Last Build Date: Wed, 01 Apr 2009 00:20:00 -0600Copyright: Copyright 2009
Wed, 01 Apr 2009 00:20:00 -0600
This move will backfire big time! The auto giant is very, very unlikely to be saved by this current TARP infusion. Doubtless it will need more in the near term. But the resentment now focused on the management of the company will then turn to Obama. Having demanded a replacement of the management, it is he who will be held responsible for the company's future.
And each time GM asks for more money, Obama will face a choice: take personal responsibility for laying off 100,000 auto workers or anteing up the additional cash. By inserting himself so deeply into the management of the company, Obama makes himself central to its future. If Obama lets the company fail, having already extended credit, he will have all of Michigan on his case. If he keeps coming up with more and more tax money, he will earn the contempt of the voters.
Socialism has its price. By taking over the management of a company, you become the determinant of its fate in the public's mind.
Obama does not seem to realize that government takeover is the beginning, not the end, of the problem. He should have stuck with being president and left making cars to others.
And, as the new CEO of General Motors, what will his policy be on corporate compensation? Will the public tolerate his letting his new company pay salaries sufficient to attract the talent necessary to salvaging the firm? Or will he have to rely on a bunch of kids right out of school, willing to work for one or two hundred thousand a year, for the company's salvation?
When it comes to the hard work of cutting retiree health benefits, reducing salaries, laying off workers and closing plants, is Obama willing to resist calls for his intervention? Is he up for taking the blame for all the "heartless" measures GM will have to take to salvage its future? He has put himself squarely in a position to pay a steep political price for his assumption of power at GM.
Most troubling is the sense that Obama cannot have thought this through. He can't have planned this. President Clinton used to say at strategy meetings that we needed to think three or four moves ahead and not just "kick the can down the road." Obama is clearly not following his predecessor's advice. He realized GM needed money. He knew the public would have a fit if he gave it. So he decided that he would appease his electorate by exacting blood from the company's management and directors by using his guillotine on some of its old gray heads.
But, had he thought before he acted, he would have realized that it would have been far better to have criticized GM from a distance even as he extended more money -- rather than to, in effect, take over the company.
The president's protestations that the government does not want to own a car company are quite beside the point. It's his now, and he better figure out what to do with it.
Wed, 25 Mar 2009 00:20:23 -0600Does he seriously believe that Wall Street investors will not worry that their winnings, should they join the Treasury as partners in risky investments, would be subject to public abuse, publicity and confiscatory taxation? Of course he realizes that his rhetoric makes it unlikely that his program will succeed. He obviously gets it that the entire concept of a public-private partnership is impossible amid a climate of waging class warfare, taxing the rich and heaping contempt on anyone who makes money. The president is quite bright and certainly understands that you cannot shake hands with your right while you launch a roundhouse with your left. So why does Obama persist in his aggressive rhetoric? Why does he continue to treat Wall Street as something out of Dante's Inferno? Because he's just not that into you! He doesn't really care if the public-private partnerships work out. He sends Geithner out to announce the program because he doesn't want to make it his own. When he announces a stimulus plan or a new spending bill, it's Obama's moment before the teleprompter. But the public-private partnerships he leaves to his Treasury secretary to announce. The most rational explanation for Obama's puzzling conduct -- sabotaging his own program by way of his own rhetoric -- is that he truly wants to be forced to nationalize the banks in pursuit of his ultimate goal of a socialist economy. Obama has to oppose nationalization today in order to achieve it tomorrow. He has to show the country and the world that he is doing all he can to help the private sector to sort things out with government help. He must ostentatiously invite the hated demons of Wall Street to join him in rescuing the banks in order, later, to say that he did his best to avoid having to take over the banks. Only then will nationalization be an acceptable alternative -- when he has run out of other options. Meanwhile, he makes sure the private sector won't play ball by going after their bonuses, sending an implicit message to the other executives on Wall Street that reads: Stay away. Even when he takes over the banks, as he almost inevitably will, he is going to have to dress up the nationalization as a temporary measure forced on him by the economy and the previously unrealized depth of the problem. He will cite the example of Sweden, where the government nationalized the banks only temporarily and returned them to private hands quickly. You can't be for nationalization. But Obama hopes to accomplish it nonetheless. Already, in the TARP and TALF programs, we can see how eager he is to use government power to manipulate the once-private sector. Consider the mandates piling up on any financial institution that takes government funds: limits on executive pay, corporate travel and conferences; a strong Buy American recommendation; and aggressive action to get them to make consumer loans. Can affirmative action, low-income lending and diversity outreach be far behind? If Obama can bring banks and the healthcare industry under government control, we will have de facto socialism. Is this Obama's goal? It is obviously where he is headed. Is Obama a socialist? Rather than throw around labels, let's do the math. The best measure of whether an economy is government- or private sector-oriented is the percentage of the gross domestic product (GDP) that flows through government expenditure. Before the current fiscal crisis, the major nations stacked up as shown in the chart on page 27. Obama's stimulus package, alone, comes to about 6 percent of GDP, vaulting the United States past Japan to 40 percent on the list above. If we add in the extra spending in the supplemental appropriations bill and the likely increases for healthcare, the total government percentage will rise well past 40 percent and probably close in on the United Kingdom's 43. That's pretty socialistic, but Obama has three more years to get us up around Germany and really ruin our economy! Morris, a former adviser to Sen. Trent Lott (R-Miss.) and President Bill Clint[...]
