Tuesday, January 27, 2009

Will 1/27/09

Grand, Yes. Bargain, No.

My take on George Will's latest. His column was published in the Washington Post.

Summary: Obama's "Fiscal Responsibility Summit" is starting to look like a giant spending spree. Will's example of "mission creep" is the recent House passage of the SCHIP program. In 2007 Bush called for a $5 billion increase. Democrats in the House passed $50 billion increase. The Senate compromised at $35 billion. This year the House just doubled that.

Fiscal Responsibility now appears to mean massive new spending.


. . . this SCHIP expansion is sensible -- if your goal is quickly to get as many people on public coverage as possible and to have children grow up thinking that it is normal for them to get their health insurance from the government. That is the goal.

My Views: With the bailout reaching $1 trillion, the mental block of spending large amounts of money seems to be breaking down. Commentators of all stripes seem to be accepting new, large spending as inevitable.

This mirrors the thinking in the business sector. There was the dot-com bubble a decade ago. Then there was the lending bubble of a year ago. During the times of both of these bubbles, conventional wisdom held that these kinds of practices were the new normal. People talked of changing conditions and changing times justifing the changing business practices.

The trouble with that thinking was that while times change, the laws of mathematics and of finance do not. The practices of the businesses that operated within these bubbles failed to stop the bubbles from bursting. The one idea that the nation should have learned was that this was inevitable. The laws of mathematics and hence, the laws of finance cannot be changed.

This is also true of the governmental sector. However the conventional wisdom may support massive new spending, the government must still pay its bills. - Else, bad things will happen.

George Will almost didn't make it as a syndicated columnist. His style was considered too erudite for a general audience.

Whatever one thinks of his views, read his work for use of language and for how he marshals facts and uses logic.

Here's his Wiki bio.

His latest book is at the right.