Is Obama Failing? (Part 1)

This article appeared in the Economist on February 2, 2010.

Part 1 | Part 2 | Part 3

This article is David Boaz's opening remarks in a larger debate on The Economist's website.

The editors make it too easy when they remind us that in claiming the Democratic nomination in June 2008 Barack Obama declared that "generations from now, we will be able to look back and tell our children that this was the moment when we began to provide care for the sick and good jobs to the jobless … when the rise of the oceans began to slow and our planet began to heal … when we ended a war, and secured our nation, and restored our image as the last, best hope on Earth." It truly would take a Messiah to fulfil such soaring promises.

But part of President Obama's problem may be that he tried to fulfil too many of them, with no sense of the limits of the state's efficacy or the public's tolerance for expanded government. The claims of some of his advocates in 2008 that no one could spend 12 years at the University of Chicago without absorbing some sense of the benefits of markets, the limits of government and the hard lessons of the 20th century now seem as off-base as Ben Stein's buy recommendation on Merrill Lynch in late 2007.

On 20 January 2009, the day of Obama's inauguration, the Washington Post wrote, "The federal government itself is a far more potent instrument, in its breadth and depth of command over national life, than it has ever been before." President Obama has never quite thanked President Bush for the new powers he inherited, but he has certainly used them.

Bush raised the federal budget by more than $1.5 trillion. He bequeathed to Obama a FY2009 deficit of about $1.3 trillion, which Obama proceeded to increase with his "stimulus" bill, an earmark-heavy omnibus appropriations bill, Cash for Clunkers and more. But more than spending, he seemed bent on using a crisis atmosphere ("You never want a serious crisis to go to waste," said Rahm Emanuel) to amass more money and power in Washington. He proposed to bring the key health-care and energy industries under the direction of the federal government. He sought to tell financial companies how they could invest and what they could pay. I don't think he really wanted to nationalise the automobile companies; it's just that, as Uncle Duke said of the pension fund, the automobile industry was just sitting there. So he snatched it up, and he and Congress started imposing political rules: build "clean cars" rather than cars that consumers want to buy, don't build them in China, don't buy palladium from the cheapest overseas sources, use unionised trucking companies, keep inefficient dealerships open — and make enough profits to pay the taxpayers back.

His Environmental Protection Agency announced that it would use previously unknown powers to regulate greenhouse gases. His Labor Department plans to push through 90 rules and regulations in 2010 that would strengthen unions and add costs to employers. He sought to give more regulatory powers to the Federal Reserve, as a reward for causing the bubble and financial collapse. He has proposed various schemes to encourage more lending to homebuyers with insufficient credit, which were just those that combined with easy money to create the housing collapse in the first place. His top advisers "flipped through the tax code, looking for ideas" on taxes to raise, reported the Wall Street Journal.

In many ways, of course, Obama has just doubled down on George W. Bush's policies of bailouts, takeovers, expanded Fed powers and nationalisations. Some of the opposition to him reflects the public's sense that we've been piling up spending and debt for over a year now, so he is being punished for his predecessor's mistakes. But Bush or Obama, these policies take us in the wrong direction. After a crisis brought on by cheap money and distortionary subsidies, he is doing more of the same. In a recession he is adding debt, taxes and regulation to the burdens already felt by business.

The policies themselves are bad enough. The lobbying frenzy created by all this money on the table is not healthy for our politics. And the uncertainty created by this ambitious and protean agenda retards recovery. From last January ("growing anxiety on Wall Street about what the government would do next", New York Times) to this month ("The people that have money are sitting in kind of a cocoon — they're not making decisions because they're concerned about what's coming down in terms of taxation and vindictiveness against the wealthy," Denver Post), we see employers and investors worrying about what Washington might do next.

And now the voters are turning against this sweeping agenda that seeks to make America a European welfare state. Obama came into office on a wave of good feeling, with 69% expressing approval and only 12% expressing disapproval. Now his ratings are below 50%. Obama's approval rating fell 21 points during his first year in office, the largest first-year decline for any president since Gallup began tracking presidential approval ratings in the 1930s. Approval by independent voters has fallen from 62% to 45%. And even young people are leaving: The Politico/Insider Advantage poll showed Scott Brown leading among voters under 30 by 61% against 30%. In contrast, the 2008 exit poll showed 18-29-year-olds in Massachusetts voting for Obama 78-20.

Worse, the voters aren't just grumbling. They have switched parties in New Jersey, Virginia and even deep-blue Massachusetts. Congressional Democrats are scurrying for the exits, and even Vice-President Biden's son has decided to take a pass on the 2010 Senate race.

Worse yet for Obama, voters are not just reacting to the continuing economic weakness or engaging in fickle channel-changing. They are increasingly opposed to his plans to "remake this great nation". The longer Congress debates the health-care bill, the less voters like it. In a Wall Street Journal/NBC News poll 53% said they disapprove of the federal government's expanded role in the efforts to fix the nation's economy, 60% disapprove of the government's financial help to banks and other lending institutions and 65% disapprove of the government's ownership stake in General Motors.

It is not just specific policies. The director of Pew Research says that "anti-government sentiment, which had been building for years, was heightened by the financial bailout and stimulus program". In a January Washington Post-ABC News poll, Americans said they prefer "smaller government and fewer services" to "larger government with more services" by 58% to 38%. Since Obama won the Democratic nomination in June 2008, the margin of support for smaller government has increased in Post-ABC polls from five points to 20 points. Gallup data show that 57% of Americans say the government is trying to do too many things that should be left to businesses and individuals, the highest number since October 1994.

When your policies aren't working, the voters have noticed and your transformative ideological agenda is moving broad public opinion in the other direction, it's safe to say you're failing.