Streetwise Professor

November 3, 2010

As So It Came to Pass, as Predicted Here

Filed under: Economics,Politics — The Professor @ 2:44 pm

On the day after the 2008 election, in a post titled “There is No Joy in Mudville,” I wrote:

My first inclination is to take a cue from DR [who you now know as “Sublime Oblivion”], and assume a Leninist “the worse, the better” attitude. Hope that Obama and Congressional Democrats rush to attempt to implement every policy wish that they have kept pent up inside for the last years–or arguably for the last 28, since Reagan’s election. Refashion completely the health care system, turning it into a government managed and financed system. Seize 401(k) accounts. Impose payroll taxes on every dollar earned. Dramatically increase the cost of energy by imposing draconian restrictions on CO2 emissions. Shove huge subsidies down “alternative energy” rat holes. Raise income taxes and capital gains taxes. Gut the military. Go all squishy when dealing with Iran and Russia. Sell Israel down the river. Restrict freedom of expression by imposing the “Fairness” Doctrine (an Orwellian expression if ever there was one.) Answer every policy dispute with accusations of racism, and criminalize speech deemed racist. All in the teeth of a recession.

You know they want to. They are almost ready to burst from the pressure of bottling up their intense desires for so long. Even the Clinton years were frustrating to them, a period of centrist triangulation after the retreat from Hillarycare.

The operative word here is “attempt.” I expect that if Obama and the extreme liberals that dominate Congress were to attempt to enact such an agenda–and it is the agenda of their desires–that even the dreamy types mesmerized by anodyne promises of change would awake from their reveries. Talk of unspecified “hope” and “change” allows the lazy listener to imagine the changes she or he hopes to see, and assume that Obama shares the same vision. (That’s how cons work.) Things are quite different when one sees the specifics, and comprehends the dramatic implications thereof. The resulting popular outrage would make the Clinton 1993-1994 explosion look like a dud firecracker. [Emphasis added.]

That’s what I expect would happen–but I am not sure. [Emphasis in original.]  There is the risk that it might not, and in the event, the costs would be catastrophic. Indeed, even if the probability of implementation of even a modest part of the agenda is small, the costs are so large that a rational, risk averse individual should recoil from thoughts of “the worse, the better.” Hence, I so recoil.

Obama and the hard-left dominated Congress indeed attempted to implement the agenda of their dreams, and succeeded in forcing through a good part of it.  Health care obviously tops the list, both on attempted and achieved.  Seize 401(k)–no, but there have been rumblings that something related to that is on the table for the lame duck session.  Cap and trade–made it through the House, but not the Senate, but even the attempt was hugely unpopular in vast swaths of the country. Subsidies down “alternative energy” ratholes–definitely.  Squishy with Iran and Russia–ditto.  Accusations that opposition was racially-driven–ditto.

And some more things into the bargain, far and away most notably a gargantuan “stimulus” program, and a general splurge in government spending that pushed deficits into the trillions.

And indeed, there was an election, the results of which in fact make the 1994 election pale in comparison.  Republican gains in the House are substantially larger than in ’94–the largest since 1946.  Republican gains in the Senate are equal, even though the realistic opportunities there were far smaller than in ’94.  The electoral rout at the statehouse level is even more astounding.

So, trying to be as objective as possible, I think it is more than fair to say that I foresaw yesterday’s demolition of Obamaism the very day after it was born; I predicted the rise of the Tea Parties before they had a name.  At the very time at which the only question that seemed to command attention was whether Obama would be more like FDR, Lincoln, or Jesus.  Maybe it was just a case of the blind hog finding the acorn, but I called this when hardly anybody saw it as even a possibility–and certainly when nobody that I know of was willing to say so publicly, even if they did see it.

And even though I take grim satisfaction in the repudiation of the Obama-Progressive agenda, and my foreseeing it, this is the coldest of comforts.  For as I said in the original post, the costs of that agenda are so immense because large parts of it have been implemented.  I would much rather have preferred that health care and Dodd-Frank and the stimulus and so much else had been stymied or gone down in flames, and live with a more equivocal election result, than to have those things enacted into law, thus sparking a powerful reaction.  The worse came to pass, and it was not better.  At best, the election will limit the damage that Obama and his Progressive allies can inflict going forward.

As to alternative explanations.  My favorite is “we were so busy being wonderful that we didn’t do a good job convincing everybody how wonderful we are.”  Yeah.  Keep going with that–and seal your electoral doom in the next election.  If the White House and its pilot fish in the press believe that a failure to communicate was their problem, they are delusional.  And delusion is not a good political strategy.  (Though California is bent on trying it.)  No, Americans understood perfectly well what happened, and what was at stake.  They tasted the dog food, and spit it out.  Obama is what economists call an “experience good”–and the experience was not good.

