Understanding Obamas Budget

President Obama’s first budget, now available as a pdf “overview” online, is properly horrifying conservatives. And not a few moderates.

But really there is nothing remarkable in the budget. President Obama is doing what he said he would do.

• Moving towards universal health care.
• Increasing government education both at the college level and early-childhood period.
• Following through on the notion of a global warming crisis caused by carbon dioxide emissions.

All these actions are perfectly consistent with the liberal world view. In the first place, liberals believe that people should be freed from the burdens and responsibilities of ordinary life in order to enjoy a richer, nuanced experience. The ideal is a creative life as an artist, a writer, or an activist.

Cult author Joseph Campbell rather neatly encapsulated this philosophy with his injunction: “Follow Your Bliss.”

There’s one problem with this notion. It doesn’t work. Most people—nearly everyone—must work. Because underneath the vision of creativity is the reality of creation. We humans are animals that must eat every day and regenerate ourselves in our children.

So if you are going to live a life of creativity, someone else is going to have to do the dirty work of getting and making so that you can do the creating and the spending.

It may seem very harmless, but in practice it comes down to the freeloader problem. Or as Charles Hurt puts it:

Obama’s budget schemes to drain staggering amounts of money from people who worked for it and steer it to people who didn’t.

This isn’t the free market. It’s the freeloader market.

Up in the higher reaches of the educated elilte, people can afford to spend their lives as creative artists following their bliss. Maybe they have a trust fund. Maybe their parents can kick in some Economic Outpatient Care to keep them going. Maybe they have the talent or connections to find a cosy academic sinecure or a berth in a liberal foundation.

But unless you have a strong work ethic, the follow-your-bliss ethic descends quickly into pathology. It ends up as the “freeloader problem.”

There are a lot of people in any society who will game the system so that they can coast along without contributing to society. Mankind has come up with a way of dealing with them. It is called Shame and Guilt, and is usually institutionalized in religion.

But our liberal friends have carefully dismantled the social controls of shame and guilt and have declared war on organized religion. That is because they want to do things that are shameful. They want to have various sexual liaisons. They want to have their health care prepaid. They want to be able to go to school indefinitely. They want to end up, if possible, in some cosy academic sinecure “doing research.” In other words, they don’t want to have to put their shoulders to the wheel and contribute. They want other people to put their shoulders to the wheel.

The huge social consequence of this is only beginning to show up. The consequence is not hard to predict. People have a choice. They can put their life energy into the world or they can take energy out. People that takers will find themselves withering away, condemning themselves to irrelevance.

When President Obama presents a budget that encourages the freeloaders, he is setting on a course that can only end in tears.

Obama Back to the Future

We conservatives thought that in 1981 with the election of Ronald Reagan that the United States had taken a path of no return. There could be no return to the disastrous policies of the Carter administration, with its synthetic-fuels energy policy, its inflation, its gas lines, and its retreat in the cold war.

Yes. Remember “synfuels?”

We conservatives believe that government doesn’t do anything well, and does a lot of things really badly.

We thought we had elected Ronald Reagan to put Big Government behind us, gas lines behind us, inflation behind us. We thought that, by the end of the 1980s we had demonstrated beyond a doubt that the future belonged to a low tax state that kept out of the way and didn’t try to administer the economy from Washington DC.

We knew all along that our liberal friends hated all this. But they didn’t dare to poke their liberal ideas above the parapet, at least not without camoflage.

But all along, we can now see, in the morning after President Obama’s first speech to a joint session of Congress, they longed to get back to their liberal agenda. They wanted to direct the economy. They wanted to administer health care and education and increase the government’s power in health and education. And in the thirty years since the end of the 1970s energy crisis they found a new way to politicize the energy business, through the notion of saving the planet from global warming.

We conservatives believe that the administrative society is a recipe for disaster. That’s the Hayek Principle. The man in Washington cannot know enough to direct the economy. Government policies picking winners and losers usually ends up backing the loser. Government administration of health care and education and welfare has been a waste. And increasing the government role is likely to make things worse.

We conservatives think that the global warming notion is mistaken. The earth’s climate fluctuates in all time scales and though the production of greenhouses gases may have affected the climate, the change not likely to be catastrophic. In any case, it will probably be better to adapt to changes in climate rather than try to steer it by carbon taxes and subsidies for renewable energy.

Then there is the question of marginal tax rates. We believe that tax rates should be low and uniform, with a bias towards lower taxes on the lower paid.

President Obama is setting the course of the United States firmly in the direction of the liberal administrative state. We believe that this will end in tears. We also believe that the American people will react pretty strongly against it.

The American people will reject the Obama agenda for one good reason. Call it the Santelli Principle: Government must not make chumps out of ordinary hard-working people by subsidizing idleness and recklessness. Reformers in the late 19th century emphasized this strongly. Welfare, they insisted, must not be bigger than the wage of an unskilled manual worker. Otherwise you make the struggles of the respectable working class worthless. You make them into chumps.

Here’s an example of what I mean, from Politico’s Andy Coller. He’s writing about people upset by President Obama’s $75 billion homeowner bailout plan.

According to the Rasmussen poll, even 49 percent of Democrats oppose mortgage subsidies like the ones Obama has proposed.

Among them: Lynn Powers, 39, a Bethesda, Md., resident who describes herself as a “liberal Democrat” who has been hardworking, prudent and responsible — and now feels “like a fool.”

Maybe President Obama has created a new group of refugees from the Democratic Party: The Santelli Democrats.

