As Larry Summers prepares to follow the rest of Obama’s economics team into richly deserved unemployment (okay, not really, they’ve mostly got tenured professorships to fall back on, Summers at Harvard, Romer at Berkeley), who is the president going to name as a replacement? The smart money apparently is on Anne Mulcahy, the former CEO of Xerox.

But that’s not all she’s done with her business career: She was, until a few months ago, on the board of directors at Citigroup, the $45 billion bailout baby that is still partly owned by Uncle Sam, who is desperately trying to dump the stock but keeps driving the price down every time he tries to offload it.

What, Lloyd Blankfein and Tony Hayward turned the job down?

That thundering sound you hear is Republicans across the fruited plains dropping to their knees praying that Obama appoints her.

Pres. Barack Obama’s plan for yet another round (!) of stimulus spending, this time focused on highway infrastructure work, is, like so many products of this administration, something other than what it seems. What Obama is proposing is another backdoor bailout for spendthrift states, such as his political home state of Illinois, giving them large injections of federal money so that they can redirect spending that would be dedicated to highway projects to other areas—e.g., to the government-employees’ unions that are Obama’s most loyal constituency. Call it “No Blue-State Appropriator or Union Goon Left Behind, Part Whatever.”

The highway system in particular (and the transportation racket more generally) is a source of endless financial shenanigans and a rich seam of political patronage to be mined by Obama’s allies at the state and local levels. The federal highway system is maintained by a combination of federal and state spending (in a few cases, local spending as well) with the bulk of the states’ money coming from gasoline taxes and fees levied on car owners. Illinois, for example, levies a 39-cents-a-gallon tax on gas (the sixth highest in the nation, according to the Tax Foundation), and it also applies its general sales tax (another 6.25 percent) to gas. Once you figure in the total tax burden, government levies are probably a bigger contributor to the price of a gallon of gas in Illinois than is the crude oil from which it is distilled. So, what does Illinois get for its money?

Part of what it gets is the Illinois Department of Transportation (IDOT), one of those wonderfully, comically inept state agencies that does things that make political analysts laugh and taxpayers weep: things like deciding to suddenly stop doing roadwork because they are out of gas money (irony!) or threaten to start leaving roadkill on the highways unless the state gives them another $20 million.

Highway maintenance is important, of course. But that’s not all that IDOT does with its money. For instance, IDOT helps to maintain a vast network of full-employment programs for petty bureaucrats, called “regional planning agencies.” Every region in the state has one, and they are not small: The Chicago version lists 94 staffers on its website. Its budget of $16.7 million comes mostly from IDOT ($3.8 million) and the Federal Highway Administration ($11.5 million), with money reshuffled from other government agencies, local levies, and our friends over at the Environmental Protection Agency (no, really!) kicking in another $1 million or so. Nearly a hundred bureaucrats spending state transportation money, FHA money, and EPA schmundo, doing . . . what? Overseeing roadwork? Not exactly.

Because our entire government is turning into a bank, IDOT is in the business of making low-interest loans and grants for business-related projects that it likes under its Economic Development Program (EDP). These are supposed to be transportation-oriented projects, but “economic development” is a famously elastic definition under which to operate.

May I give you a little flavor for how carefully this economic-development business is managed? Here’s an excerpt from the minutes of a recent meeting of the Chicago Metropolitan Agency for Planning, or CMAP. Mr. Blankenhorn is CMAP’s executive director, Ms. Powell its chairman:

Mr. Blankenhorn said IDOT’s FY2010-11 budget includes $5 million to fund Metropolitan Planning Organizations statewide, with CMAP due to receive $3.5 million of that. He said the drawback is that all the money is supposed to be used for transportation planning, and while some of CMAP’s programs, such as community and economic development, can be tied in, most cannot. He said IDOT has promised to be flexible in what spending it will allow, but it’s really up to the General Assembly to provide funding for an agency it created to do more than transportation planning. He urged CAC members to mention the need for funding other areas if they meet with their legislators or people in leadership roles at other state agencies. Mr. Mellis asked if this means CMAP is fully funded for next year. Mr. Blankenhorn said the funding is buried in IDOT’s budget, but it’s in there. Ms. Powell said CMAP is technically not fully funded if it has programs it can’t pay for. Mr. Blankenhorn agreed and said he will no longer use the term‚ fully funded.

