It has long been an article of Democratic faith that American voters love their federal benefit programs above all else. Different voters love different programs, of course, but collectively they are so addicted to those federal benefits that they will keep electing pols who promise to continue them. This conventional wisdom was vindicated for decades, as voters kept re-electing Democratic Congresses who delivered the goodies, year in and year out. Dems had discovered that spending is the secret of political longevity.
The bill always came due, eventually, but Democrats had these wonderful enablers called Republicans, who always played the role of the responsible parent – raising taxes and imposing financial “discipline” to pay for Democrats’ profligacy. In fact, Republicans earned the title of Tax Collectors for the Welfare State for playing the heavy in Democrats’ political “passion play.” This was a dream-come-true for Democrats, who could spend like drunken sailors and never worry about the bill. Naturally, the tax-collector role didn’t gain Republicans much electoral support. (Who likes the responsible parent?) They languished in a kind of permanent minority for over 60 years before Americans finally came to their senses in large enough numbers to elect Republican majorities in 1994.
By 1994, President Bill Clinton was projecting deficits of over $200 billion a year, far out into the future, assuming continued Democrat-controlled congresses. But Republicans stopped the train. With new majorities in both houses, the GOP was able to rein in federal spending and deficits until they actually achieved a budgetary surplus by 2000. They even passed a sweeping welfare reform bill in 1996. Over the anguished objections of his liberal constituency, Mr. Clinton signed it to ensure his re-election.
Things looked bright for Republicans with the election of George W. Bush, but then came the terrorist attacks of 2001 and the War on Terror that followed. Defense and homeland security expenditures soared, and the surpluses went a-glimmering. With the economy booming in mid-decade, Republican congresses forgot all about fiscal restraint. The $200 billion annual deficits came back, and Democrats finally regained congressional majorities in 2006 by promising a restoration of fiscal order and “the most ethical Congress in history” (in Speaker Nancy Pelosi’s immortal words). Happy days – they promised voters – would be here again once Democrats were in control.
Two years later, the “housing bubble” popped, the stock market crashed, and the economy went into deep recession. In the midst of the tumult, candidate Barack Obama stood like a rock, promising to “fundamentally change the United States of America.” It was a time of enormous hope – “almost a rapture” (as Thomas Mann once wrote about the start of World War I). Voters rallied to Mr. Obama in great numbers. Most had no idea what he meant by “fundamental change,” but all assumed he would bring in a wonderful new era of peace and prosperity. Some ecstatic supporters even thought their worries about mortgage payments and gasoline bills were over.
Since the election of Barack Obama, Democrats have been on a wonderful spending bender that they were sure would get them re-elected for years – possibly decades – to come. They are so convinced that most Americans want their new programs – most notably, government-controlled health care – that they ignored the ominous rumblings from the grassroots in the form of Tea Party rallies, massive demonstrations in Washington, and booming conservative Talk Radio shows, nationwide. Administration officials scoffed at the Tea Party rallies, calling them “Astroturf” – a derisive appellation indicating Democrats’ belief that the rallies were contrived (i.e., not genuine) demonstrations bought by insurance companies and other opponents of health care reform, etc. They assumed that Republicans had bused in crowds of white-haired grandmas, housewives and families – possibly because that would be the way Democrats would do things.
After a tumultuous year of radical legislation and truly mind-boggling spending (a $1.3 trillion deficit in Mr. Obama’s first year!) the elections of November 2009 were like a two-by-four across the Democrats’ chops. Conservative Republicans handily won governorships in Virginia and New Jersey – the latter an actual defeat of Democrat Governor Corzine. In January, a virtually unknown Republican, Scott Brown, came out of nowhere to defeat the handpicked Democrat for the vacated Senate seat of Edward Kennedy. Voters were loudly signaling that they had reached their limits on big spending. Democrat leaders tried to spin the results as a curious anomaly, but certainly not a No Confidence vote against themselves.
In March 2009, Democrats in the House of Representatives bullied and bribed their way to pass the Senate’s version of national health care reform, by a narrow majority. Polls consistently showed two-thirds of voters opposed to the 2700-page bill, whose contents legislators admitted they did not fully grasp and had not read. President Obama signed it amid much self-congratulation by Congressional Democrats. The President assured the American people that all would be well, now that this landmark reform was law. He knew we were going to “love it,” once we found out what was in it.
Perhaps Democrat true believers thought the Obama juggernaut was really ready to roll, once health care reform was passed. In a way they were right, but it was more like a train rolling back down a grade that it could not climb. In fact, the Obama Express had reached its high-water mark. Its greatest days were already behind it.
