Sent to my class list this morning in response to the contention that “government had to step in” because capitalism failed, because businessmen “made such a mess.”

Government created a credit crisis by arm-twisting lenders to make uncreditworthy loans while supplying securitization of the same. Government (at more than one level) additionally laid the groundwork for a housing bubble by forcing prices upward by making 30 year financing of home loans universal and easy to obtain and by creating regulatory environments that made building extremely expensive and nearly impossible in some of the housing markets featuring the greatest demand. Government lent people money to fuel bidding wars, while doing everything it could to keep new housing in short supply.

George W. Bush’s administration pursued simple-minded conventional policies attempting to placate the economy with characteristic timidity and inconsistency. Obama has taken the housing-bust induced recession as an excuse to throw funding at every democrat party special interest and constituency and to justify a power grab socializing large segments of the economy. Bush did not succeed in calming economic turmoil largely because he could not persuade the markets that he had not already lost the next election to a democrat party radical. Obama has, in a very short time in office, demonstrated that he isn’t simply a bloviating and benign big city machine crook, but is rather an extreme radical leftwing ideologue philosophically committed to every form of economic destruction. The economy is cratering as a result.

Obama’s election was a self-fueling political-cum-economic catastrophe. Markets began plummeting in early Fall from fear of an Obama victory, and that market decline made investors’ fears an inevitable reality. But, as Dick Morris explain, even after the election, economic turmoil and public panic is still an essential factor in promoting Obama’s radical agenda.

Why does Obama preach gloom and doom? Because he is so anxious to cram through every last spending bill, tax increase on the so-called rich, new government regulation, and expansion of healthcare entitlement that he must preserve the atmosphere of crisis as a political necessity. Only by keeping us in a state of panic can he induce us to vote for trillion-dollar deficits and spending packages that send our national debt soaring.

And then there is the matter of blame. The deeper the mess goes — and the further down his rhetoric drives it — the more imperative it becomes to lay off the blame on Bush. He must perpetually “discover” — to his shock — how deep the crisis that he inherited runs, stoking global fears in the process.

So, having inherited a recession, his words are creating a depression. He entered office amid a disaster and he is transforming it into a catastrophe, all to pass every last bit of government spending and move us a bit further to the left before his political capital dwindles.

But the jig will be up soon. The crash of the stock market in the days since he took power (indeed, from the moment he won the election) can increasingly be attributed to his own failure to lead us in the right direction, his failed policies in addressing the recession and his own spreading of panic and fear. The market collapse makes it evident that it is Obama who is the problem, where he should, instead, be the solution.

Hat tip to the News Junkie.

What should a president do when the economy is in the tank and investor confidence has collapsed? Why, wage class warfare and soak the rich, of course! It worked so well for FDR, after all.

The New York Times rejoices that Obama and the democrat Congress are “sweeping away” the ideas of Ronald Reagan and breaking with policies that led to three decades of growth and prosperity.

After all, Socialism has worked out so well everywhere it’s been tried.

The budget that President Obama proposed on Thursday is nothing less than an attempt to end a three-decade era of economic policy dominated by the ideas of Ronald Reagan and his supporters.

The Obama budget — a bold, even radical departure from recent history, wrapped in bureaucratic formality and statistical tables — would sharply raise taxes on the rich, beyond where Bill Clinton had raised them. It would reduce taxes for everyone else, to a lower point than they were under either Mr. Clinton or George W. Bush. And it would lay the groundwork for sweeping changes in health care and education, among other areas.

More than anything else, the proposals seek to reverse the rapid increase in economic inequality over the last 30 years. They do so first by rewriting the tax code and, over the longer term, by trying to solve some big causes of the middle-class income slowdown, like high medical costs and slowing educational gains.

Bob Krum remarks sardonically:

Barack Obama’s plans to hyper-inflate the government bubble while he taxes the rich at confiscatory levels, is so certain to collapse the economy that I can only conclude that he is a brilliant Rovian plant whose purpose is to finally drive a stake into the heart of the era of big government.

