This week, about a third of a million Americans turned out at over 300 separate "tea party" protests. They rallied to protest the Obama administration's economic policies: the bailouts, the spending and the taxes that must follow in the spending's wake.
The protesters expressed feelings of fear and loss: that their country was being changed away from them--that the era of greater freedom and opportunity opened by Ronald Reagan in 1981 is now being closed by Barack Obama.
Those fears were expressed in ways that were inconsistent, inarticulate and unfortunately often odd or worse than odd. Blame for these deficiencies fall on the events' leadership, disproportionately drawn from the Ron Paul libertarian fringe.
But the deficiencies of a band of protesters matter far less than deficiencies in the leadership of a nation. At the beginning of tax week, President Obama delivered a major economic address that revealed the much more significant gaps in this president's plans and purposes.
There was much to praise in the President's speech. His analysis of the origins of the present crisis was serious and sophisticated. The President directly acknowledged criticism of his plan and took the trouble to offer plausible replies. And the broad contours of his vision of a solution were surely correct:
Americans will have to save more and consume less in the years ahead. Federal budget deficits will have to be closed. Deficit reduction will require a slowdown in the rise of health care costs. Protectionism must be avoided, and Eastern Europe and other emerging markets must be assisted as they struggle with the effects of the downturn.
It's gratifying, too, to see an administration take pains to integrate its economic plans as a coherent and consistent whole, something that the administration in which I served did not do. (George W. Bush was responsible for the third-biggest tax cut in American history, two of the most expensive wars in U. S. history and the largest new social welfare program since 1965. That does not add up.)
OK: caveats made.
Now let's proceed to the other side of the ledger, and it is deeply troubling.
If followed, the Obama administration's budget plans would increase the federal take from the U. S. economy from one dollar in five to one dollar in four, and possibly more. That's a huge change, all the more staggering since it would occur at a time when military spending is slated to decline. Yet not by one word, not by one syllable, does the President reveal any awareness that such a huge increase in spending might have negative consequences for future economic growth.
The President is way too quick to relabel spending as investment. Where's the evidence that more spending on, say, public schools yields better results?
At this late date in history, it is dismaying to hear a presidential statement that entirely disregards the incentive effect of high tax rates, especially since it is almost certain that the tax increases he has already proposed will not be the last. Raising the top income tax rate from 36% to 39.6%, reducing the value of tax deductions for high-income taxpayers and rising tax rate on corporate dividends will not begin to produce enough revenue to service President Obama's huge new debts.
The President's speech ignored the likely inflationary consequences of his monetary policy. He implicitly welcomed a further decline in the U. S. dollar, again without even mentioning inflationary risk. His discussion of finance did not even nod to the possibility that stricter regulation of finance might have costs as well as benefits.
Perhaps worst: The President has placed at the core of his economic policy an approach to energy that can only be described as fantasy. The President has endorsed limits on carbon dioxide emissions. Fine. But he then denies that this policy will have costs. Indeed he holds out the hope that such limits would accelerate economic growth. That's delusional at best, deceptive at worst--especially since the President's energy plans emphasize replacing the cheapest form of electricity (coal) not with the next-cheapest (nuclear and hydro), but with the most expensive: wind and solar, modes of energy that cost almost 10 times as much as those in use today.
President Obama is struggling with a crisis he inherited from his predecessor. That's no excuse for creating new crises to bequeath to his successors. Yet in his first major statement, one already hears the elements of new crises to come.
David Frum is a resident fellow at AEI.