The Federal Department of Economic Recovery

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Barack Obama gave a big speech yesterday on his economic plan. No, he is not president quite yet—at least not officially—but his eye is not on the schedule of the presidential succession. He is targeting the schedule of the new Congress, which has just convened. Obama is speaking on the economy now because he wants Congress to pass an enormous economic stimulus plan for him to sign immediately upon taking office.

This speech gives us a lot of new information about what Barack Obama will do in office—and the style in which he will do it.

During the primaries and the general election, not to mention the presidential transition, Obama has weaved from the far left to the moderate center, blurring himself into a seeming enigma. But now we can see the outlines of how he will govern, and it is a combination of the far left and the center—the worst kind of combination. He will act on the ideas of the far left, while presenting them under a moderate, conventional, non-ideological cover.

The danger of Barack Obama's presidency is not that he will act openly on the old dogmas of the left. Indeed, during his transition he has largely attempted to meld into the Washington woodwork by hiring only the most conventional Beltway insiders. Instead, the danger is that he has been so steeped in leftist dogma for his entire life that he will accept the left's attitudes implicitly and automatically, without even realizing it.

All of which brings us to the main content of Obama's speech, which was an attempt to sell us a half-trillion-dollar program of government spending. This is, of course, money that the federal government does not have, so Obama has admitted that the budget deficit will explode to more than $1 trillion.

The money will be thrown around to all of the conventional pork-barrel recipients, from roads and bridges to "alternative energy," which is perpetually in need of government subsidies. But that is less important than the overall effect this spending will have. Given the current contraction in private credit—which will be further withdrawn by the government's vastly increased borrowing—an enormous amount of the money flowing through the economy will now be government money. An increasing amount of economic activity will be directed, not by the private marketplace, but by the government.

Not to worry, Obama tells us. His administration will "launch an unprecedented effort to eliminate unwise and unnecessary spending." They "won't just throw money at our problems—we'll invest in what works." And if you believe that, brother, then I'd like to sell you a can't-lose investment in one of Bernie Madoff's funds.

In fact, this spending has to be wasted, because it is being directed by a thinly disguised form of government central planning. Obama tells us that "instead of politicians doling out money behind a veil of secrecy, decisions about where we invest will be made transparently, and informed by independent experts wherever possible." What does this mean?

Elsewhere, Obama has indicated that he will create an "economic recovery oversight board." According to the Associated Press, "Obama's proposed Economic Recovery Accountability and Transparency Board is to include members the administration deems relevant to helping the country rebound from the year-old recession." Why just have an Economic Recovery Board—why not elevate it to a cabinet-level position? The Federal Department of Economic Recovery would really capture the whole flavor of this scheme.

This is a new central planning board for the American economy, in which a collection of politically connected experts will be empowered to decide which industrial enterprises are worthy of investment and which are not. This is already the policy of the Bush administration, of course, with Treasury Secretary Henry Paulson empowered to act as the economic dictator of the financial industry, deciding which financial institutions are to be supported by freshly printed government dollars and which are to be dismembered and sold. You can see all around you the evidence of how well that worked, and now Obama wants to expand this system to the whole economy.

This new scheme for central planning is an attempt to revive the most discredited idea of the creaky Old Left—but Obama is dressing it up in conventional centrist bromides. I thought that this one was particularly rich:

If we hope to end this crisis, we must end the culture of anything goes that helped create it—and this change must begin in Washington. It is time to trade old habits for a new spirit of responsibility. It is time to finally change the ways of Washington so that we can set a new and better course for America.

How is it "changing the ways of Washington" to propose expanding government power and an explosion in deficit spending? Those are the ways of Washington.

But that's not all. Comically, after proposing hundreds of billions of dollars in new spending and a trillion-dollar deficit, Obama tell us that "government at every level will have to tighten its belt." This "belt-tightening" takes the form of a federal bailout for state governments so that they can "avoid harmful budget cuts."

In this series of evasions and deceptions, there is one item that was not, alas, originated by Obama. He boasts that the hundreds of billions of dollars in new federal spending will be "free from earmarks and pet projects…. This must be a time when leaders in both parties put the urgent needs of our nation above our own narrow interests."

The "small-government conservatives" deserve this one. For decades, the ineffectual advocates of "small government" have directed all of their anger toward earmarks, which in total constitute less than one tenth of one percent of federal spending. Earmarks are small government; it's the rest of the budget that's big. And Barack Obama is now borrowing this conservative argument to justify making big government a whole lot bigger.

The biggest evasion of Obama's speech is that he is hiding what is essentially an ideological program—a resurrection of the ghost of socialism—as a rejection of ideology. He warns us that we must not "rely on the worn-out dogmas of the past" (by which he means free-market economics) and he calls on both parties (by which he means Republicans) "to put good ideas ahead of the old ideological battles."

Yet it is not easy to guess Obama's own basic ideological commitment: that "only government can provide the short-term boost necessary to lift us from a recession this deep and severe. Only government can break the vicious cycles that are crippling our economy."

Obama's premise is that only government can guide and manage economic activity. Only a Federal Department of Economic Recovery can bring back prosperity. This is the most ideological of ideological positions, an "ism." The name for it is "statism," a belief in the central role of the state in controlling the economy.

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