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By PETER FERRARA
February 11, 2009
In his inaugural address, President Barack Obama said, "The question we ask today is not whether our government is too big or too small, but whether it works -- whether it helps families find jobs at a decent wage, care they can afford, a retirement that is dignified." Or as administration spokeswoman Stephanie Cutter said in January, the touchstone is, "What will have the biggest and most immediate impact on creating private sector jobs and strengthening the middle class? We're guided by what works, not by any ideology or special interests."
Unfortunately, this rhetoric is not true. Mr. Obama's economic policy is following not what has been proven to work but liberal ideology.
The best way to understand this is to compare what's being proposed now with what Ronald Reagan accomplished. In 1980, amid a seriously dysfunctional economy, Reagan campaigned for president on an economic recovery program with four specific components.
The first was across-the-board reductions in tax rates to provide incentives for saving, investment, entrepreneurship and work. The second component was deregulation to remove unnecessary costs on the economy. In today's world, that would especially mean removing the onerous restrictions on energy production -- allowing drilling offshore and onshore for oil and natural gas, revival of the nuclear power industry, and construction of more electric power plants.
Third was the control of government spending. In 1981, Reagan forced through Congress not only his famed, historic tax cuts, but also a package of budget cuts close to 5% of the federal budget -- equivalent to roughly $150 billion today. In constant dollars, nondefense discretionary spending declined by 14.4% from 1981 to 1982, and by 16.8% from 1981 to 1983. Moreover, in constant dollars, this nondefense discretionary spending never returned to its 1981 level for the rest of Reagan's two terms. By 1988, this spending was still down 14.4% from its 1981 level in constant dollars.
Even with the Reagan defense buildup, which helped win the Cold War, total federal spending declined to 21.2% of GDP in 1989 from 23.5% of GDP in 1983. That's a real reduction of 10% in the size of government relative to the economy.
The fourth component of the Reagan recovery plan was tight, anti-inflation monetary policy, which was spectacularly successful. Inflation was cut in half to 6.2% in 1982 from 13.2% in 1980, and cut in half again to 3.2% in 1983.
We know such policies work because they turned around in just two years an economy far worse than today's. We were suffering from multiyear, double-digit inflation, double-digit unemployment, double-digit interest rates, declining incomes, and rising poverty. In fact, what we suffer with today is not the worst economy since the Great Depression, but the worst economy since Jimmy Carter -- the last time liberals were dominant politically and intellectually.
The Obama administration's economic policies do not include any of the four Reagan components. In fact, the stimulus plan is the greatest increase in government spending in the history of the planet. Meanwhile, the Fed is furiously reinflating, sowing more havoc down the line. Mr. Obama is still promising future increases in tax rates by letting the Bush tax cuts lapse, because for ideological reasons he thinks even current rates are too low. And instead of deregulating for more energy production, he is still promising massive increases in regulatory barriers -- through global warming cap-and-trade legislation -- to increased production from proven energy sources to serve an extreme environmentalist ideology.
This is why America seems so hopeless right now, and so depressed. We are stuck going in exactly the wrong direction on economic policy because of currently dominant ideological fashions.
A natural economic recovery will begin sometime this year, not because of the president's policies, but because soon this will be the longest recession since World War II. However, thanks to the administration's retrograde policies -- cut from the cloth of the 1970s and even the 1930s -- the recovery will not be what it should be. Rather, unemployment will remain too high, and inflation will resurge, recreating the disastrous economic results we suffered the last time Keynesian policies were dominant.
Mr. Ferrara is director of entitlement and budget policy for the Institute for Policy Innovation. He served in the White House Office of Policy Development under President Reagan.
By James Lewis
February 04, 2009
By their actions ye shall know them. By now we are seeing an ominous pattern of actions by the O administration. We know that President Obama is a very slick liar indeed, but then so was Bill Clinton. But Clinton had a smaller majority in Congress, and was forced to compromise after the Gingrich Congress was elected in 1994. It is still possible that Obama may turn toward the mainstream. But the early omens look dark.
Foreign and military affairs
There is a reason why Israel s voters are suddenly turning to the center-Right Netanyahu and Likud. They fear that for the first time since Harry Truman, an American administration is turning against the Jewish State. Obama s first phone call after the election was made to Mahmoud Abbas. His first television interview was with Al Arabiya. The appointments of Samantha Power and Susan Rice bode ill for the entire Middle East. A meeting with Hugo Chavez -- to negotiate what, exactly? Forthcoming recognition of radical Islamofascist Iran on their terms, not ours, are all ominous straws in the wind. Richard Holbrooke has just infuriated two crucial governments in Pakistan and Afghanistan, by predicting their doom, and still was appointed special envoy to those governments.
