Obama, Bush and the Limits of Power

by Anthony Gregory
by Anthony Gregory
Recently by Anthony Gregory: Independence and Liberty

It should now be beyond dispute that the Obama administration represents a continuation, solidification and expansion of the Bush legacy, with some minor changes in some areas and a vast acceleration of government growth in others. And yet, as we can joyously witness, the president is running into problems.

The most conspicuous feature of the Bush years was the nearly invincible faith in government power in the realm of national security. So pronounced was this trust in the national security state, war on terror, and U.S. empire, that the opposing Democrats, many of whom dissented from the Iraq war and the worst excesses in executive spying, detention and torture, looked reasonable in comparison. Many conservatives and libertarians even favored the Democrats in the 2006 election in hopes of reining in the profligate and warmongering Republicans.

Eventually, Bush and the neoconservatives ran into a wall. The Iraq war continued to consume American and Iraqi lives but the democracy and peace that were promised never came. After the administration's incompetent handling of Katrina in 2005, the Republicans began losing support among moderates, who became increasingly frustrated with the mounting deficits, the erosion of their liberties and the prolonged war abroad. Then, in 2008, the financial sector collapsed, despite the Republican presidential candidate's insistence that the "fundamentals of the economy" were sound. By November, the GOP had been marginalized.

The economic crisis has breathed new life into the Democratic agenda of corporate socialism and expansive federal government at home, just as the national security crisis of 9/11 had tipped popular opinion toward the Republican agenda of preventive war and attacks on our civil liberties. But it took years for Bush and his team to lose support among the political center, whereas we are witnessing support for Obama unravel much more quickly. This could all turn around, of course, but we have reasons to be hopeful.

Obama's health care plan, his most ambitious domestic policy program, is in peril. Although he has a solid Democratic majority in both Congressional houses, politicians are vulnerable to public opinion, and opinion is split. Some polls show a slight majority supportive of his plan. But in the last few weeks, polls have also shown a larger percentage opposed than in favor. Senior citizens, one of the demographics that was supposed to benefit the most from Obamacare, are the most skeptical group.

In order to get his plan through, Obama has to court two groups of Democrats – those who are relatively fiscally conservative and are skeptical of socialized medicine, and those on the far left who do not want too many compromises with the insurance industry and desire a full-blown single-payer system. Meanwhile, the Congressional Budget Office has undermined one of the administration's central claims, that the health care proposal will cut costs.

The CBO has detracted in other ways from Obama's economic agenda, warning that Obama's deficit may be four times as high as the already ridiculously large deficit from Bush's last year in office. In February, the CBO determined that Obama's stimulus program could be harmful to economic recovery in the long run.

And the people are feeling the failure, so far, of Obama's economic program. Much of the public remembers the warnings that without the bailouts the sky would fall and they recall the promises that the stimulus would give an immediate boost to the economy. As Goldman Sachs reports record earnings and yet unemployment continues to rise, many Americans are detecting a bait and switch and are altogether unimpressed with Obama's handling of the economy.

Here we see the two major limits on government power in play. One is public opinion. As political theorist Franz Oppenheimer and others have pointed out, government operates, in the end, with the tacit consent, or at least acquiescence, of the people. No matter what form of government, from a dictatorship to a pure democracy, the government requires social legitimacy in the eyes of enough of the public to do what it does. Public ideology is key. If a majority is strongly opposed to the government's operations, eventually something has to give. It is the importance of public opinion that explains why governments, whether ostensible republics or autocracies, would ever utilize censorship, propaganda, or control of the public school system and media to shore up public support for their works.

Constitutions alone cannot limit government. The overwhelming bulk of what the federal government is engaged in, from imperial wars to drug prohibition, from Social Security to Medicare, is unauthorized by the Constitution, and yet they persist. What matters ultimately is the Constitution in the hearts and minds of the people. So long as the American public supports unconstitutional actions, such actions will commence. Eternal vigilance is the price of liberty, as Jefferson noted. The Constitution spells out great limits on the government, but without the support of the people, the document loses its teeth.

