Drop Dead, American Business

Bloomberg's article "Obama Tells American Businesses to Drop Dead: Kevin Hassett" (6/8/09) is a commentary by the director of economic-policy studies at the American Enterprise Institute, a major (neo)conservative think tank considered influential, along with left-leaning Brookings Institute and conservative Heritage Foundation.

Mr. Hassett says in the article:

"I’ve finally figured out the Obama economic strategy. President Barack Obama and his team have been having so much fun wielding dictatorial power while rescuing “failed” firms, that they have developed a scheme to gain the same power over every business. The plan is to enact policies that are so anticompetitive that every firm needs a bailout."

"The U.S. now has about the highest combined corporate tax rate, second only to Japan among industrialized countries. That rate is so high that U.S. firms have an enormous disadvantage versus competitors. The average corporate tax rate for the major developed countries in the Organization for Economic Cooperation and Development in 2008 was about 27 percent, more than 10 percentage points lower than the U.S. rate."

"U.S. firms have nonetheless prospered because our tax code allows a business to set up a subsidiary in a low-tax country. When that subsidiary earns profits, they are taxed at the rate of that country, and don’t face U.S. tax until the money is mailed home."

The Obama admin wants to term that as a loophole for tax cheaters.

Mr. Hassett calls Obama's stance "inexplicable".

"So the question is, why does Obama advocate a policy that so flies in the face of everything that economists have learned?..."

"I have to admit I am at a loss. Maybe it is good politics to bash American corporations, and Obama isn’t really serious about making this change happen. But if the change is enacted, and domestic corporate taxes aren’t reduced to offset the big tax hike, the result will be a flight from the U.S. that rivals in scale the greatest avian arctic migrations."

It's because "he can", Mr. Hassett. It's been a "shock and awe" economic version, which visibly started back in September 2008 and has vastly accelerated under the new administration.

Microsoft is threatening to move some jobs overseas. Transocean, an oil rig company, moved its headquarters to Switzerland. A commentator from former Soviet Union calls America "red" and advice Russian companies to "flee the land of the red". Productive capital will flee, just as it did during the FDR's reign.

The stock market is struggling again today with 30 minutes of trading left, though it has managed to pull out of the negative territory. It almost feels like it is fighting with the government and its ever-increasing threat of more regulations and law changes.

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