Wed, 11 Mar 2009 00:00:00 -0600
By excluding these homeowners from help, Obama is guilty of a holier-than-thou hypocrisy. Was it not Fannie Mae and Freddie Mac that encouraged such over-mortgaged properties? Was it not the Democrats in Congress who passed legislation urging Fannie and Freddie to weaken the standards to allow more low- and lower-middle-income families to buy homes?
How can Obama suddenly pretend to be so shocked -- shocked -- that about 20 percent of America's home mortgages are now worth more than the property they finance? It was the insistence of liberal Democrats that made it so. When Housing and Urban Development Secretary Henry Cisneros demanded that Fannie and Freddie invest 42 percent of their assets in buying low- and lower-middle-income mortgages, and when his successor Andrew Cuomo raised the quota to 50 percent, what did they think would happen? When they explicitly told Fannie and Freddie not to insist on down payments in the mortgages they purchased, how did they think the purchase would be funded? Obviously, if you don't require the borrower to put money down, the full purchase price must be covered by the mortgage. To now, piously, refuse to come to the rescue of those who fell for your party's seeming generosity and bought homes on the terms it suggested is hypocritical at best.
But it is not only the over-mortgaged whom Obama will ignore, but those who have lost their jobs! If you do not make enough money such that your mortgage payments come to 31 percent of your income, you can't get your mortgage refinanced. If your income has dropped to a point where your monthly payments on your loan consume a greater part of your earnings than 31 percent, you are stuck.
So we have Obama rushing to the aid of those who have been hurt in this bad economy, but exempting from his proposed relief anyone who has lost his job and seen a cut in income or whose property values have dropped below the amount of his mortgage. In other words, he'll help anyone but those most in need.
And, once again, Obama would limit his aid to those who make below $200,000 a year. While he doesn't specify this limit in his proposal, he does limit his intervention to mortgages of less than $720,000. At standard mortgage interest rates, such a loan would call for $60,000 or so in payments a year. To qualify for relief, your mortgage payment can't be larger than 31 percent of your income -- or about $200,000. Once more, Obama makes it clear that he is not the president of anyone who makes that much money or more. He is only the president of the other people.
Obama, of course, forgets -- or doesn't care -- that those making over $200,000 account for almost a third of the total national spending and that you cannot stimulate an economy while constantly cutting off those people from any consideration in any government program. But Obama is determined to try.
Wed, 11 Feb 2009 00:30:47 -0600
Now the actions of three people who told their voters that they were Republicans have eliminated any hope that the GOP has for influence during the next two years. By making their own deals with the Obama administration and settling for cosmetic improvements in the so-called stimulus package, Sens. Collins, Olympia Snowe (R-Maine) and Arlen Specter (R-Pa.) have sold out their party, their state and their supporters.
Don't buy their excuse that they shaved more than one hundred billion dollars in spending from the Senate version. By the time the Senate/House conference reconciles the differences between the versions of the legislation passed by the two houses, most of that spending will be back in the law anyway.
Collins, Snowe and Specter had a chance to send a message to Obama that he had to deal with the Republican Party to avert a filibuster. They could have made it clear that genuine bipartisan cooperation was necessary to pass legislation. These three senators, pledged to cut taxes and oppose massive growth in federal spending, could have demanded a 2-to-1 ratio for tax cuts over spending, rather than the reverse, as Obama is succeeding in getting.
Instead, the three wimped out and caved in for peanuts from Obama. In doing so, they completely stripped their party of any leverage. There was no point in having gotten 41 votes if the three weakest links could sell the party out.
This stimulus package will:
• Hurt economic recovery by elbowing aside private borrowers and consumers as the government goes to the front of the line to borrow adequate funds to cover its deficit.
• Invite massive inflation in the future as consumers and businesspeople sit on most of the money until times improve. Then, when confidence begins to return -- no thanks to the stimulus package -- they will deluge the economy with money, triggering massive inflation.
• Expand government and spend borrowed money on projects that may have some long-term merit but are scarcely our top priority right now.
Republicans in Maine and Pennsylvania need to learn their lesson and assure that these three senators face a primary. Real conservatives, who oppose larger government, must stand up to these three phony Republicans.
They'll get their chance. Specter is up for reelection in 2010. He should have been defeated in 2006 when a real conservative, Pat Toomey, opposed him in a primary and only narrowly lost. Better luck next time.
