Friday, July 16, 2010

The Saddest Truth

Charles Krauthammer writes that Barack Obama's presidency is a play in two acts and he's already gotten everything he could have wanted in the first act (his first four years).

But Obama's most far-reaching accomplishment is his structural alteration of the U.S. budget. The stimulus, the vast expansion of domestic spending, the creation of ruinous deficits as far as the eye can see are not easily reversed.

These are not mere temporary countercyclical measures. They are structural deficits because, as everyone from Obama on down admits, the real money is in entitlements, most specifically Medicare and Medicaid. But Obamacare freezes these out as a source of debt reduction. Obamacare's $500 billion in Medicare cuts and $600 billion in tax increases are siphoned away for a new entitlement -- and no longer available for deficit reduction.

The result? There just isn't enough to cut elsewhere to prevent national insolvency. That will require massive tax increases -- most likely a European-style value-added tax. Just as President Ronald Reagan cut taxes to starve the federal government and prevent massive growth in spending, Obama's wild spending -- and quarantining health-care costs from providing possible relief -- will necessitate huge tax increases.

The net effect of 18 months of Obamaism will be to undo much of Reaganism. Both presidencies were highly ideological, grandly ambitious and often underappreciated by their own side. In his early years, Reagan was bitterly attacked from his right. (Typical Washington Post headline: "For Reagan and the New Right, the Honeymoon Is Over" -- and that was six months into his presidency!) Obama is attacked from his left for insufficient zeal on gay rights, immigration reform, closing Guantanamo -- the list is long. The critics don't understand the big picture. Obama's transformational agenda is a play in two acts.

Act One is over. The stimulus, Obamacare, financial reform have exhausted his first-term mandate. It will bear no more heavy lifting. And the Democrats will pay the price for ideological overreaching by losing one or both houses, whether de facto or de jure. The rest of the first term will be spent consolidating these gains (writing the regulations, for example) and preparing for Act Two.

I've been stunned when I've read the grumbling from leftwingers about how centrist Obama is. They aren't happy with spending $1 trillion we don't have; they insist we spend much, much more. They don't like Obamacare because it isn't socialist enough to have a public option. They complain that financial reform doesn't go far enough because some people will still be able to make a profit.

And yet, all that Obama has done to us is precisely why so many people want to kick the Democrats out. It's bizarre to me that so many people blindly voted for this man because they wanted to make history or they wanted to believe, like small children that they can eat their cake and still have it.

Krauthammer goes on to say that the second act of Obama's show will come after 2012. If Republicans win in 2010, it's far more likely Obama will be re-elected. If the consequences weren't so dire, it would almost be worth having the Democrats in charge until then.