President Barack Obama!
It is very intuitive that the spectacular deluge of regulations and taxes unleashed on US industry by the 44th President would be extremely detrimental to business and grind our economy to a near stop. The last time we saw a massive tax increase and regulatory takeover of the economy in the face of a recession was under Herbert Hoover in 1932. It would take the greatest war the world has ever seen to pull us out of the depression that resulted. If you need an illustration of how taxes and regulation hurt the economy, consider the following example from the med tech industry:
Lets say you are a running a small medical device company trying to survive in our so-called “free” country. It costs you between $35 million and $90 million to get a new device approved for use in the US. It also takes you between 5 and 10 years of R&D and regulatory to get FDA approval and there is well over a 75% chance that your company will fail along the way (run out of cash, the device doesn’t work, a test subject has a lawyer relative, etc). You watch as an unregulated low-cost internet industry takes over the VC community that used to fund medical technology ventures. Your life is one of regulatory and financing hell and your family hates you because there is a good chance that the next bump in the road will be the end of your company. The only humor in your life is a sad chuckle when you hear a delusional acquaintance say that it’s the NIH that actually ”invents” things. You stay focused on the supposed pot of gold that waits for you at the other end of the minefield you’ve chosen to navigate.
Now imagine if, in addition to your woes, the President and Democratic congress declare an all-out war on your industry. The FDA is given a “stonewall mandate” as internal whistleblowers are unleashed on the agency to root out any industry friendly regulators and blackball privileges are given to even low ranking officials. Taxes are promised to be raised 33% on investment capital which will not only drain the pool of financing you need, but steer it even further towards low-cost unregulated alternatives like a college programmer with a hot idea. Mid-tier med tech companies that might buy yours are run out of the nation or swallowed up by bigger companies because their small margins can’t take the special med tech tax in Obamacare (2.3% of revenues can look a lot more like 23% at the bottom line). That same Obamacare med tech tax (used as Chicago-style punishment to the industry for not supporting Obamacare) drains billions of dollars from the pot of gold (med tech acquisition budgets) that you and other small med tech companies look to for cashing out after all the hard work. Now you are competing with the other companies for a much smaller exit value, much like the animals in a nature special surrounding a small African watering hole during a drought… And then your elected representatives in government add “comparative effectiveness studies” to the list of things your diminished money supply will somehow have to pay for. These are studies that could stop most groups from compensating your technology, even if it somehow gets through the Obama FDA. You have to show that your technology is cost-effective… unlike nearly any technology right after launch before economies of scale can bring the price down! At what point do you fold up shop and/or leave the country?
Am I being overdramatic? Look around you. Pick up the paper. What do you see? And this is before the real regulations are slated to kick in…
Here is an example of one such company:
This next company obviously doesn’t have a lot of faith in what Obamacare will do for our markets. If only the CEO had a chance to talk to the president about it…
It is hard to imagine that this the same country of 20 or even 10 years ago. In my youth, there was a worry that the Russians would invade the US and replace freedom with socialism at the point of a gun. The man who brought down the Red Army warned us it would happen another way, and only take a generation to accomplish: