Common sense tells us that businesses are not going to make the long term investments in plant, equipment, research and development that create good paying permanent jobs based on a short term outlook.  They will only invest their capital when they have a clear vision of enough of the future to credibly forecast a return on that capital.  It is as simple as that and Mr. Obama refuses to budge.  This means that the Republicans in Congress need to stand tall and either block attempts by the lame-duck Congress to pass unequal measures or correct those measures immediately after January 1, 2011 when they take charge of the House and have greater influence in the Senate.  The current tax rates for all Americans must be made permanent in order for the private sector to unlock its job creating power.

Making the Democrats look even more foolish is that their ‘tax-the-rich’ argument holds no economic merit.  According to the Internal Revenue Service Data Book, approximately 142 million citizens file federal tax returns.  Only 3%, or 4.4 million, make $200,000 per year or more, and 3.4 million of them make less than $500,000 per year.  So Mr. Obama’s argument that he only wants to raise taxes on millionaires is misleading at best or simply an outright lie.

While citizens earning $200,000 per year or more make up only 3% of all tax payers, they pay 52% of all federal income taxes collected.  If the current tax rate on these citizens expires now, or two years from now, the government may be able to take in another $75 billion per year. If those tax rates are extended permanently and investment is unlocked due to the certainty that is created, history shows our nation would see Gross Domestic Product (GDP) growth in excess of 4% annually; a minimum of $115 billion per year in new tax revenues; and unemployment trending down sharply.

One of the measures of our exceptionalism as a nation has been our ability to correct past mistakes and protect all citizens equally.  We have done so primarily because it is right, but also because we recognize that if we fail to protect even a small group of citizens equally with the rest of the nation at some point we will find ourselves in peril. This time it is the economic well being of our nation that stands in peril if we fail to protect all citizens equally.

Mr. Obama and the Democrats in Congress are not likely to change their view on this important matter.  They will continue to be divisive and play to their liberal base.  The American people need to demand that the current tax rates be made permanent for all citizens in order to give the private sector the certainty necessary to invest in the future of our nation.  The American people need to make it known to the Republicans in Congress that we expect them to show leadership on this issue and not to wavier. 

Speeches and photo-ops, however, won’t change the fact that Obama’s policies are anti-capitalist and therefore anti-job and anti-recovery.

It’s important to note that the secret to capitalism is not all that secret.  It’s right there in the name CAPITALism.   Our system relies on:

• Step 1.  The ability of some to aggregate enough capital, i.e. save money, so that they can . . .
• Step 2.   Invest in productive enterprises, i.e. start or grow businesses which  . . .
• Step 3.   Employ people – people who  . . .
• Step 4.   Have the ability to buy things, i.e. purchasing power (critical in a 70% consumer driven economy) – which in turn  . . .
• Step 5.  Creates profits for sellers and . . .
• Step 6.  Savings – and the cycle renews.

The Left’s political policies, however, are sworn enemies of that simple and effective economic process.

Most notably, amongst those anti-capitalist/anti-job political policies is the heavy income tax burden facing American income earners today and the impending Pelosi/Reid/Obama tax increase to support their Big Government policies.  The Left uses taxes on the income earners in a political attempt to reduce the difference in classes and to raise revenue.  As with most government programs, however, it has an effect that is the reverse of its intentions – not only does it not reduce class differences, it results in the collecting of less revenues than otherwise could be collected- and nothing should be more understood than that when it comes to why Obama’s policies are anti-recovery.

For example, let’s say it takes $500,000 to start a restaurant (which represents a conservative amount in the cities of California).  If we assume two partners can earn enough in income to each have $250,000 to start that business – any policy that takes a significant portion of that money from those 2 prospective business owners and then spreads it, in the form of government programs or government rebates, among tens of thousands of people who don’t come together to start businesses, means:

• a)  that Step 1 (the ability of some to aggregate enough capital) and Step 2 (starting a business) will not occur, and therefore
• b) the remaining steps won’t occur either, i.e. no Step 3 (little to no jobs would be created), no Step 4 (no increased purchasing power for any meaningful period of time because the payments are one time payments instead of paychecks) and no Step 5 (future profits for future Step 1, savings). And without jobs, there is diminished purchasing power and no meaningful recovery.

The excessive regulatory burden we face is another prime example of an anti-capitalist political policy.  As if taking away savings isn’t bad enough, how about raising the cost of starting up the restaurant to $600,000 or more (instead of the $400,000 it could be) in the form of increased health care mandates, workers’ comp costs, ADA regulations, labor regulations and more?  Obviously, to everyone but the Left, higher start-up costs means less business startups and therefore less jobs.

To be sure, there are many other anti-capitalist policies of the Left including Cap & Trade, the proposed Wall Street regulations, skyrocketing deficits and more. All result in fewer businesses, jobs, and purchasing power and ultimately no recovery.

So, in the coming months, as the Obama Administration purportedly turns its attention to jobs, so that he can politically recover – see if he turns his attention away from his political anti-job/anti-recovery policies and toward economics so that we can economically recover – but I wouldn’t suggest undertaking a hunger strike waiting for that restaurant.