In April, the Deepwater Horizon drilling platform exploded and sank in the Gulf of Mexico. Oil started spewing out of the broken wellhead, a mile under the sea, and the Obama “never-waste-a-crisis” White House sprang into action. Using delaying tactics so obvious that even the slavering Obamaphile media could see through them, Mr. Obama’s administration did everything possible to let the spill cause maximum shore damage. This included blocking foreign oil-sweepers that could have captured most of the oil far from shore. Mr. Obama and his minions continued to proclaim that he was fully engaged to “stop the damned leak” – and that he was “kicking ass” – but the public was wise to the situation and refused to buy the story. Mr. Obama came off looking like a small boy trying to be tough.
Mr. Obama hoped to use the disastrous spill to get his “cap & trade” bill through the Senate and passed into law. But Democrat senators, feeling the heat from constituents, avoided the poisonous legislation that would tax and limit carbon dioxide emissions and raise energy prices dramatically. The president slapped a 6-month moratorium on new oil drilling in the Gulf of Mexico – ostensibly to ensure that no other leaks would occur, but actually to advance his Green Agenda. The order idled tens of thousands of Gulf workers and got very poor reviews from the public. A federal judge struck down the moratorium, but the president simply reinstated it, in a clear challenge to judicial authority. Media jocks – who would have been shouting from the housetops, had George W. Bush similarly ignored a court ruling – are very quiet in this case. (Another “curious incident of the dog in the night-time…”)
As a steady drumbeat about debt and profligate spending has begun to emanate from voters, Congress suddenly has become skittish about passing any more big-spending bills. A new Son of Stimulus bill failed to pass. Extension of unemployment benefits beyond the current 98 weeks ran into heavy opposition from some Democrats, as well as most Republicans. It finally passed the Senate by a single vote. President Obama signed it into law on July 22. I believe this bill will be recalled by historians as the last significant spending bill passed by Mr. Obama’s Democrat-controlled congress.
Since Mr. Obama took office, he and his inner circle have piously promised not to raise taxes on the country’s “working people.” At the same time, The One and his liege-men have probably been chuckling up their sleeves, knowing that big tax increases – which they can joyfully blame on George W. Bush – will arrive on January 1, 2011. This will provide – at least on paper – some of the funds needed for Mr. Obama’s massive federal spending. The rollback of the Bush tax cuts will be Mr. Obama’s “January surprise” – his “miracle on ice.”
But the rollback won’t really be a surprise, because the beans have already been spilled. Conservative pols and pundits have been broadcasting word of the impeding 2011 “tax increase” for most of the last two years – so much so, that more than a few Democrat congresspersons and senators are getting nervous about raising taxes in a recession. The sainted FDR did that, of course, causing the “double-dip recession” of the mid-1930s that extended the Great Depression to a full decade. Not to worry, says Mr. Obama, only the “rich” – i.e., those with incomes over $200,000 a year – will see their taxes go up. (This is considered only “fair,” as Joe the Plumber already knows.)
Legislators not as ideologically fixated on the “justice” of higher taxes understand, however, that many of Mr. Obama’s “rich” are actually small businessmen who should be expanding their businesses and hiring people to pull the country out of the recession. That they are hanging fire on this is considered “mean” by the clueless White House gang, but you don’t have to be an economist to see that the prospect of higher taxes after New Year might make a man cautious. Analysts say that businesses are sitting on $2 trillion in cash, but are not investing and hiring because owners and executives are waiting to see which way the tax-fish is going to flop. They already know that Obamacare will entail significant new taxes. Going back to pre-Bush rates on wages and investment-income could crash the whole teetering recovery completely.
It is not at all clear how this drama is going to play out. Republicans want all of the Bush rates extended and, preferably, made permanent. Some skittish Democrats agree, and even more of them at least want tax-rates frozen for lower-income workers. Leftist true believers want the Bush cuts to lapse at every income level to pay for Mr. Obama’s Glorious Revolution – ignoring the majority of economists who note that the reverted rates will produce little new tax revenue because the economy will sink.
Mr. Obama is a smart guy. He must understand the risk of raising taxes in a recession (first mentioned in the Dead Sea Scrolls), but he seems to be in thrall to his leftist ideology. Six months from now, we’ll all see if he really is the “pragmatist” his media acolytes have always claimed he is. We’ll also see if the GOP has been organized enough to capitalize on the most disastrous two years of a presidency in living memory. We don’t have men in business suits selling apples on street-corners – yet! – but things are not good. The next few months will tell us a lot about the future, about our messianic young president, and whether his economic “gospel” is true or false.