Does Obama understand the economy?

Great Debates
101

Right. We’re near death. 145 million civilians employed. GDP still in positive territory. Federal tax revenues up $500 billion in inflation-adjusted terms over the past 4 years (That’s 25% in just 4 years in real dollars, mind you) since the Bush tax cuts.

The time to act is now. We must tax more and regulate more to stop this disaster.

  • Let’s stick it to the oil companies, so that they lose all incentive to invest in new production, and so that the last, remaining publicly traded companies such as ExxonMobil that are down to controlling only 15% of global reserves, decide to call it quits. Then we’ll be completely at the mercy of Putin, and Hugo Chavez, and God-knows-who-else. That’ll be great. Plus the hundreds of thousands of employees that work there will get to go home. And the government will lose the tens of billions per year it currently gets in tax revenue. What are we waiting for?

  • Let’s throw up protectionist trade barriers, to choke off the one nicely humming engine of our manufacturing sector, exports. The millions of American workers in those factories will love that. It’ll just be like Smoot-Hawley from 1930 all over again! Won’t that be fun?

  • Let’s create all sorts of bizarre rules and grease the skids for labor unions to gain more traction in the places where they are currently struggling today. Since they can’t seem to make it work on their own, why not have the government give them a helpful nudge? After all, it’s only a wild coincidence that the Big Three auto makers, steel, and airlines are the most heavily unionized industries around, and also score miserably in terms of competitiveness and customer satisfaction. Plus, they are either teetering on the verge of, or have already been in-and-out of, bankruptcy. And I haven’t even thrown in the basket cases of the Post Office and the public school teachers’ unions. But no mind. This will work. Trust Barack and Joe.

  • Let’s raise taxes on capital gains and dividends so that investors are loathe to move capital to where it might do the most good, for fear of a punitive tax wallop. That’ll stoke the fires of innovation and job creation. They’ll just leave it where it sits today, and they will even be afraid to demand dividends from cash-flow generating businesses, leaving it to sit unproductively on a company’s balance sheet.

You’re right. We need to do these things right now. What could I have been thinking?

102

What could make the poor abused oil companies not continue to get rich. They set new profit records every quarter and you think if they paid their taxes they would just quit trying. get real. We all pay taxes. Does it stop you from going to work. Illogical.

103

Right.

Actually, I think we should just nationalize them ‘for the people’ and get it over with. And do it like Mexico and actually outlaw private ownership in our constitution.

After all, we both know that the oil companies are really just cartoon caricatures of fat, white men in top hats lighting cigars with $100 bills, as they step on the backs of proletariats to get into their limos. And the profits go straight into the pocket of that one, single guy to buy champagne for his bathtub and chains for his slaves. Not to bonuses for employees or dividends to investors. No, sir.

The oil companies aren’t hundreds of thousands of talented employees scrambling to attract investor capital, invest in new technologies and improve production in a fiercely competitive industry where their foreign competitors enjoy significant advantages. And that they risk losing that capital if they don’t deliver. No, not that.

And it’s not that the record numbers of absolute dollar profits bear any relative relationship to the size and scale of such an enormous enterprise. A big number is a big number. Therefore, it’s bad. I agree.

You know, the problem with Obama and Joe us that they don’t go far enough. I’m actually going to send them an email and suggest our points above to them. I’ll post a reply here on the SDMB when they get back to me, as I’m sure they will.

You’re right. I should get real. Sorry.

104

Not to defend gonzomax’s points, but you’re the one that suggested that Exxon et al. might decide to call it quits. That’s just patently absurd. The oil companies make insanely good money, and could easily afford huge tax increases while still staying in business. Not that I’m suggesting that that’s good policy, but really, if the Big 3 automakers can hold on as long as they have, the oil companies have a couple decades to go no matter what the tax situation is.

Obama is not going to tax the oil companies out of existence. Hell, even if it was a campaign promise of his that he would do so, I’d doubt he could pull off putting the big oil companies out of business within his first term.

