Obama’s Plans Will ‘Work’ — To Breed Servile Dependence

by | Mar 13, 2009 | POLITICS

The political left-wing in America and most Democrats are hopeful, even gleeful, that “Obamanomics” might “vanquish” Reaganomics,[1] that tax-hiking, pork-dispensing schemes aimed at boosting consumption and government (a la John Maynard Keynes)[2] will displace tax-cutting, supply-side policies devoted to boosting production and profitable entrepreneurship (a la Jean-Baptiste Say). In the process, Obama’s allies are unfazed […]

The political left-wing in America and most Democrats are hopeful, even gleeful, that “Obamanomics” might “vanquish” Reaganomics,[1] that tax-hiking, pork-dispensing schemes aimed at boosting consumption and government (a la John Maynard Keynes)[2] will displace tax-cutting, supply-side policies devoted to boosting production and profitable entrepreneurship (a la Jean-Baptiste Say). In the process, Obama’s allies are unfazed about plunging stock prices, or, absurdly, blame the plunges on past tax-cutting. Conditions only worsen with each new intervention, but interventionists don’t really care about improving the economy.[3]

In response, conservative critics insist that Mr. Obama’s $787 billion “stimulus” plan (enacted by Congress on February 17th), his $275 billion ‘foreclosure mitigation’ plan (proposed February 18th) and $3.6 trillion budget for 2010 (submitted to Congress on February 26th) “won’t work.” Oddly, these “critics” bestow undeserved compliments on their political opponents – and thus provide them with crucial political cover. By implicitly praising their enemy’s underlying motives, these critics effectively shield them from justified criticism. The critics who argue this way – including Rush Limbaugh – unwittingly carry water for President Obama. By insisting the schemes “won’t work,” the “critics” mean they won’t work to grow the economy – won’t revive the stock market – won’t fix the banks – won’t attract capitalists on strike – won’t bolster job creation – and won’t lift the poor out of poverty. Well, all that’s true, but it’s false to assume Obama et al actually want to achieve these things. In fact, it wants no such thing. It has other ideas –a wholly opposite aim.

Besides a desire for re-election, shared by all politicians, at root the Obama Administration wants individuals and firms to become more dependent on government. That requires not merely a more intensive redistribution of wealth to the needy (whether needy people or needy firms), but also programs and plans that might proliferate the ranks of the needy, even if that requires turning otherwise healthy people and firms into unhealthy, needy ones. Of course, this rather bearish aim might anger or disillusion the electorate, if they truly prized their independence and/or recognized the cynical aim for what it was; but if not, then to ensure re-election Team Obama can easily deflect such anger to the usual scapegoats: “Wall Street,” “the rich,” “predatory lenders,” and “tax-cutters.” This is how entities like Barney Frank get reelected and how FDR won three consecutive presidential terms amid the stagnant 1930s which his New Deal schemes helped cause.  If you find the Obama Administration insisting that it wants the economy to revive and the successful to prosper, you can be sure that it is only to ensure it will have wealth producers to milk – like barnyard cows.

There are many examples of the dependence motive, whether from last year’s campaign trail or Obama’s initial legislative schemes this year. In April 2008, during the primaries, he said the capital gains tax rate ought to be doubled, even if doing so would bring lower tax revenues, because, he insisted, the higher rate achieves more “fairness.” Obama is willing to sacrifice others and their wealth – and even the government’s revenue collections – to satisfy what he calls economic “justice.” During the campaign we also heard Obama unabashedly defend his “spread the wealthy” bias (to “Joe the Plumber.”). More recently, we’ve seen his administration admitting that it doesn’t pay much attention to Wall Street (unless it is bailing out its deadbeats, like Citibank) and doesn’t really care if stock prices happen to be plunging. They have other aims.

