Obama Doesn’t Understand Business

Each debate paints a more cohesive picture in regard to President Obama's business acumen.

He has none.

It’s clear he doesn’t know the difference between Chapter 7 and Chapter 11 of the U.S. Bankruptcy code. And neither do many of the people who will vote for him again as president.

The President didn’t “Save” General Motors. General Motors filed Chapter 11, a legal motion to restructure its debt and to reach new agreements with its creditors and contracts with its unions. The only change that occurs is the terms of the company’s debt and so business continues. The company does not get liquidated and disappear. So to say the government saved General Motors is not the truth. What the government did by buying into GM was to save the GM Union from having to take a step back from the crazy money they make and the sumptuous benefits they enjoy. And all at the expense of the people who invested their money in the company. It's the GM shareholders: retirees, town governments and regular people, who got the shaft on their investments when the government voided their stock holdings. This is what the Obama administration did. And General Motors, despite of what you may hear, isn't out of the woods as far as it's solvency is concerned, they still have a flawed business structure which it has yet to address.

President Obama is counting on the American people not to know the difference between Chapters 7 and 11 also.  

But other aspects of the economy and business seem to either elude or just doesn’t have an effect on the President’s policies toward a vibrant economic recovery for the nation.

Regulating business: The cost of doing business in this country is high. There are permits and restrictions on business, some good and some bad but all cost money and contribute to overhead.

And who bears the costs of compliance with all these State and Federal regulations? The businesses themselves, of course. All businesses have to hire their own people to make sure that they are in compliance with all the articles of regulation and tax that they are responsible for.  There is no write-off for these expenditures. They're expenditures.

It's not just an issue of good business practices, some of these regulations are out of control like the Americans with Disabilities Act which almost closed every public pool in the state of Massachusetts this Summer before it was put on hold, required all public pools to have a lift to transport disabled people into and out of the pool. A nice idea but so costly that the pools had decided that it was better to just close. The requirement has not gone away, it’s just on hold. There is also the provision in the ADA that requires public buildings to have elevators if there is a second floor. Elevators are very costly to purchase, install and maintain. This is a prohibitive sum in purchase and maintenance costs.

There are also permits, insurance, certification and licensing to starting a business that have become a burden to the point that many businesses cannot become legitimate in the eyes of government and remain thus restricted and under the table.

Then there are the taxes. The Federal tax rate on business runs from 15% to 35%. Then there are the State taxes, local property taxe, taxes on income, sales and even exise taxes on unsold inventory. There are taxes on utility bills, phone bills, shipping and purchasing. Add to that unemployement taxes, workers compensation taxes and the cost of offering a subsidy for health insurance for employees.

All this contributes to a businesses’ “Overhead” or the cost of doing business before they collect a penny in sales.

Currently the climate for American business is bad based on all of the above.

The more overhead, the less profit. The less profit, the less expansion. The less expansion, the less hiring. The less hiring, the less payroll and income taxes that are collected. It is an inevitable downward spiral of Socialism. There is no balance, only eventual failure.

Mitt Romney has proposed to drop some of this overhead. Obama isn’t on board with that right now, he's got a big government to feed.

President Obama believes if the government buys enough Chevy Volts that General Motors will become solvent. He also believes that if the government spends enough money, the economy will turn around. They also believe that by the Federal Reserve purchasing mortgage debt with printed money and deficit spending, that this will help lift up a sagging economy.

Does anybody believe this will happen?

The more taxes and fees go up, the more businesses that will close under the pressure and the less money gets collected. The government; Federal, State and Local have many mouths to feed. If tax revenues fall, these governing bodies will have to start letting some people go.

This they should understand.

With the governments faith in the so called “Green Business” to the tune of handing out hundreds of millions of dollars in support money starting to show real collapse and failure, one can draw the clear conclusion that government interference in the marketplace is never a good idea.

This particular failure falls squarely on the shoulders of the Obama administration.

