Obama: A Keynesian, Not a Communist

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by Gary North GaryNorth.com

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“It is said that if you know your enemies and know yourself, you will not be imperiled in a hundred battles; if you do not know your enemies but do know yourself, you will win one and lose one; if you do not know your enemies nor yourself, you will be imperiled in every single battle.” ~ Sun Tzu

Step one: know your enemy.

The President’s State of the Union address was long: 11 pages, single-spaced.

It was standard stuff: a laundry list of Keynesian programs, few of which will get by the House of Representatives. It was an exercise in futility. Fortunately.

He began his laundry list with economic inequality, as a good Progressive always does. “But we gather here knowing that there are millions of Americans whose hard work and dedication have not yet been rewarded. Our economy is adding jobs — but too many people still can’t find full-time employment. Corporate profits have skyrocketed to all-time highs — but for more than a decade, wages and incomes have barely budged.”

He appealed to the middle class, as every politician does. “It is our generation’s task, then, to reignite the true engine of America’s economic growth — a rising, thriving middle class. (Applause.)” This is where the votes are. Then came bipartisan platitudes:

It is our unfinished task to restore the basic bargain that built this country — the idea that if you work hard and meet your responsibilities, you can get ahead, no matter where you come from, no matter what you look like, or who you love. It is our unfinished task to make sure that this government works on behalf of the many, and not just the few; that it encourages free enterprise, rewards individual initiative, and opens the doors of opportunity to every child across this great nation. (Applause.)

Nothing Communist here. Why people say he is a Communist baffles me. He is a Keynesian. They all are.

The American people don’t expect government to solve every problem. They don’t expect those of us in this chamber to agree on every issue. But they do expect us to put the nation’s interests before party. (Applause.) They do expect us to forge reasonable compromise where we can. For they know that America moves forward only when we do so together, and that the responsibility of improving this union remains the task of us all.

This is Sam Rayburn’s politics: “Go along to get along.” He talked about the federal deficit. He lied. He said they have reduced the deficit. “Over the last few years, both parties have worked together to reduce the deficit by more than $2.5 trillion — mostly through spending cuts, but also by raising tax rates on the wealthiest 1 percent of Americans.” Reduce the deficit? It runs $1 trillion a year. Nobody has done anything to reduce it. As for spending cuts, both parties are trying to get out of the sequestration cuts that will hit in March.

“As a result, we are more than halfway towards the goal of $4 trillion in deficit reduction that economists say we need to stabilize our finances.” At $1 trillion a year, the crisis is inevitable.

But he wants out of the 2011 deal.

In 2011, Congress passed a law saying that if both parties couldn’t agree on a plan to reach our deficit goal, about a trillion dollars’ worth of budget cuts would automatically go into effect this year. These sudden, harsh, arbitrary cuts would jeopardize our military readiness. They’d devastate priorities like education, and energy, and medical research. They would certainly slow our recovery, and cost us hundreds of thousands of jobs. That’s why Democrats, Republicans, business leaders, and economists have already said that these cuts, known here in Washington as the sequester, are a really bad idea.

It’s deficits today, deficits forever. It’s kick the can.

He correctly identified the #1 problem: Medicare.

Yes, the biggest driver of our long-term debt is the rising cost of health care for an aging population. And those of us who care deeply about programs like Medicare must embrace the need for modest reforms — otherwise, our retirement programs will crowd out the investments we need for our children, and jeopardize the promise of a secure retirement for future generations.

The solution? Tax the rich . . . the universal solution for Democrats.

But we can’t ask senior citizens and working families to shoulder the entire burden of deficit reduction while asking nothing more from the wealthiest and the most powerful. (Applause.) We won’t grow the middle class simply by shifting the cost of health care or college onto families that are already struggling, or by forcing communities to lay off more teachers and more cops and more firefighters. Most Americans — Democrats, Republicans, and independents — understand that we can’t just cut our way to prosperity. They know that broad-based economic growth requires a balanced approach to deficit reduction, with spending cuts and revenue, and with everybody doing their fair share. And that’s the approach I offer tonight.

He says he will go with Simspon-Bowles. Really? Why now? Why not when it was proposed in 2010? Why did he oppose it? Why did the Democrats in Congress oppose it?

On Medicare, I’m prepared to enact reforms that will achieve the same amount of health care savings by the beginning of the next decade as the reforms proposed by the bipartisan Simpson-Bowles commission. (Applause.)

Meanwhile, stick it to the rich!

Already, the Affordable Care Act is helping to slow the growth of health care costs. (Applause.) And the reforms I’m proposing go even further. We’ll reduce taxpayer subsidies to prescription drug companies and ask more from the wealthiest seniors. (Applause.) We’ll bring down costs by changing the way our government pays for Medicare, because our medical bills shouldn’t be based on the number of tests ordered or days spent in the hospital; they should be based on the quality of care that our seniors receive. (Applause.) And I am open to additional reforms from both parties, so long as they don’t violate the guarantee of a secure retirement. Our government shouldn’t make promises we cannot keep — but we must keep the promises we’ve already made. (Applause.)

And how will this be done? The system is a gigantic squid. Why now? What’s new?

