"The ultimate result of shielding men from the effects of folly is to fill the world with fools." -- Herbert SpencerGMU Professor Walter Williams on the current financial fiasco:
How many times have we heard politicians, pundits and guardians of our news media say President Bush cut taxes, or Barack Obama is going to raise taxes? The fact is that presidents have no power to raise or lower taxes. They can propose tax measures or veto them but Congress has the ultimate power to raise or lower taxes since they can, with a two-thirds vote, override a presidential veto. The same principle applies to spending.Read the whole thing.
Presidents cannot be held responsible for budget deficits or surpluses. A president cannot spend a dime that Congress does not first appropriate. Given these plain facts, are politicians, pundits and media people - who persist in talking about a president cutting or raising taxes, or creating a budget deficit - ignorant, stupid or deceptive?
Many politicians and pundits claim the credit crunch and high mortgage foreclosure rate is an example of market failure and want government to step in to bail out creditors and borrowers at the expense of taxpayers who prudently managed their affairs.
These financial problems are not market failures but government failure. The Community Reinvestment Act of 1977 is a federal law that intimidated lenders into offering credit throughout their entire market and discouraged them from restricting their credit services to low-risk markets, a practice sometimes called redlining. The Federal Reserve, keeping interest rates artificially low, gave buyers and builders incentive to buy and build, producing the housing bubble.
The credit crunch and foreclosure problems are failures of government policy. In fact, what we see now is a market correction to foolhardy government policy. Congress' move to bail out lenders and borrowers who made poor decisions will simply create incentives for people to make unwise decisions in the future.