By Mary Kate Cary, Thomas Jefferson Street blog
It's French Revolution time. The White House put General Motors CEO Richard Wagoner's head on the guillotine this morning, when it required his resignation as a condition for further bailout money. Buried in the coverage was the fact that technically Wagoner will have to stay on board at his $1-a-year salary, because if he really resigned he'd be paid millions in severance under the terms of his contract, which the White House doesn't want either. Even the Washington Post called the move "an extraordinary intervention of the federal government into the management of a private company." The stock market dropped about 300 points as a result, ending its rally.
Pretty unbelievable. It all started with Rahm Emmanuel's comment about never wanting a serious crisis to go to waste and it took off from there ... from billions in economic stimulus and bailouts ... to returned bonuses and CEO resignations ... to trial balloons about global regulation of markets and nationalization of the banks ... to the unprecedented size and unlimited scope of the proposed federal budget and trillions of dollars of deficits. The administration's plans—in just the first two months—include wholesale federal intervention in the healthcare system, education, the energy sector, housing, and the financial markets.
It's a textbook case of overreaching by the Democrats. The problem is the Republicans haven't called it that, not yet. There's not a peep in protest. Doesn't anybody care?
Where have all the free-market capitalists gone? Where are all the advocates for limited government? With Obama's proposed expansion of the federal government into nearly every sector of our economy while running up trillions in debt, you'd think we'd hear screams from the advocates of pay-as-you-go spending and the deficit hawks. But the silence is deafening.
Perhaps all the Republicans in Congress who ran up the budget deficits under President Bush #43 feel that they can't speak up now and say that the White House's approach is wrong. Have they fallen into the Democrats' trap that they're "hypocrites" if they speak out for free-market reforms and for reducing our deficits? That's the only reason I can come up with to explain the silence.
Republicans have stood up for fiscal sanity before. Remember President Bush #41 and the 1990 budget deal, the Gramm-Rudman-Hollings spending caps, and "sequestration" of government funds if spending exceeded responsible levels? Republicans need to reclaim the mantle of fiscal conservatism and free-market capitalism. We're not all socialists yet. It's not too late.
The overreaching by the left is breathtaking, but the radical turn away from free markets is truly astonishing. During the Clinton years, Treasury Secretary Robert Rubin took a decidedly capitalist approach to the economy, and apparently taught Tim Geithner and Larry Summers everything he knew. John Heilemann in New York magazine points this out about Obama's economic team and the sharp veer they're on:
When Obama picked Geithner and Summers as his top two econo-poobahs, the main knock against them came from the left: They were both protégés of Bob Rubin. And, to an extent, it was true. Both had worked under Rubin in the Clinton administration. Both considered him a close friend, a mentor, a rabbi. Both had advocated the core policy positions that defined Rubin's time in government under Bill Clinton: free markets, free trade, globalization, deregulation, fiscal discipline = good; big deficits, protectionism, xenophobia, class warfare = bad. In this sense, they were proponents of what became known as Rubinomics.
Two months into the Obama era, however, it's hard to detect many traces of the Rubin doctrine in what the new president and his people have done or are planning to do in the future. The administration proposes to run a $1.17 trillion deficit in 2010. It intends to reregulate the financial industry. The reduction of income inequality is at the core of its tax and spending proposals. Its budget plan reflects "the largest commitment [to public investment] in 40 years," notes Bob Reich. And it imagines a level of direct government involvement in the market (and particularly in the banking sector, nationalization or no) that would have Rubin spinning in his grave—if he weren't still kicking, that is.
He is still kicking, as a director at Citigroup, which now makes him toxic to anyone in the Democratic Party. In their own minds, they've gone down the antibusiness path so far that they'd be "hypocrites" to listen to any CEO at this point. We're left hoping that the Germans and the French talk some sense into President Obama at the G-20 summit, since they've already signaled that they have no interest in the further deficit spending that he's requesting. What an irony that would be—to be told by two of the biggest welfare-state economies in the world that we're spending too much. Who would have guessed that the nation that brought us the French Revolution would be the one telling us we've gone too far?
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