Robert J. Samuelson

The Age of Austerity

We have entered the Age of Austerity. It's already arrived in Europe and is destined for the United States. Governments throughout Europe are cutting social spending and raising taxes—or contemplating doing so.

How Our Budget Policies Are Hurting Families

Among the government's most interesting reports is one that estimates what parents spend on their children. Not surprisingly, the costs are steep. For a middle-class, husband-and-wife family (average pretax income in 2009: $76,250), spending per child is about $12,000 a year. Assuming modest annual inflation (2.8 percent), the report estimates that the family's spending on a child born in 2009 would total $286,050 by age 17.

Shale Gas: Hope for Our Energy Future

You probably have never heard of oilman George Mitchell, but more than anyone else, he has changed the global energy outlook. In 1981, Mitchell's small petroleum company faced dwindling natural gas reserves. He proposed a radical idea: drill deeper in the company's Texas fields to reach gas-bearing shale rock more than a mile down.

Profits Are Back, but Hiring Isn't

Judging from corporate profits, we should be enjoying a powerful economic recovery. During the recession, profits dropped by about a third, apparently the worst decline since World War II. But every day brings reports of gains. In the second quarter, IBM's profits rose 9.1 percent from a year earlier. Government statistics through the first quarter (the latest) show that profits have recovered 87 percent of what they lost in the recession.

Massachusetts Offers Preview of Obamacare

If you want a preview of President Obama's health-care "reform," take a look at Massachusetts. In 2006, it enacted a "reform" that became a model for Obama. What's happened since isn't encouraging. The state did the easy part: expanding state-subsidized insurance coverage. It evaded the hard part: controlling costs and ensuring that spending improves people's health.

Financial 'Reform' or Revenge?

It is a myth to think that the new financial-"reform" legislation, assuming it passes the Senate, will insulate us for all time against financial panic and crisis. Great crises of the sort that occurred in 2008 and 2009 are usually separated by many decades, and so it will be hard to determine how much real protection the law provides. But the underlying ingredients of financial panics are always the same—uncertainty, ignorance, and fear—and no law can permanently abolish these.

Obama's Energy Pipe Dreams

Just once, it would be nice if a president would level with Americans on energy. Barack Obama isn't that president. His speech the other night was about political damage control: his own. It was full of misinformation and mythology. Obama held out a gleaming vision of an America that would convert to the "clean" energy of, presumably, wind, solar, and biomass. It isn't going to happen for many, many decades, if ever.

The Reluctant Recovery

It's psychology, stupid. Not since World War II has an economic recovery been so hobbled by poor confidence. Every recession leaves a legacy of anxiety and uncertainty. But the present residue is exceptional, because the recession was savage and--more important--its origins (hous­ing bubble, financial crisis) were unfamiliar.

Overconfident and Underregulated

Cost-cutting by BP, careless rig operators, and lax regulators have all been fingered as plausible culprits in the blowout. President Obama has appointed a commission to investigate the causes. There will be extensive analyses. But the stark contrast between the disaster's magnitude and the previous safety record points to another perverse possibility.

How to Create More 'Poor'

The existing poverty line could be improved by adding some income sources and subtracting some expenses. But the ad­min­istration's proposal for a "supplemental poverty measure" in 2011—to complement, not replace, the existing poverty line—goes beyond that.

Making Europe Safer

The European Union's decision to rescue Greece and to create a massive financial safety net for its other vulnerable debtors is a momentous event—though success is hardly guaranteed. Contrary to popular belief, the main purpose was not to save Greece but to prevent another financial panic, à la Lehman Brothers in late 2008, that might plunge the world economy back into recession. Sagging stock prices and a falling euro are warning signs.