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Politicians are good at making promisses.
Strong and reliable protections for our consumers.
Our nation has made a promise to America's seniors.
But don't the central planners see the unintended consequences of their laws?
Like cash for clunkers.
Does this make sense?
Sure! It will stimulate the auto business!
Stimulate! Stimulate!
Stimulate!
$9.50 an hour.
Politicians often say "we need a higher minimum wage".
It's a fairness issue.
But it would kill her job.
I think I was making a good amount of money.
Empower women.
Title IX was meant to create equality.
What it ends up doing is lessening the opportunities for men.
We don't need you lawyer tyrants.
The politicians' laws led protesters bully banks into giving risky loans.
Isn't that kind of like extortion?
It's the law.
Politicians promisse new stadiums will create jobs.
But do they?
It's handing money from your right hand to your left,
and declaring "I'm rich!"
Don't you have some place else to go?
Did you know that the government wants you in the alpaca business?
And in a house you can't afford.
Honey, there's $8,000 in here.
And what's the dumbest boondoggle?
Ethanol?
...has been a case study in the law of unintended consequences.
You're a parasite, feeding off the taxpayers.
Maybe the biggest boondoggle is...
Health care for all americans.
Tonight, my top 10 list of...
politicians' good intentions gone wrong.
And now, reporting from our nation's capital, John Stossel.
The politicians always say they'll fix things.
But their laws have unintended consequences.
Let's count them down.
We begin with promisse number 10.
Government can, and should, help the car makers.
How? I know!
Let's destroy some cars!
Does this make sense?
Sure! It will stimulate the auto business!
That was the idea behind cash for clunkers.
Cash for clunkers? We will pass cash for clunkers.
Democrats and some republicans voted for it.
Words are wrote to be a part of jump starting the economy.
For two months, last summer, the administration paid people...
$3,000 if they had their older car crushed and buy a new one.
They say that stimulates the economy.
That program was good for automakers, it was good for consumers...
...good for the suppliers, it is good for workers...
Gee, I guess I should destroy more stuff!
"Cash for clunkers" may be the dumbest policy ever.
The Cato Institute's David Boaz and edmunds.com CEO Jeremy Anwyl...
are among many who point out...
the increase in cars sold during the cash for clunker month...
simply stole sales from months before and after.
What's missing is that most of the cars that were sold in all the program...
would have been sold anyway.
Oh, it was successful.
Progressives, like Christian Dorsey, of the Economic Policy Institute...
point out that cash for clunkers did increase car sales.
But that just steals it from future years.
Well, it does, to a certain degree.
That's what stimulus, in some ways, is all about.
To get free money to get a new car.
Of course there were the usual government screw-ups.
Federal government can't process a simple rebate.
Then cash for clunkers ran out of money.
...the Department of Transportation telling law makers that...
they may need to suspend the program.
Instead, Congress just appropriated more of your money.
We are not discontinuing the program.
And more cars were destroyed.
More success!
How far can I carry this principle?
The guitar business is struggling.
I know what to do.
Let's destroy some guitars!
The economy is struggling.
Sales are down.
We need to stimulate the economy!
This will do it!
By destroying some things, then they'll have to make new ones!
That will create jobs.
Stimulate! Stimulate!
Stimulate!
Why is it good to destroy usable stuff?
Well... yes, cars that were taken out of the road were still drivable.
But, at the same time, they are not leading America forward.
When you look at a couple of cars like these...
you would never think these are gonna be cash for clunkers cars.
You know I hate to crush some up.
Some of them are better than some that I drive sometimes.
Yet the politicians still say it was a good idea.
Breathing life back into the automobile sector of the american economy.
So if destroying cars is good for the auto business,
wonder how much wealth I could create if I...
could just cause an earthquake!
This is a Fox News alert. A strong earthquake has rocked Haiti.
Seems crazy to imagine a disaster like this could help an economy, but...
some people think it can.
I think that this can be an opportunity for a real boom economy in Haiti.
She thinks that, because she can see the jobs created for...
clean-up workers, and building new buildings.
- Are you ok? - Yeah.
Likewise, after September 11th, Paul Krugman said...
"The attack could do some economic good"
"... rebuilding will increase business spending".
People think that, because they can see the rebuilding.
