In re-appointing Bernanke to another four year term as Fed chairman, President Obama completes his embrace of bailouts, easy money and deficits as the defining characteristics of his economic agenda.

Bernanke, along with Secretary Geithner (then New York Fed president) were the prime movers behind the bailouts of AIG and Bear Stearns. Rather than “saving capitalism,” these bailouts only spread panic at considerable cost to the taxpayer. As evidenced in his “financial reform” proposal, Obama does not see bailouts as the problem, but instead believes an expanded Fed is the solution to all that is wrong with the financial sector. Bernanke also played a central role as the Fed governor most in favor of easy money in the aftermath of the dot-com bubble — a policy that directly contributed to the housing bubble. And rather than take steps to offset the “global savings glut” forcing down rates, Bernanke used it as a rationale for inaction.

Perhaps worse than Bush and Obama’s rewarding of failure in the private sector via bailouts is the continued rewarding of failure in the public sector. The actors at institutions such as the Federal Reserve bear considerable responsibility for the current state of the economy. Re-appointing Bernanke sends the worst possible message to both the American public and to government in general: not only will failure be tolerated, it will be rewarded.

Getting into Iraq was easy. Fighting the war was expensive in lives and money. Getting out will cost more cash.

In fact, the Pentagon figures that taxpayers will have to spend tens of billions of dollars to bring home or transfer the equipment strewn about Iraq. According to Jason Ditz:

A lot of the cost is going to depend on what the military decides to do with the various items it required to occupy the nation and then fight an insurgency for several years with well over 100,000 US troops. Some of the gear will be shipped back to the US, others will be sent to Afghanistan for the ongoing war there. Still others will just be given to the Iraqi government so they don’t have to deal with the other two options.

The US has spent over two thirds of a trillion dollars on the war in Iraq so far (and this is only figuring the direct costs), but while President Obama has already started projecting dramatically lower costs in the near future as the war “winds down” (which so far hasn’t translated to actually removing serious numbers of troops from the nation), the costs just of hauling “mountains of equipment” out of Iraq show that nothing the military does is done on the cheap, not even ending a war.

So much for the occupation that was supposed to pay for itself!

How could a country that claims to abide by principles like constitutional government and the rule of law do anything other than investigate credible claims of official abuse?

News that Attorney General Holder will appoint a prosecutor to investigate such claims will only surprise or upset people who have lost track of our national values.

CIA Director Leon Panetta doesn’t help the cause by issuing a statement to the CIA staff saying, “America is a nation at war.” Whether we are or not, that lullaby-in-reverse — reassuring CIA staff with a poke at the panic button — would seem to ratify expediency over professionalism.

Last month I blogged about attempts by various state governments to regulate yoga instructors by forcing them to obtain a costly government license. Today the Washington Post has a story on Virginia’s efforts to place the government boot on the necks of its yogis:

The State Council of Higher Education for Virginia recently declared that studios offering yoga teacher instruction must be certified. That involves a $2,500 fee, audits, annual charges of at least $500 and a pile of paperwork.

Let’s call this what it is: extortion. And if you still harbor the illusion that bureaucrats don’t sit around thinking up ways to pilfer more money from productive members of society, think again:

In Virginia, yoga teacher training first hit the state’s radar late last year after a state employee conducting school audits happened upon an advertisement, said Linda Woodley, the higher education council’s director of private and out-of-state postsecondary education. Before that, Woodley said, ‘I was not aware they existed, and they were not aware we existed.’

Well congratulations, Ms. Woodley — the yogi community now knows you exist.

Studios can teach lotus poses to as many clients as they like, state officials said. But teacher training programs, which the state views as similar to dog grooming, massage therapy or other classes intended to prepare someone for a job, must be certified under state law. (For instance, Simply Ballroom Dance Teachers Academy, Danny Ward Horseshoeing School and Jiggers Bartending School are certified.)

Virginia citizens should sleep sound at night knowing ballroom dance teachers, horseshoers, and bartenders are government certified.

Woodley said it’s also about ensuring that students who plunk down cash for training programs that can run a few thousand dollars are getting their money’s worth. Plus, she said, being listed on the government registry will give schools a marketing tool, like a Good Housekeeping seal of approval.

Good Housekeeping seal of approval? Ladies and gentleman, this is the mentality of the state bureaucrats that the federal government has tasked with “stimulating” the economy with YOUR money.

In a four-part series on the New York Times Economix blog, Harvard economist Edward Glaeser scrutinized high-speed rail and concluded that the benefits are overwhelmed by the costs. After making generous assumptions regarding the costs, user benefits, environmental benefits, and effects on urban development, Glaeser concludes that all the benefits of high-speed rail would still be less than half the costs.

