His name was George F. Babbitt. He was 46 years old now, in April 1920, and he made nothing in particular, neither butter nor shoes nor poetry, but he was nimble in the calling of selling houses for more than people could afford to pay.
-- "Babbitt" by Sinclair Lewis (1922)

WASHINGTON -- We are waist deep in evasions because one cannot talk sense about the cultural roots of the financial crisis without transgressing this cardinal principle of politics: Never shall be heard a discouraging word about the public.

Concerning which, a timeless political trope is: Government should budget the way households supposedly do, conforming outlays to income. But the crisis came partly because so many households decided that it would be jolly fun to budget the way government does, hitching outlays to appetites.

Beneath Americans' perfunctory disapproval of government deficits lurks an inconvenient truth: They enjoy deficits, by which they are charged less than a dollar for a dollar's worth of government. Conservatives participate in this, even though deficits fuel government's growth by obscuring its cost.

The people can emulate the government because credit has been democratized. Democratization of everything is supposedly an unquestionable good, but a blizzard of credit cards (1.5 billion of them, nine per cardholder), subsidized loans and cheap money has separated the pleasure of purchasing from the pain of paying. Furthermore, the entitlement mentality fostered by the welfare state includes a felt entitlement to a standard of living untethered from savings.

Populism flatters the people, contrasting their virtue with the alleged vices of some minority -- in other times, Jews or railroad owners or hard money advocates; today, the villain is "Wall Street greed," which is contrasted with the supposed sobriety of "Main Street." When people on Main Street misbehave by, say, buying houses for more than they can afford to pay, they blame the wily knaves who made them do it, such as the "nimble" Babbitt.

Knowing that heat breeds haste, errors and unintended consequences, George Washington praised the Senate as the saucer into which legislation is poured to cool. In this crisis, however, the House of Representatives has performed that function. Republicans, especially, slowed a Gadarene rush to ratify the deeply flawed original bailout legislation.

Voting against the bill -- against putting taxpayers' money at risk in order to clean up a mess that some people got rich by making -- was easy, but not necessarily wrong. The $700 billion figure exaggerated the plan's probable cost, but accurately measured something worse -- the enormous enlargement of government's power. Continued...