A further note on laissez-faire

Another thing: If Repubs are going to oppose Ex-Im Bank on grounds that it is interference with the 'free market', one might think they would have to take on a big chunk of the U.S. economy, where oligopoly reigns (h/t). Unless their position is that oligopoly and monopoly are fine, provided that they arise from 'free-market' competition. If competition leads to one or two or three firms dominating an industry, so be it. But heaven forfend that government should "pick winners and losers." No, we can't have that.

A bad first sentence

Jerry Bowyer writing at the Forbes site (h/t):

If you pay attention to economic debates you know by now that a celebrity historian named Niall Ferguson made some off-hand comments at a financial conference in which he linked John Maynard Keynes’ homosexuality to some flaws in his economics. (italics added)

That is not what Ferguson did. What Ferguson did was to attempt to link Keynes's sexuality to a mistaken interpretation of Keynes's famous "in the long run we're all dead" line [italicized words added per TBA's comment]. As has been pointed out elsewhere, that line, when taken in context, was being used by Keynes to make a point against those economists who argued that a depressed economy, if left alone, would eventually recover on its own through the magic of the business cycle.

Thanks to a comment on my previous post, I now know that in 2004 two UCLA economists published an article in which they argued that if only certain New Deal policies, in particular the National Industrial Recovery Act, had not mucked things up by 'artifically' raising prices and wages, the Depression would have ended much sooner than it did. Live and learn, as they say.

The fiscal crisis of the state

Listening just now, on the radio version of the PBS NewsHour, to Shields and Brooks bemoaning the country's inability and/or unwillingness to make difficult choices on spending and taxes, I was reminded that a leftist scholar named James O'Connor wrote a book many years ago called The Fiscal Crisis of the State. Never read it; one of the many things I probably should have read and never did. First published in 1973, the book was reissued in 2001, according to a glance at Amazon, by Transaction (a publisher not at all known for leftism but known for reissuing important works of social science).

A puzzle (maybe)

This is a 'thinking aloud' type of post, but that's one of the things blogs are for, isn't it?

Here's the question: What explains the apparent disjunction disconnect between global downward trends in armed conflict, on the one hand, and U.S. military and foreign policy, on the other?

It's fairly clear that the amount of armed conflict in the world, while not negligible, has been declining for a few decades (though the decline may have leveled off in the last several years). Joshua Goldstein judges that "[d]espite...complexities and some ups and downs, the year 2010 was probably the most peaceful, in terms of battle deaths relative to population, in the history of the world." (Winning the War on War, p.247) John Mueller and Christopher Fettweis, among others, argue that great-power war is either obsolete or on the verge of becoming so, an argument that has to be taken quite seriously in my opinion.

Yet the U.S. continues to act, in many respects, as if the world has not really become much more peaceful than it was in, say, 1950. Yes, the numbers of U.S. soldiers in Europe and Asia have been reduced somewhat in recent years, but the U.S. continues to have alliances or other security agreements with numerous countries, military bases all over the world, thousands of troops still in Europe and Asia (primarily Japan and Korea), and aircraft carrier groups able to be dispatched to anywhere in the world. Plus the U.S. still has some tactical nuclear weapons in Europe (I actually wasn't aware of this until seeing a journal article about it the other day) and also has invested in regional missile defense systems (or, in the case of the Persian Gulf states, sold Patriot missiles to them) ostensibly as protection from an Iranian missile threat which seems to have been overestimated. Moreover, the U.S. is executing what appears to be either an encirclement or a balancing (depending on one's view) maneuver against China, via the creation of a new or refurbished 'strategic partnership' with Australia, the selling of jets to Indonesia, etc. It is true that the Pentagon, faced with budget constraints, is planning to shrink the size of the Army and Marines somewhat and also, for example, is having to reconsider its plans for a major build-up on Guam, but this does not basically change the U.S.'s global military position.

So, given -- at least for the sake of argument -- that the world is more peaceful and less dangerous than it has been in a long time, why don't U.S. actions in the military/security arena seem to reflect this reality?

