Obamacrats kill investment

The economic recovery in the US is being threatened by the attack of the Obamacrats on the rationale for investment. Much of the economy functions on the back of consumer demnd. The purchases by the public drive demand and keep output flowing through the system. But over the longer term, it is new investment that drives increases in output, thereby keeping prices low, employment rising and even tax revenues growing. Think of it this way: If I go out and buy 1000 dollars of clothing, the impact of that transaction ends once it is completed. Alternatively, if I go out and invest $1000 in a machine that makes clothing, then there will be ongoing purchases of cloth and thread as well as the employment of a person who will operate the machine; the resulting economic activity continues for years.

The Obamacrats have done all they can to discourage investment. First came the healthcare bill which made it much more costly for a business to function. Next came the refusal to keep capital gains taxes at their current levels. These taxes are now scheduled to rise by 50% over the next few years. Third is the attack on energy costs; the Obamacrats have done all they can to drive energy prices higher. This price rise makes it less profitable to invest and therefore less appealing to the investor. Fourth, is the nationalization of many industries like banking and automobiles. Why invest if you have to compete with the government or if you might face a government takeover. Fifth is the general hostility to corporate America that emanates from the White House.

The statistics show what has happened. Mostly due to the stimulus, consumer spending has actually grown by almost 1% after inflation since 2008. By contrast, private investment during the same period fell 18% in real terms. That means that once the stimulus ends, consumption will fall and there will be no growth from investment to drive the economy. Since the USA cannot continue to pay out trillions of dollars each year, there will be no way to sustain economic growth.

Obama has managed to really hurt the economy while still spending like a drunken sailor.