To hit the rest of our deficit reduction target, we should do what leaders in both parties have already suggested, and save hundreds of billions of dollars by getting rid of tax loopholes and deductions for the well-off and the well-connected. After all, why would we choose to make deeper cuts to education and Medicare just to protect special interest tax breaks? How is that fair? Why is it that deficit reduction is a big emergency justifying making cuts in Social Security benefits but not closing some loopholes? How does that promote growth? (Applause.)

In short, raise taxes.

The real deficit is $222 trillion. He never mentioned that. They never do.

Then he returned to that old favorite, a simplified tax code.

Now is our best chance for bipartisan, comprehensive tax reform that encourages job creation and helps bring down the deficit. (Applause.) We can get this done. The American people deserve a tax code that helps small businesses spend less time filling out complicated forms, and more time expanding and hiring — a tax code that ensures billionaires with high-powered accountants can’t work the system and pay a lower rate than their hardworking secretaries; a tax code that lowers incentives to move jobs overseas, and lowers tax rates for businesses and manufacturers that are creating jobs right here in the United States of America. That’s what tax reform can deliver. That’s what we can do together. (Applause.)

We have waited since 1913.

He called for bipartisanship. That means “do it my way.”

I realize that tax reform and entitlement reform will not be easy. The politics will be hard for both sides. None of us will get 100 percent of what we want. But the alternative will cost us jobs, hurt our economy, visit hardship on millions of hardworking Americans. So let’s set party interests aside and work to pass a budget that replaces reckless cuts with smart savings and wise investments in our future. And let’s do it without the brinksmanship that stresses consumers and scares off investors. (Applause.) The greatest nation on Earth cannot keep conducting its business by drifting from one manufactured crisis to the next. (Applause.) We can’t do it.

In short, no more debt ceiling battles. Capitulate! But the question is: How to avoid these battles? No one knows.

Let’s agree right here, right now to keep the people’s government open, and pay our bills on time, and always uphold the full faith and credit of the United States of America. (Applause.) The American people have worked too hard, for too long, rebuilding from one crisis to see their elected officials cause another. (Applause.)

Translation: “Let us kick the can!” We must create jobs. How? By government action. Government creates jobs.

But tonight, I’ll lay out additional proposals that are fully paid for and fully consistent with the budget framework both parties agreed to just 18 months ago. Let me repeat — nothing I’m proposing tonight should increase our deficit by a single dime.

And pigs can fly.

It is not a bigger government we need, but a smarter government that sets priorities and invests in broad-based growth. (Applause.) That’s what we should be looking for.

The reason why we face a $222 trillion deficit is because of big government. It will get much bigger unless it defaults, which it will.

Our first priority is making America a magnet for new jobs and manufacturing. After shedding jobs for more than 10 years, our manufacturers have added about 500,000 jobs over the past three. Caterpillar is bringing jobs back from Japan. Ford is bringing jobs back from Mexico. And this year, Apple will start making Macs in America again. (Applause.)

This has been going on for 35 years. What will reverse it?

Boondoggles!

There are things we can do, right now, to accelerate this trend. Last year, we created our first manufacturing innovation institute in Youngstown, Ohio. A once-shuttered warehouse is now a state-of-the art lab where new workers are mastering the 3D printing that has the potential to revolutionize the way we make almost everything. There’s no reason this can’t happen in other towns. So tonight, I’m announcing the launch of three more of these manufacturing hubs, where businesses will partner with the Department of Defense and Energy to turn regions left behind by globalization into global centers of high-tech jobs. And I ask this Congress to help create a network of 15 of these hubs and guarantee that the next revolution in manufacturing is made right here in America. We can get that done. (Applause.) We must bankroll science: the drug industry.

Now, if we want to make the best products, we also have to invest in the best ideas. Every dollar we invested to map the human genome returned $140 to our economy — every dollar. Today, our scientists are mapping the human brain to unlock the answers to Alzheimer’s. They’re developing drugs to regenerate damaged organs; devising new material to make batteries 10 times more powerful. Now is not the time to gut these job-creating investments in science and innovation. Now is the time to reach a level of research and development not seen since the height of the Space Race. We need to make those investments. (Applause.)

Why won’t the free market make these investments?

The man is a Keynesian.

More boondoggles! More Solyndras!

Today, no area holds more promise than our investments in American energy. After years of talking about it, we’re finally poised to control our own energy future. We produce more oil at home than we have in 15 years. (Applause.)

We must reduce carbon emissions. We must fight what used to be called global warming, before we had a decade of stable temperatures.

But for the sake of our children and our future, we must do more to combat climate change. (Applause.) Now, it’s true that no single event makes a trend. But the fact is the 12 hottest years on record have all come in the last 15. Heat waves, droughts, wildfires, floods — all are now more frequent and more intense. We can choose to believe that Superstorm Sandy, and the most severe drought in decades, and the worst wildfires some states have ever seen were all just a freak coincidence. Or we can choose to believe in the overwhelming judgment of science — and act before it’s too late. (Applause.)

So, it’s the same old story. He has not learned. The public has caught on. The scare is fake. But the intellectual class believes it’s real.

The man is a standard liberal. He is not a Communist.

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Gary North [send him mail] is the author of Mises on Money. Visit http://www.garynorth.com. He is also the author of a free 31-volume series, An Economic Commentary on the Bible.

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