Yesterday I attended a debate hosted by the American Enterprise Institute and the America’s Future Foundation with the timely named motion, “Are Libertarians Part of the Conservative Movement?” Speaking for the case that libertarianism is a distinct political philosophy from conservatism was Matt Welch, editor in chief at Reason. Speaking for the case that libertarians are part of the conservative movement was Jonah Goldberg, author of the New York Times bestseller Liberal Fascism and columnist for the Los Angeles Times.

Before the debate started I suspected that I would be more sympathetic with Matt Welch’s view. While the two groups are in broad agreement on economics, there are important differences on a number of social issues. As well as pointing out the differences between the two philosophies Welch made the important point that the number of people labeling themselves as Independents is rising, and that this rise is not only an indication of the level of dissatisfaction with the two major political parties, but a reflection of how more inclusive both Democrats and Republicans will have to be in order to achieve electoral seats. Welch jokingly said that the title of the debate could well have been “Are conservatives part of the libertarian movement?”, as the conservative movement began as one which sought to preserve liberty and individual rights, two of the foundations of the modern libertarian movement.

Although Welch mentioned the alternate title of the debate, Goldberg took it further and shifted the debate in an interesting direction. Goldberg said that Welch was right, and that conservatives could be viewed as part of a wider libertarian movement. After all, classical liberalism predates conservatism by centuries and defended principles that the Republican Party, and conservatives more generally, have adopted. As well as the historical and philosophical ties between the two movements Goldberg argued that there were two other areas where there is a huge amount of overlap between the two movements; practical and political.

Practically, Goldberg argued, conservatives already adopt many libertarian economic arguments. Major conservative think tanks and policy groups employ libertarian economists, and it is through groups like these that libertarian economic arguments can reach the widest audience.

Politically there is a good case for libertarians belonging to the conservative family. Ron Paul, the most libertarian GOP candidate in the nomination race, is comfortable to speak about the abolition of the Federal Reserve and the privatization of social security, something that could never be done in a Democratic primary.

What both Welch and Goldberg agreed on was that the level of government spending is the most important contemporary political issue. The country is bankrupt and social security is on track to dominate the federal budget. While this remains the case, it makes as much sense for libertarians to work their way into the conservative movement as it does for conservatives to accept them. Once spending is under control we can argue over whether to legalize meth and prostitution.

Images: shutterstock/ Mark Pockrocki

The European Commission Vice President Neelie Kroes has told a Dutch newspaper that the Euro would survive a Greek exit from the currency. The announcement comes during a strike endorsed by two of Greek’s largest public sector unions. The Greek government has been seeking foreign investment and additional funds from the IMF, EU and the ECB. These institutions have made spending cuts a prerequisite for additional funds, and it is looking increasingly unlikely that there is the political will in Greece to implement the necessary cuts.

It is refreshing to see Ms. Kroes say what many having been saying for some time. The Greek government has proven itself incapable of taking the necessary decisions that it needs to make in order to keep itself in the single currency. Ms. Kroes expressed the sentiments of many on the continent during the interview:

“The Greeks have to realize that we Dutch and we Germans can only sell emergency Greek aid to our taxpayers if there’s evidence of good will.”

It is well known that numbers were fudged and excuses made in order for Greece to join the euro in the first place, and it is only recently that the full ramification of that decision has been felt.

There is no reason to think that given another bailout the fiscal situation in Greece will improve. There is an opportunity now for some politicians to show that it is possible for the single currency to suffer one casualty. For too long European politicians have tried to keep Greece in the euro. Now it seems that all of the measures taken in Europe have been completely ineffective in getting the Greek government to pass the necessary austerity measures. Even with a Greek default, which will be disastrous for Greece, the sovereign debt crisis in Europe will be far from over.

I hope the realization that the European Commission finally seems comfortable with some countries defaulting will be a wake up call to other countries in the euro. If tough austerity measures are not taken soon the recession in Europe will deepen. All that is needed is more political will.

Image: Shutterstock/kanvag

Today the President signed an executive order freezing all Iranian government assets held or traded in the U.S. This order is the latest in a series of sanctions that have been placed on Iran by the European community and the U.S. The new sanctions include blocks on the Iranian central bank. The move comes quickly after the President said that Israel and the U.S. were “in lockstep” regarding their policies on Iran. These sanctions are an unwise move that will serve only to encourage anti-western rhetoric in Iran, and will damage an already suffering Iranian economy.

