Only when the subject of the conversation is government do most participants in that conversation treat seriously the notion that ensuring a debtors’ future solvency – and signalling to skeptical creditors that that debtor is indeed taking sensible steps to reduce its debt – requires that that debtor renege on its previous commitment to keep its borrowing from going above a certain level.

That’s the worst news you are likely to read today.

What does it take for an idea to spread from one to many? For a minority opinion to become the majority belief? According to a new study by scientists at the Rensselaer Polytechnic Institute, the answer is 10%. Once 10% of a population is committed to an idea, it’s inevitable that it will eventually become the prevailing opinion of the entire group. The key is to remain committed.

The WSJ has an editorial today entitled “Entitlement Nation“ in which it outlines America’s political history that has led to so many millions of us today receiving, even living off, payments of money, goods, or services from the government. The numbers are shocking: “50.5 million Americans are on Medicaid, 46.5 million are on Medicare, 52 million on Social Security, five million on SSI, 7.5 million on unemployment insurance, and 44.6 million on food stamps and other nutrition programs. Some 24 million get the earned-income tax credit, a cash income supplement.” The Journal rightly argues, “Congress has made so many promises to so many Americans that there is no conceivable way those promises can be kept.” It is because the current debt-ceiling negotiations are not even discussing the drastic changes to Medicaid, Medicare, and Social Security that would be needed to keep us fiscally afloat that they are really just playing pretend. We are still looking for the proverbial Adult In The Room.

I think that the growth of the Internet since 1994 (when the U.S. government turned it over to the private sector) is a counterexample worth examining. The government’s role in setting standards and promulgating regulations with regard to the Internet has been minimal (certainly in comparison with what it does off the Internet), and yet the Internet has done better than the more heavily governed economies around the world.
Those of you who know the history of telecom know that as of the 1990s there were top-down models. France’s Minitel was perhaps the most well known. The decentralized, lightly governed Internet crushed Minitel and other competitors. I think there is a lesson here that more people ought to think about.

It is an amazing thing that the press corps has taken this long to really pin the White House down on the simple fact that Obama is the one playing political games here, creating rules for others to follow while not following them himself. The public explanation for why he doesn’t want to put forward a plan of his own makes as much sense to me as the Korean-language instructions for a photocopy machine. All I know is that the White House says it doesn’t want to release a plan because it will be held accountable for having a plan, but no one should criticize the White House for not having a plan because they actually offered one verbally that was full of “specifics” nobody will specify and the Republicans are in the dark about. Oh, and even though the president insists that if we don’t raise the debt ceiling on August 2 — cats will sleep with dogs, disco will come back, Carrot Top will move into the apartment over your garage, the Chinese will put saran wrap over our toilet bowls — he insists that he will veto any plan he doesn’t like should it actually pass Congress. Of course, saying he will veto a plan makes it less likely to pass Congress and hence prevent Götterdämmerung. So there’s that. Meanwhile, Obama wants Americans to call Congress to express their support not for an actual approach but for some gauzy, poll-tested, bromides about “balance” and “fairness” and whatnot. Wasn’t this the guy who was supposed to be the next Lincoln?

Hispanics have lost wealth proportionately more than whites. I think it is pretty easy to connect the dots between government policy to expand home ownership and this outcome. As I said at the Senate banking committee, buying a home with little or no money down is gambling, and it’s wrong. Government policy promoted gambling on house prices, and minorities bore the brunt of this “help.”