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Dale F. Ogden’s Blog on
www.dalefogden.net
I want
Individual Freedom
Minimum Government
Minimum Taxes
Dale F. Ogden for Governor
of California 2010
www.dalefogden.org
“Small Government is Beautiful”
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“I cannot undertake
to lay my finger on that article of the Constitution which granted a right to
Congress of expending, on objects of benevolence, the money of their
constituents...” --James Madison Any alleged “right” of one man, which necessitates the
violation of the rights of another, is not and cannot be a right. — Ayn
Rand “Dependence
begets subservience and venality, suffocates the germ of virtue, and prepares
fit tools for the designs of ambition.” --Thomas Jefferson, Notes on
Virginia, Query 19, 1781 “The whole aim of
practical politics is to keep the populace alarmed, and hence clamorous to be
led to safety, by menacing it with an endless series of hobgoblins, all of
them imaginary.” – H.L. Mencken Experience should
teach us to be most on our guard to protect liberty when the government’s
purposes are beneficent. Men born to freedom are naturally alert to repel
invasion of their liberty by evil-minded rulers. The greatest dangers to
liberty lurk in insidious encroachment by men of zeal, well-meaning, but
without understanding. — Judge Louis D. Brandeis “Truth
does not become more true if the whole world were to accept it; nor does it
become less true if the whole world were to reject it.” —
Maimonides “If you put the Federal Government in charge of the Sahara
Desert, in five years there would be a shortage of sand.” —
Milton Friedman
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11/30/2009:
Letters: A Grim Outlook on Benefit Taxes Regarding your Nov. 16
editorial “A Tax a Day”: Medicare and Social
Security have been evolving from insurance plans into income redistribution
plans for a few decades. Sen. Harry Reid’s latest proposal to help pay
for health-care reform by assessing a Medicare payroll tax surcharge of 1% (employee
and employer tax combined) on income over $200,000 is more of a change in
magnitude than in substance. When the Medicare tax was expanded to include
all wages and salaries after 1993, payments into Medicare were completely
decoupled from expected benefits. Someone who earns 10 times the income of
another worker has, since 1993, paid 10 times as much into Medicare, but
certainly won’t receive 10 times more in benefits. If Sen. Reid adds a
progressive feature to the payroll tax, the higher-income earner may be paying
12 or 13 times as much as a lower-income worker; again, a change in magnitude,
not substance. Medicare and Social
Security both are on trend lines that result in bankruptcy. The near-term
Democratic response will be to further decouple contributions from benefits
by adding tax surcharges, uncapping the income subject to taxation and
widening the definition of income beyond wages and salaries. Those populist
measures are, as the Journal’s editors indicate, harmful to the economy,
particularly in a recession; they can be disincentives to work hard, invest
and take risk. They also are likely to
make the day of fiscal reckoning much worse. Consider what’s happened
since the inception of Medicare in 1966—the total Medicare tax was 0.35%,
the Social Security tax was 5.8% and both were assessed on a maximum income
of just $6,600. In 2009, the Medicare tax is 2.9% (employee and employer) on
all income and the Social Security tax is 12.4% on the first $106,800 of
wages. For high-income workers (earning
the equivalent of $500,000 in today’s dollars) the combined Medicare
and Social Security tax has been growing at about 6% per year for 33 years. Another
50 years of such growth in entitlement taxes versus, say, 3% per year growth
in income, means that two-thirds of a high-income earner’s pay will go
toward Medicare and Social Security. Assuming federal and state tax rates
stay “reasonable” at 45% or so of income, the rich will have to
borrow money in order to meet their total tax burden. Well before that
happens, of course, benefits will be eliminated for the affluent and the
entitlement programs (including the new health-care reform, if passed) will
become de facto welfare plans; for anyone still paying income taxes, that
conversion should be welcomed, as it will relieve pressure somewhat for
future daily tax increases. Perry Scott, Winston-Salem,
N.C. Printed in The Wall Street
Journal, page A18 11/30/2009:
The Arabs Have Stopped Applauding Obama
by Fouad Ajami ‘He talks too much,”
a Saudi academic in Jeddah, who had once been smitten with Barack Obama, recently
observed to me of America’s 44th president. He has wearied of Mr. Obama
and now does not bother with the Obama oratory. He is hardly alone, this
academic. In the endless chatter of this region, and in the commentaries
offered by the press, the theme is one of disappointment. In the Arab-Islamic
world, Barack Obama has come down to earth. He has not made the world
anew, history did not bend to his will, the Indians and Pakistanis have been
told that the matter of Kashmir is theirs to resolve, the Israeli-Palestinian
conflict is the same intractable clash of two irreconcilable nationalisms, and
the theocrats in Iran have not “unclenched their fist,” nor have
they abandoned their nuclear quest. There is little Mr. Obama
can do about this disenchantment. He can’t journey to Turkey to tell
its Islamist leaders and political class that a decade of anti-American scapegoating is all forgiven and was the product of
American policies—he has already done that. He can’t journey to
Cairo to tell the fabled “Arab street” that the Iraq war was a
wasted war of choice, and that America earned the malice that came its way
from Arab lands—he has already done that as well. He can’t tell
Muslims that America is not at war with Islam—he, like his predecessor,
has said that time and again. It was the norm for
American liberalism during the Bush years to brandish the Pew Global
Attitudes survey that told of America’s decline in the eyes of foreign
nations. Foreigners were saying what the liberals wanted said. Now those surveys of 2009
bring findings from the world of Islam that confirm that the animus toward
America has not been radically changed by the ascendancy of Mr. Obama. In the
Palestinian territories, 15% have a favorable view of the U.S. while 82% have
an unfavorable view. The Obama speech in Ankara didn’t seem to help in
Turkey, where the favorables are 14% and those unreconciled, 69%. In Egypt, a country that’s
reaped nearly 40 years of American aid, things stayed roughly the same: 27%
have a favorable view of the U.S. while 70% do not. In Pakistan, a place of
great consequence for American power, our standing has deteriorated: The unfavorables rose from 63% in 2008 to 68% this year. Mr. Obama’s election
has not drained the swamps of anti-Americanism. That anti-Americanism is
endemic to this region, an alibi and a scapegoat for nations, and their
rulers, unwilling to break out of the grip of political autocracy and
economic failure. It predated the presidency of George W. Bush and rages on
during the Obama presidency. We had once taken to the
foreign world that quintessential American difference—the belief in
liberty, a needed innocence to play off against the settled and complacent
ways of older nations. The Obama approach is different. Steeped in an overarching
idea of American guilt, Mr. Obama and his lieutenants offered nothing less
than a doctrine, and a policy, of American penance. No one told Mr. Obama
that the Islamic world, where American power is engaged and so dangerously
exposed, it is considered bad form, nay a great moral lapse, to speak ill of
one’s own tribe when in the midst, and in the lands, of others. The crowd may have
applauded the cavalier way the new steward of American power referred to his
predecessor, but in the privacy of their own language they doubtless wondered
about his character and his fidelity. “My brother and I against my
cousin, my cousin and I against the stranger,” goes one of the Arab
world’s most honored maxims. The stranger who came into their midst and
spoke badly of his own was destined to become an object of suspicion. Mr. Obama could not make
up his mind: He was at one with “the people” and with the rulers
who held them in subjugation. The people of Iran who took to the streets this
past summer were betrayed by this hapless diplomacy—Mr. Obama was out
to “engage” the terrible rulers that millions of Iranians were
determined to be rid of. On Nov. 4, on the 30th
anniversary of the seizure of the American embassy in Tehran, the embattled
reformers, again in the streets, posed an embarrassing dilemma for American
diplomacy: “Obama, Obama, you are either with us or with them,” they
chanted. By not responding to these cries and continuing to “engage”
Tehran’s murderous regime, his choice was made clear. It wasn’t
one of American diplomacy’s finest moments. Mr. Obama has himself to
blame for the disarray of his foreign policy. American arms had won a decent
outcome in Iraq, but Mr. Obama would not claim it—it was his
predecessor’s war. Vigilance had kept the American homeland safe from
terrorist attacks for seven long years under his predecessors, but he could
never grant Bush policies the honor and credit they deserved. He had declared
Afghanistan a war of necessity, but he seems to have his eye on the road out
even as he is set to announce a troop increase in an address to be delivered
tomorrow. He was quick to assert, in
the course of his exuberant campaign for president last year, that his
diplomacy in South Asia would start with the standoff in Kashmir. In truth
India had no interest in an international adjudication of Kashmir. What was
settled during the partition in 1947 was there to stay. In recent days, Mr. Obama
walked away from earlier ambitions. “Obviously, there are historic
conflicts between India and Pakistan,” he said. “It’s not
the place of the United States to try to, from the outside, resolve those
conflicts.” Nor was he swayed by the
fate of so many “peace plans” that have been floated over so many
decades to resolve the fight between Arab and Jew over the land between the River
Jordan and the Mediterranean. Where George W. Bush offered the Palestinians
the gift of clarity—statehood but only after the renunciation of terror
and the break with maximalism—Mr. Obama
signaled a return to the dead ways of the past: a peace process where America
itself is broker and arbiter. The Obama diplomacy had
made a settlement freeze its starting point, when this was precisely the
wrong place to begin. Israel has given up settlements before at the altar of
peace—recall the historical accommodation with Egypt a quarter century
ago. The right course would have set the question of settlements aside as it
took up the broader challenge of radicalism in the region—the menace
and swagger of Iran, the arsenal of Hamas and Hezbollah, the refusal of the Arab
order of power to embrace in broad daylight the cause of peace with Israel. The laws of gravity, the
weight of history and of precedent, have caught up with the Obama presidency.
