Doctor Shortage Will Worsen Health Bill

The fundamental question that the Obama Administration has never answered is a simple one: How can they treat 50 million new patients with no extra doctors?A new report from the American Association of Medical Colleges underscores the urgency of this concern. The Association notes that the United States now suffers from a shortage of 15,000 doctors - a shortfall that is expected to grow to 125,000 in fifteen years. And, the Association reports, if universal health insurance is passed, the shortage will grow to over 150,000 by 2025.

While the number of elderly people in the U.S. is expected to grow by 60% over the next decade and a half, the number of doctors will increase by only about 6%. (Total U.S. population will rise by about 17% over the same period).This shortage of doctors will, inevitably, lead to the rationing of medical care, more quickly and drastically if the Obama plan is passed. In Massachusetts, where universal health coverage was enacted under Governor Mitt Romney in 2006, the Medical Society found that the number of patients who reported difficulty in getting care has already risen by 50% up to a quarter of the patient population. The New York Times reports that "a main reason for the logjam was long waiting times for appointments."In 1949, when President Harry Truman first proposed mandatory health insurance, he coupled his initiative with an expansion of federal aid to medical schools. But Obama makes no provision for an expansion of the pool of doctors, even as he grows the population of patients by up to 50 million.Indeed, by cutting medical fees by dropping the reimbursement rates under Medicare, he likely will hasten the retirement of many medical professionals worsening the underlying shortage. The Times quotes medical experts as predicting that the three years specified in the House bill as the time by which universal health insurance coverage will take effect "is not nearly enough time to build the supply of doctors needed to care for the additional tens of million of people who would become newly insured."Because there will not be enough doctors, nurses, and medical equipment for the massive influx of patients under the Obama plan, there will be rationing, more draconian year after year. As in Canada, it is this fundamental discrepancy between the number of patients and the population of doctors that will lead to rationing. From there, the inevitable consequence will be cutbacks in care for the elderly. Optional procedures, vital to quality life but not to survival, are likely to be limited. Hip replacements, new knees, hearing aids, and such are less and less likely to be approved. And, medical administrators will be less likely to OK surgery or expensive medical treatments for the elderly who they perceive to be at the end of their "quality" years.It is the shortage of doctors, not any specific language in the text of the legislation, that makes rationing and the so-called "death panels" cited by Sarah Palin inevitable.We all agree that everybody should have health insurance, but let us precede this step by expanding the number of doctors and nurses so that we can cover everyone without sacrificing the care for anyone. Otherwise, we are not giving 50 million new people medical care. We are consigning 300 million, and particularly the elderly among them, to long waiting lists.

Disaster In The Polls For Obama

This week's polls are a disaster for President Obama. The Rasmussen poll has his approval dropping to 45 percent, after several weeks at 49 percent. The Zogby poll has it even lower -- at 42 percent.

Worse yet, he's losing his political base:


* People under 30 -- long a key element of his support -- give him no better than break-even ratings, with 41 percent approving and 41 percent disapproving of the job he's doing, according to Zogby.

* Only 75 percent of Democrats, who formerly have supported Obama strongly, now approve of his performance in office. Zogby reports that this represents a slide of more than 10 points over the summer.

* Even among blacks, only 74 percent approve of the job he's doing (also a drop of more than 10 points).

* Hispanics, who voted for him by a margin of more than 40 points, now break even (36-36) when rating his performance.

Independents, the key swing group in our politics, now deliver a sharply negative 37-50 verdict on Obama's job performance. The elderly also give him negative ratings by 42-51.

This poll-implosion leaves Obama with few good options.

He obviously can't get 60 votes in the Senate for his health-care proposals in their current form. No Republican will support them, and moderate Democrats aren't likely to vote with him.

If he tries to pass it with 50 votes, using so-called reconciliation procedures, he may also fail -- because he'd also lose the votes of less-moderate Democrats who'd quail at using parliamentary tricks to pass such a radical, unpopular program.

If Obama waters down his proposals to attract moderate support, he'd lose votes on the left -- perhaps more than he'd gain, at this point.

Yet the longer he takes to resolve this political problem, the more his ratings will slip -- diminishing his power to achieve anything. No president with support in the 30s would be able to push through a program like his health-care agenda.

It now looks like health-care reform will cripple the Obama presidency, as it did Bill Clinton's in 1993.

Of course, Clinton was able to move to the center and secure re-election in 1996. But can a true believer like Obama do the same? He's shown a willingness to move to the center on foreign policy, leaving troops in Iraq and adding them in Afghanistan. But on the domestic front, the only aread where he's been willing to embrace centrist positions is education.

At best, Obama will be months if not years recovering from this disaster. In the short term, he's likely to finish September wishing he'd stayed in Martha's Vineyard.

Elderly Swing Away From Obamacare

The most ominous signal yet for the Obama health care plan emerged in the poll by Scott Rasmussen released today. While public support for the plan fell to a new low (42% support, 53% oppose -- down five points in two weeks), the elderly emerged as the strongest opposition group. Those over 65 rejected the plan by 39-56 while almost half -- 46% -- said they were "strongly opposed" to it.

The group that supports the plan most strongly is those likely to be least affected, voters under the age of thirty, 67% of whom support the proposals.

The Democratic Senators and Congressmen can well choose to ignore polls. Polls go up. Polls go down. They may figure that the public will have moved on by the time they run for re-election, particularly those Senators who are not up in 2010. With four or six years to go in their terms, they can afford a relaxed view of polling data.

But the Democratic Party as a whole cannot afford to ignore a massive defection in the ranks of the elderly, one of its key building blocks. Ever since the New Deal coalition was cobbled together by FDR, the elderly have been a major component. Worried about Republican designs on their Social Security, they vote overwhelmingly Democratic.

But the Obama proposals, which many see correctly as a major cut in Medicare, might be seminal in driving them en masse away from the Democrats.

The Democratic Party is built on six pillars -- blacks, Latinos, single women, young people, union members, and the elderly. If legislation threatens one of those pillars, it threatens the stability of the entire partisan structure. And Obama's health care reform seems to do just that.

With 40% of the savings in medical spending coming from Medicare, the senior citizens of America are coming to see the Obama proposals as an assault on their health care system. Since their needs are fully met by Medicare, they see no need for monkeying with the system and are highly suspicious of any changes. When they watch as their fellow seniors attend town meetings to protest to their Congressmen about these cuts and are labeled "un-American" for their pains, their alienation from the Democrats just grows.

The fissure Obama is driving between his party and the elderly will not soon heal. When the elderly change their voting habits, they tend to do so for a very, very long time. Even Senators who are up in

2012 or 2014 should worry that their votes for the Obama plan could doom their ability to attract elderly support.

