Congratulations to Texas and the Aggies on becoming the home of a new federally backed center for emergency vaccines. The $91 million project, a joint effort by Texas A&M University, the federal government, and GlaxoSmithKline, will be responsible for the development and manufacture of vaccines during pandemics and other emergencies. Governor Rick Perry is of course very excited about this: The project will mean as many as 7,000 new jobs in Texas, and billions in expenditures, largely from out-of-state private and public sources.

Is this good news or not?

There are two ways of looking at this. Government spending is rarely welcomed here at Exchequer, and that $91 million is another $91 million we’re down in the hole. And while Texas and the Perry administration deserve great credit for making the state remarkably attractive to a variety of enterprises and investors, it is no secret that Texas is not above sweetening the pot for potential investors, that its methods for doing so are not immune from politics, or that the state’s leaders have a talent for keeping federal money pouring into the state for sometimes questionable projects. Practically every state and a large number of cities have economic-development funds similar to Texas’s; my impression is that Perry & Co. are no more impure than any other state administration when it comes to goosing the free(ish) market with tax dollars — they’re just a little bit better at it.

On the other hand, when government spends money, it should spend money on public goods. “Public good” is a term with a fixed meaning in economics, and it is not synonymous with “stuff that is good for the public” or “stuff the public likes.” Most of what the federal government spends money on (entitlements) is clearly not within the category of public goods, while a few things (missile defense, border patrol) clearly are. Some things, such as the federal highway system, are in a grey area, and might be considered public or non-public goods, depending on your interpretation.

Some public-health measures, such as mosquito-eradication programs in malarial areas, are clearly within the definition of public good, and it seems to me that things like the Centers for Disease Control and the  Aggies’ new pandemic-vaccine center are, too. And at the risk of sounding like a home-state cheerleader for Texas, if that $91 million center performs as advertised, then that is a relatively small price to pay for a measure of insurance against otherwise unmanageable, unforeseeable infectious epidemics, which are on my list of underrated threats. And that $91 million is not only a good investment in the event of a sudden epidemic; it is a good investment even if such an event never comes to pass, for the same reason that accident insurance is a good investment even if you never get in a wreck: Risk mitigation is inherently valuable, even if the trauma you are insuring yourself against never materializes.

But that all points to the unending challenge of trying to get government to behave: Even if  we concede that such a center is a good investment and well within the purview of federal action, we still have to worry about a great many variables: Will the project be managed effectively and efficiently? Will Glaxo’s lobbying arm turn it into yet another opening on the corporate-welfare trough? Will the project overgrow its original mandate through the inevitable mission creep associated with such undertakings? Is it a better use of resources than all the others to which we might have dedicated those funds?

Amity Shlaes’s much-admired new book on Calvin Coolidge deserves all the praise that has been heaped upon it, not least because her Silent Cal is not merely a prudent and admirable figure but an inspiring one: President Coolidge, hunched over the federal accounts with his budget generals, is not just a penny-pinching puritan (though the world could do with a good deal many more penny-pinching puritans): He is a man expending every effort to ensure that Americans enjoy a government that is reliable and honest, a worthy steward of the wealth with which it has been entrusted. Self-government works well only when the people trust their institutions.

Progressives often complain that the contemporary Right is increasingly anti-government in both its rhetoric and its policy preferences; some moderate Republican types, such as David Frum, echo that criticism. But one possible reason that conservatives have arrived at a greater distrust of the government is that the government has become less trustworthy. The self-dealing and the friends-and-family appropriations that we now regard as business as usual in Washington may be entirely legal, but they are nonetheless wrong — not just ill-advised but immoral — and it is not surprising that Americans’ trust in public institutions (and many private institutions, such as Wall Street firms) is pretty low. This is a critical problem for a self-governing republic. Even when it comes to such core governmental functions as national defense and law enforcement, it is difficult to believe that all (or even most) of every $1 appropriated to the relevant agencies is used for the purpose intended.

It leaves us with a kind of double suspicion: We suspect that the federal government will often invest our resources in doing things that are none of its business, and we also suspect that it will manage to do a great deal wrong even when it is performing tasks that are appropriate to it. Progressives believe that our politics would be less toxic if conservatives were not so hostile to the public sector; conservatives believe that our politics would be less toxic if the public sector were less deserving of our hostility.

While Texas likes to boast of its economic performance in recent years, it has also made some important advances in the intangible area of public trust, for instance by making detailed information about government outlays easily available to the public. The state’s controller, Susan Combs, is something of a crusader when it comes to openness and transparency in government. And while the libertarian tendency is currently on the ascent among Republicans, rolling back government is only one part of the conservative agenda: Making sure that government operates with a sufficient probity and thrift is an important part, too, especially for conservatives who seek an active role in government. We’d like a smaller government, sure, but we also would like a government we can trust. That is something that has to be put to the test every day, whether there is $1 at stake or $91 million.

— Kevin D. Williamson is National Review’s roving correspondent. His newest book, The End Is Near and It’s Going to Be Awesome, will be published in May. 

One thing that is missing from the debate about economic policy is the critical ingredient of humility. Humility isn’t critical for moral reasons, although humility is a virtue, and we would like our politicians to be more virtuous. Instead, humility is a practical good in the economic-policy debate, because if the effects of economic policies were decisive and predictable, then there would never be a recession or non-trivial unemployment. But there are recessions and widespread unemployment, which means either that politicians’ ability to manage the economy is much more limited than our political rhetoric suggests (more likely) or that incumbents are intentionally enacting bad policies that they know will produce recessions and unemployment (less likely).

Politicians have obvious incentives to pretend that they have more knowledge and power than they do. Nearly as much damage is done by the priesthood of professional economists and journalists, who for their own narrow interests also exaggerate what politics can achieve, be those interests professional or political or some combination of the two (assuming they can be distinguished).

This lack of humility produces headlines and sound bites like this one on Sunday from The Atlantic: “Tax Cuts Don’t Lead to Economic Growth, a New 65-Year Study Finds.” The piece itself, by business editor Derek Thompson, isn’t terrible, and one has to assume that, like most writers, he probably isn’t responsible for his headlines. But the headlines dominate political discourse, which is by its democratic nature shallow.

In fact, correlating tax-rate changes to growth rates is very close to being meaningless. That’s because the relevant comparison isn’t between observed growth rates under various tax regimes but between observed growth rates and the growth rates that we would have observed under different tax regimes. That more meaningful comparison has the academically and journalistically undesirable quality of being unknowable. Social scientists frequently measure the wrong factor because it is measurable, when the right factor is not.

Further, the effects of tax changes probably are not immediate in the vast majority of cases. If our theory is that changes in the tax code change incentives for consumers, workers, investors, and firms, then you have a great number of factors that are going to have effects that become manifest over very different time intervals. If you eliminate the sales tax on computers for one month, then you might expect a spike in month-over-month sales for one month, and that is fairly easy to estimate. If you change capital-gains-tax rates, research-and-development credits, capital-investment-write-off rules, etc., then you have a whole different range of temporal variables, since developing a better artificial hip and building a factory to produce that improved artificial hip are very different enterprises, requiring different time commitments. In an economy as complex as ours, such factors probably are not predictable even in principle.

