The Obama Regime: Year One

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What of Barack Obama, one year on? I argued a year ago in these pages (“Same as the Old Boss?”, March 2009), that he was not a revolutionary but an ordinary, government-wielding Democrat a species that, from a libertarian point of view, was dangerous enough. I wrote, “Among long-term political changes, health insurance is probably the big thing to worry about.” And it does seem so.

As I write, the u.s. Senate has taken a vote that seems to augur victory for Obama’s effort on “healthcare reform.” I hear notes of official hurrah. But the Senate did it with not a vote to spare, entirely on the names of Democrats, after an exercise in vote-buying so gross that the jeering of the pundits was nearly as loud as the trumpets proclaiming “universal healthcare.”

The Senate bill didn’t quite live up to that, as the hard Left glumly noted. The Congressional Budget Office said the Senate’s bill would increase the covered share of Americans outside Medicare by 11 percentage points, from 81 to 92%. much of this would happen by enrolling millions more Americans in Medicaid, the government program for the poor, and by providing subsidies for non-poor to buy insurance from insurance companies. For the archetypal four member family, subsidies would be offered to those with incomes, in 2009 dollars, up to $88,000 a year – four times the federal government’s poverty line.

All those receiving subsidies would, it was assumed, be thankful at election time to the political party whose name was on the bill. Many might be. But there will be long faces, too, most clearly among the young adults whom the bill would require to buy insurance. They might recall that in 2008, candidate Obama opposed the “individual mandate,” while Hillary Clinton supported it. She was being more honest. If insurers are obliged to cover everyone who applies, without “discrimination” against those who have diabetes, AIDS, etc., then the healthy have to be forced to sign up. The product being created here is not from the market, but the government; it is social insurance, and it requires compulsion to work.

Many of the young will admit they should have bought catastrophic coverage anyway, and note that it’s cheap at their age. But they will discover that under Obama law, insurance for them will no longer be so cheap. The catastrophic-only policy they were thinking about buying will no longer be offered. It will be forbidden as too thin. The word I heard from a large private insurer was that of all of his company’s individual health insurance policies, thin to fat, the average now covers 48% of an insured’s medical expenses. His staff had calculated that under the Senate’s bill the average would rise to 65% and so his company would have to charge more. The young will be squeezed in another way: they will subsidize the old under “community rating.” The idea is to keep the difference in rates between the 20-somethings and the 60-somethings down, to the benefit of the older customers. This is already required in some states, notably Massachusetts and New York, which have some of the highest premiums for young adults.

Most of these things will happen in the market for individual insurance, which covers about 9°1<> of Americans. If a new law takes effect, the individual market will presumably cover more of them, perhaps 15%. Most Americans will still be covered in the large group market, which is already federally regulated under the Employee Retirement Income Security Act (ERISA), or by Medicaid, Medicare, or a government employee program.

Such is the analysis now available from people who have read the 2,OOO-plus-page Senate bill and profess to under- stand it. I’m assuming the final bill out of the House-Senate conference will be more like the Senate’s, because the vote was closer there, and that the final bill will pass. As I write, the details are still changeable, but the essence is clearly not “universal healthcare.” It is not universal – thank goodness – and it is not health care. It is federal regulation of a certain type of private-sector insurance and a mandate for certain people to buy it.

By describing the bill in this way, I’m not trying to justify or support it. I don’t like it, and if I were in Congress I’d vote against it. But many of the people arguing against it, including libertarians, who tend to argue from first principles, are

It turns out that Obama is not an antiwar president. The bottom line: same wars, different management.


attacking an idea of full socialism, and it is not that. It is a slice only, onto a plate already containing other, thicker slices. Furthermore, it is a slice that was difficult for its proponents to include, and has been done in a way that makes further slices even more difficult, for several reasons.

First, we come to the point at which there will be fewer beneficiaries, particularly those who vote. Consider that the most commonly cited motive for people’s reluctance to embrace “Obamacare” is that more than 80% of Americans already have health insurance and are worried about losing what they have. Those who have Medicare Advantage plans – private plans paid with Medicare money – will lose part of what they have, under the Senate bill. Many Medicare Advantage clients will be voting Republican in 2010 and 2012. More young voters will, too, when they see what Obamacare costs them.

Second, the Senate bill failed to create the new government program, brother to Medicare and Medicaid, that the Left wanted and had marketed as the “public option.” Sen. Joe Lieberman (D-CT), aborted this little monster because the insurance companies hated it and a bunch of them (the Hartford, Travelers, Aetna, et a1.) are his constituents. The other last-minute foot dragger was Sen. Ben Nelson (D-NE), who talked about his concern for the unborn and demanded a slice of pork in order for that concern to dismiss itself, but who also represents a state with insurance companies (Mutual of Omaha, et a1.). The Senate bill does make the insurance companies more like public utilities, as Richard Epstein has pointed out, but the insurers are still in the private sector, and they will continue to think, contribute, and lobby largely as private units. Under the Senate bill they will have more revenue with which to defend their industry. They will use it, and that will make it more difficult to arrive at the British and Canadian nirvana of Single Payer.

