Now let’s move to the real debate. You don’t have to succumb to ideological fever or paranoid fantasy to see that the Obama administration is dragging America to the wrong future: a future of higher taxes and reduced freedom, a future in which entrepreneurs will innovate less and lobbyists will influence more, a future in which individuals and communities will make fewer choices for themselves and remote bureaucracies will dictate more answers to us all.
The intentions are not malign. But it’s not intentions that matter—it’s results.
You begin to see those results in the small hearing rooms in which Social Security disability cases are decided. In the months since the financial crisis, the Social Security Administration has been awarding more and more disability pensions: almost 100,000 in the last month of 2011, 50 percent more than before the financial crisis.
Not much surprise there. Applications for disability have jumped even more steeply. It’s not very likely that Americans are suddenly suffering a lot more accidents than they used to suffer, back when many more of them were working. More likely: with unemployment higher, more people are seeking help—and with jobs scarce, more judges are saying yes.
It’s easy to sympathize with the thinking of the individual Social Security judges. Here’s a worker who has lost her job as a forklift operator. Five years ago, a judge might have told her: forget the pension, Walmart is hiring. But now Walmart isn’t hiring—or anyway, not hiring enough. So the judge relents. Why not give the applicant just a little something? An extra $12,000 a year (the size of the average award) won’t break the federal budget. The country can figure out later how to pay for it. Which is how it happened that we’re on the verge of enrolling the 9 millionth American on disability—almost double the number of the late 1990s.
Of course, as the federal government manages more and more disability pensions, it must hire more judges and administrators to hear and process those requests. Employment at the Social Security Administration is up by more than 6,000 since 2007, or 10 percent. In fact, hiring is up across the federal government, by 15 percent since 2007. Federal hiring has been more than offset by layoffs at the state and local level. But when the economy recovers, as it will, the states and localities will hire again—and at the rate we’re going, an upswing in state and local hiring won’t be balanced by commensurate reductions in federal staffing.
You don’t have to vilify President Obama as a Kenyan socialist to recognize that his policies are reorienting the country toward more dependence on the federal government. Through most of the past half century, the federal government has spent about one dollar in five of national income. Right now, it’s spending about one in four. If Barack Obama is reelected and his policies are continued, that one-dollar-in-four ratio will harden into permanent reality, on the way to one dollar in three, with state and local spending on top of that.
Every president since the late 1970s has struggled to contain the growth of government, Democrats as well as Republicans. Jimmy Carter battled Democrats in Congress to stop wasteful construction projects. He signed the deregulation of airlines, trucking, and rail. Bill Clinton announced that “the age of big government is over,” signed welfare reform, and accepted budgets that reduced government spending as a share of national income.
Barack Obama is the first president since Lyndon Johnson to push aggressively for bigger and more interventionist government—and not merely as an emergency measure against the recession.
Look at the president’s energy policy, for example. We need to reduce our use of oil; every president since Richard Nixon has agreed to that. We know how to do it, too: raise the price. When oil prices jumped in the late 1970s, American oil use tumbled. As late as 1995, Americans were using less oil than in 1978. Not less per person. Less oil, period.
When oil prices jumped in the 2000s, Americans again changed their behavior. For the first time in a century, they drove fewer miles, year over year.
Want to reduce oil use even more? Tax it, and then let Americans decide for themselves how to conserve: whether to move closer to work, invest in a hybrid car, or buy fewer consumer products shipped from half the world away.
Instead, Obama has resorted to direct intervention in the energy marketplace. Solyndra, the failed solar-energy company that got $500 million–plus in direct government aid, is one example. Maybe a more important one is the Keystone pipeline from Canada, canceled to conciliate the president’s environmental backers. Those backers apparently prefer to change consumption habits by brute force rather than through the mechanisms of the market, as we can see from their thus-far-successful efforts to scuttle oil projects one by one—drilling in Alaska, drilling in the Gulf of Mexico, Keystone.
You see the same reliance on brute force, not market force, in health care. I am one of the few Republicans who will still defend the Heritage Foundation’s idea of regulated insurance exchanges in which customers are mandated to buy pri-vate insurance, with subsidies for those who need subsidies: Romneycare, in a word. Leaving tens of millions of Americans uninsured is both inhumane and inefficient.
But it is striking that the main engine of coverage expansion under the president’s health-care reform is actually not the mandate you hear so much about. The Congressional Budget Office projects that half of all the net gain in insurance coverage under the president’s health-care proposal will be due to higher enrollment in government programs: Medicaid and the CHIP program for poor children.
Even before Obama took office, half of all the health-care dollars spent in the U.S. were spent by government in one way or another. We’re on our way to government spending much more. And that means that health-care cost control—also urgently needed—will not come via market competition. It will come by direct government order.
Why does the president so favor the expansion of government? There’s no need to resort to paranoid theories. In his characteristically lucid way, he has already told us.
In December, Obama traveled to the Kansas town of Osawatomie to deliver one of the most important speeches of his presidency to date. There he poignantly described the dimming prospects of the American middle class—and then offered the following policy response: “The over 1 million construction workers who lost their jobs when the housing market collapsed, they shouldn’t be sitting at home with nothing to do. They should be rebuilding our roads and our bridges, laying down faster railroads and broadband, modernizing our schools—all the things other countries are already doing to attract good jobs and businesses to their shores ... Of course, those productive investments cost money. They’re not free. And so we’ve also paid for these investments by asking everybody to do their fair share.”
