The bailout became law because the legislative branch was stampeded with the threats of certain doom. It vested unprecedented economic authority in a single unelected official, the secretary of the Treasury. And it used public funds to insulate well-connected private actors from the consequences of their recklessness. Its creation short-circuited republican self-government, and its execution created moral hazard on an epic scale. It may have been an economic necessity, but it felt like a travesty nonetheless.

This is why it should be possible to both sympathize with the politicians who voted for the bailout and welcome their rebuke at the ballot box. Faced with extraordinary circumstances ”” wars, natural disasters, economic crises ”” political leaders will always incline toward a blunt utilitarianism, in which the need for stability trumps more high-minded ideals. But after a crisis has passed, it’s immensely important that the ideals reassert themselves, so that the moral compromises made amid extraordinary times aren’t repeated in ordinary ones as well.

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The United Methodist Church’s public policy agency can advocate on causes beyond alcoholism and temperance without violating the terms of its endowment, a District of Columbia judge ruled on Wednesday (Oct. 6).

Superior Court Judge Rhonda Reid Winston’s decision is the latest twist in a long-running debate in the UMC about how its General Board of Church and Society is funded and the positions it takes on political issues.

“This matter has been an enormous, unnecessary distraction,” Jim Winkler, the board’s chief executive, said in a statement. The board has for decades fought “predatory enterprises” such as alcohol, tobacco and gambling, he said.

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Bad news isn’t always a surprise. But knowing it’s coming doesn’t always help, either. And now that, as expected, South Carolina now faces a huge new bill due to Obama-Care, our state faces a terrible dilemma.

The president and his allies in Congress promised that their massive health care overhaul would extend coverage to roughly 30 million previously uninsured Americans. The bill’s critics, including S.C. Gov. Mark Sanford, warned that the states would have to cover large new tabs due to the bill’s vastly increased number of people eligible for Medicaid.

The critics were right. Tuesday’s Post and Courier reported that the ObamaCare Medicaid mandate is projected to cost our state “nearly $1 billion over the next decade, even with the federal government covering at least 90 percent of the cost.”

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As Obama administration officials put into place the first major wave of changes under the health care legislation, they have tried to defuse stiffening resistance ”” from companies like McDonald’s and some insurers ”” by granting dozens of waivers to maintain even minimal coverage far below the new law’s standards.

The waivers have been issued in the last several weeks as part of a broader strategic effort to stave off threats by some health insurers to abandon markets, drop out of the business altogether or refuse to sell certain policies.

Among those that administration officials hoped to mollify with waivers were some big insurers, some smaller employers and McDonald’s, which went so far as to warn that the regulations could force it to strip workers of existing coverage.

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Moynihan – the only person to have served in the cabinets or subcabinets of four consecutive presidents (Kennedy, Johnson, Nixon, Ford) – said politics is an argument about the future: “The central conservative truth is that it is culture, not politics, that determines the success of society. The central liberal truth is that politics can change a culture and save it from itself.”

Today, seven years after Moynihan’s death, conservatism’s contention is that liberal politics produces a culture of dependency and a government riddled with rent-seeking – the manipulation of government power for private advantage. Would that Moynihan were here to elevate the liberal side of the debate, as he did throughout his well-lived life.

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Eleven months out of the year, the parishioners of New York City can safely attend Sunday services with no reasonable fear of interlopers, television cameras or quizzical members of the press.

But this is the electoral playoff season of October, when aspiring statesmen show up on doorsteps more often than jack-o’-lanterns. That means politicians are descending on the pews.

By noon on Sunday, three churches along a single two-mile stretch of Bedford-Stuyvesant, Brooklyn, had played host to three of New York State’s more prominent elected officials: the state’s attorney general and comptroller, both of whom are running for statewide office, and the mayor of New York City.

Coincidence? In campaigns, there may be no such thing.

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“We basically have two bankrupt parties bankrupting the country,” said the Stanford University political scientist Larry Diamond. Indeed, our two-party system is ossified; it lacks integrity and creativity and any sense of courage or high-aspiration in confronting our problems. We simply will not be able to do the things we need to do as a country to move forward “with all the vested interests that have accrued around these two parties,” added Diamond. “They cannot think about the overall public good and the longer term anymore because both parties are trapped in short-term, zero-sum calculations,” where each one’s gains are seen as the other’s losses.

