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Chairman's Message

Obama and O’Malley Achilles’ Heel – The Private Economy is an Alien World to Them

Posted: July 7, 2012 at 7:53 am   /   by   /   comments (0)

Over the past week much attention has been paid to President Obama’s remarks: “If you’ve got a business — you didn’t build that.  Somebody else made that happen.”  In the debate over the comment, first in line to defend the President has been Maryland Governor Martin O’Malley.  Both argue that government spending, not private initiative is the engine of economic growth.

Only a few weeks ago Obama said:

“The private sector is doing fine. Where we’re seeing weaknesses in our economy have (sic) to do with state and local government. Often times cuts initiated by, you know, Governors or mayors who are not getting the kind of help that they have in the past from the federal government and who don’t have the same kind of flexibility as the federal government in dealing with fewer revenues coming in.”

President Obama
8 June 2012

This Obama blind spot regarding the private sector is hardly a new phenomenon.  When asked about small business in 2008 during his famous exchange with “Joe the Plumber,” the candidate responded that: When you spread the wealth around, it’s good for everybody.

Consider also the limited private sector experience of Obama Administration officials. The American Enterprise Institute tracked the private sector experience of senior officials of every administration for the past century. None had a smaller ratio than the Obama Administration mark of less than 10%.

Here in Maryland, Democrats seem just as hostile to job creators.    A 2010 study from the University of Baltimore’s Jacob France Institute concluded that employers who describe Maryland as “pro-business” has declined 58% since the 2nd quarter of 2006.  In October 2006, the Institute reported that 74% of Maryland businesses considered the state business-friendly or pro-business.  The Institute found only 31% of employers rated Maryland as being pro-business or business friendly.  Those are numbers generated before the latest round of tax increases.

Just yesterday, the US Labor Department reported that Maryland ranked third in the U.S. for the largest month-over-the-month decrease in employment.  Maryland’s decrease in employment was 11,000 and the June unemployment rate inched up to 6.9%.  Meanwhile, Virginia is holding relatively steady at 5.7% and the differential of the rates between the two states is widening to record levels.

Over the past decade, Montgomery County has had a decidedly subpar record at producing new jobs,  even as the Washington metro area created 420,000 new jobs.    Although Montgomery’s population – about 1 million – grew by 100,000 from 2000 to 2011, the county’s job total was essentially flat at around 450,000. (Despite popular perceptions to the contrary, only 10% are Federal jobs.)  In effect, the second largest jurisdiction in the country’s most economically dynamic metro area was the hole in the proverbial donut.

By most accounts, though, the fat years of the government boom spending boom that propped up the Maryland economy are coming to an end.   Some Congressional experts estimate that under the looming budgets sequestration   Maryland could 5,000 military active duty jobs and 9,000 civilian DOD employees job.  The Center for Regional Analysis at George Mason University predicts that Maryland could lose tens of thousands of private sector jobs and billions of dollars under the sequestration 36,000 jobs and the state economy could lose $2.16 billion in lost earnings and $3.14 billion decrease Gross State Product (GSP). The bottom line is a projected job loss for Maryland is at least 50,000 jobs.

So how is the state preparing?

Governor O’Malley led the charge to push the top Maryland individual income tax to 8.95%, while at the same time trying to reduce the state taxes on slot machines by up to 10%.  The O’Malley rationale for the gambling tax cut is that it will produce more revenue by attracting more gambling investment.  Consider the irony that he does not apply the same reasoning to income tax rates.

Voters face a clear choice in November.  How can we expect the economy to thrive again relying on politicians who do not understand, or even respect private business?

Mark Uncapher
Montgomery County Republican Chairman