President Obama’s Domestic Triumphs on the Eve of Independence Day

A couple of days ago, I summed up the Obama administration’s foreign policy for you (6/30/10 “Obama’s Wars – and Not Wars”). That was the bright side. This is still a sunny summer. I am as lazy as the next guy but I am retired so, I have decided it’s my duty to sum up everything you need to know about President Obama’s domestic policies thus far. It won’t take long. Stop reading right here if you are hoping for good news.

It’s true that the President inherited a massive financial crisis that turned into a recession (economic shrinkage) plus steep job loss. Personally, he had nothing to do with it. His party created it though. As far as we can tell right now, the crisis of the fall 1908 is entirely traceable to his party’s insistence that people without verifiable income and no collaterals should be given mortgages. From what we know, at this point, again, this is it. I mean that had banks been allowed to act according to their traditional prudence, there would have been no crisis. Again, we may learn later that the causes of the crisis are more complicated but, right now, there is no rival explanation anywhere, not with the Democratic Party, not from left-wing economist Paul Krugman.

There were two broad ways to try to re-start the economic engine of this nation. One was to cut taxes. (Has to be done for a long time otherwise, taxpayers don’t respond). That’s the conservative way The other, the Keynesian response, consists in engaging in swift government spending, again, to stimulate the remainder of the economy. Personally, I think the evidence in support of the appropriateness of the Keynesian response is slim. My judgment may not matter much because what the Administration did is not a Keynesian response which is supposed to be a brief, temporary remedy. It’s supposed be be followed in short order by super growth in the general economy and shortly thereafter in growth creation by the private sector. Economic growth has been anemic as compared to the aftermath of all previous recessions. That’s true whether those were given government spending remedies or not.

The last quarter, the economy grew at 2.7%. That would be kind of OK in normal times. In fact, in normal times, France or Germany would kill for such a rate. It’s not good enough for better-than- normal times; it’s nor nearly good enough for a period following a recession. There is more. See below. Net job growth in the private sector has been essentially zero. (“Net job growth” = jobs created – jobs lost during a given period.) But many jobs have been created in the government sectors. Since both states and local governments have been cutting back, it seems to me that nation-wide, job creation has been almost entirely by the federal government. If someone has data that contradict this supposition, I would like to know to correct myself here.

After a year and half of Obama administration, with both houses of Congress submissive to his will, we seem to have plateau-ed to the main economy features of a sleepy European economy. I hope this is just a phase. I hope my pessimism is unfounded. I would love to be shown where I am wrong. If I am right, no, it’s not the end of the world. Europe is not dead, after all. Rather, it’s the beginning of a long period of mediocrity for you and your children.

In the process of not solving the economic crisis, the Obama administration approximately doubled our national debt. A child born today already owes about $45,000. That’s about equivalent to our Gross Domestic Product per capita (the total value of all that Americans produce in one year divided by the number of Americans. It’s a very rough measure of average income. If you want to learn more, activate the link on this blog: “Dr J’s List of Words that Make you Sound Smart.” Otherwise, don’t bitch!) The debt owed by the average newborn is also equivalent to about two years of production of the average American worker. This means the following: If the average child wanted to pay off his share of the national debt before bringing any money home, he would have to work for two years before his first paycheck.

Unlike many conservatives, I am not necessarily against government debt. How tolerant I am depends on two somewhat related considerations. First, I want government borrowing to be linked to greater production or to improved productivity. Roads, harbors, Internet expansion, subsidies for some research and for some of higher education qualify. (The federal government has no business at other levels of education.) Filling the Social Security deficit, expanding government ownership of unproductive productive enterprise (GM), giving away money to the idle and even to the invalid, don’t qualify. Second, as much history shows, including the aftermath of WWII, high government debt is no big deal if government revenue increases naturally. This is not complicated: Roughly if the economy grows at 5. 4% per year instead of 2.7% per year, the government rakes in twice more money without raising taxes.