In other words, the president is championing a more active government, not as a way to meet social needs but as a permanent and growing source of middle-class employment. Some of us will work directly for the public sector. Others will be contractors. Either way, many more of us will be working in jobs from which it will be difficult to fire us—and where the government sets more of the terms of employment.
Something like this approach was tried in Britain under the Labour governments of Tony Blair and Gordon Brown. Between 1997 and 2008, Blair and his successor Brown used rapidly rising government revenues to finance new public-sector jobs in depressed old industrial areas. Over the decade, the public sector provided more than half of all the net new jobs in three of the four main economic regions of England—and 80 percent of the net new jobs for women.
They piled more and more taxes on a smaller and smaller slice of the economy. Meanwhile, the expanded public sector did not spark the benefits it was supposed to. The depressed areas remained depressed. The gap between rich and poor grew instead of shrinking.
Obama becomes impatient when his policies are compared to Blair’s or Brown’s. But it’s hard to see the basis for that reaction. A reelected President Obama would want to see the Bush tax rates lapse, federal revenues rise, and the proceeds used to fund a permanently higher level of federal spending and government employment.
Conceded, this president inherited the worst economic disaster since the 1930s. The recession was not his fault. But he did have options in his response, and too often he chose wrongly.
The national government has two main tools against recession: fiscal policy and monetary policy. This president has wielded both tools weakly.
People argue over the size of the president’s fiscal stimulus, but the real problem was its shape. Only about one dollar in eight out of the nearly $800 billion stimulus was devoted to the most effective form of anti-recession spending: infrastructure.
Where did the rest go? About one third took the form of tax rebates, notoriously the most useless form of fiscal stimulus. Members of the Obama administration like to blame Republicans for forcing these rebates upon them, but that’s not right. During the presidential campaign, candidate Obama had sought votes by promising a “tax cut for everyone earning less than $250,000 a year.” He welcomed the tax rebates as a means to honor that (now obsolete) campaign promise.
Meanwhile, Democratic members of Congress were dusting off antique wish lists and relabeling their wishes as “stimulus.” The president deferred to too many of them. Which is how it happened that the fiscal stimulus came to include such measures as $15.8 billion in extra Pell-grant spending and $12.2 billion in extra spending on education for the disabled. Maybe good ideas, maybe not—but in no sense economic stimulus.
The president does not direct monetary policy. But he does nominate the members of the Federal Reserve Board. Through much of his first term, that seven-member board was riddled with vacancies, sometimes lacking even a quorum for emergency action. Yes, senatorial obstructionism made it difficult for Obama to fill those slots. But senators obstruct all the time. The statement “The Senate wouldn’t let me” sounds very like “This job is too hard for me.”
The Federal Reserve acted boldly in 2008–09, then grew cautious in 2010. Not so coincidentally, the pace of recovery slowed soon after, not to accelerate until the Fed resumed easing at the end of 2010.
Yes, of course there are Obama accomplishments, especially in foreign policy. Bin Laden is dead, the Libya war ended well, and sanctions against Iran are biting hard. Ironically, many of the most important achievements in terrorism come from continuing policies inherited from George W. Bush, including the big expansion of presidential national-security powers. On this, the president’s left-wing critics are accurate on the facts, even if they are wrong on policy.
But along with those successes go equally important disappointments—equally core to this president’s record.
During the campaign of 2008, Obama vowed a much bigger commitment to Afghanistan. He kept his promise. And what does the U.S. have to show for its redoubled war there? Precious little, if anything at all.
By contrast, in Iraq the administration does have something to show for its efforts, including more oil production than at any time in the past 20 years, with more to come in the months ahead. Here the policy of almost total U.S. withdrawal threatens to destabilize all that has been accomplished, admittedly at severe cost.
Over all these challenges and uncertainties looms a gathering foreign-policy disaster exactly where Obama assumed he would have the most positive impact: in Europe, where the world is threatened with a second financial catastrophe in the space of four years—this time the collapse of the euro currency.
America urges and demands that Germany do what must be done to save the euro: a deal whereby the European Central Bank would buy bonds from deficit countries like Spain and Italy in exchange for tighter controls over future borrowing by such countries. Germany refuses, for its own domestic political reasons. And Obama, who once told a crowd of 200,000 in Berlin’s Tiergarten that Germans and Americans had “learned to work together and trust each other,” now finds his hopes of reelection dangling over Germany’s unwillingness to work with or trust his administration’s ideas for saving Europe from itself.
Yes, much of the criticism of the Obama administration has been hysterical and deluded. Yes, many of the attacks on the president and his family have been ugly and hateful. But in rejecting the extremism of some critics, we shouldn’t race to the opposite and equally invalid extreme of denying all criticism.
There is much to admire in Barack Obama the man. But his presidency, especially on the domestic front, has been a bitter disappointment to almost everybody—perhaps above all to those who most desperately needed help from the government he led. It’s time for a new way forward.