Is the New President Undermining the Free Enterprise System?
What did Obama say at his last news conference?
I want to disabuse people of this notion that somehow we enjoy, you know, meddling in the private sector, if — if you could tell me right now that, when I walked into this office that the banks were humming, that autos were selling, and that all you had to worry about was Iraq, Afghanistan, North Korea, getting healthcare passed, figuring out how to deal with energy independence, deal with Iran, and a pandemic flu, I would take that deal....I'm always amused when I hear these, you know, criticisms of, oh, you know, Obama wants to grow government. No. I would love a nice, lean portfolio to deal with, but that's not the hand that's been dealt us.
This is one of those cases where Obama is denying precisely what he is saying. He recently signed a nearly $800B "stimulus" bill into law; he's pushing for the largest budget in American history, with some estimates of the national debt over the balance of his term nearing double-digits in trillion of dollars. He's been jawboning for a new health care entitlement and a huge energy tax (cap-and-trade). The fact is, the President could have let banks and automakers (and his Big Labor monopoly cronies) file for bankruptcy, but he intervenes, primarily because I am convinced that he doesn't really believe in capitalism and he instinctively believes that government bureaucrats are better able to make industry-specific decisions than veteran industry leaders in the private sector. The government presence in industry is highly susceptible to political influence (currently Democrats and their special interest groups, including labor unions); this is exactly why Jefferson wanted restraints on federal government. Do we need to review the long list of failures of central state planning, most prominently the collapse of the Soviet empire in the 1980's? As Arthur Brooks' latest Wall Street Journal column is titled, "the real culture war is over capitalism."
The fact is that the federal government has hardly played the low-profile role Obama asserts. There was the dismissal of GM CEO Wagoner--not by the duly-elected board but forced out by the Obama Administration. Currently bondholders and shareholders are being shut out of the process involving GM and Chrysler with the government demanding a key percentage of company stock and giving a substantial portion to the UAW union monopoly or its retirees. There is moral hazard all over the place: Why should the government put billions of taxpayer money on the line for these two car companies while Ford, which clearly managed its operations and finances better, at least to the extent of not requiring a bailout, faces competition backed by the deep pockets of the Obama Administration? Second, why should American investors, bankers or bond buyers ever put money into a resurrected GM or Chrysler, given the precedence of their marginalization? Why should the the UAW monopoly and its retirees benefit disproportionately relative to other stakeholders?
What about the New President's Credibility?
Obama had unambiguously promised transparency and the elimination of earmarks. Yet he underminded the whole concept of transparency by insisting time-is-of-the-essence in limiting full and frank debate of the nearly $800B so-called stimulus bill, the vast majority of which did not go, as the President promoted and implied, to job-creating infrastructure projects in the short tem. He also signed into law, without even the implied threat of a veto, a huge number of earmarks that did little more than add to an expanding federal deficit, putting up a number of lame excuses such as the fact that President Bush served during the first four months of the current fiscal year and hence it's not really his first full fiscal year. This is rather like an obese person vowing he or she will go on a diet after the holidays. If you are legitimately against Congressional pork barrel spending, you are from day 1 of taking office; you make it clear to Speaker Pelosi or Senate Majority Leader Harry Reid that there will no longer be business as usual. Even if you post some information about earmark projects online, it really is more window-dressing than substantive reform if the nature and extent of information is not usable or if the amount of time available to assess the project is inadequate.
What About the New President's Promise to Change the Tone in Washington?
There are several indisputable pieces of evidence which bear on this matter. First, the President spoke of the need to put the past behind him in response to the Angry Left insisting on prosecuting officials in the Bush Administration over policy differences involving the use of enhanced interrogation techiques against known terrorists, methods which yielded usable information from Al Qaeda leader Khalid Sheikh Mohammed. (According to former CIA director George Tenet in his book At the Center of the Storm, KSM reportedly said at his first interrogation, "I'll talk to you guys after I get to New York and see my lawyer.") Obama then reversed himself (even contradicting his own chief of staff, Rahm Emanuel) and opened the window to prosecution, even though it's very difficult to see how the Justice Department could meet substantive burden of proof that President Bush received deliberately falsified legal advice. This kind of Banana Republic-style political vendetta is not only unprecedented and an escalation of partisanship in Washington but sets the stage that could affect his or future Democratic administrations if and when the voters decide to make a change in the White House.