Just as they can see the extra car sales of cash for clunkers.
You can see the people going in to buy cars...
because the government is subsidizing the purchase of cars.
What you can't see is what people would have bought...
if the government wasn't subsidizing the purchase of cars.
Maybe they would have bought computers.
Maybe they would have added a room on to their house.
Maybe they would have put the money into their savings account...
to save for college.
It's very hard to see what isn't done.
And there were other unintended consequences.
The cash for clunkers program may hurt you if you...
if you want to buy a used car.
Used car prices went up an avarage $1,800.
Because used cars that would have been sold...
were crushed.
Those of you hope for a bargain on used car?
Too bad!
And one more unintended consequence:
Charities that rely on used car donations were hurt.
The phone stopped ringing.
We've gotten like 2 cars donated in the last 2 weeks.
Yeah... it's tough.
So, we raise the price of used cars,
we reduced the number of cars given to charity,
we barely affected the environment...
and we spent several billion dollars on it.
...is more successful than we ever imagined...
Why doesn't the government just butt out?
You can't create a program that's gonna make everybody happy.
There're always gonna be trade-offs.
When I think the larger goals of cash for clunkers were honorable...
and some of the trade-offs... I can live with.
He can live with that!
But can taxpayers?
On to promisse number 9:
Congress must guarantee Americans a living wage.
It's only fair!
Protestors and politicians agree.
Wages should be higher.
It's a fairness issue.
For years, America's minimum wage was $5.15 an hour.
Last year, Congress raised it to $7.25.
14 states have gone further.
Washington state, for example, guarantee workers $8.55 an hour.
Progressives say it should be higher.
Absolutely.
What would that be about?
It would be about $9.00 an hour.
Well, it's a nice idea.
Economist Russ Roberts points out...
setting minimums has unintended consequences.
First reaction is:
- "Great, I get a raise!" - "Yay!"
"This is fantastic! I'm finally gonna be able to buy this, that, and that".
"Take care of my kids".
That, of course, is part of the political appeal of the minimum wage.
- That's the seen benefit. - That's the seen benefit...
if you keep your job.
What would happen if the government forced my company to increase wages?
You guys happy? You want that?
Aren't you guys... aren't you... aren't you underpaid? Come on!
So... absolutely! I mean, there's no doubt about it.
So let's give them a 50% raise. Your first thought is:
"That's awesome! 50%!" Your second thought is:
"Wonder if they're gonna keep as many camera people as they had before".
We quit hiring people without experience.
Merv Christ runs The Prime Cut,
a combination meat counter and bar in Bakersfield, California.
Minimum wage jobs are an entry level job...
to get someone inexperienced to do something.
You raise that high enough, you cut those people out of the market. Completely.
When California's minimum wage rose to $8.00 an hour,
he stopped hiring new people.
Low wage jobs used to be a way for kids and the unskilled...
to get into the labour force, to prove themselves.
Most every gas station used to offer free window cleaning.
Not anymore.
The construction industry used to be a place...
teens could get a foot in the door.
Learn the discipline of regular work.
But the minimum wage left many teens out of jobs.
No wonder teen unemployment is 26%.
If they were to get rid of the minimum wage,
we could easily hire more people.
Warren Meyer manage public parks.
When the minimum wage went up, he replaced workers with machines.
We're trying them out now, trying out various automatic gate solutions.
I must prefer having a person, because that person can be friendly...
and provide a smile, and they can provide informations about the park...
and they can answer questions, and where are the bathrooms, but...
...with a higher minimum wage, he switched to automated, ticket machines.
Fewer people, more unemployment.
In fact, unemployment has risen more...
in states that raised their minimum wage.
What would happen if we threw out the minimum wage?
Oh my goodness!
What that leaves is an employer in a catbird seat...
to drive that wages low as possible.
But wait a second.
These businesses would like to pay their employees as little as possible.
But they must pay more than minimum wage.
Because good workers have choices.
At this bowling alley restaurant,
most workers make more than the minimum.
But they didn't start there.
...have minimum wage as dishwasher, which was like...
$3.75, $4.00, somewhere. It's been a while back.
Now he makes $10.00 an hour.
Why is it that only 5% or less of the american workforce...
earns the minimum wage?
The other 95-97% that earn more... why are they being paid so much?
