Reader’s Voice: Capitalism in the age of Obama

By Eric A. Beck, Guest Column
   Given the clear choice offered us in this year’s presidential election, our nation may be educated the hard way on whether capitalism or socialism is to blame for our current economic crisis, and which system will lead us to greater prosperity in the future.
   Before casting a vote on Election Day, I would encourage everyone to first examine the root cause of the current crisis in the context of the economic philosophies held by Sens. John McCain and Barack Obama.
   I have listened to the case for change being presented by Sen. Obama as he has tried to blame the financial crisis on the so-called “trickle-down” economic policies of the Bush administration. Sen. Obama has decried “George Bush’s tax cuts for the wealthiest Americans while the middle class struggles with stagnant wages and rising prices.”
   Such economic populism is to be expected from someone whose own tax proposals reflect those of European socialist regimes that now enjoy stagnant growth, double-digit unemployment and a lower standard of living than the United States. At a time when formerly socialist countries such as China, India and more recently France have come to recognize the benefits of less government intrusion in our economic affairs, Americans seem poised to elect a President Obama that will take us in exactly the opposite direction.
   Sen. Obama’s economic populism has recently gained new life with the onset of the global credit crisis that was sparked by a collapse of the sub-prime mortgage market. Recent polls would suggest the public’s imperative for change has overwhelmed more thoughtful consideration of the root causes of this crisis, including the regulatory problems that are at its core. While both major political parties can share some blame for this regulatory failure, it was President Clinton’s sub-prime authorization of 1995 under the Community Reinvestment Act that laid the groundwork for this crisis. This authorization encouraged sub-prime mortgages as a legitimate product for consumption by low-to-moderate income borrowers that may not have otherwise qualified under more traditional credit evaluation criteria.
   Sen. Obama would like us to believe that it was President Bush who is responsible for the current financial crisis, but the senator has not been a passive bystander here. His past support for sub-prime community housing initiatives has made him the second largest Congressional recipient of PAC money from Fannie Mae and Freddie Mac, receiving over $126,000 after only serving four years in the U.S. Senate.
   In response to his expressed concerns about “Wall Street greed,” Sen. Obama has also offered us a “Robin Hood”-style tax initiative that will push aggregate income tax rates for the wealthy to levels equivalent to rates applied in socialist Europe. He says he’s doing this to provide income tax cuts for 95 percent of working Americans, many of whom do not pay any income taxes.
   This “spread the wealth” scheme has been tried before in other forms and it never works. The wealthy simply shift their money to tax shelters and municipal bonds to minimize their tax burden instead of investing in corporate stocks that contribute directly and efficiently to job growth. What this means is that a President Obama will eventually have to come back to the middle class requesting additional taxes to pay for the more than $1 trillion in new spending he has promised.
   In my view, should Sen. Obama be elected, he would become the first overtly socialist president in our nation’s history. As a committed capitalist and believer in the power of free market solutions, I could not be more strongly opposed to Sen. Obama’s tax and economic proposals. Given the track record of other nations that have adopted socialist economies, we have plenty of empirical evidence to show that socialism does not solve economic problems, it only creates them.
Eric A. Beck lives in Dayton. He can be reached via e-mail here.