Third, there is the matter of cost. The believers imagine Obamacare to be so rational, with its vaccinations, mammograms, and colonoscopies, its cost-spreading and policing of physician greed, that in the long run it won’t cost anything. Yet they are thinking not of Obamacare, but of single-payer, a system that could be both cheaper and universal, by systematically denying care to those deemed not to “need” it. Obamacare is not single-payer. The Congressional Budget Office says it will cost more, not less, than the current system, and even the Democratic politicians admit it. But yellow-dog Democrats believe that in the long run it will cost nothing. I know them; that’s what they think, and they will be disappointed. No doubt they will blame the failings of the new system on the private-sector elements. Independent voters, however, are more likely to blame the government, particularly if they hear a good case that the coming problems are the government’s fault.

Apart from Universal Healthcare, two other big changes were going to happen with Obama: a cap-and-trade program and an exit from Iraq. Neither happened in 2009.

During the 2008 campaign, few noticed that Obama kept saying he favored an intensified war in Afghanistan. People were thinking more about Iraq. In 2009 he did what he said he would in Afghanistan.

It turns out that Obama is not an antiwar president. His policy on the occupations of Iraq and Afghanistan is different in detail from Bush and Cheney’s, but not fundamentally different in respect to the way in which libertarians think about it. Obama believes America is in a War on Terror. Like Bush, he says our soldiers are killing people over there so that our cops don’t have to chase them here. The supporters of the war say that if we don’t continue to do this, Pakistan will do that, and we have a responsibility, blah, blah, blah. The bottom line: same wars, different management – and not even entirely that, as Bush’s final Secretary of Defense is now Obama’s.

The other promised change coming with Obama was cap- and-trade. In 2009 there was not a big push to get this through Congress. At year’s end Obama went to a save-the-world conference in Copenhagen and failed to save it. Blame for failure of the conference was shoveled onto the Chinese, but most of the rest of the world’s leaders were not in a mood to be stampeded on this matter by the young American president. Obama’s EPA chief, Lisa Jackson, promised to regulate carbon dioxide as a pollutant, but also sounded as if she would not be too radical about it, particularly with the official rate of unemployment at 10%.

In 2008, a particular fear of libertarians and conservatives was organized labor’s card-check bill, the fetchingly named “Employee Free Choice Act.” The bill, which would create a way to organize an employee group through non-secret ballot, had passed the Democrat-controlled House in Bush’s final year. Under Obama’s Democrat-majority Congress it was going to slide right through. Except that in 2009 it didn’t. It was shelved. Business hates card-check, and the Democrats want to be the party of labor and business, particularly during an economic slump. And anyway, there is no popular demand for card-check. Nobody likes it except labor organizers and the hard Left.

Another fear of libertarians and conservatives was that Bush’s bailout of the banks and Obama’s bailout of General Motors were permanent measures of socialism. This was never likely to be so, and at the end of 2009, it was clear that it would not be the case in banking. The banks were aggressively paying back the Treasury’s money – and good for them! With GM it was early to say, but there was little sup- port in the country, or in the Democratic Party, for making America’s largest car company a permanent federal pet.

Apart from the health insurance bill, the one really big thing Obama did in 2009 was to spend tubfuls of money. Here is where, if I look back on the predictions I made in these pages a year ago, I confess embarrassment. Yes, I knew they were going to spend money. But so much?!

It was the year in which many Americans first began talk- ing about trillions, with billions the fractional currency.

The “stimulus” was the greater part of a trillion, finely targeted at the programs Democrats favor. In my state, where the government budget came up one-quarter short, much of the stimulus went to backfill this deficit, paying teachers who otherwise would have been laid off, etc. How much this helped the economy is debatable, but it helped some. Libertarians didn’t like to admit it, but the downturn was made shallower by the bailout and stimulus both. The downside, though, was the likelihood of loss of vigor in the ensuing recovery, and the near certainty that Ben Bernanke’s almost-zero interest rates would create inflation, and perhaps a new speculative bubble. At the beginning of 2010, the amount of that cost was not yet clear, except that the dollar had already plunged on the foreign exchange market, and gold was well above $1,000 an ounce.