As to the young people who back the plan, once they learn that they will have to pay steep premiums for health care coverage, whether they want to or not, their support is likely to cool. Under the bill, for example, those making $30,000 a year would have to pay up to 7% of their income in health insurance premiums before they could get a government subsidy. A $2,100 bill for such a young person might seem affordable to Obama, but perhaps not to them. Thus, the legislation may well come to be seen as a tax on the young, another of the key constituencies of the Democratic Party.

The cost of Obama's health care changes just keeps growing -- financially and politically.

Cash For Clunkers Should Be Called Cash For Japan

The only part of the stimulus program that is working, the cash-for-clunkers program is, in reality, a subsidy to foreign car companies, proving that Barack Obama is the best president Japan ever had.

The Department of Transportation reports that the ten leading trade-ins are all American branded cars while six of the top ten new cars purchased - and four of the top five - are foreign. So the United States Senate is about to pass additional funds to subsidize the trade-in of American cars and the purchase of foreign cars.

DOT reports that the following are the ten top trade-ins, all American:

Ten Top Trade-Ins Under Cash for Clunkers

1. Ford Explorer
2. Ford F150 Pickup 2WD
3. Jeep Grand Cherokee 4 WD
4. Jeep Cherokee 4 WD
5. Dodge Caravan/Grand Caravan
6. Chevrolet Blazer 4 WD
7. Ford Explorer 2 WD
8. Ford F150 Pickup 4 WD
9. Chevrolet C1500 Pickup 2 WD
10. Ford Windstar FWD Van

And the top ten new car purchases, subsidized by the American taxpayer, are mainly foreign vehicles:

Top Ten New Car Purchases: Cash for Clunkers

1. Toyota Corolla
2. Ford Focus FWD
3. Honda Civic
4. Toyota Prius
5. Toyota Camry
6. Ford Escape FWD
7. Hyndai Elantra
8. Dodge Caliber
9. Honda Fit
10. Chevrolet Cobalt

It is a violation of the World Trade Organization rules to enact a public subsidy program and skew it toward only domestically produced products, so the Congress has no choice but to extend the program to all comers. No choice, that is, but to not spend the money in the first place.

Cash for Clunkers will do wonders for the Japanese economy, but its impact on the US job situation is problematic. This unintended consequence is a great illustration of what happens when the blunt tool of government subsidy is applied to the fine tuning of a free market economy. Government planners keep getting it wrong. That's why socialism is such a bad idea.

So Obama can boast of a great success in taking American cars off the road and replacing them with foreign cars. Great going!

Clinton's Boost Of North Korea

Was it only a week ago this past Sunday that Secretary of State Hillary Clinton called the North Koreans "unruly children" on Meet the Press and said all they wanted was attention and that "we shouldn't give it to them?"

Yes, that was her, the wife of the very same Bill Clinton who gave Kim Jung Il ten years' worth of free good publicity by traveling to North Korea and shining the global spotlight on the "Dear Leader's" generosity in releasing two journalists he had illegally seized in the first place. North Korea's last good press was before 1949, but now they shine in the glow of worldwide approval thanks to Bill (and Hillary) Clinton.

Those two nuclear explosions? Hey, so what? Those rockets that can go 4500 miles and someday hit Hawaii? Lots of countries have them and haven't the North Koreans proven that they are just plain folks?

History is curiously repeating itself. In 1993, President Clinton was working up the gumption to impose sanctions against North Korea after they were caught enriching uranium, but his momentum - always difficult to sustain at best - was derailed when former President Jimmy Carter traveled to Pyongyang to announce a deal with North Korea to stop them from going nuclear. The deal turned out to be nothing more than a green light, but no sanctions were imposed.


Now former President Clinton has upended the world's efforts to isolate and punish North Korea by letting it in from the cold.

Why did he do it? He and Hillary saw a chance for positive publicity. She, newly consigned to the inside pages of the newspaper and he, entirely absent from them, chaffed at their irrelevance and jumped at the chance to get back into the limelight.

Obama may or may not have initiated the trip, but he doubtless knew of it and approved it. Why did Obama OK it? In the upside down world of Obama's foreign policy, the more a nation is our enemy, the more he feels he as to show it kindness, love, warmth and support. The more it is our ally (Colombia, Israel, Britain, Honduran democracy advocates) the more he must give it the cold shoulder. He calls it engagement. It is really something more than appeasement but, one hopes, less than disloyalty.

But, we suspect, Obama had a more sinister motivation for letting the stunt unfold: He wanted to change the subject from health care. He knows that he is getting clobbered in the national debate. He sees his approval dropping and is watching as the elderly coalesce against his health care initiative.

So, what better way to drown out his critics of August than to pull of a spectacular hostage release? Obama would gladly punt during August, distract the nation, and then stealthily pass health care in September.

He is terrified of August. August is when legislators discover where their districts are located and go home to get an earful from those they represent. Increasingly, it seems the month will be particularly rocky for Democratic advocates of his health care proposals. He would do anything to change the subject.

But we cannot let him.

Obama's Loss Of Power

Superficially, the United States appears to have a presidential system, but in fact it more and more resembles a parliamentary form of government. When a president loses the approval of the majority of the voters and polls reflect that his ratings have fallen substantially below 50 percent, he loses his power. In this context, polls are like parliamentary votes of no confidence in European systems. While the government does not fall if it loses in the polling, it limps on until either its ratings improve or it is voted out of office at the next election.Clinton was called "irrelevant" after the congressional defeats of 1994, when his ratings hovered in the high 30s. Bush seemed almost out of power in the last years of his administration, when his approval dropped to the low 30s.Now Obama faces the loss of power that comes with dropping poll numbers. The two early symptoms of this creeping impotence are his inability to pass the union card-check legislation or to force action on healthcare before the August recess, once highly touted administration goals.