I only hope the nation survives that long.

John Hawkins gives 15 reasons he’s already tired of Barack Obama.

First you throw away $787 billion dollars on democrat party special interests, then you raise taxes on “the rich,” i.e., you, me, and Joe the Plumber, and finally you cut the Defense Budget.

After all, in 2008, with two wars underway, we spent the staggering sum of $667 billion (base budget of $480 billion and $187 billion in supplemental spending) on national defense. Why, we wasted almost as much money last year on defending the country as Obama spent in his first month in office on “community development” (i.e., ACORN), the National Endowment for the Arts, more welfare, green boondoggles, and fattening the wallets of politically connected construction companies.

Washington Post:

President Obama is putting the finishing touches on an ambitious first budget that seeks to cut the federal deficit in half over the next four years, primarily by raising taxes on businesses and the wealthy and by slashing spending on the wars in Iraq and Afghanistan, administration officials said.

In addition to tackling a deficit swollen by the $787 billion stimulus package and other efforts to ease the nation’s economic crisis, the budget blueprint will press aggressively for progress on the domestic agenda Obama outlined during the presidential campaign. This would include key changes to environmental policies and a major expansion of health coverage that he hopes to enact later this year.

A summary of Obama’s budget request for the fiscal year that begins in October will be delivered to Congress on Thursday, with the complete, multi-hundred-page document to follow in April. But Obama plans to unveil his goals for scaling back record deficits and rebuilding the nation’s costly and inefficient health care system tomorrow, when he addresses lawmakers and budget experts at a White House summit on restoring “fiscal responsibility” to Washington. …

Even before Congress approved the stimulus package this month, congressional budget analysts forecast that this year’s deficit would approach $1.2 trillion — 8.3 percent of the overall economy, the highest since World War II. With the stimulus and other expenses, some analysts say, the annual gap between federal spending and income could reach $2 trillion when the fiscal year ends in September.

Obama proposes to dramatically reduce those numbers, said White House budget director Peter Orszag: “We will cut the deficit in half by the end of the president’s first term.” The plan would keep the deficit hovering near $1 trillion in 2010 and 2011, but shows it dropping to $533 billion by 2013, he said — still high but a more manageable 3 percent of the economy.

To get there, Obama proposes to cut spending and raise taxes. The savings would come primarily from “winding down the war” in Iraq, a senior administration official said. The budget assumes continued spending on “overseas military contingency operations” throughout Obama’s presidency, the official said, but that number is lower than the nearly $190 billion budgeted for Iraq and Afghanistan last year.

Obama also seeks to increase tax collections, mainly by making good on his promise to eliminate some of the temporary tax cuts enacted in 2001 and 2003. While the budget would keep the breaks that benefit middle-income families, it would eliminate them for wealthy taxpayers, defined as families earning more than $250,000 a year. Those tax breaks would be permitted to expire on schedule in 2011. That means the top tax rate would rise from 35 percent to 39.6 percent, the tax on capital gains would jump to 20 percent from 15 percent for wealthy filers and the tax on estates worth more than $3.5 million would be maintained at the current rate of 45 percent.

Obama also proposes “a fairly aggressive effort on tax enforcement” that would target corporate loopholes, the official said. And Obama’s budget seeks to tax the earnings of hedge fund managers as normal income rather than at the lower 15 percent capital gains rate.

Overall, tax collections under the plan would rise from about 16 percent of the economy this year to 19 percent in 2013, while federal spending would drop from about 26 percent of the economy, another post-World War II high, to 22 percent.

Look who’s to the right of Congress and the White House!

Gateway Pundit relishes the irony.

