Read The Roots of Obama's Rage Online
Authors: Dinesh D'Souza
The Roots of Obama's Rage (23 page)
No sooner did the Obama administration approve the General Motors bailout than Obama ordered the firing of General Motors chairman Rick Wagoner. Certainly Wagoner was an inept executive who deserved to go, but by this standard all the major Detroit auto executives deserve to go. To get an idea of what buffoons these people are, when Congress asked them to testify about their dire financial straits, they all traveled to Washington, D.C., in private jets. Congressmen had a great time castigating them for that in front of the TV cameras. So Wagoner was just one poor performer in a circus of poor performers. His ousting may have been overdue, but it is not usually the role of United States presidents to fire inept CEOs of big corporations. Obama was using the occasion to show who’s in charge.
In the case of GM and Chrysler, the Obama administration renegotiated the terms of creditor contracts so that the union pension plans would get preferential treatment and Chrysler’s investors would move to the back of the line. For Obama the recovery of GM and Chrysler seemed less important than figuring out how the spoils would be carved up. No one should have been surprised by Obama’s behavior. As he wrote in
The Audacity of Hope
, “I owe those unions. When their leaders call, I do my best to call them back right away.... I got into politics to fight for these folks.”
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To put Obama’s comments in their appropriate context, think of Chrysler’s investors as part of the profit-seeking neocolonial overclass. And think of the unions as the struggling, lowly resisters who are fighting against that overclass. Now you can see why empowering the unions and weakening the claims of the investors took priority for Obama over everything else. Whether Chrysler can actually avoid future bankruptcy, or whether taxpayer money is being wisely spent—none of this seemed to matter. A very different battle was being fought, and Obama got the outcome he wanted.
The Audacity of Hope
, “I owe those unions. When their leaders call, I do my best to call them back right away.... I got into politics to fight for these folks.”
17
To put Obama’s comments in their appropriate context, think of Chrysler’s investors as part of the profit-seeking neocolonial overclass. And think of the unions as the struggling, lowly resisters who are fighting against that overclass. Now you can see why empowering the unions and weakening the claims of the investors took priority for Obama over everything else. Whether Chrysler can actually avoid future bankruptcy, or whether taxpayer money is being wisely spent—none of this seemed to matter. A very different battle was being fought, and Obama got the outcome he wanted.
A third measure taken by Obama to respond to the financial crisis was to sign into law a bill containing the most sweeping regulations of Wall Street since the 1930s. Working with Senator Chris Dodd and Representative Barney Frank, the Obama administration secured congressional support for a series of measures that would transfer power from the financial sector to the federal government. For instance, the government would now have new authority to oversee financial firms, hedge funds, insurance companies, and even car dealers. The Obama administration can now monitor these companies, alter their capital requirements, and even shut them down and restructure them if they are deemed to be in danger of insolvency.
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Now with Wall Street, as with the car companies, the issue is not whether some form of government intervention was necessary. In this case I think it was necessary. But the objectives of reducing Wall Street’s go-go financing schemes could more easily be met by reestablishing something like the old banking and lending requirements. If banks make loans that are federally guaranteed, then they must have a stated level of reserves to backup those loans. Mortgages should have a specified down payment or at least a specified level of risk. And that’s it. But once again Obama’s objectives appeared to have more to do with castigating the financial industry (“The American people will never again be asked to foot the bill for Wall Street’s mistakes”) and bringing the financial sector under federal control than any kind of genuine “reform.” Reform for Obama means: from now on I tell you what to do.
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Obama’s final strategy to combat the financial crisis was to open up the federal money faucet in an attempt to produce “stimulus” and “create jobs.” But how does the federal government “stimulate” an economy? And how does it “create” a job? Let’s take the job question first. Sure, the government can create jobs by, say, doubling the number of people who work at the post office, or by hiring more bureaucrats in this or that agency. But how does a government create jobs in the private sector? There is only one way: by providing incentives for entrepreneurs to hire more people. The best way to do this is to reduce corporate tax rates or capital gains taxes. Neither of these options was even considered by the Obama administration; in fact, Obama has proposed raising the capital gains tax from 15 to 28 percent.
