When it took office in 2009, many of us advised the Administration to focus on nurturing the recovery first and postponing social-policy priorities that would only add more economic uncertainty. All the more so given this recession's unusual financial roots.So we've had plenty of opportunity to try things the Obama way and the results haven't been pretty. They might still want to blame the rich, and Obama had plenty of those zingers in his speech yesterday as William Jacobson points out. While he was whining about how his critics talk about him, he was also busy bashing Republicans and the wealthy. The Democrats chose a different path for addressing the economy and we see the results.
Instead, Democrats embarked on the most sweeping expansion of government since the 1960s, imposing national health care, rewriting financial laws from top to bottom, attempting to re-regulate the telecom industry, and imposing vast new costs on energy, among many other proposals. Not to stop there, in January it plans to impose a huge new tax increase on "the wealthy," which in practice means on the most profitable small businesses.
Central to Mr. Obama's political strategy for passing these priorities has been trashing business and bankers as greedy profiteers. His Administration has denounced or held up as political or legal targets the Chrysler bond holders, Wall Street bonuses, Goldman Sachs, health-insurer profits, carbon energy investors, and anyone else who has dared to oppose any of its plans to "transform" U.S. society.
Only yesterday at a Labor Day event in Milwaukee, Mr. Obama was at it again, declaring that "anyone who thinks we can move this economy forward with a few doing well at the top, hoping it'll trickle down to working folks running faster and faster just to keep up—they just haven't studied our history. We didn't become the most prosperous country in the world by rewarding greed and recklessness."
Whatever else one can say about such rhetoric, it is not the way to restore business confidence or turn a fragile recovery into a durable expansion. It has only spread fear and even greater uncertainty.
As for blaming the Republicans, with only 40 and then 41 Senators they couldn't stop so much as a swinging door. The GOP couldn't even block the recent $10 billion teachers union bailout. The only major Obama priorities that haven't passed—cap and tax and union card check—were blocked by a handful of Democrats who finally said "no mas." No Administration since LBJ's in 1965 has passed so much of its agenda in one Congress—which is precisely the problem.
To put it another way, the real roots of Mr. Obama's economic problems are intellectual and political. The Administration rejected marginal-rate tax cuts that worked in the 1960s and 1980s because they would have helped the rich, in favor of a Keynesian spending binge that has stimulated little except government. More broadly, Democrats purposely used the recession as a political opening to redistribute income, reverse the free-market reforms of the Reagan era, and put government at the commanding heights of economic decision-making.Maybe if the Obama administration had some actual businessmen in it, they'd know the sorts of things that Missouri businessmen told Fred Barnes during the height of Recovery Summer.
Some were Republicans, some weren't, but they said roughly the same thing. We're not expanding our companies. We're not hiring. Bankers said they weren't doing much lending, but there weren't many borrowers either. One pessimistic businessman said he'd like to move his company offshore. Another said he wanted to hire but had backed off because his firm would exceed 50 employees and then be subject to the mandates and requirements of the new health-care law.The administration just doesn't get it. They're in Washington where employment is humming along. Bureaucrats aren't in a recession. The Obama Democrats don't understand why businessmen aren't hiring as they try to figure out what their labor costs will be under the Democrats' economic plans. They passed the bills they wanted on finance, stimulus, the auto-bailout, the state employees bailout, and are still trying to pass their policies on energy and unions. And those ungrateful businessmen are still not hiring? Who'd have thunk it?
Now that Recovery Summer has brought slower growth and meager hiring, it's clear who had a better sense of the country's economic condition. It wasn't cheery officials in Washington whose prediction of a summertime boom was based on economic numbers from the spring. It was folks far from Washington and immersed in the real economy who saw economic stagnation ahead and were adjusting their business decisions accordingly.
Their view of the economy was no secret. You just had to get out of Washington to hear it. Had administration experts done that—if they did, it escaped attention—they'd have spared themselves the embarrassment of a Recovery Summer without a recovery.
Washington and the rest of America have grown apart. And the gap has widened as those in Washington and outside have experienced the economic downturn, the Democratic agenda, and the Obama presidency quite differently.