Talk about man bites dog news items.

Jacob Weisberg, Slate’s editor in chief, is a liberal, but he seems to have miraculously suddenly developed a healthy concern about the growth of government. I don’t believe there is the slightest possibility of Barack Obama or Nancy Pelosi listening to any of this, but Weisberg’s Make It Stop editorial features both a refreshing dash of libertarianism and the kind of common sense which recognizes both consequences and limits and it is just not the kind of thing one normally ever finds being written by a commentator on his side of the debate.

At this point, Obama and the Democrats may be destined to learn the old lesson once again. But if they hope to avoid a repeat of Clinton’s 1994 fate in 2010, the president and his party might think about fixing a long-term upper limit on the size of government. Because of the bank bailouts and stimulus, federal spending will exceed 25 percent of GDP this year, and public spending at all levels will exceed 44 percent. But if liberals were clear that, in normal times, federal spending shouldn’t be more than 22 percent and that the public sector as a whole shouldn’t exceed a third of GDP—the level during Clinton’s second term—the fear of Democrats covertly foisting a social-democratic model on America would begin to melt away. This kind of ceiling would mean that government couldn’t grow at the expense of the economy, because it couldn’t grow faster than the economy as a whole. To substantiate his commitment, Obama should unilaterally propose large, specific cuts in programs and subsidies to be phased in as the need for stimulus spending recedes. Raising the retirement age, privatizing space exploration, and eliminating agriculture subsidies would make a decent start.

Beyond actually endorsing smaller government, Obama could identify himself with wiser government by developing the responsibility theme he sounded in his inaugural address but has returned to infrequently in the period since. Health care reform based on an individual mandate is a good example of government linking a private duty to a public benefit, but Obama hasn’t emphasized this “values” aspect of the plan. Another example might be to require public service work in exchange for extended unemployment benefits, on the principle of welfare reform. A nicotine-addicted president should also steer clear of paternalistic, class-tinged policies like taxing soft drinks. Letting personal behavior that doesn’t harm others slide means recognizing another kind of limit on government.

There’s a risk of harming the country by failing to address fundamental threats and problems—which is where current Republican policies would leave us. There’s also a risk of Democrats responding in a way that leaves behind more government than we want or need. Obama could help himself by letting people know he’s worried about that danger too.

I think most Republicans really would be fairly content, if an adequate portion of the federal budget remained reliably devoted to defense expenditures, to let the liberals have the equivalent of a spousal allowance, all the rest of the federal budget beyond defense to spend on the charitable, artistic, or environmental good works of their choice, as long as overall federal spending was not consuming so large a portion of the national economy as to curtail growth. But, would a liberal upper limit to government growth and spending ever be conceded by the American left? I have a lot of trouble picturing that.

The left would have to abandon its imperialistic drive toward limitless expansion of the state. It would have to relinquish its favorite tactic of demonizing its political opponents as selfish and greedy and its habit of identifying this year’s chosen socialist scheme as an absolute moral imperative. It would have to, at some point, stop demanding more and try to decide on reallocating what it already has, which seems far, far too difficult to ever happen.

Still, reading Weisberg today brings to mind a pleasant fantasy of a less divisive American political culture, one missing our own’s customary shrieks of hysterical accusation, one featuring occasional bipartisanship and overall rationality. That isn’t the world we live in, but it would be nice.

Barack Obama promised earlier to cut the deficit in half. His new budget slightly reduces last year’s deficit, largely as an artifact of an end to Bush-era tax cuts. The new budget also includes the abandonment of plans to return to the Moon and possibly go on to Mars.

ABC News:

President Obama will send a $3.834 trillion budget to Congress today for Fiscal Year 2011.

By way of comparison, the FY2010 budget was $3.721 trillion; the FY2009 budget, presented by President George W. Bush, was $3.518 trillion.

The 2011 budget includes $1.415 trillion in discretionary spending and a $1.267 trillion budget deficit representing 8.3 percent of the gross domestic product.

A daunting number, the deficit represents a slight improvement from the FY 2010 budget when it was $1.556 trillion, representing 10.6 percent of GDP.

One reason for the slightly smaller projected deficit include the decision to let the Bush tax cuts of 2001 and 2003 expire for individuals making more than $200,000 a year and families making more than $250,000 a year. This tax increase, which will occur automatically, will bring in a projected $678 billion over the next decade, the administration says. The tax cuts are due to expire at the end of the 2010 calendar year.

The Obama administration will ask for the Bush 2001 and 2003 tax cuts to made permanent for individuals who make under $200,000 and families who make under $250,000. …

Goodnight Moon: NASA will also experience some cuts, including a cancellation of the NASA Constellation program to develop spacecraft to replace the Space Shuttle with the goal of sending astronauts to the Moon and perhaps even Mars.

