President Barack Obama charted a dramatic new course for the nation Thursday with a bold but contentious budget proposing higher taxes for the wealthy and the first steps toward guaranteed health care for all – accompanied by an astonishing $1.75 trillion federal deficit that would be nearly four times the highest in history. Denouncing what he called the "dishonest accounting" of recent federal budgets, Obama unveiled his own $3.6 trillion blueprint for next year, a bold proposal that would transfer wealth from rich taxpayers to the middle class and the poor. Congressional approval without major change is anything but sure. The plan is filled with political land mines including an initiative to combat global warming that would hit consumers with considerably higher utility bills. – AP
Dominant Social Theme: The Democrats do it again.
Free-Market Analysis: What is going on now in America is perplexing to free-market thinkers only if one has not followed the tale from the beginning. In the near term, it actually begins with Ronald Reagan whose rhetoric was matched by a certain level of appropriate action. Reagan talked incessantly about the size of government, especially at the US federal level and even tried to prune it back a bit – though predictably he ended up leaving behind more regulation and more debt. What is more remarkable about Reagan, however, is that he truly did seem to believe in free-markets and advanced remedies, rhetorically anyway, that were free-market oriented.
After Reagan, America got four years of George Bush Senior who lost his re-election fairly early in the game when he reneged on his pledge not to raise taxes. Then came Bill Clinton and his wife Hillary who tried to nationalize health care but had to settle for far less radical governmental over-reaching. The American electorate spurned Al Gore and elected compassionate conservative George Bush Junior who then proceeded to expand the federal Leviathan by trillions and doubled the national debt from US$5 trillion to US$10 trillion.
Americans were increasingly taken aback by George Bush's spendthrift ways and institutionally the Republican Party was split by Bush's fiscal apostasy into three pieces. The first slice and perhaps smallest slice is composed of moderate Republicans, the second of Conservatives and the last of Libertarians. The difference between Republican Conservatives and Libertarians is that former are backers, at least to a degree, of the American empire while the latter are more purely the inheritors of classical liberalism espoused by Britain's best free-market political thinkers in the 1800s. Both Conservatives and Libertarians share a free-market perspective when it comes to economic issues, though the Conservative tolerance of the military-industrial complex – with its unthinkable costs – provides the Conservative movement into a political gambit rather than a governing philosophy.
And thus it goes. In the latest presidential elections, Americans were somehow presented with a choice between Senator John McCain whose positions were fairly well known: a big government man like George Bush, he was also a vociferous backer of the military industrial complex. Barack Obama on the other hand was something of an enigma who spoke of "change." He managed the trick of appealing to moderate republicans and to America's grievously misled youth.
Obama's curatives are truly radical in size and scope, justified supposedly by the dire predicament of the American economy. George Bush's egregious spending was justified by a supposed war on terror. Either camp has its reasons to spend trillions of dollars, but in both cases a large part of the American electorate was probably NOT on board, and still is not. Bush's compassionate conservatism enabled the American military industrial complex to the tune of trillions of dollars. Obama's "change" is enabling America's considerable progressive movement with even larger amounts of lucre.
The last time America's political rhetoric was at all in tune with the majority of its people was probably during the Reagan years of the 1980s. Reagan's propensity for military spending swelled the deficit and fostered continued mis-impressions about the Cold War, but from the standpoint of the average voter it could be partially justified by the collapse of the Soviet Union. It's been 20 long years since Reagan, and the US and the devolution from republic to socialist republic is well underway. Obama may indeed provide the final blows. But in fact he is operating without a safety net. The majority of Americans seek what they always have: fewer taxes and regulations, less war and more private-market opportunities. Obama knows this and his mantra of "change" was carefully calibrated to be as bland as possible. Now that he must reveal himself, everything is being presented within the context of the economic crisis. But one wonders at the possibility of his continued effectiveness. His approval ratings are down and gun sales across the country are up. Purchases of precious metals are up, too, and the political opposition, even weighed down by the legacy of compassionate conservatism, is in full cry.
American culture retains real vestiges of what it once was as a democratic republic and yet the political process has spawned at least three presidents that have not provided any actionable content, only more and more financial and regulatory tyranny. The monetary elite encourages this kind of schizophrenia, but if they hold the belief, in aggregate, that serial dysfunctional presidencies have stripped away the cultural loam of classical liberalism, they are likely very mistaken. In America, just as in Europe, frustration, even panic, is building. Unlike Europe, the American impulse will find its voices at least partially within the context of Jeffersonian republicanism. That trend is already underway, and Obama's reckless assaults, building on the reckless actions of the previous American presidency, will only hasten its expression.