Is it because their employers just feel guilty paying them less?
No, it's because employers have to pay them extra...
to keep good workers.
Kelsey started working here when she was just 13.
For being only 13, I think I was making a good amount of money.
So...
Minimum wage is fine.
Now, Kelsey makes as much as $20.00 an hour.
If you work hard, you can make more.
It's just... you have to prove yourself.
But had the minimum wage been what senator Kennedy wanted...
...increasing the minimum wage to $9.30 an hour.
Kelsey may have never had that chance.
Her job might have disappeared.
Some business at the margin says:
"I can make money paying people $6.00 an hour,
I can't make it paying $7.25. I won't expand".
If the cost of expanding workers is too much for you to absorb,
then you probably don't have the best business model going.
Wow! That's harsh. Then you deserve to fail?
How does that help workers?
What could be more cruel than to raise your wage artificially...
and having no wage?
Higher unemployment, thanks to government good intentions.
If you work, you should not live in poverty.
I'm against sexism. Aren't you?
Men and women should be treated equally.
That just seems fair.
But it's a new idea.
Our culture used to say:
"We men are the breadwinners, women do housework".
Flying high, oh my freedom got a brand new rap.
Then came the women's movement.
President Nixon signed Title IX, which says:
"No person... shall, on the basis of sex... be subjected to discrimination..."
Government can create equality.
Empower, empower, empower...
women.
Vice president Biden says: "Title IX changed civilization".
We made a significant advance in civilization.
Title IX did that?
No.
By the time Title IX passed in 1972, life had already changed.
Three years before, when I graduated in college,
my college didn't even admit women.
But by the Time title IX passed, it was already co-ed.
And today, there are more women in college than men.
Parents demand soccer leagues for their girls,
and they get them, because institutions respond to consumer demand.
But that's not good enough, say the Title IX lawyers.
The Women's Sports Foundation has conducted...
The Women's Sports Foundation is led by athletes like...
law professor Nancy Hogshead-Makar.
Makar won Olympic gold medals in swimming and a...
college scholarship only, she says, because of Title IX.
Duke University would not have given me that scholarship...
had it not been for that statute.
Maybe back then you needed to force it.
But now, colleges want to appeal to women.
Everyday, I'm on the phone with people...
who are having a hard time with their athletic programs.
Under Title IX, athletic participation is supposed to be sex proportional.
So if 50% of the students are women, 50% of the athletes better be women,
or a school may get sued.
So schools protect themselves by cutting boys teams.
The MAC was yanked out from underwater last summer,
when the university cut the wrestling program over Title IX.
Jay Hamill no longer has a swim team.
It's one of 10 teams the school is cutting.
The USA, who brought the collegiate champions...
Cal Berkeley were national rugby champions last year.
But this year, the school told them: "They are no longer a varsity sport".
Today, the university gathered student athletes together to announce the news...
Pretty much all were in shock.
Coach Jack Clark says it's all about Title IX.
We have 60 males. We've ended up... you know,
demoted out of Intercollegiate Athletics because of male headcount.
If you're trying to even out the number of men and women,
a team with 60 players is a fat target.
Even if they're national champions.
Right now we have 4 players on the national team,
12 won american's last year.
The school told them the team was cut to save money, but...
get this: this team is self sufficient.
They raise enough money to pay for themselves.
They even offered to help pay for some women's teams.
Proposed helping to fund women's lacrosse and women's gymnastics.
But that wasn't enough.
Oh, yeah, much better!
That's something that also shocked Cal's gymnastics coach.
I asked the athletic director if I handed her a check right now,
for millions of dollars would we be reinstated?
And she just said no.
No? Why?
Because under Title IX, even if the athletes raise their own money...
and pay for a team themselves, it doesn't matter.
The head counts must be even.
I think we got the short end of the stick.
The schools are competing for students,
if there's demand, they'll give it to 'em.
When the culture changed,
a million girls soccer teams appeared.
It'll happen if there's demand.
We don't need you lawyer tyrants.
Anyway that you can measure it, women are behind.
Men and women are different.
Well...
No, no, really... they may have different interest in different sports,
they may wanna play...
They're equally interested in sports?
Girls are more likely work on the yearbook,
boys wanna smash into each other.
We are just different.