Anyway, the battle is joined. The liberals have rejected the Reagan recipe of smaller government and low tax rates. They have started down a path that will either win them the support of the American people for a generation, or they have accelerated the nation towards a disastrous smashup.

One way or another, at the end of it, we shall have decided the direction of the nation. Let’s just hope that not too many people get hurt in the process.

Flailing Around in Washington

If things weren’t bad enough, Senator Chris Dodd (D-CT) isn’t making things any better. Instapundit Glenn Reynolds is careful to post an item about the author of the banking crisis, Friend-of-Angelo Chris Dodd, every day.

On Friday, Senate Banking Committee Chairman Christopher Dodd, D-Conn., mouthed off that the government might have to nationalize some big banks. Such a move would clean out investors, and investors reacted accordingly.

If you read the late great Michael Kelly’s essay “Ted Kennedy on the Rocks” in Things Worth Fighting For you learn that back in the 1980s Senator Chris Dodd was not reading up learned tomes on credit and banking, diligently preparing for the chairmanship of the Senate Banking Committee. No, he was getting roaring drunk at La Brasserie with Ted Kennedy.

It is after midnight and Kennedy and Dodd are just finishing up a long dinner in a private room on the first floor of the restaurant’s annex. They are drunk. Their dates, two very young blondes, leave the table to go to the bathroom. (The dates are drunk, too. “They’d always get their girls very, very drunk,” says a former Brasserie waitress.)

I could go on, but I won’t.

What this country needs is a lot less of the political elite grabbing on the wheel of state, and a lot more power and responsibility devolved to ordinary businessmen and ordinary consumers. For over a century, the Progressives and their heirs the liberals have been “calling the big shots” on everything from banking to health care to education to welfare and the results are in. They screwed up.

America needs a system that doesn’t depend on wise men in Congress or the bureaucracy or the Treasury or the Federal Reserve. There’s a reason for that. The wise men don’t have a clue.

• We need an economy that’s a lot less about debt and a lot more about equity.
• We need a politics that’s a lot less about patronage and federal dollars and a lot more about setting rules for everyone to honor.
• We need a culture that’s a lot less about personal creativity and a lot more about creative thinking about what we can do for other people.

The world isn’t a global village. It can’t be run by the village Big Man ordering around his deferential villagers.

The world is an organism. It runs according to ideas and notions that we hardly grasp. That’s why we need to be conservative about the powers we loose into the world, and we need to be especially careful about the powers we give to politicians.

Hey, there’s a concept. How about a greater separation of powers between the economic sector, the poliltical sector, and the moral/cultural sector! Then we could keep politicians in their place, bankers in their place, and moralists in their place.

That would at least be better than the Amateur Hour running right now in Washington DC.

Market Shrugs Bank Announcement

This is when you start to worry. The Obama administration announces its determination to shore up the banks, and the market shrugs. Well maybe the market will think it over.

According to Binyamin Appelbaum the government is easing up on the banks.

The federal government will ease the terms of its investments in more than 350 financial institutions to increase the benefit of the taxpayer dollars while reducing the cost to the banks, regulators announced this morning.

"The government will ensure that banks have the capital and liquidity they need to provide the credit necessary to restore economic growth," said a joint statement issued by the Treasury Department, Federal Deposit Insurance Corp., Office of the Comptroller of the Currency, Office of Thrift Supervision and Federal Reserve.

Hmm. Things must be worse than we thought. So now the market is saying that we need more than joint announcements. We need concrete actions that demonstrate the administration’s determination to heal the credit system. Talk won’t do it.

Here’s a suggestion. Kill the stimulus bill and kill the bailout of the ten percent who can’t afford their mortgages. Before we butter up the Democratic faithful we’ve got to get the banks right side up.

You begin to see the cost of the Obama administration’s first month when it concentrated on sluicing money at its base instead of hitting one out of the ballpark on economic recovery.

The economy is, to an extent we don’t always appreciate, is a question of confidence and trust.

Yet everyone thinks that businessmen are crooks. We can thank the great political ascendancy of the last century, the progressive educated elite, for that. They have written in a thousand books and a thousand movies that businessmen are crooks and only progressive politicians really care about people.

Well, they are wrong. Business is, more than we know, built on trust. In business, you do whatever it takes to deliver good product to the consumer. And politics, as we’ve always suspected, is built on ruthless fighting and competition for the levers of power. You do whatever it takes to get elected. Notice the difference.

As the Obama administration plays out, we will see how much this fundamental misunderstanding of the nature of business and economic activity will mitigate the success of President Obama.

The problem is, of course, that when the politicians screw up, the people get to pay for their mistakes.

"A Nation of Cowards"

This week everyone’s all riled up about Attorney General Eric Holder’s “Nation of Cowards” speech.

But why? Holder is inviting everyone to have a national conversation about race. Said he:

[T]hough there remain many unresolved racial issues in this nation, we, average Americans, simply do not talk enough with each other about race.

And we are cowards for not having the courage to talk about race.

I agree, completely. But not, perhaps, in the way that the Attorney General means.

For over thirty years, ordinary Americans have been afraid to talk about race for a very simple reason. Americans want to avoid being stigmatized as racists. But why? Aren’t we all Americans? Can’t we just get along? No, senator. Because there’s a problem.

In America today, if you disagree with a liberal on race, the liberal will call you a racist. If you disagree with a liberal on women’s issues, the liberal will call you a sexist. And if you disagree with a liberal on gay rights, the liberal will call you a homophobe.

There is a reason why liberals do this. They do it to shut people up. And we let them.

