The big topic in Washington is still health care. It’s still tax-and-spend entitlement time for even bigger federal government. And get this: President Obama’s new health-care push would apply the 2.9 percent health-care payroll tax to investments. We’ve never done this before. If we do, with the Bush tax cuts set to expire, the tax rate on capital gains and dividends could jack up over 50 percent. This is insanity. It is anti-investor, anti-stock market, anti-capital formation, and anti-growth.
I took a trip last week that offered a little perspective on where we’re heading. I was across the pond in Europe, on holiday with my bride in London and Rome. And as all the latest headlines attest, the continent is erupting. There are labor strikes everywhere. Government unions staged a general strike in Greece. Lufthansa Airlines went on strike in Germany. In France, the air-traffic controllers are on strike. And just this week, British Airways voted to strike in England.
Does any of this sound familiar?
Of course it does. It’s just like the 1970s, before Ronald Reagan and Margaret Thatcher entered the fray and put a swift end to union work stoppages and economic destruction. Unfortunately, there are no Reagans or Thatchers riding to the rescue right now.
We are today watching the total bankruptcy of the European entitlement state. We are witnessing the wholesale powerlessness of European governments to curb the massive social benefits and union wage hikes that these very governments bestowed.
Now, I wish this was strictly a Euroland problem. But Democratic Washington seems hell-bent on following a similarly disastrous policy course. Coddling unions has become a hallmark of the Obama administration. And then we have our very own Greeces, right in our own backyard. Look no farther than California and New York.
And what’s Washington’s solution? Tax hikes and increased spending.
Look, raising tax rates will simply depress our struggling-to-recover economy and shrink the revenue base. Gargantuan spending? It will never be paid for.
Do we in the United States really want to imitate the failed economics of Old Europe? Do we want redistributionism and welfarism run amok? Do we want VAT-type sales taxes that will penalize the middle class? Do we want Asia to run away with the economic-growth prize?
I say no to all of this. No, no, no.
Let me repeat my mantra: Free-market capitalism on the supply-side is our way out of this mess. It is the tried-and-true answer. What we desperately need is smaller government, fewer services, and flat-tax reform. We need a growth solution that limits government spending, limits debt, and expands the economic pie.
Washington has gone totally nuts. It’s become too much like Europe. It continues pushing blindly ahead with a fiscal product that the rest of the country doesn’t want.
Lawmakers need to change their stripes. If they don’t, voters will send them packing come November.