Obama Is Authoring Liberalism's Capitulation
In addressing the communist scourge that had impoverished many parts of the world in the aftermath of World War II, President Reagan predictably approached the challenge in an optimistic light. Rather than dignify communism by denouncing it, Reagan was instead dismissive of it “as a sad, bizarre chapter in human history whose last pages are even now being written.”
Reagan knew instinctively that communism would ultimately die of its own contradictions. Simply put, any system meant to foster equality and the sharing of gains achieved through enterprise works at cross purposes with basic human nature. At the core of most human beings is the hope that effort will be rewarded, and communism worked against this simple human need.
So while President Obama is not presently seeking the implementation of Soviet-style economic cures for the U.S. economy, his economic agenda very much embraces the kind of modern American liberalism that voters have regularly shown great disdain for. Popular history will surely suggest Obama’s predecessor in the White House failed for being overly reliant on free markets, but more realistic accounts will show that President Bush’s many economic failings were the result of a movement away from market-driven economic growth in favor of soft liberalism.
Indeed, from his zestful signing of Sarbanes-Oxley to massive spending and dollar debasement (both served as taxes on income and wealth) to his administration’s eager intrusions into the private marketplace via TARP, Bush’s presidency by any rational measure was highly “liberal” if we go by the American definition of a word that is used to describe free-marketeers elsewhere in the world. Bush’s leftward lurch revealed itself in his approval ratings, and even more clearly in stock-market indices. The S&P 500 declined 36 percent on Bush’s watch; the bear market he oversaw strong evidence that the great voting booth we call the stock market in no way countenanced his largely anti-market presidency.
Market indices take on special importance given their direction since voters went to the polls in November. While stocks have traditionally rallied post-election, in Obama’s case they’ve declined. The S&P 500 fell 11 percent in the month of January alone, and since November 4th the S&P is down 18 percent.
Some would reply that Obama inherited an unfortunate economic situation, but President Clinton arguably did too, yet the S&P rose 5 percent over the same timeframe used for Obama. More broadly, Clinton crossed the aisle on Nafta and welfare reform, signed a capital gains cut, hired Treasury secretaries after Lloyd Bentsen who regularly communicated to the markets the importance of a strong dollar, plus he matched his rhetoric about the era of big government being over with reduced spending. Clinton’s various rightward lurches in many ways embodied true change, and were cheered by the stock market as evidenced by the S&P’s 208 percent rise on his watch.
Returning to Obama and stock markets, rather than a barometer of the here and now, markets discount the future, and the present message from investors is one strongly suggesting that Obama’s economic solutions are not up to the task of righting our listing economy. Markets seem to fear that Obama is of the mind to expand on the various economic mistakes made by his predecessor.
Indeed, where Bush signed Sarbanes-Oxley to allegedly root out “executive malfeasance”, Obama has made Wall Street a top enemy with his critique of a bonus pool that is actually down 40 percent from the previous year. When we consider that nearly all of the finance meant to help existing and future businesses grow has a Wall Street origin, Obama’s bashing of the providers of finance is perhaps good political theater, but chilling rhetoric nonetheless.
On the trade front, the Bush administration gave us steel, softwood lumber and shrimp tariffs along with an aggressively negative stance vis-à-vis China. In Obama’s case, the supposed agent of change has allowed the Pelosi Congress to insert “Buy America” provisions into his economic recovery bill (wasn’t Rahm Emanuel appointed chief of staff to keep extremist Democrats in line?), plus his newly appointed man at Treasury chose to one-up the Bushies in terms of anti-China rhetoric that has resulted in an impressive decline by the dollar versus gold. Much like Bush, it appears Obama cares not a whit about the dollar.
And just as Bush presided over nosebleed levels of spending, including massive outlays to fund the disaster that is TARP, Obama has promised more in the way of trillion dollar deficits that will create work disincentives, along with an expanded TARP the price tag of which some say will approach $2 trillion. Far from fostering “change”, Obama’s moves so far suggest that he is eagerly trying to be FDR to Bush’s Herbert Hoover.
If there’s a silver lining here, it has to do with the truth offered by the stock market. With shares continuing to fall in response to an economic plan that will shrink the economy, we’re seeing with great clarity that investors don’t buy liberal left solutions no matter the person in charge. As smooth and charismatic as Obama may be, unless he gets the policies right, his presidency will fail in much the same way that George W. Bush’s did. Rich Karlgaard of Forbes has already pointed out that Obama’s approval rating is down from 72 to 58 percent, and if he continues to embrace liberalism’s discredited policies of the past, his descent will continue.
Liberalism of the American variety, much like communism, contradicts human nature. So while Obama’s acceptance of the policies of decline must be resisted, there’s hopefully comfort in the knowledge that liberalism’s implementation will be its undoing. In short, the more Obama moves leftward, the quicker he’ll author liberalism’s happy capitulation. If so, prosperity post-Obama is on the way.