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Notes on the Election
City Journal writers reflect on Tuesday’s results and on the implications of an Obama presidency.
7 November 2008
In Praise of McCain

With his long trail of dissents from Republican orthodoxy—from the Bush tax cuts to immigration, from torture to global warming, from campaign-finance reform to pork-barrel spending—John McCain couldn’t have become his party’s nominee if the American people didn’t still admire political courage and independence. And though his candidacy left much to be desired, both parties can take a lesson from his long, prickly, and sometimes egotistical example.

That example, boiled down, says this: To thine own self be true, and in being so, serve the American people the best way you know. McCain’s obsession with honor often led him down politically dubious paths, his grasp of ideas was shaky and usually subservient to vaguer notions of “service,” and he made his share of compromises against his own principles. When he got something right, though, he became a lion. He pushed for more troops in Iraq as early as 2003, when taking on the Bush White House was no easy matter, and he kept pushing until the surge became a reality. If Iraq’s tentative new beginning holds, it will surely become McCain’s great political legacy.

The Democratic Party, fresh off its big win, faces the lurking danger of overconfidence and the added temptation of wanting, at least early on, to rubber-stamp every initiative of its charismatic new leader. Telling President Obama that he’s wrong—even behind closed doors—may not be easy in early 2009. If Democrats need some instruction in how to resist a president, they can call McCain.

After McCain’s luminous concession speech Tuesday night, David Brooks called him an “archaic man.” He meant it in tribute, acknowledging the old-fashioned ideal of honor that McCain held to so fiercely. Honor carried McCain far but also hampered him at many turns. In fact, few in the media—obsessed with the canard that McCain was running a “dirty” campaign—will ever understand that in the election of 2008, the idealist candidate lost. McCain’s idealism drove his stubborn refusal to employ certain tactics against his opponent, such as criticizing Obama’s connection to the infamous Reverend Jeremiah Wright. And while McCain lived up to his pledge to abide by the public financing limits for the general election, Obama changed his mind—giving the Democrat a massive fund-raising advantage down the stretch.

Near the end of his memoir, Faith of My Fathers, McCain wrote of his Vietnam prisoner-of-war experience that he had never felt freer “than when I was a small part of an organized resistance to the power that imprisoned me. Nothing in life is more liberating than to fight for a cause larger than yourself, something that encompasses you but is not defined by your existence alone.” Sometimes it’s been hard, watching Senator McCain, to know which power he’s fighting against, or if his favorite brand of organized resistance is being a party of one. Still, we should hope that Brooks is wrong, and that men of McCain’s character, in all of their messiness, will continue to grace our politics.

Paul Beston is the associate editor of City Journal.

A Middle Ground on Taxes

President-elect Obama and conservatives have seemingly conflicting tax-policy goals. Obama wants to give annual cash payments of up to $1,000 to working-class and middle-class Americans who don’t pay federal income taxes. Conservatives want low taxes on capital, in order to allow the decimated markets and the struggling business world to heal. One policy initiative could reconcile these goals. It would encourage Americans, on average deeply in debt, to save money rather than borrow it.

The next president should declare that he won’t increase the capital gains and dividends taxes from 15 to 20 percent on affluent families, as he pledged to do during the campaign. Obama is practical enough to understand that raising taxes on capital—when people hardly need another reason to keep their money out of the markets—is a recipe for slow economic recovery. He’s competent enough and has enough goodwill with the public to explain why breaking his campaign pledge is necessary. If conservatives wanted to pick one tax rate to spare from hikes, it would be the tax rate on capital.

Then Obama should declare a 0 percent capital gains, dividends, and interest tax rate for households earning under $250,000 annually. People could take advantage of this no-tax rate so long as they pledged to put, say, 3 percent of their annual income in an account whose contributions couldn’t be withdrawn for at least five years after being made.

Such a program would encourage Americans to save and invest their money at a time when national savings rates are at record lows and asset values have plummeted. It would also encourage them to do so in investments other than their homes (capital gains on house sales are already untaxed). People could use the accounts to save or invest in government bonds; well-diversified, low-fee international stock or bond funds; reasonably diversified brokerage accounts; or safe, FDIC-insured savings accounts.

