The election campaign has entered its final phase with the administration irritatingly pretending that some sort of economic recovery is under way, and that a deficit-reduction plan that leads where a sane and numerate citizen might wish to go is in place. President Obama benefits from what Johnson and Macaulay called “the disingenuousness of years,” in this case, of the din of American electoral discourse that glories, often entertainingly, in partisan hyperbole.

The deficit is consigned to a category of perennial problems requiring some attention but in hand, as well as being entirely the fault of the previous regime. If progress is not as swift as is desired, it is yet indisputable and inexorable. And the agitations of the opposition, to the effect that conditions are more dire and that catastrophe impends, are just the excesses of unworthy office-seekers abusing the quadrennial right to frighten the voters in a poor cause.

Ronald Reagan made his national political debut in 1964 warning America that a vote for Lyndon Johnson was “the first step into a thousand years of darkness.” Over 61% of voting Americans took that step, and what they got was not a Great Society; but the Cassandras of 1964, including Richard Nixon and Reagan himself, sorted it out eventually. In 1932, Herbert Hoover warned that a vote for Franklin Delano Roosevelt was a vote to make “grass grow in the streets of a hundred cities, a thousand towns, and for weeds to overrun a million farms.” Four consecutive elections of Roosevelt as president followed, and with them, victory over almost every foreign and domestic enemy, as unemployment shrank from 33% (and not the mere 25% claimed by anti-Roosevelt revisionists) to 0.25%.

It is in this context, America’s leaders tell us, and the depressingly bland and ineffectual Romney campaign effectively confirms, that current alarmist opposition comment should be evaluated. The president said in his acceptance speech three weeks ago that “independent experts say that my plan would cut our deficits by 4 trillion dollars.” This was the silver bullet and the poison pill: Soaking the rich and absorbing the end of the Bush tax cuts, through the hopeless gridlock and intellectual bankruptcy of the entire political class, would trim $400 billion per year off deficits that would still continue to hemorrhage at over $1 trillion per year.

Mr. Obama thought no more reassurance or analysis was necessary. Romney was deemed so incompetent, the electorate so docile, and the media so collectively incapable of elucidating public questions that those 14 words would suffice. They won’t suffice. George Shultz — former secretary of state, the Treasury, and labor, and director of the Office of Management and Budget; a Marine colonel, faculty dean at the University of Chicago, and chief executive of one of America’s great corporations (Bechtel); and (next to Reagan, and along with Nixon, Kissinger, and James Baker) one of America’s greatest public officials of the past 50 years — this week co-authored a seminal column in the Wall Street Journal in which he and his colleagues, in the most measured and unpolemical terms, tried to sketch out the extent of the current fiscal problem.

The proportions of the crisis, easily overlooked in the president’s breezy routinization of an endless horizon of trillion-dollar annual budget deficits, were starkly but not histrionically presented: Federal spending is $1 trillion greater than it was five years ago, while revenues are almost unchanged; debt has increased in four years by 50% over what had accumulated in the preceding 220 years of American history combined, or $55,000 per family, or about $17,000 per man, woman, and child in the country. Because it is keeping interest rates at 1% or less, in an unsuccessful effort to incite economic growth, the Federal Reserve is encouraging the government to defer serious deficit-reduction measures.

If it costs almost nothing to borrow money, it doesn’t matter how much is borrowed. Most of U.S. federal debt is subscribed by the Federal Reserve, a 100% subsidiary of the U.S. Treasury, directly and through the banking system, and paid for by the issuance of notes. The great bulk of U.S.-government borrowing is short term, to take advantage of the current bombed-out interest rates, and the interest paid by the federal government returns through the banking system to the Federal Reserve, and then is dividended back to the federal government, so these vast and self-inflating deficits don’t really cost anything.