The bipartisan warfare-welfare state in America relies upon a very insidious ideological consequence of the two-party system, whereby the concepts of liberty and tyranny are distributed among left and right so as to prevent an honest and coherent debate from gaining traction. In a saner world, there would be those who generally favor more government and those who favor more liberty, and that would be the divide. But the Republicans have managed to appropriate the language of free enterprise and limited government in most domestic spheres, whereas the Democrats have poised themselves as the party of a more restrained foreign policy and a greater respect for most civil liberties. It is more complicated than this, given that the Republicans hold up the cause of the right to bear arms and the Democrats sometimes cite Constitutional constraints and fiscal responsibility when they are out of power. And surely the contradictions within both dominant political persuasions could be seen once we try to clearly distinguish a "personal" liberty from an "economic" one or examine most politicians' voting records. But the point is, we have a large segment of America convinced that Obama poses a threat in that he wants to expand his power at home while retracting it abroad, while the other large segment is more critical of foreign adventurism but intent on moving toward domestic socialism.

This twisted dynamic allows for government to grow in most directions under both parties. When Bush expanded Medicare, signed No Child Left Behind, increased farm subsidies, signed campaign finance reform, fastened ever more regulations onto the economy in the wake of the Enron scandal, and outspent Clinton by an unspeakable margin, the right was perhaps unhappy about it, but dared not turn against their president outright, especially in a time of war. Similarly, even though a vast majority of Democrats are opposed to the wars in both Afghanistan and Iraq, most of them are not standing up to Obama with the same vehemence with which they opposed Bush. And so, even though the pro-war faction is now a minority, the antiwar faction no longer prioritizes foreign policy, and the Obama administration can continue to expand the Afghanistan war, bomb Pakistan, and solidify policies like indefinite detention and warrantless wiretapping. When most opponents of the president support his wars, and most of the wars' opponents nevertheless support the president, what emerges is an effective majority that either supports the president or his foreign policy, allowing for it to continue unchallenged.

Another tragic result of the typical left-right dynamic is it allows for a political center that supports government intervention across the board. Polls sometimes show centrists preferring Democrats on economic questions and Republicans on foreign policy, meaning that Americans in the middle are often swayed toward the party perceived to be more willing to expand the government in any given area.

However, major issues have a way of redefining the major political ideologies in society. The war in Iraq became so discredited that many traditional conservatives began to question the neoconservative concepts of nation-building and empire, and reawaken to the Old Right principles of non-intervention and Constitutional liberty. On the left, there are some who are seeing Obama's bailouts, stimulus, and even his intentions on health care and climate change to be more window dressing for corporate welfare and politics as usual.

Even more encouraging than the revolt against Obamacare is the overwhelming public support, at 75%, for Ron Paul's position that Congress ought to audit the Federal Reserve. While much of the hostility toward Obama's domestic policy might be seen in partisan terms, distrust of the Fed completely transcends typical ideological or partisan lines. While all Congressional Republicans support Ron Paul's bill to audit the Fed, so do more than a hundred Democrats, demonstrating the impact of the wide public outrage over the Washington–Wall Street shenanigans since the financial downturn.

The Federal Reserve, a centerpiece in the bipartisan establishment, an essential component in both war finance and economic management, is now the least trusted government agency. More than two thirds of Americans do not believe the Fed is doing a good job. Two years ago, virtually no one even talked about the Fed; it was an obscure institution assumed to be necessary, wise and uninteresting. Anyone who brought it up was accused of being outside the sphere of respectable opinion. Now its champions are on the defensive, and they are desperately scrambling to restore public awe for the central bank behind the curtain.

But the opposition to Obama's economic policies, both on the right and on the anti-corporate left who view his ties to the banking industry with suspicion, along with a growing disappointment on the left as it concerns civil liberties and war, may eventually constrain Obama. Without this disenchantment, we can only expect he'd be even worse. On a similar note, had the public not soured on Iraq, the Bush administration would have likely carried out the rest of the neoconservative program, invading more countries and erecting an even more egregious national security state.

There is, moreover, another important limit on government power, one for which we must thank our lucky stars, and that is economic law. Whereas both government and defenders of liberty can and do influence public opinion, none of us has any power over this factor. Economic laws, like the laws of gravity, cannot be overturned by governmental fiat. They are part of the fabric of reality. Indeed, economic science, before it was hijacked in the 20th century by government propagandists whose main function was to inform the political class on how best to manage society through intervention, was once primarily the study of why the economy operated as it did, without a central planner, and what laws were in play that allowed for exchange and production to occur. These laws also limit what it is possible for the government to do. As brilliant economists Ludwig von Mises and Frederick Hayek taught us, socialism in its purest form cannot work because it is at war with economic reality. Keynesianism, too, is destined to fail, because it also does not reflect this reality.

