Voters now expect the GOP to improve things in America. If those expectations are not met in the next two years, Hillary Clinton has a very good chance to be elected president.I do agree that it's the economy, stupid (i.e., the first Clinton campaign against Bush, who basically suffered a recession on his watch, and while the economy was recovering, it was too little, too late), and I do think Republicans have to manage expectations: while they are in clear control of the next session of Congress, they do not have veto-proof or filibuster-proof majorities, unlike the 111th Congress under Obama. Obama will likely veto a repeal of ObamaCare and major regulations and may veto tight budgets. I don't think the voters will blame the GOP for certain facts beyond their control, like Obama's actions; at mininum, Obama will share blame: there will be an open Presidential election in 2016. Don't recall; the voters after the 2008 tsuami actually strengthened the Democrats' hand both in Congress and the White House.
I do think if there is a recession that the GOP could take a hit if the global and US economy take a tumble; just to give an example, as I pointed out in Monday's post, while consumers are getting a boost from a drop in gas prices (local prices are just under $3/gallon) with a global oil drop, if oil continues to drop, many developers of higher-cost unconventional oil sources like tar sands, shale and offshore, are seeing their profit margins collapsing; some have speculated a further slide to $60/barrel, roughly another $20 down. We could see some suppliers cut back production, say, to their lowest-cost sites, some industry consolidation. I lived and worked in Houston during a down energy market; it wasn't a pleasant experience. Texas' economy is more robust and diversified, but the natural resource industry and employment could take a hit depending on the duration of the slump.
Where the GOP could run into problems is if they can't "prove" the lackluster economy can pick up speed with a perceived freer hand, and a sputtering economy lapses into recession. The Democrats will argue economic security, i.e., government handouts. That has been a predictable pattern; the problem is that the Democrats have controlled Congress and/or the White House over the past 8 years, and we have, 5 years into the Obama "recovery", the lowest labor force participation rate. Demagogues suggest this reflects the retirement tsuami, but other age groups show dips and if anything there's a higher participation rate by senior workers. The point is, if the Dems couldn't deliver a robust economy under Obama, even after Obama hired many of the Clinton Administration economic gurus, how exactly does Hillary Clinton argue that she can change the situation? There's very little difference between Obama and Hillary on economic policy. I think as long as Obama's approval rate stays at 40% or lower, Hillary or any other Democrat will be attacked as "Obama's third term". Now I think if you have a crisis like 1929 or 2008, there will be a poplist backlash against whoever is perceived in power; however, given an existing social welfare net, the GOP would likely reassure economic security voters these (and senior) programs would not be cut, at least at the expense of lower-income people. (I could see a reform to devolve spending authority to the states or to tighten eligibility.)
As for Hillary Clinton, polls have seemed compelling, especially a year or so ago with her trouncing potential challengers, from both parties. In a country that prides itself in firsts, e.g., electing the first black President, Clinton is the first viable female Presidential candidate; in Democratic circles, she is the prohibitive favorite. She is known by all the electorate and has paid her dues; her voting record in the Senate is consistent with the mainstream "progressive" Dems. But over the past year her unfavorable ratings have been picking up, her appearances in support of several mid-term Dem candidates were ineffective, and in some purple states, she is behind one or more of the prospective GOP candidates and is polling under 50% in most recent matchups--and this is before the heat of the campaign and various gaffes and kerfuffles. I also feel after 24 years of Clinton, Bush, and Obama, America is looking for some new ideas and approaches--that's not what Hillary Clinton represents.
O'Reilly could be right--Clinton may very well run against a do-nothing Congress, and/or if the Congress does something highly unpopular--say, shut down the government in a budget, she or any Democratic nominee may win. But I'm not sure if the economy is still stagnant or in correction, she will benefit, because Obama will be held primarily responsible by many, if not most voters. (This is not say the GOP would emerge without issue; consider the 2000 election where the GOP won the White House but lost their Senate majority--and the GOP is defending more seats in the 2016 election.) But the issue is that if Obama vetoes some of the GOP's agenda and things don't improve, the GOP will argue to voters all the more reason to elect a GOP President. So I don't buy O'Reilly's talking point here, although just precisely what the GOP should do does remain of interest.
