TUESDAY may be regarded by future historians as the beginning of the end for the United States of America.
It is the first credible date that may become iconic as the moment when the federation that came into existence in 1776 and rose to global hegemony in the 20th century joined Macedonia, Rome and Britain in the catacombs of fallen empires. Barack Obam
a is America's nemesis.
This presidency has the very real potential to impoverish America on a scale that could demote it irreversibly from its economic superpower status. When a politician masquerades as a messiah, be very afraid. This column was subjected to frantic abuse circa 1997 for denouncing Tony Blair as the Great Charlatan. Today, it is hardly an isolated view.
Obama is mega-Blair. It is understandable some Americans should be deceived; but after the Blair experience there is no excuse for any Britons buying the Brooklyn Bridge. The one reservation that slightly dampens the euphoria of Obama groupies is the thought that now, with a massive recession under way, is a most inopportune time to come into office. Nothing could be further from the truth. From Obama's viewpoint, this is a preternaturally opportune moment, an unhoped-for conjunction of circumstances that uniquely enables him to implement a programme that would otherwise have been unthinkable.
In normal times, the aggressive expansion of big government and state intervention into every area of the economy and of citizens' lives would be a non-starter in America. Today, however, a recession that threatens to deepen into a depression has left frightened citizens vulnerable to the blandishments of the Keynesian snake-oil salesman. The American Recovery and Reinvestment Plan – Obama's so-called stimulus package – is the vehicle for transforming America into a Stetson-wearing European Union.
Even before the plan, the US federal deficit will be $1.2 trillion this year. Last February, when Congress passed a $152bn stimulus bill, Obama condemned it as "deficit spending" and denounced the "disdain for pay-as-you-go budgeting" it displayed. At the end of 2008, his adviser David Axelrod was canvassing "a package from $675bn to $775bn". By last week it had mushroomed to $825bn. Even the Capitol Hill cat knows it will hit $1 trillion.
Fiscal conservatives are being placated by emphasising the $310bn of his package devoted to tax cuts. Yet the way they are being directed, even at this early stage, looks wasteful. The better plan, as Republicans pointed out, would have been to cut the middle-income tax rate from 25% to 15%. For that matter, if the government has $825bn to spare, the real stimulus would have been to translate it all into tax cuts that would have galvanised the economy.
No way, José: that is foreign to the Obama mindset. The stimulus package is exactly like those parcels of toxic debt the banks were passing around. Under the pretence of "stimulus", Obama is implementing interventionist schemes and paying Danegeld to various interest groups. Obama admits 244,000 new government jobs will be created: sceptical critics put the real figure at 600,000. He promises to create 459,000 new jobs in "green energy". That says it all: federal pen-pushers and people manufacturing useless wind turbines – all the leftist, non-productive sinecures that stagnate, rather than stimulate, an economy.
Overall, Obama promises more than three million new jobs. Unfortunately, some clever clogs in Congress with a ball-point and the back of an envelope spotted that meant a cost of $275,000 per job. Governments cannot create jobs. All they can do is invent camouflaged welfare programmes. Only the market can create jobs; and massive "job" creation in the public sector destroys real employment.
To implement a programme so alien to the instincts of Americans, Obama needs a supportive mythology. He has found it in the myth of Franklin D Roosevelt's New Deal. That massive interventionist programme actually delayed recovery from the 1930s depression. During 1930-40, the US economy would have been expected to grow 30%-40%. Instead, it languished: net private investment totalled -$3.1bn. So-called infrastructure programmes are unsuitable for combating recession: they need long advance planning and proper execution; too often they are gerry-built white elephants.
Barack Obama's inauguration address on Tuesday will be big on rhetoric: that is what he does. The plan he will trumpet will be a failure economically; but it may well prove a success in achieving its author's agenda – reducing the US to a Keynesian theme park like the ones based in Brussels, Paris and, most recently, London.
