Government is the solution


"Government is not a solution to our problem, government is the problem."

 

Ronald Reagan said that. People cheered. People revered him. He was so wise.

David Letterman's show even uses that pronouncement in its regular feature, "Great Moments in Presidential Speeches." The point is to contrast soaring presidential rhetoric of the past, like that clever profundity from Reagan, with yet something else ridiculous that George W. Bush has uttered lately.

As happily as I'd take Reagan back after eight years of George W., and as loath as I am to correct a man after he's gone, I'm going to have to call the Gipper on that one.

The problem is private sector greed, irresponsibility and incompetence. Government is the solution.

We're fast becoming a nation in which health care isn't socialized, because that would be wrong, but high finance is, because that's right.

In the past few days the deficit-riddled federal government, drawing on its dwindling Chinese line of credit, has anted up or pledged $30 billion to bail out the financial speculators called Bear Stearns; up to $205 million to fortify blundering mortgage guarantors Fannie Mae and Freddie Mac; and now $85 billion in a loan by which the Federal Reserve will take over, in effect, the nation's largest insurance company, the American International Group.

The AIG managed to make a mess of the sound actuarial advantages of insurance by branching into financial instruments called derivatives. Those are lottery tickets with lipstick on them.

These derivatives were based on mortgage-backed securities, and, as we all now know, our captains of high finance have brought us nearly to ruin by lending too much money for too long for too much house to people with too little chance of making the payments.

What you do is this: You make a bunch of irresponsible mortgage loans. You get somebody else to buy or guarantee the loans, and you collect the fees. The buyers move into a big house they can't afford, with more money owed than their equity can soon, if ever, provide.

Then you take these mortgages and put them together and sell the bundles as securities. You end with this spectacular house of cards. And it will never crumble, because the U.S. government -- using the deficit spending it won't dare tap to subsidize and extend health insurance to more than 50 million of its citizens -- has got you covered.

We may need to move Wall Street to inside the Beltway, simply for the government's convenience in its statist control of it.

You probably think this is intended to be critical of government's takeover of these financial institutions. Quite the contrary.

It is entirely true that sometimes private entities can become so expansive and vitally interwoven into our economy that, upon reasoned consideration of the rampant painful repercussions, they simply cannot be permitted to go under.

What this is intended to do is call our hand on the hollow nonsense of our simplistic rhetoric, and, in so do doing, comment on our hypocrisy and priorities.

We call government the problem, bashing it merrily, until we so make a mess of things that we implore government to save us because no one else can or will. We say government must stay out of health care because nothing makes a bigger mess than government.

Maybe it's true that nothing makes a bigger mess than government. But there's something that makes at least as big a mess. That would be our high-finance industry.

And when there's a big mess all around, it's the government, having captive taxpayers, that gets tapped for the fix.

Why do we bash our savior so?

Maybe the problem for health care is that it's not yet quite a big enough disaster for statist takeover. But it's getting there.

 

John Brummett, an award-winning columnist for the Arkansas News Bureau in Little Rock, is author of "High Wire," a book about Bill Clinton's first year as president. His e-mail address is jbrummett@ arkansasnews.com.

 

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