This post is part 2 in a 3 part series coinciding with the end of the Presidency of Barack Obama on January 20th and covers a variety of domestic policy matters. Obama claims the economic turnaround after the GFC, Obamacare and environmental issues as his signature achievements. This is a more critical look at some highlights of his 8 year term.
Despite the enactment of a near $1 trillion stimulus package in 2009 designed to attempt to lift the US out of the 2008 post GFC recession, it was clear that the stimulus was targeted more at Democrat constituencies such as budget strapped left leaning cities and protecting various unions such as the infamous bailout of General Motors that shafted bondholders to protect United Auto Workers jobs. Obama sheepishly had to admit when the results of the stimulus fell far short of expectations, that there weren’t as many “shovel ready” jobs as he thought. In fact, Prof Alan Blinder at Princeton and Moody’s economist Mark Zandi calculated in 2012 that the American Recovery and Reinvestment Act or ARRA (as the stimulus was called) actually cost more than the economic growth it generated for a net loss of $51 billion!
The failure of the stimulus and of Obama’s economic policies in general have resulted in the worse recovery from a recession since the Great Depression. This chart below, produced by the Minneapolis Federal Reserve, tracks all post WW2 recoveries in terms of GDP growth over time and the Obama recovery (2007 in red) has been the longest and slowest recovery from any of the 12 post war recessions.
Obama’s 8 years in office have resulted in the following negative economic statistics:
- Record low participation rate in the labour market. In 2008 this figure was just over 66% but has dropped sharply to almost 62%, the lowest level since the mid 70’s with the US ranking now only 35th in the world. By comparison, New Zealand’s labour participation rate is a healthy 70%. This figure is alarming and must be set against the much-trumpeted reduction in the US unemployment rate. The official unemployment figure shows a healthy drop from 9.4% to 4.9% but it does not count the approximately 16 million people who have dropped out of the American workforce and are no longer actively seeking work. They are no longer covered in the unemployment figures. THIS problem shows up in the participation rate and is a clear indicator of the poor recovery.
- Stagnant income growth. Household Median income dropped dramatically from a 2006 to 2016 decade high of $70,000 and it has taken over a decade to bounce back to this same level meaning that US incomes have been essentially flat for 10 years. This is the first time this has happened since the Great Depression and further evidence of the painfully slow recovery from the GFC.
- Large increase food stamp use. Food stamps are a Federal Government household consumer assistance programme for the poor. In 2008 there were just over 32 million people on food stamps (they now use pre-loaded debit cards not stamps) and by September of 2016 this number had climbed alarmingly to over 43 million (in November of 2012 they reached a peak of almost 48 million).
Obamacare (or the Affordable Care Act as it is more formally known) is President Obama’s signature piece of legislation and touted by him and his supporters as one of his greatest domestic policy achievements. Expanding the availability and affordability of healthcare has been the dream of several Presidents given the US’s unique, complex and costly healthcare system. Unfortunately, Obama came to the task with plenty of liberal ideological baggage and he only sought big top-down solutions to the problems. Rather than look at raft of simpler and less complex reforms that would free up the clunky insurance based system, he proposed a complex jam down that added new layers of cost and complexity. When it was apparent that he was uninterested in any market based reforms as proposed by Republicans, he opted for the big government driven overhaul that was replete with mandates and taxes. Obama made it clear he was going to pass this reform come hell or high water and so it was that, unique in US legislative history in the case of landmark groundbreaking legislation, he did so without a single vote from the opposing party.
So unpopular was Obamacare from the outset and the way Obama and the Democrats chose to implement it, that it led to the unprecedented loss of the normally very safely Democratic Massachusetts senate seat vacated by the death of liberal icon Ted Kennedy. Scott Brown led a people’ revolt based around denying Obama a filibuster proof majority in the Senate to stop Obamacare. Down to 59 seats after the January 2010 MA special (like a by) election, Obama was forced to engage in legislative sleight of hand via what is called reconciliation. Only budget bills can pass the Senate by simple majority, all others are subject to the filibuster which the GOP senators were more than prepared to use. Senate Democrats created a shell budget bill and emptied it out and inserted the Obamacare legislation wording inside the shell and passed that new ‘budget’ bill by simple majority, parliamentary chicanery that poured fuel on the fire of an already unpopular law.