Some possible answers:

(1) U.S. policy is simply irrational.

(2) U.S. policy-makers don't think great-power war is obsolete and are generally stuck in an outmoded mindset.

(3) The U.S. global military posture is driven by domestic institutional forces, i.e., the power of the Pentagon and large arms manufacturers to influence Congress and the importance (or at least perceived importance) of the 'military-industrial complex' to the health of the U.S. economy.

(4) U.S. policy is a holdover from the Cold War. Elaboration: With the dissolution of the USSR and the resulting absence of a true peer competitor, the U.S. should have substantially cut back on its global military presence and commitments, according to both one strand of realist logic and 'ordinary' logic. This is what John Mearsheimer, to cite one prominent example, predicted. It didn't happen: there was some retrenchment but nothing like what might have been expected. (And NATO, far from declaring its mission accomplished and disbanding, expanded.) The reason was perhaps a combination of vested institutional interests, path dependence, and plain old inertia.

(5) Al-Qaeda done it. According to this view, had it not been for the 9/11 attacks and the subsequent decade-long reaction or overreaction (Afghanistan, Iraq, drones, etc.), the U.S. global military presence would be much smaller today than it is.

(6) U.S. global military dominance is supporting the U.S. global economic position (or what remains of it).

With the exception of #1 (which basically evades the question), I'm inclined to think there may be something to all of these answers, though I'm also a bit skeptical of #6. I would put the most weight on #3 and #4. But, as we say in the blogosphere, your mileage may vary.

Update: Another explanation for the puzzle might be that Americans are "an unusually warlike people," as Stephen Rosen argued in a 2009 article. I never got around to reading (as opposed to skimming) this, but the link will take you there if you're interested.

The our-grandchildren-will-have-to-pay-off-the-deficit myth

A quick post, as I'm pressed for time. I just caught the tail end of Marketplace on NPR. A commentator, a community banker from Pa. named Liz Herman (if I recall correctly), was saying, among other things, that the deficit worried her because she didn't want to stick her children and grandchildren with the bill (I'm paraphrasing).

One hears this all the time. It's nonsense. Yes, there are good reasons to reduce the deficit, especially over the long term and after what appears to be the start of a slow recovery gathers steam, but "oh noes! our grandchildren will be stuck with the bill" is not one of those reasons. As I remarked on a recent Crooked Timber thread, a government not facing a Greece-like crisis can continue to incur debt indefinitely, and as others added, this is particularly so if the economy grows faster than the government debt does. In any event, no one is going to knock on the door of Ms. Herman's grandson or granddaughter and say "pay up". This children-and-grandchildren-will-be-stuck-with-the-bill line is a myth devised by conservatives in search of catchy, understandable rationales for reducing government spending on programs they don't like. It's catchy, all right. It's also complete BS.

The U.S. employment picture

Outsourced to E. Klein: here.

Packer on the broken U.S. social contract

In the current issue of Foreign Affairs (here); looks like one has to register to get the whole thing.

Excerpts:

...in or around 1978, American life changed.... It was, like this moment, a time of widespread pessimism -- high inflation, high unemployment, high gas prices. And the country reacted to its sense of decline by moving away from the social arrangement that had been in place since the 1930s and 1940s....

This is a story about the perverse effects of democratization.... Once Walter Reuther of the United Auto Workers and Walter Wriston of Citicorp stopped sitting together on Commissions to Make the World a Better Place and started paying lobbyists to fight for their separate interests in Congress, the balance of power tilted heavily toward business.

Of course the move to neoliberalism occurred across much of the world, not just in the U.S., but the consequences in terms of inequality were worse here.

Update: See also Zakaria in today's WaPo on social mobility in U.S. compared to Europe. (Link to be added later)

Government has been a job-creator (even if the GOP may not know it)

"No taxes on job-creators" (meaning owners of small and large businesses and anyone making over a certain amount of money, say a quarter-million a year) has been a mantra of some Republican participants in the debt/deficit debate. In view of that, the following may be of interest inasmuch as it shows that government, supposedly the root of all evil, has been a major job-creator.

