President Obama will officially lay out his plan to reduce the federal deficit today. He is including a call for higher taxes on those most able to pay them, including a special super-tax on millionaires. The GOP response was not long in coming. “Class warfare may make for really good politics,” said Congressman Paul Ryan (R-Wisconsin) yesterday. “But it makes for rotten economics. It adds further instability to our system, more uncertainty, and it punishes job creation.”
Of course, Cong. Ryan is an expert on class warfare. He and his Ayn Rand-inspired colleagues have been practicing it for some time now. Cong. Ryan, you will recall, has proposed turning Medicare into a voucher program in which seniors would get $6,000 with which to buy health insurance on the free market. Good luck getting decent health insurance for that amount when you are under 65, let alone over 65. The wealthy, of course, could afford to pay for their health insurance but the elderly poor? Good luck. Republicans have also begun questioning the extension of the one-year cut in payroll taxes, which has obvious stimulative value precisely because it goes disproportionately to lower and middle class workers. (Finally, a tax cut Republicans don’t like!)
Cong. Ryan also brings one type of economic expertise to the debate. He is a devotee not only of Ms. Rand, but of the Austrian school of economics that favors an unrestricted market at all costs and denigrates any and all types of government regulation or interference with the results the market yields. I have suggested that readers consult Angus Sibley’s book “The Poisoned Spring of Economic Libertarianism” to discover the specifically anti-Catholic ideas that animate the Austrian school. Sibley, who once held a chair on the London Stock Exchange also knows a thing or two about how business and finance actually work and he concludes that the Austrians’ theories are bosh. Closer to home, it was that flaming socialist George W. Bush who pushed through the TARP bailout of the financial sector.
But, of course, the issue here is only partly about economics. President Obama is not a titan of industry. He is the elected chief executive of the federal government and the debate is as much about government as it is about the economy. It is about the kind of society we want. It is about whether we believe it is more important to keep our promises to seniors regarding Social Security and Medicare than it is to shrink the federal government’s tax rolls. It is about values as well as policies. It is about the free market of ideas, not just the free market of economics.
And, Ryan is right to be scared. In American history, there are two broad strands of economic populism. Conservative populism holds that government over-reach, mostly in the form of taxes, is an affront to individual liberty. Liberal populism holds that in our free society, the rich will always be the most powerful group and it is the role of government to step in and help those less powerful groups achieve other important social goods besides the accumulation of private wealth. Regular readers will recall that I quoted Arthur Schlesinger Jr.’s “The Age of Jackson” when I introduced this column and I shall repeat the quote here: “American democracy has come to accept the struggle among competing groups for the control of the state as a positive virtue – indeed, as the only foundation for liberty. The business community has been ordinarily the most powerful of these groups, and liberalism in America has been ordinarily the movement on the part of the other sections of society to restrain the power of the business community.”
Mind you, Obama’s proposals are not the stuff of Huey Long. His populism is not only mild from a policy perspective, the man himself is incapable of exuding a populist aura. Barack Obama simply does not have a populist bone in his body and, in this regard, I think Ryan and his allies miss the political mark in trying to dress him up in some kind of class warfare drag. It won’t work.
In August, the debt ceiling vote required a special select committee of Congress to produce additional savings or face across-the-board cuts in both domestic and military spending. Never mind that, in the short-term, reducing federal spending is not an economic necessity. Indeed, the main reason the economy seems to have stalled this year is that the federal Stimulus dollars started drying up. When you look at the monthly unemployment figures, private sector job growth, while hardly robust, has been steady. But, each month, the contraction of federal, state and local government budgets has resulted in significant losses in government jobs. In any event, Congress and the President signed on for more deficit reduction.
The key difference is that now there is no Sword of Damocles hanging over Obama’s head. He does not have to face a government default. And, certain Republicans members of Congress who care more about defense spending than they do about taxes may be wary of allowing the across-the-board cuts to take effect should Congress fail to meet the deficit reduction goals set up by the August compromise. Now, if the GOP walks away, the President will have teed up the central issue in the 2012 election: We want to spur job growth through direct government action, protect Medicare, Medicaid and Social Security and we will pay for it by raising taxes on the rich. The GOP wants to restrict government spending, cut Medicare and Medicaid, and keep taxes low for the very rich. I am not a pollster, but I can tell you how that choice plays out with swing voters.
I have never been afraid of populism because in a political culture that still values pragmatism more than ideology, populism has built in limits. The hateful Tea Party approach to politics has not won many adherents among those who decide elections. A genuine swing voter is, almost by definition, not very ideological. President Obama, in the past two weeks, has shown himself as a pragmatist, talking about fixing bridges and repairing roads. The Republicans continue to dwell in their world of Rand-inspired ideological certainties. So long as the President does not give away the store in negotiations, he has set himself and his party up well for 2012. And, so long as the GOP rants about class warfare and tries to paint Obama as a latter day Huey Long, they will be doing little more than preaching to their choir. Let them sing their out-of-tune hymns to the gods of the free market. Let Obama invoke Matthew 25: Whatever you do for these the least of my brethren…” See who wins.