In his Second Inaugural, looking back, Abraham Lincoln observed that, on the eve of the Civil War, “one eighth of the whole population were colored slaves, not distributed generally over the Union, but localized in the southern half of it. These slaves constituted a peculiar and powerful interest. All knew that this interest was, somehow, the cause of the war.”

After that conflict, southern apologists, such as the renowned classicist Basil Lanneau Gildersleeve, would insist that “the cause we fought for and our brothers died for was the cause of civil liberty, and not the cause of human slavery.” But the facts support Lincoln’s claim.

At the time of secession, for example, the state convention in Mississippi announced, “Our position is thoroughly identified with the institution of slavery,” and asserted, “There was no choice left us but submission to the mandates of abolition, or a dissolution of the Union,” noting that “the hostility to this institution commenced before the adoption of the Constitution, and was manifested in the well-known Ordinance of 1787, in regard to the Northwestern Territory” and grew stronger in the succeeding decades.

No one, however, made the southern case with greater eloquence and force than Stephens, who had opposed secession in Georgia on prudential grounds and then rallied to its support once the decision had been made. When he returned to Savannah to address the George convention on 21 March 1861, this is what he said:

The new constitution has put at rest, forever, all the agitating questions relating to our peculiar institution—African slavery as it exists amongst us; the proper status of the negro in our form of civilization. This was the immediate cause of the late rupture and present revolution. Jefferson in his forecast, had anticipated this, as the “rock upon which the old Union would split.” He was right. What was conjecture with him is now a realized fact. But whether he fully comprehended the great truth upon which that rock stood and stands, may be doubted. The prevailing ideas entertained by him and most of the leading statesmen at the time of the formation of the old constitution, were that the enslavement of the African was in violation of the laws of nature; that it was wrong in principle, socially, morally, and politically. It was an evil they knew not well how to deal with, but the general opinion of the men of that day was that, somehow or other in the order of Providence, the institution would be evanescent and pass away. This idea, though not incorporated in the constitution, was the prevailing idea at that time. The constitution, it is true, secured every essential guarantee to the institution while it should last, and hence no argument can be justly urged against the constitutional guarantees thus secured, because of the common sentiment of the day. Those ideas, however, were fundamentally wrong. They rested upon the assumption of the equality of races. This was an error. It was a sandy foundation, and the government built upon it fell when the “storm came and the wind blew.”

Our new government is founded upon exactly the opposite idea; its foundations are laid, its corner-stone rests, upon the great truth that the negro is not equal to the white man; that slavery—sub-ordination to the superior race—is his natural and normal condition. This, our new government, is the first, in the history of the world, based upon this great physical, philosophical, and moral truth. This truth has been slow in the process of its development, like all other truths in the various departments of science. It has been so even amongst us. Many who hear me, perhaps, can recollect well that this truth was not generally admitted, even within their day. The errors of the past generation still clung to many as late as twenty years ago. Those at the North who still cling to these errors, with a zeal above knowledge, we justly denominate fanatics.

All fanaticism springs from an aberration of the mind—from a defect in reasoning. It is a species of insanity. One of the most striking characteristics of insanity, in many instances, is forming correct conclusions from fancied or erroneous premises; so with the anti-slavery fanatics. Their conclusions are right if their premises were. They assume that the negro is equal, and hence conclude that he is entitled to equal privileges and rights with the white man. If their premises were correct, their conclusions would be logical and just—but their premise being wrong, their whole argument fails. I recollect once of having heard a gentleman from one of the northern states, of great power and ability, announce in the House of Representatives, with imposing effect, that we of the South would be compelled, ultimately, to yield upon this subject of slavery, that it was as impossible to war successfully against a principle in politics as it was in physics or mechanics. That the principle would ultimately prevail. That we, in maintaining slavery as it exists with us, were warring against a principle, a principle founded in nature, the principle of the equality of men. The reply I made to him was, that upon his own grounds, we should, ultimately, succeed and that he and his associates in this crusade against our institutions would ultimately fail. The truth announced that it was as impossible to war successfully against a principle in politics as it was in physics and mechanics, I admitted; but told him that it was he, and those acting with him, who were warring against a principle. They were attempting to make things equal which the Creator had made unequal.

In the conflict thus far, success has been on our side, complete throughout the length and breadth of the Confederate States. It is upon this, as I have stated, our social fabric is firmly planted; and I cannot permit myself to doubt the ultimate success of a full recognition of this principle throughout the civilized and enlightened world.

As I have stated, the truth of this principle may be slow in development, as all truths are and ever have been, in the various branches of science. It was so with the principles announced by Galileo—it was so with Adam Smith and his principles of political economy. It was so with Harvey, and his theory of the circulation of the blood. It is stated that not a single one of the medical profession living at the time of the announcement of the truths made by him admitted them. Now they are universally acknowledged. May we not, therefore, look with confidence to the ultimate universal acknowledgment of the truths upon which our system rests?