The very concept of checks and balances evaporated last week on Capitol Hill when these three senators sold out their colleagues and stripped their conference of its power. Now Obama can buy off the GOP senator by senator without having to make genuine compromises with the other party to pass his agenda.
In 1993, Clinton was not able to buy Republicans retail. Only Vermont's Jim Jeffords, who soon became a Democrat, gave way and dealt independently with the president. Now, with their backs to the wall, facing a spending package that will consign America to rampant inflation, massive debt and continued recession, these three senators have gone back on their most fundamental pledge to their constituents -- to act in the public good.
Wed, 28 Jan 2009 00:30:00 -0600
By demanding that Citibank cancel its plans to buy a private jet, the Obama administration is tapping into a justified populist anger against the greed, privilege, stupidity and sense of entitlement of the Wall Street biggies. But he is also setting the precedent for government control over the actions of private banks. If Obama extends his power to the selection of management and policies regarding the lending of money, nationalization will become a de facto reality. And once the government controls the banks, it controls the economy. At best, we will have a Japanese system where winks and nods from bureaucrats turn industrial policy upside-down; at worst, we will have outright federal control, with government-appointed latter-day Blagojeviches determining who gets loans and who doesn't.
With only 41 votes in the Senate and a distant minority in the House, what should Republicans do in the face of this onslaught against the basic free-market, private-enterprise system?
The answer is for the Republicans to caucus and come up with a Free Enterprise Amendment to add to the stimulus package. The amendment should spell out what the government may not do in influencing the policy of private banks. It should, for example, make it illegal for the feds to urge certain lending policies on banks or to suggest specific loans that might be granted. It should enjoin the feds from intervening in decisions on who should manage various aspects of bank operations. The idea would be to cordon off large parts of the private sector, even in subsidized institutions, to bar public federal government influence.
A well-drawn amendment would be akin to the protections in the Bill of Rights against government intervention in certain activities such as religion, press, speech, petitioning and assembly. It would lay down markers indicating what the feds may not do.
This amendment could draw strong support from Democrats and might even be negotiable with the Obama administration. Democrats are not anxious to be labeled as the party of socialism, and Republicans, who know the stimulus package will pass anyway, are looking for a way to, at minimum, influence it. Sitting on the sidelines and voting no is not the way to win friends and influence people.
If moderate Democrats and the administration prove truculent or overly limited in what they will accept, the Free Enterprise Amendment gives the Republican Party a place to stand in a filibuster. To filibuster merely to reduce the size of the stimulus or to influence the mix of the tax cuts or the specifics of the spending would not appeal to an America in shellshock over the depression. But a strong stand -- refusing to allow the stimulus package to come up for a vote -- in order to make sure that our economy remains private and that socialism does not come inside the Trojan horse makes a great deal of sense and will be seen by the American people as a wise use of power by the Republicans. Rather than asking the Republicans why they won't pass the stimulus package, they will ask Obama why he does not accede to so acceptable an amendment.
And the amendment, once passed, will be worth its weight in stopping bureaucrats from crossing lines that should not be crossed. One can easily see the day when prosecutions for violations of this amendment become commonplace.
Wed, 21 Jan 2009 00:00:00 -0600In implementing his agenda, Barack Obama will emulate the example of Franklin D. Roosevelt. (Not the liberal mythology of the New Deal, but the actuality of what it accomplished.) When FDR took office, he was enormously successful in averting a total collapse of the banking system and the economy. But his New Deal measures only succeeded in lowering the unemployment rate from 23 percent in 1933, when he took office, to 13 percent in the summer of 1937. It never went lower. And his policies of over-regulation generated such business uncertainty that they triggered a second-term recession. Unemployment in 1938 rose to 17 percent and, in 1940, on the verge of the war-driven recovery, stood at 15 percent. (These data and the real story of Hoover's and Roosevelt's missteps, uncolored by ideology, are available in The Forgotten Man by Amity Shlaes, copyright 2007.) But in the name of a largely unsuccessful effort to end the Depression, Roosevelt passed crucial and permanent reforms that have dominated our lives ever since, including Social Security, the creation of the Securities and Exchange Commission, unionization under the Wagner Act, the federal minimum wage and a host of other fundamental changes. Obama's record will be similar, although less wise and more destructive. He will begin by passing every program for which liberals have lusted for decades, from alternative-energy sources to school renovations, infrastructure repairs and technology enhancements. These are all good programs, but they normally would be stretched out for years. But freed of any constraint on the deficit -- indeed, empowered by a mandate to raise it as high as possible -- Obama will do them all rather quickly. But it is not his spending that will transform our political system, it is his tax and welfare policies. In the name of short-term stimulus, he will give every American family (who makes less than $200,000) a welfare check of $1,000 euphemistically called a refundable tax credit. And he will so sharply cut taxes on the middle class and the poor that the number of Americans who pay no federal income tax will rise from the current one-third of all households to more than half. In the process, he will create a permanent electoral majority that does not pay taxes, but counts on ever-expanding welfare checks from the government. The dependency on the dole, formerly limited in pre-Clinton days to 14 million women and children on Aid to Families with Dependent Children, will now grow to a clear majority of the American population. Will he raise taxes? Why should he? With a congressional mandate to run the deficit up as high as need be, there is no reason to raise taxes now and risk aggravating the depression. Instead, Obama will follow the opposite of the Reagan strategy. Reagan cut taxes and increased the deficit so that liberals could not increase spending. Obama will raise spending and increase the deficit so that conservatives cannot cut taxes. And, when the economy is restored, he will raise taxes with impunity, since the only people who will have to pay them would be rich Republicans. In the name of stabilizing the banking system, Obama will nationalize it. Using Troubled Asset Relief Program funds to write generous checks to needy financial institutions, his administration will demand preferred stock in exchange. Preferred stock gets dividends before common stockholders do. With the massive debt these companies will owe to the government, they will only be able to afford dividends for preferred stockholders -- the government, not private investors. So who will buy common stock? And the government will demand that its bills be paid before any profits that might materialize are reinvested in the financial institution, so how will the value of the stocks ever grow? Devoid of private investors, these institutions will fall ever more under government control. Obama will begin the process by limiting executi[...]