Obama, speaking at his press conference as I write, insists that it’s all the economy, and none of the other stuff mattered.  Again, keep on believing that, fool.  The fact is that with the economy as it is, his party would have lost seats, but nothing like the number they’ve lost; outrage over health care and spending in particular added an intensity to public revulsion that led to a wave election.

What’s more, the stagnating economy is a predictable result of the burdensome and intrusive policies of the administration.  Yes, the economy cratered in 2008, but in some respects, that should have been a boon to Obama: he could have taken credit for a normal recovery.  But his hyperactive statism has been a drag on the economy and prevented such a normal recovery.  You bought, you own it, pal.

Relatedly, the profligacy of Congress and the administration was wildly unpopular, especially when it failed miserably to achieve the promised results.

Another excuse is that the country is now ungovernable, the people’s expectations unrealistic, and Washington unchangeable.  This is the political version of Casey Stengel’s criticism of a Mets’ player: “He’s got third base screwed up so bad, nobody can play it right.”

Well, I heard the same things in 1979-1980.  The Malaise Thing and all that.  Funny, didn’t hear it from about late-1983 on.  Hell, it wasn’t heard much in 1981 or 1982 either.  This is the loser’s lament: I’m not a failure, it’s that the job is impossible.

No, usually, it’s that you’re a failure.

So what will happen going forward?  The conventional wisdom is for gridlock, and that’s probably right.  But I would note that the Republicans have some advantages.  In particular, the anxiety about government spending and borrowing is so acute that any reasonable plan to constrain spending and spending growth will be broadly popular, and extremely difficult to demagogue.  The Republicans have the initiative, the power, and the popular support on this issue, and can put Obama in a very difficult situation.

The current parlor game is “Will Obama Channel Clinton?” and triangulate successfully.  Many estimable people, such as Walter Russell Mead, think he will.  I do not.

Both objective and subjective factors persuade me that Obama will not be able to get the upper hand in the same way Clinton did in ’95-’96.

Objectively, the nation’s current problems are so much more acute, and the policy distance to be spanned so vast, that triangulation will be incredibly difficult.  In ’94, the deficit was less than 3 percent of GDP, and gross Federal debt about 60 percent of GDP.  Today the deficit is over 10 percent of GDP, and Federal debt around 85 percent of GDP, and fast on its way to over 100 percent–Japan territory.  In ’94, health care had failed to pass.  Today, Obamacare is a reality, and people will be reminded every day of its destructive effects, its costs, and the yawning gap between the promise and the actuality.  In ’94, Baby Boomers were nearing their 50s.  Today, they are reaching retirement age, with a commensurate ratcheting up in anxiety about the economic future–and often with underwater mortgages and ravaged 401(k)s to boot.  In ’94, the economy was growing–a natural rebound from the ’92 recession that benefitted Clinton.  In ’10, the economy is moribund.  In ’94, the financial system was not shaky.  You can’t say that today.

As a result, in ’94, triangulation involved things like welfare reform.  Not unimportant, but hardly a front burner issue for most Americans.  Then, the battles were over smaller matters, and the government’s fiscal constraints, though they seemed acute at the time, were nothing–nothing–as compared to today.  There was no pressing need then to deal with entitlements (though it would have been nice and foresightful had something been done), and the solvency of the country was not in question.  Battles were fought over much less consequential issues than those confronting us today.  All that makes it far, far harder for Obama to triangulate and grandstand.

This is particularly true inasmuch as his political base thinks he’s already been too accommodating to the opposition.  The election results in California in particular demonstrate the vast gulf separating the Progressive core of Obama’s support and the sentiment of the vast majority of the rest of the country.  Good luck triangulating that.

Subjectively, Obama and Clinton are worlds apart.  Clinton was the epitome of the pliable, plastic, protean politician able to reinvent himself at a moment’s notice.  Indeed, his problem leading up to ’94 was that he had essentially abandoned his centrist, New Democrat persona: it wasn’t that difficult for him to resurrect it, and do so credibly.