It is the first government ever instituted upon the principles in strict conformity to nature, and the ordination of Providence, in furnishing the materials of human society. Many governments have been  founded upon the principle of the sub-ordination and serfdom of certain classes of the same race; such were and are in violation of the laws of nature. Our system commits no such violation of nature’s laws. With us, all of the white race, however high or low, rich or poor, are equal in the eye of the law. Not so with the negro. Sub-ordination is his place. He, by nature, or by the curse against Canaan, is fitted for that condition which he occupies in our system. The architect, in the construction of buildings, lays the foundation with the proper material—the granite; then comes the brick or the marble. The sub-stratum of our society is made of the material fitted by nature for it, and by experience we know that it is best, not only for the superior, but for the inferior race, that it should be so.

It is, indeed, in conformity with the ordinance of the Creator. It is not for us to inquire into the wisdom of His ordinances, or to question them. For His own purposes, He has made one race to differ from another, as He has made “one star to differ from another star in glory.” The great objects of humanity are best attained when there is conformity to His laws and decrees, in the formation of governments as well as in all things else. Our confederacy is founded upon principles in strict conformity with these laws. This stone which was rejected by the first builders “is become the chief of the corner”—the real “corner-stone”—in our new edifice. I have been asked, what of the future? It has been apprehended by some that we would have arrayed against us the civilized world. I care not who or how many they may be against us, when we stand upon the eternal principles of truth, if we are true to ourselves and the principles for which we contend, we are obliged to, and must triumph.

What Stephens not only recognized but publicly acknowledged was that one could not justify secession as a revolutionary act if one could not establish that slavery is just – and this required a repudiation of the principles enshrined in the Declaration of Independence. It says much about the radical alteration in sentiments that had taken place in the South in the decades preceding secession that, in 1861, a Democrat named after Thomas Jefferson joined hands with a Whig named after Alexander Hamilton to reject the cornerstone on which the United States of America had been constructed by their namesakes and other like-minded patriots. Despite the differences that separated these two men from the new President of the United States, they were in agreement with him on one point: A house divided against itself cannot stand.

In his comedy routine last week at the Gridiron Club, the President reportedly delivered remarks that had a certain edge. “I’ve dispatched Hillary to the Middle East to talk about how these countries can transition to new leaders – though, I’ve got to be honest, she’s gotten a little passionate about the subject,” he is said to have remarked. “These past few weeks it’s been tough falling asleep with Hillary out there on Pennsylvania Avenue shouting, throwing rocks at the window.” And in an interview yesterday with Wolf Blitzer on CNN, when Mrs. Clinton was asked four times whether she would agree to serve in any post under Barack Obama if he were re-elected in 2012, she responded on each occasion in the negative and refused further comment.

Here is what The Daily Caller reports: “Obviously, she’s not happy with dealing with a president who can’t decide if today is Tuesday or Wednesday, who can’t make his mind up,” a Clinton insider told The Daily. “She’s exhausted, tired.”

He went on, “If you take a look at what’s on her plate as compared with what’s on the plates of previous Secretary of States — there’s more going on now at this particular moment, and it’s like playing sports with a bunch of amateurs. And she doesn’t have any power. She’s trying to do what she can to keep things from imploding.”

Clinton is said to be especially peeved with the president’s waffling over how to encourage the kinds of Arab uprisings that have recently toppled regimes in Egypt and Tunisia, and in particular his refusal to back a no-fly zone over Libya.

Mrs. Clinton has repeatedly expressed a disinclination to serve as President Obama’s running mate, and she has more than once said that she will not herself run for the Presidency and that the office the she currently holds will be her “last position” in the United States government. This may simply be true, but I have my doubts – and I have not in the past been slow to express them. It is hard to believe that the engine of ambition has fallen silent within the wife of William Jefferson Clinton. She certainly has no reason to be loyal to Mr. Obama. Nor does her husband.

Some time ago, I suggested that Mrs. Clinton would find an occasion to resign her position as Secretary of State on a matter of principle and then, after a decent interval, announce that she is a candidate for her party’s presidential nomination. By refusing to do his job as President – by remaining silent with regard to the crisis in Japan, by twiddling his fingers while Libya burns, by concentrating instead on the prospects of the various teams competing in the upcoming basketball tournament, and by ostentatiously preparing for his upcoming jaunt in Rio – Mr. Obama has given Mrs. Clinton an opening. If she has any ambition left and any self-respect, she will seize this opportunity. “There is,” as Brutus said to Cassius, “a tide in the affairs of men.”

Which, taken at the flood, leads on to fortune;
Omitted, all the voyage of their life
Is bound in shallows and in miseries.
On such a full sea are we now afloat,
And we must take the current when it serves,
Or lose our ventures.

This is Hillary’s moment – and I, for one, hope that she lays hold of it. In such a circumstance, I would not expect her to win the nomination. I suspect that President Obama has not been behindhand in that particular matter and that the fix is already in. What I have in mind is the future of the Democratic Party.