As is usually the case, the apparent cause of these defeats -- the buildup of public disapproval of both bills -- is not what is really at work. Rather, it is the president's obvious inability to improve the economy that is exacting the daily toll in his approval ratings evident in all of the surveys. Like the body counts that mounted in Iraq and drove Bush's numbers ever downward, the rising unemployment numbers are stripping Obama of his popularity and power.Obama's very activism in promoting the stimulus package in January as a cure-all has set him up for failure now that he cannot deliver on his overblown promises. Unlike Clinton's presidency, Obama's cannot be rescued by good public relations. His obvious failure to turn the economy around drags him down at every turn. Will the group of moderate Democrats that is increasingly blocking his programs prove to be a lasting coalition? As long as Obama's economic failures continue, they will grow and harden in their opposition to his radical agenda. Once their president's popularity tanks, Democratic centrists will not look forward to running in an election defending his policies. The race to distance themselves from his failures will be on.That's not how Republicans work. Among the GOP, the tendency to hunker down and follow the leader into oblivion is all too obvious. The elections of 2006 and 2008 provide vivid examples. But Democrats, particularly those who sit nervously astride red states, are not made that way. Their proclivity toward dissent and independence, muzzled in times of presidential popularity, emerges when approval ratings drop.Despite having 60 votes in the Senate, it is a serious question as to whether Obama will be able to get his controversial programs passed in the fall. The public mood is congealing against his healthcare proposals, and skepticism over the impact of cap-and-trade on American manufacturing is growing.While voters are idealistically determined to cover the uninsured, they are more selfishly concerned about their own healthcare. And they are loath to trust the man who sold them on the stimulus package when he says that their care will be protected. More and more, they are asking the very simple question that Obama cannot answer: How is he going to cover 50 million new people without more doctors?The elderly are coming to understand that his plan effectively repeals the bedrock guarantee in Medicare that seniors can get whatever care they want for free. The opposition to healthcare changes is building so fast that Obama was forced to retreat from his August deadline. And it's unlikely that he will be able to make a successful stand in September or October, when his ratings will likely be 10 points lower than they are today.

Obama Losing Popularity-Says Today Unemployment Will Get WORSE!!!

In the polling hierarchy, the least significant data measure is a president's per sonal popularity. Here, President Obama excels, with most polls showing him in the high 60s. Next comes his job approval, significant but not necessarily predictive.Obama's approval, in the Rasmussen Poll, has now dipped to 51 percent, one point less than his 2008 vote share of 52 percent. In past polls, most voters registering disapproval for the president had voted for Sen. John McCain. Now, Obama's starting to lose people who backed him last November.But the true predictive measurement is a chief executive's and his party's ratings on specific issues. As these shift, so usually do his job-approval numbers and eventually his popularity. And current trends suggest that Obama is in for rough sledding -- his job-approval ratings likely will quickly fall into negative territory and then drop further.

Rasmussen asked voters to compare which party was best on 10 issues. While Obama's ratings are likely better than his party's, the Republicans can take heart in trumping their opposition in eight of the 10 categories.The most significant topic was, of course, the economy. For the second straight month, Rasmussen shows a GOP lead over the Democrats, this time by 46 percent to 41 percent, indicating that the incessant bad news and the collapse of the false hopes the stock market entertained this spring have taken their toll.And only 39 percent of voters say that Obama is doing an excellent or good job on the economy, 11 points lower than his overall job approval. Forty-three percent say he's doing fair or poor.As unemployment continues to rise and even Obama predicts that times will get worse, this gap on economic issues will likely rise.On their competing health-care reform plans, Rasmussen finds Obama and the Republicans drawing equal support. On health care generally, Democrats find their margin down to 4 points from 18 two months ago.Obama is rapidly losing support on health reform, his key issue. And if he stays behind on health care and the economy for long, nothing much will hold him and his party aloft.Rasmussen also found a Republican edge on many other issues. Democrats led Republicans 41 percent to 38 percent on education -- but the GOP led 49-40 percent on national security, 40-34 on immigration, 46-39 on abortion, 34-33 on ethics and corruption and -- get this -- 42-37 on Social Security.When Republicans are winning on Social Security, it's bad news for the Democrats.Most ominous for Obama is the GOP lead on the economy, taxes and immigration and the party's parity on health-care reform: The issues that will dominate the next few months are all working for the Republicans.It's amazing how quickly Obama has lost his lead. His ratings had fallen steeply after his inauguration. Most polls had his job-approval dropping 13 points in his first three months. But then his number revived with the adulatory coverage at his first-100-days mark. Buoyed by hopes of a swift recovery, voters and the stock market gave him a break, and his ratings and the Dow rose sharply.But since April, he has been dropping fast -- and his alarming losses on his central agenda issues portend further declines.Congressional elections are still more than a year off, but Obama needs strong approval ratings to steer his legislative package through Congress. If he's sagging in the low 40s or high 30s by the fall, he probably won't be able to persuade moderate Democratic senators to walk the plank and vote for cap-and-trade, health-care reform, higher taxes or an immigration amnesty.His chief legislative achievements, in other words, may already be behind him.

ObamaCare

To quote the esteemed Rev. Jeremiah Wright, the chickens that were hatched in the stimulus package are coming home to roost in the healthcare proposal. The budget deficit Obama racked up paying for the massive federal spending passed in January is now having a real economic and political impact, which is forcing the president and his congressional allies into hard choices as they face his healthcare legislation.Of course, the prudent thing to do is postpone healthcare changes until the economy generates some revenues and trims the deficit. But the socialist in the White House can't do that. He's got to strike while his congressional majority is hot. So he is forcing his administration and his party to choose among unpalatable choices to finance his program. His demand may be a bridge too far, endangering his popularity with the American people.

First of all, the very fact of a focus on healthcare reform inevitably stirs discussion of the deficit. Americans are allergic to deficit spending and worry the more the deficit grows. As interest rates rise and the government finds it more and more difficult to borrow enough to cover Obama's massive spending, the economy is likely to show the negative effects. It is a matter of a few months, certainly no more, before voters start to realize that it is the deficit, not the pre-existing conditions Obama inherited, which is causing the prolongation of the recession. Already the jump in mortgage rates has slowed the refinancing, which was the only aspect of the Obama economic program that was working well.But the foreign and domestic focus on the deficit has a harsher political impact: It forces the Democrats to come up with money to fund healthcare reform. In other words, it makes them raise taxes. The Democratic Party is good at fooling itself that tax increases don't matter and are politically palatable, but they do and they are not.The massive spending healthcare will require dwarfs the capacity for the rich alone to pay the bill, no matter how confiscatory Obama chooses to become. Only broader taxes will do the job. Obama faces two practical choices: a value added tax or taxing health insurance benefits.The political harm either way will be enormous. Not only will Obama be breaking his pledge not to tax the middle class, but he will be doing so in a particularly pernicious way. If Obama opts for the value added tax (VAT), Democrats will hope to cloak the increase in the price of the product. They reason that the consumer won't know how much the tax is since it will be added on throughout the sale and resale of the product rather than at the cash register at the end, as the sales tax is. But it will work the other way. As inflation sets in, triggered by Obama's deficit spending, consumers will blame the whole thing on Obama. His VAT will be much magnified in the voters' minds to include all of the inflation going on. Just as voters blamed Clinton's gas tax increase of five cents in 1993 for the entire run-up in gasoline prices at the pump, so they will place all the blame for inflation on Obama's VAT.Or Obama could tax healthcare benefits, a direct reversal of his campaign pledge. He would be adopting a policy for which he overtly and loudly criticized McCain. And his popularity will wilt as taxpayers suddenly have to add onto their tax liability the money their employer has always paid for their health insurance. Obama will probably have his own separate line on the 1040 and even on the short form for his new tax. That's not the way to stay popular.Obama's only good option is not to move so quickly on healthcare reform, to give himself some wiggle room. But as the song says, "we're knee deep in the big muddy but the damn fool says to push on!"

