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Assessing the gigantic new budget proposed by Barack Obama is hard enough, but the $3.6 trillion behemoth turns incomprehensible when left- and right-leaning journalists assigned to analyze it seem unable to separate wishful thinking from political reality.
An early skeptic about the left-handed phenom from Chicago, I’ve never had any illusions about Obama’s commitment to left-wing “change.” Yet that’s exactly what pundits across the political spectrum say Obama is putting forth.
Of course, we heard it all before in the Clinton administrations—“Ah know you voted for chaiinge”—but the change Clinton had in mind was realigning the Democratic Party to the right of center, where he could raise more money for his political campaigns. Millions were thrown off welfare—while millions of unregulated “derivatives” were hurled into the debt markets, anti-union, anti-labor “free trade” pacts were passed and a pre-emptive war was launched against Serbia without U.N. consent.
Now Obama, a product of the non-ideological Daley machine and advised largely by Clinton retreads, has presented what ought to be described as a cautious, centrist budget, albeit one with a huge deficit. Sure, it’s a lot of money, but given the severity of the recession, it’s hardly excessive. Indeed, such unradical liberals as Paul Krugman have criticized Obama’s pre-budget stimulus package as not being nearly aggressive enough.
The same could be said of the new budget, and yet “liberals” and “conservatives” alike insist that Obama has set into motion a bold leftward shift in thinking. From the official left, The Nation magazine calls the budget proposal “an audacious plan to transform America.” In the center, Clive Crook, of the staid Financial Times, calls the new budget “a liberal’s dream of a new New Deal” and Obama himself “conservatism’s worst nightmare.” On the official right, The Wall Street Journal warns ominously of “The Obama Revolution” and asserts that the president is “attempting not merely to expand the role of the federal government but to put it in such a dominant position that its power can never be rolled back.”
From these commentaries, you might think that a crypto-socialist had taken up residence in the White House. But such a reading of Obama is absurd.
First, the “soak-the-rich” aspect of the proposed tax changes is vastly overstated. Obama wants to reduce the deduction that top earners take on their charitable giving, but he timidly declines to raise the highest marginal-income-tax rate immediately, preferring to let the Bush tax cuts expire in 2011. Not until 2012 would the President’s rich Wall Street and corporate-executive campaign donors be forced to pay 39.6 percent on part of their income—hardly confiscatory when one recalls that the top marginal rate remained above 90 percent through both Eisenhower administrations and part of Kennedy’s. Similarly, the top rate on capital gains was as high as 36.5 percent during the Nixon/Ford era; Obama aims to raise it to just 20 percent from the current 15.
Fiddling with the tax code (not reforming it) is supposed to help pay for better health care. Already, Obama’s health plan doesn’t cover everyone, but it does ensure that insurance companies and HMOs will continue reaping profits off illness and bad luck. President Truman, hardly a radical left-winger, proposed authentic national health insurance in 1945 in the form of an optional, federally administered fund to which anyone could pay a modest monthly fee and be guaranteed payment of all their medical bills. Participating doctors would have been reimbursed by the government, but such participation was to be voluntary. Such a common-sense “single-payer” program is not even being considered by Obama and Democratic leaders.
Even so, left and right persist in the fantasy that the president is a Mr. Smith Goes to Washington character prepared to “take on” the powers that be. It’s one thing to rationalize the vast sums that Obama raised for his campaign from commercial and investment banks (“Well, you have to get elected,” etc.). But rationalizing the laissez-faire beliefs of Lawrence Summers and Timothy Geithner—exhibited most notably in their scandalous opposition to derivatives regulation in the Clinton administration—borders on the idiotic. The left pretends that Summers isn’t really Obama’s chief economic adviser, while the right pretends the former Treasury secretary has converted to left-wing Gaullism. In reality, Summers and Geithner are in place precisely to prevent real reform of a banking system that helped put Obama in the White House.
On budget matters, so far, Obama’s economic “brain trust” is brain-dead. Comparisons with FDR are spurious, given that the administration so far won’t even discuss restoring some form of Glass-Steagall, the New Deal law that separated investment banks and commercial banks. Meanwhile, Obama seems to have forgotten his proposed “reform” of NAFTA or of our cheap-labor investment agreement with China (so-called Permanent Normal Trading Relations). And he’s certainly not calling for higher tariffs to protect American industry and wages, or for bank nationalizations.
The Wall Street Journal’s Big Brother socialist bogeyman is a canard. There’s no authentic national economic planning in the Obama budget, just the usual hodge-podge of programs that sound good to this or that constituency, congressman or columnist.
Here’s one little bit of central planning that could have helped, but isn’t seriously addressed: rebuilding the nation’s passenger- and freight-railroad network, badly weakened by deregulation and mismanagement. The stimulus bill has $8 billion for high-speed rail lines and the proposed budget adds another $5 billion over five years. This is chump change compared with the cost of occupying Iraq and Afghanistan, and paltry next to the typical cost-plus Pentagon boondoggle.
Why not spend $50 billion on railroads? It would make the country more energy-efficient, put lots of people to work installing and upgrading track, and encourage General Electric to rehire the 1,200 people it just laid off at its locomotive plant in Erie, Pennsylvania. With faster, better trains (including urban rapid-transit lines), American companies could get back into the passenger-train-car building business, now lost to Canada and Europe, and American steel mills could profitably use some of its excess capacity.
Obama, a moderate with far too much respect for the globalized financial class, is surely the unleft, unradical president. Which makes you wonder why left and right find common cause in saying otherwise.
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