I am against raising taxes for three reasons. The first is related to what I just said; Raising taxes usually undermines economic growth. This, in turn, makes more of the government debt unsustainable. You don’t have to subscribe to the two others reasons to object on the ground of the first reason alone. Here are those two others reason. Every increase in taxation as a percentage of the total pie, corresponds to an increase in the importance of government relative to citizens and civil society (“Civil society” is that which we do organizationally on our own, without government framework.)  The larger the government’s slice of the pie, the greater the potential for tyranny big and small. My third reason is a purely moral one: Even in a constitutional system such as ours so far, ultimately, taxes are income taken from citizens by government under threat of violence. Legal extortion by one carrying a gun is still extortion.

I could ad a fourth reason but I don’t want to be taken too far afield. Here it is, FYI: By and large, the federal government does a bad job of spending my money. A recent scandal in the newspapers shows that the federal government does not know enough to bury the right body under the right name plate at Arlington National Cemetery. Not much gets as incompetent as this!

When presented with an environmental crisis made to order for this supposedly green administration, it failed monumentally. I am not referring to the gas spill itself. It’s possible to argue that it inherited bad supervisory apparatus from previous administrations (plural). I am talking about the clean-up endeavor. The Obama administration did little that was effective. If it did, the New York Times for example, or MSNBC, would be describing the Obama measures in loving details. After dumping bitterly on President Bush for his alleged passivity after Katrina, Democrats are reduced to looking for excuses for Obama’s much longer-lasting inaction. I said at the time, and I am saying now, that it’s not obvious the federal government should be dealing at all with disasters that are not of a military nature. Here are the differences with the Katrina precedent though: The Gulf oil spill is now an inter-state problem. The Commerce Clause of the Constitution has been used much more frivolously before to justify federal intervention. Second, the Bush administration never interfered with the application of solutions to the Katrina problems by states, local governments, and private organizations. Evidence accumulates that the Obama administration has interfered massively with such, actively and passively. I mean by “ passively’ such omissions as failing to suspend the Jones Act that prevented us from accepting help from the much experienced Netherlands.

The summary of this summary is this: The Obama administration is a complete domestic failure except in one area: It has vastly expanded the scope of the federal government. If that’s you wanted, you may count yourself a partial winner. If you don’t like this success, you lost, utterly.

Come November, citizens who don’t like an on-going catastrophe have to make sure we gain enough seats to paralyze this government fiscally, to defund it. That would be a moderate response. In 1776, Americans took up guns for much less. Read the second part of the Declaration of Independence. It will make you smile. You will have a hard time finding in it denunciations of abuses worse than what we have been suffering for a year and a half.

In the meantime, here is the first part of the Declaration of Independence:

When in the Course of human events it becomes necessary for one people to dissolve the political bands which have connected them with another and to assume among the powers of the earth, the separate and equal station to which the Laws of Nature and of Nature’s God entitle them, a decent respect to the opinions of mankind requires that they should declare the causes which impel them to the separation.

We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness. — That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed, — That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness. Prudence, indeed, will dictate that Governments long established should not be changed for light and transient causes; and accordingly all experience hath shewn that mankind are more disposed to suffer, while evils are sufferable than to right themselves by abolishing the forms to which they are accustomed. But when a long train of abuses and usurpations, pursuing invariably the same Object evinces a design to reduce them under absolute Despotism, it is their right, it is their duty, to throw off such Government, and to provide new Guards for their future security.

About jacquesdelacroix

I am a sociologist, a short-story writer, and a blogger (Facts Matter and Notes On Liberty) in Santa Cruz, California.
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2 Responses to President Obama’s Domestic Triumphs on the Eve of Independence Day

  1. Lmmore says:

    Any yes, the Republicans pretend to want smaller government and yet outsource as much as possible through their big corporate greed and monopolies.

    • jacquesdelacroix says:

      One thing at a time, Lmmore: I don’t know what Republicans have to do with corporate greed (which is fine by me, by the way, it supports my well-earned retirement benefits). I know well the connection between the current administration and crony capitalism: Who saved the moribund giant GM?

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