The price of the “uncertainty tax”

By Tom Quiner

1. “I won, you lost.”

2. “What does it matter now”

3. “We’ve got to pass the bill to find out what’s in it.”

I rank these three statements at the top of my unofficial list of The Most Arrogant Statements of the Obama years. [It is a long list. Which statements would you like added to the list?]

Mr. Obama famously ran as a uniter, as the man who would “reach across the aisle” and achieve consensus.

It was all a bunch of hooey. During the Obamacare negotiations, he famously uttered statement number one above. There would be no consensus. There would be no reaching across the aisle. It was “my way, or the highway.”

Hillary Clinton is the author of statement number two. She made the pronouncement during her testimony about Benghazi. Her deceit; the administration’s deceit; the death an American ambassador and other Americans DOES NOT MATTER, because the past is the past.

Ms. Clinton may never live that statement down.

But it is statement number three that interests me in light of ongoing economic stagnation during the Obama years. Nancy Pelosi famously said we’d have to pass the 2700 page Obamacare legislation to learn what is in it.

Three years later, we’re still not sure what’s in it. Uncertainty is a tax on the economy.

The Obama presidency has created more uncertainty than any recent presidency. We have uncertainty over pending government regulations; debt ceilings; budgets; monetary policy; foreign policy.

Bill McNabb wrote in the Wall Street Journal day how much this “uncertainty tax” costs us. Mr. McNabb is chairman and CEO of the Vanguard Group. He tells us uncertainty changes investment patterns. Business owners don’t know future costs, so they sit on their cash instead of investing in growth which involves hiring new people.

Investors sit on their money.

As a result, economic growth takes a hit. Mr. McNabb gets specific on the cost to each of us:

“Three economists, Stanford University’s Nicholas Bloom and Scott Baker and the University of Chicago’s Steven Davis, have done invaluable work measuring the level of policy uncertainty over the past few decades. Their research (available at shows that, on average, U.S. economic policy uncertainty has been 50% higher in the past two years than it has been since 1985.”

We’ve had divided government over the past 28 years, but we’ve never had a Barack Obama who has polarized politics like no president in recent history, not even George W. Bush or Bill Clinton.

How much has the uncertainty tax cost us? GDP took a one percent hit, says McNabb:

“We estimate that since 2011 the rise in overall policy uncertainty has created a $261 billion cumulative drag on the economy (the equivalent of more than $800 per person in the country). Without this uncertainty tax, real U.S. GDP could have grown an average 3% per year since 2011, instead of the recorded 2% average in fiscal years 2011-12. In addition, the U.S. labor market would have added roughly 45,000 more jobs per month over the past two years. That adds up to more than one million jobs that we could have had by now, but don’t.”

Mr. McNabb presents the solution along with a warning:

“The key is to provide clarity to businesses, financial markets and everyday savers and investors. Make no mistake: A comprehensive, long-term, binding plan that brings the budget into balance over a reasonable time frame is essential. If Washington fails to achieve one, the consequences will be harsh.”