The ‘I Am Not George Bush’ Policy

All the borrowing at home and fighting abroad?
by Victor Davis Hanson
National Review Online

The first year of the Obama administration has been a vertiginous pile of confusions and contradictions. In hunting for a theme to its decision making, we might start with Obama’s relation to his predecessor.

The World War II Analogy

George Bush, a purported conservative, ran up deficits reaching in aggregate $2.5 trillion; therefore I, Barack Obama, a liberal, can legitimately exceed that figure by a factor of three or four. That seems to be the thinking of the present administration. And its common defense of the massive new deficit is the historical analogy that it will snap us out of the recession in the same way that deficit spending during World War II lifted us out of the Great Depression.

Even many supporters of the new stimuli confess that the Depression was not cured by the New Deal, but rather by the strong demand in goods and services brought on by the war that followed. So the new mega-Keynesians describe their current remedies in terms not of 1933–39, but of 1941–45.

But even if one were to accept the questionable assumption that our current recession is anything like the downturn of the 1930s (10 percent unemployment versus 25 percent), we forget that what allowed us to manage the high levels of incurred debt was the rebound after 1945, when U.S. manufacturing, natural resources, and expertise met much of the industrialized world’s postwar demand until the wrecked economies of Europe, Russia, and Japan rebounded. Yet in the current weak recovery, we certainly will not be paying back our borrowed trillions by exporting to a needy world already well supplied by Europe, Japan, Korea, and China.

Bottom line: We have no easy means to create the wealth necessary to pay back the unprecedented trillions we now owe — and we have no accurate historical parallel to guide us through these upcoming years of unsustainable levels of indebtedness, other than perhaps a Greece or Argentina writ large.

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