An observer is entitled to wonder if this administration has taken leave of its senses. I have often written here that it might do better at some point, but it has been in office for 26 months and its policy record is a shambles. It has given precisely no indication of what it proposes to do about the trillion-dollar-plus deficits it is serenely racking up and projecting. The latest budget, in lockstep with its precedents, is a farcical mockery of prudent management: It forecasts no improvements, and such forecasts as there are are based on pie-in-the-sky euphoric assumptions that Treasury officials cannot render with a straight face.

Habitués of this column would be aware that I consider these deficits to be effectively increases in the money supply, since the money has been spent and infused into the economy, even though most of the bonds that backed the deficits of the last three years were acquired by the Federal Reserve. I don’t believe that this alters the eventual nature of the impact of the spending on the economy.

There is nothing to indicate that the administration has any will to pay the debt down, rather than just devalue the currency in which it is denominated, which it can do now that the Europeans and Japanese are essentially doing the same, after putting up a smokescreen of austerity, given that the three currencies have no value yardstick except in relationship to each other. This is not responsible policy, and it is not consistent with retention of the U.S. dollar as the world’s principal currency. The dollar is likely to remain so only because of the similar European and Japanese conduct, and the fact that no one can believe a word the Chinese say about their currency or economy.

The only hard currencies in the world by traditional standards — the Canadian, Australian, and Singapore dollars, the Swiss franc, and the Norwegian Krone — have a combined money supply of only about a quarter of what the United States’s M1 was before this administration and Federal Reserve discovered the joys of vertiginous “quantitative easing.” None of the Deficit Commission’s suggestions has resonated much with the administration that set it up and fobbed off queries about its own policies for almost two years by silently referring to its upcoming recommendations, like Richard Nixon campaigning in 1968 and saying on the subject of Vietnam, as he patted his breast pocket, “I have a plan.”

The retirement age, for Social Security and other purposes, has to be raised. Everyone knows it, and nothing is said about it. The secretary of the Treasury, Timothy Geithner, is the closest approximation of a cigar-store Indian in public life since the 80-year-old Democratic candidate for vice president in 1904, Henry Gassaway Davis. Soon the Treasury will be able to generate some revenue by issuing books modeled on the children’s series Where’s Waldo?, asking us to find Timothy Geithner and remember anything he has said.

The current-account deficit, which is inching back upwards toward its heights under the stratospheric innumeracy of George W. at $800 billion, is influenced most directly by the importation of foreign oil, and is thus closely bound to energy policy and the environment. It is hard to be sure if the administration has tacitly acknowledged that the global-warming alarm was a fraud, or is still padding furtively around, trying to pretend that its hour of “settled science” will come again. President Obama does not still seem to be trying to raise a $100 billion annual self-pauperization fund to pay to Mugabe and Chávez and Sudan’s genocidal Omar al-Bashir, to atone for the economic progress of the advanced countries. But the bovine-spongiform lunacies of cap-and-trade and mass-subsidized windmill construction are still being pushed through the Environmental Protection Agency by executive fiat.

We are still on the same shaming treadmill. Countries that finance almost all the extremist Muslim activities lower the oil price at the appearance of a freshet of American purposefulness, and raise it again when America sinks back into its petro-torpor. The administration, still reeling from the BP oil spill, refuses to open up offshore activity, incentivize a sizeable move to natural gas, or reduce imports by raising the price through taxes, which, as long as it were combined with other measures, would be a justifiable current-account- and budget-deficit-reduction measure, as well as a national-security move that has been overdue since shortly after Richard Nixon (it is disturbing how current events put one in mind of the least salubrious aspects of the Nixon administration) proclaimed Operation Independence, to reduce energy imports in 1973 and the nation rushed to impeach him instead.