The animosity between Iran and the west is escalating. The assassination of an Iranian nuclear scientist (almost certainly carried out by Israeli intelligence), economic sanctions from Europe and the U.S., British and American Navy ships in the Persian Gulf, and unconfirmed reports that Israel will strike Iran as soon as April are all kindling to the neoconservatives’ fire.

What seems to be constantly overlooked is the fact that economic sanctions and assassinations will only unite a country that has a legitimate opposition. As has been noted here at TAC before, if there is one issue that will dilute the political opposition in Iran, it is foreign intervention. The backlash against a pre-emptive western strike against Iran would be severe enough without the economic hardship which our sanctions are placing on the country.

The President in his State of the Union said that no option was off the table in regards to Iran, and we should believe that he means what he says. It is a shame that the President who campaigned so heavily on the follies of the Iraq war is now engaging in eerily familiar rhetoric.

Image: Shutterstock/yui

It was reported today that Greece needs an extra 15 billion euros in order to bring its debt down to a workable level. Greece is currently in negotiations with private investors, which could end in a deal that could reduce the Greek debt burden by up to 100 billion euros. It was hoped that a deal would make a bailout from the Eurozone bailout fund and the IMF more plausible, however a European Union official has suggested that such a deal would not restore enough confidence in the Greek economy to secure additional funds. 

The main challenge for the Greek government is to somehow find a way to cut spending and implement a feasible debt reduction program while the domestic economy is struggling and the recession is worsening. There are a number of political obstacles that must be overcome before fiscal decisions are considered. The EU and IMF will not consider a bailout unless the Greek government is able to make labor market reforms, which of course involves talks with unions. At this time, these talks are still ongoing. The negotiations will be difficult, especially considering the fact that lowering of the minimum wage is being considered.

It has not been a good last few days for Europe. A fiscally binding treaty that would give power to the unelected European Commission to scrutinize the budgets of constituent nations has strong support despite objections from the Czechs who are concerned that some of the treaty’s obligations conflict with its own constitution, and the British, who have not had their concessions considered. Sarkozy, who is up against a strong socialist opposition in the upcoming French elections, has announced a financial transaction tax due to be implemented in August.

Whether it is for political gain or to dismiss accusations of idleness, the actions being taken in Europe are only prolonging the economic crisis Europe finds itself in. The powers that be in Europe are taking the chance to consolidate power and make a mockery of democracy in the name of solving a crisis largely of their own making. Even were Greece to reform its labor market and collect all of the extra funds it needs through private investment and another bailout, its stability would still be far from guaranteed.

Image: Shutterstock: zimmytws

Germany’s Chancellor, Angela Merkel, is talking sense. On the eve of her speech to Davos delegates Merkel has hinted that she will resist the IMF’s calls for a further 500 billion euro injection for bailout funds to struggling eurozone nations.

In an interview with six European newspapers Merkel said, “It makes no sense if we keep promising money but don’t combat the causes of the crisis.” She is right. The root cause of the eurozone crisis was not a lack of funds but an almost unimaginably irresponsible amount of government spending.

It is particularly reassuring to see Merkel speaking this way. Germany is the largest contributor to the already existing bailout fund, and it is understandable that Merkel would be hesitant to ask Germans to pay higher taxes or work longer so that irresponsible governments can exculpate themselves. There is only so long that German voters will put up with this.

Many of the countries at the root of the eurozone crisis should never have been let into the euro. Economically there was not a strong case for Greece to share a currency with Germany and France. However from a European federalist position, an expansive Europe made sense. The idea that Europe could ever be federalized in the same way as countries such as the United States is one of the central flaws of the European Union. No one in Europe feels like a European first and a Belgian or Spaniard second in the same way that someone might feel like an American first and a Floridian second. If Europe is going to recover from its current sovereign debt crisis then Europeans must face the fact that some countries should leave the euro. This is of course not to exclude these countries from the European community. Europe needs strong domestic trade amongst nations, but constituent nations need some of their sovereignty and responsibility back in order to achieve economic stability and growth.

