The New York Times today:
The economy is spiraling down at an accelerating pace, threatening to undermine the Obama administration’s spending plans, which anticipate vigorous rates of growth in years to come.
Those spending plans are of course being sold by the president and others as ways of addressing the economic crisis, but the budget outlines released this week make clear what the Times article implies—that the crisis is rather being used as an opportunity to check off a wish list the left has long held dear but which has essentially nothing to do with reviving the economy.
This makes for a peculiar disconnect. The stimulus package, profoundly flawed as it was, could at least have been sold on the analogy of the New Deal: action directed specifically to a serious ongoing economic crisis. The package, like the New Deal, came with lots and lots of ulterior motives, was underpinned by extremely tenuous economic claims liberally mixed with vast overconfidence, and surely sought to use the crisis as an opportunity as well, but the essence of it was an attempt to throw money at the country to try to stimulate economic activity. It was an ill-conceived effort, but one aimed at addressing a real problem.
The programs outlined in the budget released this week cannot claim that excuse. They are massively ambitious technocratic undertakings aimed at moving the country in the direction of European social democracy, and they are not predominantly directed to spurring economic growth or addressing the consequences of an economic downturn. They are more like the Great Society than the New Deal, and the Great Society was not launched during an economic downturn but rather in the midst of an extended period of prosperity and growth. They are plans that require, and therefore conveniently “anticipate” (as the Times puts it) “vigorous growth rates in the years to come”—an assumption patently at odds with the economic reality of the moment.
A huge and complicated new tax on energy, which is essentially a tax on all economic activity, will not spur those vigorous growth rates, and neither will the new federal health insurance regulatory scheme—directed as it is toward creating the conditions for basically putting the entire country on Medicare. These are not only bad ideas, they are bad ideas suited to a time of plenty. In this lean time, they seem astonishingly counterproductive.