All in all, I think that trying to manage the country’s economy is like trying to herd a bunch of cats through a minefield. No matter what you do, there’s going to be cats getting blown up; you might be able to keep most of the cats away from the most dangerous areas if you try hard; even then, you might accidentally drive them towards unknown dangers; some cats are just going to defy all attempts to keep them safe; if you’re reasonably good at finding the mines, you’re all better off than having the cats run amok; if you suck at it, you can easily do worse than if you had done nothing.

OK, sure I’m going out on a limb with the extended analogy, but I really do think that regulations and taxation are, for better or worse, here to stay, and that we therefore ought to strive for intelligent tax and regulatory policy. I think it’s wrong to think of regulations in only a more or less frame of mind. Not all regulations are equal. It would be preferable to have more wise regulations than fewer foolish ones. Likewise, fewer wise regulations beats more foolish ones. Granted, in real life, the mixture isn’t so clear cut, and everything involves tradeoffs and unforeseen consequences, but I still think that there’s a good bit of room for a knowledgeable person to be able to nudge the free market into a more equitable distribution of its benefits.

105

At least the Chicago boys are technocrats. All of them. And there’s nothing wrong with Austan Goolsbee.

106

Thanks for the intelligent response.

Yes, Rex Tillerson will not throw his hands up in the air, go out to the parking lot, and go home and call it quits. But at some point, when these guys can’t justify investing their capital any more to find, and drill for, more oil they’ll just stop and consider other alternatives about what to do with their assets and their shareholders’ capital.

It won’t be one, sudden rush (except in one case, about which I’ll talk more in a moment). These companies are constanting evaluating thousands of projects all over the world, running models of financial returns, and seeing if the payoff comes back above the line or below the line. When it’s below the line, they don’t do it. And when they decide not to do it, new exploration and drilling just became a little less than it was on the previous morning.

More and more will start falling below the line when you punch in a bigger negative number on the line item in the Excel sheet that says ‘Taxes’.

Unless, of course, someone else sees value in your company and is willing to give it a go by buying your assets. Which is what CNOOC (China’s oil company) did when they tried to buy Unocal a little while back. Remember what happened then? Think my ‘nationalization’ jibe a few posts back is so far-fetched?

I’m going to throw out a wildly counterintuitive thought for the Board. And this is coming from a guy who loves the idea of electric cars, hydrogen cars, bicycles, and all modes of non-polluting transport. But who is also a pragmatist and thinks that the internal combustion engine is going to be around for at least 100 more years, if not longer.

You need to be the oil companies’ biggest fan. Not the nationals controlled by Russia, or Venezuela, or Iran, but the publicly traded companies like ExxonMobil and Shell and BP who are constantly subject to the slings and arrows of whatever left-wing protest of the day is on the front sidewalk of their corporate headquarters.

You need to be their biggest fan. You need to root and root and root for them to make as much money as possible, to pay reasonable taxes, to hire brilliant employees, and to keep the engines of engineering innovation going as fast as possible within their 4 walls.

Otherwise, they will slowly wither away under the burdens of punitive taxation and regulation…like Barack and Joe propose. And we will lose what little control and leverage over our energy security that we have remaining. That won’t be pretty.

107

I’m pretty left-leaning. With that being said, corporations are simply small businesses that got bigger and made it. It’s what most small business owners aspire to. There’s nothing wrong with starting/running/having a very successful business. However, there is a problem with being too big and there is a problem with some of the things that these oil companies are alleged to be doing.

Mr. Pragmatist, we depend (way too fucking much) on oil. We use more of it than any other country on the face of this planet. There are people that are very sympathetic to the oil companies. The oil companies make record profits that are exceeded only by the next quarter’s profits. The price of gas and oil (until very recently, actually) has been going up, up, up and there isn’t something fishy going on? We can start leaning on alternative technologies that are indigenous sources to us for energy AND jobs.

I understand that it’s incredibly ironic that the world’s oil tends to be under places that hate us or are lukewarm to us, at best. These are all reasons why we should get off the oil teat.

And yes, Senator Obama understands this.

108

Senator Obama understands. Let’s put our faith in him. Not ourselves.

You are free to contact Senator Obama each and every day and ask for his advice on these matters. I would prefer to keep that power for myself and my fellow citizens.