The O's just announced a 10% cut in the planned increase* in the defense budget, while the overall budget deficit has just risen by two trillion dollars. That may signal a Carteresque drawdown in our burdened military. This is not the time to lower our guard, but like Jimmy Carter, the O administration is betting against history.
We now know that in violation of Federal law, the Obama campaign started negotiations with Iran, Syria and perhaps Hugo Chavez long before American voters elected O. That flagrant disregard for the law and for simple propriety signals a radical turn Left. If that is accurate, expect the Obama administration to start a scapegoating campaign against Binyamin Netanyahu if he becomes Prime Minister. That would be the first time that any American administration has turned against an elected leader of a vigorous, pro-American democratic ally. The voters in Israel may be preparing to go it alone if necessary. It would be difficult, but it can be done.
Flunking Econ 101
The O administration has some sensible economic voices, but they don't seem to carry much clout. Larry Summers is fairly mainstream, Robert Reich is turning radical, and Paul Krugman is a hair-pulling wild man. The so-called stimulus bill is pure political payoff to Democrat city machines, the teachers' unions, and faithful leftwing armies like ACORN. Those 1.17 trillion dollars are not designed to stimulate normal economic activity, defined as products and services that Americans want and will work for -- which is what "supply and demand" really means, after all.
The economy is one gigantic incentive machine. Take away the incentive value of work and buying things, and yes, you will get a very bad recession. And no, Nancy Pelosi has it wildly wrong by arguing that more subsidized birth control means more wealth per person, for those who are actually born. The administration is even ignoring the first-grade lessons of the Smooth-Hawley with its buy-American provisions in the House bill. Suddenly alarmist headlines are appearing in the worshipful European press. Will the US turn protectionist under Obama? Watch what the Senate does with the outlandish House bill, and we will know the answer.
Future generations are being burdened with this second trillion dollar payoff in a few months -- after the first trillion bucks for TARP. But fear not. The O administration is promising yet more trillions in spending, under the mad delusion that the New Deal didn't spend enough on things people didn't want. The stock market is signaling fear and doubt. So far, the market looks to be right.
A Commissar style of governance
Vladimir Lenin pioneered a double-layered style of control by Soviet Party Commissars. Every government official and military officer was doubled by a Party Commissar, who wielded the real power. The result was wild swings between radicalization and stagnation in the USSR. Nobody could act without worrying about the local Commissars, who owed their real allegiances to the Kremlin. Obama is using a similar strategy by directing Samantha Power to go wherever new SecState Hillary Clinton goes.
Those two ladies hate each other, even before Power called Hillary "a monster" during the primaries. Power will report on Hillary to the White House. The Obamas are introducing a parallel staff for the major departments in the White House, to keep a jealous eye on its own appointees. The Clintons did this with the Justice Department, where Jamie Gorelick was the real power at Justice, and Janet Reno became the PR front. We know about the results in a suicidal anti-terror policy, the cynical return of the little refugee boy Elian Gonzalez to the Castro tyranny, and the Waco massacre.
A Government-Media fusion
Karl Marx told his followers "First, conquer the Organs of Propaganda." In Marx's Germany there was no free press. Britain was one of the few examples of relative freedom in Europe, which is why Marx ended up being a foreign correspondent in London, as a ferocious public enemy of capitalism and elected governments.
Last week we found out that Rahm Emmanuel, George Stephanopoulos, James Carville and Paul Begala have been carrying on daily, hour-long conference calls for the last 17 years, even while they were hopping from one top job to another in the White House, ABC News, and various liberal political campaigns. If you think all the big media sound oddly similar, we now now why.
A lockstep alliance between government and the big media is a marker of radical Leftist rulers. Putin just had a couple of more journalists murdered in Moscow. That is not likely to happen here, but then, it wont be necessary. The big media are already PR flacks for the Left. Well, just to make that relationship of buyer and bought explicit, a Boston Globe journalist has just proposed a special Federal bailout for newsies who have utterly destroyed their own audiences. Somewhere in Hell Jozef Goebbels is smiling.
