Now that Obama is the president, fasten your seat belts. During his first year in office, and particularly during his first hundred days, we are about to witness the most prodigious output of legislation since 1981-2 (under Reagan), 1964-5 (under Johnson), and 1933-36 (under Roosevelt). The combination of top heavy Democratic majorities in Congress and a mood of public fear bordering on panic over the financial crisis and the looming depression will speed his legislation through a compliant Senate and House.
We will enter his Administration as the United States, buoyed by an aggressive free market economy. We will exit his first year – and even the first hundred days – as France, burdened with massive government regulation, a vast public sector, and permanent middle class entitlements. And Obama will take care to arrange things so that massive and permanent political change accompanies his and protects his legislative achievements in the future.
He will call this radical change a stimulus package. He will dress up a generation of liberal priorities as necessary steps to fight the economic crisis. His programs and policies won’t do much to end the depression. It will end only after the massive burden of debt is lifted from the shoulders of American and foreign households and companies, a process which will take years. At most, his stimulus will act as methadone while we withdraw from our debt addiction, mitigating the pain, smoothing over the trauma, and soothing our system.
But Obama’s strategy is to hide inside the Trojan Horse of stimulus an army of radical measures to change America permanently.
The most pernicious of his proposals will be the massive Make Work Pay refundable tax credit. Dressed up as a tax cut, it will be a national welfare program, guaranteeing a majority of American households an annual check to “refund” taxes they never paid. And it will eliminate the need for about 20% of American households to pay income taxes, lifting the proportion that need not do so to a majority of the voting population. Unlike the Bush stimulus checks, this new program will be a permanent entitlement, a part of our budget that can only go up and never down. Politically, it will transform a majority of Americans from taxpayers, anxious to hold down government spending, into tax eaters, eager to reap new benefits.
The huge spending in his stimulus package will create a budget deficit topping one trillion dollars. Ronald Reagan cut taxes to raise the deficit to stop liberals in future years from increasing spending. Obama will raise spending to raise the deficit to stop conservatives in future years from cutting taxes. As he funds every liberal dream – from alternative energy production to infrastructure renovation to more federal revenue sharing – he will force a massive expansion in the size of government for a decade to come. If the proportion of our $14 trillion GDP absorbed by the public sector increases by $1 trillion dollars, it will mean that government’s share will rise from its current 33% to about 40%, bringing us close to the United Kingdom’s ratio. If Obama adds a major expansion of health care to the mix, the proportion could reach into the mid-forties, French and German territory.
And Obama will likely use the Trojan Horse of stimulus to make a down payment on health care reform, expanding public coverage of those now uninsured dramatically. Likely, he will initially use the State Children’s Health Insurance Program (SCHIP) as his vehicle. He will ask the same pool of doctors and nurses and the same amount of medical equipment to take on the care of almost 50 million more people, necessitating rationing of medical services. Those too old, too sick, or with bad habits like smoking, may find themselves fenced off from good medical care, even if they can pay for it themselves.
While he is making these major changes, Obama will permanently alter our politics by taking three steps designed to alter the political balance:
a) He will set illegal immigrants on a path to citizenship
b) He’ll pass the card check voting system for unionization, raising the unionized share of our economy
c) He will crack down on talk radio through requirements either for equal time or for local ownership and control – or both.
Most likely, Obama’s inability to tame the depression will erode his popularity during his first two years in office. But, by then, his proposals will be statutes. The fiscal parameters, the middle class’ expectations of no taxes and government handouts, and the demographics of our electorate will be changed forever.