There is – or, at least, there once was – an adult wing in the Democratic Party. Their presence meant that the election of a Kennedy or a Johnson or a Carter or a Clinton was not apt to be fatal to our well-being. The new President might be wrong-headed; he might to some degree neglect the public interest in order to grease the palms of members of one or another of the constituencies in his party. But he would not be utterly irresponsible; he would not sell us out entirely. Barack Obama, Nancy Pelosi, and Harry Reid do not come from this wing of the party, and they are doing everything in their power to remake the Democratic Party in their own image. Yesterday’s fringe is now mainstream – and the long-term consequences are grim. Hillary Clinton is now in a position to do some good – for her party and ultimately for the country as well – by staking out a position within the Democratic Party more or less consistent with the national interest and arguing forcefully for it.

“Here,” I then wrote, “is how he could do it – if he was really intent on saving his Presidency and on turning a disgraceful performance in that office into something worthy of eulogy. This evening, after the usual formalities, he could say:

My fellow Americans, let me begin by stating the obvious. The state of our union is not good. We seem to be – we may be – coming out of a recession. But, if so, the recovery is not only jobless; it is accompanied by an increase in employment.

This is contrary to my expectation. When I became President, my economic advisers told me that the rate of unemployment would be considerably lower now than it is. They were mistaken, and I erred in taking their advice. The fault is mine. I may not have gotten us into a severe recession, but I advanced proposals and I pursued policies which have prolonged and deepened it. I am at fault.

To be precise, I signed into law a so-called stimulus bill that has thus far retarded economic growth by greatly increasing the size of the federal bureaucracy, the expense of supporting it, and the national debt. I encouraged Congress to pass cap-and-trade legislation that, had it become law, would have greatly increased the cost of energy, and I encouraged Congress to pass a healthcare reform that would have increased not only the cost of medical care but the burden on employers attendant on hiring. Everything that I did in my first year in office contributed to economic uncertainty and made employers less likely to hire and investors wary of investing.

When I became President, I knew next to nothing about economics. I had never run a business, and the only political experience that I had had was in running for office. I have now had a tutorial, and the lessons have been learned at a considerable expense – not just to me but to you. The fault is mine.

I have now learned those lessons, and I am now intent on doing everything within my power to promote an economic recovery and prosperity. To that end, I invite everyone in Congress – Republicans as well as Democrats – to join with me in reversing course.

First, I propose that we move towards a balanced budget and even towards a reduction in the national debt. To this end, I propose that Congress repeal the stimulus bill and enact a spending freeze and a hiring freeze with regard to all domestic programs, and I ask that Congress sanction the establishment of a bipartisan commission – made up of Republicans and Democrats in equal numbers – to recommend which federal programs should be eliminated. At the national level, we have been living beyond our means, and we cannot continue to do so. There are, I suspect, departments in the federal government that have no reason to exist – departments that concern themselves with matters – such as education – which are best left to the states, the localities, and individual citizens.

Second, I ask Congress to make permanent the tax cuts initially proposed by President Bush. I once spoke of the government creating jobs. I now realize that jobs in the government are parasitic on jobs in the private sector and that a tax code that punishes entrepreneurs for their success is a tax code that discourages the creation of jobs by the only people genuinely capable of creating the jobs that matter.

Third, I ask that for a three-year period Congress relieve employers of the payroll contribution made to the Social Security administration so that they can hire new workers and rehire as many as possible of those laid off.

Fourth, I call on Congress to set aside the cap-and-trade bill passed last year by the House of Representatives. To my dismay and embarrassment, we have recently learned  that the work done by the Climatic Research Unit at the University of East Anglia, which formed the basis for the four reports issued by the United Nations’ Intergovernmental Panel on Climate Change, is a sham – that the data was doctored, that the computer simulation was a fraud, and that systematic efforts were made by the most prominent climate scientists to corrupt the peer-review process and suppress legitimate criticism: all for the purpose of imposing a strait jacket on the world economy. In my inaugural address, I promised to “roll back the specter of a warming planet” and “restore science to its rightful place.” I intend to be true to my word. Until there is a genuine consensus among the scientists dealing with climate change, I would urge that we do nothing at all. Above all, I urge that nothing be done that would slow down this country’s economic recovery or inhibit economic growth.

Fifth, I call on Congress to set aside the question of healthcare reform. I objected, when I ran for the Democratic nomination for the Presidency, to the notion that American citizens should be forced to buy health insurance. I regret having deviated from that position. I have learned in recent days by way of careful study that only a small proportion of those lacking health insurance lack it because it is unavailable to them. I now recognize that most of those without such insurance are either illegal immigrants, who do not deserve our support, or young people or well-to-do people with no need or desire for insurance. I do not doubt that changes need to be made in our healthcare system, but I am now persuaded that we should enact only those changes that can be made without adding directly or indirectly to the cost of insurance or the burden of taxation.

Sixth, I have decided to keep the prison at Guantamo open and to have all terrorists whom we catch tried by military tribunals. Here also I was in error. We are at war, ladies and gentleman. We have to win this war – and coddling terrorists is not the way to do it.