Why has Obamacare been so unpopular when its goals (to extend healthcare to the uninsured) were so altruistic? There are 4 main factors that led to its widespread popularity:
1 – Obama promised that premiums would stabilize then go down due to economies of scale. In fact, they went up, in some states massively. Some families have seen their premiums more than double over the last 5 years. This occurred because the whole edifice was premised on forcing the young and healthy to buy insurance when normally they opt out because their medical needs are infrequent and cheap enough to cover out-of-pocket. Many refused to buy costly polices despite possible fines thus forcing insurers to try and recover the costs of the unhealthy people they were now forced to cover and that could only be done by increasing premiums. This problem has escalated over time not improved so the year-on-year premium increases have gotten worse not better.
2 – Obama promised repeatedly that if you liked your doctor you could keep your doctor. In reality, many of the plans offered through the exchanges offered only approved doctors on proscribed networks forcing many to give up existing doctors; sometimes specialists that were long sought after due to them treating unique even life threatening conditions. Many were forced by financial necessity onto networks with so few available doctors that long waiting lists to be seen became a feature for many forced to find a new GP on their new network.
3 – Obama promised if you like your plan you can keep your plan. In reality, employers were forced by compulsory mandates to offer comprehensive mandated coverage for all employees in a one-size-fits-all mentality meaning people were paying for coverage of things they never needed (e.g. if you don’t smoke or drink, you don’t need cover for drug/alcohol treatment or if you are a couple over 55, you don’t need cover for obstetrics). This meant people’s policies often were changed as employers and the self-employed looked for more affordable options. This usually meant a big increase in deductibles and a much higher out of pocket contribution as well as lower aggregate coverage caps all coupled with higher premiums. Many millions of people ended up with inferior and yet more costly cover.
4 – Problems with the exchanges. Creating the Obamacare insurance exchanges (online marketplaces to compare insurance policies on offer) became a massively costly exercise at the Federal level and for several states that tried to set up state exchanges. The Federal exchange cost hundreds of millions of dollars and yet was virtually inoperative on the day of launch and it took months before it was remotely functional. Several states poured tens of millions into state exchanges that were never functional and had to be abandoned in favour of the using a state portal on the federal exchange (as many smaller states opted for). Furthermore, as the fiscal instability and unaffordability of the whole Obamacare system got worse and worse for the insurance companies, more and more pulled out of the exchanges leaving many in counties across the US with only one costly insurance option available in the exchange. Right now, one third of Americans live in counties with only one insurance option on the exchange.
Federal government subsidies are available for lower income earners to take the sting out of the premium increases but for the middle class and self-employed, health insurance for many has become prohibitively expensive whilst the good coverage they had enjoyed for decades was now curtailed and limited. This was one of the hidden reasons why Clinton lost the election because she was not committed to anything more than tinkering round the edges of what had become a very unpopular policy and the 2017 Obamacare policy renewals with hefty premium increases arrived about 10 days before the November 8th election. Obama did help 20 million more people get coverage but did it on the backs of the remaining 270 million (who had coverage) who now pay a more for an inferior product. Messing with healthcare has come at a huge cost to the Democrats who can place some of the blame for their losses at the House, Senate and State level fairly and squarely on the shoulders of Obamacare.
IRS targeting of conservatives
Early in Obama’s second term it was revealed that the Internal Revenue Service (the IRS – the US equivalent of the IRD) had deliberately targeted right wing advocacy groups for special attention when applications were made for charitable tax exempt status. Specific provisions of the tax code allow advocacy groups with not-for-profit trading activity to solicit tax free donations under certain conditions. Liberal groups applying were subject to normal scrutiny and receive authorsations within the usual time frame. Conservative groups (specifically those associated with the so-called Tea Party movement) were subject to petty time wasting delays, excessively intrusive questioning, endless requests for additional paperwork and key, high profile conservative groups were subject to random audits. This targeting was done in the latter part of Obama’s first term creating the impression that Democrats were trying to silence conservative opposition in the run up to Obama’s 2012 re-election.