As for those cash transfers to people who don’t earn enough to pay federal income tax: instead of giving people money to spend with no strings attached, the feds should contribute to these long-term savings and investment funds for people who earn, say, under $50,000 a year. The government could match every $1 of individual savings through such accounts with $2 in government money, up to $1,000 annually. Such a policy could be a bipartisan winner—and it would encourage people to put money in the global debt and equity markets, where it’s sorely needed.

Nicole Gelinas, a City Journal contributing editor and the Searle Freedom Trust Fellow at the Manhattan Institute, is a Chartered Financial Analyst.

Don’t Hooverize Bush

Some Republicans, confronting the election results, may think it best to turn the page on the George W. Bush administration, rather than defend what it did well. If Republicans are to be effective critics of potential Obama missteps, however, it is crucial that they not allow Bush to be portrayed as solely responsible for our current economic woes. Put it this way: conservatives must not let Bush be Hooverized.

During the Great Depression, former president Herbert Hoover’s status as whipping boy allowed Franklin Roosevelt—who did initiate such sensible responses as unemployment compensation and bank deposit insurance—to engage in a series of economic missteps as well. FDR long avoided paying a political price for the quasi-central planning of the National Recovery Act, the unionization push of the Wagner Act, and the undermining of urban neighborhoods ushered in by public housing. Not only was he overwhelmingly reelected in 1936, but Democrats paid no price in congressional seats for the long-running Depression until 1938.

Obama’s proposed tax increases and endorsement of non-secret-ballot union elections could be similarly damaging to the economy. And Hooverization today would mean that no matter how long a prospective downturn lasts, or how ineffective or counterproductive Obama’s initiatives might be, Bush, like Hoover, would continue to be blamed for all problems.

The Hooverization process is already well under way. In keeping with the line that rampant deregulation and free-market zealotry are responsible for the incipient recession, the editors of the New York Times can write with straight faces that Obama’s victory was “decisive and sweeping, because he saw what was wrong with this country: the utter failure of government to protect its citizens.” Continued the Times in the same Bush-as-Hoover vein: “Mr. Obama inherits a terrible legacy.”

What might be the elements of an anti-Hooverization narrative? For starters, it would emphasize that the U.S. economy could never have recovered from the bursting of the tech bubble, or from September 11, had terrorist attacks continued to happen. To say that the Bush administration did not protect American citizens is simply to exclude the subject of national defense from the report card.

The deregulation canard, too, cries out for debunking. First, the Bush era should actually be remembered as one of costly, counterproductive new regulation—specifically, the Sarbanes-Oxley Act, which micromanages corporations, leading investors away from tightly regulated banks to the shadow world of unregulated hedge funds and credit default swaps. Further, Democrats ignored White House proposals for additional regulation that would have helped defuse the housing time bomb. As early as September 2003, the administration proposed to limit risks taken on by secondary mortgage giants Fannie Mae and Freddie Mac, whose meltdown would prove central to the credit crisis and market plunge. Democrats, by contrast, proved unwilling to tighten regulation (specifically, to increase capital-reserve requirements) on these government-sponsored enterprises, while pushing them to meet “affordable housing goals” that increased risk. As Massachusetts Democrat Barney Frank, head of the House Financial Services Committee, said in response to the administration’s proposal: “These two entities—Fannie Mae and Freddie Mac—are not facing any kind of financial crisis. The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.”

Whatever the elements of a counternarrative might be, selling it will not be easy. Failing to do so, however, will make it all the harder to hold the Obama administration accountable for the quality of its economic stewardship.

Howard Husock, a contributing editor of City Journal, is the Manhattan Institute’s vice president for policy research, the director of its Social Entrepreneurship Initiative, and the author of America’s Trillion-Dollar Housing Mistake.

An Ode

An infallible pol named Obama
Had a recipe chock-full of drama:
Ayers? Wright? Not to fuss—
Throw them under the bus,
And invoke your white middle-class mama.

