David Boaz

It's wall-to-wall Obama in the newspapers and on the airwaves, and I keep wondering, Was it quite so overwhelming in the run-up to previous inaugurations? I think not. Presumably the gushing media response is generated by some combination of Barack Obama's being our first African-American president, his being the antidote to an epidemic of Bush Derangement Syndrome, and our growing cult of the presidency. I complained once about people who see the president as "a combination of Superman, Santa Claus, and Mother Teresa," and this month journalists are leading the way. Even New York Times reporter Helene Cooper, writing the "pool report" for other journalists on Obama's visit to the Washington Post, noted that "around 100 people--Post reporters perhaps?--awaited PEOTUS's arrival, cheering and bobbing their coffee cups." Post reporter Howard Kurtz assured readers that his fellow journalists did gawk, but they did not cheer or applaud. The Washington Post banners Obama's "centrist approach." Even Blue Dog Democrat Jim Cooper says he's showing "great centrism." He's promising to spend a trillion dollars more than the most spendthrift president in history. If he promised to spend two trillion dollars more, would the Post see his program as left-liberal? For politicians everything is politics: "It has been more than three months since he sat through a Sunday church service and at least five years since he attended regularly, but during the transition, Obama has spoken to religious leaders almost daily. They said Obama calls to seek advice, but rarely is it spiritual. Instead, he asks how to mobilize faith-based communities behind his administration." "Nation's Hopes High for Obama," says the Washington Post-ABC News poll. Those polled say that they have high expectations for his administration, they think he has a mandate for major new programs, and they like his promise to give virtually everyone some money. Indeed, according to a graphic in the paper but apparently not online, 79 percent of respondents have a favorable impression of Barack Obama, much higher than the numbers for Reagan, Bush I, Clinton, or Bush II as they prepared to take office. In fact, the only modern president whose favorable ratings on the eve of inauguration matched Obama's was Jimmy Carter. Hmmmmm. Bob Woodward offers 10 lessons Obama could learn from the mistakes of the Bush administration. One of them is "Righteous motives are not enough for effective policy." Woodward directs all his lessons at foreign and defense policy, but that's a good rule for domestic policy too. The fact that a policy sounds right-minded -- create jobs, raise the minimum wage, ban sweatshop products, mandate energy efficiency -- doesn't mean that it will work. Economic processes are dynamic, not static. Benefits have costs. Another of Woodward's rules is "A president must do the homework to master the fundamental ideas and concepts behind his policies." Again, that applies to economic as well as to foreign policy. Has Obama read any thoughtful criticisms of Keynesian economics or of "job creation" schemes or of renewable-energy mandates? He met with conservative pundits, but has he sat down and listened to any of the many economists who oppose his stimulus plans? On a lighter note, former "Saturday Night Live" writer and Will Ferrell collaborator Adam McKay discussed Ferrell's Broadway show, "You're Welcome America: A Final Night with George W. Bush" with the Washington Post. Asked how he might make Obama-related comedy, McKay said it would be tough because "Obama's an actual adult who knows how to work." Let's see . . . four years ago Obama was voting "present" in the state senate, and now he's going to be president. His supporters range from journalists who compared him to "the New Testament" to actual voters who exult, "I won’t have to worry about putting gas in my car. I won’t have to worry about paying my mortgage. You know. If I help [Obama], he’s gonna help me.” He himself said that his capture of the Democratic nomination "was the moment when the rise of the oceans began to slow." If humorists can't find some humor there, we need better humorists. And maybe it's appropriate that a singer known as "The Boss" headlined the inaugural concert for a candidate whose wife promised, "Barack Obama will require you to work. . . . Barack will never allow you to go back to your lives as usual, uninvolved, uninformed."

The president who launched our longest war, arrogated more power to the executive than ever before, increased federal spending by a trillion dollars, pushed for the biggest expansion of entitlements since Lyndon Johnson, further nationalized education, tried to nationalize marriage, and held Americans in jail without access to a lawyer or a judge has found a theme for his presidential library: freedom.

