Europe Rejects Obamaism
by Donald Devine
Issue 134 - June 24, 2009

The mainstream media’s optimism for the country in the face of today’s overwhelmingly negative economic news is astonishing. Unemployment is up? Well it’s less than expected. The stock market is down disastrously for over two years now? Well it’s up for this year, a little anyway. Consumer spending is down? Well, savings are up. We are selling less abroad? Well, the trade deficit is down. And on and on and on - every disaster brings forth only good news and whatever President Barack Obama does about it is just wonderful! Could it be the media’s well known patriotism?

It’s just like when they rallied to Ronald Reagan when he entered office to face an unprecedented recession of both stagnation and galloping inflation in 1981, right? Sure. As the new political head of the civil service back then, no matter what the esoteric personnel or management issue was on the agenda that day, the first question by the media was always the same. “How with so many people unemployed and inflation in double-digits can you possibly propose to [fill in the blank]?” Whatever the topic, the media only wanted to talk about bad news. And the same happened to every other official, right up to President Reagan himself.

Is President Obama just an inherently nicer guy than President Reagan? Actually, Reagan was known for his amicability, even by his enemies. Could it be media bias? Perish the thought, although Chris Matthews said he “will do everything I can” to “make this presidency work.” The president went to Europe and Time celebrated with 39 gorgeous photos. As NBC’s Brian Williams admitted it is “difficult to stay objective covering this guy.” Just like for Reagan? Unemployment is fractionally below 10 percent (at 9.7 percent) and inflation is minimal (so far) so the media say the situations are different. During his economic slowdown, Reagan cut domestic discretionary spending and wrung out inflation to general media criticism that this would increase the deficit. Today Obama’s deficit alone is double Reagan’s whole budget and monetary liquidity has been increased to heights previously unimagined, perhaps to $10 trillion or so (officials tell Congress they are not sure).

The media criticized Reagan’s deficits as “$200 billion shortfalls as far as the eye can see.” Today, no one even thinks in terms of billions any more. An announced deficit of $3.4 trillion hardly bats an eye. Spend additional trillions on a new health plan? It will be made up by more efficient government operations. Like for the Postal Service? Ration oil, gas and coal for energy, now holding up what is left of the economy? It will be made up by wind and solar even though they are only one percent now and the most optimistic hope is this can be tripled in a decade or so, only leaving 97 percent from the tooth fairy. Bailout the U.S. auto companies that only make big cars efficiently and then impose regulations requiring small cars that the Japanese make better. Why not? The car czar says so.

At one time Americans despised czars as authoritarian dictators. There are self-described “czars” for almost everything. Reagan had only one and Bill Clinton and George W. Bush went up to four. Obama has 21, so far. Democrat Senator Robert Byrd criticized this “rapid and easy accumulation of power by White House staff” that “can threaten the constitutional system of checks and balances.” Sen. John McCain quipped, "Obama has more czars than the Romanovs - who ruled  Russia for three centuries." Obama’s latest idea is a pay czar, following ones for energy (with oversight of four departments), a health czar with more power than the secretary of the health department, a housing czar and, most importantly, an economic czar. What is the result for the most critical immediate problem, the economy? Trillions of dollars of liquidity have been injected into the banking system to force lending that banks are reluctant to undertake. Was it not forced government lending that led to the crisis in the first place?

The total scope (and irrationality) of the program is breathtaking. It most likely will come to disaster but the media only see only “hope.” As economist Arthur Laffer has noted, the U.S stands more than a year into a “grave” economic crisis with a deficit of 13 percent of GDP, twice the size of the next highest year since World War II. There are $100 trillion in unfunded federal programs already, in a mere $14 trillion total economy, with more on the way. But the worst is that “The percentage increase in the monetary base is the largest increase in the past 50 years by a factor of 10.” The currency in circulation, normally 95 percent of the monetary base, is only 50 percent with an enormous additional half standing ready to be lent by banks. Banks exist to lend and if they do so massive inflation is inevitable. The Fed could shrink the monetary base to previous levels or greatly increase reserve requirements but Laffer doubts it will be able to do so in the face of political pressures to spend.