So I take up the challenge issued by the nation’s first black Attorney General. I will not be cowed. I will not be silent. I will not truckle to liberals that call me racist. I will stand up to them. I believe that people should be judged upon the content of their character, not upon the color of their skin. And I believe that, in America, in the 21st century everyone should be equal under law.

I believe that:

• If you support affirmative action you are a racist.
• If you talk about “diversity” you are probably a racist.
• If you talk about “underserved communities” you are probably a racist.
• If you want to curb “hate speech” you are probably a racist.

Yes, you could say I’m mad as hell and and I’m not going to take it any more.

I notice in your speech, Mr. Attorney General that you deplore that an America with integrated workplaces is still “voluntarily socially segregated.” You recommend:

As a nation we should use Black History month as a means to deal with this continuing problem. By creating what will admittedly be, at first, artificial opportunities to engage one another we can hasten the day when the dream of individual, character based, acceptance can actually be realized.

Then you go on to say that we will need Black History until “until black history is included in the standard curriculum in our schools.”

Oh really. The reports that I get is that the schools discuss almost nothing else, unless they are talking about feminist history.

If America is socially segregated, then I suggest that government officials should stay out of it. Politicians, are after all, the masters of division. That is what they do. They get up on the hustings and they endeavor to carve out 50 percent plus one of the voters. They divide people into Us and Them. They conduct civil war by other means.

We will never solve America’s race problem until we take race out of poliltics.

And we can, because while discrimination surely still exists, it is a hurdle to jump, not an impassable barrier.

So go ahead, Mr. Attorney General. Make my day. We, the American people, woujld be delighted to stop being cowards, and instead risk our lives, our fortunes, and our sacred honor fighting against the liberal race bullies.

We look forward to the day when, after putting the nation through decade after decade of confflict over race, the average American just gets fed up with liberals and completely refuses to listen to another word on race.

We know what will happen next. It will be like a scene in a movie.

Racist Liberal (pouting): [I]f you go, where shall I go? What shall I do?

Ordinary American (shrugging): Frankly, my dear. I don’t give a damn.

The "Obama Winging It" Meme

First we hear that the Obama administration isn’t really ready for prime time. Now Karl Rove suggests that the Obamians are “winging it.”

He’s probably right. Our Democratic friends tend not to pay much attention to capitalism and the way it works, except to rail against it and propose a new intervention to correct “market failure.” Democrats like to think of themselves as the intelligent people, and like to think that they can come to Washington, apply some intelligence to the mess left by the Republicans, and then get back to the stuff they do best, which is handing out benefits to the party faithful.

They would probably be better advised to take capitalism and its development dead seriously and to make sure that they have people on their team who really have a deep understanding of markets and the modern economy. But it looks like they don’t.

So we get the stupid waste of the “stimulus” bill. We get the reckless calls for bank nationalization. And we get the Obama proposal for bailing out homeowners.

Iain Murray has looked at the Obama mortgage relief plan, and he doesn’t like it.

[P]eople who have their loans modified to help them out actually redefault for the most part. The latest figures indicate that 36% redefault after just three months, and by eight months it’s almost 60%. There is no evidence to suggest that this new mortgage restructuring plan will be any more successful.

The markets are looking for policy that will give them the confidence that we are turning the corner. The mortgage refief plan doesn’t do that. Says Murray: “Moreover, by delaying the "clean break" that foreclosure actually represents, the plan actually subsidizes harm with taxpayer money.”

Right now the M2 money supply is soaring. So you’d think that the economy should turn pretty soon. But maybe it will all go into inflation. Gold is up sharply in the last month.

The Obama administration better get its act together soon. It’s wasted precious opportunities already in the first month of office. It needs to make sure that it starts to get things right. It may not be possible to blame everything on George W. Bush, as Democrats did so well in the 1930s when they failed to get the US out of the Great Depression. “History repeats itself, first as tragedy, second as farce,” according to Marx.

Taking on the Powerful

We all know that the Fourth Estate is a keystone of democracy. We need journalists because they “speak truth to power.”

NOT.

When they talk like that, journalists usually mean criticizing the president, government, and big corporations, writes Jonah Goldberg. But the fact is that it doesn’t cost you anything to criticize traditional villains. In fact, if you criticize the president, the publicity might make you a fortune.

In fact, journalists seldom speak truth to power unless there’s blood in the water. And that’s just where politicians and local bigwigs are the targets. There’s another problem, says Goldberg:

I’ve met innumerable writers and editors who are scared, even terrified, of one or more of these groups: gays, blacks, Latinos, Asians, Jews, feminists, evangelical Christians and the handicapped.

Yes. You would think twice before speaking truth to powerful gays or powerful blacks. (But be specially careful of riling up cat lovers, warns Jonah).

Of course there is a reason why you shouldn’t criticize gays, black, Latinos, etc. They are protected groups, and they are the mailed fist of the Democratic Party. (Is it really dangerous to criticize Christians? I hadn’t noticed.)

We know why it’s dangerous to criticize protected groups. Liberals like it that way. It serves their political interests. If you can’t criticize blacks then you can’t effectively campaign against affirmative action and quotas. If you can’t criticize gays then you can’t campaign effectively for the traditional family. Liberals like it that way.

For conservatives to make progress in the culture war it is going to be necessary to develop the courage to “speak truth to power,” in other words, speaking truth to the client groups of the liberals and the Democratic Party.

It’s an issue that was raised by the industrious mice in Beatrix Potter’s Tailor of Gloucester. Who will bell the cat?

