The bailout did not address these problems. Instead, it sought to compound the problem by increasing government intervention.

Ideally, politicians now will shift gears and seek to reduce government barriers to economic revitalization. Unfortunately, the political insiders from both parties almost surely will close ranks and seek cosmetic changes in hopes of ramming the bailout through Congress.

Even if the deficit was the key variable, much of the discussion is based on absurd assumptions. Revenue estimates for Senator Obama's plan, for instance, are based on the naive assumption that significant increases in marginal tax rates will have zero impact on overall economic performance. In reality, those tax rate increases will lead to a drop in taxable income - in part because jobs and investment will shift to nations that understand that global competition makes class-warfare tax policy even more damaging than it was in the past.

The bad news, though, is that the labor market has weakened. Government policy is the main culprit. Erratic monetary policy, caused by the Fed's misguided efforts to fine-tune the economy, probably deserves the lion's share of the blame. But the White House and Congress also bear some responsibility. Record increases in the burden of government spending have made the economy less efficient by misallocating labor and capital. And the failure of Congress to make lower tax rates permanent surely is beginning to have a negative effect on business investment decisions.