We are beyond stirring speeches. The novelty of the Obama approach, and the
Obama persona, has worn off. There is a whole American diplomatic tradition
to draw upon—engagements made, wisdom acquired in the course of decades,
and, yes, accounts to be settled with rogues and tyrannies. They might yet
help this administration find its way out of a labyrinth of its own making. —Mr. Ajami, a
professor at Johns Hopkins School of Advanced International Studies and a
senior fellow at Stanford University’s Hoover Institution, is the
author of “The Foreigner’s Gift” (Free Press, 2007).Printed
in The Wall Street Journal, page A19 Copyright 2009 Dow Jones &
Company, Inc. All Rights Reserved 11/27/20096:
A vote for Jerry Brown appears to be a vote for the corrupt ACORN. I hope
that I am wrong but he may be counting on them to help him get elected with
lots and lots of illegal votes. Anyway, let’s see if Governor Moonbeam
can walk the walk... Jerry Brown vs. ACORN at the Orange County
Register Calif. Attorney General Offers Incoherent,
Troubling Answers When Asked About ACORN ...and while we’re talking about candidates
for governor, Meg Whitman is a fraud. She backed Barbara Boxer, generally
recognized at the least intelligent (i.e., “dumbest”) member of
the United States Senate. That makes Meg Whitman more of a RINO that Arnold
Schwarzenegger. 11/26/2009:
Happy Thanksgiving
11/24/2009:
The Rasmussen Reports daily Presidential Tracking Poll
for Tuesday shows that 27% of the nation’s voters Strongly Approve of
the way that Barack Obama is performing his role as President. Forty-two
percent (42%) Strongly Disapprove giving Obama a Presidential Approval Index
rating of –15. This is the lowest Approval Index rating yet measured
for President Obama... Fifty-two
percent (52%) of Democrats Strongly Approve while 68% of Republicans Strongly
Disapprove. Among those not affiliated with either major political party,
just 16% Strongly Approve and 51% Strongly Disapprove... Support for the health care plan
proposed by the President and Congressional Democrats has fallen to a new low of
38%. Sixty percent (60%) of voters believe passage of the bill will lead to
higher health care costs...
11/24/2009:
Carbon Deal Thought Safe Despite Embarrassing Emails “Revelation of a series of embarrassing
e-mails by climate scientists provides fodder for critics, but
experts believe the issue will not hurt the U.S. climate bill’s chance
for passage or efforts to forge a global climate change deal.”
(Reuters, Tuesday) So it was never about science. [It’s always about money and power; someone
should sue Al Gore and his ilk into poverty.] FEE Timely Classic “Global Warming Hot Problem or Hot Air?”
(April 1998) by Jonathan H. Adler 11/24/2009:
Global Warming With the Lid Off ‘The two MMs have been after the CRU station data for years. If
they ever hear there is a Freedom of Information Act now in the U.K., I think
I’ll delete the file rather than send to anyone. . . . We also have a
data protection act, which I will hide behind.” So apparently wrote Phil
Jones, director of the University of East Anglia’s Climate Research
Unit (CRU) and one of the world’s leading climate scientists, in a 2005
email to “Mike.” Judging by the email thread, this refers to
Michael Mann, director of the Pennsylvania State University’s Earth
System Science Center. We found this nugget among the more than 3,000 emails
and documents released last week after CRU’s
servers were hacked and messages among some of the world’s most
influential climatologists were published on the Internet. The “two MMs” are almost certainly Stephen McIntyre and Ross
McKitrick, two Canadians who have devoted years to
seeking the raw data and codes used in climate graphs and models, then
fact-checking the published conclusions—a painstaking task that strikes
us as a public and scientific service. Mr. Jones did not return requests for
comment and the university said it could not confirm that all the emails were
authentic, though it acknowledged its servers were hacked. Yet even a partial review
of the emails is highly illuminating. In them, scientists appear to urge each
other to present a “unified” view on the theory of man-made
climate change while discussing the importance of the “common cause”;
to advise each other on how to smooth over data so as not to compromise the
favored hypothesis; to discuss ways to keep opposing views out of leading
journals; and to give tips on how to “hide the decline” of
temperature in certain inconvenient data. Some of those mentioned in
the emails have responded to our requests for comment by saying they must
first chat with their lawyers. Others have offered legal threats and personal
invective. Still others have said nothing at all. Those who have responded
have insisted that the emails reveal nothing more than trivial data
discrepancies and procedural debates. Yet all of these nonresponses manage to underscore what may be the most
revealing truth: That these scientists feel the public doesn’t have a
right to know the basis for their climate-change predictions, even as their
governments prepare staggeringly expensive legislation in response to them. Consider the following
note that appears to have been sent by Mr. Jones to Mr. Mann in May 2008: “Mike,
Can you delete any emails you may have had with Keith re AR4? Keith will do
likewise. . . . Can you also email Gene and get him to do the same?”
AR4 is shorthand for the U.N.’s Intergovernmental Panel of Climate
Change’s (IPCC) Fourth Assessment Report, presented in 2007 as the
consensus view on how bad man-made climate change has supposedly become. In another email that
seems to have been sent in September 2007 to Eugene Wahl of the National
Oceanic and Atmospheric Administration’s Paleoclimatology
Program and to Caspar Ammann of the National Center
for Atmospheric Research’s Climate and Global Dynamics Division, Mr.
Jones writes: “[T]ry and change the Received
date! Don’t give those skeptics something to amuse themselves with.” When deleting, doctoring
or withholding information didn’t work, Mr. Jones suggested an
alternative in an August 2008 email to Gavin Schmidt of NASA’s Goddard
Institute for Space Studies, copied to Mr. Mann. “The FOI [Freedom of
Information] line we’re all using is this,” he wrote. “IPCC
is exempt from any countries FOI—the skeptics have been told this. Even
though we . . . possibly hold relevant info the IPCC is not part of our remit
(mission statement, aims etc) therefore we don’t have an obligation to
pass it on.” It also seems Mr. Mann and
his friends weren’t averse to blacklisting scientists who disputed some
of their contentions, or journals that published their work. “I think
we have to stop considering ‘Climate Research’ as a legitimate
peer-reviewed journal,” goes one email, apparently written by Mr. Mann
to several recipients in March 2003. “Perhaps we should encourage our
colleagues in the climate research community to no longer submit to, or cite
papers in, this journal.” Mr. Mann’s main beef
was that the journal had published several articles challenging aspects of
the anthropogenic theory of global warming. For the record, when we’ve
asked Mr. Mann in the past about the charge that he and his colleagues
suppress opposing views, he has said he “won’t dignify that
question with a response.” Regarding our most recent queries about the
hacked emails, he says he “did not manipulate any data in any
conceivable way,” but he otherwise refuses to answer specific
questions. For the record, too, our purpose isn’t to gainsay the
probity of Mr. Mann’s work, much less his right to remain silent. However, we do now have
hundreds of emails that give every appearance of testifying to concerted and
coordinated efforts by leading climatologists to fit the data to their
conclusions while attempting to silence and discredit their critics. In the
department of inconvenient truths, this one surely deserves a closer look by
the media, the U.S. Congress and other investigative bodies. Read a Selection of the Emails 11/25/2009:
A Minority View: Voluntarism or Self-Interest? How many things in our
lives would we like to depend upon the generosity and selflessness of our
fellow man, and do you think we would like the outcome? You say, “Williams,
are you now putting down generosity and selflessness?” No, I’m
not. Let me ask the question in a more direct way. Say you want a nice
three-bedroom house. Which human motivation do you think would get you the
house sooner: the generosity of builders or the builders’ desire to
earn some money? What about a nice car? Which motivation of auto companies
and their workers do you trust will get you a car sooner: the generosity of
owners and workers, or owner desire for profits and worker desire for wages?
As for me, I put my faith in people’s self-interest as the most
reliable way to get them to do what I want and believe most other people
share my faith. What would your prediction be about the supply of housing,
cars and most other things if Congress enacted a law mandating that a house
or car could only be donated, not sold? If you said there would be a shortage
of houses and cars, go to the head of the class. Bone marrow
transplantation is a relatively new medical procedure that is used to treat
diseases once thought incurable such as leukemia, aplastic
anemia, Hodgkin’s disease, immune deficiency disorders and some solid
tumors such as breast and ovarian cancer. Every year, at least 1,000
Americans die and others suffer because they cannot find a matching bone
marrow donor. The reason why there is a shortage of donors is the National
Organ Transplant Act (NOTA), enacted by Congress in 1984. NOTA makes it
illegal to give anything of value in exchange for bone marrow and that
includes, for example, giving a college student a scholarship or a new
homeowner a mortgage payment. Everyone involved in such a transaction --
doctors, nurses, donors and patients -- risks up to five years in a federal
penitentiary. There might be light at
the end of the tunnel because the Washington-based Institute for Justice
(ij.org), one of my very favorite liberty-oriented organizations, has brought
suit against this inhumane practice of the U.S. Congress. The suit, Flynn v.
