Tipping the Scales Against Washington

Several hours into last month’s marathon health care summit, President Obama became exasperated. Republican lawmakers Rep. Paul Ryan and Sen. Jon Kyl had plainly laid out their party’s objections to his massive legislation by emphasizing a major philosophical point of departure between the two parties. Democrats place a great deal of faith in the effectiveness and wisdom of the federal government in handling complex social and fiscal issues, they said, whereas Republicans view centralized planning and onerous regulation with a jaundiced and skeptical eye. This virtuosic issue-framing wouldn’t do, Obama concluded: “Any time the question is phrased as, ‘Does Washington know better?’ I think we’re, kind of, tipping the scales a little bit there–since we all know that everybody is angry at Washington right now,” he griped.

Indeed. Ryan and Kyl were stating the obvious: The American people don’t trust big government. Reinforcing those insecurities and applying them to the health care debate was precisely the point of raising the issue, and the president knew it. In fairness, negative perceptions of government bureaucracy certainly pre-date the Obama administration and the current “reform” battle. Cracks about the DMV’s inefficiencies and the Post Office’s red ink have long been political punch lines. (Oddly, Obama once unfavorably cited the Post Office while advocating increased federal involvement in health care). Those warmed-over bromides notwithstanding, much of today’s scorn for big government can be laid at the feet of policies proposed and instituted by President Obama and his party. Americans’ skepticism toward government intervention has grown more acute after a series of recent high-profile federal flops.

“Making Home Affordable” was the federal program introduced in February 2009 that touched-off Rick Santelli’s infamous Tea Party-catalyzing rant. It was a $75 Billion mortgage program devised to protect homeowners from foreclosure. Nobody relished the thought of fellow citizens being forced from their homes, but critics of the plan argued it would reinforce foolish bank lending practices, reward individuals for living far beyond their means, and punish responsible taxpayers with current mortgage payments. Epitomizing the program’s backwardness was the case of bus driver Minta Garcia. According to CNN, Garcia had managed to “buy” an $800,000 home that her family couldn’t remotely afford. Inevitably, she soon fell hopelessly behind on her payments. Thanks to Obama’s tax-funded munificence and empathy, she and others like her could qualify for personalized government bailouts.

These reprieves were short-lived. A January, 2010 New York Times report entitled, “US Loan Effort Is Seen As Adding to Housing Woes” painstakingly outlines how Obama’s mortgage plan actually accelerated the crisis. “Making Home Affordable,” the article explains, raised false hopes, leading struggling families to throw scarce money after bad, and merely delayed a “wrenching yet cleansing” market correction. “Desperate homeowners have sent payments to banks in often-futile efforts to keep their homes, which some see as wasting dollars they could have saved in preparation for moving to cheaper rental residences,” the piece concludes. “Some borrowers have seen their credit tarnished while falsely assuming that loan modifications involved no negative reports to credit agencies.” Oops.

The same month that President Obama rolled out his mortgage plan, he also signed his so-called “stimulus” act in to law. Team Obama overcame near-lockstep Republican opposition and convinced a majority of Americans the bill was both necessary and would prove effective. Among the promises offered in pitching the legislation was a pledge of unprecedented transparency in the process of dispersing the $800 Billion it would require. Also central to Obama’s sales pitch was an oft-repeated assurance: With the stimulus in effect, America’s rising unemployment rate would be arrested at 8 percent. Without it, unemployment could reach as high as 9 percent, the White House warned.

On both fronts, the “stimulus” has been a failure on its own terms. Millions of stimulus dollars have been doled out to phantom (ie, non-existent) Congressional districts across the country. Buckets of cash have been dispensed to recipients who were insufficiently vetted as qualified or eligible for the funds. Obama’s unemployment vow has also been exposed as fantasy. After passage of the recovery act, unemployment didn’t stop at 8 percent. It quickly rocketed past the projected worst-case scenario of 9 percent and currently floats in the vicinity of 10 percent. Coupled with discouraged job-seekers who no longer file for unemployment and the chronically under-employed, the so-called “real” national unemployment rate exceeds 16 percent. Public support for the program has cratered, with many Americans demanding that its remaining $500B be paid back. That will not happen. In short, the president’s most conspicuous early foray into big government intervention has become an unpopular and ineffective endeavor at best, a scandalously wasteful and dishonest slush fund at worst.

Administration officials may contend that quickly and efficiently spending nearly a trillion dollars in the midst of an economic crisis is an indescribably difficult task. It would be unfair, they’d say, to judge the efficacy of all federal interventions based on the stimulus (while, of course, insisting that it has been a great success). Fair enough. Let’s examine a comparatively miniscule, targeted program: Cash for clunkers. This $1 Billion program was designed to jumpstart US auto sales last summer while simultaneously protecting the environment by forcing fuel-inefficient vehicles off the roads. Terrific. Yet despite its relatively small scope and mission, this federal program–surprise!–encountered a number of unpleasant and unanticipated snags.

First, funds dried up in less than a week, shocking everyone in Washington, who apparently didn’t envision that many people jumping at the chance to let Uncle Sam help buy them a brand new car. Incredibly, many Democrats quickly declared the program a “success” because the government had run out of the free money it had promised citizens at a faster clip than expected. Two billion additional dollars were frantically pumped into “clunkers” to keep the program afloat. Its federally-operated website repeatedly crashed. Dealers complained about reams of red tape and reimbursement delays that inflicted paralyzing cash flow problems on their dealerships. Some experts observed that the energy expended to build clunker-replacing cars effectively negated any environmental benefit derived from forcing the older cars out of commission. Others wondered if trading in broken down “clunkers” for new, street-ready cars would likely result in more driving and thus more CO2 emissions. Still others angrily denounced the wastefulness of destroying every single element of the clunkers’ motors–some of which were perfectly salvageable. Too bad: The hastily-written law mandated irreversible motor destruction. Economically, the program led to a flurry of car sales in August, but proved to be little more than an expensive flash in the pan: Sales in September flat-lined to pre-“Clunkers” levels.

All of these failures share two elements in common. First, they were each proposed and enacted with the best of intentions: Helping struggling families keep their homes. Creating jobs and staving off rising unemployment. Boosting domestic auto sales. Preserving the environment. Who could possibly oppose any of these goals? Intentions, however, do not overshadow results, and the results of these programs have ranged from disappointing to outrageous.

The second commonality among these programs is that they all represent demonstrable failures of centralized, top-down government planning. Despite Washington’s best and brightest crafting policies they hoped would improve society, their solutions ultimately failed to achieve their stated goals, and in some cases inflamed the original problem. Senator Kyl and Representative Ryan are keenly aware of this dynamic, which is why their appeals to citizens’ concerns about Washington-on-steroids was a savvy and effective tactic. Obama’s maladroit attempt to delegitimize their point backfired. Not only did it invite further scrutiny into why Americans are so “angry at Washington right now,” it fueled the emerging narrative that Democrats’ “more Washington!” approach to health care amounts to political and fiscal insanity.