Obama the Moderate Republican?

One of my father's coworkers recently said that he would vote for "the moderate Republican who is running unopposed for the Democratic nomination." It's certainly a clever line. And while most conservatives these days would be bemused at the thought that anyone could think President Obama a moderate Republican, given his interventionist domestic policy and disregard for the Constitution and so on, it occurred to me today that the characterization has some merit.

To understand how, we must remember that the Republican Party has not always been a party of small government. In previous years, people that would be derided as squishes or "RINOs" (Republicans in Name Only) were the conventional elite of the party. This was the faction of Nelson Rockefeller and the like.

In fact, the more I thought about it, the more President Obama reminds me of one moderate (really, progressive) Republican in particular, from times past: President Richard Nixon.

Now, I'm not talking about President Obama's apparent liking for enemies' lists, or his campaign's documented use of cheating and dirty tricks to defeat Hillary Clinton during the 2008 primaries (to say nothing of what his allies might do elsewhere), or any of the other sordid comparisons you might be tempted to make. I'm strictly talking about the policy programs of Presidents Obama and Nixon. Consider:

Both presidents came into office while America was embroiled in foreign wars started by presidents of the other party, having campaigned on a promise to end those wars. Both presidents discovered that to do so, they needed to ramp up the intensity of the conflict. (Though Obama seems content to cash out of Iraq and focus on Afghanistan; admittedly, he has two unwanted wars to handle.)

Both presidents favored deficit spending to stimulate the economy, coupled with interventionist policies designed to favor some domestic groups at the expense of others. For Obama, I mean the health care bill primarily, along with the nationalization of student loans and the repeated interventions into the home mortgage market, among others. Nixon, of course, imposed price and wage controls across much of the economy and severed the link between gold and the dollar, to escape the accumulating consequences of his own and President Johnson's massive deficits.

Both Nixon and Obama put in place major environmental policies; remember that Nixon instituted the Clean Air Act, which Obama's EPA has used to dramatic effect. Both, too, were committed to expanding the social-welfare state: Nixon pushed for and won passage of the Supplementary Security Income (SSI), an expansion of welfare, along with automatic Cost-Of-Living Adjustments to Social Security.

In many ways, the Republican Party then was just as Progressive as the Democrats were; Theodore Roosevelt was, after all, a Progressive Republican and one of the leaders of Progressivism of the time. It is only more recently that the Progressive platform of massive societal restructuring through the heavy hand of government, to create a New Man who would be a compliant member of mass society rather than an uncooperative individual, has been cast out of the Republican Party—by the rise of small-government conservatism on the one hand, and newly active religious blocs on the other.

So yes; in many ways President Obama would fit into the mold of a Progressive Republican from days of yore. The difference is that today is not a Progressive moment; and Obama is running against the tide of history in trying to make policy as if it were. We should see a clear demonstration of that in a few months.

Being Paid to Borrow

On Friday, the 10-year Treasury yield ended up below 1.5%; shorter durations are even more ludicrous. At a time when inflation is something like 2% (and that's assuming you trust the official numbers, which I don't), what this means is that the Federal Government is essentially borrowing money for free, at worst—at best lenders are effectively paying real money to the Treasury for the privilege of letting it spend their assets.

I suppose that if ever there was a good time to run trillion-dollar deficits forever, this might be it. Of course, that all depends on whether the Treasury can roll all of its debt over into longer maturities before rates shoot back up…

Why are rates so low? John Mueller argues that interest rates are being driven down because of the Dollar's status as a reserve currency; something like $4 trillion is being held by other nations not to pay for our exports, but to stabilize their own currencies. This creates a serious problem, driving inflation and causing interest rates to decouple from fiscal and monetary policy. In short, politicians no longer suffer automatic consequences from borrowing loads of money.

Worse, if we were to stop borrowing so heavily, all it would do is to drive interest rates even lower as foreign buyers bid up the diminishing stock of Treasury bonds remaining. Eventually, the temptation of free money would grow intolerable to any responsible politician, and we'd start overspending again.

What can be done about this? Mueller suggests going back to gold as an international reserve. Short of that, I'm not sure how we solve the problem. Assuming that it is a problem to be solved.