Political Logic

Goodbye Rudy

The outcome that has been speeding toward Rudy Giuliani finally arrived tonight. Once the leading GOP candidate both in FLorida and nationally, Rudy has had to settle for a distant third place in the FLorida primary. His candidacy is over.

Tomorrow we will no doubt have pundits and prognosticators debating the failed strategy that Rudy employed, and lost with. Waiting to Florida to make a last stand will be seen as the main reason for his lost. The truth is that does not have anything to do with it. The problem with Rudy, and as far as the GOP faithful is concerned nearly everyone else running, is that Rudy is a moderate conservative. In many ways he what the Democrats used to be in the 50's and 60's, as it relates to social concerns. But as such, I have to ask, just where did you think Rudy was going to start?

Rudy has two bad choices to chose from. He could duke it out in Iowa, New Hampshire, and South Carolina, or he could essentially concede those states and try to make up the difference in Florida. He chose the latter, and despite the outcome it was the best decision available to him. Considering that this is the primary not the general election, he was not going to get the wins in those states. Iowa primary voters are more to the right than rest of the country and so they weren't not into Rudy from the start. Like Clinton, Rudy had large leads in national polls, but not in the first three individual states. If he had run there hard, he would have lost, and been seen as a loser. That would have killed the lead he had nationally. He may have gotten a little traction out of New Hampshire, but South Carolina? A thrice divorced man that is pro-choice? Not gonna happen.

So Florida became his bulwark, and it failed on him.

African-American Political Irrationality

    

   

    In the January issue of Black Enterprise (BE) Magazine, Senator Barack Obama received another plum endorsement as BE endorsed him for President.  With a cover story, interviews, and a letter from Chairman Earl Graves, BE makes the case for Senator Obama with the blaring cover caption, “Why Barack Obama Should Be President.”  Looking at the issue in Barnes and Noble it took supreme effort on my part to keep my head from exploding at yet another example of black political irrationality.

It’s easy to see why someone like Oprah would support Obama.  On both a personal and professional level, Oprah has always been a part of the feel good crowd.  Oprah and many others like Senator Obama on a personal level.  They think he’s a good man, great speaker, and he fills them with optimism.  For Oprah that’s all she needs to know.  The matter is all too different, or should be, for BE.  As a publication for and about black business owners the bar should be much higher.  Chairman Graves, and indeed all Americans, can support whomever they want personally.   However, as a business magazine, one would think that BE’s evaluation of a Presidential candidate would be based on how their economic policies would affect businesses in general, and black businesses in particular.  When viewed from that point of view, it’s hard to fathom how an endorsement for Senator Obama could be formed.

    A primary campaign promise from Senator Obama is that he will fight to raise taxes.  He wishes to do so in the following ways, repeal the Bush tax cuts, raise the income tax rate for corporations, remove the payroll tax cap on incomes above $102,000, and increasing the capital gains tax from 15% to 28%.  Raising taxes has been something Democrats have fought to do for the last 40 years, which makes one wonder just where is the change Senator Obama is talking about.  But on a more practical level as we move toward another recession is raising taxes smart to do?

    According to William Kucewicz, of GeoInvestor.com, charts measuring the US economy from 1972 to present show that whenever personal and corporate tax rates get higher, a corresponding downturn in the economy as measured by Gross National Product (GDP) occurs.  In simple terms, higher taxes hurts the economy not helps it.  This conclusion is not a matter of political ideology.  All anyone has to do is use a calculator and common sense. 

    Take this issue of higher corporate taxes.  By definition anything that increases the expenses of a business owner without a corresponding raise in income is bad for the business.  When a business has to pay more money to the government that means they have less money to use for expansion, they have less money to hire new employees, and so they don’t hire new ones.  They do, however, ask for more work from current employees.  Because more of their money is going to the government there won’t be any raises for the current employees who are working harder.  A higher tax means a raise for the government, and no raise for you.

    More than a few times Obama and his advocates have stated that they don’t want to raise taxes on everyone, just on the rich.  But when you look at the specifics a few troubling things come to the surface.  The first is defining rich.  When I think of the rich, a million dollars or more is what I think about.  When you look at Obama’s definition it is anyone making more than $100,000 a year.  A married couple living in a metro area, who are both working could make that.  You can bet they don’t feel rich.   The second is that by far most people who make over $100,000 and reach incomes above $250,000 are business owners.  So they get pinched both in the personal income area and the corporate income.  In other words they get double taxation.