We have to rip open this two-party duopoly and have it challenged by a serious third party that will talk about education reform, without worrying about offending unions; financial reform, without worrying about losing donations from Wall Street; corporate tax reductions to stimulate jobs, without worrying about offending the far left; energy and climate reform, without worrying about offending the far right and coal-state Democrats; and proper health care reform, without worrying about offending insurers and drug companies.

“If competition is good for our economy,” asks Diamond, “why isn’t it good for our politics?”

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The U.S. healthcare reform law will worsen a shortage of physicians as millions of newly insured patients seek care, the Association of American Medical Colleges said on Thursday.

The group’s Center for Workforce Studies released new estimates that showed shortages would be 50 percent worse in 2015 than forecast.

“While previous projections showed a baseline shortage of 39,600 doctors in 2015, current estimates bring that number closer to 63,000, with a worsening of shortages through 2025,” the group said in a statement.

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The U.S. government will face pressure to bail out struggling states in the next 12 months, said Meredith Whitney, the banking analyst who correctly predicted Citigroup Inc.’s dividend cut in 2008.

While saying a bailout might not be politically viable, Whitney joined investor Warren Buffett in raising alarm bells about the potential for widespread defaults in the $2.8 trillion municipal bond market. She said state and local issuers have taken on too much debt and that the gap between public spending and revenue is unsustainable.

“People will think the federal government will bail these states out,” Whitney, 40, the founder of Meredith Whitney Advisory Group Inc., said in an interview on Bloomberg Television’s “In the Loop.” “It’s going to be an incredibly divisive issue.”

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Bob Moon: What’s the rush? That’s what investment consultant Chris Whalen was asking today at Institutional Risk Analytics. He says the government seems to be in a hurry to get the word out that it’s aiming to start unloading its $49 billion in AIG shares within the coming year. Whalen warns the market isn’t ready and won’t support it.

Chris Whalen: We’re trying to do a public offering of shares in a company that can’t stand by itself, that has to have government support. That’s not going to work.

Flooding the market with shares, he cautions, is a money-losing proposition. He says it’s the same catch-22 the government faces with General Motors, and has already run up against trying to sell its Citigroup shares. Gauging by AIG’s total market capitalization — the value of all outstanding shares — he argues the idea of taxpayers making all their money back is pie-in-the-sky.

Whalen: The market cap of this company is single digits. They owe us $100 billion, right? So what the market’s telling you is that the company is worth, today, a tenth of what they owe us.

Read or listen to it all.

If there is one area where the Obama administration and the American people seem in fundamental agreement, it is in their contempt for Washington.

Not, presumably, for the actual place of schools and neighborhoods and monuments but for the conceptual Washington, the symbolic city. Chief of Staff Rahm Emanuel, with typical delicacy, calls it “[expletive]-nutsville,” a judgment that earthier Tea Party activists might share. Senior adviser David Axelrod has announced his spring departure. “I think he’s not having fun,” says a White House colleague. A recent profile claims that Axelrod’s idealism was disappointed by “a ferociously stubborn, possibly irredeemable system.” And Barack Obama himself constantly complains about the “politicking” and obstructionism of the capital city, where they “talk about me like a dog.” Much of the White House senior staff seems to long for a purer, simpler, more wholesome kind of politics . . . in Chicago.

The tension here is obvious. Even while depicting Washington as a flawed, fractured, hopeless mess, the Obama administration has sought to increase the influence of Washington over America’s economy and health-care system. In the Obama era, Washington helps run auto companies, oversees some corporate salaries, imposes an individual mandate to purchase health insurance, and seeks to rationalize the health-care system with a profusion of new boards, offices, agencies and commissions — estimates vary from 47 to 159 new bureaucratic entities.

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On paper, I should be a progressive voter. I am an agnostic. I am a woman in my 20s with an Ivy League graduate degree and liberal arts background.

But I’m a conservative. I vote for Republicans because I believe they have the best strategies for where the country should be headed fiscally, militarily and culturally.

Secular conservatives like me are in a bind. We want to work with religious conservatives because we agree with them on most issues. We respect the ethical contributions from many faith traditions, which inspire millions to seek the public good. But we’re troubled by the religious right’s dominance over the conservative movement, a trend that repels rational, independent-minded folks who see religious zealotry as anathema to the Founding Fathers’ pluralistic vision.