When this illegal activity was uncovered, the IRS maintained at first it was a rogue operation initiated from a regional office only in Ohio. When it panned out to be a head office (and higher) request, the key senior manager at the IRS responsible for administering and driving the policy (Lois Lerner) refused to answer questions put by Congressional investigators by pleading the 5th Amendment (the right to not incriminate one’s self in court), reinforcing conservative views that she has something serious to hide. Congressional investigators subpoenaed her email records and were met with lengthy and elaborate stonewalling with excuses like her hard drive and cell phone emails had been destroyed. It became clear that the Administration was trying to hide the involvement of the White House because it exercised what is called Executive Privilege over almost all communications with the IRS over this matter. Frustrated at the lies and obfuscation by the IRS Commissioner John Koskinan, some Congressional Republicans called for his impeachment. It was a scandal that the MSM were relatively uninterested in covering. Had the Bush White House IRS appointees targeted liberal groups in like manner, it would’ve gotten Watergate level coverage.
Fast and Furious
Fast and Furious was the name given to a programme organized by the head office of the Bureau of Alcohol, Tobacco and Firearms, a division of the Department of Treasury. The aim of the programme was to flush out potential US based suppliers of illegal arms to the Mexican drug cartels. Undercover agents entered registered US arms dealers to make purchases of weapons posing as cartel members and these sales were supposed to be tracked. Various regional managers in the ATF voiced serious objections to the programme as the tracking mechanism were weak and ineffectual. Rather than snap supposedly rogue gun dealers in the US (none were found to have breached firearms sales restrictions), the Administration become responsible for distributing hundreds of high powered pistols and semi-automatic weapons into the hands of the ruthless Mexican cartels. This fueled a fresh orgy of violence that led to the deaths of thousands of innocent bystanders in the increasingly brutal war between the cartels over the drug turf, some of which spilled over the border into US border states. Border Patrol Office Brian Terry and US Immigration and Customs Enforcement agent Jamie Zapata were both identified as being murdered by weapons allowed into cartel hands by Fast and Furious.
The scandal within this scandal was the attempt by the Administration to blame the existence of the failed programme on the Phoenix office of the ATF when in reality, knowledge and approval of the programme went at least as high as the head of the Department of Justice, Attorney General Eric Holder. Holder was proven to have lied to Congress when he testified under oath that he had no knowledge of the programme when evidence was unearthed that he did know. This led to an unprecedented motion of contempt passed by the House of Representatives. While Obama stuck by Holder and did not sack him, the scandal tainted Holder stayed for the remainder of his tenure and he resigned part way into Obama’s second term and was replaced by Loretta Lynch.
VA waiting lists
The Veterans Administration is the only 100% government run health system in the US (apart from those on Indian Reservations) and provides free health care to all US military personnel and their families. Even Medicare (for the elderly) and Medicaid (for the poor) are programmes that involve Federal government subsidies towards private sector health providers. In terms of the level and quality of service the VA provides vets, it has been a weeping sore for some time. In April 2104, it exploded into a full-blown scandal when it transpired that the Phoenix VA Hospital administrators had been leaving vets on lengthy waiting lists for essential medical treatment that then led to the untimely death of 35 vets and then covered up the failure in its systematic reporting on meeting wait list targets all the while pocketing large bonuses for supposedly exceeding the targets. On further examination, it turned out that five more VA hospitals across the country had been indulging in a similar cover up.
In 2014 The Secretary of the VA General Shineski eventually resigned over the scandal but the mid-level managers who perpetrated the fraud were never fired but placed on gardening leave with most eventually reinstated due to the complex, arcane union driven appeals process. Obama appointed Proctor and Gamble CEO Robert McDonald as the new VA Secretary and offered soothing spin about the problems being cleaned up but it appeared that little of substance was done to address the underlying systemic management failures that lay behind the scandal other than to ask Congress for billions more in funding.