Buried in its budget, but they’ll be flexible! Sweet.

So, what does CMAP spend money on? Personnel, mostly — more than half of its budget goes to salaries and compensation: Just over $9.3 million is budgeted for FY2011, or about $100,000 for each of the 94 staffers listed. (I’m looking to see how lavishly compensated the top staffers are and will update you when I get the information.) If you start pumping billions of dollars into bridges and highway resurfacing, you free up a lot of money for the CMAPs and such of the world. But given the sorry record of previous “shovel ready” stimulus programs, don’t be surprised if the bridge-and-blacktop stuff is skipped altogether and the money goes straight into “community development” projects.

This is the sort of horsepucky upon which President Obama proposes to lavish another $50 billion. Stop him.

– Kevin D. Williamson is deputy managing editor of National Review.

Here’s a prediction: In the final analysis, Bush’s wars will come closer to meeting their goals and will cost far less than Obama’s stimulus.

You know that bank we own? No, not that one, this one. There seems to be some trouble:

An all-out war has broken out between Citigroup CEO Vikram Pandit and a prominent securities analyst who is saying that the big bank may be cooking the books by inflating its earnings through an accounting gimmick, FOX Business Network has learned.

The analyst, Mike Mayo, of the securities firm CLSA, has been telling investors that Citigroup (C: 3.70 ,+0.04 ,+0.96%) should take a writedown, or a loss on some $50 billion of “deferred-tax assets,” or DTAs. That is a tax credit the firm has on its financial statement that Mayo says is inflating profits at the big bank by as much as $10 billion.

For that critique, Mayo has been denied one-on-one meetings with top players of the firm, including CEO Vikram Pandit, Chief Financial Officer John Gerspach, and any other member of management, while other analysts enjoy full access to the bank’s top executives, FBN has learned.

In fact, Mayo hasn’t had a meeting with Pandit or anyone in Citigroup management since around the time of the financial crisis, in the fall of 2008, when Citigroup was on the verge of extinction and needed an unprecedented series of government bailouts to survive.

You know who ought to be able to get a meeting with Vikram Pandit? Tim Geithner. And if not Tiny Tim, then his boss, Barack Obama, who was the top recipient of Citigroup campaign contributions in the last election cycle, having taken in more than $730,000. You know who else might be able to get a meeting? New York Sen. Kirsten Gillibrand, who is the biggest recipient of Citigroup money in this election cycle so far.

Obama and Gillibrand should know: If you’re going to bail out the bank and take the bank’s money, then when it’s time for due diligence, you need to make sure that somebody steps up.

The Land of Lincoln (or, if you prefer, the Origin of Obama) is going broke, in a big, big way, as I have noted earlier. The main reason is it going broke is because its public-sector caste is robbing the rest of the state blind.

Have the taxpayers finally had enough? Is nearly a half-million dollars a year for a suburban Chicago parks director too much?

Dozens of Highland Park residents confronted their Park District commissioners Thursday night, demanding that they resign for approving a series of exorbitant bonuses, salary increases and pension boosting payouts to top district executives between 2005 and 2008.

. . . former executive director Ralph Volpe, finance director Kenneth Swan and facilities director David Harris were awarded bonuses that totaled $700,000 during a four-year span.

Additional salary increases during that time have or will provide the three executives with pensions that rival or surpass their total salaries to run the district in 2005. By 2008, Volpe’s total compensation topped $435,000.

Swan’s salary, which was $124,908 in 2005, spiked to $218,372 in 2008. Harris’ pay jumped from $135,403 to $339,302 during that time.

Even though Harris resigned in 2008, Park District officials confirmed that he was paid the remaining $185,120 left on his three-year contract. The district also gave him a sport utility vehicle while his compensation without the SUV in 2008 still totaled $339,302 for eight months on the job, officials said.

As Derb says: We’re in the wrong business. Get a government job.