Stefan Kanfer, a contributing editor of City Journal and a former editor of Time, is the author of a dozen books, most recently Somebody: The Reckless Life and Remarkable Career of Marlon Brando.

Obama’s Family Values

It is to Barack Obama’s credit—and that of the country—that his race was so muted an aspect of this election, something that as little as 50 years ago would have been unthinkable. Even Obama’s acceptance speech on Tuesday night underplayed the racial significance of his ascendancy. Yet from now on, America’s epic struggles over slavery and civil rights will be read teleologically as pointing toward the extraordinary moment when we elected our first black president. Though the vast majority of Americans have nothing to apologize about when it comes to race relations—in fact, the country has spent enormous sums and institutional capital over the last four decades trying to bring as many blacks as possible into professional life—the idea that racism remains a powerful force in American society continues to dominate liberal thought and practice and to be embraced by a significant number of blacks themselves. This election will at least complicate that conceit.

The greatest contribution that Obama could now make to racial equality would be to press a point that he made on the campaign trail: fathers should be responsible for their children. Nothing strains race relations more than the crime and academic-achievement gaps between whites and blacks. These twin problems grow out of the 70 percent black illegitimacy rate, a number that approaches 90 percent in some urban areas. When a boy is raised without the expectation that he will have to marry the mother of his children and support his offspring’s well-being, he will fail to pick up the most fundamental lessons about responsibility, self-discipline, and manhood—lessons that help boys succeed in school and stay away from crime.

Obama’s family provides a powerful counterexample to the single-parenting norm, but he needs to drive home the value of marriage with words, too. Doing so will not only improve the nation’s social fabric but will lessen the financial burdens on government. The single mother has become a cornerstone of Democratic politics because she holds the key to the continuous expansion of the welfare state. Without unmarried moms, economic hardship in the U.S. would be far rarer. Single-parent families are nearly six times more likely to be poor than married-parent families, meaning that single mothers are producing that most precious of all political levers—poor children—much more quickly than married parents are. Children now make up nearly one-third of all poor individuals in the country: there are 13 million of them, four times more than the number of elderly poor. No wonder that fathers have been virtually excised from Democratic discourse. If he so chooses, Obama could have a major impact simply by reintroducing them into the conversation.

And while on the topic of political strategy, here’s a suggestion for Republican pundits as we move into this new era: let’s mothball the guilt-by-association attacks on Obama. Some of the questions raised about his acquaintances over the last months have been legitimate; others, however, slipped the bounds of common sense. If Obama starts excusing terrorism, there will be cause enough for alarm. But for now, Republicans should focus on what he says and does, not whom he knows.

Heather Mac Donald is a contributing editor of City Journal and the John M. Olin Fellow at the Manhattan Institute. Her latest book, coauthored with Victor Davis Hanson and Steven Malanga, is The Immigration Solution.

Obama Abroad: His Three Big Challenges

Barack Obama’s most immediate challenge is rebuilding confidence in America’s ability to stabilize the financial markets and prevent the economic crisis from worsening, but he faces daunting foreign-policy challenges as well. The first is to start working with President Bush on the withdrawal of American forces from Iraq and to ensure that progress under the “surge,” which candidate Obama never endorsed, continues. Many analysts doubted whether most American combat forces could be withdrawn within 16 months, as Obama has pledged, without jeopardizing Iraqi stability. But Iraqi and American negotiators are now moving closer to signing a “status of forces agreement,” or SOFA, prior to December 31, 2008, when United Nations authorization for the American troop presence in Iraq expires. A majority of Iraqi parliamentarians have openly opposed the current draft. But Obama’s victory may help speed the talks, Iraqi officials say.

Another top priority, obviously, will be preventing Iran from acquiring an atomic bomb and North Korea from resuming its nuclear weapons program. To thwart Tehran, Obama will have to enlist Russian support for intensified diplomacy, though relations with Moscow are now badly strained. Similarly, he will need to work with China on Pyongyang.