How Obama's Mortgage Rescue Plan Is A Failure

The data for April and May prove that Obama's plan to rescue those facing mortgage foreclosure is a dismal failure. Since this issue was the cornerstone of his economic program during the campaign, its abject failure is a significant setback for the Administration's economic plan.In the month ending on May 26th, 464,983 foreclosures of subprime and Alt-A mortgages (out of a universe of 3.2 million studied). So 15% of all subprime mortgages were foreclosed in May! Only 19,041 -- a paltry 6% -- were modified during this period. And of those modified, only 11,200 involved any reduction in the monthly payments! Only 12% involved any write-off of interest, fees, or principal and 27% of the loan modifications actually increased the monthly payments due.Alan M. White of the Valparaiso Law School, who conducted the study, noted that the data showed that "the Administration's plan to stimulate mortgage modifications does not seen to have had much effect yet, at least in this market segment" [i.e. subprimes].And the trend lines are all bad:• The number of loan modifications dropped 11% from April to May.• The ratio of foreclosure losses to modification write downs (the amount lost in foreclosure: the amount rescued by write-downs) doubled in the past month. For every dollar saved in modifications, $150 was lost in foreclosure.When Obama launched his mortgage rescue plan, he promised that it would help five million households. So far, he is about 4,969,000 short of his goal!!When will the subprime foreclosures stop? In about a year when all of these unfortunate people have lost their homes!Why is Obama's plan falling so far short of the mark? The fault is its own restrictions. You cannot get a loan modification if:• You have lost your job• You owe more than 5% above what your house is worth• You are already in default• You have not yet missed at least one payment• Your lender does not want to participate• Your mortgage is not one of the half of all mortgages insured or owned by Fannie Mae or Freddie Mac• The reworked mortgage payment would come to more than 31% of your income• Your mortgage is over $759,000• The home is not your primary residenceThe number of beleaguered homeowners who can slip through the eye of this particular needle and qualify for a mortgage modification is tiny. And yet there is an easy remedy at hand. Obama should simply say, as they did in Sweden, that the government will simply buy the distressed mortgages from the banks and adjust the payments to make them possible for the homeowners. Then, when the economy comes back, the homeowners could either pay back the government what they owe for the postponed payments or sell the house and repay the feds from the proceeds. If they won't do either, the feds could then seize the house and get their money back. Cost to the taxpayers: zero. In f act, they would likely make a profit.Why won't Obama do this? It's because a Democratic administration cannot throw people out of their homes. Better to let them default and make the big, bad bank do the dirty work.All these facts underscore how cynical was Obama's campaign in predicating so much of its economic message on an appeal to help those facing foreclosure. You don't hear Obama talk about foreclosures any more do you? That's because he knows he has no solution and that he won't offer any.

Death Of Healthcare

When all of America’s top health insurers and providers met at the White House this week and pledged to save $2 trillion over the next decade in health costs, they were pledging to sabotage our medical care. The blunt truth, which everybody agreed to keep quiet, is that the only way to reduce these costs is to ration healthcare, thereby destroying our system.Here’s why:• Essential to any cost reduction is a cut in doctors’ fees. Congress is trying to cut Medicare fees by 21 percent. But cuts in fees and doctors’ incomes will just discourage people from entering the profession and those already in it from practicing. The limited number of doctors and nurses in the United States is the key constraint on the availability of healthcare. Our national inventory of 800,000 doctors is growing at only about 1 percent a year (18,000 med school graduates annually minus retirements), while the nurse population is stagnant at 1.4 million. To stretch these limited resources so that they can treat 50 million more people is possible only through the most severe kind of rationing.• As in Canada, the best way to cut medical costs is to refrain from using the best drugs to treat cancer and other illnesses, thereby economizing at the expense of patients’ lives. Forty-four percent of the drugs approved by the Canadian health authorities for use in their country are not allowed by the healthcare system due to their high cost. As a result, death rates from cancer are 16 percent higher in Canada than in the United States. We will pay for the attempt to save $2 trillion with our lives. (And remember, one cannot opt out of the Canadian system and pay for the medications out of pocket.)• The only real way to save money on the scale projected is to ration healthcare services. Optimists say that this can be achieved by increased use of preventive care. But the Canadian experience indicates that when government — or its satellite private insurance providers — ration healthcare, they cut preventive care first. In Canada, colonoscopies are so rationed that the colon cancer rate is 25 percent higher than in the U.S. (even though Canada has a much smaller proportion of poor people, whose frequently bad diets make them more prone to the disease).Obama’s pretension that nobody will find changes in his or her current health insurance plans except for a magical reduction in their cost by $2,500 a year is a fool’s proposition. Private health insurers will be no more private than TARP-funded banks or government-subsidized car companies are in Obama’s America. They will be controlled by government healthcare planners who will approve treatments, limit drug use, hold down medical incomes and bring their cost-cutting programs to bear. Inevitably, their ax will fall on the oldest and the sickest among us, those least “deserving” of our newly limited and, under Obama’s program, diminishing healthcare resources.The other radical changes Obama is bringing about in our nation can always be reversed. New taxes can be repealed or lowered. That which was nationalized can be privatized. Government which has grown can be cut. But once the healthcare system is extended to cover everyone, with no commensurate increase in the resources available, the change will be forever. The vicious cycle of cuts in medical resources and in the number of doctors and nurses will doom healthcare in this country. This wanton destruction will not be reversible by any bill or program. A crucial part of our quality of life — the best healthcare in the world — will be gone forever.Politically, voters will feel the impact of these “reforms” very quickly. When they face rejection or limitation at the hands of the bureaucrats, they will quickly understand that the their options have become limited. Just as in the 1990s, when HMOs first became universal, the patient outrage will create a political force all its own and those who foisted this brave new world on the American people will be in their crosshairs.

A Crisis Obama Won't Waste

This economic crisis is too useful for Obama to want it to end. When Rahm Emanuel -- and later Hillary Clinton -- spoke of never letting a good crisis "go to waste," many people were shocked. But now Obama seems to embody the corollary: that the crisis should continue until he has thoroughly milked it to reshape American politics, society and the economy. Like Faust, he seems to wish that this "given moment" will "endure forever." Unlike Faust, however, he will not lose his "life and soul" to such a wish. He'll sacrifice ours instead.