This is why no matter what Obama does to expand government, it will fail to fix the economy. The economy, insofar as it is healthy, is the product of voluntary choices of production, trade and consumption, emerging spontaneously through networks of exchange. No one economic actor has the information to run the economy, no matter how many "experts" he hires. The economy is in a sense more intelligent than the sum of its parts, as it coordinates through the information gathered from prices all the miraculous production and trade we see around us.

This is what we should have learned from the financial collapse of '08, and many people have indeed been waking up to it since. Here we had the largest regulatory apparatus in human history, and it failed to predict or forestall the crisis, and now it is failing to ameliorate it. As the stimulus, bailouts and welfare programs continue to drive the economy into the ground, the government's failures will become more apparent, and it will also run out of resources with which to continue to build itself. As the economy continues its descent, there is a silver lining: We have an opportunity to explain to our compatriots the truth about economics, and why these failures are inevitable.

Central planning must fail, both at home and abroad. A Bush official once reportedly scoffed at those in the "reality-based community" who did not believe the neoconservatives' foreign policy in the Middle East was workable. But the reasons that socialism is intractable apply just as well to nation-building overseas. If government cannot manage the economy at home, how can it destroy and rebuild an economy and indeed an entire political culture in Iraq? Obama's Afghanistan ambitions are also futile, for no matter how much government force and resources are expended, it cannot turn a country like Afghanistan into a secular democracy.

Even with his majority in Congress, Obama will eventually run into a wall. He cannot inflate, borrow and tax away the economic problems, which run deep and go back many administrations. He cannot rely on ever-growing debt, because eventually the chickens will come home to roost. The Chinese will not keep lending America ever more money year after year. The goal to boost the mortgage sector back to its unsustainable level at the height of the real estate bubble is a calamitous and impossible dream. If pushed too far it will destroy the dollar, and even if it works for a short time it cannot work forever. The very Keynesian premises on which the Obama program is based – increasing government spending, stimulating personal spending and keeping credit cheap – are going to bump into reality, as similar plans did in the 1970s, when stagflation, the unanticipated presence of both recession and inflation, blew a hole in the center of Keynesian theory.

What we need, more than ever, is for critics of domestic leviathan to embrace the principles of non-intervention or at least become much less favorable toward endless wars and the behemoth U.S. empire. We also need many of those unhappy with Obama's embrace of Bush's war-on-terrorism policies to become more consistent in their skepticism of this man's domestic policies and the big-government ideology he represents. We need to show the public that, given the stark similarities between both political parties, at least in their leadership, as well as the nature of government itself, it will not do for folks to condemn Obama as Big Brother and a would-be dictator while simultaneously defending torture, more war, and the Bush administration; nor does it make sense to oppose Bush and all he stood for while virulently backing Obama, who's brandishing Bush's executive power grabs, continuing his foreign policy, bailing out the same financial interests and seeking to control more areas of our lives. Can a reorientation of the American public, along more coherent ideological lines, be achieved? If ever there was a time for us to make our case, now is it.

It is easy to become discouraged as practically everything horrific under Bush continues undisturbed and Obama steps on the gas in his program of redistributionism, central planning and mass economic destruction. At their height of influence, the neoconservatives may have also appeared unstoppable, but they ran into two obstacles that can never be eliminated: The role of public opinion, both here and in nations they tried to transform, and the role of economic law, which eventually constrains what government can achieve. Both of these limits played decisive roles in the collapse of the Soviet Union, which had been operating on unsustainable economic theories, fought an unwinnable war to transform Afghanistan and eventually lost the faith of the people it purported to rule. When the system collapsed, a new, however imperfect, system and supporting ideology replaced it. There is no reason all these limits would not apply to the unsustainable leviathan now governing the United States, with even the military overstretch in Afghanistan as a distinct factor in common.

This is reprinted from the Campaign for Liberty with permission.

August 15, 2009

Anthony Gregory [send him mail] is a research analyst at the Independent Institute and editor-in-chief of the Campaign for Liberty. He lives in Oakland, California. See his webpage for more articles and personal information.

Copyright © 2009 Campaign for Liberty

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