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Market Registers Doubts About New Obama Term

By Gwyn Morgan Created: November 22, 2012 Last Updated: November 28, 2012
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Traders work on the floor of the New York Stock Exchange Nov. 7, in New York City. The Dow Jones lost 167 points as the Standard & Poor's 500 index lost 19 points after President Barack Obama won re-election on Nov. 6. (Allison Joyce/Getty Images)

Traders work on the floor of the New York Stock Exchange Nov. 7, in New York City. The Dow Jones lost 167 points as the Standard & Poor's 500 index lost 19 points after President Barack Obama won re-election on Nov. 6. (Allison Joyce/Getty Images)

That great whooshing sound heard on Wall Street when markets opened after Barack Obama’s re-election was air gushing out of the balloon investors hoped would lift the U.S. private sector out of four years in presidential purgatory.

While President Obama had rightly denounced greedy investment bankers for igniting the 2008 financial crisis, he failed to differentiate between the Wall Street perpetrators and the great majority of American businesses that became victims of the ensuing recession.

The cruelest thing a government can do is make people dependent on public programs that can’t be sustained.

As if this tarring with one brush demonization of American business wasn’t demoralizing enough, Obama’s administration unleashed a broad based regulatory witch hunt that unleashed a crescendo of lawyer-enriching litigations, forcing corporations to focus on costly, unproductive defenses rather than creating jobs.

Moreover, while railing against companies forced to move manufacturing offshore to survive, he introduced legislation making domestic manufacturing even more costly by removing secret ballot rights of workers facing unionization. Predictably, private sector job growth remained anemic, leaving the White House to rely upon so-called “stimulus” spending for economic recovery.

But the economic doldrums continue even after driving up the national debt by 60 percent to a staggering $16 trillion over the past four years, while the damage wrought by this fiscal folly is hitting home with a vengeance.

Obama begins his second term with the so-called “fiscal cliff” looming on Dec. 31. And what is the likely outcome of efforts to avoid that fiscal cliff? In the vernacular of the chronically addicted, more “hair of the dog”, that is continuing to borrow and spend at roughly the same suicidal rate, setting the nation on course to add yet at another trillion dollars of federal debt in 2013.

At that rate, Obama’s eight years as president will have increased the national debt by $10 trillion, equal to the amount incurred during the first 232 years of the nation’s history.

There is much to admire about Obama’s personal traits. He is a good husband and father, he genuinely cares about people, and he really wants to do the right thing. The same can be said of Mitt Romney. What separates the two is how to achieve the best result for the American people. And that has largely been shaped by their contrasting life experiences.

Obama, a former civil rights lawyer and university professor, has never worked in the private sector. Perhaps that’s the root of his skepticism and mistrust of what he derisively calls “big business” and why he believes that only government spending can fuel economic growth. But what happens when the government runs out of fuel?

Romney, on the other hand, spent his pre-politics career figuring out how to turn around beleaguered private sector businesses. He understands that no country can consume wealth without creating it. And he knows that unleashing the potential of the world’s most innovative and capable private sector is the only way the United States has or will ever rise from the depths of recession.

Today in the United States, almost one in six persons survives on government food stamps and, as Romney infamously stated during the Republican Primaries, 47 percent of Americans are fully or partly dependent on government support. Unfortunately, Romney’s statement came across as blaming these people, when he should have blamed Obama’s failure to unleash job creation.

The majority of that 47 percent would much rather have a hand-up—a job—rather than a handout. The cruelest thing a government can do is make people dependent on public programs that can’t be sustained. Their suffering, when America hits that inevitable debt wall, will be profound. And, like an earthquake, the impact will reverberate most severely in its closest neighbors.

The fiscal cliff will be temporarily avoided through Band-Aid political compromises, or it will be simply punted down the road by a few months. And the national debt limit will be raised again and again because, with one out of every three dollars of public expenditures financed by borrowing and half of U.S. spending tied to Social Security entitlements, stopping the growth of the national debt would require cutting more than half of all other expenditures.

The only way to keep from going over that fiscal cliff is private sector job and wealth creation. A Romney win would have encouraged that to happen, but it’s hard to be optimistic that Obama will unleash the potential of American business any better than he did in his first term.

Gwyn Morgan is a Canadian business leader and director of two global corporations.

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