The Untenability of Centrist Politics
by Charles Lemos, Sun Jan 11, 2009 at 05:33:53 PM EST
If you need a good laugh these days, just read the Washington Post. David Ignatius'op-ed entitled Mr. Cool's Centrist Gamble is a case in point. It's true that if Obama attempts to govern as centrist he will find it to be political quicksand in the long run but Mr. Ignatius actually thinks that partisanship is politics as usual and that the dire straits we confront require a tack to the political center. Now that the ship of state is sinking, abandon partisanship is the cry inside the beltway. Funny how that when the conservative GOP controlled the reins of government, partisanship was in vogue. Yet now that the liberal Democrats assume the mantle, compromise is of the essence.
The impatient freshman senator is about to become president, but he hasn't lost his distaste for Washington politics as usual. And as the inauguration approaches, Obama is doing something quite remarkable: Rather than settling into the normal partisan governing stance, he is breaking with it -- moving toward the center in a way that upsets some of his liberal allies but offers the promise of broad national support.
Obama talked during the campaign about creating a new kind of post-partisan politics -- and dissolving the country's cultural and racial and ideological boundaries. Given Obama's limited record as a centrist politician, it was hard to know if he really meant it. John McCain had a more compelling record of working across party lines than did his Democratic rival.
It turns out that Obama was serious. Since Election Day, he has taken a series of steps to co-opt his opponents and fashion a new governing majority. It's an admirable strategy but also a high-risk one, since the "center," however attractive it may be in principle, is often a nebulous political never-never land.
Obama's bet is that at a time of national economic crisis, the country truly wants unity. "I keep telling Republicans, 'This guy has to succeed.' Otherwise, we're doomed," says David Smick, a financial analyst who wrote a prophetic book about the economic crisis called "The World Is Curved." But it remains an open question whether the Republicans will do more than applaud politely when Obama asks for help.
Obama does have to succeed (though Mr. Smick is talking about saving globalization, not the American economy per se) which is why a President Obama will have to in the end subscribe to core Democratic values and enact long-sought liberal policies that enhance fairness and restore prosperity for all, not just a select few. That's my definition of success. Mr. Ignatius' op-ed is but a ploy of the inside-the-beltway crowd to remain relevant doing the dirty work of the GOP. Though in truth, I think Mr. Ignatius misreads what the President-elect means by post-partisan. My take is that Obama is more attempting to do something that has not been done in modern American politics: unite a coalition of Democrats, Republicans and independents behind an agenda of sweeping change. Mr, Ignatius' view of tacking to the center is really an euphemism for cutting taxes in this debate over the fiscal stimulus and it hardly qualifies as "sweeping change."
Mr. Ignatius goes to state that:
Obama's yen for the middle has been clear as he crafted his economic stimulus package -- especially in his decision to include $300 billion in tax cuts to woo GOP support. After Obama made the tax-cut announcement, one big Republican campaign contributor complained to a GOP friend: "We're sunk. He's taken away our issue."
But political breadth may come at the cost of policy coherence. Are tax breaks really the best way to maintain aggregate demand in an economy that is slowing so sharply? Will frightened businesses and households actually spend the money the government puts in their hands, or will they save it? Won't infrastructure spending and other public investments have a greater stimulative effect than the politically attractive tax cuts? By throwing the GOP a tax-cut bone, Obama is signaling that getting the stimulus package passed quickly, with bipartisan support, is more important than the details.
Wrong. While getting the stimulus package passed quickly is rather important (and kudos to Speaker Pelosi for setting a mid-February deadline for its passage), the details do matter. What the Washington Post fails to understand, the New York Times does.
But the tax-cut components of the package are hardly a clean break with the Bush years, presuming that is what Mr. Obama meant by the troubled past. To win the support of Republican lawmakers, the package is shaping up to include roughly $150 billion in business tax breaks, even though such breaks are widely recognized as packing very little bang for the buck when it comes to economic stimulus.
And to make good on one of his own (misguided) campaign promises, Mr. Obama is proposing to provide tax cuts to people who make up to $200,000 a year.
The proposed tax break -- up to $500 for individuals and $1,000 for families -- makes good sense for low- and middle-income Americans, because the money is likely to be spent quickly, thus boosting demand in a contracting economy. But higher up the income ladder -- a couple making $200,000 a year is in the top 9 percent of households -- tax cuts are likelier to be saved than spent, providing relatively little stimulus.
The Obama team clearly views the tax giveaways as good politics, helping to win support for the overall package. But the severity of the nation's fiscal and economic situation should make it think twice.
The day before Mr. Obama's speech, the Congressional Budget Office projected a 2009 deficit of $1.2 trillion, nearly a threefold increase from 2008. The federal budget -- already deep in deficit after years of tax cutting while waging two wars -- is being pushed further into the red by a recession that is now more than a year old and has no end in sight.
Concern over swelling deficits should not stop Congress from taking steps to revive the economy. But rising deficits -- coupled with long-term budget problems driven mostly by the rising cost of health care -- make it imperative to get the most from every dollar that is spent on stimulus. That means spending less money for tax cuts for business and high-income Americans, and more for government programs like, say, unemployment relief and aid to states.
The day after Mr. Obama's speech, the Labor Department released the employment report for December, showing that employers had shed more jobs in 2008 than in any year since 1945. Worse, the pace of job loss is accelerating. In the third quarter of 2008, the economy shed an average of 199,000 jobs a month; in the fourth quarter, 510,000 jobs were lost on average each month.
Even with a stimulus plan, unemployment will remain uncomfortably high in 2009, and even after it bottoms out, it is likely to revive slowly. That calls for not only extending unemployment benefits but expanding them, so that they cover more workers. Currently, less than half of jobless workers collect unemployment compensation.
The deteriorating job situation also calls for ensuring that states do not have to make unduly burdensome cuts in their own budgets. State and local governments are big employers in their own right, and money that is fed through them quickly reaches beneficiaries and contractors, as well as employees, helping to save and create jobs by supporting demand.
Every dollar spent on a politically expedient tax cut is money that is not spent where it could do more good. It also perpetuates the corrosive debate in which taxes are portrayed as basically evil and tax cuts as unmitigated good. That is not a debate that Mr. Obama should engage.
When the economy recovers, the nation will face a far more difficult task than deciding how to spend its way out of a slump. As a nation, we will have to right the country's severe long-term budget imbalance. That will require reforming health care and cutting spending, and -- yes -- tax increases.
The urgency of the moment requires doing the right thing economically speaking. The margin for error is nil. To offer tax cuts as a lure to the GOP is questionable politics because in the end the measure of President Obama is going to be how he revives the economy and provides the framework for a sustainable future. And the game of tax cuts is one no longer worth playing because that's a race to the bottom and proven economic ruin. That road to a ten trillion dollar national debt was paved with low taxes.
I don't care if you raise my taxes, frankly. I do care that you give me health care, that you rebuild my cities, that you invest in education, that we start replacing the hydrocarbon economy with something more sustainable. That's the sweeping change I think that nation has signed onto and if by playing to center it is meant that we accommodate Senators McConnell and DeMint et al. on tax cuts then that's not something I am prepared to countenance without a fight. That definition of centrist politics will prove untenable. Bad economics will in the end prove to be bad politics. Just ask the GOP.