Classmate Scott Drum (a businessman) tries to explain reality to the liberals on our class email list:

Democrats have always had teenager’s approach to household economics. Someone else provides all of the money, and while they may have a vague understanding of how that happens, their primary focus is sparring over how it gets distributed and spent. These issues should be decided by who has the best ideas and who can build the most compelling and emotional stories — but Dad, EVERYONE has a car. It’s not FAIR! Think of all the good things I could do with it! Little thought is given to how it affects Dad’s ability or willingness to bring in more money or what might happen if he were to get sick or lose his job. Because, well, that’s HIS responsibility to us, isn’t it? And if he doesn’t come through, we’ll just scream “I hate you” and tell everyone how mean he is.

Except that in the real world Dad’s interest and ability to keep funding the family is affected by how he’s treated and how the kids spend his money. You simply can’t go on spending sprees, pile up debt, waste money on unproductive pork projects, vilify and punish the very people you’re depending on to produce the money you’re itching to spend. Economic growth and government growth are simply inversely correlated. I know that’s inconvenient, but it’s reality, and eventually people aren’t going to keep lending you more money when you ignore that. The other economic reality is that increasing taxation inhibits growth as well, so the circle of spending and taxing is counterproductive as well. The only way you succeed is with high levels of growth – which requires making it attractive to earn and invest and not spending money on satisfying, but unproductive things. Screaming at Dad, telling him he’s not being fair, and making life difficult for him might make you feel better, but it’s not going to get you where you need to go.

and, mocking the Obama federal spending freeze:

When I opened up my Visa statement, I discovered that my wife had charged a record amount on it last month. “Not to worry,” she told me. “I promise not to spend any more than I did last month – except of course what I have to spend on clothing, restaurants, groceries, home improvements, shoes, things for the kids and travel. My spending on cosmetics and aspirin will be absolutely frozen. Starting a year from now.”

Judy Shelton, in yesterday’s Wall Street Journal, explains just how dramatically the National Debt has been recently expanded.

Unprecedented spending, unending fiscal deficits, unconscionable accumulations of government debt: These are the trends that are shaping America’s financial future. And since loose monetary policy and a weak U.S. dollar are part of the mix, apparently, it’s no wonder people around the world are searching for an alternative form of money in which to calculate and preserve their own wealth.

It may be too soon to dismiss the dollar as an utterly debauched currency. It still is the most used for international transactions and constitutes over 60% of other countries’ official foreign-exchange reserves. But the reputation of our nation’s money is being severely compromised. …

Even with the optimistic economic assumptions implicit in the Obama administration’s budget, it’s a mathematical impossibility to reduce debt if you continue to spend more than you take in. …

By the end of 2019, according to the administration’s budget numbers, our federal debt will reach $23.3 trillion—as compared to $11.9 trillion today. To put it in perspective: U.S. federal debt was equal to 61.4% of GDP in 1999; it grew to 70.2% of GDP in 2008 (under the Bush administration); it will climb to an estimated 90.4% this year and touch the 100% mark in 2011, after which the projected federal debt will continue to equal or exceed our nation’s entire annual economic output through 2019.

The U.S. is thus slated to enter the ranks of those countries—Zimbabwe, Japan, Lebanon, Singapore, Jamaica, Italy—with the highest government debt-to-GDP ratio (which measures the debt burden against a nation’s capacity to generate sufficient wealth to repay its creditors). In 2008, the U.S. ranked 23rd on the list—crossing the 100% threshold vaults our nation into seventh place.

If you were a foreign government, would you want to increase your holdings of Treasury securities knowing the U.S. government has no plans to balance its budget during the next decade, let alone achieve a surplus?

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Borrowing money from foreign competitors, even friendly competitors, carries serious risks, as Jeffrey Karabell explained in Tuesday’s Wall Street Journal.

Eventually, when your creditor has you over a barrel, the next loan may require surrendering the role of leading economic power as part of the deal.

Most people are now aware that China is the largest creditor to a heavily indebted U.S. government. It holds close to a trillion dollars of U.S. Treasurys and has invested hundreds of billions more in private enterprises in America. Even though these facts are plainly acknowledged, policy makers and experts continue to underestimate the full ramifications of this relationship.

Consider what happened in 1946, when a cash-strapped Great Britain turned to the U.S. for a loan. For 30 years or more, the British had been consumed by the threat of a rising Germany. Two wars had been fought, millions of lives had been lost, and the British treasury was dramatically depleted in the process. Britain survived, but the costs were substantial.

In spite of its global empire, a powerful military, and an enviable position at the center of world-wide commerce, in early 1946 the British government faced a serious risk of defaulting on its financial obligations. So it did what it had done at various points over the previous decade and turned to its closest ally for assistance. It asked the U.S. for a loan of $5 billion at zero-interest repayable over 50 years. As generous as those terms seem today, such financing had been almost routine in years prior. To the surprise and shock of the British, Washington refused.

