Expect a few, small, but (mostly) worthy changes under the Obama administration

by: Chris Bowers

Tue Dec 01, 2009 at 10:30

Nathan Newman has a worthy post up detailing the many positive achievements of the Obama administration and Democratic Congress to date.  Before President Obama's speech on Afghanistan, and in light of my article yesterdayon progressive indifference to Democratic electoral troubles for 2010, it is certainly worth a read.

My rebuttal to Nathan is that the major accomplishments are temporary, and offer little change to the status-quo over the long-term.  It is true that some large, temporary changes were brought about by the stimulus, jobs bill and bailouts.  However, after 2011, the Obama administration and Democratic Congress (if the latter still exists) will not significantly alter the relative size of the social safety net, or the long-standing private / private balance of control of the commanding heights.  The Democratic trifecta will bring about some change, most of it good, but nowhere near the fundamental shifts many hoped for during the heady, heightened rhetoric of 2008.

To demonstrate this point, first consider the big-picture view of where the United States  compared to the other G7 nations in terms of public-sector social spending according to the most recent data:

Gross public social spending, as percentage of GDP, at market prices, 2005
Country Social Welfare* Education Total
France 29.2% 5.6% 34.8%
Germany 26.7% 4.2% 30.9%
Italy 25.0% 4.3% 29.3%
UK 21.3% 5.0% 26.3%
Japan 18.6% 3.4% 22.0%
Canada 16.5% 4.7% 21.2%
USA 15.9% 4.8% 20.7%
* = Does not include transportation, agricultural investment or energy production. A complete description of what it does include can be found on page 11 of this large PDF

Among large, wealthy democracies, the United States has the smallest social safety net. This is intimately connected to our far greater rates of income inequality (the US has a GINI coefficient of 45, compared to a mean of 32.2 for the other six nations), which itself connects to higher rates of health and education inequality.  Closing that gap between the United States and the rest of the G7 would be a major shift, but it isn't going to happen.

There has been little change in the size of the social safety net in the USA in recent decades.  Here is the change in public sector social welfare spending, as a percentage of GDP, by Presidential administration from 1981-2005 (the most recent year for which OECD data is available):

Reagan I: -0.3%
Reagan II: -0.1%
Bush Sr.: +2.3%
Clinton I: -0.4%
Clinton II: +0.2%
Bush Jr. I: +0.8%

Somewhat surprisingly, the only gains took place under the various Bush administrations.  Both Reagan and Clinton oversaw periods of stagnation in the size of the social safety net.

Rather than a dramatic change, the Obama administration will actually be much more like the Reagan / Clinton stagnation than the Bush expansions of the social safety net (holy crap it feels weird to write that last bit).  In the extended entry, I explain why.

Chris Bowers :: Expect a few, small, but (mostly) worthy changes under the Obama administration
The Democratic trifecta is not going to produce major changes in the size of the social safety net in the United States:

  1. Stimulus, bailout and jobs bill will run their course. By the end of fiscal year 2011, the stimulus, jobs bill and bailout will have all run their course.  None of these bills will structurally alter public social expenditures as a percentage of GDP in 2012 and beyond.

  2. Declining unemployment. Much of the Bush-era expansions of the social safety net were actually expansions in people filing for unemployment benefits.  By the end of fiscal year 2011, at the latest, the unemployment figure will have noticeably improved, thus resulting in a decline in unemployment compensation spending.  For example, from fiscal year 2009 to fiscal year 2013, the pro-teagbagger site, usgovernmentspending.com, projects that decline to be equal to 0.75% of GDP.

  3. Health care expansion.  One long-term structural change in public sector social spending by the Democratic trifecta will be health care legislation.  The House health care bill is projected to expand public-sector outlays for health care by $672 billion over ten years, while the Senate health care bill is projected to increase those same outlays by $356 billion.  Let's split the difference, and say the final bill increases outlays by $514 billion, or 51.4 billion per year, or about 0.3% of GDP.

