January 21, 2009
The Obama Presidency: Here Comes Socialism
By Dick Morris
2009-2010 will rank with 1913-14, 1933-36, 1964-65 and 1981-82 as years that
will permanently change our government, politics and lives. Just as the
stars were aligned for Wilson, Roosevelt, Johnson and Reagan, they are
aligned for Obama. Simply put, we enter his administration as free-
enterprise, market-dominated, laissez-faire America. We will shortly
become like Germany, France, the United Kingdom, or Sweden -- a socialist
democracy in which the government dominates the economy,
determines private-sector priorities and offers a vastly expanded range of
services to many more people at much higher taxes.
Obama will accomplish his agenda of "reform" under the rubric of "recovery."
Using the electoral mandate bestowed on a Democratic
Congress by restless voters and the economic power given his
administration by terrified Americans, he will change our country
fundamentally in the name of lifting the depression. His stimulus packages
won't do much to shorten the downturn -- although they will make
it less painful -- but they will do a great deal to change our nation.
In implementing his agenda, Barack Obama will emulate the example of Franklin
D. Roosevelt. (Not the liberal mythology of the New Deal, but the
actuality of what it accomplished.) When FDR took office, he was
enormously successful in averting a total collapse of the banking system
and the economy. But his New Deal measures only succeeded in
lowering the unemployment rate from 23 percent in 1933, when he took
office, to 13 percent in the summer of 1937. It never went lower. And his
policies of over-regulation generated such business uncertainty that
they triggered a second-term recession. Unemployment in 1938 rose to 17
percent and, in 1940, on the verge of the war-driven recovery, stood at
15 percent. (These data and the real story of Hoover's and Roosevelt's
missteps, uncolored by ideology, are available in The
Forgotten Man by Amity Shlaes, copyright 2007.)
But in the name of a largely unsuccessful effort to end the Depression,
Roosevelt passed crucial and permanent reforms that have dominated our lives
ever since, including Social Security, the creation of the
Securities and Exchange Commission, unionization under the Wagner Act, the
federal minimum wage and a host of other fundamental changes.
Obama's record will be similar, although less wise and more destructive. He
will begin by passing every program for which liberals have lusted for
decades, from alternative-energy sources to school renovations,
infrastructure repairs and technology enhancements. These are all good
programs, but they normally would be stretched out for years. But freed of any
constraint on the deficit -- indeed, empowered by a mandate to raise
it as high as possible -- Obama will do them all rather quickly.
But it is not his spending that will transform our political system, it is his
tax and welfare policies. In the name of short-term stimulus, he will
give every American family (who makes less than $200,000) a welfare
check of $1,000 euphemistically called a refundable tax credit.
And he will so sharply cut taxes on the middle class and the poor
that the number of Americans who pay no federal income tax will rise
from the current one-third of all households to more than half. In
the process, he will create a permanent electoral majority that does
not pay taxes, but counts on ever-expanding welfare checks from the
government. The dependency on the dole, formerly limited in pre-
Clinton days to 14 million women and children on Aid to Families with
Dependent Children, will now grow to a clear majority of the American
Will he raise taxes? Why should he? With a congressional mandate to run the
deficit up as high as need be, there is no reason to raise taxes now
and risk aggravating the depression. Instead, Obama will follow the
opposite of the Reagan strategy. Reagan cut taxes and increased the
deficit so that liberals could not increase spending. Obama will raise
spending and increase the deficit so that conservatives cannot cut taxes. And,
when the economy is restored, he will raise taxes with impunity,
since the only people who will have to pay them would be rich Republicans.
In the name of stabilizing the banking system, Obama will nationalize it.
Using Troubled Asset Relief Program funds to write generous checks to needy
financial institutions, his administration will demand preferred
stock in exchange. Preferred stock gets dividends before common
stockholders do. With the massive debt these companies will owe to the
government, they will only be able to afford dividends for preferred
stockholders -- the government, not private investors. So who will buy common
stock? And the government will demand that its bills be paid before
any profits that might materialize are reinvested in the financial
institution, so how will the value of the stocks ever grow?
Devoid of private investors, these institutions will fall ever more under
Obama will begin the process by limiting executive compensation. Then he will
urge restructuring and lowering of home mortgages in danger of
default (as the feds have already done with Citibank).
Then will come guidance on the loans to make and government instructions on
the types of enterprises to favor. God grant that some Blagojevich type
is not in charge of the program, using his power to line his pockets.
The United States will find itself with an economic system
comparable to that of Japan, where the all-powerful bureaucracy at MITI
(Ministry of International Trade and Industry) manages the economy, often
making mistakes like giving mainframe computers priority over the development
But it is the healthcare system that will experience the most dramatic and
traumatic of changes. The current debate between erecting a Medicare-like
governmental single payer or channeling coverage through private insurance
misses the essential point. Without a lot more doctors, nurses, clinics,
equipment and hospital beds, health resources will be strained to the breaking
point. The people and equipment that now serve 250 million
Americans and largely neglect all but the emergency needs of the other 50
million will now have to serve everyone. And, as government imposes
ever more Draconian price controls and income limits on doctors, the supply of
practitioners and equipment will decline as the demand escalates. Price
increases will be out of the question, so the government will impose
healthcare rationing, denying the older and sicker among us the
care they need and even barring them from paying for it themselves. (Rationing
based on income and price will be seen as immoral.)
And Obama will move to change permanently the partisan balance in America. He
will move quickly to legalize all those who have been in America for
five years, albeit illegally, and to smooth their paths to citizenship
and voting. He will weaken border controls in an attempt to
hike the Latino vote as high as he can in order to make red states like
Texas into blue states like California. By the time he is finished, Latinos
and African-Americans will cast a combined 30 percent of the vote.
If they go by top-heavy margins for the Democrats, as they did in
2008, it will assure Democratic domination (until they move up the
economic ladder and become good Republicans).
And he will enact the check-off card system for determining labor union
representation, repealing the secret ballot in union elections. The result
will be to raise the proportion of the labor force in unions up to the high
teens from the current level of about 12 percent.
Finally, he will use the expansive powers of the Federal Communications
Commission to impose "local" control and ownership of radio stations and
to impose the "fairness doctrine" on talk radio. The effect will be to
drive talk radio to the Internet, fundamentally change its economics,
and retard its growth for years hence.
But none of these changes will cure the depression. It will end when the
private sector works through the high debt levels that triggered the
collapse in the first place. And, then, the large stimulus package deficits
will likely lead to rapid inflation, probably necessitating a
second recession to cure it.
So Obama's name will be mud by 2012 and probably by 2010 as well. And the
Republican Party will make big gains and regain much of its lost power.
But it will be too late to reverse the socialism of much of the economy, the
demographic change in the electorate, the rationing of healthcare by
the government, the surge of unionization and the crippling of talk
Morris, a former political adviser to Sen. Trent Lott (R-Miss.) and President
Bill Clinton, is the author of "Outrage." To get all of Dick
Morris’s and Eileen McGann’s columns for free by email, go to