Unable to take no for answer, Britain explained that unless it received funds the government would be insolvent. The Americans came back with a series of conditions. They would lend Britain $3.7 billion at 2% interest, and the British government would have to abide by the 1944 Bretton Woods plan, which made the dollar rather than the pound sterling the reference point for global exchange rates and required Britain to make the pound freely convertible. Even more significantly, Britain had to end its system of imperial preferences, which meant no more tariffs and duties on goods to and from colonies such as India. These were not mere financial penalties: Taken together, they meant the end of the British Empire.

Within two years, Britain had left India and was on its way to decolonizing throughout Asia and Africa. Unable to compete with the United States economically and no longer able to reap the benefits of colonial trade, Britain’s military shrank and its commerce contracted. It quickly receded from its dominant global position and entered several decades of economic malaise. In the 1980s, Britain finally emerged as a prosperous country, but it was a shadow of what it had been in its heyday.

These charts from Policy Watch demonstrate “the change” in action.

Hat tip to Robert Breedlove.

Paul Kengor thinks today’s youth deserves it for supporting Obama.

There’s a collective outcry from conservatives bemoaning the “generational debt” that President Obama is in the process of placing upon this country, particularly its youth. They’re right, of course. But why complain?

It seems only fitting to me that the voters responsible for electing Obama ought to be saddled with the consequences. Let ‘em pay.

Arthur Laffer, in the Wall Street Journal, observes that free markets go up and free markets go down, but if you want enduring economic pain, there’s nothing like a panicky government trying to save the market from itself.

When markets are free, asset values are supposed to go up and down, and competition opens up opportunities for profits and losses. Profits and stock appreciation are not rights, but rewards for insight mixed with a willingness to take risk. People who buy homes and the banks who give them mortgages are no different, in principle, than investors in the stock market, commodity speculators or shop owners. Good decisions should be rewarded and bad decisions should be punished. The market does just that with its profits and losses.

No one likes to see people lose their homes when housing prices fall and they can’t afford to pay their mortgages; nor does any one of us enjoy watching banks go belly-up for making subprime loans without enough equity. But the taxpayers had nothing to do with either side of the mortgage transaction. If the house’s value had appreciated, believe you me the overleveraged homeowner and the overly aggressive bank would never have shared their gain with taxpayers. Housing price declines and their consequences are signals to the market to stop building so many houses, pure and simple.

But here’s the rub. Now enter the government and the prospects of a kinder and gentler economy. To alleviate the obvious hardships to both homeowners and banks, the government commits to buy mortgages and inject capital into banks, which on the face of it seems like a very nice thing to do. But unfortunately in this world there is no tooth fairy. And the government doesn’t create anything; it just redistributes. Whenever the government bails someone out of trouble, they always put someone into trouble, plus of course a toll for the troll. Every $100 billion in bailout requires at least $130 billion in taxes, where the $30 billion extra is the cost of getting government involved.

If you don’t believe me, just watch how Congress and Barney Frank run the banks. If you thought they did a bad job running the post office, Amtrak, Fannie Mae, Freddie Mac and the military, just wait till you see what they’ll do with Wall Street. …

Some 14 months ago, the projected deficit for the 2008 fiscal year was about 0.6% of GDP. With the $170 billion stimulus package last March, the add-ons to housing and agriculture bills, and the slowdown in tax receipts, the deficit for 2008 actually came in at 3.2% of GDP, with the 2009 deficit projected at 3.8% of GDP. And this is just the beginning.

But the government isn’t finished. House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid — and yes, even Fed Chairman Ben Bernanke — are preparing for a new $300 billion stimulus package in the next Congress. Each of these actions separately increases the tax burden on the economy and does nothing to encourage economic growth. Giving more money to people when they fail and taking more money away from people when they work doesn’t increase work. And the stock market knows it.

Wars are costly, and the US has conventionally spent more than its actual revenues in time of war. Say what you will about George W. Bush’s management of the War in Iraq. His domestic tax policies (i.e. tax cuts) combined with the Rumsfeldian parsimony in troop deployments have successfully kept the US economy healthy and avoided customary war-time inflation.

As the New York Sun notes, the deficit is shrinking faster than those glaciers the moonbats are so concerned about.

2004: $413 billion
2005: $318 billion
2006: $248 billion
2007: $158 billion

Close readers of this column may recall the top three numbers in the list above from our editorial of July 12, “Incredible Shrinking Deficit.” It commented on the mid-session review released by President Bush’s Office of Management and Budget, which projected the fourth number, the 2007 federal budget deficit, at $205 billion. Yesterday, the Congressional Budget Office released its own updated estimate for 2007, $158 billion, a deficit even smaller than the White House’s July figure. The CBO yesterday also released its latest estimate of the 2007 deficit as a percentage of the Gross Domestic Product, allowing us to update another list of deficit numbers:

2004: 3.6%
2005: 2.6%
2006: 1.9%
2007: 1.2%

Bizzyblog notes:

US Tax Revenues Up 9.7% through four months, Deficit Down 57%; US Media Outlets Mostly Ignore the News.

Treasury Report