  4. Spending freeze or 5% non-defense discretionary spending cut still looms. The Obama Administration is preparing two budget options for next year.  One option is a freeze in non-defense discretionary spending, while the other is a 5% cut.  The 5% cut would amount to about $35 billion, or 0.25% of GDP, mainly (though not entirely) in social spending.  This compares to last year's non-health care, non-defense, discretionary increase of $53 billion in the budget, or 0.4% of GDP.
Add it all up, and there will be no significant change in the relative size of the social safety net under the Obama administration.  Gross public social expenditures will increase by anywhere from 0.5%-0.8%, while the decline in unemployment compensation and coming spending freezes will entirely balance out those gains.

While the OECD does not have data on public sector social spending beyond 2005, usgovernmentspedning.com, whose numbers are very close to the OECD's for previous years, projects the following social spending trends for fiscal years 2005-2013:

Total social welfare + education spending, as a percentage of GDP
2005: 20.9%
2006: 20.9%
2007: 21.0% (last Republican trifecta budget)
2008: 21.7%
2009: 23.8% (last Bush budget)
2010: 24.7% (first Obama budget)
2011: 24.3% (next year's budget)
2012: 23.5%
2013: 23.4% (last budget of Obama's first term)

In short, there will likely not be any increase in the size of the social safety net under President Obama and the Democratic Congress.  There will be a transfer of public money from unemployment compensation to health insurance subsidies, which is a good thing and worth fighting for.  However, there might also be a Social Security commission (the Obama administration is in talks with Kent Conrad), which is worth fighting against. Such a commission would actually reduce the size of the social safety net by about 1.0% over the very long-term (the end of the 21st century) if it results in Congress passing something similar to OMB director Peter Orzag's plan.

There will also be little shift in the control of the commanding heights of the economy.  Federal ownership of large percentages of the financial, housing and auto industries will be as temporary as the stimulus funding.  The one major exception, if it passes into law, would be a public health insurance option.  While nowhere close to single-payer, it would still be a significant shift toward public control of a major industry.

As far as new financial regulations go, well, don't forget that the previous financial deregulations of 1999 were passed into law with overwhelming Democratic support in the House, Senate, and Larry Summers.  So, while I don't pretend to understand the regulatory process very well, I'm not holding my breath for strong reforms.

Overall, we will see little, long-term structural change to the economy under the Obama administration.  If you worked for Obama's election-as pretty much all of us reading this article did--what did you fight for?  Here is a list:

  • Sonia Sotomayor, plus many other non-Supreme Court judicial appointments in the same vein.

  • A far more prudent, though still perhaps inadequate, response to the Great Recession than John McCain's all tax cuts idea.

  • A generational improvement to the health care safety net, even if that will still be far from adequate.

  • Some improvements to worker rights.

  • The FCC making Net Neutrality a rule.

  • A major improvement in America's international image, and a reemergence of multilateral diplomacy.

  • Some good executive branch orders, and stimulus provisions, on climate change and renewable energy. A big land conservation bill, too.  All told, these developments might have turned the corner on national carbon output.
And that's about it.  Its all pretty good, but it is far from a progressive governing majority that would bring the United States up to speed with the rest of the wealthy, large democracies.  

We could have moved significantly closer to that goal without the 60-vote Senate, making the fight to save the filibuster in 2005 about the dumbest move progressives have made in a long time.  And no, the filibuster did not save Social Security.  By the time the Gang of 14 struck their deal, on May 24, 2005, Social Security privatization was already in the toilet in terms of popularity, and hadn't passed a single congressional committee.  It wasn't going anywhere, with or without the filibuster.

We are a long way from big change that will catch the US up to the rest of the OECD.  Not only will it require new electoral thinking and a long-term strategy, but it will also require much greater progressive control over the ideology-producing institutions of our country.

