Monday, January 19, 2015

Obama's Bubba Bait for the Middle Class

I get it, Mr. President. Your proposals, presumably to be unveiled in the State of the Union speech, are bubba bait for the middle class.

Your proposal for free community college is obvious. Poor kids get community college free already. Rich kids don't care. So it ought to appeal to the middle class. And it's more money for the education blob, which is a Democratic special interest. What's not to like? The Huffington Post reports that the idea polls well. Why wouldn't it? Everybody likes "free."

Your proposal for paid maternity leave and sick leave is the same. Of course mothers should get paid leave after they have a baby! Who wouldn't support something like that?

And now we have your proposal to increase taxes on capital and the rich and increase tax credits for the middle class. Hey, why not? Make the 1% pay and give the middle class a break!

The only problem is that these proposals don't grow the economy. And the only way to help the poor and the middle class long term is with a healthy growing economy with reduced opportunities for graft and crony capitalism.

Free community college? But the subsidies that we have already flung at the education system from K thru research grants have increased costs enormously. The result is that nobody can afford to education unless subsidized by the government. I don't call that free; I call that indentured servitude. And at the back of it all is the question: how do we reform the education system to, e.g., actually deliver basic literacy and numeracy to poor children, when it is utterly dominated by special interests with the ear of politicians?

Paid sick leave and maternity leave? Sounds great, but studies (from Jonathan Gruber!) show that labor is simply a cost to employers. If employers are forced to pay mothers for not working then that will reduce the wages of other employees. In other words, paid leave is simply another tax on labor.

Tax the rich? Sounds great, except that the higher you fix the marginal rate on taxes the more you encourage the rich and the well-connected to bribe politicians to give them little carve-outs that nobody notices, but which distort the economy. Politicians like that sort of thing because giving favors to supporters is what they do.

New free stuff, new mandated benefits, more tax-the-rich. Who knows what Obama's grand plan really is? Maybe he will seduce the middle class into voting Democrat with this bubba bait. Or maybe he won't. Or maybe he will destroy his party with his war on the loyal opposition.

But I am still slightly shocked that the president is so intent on bashing the opposition. It makes me realize how seldom presidents do that. Even Bill Clinton liked to pretend that his partisan initiatives were really "bi-partisan."

My guess is that presidents hurt themselves, hurt their party, and hurt the country when they govern in the divisive way of President Obama. That, I suspect, is why most presidents don't do it. That may be why the president's party has lost so many seats in Congress and in state legislatures during Obama's presidency.

Let's look at it this way. The whole effort of the left since the 19th century is that the only way to help the marginalized -- the workers, the women, the racial minorities -- is by positive legislation that mandates monetary and in-kind redistribution. We declare that workers must contribute X% of wages to a government pension plan. We declare that all seniors will get government subsidized health care. We mandate handouts to the poor. What? Don't you care about the poor?

But the lesson of capitalism is that nothing is fixed in stone. Everything is fluid, everything changes when new ideas and practices and technologies surprise us and change the terms of trade. All the mighty edifices of the welfare state are founded in sand, and sooner or later the wave of history sweeps up, undermines them, and topples them. Under the administrative system of the welfare state, the good intentions of reformers eventually get worn away by the natural forces of politics: the special interests get more and more carve-outs and the bureaucrats do less and less for more and more money. Eventually you get a corrupt system that rewards its supporters for doing nothing.

The record of the Obama administration is witness to this truth. The biggest winners have been the 1% and our stock portfolios. Then come the environmentalists and Big Green. Then come all the other Democratic constituencies. The poor? They have done well, if you consider that increased subsidies for not working benefit anyone in the long term. But inevitably, when you have the economy dominated by ruling class political action, the unorganized middle class gets screwed. Because the middle class is at the end of the line when goodies are being handed out to Democratic party supporters.

President Obama seems to be recognizing that he needs to suck up to the middle class. The question is: will the middle class take the bait?

Or will they decide that in 2016 it is Time for a Change, no matter what the politicians say or do?

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