All Commentary
Thursday, May 20, 2010

Obamanomics: How Barack Obama Is Bankrupting You and Enriching His Wall Street Friends, Corporate Lobbyists, and Union Bosses

In his previous book, The Big Ripoff (reviewed in the June 2007 Freeman), author Timothy Carney launched an attack on two of America’s preeminent political myths—that the Democrats are “the party of the little guy” and the Republicans are “the party of free enterprise.” Both notions are useful to candidates in the endless quest for votes, but both are overwhelmingly false. Yes, some Democrats deeply believe that all they do is helpful to Americans struggling to get by, and some Republicans really want to move towards laissez faire. Party leaders, however, are remarkably similar in their embrace of a corporative philosophy (or perhaps we should say, strategy) that trades favors to well-established institutions in exchange for campaign support.

With Obamanomics, Carney narrows the focus of his microscope to explain, as the book’s subtitle says, “how Barack Obama is bankrupting you and enriching his Wall Street friends, corporate lobbyists, and union bosses.” Under Carney’s high magnification, Obama’s campaign rhetoric that he would kick out the special-interest lobbyists and only listen to the voice of the people is exposed as a fantastic prevarication. Not only have the lobbyists not been kicked out, they have been welcomed in like long-lost children.

Many Americans will instinctively recoil from Carney’s argument. They believe something like this: “Obama is for more government economic control and businesses want less control because they favor free markets.” Carney blows that idea to smithereens, showing that big business generally does not want free markets (which are unpredictable due to competition and consumer sovereignty) and likes regulations to suppress competition and guarantee profits. The key point of the book is that big business doesn’t lobby for free markets; it lobbies for government favors.

Carney produces a mountain of evidence to support his case. To begin with, campaign contributions from big businessmen (and of course other moneyed groups, including lawyers and unions) flooded into Obama’s 2008 campaign far more freely than into the campaign of the ostensibly pro-business candidate, John McCain. People associated with Goldman Sachs were major campaign contributors, with their money flowing into the Obama treasury at a ratio of four to one over McCain. That was not an anomaly. Contributions from many industries went lopsidedly to the supposedly “anti-business” candidate.

The standard line from the media about this, when it was noted at all, was that these commercial giants were just buying “access” with the probable winner to ensure that they wouldn’t be treated too harshly in the coming administration. Carney refutes that notion by pointing out that Obama had long been cozy with certain corporate interests (such as ethanol) and that even in their inchoate stages, Obama’s policy initiatives promised steady, predictable revenues for certain businesses and industries. They weren’t just buying access. They were eagerly supporting the candidate most inclined to their corporatist desires.

After his election Obama’s policies suited many industries just fine. The prodigious “stimulus” package was manna from heaven for those whose lobbyists knew how to direct the flow of federal dollars. “With more than 800 lobbyists working on it,” Carney writes, “the stimulus particularly benefited the tech industry and its representatives.” As one corporate insider he quotes said, green lobbyists went into a “feeding frenzy.”

Instead of resources flowing into businesses to produce goods and services that consumers wanted, resources were directed into politically connected firms to produce things that appeal to politicians (or perhaps produce; some of the “stimulus” projects have since been shown to be fraudulent). The impact of Obamanomics, Carney concludes, is to shift economic power “from consumers, workers, and investors to politicians and bureaucrats.”

Readers will find their blood pressure rising as Carney takes us through the vast corporate welfare tucked into ObamaCare, the environmental crusade’s “cap and trade” legislation, Obama’s favoritism toward the United Auto Workers and the car companies it has done so much to ruin, the administration’s fondness for regulations that help big business stifle competition from smaller rivals, and, perhaps most disgustingly of all, the Wall Street bailout. “Conservatives like to think of Wall Street as a bastion of capitalism, but that image ignores the ways in which our financial sector depends on government protection,” Carney observes.

We are mired in recession, and mountains of government debt will soon hit us like an avalanche. Will Americans fall for the deception that returning to prosperity depends on still more of the statism that has brought us to this dire situation? If they’ve read Obamanomics, they won’t.