Holder, was filed in the Los Angeles Division of the U.S. District Court for
the Central District of California on Oct. 26, 2009. Doreen Flynn, the
plaintiff, is the mother of five children, three of whom have Fanconi anemia, a serious genetic disorder affecting the
blood whose sufferers often need a bone marrow transplant during their teen
years. The Institute for Justice
is not challenging Congress’ ban on compensation for solid organs such
as hearts, kidneys and livers. Instead, the lawsuit challenges only the
provision of National Organ Transplant Act that bans compensation for bone
marrow. The premise of the Institute for Justice’s legal challenge is
that there is a fundamental biological distinction between renewable marrow
cells and nonrenewable solid organs. In the case of bone marrow, the donor’s
bone marrow is completely replenished in a few weeks. That’s less time
than it takes for the human body to fully replenish a pint of donated blood
that is often sold to blood banks. Just about everyone would agree
that there would be massive shortages and discontent if there were a
congressional mandate that we must depend on our fellow man’s
generosity for our home, our car, our food and thousands of other items that
we use. Why then must a person depend on his fellow man’s generosity
for an item like bone marrow that might mean the difference between life and
death? There is no rhyme or reason for the congressional prohibition of bone
marrow other than arbitrary unconstitutional abuse of power that far too many
Americans tolerate and would like to see extended to other areas of our
lives. 11/24/2009:
Solving Whose Problem? by
Thomas Sowell No one will really
understand politics until they understand that politicians are not trying to
solve our problems. They are trying to solve their own problems-- of which
getting elected and re-elected are number one and number two. Whatever is
number three is far behind. Many of the things the
government does that may seem stupid are not stupid at all, from the
standpoint of the elected officials or bureaucrats who do these things. The current economic
downturn that has cost millions of people their jobs began with successive
administrations of both parties pushing banks and other lenders to make
mortgage loans to people whose incomes, credit history and inability or
unwillingness to make a substantial down payment on a house made them bad
risks. Was that stupid? Not at
all. The money that was being put at risk was not the politicians’
money, and in most cases was not even the government’s money. Moreover,
the jobs that are being lost by the millions are not the politicians’
jobs-- and jobs in the government’s bureaucracies are increasing. No one pushed these
reckless mortgage lending policies more than Congressman Barney Frank, who
brushed aside warnings about risk, and said in 2003 that he wanted to “roll
the dice” even more in the housing markets. But it would very rash to
bet against Congressman Frank’s getting re-elected in 2010. After the cascade of
economic disasters that began in the housing markets in 2006 and spread into
the financial markets in Wall Street and even overseas, people in the private
sector pulled back. Banks stopped making so many risky loans. Home buyers
began buying homes they could afford, instead of going out on a limb with “creative”--
and risky-- financing schemes to buy homes that were beyond their means. But politicians went
directly in the opposite direction. In the name of “rescuing” the
housing market, Congress passed laws enabling the Federal Housing
Administration to insure more and bigger risky loans-- loans where there is
less than a 4 percent down payment. A recent news story told
of three young men who chipped in a total of $33,000 to buy a home in San
Francisco that cost nearly a million dollars. Why would a bank lend that kind
of money to them on such a small down payment? Because the loan was insured
by the Federal Housing Administration. The bank wasn’t
taking any risk. If the three guys defaulted, the bank could always collect
the money from the Federal Housing Administration. The only risk was to the
taxpayers. Does the Federal Housing
Administration have unlimited money to bail out bad loans? Actually there
have been so many defaults that the FHA’s own reserves have dropped
below where they are supposed to be. But not to worry. There will always be
taxpayers, not to mention future generations to pay off the national debt. Very few people are likely
to connect the dots back to those members of Congress who voted for bigger
mortgage guarantees and bailouts by the FHA. So the Congressmen’s and
the bureaucrats’ jobs are safe, even if millions of other people’s
jobs are not. Congressman Barney Frank is
not about to cut back on risky mortgage loan guarantees by the FHA. He
recently announced that he plans to introduce legislation to raise the limit
on FHA loan guarantees even more. Congressman Frank will
make himself popular with people who get those loans and with banks that make
these high-risk loans where they can pocket the profits and pass the risk on
to the FHA. So long as the taxpayers
don’t understand that all this political generosity and compassion are
at their expense, Barney Frank is an odds-on favorite to get re-elected. The
man is not stupid. What is stupid is
believing that politicians are trying to solve our problems, instead of
theirs. As for the FHA running low
on money, that is not about to stop the gravy train, certainly not with an election
coming up in 2010. The Federal Deposit
Insurance Corporation is also running low on money. But that is not going to
stop them from insuring bank accounts up to a quarter of a million dollars.
It would be stupid for them to stop with an election coming up in 2010. 11/24/2009:
Would Obama Be President If He Made These
Five Campaign Promises? Calling a politician
dishonest is like calling a burglar dishonest. The difference is that
burglars take less of your money, don’t get invited on the Sunday
morning shows, and are more dangerous -- unless you happen to be a woman near
a male member of the Kennedy family. Even amongst politicians,
Barack Obama is such a liar that he makes Bill Clinton look like honest Abe
Lincoln by comparison. During the campaign, Barack Obama promised everything
to everybody and when people inquired too closely, his supporters screamed
that you had to be a racist for doubting him. Well now, Barack Obama is
President of the United States and he can no longer hide behind “hope”
and “change” while he votes “present” on the tough
issues. Now, people can actually judge Barack Obama based on what he’s
doing instead of just projecting their hopes and dreams on a man with no
record of leadership and a gift for soaring oratory. Quite frankly, 2008 was a
dream scenario for Barack. The sitting Republican President had a 25%
approval rating, the GOP ran an old, uninspiring candidate who was disliked
by much of the base, and there was a botched response to a last minute
financial crisis that slammed the door shut on the GOP’s last hopes of
winning. Still, with all those
advantages, could Barack Obama have become President had he told the American
people what he actually intended to do in his first year as President instead
of essentially saying, “Imagine what you want a politician to be. Ok,
got it? Great, that’s what I’m going to do!” Would Obama have been elected if he had told
Americans the truth? 1) My fellow Americans, I
pledge to push a wildly unpopular health care plan that will lead to higher
premiums, higher taxes, huge cuts to Medicare, exploding deficits, rationing,
taxpayer-funded abortions, a single payer system and poor medical care! ... 2) Under my
administration, we’ll send Khalid Sheikh Mohammed to New York to be
tried for reasons no one seems to be able to explain. Back in 2006 Barack
Obama said a “military tribunal was a perfectly fine way of handling
such dangerous individuals as Khalid Shaikh
Mohammed.” ... 3) If you make me the next
President of the United States, I will completely abandon bipartisanship and
run the most partisan administration in American history! I make no bones
about the fact that I’m no big fan of bipartisanship. However, Barack
Obama made it one of the central themes of his campaign... 4) Under my
administration, taxpayers will throw away tens of billions of dollars to prop
up General Motors and Chrysler in order to give payback to the unions that
help get me elected... 5) If you elect me as
President, I will put this nation over a trillion dollars in debt for a
stimulus bill that will be doomed to failure before it’s even passed!
There’s so little evidence that the stimulus bill has helped the
economy that even Saturday Night Live has started making fun of the idea in
skits. Of course, the whole idea never made any sense in the first place,
since it was enacted in the first half of 2009 despite the fact that the “Congressional
Budget Office estimated that the recession would end in the ‘second
half of 2009”‘ even if Obama did nothing.” So, even if the
recession is over, as many economists are speculating -- it means nothing because
it would have happened anyway. It’s like we spent a trillion dollars to
guarantee that it would get cold during the winter. Could Barack Obama have
told the American people the truth and still been elected, even under the
most favorable circumstances to liberals since Richard Nixon was impeached?