Which is why even very smart people, such as Atlantic writers, produce maddening paragraphs, such as this one from Mr. Thompson: “Well into the 1950s, the top marginal tax rate was above 90%. Today it’s 35%. But both real GDP and real per capita GDP were growing more than twice as fast in the 1950s as in the 2000s. At the same time, the average tax rate paid by the top tenth of a percent fell from about 50% to 25% in the last 60 years, while their share of income increased from 4.2% in 1945 to 12.3% before the recession.”

All of that is trivially true. The tax code in 2012 is different from the tax code in 1955. Lots of other things are different, too: Japan emerged from the postwar rubble to become a major economic power and then went into gentle decline during the subsequent years, the ruins of Europe were rebuilt, a European monetary union was created and then began coming unglued, Germany was reunited, the Soviet Union was disunited, China began to liberalize its economy, a globalized information economy emerged with India and South Korea winning significant places in it, the Internet became a critical economic reality, the population of the planet more than doubled, worldwide markets were integrated, standardized containerization revolutionized shipping, smallpox was eradicated, life expectancies grew in many parts of the world, U.S. birth rates declined . . . and so on. Telling us that tax rates were X in the 1950s and Y in 2012, while growth was A in the 1950s and B today, tells us something approximating nothing.

It certainly doesn’t tell us “Tax Cuts Don’t Lead to Economic Growth.” Try turning it around: What might the sentence “Tax cuts lead to economic growth” even mean? Maybe: “Tax cuts, independent of all other variables, consistently and predictably lead to economic growth”? I very much doubt that anybody who is not a political speechwriter or talking head would argue such a thing. How about: “In some well-defined circumstances, tax reductions may contribute to higher levels of economic growth than probably would have been observed had higher rates prevailed”? Here we have the opposite problem: Does anybody not believe that? Between the data and the headline falls the Shadow.

After 40,000 years of civilization, we very clever creatures still cannot predict the weather with any reliable degree of detailed accuracy more than about a week out. (But some of us still pray for rain.) Scientists who have spent their lifetimes working on extraordinarily specialized problems routinely are baffled by new and unexpected developments. (But some of us still believe the universe is turtles all the way down.) Our highest-paid stock-pickers routinely are outperformed by darts thrown at a board, by kindergartners, and by monkeys. (But some of us still believe in the sure thing.) On and on it goes: Executives reliably make disastrously bad decisions about their own businesses, and most entrepreneurs fail.

In spite of the massive piles of evidence surrounding them, politicians routinely tell us that if we will merely give them the power to do X, then Y surely will follow. The Obama administration predicted that if the stimulus and other policies were enacted, then unemployment would decline to 5.2 percent. (It isn’t 5.2 percent.) Mitt Romney says that if we enact his agenda, the result will be 4 percent growth. Personally, I think that politicians should be goosed with a Taser every time they use the word “percent” in a future-tense sentence. But to be more charitable, let’s instead conclude that such projections should be viewed skeptically.

Unhappily, many economists desire to play kingmaker and therefore lend the prestige of their discipline to the wishful thinking of politics, where arguments are oversimplified to a point that is indistinguishable from dishonesty. They are aided in this by journalists who provide a bridge from the rigorous world of academic research to the standards-free world of political discourse. The result is something like a fairy tale or just-so story. That voters choose to accept such fanciful promises is another piece of evidence that our politics is not rational but ritual.

Newt Gingrich has received the endorsement of J. C. Watts, a former member of Oklahoma’s delegation to the House and an influential conservative even after nearly a decade in political retirement. The endorsement speaks well of Gingrich.

Among other things, Watts had this to say:

When you consider where we are today, and you think about the good old days — of balanced budgets, entitlement reform, and paying down our national debt, getting tax relief — as a Republican majority, Newt Gingrich was the speaker. We haven’t seen things like that in the last thirteen years.

No, we sure haven’t. I am pleased that Watts put the balanced budget at the center of his case for Gingrich (even though the budget was not really balanced, once you account for the debt held by the so-called trust funds associated with Social Security and Medicare — it still was a good start).

But I wonder if Watts has considered all the implications of his argument. As speaker, Newt Gingrich superintended a real reduction in federal spending as a share of GDP: It was 21 percent in 1994, and down to 18.2 percent by 2000. That is, in my view, his most praiseworthy legislative accomplishment. But, as I argue in the current edition of National Review, the notional surpluses of the Gingrich era were the result of a double-barreled approach to fiscal balance, built in part on two significant tax increases. Gingrich et al. opposed those tax increases, but did not rescind them.

In 2000, the year of our largest notional surplus, tax collections hit nearly 21 percent of GDP. In 2011, they’ll be about 14.4 percent of GDP, according to the Congressional Budget Office, only about 70 percent of their 2000 level.

Economic conditions and tax policy are of course quite different in 2011 from what they were in 2000. Consider the longer-term picture: From 1994 to 2000, taxes averaged 19.2 percent of GDP, hitting a high of 20.6 percent in 2000. Even accounting for the surpluses, we ran a net deficit during that period, with the average annual deficit at 0.3 percent of GDP. In contrast, 2000–11 tax collections averaged 16.8 percent, a difference of 2.4 percent compared with the Gingrich era. The average deficit from 2000–11 was 4.2 percent of GDP. Put another way, the difference in tax collections during those two periods was 2.4 percent, and the difference in deficits was 3.9 percent. Spending increased during the post-Gingrich era, and increased radically in recent years: From 1994–2000, spending averaged 19.6 percent of GDP; from 2000–11, spending has averaged 20.8 percent of GDP. That’s a significant difference, but not an earth-shaking one. On the other hand, consider that from 2009–11, spending has averaged a much larger 24.7 percent of GDP, a level that would be sustainable at no level of tax collections in American history, including the years of World War II. 

As a share of GDP, Americans paid higher taxes in the Gingrich years than they pay now — significantly higher. Likewise, government spending as a share of GDP was substantially lower. So, my fancy new economic theory goes like this: higher taxes + lower spending = smaller deficits. Democrats might recall that the 1990s were not a time of Dickensian austerity or a national policy of Social Darwinism; Republicans ought to remember that the 1990s, despite the higher taxes, did not result in the Swedenification of America. For comparison, consider that the average tax level of the Reagan years was 18.2 percent of GDP, closer to the Gingrich years than to the present.

A balanced budget is the result of tax policies and spending policies. If Watts is calling for a return to the taxing-spending balance of Gingrich’s speakership, he is calling for a significant tax increase, which puts him at odds with the man he just endorsed. Practically speaking, anybody who is calling for a balanced budget who has not proposed something on the order of $1.5 trillion in annual spending cuts is calling for a tax increase. That does not mean that he is calling for a tax increase of the sort that Barack Obama and his congressional allies wish to see implemented. But it does mean that he is calling for a tax increase of some sort.

