RALEIGH – And now, an update on the status of Bailout Nation.

Let me first say that Bailout Nation is a bipartisan creation. Over the past eight years, President George W. Bush and both parties in Congress authorized federal budgets that spent too much, borrowed too much, and failed to trim the nation’s unsustainable entitlement programs – indeed, in 2003 they expanded Medicare, which already had tens of trillions of dollars in unfunded liability.

To his credit, Bush did try to introduce Social Security reforms after the 2004 election. Thanks to bipartisan opposition, he got nowhere. To his discredit, Bush did nothing to stop – and quite a lot to encourage – the expansionist monetary policies of the Federal Reserve after 2002, which along with boneheaded federal regulations and similarly inflationary policies by the world’s other central banks set the stage for the current recession.

Then came 2008 – and unmitigated disaster. Panicked and beholden to special interests, the Republican administration and the Democratic Congress approved a series of corporate bailouts and “stimulus” monstrosities. The Fed approved hundreds of billions of dollars in additional bailouts. Both major-party candidates for president, Barack Obama and John McCain, endorsed these measures.

By early 2009, when Obama took office, the federal government was already dangerously overextended, piling on massive new debts, imposing its mercurial will on private firms, and setting the stage for rampant monetary inflation in the coming years. The new president proceeded to make things drastically worse.

At the end of the 2008 fiscal year, on-budget federal outlays exceeded federal revenues by 15 percent, or $460 billion. Before the onset of the financial panic, the federal deficit had fallen below $200 billion. Unless Washington’s fiscal policies markedly change, we won’t see its like again for a long, long time.

First, the Obama administration rushed through an $800 billion “stimulus” bill that was little more than a left-wing wish list of new welfare, education, and health care spending, along with a vast bailout of state and local politicians and some poorly structured tax cuts. Then came the proposed Obama budget. According to the Congressional Budget Office, here’s what will happen if the president’s plan is fully implemented:

• Half the federal budget will be financed by borrowing in 2009, followed by annual deficits through 2019 in the 18-21 percent range.

• Publicly held federal debt will rise from the equivalent of 41 percent of the nation’s economy in 2008, already way too high, to 65 percent in 2010 and a staggering 82 percent by 2019. The only other time that the national debt has soared to (and above) such heights was World War II. Both the purpose of the federal expenditures and the nature of the international economy were very different then.

• These numbers significantly understate the federal government’s future economic impact because they leave out trillions of dollars in off-budget actions by the Federal Reserve, the FDIC, and other agencies.

Bailout Nation isn’t exactly a new model for economic organization. But it’s relatively new to America. Giving a president and Congress the authority to hire and fire CEOs, dictate product lines, set pay scales, restructure whole industries, and funnel billions of extra dollars to bankrupt private companies and bankrupt public entitlement programs will make our nation look more like a European-style social democracy than it ever has before.

Stagnation, frustration, and social discord are sure to follow.

Hood is president of the John Locke Foundation