'Populist' Obama pushes corporatist policies

Reuters

President Barack Obama delivers his State of the Union speech on Capitol Hill in Washington January 28, 2014.

Article Highlights

  • Obama and his party are showering corporate welfare on Boeing, Aetna, and possibly Warren Buffett.

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  • The Dems’ populist posturing is mostly a cynical election-year play to distract from the corporatism that defines Obamanomics.

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  • Democrats want to spend $6.4 billion extending emergency unemployment insurance.

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Democrats this week are trying to claim the populist ground for the 2014 elections, with President Obama's State of the Union Address as the centerpiece of this effort.

Meanwhile, Obama and his party are showering corporate welfare on the likes of Boeing, Aetna, and possibly billionaire Obama fundraiser Warren Buffett.

The Democrats’ populist posturing is mostly a cynical election-year play to distract from the corporatism that defines Obamanomics.

In a State of the Union preview in the Washington Post, Democratic Congressional Campaign Committee Chairman Steve Israel was quoted as saying, “This campaign is going to be about who's on your side. On that issue, the contrast between Democrats and Republicans in Congress could not be clearer.”

Chuck Schumer, long the top fundraiser and strategist for Senate Democrats, laid out the same populist 2014 strategy in a Jan. 24 speech in Washington. This populist message of fighting for the middle class runs through Obama's State of the Union Address - but it's not hard to see how shallow this rhetoric is.

On Tuesday morning, before Capitol Hill began to overflow with congressmen and reporters, Obama’s export chief was on Capitol Hill touting his agency’s record subsidies for Boeing and other major manufacturers.

Fred Hochberg, chairman and president of the federal Export-Import Bank of the United States, testified before the Senate Banking Committee in favor of re-authorizing his agency, which subsidizes exports by extending taxpayer-backed loans and loan guarantees to foreign buyers. Every year under Obama, Ex-Im has raised subsidies to new highs — $27 billion last year. Out of $14.7 billion in long-term loan guarantees in fiscal year 2012, $12.2 billion subsidized Boeing sales.

But get this: Non-Boeing Ex-Im loan guarantees were actually lower in fiscal 2012 than they were in Bush's last year — $2.54 billion last year compared with $2.55 billion in fiscal 2008.

You can see why Obama, in the 2008 election, called Ex-Im “little more than a fund for corporate welfare.” Of course, that was before the Boeing money helped elect Obama.

In other less-than-populist news, Obama’s billionaire fundraiser and advisor Warren Buffett may get a federal grant of immortality – or at least his finance firm, Berkshire Hathaway, might.

Bloomberg News reported that the Financial Stability Oversight Council - created by the Dodd-Frank financial regulation bill - is considering dubbing Berkshire Hathaway a “Systemically Important Financial Institution.” This designation would bring some added oversight, but it would also, in effect, protect Berkshire from failure by declaring it too big to fail.

Meanwhile, Obama's party is furiously fighting off Republican efforts to block a bailout of the health insurers who are finding Obamacare's exchanges to be less of a gold mine than many had expected.

Obamacare's exchanges include billions in insurance subsidies, and the law forces employers and individuals to buy health insurance. But the jury-rigged exchanges seem to be producing an older (and thus presumably sicker) mix of customers than Obama had promised the insurers. As a result, an Obamacare provision called “Risk Corridors,” which were supposed to cost taxpayers nothing in 2014, will end up bailing out insurers at taxpayers' expense.

Sen. Marco Rubio has proposed a bill to stop this bailout, and Democrats have responded by furiously denying that it's a bailout - because the Democrats are the populists, remember, and populists don't do bailouts.

Finally, in his State of the Union, Obama promised to cut corporate tax rates while closing loopholes. This is good news for U.S. corporations, but it leaves small business in the cold. Most small- and medium-sized businesses don’t pay corporate taxes—the owners pay the taxes through the individual tax code. Obama, of course, ensured higher tax hikes on small businesses by demanding that Bush’s upper-income tax cuts expire.

Amid these gifts to Boeing, Aetna, and Warren Buffett, Democrats will talk populist and try to hike the minimum wage and force tough votes on extending emergency unemployment insurance.

Democrats want to spend $6.4 billion extending emergency unemployment insurance. And, of course, minimum-wage hikes are technically free for the government, as the cost falls on small businesses.

This is a pittance to pay for some populist cover that Democrats hope will distract from the much larger sums they are funneling to corporate America.

Timothy P. Carney, The Washington Examiner's senior political columnist, can be contacted at tcarney@washingtonexaminer.com. His column appears Sunday and Wednesday on washingtonexaminer.com.

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About the Author

 

Timothy P.
Carney
  • Timothy P. Carney helps direct AEI’s Culture of Competition Project, which examines barriers to competition in all areas of American life, from the economy to the world of ideas. Carney has over a decade of experience as a journalist covering the intersection of politics and economics. His work at AEI focuses on how to reinvigorate a competitive culture in America in which all can reap the benefits of a fair economy.


     


    Follow Timothy Carney on Twitter.

  • Email: timothy.carney@aei.org

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