As Washington Post writer Robert Samuelson observes, the Obama administration’s vision of high-speed rail is “a mirage. The costs of high-speed rail would be huge, and the public benefits meager.” Yet even Samuelson falls victim to the common assumption that high-speed rail “works in Europe and Asia” because population densities in those places are higher than in the United States.

The truth is that high-speed rail doesn’t work in Europe or Asia either. Japan and France have both spent about as much on high-speed rail as they have on their intercity freeway systems, yet the average residents of those countries travel by car 10 to 20 times as much as they travel by high-speed rail. They also fly domestically more than they take high-speed rail. While the highways and airlines pay for themselves out of gas taxes and other user fees, high-speed rail is heavily subsidized and serves only a tiny urban elite.

Obama uses the fact that France, Japan, and a few other countries are racing one another to have the fastest high-speed trains to argue that we need to join the race. That’s like saying we need to spend billions subsidizing buggy whip or horse collar manufacturers or some third-world country will beat us in those technologies. The fact is that high-speed trains will never be as fast as flying on long trips and never be as convenient as driving on short trips, and there is no medium-length trip in which high-speed rail can compete without heavy subsidies.

The rail advocates go ballistic whenever anyone questions their fantasies, mostly engaging in ad hominem attacks (“you must be paid by the oil companies!”) or accusing skeptics of lying about rail. The reality is that Glaeser (like me) “almost always prefer trains to driving.” If anything, he was too generous in many of his assumptions about high-speed rail.

For example, Glaeser built his case around a hypothetical high-speed line between Dallas-Ft. Worth and Houston, the nation’s fifth- and sixth-largest urban areas which together house close to 10 million people and are located about 240 miles apart, supposedly an ideal distance for high-speed trains. If the numbers don’t work for this market, how are they going to work for Eugene-Seattle, Tulsa-Oklahoma City, New Orleans-Mobile, St. Louis-Kansas City, or any of the other much smaller city pairs in the Obama high-speed rail plan?

The rail nuts don’t want to hear Glaeser’s (or Cato’s) numbers because they fantasize the Field of Dreams “build it and they will come” myth; that building rail will “create the demand for the rail lines.” That may have been true in nineteenth-century America, when no alternative forms of transportation could compete with rail. But it wasn’t true in twentieth-century France or Japan (where heavily subsidized high-speed rail carries only 4 to 6 percent of passenger travel), and it won’t be true in twenty-first-century America.

Building high-speed rail will be like standing in the chilly vestibule of an Amtrak train in mid-winter Chicago and burning million-dollar bills to keep warm. But that’s what happens when you base your transportation policies on a slogan from a Kevin Costner movie rather than on real data.

The Bureau of Economic Analysis has released its annual data on compensation levels by industry (Tables 6.2D, 6.3D, and 6.6D here). The data show that the pay advantage enjoyed by federal civilian workers over private-sector workers continues to expand.

The George W. Bush years were very lucrative for federal workers. In 2000, the average compensation (wages and benefits) of federal workers was 66 percent higher than the average compensation in the U.S. private sector. The new data show that average federal compensation is now more than double the average in the private sector.

Figure 1 looks at average wages. In 2008, the average wage for 1.9 million federal civilian workers was $79,197, which compared to an average $50,028 for the nation’s 108 million private sector workers (measured in full-time equivalents). The figure shows that the federal pay advantage (the gap between the lines) is steadily increasing.

Figure 2 shows that the federal advantage is even more pronounced when worker benefits are included. In 2008, federal worker compensation averaged a remarkable $119,982, which was more than double the private sector average of $59,909.

What is going on here? Members of Congress who have large numbers of federal workers in their districts relentlessly push for expanding federal worker compensation. Also, the Bush administration had little interest in fiscal restraint, and it usually got rolled by the federal unions. The result has been an increasingly overpaid elite of government workers, who are insulated from the economic reality of recessions and from the tough competitive climate of the private sector.

It’s time to put a stop to this. Federal wages should be frozen for a period of years, at least until the private-sector economy has recovered and average workers start seeing some wage gains of their own. At the same time, gold-plated federal benefit packages should be scaled back as unaffordable given today’s massive budget deficits. There are many qualitative benefits of government work—such as extremely high job security—so taxpayers should not have to pay for such lavish government pay packages.

Update: I respond to some criticisms of this post here.

Update 2: Compensation data for federal workers vs. other industries here.

Update 3: In September, the government revised the data for private sector workers. On 9/30/09, Figure 1 and the related text were updated to reflect this change.

Following my and Dan’s blog posts last week on the continuing lining of Big Sugar’s pockets at consumers’ expense, the Washington Post and Wall Street Journal have written editorials on the scam. I commend both of them to you, although I could have done without the WaPo’s moralizing on the “social benefits” of high sugar prices.