So, maybe boys do wanna smash into each other and girls don't.
But girls wanna flip around on the floor.
And girls wanna swim back and forth.
When Title IX was passed,
men's gymnastics had more than 100 division I teams.
Today there are just 17.
16, after Cal finishes its last season.
It will have a huge impact on the success of the USA program.
McNeil is now training for the Olympics,
since Title IX will kill the US Olympic program.
Men's gymnastics program can have a max of 6.3 scholarships.
Women can have 12.
Women do 4 events, men do 6 events.
How can any person look at that and say "yeah, that's fair"?
It isn't fair.
It's just one of many unintended consequences of Title IX.
It tries to create equal opportunities for men and women...
and what it ends up doing is lessening the opportunities for men.
Continuing our countdown. Now promisse number 7.
If politicians take your money and use it to buid fancy stadiums...
like this one to host big events, that will boost the economy.
It's why America fought to get the Olympics.
The Olympic Games brought hundreds of thousands of tourists to China.
It's a reason cities bend over backwards to get the next Olympics.
We want these Games.
The president wanted the Olympics in his hometown so much...
that he and his wife personally campaigned for it.
I never dreamed that the Olympic flame...
might one day light up lives in my neighbourhood.
Rio de Janeiro.
But they lost.
Brazil won.
This cheering suggests that America missed out.
After all, Olympic boosters always say:
The Olympic Games, you know, have the ability,
singularly, to transform an entire nation and a city.
The job contracts and opportunity.
Thousands and thousands of construction jobs.
But economist J.C. Bradbury says...
most of that construction ends up as waste.
In China, they built the Bird's Nest Stadium,
which was a beautiful architectural feat.
There's no need for it anymore. It seats virtually empty.
People remember the big crouds.
They're less likely to remember the waste.
They always tell me this will be good.
"Oh, it's gonna put us on the map,
we're gonna have people coming from out of town,
spending their money. Then we're gonna take that money...
and spend it and spread the wealth around".
They ever live up to their promisses?
Never.
But politicians repeatedly claim...
building lavish new stadiums, like this one planned for Miami,
"will provide economic stimulus", "unleash thousands of jobs",
"revitalize the economy".
Build it, and they will come.
Always it sounds good and the prognosticators are always pretty thin.
"This is gonna be hundreds of millions of dollars in benefits".
The only problem is...
when economists go back and look what actually happened,
the benefits aren't there.
One reason is that stadiums are not in use most of the year.
Baseball teams had only 81 home games.
Basketball teams just 41.
Football, just 8.
But they do other things in those stadiums.
Oh, yeah, you wanna say... maybe there're a few concerts,
there're a few festivals, here and there...
Again, ok, let's say you're having a 100 events there,
still that's basically a third of the year you're only having it open.
Yes, on game days, stadiums do provide jobs...
for people like ushers and stadium food vendors.
But those are just the seen benefits.
The unseed cost is that those people would otherwise...
be spending their money elsewhere in the local communities.
At the local bar there's one less bartender.
There was one less waitress hired in other restaurant.
A movie theater that had one less theater full.
It's handing money from your right hand to your left and declaring "I'm rich!"
You can't see the person who doesn't get hired?
Absolutely, it's the classic seen versus the unseen.
And we're always gonna favor the seen.
The unseen, like the grocery store,
doesn't have a politician in it's pocket.
The grocery store isn't asking for big subsidies from government.
We're taking from people we patronize every day...
and asking them to pay more to subsidize...
of already wealthily baseball team and honor the football team owner.
So what do you do when the team says "we're gonna leave"?
Do what San Francisco did. When the giant said:
"we're gonna leave if you don't build us a new stadium",
the city said "we're not gonna do it".
The owner realised "ok, you got me, I'll build a stadium for you".
They don't need government welfare in to help build these things for them.
Let them do it.
The latest event that was supposed to revitalize the city was the G20.
Everybody, say cheese!
Leaders, bureaucrats from 20 nations...
come together in one city to talk about the economy.
When they chose Pittsburgh, the mayor was excited.
They see our beautiful skyline, they see our great three rivers...
Senator Bob Casey told residents the event would be an economic boom.
Local businesses were told G20 would bring in thousands of visitors.