Obama couldn’t be more different.  He was never a New Democrat, and was in fact a made man in the faction of the Democrat Party that the New Democrats formed to combat in order to make the party electable again.  Moreover, personally, he is ideological, self-righteous and rigid to the point of brittleness.  (Again, see his press conference.)  Triangulating would not be a return to an old self: it would be a betrayal of his inner core.  (Both Obama and Clinton are narcissists, but Obama’s narcissism is even more extreme than Clinton’s, and of a type that makes him less capable of personal and political transformation.)  (And as for those who say that things would be so much different had Hillary been elected–dream on.  Hillary is far more like Obama in her ideological rigidity and her political tin ear than she resembles her husband.  Indeed, Clinton’s big mistake in ’93-’94 was turning over health care to Hillary.  She exhibited all of the traits that have come to haunt Obama.  The only difference was that Obama had a bigger and more ideologically committed Congressional majority than Clinton.)

So, I don’t see triangulation working for Obama, and I see him having a far more difficult political hand to play than Clinton did post-’94.

That said, re-election in 2012 is still well within his grasp.  For one thing, you can’t beat somebody with nobody, and right now nobody is all the Republicans seem to have.  There is certainly no one of the stature and reputation of Reagan, circa 1978.  Yes, Reagan had his baggage, but he was a known quantity with a large and enthusiastic base of support.

Moreover, it shouldn’t be forgotten that even though Jimmy Carter was widely reviled and ridiculed in 1980; even though the country was humiliated by Iran; inflation was out of control; and on and on; he was ahead in the polls throughout the summer of 1980.  Indeed, the election was considered too close to call until the Carter self-immolated in the first debate (although Reagan helped strike the match with his “there you go again” retort).  Doubts about Reagan were great enough to make many Americans hesitate to vote for him, even over an abject failure widely ridiculed both without and within his own party.

Yesterday’s election results speak to this point.  The Republicans succeeded wildly in nationalizing the House races, and many races at the local level.  They succeeded far less at nationalizing Senate races and governor’s races.  In those races, personality played a much more pronounced role.  Money and advertising and more intense media coverage of individual candidates in Senate and governor’s races, in contrast to House or local races, makes it easier to personalize such a race.  Which is why Reid survived in Nevada, for instance, whereas Feingold went down in flames in Wisconsin.  Even though both their opponents were self-identified Tea Party candidates, Angle was readily portrayed as flaky whereas Johnson was too solid and accomplished a guy to suffer the same fate.

That makes it difficult–no, impossible–to prognosticate the 2012 presidential race without knowing who exactly Obama will face.  It is easy to think of candidates who would fare very poorly against Obama even if he and his policies remain wildly unpopular.  Right now there is no obvious candidate who has sufficient personal appeal to take advantage of Obama’s weaknesses.

But that’s not all bad.  In ’95, Bob Dole was the “logical” candidate (in the perverse logic of the Republican party).  He was tailor made to get hammered by Clinton.  There is no such “logical” candidate today, which means that there is a chance that the Republicans can find somebody who can exploit Obama’s vulnerabilities.

And those vulnerabilities will remain.  The mask has fallen from his persona, and people now see him for what he is.  Egocentric beyond belief, arrogant, condescending, ideological, partisan, and mean.  Health care will remain an albatross, and indeed, will become a greater liability as time passes.  My expectation is that the economy will remain sluggish.  Objectively he will be in a weak position, but it remains to be seen whether there is anyone who can take advantage of that.

At the end of “Mudville,” I wrote: “Adam Smith wrote that there is a good deal of ruin in a country. I think we are about to test the limits of how much there is in this one.”  We have indeed tested the limits.  Obama and his Progressive allies have pushed us far too close to ruin for comfort.  The best thing that can be said about yesterday’s election is that we have a chance to avoid pushing those limits yet further.  God willing.

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  1. […] This post was mentioned on Twitter by Cecil Williams, Cecil Williams and R, SteveTaff. SteveTaff said: Streetwise Professor » As So It Came to Pass, as Predicted Here -FREEDOM! […]

    Pingback by Tweets that mention Streetwise Professor » As So It Came to Pass, as Predicted Here -- — November 3, 2010 @ 4:02 pm

  2. Hard-left dominated Congress ? You must be joking! There is no left-wing party in America, only 2 pro-capitalist parties. You need to get out more !

    Comment by pce — November 3, 2010 @ 4:44 pm

  3. pce–just as long as I don’t have to get out to whatever planet you’re on. I guess it all depends on where you stand, but from where I stand the Dem party leadership, esp. in the House, is pretty far left. Maybe not for you, but that says more about you than the rest of the world.

    The ProfessorComment by The Professor — November 3, 2010 @ 5:01 pm

  4. Nice post Streetwise Prophet!

    Comment by SWP JR — November 3, 2010 @ 6:01 pm

  5. 1. Congrats, I guess.