There’s about as much chance of that as there is that Al Gore will give
up living in a big mansion and move to a Unabomber style shack in order to “save
the earth.” 11/23/2009:
The Orphan Of The American Political
Spectrum Were one to design a
political philosophy calculated to appeal to large numbers of “conservatives”
and “liberals,” it might look very much like contemporary libertarianism:
tolerant and supportive of individual rights in matters ranging from sexual
orientation to religion, and committed to the rule of law and free market
capitalism. For a host of reasons,
however, libertarianism in the US today is politically parentless, and
largely unrepresented in most of our major cultural and educational
institutions, a socio-political orphan. It’s an odd state of affairs,
and unfortunate as well. In part, the
underachievement of libertarianism is explained by the existence of the
Libertarian Party and the philosophy’s concomitant lack of standing in
either the Democratic or the Republican Party. But it’s also a
consequence of libertarianism’s embrace by some as a kind of
religion--thereby yielding fanatical and anarchist schemes like abolishing
the state, legalizing drugs, selling the sidewalks, whatever. Still, it’s one
thing to be burdened by (what shall we call them?) exuberant fans, and
something else again to be ignored as a political philosophy altogether. To
understand why you have to look at the roles played by others, starting with
the parties of the right. To neoconservatives, for
instance, libertarianism is a direct threat to their “nation building”
agenda (from the beginning many libertarians and libertarian think tanks,
like the Cato Institute, were opposed to the Iraqi adventure), made all the
worse by their appeal to many of the same people that the neocons
attempt to cultivate and corral. The so-called social and
religious conservatives--represented by people like Mike Huckabee--represent
another barrier. Particularly within the GOP, religious conservatives (not to
mention religious populists) constitute a bloc that is hostile to the
individualistic and freedom loving stance most libertarians espouse re social
issues. So-called K Street
Republicans, and many big business groups, are also dismissive of
libertarianism, preferring instead a political environment conducive to
legislative and regulatory deal making, the sort of value-free mindset that
arguably led so many to blindly follow George Bush and John McCain right into
a ditch. The right’s
hostility, of course, isn’t the only, or even the controlling, reason
for libertarianism’s lack of political clout. The fundamental
disinterest of their sometime allies on the left, like the ACLU, is a bigger
factor, and one that explains its total lack of influence within the
Democratic party. Because of the hold “economic
progressives “ (such as the education lobby, public employee unions,
faculty lounge Marxists, and trial lawyers) have over US liberalism and the
Democratic party, libertarians and their ideas are countenanced only insofar
as they are useful--usually in promotion of some social issue on which
liberals and libertarians agree. If, however, the pollsters
and a growing number of economists are right, this may change. According to
the folks at the Pew and Gallup organizations, Democrats and liberals are at
risk of major losses in next year’s congressional elections. This,
because of the public’s unhappiness with the state of the economy, and
their lack of confidence in the plans proffered by the administration, and
the majority party in Congress, to deal with it. At the same time a number
of economists in and out of government are suggesting that, far from being
solved, the nation’s economic problems are at risk of worsening. If
these economists and pollsters are right, and the Democrats take a terrible
drubbing next year, it may occur to many liberals to reassess their hoary
economic nostrums, and to link arms with the libertarians on economic issues,
not necessarily because of what’s in their hearts as because of what’s
in their heads. If so, it won’t be a
minute too soon. Because the plain truth is that the lubricant necessary to
maintain, in a country as large and fractious as the US, both our social
services and our civil rights is money, and lots of it. And the only way that
money can be produced in sufficient quantities is by the application of those
pro-business and pro-growth economic policies that are at the very heart of
libertarianism. 11/23/2009:
G.O.P. Considers ‘Purity’ Resolution for Candidates The battle among
Republicans over what the party should stand for — and how much it
should accommodate dissenting views on important issues — is probably
going to move from the states to the Republican National Committee when it
holds its winter meeting this January in Honolulu. Republican leaders are
circulating a resolution listing 10 positions Republican candidates should
support to demonstrate that they “espouse conservative principles and
public policies” that are in opposition to “Obama’s
socialist agenda.” According to the resolution, any Republican
candidate who broke with the party on three or more of these issues– in
votes cast, public statements made or answering a questionnaire – would
be penalized by being denied party funds or the party endorsement. The proposed resolution
was signed by 10 Republican national committee members and was distributed on
Monday morning. They are asking for the resolution to be debated when
Republicans gather for their winter meeting. The resolution invokes
Ronald Reagan, and noted that Mr. Reagan had said the Republican Party should
be devoted to conservative principles but also be open to diverse views.
President Reagan believed, the resolution notes, “that someone who
agreed with him 8 out of 10 times was his friend, not his opponent.” Hence the provision
calling for cutting off Republicans who agree with the party on seven of 10
items. The resolution demands that Republicans support “smaller
government, smaller national deficits and lower taxes,” denial of
government funding for abortion, and “victory in Iraq and Afghanistan.”
It calls on candidates to oppose amnesty for illegal immigrants and repealing
of the Defense of Marriage Act. The development is going
to put pressure on Michael Steele, the party chairman, as he tries to
maintain a balance between those in his party who have been saying the road
to victory is to include divergent views, and those who say the party needs
to embrace conservative principles that have been at its core. Mr. Steele managed, at his
party’s last meeting, to steer clear of potentially contentious
resolutions, including one that equated Democrats with socialists. Gail Gitcho,
a spokeswoman for the committee, said it was not clear what Mr. Steele would
do. “The deadline for submitting
resolutions for the R.N.C. Winter Meeting is more than 30 days away,”
she said. “At this point, we do not what resolutions will be submitted
nor what the final language of any resolution ultimately submitted may be.” Here is the resolution’s
list [and my comments]: (1) We support smaller
government, smaller national debt, lower deficits and lower taxes by opposing
bills like Obama’s “stimulus” bill [Where were the
Republicans with their “conservative” principles when the Bushes
were in office?]; (2) We support
market-based health care reform and oppose Obama-style government run health
care [Again, where were the Republicans with their “conservative”
principles when the Prescription benefit was passed?]; (3) We support
market-based energy reforms by opposing cap and trade legislation [How about
just getting out of the way and letting markets work?]; (4) We support workers’
right to secret ballot by opposing card check [How about “Right to Work”
laws instead of forced unionization? Unions should be voluntary associations;
no one should ever be forced to join a union.]; (5) We support legal
immigration and assimilation into American society by opposing amnesty for
illegal immigrants [Me too, so how about eliminating all the welfare giveaway
programs (which are funded by theft) and let anyone who wants to work come to
the United States?]; (6) We support victory in
Iraq and Afghanistan by supporting military-recommended troop surges [There
will never be “victory” in Afghanistan; there is no country over which
to be victorious. And I’m not convinced we have achieved “victory”
in Iraq; wait another ten years and see what happens]; (7) We support containment
of Iran and North Korea, particularly effective action to eliminate their
nuclear weapons threat [I doubt we can ever eliminate their nuclear weapons,
but we can defend ourselves. National defense is one of the few legitimate
purposes of government; what a novel idea.]; (8) We support retention
of the Defense of Marriage Act [Just get government out of everyone’s
personal lives, including marriage; do not give special privileges or
penalize married people. Live and let live.]; (9) We support protecting
the lives of vulnerable persons by opposing health care rationing and denial
of health care and government funding of abortion [Get government out of
health care and health care financing; then rationing will not be an issue.
And, as far as abortion, people can disagree: first trimester abortion should
be a decision between a mother and her conscience; third trimester abortion
effectively is infanticide and should be illegal; I’m open to second
trimester abortions so let the states decide]; and (10) We support the right
to keep and bear arms by opposing government restrictions on gun ownership
[including licenses and punitive taxes on ammunition]. 11/23/2009:
Why is the Stock Market Rallying; is it just like 1982? They recommend: buy
gold; it’s the best refuge against a profligate government. If you’re
a little gutsier, then maybe you might want to short some of the stocks with
high P/E’s. You might also consider shorting treasury bonds; how can
interest rates go any lower?
11/22/2009:
Sometimes all we need is a graph (or two) to make us happy. Why has it taken
people so long to see him for the two-bit Chicago con man that he is?
11/19/2009:
from the Daily Reckoning The Lloyd’s Prayer Our Chairman, who art at Goldman Poor Goldman Sachs. Everyone is on its case.
Criticizing. Carping. Jealous. Envious. So, today we rise in defense of the Wall Street
giant. Yes, the Goldmen may be shysters. But they
are honest shysters... We pick up sword and
shield, ready to fight for Goldman, after reading The Financial Times. The FT
has devoted a whole page to Goldman bashing. It’s time someone stood up
to say a kind word for the firm. Besides, Lloyd Blankfein
said he was sorry. That’s right. He announced that the firm regretted
its role in the world financial crisis. And if that weren’t enough, he
pledged half a billion dollars to helping small business through tough times. In his apology, Blankfein
mentioned that he thought Goldman was doing “God’s work.”
That is what prompted humorists to make up the “Lloyd’s Prayer,”
we have republished above. On the surface of it, it does seem absurd. If any
group of people ever worshipped Mammon, it is the bunch that works at
Goldman. Money is what makes that mare run; no one doubts it. In 2008, the average
compensation of the average Goldman employee averaged $364,000 - or more than
6 times the earnings of the average American who was not employed by Goldman.
Naturally, the widespread publication of this fact caused a surge of envy.
Now comes news that the average Goldman man expects to make about twice as
much this year - or about $765,000. As you can imagine, this did nothing to
soothe the jealous spirits. Instead, it inflamed them. And now, everyone has
Goldman in his sights. Newspaper editorials kvetch and moan. Union-organized
yahoos demonstrate in front of Goldman’s offices. Cartoons make fun of
Blankfein. Commentators say the Goldman crew is greedy. The Rolling Stone
magazine described Goldman as a “vampire squid.” Saturday Night
Live mocked the company. Stand up comics stock up on Goldman jokes. Even
priests criticize the firm’s claim to be doing ‘God’s work.’ The regulators cannot be
far behind. It is illegal to trade on “inside information.” So,
when a company targets the shares of a rival, and passes its buy orders
through a Wall Street firm, the traders are forbidden from trading the shares
on their own account. They cannot profit from ‘front running’
shares, based information not yet available to the public. Goldman clearly profits
from front running. But it does it by aggregating information from clients
rather than using the inside information from a single client. This gives
them a “market color,” rather than precise trading targets. In
other words, if you have a client who sets out to acquire Acme Cement
Company, you can’t buy up the shares yourself in anticipation of the
rise in the share prices. That information is “protected, inside
information.” But suppose you have two clients, each of whom targets a
cement firm? You quickly get a “market color,” don’t you?
