An observer is entitled to wonder if this administration has taken leave of its senses. I have often written here that it might do better at some point, but it has been in office for 26 months and its policy record is a shambles. It has given precisely no indication of what it proposes to do about the trillion-dollar-plus deficits it is serenely racking up and projecting. The latest budget, in lockstep with its precedents, is a farcical mockery of prudent management: It forecasts no improvements, and such forecasts as there are are based on pie-in-the-sky euphoric assumptions that Treasury officials cannot render with a straight face. Habitués of this column would be aware that I consider these deficits to be effectively increases in the money supply, since the money has been spent and infused into the economy, even though most of the bonds that backed the deficits of the last three years were acquired by the Federal Reserve. I don’t believe that this alters the eventual nature of the impact of the spending on the economy.
There is nothing to indicate that the administration has any will to pay the debt down, rather than just devalue the currency in which it is denominated, which it can do now that the Europeans and Japanese are essentially doing the same, after putting up a smokescreen of austerity, given that the three currencies have no value yardstick except in relationship to each other. This is not responsible policy, and it is not consistent with retention of the U.S. dollar as the world’s principal currency. The dollar is likely to remain so only because of the similar European and Japanese conduct, and the fact that no one can believe a word the Chinese say about their currency or economy. The only hard currencies in the world by traditional standards — the Canadian, Australian, and Singapore dollars, the Swiss franc, and the Norwegian Krone — have a combined money supply of only about a quarter of what the U.S.’s M1 was before this administration and Federal Reserve discovered the joys of vertiginous “quantitative easing.” None of the Deficit Commission’s suggestions has resonated much with the administration that set it up and fobbed off queries about its own policies for almost two years by silently referring to its upcoming recommendations, like Richard Nixon campaigning in 1968 and saying on the subject of Vietnam, as he patted his breast pocket, “I have a plan.”
The retirement age, for Social Security and other purposes, has to be raised. Everyone knows it and nothing is said about it. And the secretary of the Treasury, Timothy Geithner, is the closest approximation of a cigar-store Indian in public life since the 80-year-old Democratic candidate for vice president in 1904, Henry Gassaway Davis. Soon the Treasury will be able to generate some revenue by issuing books modeled on the children’s series Where’s Waldo?, asking us to find Timothy Geithner and remember anything he has said.
The current-account deficit, which is inching back upwards toward its heights under the stratospheric innumeracy of George W. at $800 billion, is influenced most directly by the importation of foreign oil, and is thus closely bound to energy policy and the environment. It is hard to be sure if the administration has tacitly acknowledged that the global-warming alarm was a fraud, or is still padding furtively around, trying to pretend that its hour of “settled science” will come again. President Obama does not still seem to be trying to raise a $100 billion annual self-pauperization fund to pay to Mugabe and Chávez and Sudan’s genocidal Omar al-Bashir, to atone for the economic progress of the advanced countries. But the bovine-spongiform lunacies of cap-and-trade and mass-subsidized windmill construction are still being pushed through the Environmental Protection Agency by executive fiat.
We are still on the same shaming treadmill. Countries that finance almost all the extremist Muslim activities lower the oil price at the appearance of a freshet of American purposefulness, and raise it again when America sinks back into its petro-torpor. The administration, still reeling from the BP oil spill, refuses to open up offshore activity, incentivize a sizeable move to natural gas, or reduce imports by raising the price through taxes, which, as long as it were combined with other measures, would be a justifiable current-account- and budget-deficit-reduction measure, as well as a national-security move that has been overdue since shortly after Richard Nixon (it is disturbing how current events put one in mind of the least salubrious aspects of the Nixon administration) proclaimed Operation Independence, to reduce energy imports in 1973 and the nation rushed to impeach him instead.