I am trying to be optimistic but it isn’t easy. The Obama people have been in office for less than six weeks (as I write) and yet everything seems to have gone from bad to worse.
Certainly that was the sentiment among those I spoke to the other evening at the Hoover Institution’s Washington party. Of Obama’s performance to date, Ed Crane, the president of the Cato Institute, said, “He’s in way over his head.” Bill Kristol, the editor of the Weekly Standard and normally an optimist, told me in a tone of foreboding, “I’m more worried than I thought I would be.”
Fred Smith, president of the Competitive Enterprise Institute, said at first he had thought that Obama seemed smart, so he “had hopes.” Now? “Buyer’s remorse is going to be huge,” he predicted. “I can see Obama becoming the shortest-term popular American president in history.” Did I detect a note of Schadenfreude?
Bruce Bartlett, an economics columnist and a former deputy assistant secretary of the Treasury, said he was concerned that the new economic team had “built up the expectation that these people knew what they were doing. But so far they haven’t delivered.”
The financial crisis, which weighs on all our minds, has been by far the most severe since I came to this country in 1962. But Obama seems to think that a fiscal stimulus is the best medicine. And talking of medicine, his bedside manner is chilly; Bill Clinton went public and recommended that he show a little more optimism.
The idea that a vast package of government spending will create more than three million jobs showed that the liberals have learned nothing. Some jobs may be saved but few new ones outside the public sector will be created. As for jawboning mayors to spend money wisely, the word that comes to mind is naïve.
To be sure, mistakes across the political spectrum got us into this mess. My columnar colleague Ben Stein said that the financial crisis began with “wild, immoral risks with credit.” He was right about that, and the topic needs to be brought into the moral realm. Allowing borrowers to buy a house without any down payment or even showing income or employment, and luring them in with “teaser” interest rates, plumbed new depths of irresponsibility. Borrowers who never heard of the word prudence played a complementary role.
It’s hard to believe that ethical standards can have sunk so low in this country. But they have. And notice how long this malfeasance lasted before anyone took notice. (Some did, but no one listened.) Both political parties have been implicated and neither saw the hazard until it was too late.
The moral erosion has spread from areas of traditional ethical concern such as sex and drugs into business and finance, where it was assumed that old-fashioned self-interest would protect us. And because this mostly happened under Republican leadership, the reins of power have been decisively handed over to a left-of-center White House and Congress.
It’s understandable, then, that Obama and Timothy Geithner (“a deer caught in the headlights,” someone said of his first TV appearance) would not want to give the appearance of bailing out incompetent bankers of dubious principles. But their irresponsibility is a separate lament. The stability of the U.S. economy has to come first.
Everyone talks about what a failure the first half of the Troubled Asset Relief Program was, but few inquired what would have happened if Treasury Secretary Paulson had not acted in time. As Bruce Bartlett once said, the economy is built like a house of cards—a dollar deposited in a bank is lent out many times over—so you do have to worry about a collapse. Paulson did.
As to the Obama agenda, after five weeks in office, David Brooks had this good comment in the New York Times. Aides in the West Wing were at that point planning
to create three million jobs, to redesign the health care system, to save the auto industry, to revive the housing industry, to reinvent the energy sector, to revitalize the banks, to reform the schools—and to do it all while cutting the deficit in half.
The vaguely conservative half of the “Shields and Brooks” team on PBS, Brooks worried that we now have “a group of people who haven’t even learned to use their new phone system trying to redesign half the U.S. economy.” The Washington Post showed a similar concern. “Does the political system have the bandwidth to accommodate all that Mr. Obama is asking from it?” the paper asked.
Then Obama presented his budget, with multibillion- dollar tax loophole closings for “the rich.” To my surprise, press corps “dean” David Broder actually noted that new taxes “risk stunting any recovery.” To my greater surprise, he added that when we elected Obama we didn’t know “what a gambler we were getting.” Was he naïve? Broder asked. (Is reality breaking through already?)
Showing how remote from reality the administration is, the attorney general made his strange comment about America being “a nation of cowards” for not discussing race more often. Maybe I should send Eric Holder my TAS column about the black abortion rate. (Would he care to add to the discussion?
I would welcome it.) Doesn’t he realize that for years many of us deliberately held our tongues on several such issues out of sheer politeness? Meanwhile, markets have reacted negatively to Obama’s inauspicious start. He gives every indication of aiming to implement a progressive agenda at a time when the country can least afford it. It ought to worry his supporters but it won’t, because they believe reality is not really applicable to people with good intentions, like themselves.
Almost certainly, Obama is taking Al Gore and the enviros on faith when he proposes to redesign U.S. energy policy to fend off “climate change.” (The phrase “global warming” has been largely dropped because the globe has not warmed at all over the last decade.) Obama surely doesn’t realize what’s at stake here. Eventually, I hope, he will learn that climate change is a policy game dreamed up by bored semester intellectuals and an idle upper class. Energy will become much more expensive and the workers will be hurt. The inventors of climate change won’t mind that at all, but it won’t help Obama.
HERE'S HOW I SEE THIS PLAYING OUT. The stimulus won’t work and the economy may well decline further. Eventually, market signals will penetrate the Oval Office. Trillions of injected dollars are more likely to reignite inflation than revive the economy. Obama will say that his policies haven’t had enough time to work. But he won’t want to sink his own presidency, and that is one of the few rays of hope that I can see. Reality will take hold in the end. Liberals are political creatures who have the luxury of living much of the time in a world of their own dreams. They are cushioned and abetted by friends, colleagues, the media—the Zeitgeist. If things go wrong, it wasn’t their fault. Conservatives, on the other hand, are harried with daily reminders that their “cherished” free market system has so far failed to create one or another supposed ideal (equality, say).
Sometimes I wonder: how much longer will progressivism last? The current renewal of faith in huge government spending programs already has a déjà vu feel to it. FDR has been dusted off as a household god, the New Deal placed on a pedestal. But if Obama’s recession lasts half as long as FDR’s slump, he will be a one-term president.
The hot air of enthusiasm that has borne him aloft will cool, as Fred Smith predicted. I suspect that the wave of populist adulation for Obama is a symptom of our semi-pagan times. Secular liberalism is the faith of the godless, and at the moment Obama resembles nothing so much as an idol who is carried about in triumph for a season or two before, with little warning, that god, too, fails.
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