Is Barack Obama Inexperienced, Unintelligent, or Both?

Having watched Candidate Obama make proposals which destroyed jobs and harmed job creation, we at Scragged have come to believe that Mr. Obama's team has spent so long in politics that, never having had to meet a payroll, they have no idea how the private sector operates.

On October 13, 2008, RTT News reported "a new proposal" by Candidate Obama:

The proposal includes tax credits for companies making new hires, rules to allow people to take money out of certain restricted retirement accounts and a foreclosure moratorium for homeowners. [emphasis added]

"To fuel the real engine of job creation in this country, I've also proposed eliminating all capital gains taxes on investments in small businesses and start-up companies, and I've proposed an additional tax incentive through next year to encourage new small business investment," Obama said.

One of our articles explained how the Candidate's earlier statements about his plans to increase capital gains taxes resulted in small business jobs disappearing; people pay attention to what candidates say and even more attention to what Presidents say.  On Jan 8, 2009, MSNBC reported that tax credits for new hires disappeared from the "porkulus" package due to opposition from Democrats:

Sen John Kerry, D-Mass., said, "I'd rather spend the money on the infrastructure, on direct investment, on energy conversion, on other kinds of things that much more directly, much more rapidly and much more certainly create a real job." [emphasis added]

We've deplored our elected officials' belief that when they cut taxes so you get to keep more of your income, they've spent money that rightful belongs to them.  Mr. Kerry didn't believe that rewarding private businesses for hiring people whose salary would be paid by the business would create jobs; he'd rather spend money on infrastructure where government pays the entire salary.  He didn't mention the minor detail that the unionized workers and contractors who build infrastructure understand that they're expected to make campaign contributions to help him get re-elected.

This Has All Happened Before...

Let's consider the impact of Mr. Obama's talking about a "new hire" tax credit.  Any business that was thinking of hiring anyone would stop immediately.

Why?  Because if they created a new job now, they wouldn't get the tax credit.  Any sensible business would wait until the rules were clarified.

Older business-folk know full well the effect of Presidential chatter.

Thirty-three years ago, I was employed by a solar energy start-up.  Owens-Illinois made miles and miles of fluorescent lights every year by coating glass tubes with chemicals and wiring up electric power.  With a different coating, the tubes absorb solar energy.  Run a pipe to the tube instead of wires, and the tubes heat water.

Our solar collectors looked like fish skeletons with a pipe down the center; glass pipes run up and down from the central pipe.  Pump water through the skeleton, and viola! hot water to run through your heating system.

The computers of the day were too expensive; we developed one of the first microprocessor-based control systems to control our invention.  We tested the system through a winter to make sure it would work, and indeed it did.

Mr. Carter became President on Jan 20, 1977, in the midst of an energy crisis.  On April 18, he delivered a speech saying that he'd make proposals to Congress.

Two days from now, I will present my energy proposals to the Congress.  Its members will be my partners and they have already given me a great deal of valuable advice.  Many of these proposals will be unpopular.  Some will cause you to put up with inconveniences and to make sacrifices.

The most important thing about these proposals is that the alternative may be a national catastrophe.  Further delay can affect our strength and our power as a nation.

Presidents always threaten doom if their ideas aren't adopted; Mr. Carter declared the energy crisis to be the Moral Equivalent Of War (MEOW).

As our sales force fanned out to sell solar energy, President Carter said that solar energy would receive a tax credit.  From that moment, customers slammed their doors in our faces.  We were told to come back when the credit passed and we could show that our system met the conditions for getting the credit.  Sales stalled.

We sold a system to a new and trendy underground school in Virginia.  As in the present day, Middle Eastern oil powers were interested in technologies that would support them when the oil ran out.  The Saudis funded the $625,000 solar energy system when the National Science Foundation turned down the grant request.  Nobody expected the solar system to pay for itself; the town wanted "green cred" without paying for it.

Customers started to talk to us once the tax credit was in place, but there was a problem - the sun doesn't always shine.  A building can store a month's worth of energy in a small oil tank; storing that much energy requires a huge hot water tank.  Even if you assume that you need to store only a couple of days worth of heat, it's still a very large water tank.

Most businesses decided they'd need a conventional heating system in addition to the solar system; solar systems need backup.  Including the cost of the backup system, solar heating wasn't economical even with the tax credit.

There was a happy ending, however, for the investors if not for the greens.  Many building managers who rejected our solar system liked the controller that went with it.  They wanted to buy the controller to operate their conventional system.  Clever programming cut energy use, reduced maintenance, and, best of all, the building engineer got more sleep.

"Sunkeeper" renamed itself "Andover Controls" and went on to create many, many jobs, no thanks to the Carter Credit.

And It Will All Happen Again

There are a number of lessons which could be learned:

• Whenever a politician proposes a tax credit, everything goes on hold until the rules shake out; nobody wants to miss a credit by moving too fast.
• Solar energy has problems which have yet to be solved despite 40 years more effort.  We still have no way to store or transmit large quantities of energy.
• Changing energy consumption on a national scale is extremely difficult.  Mr. Carter's Department of Energy spent billions and billions of dollars meowing about the Moral Equivalent Of War with essentially nothing to show for it.  As the acronym would imply, what we bought was less of a mighty roar than a pitiful mew.
• Politicians won't support anything that doesn't benefit them. Ethanol and infrastructure subsidies result in campaign contributions like any other earmark; community development grants register voters who vote for them.  Tax credits for small business don't yield campaign contributions because small firms can't afford to make campaign contributions.
• As a whole, the American people know that Mr. Obama's ideas are meant to help politicians, not the economy.  That's why every time he opens his mouth or signs a new law, stocks go down and more people get laid off.

President Carter spoke of "energy independence" instead of "green jobs," but President Obama faces exactly the same energy-related issues Mr. Carter faced thirty years ago.  Why should anyone believe that the billions we're proposing to spend today will make any more difference than the billions spent under President Carter?

Inexperienced, Unintelligent, or Trapped in the System?

Which brings us to our question about President Obama's intelligence.  Mr. Carter could tell President Obama how the Carter tax credits and energy investments worked out, or rather didn't; the only difference between President Obama's proposals and Mr. Carters' is that President Obama speaks more eloquently of his and looks rather better in a sweater.

Some of us at Scragged believe that Mr. Obama is a highly intelligent, but inexperienced, man who doesn't realize that his wonderful notions are already known not to work; he's never encountered the Real World of earning money and none of his few friends who have will tell him so.

Others believe that he's advocating old, unworkable ideas because he's not intelligent enough to realize that his ideas won't work and again, his people won't tell him assuming that some of them know.

Yet another group believes that even if he has new, workable ideas, he's caught in a dysfunctional Washington system which can't do anything other than waste money no matter who's in the White House.

What do you think?