Why Obama is Causing a Liberal Freakout

So far, his economic stimulus plan is not the change they were hoping for.

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For many liberals, that Obamagasmic "tingle going up their legs" from the campaign season -- to paraphrase MSNBC's Chris Matthews -- may have crept upward into stomach-churning queasiness as Inauguration Day nears. Consider this counterfactual: If John McCain had won the 2008 presidential election (just a scant half million votes needed to swing the other way in Colorado, Florida, Indiana, North Carolina, Ohio, and Virginia ... I know, I know), it's easy to imagine him picking Bono-approved, "new age" evangelist Rick Warren to give the inaugural invocation, leaving Robert Gates as defense secretary and proposing an economic stimulus package that included $300 billion in tax breaks for individuals and businesses.

Yet that's just the sort of "big change" Barack Obama has provided in the two months since winning a near-landslide victory over the man Democrats derided as "McBush." (Let's see will.i.am make a YouTube video about this right-turn of events.) Even worse for the Left, Obama advisers are now signaling, says the New York Times, "that they may put off renegotiating the North American Free Trade Agreement, overhauling immigration laws, restricting carbon emissions, raising taxes on the wealthy and allowing gay men and lesbians to serve openly in the military." You know, like, pretty much the very heart and soul of the liberal policy agenda. Even healthcare reform might only be getting what aides call a “down payment” as a "sign of dedication to the broader goals." Let the wretching begin, Daily Kossacks. (Fun Fact: Obama gave his big economic speech at George Mason University, a bastion of free-market scholarship.)

But it's Obama's $800 billion American Recovery and Reinvestment Plan that will be ground zero in this coming liberal internecine battle. "Way too much Reagan, not nearly enough FDR," griped some key liberals about a plan that would, in addition to the tax cuts, still provide a whopping half-trillion dollars over two years in government spending for infrastructure, healthcare, education, clean energy, grants to states, and aid to lower-income and unemployed folks.

Some of their greatest hysterical hits: 1) "The economic plan he’s offering isn’t as strong as his language about the economic threat," wrote NY Times columnist Paul Krugman. "In fact, it falls well short of what’s needed"; 2) the Center for American Progress, a liberal think tank founded by Obama transition co-chair John Podesta, said the Obama plan was chock-full of "special interest favorites" and "long-discredited conservative proposals"; 3) Sen. Tom Harkin said Obamanomics "still looks a little more to me like trickle-down," invoking a Reagan-era economic invective that liberals love to hurl; and 4) Nancy Pelosi, who seems to actually believe the Obama campaign spin that the Bush tax cuts somehow caused the recession, blurted out this gem: "Put me down as clearly as you possibly can as one who wants to have those tax cuts for the wealthiest in America repealed." Duly noted, Madam Speaker. Now all this angst and agita are can't-miss signs of a little understood liberal malady, Clinton Derangement Syndrome: the crippling fear that the progressive president you just elected to launch a pricey new New Deal and nationalize healthcare will, once in office, morph into a budget-balancing, tax-cutting, free trade-loving disappointment. And Obama did little to quell those fears during his appearance on This Week with George Stephanopolous. Asked how he was going to pay for healthcare, Obama gave a reply straight from 1993: "Well, you know, these are going to be major challenges. And we're going to have to make some tough choices."

But it really seems to be taxes that has put liberals into a tizzy. Such a fuss. Tax cuts have become a policy "no-go zone" for many Democrats despite the success of both Clinton's capital-gains tax cut and the famous JFK tax cuts. But apparently Team Obama sees things somewhat differently.

Call it reality-based economics, at least more so than what is practiced by Pelosi, Harkin, et al. Centrist economic advisers such as Lawrence Summers, Peter Orszag, Austan Goolsbee, and Christina Romer have actually looked at the data and come to a different conclusion from the folks on Capitol Hill: 1) Infrastructure spending doesn't work fast enough to help an economy in freefall. Indeed, Orszag has called a "green" stimulus approach "totally impractical"; 2) there just aren't enough "shovel ready" projects out there. In a report on the Obama plan, advisers Jared Bernstein and Romer point out that there "is a limit on how much government investment can be carried out efficiently in a short time frame, and because tax cuts ... can be implemented quickly, they are crucial elements of any package aimed at easing economic distress quickly"; and 3) tax cuts boost growth. Romer has produced research that found "tax cuts have very large and persistent positive output effects" of roughly $3 in GDP growth for every $1 of tax cuts.

But liberals shouldn't fear -- nor conservatives be reassured -- that Obama is somehow morphing into "Reagan with a human face," to rework an old Marxist chestnut. Or another Clinton. Obama is still going to push for a dramatic government expansion into healthcare, demand higher taxes once the economy is in gear, launch a new wave of business regulation and spend hundreds of billions on infrastructure, both green and grey. Their sort of "change" is still on the way, it's just going to take a bit longer than they expected. Like Obama said on Election Night: "We may not get there in one year or even one term ..."