It is only human nature and the experience of all observant citizens that this is an incentive to go on spending and borrowing, because it is a colossal free lunch: There is no reason to stop or reduce deficit spending, because it’s free. Rather than cutting the federal-spending coat to fit the revenue cloth, it is much easier to posture and pander and soak the rich, the 3% who allegedly earn $250,000 a year or more, although no such taxes will reduce the deficit by more than a couple percent of its steroid-bloated total. As George Shultz and his co-authors reminded their readers, the top 1% of income earners pay 37% of income tax, and half the people pay no income tax at all.

The Federal Reserve is conducting a giant game of chicken and Ponzi scheme with itself: The federal government is buying its own debt, at no net cost, since the interest comes back to it, and interest rates can be retained at negligible levels as long as there is no economic recovery. This policy implicitly concedes the failure of the last four years of “quantitative easing” and “stimulus,” i.e., flooding the country with debt that has all the practical characteristics of money-supply increases; interest rates will increase only if the economy actually starts to recover, but when it does, revenues will increase on increased activity, to compensate for rising interest rates; and until it does, borrowing is free and circular.

This is the same quest for a free ride that produced the statutory and executive requirement for trillions of dollars of commercially unjustifiable residential mortgages, that increased individual-family home ownership at no cost to the taxpayer, until the whole gigantic fraud blew up in a fiscal mushroom cloud.

The compliance industry — the vast proliferation of American lawyers, laws, regulations, and legal billing that already consumes 10% of GDP, about $1.5 trillion a year — accelerates constantly through the self-serving antics of the legal cartel in all legislative and regulatory entities. The addiction to the service-industry economy continues, and tens of millions of the country’s most talented people are working as consultants, learned professionals, brokers, traders, and ostensible facilitators, and thus are adding no value; they are qualitatively almost indistinguishable from the 400,000 troops and agents who collected the salt tax in France at the onset of the French Revolution in 1789. Though they don’t add any value, they impose a burden, much like a tax, on the efforts of those who do. This stifles the only kind of economic recovery that will be durable: increases in productivity that add value to extracted resources and finished goods.

There is a capital strike because the institutions and people that have the money, largely low-interest deposits from the Federal Reserve (nearly $2 trillion in four years), know that the economic recovery is fragile if not an outright mirage. The economic figures in the administration who enjoyed any credence, Paul Volcker and Larry Summers, are long gone, and the present Treasury secretary, Timothy Geithner, is a cigar-store Indian who never speaks, and the Federal Reserve chairman, Ben Bernanke, speaks in jargon and repetitively while thumbing his Keynes and his nose as he fights the Great Depression of the Thirties. There is no recovery because there is no confidence. Mere resumption of consumer spending will not solve the problem; it will assist the luxury and engineered-products industries of Western Europe and Japan, and do almost nothing for American manufacturing.

Until the free market, preferably with an assist from tax policy, comes to the aid of a natural restructuring to add value — along with increased domestic oil production and mid-level manufacturing; reforms in the crumbling education system and enervating legal system; a bipartisan rationalization of medical costs that are more than twice the per capita figure of those in other wealthy and sophisticated countries; the redesign of entitlements and uncontrolled programs to comply with the limits of affordability — until, that is, a day almost unimaginable in the current mindless campaign waffle and claptrap (by both candidates, and we are waiting for Paul Ryan; God save America from Joe Biden), there will be no real economic growth, no recovery, no confidence, nor much reason for any. Economics is half psychology and half Grade Three arithmetic, and the U.S. does not now have either half right.

As the percentage of people who receive benefit or work for the government (often a distinction without a difference) creeps toward a majority, opposite the number of those who gainfully work in the private sector, the American economy becomes ever more precarious. As George Shultz and the others wrote, the “fixes are blindingly obvious”: “the lowest possible tax rates on the broadest base, sufficient to fund the necessary functions of government on balance over the business cycle; sound monetary policy; trade liberalization; spending control and entitlement reform; and regulatory, litigation, and education reform.” The administration will hear no evil, and these are solutions that dare not speak their names. The reckoning will not wait four more years.

cbletters@gmail.com. From the National Review.