March 3, 2009

Could it be?

Donald B. Hawthorne

The conventional wisdom is that Obama, with strong majorities in both houses of Congress, will get every legislative initiative he wants. And from a sheer vote counting viewpoint, that would certainly be true.

But could the countervailing force not be the oft-spineless Republicans with their limited votes in Congress?

Could the real counter come from the financial markets themselves, which sense both the magnitude of the economic downturn and how Obama's proposed statist solutions will only compound the problems and adversely impact any recovery?

Consider this stock trend.

So is it a race between a financial market collapse, accelerated by its reaction to Obama's policy proposals, and Obama's aggressive and statist policy implementation effort?

Will the financial markets then be the force which galvanizes a broad reaction from the American people? Remember, the last time we had a downturn this deep was at the beginning of the 1980's and 401(k)'s weren't in place yet so the average American had far less at stake financially.

(The underlying philosophical issues on why Obama's policies are wrong are here.)

And, if you don't think the American people are beginning to pick up on it, read further down the earlier link and consider how rapidly the idea of going-John-Galt has spread.

Incentives matter deeply and drive human behavior. It is a lesson statists and socialists never learn.

It's all enough to make you shrug, isn't it?


Will Wilkinson reflects on Obama's dilemma, which some of us believe is being reflected in the declining stock market prices:

The upshot is that if you want to reduce inequality through redistribution, tax progressivity barely helps. You need to take a huge chunk of GDP in taxes in order to finance progressive spending. The more general, sort of obvious point is that if you want to massively increase government spending, the government needs a lot more revenue. But you can take everything from the rich and you still won’t have enough. So you’ve got to massively increase taxation on the middle class. The best way to do this is through a consumption tax. But Obama keeps reinforcing, again and again, that middle-class tax rates won’t rise, as if this is itself a matter of justice. So where’s all the money going to come from to do all these amazing things? Eventually, it’s a huge increase in taxes for the middle class or nothing. This may not be a big political winner.

The progressivity of the American tax system puts big-spending progressives in a bind. They should want a consumption tax with a huge, wide base. The easiest way for government to devour ever-larger chunks of economic output is through the device of a slow series of very small rate increases on a broad base. The smaller the tax base, the more dramatically you have to hike rates in order to significantly increase revenue. But dramatically hiking rates tends to discourage political buy-in from those who must pay. Indeed, it tends to incite heated resistance. Obama did very well with the rich. But that may not last if he hits them as hard as it looks like he’s aiming to. At the very least, pushback from this very powerful bloc of voters will limit his success in raising rates at the top....But even the large [increases on the small tax base] leave him massively short. And government spending cannot be debt-financed forever. And he can only inflate so much of it away.

...Democratic strategists need to be looking at clever ways for the government to take a lot more money away from middle-class families without thereby making the GOP look golden again. Obama’s been behaving as though he’s much less fiscally constrained than he really is. But by catering to the idea that middle-class taxes shouldn’t ever go up, he’s making it even tougher on himself. Unless he’s in the middle of some kind of ten-steps-ahead rope-a-dope wherein reaffirming the middle class’ right to not pay taxes is a way of softening them up to accept huge tax increases, he may be making a mistake.


Even David Brooks is disillusioned by Obama's proposals:

...But the Obama budget is more than just the sum of its parts. There is, entailed in it, a promiscuous unwillingness to set priorities and accept trade-offs. There is evidence of a party swept up in its own revolutionary fervor — caught up in the self-flattering belief that history has called upon it to solve all problems at once.

So programs are piled on top of each other and we wind up with a gargantuan $3.6 trillion budget. We end up with deficits that, when considered realistically, are $1 trillion a year and stretch as far as the eye can see. We end up with an agenda that is unexceptional in its parts but that, when taken as a whole, represents a social-engineering experiment that is entirely new.