Tim Tobisch and Megan Lindsey own Franktuary,
a hot-dog shop that stayed open late for those...
thousands of new custumers... but they never came.
It was just completely dead. Nobody was here.
Certainly the fewest custumers we've ever had.
I thought it was gonna be a good thing at first,
even though I'd like to think that I should know better.
So where were all those guests the city promissed?
Oh, here are some!
Move out of the street.
A thousand state troopers.
I here by declare this to be an unlawful assembly.
No one sees a tank and thinks: "Oh, I'll go downtown for lunch".
Next year's G20 will be in Cannes, France.
Good luck to them.
Next, Uncle Sam wants to help you buy some of these.
When we come back, I'll explain.
Wanna get rich?
Uncle Sam will give you a break on one of these.
That's politicians' promise gone wrong number 6.
We have got to support and strengthen family based agriculture...
Supporting family based agriculture is the good intention.
And America is sure doing that.
Ready, big man?
Come on.
In New Jersey, the most densely populated state,
Rose Mogerman raises alpacas.
I'll be honest. The reason I got in... I was looking for a tax shelter.
So was this woman.
The tax benefits are great.
There are so many tax benefits for livestock breeding,
and alpacas are relatively easy to raise, that one website even advertises:
Have Uncle Sam help you buy your alpacas.
- Have Uncle Sam... - Help buy your alpacas.
So, who ends up paying for your alpacas?
Uncle Sam.
Lot's of people are getting in on it.
...tractors and stuff that I've always played with,
but I could never write if off. But after purchasing the alpacas,
they... all of my toys, all of a sudden became tax trade-offs.
The Alpaca Breeders Association asked it's members,
"on a scale of 1 to 10, what motivated you to buy?"
More than half rated tax benefits a 10.
We've got into it for the tax reasons.
They make all themselves farmers, but they sound like accountants.
Take a section 179 deduction.
Depreciated over 5 to 7 years.
There's something called CAUV.
Alpacas are also valued for their fleece.
Excelent grade fleece.
But selling fleece doesn't explain the growth in alpaca raising.
25 years ago, there were 150 in America.
Now, there are 150 thousand.
Sold! $10,000!
She has a pedigree that is solid, solid grey.
At alpaca auctions, prices have gotten high.
...it's only money, don't be so uptight about it.
Just recently, an animal was sold at auction for over $600,000.
Wow!
But this is not necessarily a good thing.
Do you have some place else to go?
This llama may not like me talking about this, but...
economists at the University of California, Davis, warned:
"The industry is a bubble".
Government is good at creating bubbles.
Last year I reported how Congress's ridiculous tax credits...
created a bubble in golf cart sales.
It is endless the possibilities that this bill will pursue...
encouraging energy efficient products, such as plug-in hybrid cars.
Unfortunately, the plugs are connected to coal plants.
The National Research Council says electric cars may be worse for the environment.
No matter:
The jobs that are going to be created...
This car dealer advertised free electric cars.
Buy one for $6,000 and take the $6,000 tax credit.
Governor Mike Huckabee got one. A friend of his got 7.
I got this one. Totally free.
Free for me, anyway... you taxpayers paid for it!
The deal sure helped the golf cart industry.
My dealer sold 10,000 carts.
At least golf cart credit expired.
But most governmet giveaways don't.
I fell in love with them.
But first you fell in love with the tax breaks?
Yes! Yes, I have to be honest.
I might have had two. I wouldn't have had 100.
Next, have you got some of these in your wallets?
Be careful, I hear those evil credit card companies wanna rip us off.
But don't worry, government says it will stop credit card abuse.
That's promisse gone wrong number 5.
Enough is enough. It's time for strong, reliable protections for our consumers.
Protection. Finally!
Congress passed the Card Act, and a new bureaucracy...
that will stop credit card companies from unfairly penalizing you.
And it won't threaten the credit business.
Unless your business model depends on cutting corners...
or bilking your custumers, you've got nothing to fear from the reform.
Yes, you do. Say economists like Todd Zywicki.
Once credit card companies couldn't penalize late payers,
they simply raised interest rates across the board for everybody.
Credit card interests rose from 13% to nearly 15%.
Morgage rates actually dropped a little.
So did treasury bill rates.
But credit card interests went up.