You put two and two together. If they’re both after cement makers,
probably, the whole cement sector will go up. You buy cement makers, though
not those that your clients are buying. This aggregated inside
information gives Goldman a big advantage. So do its close contacts with the
feds. Goldman has its former operatives in key posts throughout the
government. It knows what the government is doing; it has a fair idea of what
the government will do next. In trading US government securities, the biggest
business in the financial world, this “insider” knowledge is no
doubt a handy thing to have. It doesn’t hurt either that the Fed is
making money available to Goldman at practically no cost. Nor, that the Fed
is buying its mortgage backed securities - perhaps even ones that would be
hard to unload on the private market. These contacts and sources
of ‘insider’ information are what George Soros has called the “hidden
gifts” that Goldman enjoys...and that contribute mightily to its
success. But so what? As far as we
know, Goldman holds no gun to any counterparty’s head. Nor does it
lie...unless you call saying things that aren’t true “lying.”
Goldman merely says the same falsehoods as the rest of the financial
industry...the things people want to hear...which almost everyone believes
anyway. And is there anything wrong with taking money from the US government?
Doesn’t every retiree do so? Doesn’t every larcenous Congressman
and every conniving contractor and every shiftless welfare addict aim to do
the same thing? Isn’t the whole idea of government to take from someone
and give to someone else? Then, why not to those who are most able to claim
it? The swift...the strong...the smart...the Goldmans! No, dear reader, we cannot
criticize Goldman. Instead, we admire it. Goldman took advantage of the
financial boom by selling debt and derivatives all over the world. Now, it
takes advantage of the ‘recovery,’ by trading on its client
information. And who can blame it for wanting to do business with the richest
and dumbest client of all, the US government? In God’s plan, at
least as we see it, the lowly are raised up. The rich...the proud...and the
foolish are brought down. God deals with the meek on his own. Goldman helps
him bring the boom down on the others. Until tomorrow, 11/18/2009:
From Best of the Web from the Wall Street Journal Online It has been 6½
years since the U.S. Supreme Court, in Grutter v.
Bollinger, upheld the legality of racial discrimination in university
admissions for the purpose of realizing “the educational benefits that
flow from a diverse student body.” Longstanding precedent requires the
court to apply “strict scrutiny” to any claim justifying
discrimination on the basis of race. Writing for a 5-4 majority, Justice
Sandra Day O’Connor asserted that the court’s “deference”
to the “expertise” of the defendant in this case was sufficiently
strict to meet this test. But there is reason to
doubt whether “diversity,” as practiced by American higher
education today, has any educational benefits at all--never mind whether
those benefits are sufficient to justify discrimination. Whatever its
benefits in theory, diversity in practice is often anti-intellectual,
replacing reasoned debate with ritualized expressions of phony emotion. A kerfuffle at New York
University is a case in point. Last week, as we noted, Tunku
Varadarajan of Forbes.com wrote a column meditating
on the Fort Hood massacre, which, he noted, appears to have been a
religiously motivated “act of messianic violence.” (Disclosure: Varadarajan is a friend and former colleague of this
columnist.) In addition to his work in
journalism, Varadarajan teaches at NYU’s
Stern School of Business, and his column set off predictable complaints from
Muslim students and alumni. One alum, Haroon Moghul, wrote an essay at ReligionDispatches.org in which
he accused Varadarajan of “hate-mongering.”
He wrote that Varadarajan’s column had caused
him “pain” and “feelings of marginalization,” and the
headline and sub-headline described him as “shocked” by Varadarajan’s writing. Eventually the university
president, John Sexton, was compelled to respond. While he correctly noted
that it would be wrong for the university “to punish faculty officially
for expressing such ideas,” he also issued a declaration of
disapproval: A journalist and NYU
clinical faculty member has written a piece for Forbes that many Muslims find
offensive. I understand how they feel--I found it offensive, too. I am
teaching Muslim students now, and I have taught them in the past; the
portrayal of Muslims in the Forbes piece bears no resemblance to my
experience; I disagree with the Forbes piece and think it is wrong. I say all this because as
president I have not foresworn the rights I have as a member of the NYU
faculty to challenge an idea that I believe is erroneous. Yesterday Rabbi Yehuda Sarna of NYU’s
Bronfman Center for Jewish Student Life sent an “URGENT Letter”
to his email list: I am writing to urge you
to join me today in “A Campaign Against Hate” celebrating
diversity at NYU, commemorating the victims of the massacre at Fort Hood and
responding to a recent article in Forbes Magazine entitled “Going
Muslim”. The event, dubbed “Harmonyu,”
is being spearheaded by the Islamic Center at NYU. In my opinion, the
article, written by an NYU professor, does not deal sensitively enough with
the role and place of Muslims in America. How’s that for
diversity? NYU’s Jews and Muslims are ganging up on a Hindu and
accusing him of promoting “hate”--an inflammatory charge
anywhere, but especially on a university campus. Yet it’s clear that
Rabbi Sarna knows the charge is unjustified, since
his actual criticism of Varadarajan’s
work--it “does not deal sensitively enough”--is so tepid. Likewise, President Sexton’s
claim to have been offended by Varadarajan’s
article has no credibility. There’s no doubt he was inconvenienced by it,
and we expect he’s none too happy with Varadarajan
for that. But his statement “I found it offensive, too” is a
ritualized expression of empathy, not to be mistaken for the real thing. And
if you read the entire letter, you will find that in spite of Sexton’s
statement that he has “not foresworn” his right “to
challenge an idea that I believe is erroneous,” he offers no
substantive argument to rebut Varadarajan’s
column. This is how “diversity”
works in practice: Intellectual contention is drowned out in a sea of
emotion, much of it phony. Members of designated victim groups respond to a
serious argument with “pain” and “shock” and
accusations of “hate,” and university administrators make a show
of pretending to care. At some campuses, administrators
and faculty members actually do practice censorship. NYU, at least in this
instance, is not the worst offender in this respect. But this sort of
emotional frenzy is nonetheless inimical to the spirit of rational inquiry
that universities are supposed to encourage. Every incident of this sort
makes it clearer how the University of Michigan played Justice O’Connor
and her colleagues for fools. Worse
Than Nixon [This idiot is (or claims to be...who knows?) a lawyer and says
something so stupid that it could make it impossible for that Islamic
slime-bucket, Khalid Sheikh Mohammed, to get a fair trial. An unbiased judge
could use the tainting of the jury pool by Obama and Eric Holder as a reason
to dismiss the case.] “Americans who are
troubled by the decision to send alleged Sept. 11 mastermind Khalid Sheikh
Mohammed to New York for trial will feel better about it when he’s put
to death, President Barack Obama said Tuesday,” Politico reports: During a round of network
television interviews conducted during Obama’s visit to China, the
president was asked about those who find it offensive that Mohammed will
receive all the rights normally accorded to U.S. citizens when they are
charged with a crime. “I don’t think
it will be offensive at all when he’s convicted and when the death
penalty is applied to him,” Obama told NBC’s Chuck Todd. Compare that with the
following report, from Time magazine’s Aug. 17, 1970, issue: It was in Denver’s
Federal Building that President Nixon committed the startling gaffe of
prejudging the case of Charles Manson. While complaining that the press had
made Manson a glamorous hero, Nixon said: “Here was a man who was
guilty, directly or indirectly, of eight murders without reason.” For a
lawyer who occasionally delivers homilies on legal propriety, this was a
serious breach. Attorney General John
Mitchell, who was standing at Nixon’s side, instantly recognized Nixon’s
error. “This has got to be clarified,” he told Presidential Aide
John Ehrlichman immediately afterward. Unhappily,
what ensued was a series of errors compounded by instant communications.