Excessive intervention in economic activity and blind faith in the state’s omnipotence is another possible mistake. True, the state’s increased role in times of crisis is a natural reaction to market setbacks. Instead of streamlining market mechanisms, some are tempted to expand state economic intervention to the greatest possible extent… In the 20th century, the Soviet Union made the state’s role absolute. In the long run, this made the Soviet economy totally uncompetitive. This lesson cost us dearly. I am sure nobody wants to see it repeated.”

Charles R. Kesler, in Christian Science Monitor, warns that Barack Obama intends to move America as far in a leftward direction as his predecessors Woodrow Wilson, Franklin Delano Roosevelt, and Lyndon Johnson.

Modern liberalism came to America in three waves, and it’s useful to think of Obama in this light.

The progressives of the early 20th century were the original liberals, developing the essential tenets of liberalism as a political doctrine. Woodrow Wilson and others argued that the Constitution was an 18th-century document, based on 18th-century notions of rights. While suited to its day, they said, it was now painfully inadequate unless interpreted in a vital new spirit.

This spirit was Darwinian and evolutionary, turning Hamilton’s “limited Constitution” into a “living Constitution” that must be able to adapt its structure and function to meet the latest social and economic challenges. To guide this evolution, to organize society’s march into the future, presidents had to cease being merely constitutional officers and become dynamic leaders of popular opinion.

Obama accepts all the major elements of this evolutionary approach to the Constitution and American government. As he wrote in “The Audacity of Hope,” the Constitution “is not a static but rather a living document, and must be read in the context of an ever-changing world.”

Likewise, in his inaugural address he declared, “The question we ask today is not whether our government is too big or too small, but whether it works….”

This emphasis on what “works” is his nod to pragmatism, which he implies is almost the opposite of ideological liberalism. In fact, however, such pragmatism is part of liberalism.

What “works,” after all, depends on what you think government’s purpose is supposed to be. Pragmatism tries to distract us from those ultimate questions, while assuming liberal answers to them. Thus Franklin D. Roosevelt’s New Deal promised “bold, persistent experimentation.” Obama’s domestic agenda betrays the same eagerness.

Liberalism’s second stage was economic. In the New Deal, the Great Society, and its sequels, liberals turned to the wholesale minting of new kinds of rights. Citizens were thus entitled to socioeconomic benefits through programs such as Social Security, Medicare, and Medicaid. Besides these entitlements, the federal government also extended its regulatory authority to areas previously private or under state and local jurisdiction.

But this wave crested unexpectedly, and for a while, contemporary liberals seemingly lost their enthusiasm for such top-down regulation and the work of transforming privileges into rights.

With the fall of the Soviet Union and the discrediting of socialist economies around the globe, liberals such as Bill Clinton took a second look at the free market. He populated his Treasury department with highfliers from Goldman Sachs and other Wall Street firms. In left-leaning think tanks and even in the academy, capitalism commanded strange new respect. This rehabilitation of the market, though never more than partial, was the greatest change in American liberalism in the past 40 years. Obama absorbed it, as did many members of his new administration.

But the financial crisis and market meltdown have changed things.

It looks like 1932 again, a time for reinvigorated government activism. …

An enduring Democratic majority is not out of the question. The wild scramble to stop the economic and financial downturn may well leave America with a politically controlled economy that would corrupt the relationship between citizens and the federal government – sapping entrepreneurship and encouraging new forms of dependence on the state, as in much of Europe. That would be consistent with the more socialized democracy that liberalism has been striving for ever since the Progressive Era.

Obama likes to emphasize that America is more like the world than we realize, and must become still more like it if the US is to remain the world’s leader. Despite his summoning oratory, his sense of American exceptionalism thus is far less lofty, far more constrained, than Reagan’s or FDR’s. The greatest stumbling block to Obama’s ambition is likely to be the inability of this exceptional president to persuade Americans to follow him into so unexceptional a future.

The democrat Porkulus is bad enough viewed simply as a colossal waste of money and burden on the productive portion of the economy, but additionally the many-hundred-page package (passed unread by the nation’s Solons) contains some deviously crafted provisions constituting a very large step toward federal takeover of American health care, as William Winkenwerder, Jr. and Grace-Marie Turner at National Review’s the Corner explain.