Obama’s stimulus package started at around $800 billion and will end up costing the taxpayer something close to a trillion dollars.
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Obama insisted that the government spending this kind of money would get the economy going again. According to the Department of Labor, unemployment was at 7.7 percent in January 2009, when Obama took office, and now it is 9.5 percent.
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Some stimulus! If you want to know why such programs usually don’t work, ask yourself this question: from where does the government get the funds to stimulate? The answer, of course, is from the private sector. In some form or other, the government has to take money from taxpayers in order to spend that money itself.
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Obama insisted that the government spending this kind of money would get the economy going again. According to the Department of Labor, unemployment was at 7.7 percent in January 2009, when Obama took office, and now it is 9.5 percent.
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Some stimulus! If you want to know why such programs usually don’t work, ask yourself this question: from where does the government get the funds to stimulate? The answer, of course, is from the private sector. In some form or other, the government has to take money from taxpayers in order to spend that money itself.
Now imagine that you take $100 from me and spend it. How have you stimulated anything? Sure, you have more cash to spend than you did before, but now I have less cash to spend than I did before. So when the federal government uses taxpayer funds to repair roads or fund artists or build unnecessary airports in the districts of influential Congressmen, the government is taking away money that could have been used for other things, such as starting new businesses, making new products, and hiring new employees. In sum, the stimulus was less a boost to the overall economy than a transfer of spending power from the private sector to the federal government.
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Once again it was an issue of control, and once again Obama came out a winner.
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Once again it was an issue of control, and once again Obama came out a winner.
In this case, however, the full measure of Obama’s victory is yet to be appreciated. Not only did Obama increase the power of the federal government through stimulus, he also got his chance to stick it to the fat cats. Sticking it to the fat cats is an important part of the anti-colonial program. And Obama made it clear from the outset that this group—the group he calls “the rich”—would pay for the whole thing. No tax increases on the ordinary American or the middle class. The entire bill, Obama promised, would be delivered to those Americans who make $250,000 a year or more, the overclass that, in Obama’s words, is not “paying their fair share.”
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It’s worth asking, for a moment, what is meant by this term “fair share.” What is fair for rich people to pay? Obama never addresses this question. But now consider the fact that, under today’s tax structure, a person who is earning $1 million a year pays around $375,000 in federal taxes. That’s not counting a whole raft of other taxes that typically raises the tab to around $450,000. That means if you make $1 million, you only keep $550,000. The government basically takes $450,000 off the top. Aren’t you already paying your “fair share”? According to Obama, you are not. Now consider how much revenue the federal government currently gets from the rich. According to government data, the top 1 percent of income-earners in the country pays about 40 percent of all the income tax revenues. The next 9 percent of income earners pays another 30 percent. So the top 10 percent of income-earners pays more than 70 percent of all the taxes. As for the bottom 40 percent of income earners, they pay nothing.
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Now I don’t know about you, but to my way of thinking this is an unfair system—it is unfair to the rich. First of all, I think that everyone except the truly poor should pay some taxes. If we believe in “no taxation without representation,” then we should also believe in “no representation without taxation.” In a democratic society, it is good for citizens to have at least some stake in the system. Moreover, we can all agree that the rich should pay more, but I think they should pay proportionately more. If we have an across-the-board income tax of say 20 percent, that would mean that the guy who makes $50,000 a year would pay $ 10,000; the guy who makes $500,000 a year would pay $100,000; and the guy who makes $5 million a year would pay $1,000,000. So people are paying different amounts, but they are paying at the same rate. That’s fair—and I think that’s fairness as most people understand the term.
But to the anti-colonial mindset, none of this is even relevant. The anti-colonialist believes that the rich have become rich at the expense of the poor; the wealth of the rich doesn’t really belong to them; therefore whatever can be extracted from them is automatically just. If you could take everything they have, that would mean they were paying their “fair share,” because their fair share is actually 100 percent. Recall what Obama’s father said in his 1965 paper: there is no tax rate that is too high, and even a 100 percent tax rate can be justified under certain circumstances.