Second, the President argued about his bipartisanship in the US Senate, but in terms of the stimulus package and the budget, there was no legitimate approach to negotiate with Congressional Republicans, whom were ignored with a terse "elections have consequences", and the Democrats resorted to peeling off the three most liberal GOP senators to get past a potential filibuster. The President could have easily passed a bipartisan package consisting of relief spending (e.g., unemployment extensions) and carefully chosen infrastructure projects, but decided to muscle through funding for the Democratic spending wishlist.
Third, the President has been going around in news conferences and his international apology tour, making unprovoked snide remarks about his predecessor, President Bush, and/or others (e.g., distancing himself from JFK's botched attempt to liberate Cuba or Truman's decision to drop atomic bombs in WWII). What you see in Obama is simply window-dressing of boorish political rhetoric, not in substance. It is true that Obama does not engage in direct, blunt personal attacks on the opposition--but he is simply engaging in a more subtle, elitist style of sarcasm and putdowns, including the pretense of a "balanced perspective". For instance, he mocks the conservative notion of American exceptionalism by suggesting the exceptionalism of other nations (e.g., Greece) are equally comparable. He implicitly questions America's moral standing to deter the nuclear ambitions of rogue nations like Iran and North Korea by pointing out that Truman dropped the bombs on Japan.
Fourth, the President has been engaging in selective partisan releases of information, e.g., ignoring the pleas of prior and his own CIA director not to compromise national security, which seem to support his own political views and decisions to restrict interrogation methods, while disregarding the rquest of former Vice President Cheney to provide a more balanced point of view by declassifying documents revealing the effectiveness of relevant methods. [One could argue any administration will do selective leaks, but there are qualitative differences. For example, the leak of Valerie Plame to Bob Novak was Richard Armitage, but special prosecutor Fitzpatrick pursued Libby and others, knowing Armitage's role from the get-go.]
Fifth, Obama has largely delegated his legislative agenda with limited guidance or constraints to Pelosi and Reid, whom are highly partisan and "more of the same". His anti-earmark promises were ignored by Congressional leaders. Obama could have been more proactive if he did really want to commit a bipartisan agenda.
Sixth, Obama, lacking a filibuster-proof Senate majority (although he's only one vote away, given Specter's recent self-serving partisan switch, with comedian Al Franken narrowly leading in a disputed Minnesota race), has signaled that he is willing to let Reid use, if necessary, the "nuclear option" (an unprecedented, unconventional use of the simple-majority budget reconciliation process) in order to pass his health care initiative. The Democrats steamrolling the Republican minority to push through a major policy initiative without even pretending to pursue a bipartisan mandate would take partisanship to a new level. It is indicative of the previous strategy used in passing the stimulus bill--you don't need to signal the willingness to use pass-at-any-cost unless you have have ruled out any meaningful concessions to the opposition. Obama can talk bipartisanship all he wants--but the proof is in the pudding: Bipartisan leaders would never resort to or tolerate a majoritarian abuse of power to force through a bill.
