Some Welcome Signs of Life From Private Sector

In this they are following in the footsteps of John Maynard Keynes, who never would have approved tax increases in a lagging economy. And of White House Council of Economics Advisors Chairman Christina Romer, who -- with her husband David Romer, also a respected academic economist -- surveyed tax changes since World War II and concluded: "Tax increases are highly contractionary. The effects are strongly significant, highly robust and much larger than those using broader measures of tax changes."

Democrats have some cause to complain that George W. Bush and congressional Republicans left them with a hot potato when, by using the reconciliation process to avoid a Senate filibuster, they made their now long-ago tax cuts expire after this year.

The Democratic plan has been to continue the tax cuts on people with incomes under $250,000 and to allow cuts above that benchmark to expire. That way they could depict Republicans as aiders and abettors of the greedy rich.

But the defection of Conrad, chairman of the Senate Budget Committee, and at least two Democratic colleagues raises the possibility that even in a lame duck session after the November election, Senate Democrats won't be able to get 60 votes for their plan.

In that case, they will presumably have to compromise with at least some Republicans to preserve popular Bush tax features like the child care tax credit and the 10 percent low income bracket. Otherwise, taxes will go up on even middle- and low-income people just at a time when Keynesian economists say they shouldn't. This is not a bind the Democrats expected to be in.

Two lessons seem apparent here. One is that private firms can do things government regulators can't do. The other is that if you choke the golden goose enough, it stops producing eggs -- and you have to get your hands off its neck. Grass grows up in the smallest cracks.