Politicians up for re-election are taking notice. Congressional Democratic leaders can't round up the votes for another stimulus package and have not dared to ask their members to vote for a budget resolution.
New York Times columnist Paul Krugman keeps beating the drum for even more increases in federal spending. But congressional Democrats are refusing to dance.
Democrats can plausibly claim that their 2009 stimulus package, passed less than a month after Barack Obama was sworn in, prevented a 1932-style downward spiral. But it didn't hold unemployment below 8 percent, as they promised it would.
They can argue that Treasury Secretary Timothy Geithner's stress tests prevented a meltdown of the big banks. The problem is that it didn't get them back into the lending business.
And Democrats can claim that the General Motors and Chrysler bailouts are working out better than some of us doomsayers predicted. Unfortunately, the transfer of assets from secured creditors to the United Auto Workers -- which I dubbed "gangster government" last year -- has undoubtedly deterred investment in similar enterprises.
But the brute fact remains that even enormous government spending can't revive an economy when government threatens to take away anything you earn.
America has seen this kind of thing before. In the late 1930s, when Franklin Roosevelt raised taxes on high earners, encouraged lawless sit-in strikes by labor unions and took over utility businesses, the response was a "capital strike."
Instead of creating jobs, businesses and investors put their money in mattresses. The result was a stagnant economy and double-digit unemployment-and a 75-seat Republican gain in the 1938 off-year elections.
Back then, the economy eventually perked up thanks to mobilization for World War II. No such mobilization appears on the horizon today. You may need to get a bigger mattress.
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