Image: shutterstock/Karuka

The problem with suggestions such as those made by Ms. Lagarde is that they are politically useful and influential. If you are in charge of an organization such as the IMF, it is impossible to advocate a market-oriented solution to the current crisis that allows for the default of certain countries and a radically different monetary policy. The problem with the proposed resolutions to the eurozone crisis is that those in authority approach the issue with too much political baggage. If the euro had not been a political endeavor it would be a lot clearer what steps need to be taken, particularly in regards to the PIGS nations (Portugal, Ireland, Greece, Spain). Unfortunately, too many politicians in Europe are unwilling to admit their mistake, and millions of Europeans will suffer more than necessary because of their stubbornness.

Economic stimuli can sometimes provide temporary economic stability. However, long-term economic stability and growth cannot be achieved through the sort of measures being advocated by the IMF and governments across Europe. Indeed such measures can be harmful in the long term. Economists such as Robert Barro have been arguing this point for some time.

Ms. Lagarde has not explicitly said where the new 500 billion euros she wants will come from. Whatever its source, be it increased taxation, contributions from a more fiscally responsible country, another round of quantitative easing, or a combination of these, the outlook for the long term looks bleak. It is a shame that we are in this incredibly volatile situation, but we have the politicians of Europe to thank for making the situation worse than it could have been.

While there are serious economic concerns in Europe the continent is also facing domestic political upheaval. The unelected Greek government is failing to implement needed austerity measures, Italy’s technocratic government is making too few changes too late, and the patience of the German people is being tried. There is only so long that Germans will put up with contributing to the clean up of their neighbor’s mess, and we could soon see domestic German politics reflect this growing attitude.

While the continual downgrade of European countries and the slowing growth of China are out of the responsibility or remit of any American politician, the GOP should take note. The sovereign debt crisis in Europe is our future if serious measures are not taken to adapt an aggressive and serious fiscal policy that tackles spending and government growth. Unfortunately the only candidate who understands the severity of the situation and is advocating such measures is alienated by the GOP because of his pro-peace, pro-trade and pro-diplomacy foreign policy.

He writes, “the implied cost-benefit analysis is a sham. Defenders tout IP’s hypothesized benefits while presuming the costs are virtually zero. Ignored are the costs in innovation never ventured for fear of legal reprisal, in resources consumed during litigation, in talent diverted to protecting IP rather than producing useful goods, and so on.”

Rather, innovation in a free market is dependent on the ability – within reason – to imitate competitors because innovation usually occurs in small steps. Richman puts it beautifully, “copying combined with product differentiation equals rising living standards.” The alternative is artificial scarcity induced by a government-enforced monopoly, which leads to higher prices and less innovation.

In today’s dynamic market with falling production costs and increased fear of competition, a firm depends more and more on its intellectual property rights. Enter patent trolling, copyright litigation used as a scare tactic against file sharers, and new legislative attempts to protect IP holders.

On a very related note, anyone who uses Wikipedia, Google or hundreds of other sites are finding their pages darkened today in a blackout protest against pending copyright legislation in both houses of Congress. SOPA and PIPA haven’t been brought up for a floor vote yet, but net activists are making their concerns known, as is the Heritage Foundation’s lobbying arm, which promises to list the vote on congressmen’s legislative scorecards. Support for the bills comes largely from the music industry, Hollywood and the Chamber of Commerce.

So Rick Perry colorfully characterized the private equity firm Bain Capital, once run by Mitt Romney.

How did Bain prosper? Says Perry:

“These companies … come in and loot the people’s jobs, loot their pensions (and) loot their ability to take care of their families.”

Behind this depiction is a 28-minute documentary, “King of Bain,” being aired in South Carolina by a super political action committee that supports Newt Gingrich and is financed by Vegas-Macau casino billionaire Sheldon Adelson.

The truth, however, turns out to be less colorful, as The Washington Post has awarded the documentary four Pinocchios for “manipulative interviews” and a “highly misleading portrayal of Romney’s years at Bain Capital.”

Seems that two of the companies Bain allegedly looted were not acquired until after Mitt left the firm, and the closure of a third plant in Gaffney, S.C., was no communal disaster.

