“We Are All Socialists now,” declares the cover of Newsweek magazine. Well, speak for yourselves. Oh, and let us know how that’s working out for you.

Not terribly well, if other media reports are to be believed. “Newsweek dropped its [subscription] rate base to 2.6 million, from 3.1 million a year ago, and people briefed on its plans said it was likely to go below 2 million by next year,” The New York Times reported recently. Maybe a million or so people have decided they’d rather have their subscriptions dead than read red propaganda.

Still, in a backward fashion, the magazine may be on to something.

“We remain a center-right nation in many ways -- particularly culturally,” Newsweek admits. “And our instinct, once the crisis passes, will be to try to revert to a more free-market style of capitalism -- but it was, again, under a conservative GOP administration that we enacted the largest expansion of the welfare state in 30 years: prescription drugs for the elderly.”

And that’s exactly the point. The Bush administration’s big mistakes were when it increased discretionary and entitlement spending. So, having said that, why would anyone believe that the answer to the financial crisis is more federal spending?

Yet oddly, that’s exactly the lesson Newsweek draws from today’s economic problems. “The answer may indeed be more government. In the short run, since neither consumers nor business is likely to do it, the government will have to stimulate the economy.” President Obama agrees with that logic.

He dismissed conservative complaints that the “stimulus” bill raced through Congress is too expensive. “When I hear that from folks who presided over a doubling of the national debt, then, you know, I just want them to not engage in some revisionist history,” Obama said. “I inherited the deficit that we have right now and the economic crisis that we have right now,” he told reporters during his first televised news conference. It went so well we can expect the second to be scheduled some time in 2011.

But that “the other side spent, too” dodge doesn’t get Obama and Newsweek out of their trap. If big federal spending is a problem, the answer should be to reduce spending -- not to borrow and throw out an additional $1 trillion or so.

Obama also misreads the lessons of recent history. “If you delay acting on an economy of this severity, then you potentially create a negative spiral that becomes much more difficult for us to get out of,” he told reporters. “We saw this happen in Japan in the 1990s, where they did not act boldly and swiftly enough and, as a consequence, they suffered what was called the lost decade, where essentially, for the entire ’90s, they did not see any significant economic growth.” Continued...