I don't really like to write about politics because, to me, it's mostly an elaborate game. I'm more interested in policy ideas that can be broken down into models, graphs, and numbers; and I usually look at policy judgments in terms of incentives and functionality. But Obama's presidency is an interesting case study in pure politics, just because of just how divorced the criticism of him is from the actual policies he pursues.
Ask anyone on the right, and Obama is "dangerous". He's a "socialist" who wants to "confiscate income" from businesses and redistribute it. That's kind of an article of faith for those on the right. But what's really remarkable is that not a single one of them can pinpoint anything that Obama's done that points in that direction. In fact, purely on policy grounds, Obama is a center-right politician. Now, there are a few lines of criticism of Obama that supposedly justify the "socialism!" claim, and I'll break thsoe down.
First, the public didn't like the idea of bailouts. Ignoring the economics for a second (and pretty much the entirety of the financial industry agrees that, absent massive stabilization, the entire economy would likely have collapsed), it's useful to point out that the overwhelming majority of the bailouts were passed under the Bush Administration. Under duress, a very right-leaning Administration decided that it couldn't afford to have the banks collapse on its watch, and OK'd a program that exposed taxpayers to nearly $1 trillion in losses (though Treasury eventually got repaid with interest, a fact no one seems desperate to bring up). So either the Bush Administration is the reincarnation of the Soviet Union, there's nothing functionally different about what the Obama peoeple did compared to the Bush people.
Second, the critics are angry about "runaway spending" and "super-high taxes." Which is another absurdity. You don't even need a model for it. The first step is to look at taxes. Since Obama took office, try naming a single new tax that's been enacted. You can't because it hasn't happened. In the depressed economy, Obama extended all of the Bush tax cuts, and threw in some more in the stimulus. Tax receipts are over $1 trillion below where they would have been had he done absolutely nothing and let the Bush tax cuts expire right on schedule. And taxes in 2009 and 2010 were around 14-15% of GDP. That's the lowest rate in any two-year period since 1949 and 1950. At which time neither Medicare nor Medicaid existed. But what about the "runaway spending"...? Well, turns out that's bunk too. And you realize it when you think about the issue for a second. Where are the armies of federal workers? The stimulus featured less than $100 billion a year over two years in direct governemnt purchases (the rest was tax cuts and aid to states and localities, whose tax receipts also tanked but who couldn't borrow). That's a little over 0.5% of GDP a year, which is negligible in the grand scheme of things. And the number of federal workers has actually been CUT since Obama entered office (a terrible idea on the economics, given, you know, the recession).
But what about the deficit? Aren't we running big deficits and running up the debt? Well, yeah. Here's where we play "fun with fractions." The deficit is the amount spent by the government minus the amount taken in in taxes. The annual deficit is then divided by the size of the economy (GDP) to evaluate how relatively big it is. Government spending went up a little bit after the economy tanked-- a tiny bit was the stimulus, and some was automatic stabilizers like unemployment insurance that kick in when the economy is depressed. But the amount taken in in taxes collapsed. The economy contracted and tax rates were slashed, so the 14-15% of GDP collected in taxes in 2009 and 2010 was actually even less than it appears at first glance. So the claim that we've got massive deficits is true (while we're not at full employment), but that's (temporarily) a good thing, especially while the government can borrow at super low rates. But the claim that massive deficits represent some kind of monster expansion of government is complete baloney. It's like saying that, because 6/5 is a bigger number than 7/8, 6 is more than 7 (if you think of the numerator as federal spending and the denominator as GDP).
The crux of this post, though, isn't to talk about Obama's politics per se, but to talk about his style, and the contrast to that of someone like Bill Clinton. Temperamentally, Bill Clinton was a centrist, but he was also very much an ideas person. Clinton's starting point when dealing with an issue was to consult his experts and get a feel for what the first-best policy was. Obama's starting point is to consult his experts, figure out what the first-best policy is, then figure out what the Republican position was, and come up with an idea that's right in between. It's the reputation he had as an editor on the Harvard Law Review, and it's the image that he projected when he ran for President-- as someone who would bridge the divide between the left and right and introduce a "new kind of politics." But it turns out that what works on the Harvard Law Review doesn't work in Washington. Obama thought Republicans would see that he was willing to compromise and negotiating in good faith and work with him to bridge the partisan divide. Instead, they laughed, moved the negotiating goalposts further to the right, and decided that Obama's "compromise" position was the new "far left" starting point. Then they branded him an Islamic socialist for good measure.
The conventional wisdom used to be that it was Larry Summers who pulled the President to the right on economic policy. Now, Larry Summers is an enormously well-respected economist, and very much a centrist. The idea had been that, in the stimulus debate, Christy Romer (who leans left) was pushing a full $1.3 trillion package, while Summers and Tim Geithner saw the stimulus as a way to avoid economic collapse, and so they didn't even let that option reach the President's desk, telling him that only $700-800 billion was needed. But curiously, that narrative has pretty much disappeared. Since leaving the Administration, Summers has been on message, preaching the need for investment in new infrastructure, education, and other capital investments, while noting the US's low cost of borrowing. In other words, he's sounded a whole lot like the much more left-leaning Mark Thoma and Brad DeLong (even Paul Krugman has more or less given up pitching the idea of stimulus; I think he thinks it's politically impossible). And transcripts from Obama's statements from around the time of passage seem to bear out that he knew full well the size of the stimulus that was needed, dropping the $1.3 trillion figure into public pronouncements. That indicates that it wasn't Summers that was pulling Obama rightward, but Obama himself who was reducing his negotiating position from, "What's the best policy?" to "How do I make myself look like a transcendent, non-partisan figure?"
All of this isn't to say that Obama is, per se, WRONG to want to bridge that partisan divide. He's entitled to his views, just as anyone else is. What IS wrong is the completely inexplicable claim that this temperamentally calm compromiser is an aggressive atheist Islamic Communist who's a half-step from turning the US into the USSR.
No comments:
Post a Comment