Highland Park has 34,000 residents. Its park system is not exactly monumental. Get this: By way of comparison, the head of the Central Park Conservancy in New York City earns only  (only!) $364,000 — and the conservancy itself raises most of the park’s $25 million annual budget. New York is not exactly famous for the austerity of its public institutions. That Central Park boss must feel like he’s getting the short end compared to that Highland Park parks tycoon.

You don’t say:

Democratic U.S. Rep. John Yarmuth lashed out at President Barack Obama’s economic team Thursday, saying they show more concern for Wall Street than average Americans in a blunt election-year assessment from an Obama loyalist frustrated by a tepid economic recovery.

What started out as a bashing of Senate Republican leader Mitch McConnell by union activists, who pressed for more public transportation projects, shifted gears briefly when Yarmuth took aim at Obama’s inner circle of economic aides.

“I’m not real happy with our economic team in the White House,” Yarmuth said. “They think it’s more important that Goldman Sachs make money than that you make money. And that’s where we’ve got to change the attitude of this country.”

Dear Representative Yarmuth: There is a reason that Goldman Sachs acts like it owns the Democratic party. It does:

Goldman Sachs is one firm that’s learned that politics matters: The sinking investment bank received some $12 billion in bailout funds while its competitor, Lehman Brothers, was allowed to go bankrupt. Goldman operators move easily between government and the private sector and have played key roles in both Democratic and Republican administrations. But like the rest of Wall Street, they have tilted heavily Democratic of late. Goldman Sachs was the biggest business donor to Democrats in 2008, according to a Center for Responsive Politics report. Some 73 percent of Goldman Sachs’s millions in 2006–08 donations went to Democrats, but its outlook has been informed by bipartisan pragmatism: The banking bailout came from a Republican administration and was marketed by Goldman Sachs alumnus Hank Paulson, who literally begged, on bended knee, for the money. It was managed by assistant treasury secretary and former Goldman Sachs foot soldier Neel Kashkari and was politically nudged along by Bush’s chief of staff, Josh Bolton, another Goldman veteran.

With Democrats now controlling the elected branches in Washington, Goldman has an even stronger hand: Former chairman Robert Rubin is the dean of the Goldman Sachs Democrats, the group that ran economic policy under the Clinton administration and is doing the same under Obama. Rubin acolytes Larry Summers, Timothy Geithner, and Peter Orszag already are filling key economic-policy positions, and Rubin’s son, Jamie, is raising money on Wall Street for Democrats and acting as a talent scout for the Obama administration. The elder Rubin is sure to have the ear of all the major players. Geithner, hurt in the ruckus over his unpaid taxes, has turned to the bank for a reliable loyalist, hiring former Goldman lobbyist Mark Patterson as his top aide. And Geithner’s replacement at the New York Fed? William C. Dudley, former managing director of Goldman Sachs.

Other major nodes on the Goldman-Democratic nexus include Al Gore’s London-based private-equity firm, Generation Investment Management, which was founded with assistance from former Goldman boss Paulson and includes in its ranks a half dozen prominent Goldman veterans. Former Goldman Sachs Asset Management CEO David Blood is its CEO, earning the firm its nickname, “Blood and Gore.” Goldman Sachs is a significant investor in E+Co, Blue Source, and APX, all firms positioned to profit from the cap-and-trade schemes that are at the heart of Gore’s global-warming crusade.

You get what you pay for.

Noted Obama endorser Anne Applebaum on spendthrift Republicans:

Of course, parties can change, politicians can see the light, lessons can be learned—and perhaps some Republicans have learned them. But you cannot start from scratch. You cannot forget history. You cannot pretend that the Republican Party has not supported big and wasteful spending programs—energy subsidies, farm subsidies, unnecessary homeland security projects, profligate defense contracts, you name it—for the last decade. Before the Republican Party can have any credibility on any spending issues whatsoever, Republican leaders need to speak frankly about the mistakes of the past.

They also must be extremely specific about which policies and which programs they are planning to cut in the future. What will it be? Social Security or the military budget? Medicare or the TSA? Vague “anti-government” rhetoric just doesn’t cut it anymore: If you want a smaller government, you have to tell us how you will create one.

