Wotka World Wide

Sunday, January 03, 2010

David Ignatius, on the "Californiazation" of America:

What many state governments want is a federal bailout, which would free them of the consequences of overspending. It's a classic case of what economists call "moral hazard" -- in that the bailouts would allow the irresponsible behavior to continue, rather than force a halt. One prominent economist argues that if the states were countries, the International Monetary Fund would grant relief only if it came with conditions that imposed fiscal discipline.

So will Washington become like California? Some would argue that has already happened, with the fiscal disaster masked by the federal government's ability to sell its massive debt cheaply and print money to pay its bills. And you see in Washington the same dysfunctional political process that's at work at the state level -- Democrats who get elected by delivering services and Republicans who get elected by delivering tax cuts.

The test case this year for Californiazation will be the health-care bill. Democrats' desire to provide universal access to care is right, but the country has to pay for it. Indeed, we have to lower the cost of delivering health care so that paying this bill won't be a crushing economic burden.

We should judge President Obama and Congress this year on whether they're paying for the promises they make -- and providing real reform that cuts costs, rather than another political goody bag.

He sure makes some good points. Not like anyone is listening.


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