No one in Gaffney, writes The New York Times, seems to recall the company, and the local paper did not even report its demise.

“King of Bain” is a hit piece, a malicious libel full of so many errors and lies that even Newt said it must be corrected or pulled down.

Yet if Romney is nominated, we will see this avenue of attack pursued by the Democrats. For populist assaults on capitalists and capitalism, dating back to William Jennings Bryan’s “Cross of Gold” speech to the 1896 Democratic National Convention, have a long and venerable history.

Moreover, the hysteria of Beltway Republicans and their Chamber of Commerce allies over the Newt-Perry attacks on Mitt “the predator” and Mitt “the vulture capitalist” testifies to the power of the narrative and Republicans’ fear of it. And they would do well to be fearful.

To many Americans, the period from the Civil War to World War I, when U.S. production grew from half of what Britain produced to twice what Britain produced, was a legendary era of growth and prosperity.

To others, however, this was the Gilded Age of Jim Fisk and James Gould, of robber barons and the Pullman strike, of the Haymarket Massacre and the Homestead strike at Carnegie Steel, where armed Pinkertons came up the river in barges to break the strike, only to be shot, disarmed and beaten by strikers and their families.

In 1904, Ida Tarbell wrote “The History of the Standard Oil Company,” painting oil magnate John D. Rockefeller as a capitalist without conscience, a “money-mad … hypocrite.” “Our national life is on every side distinctly poorer, uglier, meaner, for the kind of influence he exercises.”

In 1906, Upton Sinclair penned “The Jungle,” a novel depicting the horrors of the stockyards and meat-packing plants of Chicago.

Teddy Roosevelt said of these reformers, “The men with the muck rakes are often indispensable to the well-being of society, but only if they know when to stop raking the muck.”

Yet T.R. himself took up the role of trustbuster. When J.P. Morgan wrote to him to protest Justice Department moves against one of his trusts — “Just send your man to my man and we can fix it up” — T.R.’s man at Justice retorted, “We don’t want to fix it up; we want to stop it.”

Teddy Roosevelt savaged the “malefactors of great wealth,” and his cousin Franklin would echo him on taking office, denouncing “the money changers … in the temple of our civilization.”

They hate me, exulted FDR, “and I welcome their hatred!” He went on to crush and almost wipe out the Republican Party in 1936.

At the end of the Reagan era, which the left had decried, “Barbarians at the Gate” was published, portraying the leveraged buyout of RJR Nabisco by Kohlberg Kravis Roberts as a manifestation of colossal greed.

Michael Lewis — author of “Liar’s Poker,” about the fall of Salomon Brothers, and “The Big Short” — has built a successful career describing the amorality at the apex of corporate America.

Today, President Barack Obama, with his Osawatomie, Kan., attack on “breathtaking greed,” channeling T.R., seeks to insert himself in that populist tradition.

Undeniably, Americans cherish their economic freedom and respect the men who helped make America great, inventors such as Alexander Graham Bell and Thomas Edison and industrialists such as Henry Ford.

But they do not revere the men who make millions and billions at the big casinos of capitalism. They do not admire a George Soros for winning his billion-dollar bet shorting the British pound.

They believe that a man’s professional, as well as private, life should be guided by a conscience. And because they recoil from the teachings of Karl Marx does not mean they embrace the values of Ayn Rand.

Let-the-devil-take-the-hindmost capitalism, economic Darwinism, is neither conservatism nor Americanism.

Should Mitt Romney be nominated, he will need to make a national address defending his career at Bain Capital with the same conviction and passion with which he defended his faith in the campaign of 2008.

Patrick J. Buchanan is the author of “Suicide of a Superpower: Will America Survive to 2025?” Copyright 2012 Creators.com.

Rumors earlier today prompted a fall in world stock markets with the FTSE 100 down 0.5% and the Dow Jones down 0.8%. This fall in the markets is a clear indication of the severity of the eurocrisis, and how little confidence the markets have in the euro’s integrity and the measures taken by European governments to manage the debt crisis.

The last few months and years have seen desperate attempts by European nations to contain the European debt crisis. While the European Financial Stability Facility, a fund reserved for sovereign debt recovery, is guaranteed by eurozone countries, a downgrade across some of the eurozone nations will make it more difficult for some countries to raise money. Not only will private enterprise struggle, but government will find it harder to collect revenue. At the end of last year, a summit of European leaders failed to unite the continent behind a recovery plan, with the UK using its veto on the proposed treaty.