The U.S. has never been a society riven by class resentment. Yet the Obama budget is predicated on a class divide. The president issued a read-my-lips pledge that no new burdens will fall on 95 percent of the American people. All the costs will be borne by the rich and all benefits redistributed downward.

The U.S. has always been a decentralized nation, skeptical of top-down planning. Yet, the current administration concentrates enormous power in Washington, while plan after plan emanates from a small group of understaffed experts.

The U.S. has always had vibrant neighborhood associations. But in its very first budget, the Obama administration raises the cost of charitable giving. It punishes civic activism and expands state intervention.

The U.S. has traditionally had a relatively limited central government. But federal spending as a share of G.D.P. is zooming from its modern norm of 20 percent to an unacknowledged level somewhere far beyond...

The first task will be to block the excesses of unchecked liberalism. In the past weeks, Democrats have legislated provisions to dilute welfare reform, restrict the inflow of skilled immigrants and gut a voucher program designed for poor students. It will be up to moderates to raise the alarms against these ideological outrages.

But beyond that, moderates will have to sketch out an alternative vision...This is a vision of a nation that does not try to build prosperity on a foundation of debt. This is a vision that puts competitiveness and growth first, not redistribution first.

Moderates are going to have to try to tamp down the polarizing warfare that is sure to flow from Obama’s über-partisan budget. They will have to face fiscal realities honestly and not base revenue projections on rosy scenarios of a shallow recession and robust growth next year.

They will have to take the economic crisis seriously and not use it as a cue to focus on every other problem under the sun...

Malkin ridicules Brooks here.


Amateur hour at the White House. Obama thinks a monotonically decreasing price level is a gyration. What a sense of economic insight. Follow the links, especially the WSJ editorial.

More on the budget here.

Meanwhile Jennifer Rubin responds to White House nonsense and includes a quote from investor (and former Obama supporter) Jim Cramer:

Until the Obama administration starts listening, until they start paying attention to what you’re watching, to the stock market, until they realize that their agenda is destroying the life savings of millions of Americans, then all I can give you is caution. … I just want some sign that Obama realizes the market is totally falling apart. And that his agenda has a big hand in that happening.
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I think it's great.

1. Obama is scheduled to speak.
2. Short the stock market.
3. Obama speaks with a new initiative to save the country.
4. Make a killing on the stock market.

Can we get a new proposal from him this week too? There's still a good 6700 points to kill.

Posted by: Patrick at March 3, 2009 8:01 AM

"Incentives matter deeply and drive human behavior. It is a lesson statists and socialists never learn."

Truer words have never been spoken.

Posted by: Mike at March 3, 2009 8:29 AM

Given Obama’s radical roots and career (communist father; communist mentor as a teenager; ACORN, Alinsky etc. etc. etc. etc. etc. etc.), the premise of the following links – that he intends for the economy to continue to decline – while they sound farfetched, cannot be dismissed out of hand:

The Stimulus Bill Smells of Turpentine

The Cloward/Piven Strategy of Economic Recovery

This somewhat tongue-in-cheek gloating about how the Left pulled a fast one on the American public vis-à-vis pre-January 20th Obama being a moderate is also intriguing:

It's All about the Narrative: What does policy matter, when — it's historic, historic, historic — we've elected a black man president?

“And now, just as you have absorbed and internalized these stereotypes, here comes our boldest one of them all: capitalism = bad, socialism = good. ‘We Are All Socialists Now’ proclaimed Newsweek recently, in a cover story co-written by Evan Thomas, who totally coincidentally is the grandson of the six-time Socialist candidate for president, Norman Thomas.”

