This is a guest post by Tony Parker, an outspoken business owner and investor, looking at the intersection of politics and money.
While I don’t agree with all his views (see my rebuttal in the comments section) I do think he makes some valid points worth discussing. Please share your views and thoughts via leaving a comment below.
Around the water cooler – when we talk politics – one item comes up often: Is President Biden pulling a “Jimmy” – as in Jimmy Carter?
Most rational people believe that Carter, a “one term-er”, was our worst modern day president in terms of effectiveness (not counting Nixon’s criminal activity).
I believe one of his major faults was his inability to create the right environment for a robust economy. Guess what? Biden is heading down the same path despite (or perhaps in spite of) signing massive stimulus bills.
I am cognizant of the fact that President’s get too much credit when times are good and too much blame when they are bad, but the “bully pulpit”, great leadership and the right framework can have a significant impact on the economic environment.
Here is my brief three-point plan to get the economy back:
I don’t want to sound like a hard-core republican, which I am not, but cutting taxes does stimulate the economy. I don’t recommend across the board tax cuts, like the bush tax cuts, but rather targeted tax cuts that provide incentive for people to spend and invest.
When you are ready to buy your first house and you calculate the potential mortgage vs. your current rent, you always take into consideration the mortgage interest deduction. That deduction is a major incentive for you to take on the “burden” of home ownership.
This logic is also what made the home buyer and new car tax breaks so successful, because they were targeted and resulted in a direct incentive/stimulus.
Why does the government subsidize housing? Because we believe that home owners are more stable parents, take better care of their property, are more involved in the community, and they provide real economic stimulus when they purchase stuff for their new house (furniture, lawn motors, appliances, etc.).
These costs are ongoing and is a major reason why consumer spending drives over 70% of our economic growth.
Therefore, providing targeted tax cuts for individuals and business that will influence their decision-making can be a very powerful weapon. Example: If you owned a medium sized business and the government offered you a healthy tax break for building a new factory/shop – would you not seriously consider it?
After all, you want to expand your business, but you want to be sure the numbers work. The benefit: new construction jobs, new employees to run the factory, new employees paying taxes, and new employees spending their paychecks at local establishments.
Now picture several companies doing a similar investment…BOOM…a thriving economic environment. That is why Biden should extend existing business credits and employment programs, because these provide the biggest bang for the buck.
While cutting taxes or even extending the existing bush tax cuts will add to our federal deficit, I believe that the more immediate danger of a double dip recession outweighs the longer term debt issue (which does need to be addressed as well and is a topic for another post!)
Don’t Re-regulate, enforce the current regulations.
Nothing, and I mean NOTHING scares business more than regulation, or more specifically, the uncertainty of coming regulation.
Nobody likes it when the rules are changed in the middle of the game. In most cases, we have plenty of regulation on the books, but because of the government bureaucracy, enforcement is spotty and ineffective.
Hire the right people to run these agencies and pay them the big bonuses when they find corruption, fraud, etc. Then you will have a much safer and secure business environment, where catching the bad guys is actually rewarding – as opposed to our current regulators who get in bed with the groups they are regulating so that they can land cushy and high paying jobs after their government tenure.
I can guarantee one thing, until Biden stops threatening new regulation, business will sit on their hands until the “coast is clear” and the future is more certain. This means no new real job creation and the continuation of a spluttering economy.
Stop bailing out industries and failing entities
Last time I checked, we lived in a capitalist society. Is this type of democracy fair to all individuals? NO! Does capitalism reward the rich more than others? YES! But does capitalism allocate resources in a reasonably efficient manner? YES! And most important of all, does it promote prosperity? YES!!!!!
Capitalism comes with creative destruction. Some business MUST fail in order for the more efficient ones to succeed.
It hurts…its painful for employees, but it ensures that the best grow and the worst die. Otherwise you have the government subsidizing and bailing out companies forever because they cannot stand on their own (Examples: GM, Amtrack, Post Office, Citigroup, Fannie Mae).
I, for one, am sick of my tax dollars going to poorly run, inefficient, and corrupt organizations.
So President Biden, if you don’t get the economy back on track you will indeed pull a “Jimmy” and become a major disappointment to the millions who voted for you (including myself).
