The Federal Department of Economic Recovery

The Federal Department of Economic Recovery

By Robert Tracinski - January 10, 2009

Barack Obama gave a big speech Thursday on his economic plan. No, he is not president quite yet--at least not officially--but his eye is not on the schedule of the presidential succession. He is targeting the schedule of the new Congress, which has just convened. Obama is speaking on the economy now because he wants Congress to pass an enormous economic stimulus plan for him to sign immediately upon taking office.

This speech gives us a lot of new information about what Barack Obama will do in office--and the style in which he will do it.

During the primaries and the general election, not to mention the presidential transition, Obama has weaved from the far left to the moderate center, blurring himself into a seeming enigma. But now we can see the outlines of how he will govern, and it is a combination of the far left and the center--the worst kind of combination. He will act on the ideas of the far left, while presenting them under a moderate, conventional, non-ideological cover.

The danger of Barack Obama's presidency is not that he will act openly on the old dogmas of the left. Indeed, during his transition he has largely attempted to meld into the Washington woodwork by hiring only the most conventional Beltway insiders. Instead, the danger is that he has been so steeped in leftist dogma for his entire life that he will accept the left's attitudes implicitly and automatically, without even realizing it.

Consider just the first paragraph of Thursday's speech.

Throughout America's history, there have been some years that simply rolled into the next without much notice or fanfare. Then there are the years that come along once in a generation--the kind that mark a clean break from a troubled past, and set a new course for our nation. This is one of those years. We start 2009 in the midst of a crisis unlike any we have seen in our lifetime.

Put aside the way in which Obama always turns every issue into an opportunity to talk about his favorite topic: his own great historical importance. What really ought to make you choke over this paragraph is what is missing from Obama's world view. Ask yourself: is there any other year in recent memory that presented us with a shocking event that marked a "clean break" from the past and presented us with a historic crisis?

How about 2001, the year of the September 11 terrorist attacks?

The beginning of this speech puts us on notice that September 11 does not register as an important date in Obama's calendar or in his world view. The man who will soon be commander in chief is indifferent to the bloodiest foreign attack on America's soil since the War of 1812.

How is that possible? It is possible from within the world view of the ideological left. There is an old socialist slogan, usually attributed to Lenin, that captures this world view: "a bayonet is a weapon with a worker on both ends." The idea is that wars, with their appeals to patriotism, are merely attempts to distract the international proletariat from banding together to overthrow their real enemies, the capitalists.

(It should be noted that this aversion to war lasts only until the socialists take over, at which point they discover that war can be used to distract the people from the poverty and oppression of life under socialism.)

Having absorbed such socialist bromides at his mother's knee (literally), Obama clearly views September 11 as an event of little significance--compared to the opportunity to overthrow the remaining elements of American capitalism and vastly expand the role of government.

That brings us to the main content of Obama's speech, which is an attempt to sell us a half-trillion-dollar program of government spending. This is, of course, money that the federal government does not have, so Obama has admitted that the budget deficit will explode to more than $1 trillion.

The money will be thrown around to all of the conventional pork-barrel recipients, from roads and bridges to "alternative energy," which is perpetually in need of government subsidies. But that is less important than the overall effect this spending will have. Given the current contraction in private credit--which will be further withdrawn by the government's vastly increased borrowing--an enormous amount of the money flowing through the economy will now be government money. An increasing amount of economic activity will be directed, not by the private marketplace, but by the government.

Not to worry, Obama tells us. His administration will "launch an unprecedented effort to eliminate unwise and unnecessary spending." They "won't just throw money at our problems--we'll invest in what works." And if you believe that, brother, then I'd like to sell you a can't-lose investment in one of Bernie Madoff's funds.

In fact, this spending has to be wasted, because it is being directed by a thinly disguised form of government central planning. Obama tells us that "instead of politicians doling out money behind a veil of secrecy, decisions about where we invest will be made transparently, and informed by independent experts wherever possible." What does this mean? Elsewhere, Obama has indicated that he will create an "economic recovery oversight board." According to the Associated Press, "Obama's proposed Economic Recovery Accountability and Transparency Board is to include members the administration deems relevant to helping the country rebound from the year-old recession." Why just have an Economic Recovery Board--why not elevate it to a cabinet-level position? The Federal Department of Economic Recovery would really capture the whole flavor of this scheme.

This is a new central planning board for the American economy, in which a collection of politically connected experts will be empowered to decide which industrial enterprises are worthy of investment and which are not. This is already the policy of the Bush administration, of course, with Treasury Secretary Henry Paulson empowered to act as the economic dictator of the financial industry, deciding which financial institutions are to be supported by freshly printed government dollars and which are to be dismembered and sold. You can see all around you the evidence of how well that worked, and now Obama wants to expand this system to the whole economy.

This new scheme for central planning is an attempt to revive the most discredited idea of the creaky Old Left--but Obama is dressing it up in conventional centrist bromides. I thought that this one was particularly rich:

If we hope to end this crisis, we must end the culture of anything goes that helped create it--and this change must begin in Washington. It is time to trade old habits for a new spirit of responsibility. It is time to finally change the ways of Washington so that we can set a new and better course for America.

How is it "changing the ways of Washington" to propose expanding government power and an explosion in deficit spending? Those are the ways of Washington.

But that's not all. Comically, after proposing hundreds of billions of dollars in new spending and a trillion-dollar deficit, Obama tell us that "government at every level will have to tighten its belt." This "belt-tightening" takes the form of a federal bailout for state governments so that they can "avoid harmful budget cuts."

In this series of evasions and deceptions, there is one item that was not, alas, originated by Obama. He boasts that the hundreds of billions of dollars in new federal spending will be "free from earmarks and pet projects.... This must be a time when leaders in both parties put the urgent needs of our nation above our own narrow interests."

The "small-government conservatives" deserve this one. For decades, the ineffectual advocates of "small government" have directed all of their anger toward earmarks, which in total constitute less than one tenth of one percent of federal spending. Earmarks are small government; it's the rest of the budget that's big. And Barack Obama is now borrowing this conservative argument to justify making big government a whole lot bigger.

The biggest evasion of Obama's speech is that he is hiding what is essentially an ideological program--a resurrection of the ghost of socialism--as a rejection of ideology. He warns us that we must not "rely on the worn-out dogmas of the past" (by which he means free-market economics) and he calls on both parties (by which he means Republicans) "to put good ideas ahead of the old ideological battles."

Yet it is not easy to guess Obama's own basic ideological commitment: that "only government can provide the short-term boost necessary to lift us from a recession this deep and severe. Only government can break the vicious cycles that are crippling our economy."

Obama's premise is that only government can guide and manage economic activity. Only a Federal Department of Economic Recovery can bring back prosperity. This is the most ideological of ideological positions, an "ism." The name for it is "statism," a belief in the central role of the state in controlling the economy.

I am most definitely not an opponent of "ideology." Ideas and principles can capture important truths, and those basic truths become even more necessary in an emergency, not less. The principles of individual rights and free-market economics, for example, would help us to remember the supremacy of the individual over the state and the moral and practical superiority of a free economy over central planning--the hard-won lessons of the past century. These principles would help us to understand how government got us into this crisis and how we can get out of it.

But of course there are other ideas that are "worn-out dogmas" that have demonstrated their failure again and again. And those are the statist ideas that Barack Obama is trying to revive.

Robert Tracinski is editor of The Tracinski Letter and a contributor to RealClearMarkets.

Robert Tracinski

Author Archive

Follow Real Clear Politics

Latest On Twitter