All excellent points. So, take it from an Obama endorser: Don’t fall for vague rhetoric, don’t ignore big, wasteful spending programs, and remember that, before you can have any credibility, you must speak frankly about the mistakes of the past.

Debt held by the public as a share of GDP:

Pres. Barack Obama is neither dumb nor dumber, but he is tempting fate if his message is: “things could be worse.” Yes, things could be worse — and if we keep on the current track, we stand a pretty good chance of discovering how much worse things could get.

I was not much surprised when the Obama administration more or less shrugged off the new GDP numbers over the weekend — numbers  suggesting our already anemic growth is slowing, perhaps portending the second part of a double-dip recession. But the Obama administration mostly is interested in those GDP numbers to the extent that they have an effect on the number they’re really watching: the unemployment rate.

GDP growth is long-term and complicated. Unemployment is short-term — and, unfortunately, it is gameable. You can do all sorts of things to mess with the unemployment numbers: You can keep a few hundred thousand marginally employed in federal temp jobs, you can shunt great streams of federal taxpayers’ dollars to state and local governments to encourage them to hire and retain workers, or you can keep extending unemployment benefits so that the sting of joblessness is felt a bit less acutely. But once you’ve done all that, you’re pretty much out of options.

Which means that you have to, in the end, deal with reality.

And the reality is this: No amount of Keynesian theorizing or federal demand-management is going to get us out of this mess, get the economy growing, or get unemployment down. In fact, it was precisely that kind of government demand-boosting that got us into this mess to begin with: Hey, let’s increase demand in the market for mortgage-backed securities! What could possibly go wrong? Remember? So instead of throwing away another Iraq-and-Afghanistan-wars-combined-sized pile of money on beekeeper subsidies and cars that run on unicorn juice, you can put that money to much better use by — not spending it.

We have a gaggle of economic problems. Unemployment is one of them. The debt-to-GDP ratio is another: It’s heading toward World War II levels in the near term and Greek levels in the medium term, if we do not change course soon. (Note to President Obama: I’m guessing you were more of a humanities guy back in college. You studied a little Greek drama, I’m sure. Remember the key ingredient in a Greek tragedy? Hubris. Think about that.) There is no magic formula for making the economy grow in order to buck up that GDP vs. debt calculation. But we can work on the other side of the equation: by cutting spending.

A real-estate developer (and Obama supporter) writes that he wishes somebody would sit down with Americans and give us what he calls “the grown-up talk,” which goes, in part:

The economy is likely to be stagnant for some time, unemployment is likely to remain high for the foreseeable future, and near term significant GDP growth will be elusive. The time has come for us as a country to retrench for the future. Retrenching is not fun. It’s hard. But it is necessary. We have to address our real problems and solve them and those problems start and end with entitlement spending. Like it or not, we are going to have to accept things like means based testing, and increasing mandatory retirement ages. Our country cannot afford to be held hostage by the AARP and aging baby boomers . . . . We are going to have to make painful cuts. Our economic well being does not rise and fall on the fate of beekeeping and ethanol subsidies.

There are obvious areas where we can afford to cut and should cut. We have to end our sacred cow mentality toward defense spending. Is is absolutely vital for the security of our country to spend 3 times more on defense than the next country? How much additional risk do we assume if we spend 2.9x more than the next country?

The upshot is that neither tax cuts nor additional stimulus spending is likely to cause the kind of growth hoped for by advocates of each approach. There’s a lot of malinvestment out there, a lot of misallocated capital, and it is simply going to take time, pain, and frustration to work through it. We cannot magic those problems away. But government can — and must — start to get its fiscal house in order, and that begins with getting out-of-control spending on a leash.

If Barack Obama wants to serve a second term, he’s probably got about six months to get religion on spending — and if the Republicans want to do something useful with all those congressional seats they are expecting to pick up in the next two elections (rather than just redirect pork away from green-energy boondoggles and back to black-energy subsidies and the Small Business Administration) then they are going to need a plan. Here’s one. It’s not perfect, but if any Republican has a better agenda — or, for that matter, any credible agenda at all — let’s hear the plan.

– Kevin D. Williamson is deputy managing editor of National Review.