Sixth, the President delegitimizes authentic, principled opposition to his legislative agenda by falsely alleging the GOP was simply being obstructive without a constructive alternative, pointing out he has two GOP cabinet members (Transportation and Defense), and saying he is open to substantive discussions at any time. These claims are, at best, disingenuous. For instance, Congressman Paul Ryan and former Newt Gingrich have gone beyond the consistent low-tax/limited spending GOP message and have described contemporary conservative approaches to health care, education, energy, the environment and entitlement reform. As to Obama's Cabinet choices, many (including Reid) dispute the classification of Gates as a Republican, and in any event, Gates has been unable to influence Draconian cuts in Defense spending, including military weapons research and development. LaHood was directly contradicted by Obama when he suggested an alternative means of taxing drivers (i.e., versus the gasoline tax) for highway maintenance. Obama feels that it is only just that drivers of conventionally-powered autos subsidize prorated costs of road use by alternately-fueled vehicles. Then let's remember the case of GOP Senator Judd Gregg, chosen to head the Commerce Department--only for White House Democrats, horrified to discover that the Census Bureau reports to the Commerce Department and afraid that Gregg might not toe the Democratic partisan line on the Census, arranged a workaround that essentially undermined Gregg's managerial authority. There was never any legitimate reason to question Judd Gregg's professionalism and independence, and Gregg eventually withdrew his nomination.
But Obama has gone beyond just attacking Congressional Republicans and has attempted to paint more balanced news coverage (e.g., Fox News) or independently-organized dissent as partisan in nature. At a recent townhall, Obama addressed the Tax Day protests as follows:
Those of you who are watching certain news channels on which I'm not very popular, and you see folks waving tea bags around. Let me just remind them that I am happy to have a serious conversation about how we are going to cut our health care costs down over the long term, how we are going to stabilize Social Security.With respect to the tea party participants, Obama "has shown arrogance and been dismissive, even derisive" (i.e., words President Obama spoke describing America during his European apology tour). The tea party goers were a reaction--not simply against Obama and the Democratic Congress' unprecedented spending binges, but the unchecked fiscal expansionism and entitlement spending (e.g., Medicare drug prescriptions) under former President Bush and the Republican Congress. They reflected an anxiety that they and their children will ultimately pay the price through higher taxes for the escalating federal implementation of dubious political promises (over which they have no direct control or say) fraught with moral hazards (e.g., Obama's plan for other taxpayers to help pay the mortgages of some homeowners or attempts to raise the percentage of households not sharing the government cost burden via federal income taxes).
The Congressional Democrats are incredulous: when Obama has co-opted the Republican message on lower tax for up to 95% of working Americans (including tax credits to the 40% of households which don't pay income tax), what are the modern-day tea party participants protesting? Surely not taxation without representation... They miss the obvious point. This country's founding fathers were not fighting against taxation per se (the Constitution clearly recognizes the need for government and ways of paying its costs); they were disputing their lack of self-determination, of others making unilateral decisions about them without regard to their relevant knowledge, participation or consent. There is also a sense of fair play, that Obama is unduly punishing success by targeting only high-income earners to pay for his political initiatives.
Has the New President Been More Effective at Substance or Symbolism?
To be sure, Obama has announced the closure of Gitmo (without first detailing its alternative), there has been the discussion of "man-caused disasters" or "enemy combatants" (versus "terrorists"), he has all but ruled out the use of productive enhanced interrogation techniques (again, without constructive alternatives), and (as described above) he has gone around the world feeling a compulsion to apologize for American power and influence, for the actions of past administrations, and the like. It's not really clear what Obama's unsolicited criticisms of America to international audienced have done beyond validate anti-American opinions by Chavez, Ahmadinejad, Castro and others.
Is the President Liked More for His Personality or His Policies?
In an epilogue to the paperback edition of Senate Majority Leader Harry Reid's book The Good Fight, Reid mentions a conversation he had with Obama, after commending him on a speech: "Without...braggadocio or conceit, and with...deep humility, [Obama] said quietly: 'I have a gift, Harry." Yeah, right. Some have called Obama "the teleprompter President", whom got caught in an embarrassing gaffe last Monday at the National Academy of Sciences, getting ahead of the teleprompter script.
The arugula-eating President who used to grocery-shop at premium-priced Whole Foods and bought a $1.6M mansion in an upscale Chicago neighborhood does have an uncanny ability to connect with the public at large. Some 90% of the people responding to a Washington Post/ABC poll believe that Obama is willing to listen to different points of view, and over 70% think that he understands their problems. I simply don't get it; maybe my experience is different, having researched issues ad nauseum and evaluated scores of students or technical job candidates, quite often able to detect facades of knowledge or expertise.
