Monday, June 30, 2008

Obama Gets Bad News on Economic Policies

Barack Obama has been heavily preaching the gospel of wealth distribution for years and has made it a central theme of his candidacy for President. Obama has been going around the country and telling them about how he was going to take from the rich and give to the poor. The devil, of course, is in the details.

For over two decades poverty has been in rapid decline and wealth has expanded in this country. More businesses have started in recent years than in any time in history and unemployment is remarkably low (even among recession concerns). So, although Obama has won the Democratic nomination with his "us against them" message, many are questioning whether that message will work in November. For example, if people make $227,000 or more a year, their taxes will go up by $23,000 in Obama's plan. Most people at this threshold do not consider themselves rich and under McCain, they would actually enjoy a 15,000 tax cut. Furthermore, there are many families below that financial bracket who aspire to reach the $227,000 threshold.

It reminds me of 1972 when George McGovern was performing well early in his race against Republican incumbent Richard Nixon. Then he started promoting the idea of "Demogrants,' which were subsidies that would go to people who make less than $15,000 a year. Instead of his support swelling, it actually popped his electoral bubble because there many members in this lower income bracket who knew that such programs were paid by those who made more than $15,000 a year and they believed they would be among those numbers. Americans are, by their very nature, positive and believe the best for themselves and future. They knew they could earn more and would.

Americans are the same today. According to a recent Gallup poll, 84 percent of all voters are opposed to redistributing wealth as a way of solving economic problems and only 13 percent support such a policy. Instead, the vast majority of the 84 percent support policies that encourage economic growth and job creation. They believe in free markets. Obama's redistribution policies remind me of a Ponzi Scheme that will encourage poverty rather prosperity and a game which all of us will lose.

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Kevin Price is Host of the Houston Business Show (M-F at 11 AM on CNN 650) and Publisher of the Houston Business Review. Hear the show live and online at HoustonBusinessShow.com. Visit the archive of past shows here.

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