Captains of Today’s Titanics

We’ve noted previously our appreciation for the libertarian Cato Institute as well as the fact that we disagree with them about half of the time. However, when it comes to the issues Cato is exactly right about (that half we agree upon), few organizations articulate them more effectively and succinctly.


What follows are excerpts from recent Cato Daily Dispatches. The title used above is borrowed from an article by Richard Rahn, a Cato senior fellow – surely the failure of both Republican elected and party officials in recent years has earned them the description of Captain of a Titanic.


Back on August 5th, the Cato Daily Dispatch included a couple of paragraphs under this headline:


Chief Disregarded Signs of Problems at Freddie Mac


One commentator pointed out that the intellectual argument for fixing the growing problems at Fannie and Freddie was made about a decade ago. Despite constant warnings from many experts every year since, no corrective action was taken. That, of course, is the case on nearly every other area of policy reform in our nation – from school reform to tax simplification to health care to social security.


The Cato Daily Dispatch quoted Rahn explained what was evidently a big part of the problem:


“Fannie and Freddie became very big donors to the political campaigns of many leading Democrats and Republicans in Congress, and in exchange were not required to meet the same strict financial regulatory requirements as other companies. Their senior managements and boards were stuffed with very highly paid political appointees – some of whom turned out (surprise, surprise) to be both corrupt and incompetent.”


It’s also not a surprise that similar “legal corruption” and conflicts of interest are at the heart of every other barrier to reform.


Back on August 1, 2008, the Cato Daily Dispatch included a piece with this heading:


State and Local Spending Outpaces Revenue


Here’s the entire first paragraph that followed:


“State and local government spending has been rising three times as fast as revenue amid warnings from governors that their finances are nearing crisis stage,” reports USA Today. “As many Americans face stagnant wages, high gas prices and job uncertainty, new government figures show that state and local governments boosted spending 7.8% in the second quarter compared with 2007 while revenue rose 2.5%. Government is on a hiring binge, too, even as private-sector jobs disappear.”


Elected Republicans at the state and local level who still have eyes to see with and ears to hear with need to take this information in and meditate deeply upon it. Cato’s Chris Edwards wrote in “State Government Spending and Borrowing Is Soaring,” that the Department of Commerce’s just released second quarter national income data revealed that:


1) State and local tax revenues have grown about 2.1 percent over last year, with personal income taxes up 4.2 percent and property taxes up 4.3 percent. (I say ‘about’ because I estimated the missing data item for corporate tax revenues).

2) State and local total expenditures have soared 6.8 percent over last year. … The gap between spending at about 7 percent and revenues at about 2 percent is curious, given that state governments are supposed to balance their budgets each year. The explanation, according to the Commerce data, is that state and local government borrowing is soaring.



Any elected Republican who doesn’t believe that something can be done to address the problem of ever increasing taxes and out of control spending should join the Democratic Party as soon as possible.


Also in the August 1st “Dispatch” was the following higher education Econ 101 lesson:


Higher Education Act Reauthorized


“Congress yesterday passed a major overhaul of federal higher-education programs aimed at expanding financial aid and bringing greater clarity and disclosure to the student loan process,” reports The Washington Post. “By overwhelming bipartisan votes, the House and Senate approved a five-year reauthorization of the Higher Education Act. It will nearly double the maximum amount of Pell Grants by 2014 and will require the Education Department to collect and publish better data on soaring tuition costs at universities and colleges.”

In “Higher Math,” Neal McCluskey, associate director of Cato ‘s Center for Educational Freedom and author of Feds in the Classroom: How Big Government Corrupts, Cripples, and Compromises American Education, writes: “On Tuesday night, a congressional conference committee passed legislation to reauthorize the Higher Education Act (HEA) that if enacted – and it seems it will be – will drive up both the price of college and your tax bill. But don’t bother trying to nitpick it; the legislation is 1,158 pages long. .. It is doubtful many members of Congress will read even a little of the bill before it’s given a final yea or nay. And what’s the significance of 452 billion, you ask? In dollars, it’s the newly projected size of the federal deficit, a huge shortfall to which the new HEA will only be adding digits.”


We’ll know we have a real Republican Party in Illinois when elected Republican members of the General Assembly begin to get serious about addressing our bloated and wasteful state universities. We’ll know we have a real Republican Party in Washington, D.C., when we no longer read about “overwhelming bipartisan” support for such foolishness.


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