Startled reporters dashed to the press room, and within minutes, the
bulletins were moving across the land. The statement was filmed and broadcast
later on network television, with a clarification appended. But the damage was already
done. It was not until half an hour after Nixon spoke that Press Secretary
Ron Ziegler reappeared before the newsmen. After some minutes of verbal
fencing, Ziegler agreed that Nixon’s words about Manson should be
retracted. When Ziegler told Nixon what had happened, the President was
surprised: “I said ‘charged,’ “ he replied. During
the 3½-hour flight back to Washington, Mitchell persuaded Nixon to put
out a statement backing Ziegler up. It read in part: “The last thing I
would do is prejudice the legal rights of any person in any circumstances. I
do not know and did not intend to speculate as to whether or not the Tate
defendants are guilty, in fact, or not.” Obama issued a Nixonian “clarification,” as the Politico
report notes: When Todd asked Obama if
he was interfering in the trial process by declaring that Mohammed will be
executed, Obama, a former constitutional law professor, insisted that he wasn’t
trying to dictate the result. “What I said was,
people will not be offended if that’s the outcome. I’m not
pre-judging, I’m not going to be in that courtroom, that’s the
job of prosecutors, the judge and the jury,” Obama said. “What I’m
absolutely clear about is that I have complete confidence in the American
people and our legal traditions and the prosecutors, the tough prosecutors
from New York who specialize in terrorism.” But Obama’s
statement is considerably worse than Nixon’s. Whereas Nixon merely
opined that Manson was guilty, Obama prejudged the outcome of the trial and
sentencing. Manson and his co-defendants were tried in state court, a venue
where the president has no authority. By contrast, the prosecutors who will
handle cases of KSM et al. ultimately answer to Obama. Worse still, Obama was
defending his own politically charged decision to try the defendants as
civilians by offering the reassurance that the outcome is preordained. The
president’s claim amounts to an assertion that the U.S. District Court
for the Southern District of New York is a kangaroo tribunal. If this is how
the Obama administration views due process, heaven help any American who is
charged with a federal crime. Look
for the Union Label [Unions once had a
legitimate purpose...and they still might, but unions are allowed to engage
in too many coercive activities that would be illegal for business. Further,
public employee unions are behind most of the problems in states like New
York and California while teacher unions cause harm to education. Abolishing
those unions would go a long way to solving the fiscal crises in those
states.] Here’s an inspiring
story from the Morning Call of Allentown, Pa.: In pursuit of an Eagle
Scout badge, Kevin Anderson, 17, has toiled for more than 200 hours over
several weeks to clear a walking path in an east Allentown park. Little did the do-gooder
know that his altruistic act would put him in the cross hairs of the city’s
largest municipal union. Nick Balzano,
president of the local Service Employees International Union, told Allentown
City Council Tuesday that the union is considering filing a grievance against
the city for allowing Anderson to clear a 1,000-foot walking and biking path
at Kimmets Lock Park. “We’ll be
looking into the Cub Scout or Boy Scout who did the trails,” Balzano told the council. Balzano said Saturday he isn’t targeting Boy
Scouts. But given the city’s decision in July to lay off 39 SEIU
members, Balzano said “there’s to be no
volunteers.” No one except union members may pick up a hoe or shovel,
plant a flower or clear a walking path. Maybe if the SEIU joins
forces with the gay-rights extremists, they can finally defeat the scourge of
scouting. 11/18/2009: Daily Presidential
Tracking Poll: The Rasmussen Reports daily Presidential Tracking
Poll for Wednesday shows that 26% of the nation’s voters Strongly
Approve of the way that Barack Obama is performing his role as President.
Forty percent (40%) Strongly Disapprove giving Obama a Presidential Approval
Index rating of –14. That matches the lowest Approval Index rating yet
recorded for this President...
11/18/2009: Worse Than Taxes by John
Stossel Bill O’Reilly is mad
at me because I’m not mad enough about taxes. Last week on “The O’Reilly
Factor”, we talked about California’s and New York’s
enormous budget deficits and planned tax increases. Those states would have
big surpluses had they just grown their governments in pace with inflation.
But of course they didn’t. Now the politicians act like their current
deficits are something imposed on them by the recession. But that’s nonsense.
They created the problem with their reckless spending. Let’s look at the
particulars. Had the government of New York state grown at the rate of
population and inflation over the past 10 years, it would have a $14 billion
surplus today. Instead, spending grew at twice the rate of inflation
(http://tinyurl.com/yguvfpm). So New York has a $3 billion deficit. To dent California’s
deficit, bureaucrats will withhold an extra 10 percent from every taxpayer --
at least from those who don’t flee the state. New York planned to raise
the price of new license plates, but then backed off. The visible tax was
unpopular. But the hidden taxes grow. Hidden taxes are more
pernicious because they disguise what we pay for government. We blame
merchants, not our legislators, for the high price of gasoline, liquor,
cigarettes and phone calls, but the money goes to the political thieves. New York imposes a gas tax
of 61 cents a gallon -- almost a quarter of the cost of the gas. New York
City taxes cigarettes at $4.25 a pack. Washington state collects $26 per
gallon of hard liquor. Illinois politicians take a sneaky cut when you buy
junk food: They add 6.25 percent to the cost of soda and candy. My phone bill lists seven
different taxes -- unintelligible stuff like a “Public Safety
Commission Surcharge” and an “MCTD tax.” The payroll tax is
one of the biggest hidden taxes. You assume that you know what you pay
because it’s listed on your paycheck, but that’s actually only
half of it. Employers must pay an equal amount -- money that otherwise would
have been part your salary. O’Reilly was most
indignant about the visible taxes. “You, Stossel, are going to be
paying 45 percent of your money to the government!” he said. I replied
that I already pay more than that, since I live in New York City. But I apparently was not
indignant enough, because later in his show he told comedian Dennis Miller, “Stossel
doesn’t get it.” O’Reilly is right
about my not being furious. It’s not that taxes don’t anger me.
They do. But I’m more angry about the arrogance of the ruling class. It
reminds me of Walter Williams’ riff: “Politicians are worse than
thieves. At least when thieves take your money, they don’t expect you
to thank them for it.” Taxes, even counting
hidden taxes, are not the real measure of what the thieves take. The true
burden of government, the late Milton Friedman said, is the spending level.
Taxation is just one way government gets money. The other ways -- borrowing
and inflation -- are equally burdens on the people. (State governments can’t
inflate, but they sure can borrow.) O’Reilly told me
that America is ready for a tax revolt. I hope he’s right. But I don’t
think it will happen until more people see the ruling elite for what it is: a
gang of arrogant bullies that has the audacity to believe that they know how
to direct our lives better than we do. That’s why, bad as
the taxes are, I’m more upset about ObamaCare, Medicare, the “stimulus,”
the auto bailout, the bank bailouts, the Fannie/Freddie bailouts, the
trillions in guarantees, and on and on. The politicians’
spending schemes represent presumptuous interference in our lives. They are
an assault on our autonomy. 11/17/2009: Five Terrible Cruelties of Liberalism
by John Hawkins Liberalism is an
extraordinarily deceptive, ruinous and cruel ideology. That’s because
liberalism comes, arms wide open, whispering sweet words of compassion and
pity, even as it forcefully slams down a boot upon the neck of people it’s
“helping.” 11/17/2009: Bowing to “World Opinion” by Thomas Sowell ...”As a private
citizen, Barack Obama has a right to make as big a jackass of himself as he
wants to. But, as President of the United States, his actions not only
denigrate a nation that other nations rely on for survival, but raise
questions about how reliable our judgment and resolve are— which in
turn raises questions about whether those nations will consider themselves
better off to make the best deal they can with our enemies.” 11/13/2009: California, Michigan Face Doomsday Budget
Scenarios Finance directors for
California and Michigan outlined dire fiscal scenarios for both states that
could span far beyond the recession and into the next decade. Short-term budget gaps
have battered states as revenue plummeted during the recession. Aided by
about $250 billion in funds from the stimulus package (which is being
distributed through the end of next year), states managed to close the gaps
this year. But both finance directors, speaking at a Pew Center on the States
event, were pessimistic about their states’ futures even beyond fiscal
2011. “We’re facing
a cliff in 2011 when stimulus dollars run out,” said Mitchell E. Bean,
the director of the Michigan House Fiscal Agency. “There is not an end
in sight, even in recovery.” Filling the most recent
holes led states, notably California, to consider drastic options. As of July
2009, California’s budget shortfall was 49.3% of its general funds. “I looked as hard as
I could at how states could declare bankruptcy,” said Michael C. Genest, the director of the California Department of
Finance who is stepping down at the end of the year. “I literally
looked at the federal constitution to see if there was a way for states to
return to territory status.” There was none, so the
legislature cut back sharply on education and health care to fill the gap.
Mr. Genest already predicts the 2011 shortfall will
outpace the projected $7 billion gap. It’s a smaller deficit than this
year, but the choices will be more difficult. “All the options
have been taken away or used up,” Mr. Genest
said. And with rising costs there’s no end in sight for the state’s
budget woes. Mr. Genest estimated that, eventually,
40% of the state’s budget would go to the state Medicaid program, 40%
to education, 10% to debt service and 6% to retiree medical services and
pension — leaving little left for anything else. Mr. Bean described a
similarly depressing scenario for Michigan, which could end the recession
with 25% fewer jobs than in June 2000 and a total of 1 million job losses. He
noted that strict term limits often lead to political gridlock that prevents
large scale reforms, such as overhauling the tax code so it is broad based
with lower tax rates. In the meantime, a $2.8 billion budget gap last year
led the state to make its own set of cuts and Mr. Bean said lawmakers will
likely have to trim the budget at least 12.5% this year. “Citizens don’t
quite understand yet the implications of some of the cuts that we’ve
made,” Mr. Bean said. “A lot of it has fallen on local
governments. I am very concerned that we’re going to have a lot of
insolvencies in local governments.” Additional stimulus money
wouldn’t fix the long-term problems, the two men agreed. “Unfortunately
I think we’re going to have to hit the wall before we have any real
reform,” Mr. Bean said, which means more localities filing for
bankruptcy and maybe even some schools. But don’t expect the
states to turn down any extra funds. “I think if you ask a heroin
addict if he wants some free heroin he’s always going to say yes,”
Mr. Genest said. 11/14/2009: The
Passing-on-Costs Myth by Robert Ringer Any civilized person dislikes
the thought of minorities being oppressed, and I would argue that the most
oppressed minority in the U.S. is the small businessperson. But he is not
without his supporters. By and large, his employees think highly of him. Why
not? After all, he gives them the opportunity to earn a living. So, who is it that doesn’t
like small business owners? The government! Why? Because small businesspeople
are stubbornly independent. They don’t need or want government help.
