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When Barack Obama campaigned for president in 2008, he postured as an outsider who would bring real change to Washington. Those of us who paid more attention to his policy prescriptions than his racial background noticed that in fact he was just another fiscal moderate / social liberal in the mold of John Kerry. His one distinguishing trait from Hillary Clinton was his apparently non-imperialist foreign policy, exemplified by his outspoken opposition to the war in Iraq. Between the election and his inauguration, he debunked his own mythology by finalizing Bush’s bank bailout and nominating Hillary Clinton as Secretary of State, thereby defeating the purpose of choosing him over her. Once again, the imperial establishment won.

The center-left news media, being a propaganda organ of the neoliberal elites, who gleefully dole out freedoms in sexuality and narcotics in place of any real political or economic power, continued to burnish the Obama mythos, despite all evidence against it. He was praised as an agent of peace and a man of the people even as he continued the American imperial project and defended the financiers who ruined the economy. He was actually praised while doing the exact same things for which Bush had been vilified. Here are some of the more pertinent similarities to his predecessor.

Both Bush and Obama lowered corporate taxes and increased U.S. energy production. In the 2012 campaign, Obama boasted of having eliminated 77 government programs and having cut $1T in discretionary spending. “More importantly,” he said, “cuts will help us grow,” accepting GDP growth as a categorical imperative. He cut $716 billion from Medicare, ostensibly from overpaying insurers and providers.

In his second debate with Romney, Obama postured as being pro-oil and gas production, and did not challenge the dogma that the economy trumps other social criteria. He claimed that Romney’s “social extremism” (i.e., the values that were the norm of Western civilization until yesterday) was “bad for the economy.” At the same time, he bragged about small businesses and tax cuts for the middle class, while claiming that Romney’s cuts “won’t help us grow.”

In counter-terrorism, he evinced the same vengeful attitude that was deplored in his predecessor, saying, “When you mess with Americans, we hunt you down.” He liked to boast that national security is not political, only confirming that U.S. foreign policy is dominated by a power elite straddling both parties.

For all his supposed sophistication, he shared with Romney the simplistic mercantile canard that a country needs to have a “favorable” balance of trade by increasing exports.

In foreign policy, the similarities are most striking. Obama kept military spending high, in fact above the Bush-era peak. He openly claimed the right to depose heads of state at will, even when they posed no immediate threat to the U.S. He remained pro-Zionist, while engaging in anti-Iranian rhetoric, using the deceitful claim that Iran wants to “wipe Israel off the map” as though they had genocidal intentions. His pledge to stand by Israel if attacked binds the U.S. to whatever aggressive policy Israel exercises toward her neighbors.

He boasted about his war of choice against Gaddafi, and claimed there was no “mission creep.” He bragged about killing Bin Laden without obtaining permission to enter Pakistani airspace. In a word, he showed the same contempt for the sovereignty of other nations’ as his imperialist predecessors.

In 2012, Obama recast his opposition to the Iraq war in imperialist terms, claiming that the fault was not the lack of just cause to invade a sovereign nation (he could claim no such high ground after Libya), but because, absurdly, this supposedly “took our eye off the ball” in Afghanistan, as if the U.S. military couldn’t do two things at once. He claimed he could focus on Afghanistan after the war in Iraq ended. The withdrawal actually was completed on Bush’s schedule, despite Obama’s attempt to get the Iraqis to allow U.S. troops to stay longer. He actually increased the use of drone strikes compared with Bush.

Like other American imperialists, Obama proclaimed the objective of promoting the free market system everywhere. He also espoused “nationalism in trade,” which means protectionism if it means anything, and making sure that everyone else plays by the rules. In other words, when it was time for re-election, he played to the same economic populism and nationalism for which he later disparaged his successor.

In view of these broad outlines, my readers may perhaps be less than surprised when I fail to get caught up in U.S. partisan politics. They are both halves of the same imperialist whole, or at least that has been the case until the unthinkable happened in 2016. More on that to come.

Political analyses tend to be exercises in confirmation bias, as shown by most treatments of the last two U.S. presidents, George W. Bush and Barack Obama. Now that they are both former presidents, hopefully we can look at their records a bit more dispassionately.

The fiscal performance of the Bush years are marred by then-record budget deficits following the balanced budget of the late Clinton administration (with no small amount of pressure from a Republican Congress). Bush made gratuitous cuts to the top marginal income tax rates, which were fiscally irresponsible and unnecessary. If we look at the actual fiscal history, however, these “tax cuts for the rich” were not the driving force of the deficits. From 2003 to 2007, total revenue actually increased, but the problem was that expenses from 2000 to 2007 nearly doubled. No one can seriously contend that the budget could or should have been balanced by increasing revenue, as if doubling taxes were viable.

