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Hurricane Katrina highlights both the spending problem and the moral hazard. Thousands of people lost everything, and the federal government jumped in to help. It offered tens of billions of dollars in aid -- and some went so far as to propose making federal flood insurance retroactive. With all that money, why would anyone ever pay for insurance? With Social Security and Medicare, the federal government is creating a similar moral hazard for future generations.

By most press accounts, President Bush took a pounding at the recent Americas Summit in Mar del Plata, Argentina. But two other presidents, Nestor Kirchner of Argentina and Hugo Chavez of Venezuela, have the most bruises -- and all of them were self-inflicted.