Let's be clear: there's not a lot the government can do to directly affect hiring; this is a business decision which is affected by a lot of intrinsic business factors and macroeconomics factors beyond its control: demand for goods and services, supplies, existing capacity, labor supply, technology, etc. The government, however, can negotiate opening new global markets for American products and services; it can also facilitate production by allowing freer labor policies (including immigration) and enabling imports of relevant raw materials or components. It can pursue sound money policies, in part by engaging in seriously overdue Federal Reserve reform, including audits and removing the second mandate (full employment, which is not only unrealistic but results in activist policies which exacerbate regime uncertainty); it can lower the tax and regulatory burden on business, stop competing with the private sector for investment dollars,
There is little expansion; no wage improvement. The Democrats lost this week because take-home pay has gone down on President Obama's watch. So in order to stimulate the economy, Republicans need to lower the corporate income tax to about 20%. That will give companies more money to expand, thus creating jobs.First of all, there are a number of reasons that the Democrats lost, including but not restricted to economic factors, the Democratic leftist agenda, the college cost bubble, bad public administration (e.g., VA healthcare, a radical EPA and partisan IRS and immigration control), activist "progressive" jurists, ObamaCare, Obama's lawlessness, a dysfunctional Senate that can't even pass a budget, and out-of-control government spending and huge unfunded liabilities. But I'll accept as a starting point that a lackluster economy and declining household income and net worth, not only relative to pre-recession 2007, but even as far back as 1999, is a primary problem, although I might rephrase it like this: an aging workforce has concerns not only for its own insufficiently funded approaching retirement but for the seemingly bleak economic prospects for the future of its children and grandchildren.
I do agree that the progressive business tax is a problem: the high level is globally noncompetitive, and at minimum a lower, flatter tax level is absolutely long overdue. (In fact, I would like to see more of a transition from economically inefficient income taxes, which penalize productivity, towards consumption taxes.) I would further add that we, at minimum, should repeal any recent increases to individual investment taxes . The issue I have with O'Reilly here is with his explanation of the policy. the reason you do it is because it's bad economic policy which discourages economic success and it unduly steals from the productive to feed the nonproductive, i.e., the State. When the government steals $100 from me, I don't argue the reason the government should return it is so I can invest it to create jobs; I argue that the government should return it, because it's my money to do with as I wish: to consume, save and/or invest. Second, many corporations are already hoarding cash and have chosen not to invest. So even if you return the corporation's money, there's no guarantee that the corporations will invest. Why don't they invest more in job-producing capital projects? I would argue in part it has to do with regime uncertainty, particularly federal/state/local regulations (environmental, healthcare, tax hikes, etc.) In short, we need more economic liberty. So what O'Reilly here is giving us a necessary, but insufficient rationale for economic growth.
Number two, there should be a six-month tax amnesty on corporate money that is being held overseas.OK, while this is better than the status quo, it's a poorly designed stop-gap. Let's be clear what's going on. We are one of a short list of OECD countries which still relies on a global vs. territorial tax system. If and when businesses expand internationally, they pay taxes in that target State, which, after all, provides relevant services. What territorial tax systems do is say, we'll tax you on what you make or sell here and only here. Since the US charges more taxes on business than any other large economy, it think it should be able to tax say, your Chinese business as if it was located in the US, even though the US doesn't provide any services. The US may allow you to deduct your Chinese taxes, but it thinks it has the right to take the differences. (Now if it turns out Chinese taxes are more than US taxes, do you think Uncle Sam will rebate the difference? Are you kidding? This is a US money grab, pure and simple.) Now when you factor in higher US taxes and regulation, why would you repatriate your profits here unless you saw exceptional growth opportunities that would return you more taking in those higher costs? It just may make more sense to float paper in the US market to do that expansion.
In short, amnesty is a short-term fix that doesn't address the injustice of maintaining a global tax regimen. What business needs is the ability to flow its funds without worrying about a US tax grab if it wants to use that money to fund US projects. What the US needs to do is to modify tax costs as described above and enact more economically liberal/business-friendly policies, including reforming/repealing Draconian environmental policies. Once again, O'Reilly is describing something that is necessary, but insufficient.