A distinct issue is whether Bush’s profligate spending in any way caused the subsequent sharp recession. It is astounding that so many analysts, including the neo-Keynesian Paul Krugman who should know better, have blamed Bush’s fiscal policy for the recession, without offering a coherent mechanism by which this might occur. Nearly a century after Keynes’ revolutionary work, most people are still beholden to the view that a nation’s economy is to be run like a household, with expenses never to exceed revenues. Worse, they confuse the government’s budget (fiscal policy) with national prosperity (economic policy). A brief look at two historical examples should explode these myths.

By conventional Keynesian accounts, New Deal spending, followed by the massive expenses of WWII, with fiscal deficits of over 100% of GNP, brought the U.S. out of the Great Depression. Even if we do not accept this causality, it is incontrovertible that massive deficit spending is sometimes compatible with sustained economic growth. We also know that austerity measures during recessions can be disastrous, since this shrinks the money supply, creating a vicious cycle of contraction.

Reagan’s first term is generally considered successful by most economic measures, yet federal revenues increased only nominally from 1980 to 1984, and actually decreased in real dollars. Nonetheless, there was strong real GNP growth starting in 1982-83. Again, fiscal deficits are compatible with strong growth.

To sustain the thesis that Bush’s deficit spending somehow caused the recession of 2008, one needs to adopt the pre-Keynesian conservative myth that defict spending causes recessions. That liberals are willing to reverse their economic theories for the sake of condemning a conservative president is one of the stranger manifestations of confirmation bias.

As a counterexample, Spain, for all its pre-recession fiscal discipline, was hardest hit by the financial crisis. There is simply no correlation to be found between budget deficits and economic recessions.

Another supposed culprit is banking deregulation. This is blameworthy only in the trivial sense that if banks were forbidden from swapping derivatives, there could be no derivatives crisis. When we get more specific, however, the argument evaporates. For one thing, American critics of deregulation seem to forget that the financial crisis was a global phenomenon. Before they blame the repeal of the Glass-Steagall Act’s separation of commercial and investment banking, they should consider that most European countries had no such legal restriction in the first place. Further, financial deregulation had a bipartisan consensus, beginning with Clinton, Greenspan and a GOP Congress.

It may be safely said that the 2008 crash reflected a general overvaluation of assets and derivatives, much like the Dot com crash at the end of the Clinton years. Few would blame Clinton for the Dot com bubble, so why is Bush blamed for the housing bubble? In the latter case, the housing market has heavy government regulation and intervention, so government gets scrutinized when this market collapses.

It is common to blame subprime lending and predatory practices that led people into foreclosure. While these may be rightly deplored, they do not account for the fact that the houses themselves were overvalued, not just the creditworthiness of borrowers. Granted, easy lending is one factor driving up prices, but an asset bubble can occur even apart from borrowing. It has long been a myth that home ownership is a way to build wealth, when in fact residential real estate does no better than gold over the long term, so it is effectively a storehouse of wealth, not an engine of growth. The use of home ownership as a substitute for decentralization of real capital is not sustainable indefinitely. People cannot live off their homes, and will need income-generating capital in their retirement.

Regardless of what causes a housing bubble, there is little that government can do to stop it. You cannot freeze house sales, as you might freeze a stock exchange when there is a sudden drop. At best, you can improve lending practices going forward, but there is no remedy for the devaluation that must happen. This may sound liquidationist, except we are not dissolving companies, only recognizing that we cannot force people to pay more for an asset. Granted, some houses may be abandoned due to oversupply, but we can hardly force people to live in more than one home.

The remedy of Keynesian liberalism is to constantly stimulate demand. When you reach the point where the market does not meet demand (a crisis of oversupply), then the government should intervene with deficit spending and expanding the money supply, offering easy credit. What should be done when easy credit was part of the problem?

The last resort is to export inflation, relying on cheap labor from other countries to make products affordable to those with devalued assets. Yet even this game can only be played for so long, as the Chinese minimum wage has risen to over $1.50/hr. The race to the bottom must end, and as the populace of various nations rise up in revolt against global neoliberalism, perhaps someone will propose the real remedy of decentralizing capital, instead of shifting it between political and financial elites.

In the next post, we will examine the Obama legacy, as compared with that of Bush, finding some remarkable similarities.