...[Drudge] hurts what we’re [the WH] trying to do but then it is very damaging to that individual person.

Just about the only reason I allign myself with Republicans over Democrats is because I believe that fiscal policy is way more important than social

What happens, though, if the price of a product is artificially set below its clearing price?

If music CDs usually sell for, say, $15, there will be a given number of people willing to purchase them at that price. However, if a third party decides to subsidize music lovers to the tune of $5 per CD, more people will decide they can afford to purchase CDs. Demand will increase. Delighted producers will make more of them. Sales will increase.

Before long, producers will realize that all those people willing to buy CDs at the unsubsidized price of $15 are paying less than they are willing to pay. So the producers will start increasing their prices, say to $17 at first, then $19, then $20. After all, with the subsidy, the consumer has to pay only $15.

But some consumers who have grown accustomed to buying cheaper CDs will have to cut back on their purchases or stop entirely. They are unhappy about seeing their living standard fall. So they demand a larger subsidy, joined by the producers, who face declining sales. If the buyers succeed in getting the “music they deserve” at the price they want, the whole cycle begins again.

So it is with government programs that mask the true costs of college for students. State and federal grants, guaranteed student loans, and direct subsidies to public colleges and universities lower the apparent price of obtaining a college education. This leads to a higher demand. College administrators then feel justified in increasing tuition and fees, realizing that many if not most students are subsidized in one form or another.

The cycle is born: raise tuition; give out more aid; raise tuition again.

Lesser Students

A side effect of this policy is that it attracts more poorly qualified and less motivated students who value higher education less than others who are willing to pay the full price. Colleges have to devote more resources to remedial programs, and students in these programs have a greater dropout rate.

Another problem is that since public administrators do not have to show a profit to stay in business, they are less concerned with the satisfaction of their customers. (Remember the last time you had to wait in an interminable line at the post office or department of motor vehicles?) Administrators also have incentives to increase their budgets needlessly. After all, increased “costs” translate (through a kind of self-fulfilling prophecy) into increased subsidies.


Read more: http://www.fee.org/the_freeman/detai...#ixzz2PQRqxtMc

JIMMY KIMMEL, HOST: Mayor Bloomberg is somebody that…

BILL MAHER: [Sighs] Ohh.

KIMMEL: Now, what do you think of his efforts to protect us from carbonated beverages and the like?

BILL MAHER: I don't like it. You know, I think it gives liberals a bad name. I really do. It makes liberals look like bullies who want to tell people what to do. And they never met a regulation they didn't like. I mean, obviously we do have a problem with child obesity. I don't want our children to be 99 percent Mountain Dew. But this is not the way to go about it.

You know, I mean, because, first of all, we all do something that hurts our health, you know? We all eat stuff we shouldn't. Probably the optimal food for primates is bread, fruit, lawn clippings and rain. But at a certain point that gets old. And we just don't want, I mean, we don't want to be a nanny state like this. I mean, you know, I don't know what Mayor Bloomberg has in mind, but there's something wrong about the seventh richest man in the world sitting in bed at night thinking, “You know what people shouldn't do? Drink too much Sprite. Let's make that a law.” That makes me want to join the Tea Party and marry Ann Coulter, you know, and that's not where I want to be.

As the chief financial officer of the nation’s second-largest state, even I have found it hard to get a handle on how much governments are spending, and how much debt they’re taking on. Every level of government is piling up incredible bills. And they’re coming due, whether we like it or not. Even in low-tax Texas, property taxes have risen three times faster than the inflation rate and four times faster than our population growth since 1992. Our local governments, meanwhile, more than doubled their debt load in the last decade, to more than $7,500 in debt for every man, woman and child in the state. In Houston alone, city-employee pension plans are facing an unfunded liability of $2.4 billion. But too many taxpayers aren’t given the information they need to make informed decisions when they vote debt issues. Recently I spent several months holding about 40 town-hall meetings with Texans across our state. Each time, I asked the attendees if they could tell me how much debt their local governments are carrying. Not a single person in a single town had this information.