They make their own way in the world. Profitability is the name of the game
for them, but it’s not an easy task. In a truly free society,
it would be difficult enough for a small business to make a profit. A
small-business owner is like an orchestra conductor. He has to be on top of
every aspect of his enterprise. He has to make sure that every employee is
doing his job correctly. And when he goes broke -
as millions of small businesspeople have done - he often feels like all he
has to show for his work is that he gave his employees a good lifestyle for
an extended period of time. They go on to the next job, and he goes on to
face his creditors. Ironically, the small
businessperson’s biggest threat is also his biggest employee - the
government. I say biggest employee, because the government is supposed to
work for him. It says so in that antiquated little piece of work called the
Constitution. But those who hold the reins of power don’t much care
about the Constitution. As a result, the
government taxes the small businessperson at every turn, regulates him to
death, and harasses him in an almost sadistic fashion. Rather than being his
humble servant, the government has transformed itself into the natural
predator of the small businessperson. Without government, it is
breathtaking to imagine what the average small businessperson could
accomplish. In a true laissez-faire economy - which, by the way, has never
existed on this planet - the small businessperson would be able to create
wealth on a scale that is impossible for a socialist thinker to comprehend. Now, along comes
government’s next big roadblock for small business - government-run
healthcare. In one form or another, sooner or later, a bill will be passed -
over the objections of a majority of American serfs. And when it passes, the
one thing of which we can be certain is that it will mean higher taxes for
everyone - particularly small businesspeople. Having said this, I
thought it would be a good time to disrobe an economic myth that even most
libertarians and conservatives buy into. For as long as I can remember,
conventional wisdom has insisted that companies don’t pay taxes, only
consumers do. The idea is that any increase in a company’s taxes are
merely passed along to its customers. While this is true, to a
great extent, in some industries (utilities being the most obvious example),
it is not true in most. A government-enforced monopoly like a gas or electric
company can, for the most part, pass along higher taxes to its customers.
Even with utilities, however, there is, at least in theory, some degree of
choice. But in most industries,
especially those that sell discretionary products and services, customers
always have a choice. Whether it’s parallel competition (alternatives
to a product or service), dollar competition (people making decisions to
purchase some products and do without others), or invisible competition
(entrepreneurs always being ready to enter into an overpriced industry and
compete at lower prices), companies can’t treat their customers as
though they are cows waiting to be milked at the whim of corporate
executives. Which brings me back to
taxes. No matter what kind of healthcare bill finally emerges from the
Criminal Crowd in Washington, you can bet the farm that small businesses will
get hit the hardest. Small businesspeople stand for everything that
politicians hate. Small businesses provide jobs. Small businesses produce
products and services that people are willing to purchase, without the threat
of government coercion. Small businesses create wealth and thereby grow the
economy. All of the above conflict
with the current administration’s desire to collapse the economy and
get as many people as possible on the dole (the Cloward-Piven
Strategy). That’s why the government’s omnibenevolence
never finds its way to small business. Small business is the enemy, because
it eliminates the need for people to look to the government for benefits. Healthcare legislation -
in whatever grotesque form it ends up taking - will surely increase operating
costs for small businesses across the board, starting with taxes and/or
fines. And, as I said, a business cannot automatically pass along an increase
in expenses to its customers. This is even more true in a bad economy, when
people are not willing, or able, to pay higher prices. Instead, they will find
alternatives - often government-subsidized alternatives - or do without.
Either way, the higher cost of doing business will cause small businesses to
lay off employees, which will increase unemployment, increase jobless
benefits, and further depress the economy. And, of course, many small
businesses will shut their doors - either through voluntarily or involuntary
liquidation. Some of the more fortunate ones will go the Atlas Shrugged route
and simply stop producing and walk away. Any way you slice it, the biggest
cost of government-run healthcare to all of us will be the devastation that
it will do to the engine of our economy - America’s 27 million small
businesses. But it’s okay,
because Baltimore-bred, airhead Nancy - with her glued-on, toothy smile - has
already congratulated herself and her Congressional partners in crime for “delivering
affordable healthcare to every American.” Doesn’t her upbeat
nature make you feel warm and fuzzy all over? Arrgh!
Now let’s sit back,
reminisce about the golden days of Western civilization, and see what kind of
Trojan horse the Senate Mob comes up with. Perhaps they’ll pleasantly
surprise us, but don’t hold your breath. Copyright 2009 Tortoise
Press, Inc. All Rights Reserved. An Obituary You Really Must
Read (Oldie) An Obituary printed in the
London Times - Interesting and sadly rather true. Today we mourn the passing
of a beloved old friend, Common Sense, who has been with us for many years.
No one knows for sure how old he was, since his birth records were long ago
lost in bureaucratic red tape. He will be remembered as
having cultivated such valuable lessons as: Ÿ
Knowing
when to come in out of the rain; Ÿ
Why
the early bird gets the worm; Ÿ
Life
isn’t always fair; and Ÿ
maybe
it was my fault. Common Sense lived by
simple, sound financial policies (don’t spend more than you can earn)
and reliable strategies (adults, not children, are in charge). His health began to
deteriorate rapidly when well-intentioned but overbearing regulations were
set in place. Reports of a 6-year-old boy charged with sexual harassment for
kissing a classmate; teens suspended from school for using mouthwash after
lunch; and a teacher fired for reprimanding an unruly student, only worsened
his condition. Common Sense lost ground
when parents attacked teachers for doing the job that they themselves had
failed to do in disciplining their unruly children. It declined even further
when schools were required to get parental consent to administer sun lotion
or an aspirin to a student; but could not inform parents when a student
became pregnant and wanted to have an abortion. Common Sense lost the will
to live as the churches became businesses; and criminals received better
treatment than their victims. Common Sense took a beating when you couldn’t
defend yourself from a burglar in your own home and the burglar could sue you
for assault. Common Sense finally gave
up the will to live, after a woman failed to realize that a steaming cup of
coffee was hot. She spilled a little in her lap, and was promptly awarded a
huge settlement. Common Sense was preceded in death, by his parents, Truth
and Trust, by his wife, Discretion, by his daughter, Responsibility, and by
his son, Reason. He is survived by his 4
stepbrothers; I Know My Rights, I Want It Now, Someone Else Is To Blame, and
I’m A Victim Not many attended his
funeral because so few realized he was gone. If you still remember him, pass
this on. If not, join the majority and do nothing 11/11/2009: Pfizer and Kelo’s Ghost Town The Supreme Court’s
2005 decision in Kelo v. City of New London stands
as one of the worst in recent years, handing local governments carte blanche
to seize private property in the name of economic development. Now, four
years after that decision gave Susette Kelo’s
land to private developers for a project including a hotel and offices
intended to enhance Pfizer Inc.’s nearby corporate facility, the
pharmaceutical giant has announced it will close its research and development
headquarters in New London, Connecticut. The aftermath of Kelo is the latest example of the futility of using
eminent domain as corporate welfare. While Ms. Kelo
and her neighbors lost their homes, the city and the state spent some $78
million to bulldoze private property for high-end condos and other “desirable”
elements. Instead, the wrecked and condemned neighborhood still stands
vacant, without any of the touted tax benefits or job creation. That’s especially
galling because the five Supreme Court Justices cited the development plan as
a major factor in rationalizing their Kelo
decision. Justice Anthony Kennedy called the plan “comprehensive,”
while Justice John Paul Stevens insisted that “The city has carefully
formulated a development plan that it believes will provide appreciable
benefits to the community, including, but not limited to, new jobs and
increased tax revenue.” So much for that. Kelo’s silver lining
has been that it transformed eminent domain from an arcane government power
into a major concern of voters who suddenly wonder if their own homes are at
risk. According to the Institute for Justice, which represented Susette Kelo, 43 states have
since passed laws that place limits and safeguards on eminent domain, giving
property owners greater security in their homes. State courts have also held
local development projects to a higher standard than what prevailed against
the condemned neighborhood in New London. If there is a lesson from
Connecticut’s misfortune, it is that economic development that relies
on the strong arm of government will never be the kind to create sustainable
growth. Printed in The Wall Street
Journal, page A20 Senior Health-Care Solution So, you’re a senior
citizen and the government says no healthcare for you. What do you do? Our plan gives anyone 65
years or older a gun and 4 bullets. You are allowed to shoot two senators and
two representatives. Of course, this means you will be sent to prison. There
you will get three meals a day, a roof over your head, and all the healthcare
you need (the courts have mandated it)! New teeth? No problem. Need glasses?
