Yuval Levin aptly summarizes what is becoming a daring game of bait-and-switch by the Obama team:

The budget offers an audacious array of technocratic initiatives aimed at transforming the relationship between Americans and their government and moving the country in the direction of European social democracy. It sets the stage for a vastly expanded federal role in the health insurance market–as one “option” among many to begin with, but with the help of price controls and the power to set rules of entry guaranteed to soon be the reigning, if not the only, option. It puts the federal government in command of a complex scheme of carbon-emission taxes and credits. It opens the way for a significantly increased federal role in education (including higher education).

These programs are not directed at the economic emergency, but are instead unrelated, enormous policy initiatives.

As Levin points out, not only do these measures not address the economic recovery — they make that recovery more difficult. He concludes: “This combination of counter-productive action and baffling inaction only unnerves investors and is deeply anti-stimulative.”

Now all of this raises an interesting question: just how does the Obama administration think an economic recovery is going to come about? It’s possible, I suppose, they believe the hocus-pocus Keynesian stimulus plan will do the trick. But most of that spending either isn’t stimulative or is to be spent years from now. Maybe they think the problem will be solved once the banking crisis is resolved. But then Tim Geithner seems light-years from a credible, reassuring plan. Maybe they think the economy will just get better on its own. That would be remarkably similar to the thinking of their opponents who supposedly want to “do nothing.”

And while Paul Krugman’s complaint is the polar opposite of conservatives’ complaint– namely, that Obama is doing too little — his vision isn’t that far off from that of conservatives:

It’s September 2009, the unemployment rate has passed 9 percent, and despite the early round of stimulus spending it’s still headed up. Mr. Obama finally concedes that a bigger stimulus is needed.

But he can’t get his new plan through Congress because approval for his economic policies has plummeted, partly because his policies are seen to have failed, partly because job-creation policies are conflated in the public mind with deeply unpopular bank bailouts. And as a result, the recession rages on, unchecked.

In some sense, then, critics both from the Right and Left agree the stimulus was a wasted effort and there isn’t much else in the agenda to promote recovery. Even Obama supporter Warren Buffet seems concerned that the administration’s  message has been “muddled” and has only induced more fear among consumers and investors. And he’s not thrilled about using the crisis to “try and ram through a whole bunch of things.”

It is curious indeed to have a single crisis this enormous, one which was in large part responsible for the candidate’s victory, and have such a lackadaisical attitude toward solving it. You would think every policy move, every “summit,” and the budget itself — which is a blueprint for the administration’s agenda — would focus on that singular mission: economic recovery. The fact that the administration is running off in a dozen different directions suggests they have either not the inclination or the know-how to address the most critical issue of our time.

No wonder the markets are in a funk.