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What you can expect from an Obama administration.

Foreign Policy

A) Iran - If Senator Obama follows the path that he has laid out for Iran then the country will go Nuclear within just years. World leaders including Prime Minister Brown and French President Sarkozy have both spoken out against Obama's plans in dealing with Iran. Just one week prior to the election a private memo released by the French President referred to Obama's foreign policy as simply "naive" and "irresponsible." A military strike by Israel will offer the only alternative.

B) North Korea - Nothing will change in North Korea unless Kim Jung Il, the "dear leader" becomes incapacitated. If Kim Jung Il were to pass away or be unable to rule that would be unwelcome news to South Korean, Japanese, and US leadership. Kim Jung Il is brutal, but he is a narcissist and hypocrite who lives a lush personal lifestyle and has never defied the world to the point that it would threaten his lifestyle. The greater danger is the next generation, who have been indoctrinated into believing that the Western World led by the US is to blame for the 17th century lifestyles. With no dissent, no outside media and no generation left that has experienced freedom, this entire society has been brainwashed into believing that the destruction of the US, South Korea, Japan and Europe is necessary.

C) BROKEN BORDERS - You may as well forget about it. Senator Obama, nor the Democratic Leaders have no intention of dealing with border security or combating the tide of Illegal Aliens flowing across the border. They won't even discuss the issue. Senator Obama voted against the appropriation for the 700 mile border fence and let's face reality. A man whose own Aunt is an illegal alien will never take action to address the issue.

D) Russia - The bear has risen from its nearly twenty year slumber and is once again stalking Eastern Europe. For the past ten year, European conflict experts have warned against the rise of Russian Imperialism and the societal movement away from democratic rule. Russia will continue to test their boundaries and seek control of European energy supplies, they will become more aggressive towards what is left of Georgia and then move onto Ukraine.

E) Venezuela - I have long warned against the morphing of Socialism in Fascism in Venezuela. Chavez is bent upon military and economic domination in the region and without forceful US protection of its neighbors, Venezuela will continue its military buildup and aggression. For 60 years, US leadership has worked to counteract the rise of a socialist based fascism in Central and South America, yet today we have elected a leader that has run on a platform nearly identical to that of Chavez. Venezuela has funded the guerrilla war waged by Marxist Colombian Rebels, providing money, weapons and even troops in an attempt to overthrow the Democratic nation. Venezuela has openly defied international borders by sending troops into the border regions of Guyana and openly laying claim to the sovereign territory. Chavez is headed down a path by which he seeks dominance of South Central America. Nearly every expert agrees that if international intervention does not occur, South America will break out into war.

Economy

A) A Second Fruitless Economic Stimulus Package - The stimulus package will be not be passed until after Obama's inauguration. At that time the stimulus package will be massive and fruitless. It will dole out billions of dollars to state governments that have improperly budgeted and overspent. The package will allow state's like Illinois that is currently $2 billion in arrears for medicaid payments to providers to catch up on their bills. In addition, the bill will enable a massive infrastructure improvement program committing billions to road projects, sewage plants and water systems. By time the money flows through Federal and State wash cycles, pennies on the dollar will flow back into the general economy. You might receive some infrastructure improvement, but the net effects will be negligible and will not provide relief to middle class America.

B) The Federal Deficit will Balloon - There is no way around this as even before a second stimulus package, Democratic Leadership and Senator Obama have called for hundreds of billions of dollars in new federal expansionary spending. Considering the $350 billion already appropriated to the bailout, another $350 billion committed to the financial bailout and a second stimulus package as large as $500 billion, it is realistic to believe that the federal deficit will exceed $1 trillion dollars next year, with no signs of shrinking.

C) National Security Budget Cuts - The federal budget currently allocates just 14% of its revenue to homeland and national security. That amount includes domestic security an national security spending. To give you some perspective, current national security spending is at its lowest level in US history and just a fraction of the 43% that President Kennedy allocated to National Defense. Senator Obama and the current Democratic Leadership have been consistent in their calls for billions of dollars in national security budget cuts. It will happen and by the end of 2010 if the United States is not involved in a broader war, national security spending will be well below 10% of our federal budget.

D) Energy - You may as well forget about any expansion in domestic oil and natural gas production, it will not occur. Democratic Leadership and Senator Obama will reinstate the federal moratorium on offshore drilling and push for legislation that will double land lease rates and shorten the development time for that land. Domestic Production of oil and natural gas will continue to decrease. Moreover, cap and trade rules that will be instituted by this Congress and Obama take effect, any opportunity to expand domestic refining capacity will be lost. No new refineries will be built, the C&T rules will punish the development or refinement of oil shale or Canadian oil sands and we will become more and more reliant upon the light, sweet crude flowing from the middle east. In addition, Obama and the Democratic Leadership will push for a Windfall Profits Tax on oil companies at a much lower target price than the $80 per barrel suggested on the campaign trail. In order for the tax to take affect today, they will push for a target of $60 per barrel. The resulting production based tax will become regressive. US coal production will fall and the coal powered energy industry will shrink dramatically as increased taxes destroy industry profits. Energy prices will rise dramatically in coming years, causing larger amounts of money to flow to other nations, causing higher prices and inflation domestically and limiting opportunity to push the US to the forefront of alternative energies. Countries such as Saudi Arabia and the UAE that are committing billions of dollars in oil profits to alternative energy research will increase their dominance and further their plans to become the world's energy suppliers.

