Elections matter. And they matter most when a party on one side of the political and ideological spectrum succeeds a rival on the other side of the spectrum. Any doubt that just such a shift occurred in America in 2008 was dispelled when the Obamas put their fashion stamp on the Bushes’ Texas-style White House. Barack Obama promised at his first inauguration to transform America to a society more in line with liberal—I believe “progressive” is the word of choice these days—policies, and made huge progress towards that objective during his first term, converting the health care system to a government-run operation, reviving and applying Keynesian anti-recession nostrums, and expanding the welfare state.
Always, however, keeping in mind the need to seek reelection in a country more or less evenly divided between left and right. That moderation-inducing restraint now behind him, Obama has made clear where he plans to take the nation’s economy. And by forcing the Republican opposition to back down in the battle of the fiscal cliff, and again in the battle over the debt ceiling, the president has demonstrated, at least to his own satisfaction and that of his supporters, that he is astride the political field, if not quite like a colossus, at least like a man who can finish the job of transforming the economy into one more to his liking.
Those who have been complaining about uncertainty, and its negative effects on economic growth, need complain no more. You don’t have to read between the lines of the president’s second inaugural address, or consult your favorite pundit, to know where we are headed: you need only to have listened to or read the address itself.
Times have changed so that our “founding principles” must be applied to meet “new challenges.” That means a greater reliance on “collective action”—government—to make certain that “a shrinking few” do not claim a disproportionate share of the nation’s wealth at the expense of a struggling middle class and the poor. What the president’s inaugural address lacked in the grandeur of those of many of his predecessors it amply made up for with candor.
Top of the agenda is reducing income and wealth inequality by raising taxes on upper income families by eliminating some of the deductions from which they benefit, and raising their tax rates. Obama believes what economists of the Left have been telling him, that inequality is not only in some sense unfair, but that it also stifles economic growth by denying middle class and poor families incomes they would spend and the richer would not. Never mind whether this makes sense: it represents a position increasingly trumpeted by respected academic and activist economists, and attractive in an era of frozen middle-class incomes.
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