The fact is that it is going to take a few suicide volunteers to turn the tide on this, people willing to risk their career, their reputation and everything. That is the real meaning of “speaking truth to power.” Because, as we all know, if you disagree with liberals on race you get called a racist. And if you disagree with liberals on gay rights then you get called a homophobe.

Most of us will do anything to avoid that.

Stimulus: A Clash of Faith

These days we live in an age of reason. Everyone claims that their ideas about politics and economics are driven by reason and science.

But that is wrong. We live in an age of faith, an age of faith in science. Everything comes down to faith.

And that goes for economics too.

The “stimulus” bill that President Obama is signing today is an act of faith. Ever since the late 19th century a large group of the western elite has believed that capitalism is inherently unstable, and can only succeed if minutely regulated by large-minded people like themselves. We generally call these people liberals or progressives.

Against this movement is another group and another belief system, one that we call the conservative movement. It believes that by and large, if framed by appropriate laws, the free market economy can run itself subject to the fluctuations of the business cycle, and that the interventions of large-minded people usually make things worse.

In the Reagan-Bush era conservatives believe that we made the point pretty clearly that a regime of stable regulation of business, a sensible and simple tax regime, and a level playing field is the best approach to political economy.

But our liberal friends hated every moment of this period. Because their faith says that you need people like them to help the helpless. If you don’t have minute regulation of the workplace, they say, people will be brutally exploited. If you don’t give targeted groups a helping hand then these traditionally marginalized groups will never succeed in reaching the mainstream of American life.

Arguments like this don’t get settled over the dinner table. They are fundamental arguments of faith, and only the clearest and most brutal experience will ever change minds.

In my view the present “stimulus” bill is the Last Hurrah of the interventionist faith. After the Obama era is over, there will be a lot fewer people that believe in government intervention to fix the economy.

The argument against the liberal faith has been developed by many people over the years, most notably by F.A. Hayek, who argued that the “man in Whitehall” or Washington just could not know enough to regulate an economy. It has been most powerfully made by the disastrous economic record of socialism and communism (and in a short while by the Bolivarian Revolution in Venezuela).

But our liberal friends can’t bring themselves to abandon their faith in their own ability to create a better world through detailed and comprehensive government administrative programs. And so we are going to have to descend into the pit before we will get to junk their whole cruel, corrupt, wasteful, unjust, and deluded welfare state.

Learning from the Secret of FDR's Success

The conventional line on the New Deal is that FDR captured a generation with his New Deal programs. Sure, they didn’t all work, but they gave people hope.

Not exactly, writes Michael Barone. What put FDR into the pantheon of national heroes was World War II.

In 1938 the Democrats suffered a meltdown.

In the 1938 off-year elections, Democrats lost 81 House seats, 51 of them in the industrial belt from Pennsylvania and Upstate New York west to the Upper Midwest. The Democratic governors of Michigan and Ohio were defeated for re-election. The congressional district that included Flint, Mich., site of the first sit-in strike, went from Democratic to Republican; so did most congressional districts in Ohio.

The 1938 elections didn’t return the Congress to Republican control but the 81 seats that changed hands almost wiped out the 92 seats that had gone Democratic in the 1932 election.

So the Republicans were looking good for 1940. But then along came World War II and Americans decided to stick with FDR. A whole generation went to war, and found that government could get things done. Then they went home and got an education on the GI Bill. Hey, government really worked for those people, so they went to work and voted Democratic. After all, they had benefitted from government programs. They owed the generations coming after them and wanted to give them a helping hand.

So what? What does that have to do with today?

I think that the Democrats are completely misreading the American people if they think that it’s time for a New New Deal. And they are kidding themselves if they think that the American people are going to swallow the stimulus package. Today’s Americans—outside the political looter class—don’t think that government works. They don’t think that Senator Harry Reid (D-NV) and Speaker Nancy Pelosi (D-CA) are noble public servants. And they will soon start to think that President Obama is just the President of the United States and not a hope-and-change phenomenon.

The Democrats have been playing a high-stakes game with the American people. They insisted that President Bush was uniquely stupid and that Republicans were corrupt and dominated by the right. They, the Democrats, were the friends of the middle class.

That’s all fine and good. Everyone gilds the lily when running for office. But when you actually get elected you really ought to at least go through the motions of pretending that you meant all that stuff.

But no. The Democrats arrived in Washington last month thinking that they were at First and Goal rather than First Down on their own 20 yard line. So they nominated a bunch of lobbyists and tax cheats to the cabinet. So they passed a “stimulus” bill that shovels money at people already in receipt of staggering amounts of government spending. So they shoved through a partial repeal of welfare reform.

Here’s a fearless prediction. I’ll bet that very few centrist Obama voters thought they were voting for a repeal of welfare reform. They are really going to get a shock when Republicans tell them that their Democratic congressmen voted to turn back the clock on welfare.

Recalled to Life

Remember “Recalled to Life?” It comes from A Tale of Two Cities, Charles Dickens’ romance about the French Revolution. The phrase referred to Dr. Manette, imprisoned in the Bastille and now released.

For years Republicans and conservatives have felt a bit like they were imprisoned, or at least uncomfortably shackled.. The long withdrawing roar of the Bush administration and the cold-cock politics of the Democrats put decent, common-sense reform in the meat locker and sadly depressed Republican morale.

But now, in a short three weeks, the Obama administration has Recalled the conservative base to Life. In the lobbyist-fest of the Cabinet nominations, in the pork-fest of the stimulus bill, in the stealth repeal of welfare reform, we are reborn. Thank you, Mr. President, we needed that.