Between 1990 and 2008, the number of employed workers in the United States grew from about 122 million to about 149 million. Of the roughly 27 million jobs created during that period, 98 percent were in the so-called nontradable sector of the economy, the sector that produces goods and services that must be consumed domestically. The largest employers in the U.S. nontradable sector were the government (with 22 million jobs in 2008) and the health-care industry (with 16 million jobs in 2008). Together, the two industries created ten million new jobs between 1990 and 2008, or just under 40 percent of total additions.

-- Michael Spence, "The Impact of Globalization on Income and Employment," Foreign Affairs, July/August 2011, p.30 (emphasis added).

Malefactors of great wealth

John Quiggin at CT:

What the US needs at this point is someone willing to advocate a return to the economic institutions that made America great – 90 per cent top marginal tax rates, strong trade unions, weak banks and imprisonment for malefactors of great wealth.

I associate the phrase "malefactors of great wealth" with FDR, but it was first used by TR.

Vague 'lessons' from the German model

Steven Rattner's For. Aff. piece "The Secrets of Germany's Success," subtitled "What Europe's Manufacturing Powerhouse Can Teach America," purports to draw lessons for the U.S. from the recent German experience. However, with one exception, the lessons are so general that they don't require an appeal to the German example. Distilled from the end of the essay, the lessons are:

1. Exploit the U.S.'s comparative advantage (e.g. in entertainment, technology, and finance)

2. Improve technical training

3. Encourage new industries (e.g. alternative energy)

4. Foster an export orientation

The only "lesson" that draws with more specificity on Germany is that the U.S. "should work to ameliorate" high unemployment along the lines of what Gerhard Schröder did in 2005 with the Agenda 2010 program whereby the government agreed to cover a portion of the salaries lost when workers' hours were reduced, thus allowing firms to keep workers on rather than fire them. In return, unions agreed to moderate wage increases. In the current U.S. budget climate the idea, though perhaps a good one, is probably not transplantable.

But the piece is informative even if the "lessons" are a bit disappointing.

See also a recent blogpost by Charles Lane at WaPo (link to be added later).

Worth interrupting the break for...

...this piece on U.S. income inequality in WaPo today.

A brief excerpt:

In 1975, ...the top 0.1 percent of earners garnered about 2.5 percent of the nation’s income, including capital gains, according to data collected by University of California economist Emmanuel Saez. By 2008, that share had quadrupled and stood at 10.4 percent.

The phenomenon is even more pronounced at even higher levels of income. The share of the income commanded by the top 0.01 percent rose from 0.85 percent to 5.03 percent over that period. For the 15,000 families in that group, average income now stands at $27 million [per family per year, presumably].

That S&P warning

See here.

[Hat tip: dsquared]

Deficits and debt (continued)

In an earlier post ("Brooks, Burke, and Hamilton," Jan. 28), I wrote that David Brooks (in one of his recent NYT columns) had not given a particularly good explanation of how and why rising U.S. deficits and debt-to-GDP ratios would be economically harmful.

Today I happened to catch on the radio a bit of Fed Chairman Bernanke's speech at the National Press Club (full text here); the part of the speech I heard addressed fiscal policy, deficits, and debt. Bernanke did a somewhat better job than Brooks of explaining why high debt and deficits are unsustainable, but even Bernanke's explanation I found too cryptic and thus less than satisfying. After citing Congressional Budget Office estimates of what will happen to debt and deficits in the absence of major legislative policy changes, and after pointing out that the aging U.S. population and rising health-care costs are the underlying main drivers of projected rising deficits, Bernanke said this:

The CBO's long-term budget projections, by design, do not account for the likely adverse economic effects of such high debt and deficits. But if government debt and deficits were actually to grow at the pace envisioned, the economic and financial effects would be severe. Sustained high rates of government borrowing would both drain funds away from private investment and increase our debt to foreigners, with adverse long-run effects on U.S. output, incomes, and standards of living. Moreover, diminishing investor confidence that deficits will be brought under control would ultimately lead to sharply rising interest rates on government debt and, potentially, to broader financial turmoil. In a vicious circle, high and rising interest rates would cause debt-service payments on the federal debt to grow even faster, causing further increases in the debt-to-GDP ratio and making fiscal adjustment all the more difficult. (emphasis added)

