If you haven’t yet read the Congressional Budget Office’s scoring of the Obama budget plan, I highly recommend it. CBO analysts shows several things to be true: 1) for all the talk of transparency and reform, Obama’s budget numbers are phony and based on risible economic assumptions; 2) previous administrations have been wasteful, but the current administration is full of wastrels; and 3) there’s a reason why even committed European social democrats think the president’s fiscal plans are irresponsible.
As to the specific issue of federal bailouts of big business, there are two ways to argue the case against them. One is short — “Hell, no!” You’re hear this a lot tomorrow at the hundreds of Tax Day Tea Parties around the country. (I’ve been inclined to it myself lately.) The other way to argue the case, marshalling the data and historical experience to show how government is fated to screw up even the most well-intended intervention in private business, is effectively demonstrated in a new Cato Institute paper by Jagdeesh Gokhale. It is well worth your time, particularly when Gokhale discusses the conduct of bailout plans already enacted and why they aren’t likely to be temporary as originally promised:
In the future, continued government involvement in financial firms may be justified by Congress on several grounds: financial company failures must be prevented to avoid financial panics; a Republican administration, no less, acquiesced in implementing this initiative; foreign banks otherwise would be unduly advantaged; and so on. Chances are, however, that despite promises of stricter regulation of financial companies, politicans’ power and incentives to expand home loans and other credit to those with poor credit records will be strengthened — setting the stage for a future financial panic — because, rather than in spite of, the Treasury’s initiative.
The lesson for conservatives is never to be tempted in the midst of panic or entreaties by purportedly “conservative” politicians to abandon our basic principles of constitutional government and human action. These principles are tools and guardrails, not handcuffs or roadblocks.