Reagan was Right: Government is the Problem

I would argue that it is because of government that we have high gas prices, high health care costs, and the economic recession we currently find ourselves in. Let’s take them one at a time.

1. High Gas Prices: Oil companies make a 5 cent profit per gallon of gas sold. This is not a windfall profit. That profit comes from exploring, drilling, refining, shipping, and providing gas to the consumer. As a result of exploring, drilling, refining, shipping, and providing gas to the consumer, millions of people have good, well paying jobs. The federal government collects 18.1 cents per gallon of gas sold in taxes. This is a windfall profit. They did nothing to earn that money, they simply collect it. State and local gas taxes are even more. But despite collecting a windfall profit on gas, does the government do anything at all to help lower gas prices? No, it is just the opposite. They do everything they can to hinder oil companies from exploring and drilling for oil and natural gas. The federal government refuses to allow for more oil refineries and nuclear power plants to be built. The next time you hear a politician talk about the windfall profits of Big Oil, ask him how much of a windfall the government makes on a gallon of gas (by the way, the higher the gas price, the more taxes per gallon the government collects). “Big Oil” is not the problem, government is.

2: Health Care Costs: Why has healthcare costs grown so disproportionately to other sectors of the economy, such as hotel stays? The answer is that a gap has been created between the provider (doctor) and the consumer (patient). Who created this gap? If you guessed the federal government, you are correct! “The Health Maintenance Organization Act of 1973 required employers with 25 or more employees to offer federally certified HMO options” (Wikipedia, 2009). Medicare and Medicaid have further removed consumer from provider and elevated costs. A doctor who takes Medicare will only get reimbursed about thirty percent of what it costs, so he has to pass those costs on to others. TORT laws drastically promote frivolous lawsuits thanks to the federal government. As a result, malpractice insurance is a doctor’s highest cost. Insurance companies are not allowed to provide customizable plans nor are they allowed to sell across state lines because of the government. Insurance companies have to cover certain things, because of the government. We don’t have hotel insurance and anyone can find a hotel within their price range. Why is that? Because the consumer pays for it directly and, thus, he or she shops around and finds the best deal. I recently had surgery to repair a broken finger. The anesthesia bill was $1200.00 if I went through my insurance, in which case I would not have to pay a dime out of pocket. If I paid cash, it would have cost only $400.00! That is a 66% savings! If we would get the government out of it and slowly re-establish the patient/doctor relationship, heath care costs would dramatically decrease. Something like a tax credit for HSA’s, which would allow people to shop around for health insurance and health care (allow insurance companies to provide customizable plans and sell across state lines) and then let the people keep what they don’t spend each year, you would see heath care costs fall dramatically. Insurance companies are not the problem, government is.

3. Economic Crisis: The housing market bubble and resulting collapse was a direct result of the Community Redevelopment Act passed under Jimmy Carter and judiciously enforced by the Clinton Administration. Reforms urged by the Bush administration were blocked time and time again by Barney Frank, Chris Dodd, and other Democrats in Congress. The long short of it is the government, with the help of ACORN, forced banks to lend money to people who could not pay it back. So, they came up with sub-prime loans. Hence, the sudden increase in demand for homes and the resulting skyrocketing housing “values” which were really false values because they were based on a false demand. Then, when the sub-prime rates began to go up, people suddenly could no longer afford the loan they couldn’t really afford to begin with and the bubble burst. Suddenly, there were a lot of worthless assets on the market and banks and other financial institutions that held these derivatives were now on the verge of collapse. Once again, government was the problem.

Corporations are not the problem. They rise and fall as other companies come out with better products or are able to produce them at better prices or better marketing strategies. If the government stays out of it, the free market will always fix and correct itself. That is the nature of free markets. People will always look for deals and act in their own perceived best interest. The whole system acts as one giant machine with an infinite number of checks and balances on itself. But when government throws a wrench in the cogs, everything flies apart. Reagan was right. Government is the problem.

Wikipedia (2009). Health Maintenance Organizations. The Wikipedia Foundation. Retrieved January 28, 2010, from: http://en.wikipedia.org/wiki/Health_maintenance_organization.