Dick Morris Discusses the Obama Catastrophe

Disgraced Clinton adviser turned Fox News opinionator Dick Morris and his wife, Eileen McGann, are infuriated by Barack Obama. And they've turned that ire into a new tome, Catastrophe, detailing their grievances. Morris recently chatted with U.S. News about Obama, the end of Keynesian economics, and why the GOP shouldn't think about 2012 yet. Excerpts:

What prompted you to write this book?

What always prompts us to write a book is anger and outrage. We found ourselves so disagreeing with everything that Obama is doing and so much convinced that it was going in the exact wrong direction and would be very bad for the country that we just thought it was important to put it all down in one place and document it and write it up. The sound bites on Fox News weren't enough toreally elaborate it, so we felt a book was in order. And then as we wrote it we came increasingly to the view that this is not so much a question of Obama adopting wrong-headed policies, it's Obama adopting appropriate and accurate policies which achieve wrong-headed goals. So we began by feeling that his stimulus package would do nothing to solve the recession, and then we concluded byrealizing that it wasn't solving the recession that was his major goal. It was expanding government.

So it's not that his heart is in the right place and his head in the wrong place, but that his heart is in the wrong place?

Head and heart—I wouldn't do it that way. I think that he is a very sincere person with very deeply felt views. I just think he's wrong. I think that he really believes that the United States—that the American model is wrong and that the European social democratic model is right.

In what way?

I think first he feels that the government share of the economy, of GDP, should be in the mid-40s, not in the mid-30s. I think he feels that that growth should include a much more active role in healthcare and education and all of the many items that are enumerated in the stimulus package. And I think he feels that America suffers from a dearth of public investment. And I think that he sees the need to solve the recession as a way of passing legislation that is ultimately far more extensive, more liberal, and more costly than Congress ever would normally approve.

But can't his agenda be explained not as secret socialist but as traditional Democrat?

To do that you'd have to believe he's dumb. To believe that he believes that his stimulus package would solve the economic problem, you would have to believe that he completely ignores the experience of what took place in Japan, where there was massive public spending and no visible impact. He would have to literally believe that you can run the deficit up this high, borrow this much money, force interest rates higher in order to lend this much money, raise taxes higher in order to fund this much money, and not vitiate the effect of the stimulus. The more you look at it, the more you come to the conclusion that he would have to be really, really wrong-headed to believe that.

Is "doctrinaire socialist" (per the book jacket) a bit much, though?

Well, I don't believe that he favors government ownership of the means of production universally, as a socialist does, but I think that a European social democratic model is not far-fetched. His strategy for doing it is that in each major industry that he can, he puts in a government entity, a government horse in the race. And the government horse gets subsidies—it's on steroids. And it wins the race, therefore. And ultimately drives the private sector companies out of the industry.

Is the GOP your answer, or is it part of the problem, too?

It varies. The Democrat portion for the blame for this crisis was, I think, the insistence that Fannie Mae and Freddie Mac focus on subprime mortgages to poor people. The Republican part of this complicity was to limit regulation and not to be more aggressive in regulating the banking operations, particularly the derivatives and the credit default swaps and so forth. What Obama should have done to deal with the economy is he should have enacted long-term financial stimuli, largely through tax cuts, that permit people to make long-term assessments of changes in their financial condition. Essentially Keynesian economics has been replaced by the theory of rational expectations. If you can give them a long-term basis for saying over 10 years your tax rate's going to be reduced, then there is a basis for saying maybe I can spend this money, and this is going to be a recurring source of income. Every dime of the stimulus package has gone right into savings—paying down credit cards and paying off debt, which, while it contributes to the long-term health of the United States, does nothing in the immediate future to deal with this recession.