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It is a very scary picture.

The problem with the business cycle under this analysis, you’ll notice, is not the bust ”” it’s the boom. That’s when the bad investment decisions are made, largely because political influence in the markets (housing policy, tax breaks, artificially cheap money and other interest-rate subsidies, risk subsidies, etc.) distorts economic calculation.

Which brings us back to the entitlements. It’s easy to say: Well, we’ll just raise the retirement age, or cut benefits, or means-test them, or raise taxes on the wealthy who receive them (which amounts to means-testing, but Democrats like that version better). And, yes, that probably is what we will do, eventually. But that does not get us out of the economic pickle: People have been making decisions for years and years ”” decisions about saving, investing, consuming, working, and retiring ”” based at least in some part on what are almost certainly faulty assumptions about what sort of Social Security, Medicare, and other benefits they will receive when they retire. When those disappear, a lot of consumption is going to have to be forgone ”” and a lot of capital dedicated to producing those goods and services for consumption will be massively devalued. Businesses will have to retrench, probably in a way that is more disruptive and more expensive than the housing-bubble recession necessitated.

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Efforts to tame America’s ballooning budget deficit could soon confront a daunting reality: Nearly half of all Americans live in a household in which someone receives government benefits, more than at any time in history.

At the same time, the fraction of American households not paying federal income taxes has also grown””to an estimated 45% in 2010, from 39% five years ago, according to the Tax Policy Center, a nonpartisan research organization.

A little more than half don’t earn enough to be taxed; the rest take so many credits and deductions they don’t owe anything. Most still get hit with Medicare and Social Security payroll taxes, but 13% of all U.S. households pay neither federal income nor payroll taxes.

“We have a very large share of the American population that is getting checks from the government,” says Keith Hennessey, an economic adviser to President George W. Bush and now a fellow at the conservative Hoover Institution, “and an increasingly smaller portion of the population that’s paying for it.”

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Ask yourself: What made our Greatest Generation great? First, the problems they faced were huge, merciless and inescapable: the Depression, Nazism and Soviet Communism. Second, the Greatest Generation’s leaders were never afraid to ask Americans to sacrifice. Third, that generation was ready to sacrifice, and pull together, for the good of the country. And fourth, because they were ready to do hard things, they earned global leadership the only way you can, by saying: “Follow me.”

Contrast that with the Baby Boomer Generation. Our big problems are unfolding incrementally ”” the decline in U.S. education, competitiveness and infrastructure, as well as oil addiction and climate change. Our generation’s leaders never dare utter the word “sacrifice.” All solutions must be painless. Which drug would you like? A stimulus from Democrats or a tax cut from Republicans? A national energy policy? Too hard. For a decade we sent our best minds not to make computer chips in Silicon Valley but to make poker chips on Wall Street, while telling ourselves we could have the American dream ”” a home ”” without saving and investing, for nothing down and nothing to pay for two years. Our leadership message to the world (except for our brave soldiers): “After you.”

So much of today’s debate between the two parties, notes David Rothkopf, a Carnegie Endowment visiting scholar, “is about assigning blame rather than assuming responsibility. It’s a contest to see who can give away more at precisely the time they should be asking more of the American people.”

Read it all (and please note that the Samuelson piece he mentions was posted on the blog).

During the recession, political and business leaders have held out the promise that American advances, particularly in green technology, might stem the decades-long decline in U.S. manufacturing jobs. But as the lighting industry shows, even when the government pushes companies toward environmental innovations and Americans come up with them, the manufacture of the next generation technology can still end up overseas.

What made the plant here vulnerable is, in part, a 2007 energy conservation measure passed by Congress that set standards essentially banning ordinary incandescents by 2014. The law will force millions of American households to switch to more efficient bulbs.

The resulting savings in energy and greenhouse-gas emissions are expected to be immense. But the move also had unintended consequences.

Rather than setting off a boom in the U.S. manufacture of replacement lights, the leading replacement lights are compact fluorescents, or CFLs, which are made almost entirely overseas, mostly in China.

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Health insurers say they plan to raise premiums for some Americans as a direct result of the health overhaul in coming weeks, complicating Democrats’ efforts to trumpet their signature achievement before the midterm elections.