Take the sentence I've highlighted. High rates of government borrowing, the first part of the sentence asserts, would drain funds from private investment (presumably what is meant is productive private investment, e.g. in business expansion), but the mechanism involved is not spelled out. Turning to the second part of the sentence, it is not very clear to me how "increasing our debt to foreigners" will adversely affect "U.S. output, incomes, and standards of living." I'm not saying this is wrong; rather, I'm saying that in a public speech by the Fed Chairman at the National Press Club it would have been nice to have more of a real, step-by-step explanation instead of simply an assertion, which is pretty much what the quoted passage amounts to. The stuff about the vicious circle of lender unease leading to rising interest rates (to attract continued purchase of debt instruments) leading to still higher debt ratios does not really count as an explanation, either. Maybe the recent reports of the several deficit commissions contain explanations, but chances are I won't have time to read them.

P.S. In a comment on my earlier post, Hank suggested that the debt/deficits are ultimately unsustainable because the government cannot print money endlessly to meet ever-increasing debt service obligations. To do so would raise the specter of either possible hyperinflation or a default crisis. At some extreme point this is undoubtedly true, but Brooks and Bernanke have not couched their warnings in these terms, at least not explicitly. Rather, their point is that, well short of a default crisis, the deficits and debt have harmful effects, and that's the assertion on which I've been focusing.

Brooks, Burke, and Hamilton; or, tell me what will happen when the national debt hits 90 percent of GDP

David Brooks is exercised today about the size of the deficit and the projected national debt. In the guise of Alexander Hamilton having a drink with Edmund Burke, Brooks says:

You’re mad, Burke! Obama has completely misread the national situation. The United States is careening toward disaster. The deficit this year is the highest in history: $1.48 trillion. In a mere eight years, the national debt will hit 90 percent of G.D.P. Interest payments alone on the debt will be $1 trillion! And he goes before the country with nostalgic happy talk and decides to spend the next two years treading water?

He pats himself on the back for a spending freeze projected to save $400 billion over 10 years. That’s an infinitesimal sliver of the $45 trillion the government will be spending over that time.

Is he aware of the national bankruptcy rushing ever closer? Doesn’t he see that the nation wants a fundamental change in Washington, not a few more tax credits for solar panels?

Obama is going to go down in history as the Nero who fiddled as Rome burned. He reformed health care without changing the ruinous incentives that were bankrupting the system. He submitted budgets that hastened the national collapse. The Republicans accuse him of being a socialist, but, the fact is, he’s Mr. Status Quo.

Brooks advises people to read Tyler Cowen's new book The Great Stagnation. Maybe Cowen explains there exactly what will happen when the national debt hits 90 percent of GDP. Brooks doesn't bother to do that here. The one concrete consequence that occurs to me is that eventually Social Security and Medicare will run out of money without substantial reforms in how they operate. This is related but not identical to the general concern about the size of the deficit and the debt. It will be interesting to see whether the U.S. political system manages to change the entitlement programs in some way before they go bankrupt. But that still doesn't answer the broader question why the deficit and the debt herald, in Brooks's phrase, "national collapse".

UPDATE: Brooks's colleague Mark Shields said on the NewsHour tonight that running a big deficit is bad public policy because it transfers money to bond-holders, who tend to be rich. Huh? Running a big deficit may be bad (in some circumstances), but I think this may be the first time I've heard someone say it's bad because it's upwardly redistributive. Shields also said that no dollar paid on interest on the deficit ever put food in the mouth of a hungry child or built a bridge or.... Of course, what he didn't say is that any given dollar of deficit spending may in fact be doing those things. Or it may not; it depends on which dollar of the budget, so to speak, one looks at. Shields's "reasoning" here would not get a passing grade in Econ 101.