There is, of course, much else that could be said, but this is not the time. As a nation, we need at this point in our history to focus our attention on the economy and on the twilight war against Islamic terrorism in which we are now engaged.

Last year, I concluded my post by saying, “I doubt very much whether President Obama will say anything of the sort. But if he did – and if he followed through – I am confident that he could restore his stature, regain a measure of popularity, and rescue his party from the cataclysmic defeat in store for it in November. I am told that Newt Gingrich once said of William Jefferson Clinton that the man never stopped learning. Can anything of the sort be said of Barack Obama? Soon – all too soon – we will learn.”

I quote my earlier post here in full because I think that with a tweak here and there it would still do the job. Unemployment is no longer increasing, but it is not noticeably declining. An adjustment would be needed in this regard. Obamacare was shoved through Congress, and it would therefore now be requisite for the President to apologize for his conduct and that of his party in this particular and call for the bill’s repeal. The Environmental Protection Agency seems to be intent on abusing its regulatory powers to impose on us something like cap and trade. The President would have to promise to put an end to that. He would also be well advised to beg forgiveness for defrauding the bondholders of GM and Chrysler, and he certainly needs to fire Attorney General Erich Holder  and others within the Department of Justice for their handling of the Black Panther case. These matters could be mentioned briefly.

I would make only one significant change. After the penultimate paragraph above, I would add the following.

There is one more matter that I need to mention, and it weighs heavily on my heart. This last week in Philadelphia, a grand jury issued a three-hundred page report detailing the conduct of Dr. Kermit Gosnell and his staff at the Women’s Medical Society in that city. I have read that report. It sickened me, and it made me profoundly ashamed. I have long been a supporter of abortion. As a state senator in Illinois, I did what I could to prevent the outlawing of partial birth abortion, and this past Saturday, on the 38^th anniversary of the Supreme Court’s decision in Roe v. Wade, I issued the following statement:

Today marks the 38th anniversary of Roe v. Wade, the Supreme Court decision that protects women’s health and reproductive freedom, and affirms a fundamental principle: that government should not intrude on private family matters.

I am committed to protecting this constitutional right. I also remain committed to policies, initiatives, and programs that help prevent unintended pregnancies, support pregnant women and mothers, encourage healthy relationships, and promote adoption.

And on this anniversary, I hope that we will recommit ourselves more broadly to ensuring that our daughters have the same rights, the same freedoms, and the same opportunities as our sons to fulfill their dreams.

I regret my deeds and I regret my words. The massacre of the innocent does not, as I so cynically claimed, fall within the sphere of “private family matters,” and no one has the right and no one’s daughter or son should have the freedom and the opportunity to kill another human being simply because the existence of that human being is an inconvenience. I apologize for my conduct and I call on Congress to frame a constitutional amendment restoring moral police in this particular to the states and the localities where, I am confident, this matter will be properly dealt with. Mea culpa, mea culpa, mea maxima culpa.

If the President were to do as I suggest, I have no doubt that his speech would really be a game-changer. My bet, however, is that he opts to continue playing the same old game and that his rhetoric this evening will be no less disingenuous than that found in his statement commemorating the 38^th anniversary of a Supreme Court decision that has sanctioned by now our bringing to an abrupt and violent end more than 50 million human lives.

The blunders that we are now making are by no means unprecedented. The first example that comes to mind is England under William III, which was arguably the first fully modern, fully commercial polity in human history. As Winston Churchill points out in his Marlborough: His Life and Times, England’s Dutch king fought vigorously to maintain in England in the wake of  the War of the League of Augsburg (1689-97) a standing army as a deterrent, but he was thwarted by a Parliament weary of war, unfriendly to taxation, and intent on harvesting a peace dividend. In the absence of an England capable of deploying on the continent of Europe an expeditionary force at a moment’s notice, when the last Hapsburg monarch of Spain died without issue, Louis ignored the terms of his marriage with a Spanish Infanta and connived in installing on the Spanish throne his grandson Philip, who was in line to inherit the French throne as well. Given their immense wealth and their holdings in the New World, the unity of France and Spain would have had as its practical consequence the establishment of a universal monarchy dominant over Europe. This was the very eventuality that the War of the League of Augsburg had been fought to prevent, and in response the English, the Dutch, and the Hapsburgs in central Europe launched the War of the Spanish Succession (1701-13), which the first two of these states were initially – thanks to the natural propensity of liberal, commercial polities – ill-equipped to fight.

Churchill – who was awarded the Nobel Prize in Literature in part as a recognition of his remarkable accomplishment in Marlborough: His Life and Times – composed this magisterial study in the 1930s, and one cannot read it without realizing that writing this work was a central part of his intellectual preparation for becoming a wartime Prime Minister. Britain was caught in the toils of the Great Depression at the time, and he watched in horror and raised his voice in protest as Germany under Hitler rearmed and as Britain and France succumbed to wishful thinking and repeatedly chose butter over guns. The Second World War – and the casualties accompanying it – were the price that was paid for the improvident stewardship of the political leaders of Britain and France.

