The Fear-Based Economy
Further tax increases could bring an already frightened, sputtering economy to a standstill.
July 21, 2011 - 12:00 am
Finally, someone has publicly said what everyone has long known.
On Monday, during his company’s second quarter earnings call with investors, Wynn Resorts CEO Stephen Wynn ended the three-year truth embargo over who is holding back the U.S. economy.
In July 2008, yours truly christened the economic conditions America began facing roughly a month earlier as the POR (Pelosi-Obama-Reid) Economy, named after its primary creators: House Speaker Nancy Pelosi, Democratic presidential nominee Barack Obama, and Senate Majority Leader Harry Reid. In a comment at that original post, I noted that the economy’s job and wealth creators were “genuinely frightened by the lack of seriousness and presence of abject irresponsibility in Congress and in Obama.”
This fright went viral long ago but remained whispered in carefully chosen company until Wynn broke the silence. When an earnings call participant asked why his firm hasn’t expanded its meeting space in Las Vegas, Wynn responded:
I’m afraid to do anything in the current political environment in the United States.
… my customers and the companies that provide the vitality for the hospitality and restaurant industry, in the United States of America, they are frightened of this administration. And it makes you slow down and not invest your money.
… this is Obama’s deal, and it’s Obama that’s responsible for this fear in America.
Why shouldn’t the economy’s key players be afraid? In 2-1/2 years, Barack Obama and his administration have shown that they will do anything in their power — even if not in their constitutional power — to further their far-left redistributionist and science-free environmental goals. If it means subverting the rule of law to favor bankrupt union-dominated car companies, so be it. If it means shutting down oil drilling and exploration in the Gulf of Mexico and restoring it in slow motion at a cost of tens of thousands of jobs, well, that’s unfortunate collateral damage. If it means revoking an already-issued permit for coal mining, too bad, so sad.
In Wynn’s case, if it means demonizing convention and tourist spots when the timing fits, well, as far as Team Obama is concerned, his company will just have to deal with it. Why should Wynn even think about adding meeting rooms when at any politically convenient moment, Obama can and has shown at least twice that he will demonize a key travel destination?
More broadly, Wynn was speaking for the economy’s most productive participants: the businesspeople, entrepreneurs, and investors who drive commerce, create wealth, and create jobs. As long as Barack Obama is president and his apparatchiks remain in control of their expanding bureaucracies and unaccountable czardoms, fear and intimidating uncertainty will reign.
Wynn’s stated indisputable truth must be at the core of the current debt ceiling, tax, and spending negotiations taking place in Washington.
It has long been known and accepted, with proof going all the way back to Herbert Hoover’s ill-conceived actions in the early 1930s, that tax increases will at a minimum prevent an economy attempting a recovery from reaching its full potential. At worst, they will send it back into recession. Additional tax increases in the current economy will create an overwhelming danger of another recession and a subsequent malaise which could rival the Great Depression.