For President Obama, the era of big Government is not over. "It is true, we cannot depend on government alone to create jobs or generate long-term growth," he proclaimed in his first budget to Congress. But "at this particular moment, government must lead the way." A partial Obama to-do list, only some of it done, includes a remake of the health care and energy sectors; a $787 billion stimulus bill aimed, so far, mostly at public employment; takeovers of General Motors and Chrysler; a "pay czar" to cut salaries at bailed-out banks and a proposed new consumer-protection agency to police the nation's lenders.

When Obama took office, conventional wisdom held that the American people, jarred by a financial crisis they were routinely told was "the worst since the Great Depression,"...