How Obama could blow it

Together with then-Fed chairman and ruthless bastard (I mean that as a compliment) Paul Volcker, Reagan imposed economic pain that no self-respecting Democrat would tolerate in the Age of Obama. Reagan’s attitude was, basically, “You’re going out of business? What do you want, a cookie?” He softened his stance later in his presidency, but not when he was trying to beat back stagflation. Obama’s attitude is very different: if the nation’s biggest banks face the prospect of going under, they’ll be bailed out. The same goes for the Big Three automakers, and the list will go on. There may well be good reasons for Obama’s itchy intervention-finger, but there’s a real danger that we’ll be left with zombie banks, zombie industries, and a zombie economy that limps along, bleeding jobs and growth for years. Think of this as removing a Band-Aid really, really, really slowly.

What happens next? Honestly, what happens next is even scarier. The Establishment—the academic and policy elite, Wall Street, famous sexy people—are more invested in Obama than they’ve been in any president in decades. If Obama fails, a whole system will go down with him. The Republicans will win by default, and they’ll have learned nothing from over a decade of borderline-imbecilic unforced errors.