A few somewhat jaundiced thoughts on the 2011 State of the Union

Candidate Obama in 2008 said repeatedly that tax breaks which reward U.S.-based corporations for "shipping jobs overseas" needed to be ended. After his inauguration, however, other, apparently more pressing issues (stimulus, health care, etc.) took precedence, and we heard little in his public addresses about ending such tax breaks. Even if the issue came up in Congress in the first two years of the administration (and it might have -- I don't follow tax policy closely enough to know), I'm reasonably sure those parts of the tax code are still in place. But the State of the Union speech this evening hit a rather different note on tax policy: the emphasis fell on lowering corporate tax rates, with an eye supposedly to creating a climate more conducive to hiring and job-creation. There was a glancing reference to ending loopholes in the corporate tax scheme, another glancing reference to ending tax breaks for oil companies, but the emphasis was clearly on a more 'business-friendly' approach -- one dictated, or perceived to be dictated, by political and economic 'realities'.

Listening to the State of the Union this evening, you'd think that lots of Americans are just chomping at the bit to start small businesses and become entrepreneurs, and all they need is a few encouraging words and more government investment in certain kinds of research-and-development to propel them off their butts and to the drawing boards. Of course there are creative people who start businesses in their garages and succeed brilliantly, but most small businesses, I believe, actually fail rather than succeed, and the commanding heights of the U.S. economy continue to be ruled by huge multinational corporations like, oh, General Electric, a company that has closed many U.S. plants and laid off many U.S. workers in the past 25 or so years (as have many others) and whose chairman was just appointed by the President to be head of a new 'jobs council'. (Bit of a through-the-looking-glass effect here?)

Another prominent theme in the speech tonight was education. The emphasis here was, as one might have expected, almost entirely instrumental. We need a more educated population because the jobs of the future will increasingly require post-secondary education, so the message went. But of course this is post-secondary education of a particular kind -- technical, scientific, narrowly vocational. If you're a young person not interested in science, applied math, and technology, the President's message had very little for you: no mention that I recall of the arts, literature, history, the social sciences, philosophy. Of course not: these things have no immediate, direct vocational value, and the President didn't even bother with the usual comforting cliché about the benefits of a liberal arts education in encouraging transferable skills, critical thinking, etcetera, etcetera. Such honesty is perhaps on one level brutally refreshing, though it does leave one wondering, as I say, about the fate of those whose talents lie in other areas than science and math. I guess some observers who are in a cruel mood might say, well, it's just their own bad luck for having been born with the wrong set of dispositions; and yet one can't help noting that most of the people who were loudly cheering the President's words in the House chamber are themselves not scientists, not applied mathematicians, not entrepreneurs (except for a few select invited guests), and the President's own education, of course, was not in math or the sciences.

If one has lived long enough and heard enough State of the Union addresses, it is possible to find them depressingly similar in certain respects: how many times have presidents called for improvements in education and in international competitiveness? For a simplification of the income tax system? Not even a president with Barack Obama's formidable rhetorical and expository skills can completely avoid the impression that much of these occasions consists simply in going through certain specified motions, much like a dancer or actor following a script, and that if the right keywords are struck -- competitiveness, entrepreneurial spirit, clean energy, high-speed rail, meeting the challenges of the digital world -- people will applaud and all will be well. And then of course you end with a reminder that "none of this will be easy," lest anyone actually dare to suppose that some concrete achievements might be quickly forthcoming. This is not, I hasten to add, a criticism of Obama so much as a criticism of the form: the State of the Union has increasingly become a set of quasi-mandatory figures of speech, much as have, say, the public statements of nominees in Supreme Court confirmation hearings.