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Doesn't your post assume a stagnant electorate? (4.00 / 2)
If unemployment, for example, stays at near 10 percent for several years as is the prediction from economists, do you think this changes policies significantly regarding the safety net? Remember, we are already complicating a jobs stimulus due to facts on the ground. This is only the first year, and they are forced to change direction.  I happen to think the economic policies we have had for the last 30 years are unsustainable, and, that we are  at the start, rather than end, of feeling a decline in living standards that can not be covered up by personal credit as it has been in the past. I do not forsee this tension going away anytime soon. Thus, I think it is hard to predict what the outcome will be. I see two choices- a right wing populist presidency or the Democrats getting their act together to finally respond to the never ending economic tensions caused by neoliberalism.  

The future is always hard to predict (4.00 / 2)
I certainly grant that the future is always hard to predict.

However, the future of budgetary policy isn't quite as hard as some things, because every budget comes with a projection of budgets five years down the road. And, in those projections, we should expect restrictions (due to the end of the temporary programs like the stimulus), not expansions.

Aside from health care, there just aren't any long-term changes to the social safety net on the legislative horizon. The extensions in unemployment benefits, and the new jobs bill, are short term.

As far as a new policy direction goes, I pretty much see health care and the temporary brought on by unemployment extensions and a jobs bill to be the only major new spending that either side will propose for the social safety net.

That could change, but I doubt it. If none of this works, expect the next Congress and administration to start cutting spending. And that is even if it gets worse, or stays bad over the long-term. The chance for a more progressive President won't come until 2016. The chance for a more progressive Congress, probably not 2012 or 2014. And outside of the Progressive caucus, which won't take power in the next few years, there just isn't a political bloc--at least right now--that is proposing a long-term expansion of the social safety net.

To put it a different way, not only are there no plans for a long-term increase in the social safety net among the people currently in power, there aren't any plans for one among the people most likely to take over, at least in the short-term, in D.C.

[ Parent ]
Too early to tell (0.00 / 0)
Your scenario (or a worse one) is quite possible, but these are unusual times.  One thing I take issue with is assuming Obama himself is static (or even determined).  He may push for more or less progressive policies based on events, electoral calculations, etc., which in turn depend in part on what pressures he comes under, which progressives could have at least some influence over.  While it's hazy, I believe arguments that FDR ended up being more left-wing than he might have been.

[ Parent ]
One nit to pick (4.00 / 1)
Somewhat off-topic, I suppose, but I have one nit to pick about the filibuster:

There is one use of the filibuster I haven't seen you discuss  (though I don't read here regularly): i.e., its use, and potential use, with regard to judicial appointments.

When it comes to legislation, I understand how the filibuster mostly stands in the way of progressive legislation.  But when it comes to judicial appointments, it is equally effective for both conservative and liberals.  

It is? (4.00 / 4)
Democrats blocked three judicial appointments under Bush with the filibuster. That is a paltry record compared to what it has blocked in the last year alone:

--$100 billion in stimulus spending
--The House version of the public option
--The climate change bill

I'll take those three right-wing judges for all of that, any day of the week, and twice on Sundays.

[ Parent ]
But that record says more about Democrats than the filibuster (4.00 / 2)
Democrats may have been shy about using the filibuster, but they had equal power to block nominations.  

My point is that, while the filibuster may be inherently anti-progressive when it comes to legislation, it is not inherently anti-progressive when it comes to judicial nominations.  

And by the way, a couple of terrible Supreme Court justices can do a helluva lot of damage.

[ Parent ]
Static discussions are deceptive (0.00 / 0)
I'm not sure how to take old OECD statistics that precede incorporating stimulus dollars and projections afterwards as strong arguments.   It is true that stimulus dollars could be a temporary blip but it's just as possible they create momentum to extend them.

The unemployment expansions in the stimulus have already been extended once and other areas like health care subsidies could easily be adopted as permanent program over time, given the precedent.  Projected future spending is always a guess.

Budget fights are budget fights that continue year to year and even entitlements have their ebbs and flows.  Having raised expectations on how we deal with a social emergency, it gives political ammunition to expand the social safety net on an ongoing basis.  