Also, banks stopped offering credit to some people.
JPMorgan Chase cut off 15% of it's custumers.
Hundreds of thousands of people can't get cards who used to be able have cards...
and all the rest of us now have to pay more for credit.
Maybe they're better off not having credits.
Because they couldn't handle it.
Just to say that they don't have a credit card...
doesn't mean that they don't have credit.
They'll just go to more expensive places.
They're gonna go to the local payday lender,
or the local pawn shop to get the money that you...
...and really get ripped off!
And, how much did you wanna loan today?
Payday lenders are businesses that make small short term loans.
Often just till payday.
A bill came in and it was a little higher then I anticipated.
I borrowed $150. That was good for me.
But the annual interest...
This place posted clearly 521%.
Some places charge more.
800% interest is legal?
Maybe not, once consumer protectors get Congress...
to ban those abusive payday loans.
But what elites call abuse, some consumers call a way out.
I know people say "predatory landing... blablabla..."
"high interest rate"... but if you have an emergency...
For many people, payday lenders are the only way...
they can avoid missing a bill payment.
It's not just a matter sometimes of saving money,
it's a matter of saving yourself grief.
Why don't they get a credit card?
Oh, I forgot! These men made that tougher.
Everytime I apply, you know, they turn me down.
People who have limited choices when it comes to credit...
are not likely to have their situations improved by taking away...
some of those limited options that they have.
The political class promissed to fix credit card penalties.
But the penalties equal less than 7% of banks earnings.
Banks make much more charging interest.
Politicians say they rip us off there too.
If they could get away with charge you 1,000% interest, they would.
Certainly they would. The problem is they can't.
This is one of the most competitive markets in America.
I've got 4 credit cards in my wallet.
As I sit here talking to you, my credit cards are competing for my business.
If one credit card tries to rip me off, or charge me too much...
or even... if they don't talk to me nice on the phone,
I'll switch to another credit card.
And caps on rates have unintended effects.
Arkansas wants cap interests at 10%.
Very few people can get a credit card in Arkansas as a result.
Arkansas was also known as the pawn shop capital of America.
Pawn shop interest is often 250%.
In the 1960's, the second biggest revenue source,
above organized crime, was illegal lending.
Is that the world we wanna go back to?
Where we get rid of payday lending?
And we're so morally outraged that we're gonna put people...
in the hands of the leg breakers and the loan sharks?
They charged an interest rate that was well over 1,000%.
And their collection techniques were a lot tougher than your local pawn shops.
Now, promisse gone wrong number 4.
Government will give everyone health insurance,
but for less money.
That was a big one!
This was the triumphant signing ceremony.
And then...
Happy birthday to you!
They gave the speaker a birthday celebration.
Look at the big smiles.
They were thrilled that their Affordable Care Act...
would give insurance to many more people for less money.
Can you imagine a more important birthday privilege...
than to be signing health care for all americans?
Speaker Pelosi wouldn't talk to us about health care.
Nor would anyone from the administration.
They told us to talk to Ron Pollack,
of Families USA.
A group that fought for Obamacare.
Giving people all these things, doesn't that create some unintended consequences?
Some bad stuff?
I don't think it creates bad stuff.
It means that people can get preventive care.
No unintended consequences coming up now?
No, I don't believe... I don't believe that for a moment.
But I keep hearing about problems.
What we've got is rising premiums,
we've got people being dropped from their health insurance plans,
we've got health insurance companies fleeing the market.
The president told us:
If you like your health care plan...
...you'll be able to keep your health care plan...
I'ma repeat that: if you like your plan, you'll be able to keep it.
But Principal Financial has completely left the health insurance market.
Their 1 million custumers will have to find insurance elsewhere.
Also,
three insurance companies are dropping stand-alone child policies.
WellPoint, Humana, CIGNA...
have gotten out of the child-only business.
Well, the child-only business is less than 1% of those...
Principal Financial Group got out of the whole business.
The fact that some marginal company drops out of the market...
It's a million custumers, not that marginal.
But, let them go out of business, not a problem.
- Not a problem? - No, not a problem.
When there are what the administration considers problems,
they make exceptions.
100 plus employers have obtained waivers from the administration,
which allows their workers to opt out of the new law.
So far, they've given out more than 100 free passes.
