The Crash of '08 may have upended an unhealthy dynamic of deficit spending combined with "off budget" accounting for our largest line items. Real questions are being asked about whether the US can really afford all that we have committed to do: trillions for banks plus a trillion more to the government to redistribute under the guise of stimulus. It might not seem like it, but the bank bailouts and the stimulus are actually inter-related. With the death of Wall Street and the loss of what has become the US's most productive sector, the welfare state has lost its paymaster and fund raising arm. It has been an open secret that the left wing "party of the common man" has been the party of Wall Street for quite some time. The welfare state needs the banks to provide the means to finance US debt and it needs the outsize taxes paid by Wall Street billions to inflate the tax rolls. Thus, while America's heavy industries suffer under business killing environmental laws and payroll taxes, the financial sectors benefitted from "deregulation" in the form of toothless regulators and corrupt friends in Congress.
Even the most idealistic government is a means of distributing limited resources. The earliest conception of our federal government was that of a national government with limited powers. It followed that limited powers would mean limited expenditures. Early America was also cheapskate America. The original business of the federal government was conducted in rented rooms in Philadelphia and New York. At the end of the Civil War, US Grant found himself without a pension because the government simply did not provide them. As late as the 1950's. American presidents lacked any kind of pension.
Those days are long behind us, of course. Blame what you would like: LBJ's "original sin" of mingling the social security surplus with the budget; FDR's court packing scheme which bought the favorable Supreme Court rulings that provided the legal grounds for his vast expansion of federal power; Woodrow Wilson's agitation for a "living" constitution (which would revive the lost power of the segregated South). It doesn't matter. The welfare state is simply growing beyond all reason or beyond all ability to pay for it. Conservatives have provided an ideological counter-weight to Democratic demands, but the Crash of '08 may finally provide its practical counter.
No Democrat has ever had to answer the question "How big should government grow?" They simply return to DC each spring, like swallows to Capistrano, with new initiatives and spending plans. Some address real needs, but most are simply creations of the welfare-industrial complex; the universities, community activists, unions, think tanks, journals, and non-profits that generate unending plans to solve the unsolvable: war, poverty, inequality, the weather. Results are not as important as the is the all-important goal of Doing Something. And if any Republican (or occasionally practical minded Democrat) suggests otherwise, they are dubbed racists, child killers, plutocrats, you get the idea.
The increasing hysteria coming from The Left - perfectly encapsulated in Nancy Pelosi's notorious speech before the first House bailout bill - reveals more than they realize. They know that populist promises first made in the Thirties are becoming more untenable by the day and yet for all their talk of bipartisanship, they cannot make the most basic concessions. They cannot agree to meaningfully raise the retirement age to either receive pensions or start receiving Social Security benefits; they cannot accept a temporary cut in the payroll tax or corporate taxes; they cannot ease the regulatory burden on US auto manufacturers (and instead are increasing it with "green" regulations!). Not only that, the welfare-industrial complex is beginning its media campaign to convince the US that we need government sponsored health care. Are they in denial, or are they determined to ride this train to the end of the line?