Gingrich, of course, is not calling for a tax increase, but for a very large tax cut. Which is to say, he wishes to return to the attractive fiscal outcomes of the 1990s without returning to the policies that produced them. This does not seem very sensible to me.

It bears repeating — daily — that taxing and spending is in the main the outcome of decisions made in Congress, not in the White House, which is why it makes sense to write about the Gingrich surpluses, rather than the Clinton surpluses. And which is why an intelligent Republican presidential candidate might want to begin his fiscal agenda with this guiding principle: “I shall be joined at the hip with Paul Ryan.”

A final thought: Those Gingrich supporters who dismiss Jon Huntsman on the grounds that he served as an ambassador under the Obama administration should take to heart this 2008 Associated Press report:

J. C. Watts, a former Oklahoma congressman who once was part of the Republican House leadership, said he is thinking of voting for Obama. Watts said he is still a Republican, but he criticizes his party for neglecting the black community. Black Republicans, he said, have to concede that while they might not agree with Democrats on issues, at least that party reaches out to them.

“And Obama highlights that even more,” Watts said, adding that he expects Obama to take on issues such as poverty and urban policy. “Republicans often seem indifferent to those things.”

Now, who wants to call J. C. Watts a RINO? Anybody?

From Williamson’s Political Dictionary, Vol. 1: newt, [noot; nyoot] v., to put one’s foot in it while putting one’s finger on it.

The usual half-wits (and quarter-wits, and hemidemisemi-wits) are having a great deal of fun with Newt Gingrich’s characterization of child-labor laws as “truly stupid,” a comment that launched a thousand Dickensian exaggerations. Never mind that Newt Gingrich was undeniably correct, even if he does have a knack for saying the right thing in a way that makes it sound wrong.

The former speaker is working from the radical notion that if we lower barriers to work-force participation then we might reasonably expect to see higher levels of work-force participation, and that if we erect barriers to work-force participation, we might reasonably expect  to see less of it.

Here are a few truths that rarely are spoken: About half of Americans will not really benefit from a four-year college education, and we should not waste the time and resources to put them through four (or five, or six) years of undergraduate work at a satellite campus of Mediocre U. And let us not overlook the fact that one of the most precious resources being wasted is the time, energy, and money of millions of 18-to-24-year-old Americans who could be making better use of their youth. The evolution of the bachelor’s degree into a general professional license has resulted in the massive misallocation of human capital (and financial capital) that mostly serves the economic interests of a very narrow and parochial special-interest group: college faculty, staff, and administrators, a reliably overpaid and underworked population of sinecure-clingers insulated from economic realities by our baroque education-funding system and protected by such medieval institutions as tenure.

Gingrich was right to say that the real value of a first job isn’t the money one earns but the lessons one learns: how to show up on time, how to be honest, how to be dependable, how to take direction, how to separate one’s personal life from one’s professional obligations, etc. Having fewer 16-year-olds working as part-time janitors does not mean that you will have proportionally more of them fine-tuning their Harvard admission essays. Having more 16-year-olds working as part-time janitors does not mean that we will have proportionally fewer rocket scientists and Ezra Pound scholars down the road. Most of our young people aren’t headed down that route.

One of the most dangerous and destructive tendencies in American public life is the upper class’s habit of generalizing its own desires, tastes, approaches, and interests onto the body politic at large. Thus did (for example) Governor Reagan help transmit the Hollywood elite’s culture of at-will divorce to the middle and lower classes. Unlike the rich and famous, the women and children of the middle and lower classes are not protected by vast amounts of money and social capital, and therefore were poorly positioned to endure the havoc that no-fault divorce wrought upon American family life, a development from which the nation probably never will recover. (Oops.) Our elites seem to be imagination-challenged, and they can never quite realize that other people are making their life choices while consulting a very different menu of options. This class blindness is the source of Karl Rove’s sputtering horror at the idea of his children “picking tomatoes.” It is also the source of Barack Obama’s managerial liberalism, which implicitly holds that if the poor ignorant wretches in the non-elite classes would only make the same life decisions as Barack and Michelle Obama, then they would get (roughly) the same outcomes. But that is not the case.

There is a relatively small minority of high-IQ Americans who form what Charles Murray famously called the “cognitive elite.” There is a larger group, but still a relatively small one, of very driven people who are attracted to a particular occupation early in life — those people who always knew that they were going to become doctors, truck drivers, teachers, boxers, newspapermen, farmers, automobile mechanics, what have you, and take the necessary steps to do so early in life. But there is a relatively large group of young people who are of average or below-average IQ, have no particular skills, and no clear path set for them early in life. Early work experiences are critical for people in this group, both because they instill necessary habits and provide necessary experience, and because having a variety of early work experiences provides a richer range of options. The more work experiences one has early in life, the more likely one is to encounter an occupation that matches one’s talents and interests.

In the course of doing a little reporting on long-term unemployment in New York (see “Keeping Blacks Poor,” National Review, February 2010), I learned some depressing stuff:

There’s not much other work to be had in the Bronx, where unemployment is currently at about 13.1 percent. Much of the Bronx is young and black or young and Hispanic. Nationally, the unemployment rate among blacks rose to 16.2 percent in the year-end numbers, while the rate for whites fell to 9.0 percent. For black youths, the numbers are startling: 50 percent for 16–19-year-olds, 26 percent for 20–24-year-olds. A study from the Community Service Society of New York puts actual work-force participation among black men 16–65 years of age in New York City at about 50 percent, and the number for young black men nationwide is just 40 percent.  Never mind the jobless recovery: For a great many black Americans, it’s been a jobless eternity, in good times and in bad. Why? 

One of the factors that stood out in my interviews was lack of early work experience. These perennially unemployed thirtysomethings hadn’t lost jobs at factories or been the victims of outsourcing: They had never had a real job of any kind. In many cases, many of the men in their families and circles of acquaintance had never had a long-term job of any kind, either:

At 35 years old, C has never held a job. His friends, acquaintances, known associates (C is a little foggy on whether he’s on probation or parole, but he’s got some known associates): no jobs, never really had them. His father? Do not ask C about his father. In fact, the only people C can think of who have jobs are women: His mother worked, the mother of his children works. He did know a woman who was dating a taxi driver once. C says he would like to work but is more of an independent businessman. He describes the informal work he has done as “this and that.”

There are always economic tradeoffs, of course. But the alternative to work for a lot of teen-agers is not lacrosse or volunteering on the Obama campaign or putting in a couple extra hours of study for the SAT. If you want to say that as a general rule we’d prefer to keep teen-agers away from work during the school year because we want to emphasize academic achievement, fine: But you should have the intellectual honesty to admit that you are simply elevating the interests of one group of young people over those of another. It’s a lot like the minimum wage: You may think that putting a floor on wages is worth the tradeoff of higher unemployment for low-skilled workers and permanent unemployment for the least-skilled workers, but you’re still making a trade. (And maybe you’re not the person best situated to judge the economic interests of people you’ve never met and about whom you know nothing?)