Wed, 14 Jan 2009 00:25:00 -0600
The crucial difference between the approach favored by House Republicans and former Speaker Newt Gingrich (R-Ga.) and the bailout that was passed in October of last year was that the Republicans contemplated using insurance and loans, not outright grants, to shore up endangered companies. One key reason for their resistance to giving away grants was the realization that the Democrats would demand that the "taxpayers get something back" for all the capital they were giving banks. Inevitably, they realized, federal aid would come with a demand for government-owned stock in the companies receiving the assistance.
Now that the feds have become stockholders in our major banks and insurance companies, the question is: What will they do with this power?
Hanging in the balance will be whether the United States continues to follow free-market economics or chooses to emulate the no-growth, government-dominated economies that prevail in Western Europe.
Will we cash in our capitalist system for a socialist democracy?
It is easy to see how socialism could start. Federal regulators might demand, with some justice, that banks limit their compensation and bonus packages to senior executives, just as they have already made manifest their displeasure at AIG's party-loving, frat-jock ways. From there, the feds could go to imposing affirmative action goals on hiring and promotion, government guidance on lending decisions, proscriptions on redlining and the like.
It is great that Citibank has agreed to work in bankruptcy courts with defaulting lenders to restructure and reduce loan payments and even to cut interest rates or forgive principal. But it is dangerous that Citi's enlightenment came not from inner virtue but from pressure by its federal government benefactors.
Even if we do not evolve into a European-style government with permanent ownership positions in key banks and insurance companies and a public sector that is not shy about issuing orders, we could go the way of Japan very easily. Tokyo needs no such formal power; a word to the wise whispered into a banker's ear by a MITI bureaucrat can achieve sudden changes in bank policy. The result of this public power over private companies has been a kind of crony capitalism that has brought economic growth to a standstill in Japan as it has in Europe. Too often the public regulators guess wrong, as when Japan told its industry to focus on mainframe computers rather than laptops.
And there is always a Blagojevich somewhere, scheming to get rich by demanding kickbacks from publicly subsidized banks and insurance companies. Political cronyism and corruption seeps into private business decisions when the door is opened by taxpayer subsidies and government stock holdings.
The solution is clear. President-elect Obama wants the $350 billion to be at his beck and call when he takes office. He's right to want it. But Congress should attach an amendment limiting the role the federal government can play in the ownership, management, policies and operations of the companies to which it pays this bailout money. We want bailouts, not a government takeover in disguise.
Wed, 07 Jan 2009 00:06:31 -0600
But it won't work for one basic reason: Livni and Barak are weak compared to Netanyahu and won't bring to bear the degree of force necessary to accomplish their objective. Instead, they will wage the war with one eye on the international reaction and will pull the punches needed to bring Hamas to submission. They will not close the Gaza border to supplies, and they will cave in to demands to suspend the ground war long before it has silenced Hamas.
Livni and Barak will snatch defeat from the jaws of victory by giving up before final victory is achieved. And their obvious failure to persevere will be all Netanyahu needs to win the election.
After all, Livni, Olmert and Barak have set a very high standard for success. Having triggered the war in order to stop Hamas's rocket attacks, they cannot stop it and declare victory unless the attacks do, in fact, stop. Hamas cannot let Israel silence its attacks while it still breathes and has life. So the attacks won't stop. With 1.5 million homes to hide in, the Israeli Army cannot hope to destroy every rocket and every launcher and kill every terrorist. The attacks will continue, as they have continued, day after day, even during the invasion. And, faced with international pressure and the dissatisfaction war is causing in their internal party ranks, Livni and Barak will lose their gamble.
