Thursday, November 1, 2012

The Economist Endorses Obama

The Economist magazine has chosen to endorse Obama. If this wasn't such a serious issue, it would be almost comical, even cute. They write:
Mr Obama’s first term has been patchy. On the economy, the most powerful argument in his favour is simply that he stopped it all being a lot worse. America was in a downward economic spiral when he took over, with its banks and carmakers in deep trouble and unemployment rising at the rate of 800,000 a month. His responses—an aggressive stimulus, bailing out General Motors and Chrysler, putting the banks through a sensible stress test and forcing them to raise capital (so that they are now in much better shape than their European peers)—helped avert a Depression. That is a hard message to sell on the doorstep when growth is sluggish and jobs scarce; but it will win Mr Obama some plaudits from history, and it does from us too.

Two other things count, on balance, in his favour. One is foreign policy, where he was also left with a daunting inheritance. Mr Obama has refocused George Bush’s “war on terror” more squarely on terrorists, killing Osama bin Laden, stepping up drone strikes (perhaps too liberally, see article) and retreating from Iraq and Afghanistan (in both cases too quickly for our taste). After a shaky start with China, American diplomacy has made a necessary “pivot” towards Asia. By contrast, with both the Israeli-Palestinian dispute and his “reset” with Russia, he overreached and underdelivered. Iran has continued its worrying crawl towards nuclear weapons.

All these problems could have been anticipated. The Arab spring could not. Here Mr Obama can point to the ousting of tyrants in Egypt and Libya, but he has followed events rather than shaping them, nowhere more so than with the current carnage in Syria. Compared with, say, George Bush senior, who handled the end of the cold war, this aloof, disengaged man is no master diplomat; set beside the younger Bush, however, Mr Obama has been a safe pair of hands.

The other qualified achievement is health reform. Even to a newspaper with no love for big government, the fact that over 40m people had no health coverage in a country as rich as America was a scandal. “Obamacare” will correct that, but Mr Obama did very little to deal with the system’s other flaw—its huge and unaffordable costs. He surrendered too much control to left-wing Democrats in Congress. As with the gargantuan Dodd-Frank reform of Wall Street, Obamacare has generated a tangle of red tape—and left business to deal with it all.

It is here that our doubts about Mr Obama set in. No administration in many decades has had such a poor appreciation of commerce. Previous Democrats, notably Bill Clinton, raised taxes, but still understood capitalism. Bashing business seems second nature to many of the people around Mr Obama. If he has appointed some decent people to his cabinet—Hillary Clinton at the State Department, Arne Duncan at education and Tim Geithner at the Treasury—the White House itself has too often seemed insular and left-leaning. The obstructive Republicans in Congress have certainly been a convenient excuse for many of the president’s failures, but he must also shoulder some blame. Mr Obama spends regrettably little time buttering up people who disagree with him; of the 104 rounds of golf the president has played in office, only one was with a Republican congressman.

Above all, Mr Obama has shown no readiness to tackle the main domestic issue confronting the next president: America cannot continue to tax like a small government but spend like a big one. Mr Obama came into office promising to end “our chronic avoidance of tough decisions” on reforming its finances—and then retreated fast, as he did on climate change and on immigration. Disgracefully, he ignored the suggestions of the bipartisan Bowles-Simpson deficit commission that he himself set up. More tellingly, he has failed to lay out a credible plan for what he will do in the next four years. Virtually his entire campaign has been spent attacking Mr Romney, usually for his wealth and success in business.
You would think that this is a situation of damning by faint praise, but they go on to select Obama over Romney for the reason that it is better to select the devil they know than the one they don't.

I suppose that from a region that generally considers anything to the political right of communism to be the "right wing," any candidate that has even a whiff of fiscal conservatism must seem like the devil. Thus, the reason for the sophistry set out above.

Obama had nothing to do with "stress testing" banks. The banking system is regulated by the Federal Reserve, which is independent from the Federal government.

His stimulus was a failure. The decision to stabilize banks (via TARP), even if it was necessary, was made and done before Obama came to office. There is no credible evidence that the money spent in the stimulus created or sustained jobs, or stimulated the economy. And Obama has certainly used his executive power to drive up energy costs in the U.S., and discourage domestic energy production. There are plenty of economists that would state that Obama deepened the recession. It is a little over the top for the Economist to say that Obama saved us from a depression.

His "bailout" of GM and Chrysler was a failure as well. I don't know if the editors of the Economist have any idea of how U.S. bankruptcy laws work, but a bankruptcy would have resulted in a reorganization that would have allowed the companies to shed a significant amount of debt while continuing operations. Instead, Obama handled the situation in a manner that cheated many of the investors (who probably won't be duped again into lending money to the two companies), but was designed to reward the unions (not the workers, though--they will still be losing jobs to overseas factories). I would also note that it resulted in many dealerships going out of business. Oh, and the U.S. taxpayer lost money on the whole deal.

The Economist also believes that foreign policy was is in Obama's favor, although they couldn't point to a single success. He turned Iraq from a nominal success to what is increasingly appearing to be a failure. Afghanistan has clearly turned into a failure under Obama's watch. His handling of the Arab Spring has been a failure. While the Arab Spring may not have been foreseeable, that the overthrow of Qaddafi and Mubarak would allow the Muslim Brotherhood to seize power in Libya and Egypt was entirely foreseeable. His pandering to nations and leaders hostile to the U.S. and U.S. interests has considerably weakened the U.S.' position and emboldened our enemies. Obama has also jeopardized our only dependable ally in the Middle-East, Israel. It may be debatable about the best route to take with Iran, but I don't think that Obama's offer to recognize Iran's nuclear rights is even worthy of consideration. So, in the end, Obama has weakened our position in the Middle-East, and Iran is on the verge of obtaining nuclear weapons. Oh, and Benghazi and supplying arms to terrorists and drug cartels. Not what I would term being in "safe hands."

The other "achievement" the Economist points to is health reform. Really. Enacting a program which has only one outcome--insolvency--is an achievement? I don't think a plan that was enacted over the objections of the majority of people, that creates a huge government bureaucracy and countless regulations, does nothing to increase access to doctors or medical care, forces smaller medical practices to merge with large practices or hospitals just to keep up with all of the red tape, and increases the tax burden on working people is an achievement. The word they are looking for is "disaster." As in, what happens when a useless organ, like your appendix, bursts.

Even if you accept the Economist's premise that Romney is an unknown (actually, he is a moderate--too moderate for my tastes, but that is another issue), it is still obvious that Romney is the better choice. We know what Obama is like, and we know that as a lame-duck president he will be even worse. Voting for Obama is like playing Russian roulette with a single-shot pistol. Even if Romney is an "unknown," you at least get to spin the cylinder before pulling the trigger.

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