The Pentagon has informed Congress about another of its procurement projects that is plagued by cost overruns. In other news, the sun will rise and set today, and the pope is Catholic.
Last week, after Rep. Barney Frank (D-MA) said that holders of Fannie Mae and Freddie Mac’s debt shouldn’t be expected to be treated the same as holders of U.S. government debt, the U.S. Treasury took the “unusual” step of reiterating its commitment to back Fannie and Freddie’s debt.
1. Additional federal spending transfers resources from the more productive private sector to the less productive public sector of the economy. The bulk of federal spending goes toward subsidies and benefit payments, which generally do not enhance economic productivity. With lower productivity, average American incomes will fall.
U.S. News & World Report’s columnist, Paul Bedard, reports that Transportation secretary Ray LaHood told him that it’s fun playing Santa Claus to states and cities around the nation.
In August, President Barack Obama commented that “UPS and FedEx are doing just fine. … It’s the post office that’s always having problems.” We found out just how deep those problems were when Postmaster General John Potter announced that the U.S. Postal Service is facing $238 billion in losses over the next 10 years.
The Economist’s Free Exchange blog asks: “[W]hy isn’t federal aid to states more popular, and popular enough to get through Congress, given that nearly every American lives in one?”