A Reality Check On Obama's Wish List

By MICHAEL BARONE | Posted Friday, October 24, 2008 4:30 PM PT

What will an Obama administration and a Congress with increased Democratic
majorities do?

That's a relevant question, given the Democrats' leads in the polls. And
it's a little hard to answer, given the financial crisis that has been
raging and the recession that seems to be ahead.

One thing they will certainly do is raise taxes on high earners. The Bush
tax cuts are scheduled to expire in 2010, and congressional Democrats will
gleefully allow the top rates to rise.

Left-leaning Democrats, such as Barack Obama himself, want to "spread
the wealth around," as the candidate told Joe the Plumber in October.
Blue Dog Democrats want to reduce the budget deficit and will welcome the
additional revenue that the Congressional Budget Office's static-analysis
models will promise.

Raising taxes when the economy is weakening is not the medicine prescribed
by Keynesian economics, and it is probably not what Obama's economic
advisers would prescribe if they were starting from scratch today.

It is what Herbert Hoover and Congress did in the early 1930s, and it
helped to produce the Great Depression. But it is baked into the pie.

So is a slide toward trade protectionism. The breakdown of the Doha Round
and House Speaker Nancy Pelosi's refusal to bring the Colombia Free Trade
Agreement to a vote mean that both multilateral and bilateral trade
liberalism channels are clogged. Obama may or may not try to renegotiate
NAFTA, as both Canada and Mexico have center-right governments satisfied
with current arrangements. But the trend will be toward less free trade.

The prospects are cloudier for two other issues on which Obama has made big
promises. Much of the next Congress's time and psychic energy will be taken
up with refashioning financial regulation -- a subject of considerable
difficulty. And the looming recession will make it politically risky for
Democrats to push big spending programs.

This means that Congress in the next two years may not pass Obama's
national health insurance plan.

The weakening economy and the enraged reaction earlier this year to
$4-a-gallon gasoline also make it less likely that Congress will pass
carbon reduction legislation -- certainly not a carbon tax and probably not
a cap-and-trade system.

In any case, health insurance and carbon reduction will be heavily lobbied,
despite all the denunciations of lobbyists issued by Obama (and John
McCain). Any one-size-fits-all health care bill affects various regions
differently, because we have many health care delivery and finance systems
across the country.

Same goes for carbon reduction legislation, as the economies of some
regions depend more heavily on coal than do others; it may be hard to
convince voters there that we have to impose burdens on them today to
achieve promised benefits in 2050. These disparities cut across party lines
and helped defeat the Clinton health care proposals in 1994. They will
probably come into play again if far-ranging bills are pressed forward.

Two issues pushed by Democrats in this Congress have no budgetary costs.

One is the "fairness doctrine," which is intended to shut down
talk radio, the one communications medium in which conservative voices are
dominant.

The other is the so-called card check bill, which requires employers to
bargain with unions when their organizers secure signatures on cards from a
majority of employees; secret-ballot unionization elections, required now,
would be a thing of the past. The aim is to vastly increase union
membership, pumping money into a Democratic pressure group.

What might happen in the unlikely event McCain is elected and faces a
Democratic Congress?

Presumably he would try to hold tax rates down, but to do so he might have
to embrace the kind of bipartisan tax reform enacted in 1986, with low
rates and fewer preferences. Democrats might be willing to bargain if they
could get rid of the alternative minimum tax, which threatens their core
constituencies.

McCain's plan to end the tax preference for employer-provided health
insurance could be the basis of compromise with a similar plan advanced by
Democratic Sen. Ron Wyden that has bipartisan support. McCain might also
seek a bipartisan carbon reduction bill.

Much depends, whoever wins, on whether Democrats elect enough senators to
overcome filibusters.

Even more may ride on the course of the economy and the depth of the
recession, which could scotch either candidate's proposals.

Copyright 2008 Creators Syndicate, Inc

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