President-elect Obama, for his part, has remained largely silent, declaring that America has "only one president at a time." But his silence is militated as much by his desire to see Livni get elected as by any support for Israel or reticence to speak out while Bush still serves. He needs Livni to win just as Bill Clinton needed the Labor Party and Shimon Peres to win while he was president. If Israel is to be led by Netanyahu, Obama will be in perpetual conflict with the tough Israeli leader. He will constantly be constrained to try to hold Netanyahu back from military attacks on Iran and on Hamas and Hezbollah, and he won't bring Netanyahu to any negotiations until the Israeli leader feels he has a partner with whom to negotiate. Netanyahu is not going to play the game of pretending that the emperor has clothes by believing that the Palestinian Authority represents anyone but itself. He will demand that the Palestinians show their interest in peace through negotiations by electing leaders who want to negotiate. Otherwise, land for peace will be DOA in the Israeli Cabinet.
So it is in everybody's interest that Livni win, except for Israel's. Because Hamas and Iran represent real threats, not just phantoms, Israel will be ill-served if the current demonstration of toughness leads them to elect doves for the next five years. Doves won't defeat terrorists.
Wed, 17 Dec 2008 00:24:23 -0600
Meanwhile, in Israel, there is a growing consensus, reflected in public opinion surveys, that trading land for peace is a chimera. Netanyahu points out that "we do not have a viable partner with whom to negotiate peace." The Palestinian Authority does not speak for the people of either Gaza or the West Bank, and Hamas, which probably does (it won the election), does not want to be a party to any peace agreement. Recent experience suggests that Hamas will quickly install rocket launchers on any territory Israel concedes, using it not as a basis for peace, but as a platform from which to kill more Jews.
Former Prime Minister Ehud Olmert and the candidates of the left, Labor's Ehud Barak and Kadima's Tzipi Livni, are deeply committed to land for peace. Their rejection by the Israeli electorate -- the anticipated outcome of the Feb. 10 election -- will signal a bold departure in the political consensus of the Jewish state, a consensus that flies directly in the face of Obama's likely policy.
The difference between the U.S. and Israel also extends to the realm of how strongly they oppose Iranian development of nuclear weapons. While Iran moves closer and closer to a bomb that could and will be used against Israel, Obama speaks of extending the American "nuclear umbrella" to cover Israel.
Reading between the lines, this means that he doesn't think he can stop Iranian nuclear ambitions and will retreat to a policy of deterrence, accepting a nuclear Iran in the bargain.
If Netanyahu wins the election, he will bring with him a determination to stop Iranian nuclear weapons, no matter what, and a refusal to concede more territory in the name of the peace process. But Obama's foreign policy team will be focusing on pushing Israel in just the opposite direction.
The result is likely to be the most significant divergence between Israeli and American policies since 1956, when President Eisenhower sided with the Arabs to halt the British-French-Israeli invasion of Suez.
The United States has tremendous leverage over Israel -- military, financial and political. And Obama's ability to carry the Jewish vote by a wide margin despite his likely Middle East policy makes him largely immune to the kind of political pressure that has disciplined American presidents in the past and forced them to incline toward accommodating Israeli views on the Middle East.
But Israel probably has the military capacity to bomb Iran and to win the Middle East war against Syria, Hamas, Iran and Hezbollah that is likely to result. Unlike Olmert, Netanyahu will use ground troops right off the bat and will fight such a war to win and to win big. But they may have to do it without their strongest ally: the United States.