Aetna Inc., some BlueCross BlueShield plans and other smaller carriers have asked for premium increases of between 1% and 9% to pay for extra benefits required under the law, according to filings with state regulators.

These and other insurers say Congress’s landmark refashioning of U.S. health coverage, which passed in March after a brutal fight, is causing them to pass on more costs to consumers than Democrats predicted.

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The unexpectedly deep plunge in home sales this summer is likely to force the Obama administration to choose between future homeowners and current ones, a predicament officials had been eager to avoid.

Over the last 18 months, the administration has rolled out just about every program it could think of to prop up the ailing housing market, using tax credits, mortgage modification programs, low interest rates, government-backed loans and other assistance intended to keep values up and delinquent borrowers out of foreclosure. The goal was to stabilize the market until a resurgent economy created new households that demanded places to live.

As the economy again sputters and potential buyers flee ”” July housing sales sank 26 percent from July 2009 ”” there is a growing sense of exhaustion with government intervention. Some economists and analysts are now urging a dose of shock therapy that would greatly shift the benefits to future homeowners: Let the housing market crash.

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The U.S. economy will eventually rebound from the Great Recession. Millions of American workers will not.

What some economists now project ”” and policymakers are loath to admit ”” is that the U.S. unemployment rate, which stood at 9.6% in August, could remain elevated for years to come.

The nation’s job deficit is so deep that even a powerful recovery would leave large numbers of Americans out of work for years, experts say. And with growth now weakening, analysts are doubtful that companies will boost payrolls significantly any time soon. Unemployment, long considered a temporary, transitional condition in the United States, appears to be settling in for a lengthy run.

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This coming Monday marks the second Labor Day of the Obama administration, and the American work force has little to show for it other than higher unemployment, stagnant wages, last year’s $1.4 trillion federal deficit, this year’s $1.3 trillion deficit, and next year’s anticipated $1 trillion-plus deficit. Oh, and a slew of new federal regulations and programs””like ObamaCare””that will make it even more expensive for businesses to retain current workers, much less create new jobs.

No wonder American confidence in the future is evaporating. And when confidence crumbles, consumers won’t spend, lenders won’t lend, investors won’t invest, and businesses won’t hire.

Today we see businesses husbanding cash rather than hiring. Nonfinancial S&P 500 companies are sitting on a record $837 billion. Personal savings are increasing dramatically, to over 6% of income today compared to barely 1% in 2005. Those small businesses still willing to take on more debt to expand are having tremendous difficulty finding credit.

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…the most effective tax cut for putting people back to work quickly is one that businesses and households get only if they spend money. Last year’s cash-for-clunkers program was an example. So was a recent bipartisan tax credit for businesses that hired workers who had been unemployed for months. Perhaps the broadest example is a temporary cut in the payroll tax for businesses, which reduces the cost of employing people.

Any of these steps would increase the budget deficit, obviously. But relative to the multitrillion-dollar, Medicare-driven, long-term deficit, a temporary tax cut costing a couple of hundred billion dollars isn’t significant. The more pressing problem today, by far, is the weak economy.

The great historical lesson of financial crises is that governments are usually not aggressive enough in responding. That was Japan’s mistake in 1990s, Herbert Hoover’s in the early 1930s and even Franklin Roosevelt’s in the mid-1930s.

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It increasingly seems as if the policy makers attending like physicians to the American economy are peering into their medical kits and coming up empty, their arsenal of pharmaceuticals largely exhausted and the few that remain deemed too experimental or laden with risky side effects. The patient ”” who started in critical care ”” was showing signs of improvement in the convalescent ward earlier this year, but has since deteriorated. The doctors cannot agree on a diagnosis, let alone administer an antidote with confidence.

This is where the Great Recession has taken the world’s largest economy, to a Great Ambiguity over what lies ahead, and what can be done now. Economists debate the benefits of previous policy prescriptions, but in the political realm a rare consensus has emerged: The future is now so colored in red ink that running up the debt seems politically risky in the months before the Congressional elections, even in the name of creating jobs and generating economic growth. The result is that Democrats and Republicans have foresworn virtually any course that involves spending serious money.

The growing impression of a weakening economy combined with a dearth of policy options has reinvigorated concerns that the United States risks sinking into the sort of economic stagnation that captured Japan during its so-called Lost Decade in the 1990s.

