Ethics & Public Policy Center

Responding to the Obama State

Published in Commentary Web Exclusive on April 9, 2009



By now almost everyone agrees the numbers are staggering. Since Barack Obama took his oath of office around 11 weeks ago, he has proposed a $3.6 trillion budget, which will create a deficit this year of almost $1.8 trillion. This amounts to 12.3 percent of the GDP, up from 3.2 percent in 2008 and 1.2 percent in 2007. The President's budget was submitted in conjunction with a $410 billion omnibus spending bill, complete with some 8,500 earmarks. This legislation, in turn, came in the aftermath of a $787 billion stimulus package.

On top of this almost $5 trillion figure we need to add the $250 billion the Obama administration has already signaled is likely to be needed for the second installment of the Troubled Asset Relief Program (TARP). More is sure to follow. Obama has also established a 10-year fund for health care which will cost more than $630 billion. Because of Obama's plans, we will need to borrow anywhere from $3 — $4 trillion over the next three years and, based on the Congressional Budget Office's figures, the President will add around $9.3 trillion to our debt from 2009 to 2019. To put it another way: Obama will double the national debt in five years and nearly triple the national debt in ten years. And for good measure, the President wants to impose a tax increase of well over a trillion dollars over 10 years.

Enormous economic and political consequences are likely to flow from Obama's actions.

On the economic front, it's quite likely that the combination of massive deficits, higher marginal tax rates, and a much larger role by the public sector in the economy (especially in health care and energy, if Obama gets his way) will be injurious: penalizing and discouraging the investor class and the creation of small businesses; hampering innovation; increasing dependency on the state; and piling up an unprecedented debt burden. The government will need to print vast sums of money in order to finance our debt, generating a huge increase in the money supply, making high inflation and interest rates a real possibility. President Obama is pursuing policies that have historically led to distortions and disruptions in the economy, the subsidization of programs and industries that are inefficient, and severing the link between reward and effort.

Every recession in our history has been followed by a recovery; this one should be no different. But the recovery will, I think, be a good deal slower and weaker than if Obama had pursued proven growth policies. And in the process, the American landscape will have been significantly changed. 

On the political side, the President's spending and taxing proposals means that whatever intra-party differences Republicans might have had are now overtaken by the threat they see in Obamaism. Bill Clinton's Secretary of Labor, Robert Reich, said of the Obama budget, “We can basically say goodbye to the philosophy espoused by Ronald Reagan and Margaret Thatcher.” For conservative, them are fightin' words. And so conservatism is now unified, almost as one, in opposition to Obama's embrace of European-style social democracy.

Conservatives, in opposing Obama, must obviously offer intelligent and compelling policy alternatives. But those issues need to be placed within a broader context. The task for conservatives is to articulate the philosophical underpinnings of our views in a way that hasn't been done in a generation.

In doing so, conservatives should recognize (as our Founders did) that government has important duties to discharge, from upholding our laws to defending our nation to safeguarding our currency to funding basic services. And the last year has reminded us all that government needs to play an important role in the economic life of our nation, providing guardrails and energetic (though limited) oversight. For example, sometimes government must intervene in order to stabilize a collapsing financial system in a way that allows the free market to thrive. This explains why a strong free market advocate like Representative Paul Ryan believes government should establish a fund to purchase troubled assets from financial institutions and hold them until they can be sold. The danger comes not from those who (like Ryan) are interested in restoring balance to our capitalistic system but from those who (like Obama) aim is to alter the balance.

One senses that we are at a moment when there is a pressing need to again explain the connection between economic and political liberty; why a massive, centralized state not only chokes off economic recovery but also undermines self-government and the qualities that give rise to it; why breeding contempt for those who succeed is corrosive and counterproductive; and why ensuring equality of opportunity is vastly preferable to enforcing equality of outcome. And at a time when democratic capitalism is under attack, conservatives need to rally to its defense. The free market is not perfect; no human institution or arrangement is. But it is far and away the best economic system ever devised, responsible for unprecedented prosperity and human flourishing.

The Obama presidency is still in its early stages. Yet it is clearly attempting to alter, in deep and lasting ways, the relationship between the state and its citizens. There will not only be far-reaching economic ramifications, but political and social ones as well. It is the task of conservatives to explain what they are. They need to give voice to the inchoate but increasing public doubts about Obamaism.

The public, sooner or later, will want an alternative to Obama's brand of statism. This will require presenting more than talking points and budget numbers. It will require conservatives to present not just a governing agenda, but an articulation of their political philosophy. That is their burden; it is also their opportunity.

Peter Wehner is a senior fellow at the Ethics and Public Policy Center in  Washington, D.C. He served in the Bush White House as director of the office of strategic initiatives.

Comments are closed.



RELATED PUBLICATIONS