The health-related provisions take a sharp turn toward greater government control over our health sector, without any hearings or serious debate in Congress and without telling the American people what the changes would mean for their personal health care. This is the biggest land grab in the health sector ever attempted by the federal government, and it would be a major step toward thrusting full responsibility for health-care financing onto the American taxpayer—today and for decades to come.

For starters, the bill would create a 15-member federal health board, composed entirely of federal employees appointed by the president, charged with running “comparative effectiveness” research to assess which drugs and other medical treatments are most effective. The board’s decisions would determine what medical treatments the federal government would or would not pay for. The treatments some patients desperately need might not be on the list. House Appropriations Chairman David Obey (D., Wis.) explained that drugs and treatments “that are found to be less effective and in some cases, more expensive, will no longer be prescribed.”

The bill would also establish a $400 million slush fund, which the secretary of health and human services would use to give government, not doctors and patients, more control over health-care decisions.

There will be a substantial burden on employers: The bill would impose a back-door mandate for them to continue providing health insurance to workers long after those workers have left. PricewaterhouseCoopers says the ten-year cost of this provision would be up to $65 billion just for those workers currently eligible for COBRA (the current program through which people can participate in ex-employers’ health plans). The estimated costs would be even higher if many more workers retire early, as they likely will if they know they can continue their employment-based coverage indefinitely.

James Lewis, at American Thinker, admires the scale and enthusiasm of the orgy of looting well underway on the Potomac.

Just before the election, Barack Obama made fifteen references to “pie” in 100 seconds of a speech — all about dividing up that yummy pie of the American economy. His audience laughed and chanted, “Pie! Pie!” to show how hungry they were. In one fell swoop Obama gave away the rapacity of socialism. In his first weeks of his presidency the world has seen how hungry he really is.

Mr. Obama doesn’t look like he has an eating problem, but he is hungry, voraciously hungry. …

Socialism is rapaciously greedy — that’s what endless envy warfare comes down to. The Left likes to preen itself with the word ‘progressive,’ when it is actually the most regressive political strategy in history. The key political move is to seek out the most rapacious people — not hungry for food but power — and use them to mobilize an attack on the productive sector, the milk cows of society. It is the most primitive political strategy ever. It goes back to the Romans and long before. Karl Marx merely reinvented a very old and decrepit wheel.

That is why everything is grist for the mill of Obama Marxism. Old-time Marxism just pitted the poor against the rich — a compelling sympathy play in the 19th century, with grinding poverty, industrial workers living in little better than slavery, and peasant farmers in Europe who were all but slaves, as in Czarist Russia. Then decades of capitalist vitality provided the goods and services for an unprecedented spread of wealth, so that today Joe the Plumber is an instinctive conservative. Industrial workers became prosperous.

So the Left needed a new underclass. That is why the Boomer Left had to find new victim groups — women who could be made to envy men, blacks to envy whites, homosexuals to envy heterosexuals, the young against their parents, each ethnic group against the other. The New Marxism plays off any victim group against any perceived winner.

Nadeem Esmail, in the Wall Street Journal, suggests Americans thinking about socialized health care ought to look at the Canadian health system to see what it’s going to be like.

Health-care resources are not unlimited in any country, even rich ones like Canada and the U.S., and must be rationed either by price or time. When individuals bear no direct responsibility for paying for their care, as in Canada, that care is rationed by waiting.

Canadians often wait months or even years for necessary care. For some, the status quo has become so dire that they have turned to the courts for recourse. Several cases currently before provincial courts provide studies in what Americans could expect from government-run health insurance.

In Ontario, Lindsay McCreith was suffering from headaches and seizures yet faced a four and a half month wait for an MRI scan in January of 2006. Deciding that the wait was untenable, Mr. McCreith did what a lot of Canadians do: He went south, and paid for an MRI scan across the border in Buffalo. The MRI revealed a malignant brain tumor.

