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Obamanomics: Conservative or Revolutionary?

Posted by Larry Doyle on March 16, 2009 4:17 PM |

A loyal reader shared with me a recent posting from former Clinton Labor Secretary Robert Reich. Earlier today I cross posted a piece from No Quarter in which Reich was less than complimentary of Secretary Geithner. Well, let’s see what Mr. Reich has to say about President Obama’s economic program: Is Obamanomics Conservative or Revolutionary?

Prior to delving into my thoughts and commentary on Reich (or anybody), I always find it useful to consider the perspective of the writer. In regard to Mr. Reich, let us not forget that Robert Reich Excludes White Male Construction Workers from Obama Stimulus Plan. Utilizing that perspective, Mr. Reich would be considered to be more than slightly left of center. Additionally, in considering the Obama economic plans, I think it is critically important to incorporate the economic plans and agenda of the Democrats in Congress. These Congressional leaders have a major influence in this process. These Democrats, including David Obey (D-WI), Nancy Pelosi (D-CA), Harry Reid (D-NV), Barney Frank (D-MA), Chuck Schumer (D-NY), Chris Dodd (D-CT), and Steny Hoyer (D-MD) amongst others are major players in the stimulus, budget, and Omnibus bill that have come down from Congress. It is not totally clear where the lines are drawn between the White House and Congress on all the economic issues. That said, let’s see what Mr. Reich has to say and then critique his assessments of Obamanomics.

Taxes: Reich discounts the increase in taxes as merely restoring them to levels seen under Clinton and only after the economic recovery is well under way. He does not address the overall level of taxation already underwritten by the top 3%. For what it is worth, that level is approximately 50%. I will give Reich an assessment on this issue as less than full disclosure.

Universal Health Care: seems fairly simplistic based on Mr. Reich’s assessment. Why hasn’t this change already occurred?  Could it be the lobbying of the pharmaceutical companies? Perhaps. How about those who are subject to the rationing of health care under the government control? Mr. Reich does not fully explore the topic.

Cap and Trade: Very simple again, no? Let the government set a reasonable level of emissions and then utilize market principles to price it out. Reich assumes that corporate and consumer behaviors will not necessarily change. As costs rise, where do those costs get passed? Is it illogical to think that as marginal costs increase that certain companies may look to move production plants elsewhere? Could those costs get passed along to consumers?

Education: Reich proposes that Obama’s plans are mainstream and incremental. He offers no commentary on the money directed via the Stimulus plan to support education. I personally think that Obama is headed in the right direction with his education plans but does not go far enough to support the use of vouchers for urban students. While the Obama children have the good fortune to attend the Sidwell Friends School, some current minority students at that school may have to leave next year because their vouchers will be discontinued. That’s wrong. Why does that happen? Democratic support for the teachers’ unions trumps the well-being and development of many urban students. Reich dodges this issue completely.

Reich uses the balance of his piece to totally repudiate the era of Reaganomics over the last 25 years. He gives President Clinton a pass while stating that he came to office during an era of economic expansion. Little does he recall the challenging economic times of the early Clinton years. He offers no comment on the economy under the Clinton administration balanced with a Republican Congress.

I will give Reich his due as to the breakdown of our financial regulatory structures of the last ten years. While he conveniently places blame for that squarely in the Republican camp, I would encourage him to speak to Robert Rubin and Alan Greenspan. I am sure he is well acquainted with them.

In summary, I view Reich’s commentary as far too simplistic, biased, and political as to warrant any real credibility. If he were to be more balanced and forthcoming in his review, his points of legitimacy would gain muster. Opportunity lost.

I would expect a greater degree of depth and substance from an individual with Mr. Reich’s background. Given his performance in this piece, he is not likely to enter our Economic All-Stars anytime soon.


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