Now we know. There is no Hope. There is no Change. There is nothing to Believe In. It is back to business-as-usual. The Obama administration is giving the clearest signal you can give that the Democrats have not changed. In fact, they are beside themselves in pent-up frenzy after having to pretend throughout the Clinton era that they were really “new” Democrats who weren’t at all like the McGovern Democrats of the 1970s or the San Francisco Democrats of the 1980s who always “blamed America first.”

After years of patient message management and brilliant tactics the Democrats got the American people to believe that they were the party of the middle class and that the Democratic Party was a center-left party and that the Republicans were dominated by the right. You gotta say: they did a remarkable job with that message.

But now it looks like the Democrats under President Obama, Speaker Pelosi, and Majority Leader Reid are throwing off the cloak of invisibility. Underneath all that rhetoric they are liberal Democrats, and that means they believe in the neo-feudal welfare state and its huge patronage systems. They are building a land of great fiefs, vertical hierarchy, and a sea of helpless peasants.

Back in November, I voted for Barack Obama because I thought that, after four years of the Democrats in power, the American people would be ready for a Republican age of reform. Silly me. How wrong can you be?

It’s beginning to look as if the American people will be ready for Republican reform in about another month.

So I think I’ll take time this weekend to make my first contribution to Sarah Palin’s new PAC. Money, said Jesse Unruh, a California sate politician, is the mother’s milk of politics.

But isn’t this all too much too soon? Not really. Here’s the Four Step program I see in the months ahead.

1. Energize the base.
2. Start the money flowing.
3. Organize.
4. Start a conversation with the American people.

So let the games begin!

The Stealth Repeal of Welfare Reform

It is cruel, Mr. President. It is corrupt. It is wasteful, it is unjust. And it is delusional.

What I am talking about? I am talking about the reports from Benjamin E. Sasse and Kerry N. Weems, Mickey Kaus and from Robert Rector that your stimulus bill is repealing welfare reform.

All reports agree that the provisions in the bill that remove incentives to the states to reduce welfare caseloads will result in expansion of welfare programs. The bill will result in a return to the status quo ante 1996. And that is wrong.

I think it is fair to say that nowhere, Mr. President, did you say that you would be turning back the clock on welfare reform. I am talking about the rotted, dysfunctional welfare system that had been a national scandal for 30 years before President Bill Clinton signed off on the landmark reform bill in 1996.

The Obama administration has no mandate to roll back welfare reform. None at all.

This is wrong, Mr. President. It is cruel, corrupt, wasteful, unjust, and it is deluded. Let us count how this is so.

1. Cruel: Let’s roll the Ellwood and Jencks chart from their 2004 report on welfare. Need I say more? It is cruel to destroy the low-income family in America with your welfare benefits.
2. Corrupt: Let’s face it. We know why liberals like welfare. It is about patronage, about the same as pirate captains sharing out the plunder. Liberals share the wealth because that is how they buy the patronage support of Democratic Party rank-and-file voters. And then, of course, liberals get to award themselves big administrative jobs to hand out the loot. Pensions too. This is corruption, pure and simple.
3. Wasteful: I could go on and on. There is the waste of taxpayers’ money. There is the waste of the lives caught up in the “poverty trap” of welfare. There is the waste of talent in the people who supervise and administer the programs. There is the waste, dare I say it, of scarce global resources at a time when we are trying to save the planet.
4. Unjust: It is a gross injustice to force Americans to pay for this expansion of welfare. There’s a penalty for injustice, and it catches up with you in the end.
5. Deluded: Yes, liberals. Go ahead. Make my day. If you think that this is just a cute little sweetener for your friends, you don’t understand what you are doing. Let us leave aside the record of thirty years of social science, of political philosophy, of simple decency and common sense, all of which thunders that government welfare is a terrible idea that devastates lives. There is the simple politics of it. Government welfare is very unpopular with the voters. They hate it.

There is only one thing to say about the monstrous repeal of welfare reform by the Obama Adminstration and the Democratic Congress.

This shall not stand.

The SNL Administration

I haven’t watched prime-time TV for 15 years. But I know that back in the day Saturday Night Live developed the concept of “not ready for prime time.” Not that I ever watched the Not Ready for Prime Time Players. (But I did just check Google to make sure I had my facts straight.)

It was common knowledge that the Clinton administration was not ready for prime time in 1993. And now it is looking like the same is true of the Obama administration.

Certainly the Obamites have swung and missed at three pitches in a row. First of all there was the “stimulus” bill that isn’t. Then there was President Obama’s first prime-time press conference. (A non-political friend call and said: R-O-O-K-I-E!)

Now we’ve just had to go through Treasury Secretary Tim Geithner’s not-read-for-prime-time performance on completing the bank bailout. Writes Larry Kudlow:

On Tuesday morning, stocks opened down about 75 points in the wake of Obama’s pessimism. But stocks really started to tumble when Tim Geithner stepped to the microphone. He totally bombed in his debut.

Geithner had no real plan to deal with the problem of unmarketable toxic assets on bank balance sheets. He offered no new architectural structure, no good way to remove the toxic assets, no clear pricing or funding proposals, and no meat on the bones.

Look. I’m a conservative and a partisan Republican. I have no debt and cash in the bank. What do I care if the Obama administration totally tanks and fails to fix the most important government program of all: the government-run and government-dominated credit system? Hey, all this stumbling and bumbling has energized the Republican base like you couldn’t believe.