I mention these disgraceful examples because I suspect that we are following in their wake.

In the aftermath of the Cold War, we cut back dramatically on the size of our military establishment. We had the men and equipment to fight the first Gulf War with ease. We barely had enough to manage the second Gulf War, and we stretched our resources to the limits in fighting the insurrections that took place in its aftermath and in the aftermath of our intervention in Afghanistan. To his discredit. George W. Bush failed to face up to our inadequacies, and Barack Obama, in his eagerness to reallocate resources to the entitlement state, has made things much, much worse. It says much about him – but it also says much about the propensities of liberal democracies – that he is now intent on making further cuts and that he is likely to get his way.

It is exceedingly difficult to defend large peacetime military budgets. If our preparations for war are adequate, they are nearly always made to seem unnecessary. If they are adequate, they tend to deter aggression, and we find ourselves in possession of a plethora of military resources that we have no pressing need to use. It is always tempting in such circumstances to suppose that the expenditures incurred were a colossal waste, and we are then inclined to sacrifice military preparedness for cuts in taxation and expenditures on social welfare programs. All that it takes to justify such a shift in resources is wishful thinking, and wishful thinking is something that human beings are exceptionally good at – especially when there is some darling domestic outcome that they have their hearts set upon.

In the Pacific, we are witnessing a dramatic shift in the balance of power. Earlier this year, the Chinese fielded missile forces capable of annihilating in a matter of minutes all but one of our bases in Asia. The handwriting is on the wall. In a few years, they will have missiles capable of eliminating the last of these. This year, they also fielded missile systems capable of finding and sinking our aircraft carriers in the western Pacific. In 2009, when Robert Gates cut back radically on the budget for acquiring in great numbers F-22 stealth fighters, he reportedly did so on the presumption that the Chinese would not be able to produce stealth fighters in any number before 2020. He was dead wrong.

What the Chinese military did on Tuesday was intended as a humiliation for and a warning to us. To all appearances, it was also a stab at the Chinese civilian leadership. Hu Jintao was apparently unaware of what was going on. It is impossible to be certain about the meaning of the Chinese military build-up and of the tone of belligerence that has accompanied it. In their public statements, our leaders and opinion-makers tend to dismiss both as unimportant. It is only natural, they say, that an emerging power should flex its muscles and bully its neighbors. Ignore their belligerence, they say. Defer to them, treat them with the respect due a great power, and that belligerence will dissipate.

These observers may be correct, and I certainly hope they are. But I have my doubts. China is not a liberal democracy and has never been one. It is culturally distinct from the West. For the most part, in the last four decades, it has played by the international rules gradually worked out in the West in the three and a half centuries years that have passed since the Treaty of Westphalia brought the Thirty Years War to an end. But it is by no means clear that, as China gains in economic heft and military power, it will continue to play by those rules. I would not be surprised at all if the Chinese were to renounce the international system and follow in the wake of the Japanese by attempting to establish military hegemony in the western Pacific and to set up on mercantilist lines a new Greater Asian Co-Prosperity Sphere.

It is perfectly possible that, when the history of our times comes to be written, it will barely mention 9/11, the Iraqi and Afghan conflicts, the recession of 2007, Obamacare, the Tea-Party Movement, and the crisis of the entitlement state. It is perfectly possible that it will focus instead on the improvident stewardship of Barack Obama and the wishful thinking to which the American people fell prone. We can only hope that what happened in China on Tuesday turns out to be a wake-up call for the Republicans. As Vegetius put it long ago, “If you want peace, prepare for war.”

As I have already pointed out in anticipatory posts – first  here, then here – he could not hire William M. Daley as his new White House Chief of Staff without eating a substantial helping of crow. Among Democrats, no one was as critical in public of the course chosen by Obama, Nancy Pelois, and Harry Reid in 2009 as was Daley. The op-ed he published in The Washington Post on Chrismas Eve, 2009 – just a few hours after Harry Reid jammed through the Senate a bill burdened with provisions known as the Cornhusker Kickback, the Connecticut Compromise, the Louisiana Purchase, and the Florida Flim-Flam – predicted that, if the Democratic Party followed through on what it had already done, it would not only be routed at the midterm elections in November, 2010; it would lay the foundations for “electoral disaster . . . in many elections to come.” I doubt that President Obama will step forward and publicly admit fault. That, as far as I can tell, he does not have in him. But before Daley took the job, he must have heard the President whisper the familiar words that this son of one Chicago mayor and brother of another first learned as an altar boy: “Mea culpa, mea culpa, mea maxima culpa.”

In practice, this means that Daley will wield far more authority than was ever accorded to Rahm Emanuel. There are signs the he is already doing so. Reports indicate that Robert Gibbs’ departure is Daley’s doing and that Valerie Jarrett’s wings will be clipped. In these matters, Obama is utterly cold-blooded.  As William Ayers and the Reverend Jeremiah Wright learned not so long ago, when circumstances change, this would-be Messiah is not loath to dispense with those hitherto near and dear. One aide is quoted as describing him as “the most unsentimental man I’ve ever met.”