In order to support business one must know what it takes to run a business and there are few in the current administration that have done that. Secretary of the Treasury Tim Geithner is one and President Obama is another. Vice President Joe Biden is yet another. Together they have zero business experience, being mainly long time bureaucrats, and it shows in their understanding of the country’s economy and business atmosphere. This is not an encouraging scenario.

And here we are. Do you go to the guy who’s had a business for a job or do you go to a guy who’s never had a business and who’s only jobs were on the public payrolls?

So what’s the answer?

Both Republicans and Democrats Complicit in U.S. Decline

Neither side is without blame for the mess we’re in. Both sides voted for the Wars in Afghanistan and Iraq and both sides continue to support them. Both sides have intervened in the affairs of foreign nations and both sides spend money like sailors on shore leave in their attempts to buy the vote from one group or another.  

George Bush proposed a stimulus package and both the Republicans and Democrats voted for it. The new Democratic administration proposed another stimulus package and  the Democrats and Republicans voted for it and also asked for the funds knowing full well that those funds were adding to the deficit.

Both the Republicans and the Democrats have neglected to mandate balanced budgets or fiscal responsibility based on the financial realities that face every working citizen in this country every goddamned day. They are above such things and are actually exempt from the laws they themselves pass.

Since the advent of Medicare and the Great Society, each administration has been kicking another brick under the pyramid in order to prop up bad policy and to pass the debt for such on to a new generation. There isn’t a whole lot of difference between either party from what recent history reveals. Each change brings more spending on entitlements and increased costs for people who only want to get ahead in this world so they’ll have enough to raise and educate their children and have enough to live comfortably in their retirement years.

The government should have nothing to do with any of that.

But here they are, inside every major system in the country and making a shambles out of it. The public school systems across the nation are shameful in their costs and failure to deliver results on a par with other nations. To them it is all about the lunch programs or teaching diversity whereas in other nations it’s all about math and science. There is nothing in the Constitution that says the Federal Government, the people who are supposed to be providing for our common defense and creating a level playing field for business, should be involved with the day to day minutia of what’s going on in a public school. That’s for the States to provide.  And the result of the Federal Government buying its way into the public school system is increased requests now for them to fix it. Go figure. It's like asking an arsonist for help putting out a fire.

There is also no mandate for the government to be involved in your medical care but there they are stacking yet another bureaucratic plan on top of the other past bureaucratic plans before it and each infusing more money into it to cover for it's failures.

And throughout it all, each administration, Republican or Democrat, has added to the mess, raised the debt ceiling, voted for the unfunded mandate and attempted to fix the previous administrations fiscal missteps by either throwing more money at it or paying out less in benefits.

So now when a Republican  presidential hopeful comes along and says he wants to right the sinking ship, they have little to stand on. The Republicans like Paul Ryan actually asked for stimulus money for his state. Many Republicans have asked just like many Democrats have asked. Yes, to their credit there were also Republicans who refused stimulus funds, they get it, but they are but a cry in the wilderness.  And I'll only mention RomneyCare.

But ultimately, it’s just all about the dough to these bureaucrats, each clamoring for Federal money for their state and bowing to all the conditions and strings attached to it no matter whether it’s harmful to the nation and its people in the long run. The Congress has gone along with many hair brained spending scemes like "No Child Left Behind" and "Medicaid Plan B" prescription benefit plan.

The Federal Government has become a giant "Make Work" program and results are not as important as long as the government checks keep coming in. Since government doesn'ctually produce anything, this sends the country into deficit.

Even those crusaders for reform have skeletons in their closets voting for stimulus packages, requesting government money and voting for endless wars or crazy spending by past administrations. No one, it seems, has any moral high ground anymore. We’ve become a society too easily bought and it shows.

But there is now a nation of people the government has to support and much of it is mandated by law.  This is really what the people will decide in November: Which side can keep those checks coming?

By the way things are looking, the answer will probably be: Neither.