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:
* = 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.
The Democratic trifecta is not going to produce major changes in the size of the social safety net in the United States:
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.
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.
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.
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%
2007: 21.0% (last Republican trifecta budget)
2009: 23.8% (last Bush budget)
2010: 24.7% (first Obama budget)
2011: 24.3% (next year's budget)
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.
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.