Daley’s arrival at the helm also means that Obama has decided to pivot and reposition himself as a budget-cutter and a friend to big business. The left within the Democratic Party is now in an uproar, which will help the President far more than it will hurt him. If he is to present himself as the Comeback Kid, he will have to ditch his party in much the same manner as Slick Willie from Arkansas. John Boehner and Mitch McConnell will have to be ready to do business with one hand – while they are investigating malfeasance on the part of the administration with the other. Politically, we are in for a battle royal.

To a considerable degree, the outcome will turn on contingencies. The stock market is up, business leaders seem sanguine, and investor confidence is high. As I argued in an earlier post, however, there are storm clouds on the horizon. Housing prices are dropping, and some observers believe that they are still overpriced by twenty percent. If they continue to fall, more homeowners will find that they owe more than the house is worth – and many of these will default on their mortgages. Moreover, almost all of the states and a great many of the municipalities in the country have large unfunded obligations which will soon at least in part come due, and some of our most populous and wealthy states – Illinois, New York, and California among them – have massive deficits in their current operating budgets. They will have to cut jobs and services, and they may be forced to raise taxes. Neither expedient will speed the recovery. We could easily slip back into recession – and if we do or if, as is highly likely, unemployment remains high, the President will get the blame.

To the discontent derived from the economy, we can add that attendant on Obamacare – which grows more unpopular with every passing month. If the Republicans in the House vote to repeal the bill and if the Democrats in the Senate block the bill, President Obama and his party will be made to pay. If the bill passes both the House and the Senate and President Obama vetoes it, he alone will bear the blame. The situation favors the Republicans. The President is vulnerable.

But it is not sufficient that opportunity present itself. Someone has to have the moxie to seize it – and the time has come for reflection on the question of the hour. Who within the Republican stable is fit to lead?

I myself would rule out Romney, Huckabee, and Gingrich. As I noted in an earlier post, though each has undoubted virtues, each has baggage. I am of two minds about Sarah Palin. Her political instincts are brilliant. But I would regard her as a risky pick.

Who else is there? I can think of some names. What are the pluses and minuses? Speak your minds.

You see: Bill Daley has a history. On Christmas Eve, 2009 – a few hours after the Democrats in the US Senate shoved through a version of Obamacare adorned with colorful provisions nicknamed the Cornhusker Kickback, the Louisiana Purchase, the Connecticut Compromise, and Gatorade (sometimes called the Florida Flim-Flam) – the gentleman in question published an op-ed in The Washington Post, warning his fellow Democrats that they were in danger of bringing about a realignment in favor of the Republicans.

After alluding to the announced retirements of four centrist Democrats in the House and to Parker Griffith’s switch to the Republican side, Daley argued that “the Democratic Party — my lifelong political home — has a critical decision to make: Either we plot a more moderate, centrist course or risk electoral disaster not just in the upcoming midterms but in many elections to come.”

The political dangers of this situation could not be clearer.

Witness the losses in New Jersey and Virginia in this year’s off-year elections. In those gubernatorial contests, the margin of victory was provided to Republicans by independents — many of whom had voted for Obama. Just one year later, they had crossed back to the Republicans by 2-to-1 margins.

Witness the drumbeat of ominous poll results. Obama’s approval rating has fallen below 49 percent overall and is even lower — 41 percent — among independents. On the question of which party is best suited to manage the economy, there has been a 30-point swing toward Republicans since November 2008, according to Ipsos. Gallup’s generic congressional ballot shows Republicans leading Democrats. There is not a hint of silver lining in these numbers. They are the quantitative expression of the swing bloc of American politics slipping away.

Griffith and the Democrats who have decided to retire are, Daley said, “the truest canaries in the coal mine.”

In drawing attention to this in a piece posted later that morning, I remarked, “Bill Daley is a man well worth listening to. His father was a legendary machine politician and longtime mayor in Chicago; and his brother has for sometime held that office. Bill Daley is himself the man behind the curtain. He was Clinton’s Secretary of Commerce, he chaired Al Gore’s presidential campaign back in 2000, and, as is widely acknowledged, he is the brains behind today’s Chicago machine. He is also a leading Catholic layman, and he knows just how explosive the abortion question could be. He would not have written this op-ed had he not been profoundly worried.”

Of course, as I pointed out, Daley thought that the Democrats could head off disaster in the long run by changing course. “It may be too late,” he observed, “to avoid some losses in 2010, it is not too late to avoid the kind of rout that redraws the political map.” All that his party had to do was to “to acknowledge that the agenda of the party’s most liberal supporters has not won the support of a majority of Americans — and, based on that recognition, to steer a more moderate course on the key issues of the day, from health care to the economy to the environment to Afghanistan.” The Democrats need not, he added, abandon their radical agenda. They needed only take the polling data “as a sign that they must continue the hard work of slowly and steadily persuading their fellow citizens to embrace their perspective.”