But the list I gave included a number of non-budgetary victories as well, from CAFE gas mileage standards to pay equity laws, so it's worth adding those in as well to the standards adopted-- and the stimulus had many new regulatory changes embedded in them as well.

Maybe worse than it seems (4.00 / 2)
At least health care spending acts to exaggerate U.S. welfare spending relative to other rich countries, as it's so wasteful.  For example, I believe the U.S. government actually spends more per capita on health care than Canada's, but Canada gets way more bang for the buck because its system keeps costs so much lower.  Thus, for example, Canada seems barely ahead of the U.S. on social spending, while my impression is its really notably better (although hardly the paradise some U.S. progressives seem to think).

There may be things that push it in the other direction that I'm not thinking of, though.

Articulating a vision is important (4.00 / 2)
As some commenters have noted, and more are apt to note, there is a potential for some of the small changes so far to snowball into larger and larger changes. That, as far as I can tell, is the only possible way to excuse Obama's strategy so far: that he believes in incrementalism and truly thinks that what he's been doing will make further change easier in the long run. All other interpretations of Obama's presidency so far imply that he's a conservative who acts on nostalgia for the comfort of the 1980s.

The problem with the incrementalism excuse is that there's nobody with a real bully pulpit articulating any sort of long-term vision or ethical ideal for the progressive future that is supposedly the goal of the incremental changes.

Health insurance reform was argued based on long-term budgetary constraints - not with any appeal to the moral imperative to keep people from dying for lack of insurance (although SCHIP is an exception to that, the moral argument really predates Obama).

Interventions in the economy have all been premised on preventing collapse of the global economy, not on any moral imperative to keep people working so they can keep food on the table and a roof over their heads. That jobs are a lagging indicator is probably viewed as a feature - it allows people to exercise the personal responsibility that Obama has always touted.

The best place to find any sort of moral vision in Obama's presidency is in foreign policy, where the moral vision can perhaps best be expressed as "improve America's international image and return to multilateral diplomacy in order to finish what Bush started." Sure, Obama went to Dover one night (as hardly less of a photo op than Bush used in New Orleans), but he has yet to really acknowledge that war is evil, that it is ruining the lives of tens of thousands of US soldiers and millions of foreign civilians, and that it is imposing a financial burden on the US far in excess of any domestic program that has been argued as a budgetary problem. I'm almost surprised that nobody in the administration has yet tried to justify the Afghanistan surge because reducing government spending on war right now would be bad for the economy. (Health insurance reform has to be deficit neutral, but the fragile state of the economy is a good excuse not to impose a war tax to pay for Afghanistan.)

Obama's vision has every indication of being exactly as progressive as Reagan's. I suppose we should be thankful that at least his imagery is progressive, rather than the reactionary imagery Reagan used. And we should certainly be thankful that Obama seems truly to believe in competent government - if nothing else because it provides tasteful photo ops like Dover instead of the tasteless New Orleans debacle.

Any snowballing of progressive change will happen in spite of the Obama administration digging in against real change. Change we can believe in means change that is inevitable - not change we actually need but that might be too hard to accomplish so it might not happen so we can't really believe in it very much.

tweedledeedumb (0.00 / 0)
But everyone knows the Democratic Party is the stalwart champion of working folks while the Republicans are the jackels bent only on propping up the interests of the rich on Wall Street.

Indeed, hasn't Obama demonstrated this yet again by putting the bankers on a short leash while expanding government programs to greatly enhance the prospects for those on Main Street?

This is just common knowledge. After all, that's why the multitudes voted in the Democrats in 2006 and Obama in 2008. They know who has their interests at heart.

We don't need charts and statistics for that.

Do we?

This is not inspiring (4.00 / 1)
Not only will it require new electoral thinking and a long-term strategy

Calling for new thinking is actually quite old, what would be new would be actually doing some new thinking.  Otherwise, you become a disciple of Matt Groening, who put it in Life in Hell, "Keep your expectations tiny and you won't be so whiny!"

