The illusion that Barack Obama will lead from the economic center has quickly come to an end. Instead of combining the best policies of past Democratic presidents John Kennedy on taxes, Bill Clinton on welfare reform and a balanced budget, for instance President Obama is returning to Jimmy Carter’s higher taxes and Mr. Clinton’s draconian defense drawdown.
On the growth effects of a large expansion of government, the European social welfare states present a window on our potential future: standards of living permanently 30% lower than ours. Rounding off perceived rough edges of our economic system may well be called for, but a major, perhaps irreversible, step toward a European-style social welfare state with its concomitant long-run economic stagnation is not.
All that matters to Obama is spend, spend, spend! Someone is going to be paying alot of money in taxes to pay for his big spending spree long after he is gone from the White House.