SOTU Thoughts Part II: A Defense That Is Really Offensive

Yuval Levin argues that Obama’s lack of major proposals represents (in part) the “exhaustion of liberalism in our time.” I agree with Levin that Obama’s SOTU was mostly defensive,  but I take that as more scary than anything else. I think Obama is betting that, in the medium-term, the defensive favors greater spending, higher taxation and greater centralized resource distribution by the government.

As entitlements remain unreformed and people do not make adjustments, last minute “reforms” will primarily take the forms of tax increases and government administrative health care spending controls. As Obamacare is implemented, premiums rise, people lose their employer-provided health insurance, and the cost of Obamacare’s subsidies are larger than “expected”, Obama is counting on a movement to single-payer comprehensive health insurance to stick it to the greedy insurance companies who are overcharging the American people. None of this will happen right away, and most of it probably won’t happen during Obama’s term as president, but he is preparing the ground (both substantively and rhetorically), for the government to claim a much larger share of people’s earnings and exercise much closer control over the health care sector. Compared to transformational Progressive dreams, this probably looks like “a defensive game of retrenchment and reaction,” but to Obama it probably looks like winning.

Reihan Salam pointed out that the combination of the Obamacare tax increases and the fiscal cliff deal has already pushed current law above the post-WWII average for federal taxes as a percentage of GDP.  Obama is probably counting on a series of confrontations and crises where, in fits and starts, taxation and government control over health care spending both gradually increase because we can’t “cut our way to prosperity.” Conservatives have to win positive victories to change the trajectory of government policy and do so with a coalition that is in relative demographic decline. Oh, and he is one slip in the shower away from a liberal Supreme Court majority and who-knows-what fresh horrors.

I actually think that the center-right would be undervalued today if it was a stock. Republicans have gotten a lot wrong to get this far down and there is huge upside (and raising taxes is probably going to get old faster than Obama thinks), but I can see why Obama thinks he can win primarily by playing defense.