First came the "stimulus package." With only about $185 billion of its $800 billion in spending to be spent in 2009, Obama clearly never intended the spending to be about stimulus but wanted the need for a stimulus to trigger the spending he wanted anyway.
Then came the Troubled Asset Relief Program (TARP) funding, often forced down banks' throats. Now comes word that even as banks want to return the money, the Treasury is making them keep it. One source at a TARP bank reports that Treasury Secretary Timothy Geithner is insisting that banks go through their "stress test" before refunding the TARP money. As Stuart Varney speculates, in The Wall Street Journal, Obama wants the banks to keep the money so he can enforce his regulations on them.Now comes Geithner's plea for extra regulatory powers and Obama's concession to global economic regulation at the G-20 summit. Both moves are game-changers for any major American business. Geithner wants the power to take over any business -- presumably in any field -- whose failure would imperil the national economy. Today it's banks, brokerage houses, car companies and insurance firms. Tomorrow? Who knows?And Obama agreed to agree on international "high standards" for the regulation of all "systemically important" companies to be promulgated by the new global Financial Stability Board (FSB). The United States, occupying one of 20 chairs on the FSB board (21 if we count the EU), will come to a consensus with other central bankers from the G-20 nations on what these regulations should say. Then the Securities and Exchange Commission, the Federal Reserve and the other regulatory arms of the U.S. government will impose them on our economy.(Some have objected that Congress needs to be consulted, but as long as the agreements are "voluntary" and the U.S. agencies are merely "asked" to impose the regulations, no further grant of congressional authority is needed. But, of course, there will be nothing voluntary about the administration's demand that the agencies implement the coming FSB directives, no matter how intrusive they may be.)And, finally, there is Obama's delegation of a total overhaul of the tax code to a commission headed by Paul Volcker with a mandate to report back in December of this year.So with the tax code totally changing, Europe about to formulate regulations for our economy, the U.S. government empowered to take over any large company, the deficit and spending reaching unbelievable levels and the feds insisting on continued control of banks, what businessman in his right mind is going to invest in anything? How could even the most foolish optimist pull the trigger on a business investment without knowing the tax consequences, the regulatory framework and the policy of the banks on lending?But Obama knows all this. He knows that his steps will delay economic recovery. But he wants these changes, not as means to an end, but as the end itself. And he is determined to get them passed and set in stone while the rubric of "crisis" justifies his doing so.He is not unlike a leader who takes his country into war, knowing that by "wagging the dog" he can reinforce his power.But ultimately, does Obama care if he is reelected? Doesn't he know that he needs a good economy to extend his mandate to eight years? Yes, of course he does. But he probably figures that he can turn the economy around as Election Day 2012 draws nearer and reap all the credit then. In the meantime, no good crisis should ever go to waste.

Declaration Of Independence Has Been Repealed

On April 2, 2009, the work of July 4, 1776 was nullified at the meeting of the G-20 in London. The joint communiqué essentially announces a global economic union with uniform regulations and bylaws for all nations, including the United States. Henceforth, our SEC, Commodities Trading Commission, Federal Reserve Board and other regulators will have to march to the beat of drums pounded by the Financial Stability Board (FSB), a body of central bankers from each of the G-20 states and the European Union.

The mandate conferred on the FSB is remarkable for its scope and open-endedness. It is to set a "framework of internationally agreed high standards that a global financial system requires." These standards are to include the extension of "regulation and oversight to all systemically important financial institutions, instruments, and markets...[including] systemically important hedge funds."

Note the key word: "all." If the FSB, in its international wisdom, considers an institution or company "systemically important", it may regulate and over see it. This provision extends and internationalizes the proposals of the Obama Administration to regulate all firms, in whatever sector of the economy that it deems to be "too big to fail."

The FSB is also charged with "implementing...tough new principles on pay and compensation and to support sustainable compensation schemes and the corporate social responsibility of all firms."

That means that the FSB will regulate how much executives are to be paid and will enforce its idea of corporate social responsibility at "all firms."

The head of the Financial Stability Forum, the precursor to the new FSB, is Mario Draghi, Italy's central bank president. In a speech on February 21, 2009, he gave us clues to his thinking. He noted that "the progress we have made in revising the global regulatory framework...would have been unthinkable just months ago."

He said that "every financial institution capable of creating systemic risk will be subject to supervision." He adds that "it is envisaged that, at international level, the governance of financial institutions, executive compensation, and the special duties of intermediaries to protect retail investors will be subject to explicit supervision."

In remarks right before the London conference, Draghi said that while "I don't see the FSF [now the FSB] as a global regulator at the present time...it should be a standard setter that coordinates national agencies."

This "coordination of national agencies" and the "setting" of "standards" is an explicit statement of the mandate the FSB will have over our national regulatory agencies.

Obama, perhaps feeling guilty for the US role in triggering the international crisis, has, indeed, given away the store. Now we may no longer look to presidential appointees, confirmed by the Senate, to make policy for our economy. These decisions will be made internationally.

And Europe will dominate them. The FSF and, presumably, the FSB, is now composed of the central bankers of Australia, Canada, France, Germany, Hong Kong, Italy, Japan, Netherlands, Singapore, Switzerland, the United Kingdom, and the United States plus representatives of the World Bank, the European Union, the IMF, and the Organization for Economic Co-operation and Development (OECD).

Europe, in other words, has six of the twelve national members. The G-20 will enlarge the FSB to include all its member nations, but the pro-European bias will be clear. The United States, with a GDP three times that of the next largest G-20 member (Japan), will have one vote. So will Italy.

The Europeans have been trying to get their hands on our financial system for decades. It is essential to them that they rein in American free enterprise so that their socialist heaven will not be polluted by vices such as the profit motive. Now, with President Obama's approval, they have done it.