The administration has done well in Afghanistan and not badly in Iraq, and deserves credit for that. But the mollycoddling of the medieval regime in Iran is completely inexplicable. The United States failed to engage the government once Ahmadinejad was reestablished, contrary to the clear wishes of the great majority of Iranians, as the ventriloquist’s dummy for the theocracy, racked as they are by capricious pseudo-legal despotism, 30 percent unemployment, and double-digit inflation. And as his Islamo-Ruritanian junk wagon of a government groans toward a nuclear military capability, the U.S. answers with passivity, entreaties for more categories of ineffective sanctions, sober warnings that a military option against Iran would not work (of course it would, though it might have to be repeated every few months), missile defenses for uneasy allies who have already had a promised system snatched away from them and downsized, and a convenient disarmament plan to scale back America’s deterrent military capacity.

No part of this policy has ever made any sense, and to top it off, after a good deal of sanctimonious claptrap about the evils of Qaddafi, the administration is now grimly saying that it would be a real challenge to operate a no-fly zone in Libya, or give useful assistance to the apparent 80% of Libyans who want to divest themselves of their leader. Jefferson and Madison, pacifists though they were, managed a better showing on the Shores of Tripoli 200 years ago than the incumbent has. President Obama is allegedly expressing to his entourage his preference for “organic revolutions.” As he observes the unfolding massacre in Libya, he might wish to consider that by that method, the French would have ignored Benjamin Franklin’s masterly diplomacy and left Washington to proceed organically in an endless and indecisive civil war; in such matters, a knowledge of history is more useful than of social science.

The one useful development in this dismal affair is that, as Europe is forced to impose some economic disciplines on itself, and as the Islamophobic Mme. Le Pen pulls ahead of President Sarkozy in the French polls, it may be that the combination of the temporary quasi-abdication of the United States as a Great Power, the failure of the stagnant excessive-benefit Euro-state, and the endless provocations of militant Islam are prodding Europe back into some degree of effectiveness. The leadership deficit in this country over the last 15 or more years has created a vacuum that friendly states are still better able to fill than hostile ones, so complete was the American-led victory in the Cold War.

The health-care debacle is too notorious to require being labored again here, but the revelation that the Republican plan to starve Obamacare of funds has been frustrated by a combination of pre-funding $105 billion in the initial 2,900-page bill, and granting the HHS secretary vast discretion to fund it on her own authority, seems to compound the measure’s inherent failings with fiscal indestructibility, a usurpation of what are generally thought to be the rights of the legislature. On this basis, Oliver Cromwell could have extended the Long Parliament to the present time. The excellent Congresswoman Michele Bachmann has brought this to light, and the implications are that the legislative process will henceforth have one window only on new bills and measures, and after that, change will depend on uprooting and disposing of whole governments, legislative and executive, on Election Day. As America is ever more passive abroad, it seems to slide into deeper conflict in its own capitols.

This trend has been well aired in Wisconsin, where the Democratic party has, in camp and nostalgic fashion, returned to the joys of organized labor. In an era when the work force and the management, lenders and shareholders all have effectively the same interest — productivity and quality of work — organized labor has been sliced back to the least efficient, least necessary, least competent sector of the entire labor market: the public-service unions. This is the withered detritus of such great men as Samuel Gompers, George Meany, and Lane Kirkland: Homeland Security people conducting intrusive searches of the innocuous; prison guards topping up their incomes smuggling to the higher-income and -IQ inmates; the teachers’ unions that have propagated ignorance where education long prevailed; and the unindustrious anthills of paper-pushers and issuers of insulting and erroneous ukases on behalf of the agencies of the immense infestation of government riveted on America’s back. In identifying itself wholly with the ethos, work habits, and intellectual effervescence of this group, the Obama Democratic party has engaged in a romantic trek to its sources.

Once again, Mr. Nixon had the right diagnosis, if we conflate two of his famous comments: “No power on earth can defeat or humiliate the United States except the United States,” and America has become “a pitiful helpless giant.” The process is reversible.

This originally appeared in the National Review online.