Gingrich’s suggestion that young people be employed doing manual labor at the institutions charged with educating them is characteristically insightful and bold — meaning that he’s already walking it back a little bit, because All The Right People are aghast that somebody, somewhere, may not be dreaming of seeing the leaves turn in Princeton.

—  Kevin D. Williamson is a deputy managing editor of National Review and author of The Politically Incorrect Guide to Socialism, published by Regnery. You can buy an autographed copy through National Review Online here.

I am pleased that Republicans put up Rep. Paul Ryan as the alternative to Barack Obama’s “investment” happy-talk last night. Love the Ryan Roadmap or hate it, Ryan has had the guts to talk realistically about some really hard issues, including putting out proposals for entitlement reform that lend themselves to easy demagoguery by the likes of Chuck Schumer, who has been in Congress for more than a decade without taking one single baby step toward balancing the budget or addressing the entitlement crisis. The Republicans could have put up some unthreatening diversity candidate to babble about inane generalities; instead, they put up a white guy from Wisconsin who wants to go hammer-and-tongs after the hardest problem facing our nation today. That’s a rare bit of political courage from a party usually short on it.

As for the president’s speech: As always, I’m neither an economist nor an investment adviser, but I’d say the outlook for little green pieces of paper produced by the U.S. Bureau of Printing and Engraving does not look so hot. Obama seems awfully impressed by the fact that the for-profit police state based in Beijing makes solar panels. He’s not quite New York Times op-ed page in his enthusiasm for China’s central-planning “investment” model, but he’s getting there.

I liked the fact that the great American Demosthenes stumbled over that story about the Chilean rescue company, saying that volunteers sometimes worked “three- or four-hour days.” Three- or four-hour days? What about coffee breaks? Are these government workers? (He corrected himself: He meant three or four days straight.)

Executive summary: Despair.

—  Kevin D. Williamson is a deputy managing editor of National Review and author of The Politically Incorrect Guide to Socialism, just published by Regnery. You can buy an autographed copy through National Review Online here.

Good news for Generic Republican, who already has established himself as a legitimate contender for the White House in 2012: OPEC is not bailing us out. The oil cartel is making it known that it is cool with $100 oil and will not act unless prices move significantly higher and stay there. Oil, like most commodities, has been rising steadily as governments around the world keep their printing presses running to dump new money into the global economy.

Oil producers have a real good to sell, one with intrinsic value. They do not want to be paid in devalued currencies. Neither do producers selling precious metals, fertilizer, farm products, etc., which is one reason why wholesale food prices are going zoom, zoom, zoom.

Oil at $100 and unemployment ~10 percent is bad news for Obama’s re-election hopes, of course. (It should go without saying that it is bad for America, too, and that I do not wish for economic suffering to be visited upon my fellow citizens in order to hamper the Obama administration.)  But you know what’s even worse than $100 oil? $150 oil, which the CEO of Gulf says would not surprise him. There will be tremendous political pressure put on OPEC and the other producers if that happens. But why would OPEC want to bail us out? What is in it for them? Devalued U.S. dollars? If the Obama administration will not get behind a solid dollar for sound economic reasons, maybe narrow political self-interest will be enough.

We spend a lot of time thinking about our competition with China in producing goods and services; but it is equally important, probably more important, that we compete with the Chinese and the other rising economies as consumers of goods and services. The United States is still the big boss in terms of global energy demand, but small, steady changes elsewhere are making it a new game. The energy autarkists who like to rave about the evils of “Arab oil” (never mind that the biggest part of our oil imports are Canadian and Mexican) fail to appreciate that with every passing month it matters a little bit less to the Arab world whether we buy their oil or don’t. Clout has a shelf life, and money talks. What is our money saying, vis-à-vis oil, food, metals, etc.? I think it’s saying “Help me!” in that tiny, terrifying little voice at the end of the original The Fly.

Back to Obama: I’m starting to think that we despairing deficit hawks have to be more politically engaged. I’ve operated for the past several years under the theory that when it comes to the big, macro debt-and-deficit issues, it does not much matter who holds political power: I did not see much evidence that a Republican Congress or a Democratic Congress was going to act before the market acts, forcing fiscal discipline on the United States by jacking up borrowing costs. Yes, there are differences, but the differences between the parties is very small compared with the difference between either of the parties and what reality requires.

But I am starting to reconsider that. The Republican party still is not serious about the fiscal issues, but there is an element within the party that is, and it needs to be encouraged and empowered. Somebody has a chance to own this issue. Who will?

—  Kevin D. Williamson is a deputy managing editor of National Review and author of The Politically Incorrect Guide to Socialism, just published by Regnery. You can buy an autographed copy through National Review Online here.

Jim DeMint will work against the Obama-GOP tax deal, on excellent principled grounds: It contains unfunded spending and it increases uncertainty by leaving tax rates temporary. This is what serious fiscal leadership looks like: There is not much political juice for DeMint in opposing the tax plan — socialist Bernie  Sanders is threatening a filibuster, too — but he is serious about the deficit.

There is much that I do not like about the new bipartisan deal on tax rates. One of those things is the extension of unemployment-benefit spending without compensatory cuts elsewhere in the budget. I think unemployment insurance is one of the better social safety-net programs, but that $56 billion still has to come from somewhere. There’s a $161 million NEA budget, the $600 million a year that ethanol subsidies put in the pockets of BP alone, $16.5 billion in 2010 earmarks . . . that failed $50 billion foreclosure-prevention program would have just about covered it. It’s not like there are no cuts to be made.

What is worse is this: It is yet another product of consumer-driven economic policy, premised on the mistaken belief that robust consumer spending, which is alleged to (but does not) account for 70 percent of the nation’s economy, is the key to recovery. Buying stuff does not make you rich; making stuff makes you rich. Investing in the capacity to make stuff and provide needed services makes you rich. What does the tax deal do for people who want to save and invest their money in productive enterprises that create real wealth and real jobs? Not much.

The payroll-tax holiday will probably mean that the average American family goes out to dinner once a month more often: If a guy earning $50,000 gets a temporary income boost of $84 a month for two years, that is walking-around money. If you want to put some cash in Americans’ pockets, better to give them the whole $2,000 at once — they might use it for something more useful, like paying off a credit card (or catching up on a late mortgage payment or two). They might even pop it in an investment account, which would be an excellent use of the money. Dribbling it out means it will get dribbled away, which is counterproductive.

Nobody is launching a new business or hiring a full-time employee on a temporary 2-point payroll-tax cut. What about the people who are in a position to make large investments and create new enterprises? If anything, this deal makes their lives even more complicated: It uglies up the fiscal picture, further complicates the tax code, and necessitates another tax fight in 2012. Which is to say, it increases uncertainty. As Edmund Andrews and Jim Tankersley put it over at National Journal:

Those who place high importance on being able to plan ahead—corporations planning billion-dollar capital investments or individuals deciding how much of their income to save or spend—still don’t know what to expect two years down the road.

Precisely.