It's Obama's Company Now

GM, now renamed Government Motors, has a new CEO: President Barack Obama.By replacing the head of the company and demanding a restructuring of its board in return for further TARP aid, Obama has taken upon himself the responsibility for the future of the company. As Gen. Colin Powell said when Bush was considering invading Iraq and toppling the Saddam Hussein government there: "If you break it, you own it." Now it is Obama's company.This move will backfire big time! The auto giant is very, very unlikely to be saved by this current TARP infusion. Doubtless it will need more in the near term. But the resentment now focused on the management of the company will then turn to Obama. Having demanded a replacement of the management, it is he who will be held responsible for the company's future.And each time GM asks for more money, Obama will face a choice: take personal responsibility for laying off 100,000 auto workers or anteing up the additional cash. By inserting himself so deeply into the management of the company, Obama makes himself central to its future. If Obama lets the company fail, having already extended credit, he will have all of Michigan on his case. If he keeps coming up with more and more tax money, he will earn the contempt of the voters.Socialism has its price. By taking over the management of a company, you become the determinant of its fate in the public's mind.Obama does not seem to realize that government takeover is the beginning, not the end, of the problem. He should have stuck with being president and left making cars to others.And, as the new CEO of General Motors, what will his policy be on corporate compensation? Will the public tolerate his letting his new company pay salaries sufficient to attract the talent necessary to salvaging the firm? Or will he have to rely on a bunch of kids right out of school, willing to work for one or two hundred thousand a year, for the company's salvation?When it comes to the hard work of cutting retiree health benefits, reducing salaries, laying off workers and closing plants, is Obama willing to resist calls for his intervention? Is he up for taking the blame for all the "heartless" measures GM will have to take to salvage its future? He has put himself squarely in a position to pay a steep political price for his assumption of power at GM.Most troubling is the sense that Obama cannot have thought this through. He can't have planned this. President Clinton used to say at strategy meetings that we needed to think three or four moves ahead and not just "kick the can down the road." Obama is clearly not following his predecessor's advice. He realized GM needed money. He knew the public would have a fit if he gave it. So he decided that he would appease his electorate by exacting blood from the company's management and directors by using his guillotine on some of its old gray heads.But, had he thought before he acted, he would have realized that it would have been far better to have criticized GM from a distance even as he extended more money -- rather than to, in effect, take over the company.The president's protestations that the government does not want to own a car company are quite beside the point. It's his now, and he better figure out what to do with it.

Obam's Worst Jobs Killer

More than anything else, business needs a predictable environment if it is to create jobs. Changes in the regulatory environment and the tax code make it almost impossible for businesses to make investments.Yet President Obama seems to ignore this reality. Each day's news brings another bold and far-reaching proposal to change the fundamentals of the US economy. And each time he indulges his personal ideology with such a pronouncement, businesses all over the world cut back on their planned investment until the dust settles.

Most incredible was the fact that he chose the middle of a deep recession to announce a major tax-code overhaul.Stressing how far-reaching the changes might be, he appointed a commission headed by former Federal Reserve Chairman Paul Volcker to report back by early December on what the changes should be.Assuming Obama will need several months to figure out which of its recommendations to adopt and Congress will take several more months to enact its own version, the announcement effectively leaves business up in the air for at least 12 more months -- uncertain of the tax consequences of any potential investment. Who in their right mind is going to invest significantly in new plant, equipment, services, personnel or anything else? How can you consider doing so, when you can't know how the tax code might penalize you?And, in the same week, Obama announced that he'd seek to regulate nonbank institutions, including those he deems to be "too big to fail" lest their collapse injure the economy. Which businesses will be included? Nobody knows.We may not know even when the law is passed. As companies grow or merge or acquire one another, they may step over the invisible line and become "too big," and thus subject to Obama's regulation.How can a firm plan on expansion without knowing what increment in its size will attract regulatory scrutiny? It's hard enough to anticipate possible anti-trust complications -- and the Justice Department is at least usually willing to consult before any merger on what its attitude will be. Obama's leaving everybody guessing.Growth demands investment, and investment demands stability. So the more Obama stirs the pot with his proposals and potential changes, the more he retards exactly the investment he needs to get the economy moving again.At least Obama has toned down his rhetoric, no longer echoing JFK's comment that "all businessmen are SOBs." But his actions do more than his words ever did to hobble any recovery.So why insist on pushing these "reforms" now? Because, while it might be wiser to wait until after the economy's out of recession, it may then become politically impossible to get them through Congress.So he's determined to use the sense of panic to enact his changes now.Again, he's putting his ideological agenda ahead of the requisites of national economic recovery. We needed a pragmatic pilot; we elected an ideologue instead.

Obama Isn't really Into You

Does President Obama truly believe that he can castigate and condemn Wall Street on Mondays, Wednesdays and Fridays and then secure its cooperation on the other days of the week?Does he not understand that when he ignites a public furor over AIG bonuses and then incites Congress to pass a punitive tax, he sends shivers down the spines of every other corporate executive who makes a lot of money?Does he seriously believe that Wall Street investors will not worry that their winnings, should they join the Treasury as partners in risky investments, would be subject to public abuse, publicity and confiscatory taxation?Of course he realizes that his rhetoric makes it unlikely that his program will succeed. He obviously gets it that the entire concept of a public-private partnership is impossible amid a climate of waging class warfare, taxing the rich and heaping contempt on anyone who makes money. The president is quite bright and certainly understands that you cannot shake hands with your right while you launch a roundhouse with your left.So why does Obama persist in his aggressive rhetoric? Why does he continue to treat Wall Street as something out of Dante's Inferno?Because he's just not that into you! He doesn't really care if the public-private partnerships work out.He sends Geithner out to announce the program because he doesn't want to make it his own. When he announces a stimulus plan or a new spending bill, it's Obama's moment before the teleprompter. But the public-private partnerships he leaves to his Treasury secretary to announce.The most rational explanation for Obama's puzzling conduct -- sabotaging his own program by way of his own rhetoric -- is that he truly wants to be forced to nationalize the banks in pursuit of his ultimate goal of a socialist economy.Obama has to oppose nationalization today in order to achieve it tomorrow. He has to show the country and the world that he is doing all he can to help the private sector to sort things out with government help. He must ostentatiously invite the hated demons of Wall Street to join him in rescuing the banks in order, later, to say that he did his best to avoid having to take over the banks. Only then will nationalization be an acceptable alternative -- when he has run out of other options.Meanwhile, he makes sure the private sector won't play ball by going after their bonuses, sending an implicit message to the other executives on Wall Street that reads: Stay away.Even when he takes over the banks, as he almost inevitably will, he is going to have to dress up the nationalization as a temporary measure forced on him by the economy and the previously unrealized depth of the problem. He will cite the example of Sweden, where the government nationalized the banks only temporarily and returned them to private hands quickly.You can't be for nationalization. But Obama hopes to accomplish it nonetheless.Already, in the TARP and TALF programs, we can see how eager he is to use government power to manipulate the once-private sector. Consider the mandates piling up on any financial institution that takes government funds: limits on executive pay, corporate travel and conferences; a strong Buy American recommendation; and aggressive action to get them to make consumer loans. Can affirmative action, low-income lending and diversity outreach be far behind?If Obama can bring banks and the healthcare industry under government control, we will have de facto socialism. Is this Obama's goal? It is obviously where he is headed.Is Obama a socialist? Rather than throw around labels, let's do the math. The best measure of whether an economy is government- or private sector-oriented is the percentage of the gross domestic product (GDP) that flows through government expenditure. Before the current fiscal crisis, the major nations stacked up as shown in the chart on page 27.Obama's stimulus package, alone, comes to about 6 percent of GDP, vaulting the United States past Japan to 40 percent on the list above. If we add in the extra spending in the supplemental appropriations bill and the likely increases for healthcare, the total government percentage will rise well past 40 percent and probably close in on the United Kingdom's 43.That's pretty socialistic, but Obama has three more years to get us up around Germany and really ruin our economy!

