RALEIGH – There’s a new Democratic administration, the economy is faltering, and the Left feels more empowered than it has in decades – so get ready for talk of a new New Deal or Great Society. Time magazine couldn’t wait for the telltale explosion of new alphabet soup agencies next year to confirm the onset of Progressivism, Version 3.1, and decided to put a famous picture of Franklin D. Roosevelt on the cover of its latest issue, with Barack Obama’s face photo-shopped comfortably into place.
My guess is that Obama, a canny Chicago politician who outmaneuvered the Clintons and the Republicans to win the top job, is too smart to stumble into 1930s-era pump-priming or 1960s-era federal overreaching. Admittedly, however, my guesses haven’t always been on the mark lately.
Obama has two divergent paths ahead of him. One is named Roosevelt/Johnson. The other is named Clinton. The first path assumes a lasting Democratic majority and therefore the ability to enact radical restructuring of the nation’s governmental and economic institutions without risk. The second path recognizes that while Democrats had two good election cycles in 2006 and 2008, American political history isn’t over. The nation still has significant political divisions and disagreements. The electorate tossed out George W. Bush’s Republican party, for its own policy miscues and incompetence as well as the bad luck of being in power during an international economic downturn. But the public didn’t vote for a new New Deal or Great Society. Certainly Obama campaigned for neither. He campaigned as an economic-policy centrist, promising sound money and tax relief for virtually all Americans.
The Roosevelt/Johnson path ahead for the Obama administration would take the federal budget deficit far north of $1 trillion to engage in a variety of pointless pump-priming and make-work schemes. Just as Roosevelt’s New Deal postponed the nation’s recovery from the Great Depression for more than a decade, an Obama lurch into frenetic Keynesianism would further degrade the confidence of international investors in the American economy and protect faltering American industries from the necessity of change. Whatever resources the federal government devotes to “stimulus packages” must first be confiscated from the taxpayers – through either statutory tax hikes or inflation, which is a way to tax without enacting legislation. While increased federal spending may be associated with new jobs and income streams, the federal confiscation to pay for the spending increase is associated with lost jobs and income streams.
A net stimulus exists only to the extent that Washington knows better how to spend our money than we do. But Washington’s wisdom doesn’t extend very far at all, as evidenced by all the talk of bailing out Ford, Chrysler, and General Motors. Talk about throwing good money after bad.
My hunch is that Obama will pay lip service to the dubious schemes of Nancy Pelosi and Harry Reid, but will in the end decide on a more Clintonian course (an adjective I mean in a nice way, really!) Judging by how many Clinton veterans seem poised to advise or serve the Obama administration, there’s lots of evidence for my proposition. The Clintonian course for 2009 and beyond means eschewing trade protectionism, restraining the impulse to open the federal fiscal floodgates, and avoiding any declaration of war on American competitiveness in midst of recession – which would be the inescapable result of enacting Big Labor’s legislative agenda.
You better hope I’m right.
Hood is president of the John Locke Foundation