Appointing openly corrupt officials
Obama's no-lobbyist rule is now a public joke. Confessed tax cheaters were propopsed for top positions, like Tom Daschle and Timothy Geithner. Big lobbyist power couples in Washington are being drawn in, including the Daschles. And of course we have the endless Congressional show of Democrat corruption by Charlie Rangel, Chris Dodd and far too many others.
The appointment of radical Greenies to positions like the "Science Czar" -- a huge self-contradiction -- are sending very bad signals to the giant Federal research establishment.
Moving against conservative media
Immediately after the election, Fox News and Washington Times reporters were thrown off the Obama campaign plane. Obama's first television interview just took place with terror-supporting Al-Arabiya TV, an Islamist riff on CNN. A Republican FCC member has warned that a disguised censorship rule giving local leftist groups additional "community input" into radio license renewals may become law by administrative fiat.
That's what we are seeing so far. Keep a sharp eye out in the coming weeks and months. Let's hope the O's will see reason somehow. But so far, the signals sent by their actions are ominous.
By Victor Davis Hanson
February 04, 2009
Some of us have been warning that it was not healthy for the U.S. media to have deified rather than questioned Obama, especially given that they tore apart Bush, ridiculed Palin, and caricatured Hillary. And now we can see the results of their two years of advocacy rather than scrutiny.
We are quite literally after two weeks teetering on an Obama implosion—and with no Dick Morris to bail him out—brought on by messianic delusions of grandeur, hubris, and a strange naivete that soaring rhetoric and a multiracial profile can add requisite cover to good old-fashioned Chicago politicking.
First, there were the sermons on ethics, belied by the appointments of tax dodgers, crass lobbyists, and wheeler-dealers like Richardson—with the relish of the Blago tapes still to come. (And why does Richardson/Daschle go, but not Geithner?).
Second, was the "stimulus" (the euphemism for "borrow/print money") that was simply a way to go into debt for a generation to shower Democratic constituencies with cash.
Then third, there were the inflated lectures on historic foreign policy to be made by the clumsy political novice who trashed his own country and his predecessor in the most ungracious manner overseas to a censored Saudi-run press organ (e.g., Bush is dictatorial, the Saudi king is courageous; Obama can mend bridges that America broke to aggrieved Muslims—apparently Tehran hostages, Rushdie, serial attacks in the 1990s, 9/11, Madrid, London never apparently occurred; and neither did feeding Somalis, saving Kuwait, protesting Chechnya, Bosnia/Kosovo, billions to Egypt, Jordan, the Palestinians, help in two Afghan wars, and on and on).
Fourth, there was the campaign rhetoric of Bush shredding the Constitution—FISA, Guantánamo, the Patriot Act, Iraq, renditions, etc.—followed by "all that for now stays the same" inasmuch as we haven't ben hit in over seven years and can't risk another attack.
Fifth, Gibbs as press secretary is a Scott McClellan nightmare that won't go away, given his long McClellan-like relationship with Obama (McClellan should have been fired on day hour one on the job). Blaming Fox News for Obama's calamities is McClellan to the core and doesn't work. He already reminds me of Reverend Wright's undoing at the National Press Club—and he will get worse.
Six, Biden is being Biden. Already, he's ridiculed the chief justice, trashed the former VP, bragged on himself ad nauseam in Bidenesque weird ways, and it's only been two weeks.
And the result of all this?
At home, Obama is becoming laughable and laying the groundwork for the greatest conservative populist reaction since the Reagan Revolution.
Abroad, some really creepy people are lining up to test Obama's world view of "Bush did it/but I am the world": The North Koreans are readying their missiles; the Iranians are calling us passive, bragging on nukes and satellites; Russia is declaring missile defense is over and the Euros in real need of iffy Russian gas; Pakistanis say no more drone attacks (and then our friends the Indians say "shut up" about Kashmir and the Euros order no more "buy American").
This is quite serious. I can't recall a similarly disastrous start in a half-century (far worse than Bill Clinton's initial slips). Obama immediately must lower the hope-and-change rhetoric, ignore Reid/Pelosi, drop the therapy, and accept the tragic view that the world abroad is not misunderstood but quite dangerous. And he must listen on foreign policy to his National Security Advisor, Billary, and the Secretary of Defense. If he doesn't quit the messianic style and perpetual campaign mode, and begin humbly governing, then he will devolve into Carterism—angry that the once-fawning press betrayed him while we the people, due to our American malaise, are to blame.