    I too predicted a midterms loss, in January 2010 admittedly and less clearly. I didn’t think it would be that gargantuan because of the sheer insanity of the current GOP, but I guess I misunderestimated the American voter.

    Republicans will carry the mid-term elections in 2010, but there is a strong mood of apathy and a sense that what is really needed is a new party, a new politics – though this will only start playing a great role in the post-Obama, or post-2012, era.

    2. LOL @ hard-left too. In most European countries Obama would be considered center-right. Bernard Finel has it pretty much spot on:

    3. I hope you enjoy the Lysenkoism and kangaroo trials now being trotted out by the Republicans. All power and glory to Big Oil! 🙂

    Anyway, I really hope those right wing freaks go overboard with their radical ultra-conservative and pro-corporatist agendas – to demonstrate the danger they pose to fundamental liberties in time for 2012.

    Comment by Sublime Oblivion — November 3, 2010 @ 7:20 pm

  6. By American standards–very left. By European standards, maybe not. But we’re not Europeans yet, and if y’all love the Euros so much . . .

    Indeed, one of the main drivers of the election is that a pretty healthy majority of voters, and a very large majority outside of CA, NE, and NY don’t want to be Euros, thank you very much.

    There’s actually a well-known poli-sci explanation as to why there are no major extreme left or extreme right parties in the US. (An explanation first advanced, I think, by my dad’s poli sci professor at Lawrence College, William Riker–later to become one of the giants of the profession, and a renowned professor at Rochester.) Specifically, the winner-take-all system drives out fringe parties. They can survive in parliamentary systems where they can be pivotal in the formation of coalitions. Not so under the US system.

    So, no, the US Dems are not as radical as many foreign parties. But to say that the Dem delegations from coastal states and urban areas are “pro capitalist” is a sick joke. With friends such as these I don’t need any enemies, thanks.

    The ProfessorComment by The Professor — November 3, 2010 @ 8:01 pm

  7. BTW, you might be too early signing off California – the passage of Prop 25 promises out of the way out of the political gridlock on budgets.

    Comment by Sublime Oblivion — November 3, 2010 @ 8:54 pm

  8. Great post SWP.

    If Obama falls short of the standards of the Euroleft it certainly isn’t due to lack of aspirations but only lack of opportunity.

    Comment by pahoben — November 3, 2010 @ 9:42 pm

  9. I’ll venture to suggest that America’s lack of basis for a genuine social democrat party and welfare state is more to do with its deep racial divisions than the Riker argument. People will not support a system of transfers to people who they perceive as different from and morally inferior to themselves. Though America does partially offset this through having a surrogate welfare system in the form of its military.

    Comment by pce — November 3, 2010 @ 10:39 pm

  10. What would the left have without endless focus on divisions of every stripe?

    Comment by pahoben — November 4, 2010 @ 8:01 am

  11. SWP, if you even plan on travelling through that great corn state west of Iowa, I’d suggest you not use NE so cavalierly when discussing where the lefties in America lie.

    Comment by YourEconProf — November 4, 2010 @ 10:33 am

  12. Since when did a bolshevik wanker like Sublime Oblivion care about fundamental liberties.

    After all, he denies the crimes of the Russian empire and it’s successor states, the USSR and neo-fascist modern Russia.

    He seems to think the 60,000,000 or so people killed by the Russian communist party did not have any rights.

    Comment by Andrew — November 4, 2010 @ 1:12 pm

  13. YourEconProf–NE was shorthand for New England, definitely *NOT* Nebraska. Sorry about the confusion. Thanks for pointing it out.

    The ProfessorComment by The Professor — November 4, 2010 @ 3:34 pm

  14. A lot of typos at SWP lately…but with Helicopter Ben print, print, printing, ‘Oleg’ Sechin may decide U.S. refineries and even LNG terminals (wouldn’t want those Euros to buy U.S. shale gas without the Motherland getting at least some cut, no?) look mighty cheap right now.

    The Evil Empire is coming Houston Mr. Pirrong. In fact, they’re already there. Or did you check out Gasputin’s outpost?

    As Sublime Oblivion said, all power to the GOP oilmen who will crush the weak McCain/Scheunemann anti-Russia hawks!

    Comment by Ivan — November 4, 2010 @ 5:38 pm

  15. No, the glorious revolution under Obama MUST continue. There are still some capitalist pigs with money, we must confiscate it ALL and give it to ourselves. Onwards Comrades. Long live the glorious revolution. Hope and Change.

    Comment by Opinionated Bloviator — November 6, 2010 @ 1:44 am

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