The last part of the speech, on foreign policy, had the air of an afterthought. The obligatory references to Iraq, Afghanistan, and Pakistan, where the President said that safe havens of terrorist/extremist elements were shrinking as never before, conveniently avoiding any specific mention of the difficult, precarious position the government of Pakistan is in vis-a-vis, e.g., Baluchistan and areas in the northwest like North Waziristan. No mention of drone strikes, of course, since the U.S. does not officially acknowledge that they exist. No mention of grand strategy or anything approximating it. No mention of continuing violence and political gridlock in Iraq. And South Korea, our competitor in jobs and education and exports in the first part of the speech (though this was tempered somewhat by the call for ratification of the U.S.-South Korea free trade agreement), is magically transmogrified into our brave ally in the last part of the speech, standing up to potential aggression by the North. I think the whole foreign policy section could have been dispensed with: the performance had already been given, the prescribed moves made, the applause lines spoken, the new spirit of bipartisanship affirmed, and everyone was eager to leave.

Mystifications of the deficit hawks

Notwithstanding that the word economics comes (partly) from the Greek word for house (oikos), the analogy between the economic affairs of a private household and the economic affairs of a country -- an analogy beloved by the so-called deficit hawks -- does not work. A government is not a private household and the principles of household economy have only a marginal relevance to economic policy at the level of a nation-state.

Regrettably, neither Pres. Obama nor his advisers have publicly confronted and rejected this false analogy, and as a result it has largely held sway in public debate. As F. Llewellyn and J. Schwartz write in the current issue of Democratic Left:

The mass media reinforces the dominant conservative ideological view that the government should manage its finances as if it were a private household -- instead of realizing its power to expand long-term growth (and fiscal balance) by engaging in productive public investment.... And as President Obama has refused to take this ideology head-on, he is likely to suffer political losses in 2010 and could lose in 2012.... Even if the Democrats retain control of both chambers of Congress in 2010 and the president is re-elected in 2012, a cross-party alliance of deficit hawks could prevent passage of the real reforms we need.

Llewellyn and Schwartz call attention to a March for Jobs on Oct. 2 in Washington, which "represents the first nationally coordinated grass-roots effort to push back against the right wing, tea party, deficit hawk politics that captivate the mainstream media and the political class." I'm no longer much of a demonstration goer, but this is one demo I intend to make.

The world according to Fortune

In a commentary on last night's Nightly Business Report (PBS), Allan Sloan, senior editor at large of Fortune magazine, argued that the "real bailout" was not TARP (the Troubled Assets Recovery Program), but rather such measures as the Federal Reserve's keeping interest rates close to zero. He said, among other things:

"The real bailout is the stuff you don't see and that didn't have a dramatic congressional vote, the way TARP did. The Fed keeping short-term interest rates at almost zero is a huge, huge subsidy to banks and investment houses. It's a major reason they're now making so much money and it's a huge penalty to America's savers and retirees, whose income on money market funds and short-term CDs is almost nothing."

How nice to see that Mr. Sloan is concerned about America's "savers and retirees." But what about America's workers and the economy as a whole? Wouldn't things likely have been worse than they were, and for almost everyone, if the Fed had not kept interest rates close to zero? One hardly needs to be an economist to see that an extraordinarily severe recession prompted this reaction and that the Fed would have been criticized if it had not lowered interest rates in the face of mass unemployment and severe contraction. Now, it's true I don't know how much low interest rates actually helped the economy, and I'm aware of reports that it remains difficult for small businesses to borrow because banks are still wary of lending. But it does seem to me that describing the policy of low interest rates as nothing more than a subsidy to banks and a penalty on savers, without any reference to its intended effect on the economy generally, is not likely to promote (to quote Mr. Sloan again) "understanding" as opposed to "grandstanding."

P.s. On a somewhat related note, see today's Wash Post article about the Democrats' renewed emphasis on the U.S. manufacturing sector.

The yuan saga continues

The Chinese central bank's somewhat vague statement that it will move toward a "more flexible" exchange rate has drawn a range of reactions, from welcoming to highly guarded. This will be an important issue at the G-20 and beyond.

Lunacy on stilts

All Things Considered ran a piece this evening about a new shopping mall in East Harlem whose tenants -- mostly big retailers -- have agreed to hire a proportion of their work forces from among local residents. One of the retailers (Best Buy, I believe, though don't quote me on that) was reported to be proud that it had hired one of every two local applicants.

