Has the Government Competence Bubble Finally Burst? Or the Government Cares Bubble?

I remember how the critics attacked George Bush and his administration after the FEMA response to Hurricane Katrina. Much of the anger was probably deserved.

But how does that look now?

Obamacare is not a botched response to a disaster. It is the disaster.

Right now it looks like thousand of people believe they have been signed up for Medicaid that are in for a nasty surprise when they go to the doctor. Millions are losing their insurance. Many millions more, the employees of small businesses, will lose their insurance in 2014. Many are discovering insurance is less affordable as a result of the law.

Dare we hope that the Government competence and caring bubbles have finally burst?

Bubbles are created when people become convinced that there is money to be made in an investment. People become convinced that internet companies are golden, or that housing prices will never go down in value. Because they are deluded, they create feedback that confirms their irrational exuberance. As more people invested in internet stocks, the price of those stocks went up, and confirmed to the credulous that internet stocks were a great investment. As people bought more houses because they believed that housing prices would rise, they drove up property values and thus confirmed the idea that housing was always going to go up.

But eventually someone realized that there were not enough buyers who could afford those expensive homes. As soon as a few people began selling their properties to avoid future losses the market value of homes tanked. People lost their faith in the bubble.

Liberals constantly trot out past accomplishments of our government as evidence that our government is competent and caring enough to take care of all other problems or perceived inequalities. If the government ever failed to meet expectations, each party could blame the other one for messing up the system and double down on their promises that, if only they were granted overwhelming power in government, they could turn the situation around.

Like a banker sighing over the sunny days of 2005 when the housing bubble was in its prime, Barack Obama appealed to the past glories of the Welfare-Warfare State to justify a government that “works.”

Now, there are some who question the scale of our ambitions, who suggest that our system cannot tolerate too many big plans.  Their memories are short, for they have forgotten what this country has already done, what free men and women can achieve when imagination is joined to common purpose, and necessity to courage.

He is not completely wrong. The government appeared to score major successes largely because the majority of Americans, from the “Progressive” Era onward, had a naïve faith in government competence and caring. It was unsustainable (and the programs themselves, like social security and the Federal Reserve, have proven to be unsustainable to anyone who looks at what they are doing), but the irrational euphoria gave government an advantage at the time. Now it has crashed.

Or has it?

The Democrats in Congress have given Obama a three-day deadline to fix the problem of cancelled insurance policies or else they will cooperate with the Republicans. Republicans need forcefully communicate that this is not just an accident that we can fix and move on from. This is what happens when you give a central authority so much authority and control over so much of the economy. Democrats are responsible for this mess NOT just because of their moral character, but because they are the party that believes in central government control as the salvation of the nation.

Will Republicans take this opportunity to really attempt to win over the hearts and minds of Americans to a new way of thinking about government?

Or will they try to bail out the bubble?