I actually agree with most of your post. I would be happy to debate a nice, healthy increase in gasoline consumption taxes (ala Europe) at the retail end with corresponding reductions in personal income taxes, corporate taxes and the like. We should start another thread if that’s the case.

But not CAFE, and not arbitrary seizure of shareholder profits, and not anything giving the wizards of Washington the power to direct monies here, there and everywhere else they see fit in a spasm of nanny-state micromanagement beholden to special interests. Ref: Fannie and Freddie. Ref: Ethanol subsidies. I’ll keep bringing those up because they are so recent, and therefore might be fresh in everyone’s mind.

What else does Senator Obama understand? I’d like to know. From his and Joe’s economic platform, I can only conclude he understands very little about how jobs, improved living standards and wealth are sustainably created in a free society.

109

Tell me, what are your options for getting to work right now? What are your current choices? The point is that there need to be more options, especially ones that don’t require oil. Right now there aren’t very many (none for those more rural areas). There needs to be a massive R&D push and incentives to create the new infrastructure and to push a transition. No one’s talking about taking away your choices - quite the opposite really - giving you more of them.

A gas consumption tax would be extremely regressive and really hurt people in rural communities. It’ll end up hurting the people who actually don’t have other options. That’s been debated before.

And no one’s talking about a nanny state. They’re talking about investing in finding solutions for the future. I’ve seen this theme in a few of your posts now… I’m wondering, what precisely leads you to think your freedoms or options will be constrained as a result of their economic plan?

110

IdahoMauleMan, are you aware that your “hot girl” Sarah, imposed a windfall profits tax on the big oil companies in Alaska, then spread the wealth among every single man, woman and child to the tune of $3,200.00 each? I don’t see those oil companies failing, do you? I also don’t see you complaining about her stance on this issue, which does matter, since she’d stand a good chance of becoming President if they’re elected and McCain croaks.

Story.

111

As you noted before the oil companies will do what is in their best interests (only makes sense). This so far has not included very serious attempts on their part to research and push alternative fuels and why would they? Sure they do some for the public relations angle but they are in the business of selling oil and have no interest in seeing anyone buy less of it.

I agree a windfall tax is bogus and provably counterproductive (wasn’t it done back in the 80’s?). Not sure CAFE really helps either. However, incentives could be given to encourage the oil companies (and others) to invest in new energy technologies and improve fuel efficiency.

I seriously doubt encouraging the oil companies to seek more oil is the way to go. We want to get off of oil dependence and every analysis I have seen has suggested even if we let them drill wherever they liked (read offshore and ANWR drilling) it’d amount to a drop in the bucket and we’d still be massively beholden to foreign oil. It will not make even a noticeable blip in the oil markets. Not to mention if they start today that new oil will not be in the pipe for 10 years. If in 10 years we have not traveled far down the road towards getting off oil we have failed big time.

Your guy’s solution is a nod towards alternate energy and handing huge tax cuts to these corporations because apparently they are not making enough currently. :rolleyes: If the oil companies are experiencing record profits why do you think MORE profits for them will suddenly solve our energy problems? Mostly that will end up in the CEO and shareholder’s pockets. We have seen years of this…it hasn’t helped one bit.

112

I’ll level with you. What Obama and McCain say on the topic are similar. The main difference is the “drill, baby, drill” slogan. We can’t drill ourselves out of this problem. T. Boone Pickens has even said the same thing, and he should have some weight in the matter. I don’t trust McCain to get it done, however. Not with special interests weighing in heavily and his penchant for being an accessory to the Bush folks.

What’s wrong with CAFE standards? Hell, they should be more stringent. There was a HUGE kerfluffle to get them raised in (if I remember) 15 years to 30MPG where Europe is today. Also, there’s no arbitrary seizure of profits. Funny, we’ll bail out AIG, but what is the People’s Insurance Company going to do for us and our investment? Are our rates going to be lower now that I partially own a warrant to this company as a stockholder? What is this new asset going to do for us, seeing as how we bought it. The oil companies have been milking us dry for every penny. With all the factors I mentioned in the previous post, doesn’t it seem like there’s something in the equation that’s not Kosher?

