Two Reasons Why This Isn't Just About the Debt Ceiling

We are all rightly focused on the efforts of Speaker Boehner and the Republicans to deal with the debt ceiling and deficit.  We are all caught up in the bargaining back and forth and whether one side or the other is losing the fight over gaining control over spending at the federal level.  Sometimes, though, we lose focus on the real issue — the federal government is too large, too ineffective and has burst well beyond its Constitutional limits into areas of our lives it was never intended to occupy.

From the pages of the Wall Street Journal this weekend, there are two striking examples of the Leviathan in action.

The first story that caught my eye described the mushrooming number of federal laws, and resulting convictions.  There has been a dramatic increase in the number of convictions of federal crimes over the past several decades — because the federal statutes often have lower burdens of proof that crime was committed.  The article points out

The U.S. Constitution mentions three federal crimes by citizens: treason, piracy and counterfeiting. By the turn of the 20th century, the number of criminal statutes numbered in the dozens. Today, there are an estimated 4,500 crimes in federal statutes, according to a 2008 study by retired Louisiana State University law professor John Baker.

but for me, the real kicker in the article was this:

There are also thousands of regulations that carry criminal penalties. Some laws are so complex, scholars debate whether they represent one offense, or scores of offenses.

Counting them is impossible. The Justice Department spent two years trying in the 1980s, but produced only an estimate: 3,000 federal criminal offenses.


A Justice spokeswoman said there was no quantifiable number. Criminal statutes are sprinkled throughout some 27,000 pages of the federal code.

In essence, our government has created a situation that is so out of control, it can’t even count the number of laws that we may be subject to a the federal level.  And worse yet, it doesn’t seem terribly worried about it.

How did we, who allow our government to rule through our consent, ever allow this to happen??

The second WSJ story that caught my eye was about the impact of home foreclosures.   The article talks about the crisis and the fact that Fannie Mae and Freddie Mac now currently have title to a huge number of homes:

These firms and U.S. banks currently own more than 500,000 foreclosed homes, and there’s another 2 million loans in some stage of foreclosure. The high share of distressed sales in many struggling markets is contributing to continued declines in home prices.

The article goes on to describe the thinking in Washington, from Mr. Bernake at the Federal Reserve and others as to what the resolution to the issue could be.  Not surprisingly, one proposal is to turn Freddie Mac and Fannie Mae in to landlords, allowing them to rent out the foreclosed properties.  This is really troubling on a lot of levels, but mostly because of Einstein’s famous observation:

We can’t solve problems by using the same kind of thinking we used when we created them.

But in Washington, it seems, they believe that turning the federal government into the largest landlord in the country is a good thing.

If the federal government cannot keep track of the number of criminal laws they have written, what’s the likelihood that they will be able to keep track of a million or so houses?  Why should we trust them to do so?

The article discusses the need for the government to intervene, in spite of the facts in the article that show that the private sector, through the traditional means of foreclosures and sheriff’s sales, is in fact absorbing the foreclosed properties, in many cases improving them, and then renting them to qualified families.  In short, the system is working, although maybe a bit slower than some would like.  There doesn’t seem to be a compelling reason for the government to be involved at all, except for some bureaucratic hand wringing that the market isn’t moving fast enough.

The obvious answer — empowering the private sector to move faster through incentives — isn’t even mentioned in the article.

So, while we worry about the drama in Washington over the budget, we should not take our eye off the real target — the size and scope of the federal government.  As candidate Ronald Reagan said “…government is the problem.”