(Yes. Forget the idea that the banks are private. Banking has been a government-regulated business since whenever. And it has been totally in the pocket of government ever since the Federal Reserve System was formed in 1913.)

(And if you wonder why bankers get all those bonuses, remember this. State and local government workers earn about 50 percent more that comparable workers in the private sector. So why shouldn’t government sponsored enterprises like the banks earn more than ordinary mortals too?)

But the fact is that the people who are going to be hurt by all this are the Democratic faithful. They are the people who got suckered into mortgage loans they couldn’t afford. The people who work in retail. The people who work at the less desirable trades in construction.

So I do care. And I wish that the Obama administration would get its act together, stop playing politics, and get the economy back on track. It’s not that hard. First of all, we’ve got to do Stage 2 of the bank bailout. We’ve got to get the bad loans off the books of the banks. We did that after the S&L meltdown (another Democratic program that went south). Secondly, it wouldn’t hurt to throw a lifeline to small business. Try something like a cut in the FICA tax, the tax on jobs. Try lowering the corporate income tax rate.

But let’s do one thing right now. Let’s stop throwing money at the Democratic establishment. They get 20 percent of GDP to play with already, and have just about zero accountability. So why load ’em up with more? They’ll just waste it.

Stimulus: Administrative vs. Incentive

The good thing about the Obama administration is that it gives the nation a clear experience of the difference between the two political parties.

Like the “stimulus” package. It clearly reestablishes the Democratic Party as the party of the administrative solution. Got a problam? Design a program and administer the people and resources needed through a bureaucratic, political process.

By comparison, here is Republican Newt Gingrich’s 12 Point Plan, which almost 100 percent pure incentive.

1. Payroll Tax Stimulus. Cut FICA, the tax on jobs.
   
   
2. Real Middle-Income Tax Relief. Reduce the marginal tax rate of 25% down to 15%.
   
   
3. Reduce the Business Tax Rate. Match Ireland’s rate of 12.5% on corporate income tax.
   
   
4. Homeowner’s Assistance. Provide tax credit incentives to responsible home buyers.
   
   
5. Control Spending. This begins with eliminating Congressional earmarks and wasteful pork-barrel spending.
   
   
6. No State Aid Without Protection From Fraud.
   
   
7. More American Energy Now. Explore for more American oil and gas, plus clean coal, ethanol(???), nuclear power and renewable fuels.
   
   
8. Abolish Taxes on Capital Gains. Match China, Singapore and many other competitors.
   
   
9. Protect Our Right to Vote in the Workplace. We must protect a worker’s right to decide by secret ballot whether to join a union.
   
   
10. Replace Sarbanes-Oxley. This failed law is crippling entrepreneurial startups.
    
    
11. Abolish the Death Tax.
    
    
12. Invest in Energy and Transportation Infrastructure.
    

Notice the difference between this plan and the president’s plan for admininstrative distribution of government handouts for this administered idea or that administered idea; this cash handout versus that cash handout? It’s the difference between an administrative world-view and an incentive world-view, between the notion that you must lay out the specifics of what you want to do, and the idea that you only need to lay out the incentives and people will respond positively and competently.

It all goes back to my Two Nations concept. We really are two nations here in the United States, between whom there is no understanding and no sympathy. Take any difference: Venture Nation versus Tenure Nation. Contract Nation versus Power Nation. The difference between conservatives and liberals is as clear as day.

Or take today’s example: Incentive Nation versus Administrative Nation.

Let's Be Serious, Mr. President

It’s sometimes hard to remember, but governments are instituted among men for serious reasons. The principal reasons are to secure peace at home and abroad and provide a platform for people to go about their daily lives and earn a living.

In the modern era, that means a functioning credit system. As long as the credit system is sound, then everything else will fall into place.

So when the Obama administration put off the announcement of Bank Bailout Part II, to clear the decks for Senate passage of the so-called stimulus bill, you could say that it demonstrated as clearly as can be where its priorities lie.

First of all we service the Democratic faithful with a trillion dollar bonus. Then we fix the economy. Thanks, Mr. President.

Mr. President: I am sorry to say this, but you are wrong. You are making a terrible mistake.

The only thing that is important right now is to finish the business of righting the credit system, to recapitalize the banks and to do something about the toxic debt. That’s what you need to restore confidence in the banks, and get the economy moving again.

But that’s not what the Obama administration has elected to do. And it speaks volumes.

There’s a lot of political hot air venting right now about bankers dealing themselves big bonuses. Although it is small potatoes, it is scandalous. What we have seen in the last year is that the big beasts of Wall Sreet aren’t as big and aren’t as smart as they thought. There’s a simple reason for this. The credit system is not a glorious triumph of the capitalist system. Not at all.

The credit system is a government program, and has been ever since the Federal Reserve Act of 1913.

What does that mean? It means that the government is responsible for the monetary and credit system, and the bankers are just subaltern clerks. It’s the government that mucked up the credit system with its foolish idea that it could shovel credit at low-income homeowners without creating an economy-wide housing bubble. Now it’s the government that must clean up the mess it made.

The fact that the bankers thought it was time to hand out bonuses shows how dumb they really are.

OK, so the bankers are dumb. But the Obama administration is dumber. It would rather focus on increasing Medicaid grants to the states, and building important universities and a thousand other pet projects than fixing the credit system that it broke with its Fannie Freddie catastrophe.

I can’t say that I’m disappointed. I am getting exactly what I hoped for when I voted for Obama.