That Obama and his cohorts want to breed dependency is clear from the details in their plans; it’s not that “the devil is in the details,” as so many claim, for in fact the devil (the evil) is in the overarching theme (redistribution). The bailouts and attached strings make the banks more dependent on government. Caps on executive pay repel talented managers and leave in place bureaucratic ones dependent on political whims. A proposed ¼% tax on all security trades would hurt liquidity and boost volatility while making the exchanges more dependent on government. Extensions of unemployment “insurance” (subsidies) will leave the jobless more dependent on the state, while making the job-holding taxpayer poorer and also more dependent on government. Socialized medicine will make health-care providers and patients more reliant on government than they already are.  Foreclosure “mitigation’ will turn mortgage deadbeats into squatters, dependent on the state as landlord. The “rich” are to lose their tax deduction for charitable giving, which will make charities more dependent on government for funding. “Cap and trade” taxes and rules will make energy users less able to access cheaper, more abundant fossil fuels, making them more dependent on the scarce, costly “alternative energies” rationed by the EPA and Energy Department. Mortgage “cram-downs” will render lenders more dependent on the whims of altruistic bankruptcy judges. The “Employee Free Choice Act” would abolish the secret ballot for elections on unionization, would violate the free choice of employers and would them more dependent on the biased National Labor Relations Board. Even local governments will become more dependent on the federal government, as strings are attached to the receipt of “stimulus” funds.

Obama-style rule entails breeding greater dependence by people (and firms) on government. Of course, we’ve seen that when Republicans gain power their need-based policies also tend to breed dependence; but in general, the political right wing in America doesn’t have this as their main goal or even their modus operandi. The Obama-style Democrat, in contrast, wants to breed dependency; it provides them a sense of power and control over others, a level of control that they crave.  If there still exists in you – the reader and patriotic American – anything like the spirit of independence that made this country great, you’ll actively denounce and foreswear Washington’s cynical and liberty-crushing institutionalization of servile dependence.

[1] See David Leonhardt, “A Bold Plan Sweeps Away Reagan Ideas,” The New York Times, February 27, 2009, p. A1 and Tobin Harshaw, “Has Obamanomics Vanquished Reaganomics?” The New York Times, February 27, 2009.

[2] Lori Montgomery, “In $3.6 Trillion Budget, Obama Signals Broad Shift in Priorities,” The Washington Post, February 27, 2009, p. A1. Excerpt: “President Obama delivered to Congress yesterday a $3.6 trillion spending plan that would finance vast new [spending] in health care, energy independence and education by raising taxes on the oil and gas industry, hedge fund managers, multinational corporations and nearly three million of the nation’s top earners.”

[3] See Richard M. Salsman, “Why They Won’t Leave Bad Enough Alone,” The Capitalist Advisor, InterMarket Forecasting, Inc. February 13, 2009 (available at http://www.intermarketforecasting.com/02.13.09%20-%20Why%20They%20Won’t%20Leave.pdf).

Dr. Salsman is president of InterMarket Forecasting, Inc., an assistant professor of political economy at Duke University and a senior fellow at the American Institute for Economic Research. Previously he was an economist at Wainwright Economics, Inc. and a banker at the Bank of New York and Citibank. Dr. Salsman has authored three books: Breaking the Banks: Central Banking Problems and Free Banking Solutions (AIER, 1990), Gold and Liberty (AIER, 1995), and The Political Economy of Public Debt: Three Centuries of Theory and Evidence (Edward Elgar Publishing, 2017). In 2021 his fourth book – Where Have all the Capitalist Gone? – will be published by the American Institute for Economic Research. He is also author of a dozen chapters and scores of articles. His work has appeared in the Georgetown Journal of Law and Public Policy, Reason Papers, the Wall Street Journal, the New York Times, Forbes, the Economist, the Financial Post, the Intellectual Activist, and The Objective Standard. Dr. Salsman earned his B.A. in economics from Bowdoin College (1981), his M.A. in economics from New York University (1988), and his Ph.D. in political economy from Duke University (2012). His personal website is richardsalsman.com.

The views expressed above represent those of the author and do not necessarily represent the views of the editors and publishers of Capitalism Magazine. Capitalism Magazine sometimes publishes articles we disagree with because we think the article provides information, or a contrasting point of view, that may be of value to our readers.

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