Wednesday, January 27, 2010

State of the Union

On this day of the president's annual State of the Union address, I think the title of Andrew Wilson's Spectator article this morning sets us up nicely for what we'll hear: Coming Tonight: The Mythic Tale of How Barack Obama Averted the Next Great Depression. Of course, this is the argument being used to secure a second term as chairman of the Federal Reserve for Ben Bernanke. At the end of the day this really amounts to saying, "It coulda been worse." It could always be worse, but not much worse. The other barb being levelled at those, like myself, who think Benanke should not be given a second term, is that we are engaging populism, which is a peculiar form of demagoguery.

I like the counter-argument made yesterday by Senator Jeff Merkley of Oregon, who resonded to the "it coulda been worse" argument by accepting it at face value: "After the house has burned down you don't need a fireman, you need a carpenter." Here's a fun game we can play during the speech, keep score as to how much new, deficit expanding, government spending is proposed and how many times he still blames President Bush for the mess we're in. Add the new spending to all the other expensive initiatives, like cash for Toyota and Honda and the $787 billion non-stimulating stimulus, which are wholly creations of the current administration and the Democratic-controlled Congress. The non-stimulating stimulus does not even meet Pres. Obama's benchmarks for success, like keeping unemployment at or below 8%, etc. Pay no attention to yesterday's announced freeze on domestic discretionary spending, the savings to be realized by this freeze only amount to $100 billion more than the $150 billion jobs bill, which is in addition to the $787 billion non-stimulating stimulus, which the CBO is now saying will cost an additional $75 billion, thus making the savings in domestic discretionary spending only $25 billion. I agree with the editorial in today's Wall Street Journal: "stop spending more now: Drop the health-care bill, cancel the unspent stimulus spending from last year, kill the $150 billion new stimulus that has already passed the House, and bar all repaid bailout cash from being re-spent. Everything else is marketing."


Something I read a long time ago, during the administration of the first Pres. Bush, from P.J. O'Rourke's book Parliament of Whores, comes to mind: "giving money and power to Congress is like giving whiskey and car keys to teenage boys." This time-tested axiom was as true when the Republicans controlled the White House and both chambers of Congress, as it is now that the tables are turned and the Dems are in power. We need to get beyond the myth of gridlock, which states that unless one party controls everything nothing gets done. In the first instance, there are a lot of cases where getting nothing done would be excellent. Secondly, there needs to be opposition that has to be taken seriously, like having control of at least either the House or the Senate. Otherwise, we'll get more reckless spending that benefits almost everyone except those it supposed to benefit, everyday people. Even before tonight's announcement of many new, expansive and expensive programs, we are already beyond the realm of even any kind of rational Keynesian construct. The recent Supreme Court decision permitting no limits on what corporations can spend on elections goes a great distance to perpetuating this fiscal insanity. Apparently, change you can believe in is a variation on the old theme, plus ça change, plus c'est la même chose.

As Pete Peterson pointed out in his insightful book, written quite a few years ago now, the thesis of which is captured in the title, there is only one true bi-partisan activity: Running on Empty: How the Democratic and Republican Parties Are Bankrupting Our Future and What Americans Can Do About It. There is reason for optimism, the kind of revolt that took place in Massachusetts last week, which I do not see in partisan terms. It was a time when elections worked the way they are supposed to work. Even though Pres Carter infamous malaise speech effectively marked the end of his presidency (and rightfully so), his observation that the people of the United States will never have a better government than they deserve is true. It is a provocation that challenges us.

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