Wed, 26 Nov 2008 00:35:10 -0600These bailouts and stimuli will not solve the problem. They are simply painkillers -- methadone -- designed to mitigate our suffering. It is only the private sector shakeout, "creative destruction" in the words of Joseph Shumpeter, that can eradicate the bad debt and bring the economy back to health. To fail to go through this process would put us in the same situation as Japan, which evaded a reckoning with its bad-debt crisis and has suffered with 20 years of stagnation as a result. But to go through withdrawal, even with methadone, will be a long and painful process. Liberals -- demand-siders -- and conservatives -- supply-siders -- disagree on the remedies for the crisis. The demand-siders feel that we need to stimulate demand by passing out checks and cutting middle-class taxes. The right points out that this will only be a drop in the ocean of global demand and that much of the money will be used for debt reduction and to buy Chinese products. The supply-siders plead for a cut in corporate taxes and capital gains levies. Critics say that the current lack of confidence in the economy inhibits investment no matter how much the tax code incentivizes it. Both solutions and both criticisms are correct. The proper medication -- the right methadone -- is a balance between the two. But, conceptually, what is happening is the end of the consensus around free market economics engendered by the fall of communism. The era of free market consensus lasted from 1989 through 2008. It is now over. George W. Bush and Barack Obama will leave us with a legacy of government regulation, at a minimum, and control, at the maximum, over the economy. When the Republican version of the bailout, calling for loans and insurance instead of outright grants of money to corporations, was rejected (thanks to John McCain), the fate of the free market era was sealed. With the bailout cash came the reasonable demand for "equity for the taxpayers" in return. Enter the government. Now the federal government is the major shareholder in most of our important financial and insurance companies, and in many of our manufacturing corporations. Now we hear this leverage articulated in reasonable demands for limits on corporate executive bonuses and compensation. But soon it will metastasize into calls for a public voice in lending policies and government management and control. Obama and a top-heavy Democratic Congress will accelerate this trend, and there is nothing the Republican Party will be able to do about it. In the meantime, Obama will pass his entire radical agenda by dressing up the expansion of health insurance and his other schemes as part of a "stimulus package." Already, he includes a grab bag of items from his campaign agenda in his characterizations of the legislation. He wants wind energy, solar panels, infrastructure construction, school buildings and anything else he can think of. Thus sanitized, the most massive pork barrel in history will be rubber-stamped in a matter of days by the new Democratic Congress. Obama will be freed from the discipline of the balanced budget. With a bipartisan consensus that deficits are vital in fighting the crisis (or mitigating the pain), there is no constraint on Obama and his party. The sky is the limit on spending. Indeed, spending is now a national duty. The inevitable result will be massive inflation. You cannot run a deficit of a trillion dollars as some suggest and not have double-digit inflation. The Fed will be powerless to stop it because it will not bite the bullet and raise interest rates, for that would truly bring on the mother of all depressions. And since the deficit spending will have been simply to reduce the pain of the depression and not to cure its cause, it [...]
Wed, 19 Nov 2008 00:28:34 -0600
According to The Washington Post, it would "examine the books of major financial institutions that operate across national borders so regulators could begin to have a more complete picture of banks' operations."
Their scrutiny would extend to hedge funds and to various "exotic" financial instruments. The International Monetary Fund (IMF), a European-dominated operation, would conduct "regular vigorous reviews" of American financial institutions and practices. The European-dominated College of Supervisors would also weigh in on issues like executive compensation and investment practices.
There is nothing wrong with the substance of this regulation. Experience is showing it is needed. But it is very wrong to delegate these powers to unelected, international institutions with no political accountability.
We have a Securities and Exchange Commission appointed by the president and confirmed by the Senate, both of whom are elected by the American people. It is with the SEC, the Treasury and the Federal Reserve that financial accountability must take place.
The European Union achieved this massive subrogation of American sovereignty the way it usually does, by negotiation, gradual bureaucratic encroachment, and without asking the voters if they approve. What's more, Bush appears to have gone down without a fight, saving his debating time for arguing against the protectionism that France's Nicolas Sarkozy was pushing. By giving Bush a seeming victory on a moratorium against protectionism for one year, Sarkozy was able to slip over his massive scheme for taking over the supervision of the U.S. economy.
All kinds of political agendas are advancing under the cover of response to the global financial crisis. Where Franklin Roosevelt saved capitalism by regulating it, Bush, to say nothing of Obama, has given the government control over our major financial and insurance institutions. And it isn't even our government! The power has now been transferred to the international community, led by the socialists in the European Union.
Will Obama govern from the left? He doesn't have to. George W. Bush has done all the heavy lifting for him. It was under Bush that the government basically took over as the chief stockholder of our financial institutions and under Bush that we ceded our financial controls to the European Union. In doing so, he has done nothing to preserve what differentiates the vibrant American economy from those dying economies in Europe. Why have 80 percent of the jobs that have been created since 1980 in the industrialized world been created in the United States? How has America managed to retain its leading 24 percent share of global manufacturing even in the face of the Chinese surge? How has the U.S. GDP risen so high that it essentially equals that of the European Union, which has 50 percent more population? It has done so by an absence of stifling regulation, a liberation of capital to flow to innovative businesses, low taxes, and by a low level of unionization that has given business the flexibility to grow and prosper. Europe, stagnated by taxation and regulation, has grown by a pittance while we have roared ahead. But now Bush -- not Obama -- Bush has given that all up and caved in to European socialists.
The Bush legacy? European socialism. Who needs enemies with friends like Bush?
Thu, 06 Nov 2008 00:28:13 -0600
If Obama raises taxes, the situation could get even worse. With a liberal Congress on his hands, he will be constrained to move to the left, if he needs any pushing. When Clinton was elected in 1992, the Democrats in control of Congress gave him a clear message: Either you govern within the four walls of the Democratic caucus or you won't get our support. Crossing the aisle to get Republican votes, even including the GOP in negotiations, was a no-no for which the president would pay dearly if he transgressed.
