Obama's Left Turn:Centrists fear that the president's budget reveals his liberal leanings
National Journal ^ | March.7, 2009 | Stuart Taylor
Posted on Friday, March 06, 2009 11:18:35 AM by Reagan Man
Having praised President Obama's job performance in two recent columns, it is with regret that I now worry that he may be deepening what looks more and more like a depression and may engineer so much spending, debt, and government control of the economy as to leave most Americans permanently less prosperous and less free.
Other Obama-admiring centrists have expressed similar concerns. Like them, I would like to be proved wrong. After all, if this president fails, who will revive our economy? And when? And what kind of America will our children inherit?
But with the nation already plunging deep into probably necessary debt to rescue the crippled financial system and stimulate the economy, Obama's proposals for many hundreds of billions in additional spending on universal health care, universal postsecondary education, a massive overhaul of the energy economy, and other liberal programs seem grandiose and unaffordable.
With little in the way of offsetting savings likely to materialize, the Obama agenda would probably generate trillion-dollar deficits with no end in sight, or send middle-class taxes soaring to record levels, or both.
All this from a man who told the nation last week that he doesn't "believe in bigger government" and who promised tax cuts for 95 percent of Americans.
The president's suggestions that all the necessary tax increases can be squeezed out of the richest 2 percent are deceptive and likely to stir class resentment. And his apparent cave-ins to liberal interest groups may change the country for the worse.
Such concerns may help explain why the Dow Jones industrial average plunged 17 percent from the morning of Inauguration Day (8,280) to its close on March 4 (6,876). The markets have also been deeply shaken by Obama's alarming failure to come up with a clear plan for fixing the crippled financial system -- which has loomed since his election four months ago as by far his most urgent challenge -- or for working with foreign leaders to arrest the meltdown of the world economy.
The house is burning down. It's no time to be watering the grass.
This is not to deny that the liberal wish list in Obama's staggering $3.6 trillion budget would be wonderful if we had limitless resources. But in the real world, it could put vast areas of the economy under permanent government mismanagement, kill millions of jobs, drive investors and employers overseas, and bankrupt the nation.
Meanwhile, liberal Democrats in Congress are racing to gratify their interest groups in a slew of ways likely to do much more harm than good: pushing a union-backed "card-check" bill that would bypass secret-ballot elections on unionization and facilitate intimidation of reluctant workers; slipping into the stimulus package a formula to reimburse states that increase welfare dependency among single mothers and reduce their incentives to work; defunding a program that now pays for the parents of some 1,700 poor kids to choose private schools over crumbling D.C. public schools; fencing out would-be immigrants with much-needed skills.
Not to mention the $7.7 billion in an omnibus spending bill to pay for 9,000 earmarks of the kind that Obama campaigned against: $1.7 million for research on pig odors in Iowa; $1.7 million for a honeybee factory in Texas; $819,000 for research on catfish genetics in Alabama; $2 million to promote astronomy in Hawaii; $650,000 to manage beavers in North Carolina and Mississippi; and many more.
Meanwhile, the stimulus package is stuffed with spending such as "the $88.6 million for new construction for Milwaukee public schools, which, reports the Milwaukee Journal Sentinel, have shrinking enrollment, 15 vacant schools, and, quite logically, no plans for new construction," in the words of conservative columnist Charles Krauthammer.
Obama can take credit for keeping campaign promises (which he might have been wiser to defer) on health care, energy, and more, and for ending some of George W. Bush's budget gimmickry. But he has been deceptive in basing his deficit projections on phantom expenditure cuts and wildly optimistic revenue estimates, and in proclaiming "a new era of responsibility" to be paid for by raising taxes only on "the wealthiest 2 percent of Americans."