As the saying goes, “Once Fooled, Twice Shy.”
Other posts by Tony Parker (that maybe just as controversial)
17 thoughts on “Why Biden Will be a One Term President and What He Should Do To Save Our Economy!”
Obama is doing well considering the lay of the land he landed on , THE WORST mess since the Great Depression. JIMMY CARTER IS THE ONLY PRESIDENT WHO DID ANYTHING FOR THE PEOPLE OF THIS COUNTRY, HABITAT FOR HUMANITY IS THE ONLY TIME IN HISTORY THAT ANYONE EVER LIFTED A FINGER TO HELP PUT A ROOF OVER MANY A FAMILY IN THIS COUNTRY. SO GET OFF the Presidents ASS AS WELL As JiMMY cARTERs. I WOULD love TO SEE YOU DO AS MUCH AS THEY HAVE DONE FOR THIS COUNTRY.
I have to agree Suzanne, Carter is very underrated. He was the only president in my lifetime that was completely forthcoming and tried to do the Christian thing by Americans. He would have been much more successful if he had stuck to sound bites and posing for photos in front of causes that he had nothing to do with just to make himself look good. Despite his wealth and stature he has dedicated his life to helping the disadvantaged. I would stand by him any day!
should there be a tx deduction for second homes or retirement homes? just wondering. Tony we disagree but you seem to treat others who disagree with you respectfully and I appreciate it
Obama did try to pass a bill to help small business that addresses what Tony is saying but that that was filibustered by the Senate Republicans. so Tony obama has tried to address what you are taking about in terms of small business tax credits. what Obama can do is put people in place that will regulate the industries that Tony mentions. Especially with coal and coal mining companies is that the process now allows them to filibuster and delay any meaningful change in how they do business so new regulations are needed. Power companies are fighting the right of the EPA to regulate greenhouse gases which the Supreme Court says they have!l Judges which have a personal interest in BP and some of the other companies in the oil spill have not recused themselves from making decisions which might affect their own personal stock holdings. He left out AIG in the list of firms that was bailed out as well as Chrysler. the Post Office is required to prepay its healthcare benefits for its employees unlike private companies which are allowed to go bankrupt in many cases to avoid its pension obligations. if the Post office was allowed to shed this burden it would not be losing money. But congress in its infinite wisdom put a burden on the Post Office that it allows private companies to avoid. I am the son of a postal worker and when I hear the Post Office being bandied about as an institution that does not work, I have to speak up. He should have increased taxes to pay for these wars. He is bringing an end to the war in Iraq so is the total number of troops increased since that is happening. He will be a one term President and I am fine with that. Many business people do not realize this about the Post office
Two points: Contrary to Parker’s assertion that “most rational people believe Carter was our worst modern day President,” a variety of polls from many sources show that George W. Bush is the easy winner of that ignominious distinction. Second: Tax cuts without corresponding spending cuts can never stimulate the economy because each dollar cut causes a $1 shortfall to the Treasury, while it generates just 17 cents in new revenue. Hence it creates an $.83 deficit that must be financed. The annual interest on that $.83 cents is approximately 3 cents, leaving us with a deficit of $.86.
Obama has done more damage in 18 months then any two term president has done in our history. With unemployment at 9% in another two years do you really think Americans won’t notice?!
It’s hard not to notice when the president is more concerned with passing regulations on business and finding new taxes to impose on businesses and people to pay for all these entitlements then putting people back to work. I wish he was more concerned with jobs then he is with the Arizona law which is nothing more than a copy of the federal law. Please save your ideology for someone who knows nothing about business or hasn’t been in the private sector.
I’m not sure if you know anything about business, but I am sure you know nothing about immigration law. You clearly are making a lot of assumptions about what the President is thinking. Just because his main focus is a crisis, that by the way was created by someone else, doesn’t mean he should ignore everything else going on around him! Obviously, you don’t agree with the President’s approach and that is what you should focus on rather than criticizing him for something he is acting on.
If Obama is so bad imagine what Republicans would be when they come to power. They are the only people who are responsible for the current crisis. Remember Ronald Reagan? He single handedly destroyed the American middle class by empowering the rich and ignoring the former.
Reagan destroyed the middle class? If thats what happened we need to dig him up and have him do it again.
I agree with the writer, BO is toast for lying to the American people about stopping the wars…he’s increased the troop count. He lied about not letting the unemployment rate rise about 8%…but we still have to pay off the 800+ billion he spent.
One term and the incompetent bum is out. But don’t worry some neighborhood out there will need an organizer.
Oh Fred, if everytime an effort was put forward that didn’t move as quickley or as much as we would like, we called the promise/committment a “Lie” then we would all be liars. It is only when someone makes a promise and doesn’t try with everything they’ve got that I have a problem. The type of problems we are talking about here are not things that can be overturned in a brief amount of time. Not to mention that there is no “one way” or a playbook that can be referred to that will definatley work. This is all about trial and error.
Andy – I think you should stop publishing guest posts from Tony Parker. He is just blaberring on without offering any real solutions. We have cut taxes, offered more stimulus and reformed public agencies. Yet we are stil headed for another depression.
Finally, someone saying it like it should be said. President Obama’s ratings are now below 50% – there is a reason why. If he doesn’t open his eyes to what main street america is thinking he will become an infamous president who bought change, but the wrong kind.
Tony, if someone sounds like a republican, talks like a republican then they must be a…..(republican). I agree with you that the govt spending has been ineffective, but it is better than doing nothing. A recent article shows that without the stimulus 10 million more jobs would have been lost and GDP would be down by 6%.
I worked for one of the bailed out companies (GM) and I was able to get my job back in Feb. So I am very thankful to Obama. The government is there to support it’s citizens in times of need, nothing wrong with that.
I do agree that regulation needs to be looked at. The same politicians that allowed Fannie/Freddie/Sallie/Ginne and all the mae’s to grow are the same one now saying to cut them back (eg. Barney “crazy man” Frank). Probably because they no longer contribute to their campaigns.
I am a fiscal conservative, but am not a republican (they would kick me out for being pro-choice and pro-immigration. plus Rush irritates me to no end). I am not a member of the tea party (they would kick me out for believing that Obama was born in Hawaii and that the federal government has a role in our lives).
R u serious? Do you think that the Republicans or President McCain could have done a better job? The fact is the economy is out of control and the inefficient US government cannot control anything. If we pay the regulators more, they will just become fat cats like their brethren on Wall Street. Tony – you may not be a republican but you sound like a Tea Party member to me!
Tony, your heart is obviously in the right place but cutting taxes on the rich is not a way to get out of this almost unthinkable mess the country is in right now. The are 35 million people who do not have enough to eat, millions of people out of jobs, and not likely to find one soon. They don’t pay any taxes so you can’t cut them. What we need is for Obama to replace foolish and deluded people like Geithner, Summers et al, and to devise a plan to create jobs somethng like Roosevelt did (almost too late) in the late thirties. The economic policies espoused by Bush, and before him Reagan, and now Obama, are disastrous. Friedmanian policies simply don’t work. Even that old fool Greenspan sees that now. He employed 400 Ph.D.s in Economics at the Fed. and they didn’t see how ruinous de-regulation was. We need regulations. Good ones, that work. Please think through all this again.
Thanks for the post Tony, hopefully we will get some interesting debate. While I do agree the President could have focused more on the economy, rather than health care, I do think that in 10 years we will be thanking him for finally getting health care reform moving.
Also financial reform will do more good than bad from a consumer perspective and once people digest it they will find it is not as bad as some feared. All this takes time. The problem is that all the “big” reform the President has pushed through Congress will take time to filter through, which does not really help the 10% unemployed right now. To me if Obama can get confidence up (perceived as much as real), he will get re-elected. I was pretty young when Cater was President, but I think Obama has a much tougher situation than he did. Voters will give him a break for this, but it is likely that Democrats will loose control of the house or even the Senate.
The Bush tax cuts will get extended, I believe for those earning less than $250K. While tax cuts are a good stimulus in the short term, we need long term structural change to our industries and education systems to create new jobs (e.g in renewable energy etc). In the longer term jobs are the only thing that will save this Economy.
I agree we should stop bailing out industries, but the government bailouts to date have saved lots of jobs and apart from Fanne/Freddie, all have provided a profitable return on investment. So one can say that “targeted” bailouts are in fact good economic sense.