The result was predictable. Moderate initiatives like welfare reform were scrapped, the Congress passed tax hikes and legislation became festooned with liberal amendments. Faced with the need to round up every last vote in the Senate and House Democratic caucuses, Clinton had no choice but to load up conservative bills like an anti-crime measure with liberal pork (like a provision for midnight basketball courts in urban areas) to get unanimous caucus backing.
Obama will have to move left to appease his caucus. He will become their hostage, and they his jailers.
This dynamic will produce extreme-left-wing governance, which the Republicans can blame for the continuation of the recession and for any worsening. The party will recover, fed by anger at Obama's policies, and will emerge from this defeat stronger than ever.
But the Republicans must learn the lesson of MoveOn.org. Founded in the bleak days of the Clinton impeachment, MoveOn developed a grassroots Internet base. Building up its e-list of activists and contributors, MoveOn laid the basis for the incredible Internet appeal of the Obama campaign. At last count, Obama has 4.5 million donors, most online.
Conservatives cannot count on the Republican Party to fight their battles for them, and certainly cannot count on them to win. The right needs to develop cyber-roots conservative organizations to rival the power of groups like MoveOn.org. The stellar efforts of NewsMax.com and its ally, GOPtrust.com, illustrate the power of such efforts. Together, these groups raised $10 million for an independent expenditure on media in swing states featuring the Rev. Jeremiah Wright's anti-American bombast.
And their efforts worked.
Virtually all the polls agreed that Obama would win 52-53 percent of the vote, but the surveys varied in the amount of undecideds they found. On Election Day, virtually every undecided voter went to McCain, and Obama's final vote share was no more and no less than the 52-53 percent the surveys had predicted. This unanimity among undecided voters is attributable to the endgame of groups like GOPtrust.com and NewsMax.com.
These groups have to lead the way in running media to battle against the leftist legislation that will undoubtedly emanate from the Obama administration and the liberal Congress America has just elected. Then they can become the basis for a Republican resurgence, just as MoveOn.org was this year for the Democrats.
Wed, 29 Oct 2008 00:40:00 -0600
At the beginning of this contest, Obama effectively made the case that the election was a referendum on Bush's performance in office. Painting a vote for McCain as a desire for "four more years of the same failed policies," he made the most of Bush's dismal approval rating. Had he been able to keep the focus on Bush, he would likely have inherited most of the undecided vote.
But as Obama surged into a more or less permanent lead in October, animated by the financial crisis, he has assumed many of the characteristics of an incumbent. Every voter asks himself one question before he or she casts a ballot: Do I want to vote for Obama? His uniqueness, charisma and assertive program have so dominated the dialogue that the election is now a referendum on Obama.
As Obama has oscillated, moving somewhat above or somewhat below 50 percent in all the October polls, his election likely hangs in the balance. If he falls short of 50 percent in these circumstances, a majority of the voters can be said to have rejected him. Likely a disproportionate number of the undecideds will vote for McCain.
But don't write Obama off. His candidacy strikes such enthusiasm among young and minority voters that there is still a chance that a massive turnout will deliver the race to the Democrats. None of the polling organizations has any experience with -- or model for -- so massive a turnout, especially among voters notorious for staying at home. But the primaries proved that these young and minority voters will not stay home this time, but will vote for Obama. The effect of this increased vote is hard to calculate, but it may be enough to offset the undecideds who will vote for McCain.
But the basic point, one week before Election Day, is that even if Obama clings to a four- or five-point lead over McCain in the polling, the election is not over. The question is not so much how large his lead is over the Republican, but whether or not he is topping 50 percent. As long as the polling leaves him below that mark, he is vulnerable and could well lose.
Clearly, in recent weeks, McCain has been able to cast Obama as a leftist. He has made the issue of income redistribution central to the campaign. With the aid of Joe the Plumber and the discovery of Obama's Chicago PBS interview, in which he lamented the absence of redistribution of wealth, McCain has made the proposition seem central to Obama's ideology. The unprecedented power the bailout has given government over the banking industry raises the real specter of socialism in America. The banks have, effectively, been nationalized. How will government use its power over them? This new reality, coupled with Obama's professed pursuit of "social and political justice" through "redistribution of the wealth," is enough to send a shiver down the spine of those who embrace the free market as the key to economic growth.
The audacity of Obama's injection of a social democratic concept borrowed from Western Europe into American politics is stunning. And almost half the voters seem to be buying it.