I opined that Daley’s “tactical advice” was sound. But I thought it “too little and too late.” With “the Senate’s passage of Harry Reid’s version of the healthcare bill in the wee hours this morning,” I wrote, “the die is cast.”

Whether my judgment was correct we will never know – for Barack Obama, Nancy Pelosi, and Harry Reid did not take Daley’s advice. Even after Scott Brown’s remarkable victory over Martha Coakley in the race for Ted Kennedy’s seat in the Senate – a race that turned on Obamacare – the Democratic Party’s unholy trinity pressed on, getting the commanding Democratic majority in the House of Representatives to hold its nose and pass the Senate version of Obamacare.

What is certainly clear by now is that Daley’s warning was apt. As political scientist James W. Ceaser points out in the current issue of The Claremont Review of Books, the Democratic Party this past November “the greatest midterm defeat following a new president’s election since 1922.” It was, he adds, and election that

changed the landscape of American politics. In viewing the national electoral map of House seats, it is as if someone came in overnight and redid the whole canvas, changing huge swaths of blue to red, especially in the vast area between the coasts and-adding to the impression of Republican dominance-in non-urban districts, which cover much larger geographic areas. Republicans have their largest majority in the House since 1948. And the political reality is even redder than it looks, since a number of the blue dogs who did survive, having observed their colleagues’ cruel fate, will now be less likely to sit and stay at the president’s command. In the Senate, one new Democrat, West Virginia’s Joe Manchin, was elected by firing a shot in a campaign commercial at President Obama’s cap-and-trade policy, and a large number of the 23 Democratic senators up for re-election in 2012, especially those who come from redder states, have taken note. Although the House Democrats come January will be a more progressive lot, with a small but helpless contingent of surviving blue dogs, the Senate is apt to be very different. Some Democrats may look to “do business” with Republicans, although there appear to be too few moderate Democrats to mount a sustained opposition against Obama from the center. If the president faces pressure from within his party, it is more likely to come from progressive intellectuals and bloggers outside of Congress. Given where the center of American politics now is located, such posturing will be of no real significance.

From this, we can draw, I think, the following conclusion. If Obama asks Daley to serve and if he agrees to resign the well-remunerated position that he now occupies at JPMorgan Chase and come on board, he will serve as Obama’s Dave Gergen, and David Axelrod, who is leaving the White House to run the President’s re-election campaign, will turn into something hard to distinguish from Dick Morris. And this means that, at least for a time, the President will try to alter his image as a radical by doing considerable business with Mitch McConnell and John Boehner. If, however, Daley is not asked to serve or demurs when asked, that, too, will be a sign.

Stay tuned.

The economists who study recessions tend to think about them in turns of the business cycle – and rightly so, for in most cases it is the business cycle that produces the downturn. In the course of such a cycle, boom builds upon boom and bust upon bust. It is a bit like a game of crack the whip. Downturns occasioned by the business cycle are caused by overproduction. When businesses have more stock than they can sell, they stop producing and lay off workers. The workers laid off and no longer getting paychecks cut back on their consumption, and this in turn reduces the demand for goods and services and causes other businesses, which find their products and services no longer as much in demand, to curtail their efforts and lay off another set of workers. And so the recession grows, building on itself, until some businesses find that they have underproduced or underprovided for the services in demand. Then, the same process takes place in reverse with stepped-up production and a stepped-up provision of services requiring stepped-up employment, which occasions more consumption requiring another round of stepped-up production and provision of services and a further increase in employment and so forth – until production and provision once more overshoot demand. In the absence of perfect knowledge, human beings living in commercial societies are fated to suffer from an oscillation of this sort – between boom and bust.

When Barack Obama became President, his economic advisors appear to have been on automatic pilot and to have taken it for granted that this was the sort of recession that they were up against. And so they opted for a remedy that – if applied in the proper fashion, at the proper time, and  in the proper amount – might serve to hasten an economy’s recovery from a recession occasioned by the business cycle. That is, they sought to prime the pump – to increase consumption by artificial means, to borrow money from the future, put it in the pockets of certain citizens, and hope that they would spend it right away and thereby put others back to work.

Such was, at least, their pretense. In practice, of course, the so-called “stimulus bill” was a targeted measure – a massive pay-off designed to reward the public-sector employees and unionized workers involved in infrastructure construction who make up core constituencies within the Democratic Party and to do so at the expense of those whose taxes the Democrats intended in the future to raise. Obama’s advisors did not worry much about the manner in which the “stimulus” was to be applied, its timing, and amount, however. For they took it for granted that the expenditures would do no immediate damage to anyone and that the economy would bounce back quickly in any case, as it always does when the downturn is caused solely (or at least primarily) by the business cycle.

