Bush-Obamaism, and the "Bailout" State

There was a time, not so long ago, when those of us on the right railed about "welfare," the costs and damaging impact it had on society and culture, and how, rather than helping those recipients of government largess, it often hurt them, providing as it did, perverse incentives for dysfunctional behavior.  Welfare, we said, was corrosive to the fundamental values of American society, to personal responsibility and discipline, of accountability and hard work.  And, indeed, I believe, we were correct in this analysis, as massive transfers of wealth since Great Society have done nothing to alleviate poverty but rather deepened it along with establishing negative patterns of behavior that have become intergenerational.  It also added permanent and costly federal programs that have proven impossible to dial back.

And, yet, how quaint that discussion now seems in light of the government jamboree that has occurred over the last year in response to the mortgage crisis, brought on itself in large measure by its own misguided policies.  In retrospect, the contest over welfare that animated the debate between left and right previously, seems antiquated now in light of the radical transformation of the concept of "welfare" that has occurred in the last year, the redefining of government assistance to include not just the ranks of the poor as before, but banks, insurance companies, industries, states, and municipalities. 

It is corporate titans and governors now lining up for handouts.  The operative word, of course, is no longer welfare but "bailout," and bailout indeed is what the government has been doing (with businesses happily colluding), lurching from one disordered spending bacchanal to the next in the hope of finding a role for itself and assuring the nation of its relevance.  In the meantime, it has only prolonged the crisis and compounded it while permanently altering for the worse its relationship with the private sector.  It has also piled on massive debt for future generations to absorb.

But it is worth reviewing, the awful flailing and blundering of our government, its spasms and twitches of inconsistent activity, its confused and neurotic careening from one bailout and stimulus package to another, adding yet new government duties and responsibilities to an already bloated canon of programs, replete with record deficits, a shrinking private sector, and a distorted marketplace holding on to its cash instead of busily picking over the remains (assets) of failed firms (at bargain prices), as it prepares the way for the next growth cycle.

And through all of this, there has been painfully little explanation of the roots of the financial crisis, the decisive role played by the government through its sponsorship of Fanny Mae and Freddie Mac, the Community Reinvestment Act, its undermining of traditional lending practices, its quotas for faulty loans to those unable to pay, and the availability of cheap money from the Fed.  Indeed, the federal government was at the center of the debacle, a responsibility it has managed to deflect and ignore. 

But a knowledge of the parade of travesties that have mysteriously passed for enlightened government policy is useful if only to gauge the depth of the incompetence, the unending bailouts and stimulus packages that have sailed forth under the banner of both parties at overwhelming taxpayer expense, the return of discredited prescriptions for curing economic disease, of Keynesian economics, of massive government spending and roaring deficits, of a direct and deliberate insertion of government into the private realms of business enterprise; it is disheartening, indeed, to see the wholesale abandonment of primary principles that have guided our nation.  Indeed, the past year has been nothing if not a frontal assault on capitalism itself, the engine that has done so much to advance the human good and made the US the envy of the world.  This was an attack perpetrated by both political parties, a full scale attack on freedom by the political class, a spectacular display of political conceit and self-regard, and of elected elites run amok. 

The price tag for the unprecedented spending spree comes to nearly $3 trillion or just shy of the entire federal budget for 2008, all of it borrowed.  And still, the stock market collapsed, the economy continues to contract, and unemployment approaches (and will likely surpass) 10%.

The result, then, of our government's hyperactivity will be a deeper recession, enormous debt, and an unchecked federal government brimming with ambition; there is now also an expanded sense of entitlement in our nation (exceeding already burdensome levels) that includes not just the destitute but banks, insurance companies, states, cities, homeowners, students, credit card holders, just about everyone.  Moral hazard anyone?  Welfare redefined, indeed, into a far more pervasive, costly, and insidious bailout culture.

The tragedy for Republicans is that the frenzied and dizzying embrace of lavish spending packages that have achieved nothing other than to subvert the private sector began with George Bush.  In so doing, he has squandered whatever credibility Republicans once enjoyed on the matter of fiscal responsibility.

Bush-Obamaism is a debilitating continuum that threatens the Republic.  All those concerned for the integrity of their nation should oppose it.