The day after President Obama’s State of the Union, Congress went ahead and passed a $1.9 trillion—that's right—a $1.9 trillion increase in the federal government’s debt limit. Let me tell you why this bothers me.
First, it means future tax rates are going to have to go up, in order to avoid bankruptcy.
Second, Mr. Bernanke bought a lot of our debt in 2009. That brought down the dollar and hiked the gold price. So, has Washington set us up for major inflation in the years ahead?
The Obama White House saved Bernanke’s floundering re-confirmation with a flurry of last minute pressure and phone calls. Does that make the Fed head Obama’s man? 47 Democrats voted for him. Only 22 Republicans did. Are Democrats the easy money party? I'll let you decide.
Meanwhile, President Obama basically stood by his agenda in his address. There was no Senator Scott Brown burning bush epiphany. Obama wants to raise taxes on foreign corporate profits. That’s a very bad idea. It’s bad for growth, bad for jobs, bad for stocks and it’s protectionist.
Obama whacked banks and is standing by this bank tax hike that will actually reduce bank loans in the future. He did not extend the Bush tax cuts on capital and investors. He stayed with big government healthcare, implying all the over-spending and over-taxing that goes with it.
He stayed with cap-and-trade. Yet another mammoth tax hike. He even took an ill-advised and uninformed whack at the Supreme Court.
And you know what?
His teensy, tiny, temporary tax credits for small business are not real incentives. They are just a form of government spending. That's why they don’t produce growth and jobs.
It looks to me like we’re still on a course of tax-tax-tax and spend-spend-spend. It's a sorry mix for stocks and economic growth.
I’d hoped to see a bigger spending freeze and real limits for small government. And I still believe across-the-board tax cuts,-the one policy Obama refuses to look at, is still the answer to jobs and growth.
On that score, check out Massachusetts Senator-elect Scott Brown's response to Obama’s State of the Union:
"Bold action means broad based tax cuts for families and businesses to create jobs and not merely targeted tax relief. Bold action also means major reform and restructuring to actually cut spending and not just freeze it."
Well, I couldn't have said it better myself. In fact, I have said it about a thousand times.
Tea party free market populism.
Also on CNBC.com today:
- Obama to Propose $33 Billion Tax Credit to Create Jobs
- Consumer Mood at 2-Year High Despite Financial, Job Worries
- Slideshow: How Your Tax Dollars Are Spent
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