There is room in politics for these kinds of piecemeal, go-along-get-along deals — I advocate them on spending cuts, for example: A nearly perfect scenario would see Republicans trading $1 in cuts reducing spending on things that they like for $1 in cuts to spending Democrats favor — lather, rinse, repeat, 1.4 trillion times or so. But there is a deeper problem that is not getting addressed: All of this effort to pump up consumer spending is the crystal meth of economic policy, a collection of short-term feel-good measures that serve mostly to camouflage deeper problems in the economy. We are directing our efforts at spending — at the depletion of savings and capital — rather than measure to encourage the accumulation of savings and capital, which is to say, at investment. Real investment only comes from real savings — forgoing present consumption for future gains — but that takes a deeper policy game and a time horizon longer than two years.

Meaning, do not expect this to do a lot of good. I have my differences with the supply-siders on some specifics, but  they are correct on a crucial insight: You treat investment poorly and subsidize consumption, you get less investment, more consumption.

– Kevin D. Williamson is deputy managing editor of National Review and author of The Politically Incorrect Guide to Socialism, to be published in January.

Nick Gillespie and Veronique de Rugy share the bad news:

Since Bill Clinton left the White House in 2001, total federal spending has increased by a massive 60 percent in inflation-adjusted 2010 dollars. In fiscal year 2010, which ended September 30, the federal government spent $3.6 trillion, or 25 percent of Gross Domestic Product. That’s the most spending, in terms of percentage of GDP, since 1946. Likewise, last year’s $1.5 trillion deficit, as a percentage of GDP, was the largest deficit since 1945.

Most economists talk about a debt-to-GDP ratio of 60 percent as a trigger point that makes investors very nervous about a country’s ability to pay its obligations. The debt to GDP ratio was 63 percent this year and the Congressional Budget Office (CBO) projects it will be 87 percent in 2020. Just three years ago, it was 36.5 percent.

In other words, stock up on bottled water and canned goods.

But they have, if not exactly a plan, then an argument that the budget can be balanced without higher taxes and without draconian cuts. They argue that higher tax rates will not produce higher revenue. I am a bit skeptical that there is some hidden law of taxation that ensures that government’s share of GDP cannot exceed 19 percent, a claim they endorse, but we can agree that, for whatever reason, federal revenue tends to stay in a fairly narrow band. But it is not that narrow: There’s a big difference between revenue equal to 15 percent of GDP (right about now) and revenue equal to about 20.5 percent of GDP (the millennial surplus). I’d prefer to see federal revenue equal to something more like, oh, 7 percent of GDP, presuming that federal spending also is equal to about 7 percent of GDP. We spend way too much, and 20 percent of GDP is way too much government for my taste, but I am not convinced that a government that spends 20 percent or 21 percent of GDP cannot collect 20 percent or 21 percent in taxes. (Again, not that I want it to.) And I also believe that the deficit is more dangerous right now, and worse for the country, than tax hikes would be. If you balance the budget and reduce spending, you can repeal a tax hike; you cannot repeal a fiscal crisis.

So, I think things are pretty dire and that radical action is needed. But Nick and Veronique argue for relatively painless cuts:

A balanced budget in 2020 based on 19 percent of GDP would mean $1.3 trillion in cuts over the next decade, or about $129 billion annually out of ever-increasing budgets averaging around $4.1 trillion. Note that these are not even absolute cuts, but trims from expected increases in spending.

Meaning, we’ve got a $1.3 trillion deficit, so cut $1.3 trillion out of spending growth in the next ten years and you’ve got a balanced budget.

Which is true. But you’ve also got ten more years’ worth of crushing deficits piling up, the economic effect of which is unknown. The United States is not much like Japan (it is not much like any other country) and it probably cannot carry a debt load of proportional weight. We do not which T-bill will be the one that breaks the camel’s back.

That being written: Cutting $1.3 trillion would be a heck of a good start — it beats the status quo. I’ll send John Boehner flowers if he announces $1.3 trillion in spending reductions.

But here’s a question for Nick and Veronique: Do we have ten years?

– Kevin D. Williamson is deputy managing editor of National Review and author of The Politically Incorrect Guide to Socialism, to be published in January.

But the deficit lives on, and so does the march toward Fiscal Armageddon.

National Review’s initial editorial take was cautious optimism; as the plan was chewed over, the ratio of caution to optimism increased. Exchequer has been a bit of an outlier in its enthusiasm for the general shape of the plan.

Ezra Klein argues that, as an intellectual framework, Simpson-Bowles will live on. If it does, keep in mind this from Heritage, some of the smartest criticism of the plan from the right. I don’t agree with all of it, but there is much useful thinking here:

Measured against the baseline, the commission would reduce deficits by $8 trillion between 2011 and 2020. Revenues would rise by $3.3 trillion, program spending would fall $3.5 trillion, and $1.3 trillion would be saved in net interest costs. So despite nearly all long-term deficits arising from soaring spending, the commission report nearly splits the difference between tax hikes and spending reductions in the first decade (see Table 1 and Chart 1).

Digging deeper, the commission would reduce Social Security and health spending (the cause of nearly all long-term deficits) by just $442 billion in the first decade—a 2 percent reduction from the projected $20.2 trillion spending level. The growth rate of these programs would merely dip from 6.5 percent to 6.2 percent annually. Other mandatory spending, which has grown immensely over the past decade, would still spend 95 percent of its baseline level over the next decade.

The only real significant spending reductions would come in discretionary spending. And here the commissioners are sorely misguided in their approach to cutting defense spending, which is already under-funded.

I don’t think defense spending is under-funded, not by a long shot — practically every slice of the federal budget pie is due for a reduction. But I do agree that defense is one of the few areas of federal activity in which policy has to take a very strong precedence over budget. (Remind me again why we have all those troops in South Korea? Okinawa?)

Here’s the case for pessimism: You can pass a plan — and you can even, in theory, pass a good plan — but that doesn’t mean that the plan will get enacted. If you can’t make cuts in one  program, you can’t make cuts in a thousand programs.

So, instead, Uncle Same is issuing about $100 billion a month in new bonds. Which is to say, every month we’re expecting the bond markets to absorb new Treasury debt equal to five General Motors IPOs, or roughly twice the total market value of Ford, or the quarterly revenue of ExxonMobil in a decent year — and ExxonMobil usually is neck-and-neck for the title of World’s Largest Corporation — so that’s a  lot of money. Annually, that deficit adds up to something between the GDP of Canada and the GDP of Brazil. The Fed is buying that debt right now — monetizing the debt in the name of “quantitative easing” — but it cannot do that forever. What happens then? And what happens when the markets have had their fill of U.S. debt?

So, Simpson-Bowles or no Simpson-Bowles, we are going to have a balanced budget. The question is whether Washington is going to balance the budget or the bond market is going to balance the budget for them. Which is to say, we have the choice between an orderly transition to a smaller state with more austere finances or a fast-and-dirty, disorderly, banana republic-type transition.