“Hence our blitzkrieg attack on Amerikkka this past month, which you wingnuts should have seen coming, and might have seen coming were it not for our control of the narrative. Heck, it wasn’t as if the Dear Leader and Teacher didn’t warn you. Sure, Hussein’s backstory didn’t stand much scrutiny. Sure, none of our finest Finemans ever explained who backed the Quisatz Haderach’s remarkable glide from Punahou to Occidental to Columbia to Harvard to Chicago to the state senate to the U.S. Senate to the White House. True, there was some oblique acknowledgment of his family’s radicalism, his strange mentoring by a Communist, Frank Marshall Davis, his admitted drug use, and the curious case of the editor of the Harvard Law Review who never quite managed to publish anything, although he probably shot plenty of hoops. And, of course, there was the mercifully brief flurry of interest in his relationships with the Rev. Jeremiah Wright and William Ayers — which thankfully John ‘Honorable Campaign’ McCain took off the table.”

“You had both houses of Congress, the presidency, and a majority of the governorships, and — thanks to the Honorable Campaign, the Gang of 14, and ‘power-sharing’ in the House — you blew it. You can bet we won’t be making that mistake. Nancy Pelosi has marginalized the House Republicans to the point of irrelevancy, and now comes word that the administration may consider using a procedural maneuver in the Senate to pass universal health care, put Marx and Engels on the currency, and mandate the singing of ‘The Internationale’ in schools in lieu of the Pledge of Allegiance with just 50 votes. You should have nuked us when you had the chance.”

Posted by: Tom W at March 3, 2009 9:57 AM

I think Holder spoke too soon on the renewed effort at the Assault Weapons Ban reintroduction and has galvanized resistance.Many newer Dems ran as somewhat social conservatives and won't commit political suicide by voting in a new AWB,which will guarantee serious losses for them in 2010.
I am also hopeful that the current economic woes and high unemployment will derail any generalized amnesty that Obama and his new toady at DHS,Napolitano,are hoping for.
The border drug war situation will influence all but the most asinine ethnic pimps to realize that border security is more urgent than any Afghan campaign.
Obama will run out of "honeymoon"status pretty quickly because the economic nightmare is beyond the ability of any politician to set right in the forseeable future.

Posted by: joe bernstein at March 3, 2009 10:22 AM

>>I think Holder spoke too soon on the renewed effort at the Assault Weapons Ban reintroduction and has galvanized resistance.

I'm not so sure.

A few weeks ago the new (Illinois originated) Secretary of Transportation floated supporting a "pay per mile" tax on drivers. That got swatted down by the White House after the reaction (or so they said).

One wonders if they're deliberately floating trial balloons to gauge what they can get away with?

Of floating trial balloons to distract attention from other "change" that we can't believe in?

Or all of the above?

With each day more and more are realizing that Obama's rhetoric is routinely contradicted by his actions, as he's steeped in the radical training of masking one's real agenda.

Posted by: Tom W at March 3, 2009 11:51 AM

I don't know, Tom.Ray Lahood,the knucklehead who proposed a mileage tax,is a Republican,who started out as a protege of Bob Michel.
I think Holder got cocky and had diarrhea of the mouth.He is so eager to impose his demented idea of "justice"on this country,he just can't wait.
I wouldn't be surprised if Holder goes after Sheriff Joe Arpaio of Maricopa County in Arizona on civil rights charges.Can't you just picture some creature like Steven Brown on his shoulder,whispering in his ear?
I think a lot of Blue Dog Dems got nervous with Holder blabbering about reinstituting the AWB.It played a major role in their defeat in 1994.
I don't see how this megaspending plan combined with higher taxes on those who provide jobs can succeed.I don't pretend to have any good knowledge of economics,but from what I've seen neither do economists.
I got very suspicious of the whole Wall Street milieu after the Enron revelations.It was like a distant early warning of a tsunami and no one paid attention.Both sides are to blame,and it is galling to be preached at by a money grubbing creep like Jack Reed.He took a payoff to look the other way as far as I am concerned.So did Dodd,Schumer,and Bunning.And I like Bunning's positions on most stuff,but he screwed up accepting the bankers money.
Bawney Fwank is in a class of his own as a lying scumbag.

Posted by: joe bernstein at March 3, 2009 10:43 PM
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