Wed, 22 Oct 2008 00:00:00 -0600Social populism, the conservative reply, attacks the values of Hollywood and the intellectual elite. It criticizes the welfare state and opposes a redistribution of wealth from the hardworking and deserving to what it sees as the freeloaders. More recent in origin, social populism has its roots in abolitionism and Prohibitionism and achieved its modern form in Richard Nixon's silent majority, Jerry Falwell's and Pat Robertson's Christian Coalition and Ronald Reagan's new right-wing majority. Within the Republican Party, social populists oppose the country-club wing and emphasize social conservatism over economic austerity. In recent years, both forms of populism have been in remission. Clinton's policies of triangulation and Bush's lack of focus on domestic issues have steered both parties away from either economic- or social-populist impulses. But the Obama campaign has been, from the beginning, grounded in economic populism. His explicit attack on the Bush tax cuts "for the rich" and his promise to make them "pay a little bit more" resonated with economic-populist voters. When the Wall Street crisis hit and top executives fled failing companies, taking hundreds of millions of dollars with them, the economic populists powered Obama to a nine-to-10-point lead in the polls. But meanwhile, social populism was making a comeback on the right. Initially galvanized by Mike Huckabee, the social populists went wild when McCain chose Sarah Palin for vice president. Palin's life story epitomized the values of social populists. Her opposition to abortion, her mothering of a special-needs child, her backing for guns and her robust crusade for energy sources brought mainstream Republican values to the McCain ticket. If McCain wins this election, which he might well, it will have been the social populism of Sarah Palin that engineered much of his comeback. When the financial crisis broke, McCain and Palin attacked corporate greed and called for restoring values on Wall Street. But their critique seemed merely a faint echo of the outrage of the left's economic populists. Then came Obama's conversation with Joe the Plumber, possibly the decisive moment in the election. His blunt, blue-collar criticism of Obama's proposal to "spread the wealth around" found immediate resonance among social populists. Where economic populists want to take from the undeserving, overfed rich and give to the needy poor, social populists decry taking from hardworking, thrifty citizens and giving to illegal immigrants and the self-indulgent lazy. At last, the McCain camp has something to say. Finally, it has, in McCain's phrase, "nailed Jell-O to the wall" and found a way to attack Obama's tax plans and support for social engineering and income redistribution. It is true that the richest Americans are getting richer a lot faster than the rest of the country. The top 10 percent experienced a real (after inflation) income growth of almost 50 percent in this decade. The rest of America saw its income rise, but by less than 5 percent after inflation. But it wasn't Bush tax cuts that fueled the growing inequality. The top 1 percent of American taxpayers now pay 40 percent of the taxes (compared with 33 percent in 2003 and 24 percent in 1986). Obama's proposed increase in taxes on the rich will kill the economy and send us into a deeper depression. But Clintonian policies like expanding the earned income tax credit, stretching out eligibility for food stamps and Medicaid, and funding college scholarships can make a huge difference. How will we pay for them? By keeping taxes on the rich at their current levels and using growing tax revenues to pay to promote downward irrigation of wealth. Politically, the un[...]
Wed, 15 Oct 2008 00:40:00 -0600
With friends like this, Obama doesn't need enemies. As their radical activities make headlines every day, Obama's intimate involvement with these radicals becomes more and more of a political liability.
The other Obama scandals have no topical relevance. Rev. Wright no longer spews hatred from the pulpit and has apparently been persuaded to stay away from media interviews. Likewise, William Ayers is making himself scarce; the Obama/Ayers relationship, whatever it may have been, is clearly in the past. Rezco is facing sentencing in his own corruption case, but isn't likely to turn on the one man who may acquire the power to pardon him.
But, as Election Day approaches and early balloting proceeds in many states, ACORN's tactics will get more and more media attention. As election officials discover ACORN frauds, the association will become more injurious to Obama, particularly when it is his own campaign that is funding many of the fraudulent activities. At the very least, the negative publicity ACORN will attract will paint Obama as a radical with questionable judgment. At the most, it might cause voters to wonder if he is not involved in electoral fraud.
The recent book by Wall Street Journal editor John Fund, "Stealing Elections: How Voter Fraud Threatens Our Democracy," discusses the prevalence of voter fraud, made newly possible by lax enforcement of laws requiring identification to vote. As Fund indicates, the motor/voter laws have encouraged waves of new voters, many of them ineligible to participate. Let us remember that eight of the 9-11 hijackers were registered to vote!
So ACORN is the gift that will keep on giving as its activities attract attention while Election Day nears.
But are these McCain attacks on Obama going to work? Clearly they haven't so far. Obama has lower negatives than McCain and his unfavorable rating has not risen, despite the avalanche of attack advertising to which he has been subjected. Possibly, voters are just inured to the attacks and disregard them. But they are more likely just distracted by the financial meltdown all around them. We have never had a presidential race, since 1944, where the contest was not the most important news in the four weeks before the election. (In 1944, the war overshadowed the election much to the frustration of the Republican candidate Thomas E. Dewey). The candidates seem unable to get a word in edgewise as the financial news dominates. People follow the Dow Jones more than the Gallup, Rasmussen or Zogby polls.
If the presidential race remains an afterthought, crowded out by the financial news, Obama will waltz into the White House by a comfortable margin. But if the stock market stops its gyrations for a while and no new household name/corporation or bank goes broke, the negatives against Obama will compel attention at last. And then the race may close swiftly and dramatically.