Will government demonstrate its effectiveness?

The stimulus package is not only a political crucible for Obama and the congressional Democrats who pushed it through; it is also the ultimate test of government’s ability to deliver, from a vast array of federal agencies and departments down to state and local offices across the country.

It will be up to thousands of Cabinet undersecretaries, regional agency directors and local contracting officers to get the stimulus money out fast enough to boost the economy and to meet Obama’s broader policy goals. Obama has cast his election as a repudiation of an anti-government philosophy that has been in vogue for the past three decades. The stimulus spending offers the prospect of renewing confidence in the public sector just as many are losing faith in corporate America. If done poorly, though, it could undermine Obama’s longer-term vision of reaffirming the positive role of government in the lives of Americans.

Of course, it doesn’t much matter whether government actually delivers but rather whether it’s *seen *to deliver. The New Deal, for example, despite its repeated failures and cockamamie schemes, has nevertheless been judged a success by history.

What happens when the House of Representatives and Senate pass slightly different versions of the same legislation? Any schoolkid can answer that: the House and the Senate send delegates to negotiate a compromise bill.

If only it actually worked that way. All too often, the negotiators don’t split the difference during the House-Senate conference, particularly when it comes to spending. Instead, they pick the higher spending number, increase it, and call it a compromise.

Consider the funding earmarked for intercity rail in the economic “stimulus” bill. As passed, the House bill would spend $1.1 billion on Amtrak and high-speed rail, and the Senate version $3.1 billion. When negotiating the final version of the legislation, House and Senate negotiators came together and “compromised” on $9.3 billion–a figure three times higher than the largest amount in either bill.

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The recent debate over “temperamental conservatism” and Sam Tanenhaus’ essay in the New Republic, which Ross Douthat rounds up, suggests that nobody has any real idea what the term even means. Damon Linker’s analysis reflects this profound confusion:

Instead of standing athwart history yelling, “Stop!,” Tanenhaus’s ideal conservative would patiently clear his throat before ironically intoning, “Hey, would you mind slowing down a little bit so we can catch up with you before the next round of creative destruction?” That’s temperamental, not ideological, conservatism.

Any political philosophy that anticipates “the next round of creative destruction” and worries about being left behind isn’t conservative at all, temperamental or otherwise. It isn’t a sober, pragmatic recognition that change happens and must be accommodated. Instead, it’s a sort of milder progressivism, a belief in the inexorable march of history towards a preordained end.

Paul Krugman makes an astounding assertion in the New York Times:

Remember, Herbert Hoover … slash[ed] spending and raise[d] taxes in the face of the Great Depression. Unfortunately, that just made things worse.

Hoover “slashed spending”? Um–no. He was hardly a model of fiscal restraint, laissez-faire or anything of the sort.

Federal spending, 1929 (last Coolidge budget) to 1933 (last Hoover budget)

That’s a 55% increase in nominal spending during Hoover’s term in office, which was a period of marked deflation. Put another way, spending increased from 4% of GDP to 9% of GDP–a doubling of spending in four years.

Krugman’s not wrong on one thing: Hoover sure did raise tax rates on income.

Federal tax revenue, 1929 (last Coolidge budget) to 1933 (last Hoover budget)

Nominal tax revenues collapsed even with Hoover’s higher tax rates (by today’s progressive definition, that means that from 1931 to 1932 he enacted a 25% tax cut). Even with the 160% higher rates, the percent of GDP taken increased just 25%, from 4% to 5% of GDP. Could there be a link between higher tax rates and reduced economic activity and reduced revenue?