There is some evidence to his argument. Morality aside, there is a lot to suggest that the government backing of these insurance helps reduce costs...sometimes tremendously.
There are two key points. One is that government does not bail out the company...they bail out policyholders. If the company wants to remain solvent, they still have to adjust for risk....it is just that policyholders can have some piece of mind.
The other key point is when government provides limited liability coverage on companies. This is a morally questionable act, but there is little doubt that it lowers costs. For example, when the BP oil spill happened, BP used government laws to limit its liability. Furthermore, it is using the legal system to defer payment on damages. Fact of the matter is, if oil companies had to plan to pay for any potential damage, their costs would go through the roof; that would be evidenced by higher oil and gas prices. The government instead socializes that risk, greatly bringing down the overall cost to the economy.
This was part of the reason why Obama was heavily criticized for asking BP to pay all the damages. Because it sets the precedent that companies need to be fully liable for their actions, up to and including the seizing of the assets of the company managers. We might cheer that from a moral and "what is fair" point of view, but there is little doubt that that precedent has made oil and gas a lot more cautious. This leads to more costly preventative measures, less drilling, and higher prices.
Plan for eliminating the national debt in 10-20 years:
Specific cuts; defense spending: http://rolexian.wordpress.com/2011/01/03/more-detailed-look-a
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