The euro crisis is getting worse the longer it lingers on. European politicians are not yet ready to admit that the euro, which was always a political rather than economic experiment, has been a failure. The admission of countries like Greece, which had huge levels of government spending, was a mistake for which Europe is now paying a very heavy price.

Unfortunately it is the millions of Europeans that will pay this price for the politically motivated and moronic economic policies of the last few decades, and not the politicians who implemented them. Too many mistakes have been made in the efforts to manage the debt crisis to make recovery manageable, and today’s news is an indication of things to come.

Some attribute Hostess’ troubles to healthier eating habits among Americans, the USA Today article on their filing states:

Hostess has enough cash to keep stores stocked with its Ding Dongs, Ho Hos and other snacks for now. But longer term, the 87-year-old company has a bigger problem: health-conscious Americans favor yogurt and energy bars over the dessert cakes and white bread they devoured 30 years ago.

Last year, 36% of Americans ate white bread in their homes, down from 54% in 2000, according to NPD Group. Meanwhile, about 54% ate wheat bread, up from 43% in 2000.

That explanation sparked some discussion from Reason’s Nick Gillespie, who writes:

I’m not sure I’m buying that argument in its totality, but there’s no question that sliced white bread, especially Wonder Bread, went from being the staff of life for upward-striving post-War middle-classers to being a cultural touchstone for all that was bad and wrong with America. Whether we’re buying less of the stuff – or feel less in need of the myriad ways it supposedly enriches our bodies – I don’t know. But there seems less a role for white bread in a world where even the Olive Garden is pushing rustic loaves of yeast and flour.

Big Government’s Dana Loesch was skeptical, observing that the USA Today article buried facts about Hostess’ union problems and rising ingredient costs deep in the article.

 It’s not difficult to sell creme-filled heaven snacks and America isn’t exactly eating healthier. If anything, America is eating leaner because the price of everything has increased eleventy-fold because the cost of energy is passed to us, the consumers.

…

…Hostess, a privately held company based in Irving, Texas, has outstanding debts of more than $860 million and owes over $50 million to vendors, an economic situation that sources attribute to rising prices for sugar, flour and other ingredients and higher labor costs which the company’s approximately $2.5 billion in annual sales have not been able to cover.

…

Additionally, Hostess employees are unionized while most of its competitors aren’t. As a result, Hostess has high pension and medical benefit costs.

While the broader trend Gillespie observes is certainly true – Trader Joe’s anyone? – it’s also true that during recessions, people adjust their purchasing habits. The stock price of McDonalds, for instance, has doubled since late 2007. Based on today’s report, it appears Loesch is right. If an agreement with the unions isn’t reached in 75 days, the terms of the loan state that Hostess could begin selling off its assets.

Also, apparently during the earlier negotiations the international parent union was representing the local chapters, which they aren’t authorized to do:

In perhaps the hearing’s most dramatic moment, Hostess President and Chief Executive Brian Driscoll took the witness stand and told a lawyer for the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union, or BCTGM, that he was unaware that during recent labor negotiations, the international parent union wasn’t actually authorized to negotiate on behalf of the local unions.

“Who were you negotiating for?” Driscoll asked the union’s lawyer, Bredhoff & Kaiser PLLC’s Jeffrey Freund.

“I’m asking the questions,” Freund responded.

“I would like my $900,000 back,” Driscoll said, referring to the amount of money Hostess has paid to its professionals negotiating with the unions. While Driscoll’s response elicited laughter from nearly everyone in the courtroom but himself, the back-and-forth is a clear precursor to a tough fight between Hostess and the union both in and out of the courtroom.

It’s hard out there for a snack food company, and these hamfisted union negotiations certainly don’t help. Hostess is more or less the last independent publicly-traded purveyor of snack foods with names most people have heard of. Almost all of the brands that filled the school lunchboxes of American children for decades have experienced major upheavals in the last quarter-century. The venerable Keebler (est. 1853) is in the hands of Kellogg as of 2001.  Nabisco has been passed around like an, erm, Ho Ho since its merger with RJ Reynolds in 1985, and will presumably be a part of the snack-food company resulting from Kraft Foods’ planned split.

