Obamanomics defined: Big Government in service of Big Business
By: Timothy P. Carney
Examiner Columnist
December 1, 2009
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Editor's note: This week, we will be running excerpts from "Obamanomics: How Barack Obama Is Bankrupting You and Enriching His Wall Street Friends, Corporate Lobbyists, and Union Bosses," the new book by Examiner columnist and lobbying editor Timothy P. Carney, released this week from Regnery Publishing. The following is excerpted from Chapter 1: "Obamanomics 101."
President Barack Obama, if he gets his way, will increase government control over the U.S. economy in ways previously thought impossible. This isn't surprising, but you may be surprised to learn who's benefitting: the biggest and most well-connected businesses.
Just as President George W. Bush, with his bailouts, spending sprees, and new entitlements, abandoned the free market at the behest of Wall Street and drug makers, Barack Obama's vision of bigger government is also the dream of corporate lobbyists.
Obama's healthcare reform, stimulus spending, global warming legislation, and auto industry bailouts are ambitious packages of regulations, taxes, mandates, and spending that benefit Big Business -- what corporation wouldn't welcome more taxpayer-funded subsidies, regulation that crowds out competition, and government mandates that drive more business to them?
There are other big beneficiaries as well: Politicians, who gain more power; and lobbyists, who gain more influence.
The victims are small businesses crushed by regulations and taxes, taxpayers -- especially future taxpayers who will be burdened by the debt financing today's spending sprees -- and consumers, who face higher prices and fewer choices.
What should we call this Big Business-Big Government agenda pursued by President Obama? Although robust corporate-government collusion was hardly invented by the current administration, the U.S. has not seen such a consistent practitioner of corporatism in more than half a century. It's fitting then to name this Big Business-Big Government practice Obamanomics.
Make no mistake -- President Bush's Wall Street bailout was probably America's biggest dose of corporate socialism since World War II. But President Obama has seen Bush's $700 billion and raised him another couple trillion -- and counting.
The Laws of Obamanomics
Underlying Obamanomics are some basic economic facts and political realities. These are the Four Laws of Obamanomics, paired below with some of the lobbying strategies that exploit these laws.
1) During a legislative debate, whichever business has the best lobbyists is most likely to win the most favorable small print. Similarly, once a bill has passed, the business with the best lawyers and lobbyists will best be able to craft the regulations and learn how to game them. A big business, counting on this fact while lobbying for more government spending or control, is employing The Inside Game.
2) Regulation adds to overhead, and higher overhead crowds out smaller competitors and prevents startups from entering the industry. When corporations, knowing this, lobby for more regulation of their industry, I call this the Overhead Smash.
3) Bigger companies are often saddled by inertia, meaning robust competition is a threat. Adopting regulations that stultify the economy is the equivalent of raising the basketball hoop to twenty feet at half-time: it protects the lead of whichever team is ahead. When Big Business seeks to stultify the economy to hold back smaller competitors, I call it Gumming the Works.
4) Government regulation grants an air of legitimacy to businesses, boosting consumer confidence, often beyond what is warranted. This is The Confidence Game.
Of course, these laws of Obamanomics are related, and the tactics almost always overlap. Rarely is one tactic at play without some trace of another. I use the term Regulatory Robbery to encompass all these tactics -- and there are other common forms of Regulatory Robbery aside from the four listed above.
An important note: There are, on the Left, often Big Government proposals that would be devastating to Big Business. In healthcare, for instance, there's the single-payer idea -- that government should be the HMO for all. This would drive private insurers out of business and possibly reduce profits for providers. Proposals like this get lip service from liberal politicians, but once those politicians get in the room with the staffers, lobbyists, and consultants, there's inevitably a tack "toward the center" -- really, a tack towards Big Business.
Understanding the laws of Obamanomics is critical to understanding today's confusing political landscape. Without knowing these laws, one is left wondering why Big Business wants to be regulated. Ignorant of these laws, most reporters think industry support of Big Government is a sign of consensus rather than a form of favor-seeking.
In brief, Obamanomics boils down to this:
Every time government gets bigger, somebody's getting rich.
This book names the names.
Timothy P. Carney is The Washington Examiner's lobbying editor, His K Street column appears on Wednesdays.
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