Guaranteeing the guarantees
Occasionally you hear things that you find hard to believe. That happened recently when I heard the 44th President of the United States giving a government guarantee for the warranties of cars purchased from General Motors and Chrysler.
It was the perfect metaphor for the unparalleled intrusion of government into the marketplace that accelerated with the 43rd President’s bailout of financial institutions deemed “too big to fail.” It is now at warp speed with the policies of the current administration. Our federal government is now favoring certain companies over others - - both in the financial sector and the automobile industry. These policies are ripe for conflict of interest, cronyism, and more manifestations of the cruel law of unintended consequences.
Guaranteeing the automotive warranties is perhaps a symbol for the new approach to governance in America. The federal government is lining up a bevy of “guarantees” that, if enacted, would significantly change our social compact.
One of the “guarantees” is in health care. President Obama and many of his allies in Congress want to move to a universal health care system in which every American is guaranteed health care coverage. While the plan is not designed to be a “single payer” system with the federal government making all of the payments for (and many of the decisions regarding) health care procedures, it could eventually default into such a system.
The cost for the health care plan the president advocates would be enormous. Greatly expanding health care coverage will place escalating demands on the providers within the system. When costs rise (and they will), the government no doubt will employ the same “cost saving” measure it uses for Medicare and Medicaid: reducing the amount of compensation paid to providers. That would likely drive more providers out of the system and could result in rationed care.
President Obama plans to raise the money for his health care initiative from a huge “hidden” tax on carbon emissions. His “cap and trade” approach would have the federal government “guarantee” success in the fight against “manmade” global warming by limiting the amount of carbon dioxide emissions permitted and taxing those that exceed the limits.
The president and his congressional supporters, disregard the fact that the amount of atmospheric warming has only risen 0.4 of a degree centigrade in the last 100 years and none in the last 11. They are on a jihad that could cost the U.S. economy as much as $1.9 trillion if this plan is implemented. The effect on jobs and economic growth would be so damaging that even many members of the “tax and spend” crowd in Congress are starting to put the brakes on this idea.
President Obama and many in Congress are pursuing a goal of “guaranteeing” a comfortable life for every citizen of the U.S. In their scenario, the government would see to it that every American will have a good job, a good education, high quality health care and a sound retirement. That is a noble goal that is easier to promote than to accomplish.
Historically, those ends are achieved by hard work, a diligent approach to studies and saving for the future. Our leaders in Washington should perhaps eschew the temptation to promise so many guarantees and instead concentrate on making the massive behemoth of the federal government do less and do it much better for the folks who pay dearly to finance it. Promises quickly turn empty fast when the models that deliver them don’t work and the cost for providing them brings with it the specter of fiscal insolvency.
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