If the pundit class is right, Americans are in for another era of big government: the New Deal on steroids. In presidential debates, hundreds of billions of dollars in proposed spending were tossed around the way mere billions once were. Within a year of our first half-trillion-dollar deficit, we might see our first--wait for it--trillion-dollar deficit. We seem on the verge of socializing both health care and the credit market.

But I'm starting to wonder whether the commentary has it backwards. In a socialized credit market, the government displaces banks. Governments around the world, including our own, are trying desperately to do the opposite: to induce banks to displace the government as the system's leading lender. Plus, nationalizing the banks would require permanent institutional change. Every bailout and rescue package that we've seen over the past few weeks, and every one we will see over the next few months--no matter who wins in November--screams "temporary." The packages are designed to put lots of government money into the credit system now, and to remove as much of it as possible as soon as possible. The New Dealers liked programs with a longer shelf life.

As for more New Dealish issues like health care, I wouldn't bet the ranch on radical change there either--even if November produces a Democratic sweep. The reason is simple: The government doesn't have the money.

In a recession, federal revenues will fall, and fall sharply. Capital gains tax revenues will plummet, as will revenues from the corporate income tax. Individual income taxes at the high end--which is where most income tax revenue is realized--will fall too, and substantially: Highly paid professionals can see their pay fall as well as rise. The once-hot issue of out-of-control CEO pay will fade, along with CEO paychecks. Payroll tax revenues will fall as unemployment rises.

Readers might think: So what? We've run huge deficits before, and they haven't produced catastrophe. Why not run even bigger ones for awhile? There are two answers. First, "awhile" means "permanently," given that the already-mentioned half-trillion dollar deficit is mostly structural: Deficits of that size (and larger) will recur even in reasonably good economic times, unless spending is cut dramatically or taxes are raised substantially. And no, you can't get the needed revenue by raising taxes on the rich; you have to squeeze the entire top half of the income spectrum to do the job. As between that and spending cuts--including modest cuts in Social Security benefits (say, indexing for price increases rather than wage increases and a further phased-in increase in the retirement age)--spending cuts will prove more politically saleable.

Second, save for the last years of World War II, we haven't run huge deficits at a time when the debt-to-GDP ratio was as high as it is today. And World War II isn't comparable, since it was bound to end within a few years, after which a large fraction of the required spending would end as well. Running massive deficits in our circumstances risks creating federal budgets the majority of which cover interest on the growing federal debt--year in, year out for the indefinite future. Eventually, that leads to one of three things: politically suicidal tax hikes, substantial cuts in federal spending, or the large-scale printing of money to lower the debt's value. To get a picture of the last option, think Germany in 1923, when wheelbarrows full of nearly worthless marks were used to pay for the day's groceries. German hyperinflation started as a means of paying off postwar reparations--debts that seemed too high to pay with honest money. Sound familiar?

That is the true big-government option for America's economic policy-makers. I doubt that even Robert Reich would go for it.

Any way you slice it, the answer is the same, and it applies regardless of which party is in power. Unless middle-income Americans are sold on the idea that their taxes should be not just higher but much higher, we are entering the Age of Spending Restraint. Not the Age of the Federal Checkbook, and certainly not the Age of American Socialism. Whatever he says in the midst of his campaign, the next president is more likely to be a twenty-first-century Calvin Coolidge than an up-to-date FDR.

That era of small government you never saw? It may be coming, and soon--perhaps sponsored by a Democratic president and a Democratic Congress, with a large dose of bipartisan cooperation thrown in for good measure. Now that's change worth hoping for.

William J. Stuntz is the Henry J. Friendly professor at Harvard Law School.

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