Now certainly President Obama can’t say any of this, but if he believes it, that would explain why he seems indifferent to the magnitude of bills that he is racking up on behalf of the taxpayer. Obama’s intention is to extract all that money from the overclass, and this to him is the hidden benefit of all this stimulus. It’s not simply where the money goes; it’s also a matter of making the fat cats pay. How delicious it must be for President Obama to run a trillion-dollar tab and hand it over to the overclass. How much he must wish he could tell his father about it so that they could both laugh their heads off at how the tables have been turned. Yes, dad sure would be proud if he could see him now.
Obama’s most significant economic achievement to date is not financial regulation but health care reform. While the financial regulations were a response to an acknowledged crisis, the health care reform was not. Admittedly Obama acted as though this was all part of some grand economic strategy to put the country back on track. But if anything, the high cost of Obama’s health care program will further burden the economy and stall future growth. We have to admire Obama’s persistence here. The Clintons tried with health care and failed. Obama suffered some stinging setbacks, especially with Scott Brown’s election in Massachusetts. Even so, Obama got the job done and signed America’s biggest new federal program since the Great Society in the 1960s.
Now Obama was certainly right that health care in America is expensive and costs in recent years have soared. He also identified some other problems with the system, such as the fact that people who went from one company to another couldn’t take their health insurance with them. Obama neglected to point out that the government was largely responsible for health insurance not being portable. That’s because during the federal government-imposed wage and price controls of World War II, companies found that providing health insurance was a way to give employees compensation that went beyond the limits imposed by the law; that’s how we got employer-provided, rather than individual-purchased, health insurance. But the biggest problem with America’s health care system was, of course, cost. Obama made it sound as though high costs were preventing millions of Americans from getting health care. This was totally bogus. Even Americans who didn’t have health insurance, either because they couldn’t afford it or because they chose not to buy it, could still get treatment. No one, for instance, with a serious condition gets turned away from a hospital emergency room. Hospitals are absorbing those costs and, of course, passing them on to paying customers. So, granted, this is one factor driving up insurance premiums.
But the most important reason America’s health care system is so costly is that it’s the best health care system in the world. America leads the world in new drug development, and Americans have higher survival rates for most major illnesses, from cancer to heart disease. Better quality costs more. Also, people are living longer these days, and when we get older our health needs, and the cost of meeting those needs, rise. Technology now makes it possible to treat more illnesses and to prolong longevity, and all of this is very expensive.
Now of course we want to keep that quality, while reducing costs. Is there a way to do that? Yes. Perhaps the single biggest factor driving up costs is that the health care customer is not the one who is typically paying. If I go to my doctor and say my head hurts, the doctor is going to want to run a bunch of tests. He’s probably going to do every possible test, because he doesn’t want to leave even the slightest chance that he’ll miss something and get sued. Now the reasonable question for me to ask is, “What tests do you think are the most effective? And how much is each one going to cost?” But in fact I never ask that question, because I’m not the one who is paying for the tests. My insurance company is paying; I’m only going to fork over the $20 copayment. So my attitude is, “Test away!”
Clearly the best way to reduce health care costs and reduce health insurance premiums is to restore customer control to the process. Why not leave America’s health care system in place but alter the incentives that people face? If there was a way to put the money in the customer’s pocket, then the customer would make sure that the money—
his
money—was wisely spent.
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This was not Obama’s approach; in fact, it did not receive serious consideration.
his
money—was wisely spent.
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This was not Obama’s approach; in fact, it did not receive serious consideration.
When Republicans proposed market-based approaches that empowered consumers, Obama was respectful but uninterested. Consequently, not a single Republican voted for Obama’s health bill. Obama could have modified his plan by incorporating some Republican suggestions. This would not only have brought some GOP moderates to his side, it would also have increased public support for his program. Obama made no such effort. He completely ignored the Republicans. Politically, Obama’s conduct is strange. Every Great Society program enjoyed substantial bipartisan support. Even the controversial Bush tax cuts, enacted shortly after George W. Bush was elected, were supported by twenty-eight Democrats in the House and twelve Democrats in the Senate. Obama could have won at least modest Republican support if he really wanted to. So why didn’t he want to? The reason, I suspect, is that for Obama the Republicans are the neocolonial party. They are not just wrong; they are evil. Consequently Obama will “play nice,” but only for show: in reality he has no desire to work with the enemy.
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