DEPT. OF ECONOMICS

In the closing weeks of last year's election campaign, we wrote that Democrats had in mind the most sweeping expansion of government in decades. Liberals clucked, but it turns out even we've been outbid. With yesterday's fiscal 2010 budget proposal, President Obama is attempting not merely to expand the role of the federal government but to put it in such a dominant position that its power can never be rolled back.

The first point to understand is the sheer magnitude of federal spending built into this proposal. ... federal outlays will soar in fiscal 2009 to $4 trillion, or 27.7 percent of GDP, from $3 trillion or 21 percent of GDP in 2008, and 20 percent in 2007. This is higher as a share of the economy than any year since 1945, when the country was still mobilized for World War II. It is more spending by far than during the Vietnam War, or during the recessions of 1974-75 or 1981-82.But let's assume, for the sake of argument, that Mr. Obama is right that this spending is needed now to "jump-start" an economic recovery. Though the budget predicts that the economy will recover in 2010, spending will still be 24.1 percent of GDP that year, and the budget proposes that spending will remain higher than 22 percent for the entire next decade even as the defense budget steadily declines. All presidential budgets predict spending will decline in the "out years," if only to give the illusion of spending restraint. Obama tries the same trick, but he is proposing so many new and expanded nondefense programs that his budgeteers can't get anywhere close even to Jimmy Carter spending levels. ...

The falling deficit also assumes the largest tax increase in U.S. history, starting in 2011 with the repeal of the Bush tax rates on incomes higher than $200,000 for individuals and $250,000 for couples. The White House says this will yield upwards of $1 trillion, if you choose to believe that tax rates don't affect taxpayer behavior. ...

Democrats will want to rush all of this into law this year while Obama retains his honeymoon aura and they can blame the recession on George W. Bush. But Americans are only beginning to understand the magnitude of Obama's ambitions, and how much of their own income will be required to fulfill them.