Paul Ryan is possibly my favorite congressman, and he has excellent ideas about the budget, but he does not have an S on his chest. I like Mitch McConnell, but he couldn’t get Republicans behind a measly little earmark moratorium in the Senate. And even if Simpson-Bowles or something like it had advanced, a good number of conservatives would campaign against it in order to preserve preferential tax treatment of mortgages and the like.

So, that being written, I’m going to spend the weekend researching investment options that short Treasuries.

– Kevin D. Williamson is deputy managing editor of National Review and author of The Politically Incorrect Guide to Socialism, to be published in January.

. . . and the reliably sophomoric tax lobbyist Ryan Ellis of Grover Norquist’s Americans for Tax Reform calls him a liar, arguing that he has broken his no-tax-hike pledge. With friends like these, who needs lobotomies?

The Simpson-Bowles proposal would reduce tax rates but eliminate lots of deductions, meaning that some Americans would pay less taxes, some would pay more, and the federal government would, net, collect more revenue. (In theory, of course; actual mileage may vary.) We would stop providing special benefits for homeownership and the like. Higher net revenue: Ergo, it is tax hike, and Tom Coburn is a liar.

But: Certain naive supply-siders also believe that cutting tax rates also means that the government collects, net, more revenue. But somebody has to write a tax check for that higher revenue: Ergo, tax-rate cuts are tax hikes, and everybody is a liar. A paradox!

And, more important: We are running a deficit. Those bonds have to be paid someday. If the U.S. government spends $1 today, that is $1 that has to be paid in taxes — regardless of what today’s tax rates are. Meaning that,  in the real world, the actual tax-hikers are Grover Norquist and company, inasmuch as their preferred political approach has led inexorably to higher deficits, and therefore higher debt, and therefore, to higher taxes at some point in the future. If Simpson-Bowles helps to reduce the long-term deficit, then its supporters are in fact tax cutters, from the point of view of anybody smart enough to follow the timeline long enough. Holding tax rates steady today is not the same thing as fighting tax increases — not when there is a deficit. Norquist should call his outfit “Americans for Tax Deferral.”

ATR has done some good work in the past, but Ellis, with his loose language — and his even looser thinking — makes them look foolish. Worse, ATR reinforces the worst of Republican political habits: Tax like libertarians, spend like socialists.

I am grateful that Tom Coburn is in government and Grover Norquist and his henchettes are not.

– Kevin D. Williamson is deputy managing editor of National Review and author of The Politically Incorrect Guide to Socialism, to be published in January.

Do conservatives want a government shutdown over spending? Should we want a government shutdown over spending?

Grover Norquist wants one:

The head of the influential Americans for Tax Reform is encouraging the new House Republican majority to adopt a take-no-prisoners approach to federal spending — and if that leads to a 1995-style government shutdown, so be it.

Midterm voters “were voting to stop the Obama spendathon, and that’s what people were sent to Washington to do,” Norquist said in an interview for POLITICO’s “Taxing America” video series.

“That’s what all the freshmen are going to do. That’s what the fight’s going to be about,” he said of the party’s majority-makers, who are spoiling for a showdown with President Barack Obama. The president “will be less popular if — in the service of overspending and wasting people’s money — he closes the government down, as opposed to now, when he’s just wasting people’s money.”

But veterans of that 1995 fight — and in particular incoming House Speaker John Boehner — are ambivalent about Norquist’s shut-it-down push. They saw what a setback the shutdown turned out to be for the party, and Boehner in particular doesn’t sound eager for the same thing to happen to his Republican caucus.

Dick Morris also has predicted a shutdown. And this time, he says, Republicans will win the debate. Why? “Because you have me on your side.”

I like Dick Morris a lot. I think Dick Morris is a hoot. I also think Dick Morris predicted that Republicans would win the Senate this time around:

The Democrats will lose both the Senate and the House. They will lose more House seats in 2010 than the 54 they lost in 1994 and they will lose the Senate, possibly with some seats to spare.

I would not bet much of my own money on predictions made by Dick Morris.

Most conservatives have been hostile to the Simpson-Bowles deficit-reduction plan, and there are reasons to be cautious: We could end up with a big tax hike and no real spending cuts. On the other hand, we could end up with a tax hike that takes the form of significantly lower personal-income tax rates combined with the end of a bunch of deductions and special tax breaks in the code, which would be, in my view, preferable to the current system. I’d rather see a top rate of 28 percent with no deductions than a top rate of 35 percent with lots of deductions. Simplification of the tax code is a good thing. Flat is great, flatter is good.

The main problem with Simpson-Bowles is that it establishes too high a baseline for both revenue and spending. But it would substantially reduce the deficit, and a stronger conservative congressional caucus — if such a thing materializes in 2012 — would be much better positioned to reduce both taxes and spending if Republicans have already pushed forward with deficit reduction under a plan endorsed by the bipartisan chairmen of  President Obama’s deficit panel.

Simpson-Bowles goes to a vote on Friday. I expect it to go down in flames. Conservatives basically have a choice to go in the Simpson-Bowles direction, to go in the Grover Norquist/Dick Morris/scorched-earth direction, or to do nothing. Keep this in mind: If you think Simpson-Bowles doesn’t go far enough with spending cuts, you can always enact more cuts down the road. There’s nothing about Simpson-Bowles that forecloses further conservative reform. If you shut down the government and get your head handed to you at the next elections, you lose the opportunity to enact further reform. If you do nothing and coast, you get what we’ve been getting for the past ten years or more and invite the question: What is the point of having a Republican majority?

Nothing about our current fiscal situation is simple or obvious. But it seems to me that there’s a pretty persuasive case to be made that the Simpson-Bowles framework represents the best politically achievable course of actions for conservatives at the moment. If we can actually get a smaller deficit, a simplified tax code, and meaningful controls on spending, that’s a victory — not just a political victory, but a real victory.

– Kevin D. Williamson is deputy managing editor of National Review and author of The Politically Incorrect Guide to Socialism, to be published in January.

I am not at all convinced that congressional Republicans are serious about refusing to raise the debt ceiling, but I am pleased that Mike Lee and others are getting ready to make an almighty stink about it. As somebody famous once said, elections matter — and the Democrats, along with a few lukewarm Republicans, are about to get their first real experience of what Americans sent to Congress in November.

Advice to Republicans: You had better hold out for some real spending cuts.

You can already see the outlines of a deal shaping up in Washington, one in which Republicans give in on the debt ceiling in exchange for Democrats’ agreeing to extension of all the Bush tax cuts. That’s a bad deal for Republicans, and for anybody else who cares about fiscal discipline: It’s a bad deal for Republicans because, unless they do something stupid, they’re going to get their way on the Bush tax cuts, regardless. Nobody wants to raise taxes right now, and it is unlikely that freshly shellacked congressional Democrats will fight hard for a tax hike on their donors at just this moment. If the tax cuts are to be extended, then Republicans should insist that they be written into regular law  instead of coming up for renewal every few years, and then impose compensatory spending cuts to zero out the deficit impact. (My more enthusiastic supply-side friends will not be surprised that I do not think that the government should bother accounting for growth effects of  the lower tax rates; the effects are real, but they aren’t reliably predictable, and if we leave them out of the calculation then that extra revenue is gravy — and it can be put toward further deficit and debt reduction.)