Why were the others turned down? Well, some of them, when asked in the interview why they wanted to work for the company, had replied that they needed a job -- and this was disqualifying!!

Here we have a program designed to encourage and facilitate the hiring of poor, inner-city residents, and an applicant fails if s/he tells the prospective employer that he or she wants to work for it because he or she needs a job. What is the applicant supposed to say? "I like meeting new people"? "I've always wanted to work for Best Buy/Costco/whoever"? "My goal is to be the manager of a retail establishment and this job will be a first step toward that goal"? Your guess is as good as mine. The point is that honesty is penalized and b.s. is rewarded. To someone immersed in the through-the-looking-glass culture of corporate America, this may make sense. To a sane person with some distance from that culture, it is crazy -- totally, thoroughly nuts.

Has Obama "spread the wealth"?

Looking back at this old post and the comments attached to it, I was reminded of the ruckus that Republicans made during the 2008 presidential campaign about Obama's alleged redistributionist beliefs. The then-candidate's remark to 'Joe the plumber' about "spreading the wealth" became a club that Republicans wielded mercilessly until election day.

Well, the Obama administration has been in office now for 15 months. Has it embarked on a concerted effort to redistribute wealth and income? Hardly. Rather, the administration's efforts on domestic policy have focused in large part on measures either to restore the status quo ante or to shore up safety nets in the face of the ongoing effects of the recession and the financial crisis. Health care reform as passed will, at some future point, raise tax rates a bit on upper-income taxpayers, and Congress I believe let the '01 Bush tax cuts, which primarily benefited the wealthy, expire. [Correction, 7/27/10: I was premature on this. They haven't expired yet.] But those are the only measures I can think of offhand which might be claimed to have some kind of redistributive effect. (Giving millions of more people access to health insurance, which the health care reform bill has as one of its main aims, is laudable but will not directly change the distribution of wealth or income much, if at all.)

In fact, it's the administration's relative lack of concern with redistribution, and its failure to move more aggressively to reduce unemployment and invest more heavily in public works, that has disturbed (to use a mild word) elements of the Left (or the progressive movement, if you prefer that terminology). For example, writing in the current issue of Democratic Left, Joseph M. Schwartz says:

"...the claim that the president's stimulus plan saved more than 2 million jobs...provides little solace to the some 25 million Americans either unemployed, underemployed, no longer searching for work or working far fewer hours than they need. Yet the administration is celebrating the creation of 140,000 (mostly temporary) jobs in March, when it would take job growth of 350,000 per month over the next 4 years (!) to replace the seven million jobs lost in the Great Recession (plus employ the 120,000 young persons who join the labor force each month)....

"President Obama fears that embracing the revenue-raising powers of progressive taxation opens him to charges of being a tax-and-spend, weak-on-defense and craven-on-terrorism Democrat.... Yet what good does the president's buffing his neoliberal credentials do when such policies won't lower unemployment rates? These rates virtually guarantee electoral defeat for his party in 2010 and for himself in 2012! Why not tell the truth: that amid a collapse in private investment and consumption, only massive counter-cyclical public investment in alternative energy, mass transit, and infrastructure can put Americans back to work and restore the consumer demand needed to spur private capital investment?"

So there you have it: far from Obama's having fulfilled right-wing fears that his "socialist" administration would embark on a massive redistribution of wealth, 15 months after Obama took office the leading theoretician of Democratic Socialists of America is complaining about insufficient "counter-cyclical public investment" in terms that he probably could have applied in the same way to every other president since FDR! Chances are that no president will ever favor measures that will satisfy Joe Schwartz and those (like me) who share his domestic-policy views, because structural forces constantly push presidents to the perceived middle of the political spectrum. In any case it was always clear that Obama, despite his remarks to Joe the Plumber, was not a committed redistributionist. The whole idea was preposterous, a right-wing fantasy cooked up in a desperate, futile effort to salvage McCain's presidential campaign.