The biggest single waiver by the federal government...
was for the United Federation of Teachers.
But if this is such a good law,
why do the politicians give waivers to those who kiss their ring?
It sounds like cronism.
The administration is taking a look at individual circumstances...
where a major change needs to be made by 2014.
- And... - More than 100 already?
A third of them to unions in New York City?
- Eh... you know... - Sounds like a scam.
Eh... well... that...
I think that's a misinterpretation of what is happening.
And then, there's the cost problem.
My proposal would bring down the cost of health care...
Not so far! Prices are up.
...facing rate increases of 1 to 9%.
Obamacare is just faith based policy making.
This idea that we can give people all sorts of benefits...
and there aren't going to be no other costs.
Of course, maybe the problems were not unintended.
Maybe Obamacare's supporters meant to kill off private insurance companies...
and leave us with government run health insurance.
But if that was their intent,
there was still one unintended consequence.
The Republicans have gained control of the House of the Representatives.
Next, politicians promise number 3.
They're gonna solve our energy problem.
You know, we're running out of this.
Or, we buy too much of it from arab sheikhs.
Their solution: take your money and give it to americans who make ethanol.
Renewable, home grown fuels...
Ethanol subsidies bring both parties together.
After all, americans can grow it and create...
...a nation that is stronger, cleaner and more secure.
One that protects our national security,
safeguards our environment and promotes economic growth.
Ethanol, now is the time.
No, it's not!
Corn based ethanol has been a case study...
in the law of unintended consequences.
Oh my gosh! Something I can agree with senator McCain about.
He could not see the unintended consequences...
of things like McCain-Feingold.
But at least he sees them for ethanol subsidies.
We should not be subsidizing ethanol.
We're trying to change american's fuel consumption pattern.
General Wesley Clark now fights for ethanol.
In 2008, we paid over 50 billion dollars...
to the Saudi government for imported oil.
And we're still doing it, even though we're paying you guys a ton.
The point is that the money that's paid on ethanol...
is money that stays within the american economy.
It does, but at what cost?
The Congressional Budget Office says for each gallon of gas replaced with ethanol,
we pay $1.78 in subsidy.
But at least our money stays in the country.
It makes me feel good. I'm keeping the money in America.
All these programs are designed to make people feel good.
We're gonna help the farmers...
and we're gonna hurt the foreign oil producers with ethanol.
And we don't look at what is not seen which is the rising price of milk...
and the excessive amount of fertilizer...
and fuel that was used to produce this additional corn.
Oh, yeah, food prices are higher.
Because so much farmland now goes to corn used for ethanol.
And we consume lots of corn.
Corn syrup sweetens thousands of foods.
It helps create the meat we eat.
Corns are our biggest item.
Steve Fogelsong, who raises cattle, is mad that feed cost more now,
because ethanol is both mandated and subsidized.
If you wanna do the same thing for me that you're doing for the ethanol guy,
than you have to mandate that absolutely every man, woman and child...
in America has to eat 50 lbs of beef and then you're gonna turn around...
and give me $2.00 a hundred weight on the steers.
Then we're at the same place.
But the ethanol industry wants more subsidies while talking about free markets.
You should have free market competition.
A free market means no subsidies.
Exactly, but it also means...
But you've been getting subsidies for years, stop!
It's... we're ready to transition out of the subsidies, but...
- Ok, tomorrow? - Well, it depends.
Can you give us a chance so that americans...
can have a choice as to what they put in their pumps?
By choice, he means government should now pay...
to have gas stations intall these special ethanol pumps.
But government didn't install gasoline pumps.
Entrepreneurs did.
If the public wants it, service stations will do it.
Why does the tax payer have to pay $75,000?
Because it's like anything else, you gotta get it started.
You're a parasite feeding off the tax payer.
Stand on your own feet.
We're ready to stand on our own feet.
To do that, it needs a fair playing field.
Fair?
They want more subsidy when ethanol already gets 50 billion of your dollars?
Increases the cost of food...
and, as it turns out, isn't even better for the environment than gasoline.
Corn ethanol is responsable for incredible environmental harm.
Ben Schreiber works for the environmental group Friends of the Earth.
The green lobby once supported ethanol, but now they say:
The environmental consequences of corn ethanol are worse...
than the environmental consequences of gasoline.
