The Economy Leaks

New York Times columnist Ross Douthat writes in Monday's edition that even if it's true that the Wall Street bailout program (TARP) saved the economy from becoming even worse (and he acknowledges it probably did), it's still ok to "welcome" the "rebuke" in next week's midterm elections of the politicians that passed it. Douthat claims, "after a crisis has passed, it's immensely important that the ideals reassert themselves, so tha the moral compromises made amid extraordinary times aren't repeated in ordinary ones as well." After all, TARP did produce "the kind of crony capitalism you'd expect from a banana republic."

In separate op-eds, two Princeton economists attempt to stem the backlash against the bailout and even push for a stronger governmental effort to spur the economy. Douthat's Times opinion-page colleague Paul Krugman thinks the argument that the upcoming elections will be a repudiation of President Obama's ideology is bogus. What happened is that the president's actual programs were "more conservative than his election platform," and "the truth is that if the economy" was in even better shape, people wouldn't care so much about government spending. Had the administration passed a much larger stimulus package, the economy would have improved faster, ergo voters would be giving Democrats the rubber stamp next week. But, alas, Krugman says, "we're about to hit rock bottom" as voters will probably choose more Republicans, "the people who got us into this mess."

The other Princeton professor, Alan Blinder (a former vice chairman of the Federal Reserve), also believes the government must do more because "the economy still needs a boost," and the economic theory behind it is solid "and, by the way 75 years old: The government should push the economy forward when unemployment is high." But unlike Krugman, who focuses on government spending and the political fallout, Blinder writes in the Wall Street Journal that there are a number of other things in the "government's kitbag." He proposes governmental hiring, a new jobs tax credit and cutting sales taxes. But those are "fiscal policies" (taxing and spending) which are decided upon, unfortunately, by a "Congress . . . paralyzed by extreme partisanship." And so what the government can do is change monetary policy, using the Fed to purchase U.S. Treasury debt and keep interest rates low. It's not the best option, but Blinder says—paraphrasing Donald Rumsfeld—"you go to war against recession with the army you have."

Commentators are also busy on the foreign- and military-policy front. In between Douthat and Krugman's columns in the Times, University of Florida law professor and former Air Force officer Diane H. Mazur attempts to explode the "myth" that Ivy League universities kicked the Reserve Officer Training Corps (ROTC) programs off their campuses in response to the Vietnam War. In fact, she writes, no university "bans" ROTC; there's a law against that. What really happened, Mazur says, is that the military didn't want to comply with the colleges' "rules for academic course content and professor qualifications," and "walked away." The "fiction" that these bans exist, therefore, "lets the military (and to some extent, the universities) off the hook when it comes to the growing distance between civil and military America."

Moving offshore, former–Under Secretary of Defense Douglas Feith argues in the Journal that Israel can be democratic and hold on to its Jewish identity (just look at Ireland, Poland, Croatia, Japan and Hungary, he says).

And moving farther East, Washington Post columnist David Ignatius reports back from a weeklong trip to the Middle Kingdom, returning "more perplexed" than when he started. He thinks it's in America's interest to push China's leaders "to achieve genuine stability that can come only with a more democratic, less paranoid political system" in order to avoid "the anarchic crackup that nobody talks about, but everybody fears." Fellow Post pundit Jackson Diehl thinks one way Washington could pressure Beijing (and Tehran) to open up is via the internet, by funding companies which have developed software that breeches censorship firewalls like those in China and Iran, as well as Syria, Vietnam and Saudi Arabia.

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