When I hear Obama talk about the higher efficiency of government administrative costs of health care, I know that in many exposures I've had with government information systems that agencies are running on obsoleted database or other application software, often lag (versus the private sector) in implementing state-of-the-art security practices and other best practices (in one case, I was asked to shut down a database when the agency discovered one of their scientists had published access information that had exposed a security vulnerability), and failed to maintain adequate records of various assets. (I recall a civil servant once asking for my help in determining just how many Oracle licenses were deployed across the facility, and I had no records beyond the subset of application databases I was managing under our contract.)
The fact is, I also know that Medicare/Medicaid do not maintain state-of-the-art fraud detection, something those operating in the private sector cannot afford to do. So when Obama confidently asserts that the government can achieve cost savings that the private sector has seemingly ignored by digitizing medical records, I'm immediately skeptical. The federal government maintains a high-cost structure (no layoffs of civil servants during a recession), and Presidential candidates rarely promise to significant cut operating budgets. The federal government doesn't have to worry about upstart or well-established competitors underpricing their services and grabbing market share at their expense. I also know that Obama has never operated a business or met a payroll (prior to becoming President).
As a professional lawyer, Obama has been trained to argue equally well either side of an argument. (Bush, on the other hand, was a businessman before he became governor of Texas.) Daniel Henninger in last Thursday's Wall Street Journal recounts the following:
Early in the campaign, in January 2007, a New York Times reporter wrote a story about Mr. Obama's time as president of the Harvard Law Review. It was there, the reporter noted, "he first became a political sensation."Here's why: "Mr. Obama cast himself as an eager listener, sometimes giving warring classmates the impression that he agreed with all of them at once." Also: "People had a way of hearing what they wanted in Mr. Obama's words."Harvard Law Prof. Charles Ogletree told how Mr. Obama spoke on one contentious issue at the law school, and each side thought he was endorsing their view. Mr. Ogletree said: "Everyone was nodding, Oh, he agrees with me..."Al Gore's former chief of staff Ron Klain, also of Harvard Law, reflects on the Obama sensation: "The interesting caveat is that is a style of leadership more effective running a law review than running a country."
You would think that people would have had enough experience, say, with used-car, high-pressure or infomercial salesmen or manipulative spouses or children to recognize when they are being played, even on a national scale. The fact of the matter is that Obama's popularity has no ideological coattails. Obama recognizes that this is still a center-right nation which is why he often pays lip service to certain conservative issues like low taxes, traditional marriage, charter schools, the right to protect one's family, and deficit reduction. But it's a work; for example, Obama enjoys widespread support among gay activists, nothing like the vitriolic response to Miss California USA and Miss USA runner-up Carrie Prejean's politely-worded support in favor of traditional marriage, even going to the extent of alleging she has had a breast augmentation procedure. Obama's popularity comes mostly from the intentional ambiguity of trying to be all things to all people.
My research background focuses on validation using multiple objective, reliable measures and replicated confirmation of hypothetical relationships. Thus, if I'm looking to judge Obama's authentic stand on behalf of deficit reduction, I'm looking at a number of ways to confirm that hypothesis: Is he willing to put his political capital on the line to push for manpower reductions, knowing public sector unions would oppose such measures? Is he willing to use the threat of a veto against pork barrel projects pushed by his own party or budget allocations exceeding a certain percentage? Is he willing to postpone major spending initiatives while federal revenues are under pressure from the recession? After criticizing Bush and the GOP-led Congress for a large cumulative federal debt, is he willing to commit to a lower federal deficit? Is he willing to put politically unpopular higher taxes on the table (beyond a modest increase on the upper two tax brackets) if that's what's needed to finance his spending priorities, or is he willing to expediently defer the costs to future administrations?
