Obama pivots as liberal dream collapses

December 20, 2010

Well, that was quick. America’s supposed generational shift toward an embrace of high-tax, high-service Big Government didn’t even make it a full two years. The new public policy consensus — built around favorite liberal issues of the environment and income inequality — promoted by Washington elites has been a flop with the public.

The nation’s ruling class thought for sure the financial crisis and subsequent Great Recession would create so much economic insecurity that it would be easy to pass a broad expansion of the welfare state — all financed by a combination of higher income taxes on the rich and new energy taxes on the middle class.

Instead, concerns about the federal budget deficit and competition with China became paramount. And the liberal agenda of healthcare reform and cap-and-trade suddenly seemed terribly off-point. So within a span of seven weeks, Democrats lost control of the House and then their legislative agenda.

First, the $858 billion tax deal. The near-term economic impact may modest. Some $500 billion of that total is merely the “cost” — as government bean counters look at things — of extending current income tax policy. Consumers will save most of the payroll tax cut, while extending the funding of unemployment insurance will make unemployment a bit higher than it would otherwise be.

But longer-term, the package is extremely bullish. It shows clearly that the “battlespace” of the coming Republican-Democrat fiscal clash will almost entirely be on the spending side of the ledger. There is little appetite among the public for sending more tax dollars to a wasteful and inefficient Washington. And the debate over restructuring the U.S. healthcare system will be between trusting government rationing or trusting market efficiency and choice.

The failure to pass a 2011 budget is also tremendously positive. It shows the impact of the Tea Party movement has not waned since the November midterms. This creates a situation next year where the flood of new Tea Party Republicans can combine a threat of government shutdown with a refusal to raise the national debt ceiling so as to squeeze spending cuts out of Obama and congressional Democrats.

Indeed, some GOP insiders believe the president — with a bit of nudging — may be ready to strike a deal to reform the tax system and cut future Social Security benefits along lines suggested by his own debt commission earlier this month. And as the tax compromise shows, Obama now seems willing to anger some within his own party in order to get legislation passed and win the reelection.

But if Obama does manage to somehow eke out a second term, it will be as president of a country that he may understand a bit better than he did two years ago. His true value and concerns in 2008, it turns out, were not those of most of his countrymen. Most Americans were not itching for government-run healthcare, a vast energy bureaucracy, an expansion of union power or new penalties on success and wealth creation. To a great extent, the term Tea Party America is redundant. The U.S. remains a center-right nation, and prosperity usually ensues when its leaders understand this.


We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/

This is a hardly a pivot. This is Obama trying to set the best course for himself. He has abandoned his party, his base and his philosophy. He just wants to make certain that he is not held accountable for the economy or much else. And let’s not forget its time for a vacation.

Posted by subrot0 | Report as abusive

Well let us see. The Obama group has tried to use the legislatures, the courts, and the executive branch agencies to forward the his agenda. While he may talk about accomedation with the Republican House the executive branches continue, even in defiance of Constitutional law, to legislate. These moves are not secret anymore in part due to the Internet. If Issa in the House starts calling in the heads of these agencies Obama may be seen to be spinning not pivoting.

Posted by toadold | Report as abusive

I love when you see an article where the author is going on and on about how ‘right wing’ America is economically, and supposedly speaking for the majority.

How no real Americans really want to improve our health care system, how the common, down to earth, decent folk are just so anxious to dismantle social security and basically all social services. …Then you look to see who is this person who calims to be speaking for this supposed vast majority of ordinary citizens: a business columnist who writes for the NYT and various money/investment publications. Yep. that represents me alright. I have SOOO much money to invest these days..

Posted by wtcskeptic | Report as abusive

“The whirling dervish pivots to the same

Possibly unnoticed:

The court decision voiding the individual mandate for buying health insurance – (the mechanism for greasing the health care insurance industry approval of “Obamacare” rules) – that decision does not void the regulations the mandate was intended to partially finance.

I’ll be more than a little surprised if the necessary number of legislators vote to withdraw the poisonous promises concerning “pre-existing conditions”, “costless” medical procedures, and other mob pleasing “benefits” that are a part of the “Obamacare” scheme.

Merry Christmas and April Fool!

Posted by Rolyat136 | Report as abusive

Ya! let’s get busy cutting that nasty social security or should i say SOCIALIST security he,he! We’ll throw those lossers out on the streets latter. Serves them rite for not going to college like decent folk.

Posted by Dave1968 | Report as abusive

Obama did not pivot-he lost, and Harry Reid caved. They’re not happy. This is not going to help any Dem in 2012.

Posted by pduggan | Report as abusive