Is Obama Really the Liberal Reagan?

And if elected, will he try to reverse Reaganomics?

By + More
FE_PR_080211obama.jpg
Senator Obama holds a rally on the campus of the University of Maryland, the day before the Potomac Primary.

Is Barack Obama, the "change" candidate, really a pragmatist, albeit a liberal one? Is he a guy who, if elected as our 44th president, might compromise with Republicans on key issues as he begins to "heal the nation"? Here is the case I've tried to make, though I'm not fully convinced myself:

1) Obama has surrounded himself with centrist economic advisers, like the frustratingly reasonable Austan Goolsbee of the University of Chicago. Former Fed chief Paul Volcker is also a supporter.

2) Obama seems skeptical that we can somehow "stop globalization" by pulling out of NAFTA or the World Trade Organization. Better to cut smart trade deals and help displaced workers.

3) Obama's healthcare plan is more cautious than Hillary's, with no mandate to buy coverage. And no single-payer Kucinich kind of deal—at least not yet.

4) Obama has resisted the temptation to call for an interventionist mortgage rate freeze or a moratorium on resets, as Hillary did, to help homeowners. Instead, he favors tax credits.

Now, you may not buy any of this, especially given Obama's rating as the most liberal member of the U.S. Senate. My friend Larry Kudlow sure doesn't seem to. As he wrote yesterday over at the Corner on the National Review website:

The Wal l Street Journal's Steve Moore says Obama's tax plan would add up to a 39.6 percent personal income tax, a 52.2 percent combined income and payroll tax, a 28 percent capital-gains tax, a 39.6 percent dividends tax, and a 55 percent estate tax. In other words, Sen. Obama is a very-high-tax candidate.... Interestingly, at least two of Obama's top economic advisors—Austan Goolsbee and Jeffrey Liebman—are highly regarded free-market economists.... But somehow their candidate has a very punitive high-tax campaign plan for the economy.

I would say a few things in response:

1) Yes, Obama is for raising income-tax rates on wealthier Americans. But that, along with advocating greater government involvement in healthcare, was the admission ticket to the Democratic primaries. And his tax plan does cut taxes for the middle class as well as make filing easier. It does, though, seem to completely ignore the effects of taxes on economic growth and productivity.

2) Yes, Obama wants to raise payroll taxes. But he's actually a bit of a maverick in this since it's the semiofficial Democratic line that Social Security is not really in crisis.

3) Ultimately, I think it might boil down to how big a congressional majority Obama would have to work with—and to pressure him—and what kind of person he is. If there's a Democratic landslide in November, would Obama use that electoral edge to push through all those huge tax increase and spending proposals without any GOP votes—as Clinton did with his tax hikes in 1993? Or would he attempt to compromise?

4) President Obama would come into office facing a $400 billion budget deficit and the prospect of huge future deficits because of Social Security and Medicare. I think that factor alone may turn Obama into an incrementalist on domestic policy, perhaps even fighting his own party to keep down spending, as did Jimmy Carter. Clinton got lucky in that regard by getting a Republican Congress that also wanted to balance the budget.

5) I wonder what Obama voters are really voting for? They want the United States out of Iraq, to be sure. But what beyond that? Well, consider this: I've heard Obama supporters say that Obama will be "their Reagan." That's interesting because whenever Democrats compliment our 41st president, they almost always focus on his personality (infectious optimism and generous spirit) rather than policy (slashing taxes and confronting the Evil Empire). But do voters have any expectations beyond Obama's optimism and his vow to bring America together? Are all those young voters, independents, and frustrated Republicans really voting for greater government involvement in the healthcare system and huge tax increases—in essence, Reaganomics in reverse? People knew what they were getting when they voted for Reagan. Obama? I'm not so sure.


TAGS:
Obama, Barack
Reagan, Ronald
2008 presidential election

You Might Also Like