Why Obama’s left leaning is no tactical feint

Obama: “It was hard for me to believe that you were entirely serious about that socialist question.”

http://washingtontimes.com/weblogs/joe-
curl/2009/Mar/08/obama-makes-oval-
office-call-reporters/

Well, President Obama may be just shocked that some think he is far left and maybe even socialist; but some that wonder about his socialism include FT and The Wall Street Journal….

Michelle:
http://michellemalkin.com/2009/03/09/oba
ma-im-not-a-socialist-i-just-play-one-on-tv/

Can Democracy Fail With Obama’s Socialist Help?

Obama Doesn’t Understand What Many Americans Are Thinking

*************

By Clive Crook
FT

On this page last week I argued that Barack Obama’s first budget showed him to be more of a left-leaning liberal than I and many others – sceptics and admirers alike – had previously supposed. People I respect have accused me of going off the deep end about this, or of neglecting Mr Obama’s tactical finesse, or both.

Mr Obama is calling for little that he did not promise in the campaign, I am reminded, so he cannot be accused of springing a surprise. I welcome many of the budget’s main elements, notably healthcare reform and the cap-and-trade system for carbon emissions, and the president made it clear all along that he wished to reverse the Bush tax cuts for the high paid. So the revelation that Mr Obama is a progressive liberal must arise from the proposal to curb high earners’ income-tax deductions. That was a surprise, but a small matter: hence the charge that I am getting carried away.

Alternatively, I am told, Mr Obama is playing a shrewder game. Like any good negotiator, he has adopted a maximalist opening position. He expects to be walked back from it, ending up where he wanted to be in the first place, with a more centrist plan than the one he pitched.

An outside view of the New York Stock Exchange on Wall street. ...

On the first point, the tax-deduction proposal is not so small. Instead of applying the highest marginal rates of tax to each deduction, the plan would apply a 28 per cent rate. This is equivalent to a tax increase of roughly $35bn (€28bn, £25bn) a year on households earning more than $250,000. Hardly chicken feed, it is roughly half of the amount raised by returning high earners’ marginal rates to their pre-Bush levels.

Not everybody would regard two-earner households with an income of $250,000 a year as rich; and many of the taxpayers in question have seen their retirement savings, college funds and housing equity destroyed. The scandal of widening inequality that still animates the Democrats’ thinking is a story about the top fraction of one per cent of the income distribution, not the top end of the middle class. Also, it is out of date: as though the housing and stock market meltdowns had never happened, the budget raises taxes on the “rich” to where they were before the Bush administration – and then some.

Granted, other things being equal, reducing the value of tax deductions – not just for the highest earners, but for every taxpayer – makes sense. It broadens the tax base and requires lower marginal tax rates for any given amount of revenue raised. But look at Mr Obama’s proposal in context. He is not broadening the base to lower marginal rates. He is raising marginal rates on the highly paid, and increasing their effective tax rate by rolling back deductions. The measure is an unexpected element of redistribution in a package that was highly redistributive to begin with.

Standing back, the budget’s two great innovations are healthcare reform, an enormous undertaking only partly paid for in the plan, and cap and trade, a big new source of revenue. A centrist administration might have married the two – arguing, correctly, that a public investment as costly and far-reaching as healthcare reform should impose some costs on most taxpayers, not just on a few million at the top. Instead, the revenues from cap and trade are spent mainly on wage subsidies and tax cuts tilted toward the working poor. The down-payment on the cost of healthcare reform is financed by an additional tax increase on the rich.

A centrist administration would have thought about how to create a political constituency for cost control in health, and in public spending more generally. The administration rightly emphasises that healthcare cost control is the single biggest challenge in fiscal policy. Without it, public debt will stay on its present unsustainable path until it hits the wall of a new financial crisis. The need to create a wider constituency for fiscal discipline is the best argument for associating healthcare reform with a new and broadly based tax. Instead, the budget makes this already small constituency even smaller, telling almost all taxpayers they can have everything for nothing.

This message comes through loud and clear in the budget taken as a whole. Mr Obama is not a centrist – unless the second point is correct and I am underestimating Mr Obama’s tactical intelligence. His political skills are undeniable. Yet I find the view that you make a phoney offer and aim to be bargained down difficult to credit.

The question is, who is Mr Obama supposed to be bargaining with? If the answer were a Republican-controlled Congress, this theory might be worth entertaining. Scare conservatives with a pitch for social transformation – a new New Deal – then settle for a judicious nudge to the left. But the bargains Mr Obama needs to strike are not with Republicans, who for the moment are clueless, leaderless and powerless. The people he needs to do business with are members of his own party – and unless I am much mistaken, those people are liberals.

Read the rest:
http://www.ft.com/cms/s/0/328430d0-0
c0c-11de-b87d-0000779fd2ac.html

Related:
Venezuela’s Chavez Urges Obama, U.S. Down Socialist Path

Obama’s Radicalism Is Killing the Stock Market

NYT: After March 6 Economic News, “2009 is Probably a Lost Cause”

Obama’s First Weeks: Economic Disaster, Socialist Agenda, Congressional Pork, Limbaugh Attacked, and “We Won”

http://spectator.org/archives/2009/
03/09/slickness-with-a-straight-face

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