Obama's Free Lunch--and Breakfast and Dinner
Henry A. Wallace, handpicked as vice president by Franklin Roosevelt, would have liked President Obama. In 1942, Wallace called for federal support for education—a novel concept at the time—and universal health care for workers. Highly progressive even by New Deal standards, Wallace championed many social programs and government giveaways. In response, prominent Princeton economist Harley L. Lutz employed one of the earliest known uses of a now-famous aphorism.
“Mr. Wallace neglects the fact that such a thing as a ‘free’ lunch never existed,” Lutz wrote. “Until man acquires the power of creation, someone will always have to pay for a free lunch.”
Harley Lutz didn’t live to see Barack Obama’s political rise. The Princeton professor passed away in 1975, the year famed University of Chicago economist Milton Friedman produced a best-selling book, “There’s No Such Thing as a Free Lunch.”
Practicing what he preached, Friedman worked until the day he died in 2006 at age 94. Obama was in the Senate by then, already eyeing the White House and planning a successful 2008 presidential run that included campaign slogans “Change We Can Believe In” and “Yes We Can!”
Six years into the Obama presidency, those mottos have been fleshed out with a subtext that might be expressed thusly: “Lutz and Milton Friedman Were Wrong.” The Obama doctrine, espoused unambiguously in his 2015 State of the Union address, is that there is indeed a free lunch. Free breakfast and dinner, too. And free midnight snacks. Don’t forget happy hour. “Drinks all around!” is this administration’s mantra.
In his speech, Obama called for government-subsidized broadband access, federally mandated sick leave, and “free” community college. His goal, the president said, is ensuring that “two years of college becomes as free and universal in America as high school is today.”
The administration put the price tag at $60 billion over the next 10 years. Although that’s a high number, it vastly understates the likely costs: making community college as universal as high school would require building many more colleges. Moreover, California’s experience suggests that the president’s proposal is a solution in search of a problem. In California, which pioneered the junior college system, annual tuition averages around $1,500 a year, meaning that students spent more on books than tuition. So cost isn’t the problem—access is: the state reported in 2012 that 470,000 junior college students were on waiting lists for classes they need.
There are other problems with the president’s “free lunch” approach to governance. Here are three:
First of all, the president doesn’t have this money to spend. He’s borrowing it. The day Obama took office, the national debt was $6.3 trillion. Today, it stands in excess of $13 trillion, which is what happens when you run annual budget deficits averaging $1 trillion a year. The president is happy that the 2014 deficit is “only” $483 billion. I’m happy, too, but that number would still be larger than any other deficit in U.S. history—even adjusting for inflation—except for during George W. Bush’s last year in office.
Yes, Obama inherited a fiscal mess, no doubt. But acting like there’s a pile of found money lying around is disingenuous. Future generations of Americans will foot that bill because voters are being promised more goodies than their politicians are making them pay for.
The second problem is one of federalism. By what rationale should workplace salaries be mandated from Washington? States and counties with traditional manufacturing might mandate time-and-a-half for hourly employees. States and counties with many seasonal agricultural jobs might not. And when it comes to the minimum wage, the folly seems obvious. Do entry-level workers in Lincoln, Nebr. (median housing price $146,000) need to be paid exactly the same as those in San Francisco (median housing price $769,000)?
Most states are managing this issue pretty prudently, U.S. Department of Labor data suggests. Only five—all of them in the South—lack a minimum wage law. Fourteen others have laws tying their minimum to the federal standard. A majority of states exceed the federal minimum.
Third, when the president says he wants to mandate sick leave and raise the minimum wage—and underwrite “free” community college by raising capital gains taxes—he continues to send a message of hostility to business. Over the years, many Democrats have exhibited an odd duality about business: they venerate jobs, but not employers. Obama takes this to new levels, while cheerfully spending Other People’s Money.
In his State of the Union, Obama didn’t try to explain why business owners launching a startup or trying to keep a small business afloat should welcome federal laws governing their pay scales. Instead, he taunted Congress: “If you truly believe you could work full-time and support a family on less than $15,000 a year, go try it.”
This was effective theater, but also a reminder how easily Obama’s populism slips into business-bashing. In his 2012 campaign, he said, “If you’ve got a business—you didn’t build that. Somebody else made that happen.” He meant somebody in government. It was also in 2012 that most Americans learned that the Affordable Care Act included a requirement that employers pay for “free” birth control.
Here, folk wisdom about free lunches comes full circle. “Free Lunch” originally was not a metaphor; it was an advertisement. Saloons, mainly in the American West, offered free lunch with the stipulation that patrons purchase at least one drink. Only the most naïve would deem this lunch truly free, so the extrapolation to government came naturally. The earliest known reference came in a 1938 editorial in an El Paso, Texas, newspaper unearthed by “Yale Book of Quotations” editor Fred Shapiro.
Called “Economics in Eight Words,” it’s a fable about a king who asks his advisers for a brief economic textbook. Instead, they produce 87 volumes of 600 pages each—thicker than Obamacare’s statutory language and regulations—which results in their execution. Finally, the last remaining economist says he can distill the dismal science into eight words: “There ain’t no such thing as a free lunch.”