A Cautionary Election Note

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In The Economic Consequences of the Peace, John Maynard Keynes wrote that the “best way to destroy the Capitalist System” was to “debauch the currency” through “a continuing process of inflation,” one that allowed governments to “confiscate, secretly and unobserved, an important part of the wealth of their citizens.” If inflation is the best way to destroy a free-market economy, Peter Dreier, an advisor to Obama’s 2008 campaign, deserves credit for discovering the second-best way. In his new study of the president, Radical-in-Chief, Stanley Kurtz cites a 1979 essay, “The Case for Transitional Reform,” in which Dreier envisioned a progressive politics that would undermine America’s market economy by “injecting unmanageable strains into the capitalist system, strains that precipitate an economic and/or political crisis.” In Dreier’s prophecy, a “revolution of rising entitlements” and an “expansion of state activity and budgets” would bring about a “fiscal crisis” and lead to a vast expansion of government authority over the economy.

Three decades later, Dreier’s vision of an ever more rapacious public sector inexorably confiscating the wealth of the productive element of the nation is becoming a reality. In “The Case Against the Fiscal Stimulus,” Harvard economist Jeffrey Miron lays bare the unstated purposes that animate Obama’s economic policies. The administration’s “true goals were not just economic stimulus,” Miron argues. “Instead, the Administration wanted to reward its constituencies (unions, environmentalists, public education) and increase the size and scope of government. This tactic is consistent with the Administration’s policies in general. Across the board, it has taken a big government, redistributionist approach, whether regarding housing, unions, health, the auto industry, trade, antitrust, or financial regulation.”

Yet even as voters said “No we won’t” on Tuesday, it is not clear that the Republicans they tapped to deliver their rebuke will have enough power to resist Obama’s efforts to enlarge the public sector. {snip}

{snip} Liberal demographers like Ruy Teixeira of the Center for American Progress believe that the changing complexion of the electorate will make the political environment in 2012 considerably tougher for Republicans. Teixeira argues that as the number of non-Hispanic white voters falls, relative to the overall population, growing nonwhite minorities will continue to favor the Democrats. Liberal demographers might not be right when they argue that minority voters–particularly Latinos–are likely to prove decisive in the next presidential contest, but Republicans would be foolish to underestimate the challenges that confront them.

President Obama, for his part, is gambling that the liberal demographers are right. As early as July, the White House began to turn away from the rhetoric of postracial unity that Obama used in the 2008 campaign and to experiment with a rhetoric of racial and ethnic revanchism. The “Republicans, if you do the math,” a Democratic insider told the Washington Post’s Michael D. Shear, “cannot be successful as a national party if they continue to alienate Latinos.” In June, when a group of Latino activists visited the president in the White House, top aide Valerie Jarrett “made one thing clear to them: The White House plans to use the immigration debate to punish the GOP and aggressively seek the Latino vote in 2012.” The president was clearly following the new electoral counsel of discipline and punish in his now notorious interview on Unavision, in which he called on Latinos “to punish our enemies” and “reward our friends.” {snip}

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