Feds Buying Treasury Bills

In an effort to promote liquidity and boost the economy, the Federal Reserve yesterday announced plans to grow the money supply by another 50 percent to 60 percent. This ignores the profound observation of Gen. George Patton: "You can't push a string."When the Fed expands the money supply, it doesn't pass out $100 bills on Broadway. It gives lines of credit to banks and other financial intermediaries to generate some money and also buys up Treasury bills in circulation to pump out more cash.But the money supply has already expanded by 271 percent in the past five months. Why does the Fed expect what hasn't worked to suddenly start working?Right now, there is about $800 billion plus currency in circulation sitting in wallets, purses and cash registers around the country. Another $800 billion is sitting in a vault at the Federal Reserve Board, for a total monetary supply of about $1.6 trillion.In a vault? Yes. When Congress voted the TARP program to bail out banks, the banks actually took only a small part of the money. The rest they used to offset losses on their balance sheets while letting the Fed hold onto the money.Why didn't the banks want the money? Because they're not about to make loans in this economy. They're more than happy to let the cash sit at the Fed earning them interest. (The Fed decided to start paying interest last November).So now the Fed will, in essence, be creating another trillion of money supply to sit in the vault alongside the $800 billion already there. The new money will remain idle for the same reason the old money has because banks won't make loans in this environment.And what of the money that is going out the door to buy Treasury bills? Those selling Treasuries won't run out and spend the money on flat-screen TVs. With higher taxes coming up next year and the economy in the tank, they won't spend it or lend it they'll probably just turn around and buy more T-bills.Think of a parking garage filled with cars. The cars' owners leave them in the garage, because it's a bad day with rain and snow and conditions aren't suitable for driving. Similarly, banks and consumers leave their money in the vault at the Fed or in their bank accounts or under the mattress.When conditions improve, though, all those metaphorical cars will suddenly be taken out for a drive. All at once. And a traffic jam of monumental proportion will ensue.When everybody starts spending the money they're now leaving in vaults and mattresses, way too much money will be chasing way too few goods and services. Double-digit inflation will return to America.Yesterday's Fed action won't help but it will put more money out there that the Fed will have to mop up once the economy, on its own, revives.

Can President Get The Job Done?

The furor over the huge federal spending under President Obama - a $1.75 trillion deficit, 13 percent - obscures an even more basic question: Does he know what he is doing?That is, does he know how to do anything other than spend?His stimulus package, of course, took no special ability: He left the details to Democrats in Congress. But his two other major initiatives - his banking - and mortgage-relief plans - are both flawed and unlikely to solve their respective problems.Indeed, they're so wide of the mark as to prompt questions not of Obama's ideology but of his basic competence.The bank-bailout plan seems to be largely stillborn. Having wished that the private sector would flock to invest in toxic assets if offered the right incentives, the Treasury secretary is still hoping. Crossing his fingers seems to have replaced effective policy in his planning.To date, no massive infusion of private-sector capital seems in view and Washington is doing little more than writing checks to prop up the failing banks. That doesn't take a genius. But the difficult task of relieving the banks of toxic assets so they can rekindle the flow of loans seems to be beyond the ability of the president and his administration.Perhaps Obama privately isn't so concerned about the banks or the businesses that need the credit markets restored. Those are Republican interest groups, right? But he surely must want his mortgage-rescue plan to work - the homeowners facing foreclosure tend to be Democratic constituents.But this plan, too, falls far short of the mark.Incredibly, it excludes anyone who has lost their job and can't afford to make their payments even if they were to spend 31 percent of their income trying to do so. If you can't come close to affording your mortgage, even if only because of a (hopefully temporary) loss of employment, forget about it: Obama is not going to help you.Nor will he help you if your mortgage exceeds your home's value. One out of five mortgages now falls into this category - and the continued fall in property values will put more and more homeowners in it. But they can expect no help from Obama's rescue plan.Why would a liberal be so callous? Why would he leave so many out in the cold? Could it be that the administration simply can't figure out how to help these folks? That the president couldn't devise a counter to his financial advisers, who presumably wanted to exclude these folks?It was Clinton-era Housing Secretary Henry Cisneros who urged Fannie Mae to spend 42 percent of its money buying mortgages for lower-income people and who suggested that they no longer require down payments. And it was his successor, Andrew Cuomo, who upped the ante to 50 percent of the Fannie Mae portfolio.After Democrats inveigled people to buy homes they could not afford, how can they justify passing a plan that excludes them from assistance?It appears that Obama is at sea when it comes to financial policy, economic-recovery planning and credit-rescue efforts. We're stuck not only with a socialist but seemingly an incompetent one.

Phony Mortgage Plan

President Obama and his big spenders are moving quickly, to the relief of those who are facing foreclosure on their mortgages. But the program they are offering will do nothing for those most in need.
In the fine print, Obama’s plan provides no relief for any homeowner whose mortgage exceeds the total value of his home. But these folks are the ones who have been conned into taking sub-prime mortgages so loaded with brokerage commissions, interest rate subsidies, bank fees and lawyer and title-company charges that the amount of the mortgage has ballooned. These high mortgage amounts, coupled with declining property values, have turned about 20 percent of American mortgages upside down, so that the debt exceeds the value of the property.