Executive Amnesty on Immigration
Democrats in general (and Obama in particular) see illegal immigration as being very much to their political advantage. By allowing illegals in by not properly policing the borders and not catching up and returning illegals caught by law enforcement and supporting a path to citizenship, it means a steady flow of new Democrat voters.
Rising illegal migrant numbers has lead to an increase in violent crime in border states (as some of the Mexican drug war spills over into the US), state education and health budgets are strained by the influx of new children that can’t speak English and people who get sick and go to county emergency rooms. Whole suburbs of cities get taken over by Hispanic migrants and US citizens become the unwitting victims of the random acts of violence (murder and rape) by illegals and their gangs.
Because illegal immigration is mostly unpopular with the majority voting public, attempts at immigration reform flounder in Congress. Democrats universally oppose anything other than no real border controls and a full path to citizenship and elite moderate Republicans are usually weak on border enforcement and support some kind of amnesty and a path to citizenship albeit slower and harsher than what Democrats want. Rank and file voters revolt when these alliances unite in Congress and attempt to reform the system and the issue gets postponed over and over again.
Even with a record House majority and a filibuster proof Senate (2009 – 2010), Obama could not get his permissive reform passed so he decided to cut through the usual legislative pathway and passed a sweeping amnesty by Executive Order bypassing Congress by using his power as the head of the Executive through such things as:
- Ordering ICE (Immigration and Customs Enforcement) to release illegals caught (known as catch and release) and to not cooperate with local state, county and city law enforcement agencies who mostly frequently catch illegals;
- Not enforcing extradition of violent repeat illegal felons meaning they are sometimes released into communities to reoffend again;
- Keeping and even increasing Federal funding for so-called sanctuary cities who instruct their police departments to not enforce any Federal immigration law;
- Not going forward with spending appropriated funds on border protections measures such as extending the double fencing or hiring more Border Patrol agent thus hamstringing interdiction efforts;
- Funding the college education through Federal grants of the so-called Dreamers (children of illegals born in the US).
Such unconstitutional conduct has been stopped at the Federal appeals court level but is indicative of Obama’s disdain for normal lawmaking and seeking to impose an unpopular policy on an unwilling electorate to please the ideological leanings of his own party via the back door.
Decline of race relations
Politicisation of the bureaucracy is a feature of the American political system with over 3,000 political appointees who fill the upper echelons of every US Federal Government agency. Nowhere in the Obama Administration was politicisation taken further than ever before than in the Department of Justice. It proceeded to act on a number of race based issues that skewered dramatically in favour of what is called affirmative action including:
- The refusal of the DOJ to prosecute members of the New Black Panther Party whose members where filmed intimidating voters in predominantly black precincts during the 2008 Presidential Elections. Such blatant acts of intimidation were normally routinely prosecuted.
- Aggressively challenging in State then Federal courts various voter ID laws enacted by mostly Republican State Legislatures in various states across the US. Republicans allege voter fraud in some areas due to lax voter registration and voting procedures and attempt to limit such fraudulent activity by requiring voters prove citizenship eligibility via a photo ID at the time of voting such a driver’s license or passport. Democrats allege that Republicans enact such laws to suppress minority and black voters who are less likely to have either forms of ID (States that enact such laws offer a free no DL photo ID).
- After the race riots in Ferguson, Missouri after the police shooting of Michael Brown (and in several other municipalities where black men were shot by police), the DOJ would engage in aggressive investigations to see whether racist hate crimes had been committed by police. Whilst no DOJ investigation of this type has unearthed anything, it has had a chilling effect on policing with heavily minority precincts now more lightly policed and a greater reluctance to stop anyone for anything other than very serious obvious crimes. The so-called broken windows policy pioneered in New York City that targeted pity criminals was responsible for a large decline in major crimes has been largely stopped by this activity.
