President Obama’s first hundred days
In his first one hundred days, President Obama has shown himself to be one of the most radical U.S. presidents in history. He is harming America’s defenses by publishing memos on interrogation of detainees and threatening to prosecute lawyers who drafted supportive memos. He shakes hands with America’s enemies, such as Venezuelan leader Hugo Chavez, and sends mixed signals to its friends, such as Colombia’s President Uribe.
And, in the name of combating a recession, he is destroying the fundamental institutions of America’s free-market economy.
Not only would President Obama’s proposed programs move government spending to levels, in relation to the economy, unseen since the end of World War II, but his administration is increasingly involved in the minutiae of a new, unwise, industrial policy, such as how much firms can pay workers, and which banks are allowed to repay government loans, and which industries and companies deserve a government rescue package.
Under Obama’s proposed budget, the nonpartisan Congressional Budget Office projects the government deficit to hit $1.2 trillion in 2019, or six percent of GDP, after “bottoming out”—if it does—at $658 billion in 2012, a level more than 40 percent above the highest deficit under the presidency of George W. Bush. By 2019, government spending would take up nearly a quarter of GDP, far higher than at the peak of Iraq war spending and the highest, excepting 2009 and 2010, since 1946.
Much has been written about President Obama’s plans for multi-year, growing expenditures on energy and health care. He has proposed to invest billions of dollars in wind, solar power, and other renewables, which now produce about 3 percent of U.S. energy, yet he neglects nuclear power, which produces 20 percent. He has suggested a substantial cap-and-trade energy tax, which would raise more than a trillion dollars over time, according to some estimates. And he wants a down payment of $634 billion for a universal health care plan whose details he has not yet confided to the public.
In addition, Obama is pushing for other programs which are both costly and naive. One of his priorities is high-speed passenger rail service, which was given a downpayment of $8 billion in economic stimulus funds and possibly $5 billion more in the budget. This proposal is, to put it charitably, poorly-designed. Real high-speed rail, with trains that travel 150 miles an hour and faster, can be found in Europe and Japan, but they have not stemmed the increasing use of road transportation. And these trains need their own, specially engineered rights-of-way, which would cost much more than $13 billion.
Some of Obama’s economic proposals appear to be aimed at placating labor unions, an important element in his political base, rather than encouraging economic recovery. In March, even before the swine flu scare, he signed legislation ending a program, opposed by the Teamsters union, allowing a small number of Mexican trucks to enter into the United States. Mexico is retaliating by imposing tariffs on almost 100 agricultural products, including wheat, beans, beef and rice, hurting American exporters.
In another concession to unions, the president has let the U.S. Labor Department end some disclosure requirements for union finances, originally put in place so that union members can learn how their dues are being spent.
Although Obama lauds transparency, the Labor Department has announced that it would not enforce the filing of the form that requires union officials to report conflicts of interest, such as whether they had personal relationships with firms doing union business. In addition, unions will no longer be required to disclose supplemental information about officers’ pensions and compensation.
Even as unions are allowed to reveal less about their finances, financial institutions that have taken government funds, some reluctantly and under Treasury Department duress, are subject to an unprecedented level of scrutiny as to their compensation of senior executives. Goldman Sachs, Morgan Stanley, and J.P. Morgan are being discouraged from repaying their Troubled Assets Relief Program funds, even though pay caps are interfering with retention of talented staff. A government pressuring banks to do something not required by law is engaged in extra-legal behavior.
The government’s treatment of executive compensation bonuses, standard in many industries, has also been capricious. Some executives working in banks that received TARP funds were paid their bonuses without complaints from Washington. Others, notably those working at AIG, were demonized both by the press and government.
For those who favor nationalization of the economy, or at least of big business, Obama’s first 100 days have been a roaring success. Others, however, pray that the economy can survive not only the recession but also the president’s prescriptions.