F) Taxes - Tax rates will go up, and they will initially go up on any individual making more more than $100,000, and when that fails, the target will move downwards. What will most likely happen is that Democrats will vote to extend the Bush tax cuts on all but those individuals in the top brackets. However, the current leadership will then provide a FICA credit to those 40% who currently pay no income tax and lift the limits on FICA for everyone else. The result will mean a 6% increase in taxation for any American earning more than $100,000 per year. For those in the top brackets who are already responsible for a vast majority of our governments revenue, they will see their taxes increase by well over 10%. The self employed will suffer the most as they are responsible for both sides of the FICA tax and will suffer a 13% FICA tax rate on earnings over $100,000. In addition, small businesses responsible for FICA taxes and increased rates and a 40% increase in the minimum wage will have no alternative but to both raise prices and eliminate employment growth.

G) Regulation & Competition - When our progressive President's, Teddy Roosevelt, Taft and Wilson, implemented the nation's first measurable regulatory reform, they did so out of a belief that regulation should not stifle business growth but rather promote fair and increased industry competition. These leaders believed that a highly competitive environment competing for both consumers and workers would lead to improved employee benefits, better working conditions and lower prices. Yet, after the break up of Ma Bell our government radically shifted the regulatory environment to a more punitive and in many cases tax-based regulatory environment. The results of decades of tax-driven, punitive regulation has actually driven competition out of the market place. The financial sector, both banking and insurance based has dramatically shrunk, leading to the death of regional insurance companies and local banking. The oil industry, telecommunications industry, energy industry, and others have all fallen victim to the same consolidation. The net result is larger and more powerful companies, focused on profits and driving out existing competition. The financial crisis that we are facing is the perfect example of the need for more competition and regulatory reform. When one financial company has become so large that its failure can cause billions of dollars in losses worldwide, then there is a problem. The unfortunate part of this financial crisis is that as these mega financials fail, the government has allowed the creation of Super Mega Financials in Bank of America, JP Morgan and Citi. Now imagine if one of those three failed. An Obama administration will do nothing to stem this tide of false regulation predicated on taxation that stifles competition. The Obama administration and current Democratic leadership will not reform our regulatory system, but will instead add a new round of punitive tax-based regulations that will further diminish competition and lay the framework for a larger crisis if one of these super mega corporations fail.

H) The Shrinking Middle Class - With a downturn in global economies, has come a new populist assault among the upper class. Senator Obama and the current Democratic Leadership wish to use the tax code to build our economy from the bottom up. Their belief is that economies grow from the lower classes upward. Their belief is that we can strengthen the middle class, while diminishing the upper and lower classes. This belief in a middle class driven society has been attempted in the past with no avail. Marxism is based upon one absolute belief: The creation of a communal society in which there is a extremely limited upper class and little or no lower class. This theory was the basis of the Russian revolution, the Cuban Revolution and the current undertaking in Venezuela. This theory will fail as it has never worked in the past.

The Obama plan is predicated upon taxing the upper class and businesses in order to equalize income and provide greater upward mobility to the lower class. However, true upward mobility can only be achieved if there is upward mobility within all classes. The wealthy of this nation drive the investment that is necessary for economic growth, the less of a potential return on their investment because of taxation, the fewer dollars will be committed to that enterprise. In addition, the wealthy do not suffer from an ever progressive tax system as they have accrued their wealth. Ultimately, as business taxes and upper class taxes increase, the wealthy and US businesses will raise prices so as not to affect their bottom line. As a result any redistribution at the bottom is eroded by a higher cost of living.

Next, although there may be some initial limited upward mobility from the lower classes, upward mobility of the middle class will be stifled by an increasingly progressive tax system. As a result, there will be fewer wealthy and those attempting further upward mobility will become frustrated and eventually accept a fate as perpetually middle class. If we make it harder for the middle class to move upwards by a massive tax system that will remove 50% or more of their income, why not settle for less and forgo the work. As middle class mobility stifles, the tax base will shrink and the disparity between the upper and middle classes will grow. Thus, the ultimate result is that today's middle class has little opportunity for upward mobility, yet have to high of an income to receive any redistributive benefit. The middle class becomes stagnant and ultimately begins to fail as inflation erodes their purchasing power.

This is what has occurred time and time again in societies that have attempted bottom-up growth. The middle class shrinks and ultimately we are left with a working class and an elite class. Our nation has never grown from the bottom-up and those great leaders of our past such as Kennedy and Reagan understood the implications of this system of income equalization.

Our nation has the financially strongest and demographically largest middle class of any nation in the world. Our society has the highest standard of living of any nation in the world. Our middle class is only possible because of the potential of upward mobility, Obama's plans to increase taxation on this upward mobility will stifle the middle class and eventually lead to contraction.
You cannot have upward mobility unless you have upward mobility across all classes.

This is just the beginning. Just as in 1976 we have just elected what Ronald Reagan referred to as the 'trust me' government the government that promises the world and in the end will leave our middle class weaker and the world less secure.

J Brown
November 5th, 2008