For a company like Hostess with a less diversified line of products, it’s a lot harder compensate for the cost of something like this, too.

Mitt Romney stands as the very strong favorite to gain the Republican nomination, but he may have been severely wounded by the sharp attacks of Gingrich and his backers, which portray him as a heartless financial manipulator who made his huge fortune because “he likes to fire people.” Perhaps partly as a result, Romney’s support among less affluent Republicans–let alone less affluent voters in general–is quite weak. And in a general election campaign, President Obama’s TV ads could simply quote the harsh statements of these leading conservative Republicans to devastating effect, much like George W.H.Bush destroyed Michael Dukakis’s candidacy largely by regurgitating the “Willie Horton” charges previously made by Al Gore. This puts any Romney campaign in a difficult box.

But as Salam points out, that box may have a crack. Apparently Romney has generally been supportive of minimum wage laws, and has even endorsed their automatic increase through indexing, a somewhat heretical stance in the eyes of some of his rival candidates. So if Romney supports a minimum wage and also supports raising the minimum wage, he would be seen as bold rather than completely unprincipled if he called for a minimum-wage increase measured in dollars rather than pennies.

Certainly his Republican rivals would leap to the attack. Perhaps Gingrich and his supporters would immediately switch from accusing Romney of being a vile “capitalist” to denouncing him instead as a vile “communist.” Perhaps Santorum would explain how sheer “grit and gumption,” rather than any government wage laws, had enabled him to rise from his humble working-class roots to earning a million-dollar-plus annual income as a “corporate consultant” the moment he left high political office.

But I suspect that none of these attacks would be particularly effective given the demographics of the undecided Republican voters in approaching primary states like South Carolina and Florida, and NR’s Salam feels the same. He may have mixed feelings about the actual economic questions involved, but he recognizes that if Romney dared to propose a steep rise in the federal minimum wage “he would devastate his Republican rivals.”

And that would just be the beginning. It is well known that food stamp use has skyrocketed during the four years of the Obama Administration, and while it is not entirely fair to blame a president for the consequences of a financial collapse that began shortly before he entered office, politics—like life—is not always fair. So consider the potential impact of a Romney campaign tagline such as “President Obama gave you food stamps but I’ll give you a Living Wage.”

In particular, this sort of issue might be ideal at attracting the votes of the huge white working class, considered a key swing group in this particular election cycle. I suspect that someone, liberal or conservative, who currently scrapes by on $8.85 per hour working as a Wal-Mart greeter would tend to pay a great deal of attention to a presidential candidate who promised that his first act in office would be to raise that hourly wage to an even $12.00, even if rival campaign ads were endlessly denouncing that fellow as a “heartless capitalist.” Furthermore, since top Wal-Mart executives have themselves spent many years pleading for a large rise in the minimum wage, if the Wal-Mart CEO stood on the same platform and publicly endorsed the proposed plan, that candidate promise would seem just like money in the bank.

Every hour of the day, American politicians are selling their votes to special interests in exchange for large financial contributions. So perhaps just this once it might only be fair to give American workers a chance to sell their own votes in exchange for a far more modest sum of two or three dollars per hour worked.

Sometimes American politics can take unusual twists and turns.

Cordray’s nomination had been blocked by a Senate filibuster. There was no way he was going to win approval in 2012.

Enraged Republicans denounced the appointment as an affront and a usurpation of power, for the Senate had not formally gone into recess.

The White House airily dismissed the Republican rage, saying no Senate business is being conducted during the Christmas-New Year break, and to argue that the Senate is still in session is a sham.

Obama seemed to delight in his Trumanesque contempt:

“I will not sit by while a minority in the Senate puts party ideology ahead of the people they were elected to serve. … Not at this make-or-break moment for middle-class Americans.”

Cordray’s appointment will be contested in the courts. Yet it will likely stand, though its in-your-face aspect added appreciably to the bad blood bubbling in this city.

The Obamaites seem not to care.