The numbers don't add up -- and still won't if and when, as seems almost certain, Obama ratchets up his so-far-fairly-modest new taxes on the top 2 percent. "A tax policy that confiscated 100 percent of the taxable income of everyone in America earning over $500,000 in 2006 would only have given Congress an extra $1.3 trillion in revenue," according to a February 27 editorial in The Wall Street Journal. "That's less than half the 2006 federal budget of $2.7 trillion and looks tiny compared to the more than $4 trillion Congress will spend in fiscal 2010. Even taking every taxable 'dime' of everyone earning more than $75,000 in 2006 would have barely yielded enough to cover that $4 trillion."
As for the budget's $2 trillion in projected net "savings," Obama's budget director, Peter Orszag, admitted in testimony on Tuesday under questioning by Rep. Paul Ryan, R-Wis., that $1.6 trillion comes from phantom cuts of the money that would be needed to sustain the troop surge in Iraq for another decade -- money that nobody ever intended to spend.
Other supposed savings -- especially from Medicare -- seem unlikely to materialize absent benefit cuts, which Obama has not proposed. And the cost of any health care legislation -- to be drafted largely by a Congress that is allergic to the kind of cost-cutting necessary to make universal care sustainable -- is likely to be two or three times the $634 billion over 10 years that Obama has budgeted.
Meanwhile, "politics trumps economics" in Obama's housing program, says Washington Post columnist Robert Samuelson. It targets tax credits narrowly on first-time homebuyers with weak credit ratings while creating few incentives for the more affluent and credit-worthy people who have the collective buying power to revive the housing market. Obama also supports a "cram-down" proposal -- authorizing bankruptcy judges to unilaterally cut distressed homeowners' payments -- that would be hopelessly unadministrable at best and might drive up mortgage rates.
Small wonder that liberal commentators who complained about Obama's initial stabs at bipartisanship are ecstatic about his budget. And small wonder that some centrists who have had high hopes for Obama -- including New York Times columnist David Brooks, my colleague Clive Crook, David Gergen, and Christopher Buckley -- are sounding alarms.
In a March 3 column headed "A Moderate Manifesto," Brooks wrote: "Those of us who consider ourselves moderates -- moderate conservative, in my case -- are forced to confront the reality that Barack Obama is not who we thought he was. His words are responsible; his character is inspiring. But his actions betray a transformational liberalism that should put every centrist on notice.... The only thing more scary than Obama's experiment is the thought that it might fail and the political power will swing over to a Republican Party that is currently unfit to wield it.... [We] thus find ourselves facing a void. We moderates are going to have to assert ourselves. We're going to have to take a centrist tendency that has been politically feckless and intellectually vapid and turn it into an influential force."
Exactly right, except perhaps the "intellectually vapid" part. But turning centrist values into an influential political force will take some doing. Although almost 30 percent of Americans call themselves political independents, the political and intellectual classes are so ideologically polarized that resurgent Democratic liberals and wounded Republican conservatives get most of the media attention.
With the Republican Party in ruins and dominated by such hard-right conservatives as Rush Limbaugh, no center-right figure on the scene today has the stature to lead a loyal opposition against a popular president who puts a moderate face and an eloquent voice on an ambitiously liberal ideology.
Fortunately, a dozen or so centrist Democrats in the Senate are voicing concerns about the more profligate spending proposals. Together with the Senate's three centrist Republicans, they could hold back the liberal tide and appeal to the more moderate angels of Obama's nature.
I still hold out hope that Obama is not irrevocably "casting his lot with collectivists and statists," as asserted by Peter Wehner, a former Bush aide and a leading conservative intellectual now with the Ethics and Public Policy Center, in Commentary magazine's blog Contentions.
And I hope that the president ponders well Margaret Thatcher's wise warning against some collectivist conceits, in a 1980 speech quoted by Wehner: "The illusion that government can be a universal provider, and yet society still stay free and prosperous.... The illusion that every loss can be covered by a subsidy. The illusion that we can break the link between reward and effort, and still get the effort."
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THE RATS ARE LEAVING THE SHIP!
