Wednesday, February 21 , 2018, 11:32 pm | Fair 40º


Mona Charen: S&P May Have Been Right, But for the Wrong Reasons

Obama administration policies, not the political system itself, the source of our economic problems

Much of the interpretation of Standard & Poor’s downgrade of U.S. debt focused on the “dysfunction” of the U.S. political process. And certainly the S&P — which, let’s not forget, contributed to the 2008 financial crisis by failing to downgrade bad mortgage debt — invited such analysis by citing “the prolonged controversy over raising the statutory debt ceiling and the related fiscal policy debate.”

Yes, the confrontation over raising the debt ceiling was ugly, but not nearly as ugly as the underlying policies that are carrying us to the brink of insolvency. This focus on the contentiousness of the debate, rather than on debt, is dangerous and obtuse. It’s reminiscent of those liberals during the Cold War who were more upset about someone being called a communist than about someone actually being a communist.

Standard & Poor’s may have been right for the wrong reasons. The real reason for doubt about our future capacity to pay our debts is that one of our two political parties is wedded to the social/democrat agenda that is, even as we speak, bringing Europe down.

It is our misfortune that at a moment of heightened economic fragility, we elected a Keynesian liberal who thought of the private sector as a bottomless piggy bank for his redistributionist schemes. Rather than bolster the economy in the early months of his presidency and in the depths of the recession, President Barack Obama further burdened it with Obamacare, the Dodd-Frank Act and a truly punitive regulation agenda.

For example, The Wall Street Journal reports that the Obama administration has intensified its pursuit of drug company executives: “The campaign against drug-company CEOs is part of a larger Obama administration effort to pursue individual executives blamed for wrongdoing rather than simply punishing companies.” The Obama raiders at the Food and Drug Administration interpret wrongdoing very broadly.

Henry Miller at Forbes notes that the FDA now “specifies that a corporate officer can be convicted of a misdemeanor for corporate violations if he was in a position to detect, prevent or correct an action that caused a violation of law — even if the person had no knowledge of the action. That is, intent is not required. Penalties for a convicted executive can include forfeit of profits, fines and a prison sentence.”

Multiply that across the hundreds of agencies and departments that regulate U.S. business and you have a substantial chilling effect on risk-taking and entrepreneurial activity. The private sector has been bullied and burdened into quiescence. The public sector, which depends upon a vibrant private economy, has gone on a bender without the slightest nod toward reality.

It isn’t the contentiousness of debate in Washington that has depressed and demoralized the country; it is the Obama administration.

A thought experiment: Obama is knocked out cold playing basketball. When he awakes, he is unhurt but sees the world through new eyes. Recognizing that the economy desperately needs a boost and that the country he loves is staggering under the weight of excessive government, he proposes a new series of policy initiatives:

» 1. Repeal Obamacare and replace it with a market-based, competitive health-care system.

» 2. Reduce the corporate tax rate from 35 percent (the second highest in the world) to 15 percent and close loopholes.

» 3. Require all agencies and departments of the federal government to perform an “economic impact” analysis of any new rule or regulation and examine all existing regulations in that light.

» 4. Reform Medicare along the lines Paul Ryan suggested.

» 5. Privatize Social Security along the lines Chile adopted (exempt current retirees and those older than age 50).

» 6. Abolish Medicaid and give block grants to states to care for the medical needs of the poor.

» 7. Reform the tax code to simplify and streamline it. Repeal loopholes and exemptions, and reduce rates across the board.

» 8. Abolish the Department of Education, which has spent $1 trillion in the past 30 years while student scores have remained unchanged.

» 9. Promote offshore drilling in the United States rather than Brazil.

Does anyone doubt that if some of the above agenda items were successfully enacted that the recovery would dwarf all previous bounces? The vitality of the American economy is still there — it’s just suppressed, as it was during the Great Depression.

It wouldn’t require such an ambitious agenda to restore American growth and financial health. A simple repeal of Obamacare and a reduction in federal spending to 2008 levels would probably do the trick.

But all of the talk about how dysfunctional our political system is just obscures the truth — that our problems stem from mistaken policies, not a broken system.

Mona Charen writes for Creators Syndicate. Click here for more information or to contact her. Follow Mona Charen on Twitter: @mcharen.

  • Ask
  • Vote
  • Investigate
  • Answer

Noozhawk Asks: What’s Your Question?

Welcome to Noozhawk Asks, a new feature in which you ask the questions, you help decide what Noozhawk investigates, and you work with us to find the answers.

Here’s how it works: You share your questions with us in the nearby box. In some cases, we may work with you to find the answers. In others, we may ask you to vote on your top choices to help us narrow the scope. And we’ll be regularly asking you for your feedback on a specific issue or topic.

We also expect to work together with the reader who asked the winning questions to find the answer together. Noozhawk’s objective is to come at questions from a place of curiosity and openness, and we believe a transparent collaboration is the key to achieve it.

The results of our investigation will be published here in this Noozhawk Asks section. Once or twice a month, we plan to do a review of what was asked and answered.

Thanks for asking!

Click here to get started >

Support Noozhawk Today

You are an important ally in our mission to deliver clear, objective, high-quality professional news reporting for Santa Barbara, Goleta and the rest of Santa Barbara County. Join the Hawks Club today to help keep Noozhawk soaring.

We offer four membership levels: $5 a month, $10 a month, $25 a month or $1 a week. Payments can be made through PayPal below, or click here for information on recurring credit-card payments.

Thank you for your vital support.

Reader Comments

Noozhawk is no longer accepting reader comments on our articles. Click here for the announcement. Readers are instead invited to submit letters to the editor by emailing them to [email protected]. Please provide your full name and community, as well as contact information for verification purposes only.

Daily Noozhawk

Subscribe to Noozhawk's A.M. Report, our free e-Bulletin sent out every day at 4:15 a.m. with Noozhawk's top stories, hand-picked by the editors.

Sign Up Now >