I felt that it was time for a change from the seriousness of the Bush Administration. Democracy, we know, is the system where the people get what they want: good and hard. And what the people need right now is a four-year demonstration of the unserious nature of the today’s liberal Democratic oligarchy.

It looks like we are going to get just what the doctor ordered.

The How and the What

In government there are two ways of looking at things: how you do things—the process and the image—and then there is the what, the actual policies and ideas that you implement in law and regulation.

President Obama ran as a how candidate, according to Kimberley A. Strassel. He wanted us to judge him on the way he was going to do things.

It was all about how he was going to do it — with bipartisanship and ethics and a new era of "responsibility." Now comes the reckoning. President Obama is being judged not on the what, but the how.

Well, it’s one thing for liberals to talk to themselves about ethics rules and process, and blow clouds of smoke about Hope and Change. But the truth is that government is about force. In our case, it is $5.5 trillion a year of force budgeted or estimated in FY09 at all levels of government, according to usgovernmentspending.com.

So the bottom line is that, what with the gigantic amounts of money swilling around in government, almost anyone who has had something to do with government has got their hands dirty. That creates problems when you advertise, as President Obama does, that all can be fixed with the proper process.

His first full day in office, Mr. Obama imposed the "most sweeping ethics reform in history," barring officials from working on issues on which they’d lobbied in recent years. Then came the realization that a lot of really smart people hadn’t just sat around for years waiting for him to give them government jobs, but had used their expertise for private profit.

You see, it doesn’t matter if you have the most ethical administration in history. If you are shoveling government spending out the door then people are going to lobby big time for a chunk of it. And the senators and congressmen and former senators and former congressmen are going to be right in the middle of all the wheeling and dealing, using their experience and their contacts to help their clients get a piece of the action.

This is what our liberal friends don’t understand. They think that because they are rational and compassionate that their ideas on politics and government programs are rational and compassionate. Put in a proper ethics reform and a few more billion dollars and money will start to flow to the areas with the greatest need.

But they are deluding themselves, of course. Politics is a competitive struggle for power between powerful men and women. The medium of exchange in this fight is government spending for programs. It is ultimately civil war by other means. For all that the language of politics is about helping people, the truth is that it is all about power. And anyone who thinks differently is deluding themselves.

That’s why I say that the welfare state is cruel, corrupt, wasteful, unjust, and the people who believe in it are deluded.

Stimulating Hope and Change

How could it happen? How could all the promises about Hope and Change get buried in the dust of politics-as-usual so quickly? Is it really impossible for our political leaders to do anything without covering it in political chicanery and ethical lapses. Can’t we stimulate the economy without a christmas tree bill that shovels money at every liberal special-interest gropup in the nation?

My answer is: What do you expect when the government is handing out $5.5 trillion a year in goodies? Here’s the gory details from usgovernmentspending.com.

United States Federal

State and Local Government Spending

Fiscal Year 2009

Amounts in $ billion



Pensions: $891.1

Health Care: $958.2

Education: $873.7

Defense: $806.1

Welfare: $467.7

Protection: $325.0

Transportation: $247.8

General Government: $193.3

Other Spending: $403.6

Interest: $361.7

Balance: $24.3

Total Spending: $5,552.4

Gross Public Debt: $12,969.0

This isn’t rocket science. When government is spending all that money then inevitably the people in politics want to use that money to build political support. If you don’t want them doing that, then you must give them a lot less money to play with.

Now the question is: Did President Obama know all this, but just told the American people what they wanted to know? Or is he just naive, and believed that by introducing new ethics rules he would really clean up government?

It really doesn’t matter. But with every cloud there is a silver lining. By creating ridiculously high expectations for hope and change President Obama has handed conservatives and Republicans a much-needed helping hand. So let’s get the word out to the American people. Do you want government and a governing class that are less corrupt? Then you must start voting for people who will reform government by dismantling the vast patronage system we call the welfare state.

Because the welfare state is cruel, corrupt, wasteful, unjust, and the people that believe in it are deluded.

Welfare Reform, Part 2

Whatever happened to welfare reform? Last we heard, President Clinton had signed welfare reform in summer 1996 after vetoing two bills from the Republican Congress. Democrats had all predicted disaster. But by the year 2000 welfare rolls had dropped to 6 million—from a level of 13 million in 1995—and child poverty had gone down too. After that, silence.

Well, it turns out that, right under our noses, the incompetent Bush administration has been doing welfare reform part 2, and it’s working, according to Steve Malanga in City Journal.

The reason you haven’t heard about this new welfare reform push is that it was implemented in the 2005 Budget Reconciliation Act. These days you can’t reform anything in a regular authorization bill because the liberal moss-backs in the Senate will filibuster any reform of the welfare state. So you slip it in under the radar in the budget process where you only need 51 votes in the Senate.

The new reforms put the states back under the gun to move welfare recipients from welfare to work. Writes Malanga:

The federal government also tightened the definition of what counts in fulfilling the work requirement: no longer would spending time in psychological counseling or in traveling to job training do the trick. And the feds urged states to enroll more welfare recipients with physical or mental disabilities in job-training and job-placement programs.

In case some liberal states didn’t get the point, the Bushies spelled it out for them.

“Individuals who happen to have disabilities should be afforded the same opportunities to engage in work—to find work-related training, work experience, and employment—as those who do not have a disability,” the Bush administration’s Department of Health and Human Services wrote in its new regulations.

As is the common practice, Malanga tells the story of a welfare poster girl, Debra Autry, who had, in social-services jargon, “multiple barriers to work” and “been out of work and on public assistance from more than two decades.”

