The American Spectator

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It was a sadder and wiser america that entered the year 2010. Voters had learned that the "messiah" who had ascended to the presidency a year earlier possessed no divine powers. He was merely a Chicago machine politician, and a very inexperienced one at that. But the Obama administration and its left-wing "progressives" were able to wreak considerable havoc in the space of a year. They sent the federal deficit soaring. Combined federal, state, and local borrowing in the capital markets climbed to near $2 trillion, a heretofore unimagined binge of governmental profligacy. The federal debt to foreign official lenders surpassed $2.4 trillion in November of 2009; China, previously the biggest foreign creditor, became nervous about the future value of the U.S. dollar, and hence was passed by Japan in holdings of U.S. Treasury securities.

The Federal Reserve was slavishly compliant with political demands, a posture that won gentle Ben Bernanke reappointment as chairman. Specifically, the Fed was over-exercising its singular prerogative to write checks on thin air to sop up large gobs of Treasury debt. That's a time-honored prescription for future inflation or economic stagnation or both, which we learned to call "stagflation" under Jimmy Carter in the late 1970s.

The two main authors of the 2008 sub-prime mortgage debacle, government-sponsored mortgage buyers Fannie Mae and Freddie Mac, were still humming along despite their misdeeds, only now under explicit federal control. Their huge losses, mostly the product of the Obama administration bailout of mortgage deadbeats, were adding many further billions to the taxpayers' tab beyond the $1.4 trillion on-budget bar bill.

With unemployment hovering around 10 percent, it was clear that the $862 billion "stimulus" program, enacted in early 2009 at the urgent insistence of Keynesians like the New York Times's Paul Krugman, had taught yet again an old but much ignored lesson: government can't stimulate the economy by robbing anonymous Peters to pay politically friendly Pauls. But even though it didn't work in 2009, the Obamanites have decided to try it again in 2010, discarding the tainted word "stimulus" and calling it a "jobs" bill with further billions of spending. It's gotta work some day, the Obamanites insist, because Krugman promised it would. Money, of course, is no object.

If the plan of the Obama-Pelosi-Reid junta in 2009 was to scare the hell out of potential investors in new job-creating ventures, they succeeded. They wanted to batter industry with a cap-and-tax bill to curb carbon emissions. The cap-and-tax scheme was a particular idiocy because its premise was that Congress could change the climate of the earth by passing a law. Fortunately, some anonymous whistle-blower managed to unearth e-mails that showed that researchers at Penn State and England's East Anglia university had been cooking the numbers to allow the United Nations to persist in its spurious claims that the planet itself was cooking. They had chosen to conceal the fact that their temperature readings had shown no global warming for years. Ho hum, just another episode of UN sponsorship of junk science.

It was a year of fakery in Washington that extended well beyond the global warming nonsense. The president promised that the middle class would pay "not a dime" more in taxes while at the same time plotting his cap-and-tax on the energy resources everyone uses daily. He had promised that the health care takeover would save money, a claim believed by no one, including the Congressional Budget Office, which forecasted a trillion in extra costs.

None of this was lost on voters. Independent voters who had swallowed the Obama Kool-Aid in 2008 began deserting him in droves. His first-year job approval rating fell further than for any president in modern history, to 48 percent from 65 percent, according to the reliable Rasmussen poll. The Rasmussen job approval index in mid-February, subtracting those who strongly approve (27 percent) from those who strongly disapprove (39 percent) was 12 percentage points, suggesting extreme polarization within the electorate. Most striking of all, 75 percent of voters polled said they were angry at the policies of the federal government.

Despite the role his megalomaniacal health plan played in his plummet back to earth, Mr. Obama nonetheless advised his co-conspirators, House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid, to "punch it through" Congress by whatever means available. That was an invitation to the Democratic Party to commit hara-kiri, an offer some members of Congress were reluctant to accept, no doubt because they doubted that even Nancy Pelosi could find cushy lobbying jobs in Washington for 200 displaced lawmakers, as she had promised those willing to fall on their swords.

Wait a minute! Maybe I am underestimating the market value of men and women with close familial relationships (in some cases literally) with the anonymous congressional staff gnomes who actually write 2,000-page bills sprinkled with special interest loopholes and "carve-outs." Those things are worth a lot of money. But at least the displaced legislators would lose the prerogatives of power.

If the democrats persist in following the progressives to their doom, that hara-kiri will come when the voters speak again in November. But then the question will arise: who's going to clean up the mess and how is it to be done? The answer is that it can be cleaned up if voters elect a sufficient number of reform congressmen and the surviving Democratic members and their Republican fellow travelers are scared straight by the election outcome. As in 1994, it might be possible to marginalize White House leftists, particularly if they keep saying stupid things, like praising the air security bureaucracy after it allowed an African terrorist a shot at blowing up a Northwest airliner -- or insisting that a government takeover of health care will cut costs.

A reform Congress would put first things first, namely getting the federal budget under control. The American people will have made it clear that turning the health care system on its ear is not one of their priorities and even less so is saving a planet that shows no sign that it is in need of saving from global warming. What they want is a stop to all the wild spending of money the U.S. doesn't have.

A new Congress willing to seriously address that question -- I'm assuming that the president will be marginalized by the November results as Bill Clinton was in 1994 -- will have a lot more to work with than some pundits think. I am talking about the powerful motive force generated by the 140 million people who go to work each day to earn a living for themselves and their families, of whom maybe 98 percent do it through honest toil. They include productive people in the public sector, such as teachers or firemen, but the vast majority work for privately owned firms or themselves. They perform billions of tasks, some routine but many of which require high skills and long training. The work they do is useful enough to their fellow men to earn a market reward, or in other words, an income.

In short, the "economy" is not some abstraction or a number on a chart, but the living, throbbing sum total of all this human effort. Bill Clinton, full of himself as usual, liked to boast that he was "growing the economy," but the main contribution politicians can make is to get the hell out of the way of people trying to make a decent living and climb up a few rungs on the income ladder.

Included in this vast work force are a substantial number of individuals who have the brains and daring to launch new business ventures. They are the main source of productive economic growth. One reason the U.S. economy has been struggling to recover from the shocks and failures of 2008 is that the brainstorms and borrowing excesses of Washington have sapped the confidence of investors and risk-takers. There are nearly 15 million people sitting on the sidelines who would like to have jobs, but while Nancy Pelosi yammers about "jobs, jobs, jobs," the legislation she and her colleagues have enacted or propose to enact is the main reason business confidence has evaporated and the great American job machine has stalled.

As Ronald Reagan and his supply-side advisers proved in the early 1980s, all you have to do is remove the fetters and the American economy will roar again. Reagan abolished the last vestiges of crippling price controls, restored the soundness of the dollar, and cut the punitive tax rates on higher incomes that prohibited capital accumulating for productive investment. The result was 25 years of relative prosperity. It will be tougher this time around, because there has been more damage inflicted by both Republicans and Democrats to the nation's financial underpinnings. But it can be done.