Report Card: Domestic Policy
Certainly Obama has been able to push a number of initiatives through Congress, including some Democratic bills that didn't carry under the Bush Administration, including an expansion in SCHIP and the so-called Lilly Ledbetter/Equal Pay Act. [The latter stems from an earlier Supreme Court decision denying a woman filing late in her employment for an alleged gender pay discrimination incident long preceding the multi-month filing window (in fact, a key witness had died). The end result is that alleged victims of discrimination, under indefinite filing windows, could hold a company accountable for decisions higher management might not even be aware of and which would be difficult to defend against (which is why you often have statutory limits other than serious crimes, like murder). Hearing partisan Democrats like Senator describe the enforcement of review periods as "conservative judicial activism" offends the minds of reasonable people.] More notably, Obama pushed through the so-called stimulus and omnibus budget bill.
There are a number of criteria I would put forth in judging Obama's performance. First, you would have to say with significant majorities in both the House and Senate, the Democrats would have likely passed these bills without Obama as the Democratic President. Second, several measures that Obama favors--card-check for unions, mortgage cramdowns, restrictions on higher-income deductions (e.g., for charitable donations), and "cap-and-trade"--appear to have been stopped by threat of a Senate filibuster, at least for this session of Congress. Third, Obama did not do a good job holding the budget bills to more modest budgetary constraints, including earmarks; in fact, Obama seemed to delegate responsibility for framing the bills to a highly partisan Congressional leadership, which to me is an abdication of leadership and responsibility. Fourth, Obama got elected on promises of "turning the page" on politics as usual, transparency, bipartisanship, and no earmarks. I have discussed some of these items above; for example, Obama pressed hard for the overloaded stimulus bill, arguing time was of the essence, even before the House and Senate bills were reconciled, not allowing an adequate time to review details and not making a legitimate attempt to broker a true bipartisan compromise but instead peeling off 3 liberal Republican votes to ramrod a partisan bill through Congress. Obama can come up with 101 excuses for violating manifestly broken campaign promises, but if he does that, he ends up doing "politics (or lawyering) as usual", looking for loopholes to rationalize politically motivated decisions.
On the economic front, Obama spent the first several weeks of his Presidency talking down the economy, a self-fulfilling prophecy. It's not clear the recession has bottomed or whether Obama's economic policies are simply deferring the day of reckoning. For example, Chrysler this week filed for bankruptcy--even after Obama sought to stave off bankruptcy by providing generous federal loans: The key question is whether Obama simply threw good money after bad, unnecessarily exposing the American taxpayer to the end result of bad management and labor decisions.
I think that Obama was talking down the economy purely for political reasons--to prop up support for his stimulus and budgetary initiatives. I think that if Obama had sounded a more upbeat, optimistic tone from the get-go (e.g., his early campaign "yes we can" and "hope" themes), had exhibited more patience in letting the economy find a bottom, and provided a more consistent message (i.e., I believe that inconsistent messages contributed to uncertainty resulting in business analysis paralysis), we would now be further along on the road to recovery. I believe that Obama's meddling in auto and bank industrial policy is counterproductive and sets a bad precedent. I think Treasury Secretary Geithner's false starts and final decision on a private-public investment vehicle for dealing with toxic assets were unsatisfactory; the fund has an uncompetitive high barrier to entry, the banks have no incentive to sell notes at prices that wipe out their equity, and any investor realizes that outsized profits will create a political issue for Obama (and the knee-jerk response from Democrats is a windfall profits tax). A solution to this problem is beyond the scope of this email, but let's just say I think the federal government has the ability to hold an asset (contracting out property management) until the housing market recovers (which it has always done after past corrections) and can offer the banks a net present value of that projected price, which is above what a depressed housing market would offer. Banks would be willing to take more modest writedowns on problem mortgages.
Finally, I would like to see Obama taking full responsibility for his leadership and responsibility in economic policy instead of constantly whining about the hand that he had inherited from Bush and preposterously comparing his fiscal policies to Bush's. I've seen some estimates almost Obama's deficits projected up to $9T, even after upcoming 2011 tax hikes on the upper two income brackets, far above the roughly $2T accumulated under Bush. If Obama did not want the responsibilities of being President, he shouldn't have run for the job. Bush had been dealt a far more difficult hand from a political standpoint following a controversial election and an evenly-split Senate (until a Republican defection threw control to the Democrats).
