Obama's Stealth Socialism

Socialism" has lost its sting, twenty years after The End of History and the fall of the Berlin Wall. The Millennials who are supposedly so enraptured with Obama have no memory of the inordinate fear of communism and its softer cousin socialism that gripped the world for 140 years, since failed revolutions swept Europe n 1848. Hence they would have a hard time appreciating why Joe the Plumber and many others are growing concerned over the radical associations of Obama, and why Obama tried so vigorously to "Palinize" a private citizen who dared raise the "S" word. Let me help by highlighting four elements of Obama's plans that take us way down The Road to Serfdom:

1. Health: Obama's plan will lead to nationalized healthcare
2. Pensions: Obama's plan will lead to nationalized retirement
3. Labor: Obama's plan will destroy American competitiveness
4. Taxes: Obama's plan will make a progressive tax system into a new welfare system

1) Health: Obama's health plan looks oh so reasonable until one realizes that it has been tried and failed miserably five times in the US. In every case, it devastated the private health insurance business. Reason: it requires issuance of policies to people at low rates regardless of pre-existing condition, and this causes the young and healthy to opt out, since why pay in for 20 years when you could buy in when a problem emerges with no penalty? This converts insurance into a pay-as-you-go system, and the private insurers bail out. Implication: nationalized health care through stealth.

2) Pensions: The Democrats just floated the idea of removing the tax break for 401(k) plans, and forcing people to pay into a new government pension system - Social Security 2.0. They dangled the carrot of making up the 40% or so loss from the recent market drop, but in return giving only a 3% nominal return rather than the market's long term 7% real return. Effect? Those Millennials retire 40 years from now with not even 2x what they put in, rather than the 4x or more from the private system - even assuming the government can make good on the promise. And that is not even taking into account inflation! The 3% might mean the worker gets less out than they put in! Also, removing the $4.5T from the private pension system means the devastation of that system and a huge hole in the whole investment sector. Implication: creeping nationalization of private retirement and savings.

3) Labor: Obama supports the Employee Free Choice Act which removes the right of private ballots from Union actions. Trade Unions are the backbone of socialism, and they brought England to its knees during the Winter of Discontent before Thatcher reversed course. Obama's plan removes free choice from union members, and subjects them to intimidation. If we look at the English example as a model, the result will be increased strikes, organized strikes, higher wages, and increased featherbedding. The industries in the most trouble today, such as autos, are those which are most unionized. Implication: American business falls further behind in global competitiveness, and the government will have to intervene with trade barriers and subsidies along with central planning to keep the factories running.

4) Taxes and Welfare: The Obama tax plan is mostly a welfare plan. The 'rich' he wants to tax will have higher payroll taxes, not just income; and this breaks the historic link of social security with payments into the system. It turns social security into just another welfare system. The 'middle class' he wants to cut are largely given a dole - $500 an individual or $1000 a family. His tax cut is not a cut - a large percent of recipients (40%) pay no income tax today. This turns the tax system into just another welfare plan. How will he pay for this? Clearly taxing only those above $250k is inadequate, and already his team has lowered that level - first to $200k (Obama), then to $150k (Biden) and now to $120k (Richardson). Obama has changed his tax plan a number of times, and based on the most recent changes, it appears the real number is now in the $84-100K range. Implication: Obama will have to soak the middle class in order to redistribute welfare in the guise of a tax cut to the poor.

These plans are radical, yet disguised as reasonable. The new welfare plan is a "tax cut." The new labor plan is "free choice." The new social security is to "restore the lost savings." The new health plan is said to strengthen "private insurance." Yet each one accomplishes the opposite: welfare not a tax cut; intimidation not union choice; nationalization of savings not restoring savings; and evisceration of prvate insurance not strengthening it.

If there was no other reason to vote against Obama, it is his embracing of Orwellian language to sell pernicious policies. I can think of no other major party candidate in living memory who was this duplicitous.