The George W. Bush Presidential Center will include a "Freedom Institute" focused on a broad portfolio of topics, including the expansion of democracy abroad and education reforms of the kind Bush implemented during his presidency, according to organizers.

Coming next: The Clinton Center for Honesty and the Paris Hilton Center for Modesty.

James Q. Wilson, reviewing Robert Kaiser's new book So Damn Much Money: The Triumph of Lobbying and the Corrosion of American Government, explains how we could -- but won't -- break the power of lobbyists:

Or one could do what would make the greatest difference: reduce federal spending programs of the sort that create incentives for lobbyists to expand them. The central reason earmarks developed in the 1970s is that by then Washington was trying to solve so many problems that it appropriated money for virtually everything. Kaiser acknowledges that this is the problem. He notes that politicians, both liberal and conservative, have produced "a more intrusive government, more important to the well-being of more Americans." The more groups saw "their own fate at stake in Washington's debates on public policy, the better the market for lobbyists," he writes. But reducing the extent of government activity is only slightly more likely than amending the Constitution. It may be better to step back and ask, "Do American voters dislike Washington because it is corrupt, or do they dislike it because it is ineffective in solving the problems (some real, some only imagined) that it has embraced?" When the federal agenda did not include agriculture, the environment, drug abuse, gun control, academic research, mortgages, homelessness and school quality -- and that was during Kaiser's lifetime and mine -- it was hard to have an earmark because there were few programs to which they could be attached. And that was also the time when the great majority of Americans thought national officials were doing a good job.

For the third time in 30 years, a president has to decide where to send his school-age children after moving to Washington, D.C. And having school-age children naturally gives any new president a particular interest in the D.C. public schools. A big headline in today's Washington Post (actual paper copy) proclaims, "Obama Interested in D.C. Schools." In an interview with the Post, President-elect Obama said he was determined to be part of the local community and that

he and his wife had specifically discussed working with the D.C. public schools, using their own celebrity and success "as leverage to get kids and parents and teachers excited about the possibilities of an education." He said he was "trying to think about regular visits to local schools to meet with kids and meet with teachers and principals" and reiterated his desire to open up the White House "in ways that haven't been done before." At a policy level, he said that he had met D.C. Schools Chancellor Michelle A. Rhee but had not spent much time with her and that he expects his incoming Education Department secretary, Arne Duncan, to be "interested in how the school experiment here goes."

But the next sentence acknowledges that

Obama's two daughters are attending the private Sidwell Friends School.

So he'd like to make regular visits to the D.C. public schools, but he ain't sending his own kids there. Which is perfectly understandable. Neither did Bill and Hillary Clinton. Or Al Gore. Or Vice President-elect Biden's son. Indeed all their children attend or did attend Sidwell friends. The Carters sent Amy to D.C. public schools, but that was the last time a president did so. The Obamas don't seem to have considered public schools. They're sending Malia and Sasha to Sidwell, a school of choice for the Washington elite. Of course, the Obamas also sent their daughters to private school in Chicago. What's most striking to me in all of this is that Obama has named Chicago school superintendent Arne Duncan to oversee the nation's schools, even though in seven years he wasn't able to produce a school in Chicago that Barack and Michelle Obama would send their own children to. "What he did for Chicago, he can do for America"? Perhaps Obama and Tim Geithner believe that taxes and public schools are for the little people. And it would be nice if they'd give the little people a break on their taxes and a choice of schools.