The response of radical black advocates was to form the Black Lives Matter movement (generously funded by left wing billionaire George Soros). BLM has aggressively targeted police departments all over the US and this has fueled the rise of targeted random shootings of mostly white police officers. Since Ferguson almost 20 policemen have been shot by radical anti-cop activists in ambush style killings. BLM protests are intrusive and sometimes violent and in key minority dominated cities, has led to riots and lootings. The level of intrusive policing has scaled back leading to an increase in property and violent crime across large cities in the US with heavily black populations the most glaring example being Chicago which has seen a sharp upswing in gun related shootings and killings.
Solydra was a rapidly growing manufacturer of solar panels based in California that became a darling of the new Obama Department of Energy that was heavily focused on alternative energy sources. In 2009, Solyndra was given over $500 million in combined grants and loans and proceeded to build a fancy factory in Fremont, California, one of the most costly and bureaucratic places in the country to open a new factory. By 2011 it had shut its doors and gone bankrupt leaving 1,100 people out of work. Upon investigation, it turned out that the company’s finances were shaky from the start and its business plan very weak but Obama’s highly ideological anti fossil fuel Energy Secretary Steve Chu wanted a showpiece of the Administration’s commitment to green energy and ignored the objections of more savvy business analysts at the Office of Management and Budget and pushed ahead with the loans to create a great green energy photo op for President Obama. The scandal had political overtones with major Obama donor billionaire Jim Kaiser accused of channeling some of the D of E loan back to Democrats via his campaign donations due to his position on the Solyndra board. There were several similar but smaller defaults on loans made to politically favoured green energy companies.
Spying on journalists
In one of the most egregious and naked displays of power in the entire Obama term came when Eric Holder’s Department of Justice ordered agents to track the movements, phone calls and emails of Fox News reporter James Rosen ostensibly because they believed him to be the source of leaks to the North Koreans. Holder initially tried to deny he’d signed off on the surveillance until forced to admit that he did under oath. The reporting of this surveillance was perhaps one of the few times when the Obama Administration came under withering fire from the MSM; many of their reporters decrying the chilling effect such spying would have on free speech and their to get their confidential sources for stories to open up.
The Obama Administration EPA (Environmental Protection Agency) has been one of the most ideologically aggressive in its history. When it was clear that Obama could not get Cap and Trade or a Carbon tax through even the heavily Democratic Congress, he resorted to the enactment of the environmental movement’s aggressive anti-fossil fuel anti-business agenda by executive edict via EPA findings and rulings. The EPA used older legislation such as the Endangered Species Act, Clean Air Act and the Clean Water Act to drive coal mines and coal fired power plants out of business, to restrict oil drilling on Federal land and in the Gulf of Mexico and to punish industry through zealous interpretations of these laws forcing some into costly and sometimes bankrupting litigation. The ultimate irony came when the EPA itself was the cause of a massive chemical spill into the Colorado River that had a devastating effect on local Indian tribes. The EPA were utterly unrepentant and attempted to deny blame all the while prosecuting business aggressively for far less egregious offences. The EPA also displayed contempt at attempts by Congress to scrutinize its efforts and have it follow laws rather than govern by regulatory fiat via aggressive Findings. The EPA Administrator Lisa Jackson was found to have used a series of private email addresses via which she communicated with environmental lobbyists to avoid Congressional scrutiny.
Obama’s intensely ideological stance on environmental issues was most apparent in the way he handled the approval of the Keystone XL Pipeline. Despite strenuous efforts to avoid any environmentally sensitive sites, Obama did the bidding of the various environmental groups by stalling the approval for years with needless ‘reviews’ before finally killing the deal killing with it the tens of thousands of well paying mostly union jobs that would arise from its construction. The irony is the environmental damage from oil shipped by rail (from the huge rise in oil rail car accidents and spillages) could have largely been avoided by transporting the oil via the Keystone pipeline.
Obama has left a very chequered domestic policy legacy. There were serious scandals that were poorly reported by a largely sycophantic press and his signature liberal initiatives have largely collapsed and failed under the predictable burden of their own ideological flaws. Obama’s legacy will be quickly erased by President Trump mostly because very little of what Obama was bipartisan and so lodged in the popular psyche of Americans.