Elections matter. And they matter most when a party on one side of the political and ideological spectrum succeeds a rival on the other side of the spectrum. Any doubt that just such a shift occurred in America in 2008 was dispelled when the Obamas put their fashion stamp on the Bushes’ Texas-style White House. Barack Obama promised at his first inauguration to transform America to a society more in line with liberal—I believe “progressive” is the word of choice these days—policies, and made huge progress towards that objective during his first term, converting the health care system to a government-run operation, reviving and applying Keynesian anti-recession nostrums, and expanding the welfare state.
Always, however, keeping in mind the need to seek reelection in a country more or less evenly divided between left and right. That moderation-inducing restraint now behind him, Obama has made clear where he plans to take the nation’s economy. And by forcing the Republican opposition to back down in the battle of the fiscal cliff, and again in the battle over the debt ceiling, the president has demonstrated, at least to his own satisfaction and that of his supporters, that he is astride the political field, if not quite like a colossus, at least like a man who can finish the job of transforming the economy into one more to his liking.
Those who have been complaining about uncertainty, and its negative effects on economic growth, need complain no more. You don’t have to read between the lines of the president’s second inaugural address, or consult your favorite pundit, to know where we are headed: you need only to have listened to or read the address itself.
Times have changed so that our “founding principles” must be applied to meet “new challenges.” That means a greater reliance on “collective action”—government—to make certain that “a shrinking few” do not claim a disproportionate share of the nation’s wealth at the expense of a struggling middle class and the poor. What the president’s inaugural address lacked in the grandeur of those of many of his predecessors it amply made up for with candor.
Top of the agenda is reducing income and wealth inequality by raising taxes on upper income families by eliminating some of the deductions from which they benefit, and raising their tax rates. Obama believes what economists of the Left have been telling him, that inequality is not only in some sense unfair, but that it also stifles economic growth by denying middle class and poor families incomes they would spend and the richer would not. Never mind whether this makes sense: it represents a position increasingly trumpeted by respected academic and activist economists, and attractive in an era of frozen middle-class incomes.
Then comes restructuring the energy sector as part of a fight to prevent “climate change,” the existence of which the president believes to be beyond question. This will require more subsidies to solar energy and to wind farms, both of which energy sources have proved wildly uneconomic here and abroad, and creation of barriers to the development of the nation’s abundant fossil fuel resources. All to be accomplished by administrative regulations rather than by seeking congressional approval.
As for the deficit, worry not. We can afford existing entitlement programs that protect children and the elderly without running the risk of over-borrowing and defaulting on our mounting debts. Which is certainly true, since if investors decide that they are no longer willing to lend us $40 for every $100 we spend, we can run the presses, and pay off our debts with a depreciated currency, something that troubles our Chinese creditors. That would continue the massive wealth transfer now underway from creditors—savers and investors, victims of the zero-interest policy being pursued by the monetary policy gurus at the Federal Reserve Board—to debtors who will be able to repay their creditors with cheap money.
Before you view this as an attack on the president, let me assure it is not. It is intended as a description of the president’s plan to transform the economy—a plan that is coherent, has a clearly stated goal (expanding the role of government), with the means of its implementation (administrative action and criminal prosecutions) already in place. It is attractive to a majority of voters, some pursuing self-interest, others believing that Obama’s America will be a kinder, gentler place.
Conservatives have no equally coherent vision on offer, at least not one likely to attract massive voter support. Conservatives of an earlier day could not accept the changes introduced by Franklin Roosevelt’s New Deal, and wandered the political wilderness predicting the end of the world, at least as they knew it, rather than attempting to see how the liberal reforms of FDR could be made to work more efficiently in a capitalist system. So, too, many of today’s rightish politicians, with the honorable exceptions of such as Paul Ryan. Rather than recognizing that the some of the transformations proposed by Obama might make the banking system more responsive to the needs of consumers and the economy, most conservatives speak wildly of repealing the Dodd-Frank reform law. Rather than recognizing that there are aspects of Obamacare that a decent society might find acceptable, some conservatives plot its repeal. Rather than recognizing that rising income inequality is indeed a problem, and suggesting solutions other than redistributive taxes, conservative politicians shout “no, never” to tax increases they do not have the political power to prevent. Rather than recognizing that a properly functioning capitalist economy requires action to preserve competition, they rail against antitrust enforcement.
So we can see the shape of the America Barack Obama will leave to his successor, his legacy. Those among us who believe that incomes are now unfairly distributed to favor the rich, will see a fairer America. Those who believe the globe is warming, will happily see a greener America, with lower carbon emissions. Those who believe that government does not spend, but “invests,” will view with equanimity the $20 trillion debt that Obama will leave to his children and ours.
On the other hand, those who believe that taxing high earners stifles innovation and hard work; that forced use of inefficient energy sources will drive up costs and make the nation less competitive; that printing money will lead to inflation; and that governments allocate resources less efficiently than profit-seeking individuals, will spend the next four years figuring out how to elect a president who shares their worries and can stop the liberal drift, even if unable to reverse it. Their task might be a bit more likely to succeed if they injected a bit of “neo” into their conservatism.