Open up your ears and your mind, little one. There’s information out there, but you’ve got to objectively look at it. The nanny state can’t make you learn, after all.

113

To be fair, before McCain took up the silly, pandering torch of “Drill, baby, drill!”, I took a gander at both candidates’ energy policies.

Unless something has changed drastically (or I overlooked something…always possible :)), they’re not that far apart. IIRC, the largest differences were that: McCain mouthed strong support for nuclear, while Obama barely mentioned it; Obama mouthed strong support for government funding for R&D into future tech, while McCain shied away from it.

114

Looking at both their (admittedly vague) proposals I agree but now you do have to add in “drill, baby, drill” and also add in a corporate tax reduction as well as allowing immediate write-offs of investments (rather than the depreciation they do today). While not targeted at the oil companies in particular they will certainly be a massive beneficiary of it. I’d much rather see that money applied to research into new technologies and/or building a new energy infrastructure (e.g. hydrogen refueling stations or whatever is appropriate to what they come up with). McCain will just hand that money, more money, to those who already have scads of it and have shown no inclination to actually help solve our energy issues.

115

Almost everyone in America wondered why the American Auto companies did not start engineering and building small ,reliable good mileage cars. They were making an absolute killing on the SUVs. They certainly could have prepared for the future. But our system rewards those who make money short term. A guy who invested heavily in the future would have had trouble holding his job. You do not trim profits or cut dividends. You get in trouble and let the taxpayers save you.
Higher CAFE standards would have forced them to develop and manufacture smaller and more modern autos. Our CAFE standards are far below those of most the rest of the world.

116

Something else to ponder: higher horsepower. We don’t need more horses. Marketing every car as some fast-driving (seriously, I can’t remember a car ad in which the subject wasn’t shooting down a street somewhere) and then increasing the horses are hurting the situation as well.

117

The current economic crisis and the mortgage lending shenanigans, and the reason that 18 to 29 year olds hate Bush is seen here.

And by the way what you just looked at is not Bush’s fault! It is the fault of modern day economists who say that a trade deficit is not a problem. Most notably David Friedman of the so called illustrious “Chicago School”.

Well the trade deficit is the cause for the current crisis. See

Milton Friedman was wrong on this one economic aspect of trade deficits but was so right in all other economic questions but alas his analysis goes unheeded by the current crop of tax and spend and big government Democrats and Obama and his Marxists supporters.

Milton Friedman views of monetary policy, taxation, privatization and deregulation informed the policy of governments around the globe, especially the administrations of Ronald Reagan in the U.S., Brian Mulroney in Canada, Margaret Thatcher in Britain, and Augusto Pinochet in Chile, and (after 1989) in Eastern Europe. And still heeded by McCain, today. See Page Not Found - Search - National Taxpayers Union

Obama’s economic policies along with the Democrat co conspirators will send 45 million American households into bankruptcy See AGW legislation plus Obama Spending = bankruptcy for 45M US Households - Great Debates - Straight Dope Message Board and no Obama does not understand the Economy nor do his advisers.

118

Thank you, I appreciate the confirmation that I didn’t overlook some serious items. Again, last time I looked closely at their proposals was prior to the “Drill!” silliness; certainly, some things have changed, that in my view puts more light between the candidates. In addition, I don’t necessarily disagree with the substance of what you’re saying; I just know enough to know that I’m no expert in energy or economic policy.

My reason for the “To be fair” is that so many threads recently descend into inanity rapidly, if they didn’t already start off that way (cough most anything about Palin cough). So far, this thread has been (relatively) astoundingly rational (kudos to IdahoMauleMan for sticking with it) and I’d like to do what I can to have that continue.

Sorry for the digression…and to claw back towards the topic at hand, I’m also wondering why CAFE is so bad? Granted, it’s a minor specific in a broader point, and pursuing it might be seen as promoting a digression. But I don’t get it and thought I’d ask…

119

Oh, crap.

120

Oh, those are just SUPER to have on your resume…a fascist dictator and a handful of countries that went the Chicago School route and collapsed into the equivalent of 3rd-world nations or organized crime satrapies.