Obama’s Path to a Lost Decade
For better or worse, many Americans invested a great deal of hope in President Obama’s election, and while we clearly can’t pass judgment on the entirety of Barack Obama’s presidency after just a hundred days, now seems like a reasonable time to take a step back and evaluate his administration to date.
Based on the campaign that President Obama ran, and the expectations that he therefore set for his presidency, it seems to me that there are two arenas in which it is fair to judge him — on policy and on political terms. On the policy front, those judgments are fairly straightforward: do we believe the decisions he’s made will in the end have a positive or negative effect on our nation? On the political front we have a different metric, one set by the President himself: has he truly ushered in an era of the “new politics” we were promised or are we — using words we heard a fair amount last year — looking at more of the same?
To those who have followed the spirited back-and-forth on the merits of President Obama’s stimulus plan the following should not come as much of a surprise, but I believe the policy prescriptions the President has chosen as the means to combat the economic crisis will prove disastrous for this country in the long-run.
First, history shows us quite clearly that a government cannot spend its way out of an economic downturn. It didn’t work in Japan in the 1990s, when the ten stimulus packages implemented over an eight year period failed to prevent the “lost decade.” Nor did it work during our own Great Depression, when FDR’s own Treasury Secretary lamented the fact that massive spending had brought them little in the way of increased employment and much in the way of debt.
Yet spending our way out of this situation is precisely what the President is attempting to do, and the nearly $800 billion stimulus package is merely the tip of the iceberg. Bloomberg recently reported that our government has now “spent, lent, or committed” $12.8 trillion in its attempt to blunt the recession. Fairness demands that we point out this money was not all spent on President Obama’s watch — his predecessor surely deserves a portion of the responsibility, but just as surely this President has exacerbated the problem at least tenfold.
Second, the recent string of invasive actions by the federal government has completely altered the long-defined and successful relationship between the private sector and the government in this country. In his well-regarded essay, “The Spirit of Democratic Capitalism,” AEI scholar Michael Novak points out that “No state had so legitimated and separated the economic sphere [from government] as did the fledgling United States,” and that that was indeed central to the genius of America.
I’d suggest that anyone observing what’s taken place recently would be hard pressed to argue that this administration has worked to maintain that separation. To use just one example, a few weeks back President Obama effectively fired the Chairman and CEO of General Motors, the same company that was once revered as an icon of American economic prowess.
An economic environment in which winners and losers are determined not by the market but by political fiat undermines the real stimulus of our economy — private capital. For entrepreneurs to take risks in the marketplace they need to have an understanding of what the rules are and that’s not possible when they see ad-hoc bailouts and the President taking unilateral action in the economy as he has.
Third, the level of debt that the Obama administration is encouraging will have dire consequences. I could quote an army of statistics on this front, but I’ll stick to one: according to the Congressional Budget Office the budget submitted by the President would double the national debt over the next decade. Think about what that means — a debt that took us over 200 years to accrue will be twice as large just ten years from now. With debt levels of that nature you can paint a scary picture for things like the value of the dollar and the tax burden on future generations.
So the bottom line is I’m not high on the policy component of President Obama’s first hundred days, and while I’d love to say I feel differently about the political front, unfortunately I can’t here either.
In his inaugural address, the President proclaimed “an end to the petty grievances and false promises, the recriminations and worn-out dogmas, that for far too long have strangled our politics,” something I joined with millions of Americans in hoping for as my years in public life have reinforced how needed that change is.
Yet when I proposed using a portion of the stimulus dollars to pay down debt in South Carolina, under the notion that states are the laboratories of democracy and a one-size fits all approach dictated from Washington does not fit with the principles this nation was indeed founded upon, President Obama’s DNC launched attack ads against me. Worse, these ads hit the airwaves before the White House even bothered to respond to our waiver request. I’d suggest that actions like these shatter the idea of “change” the President so eloquently articulated in his inaugural.
While there’s clearly been a lot to disappoint in President Obama’s first hundred days, for conservatives there may indeed be a silver lining. It’s the notion that Newton’s Third Law — for every action there is an equal and opposite reaction — may not apply just to physics but to politics as well. We’ve seen some of that reaction with the Tea Party protests that rose up organically across this nation, and as the President continues to overreach conservatives have a real opportunity to present an agenda centered on fiscal sanity that will become increasingly attractive to more and more Americans.