Indeed, from year-end reports out of Hawaii, this is the new Obama strategy. He has given up on working with Congress and intends to run a year-long campaign modeled on Harry Truman’s 1948 demagogic assault on the “no-good, do-nothing 80th Congress” — the one that passed Taft-Hartley and enacted the Marshall Plan.

Details of the Obama strategy were spoon-fed to the Post and New York Times. The Times lead: “President Obama is heading into his re-election campaign with plans to step up his offensive against an unpopular Congress, concluding that he cannot pass any major legislation in 2012 because of Republican hostility to his agenda.”

The Post lead: “President Obama has a New Year’s resolution that will shape his re-election strategy at the dawn of 2012: Keep beating up on an unpopular Congress.”

Once he gets a year’s extension of the Social Security payroll tax cut, said White House deputy press secretary Josh Earnest, that is the last “must-do” item, “the president is no longer tied to Washington, D.C.”

But if the president is about to barnstorm the nation savaging Congress for a full year, where does that leave the country?

If Obama will be proposing nothing to deal with the fiscal crisis — trillion-dollar deficits as far as the eye can see — how does America avert the future that Italy faces? Italy’s debt is 120 percent of gross domestic product; ours, at 100 percent of GDP, is not all that far behind.

The U.S. fiscal crisis can be simply summarized. Since 2009, the federal government has been spending 24 to 25 percent of gross domestic product, while tax collections have fallen to 15 percent. When his first four years end, Obama will have grown the debt by $6 trillion.

And if he is giving up on any solution in 2012, believing he can win re-election by vilifying the GOP as toadies to America’s top 1 percent, who are icily indifferent to the middle class, what hope is there for any political cooperation, should Obama win?

As of today, Obama is running even with Mitt Romney. He has lost much of the enthusiasm of the young and the minorities that he had in 2008. College-educated whites who had hopes for him seem disillusioned.

Assuredly, he may still win. But should Obama win, how, after a campaign like the one he intends to conduct, does he unite the country?

How does he work with a Republican Party that will likely still hold the House and will have made gains in the Senate, after he has spent a year castigating that party?

And what happen to the nation if we have five more years of political gridlock?

If the president failed to broker a budget compromise with the GOP in 2011 and has given up on 2012, how does he work with a Republican House in 2013? How does he, in a second term, resolve this budget crisis when his bottom-line demand for higher taxes is poison to a party he has just trashed for 15 months as a tool of Wall Street?

Resolving our fiscal crisis seems today beyond the capacity of the U.S. government, as currently constituted. We appear to be in a crisis of the regime rooted in an irreconcilable ideological conflict between two parties of relatively equal strength.

Republicans who refused to raise taxes in 2011 are not going to agree to raise them in 2013 in response to a request from an Obama who defeated them by portraying them as the party of the 1 percent in 2012.

If Obama is re-elected, the crisis endures.

It will then be resolved when the world realizes that the U.S. deficit and debt are beyond the capacity of this U.S. government to bring under control.

At that point, the ratings agencies and world markets will begin to treat the U.S. debt the way they treat the debts of Italy and Spain.

Patrick J. Buchanan is the author of “Suicide of a Superpower: Will America Survive to 2025?”

Copyright 2012 Creators.com

Schemes and initiatives such as these are used by right and left leaning governments, and not exclusively the recourse of traditionally economically interventionist governments.  Over in the UK a conservative-lead government announced a similar scheme in November’s Autumn Statement, for which British taxpayers will be expected to pay almost £1 billion. According to the plan announced by Cameron’s government, young people who have been unemployed for more than three months will be offered private-sector work experience. Young people who do not take up the offer risk losing their unemployment benefits. The scheme was introduced by the British government in light of the depressing youth unemployment figures. When faced with such figures, any politician’s first instinct will be to do something.

The plan announced by the White House shows the same damaging instinct in practice. Faced with a falling popularity and disappointing employment figures, the President has decided to implement a plan that aims to boost employment while maintaining support from underemployed or unemployed youth.

The root cause of unemployment here and in the UK is flawed fiscal and monetary policy. Businesses are not hiring because there is not enough flow of credit. In addition many times the regulations and procedures in place for the hiring process make taking someone on economically prohibitive. Governments should let the private sector do the hiring and training and concentrate on developing a sound fiscal and monetary policy that will enable economic growth and employment.