Tuesday, January 20, 2009

Don't Waste a Crisis?

By Victor Davis Hanson

Euphemism comes from the Greek word euphemia , which means "using the good word" -- usually in place of the accurate bad one. Recently we've become experts at it. Printing trillions more dollars and growing government to cover new debts isn't so bad if we call it "stimulus." That is far smarter than saying something honest like,

"I propose a new $1 trillion debt program."

The old-fashioned spendthrift policies we used to ridicule as congressional pork and "earmarks" are now justified under that ubiquitous nice word "stimulus." If funding another questionable museum in your district was once congressional pork barreling, it will now be a patriotic act to get the national economy moving again.

Yet much of what is driving this national hysteria in our reaction to the current economic downturn is psychological. After all, no plagues, wars or earthquakes have killed our workforce, destroyed our infrastructure or wiped out our computer banks. [snip]

We are going to have to pay these debts back by cutting federal spending and entitlements or raising taxes -- or both. Or we can convince panicky debt holders abroad to loan us even more money for years at near-zero interest rates. Or we can try simply printing trillions of new dollars to inflate the economy while hoping that creditors don't mind being paid with funny money.

What got us in this debacle was the lack of self-control on the part of consumers who borrowed to spend more than they could pay back, rapid growth in government debt, and Wall Street speculators who wanted obscene returns they had not earned.

It would be a pity if the government now trumped these bad examples and turned some helpful federal loan guarantees of troubled banks into a permanent state-run economy with crushing debt for generations to come.

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