But this makes no sense,
it was picked on because of you environmental groups saying:
"Oh, don't use oil! Oil is bad!"
But now that we studied ethanol more fully,
we realized that it actually has worse consequences than gasoline.
So... oops! We were wrong! But now, we can't undo it?
We're fighting to undo it.
But government programs are almost never undone.
Boondoggles live forever.
You know, I said clash for clunkers was the dumbest program ever...
but it's a lot smaller than ethanol.
So ethanol might be pound for pound the dumbest program ever.
Promisse gone wrong number 2.
Government can increase home ownership.
We want more people owning their own home.
Some politicians even promissed...
Our home ownership strategy will not cost the tax payers one extra cent.
It hasn't worked out that way.
These experts in the housing bubble point out...
not only did our policy cost tax payers billions, it also...
Killed neighborhoods, it's ruined people's lives,
it gave people an illusion they could afford something they couldn't afford,
rich and poor.
I'm told greedy bankers caused the bubble.
Government exaggerates rather than minimizes...
the age old impulse to greed.
The government made it harder...
for bankers who wanted to do the right thing.
Because if a banker stayed with safe loans, he missed out on profit...
he could make selling lots of high risk loans to Fannie Mae and Freddie Mac.
If he was making good loans he might only be earning 8% rather than 20%.
Maybe he loses his job as CEO.
The most damage was done through the bundling...
of bad loans to Fannie and Freddie.
But some was done by a law that requires banks to lend to disadvantaged people.
Make the goal of affordable housing a goal that is obtainable for all americans.
So Congress told banks: "Make loans in poor neighbourhoods...
or we may not let you merge with other banks".
Phyllis Salowe-Kaye runs an advocacy group that uses the law...
to demand that banks make more loans.
We said to banks, you have to make special products...
that are affordable to low and moderate income people,
particularly women and minorities.
Any bank merging knows they have to come and talk to us.
A bank that wants to merge has to talk to you?
They don't want us standing in front of their bank picketing.
Whether we stand up dressed as turkey at thanksgiving...
and saying this bank is a turkey...
Sounds like you're running an extortion racket.
Give us money or I will stop your merger.
We say "lend money".
Isn't that kind of like extortion?
It's the law. The law gives us the right to do it.
Even worse, government push morgages that require...
down payments of just 3% or less.
This chart shows how those loans gradually increased.
Having everyone own a home is not the american dream.
It's the dream of the National Association of Realtors.
The National Association of Realtors wants you to take advantage...
of the $8,000 first time home by your tax credit.
So, given all the foreclosures, did the government stop subsidizing housing?
No.
Honey, there's $8,000 in here.
We haven't learned the simplest lesson, which is:
We ought to stop fiddling with the housing market.
No, we haven't learned that lesson.
Nor have we learned not to fiddle with the automotive market.
And the livestock market, and college sports,
and health care, and fuel, and stadiums, and credit cards,
and all the things that government promisses to make better.
While really making them worse.
And that's the number one promisse gone wrong.
These guys say they'll be fiscally responsible.
And then we elect them, and they spend more.
They're spending us into bankrupcy.
There must be 10,000 harmful programs and yet they keep creating more.
Why can't we cut them?
Every one of those 10,000 programs have a lobbyist in Washington.
And each lobbyist will spend big to preserve his program.
They've got these TV commercials with a soft music...
and rugged farmers producing these products...
And those lobbyists...
They always know when the bill is up before Congress...
and they send political contributions, they send people to Washington to lobby,
but the rest of us don't do that.
Look at the Tea Party, they say don't spend so much money.
But they don't have signs out there saying "stop the clash for clunkers program",
"stop the ethanol program", "stop the Title IX subsidy program"...
You could do a whole show on people should be more engaged,
people should be better citizens.
But the fact is we have lives and there's no way that any normal person...
can know about the 10,000 programs that make up...
the 3.5 trillion dollars federal budget.
And so the programs keep growing.
And we must pay for their costs and their unintended consequences forever.
Unless... there's a new wind blowing in America.
A new attitude, a new expectation that maybe Washington should do less.
I hear there is. I sure hope so.
That's our program for tonight. I'm John Stossel,
hoping for a restoration of freedom.
Good night.