“What a waste of a year. What a year for doing nothing and going nowhere…

“For me, the payroll tax battle is yet another indication of just how dysfunctional our political process remains. Let’s keep in mind, of course, that this year’s economic stagnation was bankrolled by a $1.3 trillion budget deficit, the continuation of the Federal Reserve’s zero-interest policy, as well as a Fed balance sheet that now amounts to an incredible $2.3 trillion. (As a point of comparison, non-residential, private sector investment as measured by gross domestic product will print at roughly $1.9 trillion this year.) Put simply, our political class still lacks the capacity to do anything about the structural problems in our economy, beyond the same old stuff that has not worked so far.

“This is why I say: Good for President Obama that his job approval numbers have ticked up from just-plain-awful to not-awful-but-still-pretty-bad, but this does not change the fact that, if more politicians are going to lose their jobs because of this mess, he will be the next one kicked off the island. That’s just the way these things go. You don’t run a huge deficit, produce nothing for it, and get to keep your job.”

“Amid this month’s payroll tax fracas, few noticed that Congress passed a 1,200-page, $1 trillion omnibus spending bill for fiscal 2012. Maybe no one in Washington boasted because it’s a victory for spending as usual. Republicans—in the House and Senate—need a better strategy…

“The news is that after accounting for last-minute unemployment insurance extensions, ’emergency’ spending and higher Medicare physician payments, total federal outlays are estimated to be $3.65 trillion in fiscal 2012, up slightly from $3.6 trillion in 2011. The last year has seen no major reforms in any of the big entitlement programs—Medicare, Medicaid or Social Security. Spending on food stamps alone is scheduled to reach $80 billion in 2012, more than double the amount as recently as 2007…

“There has to be a better way. Tea party expectations of major reforms were always unrealistic with Democrats controlling the Senate and White House. But that’s no reason that Republicans in Congress can’t use their power to fight for their priorities.”

“‘In terms of the president’s relationship with Congress in 2012 — the state of the debate, if you will — the president is no longer tied to Washington, D.C.,’ spokesman Josh Earnest said in a news briefing in Honolulu.

“The assertion is striking given that Obama, as president for nearly three years, is the symbol and personification of the federal government. It also offers a glimpse into an Obama reelection strategy that will target a ‘do-nothing’ Congress much in the style of Harry S. Truman’s reelection campaign in 1948…

“Earnest said that the White House’s goal was to contrast the image of a ‘gridlocked, dysfunctional Congress’ with ‘a president who’s leaving no stone unturned to try to find solutions to the difficult financial challenges and economic challenges facing this country.’…

“[He] said that now that Obama was ‘sort of free from having to put out these fires, the president will have a larger playing field, as it were. And if that playing field includes working with Congress, all the better. But I think my point is that that’s no longer a requirement.'”

“At the end of 2011, America, like much of the rest of the Western world, has dug deeper into a cocoon of denial. Tens of millions of Americans remain unaware that this nation is broke — broker than any nation has ever been. A few days before Christmas, we sailed across the psychological Rubicon and joined the club of nations whose government debt now exceeds their total GDP. It barely raised a murmur — and those who took the trouble to address the issue noted complacently that our 100 percent debt-to-GDP ratio is a mere two-thirds of Greece’s. That’s true, but at a certain point per capita comparisons are less relevant than the sheer hard dollar sums: Greece owes a few rinky-dink billions; America owes more money than anyone has ever owed anybody ever…

“Underneath the patchouli and pneumatic drumming, the starry-eyed young share the same cobwebbed parochial assumptions of permanence as their grandparents: We’re gayer, greener, and groovier, but other than that it’s still 1950 and we’ve got more money than anybody else on the planet, so why get hung up about a few trillion here and a few trillion there? In a mere half century, the richest nation on earth became the brokest nation in history, but the attitudes and assumptions of half the population and 90 percent of the ruling class remain unchanged.

“Auld acquaintance can be forgot, for a while. But eventually even the most complacent and myopic societies get reacquainted with reality. For anyone who cares about the future of America and the broader West, the most important task in 2012 is to puncture the cocoon of denial.”

“By comparison, Europe’s democratic leaders look woolly and vacillating, just as they did back in 1932. Indeed, for the democratic West, this was a truly terrible year…

“Sadly, there seems little point in looking across the Atlantic for inspiration. In 1932, President Herbert Hoover, beleaguered by rising unemployment and tumbling ratings, flailed and floundered towards election defeat.

“Today, Barack Obama cuts a similarly impotent, indecisive and isolationist figure. The difference is that in 1932, one of the greatest statesmen of the century, the Democratic politician Franklin D. Roosevelt, was waiting in the wings.

“Today, American voters looking for alternatives are confronted only with a bizarre gaggle of has-beens, inadequates and weirdos, otherwise known as the Republican presidential field. And to anybody who cares about the future of the Western world, the prospect of President Ron Paul or President Newt Gingrich is frankly spine-chilling.”

“More than anything else, you are the ones who make me hopeful about 2012. Because we’ve got some difficult debates and some tough fights to come. As I’ve said before, we are at a make-or-break moment for the middle class. And in many ways, the actions we take in the months ahead will help determine what kind of country we want to be, and what kind of world we want our children and grandchildren to grow up in.

“As President, I promise to do everything I can to make America a place where hard work and responsibility are rewarded – one where everyone has a fair shot and everyone does their fair share. That’s the America I believe in. That’s the America we’ve always known.”