But the greatest political danger comes from unemployment. Since Congress passed the stimulus, the nation has lost 1.6 million jobs and unemployment has significantly passed the 8 percent level the White House said that the stimulus was necessary to avoid. But the president said recently that his administration has “saved or created” 150,000 jobs over this period. The problem is - it is possible to measure job loss but impossible to know what “saved or created” means. Democratic Senate Finance chairman Max Baucus told Treasury Secretary Tim Geithner about the stimulus promises to save or create:

You created a situation where you cannot be wrong. If the economy loses two million jobs over the next few years, you can say yes, but it would've lost 5.5 million jobs. If we create a million jobs, you can say, well, it would have lost 2.5 million jobs. You've given yourself complete leverage where you cannot be wrong, because you can take any scenario and make yourself look correct.

Unlike under Reagan, the media will not challenge the numbers so there can be no political reaction and the Obama programs can go forward. See how patriotic they have become?

The good news is that, somehow, without the media, the American people have figured out that something is wrong. A May Gallup Poll found 51 percent disapproved how Obama was handling spending, 48 percent disapproved on the budget, and 42 percent disapproved of how he was handling the economy – even as two-thirds of Americans viewed the president favorably. They like him but they are very skeptical of what he is doing. Americans just do not believe in the tooth fairy.

The partial good news for those concerned about Obama’s proposed complete overhaul of the health system is that Latin America is creating a new private health care system for foreigners so that U.S. citizens can do what Canadians do to escape government rationing there—go south for hospitals and procedures denied or delayed by the government system. Energy restrictions have an even easier escape route – move operations of U.S. firms overseas to India and China who are not covered and can produce more efficiently. The only real problem is seriously inflated money and the eroding of savings and dislocations of the economy it causes - but the smart folks can afford gold and the government officials and the unions are in inflation-adjusted pensions guaranteed by the government.

Still, the politicians may not be home free. The recent elections for the European Parliament demonstrated in a most dramatic manner what popular skepticism about government leaders using taxpayer money to spend their way out of the worldwide economic turndown can do. Center-right governments that have been prudent in their spending in Germany, France, Italy and Poland did remarkably well. Leftist governments in Britain, Spain, Austria, Estonia, Hungary and other socialist governments did very poorly. Budget-conscious parties won everywhere, especially in Britain where Labor’s Prime Minister Gordon Brown mimicked the George W. Bush and Obama policies of throwing trillions in bailouts after all problems and suffered the worst electoral defeat in its history.

Things are upside down. In the U.S., capitalism and markets are criticized and government is perceived as the solution. In Europe, as Washington Post columnist Anne Applebaum was surprised to find,

We've been waiting and waiting, but the widely predicted European backlash - against capitalism, against free markets, against the right - has not come. There are no demands for Marxist revolution, no calls for nationalization of industry, not even a European campaign for what the Obama administration calls "stimulus" -- a policy more colloquially known as "massive government spending."

Of course, in the U.S. the more conservative party has a problem that those in Europe did not. It was the Republican Congress that began the massive multi-trillion dollar give-away called the stimulus and then presided over the unprecedented expansion of the money base. President Bush not only overrode Congress to begin the auto bailout but he appeared recently in Erie Pennsylvania to congratulate himself for being the inspiration for the Obama stimulus and monetary policies, which he surely was. Moreover, he became the largest domestic spending president of recent times – Democrat or Republican – well before the financial crisis, which did begin on his watch, of course.

As long as the Democrats can arrange speaking engagements for Mr. Bush, it will be exceedingly difficult for the GOP to repeat the success of their compatriots in Europe. On the other hand, the media adore President Obama so much that they keep giving the current president rather than his much disliked predecessor all the “credit” for the great-sounding economic and social programs. Perhaps on Election Day 2010 Americans will give President Obama the “credit,” surprising his legislators with the same reception the European voters gave their politicians this year.

Donald Devine, the editor of Conservative Battleline Online, was the director of the U.S. Office of Personnel Management from 1981 to 1985 and is the director of the Federalist Leadership Center at Bellevue University.