There was a tendency among libertarians to exaggerate the immediate import of this. In 1933, 1934, 1935, and 1936, the opponents of the New Deal, facing similar deficits, money creation, and rock-bottom short-term interest rates, made a noise about an inflation that didn’t happen in the 1930s. There was a serious inflation in the late 1940s, after the war – and you could blame it on the war alone, or the war and the New Deal, as you liked. It’s too early to ring the alarm for hyperinflation, as some on the Right want to do. But some inflation is coming, and it will not be good. Whatever the amplitude – and that will depend also on the taxes imposed – the incontinent spending of the Obama administration worries a broad spectrum of Americans, particularly conservatives. You see it in the rise of the Tea Party movement.

This movement is not universally welcomed among libertarians. Jeffrey Friedman, editor of Critical Review, writes:

“The faith that libertarians put in the populist opposition to Obama discourages me. I say this as someone who hap- pens to be living in rural Texas: the tea partiers don’t represent the future of America. Two-thirds of all Americans go to college, one-third graduate, and every year another half a million social science and similar degrees are awarded. These so-called elites find the flag-waving, Constitution- venerating, 1/socialist”-hating town-haIlers and tea par- tiers mystifying or scary. We could be making great strides in the universities but we aren’t, and I think the libertarian brand is being sullied beyond repair among the college educated by being linked to an intellectual spectrum rang- ing from Glenn Beck to Ayn Rand.”

I see Jeff’s point. The tea partiers are not theoreticians, and they offer a difficult brand to market on a university cam- pus. But they are on our side. Their motivation is to protect and defend the constitutional republic, as they understand it. Libertarians should be trying to deepen their understanding of it. It wouldn’t hurt also to listen to them, to hear what motivates them to go out and yell at members of Congress, and to take time off from work, travel to Washington, DC, and have a giant demonstration, as they did on Sept. 12, 2009. Academics don’t do those things. Journalists like me usually don’t do them. But they do have an effect. They inspire fear and loath- ing on one side and boldness on the other. They can change the balance of political will.

The tea partiers made an impact in 2009. They opposed Obama. The cheerleaders for government denounced them as racists, picking on a few anti-Obama signs that might be interpreted that way, but it was a slimy tactic and in the end it didn’t work. Paul Krugman, The New York Times’ Nobel- wielding tub thumper for inflation, called the Tea Party movement “AstroTurf” in order to discredit it, but the big Sept. 12 demo in DC, made the label hard to stick. By year-end, the tea partiers had also begun affecting the Republican Party, which was out of power and trying to shuck off the snakeskin

of George W. Bush. Like the Ron Paul movement, the tea par- tiers really wanted to take over the party, which was probably not possible. But they were making themselves heard.

And public opinion was changing. Late in 2009, public approval of President Obama dropped below 50%. A majority of Americans turned against the health insurance bills even before they passed the House and Senate. By early December, the Gallup Poll reported that the idea of government guaranteeing all Americans health insurance was being rejected, 50% to 47% – the first time the “nos” had it since Gallup began asking the question. Said Time magazine, on December 9:

“In the latest NBC/Wall Street Journal poll, only 23% of respondents said they trust the government “always or most of the time” – the smallest proportion in 12 years. The percentage of voters who think government should “do more to solve problems and meet the needs of people” has dropped 5 points since Obama’s first weeks in office, while that of those who think government should leave more things “to businesses” rose 8 points. The shift is especially noticeable among independent voters, a small plurality of whom wanted government to “do more” after Obama took office; now – by a margin of 17 – they think government does “too much.””

Regarding foreign policy, the Pew Research Center reported that 49% of Americans agree that the federal government should “mind its own business internationally” and leave it to other countries to fend for themselves. Pew also reported that 44% agreed that the United States “should go our own way in international matters, not worrying about whether other countries agree with us or noL” Both of these were the highest readings in 40 years.

It would be easy to say in a libertarian magazine that the country is becoming like us. But libertarianism is a political philosophy, and most Americans don’t have one of those. They have feelings and attitudes only. The swing in the polls is much more of a gut-level thing, a reaction of political independents against the too-aggressive statism of the Obama agenda. The independents, who gave Obama his margin of victory, didn’t elect him to put through the entire wish list of the left-liberal wing of the Democratic Party: card-check, cap-and-trade, and all the visions of another New Deal. They elected him because he was fresh and young, unlike Hillary Clinton; because he was black, unlike John Edwards, and it was a good time to have a black president; because he offered a classic American story, which grabbed the imagination more effectively than John McCain’s old prisoner-of-war stuff; and because they were tired of the Republicans.

In 2009, Obama tried to play the hand he wanted to play – the left-liberal one – and he met resistance. He won some, and he made the state bigger. Libertarians are pained by that, and properly so. But recognize also that Obama lost more. His stature is reduced. He will have a harder time this year, and a still harder one after the new Congress takes power in January 2011.

Indeed, there are reasons for hope and change.

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