Ontario’s government system still refused to provide timely treatment, offering instead a months-long wait for surgery. In the end, Mr. McCreith returned to Buffalo and paid for surgery that may have saved his life. He’s challenging Ontario’s government-run monopoly health-insurance system, claiming it violates the right to life and security of the person guaranteed by the Canadian Charter of Rights and Freedoms.

Shona Holmes, another Ontario court challenger, endured a similarly harrowing struggle. In March of 2005, Ms. Holmes began losing her vision and experienced headaches, anxiety attacks, extreme fatigue and weight gain. Despite an MRI scan showing a brain tumor, Ms. Holmes was told she would have to wait months to see a specialist. In June, her vision deteriorating rapidly, Ms. Holmes went to the Mayo Clinic in Arizona, where she found that immediate surgery was required to prevent permanent vision loss and potentially death. Again, the government system in Ontario required more appointments and more tests along with more wait times. Ms. Holmes returned to the Mayo Clinic and paid for her surgery.

On the other side of the country in Alberta, Bill Murray waited in pain for more than a year to see a specialist for his arthritic hip. The specialist recommended a “Birmingham” hip resurfacing surgery (a state-of-the-art procedure that gives better results than basic hip replacement) as the best medical option. But government bureaucrats determined that Mr. Murray, who was 57, was “too old” to enjoy the benefits of this procedure and said no. In the end, he was also denied the opportunity to pay for the procedure himself in Alberta. He’s heading to court claiming a violation of Charter rights as well.

These constitutional challenges, along with one launched in British Columbia last month, share a common goal: to win Canadians the freedom to spend their own money to protect themselves from the inadequacies of the government health-insurance system.

Bad as the democrat stimulus package is on the surface, Charles Hurt notes that it contains a covert clause with far-reaching ramifications.

Buried deep inside the massive spending orgy that Democrats jammed through the House this week lie five words that could drastically undo two decades of welfare reforms.

The very heart of the widely applauded Welfare Reform Act of 1996 is a cap on the amount of federal cash that can be sent to states each year for welfare payments.

But, thanks to the simple phrase slipped into the legislation, the new “stimulus” bill abolishes the limits on the amount of federal money for the so-called Emergency Fund, which ships welfare cash to states.

“Out of any money in the Treasury of the United States not otherwise appropriated, there are appropriated such sums as are necessary for payment to the Emergency Fund,” Democrats wrote in Section 2101 on Page 354 of the $819 billion bill. In other words, the only limit on welfare payments would be the Treasury itself.

“This re-establishes the welfare state and creates dependency all over the place,” said one startled budget analyst after reading the line.

In addition to reopening the floodgates of dependency on federal welfare programs, the change once again deepens the dependency of state governments on the federal government.

Never let a serious crisis go to waste. What I mean by that is it’s an opportunity to do things you couldn’t do before. – Rahm Emanuel

The Wall Street Journal quotes the democrat White House Chief of Staff’s dictum in explaining what the democrat’s so-called stimulus package is all about.

Democrats in Congress are certainly taking his advice to heart. The 647-page, $825 billion House legislation is being sold as an economic “stimulus,” but now that Democrats have finally released the details we understand Rahm’s point much better. This is a political wonder that manages to spend money on just about every pent-up Democratic proposal of the last 40 years.

We’ve looked it over, and even we can’t quite believe it. There’s $1 billion for Amtrak, the federal railroad that hasn’t turned a profit in 40 years; $2 billion for child-care subsidies; $50 million for that great engine of job creation, the National Endowment for the Arts; $400 million for global-warming research and another $2.4 billion for carbon-capture demonstration projects. There’s even $650 million on top of the billions already doled out to pay for digital TV conversion coupons.

Read the whole thing. You and your children and your grandchildren will be paying for it.