Disconnected? That’s the New York Times take on the Obama administration, but there is a silver lining:

The economy is spiraling down at an accelerating pace, threatening to undermine the Obama administration’s spending plans, which anticipate vigorous rates of growth in years to come. A sense of disconnect between the projections by the White House and the grim realities of everyday American life was enhanced on Friday, as the Commerce Department gave a harsher assessment for the last three months of 2008. In place of an initial estimate that the economy contracted at an annualized rate of 3.8 percent — already abysmal — the government said that the pace of decline was actually 6.2 percent, making it the worst quarter since 1982.

The silver lining is that this might head off the ludicrous plans to hike taxes, nationalize industries and vastly expand regulation and anti-business measures (e.g. cap and trade) in a recession. Now it’s true that the Obama team’s supposedly honest budget has been revealed in less than a week as pure fantasy:

If, as is widely anticipated, the economy grows more slowly than the White House assumes, revenue will be lower, forcing the government to cut spending, raise taxes or run larger deficits. Economists also criticized as unrealistically hopeful the assumptions by the Federal Reserve as it began so-called stress tests to gauge the health of the nation’s largest banks. In testimony, Ben S. Bernanke, the Fed chairman, said that the nation’s unemployment rate would most likely reach 8.8 percent next year.

Well, yes it would be insane to raise taxes even higher when the recession proves to be worse than expected, but this is all a matter of degrees. Why raise taxes at all or threaten to raise them while the economy is in free-fall? Why concoct a cap and trade policy that aims to suck another $645B more out of the economy in “carbon revenues”?

The Grand Design to remodel the U.S. economy is running head long into the worsening recession. The Obama administration may need to slow down the massive redesign of our tax, energy, and healthcare policies (and indeed the entire relationship between individuals and their government) in order to give the economy a chance to recover. A viable bank recovery plan and corporate or payroll tax relief aren’t as sexy as nationalized healthcare, but the president’s supposedly brilliant advisors might want to consider a whole lot less of the latter — unless they really do desire a replay of the 1930s.