Obama's war against business

Larry Kudlow:

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This looks very much like a war against investors, businesses, and entrepreneurs. Shareholder rights are being eviscerated. Political decisions are replacing the rule of law, the rule of bankruptcy courts, and free-market principles.

We are witnessing more spending, deficits, and debt-creation than anyone ever imagined. Bailout Nation has run amok. This started under Bush, but Obama is raising the stakes exponentially.

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All of this will certainly lead to large tax-rate hikes that will rob incentive power from entrepreneurs, investors, and small-business owners. Just look at Britain, where the top tax rate has been raised to 50 percent from 40 percent. The Thatcher Revolution is being repealed over there. Unless current trends are reversed, the Reagan Revolution will be repealed over here.

The Obama budget already will raise taxes on overseas corporate earnings and oil-and-gas companies at home. It will elevate taxes on capital gains and dividends for investors and will lift the top tax rate for successful earners. And more is coming.

But this is the wrong direction for economic growth. Instead, business tax rates should be slashed -- which, by the way, would repatriate corporate earnings for domestic investment. We need a capital-gains tax holiday. We should be flattening individual tax rates across-the-board. And all manner of loopholes and special-interest deductions should be repealed to broaden the taxable-income base.

Nowhere is the Obama vision of government interference more evident than on the banking front. The White House and Treasury are using TARP as a bullying club to force government control on the country's financial institutions. There is no exit strategy; no endgame in sight. Quite the opposite: News reports suggest that six major banks could be subjected to government ownership, putting them in the same club as Fannie Mae, Freddie Mac, AIG, GM, and Chrysler. This reminds one of Francois Mitterrand, the former socialist president of France. It's way outside the American economic tradition.

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Economic recovery is still likely in the second half of the year. And President Obama will claim victory for his big-spending policies. But the reality is much different. Massive Federal Reserve pump-priming is moving the economy from deep recession to some kind of recovery. Meanwhile, the combination of deficit spending and easy money increases the threat of stagflation.

Will Republicans take advantage of the wide opening created by Obama's 100-day lurch to the left? So far the GOP has produced only fragmented policy alternatives and no central spokesperson. That's not unusual for the party out of power. But the Specter defection underscores the GOP's sagging fortunes.

Right now, the most promising Republican leader -- at least in a policy sense -- is former Vice President Dick Cheney. His attack against the release of the CIA interrogation memos and his forceful call for the release of the information gathered during those interrogations -- facts that helped keep America safe after 9/11 -- clearly rattled Team Obama. Mr. Cheney should now launch a counterattack on Obama's tax-and-spend New Deal/Great Society enlargement of government power.

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VP Cheney has been speaking out mainly on national security issues. But he and Kazrl Rove appear to be among the few Republicans who will speak out on the issues where Obama is screwing up. It is important to make the points on the screw ups now so that Obama and Democrats will be held responsible in the future when their policies fail.