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“The economy is going to limp along for the next few months,” said Gus Faucher, an economist at Moody’s Analytics. There’s even a one in three chance it could slip back into recession, he said.

Many temporary factors that boosted the economy earlier this year are fading. Companies built up their inventories after cutting them sharply in the recession to match slower sales. The increase provided a boost to manufacturers, but now many companies’ stockpiles are in line with sales and don’t need to grow as much. In addition, the impact of the government’s $862 billion fiscal stimulus program is lessening. That leaves the private sector to pick up the slack. But businesses are cutting back on their spending on machines, computers and software, according to a government report earlier this week. And the housing sector is slumping again after a popular home buyer’s tax credit expired in April.

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[Paul] Otellini singled out the political state of affairs in Democrat-dominated Washington, saying: “I think this group does not understand what it takes to create jobs. And I think they’re flummoxed by their experiment in Keynesian economics not working.”

Since an unusually sharp downturn accelerated in late 2008, the Obama administration and its allies in the U.S. Congress have enacted trillions in deficit spending they say will create an economic stimulus — but have not extended the Bush tax cuts and have pushed to levy extensive new health care and carbon regulations on businesses.

“They’re in a ‘Do’ loop right now trying to figure out what the answer is,” Otellini said.

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Mr. Rasmussen has a partial answer for …[White House Chief of Staff Rahm] Emanuel’s question, and it lies in a significant division among the American public that he has tracked for the past few years””a division between what he calls the Mainstream Public and the Political Class.

To figure out where people are, he asks three questions: Whose judgment do you trust more: that of the American people or America’s political leaders? Has the federal government become its own special interest group? Do government and big business often work together in ways that hurt consumers and investors? Those who identify with the government on two or more questions are defined as the political class.

Before the financial crisis of late 2008, about a tenth of Americans fell into the political class, while some 53% were classified as in the mainstream public. The rest fell somewhere in the middle. Now the percentage of people identifying with the political class has clearly declined into single digits, while those in the mainstream public have grown slightly. A majority of Democrats, Republicans and independents all agree with the mainstream view on Mr. Rasmussen’s three questions. “The major division in this country is no longer between parties but between political elites and the people,” Mr. Rasmussen says.

His recent polls show huge gaps between the two groups. While 67% of the political class believes the U.S. is moving in the right direction, a full 84% of mainstream voters believe the nation is moving in the wrong one.

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Gay marriage is not going away as a highly emotional, contested issue. Proposition 8, the California ballot measure that bans same-sex marriage, has seen to that, as it winds its way through the federal courts.

But perhaps the public has reached a turning point.

A CNN poll this month found that a narrow majority of Americans supported same-sex marriage ”” the first poll to find majority support. Other poll results did not go that far, but still, on average, showed that support for gay marriage had risen to 45 percent or more (with the rest either opposed or undecided).

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Justin Wolfers, a Professor of Business and Public Policy at the University of Pennsylvania has these as his first two:

1. If it walks like a bank and quacks like a bank, it’s a bank. Bring all banks out of the shadows and into the glare of the regulatory sunlight.
2. Too often financial information is written with two pens. The small font sizes provide enough cover for a lawyer to sign off, but in larger type, they tell a story that is misleading enough to encourage a steady stream of suckers. That doesn’t seem fair. Here’s a different approach. If your firm’s marketing materials lead a random sample of 100 Americans to believe that the mortgage, or credit card, or other financial product is less onerous or risky than it actually is, then your marketing materials are misleading, and your firm is liable for damages.

Read it all.

Here is one:

We have nothing to gain by continuing to wage war in Afghanistan. We are keeping that poor country in turmoil, killing innocent people and spending money that could be used to create jobs. We have had no success in nine years, and we can expect no success in nine more. We are wasting soldiers’ lives. We should bring our troops home now.

Joel Welty

Blanchard, Mich.

Read them all.

It is hard to imagine that anything has gone unsaid about the so-called Ground Zero mosque, but an important point seems to be missing.

The mosque should be built precisely because we don’t like the idea very much. We don’t need constitutional protections to be agreeable, after all.

This point surpasses even all the obvious reasons for allowing the mosque, principally that there’s no law against it.

Read it all.