By excluding these homeowners from help, Obama is guilty of a holier-than-thou hypocrisy. Was it not Fannie Mae and Freddie Mac that encouraged such over-mortgaged properties? Was it not the Democrats in Congress who passed legislation urging Fannie and Freddie to weaken the standards to allow more low- and lower-middle-income families to buy homes?
How can Obama suddenly pretend to be so shocked — shocked — that about 20 percent of America’s home mortgages are now worth more than the property they finance? It was the insistence of liberal Democrats that made it so. When Housing and Urban Development Secretary Henry Cisneros demanded that Fannie and Freddie invest 42 percent of their assets in buying low- and lower-middle-income mortgages, and when his successor Andrew Cuomo raised the quota to 50 percent, what did they think would happen? When they explicitly told Fannie and Freddie not to insist on down payments in the mortgages they purchased, how did they think the purchase would be funded? Obviously, if you don’t require the borrower to put money down, the full purchase price must be covered by the mortgage. To now, piously, refuse to come to the rescue of those who fell for your party’s seeming generosity and bought homes on the terms it suggested is hypocritical at best.
But it is not only the over-mortgaged whom Obama will ignore, but those who have lost their jobs! If you do not make enough money such that your mortgage payments come to 31 percent of your income, you can’t get your mortgage refinanced. If your income has dropped to a point where your monthly payments on your loan consume a greater part of your earnings than 31 percent, you are stuck.
So we have Obama rushing to the aid of those who have been hurt in this bad economy, but exempting from his proposed relief anyone who has lost his job and seen a cut in income or whose property values have dropped below the amount of his mortgage. In other words, he’ll help anyone but those most in need.
And, once again, Obama would limit his aid to those who make below $200,000 a year. While he doesn’t specify this limit in his proposal, he does limit his intervention to mortgages of less than $720,000. At standard mortgage interest rates, such a loan would call for $60,000 or so in payments a year. To qualify for relief, your mortgage payment can’t be larger than 31 percent of your income — or about $200,000. Once more, Obama makes it clear that he is not the president of anyone who makes that much money or more. He is only the president of the other people.
Obama, of course, forgets — or doesn’t care — that those making over $200,000 account for almost a third of the total national spending and that you cannot stimulate an economy while constantly cutting off those people from any consideration in any government program. But Obama is determined to try.

Obama's Inflation To Hit Next

In the last five months, according to the Federal Reserve Board, the money supply in the United States has increased by 271 percent. It has almost tripled.Have car sales tripled? Home purchases? Consumer spending? Corporate investment? Not only have they not tripled, they have all declined more sharply than they have since at least the recession of 1981-82, and perhaps since the Great Depression.So where is the money? If it isn't being spent, where is it?It is being parked, squirreled away. Consumers are using it to pay down their credit card balances, pay off their mortgages, reduce their student loans, make the payments on the car sitting in their driveway -- not the one in the dealer's lot. Businesspeople are buying T-bills, investing the money and saving it. They aren't spending, either.But one day this recession -- despite Obama's best efforts -- will end and things will begin to look up again. Then we can expect all of this money to come out of its parking space and get back on the highway of commerce. All at once. The inevitable result will be double-digit hyperinflation.Since the spending and borrowing splurge is not confined to Washington, but is being mimicked all over the world, the inflation will not strike just one country but will be global in scope. The first global inflation in our history (except, perhaps, right after World Wars I and II), it will confront our policymakers with yet another unprecedented challenge and send them back, once more, to their economics texts. There, they will find that the only remedy for global inflation is global recession, a la Paul Volker. Having just emerged from a ruinous depression, nobody will be in the mood for more unemployment, but that is just what will have to happen to cool off the inflation and break the inflationary psychology that is likely to set in.The point of this gloom and doom is that all this pain is entirely preventable. It will be caused by Obama's excessive spending and trillion-dollar-plus deficits. This spending, of questionable utility in overcoming the current recession/depression, is so far out of line with what the economy can handle that it will do more harm than good when the inflation hits.Proof that his spending will have little impact on the depression is the vast increase in money supply with no commensurate improvement in the economy. Providing money, via spending hikes or tax cuts, does not guarantee that the money will be spent. Tax cuts can be saved and spending increases, while surely spent once (on the initial project), can rapidly lose their multiplier effect as wage-earners on the government payroll bank their money just like those who get tax cuts will do. Getting out of this economic mess depends on consumer and business confidence, a faith that Obama is eroding with his looming tax increases as rapidly as he tries to kindle it with his excessive spending.None of this should come as any news to Obama. He likely knows all this. But he is determined to pass his agenda of bigger government, nationalized healthcare and vastly greater spending even at the price of inflation and subsequent recession. He puts ideology first and the economy a distant second.The stock market has figured out his priorities and is responding accordingly. One can only hope that voters also eventually realize what is going on.

War On Prosperity

President Lyndon Johnson's administration was known for his War on Poverty. President Obama's will become notable for his War on Prosperity.We're speaking, of course, of Obama's plans to hike income taxes on the most wealthy 2 or 3 percent of the nation. He's not just raising the top rate to 39.6 percent; he's also disallowing about one-third of top earner's deductions, whether for state and local taxes, charitable contributions or mortgage interest. This is an effective hike in their taxes by an average of about 20 percent.And soon the next shoe will drop - he'll announce that he's keeping yet another of his campaign promises: to apply the full payroll tax to all income over $250,000 a year. (Right now, the 15.3 percent Social Security tax only applies to the first $106,800 of income - you neither pay the tax on income above that, nor accumulate added benefit.) For many taxpayers in this bracket, this hike will raise their total taxes by about half.Finally, he's declaring war on investors by raising the capital-gains-tax rate to 20 percent.These increases are politically insignificant: The top 2 percent of the nation casts only about 4 percent of the votes, barely enough to attract the notice of even the most meticulous pollsters.But they have enormous economic significance. Those who earn more than $200,000 pay almost 60 percent of America's income taxes and account for a third of its total disposable income. If these spenders and investors are hunkering down, waiting for the revenuers to beat down their doors, their confidence will be anything but robust. Their spending will drop; they'll be unlikely to invest (except in new tax shelters).Franklin Roosevelt's presidency was marked by an emphasis on recovery in his first term and class warfare (which he called "reform") in his second. Campaigning for re-election in 1936, FDR famously declared, "I should like to have it said of my first administration that in it the forces of selfishness and of lust for power met their match. I would like to have it said of my second administration that in it these forces met their master."Obama seems to have skipped the first-term FDR program and jumped right into the class divisions and warfare of the second.But the president would do well to remember that Roosevelt's assault on the rich led directly to the recession of 1937-39 - when unemployment soared back up to 19 percent. (It was brought down only by World War II.)Obama must realize that his tax hikes will dampen investment and consumer spending and prolong and deepen the economy's woes - this is presumably why he's postponing most tax hikes until 2011. But taxpayers, particularly wealthy taxpayers, are not dumb: They'll know what's coming, and look to secure the hatches in advance by sitting on their money.But then, Obama must also realize that his stimulus package, with its massive growth of government, is going to kindle huge inflation in coming years. And he surely realizes that he can't expand government health insurance as massively as he intends introducing rationing of medical services.He must know, but not care.Here is a president who would rather redistribute income than create wealth. He thinks it more important to grow government than to fight inflation. He believes that it is crucial to expand health care to the young and middle aged, even if it means cutting it back for the elderly. He's more committed to effecting "broad change" in his first term than he is to winning a second one.We have a president, in short, who will stand on his principles. Unfortunately, they're bad ones.