Health Care, Education and Energy or Fix the Problem At Hand

Charles Krauthammer writes:

The logic of Obama’s address to Congress went like this:

“Our economy did not fall into decline overnight,” he averred. Indeed, it all began before the housing crisis. What did we do wrong? We are paying for past sins in three principal areas: energy, health care, and education — importing too much oil and not finding new sources of energy (as in the Arctic National Wildlife Refuge and the Outer Continental Shelf?), not reforming health care, and tolerating too many bad schools.

The “day of reckoning” has now arrived. And because “it is only by understanding how we arrived at this moment that we’ll be able to lift ourselves out of this predicament,” Obama has come to redeem us with his far-seeing program of universal, heavily nationalized health care; a cap-and-trade tax on energy; and a major federalization of education with universal access to college as the goal.

Amazing. As an explanation of our current economic difficulties, this is total fantasy. As a cure for rapidly growing joblessness, a massive destruction of wealth, a deepening worldwide recession, this is perhaps the greatest non sequitur ever foisted upon the American people.

At the very center of our economic near-depression is a credit bubble, a housing collapse and a systemic failure of the entire banking system. One can come up with a host of causes: Fannie Mae and Freddie Mac pushed by Washington (and greed) into improvident loans, corrupted bond-ratings agencies, insufficient regulation of new and exotic debt instruments, the easy money policy of Alan Greenspan’s Fed, irresponsible bankers pushing (and then unloading in packaged loan instruments) highly dubious mortgages, greedy house-flippers, deceitful homebuyers.

The list is long. But the list of causes of the collapse of the financial system does not include the absence of universal health care, let alone of computerized medical records. Nor the absence of an industry-killing cap-and-trade carbon levy. Nor the lack of college graduates. Indeed, one could perversely make the case that, if anything, the proliferation of overeducated, Gucci-wearing, smart-ass MBAs inventing ever more sophisticated and opaque mathematical models and debt instruments helped get us into this credit catastrophe in the first place.

And yet with our financial house on fire, Obama makes clear both in his speech and his budget that the essence of his presidency will be the transformation of health care, education and energy. Four months after winning the election, six weeks after his swearing in, Obama has yet to unveil a plan to deal with the banking crisis.

What’s going on? “You never want a serious crisis to go to waste,” said Chief of Staff Rahm Emanuel. “This crisis provides the opportunity for us to do things that you could not do before.”

Things. Now we know what they are. The markets’ recent precipitous decline is a reaction not just to the absence of any plausible bank rescue plan, but also to the suspicion that Obama sees the continuing financial crisis as usefully creating the psychological conditions — the sense of crisis bordering on fear-itself panic — for enacting his “Big Bang” agenda to federalize and/or socialize health care, education and energy, the commanding heights of post-industrial society.

Clever politics, but intellectually dishonest to the core. Health, education and energy — worthy and weighty as they may be — are not the cause of our financial collapse. And they are not the cure. The fraudulent claim that they are both cause and cure is the rhetorical device by which an ambitious president intends to enact the most radical agenda of social transformation seen in our lifetime.

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15 thoughts on “Health Care, Education and Energy or Fix the Problem At Hand

  1. I guess if the stock market turns around and goes back to 14000 Krauthammer will be wrong, but as of now he is dead on. Whether you are on the right or left, Krauthammer has written a piece that is hard to argue against. What Obama is doing reminds me of Bush. Bush used the crises and fear of 9/11 to launch the Iraq war. Obama is also connecting an unrelated political agenda to the crisis at hand.

  2. And don’t tell me about polls, Bush once had polling over 90%. Somehow or another the American public is a willing actor in the real estate disaster, hoping to make the easy millions, but now that it is over we are supposed to respect the majority’s opinion as something wise and smart? There is a reason I put sheep in my film.

  3. But, the sad truth of it is that Obama is doing just what he said he would do, and apparently what the sheep that voted for him wanted. He is leading us down the path to socialism and he is trying to share the wealth. The government is able to step in ‘to solve the problem’, but once they have stepped in, there is no guarantee that they will step out once the problem is solved, if ever.

    And share the wealth! Engineering programs and increasing taxes on the rich so they can help the poor and the irresponsible. Heck, there is even a congressman who is proposing putting a tax on stock trading, saying that the tax payer should not have to pay for the gambling on the stock market. Where do these people get their ideas?

    Many of the talking heads on TV are saying that the market is reacting to the fear of the unknown, the fear of a depression, job losses, foreclosures, the collapse of industry giants, etc. I believe that the market is trying to tell the government that it does not like the programs that are being put in place and that it does not want to go where it seems the administration is trying to take us.

    And why do they think that the American public is gullible and foolish enough to be led down a path from which there is no return? The time to act is not yet past, but it soon will be!

  4. The biggest question that I have concerning the financial crisis is, is the problem fixable or is the best solution to let the banks fail? As of now, I continue to see the Fed pumping money into the system, but the market and more specifically the financial institutions that have received Fed support continue in a downward spiral like fashion.

    And Rick, I’m on the same boat as you concerning higher taxation, but what I think is more problematic to the entire system and our way of life is the increasing amount of power that the Fed gov’t continues to gain. That’s probably the biggest move towards socialism, and it would be entirely unfair to say it began with Obama.

