The Wall Street Journal editors observe of the president’s economic agenda and long “to-do” list (which includes everything from healthcare, to cap-and-trade, to financial re-regulation, to education):
What’s striking is that Mr. Obama betrays no sense that maybe all of this isn’t achievable, much less affordable, all at once. In contrast to Bill Clinton, he has abandoned any deficit concern, building in red ink of at least 4% of GDP for the next decade. And that’s assuming the revival of rapid economic growth, and before counting the real cost of health care.
[. . .]
More troubling still is Mr. Obama’s leap into managing major U.S. industries. Even the European left got out of the nationalization business as a loser after the 1970s. But the Obama White House and Treasury are nationalizing GM and Chrysler, expanding government’s role in the mortgage markets, and widening their ownership of the U.S. banking system. The deeper they dig in, the harder they will find it politically to exit. And as economic policy, the mauling of GM bondholders, the banker-baiting on Capitol Hill, and the refusal to let even healthy banks escape the TARP won’t revive animal spirits.
Two key issues remain. First, we haven’t the money to pay for all (or a fraction) of this and our ever-increasing debt is unsustainable, nearly all responsible parties agree. The method by which the president reconciles his ambitions to our collective checkbooks will largely determine the fate of his presidency. Will he rely on Ben Bernanke to inflate our obligations away, or raise taxes on many people besides “the rich,” or curb his ambitions? We don’t know yet, but there really is a limit, if not to his ambition, then to the amount of treasury paper we can float.
And second, if the public really hasn’t dramatically and permanently shifted to the Left will they like what they are about to get? The public recoils against bailouts but is about to own GM, unless the bondholders revolt. The public doesn’t want European nationalized healthcare but may get it after private insurers are forced out with a “public option.” And Midwesterners certainly don’t want what remains of their industrial job base eroded by a new regime of energy taxes and regulation.
At the end of the day, the public will judge whether the president and Congress have successfully revived the economy and reformed healthcare, education, and energy policy or whether they have taken voters where they didn’t want and can’t afford to go. By then much damage to the private sector and our country’s creditworthiness may be difficult to reverse. Nevertheless, the public always gets the last vote. And as we learned all too well over the last eight years, no party’s grasp on power is permanent, particularly if they fail to deliver.