I've put out some new thinking in my comment:


Initial responses are along the lines of, how can we do that and still have credible candidates who can actually be elected?  Fascinating how pervasive is this mind-frame, when my whole point was a direct challenge to that very approach.  A full-court primary press would impact at the national level, regardless of whether it would win any seats.  It would be a step in building an uncompromising progressive infrastructure.

I was looking at Firedoglake yesterday.  It was noted that last summer they were calling for the defeat of any healthcare bill that didn't include a ROBUST public option.  Now Jane Hamsher is peddling a bill that has ANY public option.  How did that happen?  Over and over.  Progressives call for the Democrats to do something bold that will inspire the base.  But they won't.  You know they won't.  So why keep repeating the litany?

What I do like is that you give a cold assessment of what we can expect in the next few years, with one problem.  You assume that unemployment will go down significantly.  But if the current crisis is structural and Obama's Wall Street coddling make it worse, then the economic prospects are bleek indeed.  Why not work to intersect that moment, rather than saying "whoops" down the road?

It may have been easy to sneer at my approach a year ago, just as we sneer at them in NY-23.  But they were successful in building their force.  That they don't give a damn whether the Republicans lost the seat is their strength.

At this point, I'm the practical one.  You're the one with something to prove.

Full Court Press!  http://www.openleft.com/showDi...

Desire to be on the winning side (0.00 / 0)
even if the win is largely, or partly, illusionary.

I was looking at Firedoglake yesterday.  It was noted that last summer they were calling for the defeat of any healthcare bill that didn't include a ROBUST public option.  Now Jane Hamsher is peddling a bill that has ANY public option.  How did that happen?

"It sounds wrong...
     ...but its right."

[ Parent ]
heh (0.00 / 0)
"the previous financial deregulations of 1999 were passed into law with overwhelming Democratic support in the House, Senate, and Larry Summers"

The man contains a full legislative deliberative body within himself? That's mighty impressive.

Forget about the House, how many seats are the Republicans going to pick up in 2010 in Larry Summers?

Another similarity to Reagan (0.00 / 0)
The dominance of military spending over domestic programs will lead to either a reduction of spending on social programs at the expense of military spending, or a larger deficit because no one will make the hard choice of raising taxes.

The difference is in what the military will spend the money on, that's true. But the calculations are the same. But we already knew/know that the Democrats and Obama are not agents of major change, so don't expect them to redistribute the wealth away from the military.

"It sounds wrong...
     ...but its right."

your statistics may be biased (4.00 / 1)
I can't help but wonder if the "increases" in social spending percentages have more to do with the lack of growth of GDP.  

New Jersey politics at Blue Jersey.

also (0.00 / 0)
I think criticizing Obama on the basis of a projection which presumably assumes he does nothing that is not already existing law is bogus.

New Jersey politics at Blue Jersey.

[ Parent ]
multilateral diplomacy (0.00 / 0)
In the grand scheme of things, the return of multilateral diplomacy is a huge, huge deal. Its more important than almost any other issue, except global warming and possibly the stabilization of the U.S. economy, because it has truly global consequences and impacts vast numbers of people.

The return of sane diplomacy itself represents a tremendous progressive victory. We shouldn't be selling ourselves short here -- based on this issue alone, every single person who helped get Obama elected made the world a substantially better place.  

A holding action (0.00 / 0)
buying us time

to change the culture.

(is this a haiku?)

You're being a little too pessimistic in terms of budget increases (0.00 / 0)
You pooh-pooh Obama's 2010 budget as only increasing social spending by 1.2% of GDP.  Sure, if you measure it by GDP percentage it sounds small, but what if you measured it instead by absolute dollars, or in comparison to previous budgets, or by the number of people it helps?  They may be substantive gains.

Plus, given the rightward lean of our politics in general I'd be happy with any positive number.  I can't keep my expectations very high.

Now the impending budget freezes/cuts are very bad, no doubts there.


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