First they had Autry cleaning out government offices, but she didn’t like that. So she got a job at a Revco drugstsore (later bought out by CVS).

[S]he enrolled in the company’s program to learn how to become a pharmacy technician and eventually began working in that position, which typically pays between $25 and $30 per hour.

Well, that’s nice. Think of that: a former welfare recipient earning $60K a year. But there’s more.

Autry’s hard work inspired her children. Her daughter just earned a degree as a physical therapist, while one son is in college and another is working full-time. “I was on welfare because there were no jobs that interested me,” she recalls. “But once I had to go back to work, I realized there’s a future if you want to better yourself. It was the best decision I ever made.”

Don’t expect to be reading much about this in the New York Times, old chap. After all, this is another success of the Bush administration, and we wouldn’t want people to get the wrong idea.

Unfortunately, we are not yet home free on welfare. Writes Malanga:

Ominously, Democratic foes of welfare reform have gathered power both in Congress and in President Obama’s cabinet.

No doubt. No doubt there are careers, power, and the love of beautiful women at stake.

Like I say. The welfare state is cruel, corrupt, wasteful, unjust, and the people that support it are deluded.

It's Not As Bad As That

With President Obama safely inaugurated, the experts are looking at GOP prospects and they are painting a gloomy picture. Both Michael Barone and John J. Pitney see a gloomy short-term outlook.

Barone notes that Republicans are doing dismally with black and young voters and are even losing the educated voters in the affluent suburbs.

Pitney worries that Democrats have a lock on congressional districts that are black, Hispanic, New England, and New York.

So how do Republicans have a chance?

They have a chance because things will change. Republicans are losing because voters are fed up with them, particularly upscale, educated voters that are influenced by upscale media. The upscale media has been running hard against Republicans ever since 1998 and the disgrace of Bill Clinton. (Plus there is also the fact that many educated voters work for the government.) On top of that, President Bush asked Americans to have patience while he solved the problem of Iraq. Who needs patience?

But Republicans are not running for office in the springtime of Obama’s adminstration. They will be running in 2010 and 2012. In 2010 they will be running against the first two rookie years of Obama. And in 2012 they will be running against four years of Obama. Given that the early signs are that Obama aims to govern as a patronage president, handing out goodies to the Democratic faithful, you couuld build a case that many swing voters are going to swing against the president and the Democrats in the near future.

After years of media drumbeat the voters now believe that the Democrats are the center-left middle-class party and the Republicans are dominated by the right. Well, they would, wouldn’t they? That’s all they’ve heard for ten years.

In fact, it’s probably more accurate to say that the Democrats are a center-left party that would like to be leftier. And the Republicans are a center-right party that would like to be more libertarian. But as we get into the Obama administration it will be easier and easier to make the argument that the Republicans are a center-right party that works for the middle class and that the Democrats are a bunch of corrupt left-wing loonies that sneer at the middle class behind their back.

When Republicans start to make that argument hit home then all of a sudden upscale voters will start listening to Republicans again and New Englanders will stop looking down their noses at them.

And all of this is assuming that the advancing recession doesn’t cause significant hardship and anger and prompt a broad political realignment.

Be of good cheer! When the other guys are in power then there is everything to play for, and the only way is up.

New Deal Put "Great" in Depression

You can’t say this often enough. The New Deal prolonged the Great Depression. If you want a book-length treatment, a good one is Amity Shlaes readable Forgotten Man, now out in paperback.

And today there’s a good article in the Wall Street Journal by Harold L. Cole and Lee E. Ohanian: “How Government Prolonged the Depression.”

The New Deal is widely perceived to have ended the Great Depression, and this has led many to support a "new" New Deal to address the current crisis. But the facts do not support the perception that FDR’s policies shortened the Depression, or that similar policies will pull our nation out of its current economic downturn.

Then the authors talk numbers.

Total hours worked per adult, including government employees, were 18% below their 1929 level between 1930-32, but were 23% lower on average during the New Deal (1933-39). Private hours worked were even lower after FDR took office, averaging 27% below their 1929 level, compared to 18% lower between in 1930-32.

Let’s put that in a table, to make it all even more clear.

Total hours worked per adult 1929 1930-32 1933-39 Private and public sectors 100% 82% 77% Private sector only 100% 82% 73%

It’s not very pretty is it? And the reason is pretty simple. In the NRA, the government operated a wage-and-price control program to keep wages and prices up. You may remember the wage-and-price controls of the 1970s. It was different from the NRA in that it intended to keep wages and prices down, not up. The result? Inflation, big time. Not surprisingly, the NRA had the opposite effect. It kept deflation going. Fabulous job, guys.

Cole and Ohanian mention another disaster: the recession within a depression of 1937-38..

The downturn of 1937-38 was preceded by large wage hikes that pushed wages well above their NIRA levels, following the Supreme Court’s 1937 decision that upheld the constitutionality of the National Labor Relations Act.

You see, in 1935 the New Dealers passed the Wagner Act that mandated monopoly rights for organized labor. Not suprisingly, workers organized into labor unions in autos and steel racked their wages up substantially. And that impoverished the rest of the country.

This is not rocket science. When the government sets up privileges and monopolies for favored special interests, fixing prices, setting barriers to entry, mucking around with the relations between worker and employer, the people suffer. These special interests could be evil bankers, or they could be honest working stiffs. They could even be hard-working teachers in inner-city schools. The result is still the same. The people suffer.