Where Obama Will Spend His Political Capital?

President Obama came into office with a big agenda. He wanted to end the Iraq war, introduce a Cap & Trade environmental reform program, reform health care, cut taxes on all but the wealthiest among us, and stimulate alternative energy production. His message of hope and change was powerful enough to make it a real possibility that such major changes could take place. But then the economy fell apart.

In the face of an economy that was imploding on multiple levels, our president chose to start spending government money. He sent money to bail out the auto industry, the first wave of home foreclosures, the financial industry, the insurance industry, and the construction industry. Each of these bailout plans had a huge price tag associated with it, and when summed up that magical number has passed $10 trillion. (Just in case you are in doubt about these numbers, check out the national debt clock at http://www.usdebtclock.org/, it promises to blow your mind.)

The bailout money has not had time to work yet, so the results are difficult to predict. We may have seen the worst and are beginning a long, slow climb out of trouble. On the other hand, we may be experiencing a suckers' rally that will drop us off a cliff. No one knows for sure. But what we do know for sure is how much debt the U.S. has taken on in this attempt to mend the economy. And just like any other entity capable of taking on debt, the U.S. government will have to pay up.

In the background we have seen the Cap & Trade legislation die a slow and quiet death. Both political parties saw it as a new tax, and killed it in short order. This created a new problem for our president. You see, the Cap & Trade tax was supposed to pay for the new health care reforms, and now there is no money for health care. So the president has been forced to take a new angle on the problem, saying that health care reform is important enough to justify even more government debt. The administration is in a mad rush to pass such reform in the next 8 months before "other issues" become primary.

These "other issues" that are about to become the primary focus are charging at the Obama administration like a mad bull; tax increases for all. That's right, everyone, the rich and the poor, are going to have to deal with higher taxes very soon. There is simply no way around it. The basic truth is that taxation must be equal to the amount of government spending, there is no other way for a government to fund itself (apart from printing money, which we are trying as well). So taxes must be raised in order to cover the trillions of dollars of bailout expenditures. Period.

Explaining these tax increases will require every bit of political capital president Obama has. His reforms will suffer. His agenda will change. And all the while, taxes will increase. Taxes on beer, cigarettes, income, real estate, sales, vehicles, fuel, food, health care, telecommunications, mail, charitable donations, savings, investments, clothes, and on and on and on and on...

Paying up will be painful, and could very well cost president Obama the office he recently won. At the end of the day there just aren't enough "wealthy" citizens to cover the tab, and everyone else who has been promised a tax break may struggle with the reality that our economic crisis is something we must all pay off for years to come. The very real political danger that our president faces is the notion that the change he brougth us is a change towards higher taxes, and that is not a platform that gets a politician re-elected.