My best guess is that the debt ceiling is going up. Nobody reasonably expects a Republican House to be able to prevail upon a Democratic Senate and President Obama to balance the budget today. But Republicans can — and must — insist on a real deficit-reduction program that is very largely focused  on spending cuts rather than tax hikes, one that has some real teeth on the enforcement end of things. The timeline doesn’t have to be tomorrow, but it had better not have a 20-year grace period, either: Real cuts should start kicking in right now, and the deficit should be significantly reduced within five years and radically reduced within ten.

Both politically and economically, I still think the Simpson-Bowles proposal is the best starting  point. House Republicans can and should remind voters every day that the deficit-commission chairmen appointed by President Obama have recommended an array of spending cuts, and then get to work. They can pass the cuts as a package or they can force them through one at a time, but get going now: The fact that these are Obama-appointed chairmen is politically powerful at this moment, but if the full panel waters down its recommendations, that will take away some of the fire. Now is the time to move the ball forward.

And, speaking of Simpson-Bowles and the Bush tax cuts, I much prefer a Simpson-Bowles tax system (no deductions, top rate of 23 percent) to the Bush tax regime (crazy complicated deductions, top rate 35 percent). So, House Republicans could say, “Hey, look, we’re offering you jokers a bipartisan olive branch: We’ll drop the whole argument about the Bush tax cuts if we can go straight to implementing the bipartisan Simpson-Bowles program, for which we thank the chairmen and President Obama, who appointed them.” No, Simpson-Bowles is not perfect: But passing it does not preclude passing additional spending cuts down the line or additional reforms of our tax system. And if you want to get something in exchange for raising the debt ceiling, a program that actually lowers the deficit would be appropriate. 

Why now? Why move so aggressively? Here is one reason: We are not out of the fiscal woods yet, by a long shot, and the Greco-Irish disease is going to make a showing in California, Illinois, New Jersey, and elsewhere. We had better have a real plan for controlling the national debt in place before we have to deal with the coming state meltdowns.

– Kevin D. Williamson is deputy managing editor of National Review and author of The Politically Incorrect Guide to Socialism, to be published in January.

Today the House of Representatives. Tomorrow . . . what? Turning around the direction of the country and dodging Fiscal Armageddon is going to take more than a working majority in the House. Keeping in mind the usual caveat that politics alone may not be enough to get the job done, it is probably going to require a large conservative majority in the Senate. And it is probably going to require the absence of Barack Obama and his administration. Which brings us to the next election.

When I suggested that Sarah Palin be made chairman of the Republican National Committee, the committed Palin partisans came charging out of the penumbras, detecting in my suggestion a sinister plot to keep her from running for president in 2012. It wasn’t — I was still skeptical that she’d run, and I still am, a little. But it’s getting kind of hard to deny that she looks a whole lot like a candidate, and a frontrunner.

About that: I don’t have particularly strong feelings about Palin. She’s not my first choice for president of the United States, but she’s not my last, either. I’d much prefer a Palin administration to another Obama administration. Here’s the problem: People think she’s intellectually unserious. Before you hit that e-mail send button, re-read that sentence: I don’t think she’s a lightweight — I really don’t — but that’s her reputation. Big swaths of the American electorate believe her to be unqualified to serve as president, and she hasn’t done much in the past year or so to change voters’ minds.

So, here’s an idea for Sarah Palin, if she wants to run for president: She shouldn’t just announce her own individual candidacy. Instead, she should announce an administration: herself, possibly a vice presidential candidate, and at least a half a dozen key cabinet secretaries, especially treasury, state, defense, and commerce. Add to that a chairman of her Council of Economic Advisers. The question in 2012, then, won’t be Barack Obama vs. Sarah Palin — it will be the Obama administration vs. the Palin administration: a very different kind of question.

You don’t have to think Sarah Palin is dull to agree that expounding on fine-grained policy detail has not been her forte — she’s an inspirational figure, and her appeal is more about values than about policy proposals. But somebody has to talk about the policy stuff, too. Announcing a Team Palin from Day 1 would totally change the conversation — and possibly help to thin out the primary field, too.

This isn’t just a political gimmick: 2012 is a key election for conservatives. There is a real chance to turn around the direction of our country, one that should not be missed. The stakes at present are very high, and the issues at hand are larger than any individual’s political ambitions. A conservative Republican unity ticket dedicated to restoring fiscal and economic sanity in Washington could, if played right, change history.

So, here’s my entry into conservatives’ favorite parlor game:  Staff the Palin Administration. I know there are enormous problems with these choices — not all of these people are even Republicans or conservatives, some of them aren’t particularly well-disposed toward Palin, some of the business types would be hesitant to enter politics, etc. — consider it more my personal dream team than a set of plausible picks.

Got better choices? Name your own team in the comments section.

Vice President of the United States
Mitt Romney
WHY: The strongest 2012 candidate right now is “Generic Republican,” and Mitt Romney is as close to a generic Republican as the world is apt to see: silver spoon, plain brown wrapper. He is the vanilla ice cream of American politics: nobody’s favorite, but nobody’s least favorite, either. Smart, decent, reliable.  Good to have a guy around who knows how to read a balance sheet, and excellent to have one who has actually turned a profit as a profit-turning enterprise.

Secretary of State
John Bolton
WHY: Because he will strike fear into the hearts of our enemies. Our friends, too. Most awesome political mustache since Bismarck. 

Secretary of the Treasury
Mitch Daniels
WHY: “The Knife” is the man you want standing athwart Treasury, yelling, Stop!

Secretary of Defense
David Petraeus
WHY: Somebody has to be good cop to Bolton’s bad cop. Also, General Petraeus has more credibility than just about anybody else on the scene. Unflappable.  

attorney general
Wallace Jefferson
WHY: The Texas Supreme Court chief justice is a super-smart lawyer and a Washington outsider, well positioned to reform and streamline the way DOJ does business: the necessary antidote to four years of Eric Holder.  

Secretary of the Interior
Jerry Taylor
WHY: The Cato scholar understands federal regulations better than the regulators — who better to reform them? But he’s no patsy of the business interests who profit from federal corporate welfare, either.

Secretary of Agriculture
Pat Woertz
WHY: The Archer Daniels Midland CEO is steeped in the subtleties of the commodities markets and the real business of agriculture. Want to sell more stuff to China? How about we start with food? She’d be perfect, if we can afford her.

Secretary of Commerce
Indra Nooyi
WHY: As CEO of Pepsico, she’s been one of the most successful executives of our times and a first-rate negotiator. Now is the time to start cutting new trade deals and get the economy moving again.  

Secretary of Labor
Lincoln Diaz-Balart
WHY: Poetic to have Fidel Castro’s Republican nephew slugging it out with the labor unions that remain the last robust vestige of old-fashioned thug socialism in the United States.