A third pressing challenge is the widening conflict in Afghanistan and Pakistan, which Obama has embraced as a war of necessity. In a rare consensus, America’s 16 intelligence agencies recently warned that Afghanistan is on a perilous “downward spiral” and that the war could be lost unless the Afghan government reduces rampant corruption, the booming heroin trade, and the increasingly sophisticated cross-border attacks from Pakistan. General David Petraeus, the new head of Central Command, is conducting a military review of policy toward Afghanistan, and the president-elect must work with him to devise an effective strategy. Obama has already vowed to expand American forces in Afghanistan and to continue striking Islamic militants inside Pakistan if the weak but pro-American government in Islamabad cannot stop militants in northwestern Pakistan from crossing into Afghanistan.

In the longer term, the Obama administration must devise more effective strategies to counter the expansion of Islamic extremism and respond to the rise of China as an economic and military power. If it has any time or energy left over, it should devise more effective ways to contain Venezuela’s Hugo Chávez.

Judith Miller, a contributing editor of City Journal, is a Pulitzer Prize–winning journalist and a commentator on Fox News.

Another Ode

In diplomacy,” argued Obama,
“Preconditions can only cause trauma!”
So the prez-elect flew
To Tehran’s central zoo
And commenced two-way talks with a llama.

Benjamin A. Plotinsky is the managing editor of City Journal.

Will Obama Resist Bad Advice?

To tag Barack Obama as a socialist, as many of his critics have done, is to suppose that he is committed to a strong ideology. He is not: he ran a calm and cool presidential campaign devoid of any specific commitments. Obama is a feel-good pragmatist, very much attuned to contemporary skepticism. He also happens to be a fairly good manager, as demonstrated by his brilliantly run campaign. As a Harvard-trained lawyer, he has the capacity to listen to various opinions on any subject, no doubt. But will he be able to make effective decisions after hearing from all of his soon-to-be-known (and supposedly bipartisan) advisers?

Obama’s deliberate avoidance of articulating a clear-cut world vision, or any comprehensible ideology, could incline him toward politically correct, media-savvy policies. Take economics. As media pundits the world over are now telling us, state interventionism is back. Its return is not based on rational or scientific reasons, but on scapegoating the Bush administration and exacting revenge for those statist exiles who have learned nothing from previous economic crises. Economists now know that protectionism and excessive regulation of the economy greatly aggravated the Great Depression. We also know that the 1974 depression was aggravated by Keynesian policies, which led to inflation and unemployment until the 1980s.

These demonstrably ineffectual policies could attract the inexperienced Obama crowd and might even be popular in the short term. Increased individual consumption (thanks to more government spending and thus a bigger budget deficit) and closing the borders to trade to protect U.S. jobs could make for an exhilarating year or two, until inflation and unemployment strike back. Will Obama take the risk of looking uncool and resisting such neo-Keynesian advice? If he were to stay on a free-market course—pitting him against many in his own party—he could probably lead the U.S. economy to recovery just in time for the next midterm election.

Another temptation would be multilateralism, that fashionable canard among global bureaucrats. But international organizations are dominated by nondemocratic regimes whose leading ambition is to downgrade any American support for human rights and global economic growth. Let us hope that Obama will find the courage not to sign the Kyoto Treaty or its equivalents. If he really wants to go green, a low carbon tax would be the best incentive for innovation and reducing oil dependence. But perhaps it will not be trendy enough to satisfy his admirers.

Still another foreign-policy temptation would be to share pierogi with Medvedev, lamb chops with Ahmadinejad, and kimchi with Kim Jung Il. Neville Chamberlain tried such ingratiating gestures on the eve of World War II and found that they did not work. They would be great photo opportunities, however, and make Obama even surer to grace Time’s Man of the Year cover. On the other hand, if he were to support a worldwide democratic and human-rights agenda, he could approach it with far more global credibility than George W. Bush currently has.

And then he could make history for real.

Guy Sorman, a City Journal contributing editor, is the author of numerous books, including The Empire of Lies: The Truth About China in the Twenty-First Century.

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