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The High Cost of the Stimulus

The opinions expressed by columnists are their own and do not necessarily represent the views of

On precisely the day Barack Obama signed into law the most gargantuan economic measure in the nation's peacetime history (White House Chief of Staff Rahm Emmanuel termed it "the most major, sweeping, comprehensive legislation as it relates to economic activity ever") -- at almost precisely the moment of his pen-strokes -- the stock market's hope balloon went "bang!"

The Dow fell to its bear-market low. In a cascade of awful economic news, the market had struggled to hold on. But the signs weren't good. It fell on the day of the inauguration of a man who had campaigned as the embodiment of an idea called hope. It fell on the day his tax-challenged treasury secretary rolled out his salvational plan. Then, at the signing, it fell again. Said The Wall Street Journal Wednesday, with gold pushing toward its all-time high (up 9 percent this year, with the Dow down 14 percent): "The rising gold price says investors are starting to freak out over governments' response to the credit crunch."

The market is testifying to the difficulty of keeping hope alive. And to borrow the understatement Apollo XIII astronaut Jim Lovell gave the language, "Houston, we have a problem."

Again on the day of the signing, these things also happened:

-- Chrysler and General Motors begged for $21 billion in additional taxpayer dollars to keep from going toes-up.

-- Word came that Lloyds of London may follow G.M., et al., down bankruptcy's road.

-- China, the holder of $900 billion in U.S. Treasury bills alone, bought in big time to one of the world's premier gold-mining companies.

-- Roland Burris -- the joke now occupying Obama's seat in the joke called the Senate -- insisted in the face of calls for his resignation that he did not misspeak to investigators about his communications with Illinois' (former) joke of a governor.

-- Hugo Chavez won a referendum effectively crowning him tin-pot dictator for life in Venezuela, one of our major sources of imported oil.

-- Pakistan conceded the inevitable and sanctioned Sharia law in the country's jihadist-held Swat Valley.

-- Kansas halted taxpayer refunds because it is out of cash, and California continued giving refunds in the form of IOUs.

-- After a very public display of drunken incoherence at a meeting of the world's leading economies, Japan's finance minister resigned.

-- It was revealed that following passage of the 600-page stimulus bill, wherein Congress restricted private-sector executive pay, Congress acquiesced to its own annual pay raise. Shameless members of Congress from both parties then prepped for junkets to exotic locales here and abroad to -- you know -- fact-find and confer.

And that's just a partial listing. Houston, we have a problem that is huge, vast and broadly economic but not exclusively so. These days, we hear hardly a word about terror and what the administration just ended called The Long War.

For an economy in freefall or meltdown or whatever, Obama our secular savior -- in concert with the Democratic congressional elite -- has advanced a stimulus package larger than any single element of Franklin Roosevelt's New Deal. In doing so, they evidently are following the advice of progressive Princeton economist (and New York Times columnist) Paul Krugman, who believes FDR's policies didn't end the Great Depression but extended it until the onset of World War II because FDR didn't spend enough.

Obama shares FDR's impulse that throwing federal money at a depression is the way to tame it. Yet spending rarely works. Tax-cutting usually does -- as Presidents Kennedy, Johnson, Reagan (three times), and Bush II demonstrated. Obama does not share their belief in the virtue of cutting taxes to strengthen the economy. Nor does he share, notably, Reagan's abiding optimism. Talking grimly about imminent catastrophe, Obama sounds more like Dr. Doom.

The problem we have is this.

Americans in the past 12 months have lost $13 trillion in the stock and housing markets. Their debt burden includes $2.6 trillion owed on vehicles and credit cards and $10 trillion owed on home mortgages. Most of these good people have no confidence in the economy. Most have done nothing wrong except to buy into the federally promoted debt culture for things they couldn't afford and didn't need -- a culture wherein the federal government now proposes to bail them out with money it doesn't have either. The government can manufacture such money only through devices that will inflate the dollar -- thus diminishing its value down the road, along with the value of dollar-denominated nest-eggs.

In the first month of his administration, Barack Obama has exhausted nearly all his bipartisan goodwill largely on social programs long coveted by heavy-breathing leftists -- programs that will cut few substantive taxes and create few durable jobs. Perhaps he has taken a leaf from the notebook of Stuart Chase -- a New Dealer who wrote upon his return from a trip to the Soviet Union: "Why should Russia have all the fun remaking a world?" Yet the fun and havoc of change come at high costs in broken lives and broken balloons of hope.

Oh, and we've hardly mentioned (or heard Obama mention) islamofascist terror -- and its relentless, insidious, ambitions on the West.

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