New Year Right Agenda
by Donald Devine
Issue 147 - January 6, 2010

The 2010 election must be the top priority for conservatives this year - and only two issues will matter to voters when they go into the polls this November, the economy and health reform. Both offer an incredible opportunity to derail President Barrack Obama and his party’s march to socializing nearly everything.

The decisive fact is that the economy is in much worse shape than the consensus preached by professional economists and market analysts, who are mostly positive because it is good for business. Retail sales in 2009 were up over 2008, since a $787 billion stimulus must pump funds temporarily - but even so the increase was a mere 2.4%. Existing home sales were up 7.4%; but new home sales went down 11.2%. Reduced unemployment is cited; but it is down only from 10.2 to 10.0 percent, still extremely high historically. The stock market is up? Only if one ignores inflation as The Wall Street Journal’s E.S. Browning proves in the chart nearby. Today’s DJIA of 10,000 is equal to 500 when adjusted for the price of gold. Economically, things will remain grim.

Worse, Democratic ideology leaves no clue how to fix this. The “progressive” solution is to throw money at every policy problem. But after the trillions by Presidents George Bush and Obama, the banks still will not lend to the productive private sector. As Yale Professor Jonathan Koppell notes, President Obama now has become “frustrated that corporate recipients of federal largess are making money buying Treasuries rather than lending to capital-starved businesses.” He recently held a summit to plead for private sector lending. Some participants announced token programs but it is unlikely the presidential begging will produce anything meaningful. In an uncertain financial environment it is much safer to borrow at zero and buy government-guaranteed bonds.

If throwing money fails, the other progressive tool is to use the power of regulation to force business to behave. The Obama Treasury now proposes a Financial Services Oversight Council to further discipline the big business heads. But if tough TARP requirements or even direct government ownership such as with AIG, Citi and GM did not work, and after widening “too big to fail” by higher deposit insurance ceilings and extending protection to mutual funds, on top of guaranteeing faltering bonds and weak mortgages, and dramatically increasing access to the Federal Reserve discount window, why will the next regulation work? Indeed, Prof Koppell asks whether new guarantees will not simply make all large corporations future Fannie Mae’s and Freddie Mac’s, whose politicized lending caused the economic collapse in the first place.

Threats fall on deaf ears because the banks and others read recent history by both parties as proving that the government will not allow them to fail. A quick trip by their lobbyists to Congress, now accompanied by their union heads, should work as well as it did for Fannie and Freddie. Indeed, the more Federal control, the greater obligation the government has to “save” them. So, it is all left to the Fed. But the Federal Reserve is in a bind. The only thing the market responds to positively is free money - that is zero interest rates. Yet, even Fed Chairman Ben Bernanke is quietly signaling rates must rise. What happens to the optimism then? Inflation for the last six months annualized is already at 5.6% excluding imputed rent. Even the Fed expects recovery to take years. That will be too late for the Democratic Congress.

As if that were not enough, the other impending disaster is wholly self-inflicted. The number one ideological obsession of Democratic Party progressives has been to gain control of the health care system to make all Americans healthy, wealthy and wise, as the saying goes. It does not matter that public opinion polls show most Americans oppose Federal control and increasing numbers have rejected each new “reform” the Democrats in Congress have introduced. But nothing can deter them from their “change no one believes in.” Even the Democratic left as represented by former party chairman Howard Dean says Congress should start over. But after years promoting health reform as their number one duty to humanity, Democrats just cannot stop. Colorado’s Michael Bennet told CNN he would support a bill even if it cost him his job as Senator and Speaker Nancy Pelosi is willing to give up even 40 House seats. They may soon get their wish.

The Democratic plan appears designed to alienate everyone. In order to reduce the number of uninsured, the largest such group, young people, will be mandated to purchase health insurance at rates two to three times what they would pay currently based on age and experience. Well, they do not vote – but everyone else must purchase insurance too or pay fines up to 2% of their income. For those with insurance, middle-aged persons purchasing individual insurance would face an increase in premiums of $2,100 in 2016. A family would pay $15,200 in 2016 if the Senate bill prevails or $13,100 if it fails. Seniors would take a cut of $471 billion in Medicare over the coming decade. States other than ones paid off with special exceptions to secure Senate votes would face 15 million new people on their already bursting Medicaid welfare rolls. Total Federal health spending would increase $2.5 trillion and a new independent board would recommend “best practices” (such as for mammograms?) to control costs.

Who is left to support ObamaCare besides the Senators who have excluded their states from the obvious downsides of the proposal? Doctors support it because they have been promised increases in their government-approved Medicare fees or otherwise would receive a 21% reduction - a deal they cannot refuse. Health providers, hospitals, drug companies and insurance companies favor it because millions of new customers are expected to purchase their products once they are forced to buy insurance. Unions get numerous exclusions and probably will end up with another from the expensive “Cadillac” plans restrictions they use to recruit members. There are regular people favoring government control of medical decisions who support the bill too but ObamaCare could not have been adopted without this business-as-usual special interest politics and its regulatory threats.

There are other issues than the economy and health care and conservatives and Republicans will have to contest them as best they can over the next year. But the unpleasant fact is that the Democrats have the votes in Congress to do as they please. If they will jump off the cliff for ObamaCare, they are capable of anything. At best, they can be slowed down. Conservatives will be tempted to push their favorites but, as far as the election is concerned, social issues such as abortion are best pushed directly to favorable constituencies and, whatever the subtleties, voters think President Obama has continued President Bush’s foreign and defense policies and they do not support either. Carping at ineffective airport screening not only recalls the Bush era “shoe bomber” but sounds either like the Republicans are wishing for a terrorist to succeed or for check-in procedures to be even more burdensome.

What is the right Republican message? Keep it simple: “We will stop spending the country into bankruptcy and we will repeal ObamaCare just as Congress did in 1989. We know we have to re-earn your trust but you know down deep if Democrats keep their big Congressional majorities, unemployment will never return to normal. Someone needs to check their power.” Forget third parties. As unreliable as the GOP is, there is no viable alternative. Otherwise, Republicans should shut up and let President Obama and the Democrats self destruct. The economy/health mantra should be the only one beamed at independents for the next eleven months. And any conservative with a bit of interest in running for office should do so. It will be a good year.

Donald Devine, the editor of Conservative Battleline Online, was the director of the U.S. Office of Personnel Management from 1981 to 1985 under Ronald Reagan and is Senior Scholar at Bellevue University’s Center for American Vision and Values.

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