But, of course, this did not happen. The economy did not bounce back. On 10 January 2009, Christina Romer – Chairman of President Obama’s Council of Economic Advisors – predicted that, if the so-called “stimulus bill” were passed, it would save 3.5 million jobs, that unemployment would stay below 8%, and that joblessness would quickly decline from that level. In the twenty-three months that have passed since Romer made this prediction, we have lost something like 3.5 million jobs, unemployment has climbed to about 10%, and it has not appreciably declined from that level. The chart posted below, which first appeared on Business Insider and on Calculated Risk, illustrates nicely the difference between the ordinary course of a recession and the course taken by our most recent downturn.

The only defect of this chart is that it fails to capture the full level of distress. To the 15.1 million Americans seeking employment (the basis for putting it at 9.8%), one has to add, as Irving Stelzer recently pointed out, the 2.1 million who have given up looking for work and the 9 million who have been kept on but only part-time. What the chart does show, however, is that we are not experiencing an ordinary downturn.

There is, as it happens, another type of recession not rooted so firmly in the business cycle, which you might call it a fiscal recession. The last one we experienced in the United States began in 1929, and it was a doozy. Fiscal recessions are a function of the level of indebtedness. The one in 1929 was preceded by an extended period in which the Federal Reserve Board, supported by the Secretary of the Treasury, followed an easy-money policy. Interest was low; money was lent to all and sundry on easy terms; home-buyers and consumers took out loans they could not manage; and investors with borrowed money took great risks in attempts to make a quick buck. Bubbles appeared; and when the stock market finally crashed and the unemployment rate went up, the number of bankruptcies was legion. Those able to manage their debts concentrated on paying them down; and, for a good long time thereafter, Americans were very, very reluctant to take on debt.

This is not the whole story, to be sure. After the crash in 1929, the Federal Reserve Board kept interest rates high; Herbert Hoover and the Republican Congress increased taxes and tariffs; and Franklin Delano Roosevelt and the Democrats compounded thereafter the damage that their predecessors had done by sustaining their policies and by raising taxes further. In all other respects, however, the current downturn is more like the Great Depression than it is like any recession subsequent to World War II.

One other qualification deserves mention. No recession is ever purely fiscal, and even in recessions produced by the business cycle, those who have taken on excessive debt or who have lent foolishly go bankrupt. I have been speaking in terms of ideal types. What one needs to focus on right now, however, is the fact that policies which might help to turn around an economy suffering a downturn rooted primarily in the business cycle will backfire if that downturn is chiefly caused by an excess of indebtedness – which is precisely what is happening right now.

Between them, Alan Greenspan and his successor Ben Bernanke – with the support of two Presidents from different parties and a series of Secretaries of the Treasury appointed by both Presidents – ran an easy-money policy for something like two decades. In the process, home-owners, consumers, investors, states, and municipalities ran up massive debts that they had little hope of paying off.  Under George W. Bush, the federal government did so, on a lesser scale, as well; and then, under Barack Obama, the federal government did so on a scale unprecedented in peacetime.

We have now been left holding the bag. Something like 2.1 million houses are in foreclosure. States like Illinois, New York, and California are insolvent. And the powers that be have colluded in delaying the day of reckoning. The banks have not yet fully recognized their losses; the real estate market has not cleared; and nothing has been done to balance the budgets of some of our largest and most important states. In the meantime, Barack Obama and his party have lead the federal government into what economists call a fiscal trap.

In the next couple of years, the banks will have to face the music, and those houses will be dumped on the market – which will drive housing values down further and encourage those who find that they owe more than their houses are worth to join the millions who have stopped paying their mortgages and, in effect, abandon ship.

In the next couple of years, as Walter Dean Burnham has recently argued, Illinois, New York, and California are going to have to declare bankruptcy, give their bondholders a haircut, cut salaries and benefits, and let go a great many public-sector workers.

Moreover, in the near future, as Lawrence Lindsey has recently pointed out, interests rates are going to rise, and the federal government is going to find the cost of servicing its debt harder and harder to sustain.

These are separate matters,  but the odds are good that the second housing crash, the recognition of state insolvency, and the fiscal crisis of the federal government will coincide. To date, everything that the Obama administration has done has served only to delay the arrival of our day of reckoning and deepen the fiscal crisis on the horizon. If the unemployment rate is not coming down, it is because employers see through the charade and are intent on not getting caught short when the entire structure comes tumbling down.

The next few years are going to be grim, and those in charge do not inspire confidence. Would you entrust your welfare to Jerry Brown, Andrew Cuomo, Pat Quinn, and Barack Obama? We have to hope, however, that these men wake up, swallow their preconceptions, and without delay move decisively in the direction of balancing the budgets of California, New York, Illinois, and the United States.

I myself very much doubt that they will do so. Unless these men – our President above all – demonstrate qualities that they have never before evidenced, we are in for a truly terrible ride. There is only one silver lining; and welcome though it might be in ordinary circumstances, it is hardly worth the cost. Politically, this means that Barack Obama is likely to be remembered for having done to the Democratic Party what Herbert Hoover did to the Republicans.