Secretary of Health and Human Services
Bobby Jindal
WHY: Has actually fixed a health-care system. That’s saying something. Put him in charge of replacing Obamacare with a consumer-driven, market-based system.

Secretary of Housing and Urban Development
Robert C. Merton
WHY: Because we need a smart financial economist to help us unwind the housing-securities mess and send Fannie and Freddie bye-bye. Nobel Prize in Economics is a nice line on his résumé.

Secretary of Transportation
Ronald Utt
WHY: The Heritage Foundation scholar has a nose for waste when it comes to infrastructure spending. DoT is hog heaven when it comes to federal pork — and Utt is the sort of guy who might actually enjoy cleaning it up.

Secretary of Energy
Lynn Elsenhans
WHY: She’s the CEO of Sunoco, a hugely profitable oil company that is also the industry’s model for good corporate citizenship when it comes to the environment. She knows how to strike the balance. Likes to play hoops, too.

Secretary of Education
Harvey “C-Minus” Mansfield
WHY: Because the Harvard don believes in defending standards and not in suffering fools.

Department of Veterans Affairs
Unfilled. Why is this still a separate cabinet department? Send it to DoD, for Pete’s sake. If only there were some senior Republican senator, maybe a nationally famous war hero with a longstanding interest in veterans’ affairs, to shepherd through the legislation. Suggestions?

Secretary of Homeland Security
Rudy Giuliani
WHY: Because we need some steel in our spine on everything from border-control to straightening out TSA. Also, why should Tina Fey dominate all the wig-and-dress action in a Palin administration? Also, Rudy owes the world an act of penance after failing to run for governor of New York, leaving the field to Carl Paladino.

Chairman of the Council of Economic Advisers
Tyler Cowen
WHY: We’re going to need a monetary economist — just a hunch. Also, can provide the cabinet with excellent advice on out-of-the-way lunch spots in the D. C. area. Generally brilliant.

I saw a performance of Richard II over the weekend. With the commoners hostile to the spendthrift king, the nobles lay out their complaints against him, including this line, in which his prodigal ways are compared to those of his predecessors:

More hath he spent in peace than they in wars.

Shakespeare: always relevant.

A couple of thoughts for a pre-election Friday afternoon:

1. The End of . . . Clintonism: The all-but-inevitable historic pounding that the Democrats are about to suffer is, of course, a repudiation of Obama’s overreach specifically, of the Obama-Reid-Pelosi model of unified Democratic government, Obamacare, stimulus, etc. It also, I think, spells the end of the Clinton economic aura. Since Carter, Democrats had had the worst sort of reputation when it came to the economy, and for good reason: Everybody remembered the gas lines, ridiculous stagflation, etc. And then along came Clinton. Amazing man, Bill Clinton: He inherited a recovery from George H. W. Bush, handed off a recession to George W. Bush, and somehow, in the middle, made himself look like an economic genius, claiming credit for the booming growth of the 1990s and the nominal budget surplus.

In retrospect, it’s pretty obvious that just as every investor looks like a genius while he’s riding up the bubble — and the dot-com stock market was a big one — every politician looks like a genius when the bulls are on the rampage. Clinton’s Big Government ambitions — see Hillarycare — got nipped in the bud well and early, and the Gingrich-Armey monkey-wrench gang kept the Clinton machinery in check. But subtract the bubble and the whole decade looks a lot less impressive, and the Democrats’ campaign paeans to the Clinton economy do not sound as impressive in 2010 as they did in 2000. Americans are starting to internalize the meaning of bubbles, and to re-evaluate.

2. Revenge of the Rubes: As of this morning, the DJIA is down 18.25 percent from where it was three years ago. NASDAQ is down 10.61 percent. Wall Street is a gloomier place. But: Commodities prices are hitting record highs, especially farm products. Cotton is at a record high. Wheat prices are up. Rice is rising so fast that the Chinese are enacting controls on futures trading. Part of this is regular old demand, particularly in China. Part of it is that the specter of the Fed engaging in more “quantitative easing” — debasing the dollar to prop up securities — is directing money from cash to commodities. (And: Guess which country in the world is a great big giant exporter of a lot of this stuff?) In other words, after a few years of bailouts and free-money economics for the benefit of Wall Street, brought to you by Barack Obama (D., Goldman Sachs) the result is likely to be a significant wealth-and-power shift from the financial world to the farming-and-mining world. (My cotton-growing friends in West Texas are a happy bunch just now.) Meaning that Lamborghini will sell fewer of these to second-year investment bankers and more of these to third-generation commodities producers.

That’s one possible outcome, anyway. The future is unknowable and is largely what we make of it — something to keep in mind Tuesday.

The story of budgetary politics: The necessary is the impossible, until it isn’t — then the impossible is the only alternative.

In the case of the state of New York, the impossible is the billions of dollars in spending cuts that Carl Paladino wants to make in the state,  which, among other excesses, spends 40 percent more per government-school student than the national average. Can the impossible be done? Governor Paterson has some unusually insightful words:

“Everybody talks about what they’re going to do when they get into the executive branch, then when they get there the Legislature shuts them down,” said Governor David Paterson, 56, a Democrat and 20-year senator who isn’t on the Nov. 2 ballot.

In politics, the impossible is what you do when the money runs out.

. . . city hall is where they might do some good. Union goons, meet Exchequer’s new favorite mayor, Tomás Regalado of Miami. (Technically a non-partisan election; he’s a Republican.)

Miami commissioners are likely to impose contracts on the city’s employee unions that will cut wages and pensions to ease a projected $96.5 million operating- budget gap next fiscal year, Mayor Tomas Regalado said.

“Probably in two weeks the commission will impose a contract whereby we will be reducing salaries and pensions, which is what’s responsible for the deficit,” the first-term mayor said in an interview on Bloomberg Television outside City Hall today.

Miami faces a pension payment exceeding $100 million in the fiscal year that begins Sept. 30, Regalado said, which will consume a fifth of its operating budget. Moody’s Investors Service and Standard & Poor’s both cut the city’s general- obligation bond ratings in the past two months, citing the deficit and pension costs.

Get that, taxpayers and bond-market watchers: Government workers’ pensions alone will consume 20 percent of the city of Miami’s operating budget. For many states and municipalities, it is going to get a lot worse than that very soon.

Miami has been playing catch-up on its pensions since the Carter administration, when it came to light that the city was using pension funds for general operating expenses. But with a city attorney who is paid $380,000 a year and a deputy — deputy! — fire chief who is paid $353,000 a year, Miami has a long way to go achieving fiscal sanity. (Would you like a list of Miami’s city salaries? It is here. Read it and retch.)

Mayor Regalado does not want to increase taxes; Miami, already among the cities hardest hit by the real-estate crash, really cannot be jacking up property taxes with tens of thousands of vacant condos languishing on the market. So, he’s biting the bullet, cutting the fat where it’s found — in the paychecks of overfed city bureaucrats — and, apparently, trying to do the right thing.

Hope he has an exit strategy.