Mean Street: Why Obama Doesn’t Matter. And You Do.
Across America, there was jubilation and dancing in the streets. We have a new prophet. We are set free and ready to follow.
But soon enough we will learn that President-elect Barack Obama himself doesn’t make a new nation. He cannot right every social wrong or work economic miracles.
And he certainly can’t give you everything you want. Even if you wore an “Obama for President” button for the past 15 months.
So it is time to get back to work. And face reality: Without sacrifices from all Americans, Obama won’t matter.
It was an Obama supporter, Warren Buffett, who famously said that “when a management team with a reputation for brilliance tackles a business with a reputation for bad economics, it is the reputation of the business that remains intact.”
And so it will probably be for Obama–a charismatic, transcendent leader. The U.S. government is just like a business with very bad economics. And lately, those economics have gone from bad to worse.
Name a crisis and we are in the middle of it. A housing crisis, a banking crisis, a retail crisis, an auto crisis.
The word “crisis” is overplayed in our lexicon. But there is no denying GDP contraction or national unemployment that approaches 10 million workers.
This has harsh consequences. Government tax receipts will fall and budget deficits will rise. And Obama will be hard-pressed to come up with the money to finance the change he has promised.
Of course, the U.S. Treasury will continue to print money to hand out to the Chinese and Saudis, but that can only go so far. Otherwise we will have debts we just can’t pay, and inflation we just can’t control.
The money to pay for our way of life must come from the sacrifices of the American people. Like the sacrifice of paying higher gas taxes or working a second job. How about the sacrifice of just living within our means?
Lately, we haven’t been too good at sacrificing anything. For most of this decade, household debt has exceeded GDP. Only $4-a-gallon gas seems to get our blood up. Of course, as soon as the price drops, we forget our addiction.
No, sacrifice means that many of the people who put Obama into power–like the labor unions and tort lawyers–may have to renounce large parts of their economic claims. Or at least delay them.
That could mean state and city unions accepting less-generous pensions. Or the UAW making substantial concessions in any Detroit bailout. Or keeping the tort lawyers away from any health-care overhaul.
A pipedream?
Perhaps. But the U.S. economy–and by extension–the Obama presidency really can’t afford the price of many of his campaign promises. At least not now.
Sacrifice also means that the folks who didn’t support Obama will have to chip in, too.
Heavy regulation of the banking industry? Sorry, Wall Street. It is inevitable that you will have to pay a price for the failure of self-regulation. Limits on executive pay could be part of the bargain.
Higher taxes for the well-off also will come into the equation. It is undoubtedly bad policy to raise income or capital-gains taxes in a lousy economy, but politics is about trade-offs.
The easy part was electing Obama. The hard part is making him matter.
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Thanks so much for sharing your thoughts!