At the Senate hearing on the nomination of Lisa Jackson to be administrator of the Environmental Protection Agency, Sen. Barbara Boxer pressed Jackson to regulate coal ash in the wake of two spills in Alabama and Tennessee. "You have the authority to regulate this," Boxer told Jackson. And, Boxer warned, if the unelected bureaucracy at EPA doesn't issue a regulation soon, Congress just might have to legislate: "If we are not satisfied with action, we may move legislatively." As it happens, Article I, section 1, of the U.S. Constitution stipulates, ‘‘All legislative powers herein granted shall be vested in the Congress of the United States, which shall consist of a Senate and House of Representatives.’’ And as David Schoenbrod and Jerry Taylor wrote in the Cato Handbook for Congress:

For the first 150 years of the American Republic, the Supreme Court largely upheld the original constitutional design, requiring that Congress rather than administrators make the law. The suggestion that Congress could broadly delegate its lawmaking powers to others— particularly the executive branch— was generally rejected by the courts.

Today the chair of the U.S. Senate's Environment and Public Works Committee tells a nominee for a position in the executive branch that if the bureaucracy won't exercise Congress's powers, Congress just may have to. (I'm not addressing here whether regulation of coal ash is a good idea, just the question of who should issue important and costly regulations.) Of course, this comes a couple of weeks after President Bush said that if Congress wouldn't give taxpayers' money to General Motors and Chrysler, he would. In effect, his last grab for executive power was the power to appropriate money from the public fisc. But as Gene Healy pointed out, even here Congress was as much at fault as the president: it had effectively given him carte blanche in the TARP legislation, just as it did in the authorization for the Iraq war. Congressional spinelessness is at least as big a factor as presidential arrogance in the rise of executive power.

Journalists are telling us that John Maynard Keynes, the intellectual inspiration of the New Deal and its tax-and-spend philosophy, is all the rage again. The Wall Street Journal offers an interesting vignette on Keynes's view of how to create jobs:

Drama was a Keynes tool. During a 1934 dinner in the U.S., after one economist carefully removed a towel from a stack to dry his hands, Mr. Keynes swept the whole pile of towels on the floor and crumpled them up, explaining that his way of using towels did more to stimulate employment among restaurant workers.

Now I should say that various people report this story, including Ludwig von Mises, but no one cites an original source. Assuming it's true, though, it just seems to underline the absurdity of the whole "make-work" theory that is back in vogue. Keynes's vandalism is just a variant of the broken-window fallacy that was exposed by Frederic Bastiat, Henry Hazlitt, and many other economists: A boy breaks a shop window. Villagers gather around and deplore the boy's vandalism. But then one of the more sophisticated townspeople, perhaps one who has been to college and read Keynes, says, "Maybe the boy isn't so destructive after all. Now the shopkeeper will have to buy a new window. The glassmaker will then have money to buy a table. The furniture maker will be able to hire an assistant or buy a new suit. And so on. The boy has actually benefited our town!" But as Bastiat noted, "Your theory stops at what is seen. It does not take account of what is not seen." If the shopkeeper has to buy a new window, then he can't hire a delivery boy or buy a new suit. Money is shuffled around, but it isn't created. And indeed, wealth has been destroyed. The village now has one less window than it did, and it must spend resources to get back to the position it was in before the window broke. As Bastiat said, "Society loses the value of objects unnecessarily destroyed." And the story of Keynes at the sink is the story of an educated, professional man intentionally acting like the village vandal. By adding to the costs of running a restaurant, he may well create additional jobs for janitors. But the restaurant owner will then have less money with which to hire another waiter, expand his business, or invest in other businesses. Before Keynes showed up in town, let us say, the town had three restaurants among its businesses, each with neatly stacked towels for guests. After Keynes's triumphant speaking tour to all the Rotary Clubs in town, the town is exactly as it was, except the three restaurants are left to clean up the disarray. The town is very slightly less wealthy, and some people in town must spend scarce resources to restore the previous conditions. The man built an economic theory on this! Now we are told that "Keynes is back," and we need a new New Deal, and the Obama administration is going to create millions of jobs by shuffling money through the federal government. And the theoretical underpinning of this plan comes from a man who thought you could stimulate employment by breaking things. As Jerry Jordan wrote in the Cato Journal, the real challenge for society is not creating jobs but creating wealth -- that is, a higher standard of living for more people. There are many destructive ways, beyond messing up the towels in a restroom, to create jobs:

I am reminded of a story that a businessman told me a few years ago. While touring China, he came upon a team of nearly 100 workers building an earthen dam with shovels. The businessman commented to a local official that, with an earth-moving machine, a single worker could create the dam in an afternoon. The official's curious response was, "Yes, but think of all the unemployment that would create." "Oh," said the businessman, "I thought you were building a dam. If it's jobs you want to create, then take away their shovels and give them spoons!"

President-elect Obama proposes that the federal government "create or save" jobs by spending upwards of $600 billion. Where would this money come from? If it comes from taxes, it will be taken out of the more efficient private sector to be spent in the less efficient government sector, and the higher tax rates will discourage work and investment. If it is borrowed, it will again simply be transferred from market allocation to political allocation, and our debt burden will grow even greater. And if the money is simply created out of thin air on the balance sheets of the Federal Reserve, then it will surely lead to inflation. There is no magic road to wealth. You have to work, save, and invest. And when the government lures individuals and businesses into making bad investments with cheap money, the malinvestment has to be liquidated. Avoiding that truth, prolonging the process of adjustment, is a good way to turn a recession into a depression. And you can't get economic growth back by breaking windows, throwing towels on the floor, or spending money you don't have.

In his weekly radio address on January 4, President-elect Obama promised that his economic plan would "create three million new jobs, more than eighty percent of them in the private sector." Dan Mitchell pointed out that that suggested that he intended to hire 600,000 new bureaucrats. That point got some attention, and apparently it actually made Obama and his supporters nervous. Because in his January 11 radio address, he promised that 90 percent of the jobs he creates or saves will be in the private sector. And interestingly, both the Washington Post and the New York Times put that in the first sentence of their page-one stories on Sunday. This was the first sentence in the lead story in the Sunday Post:

Facing increased skepticism from both parties about the details of his economic stimulus proposal, President-elect Barack Obama and his team yesterday laid out new claims regarding the $775 billion package, saying that 90 percent of the jobs produced would be in the private sector, including hundreds of thousands in construction and manufacturing.

Well, it's good to know that the Obama team is now thinking about -- or at least wants us to think they're thinking about -- creating private-sector jobs rather than just hiring more bureaucrats. Of course, we still have the problem that huge government spending programs won't actually create jobs.

The Washington Post reports:

Robert Rubin, a key figure in the U.S. financial boom as Treasury secretary and then as a senior adviser at Citigroup, announced his retirement from the troubled New York bank yesterday in the latest sign that Citigroup wants to break from its recent past. Rubin joined Citigroup in 1999, soon after the company emerged as a financial services giant. He has since earned more than $115 million as Citigroup has suffered through setbacks and missteps that culminated in a November bailout by the federal government…. Citigroup, the long-time champion of free markets and deregulation, is increasingly dependent on the federal government, which has invested more than $50 billion to help it weather the economic crisis.

After we've invested $50 billion in the company, seems like we ought to call it Taxpayergroup. It's not really a private company more, though private parties like Rubin may still profit handsomely from it.

NPR reports on the Illinois legislative debate about impeaching Gov. Rod Blagojevich:

Their case for impeachment goes beyond criminal allegations. They say he abused the power of his office: bypassing the Legislature to create new programs he couldn't pay for; circumventing hiring laws to give jobs to political allies; and misappropriating taxpayer funds. "He has snubbed his nose at that oath of office and, therefore, snubbed his nose at the people and the constitution," said Republican Rep. Mike Bost.

It's a good thing for presidents that members of Congress don't apply such standards in Washington.

A headline on WashingtonPost.com:

Obama Bets Big on Big Government

The trouble is, he's betting our money.