Grade: D+
Report Card: National Security
True to his campaign promises, Obama is slashing investments in military weapons research and development and related DoD projects, seemingly the only federal expenditures that he seems to be cramming down (versus domestic spending priorities). In a world where Iran and North Korea seem intent on joining the roster of nuclear weapon-holding nations, thus instigating a nuclear arms race in the Middle East and southeastern Asia, and long-range missile technology, possibly threatening the US or key democratic allies (e.g., Israel), Obama is making decisions against the long-term interests of the United States. The military is short of manpower needed to staff ongoing engagements in Iraq and Afghanistan, equipment and munitions are badly depleted, and Obama has questionably accelerated US involvement in Afghanistan (given high-profile failures of other governments occupying Afghanistan, notably the Soviet Union) without winning commensurate commitments from our NATO partners.
Also of particular concern is Obama's unilateral restrictions on enhanced interrogation techniques and unconscionable, politically motivated, selective declassification of documents, over the unanimous objections of past and current CIA directors. Since when have international terrorists been signatories of international agreements? Does Obama not understand if the US unilaterally discloses its playbook, that our adversaries will prepare their followers to counteract precisely those methods? I recently wrote a post where I talked about dealing with students whom violated academic honesty policy. Without fail, the students wanted to know how I caught them, which I refused to discuss. I feel in dealing with wrongdoers, it is helpful to maintain an operating arena where there is FUD (fear, uncertainty, and doubt), not have a KSM simply demand to see his New York lawyer.
Grade: F
Report Card: Foreign Relations
Obama's "apologies", which were de facto personal attacks on his predecessors like Bush, Kennedy, and Truman, were unprecented, unnecessary, and counterproductive, simply validating anti-American rhetoric. Other nations will always resent America's economic and military leadership, and Obama's desire to win friends and influence people is more relevant for a motivational speaker than a President. A President should always be careful of maintaining the prestige of the Oval Office and maintain certain criteria for access, never allow himself to be publicly humiliated as when Venezuelan dictator Hugo Chavez presented him with the "gift" of a notorious anti-American screed. We should never see a petty despot dress down an American President to the approval of a third-world audience eager to see one of their own putting the American President in his place. Have we forgotten Palestinian celebrations in the immediate aftermath of 9/11? Obama, you need to get over this compulsive need to be liked by everyone. Other countries make foreign policy based on their own interests, not whether an American President is personally popular. Who can forget Bush's claim that he could look into then Russian President Putin's soul? Putin's subsequent actions (e.g., the unprovoked invasion of Georgia) certainly put that judgment into question.
The idea that the policy initiatives of rogue nations like North Korea and Iraq are influenced by interpersonal dynamics (e.g., listening, deference, etc.) is, at best, naive. It's not really clear what Obama's diplomatic objectives are. On the other hand, in the aftermath of Obama's recent decision to relax certain conditions relevant to the Cuban embargo, without a commensurate response from Cuba on basic human and democratic rights, it's very clear what Cuba wants from a more receptive Obama administraton: access to international loans, largely underwritten by the United States, given Cuba's reputation of being an international deadbeat. Conservatives such as myself reject from the get-go the United States bailing out a Communist dictatorship.
What's important is not so much the style of Obama's foreign policy as its results. There are two primary pieces of evidence: (1) Obama's inability to convince the rest of the G20 nations to commit to a US-style fiscal stimulus; (2) Obama's inability to convince the rest of NATO to match his increase of US combat troops in Afghanistan. After years of attacking Bush on unilateralism and largely attributing challenges in foreign relations to Bush's diplomatic style, Obama is learning a change of style may make him more personally popular around the world but personal popularity does not translate to a productive American foreign policy.
Grade: C+
