Told You So

I warned months ago that my fear of an Obama election was the recasting of America as a European style state. A sampling of recent articles that make the case....

We Are All Socialists Now
In many ways our economy already resembles a European one. As boomers age and spending grows, we will become even more French.

The interview was nearly over. on the Fox News Channel last Wednesday evening, Sean Hannity was coming to the end of a segment with Indiana Congressman Mike Pence, the chair of the House Republican Conference and a vociferous foe of President Obama's nearly $1 trillion stimulus bill. How, Pence had asked rhetorically, was $50 million for the National Endowment for the Arts going to put people back to work in Indiana? How would $20 million for "fish passage barriers" (a provision to pay for the removal of barriers in rivers and streams so that fish could migrate freely) help create jobs? Hannity could not have agreed more. "It is … the European Socialist Act of 2009," the host said, signing off. "We're counting on you to stop it. Thank you, congressman."

There it was, just before the commercial: the S word, a favorite among conservatives since John McCain began using it during the presidential campaign. (Remember Joe the Plumber? Sadly, so do we.) But it seems strangely beside the point. The U.S. government has already—under a conservative Republican administration—effectively nationalized the banking and mortgage industries. That seems a stronger sign of socialism than $50 million for art. Whether we want to admit it or not—and many, especially Congressman Pence and Hannity, do not—the America of 2009 is moving toward a modern European state.

We remain a center-right nation in many ways—particularly culturally, and our instinct, once the crisis passes, will be to try to revert to a more free-market style of capitalism—but it was, again, under a conservative GOP administration that we enacted the largest expansion of the welfare state in 30 years: prescription drugs for the elderly. People on the right and the left want government to invest in alternative energies in order to break our addiction to foreign oil. And it is unlikely that even the reddest of states will decline federal money for infrastructural improvements.

If we fail to acknowledge the reality of the growing role of government in the economy, insisting instead on fighting 21st-century wars with 20th-century terms and tactics, then we are doomed to a fractious and unedifying debate. The sooner we understand where we truly stand, the sooner we can think more clearly about how to use government in today's world. -Meacham & Thomas, Newsweek

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Here Comes the State
Voters, then, have every reason to expect from Washington a stimulus bill that will help restore growth. But they aren't getting one. The stimulus plan is flawed. It marries a few measures that count as stimulus with tons of spending on a domestic agenda that the Democrats have waited years to push through Congress. Why? Because Obama and the Democrats who run Congress are more interested in an idea than they are in economic recovery.

That idea has two components. One: The conservative era, with its more-free-than-not markets, is over.
Two: Now is the time to complete the American welfare state by (a) introducing universal health care and (b) fostering economic equality through higher taxes on income, capital, and estates and increased union membership.
The stimulus bill needs to be seen in this light. It is just the beginning. For Obama, the stimulus is a "down payment" on "investments" in health care, alternative energy, education, scientific and medical research, and infrastructure. When you buy a car, you don't stop with the down payment. There are many, many more "payments" to come. How large will these payments be? How long will we be paying them?

Our newly political economy has diverse sectors. This week the administration will lay out its rescue for the banking sector. The plan likely will combine buying up bad mortgage-backed securities with guaranteeing financial institutions' balance sheets. This might or might not help the global financial system. What it definitely will do is further enmesh the government in that system. -Matthew Continetti, The Weekly Standard
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The Stimulus Tragedy
Obama bets that we can spend our way to prosperity.
President Obama has started to play the "catastrophe" card to sell his economic stimulus plan, using yesterday's terrible January jobs report to predict doom unless Congress acts. No doubt he'll get his way, but the tragedy of this first great effort of the Obama Presidency is what a lost opportunity it is.

Everyone agrees that some kind of fiscal stimulus might help the economy, and that running budget deficits is appropriate in a recession. The stage was thus set for the popular President to forge a bipartisan consensus that combined ideas from both parties. A major cut in the corporate tax favored by Republicans could have been added to Democratic public works spending for a quick political triumph that might have done at least some economic good.
Instead, Mr. Obama chose to let House Democrats write the bill, and they did what comes naturally: They cleaned out their intellectual cupboards and wrote a bill that is 90% social policy, and 10% economic policy. (See here for a case study.) It is designed to support incomes with transfer payments, rather than grow incomes through job creation.

This is the reason the bill has run into political trouble, despite a new President with 65% job approval. The 11 Democrats who opposed it in the House didn't do so because they want to hand Mr. Obama a defeat. The same is true of the Senate moderates of both parties working to trim their $900 billion version. They've acted because they can't justify a vote for so much spending for so little economic effect. You know a piece of legislation is in trouble when even its authors begin to deny paternity, as economist Martin Feldstein has recently done. - Wall Street Journal

Post sponsored by Quality-Resumes.