Why President Obama wants the economy to fail

John Jordan Board Member, Hoover Institution
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The President is no economic illiterate, despite what conservatives think. He understands basic macroeconomics just fine, thank you – but with a twist.

Mainstream Democrats worship at the altar of the New Deal. It’s an article of faith that massive government spending pulled America out of the Great Depression. (With all respect to Paul Krugman, the truth is more complicated, but that’s not within the scope of this article.)

The president’s view of spending, deficits and debt is not merely Keynesian theory run amok. Its origins and objectives are far more terrifying. Where the traditional Democratic playbook for economic downturns was provided by Keynes and first made policy by FDR, the Obama template comes straight from Saul Alinsky.

Alinsky, the father of  “community organizing,” hails from the president’s Chicago and is revered by today’s fashionably leftist university faculties. His 1971 Rules for Radicals: A Pragmatic Primer for Realistic Radicals distills and updates Karl Marx’s Das Kapital for the 20th century, as a how-to manual for exploiting the darker corners of human nature. Alinsky repackaged such Marxian terms as “bourgoisie” and “proletariat” into 20th century American idiom as “Haves,” “Have Nots” and “Want Mores.”

More ominously, Alinsky advises identifying an “enemy” and elevating and manipulating “symbols” to better unite and direct the passions of the community to be ‘organized.’ Even worse, he addresses the central question of civil society – “do the ends justify the means?” – only in the context of “goal-setting.” Moral absolutes appear to have no place in his system, only controlling the political process matters without regard to the sanctity of the individual, the rule of law, and the rights of those who disagree.

In that context, the President’s own statements and economic policies compel some alarming conclusions.  Namely, that bloated federal spending does not serve the classic Keynesian purpose – to ameliorate and ultimately end economic slumps inherent in free-market economies.  Rather, it is an extension of Alinsky’s construct: to sharpen and exploit those downturns as means to achieve the objectives of the ‘organizer.’

Chronic deficits, massive increases in the national debt, and persistent joblessness are part of President Obama’s plan for the “transformation” of America. You read that right: they are not a problem, but rather necessities as part of a broader plan to make America conform to their notion of ‘fairness.’ That America will be much poorer overall and that a far greater percentage of her people dependent on the government, which is a success in their eyes.

Just what does the destruction of economic growth and opportunity “create” for Mr. Obama and his allies?

First, it creates a bigger government workforce – and thereby, larger public employee union memberships and dues collections.  Not hard to figure where those dues go at election time.

Second, it creates greater “fairness,” as the President defines it – dragging everyone down to the same level. In 2008, then-Senator Obama told ABC’s Charlie Gibson that he supports raising capital gains taxes for the sake of “fairness” – even if it reduces federal receipts – adding on another occasion, “I do think that at a certain point you have made enough money.” No mainstream Democrat worth his or her salt would reduce revenues and thereby the ability to finance bigger government. Obama’s primary interest in tax policy, by contrast, is redistribution, not maximizing revenues.

Third, it creates greater dependence on government – and thereby, more Democratic voters. That explains the president’s unwillingness to support any proposal to reduce the number (47 million) of Americans on Food Stamps or tackle unemployment that does not involve further expenditures, or altering Obamacare in any meaningful fashion.

Fourth, the growth in the federal debt in combination with the above will create a political imperative for confiscatory taxation. With the impending retirement of a large number of boomer voters it will be politically untenable to restrain entitlement spending in a meaningful way. Although economically self defeating, higher taxes will be the order of the day. This will be accelerated if interest rates rise and/or creditors demand higher interest rates due to America’s debt to GDP ratio.

The president has made clear his intention to ‘transform’ America through his words, and it is only by examining his background and his deeds in office that his vision of this country is becoming clear. The America of dreams and big things that has for centuries been the envy of the world is to be reduced. An America that is ‘fair’ is one that is manifestly poorer; a country that has replaced growth and prosperity with the iron hands of state power, taxes, and dependence.