  5. All time periods in history are cyclical and human nature will never change. That is why we are in trouble now.

  6. Once again, a piece by the foremost American thinker today. Hammer is always spot on and a joy to read. Only thing I would add is that government is ALWAYS the reason for bubbles – can you name a bubble that was notdirectly or indirectly driven by government’s “good” intentions? Too much regulation created the easy money in the 90’s, too much regulation created the housing bubble (put Barney Frank and Chris Dodd on truth serum and they will admit it), as Clinton and the Democrats in Congress pushed (read: forced) Fannie and Freddie into accepting loans they otherwise should have. Such action always then creates a herd mentality (the sheep metaphor that Mike uses is perfect), and a bubble ensues. There is a white paper I read a few years ago that studied totally unregulated communities around the world, free of government manipulation, except for police/fire etc. The one common denominator they found in all is that there were NEVER ANY BUBBLES. So without government’s “good intentions”, bubbles like the draconian effect of housing, would have resolved themselves in the private markets.

  7. Michael, If the American public are sheep(I agree) then
    the Murdoch Street Journal readers and Fox viewers are
    sheep squared. Obama is like a daytrader, you have limited
    time to take the trade. Political capital doesn’t last forever. I haven’t seen this movie before, so I will wait to see how it ends before giving it a thumbs up or down. From the frency I see coming from the losers to denounce everything and anything be it fact or fiction, it looks like they are worried that it may work. Socialism scare alert, yea right. Eight years of fascism was great wasn’t it? Hows their 401k doing after bush? Don’t give me that crap about Obama causing the market to go down. How much did the market (NASDAQ) go down after bush stole the election? Did anybody blame him? I love these pundits who
    try to simplify some of the most intertwined events for their dumbed down readers and viewers. Here are a couple of links that I found.
    http://www.portfolio.com/news-markets/national-news/portfolio/2008/11/11/The-End-of-Wall-Streets-Boom
    http://www.ritholtz.com/blog/2009/03/2000-crash-bush-09-obama/

    PS. I have both of your books and would recomend anyone who lost money read them. bty, I was short or flat for the ride down, so I am not pissed at anybody. If you lost money in this crash, take it out on the first person you see in the mirror.

    bye,bye(oops) I mean later.

  8. Rick wrote”
    “I believe that the market is trying to tell the government that it does not like the programs that are being put in place and that it does not want to go where it seems the administration is trying to take us.”

    Isn’t it just possible that the market is reacting to the snow-ball effect of the sub-prime crisis instead?

    Using your argument, what was the market telling us about Ronald Reagan back in 1981-1982? The Dow was at 950 on January 20 1981. It fell to 776 in August 1982, a decline of 18.3%. Was that market telling us that it didn’t like Reagan’s policies and that it did not want to go where it seemed that Reagan was trying to take us. Using your logic, it was. And the market was wrong. Isn’t it just a tiny bit possible that the market is wrong again?

  9. Hopefully partisan hats can come off for just a second…Reagan and Obama don’t share any common view on economics. Entirely different ways of viewing the world. And of course the immediate retort is, “Well, look how bad it was under Bush!” I could care less about Bush. He was no free market capitalist and said so. If you turn out to be “right” Joe…then the new unfolding America will be a very government heavy type operation.

  10. Michael, you are correct. We would be in for a bigger government.

    But let me ask you this; I read the Krauthammer article. I understand the argument he is making. However, he is not addressing the one face facing thousands of small business operations such as mine. My company’s health care costs increased by 40% over last year. We have had double digit increases for as long as I can remember. We lost a contract to some company in France because they could afford to bid lower than we could. We have a harder and harder time competing with companies in Western Europe that do not have to deal with these skyrocketing health care costs that companies here in the States have to do.

    How would you or Mr Krauthammer help us compete better internationally? It feels like right now we are fighting we are fighting with our hands tied. Just saying that the government shouldn’t help us is not a solution.

  11. Ooops – posted too early.

    Just saying that the government shouldn’t help us is not a solution. It is not a solution because this would mean that we would permanently not be able to compete with foreign companies.

  12. 1. First, saying government is not a solution is indeed a solution. Read “Human Action” by Mises. Watch just about any video by Milton Friedman. If you don’t get educated how can you debate the subject?

    2. Second, where is there evidence that government involvement improves the ability to compete with foreign companies? Your remark sounds populist sweet, but carries no substantive weight. It is just feel good happy talk for those Americans in dead end jobs that eventually die off.

    3. Third, capitalism doesn’t provide for a government mechanism to protect against obsolescence. Instead of looking to government for protection (gee that has worked for the UAW and autos, eh?), time to reinvent yourself and or your business.

    4. Fourth, when it comes to health care the vast majority of America’s health issues are driven by the choices of what we put into our bodies. For example, why should my tax dollars go to pay for diabetes treatment for fat bodies who munched at McDonalds their whole life? Obesity is a choice. Rare congenital disorders are not the cause of spiraling health care costs.

  13. No one is going to help you compete internationally except yourself. If you can’t do it then time to move on. If you can’t compete, subsidies and government moat building is not the answer. That world sucks. I would personally never wake up and ask how someone can help me compete. Its up to me.

  14. Here is a health care solution for you: remove all candy, sodas, french fries, burgers, etc. from all public schools in America. Gee, why doesn’t that happen?

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