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Saturday, May 2, 2009

The Liberal Hour

Dick Cheney is often critical of President Obama, but on one issue we suspect the former Vice President has a grudging admiration: In a mere 100 days, the Democrat has silenced eight years of criticism about the Imperial Presidency. It is once again the liberal hour in American politics, and the media and political classes now see energy in the executive as a national asset.

[Review & Outlook] AP

Though we disagree with much of Mr. Obama's agenda, this turnaround has its benefits. A worried electorate wants to feel better about the country after the bitterness of the Bush years, and his cool confidence has lifted the public mood. He is a likable man who seems open to other arguments, even if he really isn't. His rise to Commander in Chief has sapped the war debate of its partisan animus, and he is now responsible for success or failure in Iraq and Afghanistan. He has made responsible decisions on both fronts.

We have our doubts about Mr. Obama's faith in diplomacy with enemies, but even here his first three months have had their uses. When Kim Jong Il broke his nuclear promises and tossed U.N. inspectors from North Korea in 2002, Democrats blamed President Bush. Now that Kim is doing the same despite Mr. Obama's open handshake, we know better. Our guess is that Mr. Obama's dalliance with Iran, Syria and other rogues will be similarly instructive, and we can hope the President draws the proper lessons before Iran goes nuclear. It's too early to know if Mr. Obama will turn out to be a tough-minded liberal internationalist, in the Tony Blair mode, or a naive globalist, a la Jimmy Carter.

On the home front, there can no longer be any such doubts. Mr. Obama talks the language of pragmatism, but his program has revealed a man of the left. He clearly views the financial crisis and the liberal majorities in Congress as a rare chance to advance the power of the state in American life. The only two comparable moments in the last century were 1965, which gave us the Great Society, and 1933, which bequeathed the New Deal. Mr. Obama's goals are at least as ambitious, resuming the march toward the European welfare state that was stopped by what Democrats like to call the Reagan detour.

His main method here is to make the federal government the guarantor of middle-class security. He wants to make a college education a new entitlement, regardless of the cost. He wants state-financed health-care available to all, even if it means jamming a $1 trillion bill through the Senate with 51 votes. And he wants a cap-and-trade tax that would punish the main current sources of U.S. energy and hand Washington a vast new source of revenue.

Oh, and by the way, he also wants to fix the financial system, run the auto industry, and build a nationwide, high-speed rail network. And on the seventh day, he rested.

What's striking is that Mr. Obama betrays no sense that maybe all of this isn't achievable, much less affordable, all at once. In contrast to Bill Clinton, he has abandoned any deficit concern, building in red ink of at least 4% of GDP for the next decade. And that's assuming the revival of rapid economic growth, and before counting the real cost of health care.

He claims to believe that the revenue to pay for this can be had merely by tapping the rich, as Democrats did during the 1990s, because he and his advisers assume that higher tax rates don't matter. But growth in the 1990s got going in earnest only after HillaryCare collapsed, Republicans took Congress and at least for a while spending was restrained and taxes were cut. The current arc of spending and taxes is only going up -- and to levels not seen in decades. The Obama program is going to test the liberal faith, not observed since the 1970s, that deficit spending and easy monetary policy are engines of prosperity. If they are wrong, then Mr. Obama will eventually find himself managing the politics of stagflation.

More troubling still is Mr. Obama's leap into managing major U.S. industries. Even the European left got out of the nationalization business as a loser after the 1970s. But the Obama White House and Treasury are nationalizing GM and Chrysler, expanding government's role in the mortgage markets, and widening their ownership of the U.S. banking system. The deeper they dig in, the harder they will find it politically to exit. And as economic policy, the mauling of GM bondholders, the banker-baiting on Capitol Hill, and the refusal to let even healthy banks escape the TARP won't revive animal spirits.

This last point may be more a matter of Mr. Obama's character than his ideology. One lesson from the first 100 days is that the President doesn't like to do things that are politically difficult, such as stand up to Congress. He has abdicated the writing of most legislation to liberal committee chairmen, at the cost of bipartisanship. This means that when he really needs Republicans -- on trade and national security -- they might not be there. And he has bent far too easily to his party's populists on AIG bonuses, Mexican trucks and interrogation memos -- even as they threaten to complicate his other priorities.

Mr. Obama is more popular than his policies, and sooner or later the twain shall meet. For now, we are living in another era of unchecked liberal government. The reckoning will come when Americans discover how much it costs.

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