Tuesday, June 8, 2010

Suppose the Liberal Luck Ran Out

Our liberal friends don't know how lucky they are. They've been wrong on pretty well everything (except civil rights between 1962 and 1965) but somehow the American people keep voting for them.

They were wrong on the Great Depression. FDR's economic policy kept the nation buried in misery for a full decade. They were wrong on Communism. It was an evil, just as evil as fascism. They were wrong on government welfare. Their cradle-to-grave welfare state has demolished the working class. In the 1970s their Keynesianism gave us the worst inflation since the Civil War. In the 1990s and 2000s their housing subsidies gave us bubbles and a banking crisis.

One big reason why liberals never seem to get the blame for their screw-ups is that they get to make their own weather. With bribed apologists in the academy, willing accomplices in the media, and immoralists in the commanding heights of the culture, they can spin everything to make themselves look good.

But now we have President Obama. Our liberal friends liked to make fun of President Bush as a fortunate son, a dim-witted scion who wasn't up to the job. Actually, George W. Bush had a baptism of fire with his failing oil firm, Arbusto, which must have taught him a lot about dealing with disaster, and helped him soldier through the dark days of the Iraq mess.

President Obama, on the other hand, really is a fortunate son. He's been eased along by helping hands his entire adult life. Now he is president at a tricky time when the president is really going to have to make some tough choices. He is going to have to make decisions that are going to anger his supporters.

The big thing he is going to have to face is big spending cuts for government. And that is really going to piss off his liberal supporters, who, working in government, have never had to deal with financial reverse.

Arthur Laffer, writing in Wall Street Journal, is predicting a "collapse" in 2011. More precisely, he predicts that the big tax-rate increases that take effect next January are already warping the recovery from the Great Recession. Businesses and individuals are pushing income into 2010 before the big tax increase. That means that 2011 will be pretty dismal, economically.

Maybe we are already seeing the dismal outlook, as the stock market has been swooning for the last month. We are, in early June, just a little over six months out from January 2011, and the market generally leads the economy by about six months.

If the economy is still sluggish in mid 2011, then look for the Obama administration to start proposing some really stupid stuff to goose the economy in time for reelection.

The problem is that there isn't much the Feds can do to goose the economy with Keynesian "stimulus." What do you think they have been doing for the last two years?

The Feds are already maxed out on borrowing. More borrowing would probably create angst in the credit markets and raise interest rates, and a continued easy money policy from the Fed is sure to be developing major inflation by 2012.

See what I mean? Some time in the next two years, the federal government is going to have to bite the bullet and implement real spending cuts to get its fiscal house in order. President Obama is going to be president, pushing spending cuts for liberal voters that have never faced spending cuts in their lives. Federal government employees will be losing their jobs. Teachers by the tens of thousands will be losing theirs. State and local governments will be going broke, and maybe cutting pension payments and health care benefits.

When the liberals run out of luck, it ain't gonna be pretty. The question is: what will the American people think? Will they feel sorry for well-paid teachers suddenly having to pay for health insurance? Or will they decide that big government and its supporters had it coming?

It all depends on who makes the weather.

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