Third, raise the minimum wage. That will encourage young people to get into the marketplace and other folks to get off the dole. Ten bucks an hour will not break anyone.WRONG! WRONG! WRONG! This reminds me of when I briefly lived in Silicon Valley, and movie theaters thought that anyone complaining about $10 movie tickets and living there should be ashamed of themselves (that's when I became an earlier subscriber of Netflix). O'Reilly is an unprincipled populist here, and he doesn't have a clue about the labor market. It's like a supermarket wanting to charge Warren Buffett $100 for a loaf of bread, arguing that he won't feel it. WalMart uses its purchasing power to negotiate price breaks on various items to sell to its lower-income shoppers. Arguing that it should pay workers above the market-clearing wage for its positions is utterly clueless. WalMart will hire workers when the perceived benefits meet or exceed perceived costs. Otherwise, it would hire even more lower-wage workers than it does already. It's not a question of whether or not WalMart can absorb a hit for a small fraction of its employees; it's more of a business issue, and the labor market, not some politician or commentator pulling some arbitrary number out of his ass. If "progressives" want to argue some income tax credit, that's another issue, but at least the government would not be trying to intervene in the markets, having to come up with the money to deliver its promises.
Familiar readers know what I'm about to say: Raising the minimum wage simply structurally excludes inexperienced and/or younger workers whose market work value is below that threshold. All you are doing is prohibiting gainful employment at lower wages; employers typically respond to minimum wage hikes by things like reducing hiring or assigned hours, cutting down on training costs, etc. We should actually repeal minimum wage laws.
The capital gains tax should also be cut to 15%.That encourages private investment so more money will flow into the marketplace. If Republicans do those things, the economy will surge, employment will rise, and so will wages.Yes, lowering the cost of job-yielding investments should increase investment. But note that O'Reilly doesn't talk about the massive national debt, the unfunded liability iceberg, or the $1.8T regulatory albatross on the economy. He doesn't talk about things like cutting payroll taxes or repeal employee benefit mandates, like healthcare. On the state level, he doesn't talk about reforming occupational licensing laws.
Other things: It would be a very bad idea to try to repeal Obamacare. President Obama will veto the attempt, so it's a waste of time. How about immigration? All the polls say Americans want a fair reform bill. So Republicans should introduce one. Finally, on social issues like gay marriage, legalized pot, that stuff ... let the states decide.Briefly: I agree that Obama would likely veto a repeal of ObamaCare, and in fact it is unlikely Mitch McConnell could overcome a filibuster of some 46 Democrat senators. But I think for political reasons, McConnell would want the filibuster vote on the record for 2016, I could see some votes, on say the individual and business mandates, could put Democrats on the hot seat, and I see there are ways the budget reconciliation process could be useful as a means of making some reforms in the interim. So I disagree with O'Reilly here; ObamaCare is deeply disliked; I think the GOP does need to show voters it made a good faith attempt to deal with the issue, and it provides a compelling argument to regain the White House in 2016. I might also push forth solutions to enable ways to devolve healthcare authority to the states, allow insurance companies to market across states, enable cross-state pooling, self-insurance, etc. I advocate immigration reform as win-win politics; O'Reilly says more than the above--he opposes Obama's reputed amnesty, etc., but I also want to saw freer flows of workers across borders, reformed quotas, temporary worker programs, greater flexibility with highly-skilled, in-demand foreign professionals, etc. I don't really see a social agenda, but I think the confirmations of activist judges are a legitimate issue, and we need to reform/repeal the failed War on Drugs and enact related prison sentence reform.
In O'Reilly's place, I would have actually approached this discussion from a different perspective. I would have started from the fact of an extended period of subpar economic growth and ask what can the Congress do to facilitate that, noting that an improved employment picture is a consequence of more robust growth. I would then note how under the Obama Administration, we've seen a deterioration of economic liberty and then ask, how can we reverse this? We would then discuss how to reduce regime uncertainty, restore civil liberties, privatize nonessential government operations, sunset regulations, repeal and replace the income tax system, implement unilateral free trade, free the education and healthcare markets, etc.