    It’s easy to pick on corporate taxes when you’re talking about ExxonMobile, Dell Computers, or General Electric.   After all, ExxonMobile made 40 billion dollars in profits last quarter.  But higher corporate taxes on companies this large don’t really hurt them.  They have the money, and legal resources to set-up entities to avoid the higher rate.  The person who does get hurt is the family soul food restaurant that wants two locations, not one.  It hurts the single mom who starts the home based business and sees more of her added income go to Uncle Sam than to her kids college fund.  It hurts the 50-person firm that wants to expand to a 100-person firm.  It hurts the people and businesses that account for over 80% of the jobs in America.      

    If you believe Senator Obama’s remark on Al Sharpton’s radio show where he says, “When America gets a cold, black America catches the flu,” then that means anything that affects the economy in a negative way, affects blacks even more.  Economic data from the US governmental reports, and independent think tanks like the Heritage Fondation show America catching the cold whenever tax rates gets to high.  Translation, if Obama gets elected, and is successful in raising taxes, then America is going to catch a cold, and black are going to get a flu.

    Senator Obama says he’s looking out for working-class Americans, but you can’t help them by punishing the people that employ them.  Working-class Americans, black and white, are hardworking, good people, but by definition are working for someone else.  They are not creating jobs.  They don’t control business expansion.  Business owners do that, and they can’t with less money to work with.

    Less money to the government means more money to use in your personal life.  It means the soul food restaurant has the money to expand.  Or even more important it means it has more cash to handle a downturn in business.  More personal income means that people can go buy more stuff, like cars, flat screen TV’s, or better yet, invest in a mutual fund.  It spurs growth in every facet of life.   The average income of BE subscribers is right at $102,000 with an average net worth of around $358,000.  That makes them a part of the rich class Obama says needs to pay more taxes.  In other words, BE’s pick for President is a man that has economic policies damaging to the BE 100, and BE’s subscribers.

    How could the BE editors, writers, and Chairman miss these fundamental business facts.  Or better yet, how could a business magazine choose a man that has no business experience, no business background over a candidate that like Mitt Romney who knows more about business and economics than all the other Presidential candidates combined?   Based on facts alone can there be any doubt about his business credentials?  Does anyone deny he’s rich?  Is it in dispute that he’s succeeded at the highest level in business?  No, it is not.  On balance, why Obama and not Romney?

    The only plausible explanation would be that Romney, and indeed none of the Republicans, was ever considered.  There’s a real argument to be made that blacks just default to the Democrats, and ignore that facts on the ground.  The average citizen has that excuse, BE does not.  BE knows business, and therefore their pick for President ought to reflect a business perspective. 

    If you want to look beyond the issue of taxes, and look to social issues, there is no doubt health care is a preeminent one in this election cycle.   Many people don’t have it, and many are struggling to pay for the coverage they have.  Obama’s answer is both simple and predictable, Universal health care, health care for everybody.  It makes a great bumper sticker, but hardly seems like the change in direction he touts.  Haven’t the Democrats been pushing for this for years?  Canada has it, so does England, Japan, and Germany.  They also have long wait times for needed services; lower survival rates for serious diseases like cancer, than America, and they all have high tax rates in order to pay for it.  So once again we come back to the economic issue.  Health care is expensive, and so Obama has decided the best way to address it is to have the government for it.  Well, with what money?  It is easy to say if we didn’t have a war we could pay for it, but that’s not true.  We didn’t have a war in the 1990’s and we still could not have paid for it then either, at least not without tax rates for everyone topping above 50%.

    Which brings us to an unspoken fact about Senator Obama and indeed the rest of the Democrats.  To pay for the social programs they wish to pass, they need more tax revenue.  That’s the reason for the tax hike.  Not because the rich don’t pay taxes.  The richest five percent of the country account for 80% of the tax revenues even though they only account for two percent of the tax returns received.   Forget for the moment discussing whether the government should be creating programs like Universal health care, or federal buy-out funds for people who buy homes they cannot afford.  To pay for them, Obama believes that you need to raise taxes.  But you don’t need a higher tax rate you need higher tax revenues.  Oddly enough, according to the Tax Foundation and Internal Revenue Service tax revenues historically are higher in times of low taxation, and lower in times of high taxation.

    So again we’re back to Senator Obama not realizing the reality of economics in both the cost of social programs, or the effect on the economy.  Which begs the question of how could he be the man for the country?  The simple answer is he is not.  The facts don’t support that notion.  His experience does not support that notion.  Question: how many CEO’s of the BE 100 would allow a second year employee to run their business?  Answer: not many.

    Barack Obama is a motivating speaker, but so is Les Brown.  Barack Obama is a good man, and appears to have more character than the “so-called first black president.”  Barack Obama, however, is not the man to help African-American business owners.  He is not the man to help the economic situation of working class blacks.  This is not supposition.  Careful scrutiny of the facts and effects of his economic policies bore this out.  And its about time African-Americans realize it.