Tags: Editor's Pick | sowell | debt | deficit | default | cbo | healthcare

Thomas Sowell to Newsmax: CBO Should Be Abolished

By    |   Thursday, 15 March 2012 08:17 PM

Conservative economist Thomas Sowell is calling for the abolishment of the Congressional Budget Office (CBO) after it revealed this week that Obamacare may cost American taxpayers nearly twice the $940 billion it originally estimated — $1.7 trillion over the next decade.

“I think occasionally the CBO does something that’s useful,” Sowell told Newsmax.TV in an exclusive interview. “But by and large, I think it should be abolished.”

Story continues below the video.

In September 2009, President Obama estimated healthcare reform under the Patient Protection and Affordable Care Act would cost an additional $900 billion over 10 years. The CBO initially projected the cost at $940 billion.

Adding insult to injury, the CBO’s latest projections also indicate that some 3 million Americans will lose their employer-based insurance coverage. This comes despite the repeated assurances of the president and others that they would be able to stay on their current employer-based policies, if they wished to do so.

In the interview, Sowell says it is time to seriously consider whether the CBO has outlived its usefulness.

“It’s one of a number of federal agencies that give the public a sense of assurance in things where there is no assurance,” said the award-winning economist, who recently released a revised edition of his book “Intellectuals and Society.”

Sowell has long favored free markets, and objects to the tendency to prescribe and control consumer behaviors. He contends that bureaucracies often try to pick winners and losers in markets they are ill-equipped to understand.

Asked to comment on the recent report that the city of Stockton, Calif., plans to default on some of its municipal bonds, Sowell says the federal government should stay out of the matter and allow insolvent cities and counties to work out their debts on their own.

“I think it is far worse to bail them out than to let them default,” Sowell told Newsmax. “Default gives people the truth. It tells them that they spent irresponsibly, and this is the consequence. It means that people who might buy municipal bonds in the future will be a lot more cautious about doing so, and it will be harder for politicians to raise money by selling bonds.

The long-time Hoover Institute scholar added: “When you come in and rescue them, then of course that means they can keep right on doing what they have already done. That’s true not only for cities. It’s true for homeowners, it’s true for whole nations. If people in Germany have to pay for the money that’s been wasted in Greece, then there’s less reason for people in Greece to stop wasting money.”

Other highlights from the exclusive Newsmax interview:
  • Sowell said the Securities and Exchange Commission gave investors “false assurances” by requiring financial institutions to get “clearances from rating agencies like Moody’s and Standard & Poors. Nobody properly understood the mortgage backed securities, and investors would have been better off had they simply been told buyer beware.
  • He thinks it would be a mistake for President Barack Obama to release more oil from the nation’s Strategic Petroleum Reserve in order to drive down the price of oil, saying the impact on prices would be minimal and would only last for a few weeks anyway. “If you’re going to drizzle it out bit by bit every time there’s some political reason to do so, then you don’t have a reserve anymore,” he warned.
  • He suggested the administration’s recent effort to take credit for increased U.S. domestic energy production is disingenuous. “It’s true that there’s a lot more drilling going on now than a few years ago. But all the drilling that’s going on is occurring on private land, under leases signed by the Bush administration and by earlier administrations. Obama himself has drastically cut back on federal leases, and on drilling on federal land.”
  • Sowell believes the much-maligned gridlock in Washington, D.C., actually may be helping the economy. “What little economic improvement we’ve seen has come primarily during the period of so-called gridlock in Washington,” he said, “and I don’t think that’s accidental. I think most of the policies that have been followed have been detrimental. And now that you have gridlock in Washington and they can’t push these policies anymore, the economy is beginning to recover on its own — as the economy has recovered on its own numerable times for the past two centuries.”
  • Finally, he said the drawn-out GOP primary process this cycle will probably hurt the eventual nominee, but how much depends on who wins the nomination. “If it’s Romney, he has his own money and it won’t be that big a problem,” he said. “If it’s not Romney, whoever the candidate is, is going to have to raise an awful lot of money in an awfully short time, in order to have any chance at all in the general election.”

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Thursday, 15 March 2012 08:17 PM
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