Great. New hip, knees, kidney, lungs, heart? All covered. And who will be paying for
all of this? The same government that just told you that you are too old for
healthcare. Plus, because you are a prisoner, you don’t have to pay any
income taxes. What a country! May 2003: The Therapeutic State: The Myth of Health
Insurance “Health
Insurance” is Really a Statist System of Cost-Shifting” Forty million Americans
are said to have no health insurance. Those who do have health insurance are
frustrated by having to pay ever-increasing premiums for steadily diminishing
medical services. Conventional wisdom tells us that we are facing a “health
insurance crisis.” It is important to
recognize that what we call “health insurance” has little to do
with health and nothing to do with insurance. We do not face a “health
insurance crisis.” We face the consequences of a set of economic and
social problems rooted in a futile effort to make the distribution of health
care—unlike the distribution of virtually every other good and service
in our society—egalitarian. The typical contractor of
homeowner’s insurance is the homeowner. He buys insurance to protect
himself from costly loss caused by events outside his control, such as fire,
not to defray the recurring expense of maintaining it. The ideal outcome for
both the buyer and the seller of home and automobile insurance is for the
policyholder to never make use of his policy. The typical contractor of
health insurance is not the insured person but his employer. Neither party is
free to negotiate the terms of the policy. The employee cannot bargain for a lower
premium in exchange for a high deductible or for choosing to be not covered
for alcoholism or schizophrenia. The employer is not free to decline coverage
for state-mandated medical services. In New York State, for example, the
Women’s Wellness Act mandates group health-insurance plans to cover
contraceptives including abortifacients, and the
Infertility Coverage Act mandates that they cover infertility treatments,
including selective fetal reduction (abortion of multiple fetuses conceived
by artificial means). The economic survival of
an insurance company depends in large part on collecting more in premiums
than it pays out in claims. To bring about that outcome the insurer employs
certain methods, some complicated, some very simple. Although embarrassingly
obvious, some of these simple measures need to be mentioned because they are
absent from what we mislabel “health insurance.” For example, a
person cannot buy a policy to protect himself from a loss caused by his own
actions, such as burning down his own home. But so-called health insurance
protects the individual from the medical consequences of his own actions, for
example, injuring himself by smashing his car while drunk. Not surprisingly,
all the participants in the complex scheme we call “health insurance”
are unhappy with the result. In the case of genuine
insurance, there is a direct relationship between the dollar value of the
protection purchased and its cost to the insured. The premium for a
life-insurance policy with a face value of $100,000 is less than for a policy
for a multiple of that amount. In health insurance no such relationship
exists between premium paid and compensation received. Moreover, the
health-insurance company, acting on its own behalf, can write a contract with
a “cap” on claims, that is, for the maximum amount it will pay
the insured, regardless of the health-care cost he incurs. The insured
person, who typically does not act on his own behalf but is “provided”
insurance as an important part of his job benefit, has no reciprocal options. The sole rational purpose
of true insurance is to protect the insured from an unanticipated economic
loss so large as to jeopardize his economic well-being. No one sells or buys
insurance to cover the cost of maintaining his property. Home insurance does
not pay for plumbing repairs; automobile insurance does not pay for replacing
worn-out windshield wipers. Yet people demand precisely this kind of
reimbursement from so-called health insurance. “Health Insurance”: The Illusion of
Equality If health insurance is not
insurance, what is it? It is a modern version of the illusion that all men
are equal—or, when ill, ought to be treated as if they were equal. When
religion was the dominant ideology, death was (supposed to be) the great equalizer:
once they departed the living, prince and pauper were equal. Today, when
medicine is the dominant ideology, health care is (supposed to be) the great
equalizer: everyone’s life is “infinitely precious” and
hence deserves the same protection from disease. Of course, prince and pauper
did not receive the same burial services, and rich and poor do not receive
the same medical services. But people prefer the illusion of equality to the
recognition of inequality. Actually, the ruled have
always longed for “universal health care,” and the rulers have
always supplied them with a policy that the masses accepted as such a
service. In the Middle Ages, universal health care was called Catholicism. In
the twentieth century, it was called Communism. In the 21st century, it is
called Universal Health Insurance. What we choose to call “health
insurance” is, in fact, a system of cost-shifting masquerading as a
system of insurance. We treat a public, statist political system of health
care as if it were a system of private health insurance purchased for the
purpose of obtaining private medical care. Everyone knows but no one
admits that health insurance is not really insurance. In fact, Americans now
view their health insurance as an open-ended entitlement for reimbursement for
virtually any expense that may be categorized as “health care,”
such as the cost of birth-control pills or Viagra. The cost of these services
is covered on the same basis as the cost of medical catastrophes, such as
treatment for the consequences of a brain tumor. Such distorted incentives
produce the perverted outcomes with which we are all too familiar. From a public-health point
of view, the state of our health is partly, and often largely, in our own
hands and is our own responsibility, even if we have a chronic illness, such
as arthritis or diabetes. It is an immoral and impractical endeavor to try to
reject that responsibility and place the burden for the consequences on
others. If a nation values anything
more than freedom, it will lose its freedom; and the irony of it is that, if
it is comfort or money it values more, it will lose that too. — William
Somerset Maugham [1941] It is our true policy to steer
clear of permanent alliances with any portion of the foreign world....
Harmony, liberal intercourse with all nations are recommended by policy,
humanity, and interest. But even our commercial policy should hold an equal
and impartial hand, neither seeking nor granting exclusive favors or
preferences. — George Washington, Farewell Address [September 26, 1796] 11/11/2009: A Minority View: Constitutional Contempt
by Walter E. Williams At Speaker Nancy Pelosi’s
Oct. 29th press conference, a CNS News reporter asked, “Madam Speaker,
where specifically does the Constitution grant Congress the authority to
enact an individual health insurance mandate?” Speaker Pelosi
responded, “Are you serious? Are you serious?” The reporter said,
“Yes, yes, I am.” Not responding further, Pelosi shook her head
and took a question from another reporter. Later on, Pelosi’s press
spokesman Nadeam Elshami
told CNSNews.com about its question regarding constitutional authority
mandating that individual Americans buy health insurance. “You can put
this on the record. That is not a serious question. That is not a serious
question.” Suppose Congress was
debating a mandate outlawing tea-party-type protests and other large
gatherings criticizing Congress. A news reporter asks Nancy Pelosi where
specifically does the Constitution grant Congress the authority to outlaw
peaceable assembly. How would you feel if she answered, “Are you
serious? Are you serious?” and ignored the question. And what if, later
on, someone from her office sent you a press release, as was sent to CNS
News, saying that Congress has “broad power to regulate activities that
have an effect on interstate commerce,” pointing out that
demonstrations cause traffic jams and therefore interferes with interstate
commerce? Speaker Pelosi’s
constitutional contempt, perhaps ignorance, is representative of the majority
of members of both the House and the Senate. Their comfort in that ignorance
and constitutional contempt, and how readily they articulate it, should be
worrisome for every single American. It’s not a matter of whether you
are for or against Congress’ health care proposals. It’s not a
matter of whether you’re liberal or conservative, black or white, male
or female, Democrat or Republican or member of any other group. It’s a
matter of whether we are going to remain a relatively free people or permit
the insidious encroachment on our liberties to continue. Where in the U.S.
Constitution does it authorize Congress to force Americans to buy health
insurance? If Congress gets away with forcing us to buy health insurance,
down the line, what else will they force us to buy; or do you naively think
they will stop with health insurance? We shouldn’t think that the cure
to Congress’ unconstitutional heavy-handedness will end if we only
elect Republicans. Republicans have demonstrated nearly as much
constitutional contempt as have Democrats. The major difference is the
significant escalation of that contempt under today’s Democratically controlled
Congress and White House with the massive increase in spending, their
proposed legislation and the appointment of tyrannical czars to control our
lives. It’s a safe bet that if and when Republicans take over the
Congress and White House, they will not give up the massive increase in
control over our lives won by the Democrats. In each new session of
Congress since 1995, John Shadegg, R-Ariz.,) has
introduced the Enumerated Powers Act, a measure “To require Congress to
specify the source of authority under the United States Constitution for the
enactment of laws, and for other purposes.” The highest number of
co-sponsors it has ever had in the House of Representatives is 54 and it has
never had co-sponsors in the Senate until this year, when 22 senators signed
up. The fact that less than 15 percent of the Congress supports such a
measure demonstrates the kind of contempt our elected representatives have
for the rules of the game -- our Constitution. If you asked the
questions: Which way is our nation heading, tiny steps at a time? Are we
headed toward more liberty, or are we headed toward greater government
control over our lives? I think the answer is unambiguously the latter --
more government control over our lives. Are there any signs on the horizon
that the direction is going to change? If we don’t see any, we should
not be surprised. After all, mankind’s standard fare throughout his
history, and in most places today, is arbitrary control and abuse by
government. 11/9/2009:
Pfizer abandons site of infamous Kelo eminent domain taking
The private homes that New London, Conn., took
away from Suzette Kelo and her neighbors have been
torn down. Their former site is a wasteland of fields of weeds, a monument to
the power of eminent domain. But now Pfizer, the drug company whose
neighboring research facility had been the original cause of the homes’
seizure, has just announced that it is closing up shop in New London. To lure those jobs to New London a decade ago,
the local government promised to demolish the older residential neighborhood
adjacent to the land Pfizer was buying for next-to-nothing. Suzette Kelo fought the taking to the Supreme Court, and lost.
Five justices found this redevelopment met the constitutional hurdle of “public
use.” The Hartford Courant reports: Pfizer Inc. will shut down its massive New London
research and development headquarters and transfer most of the 1,400 people
working there to Groton, the pharmaceutical giant said Monday.... Pfizer is now deciding what to do with its giant
New London offices, and will consider selling it, leasing it and other options,
a company spokeswoman said. Scott Bullock, Kelo’s co-counsel in the
case, told me: “This shows the folly of these redevelopment projects
that use massive taxpayer subsidies and other forms of corporate welfare and
abuse eminent domain.” December
2009: Liberty Magazine (pages 18 & 20): “Hollow
man” — It may seem premature to write
off the Obama presidency as a failed experiment in messianic politics, i.e.,
the politics of deliverance and hope; but I do not think so. The flaws of Mr.
Obama, and of his administration, are too deep and structural to be salvaged
by any desperate, last-minute remedies. The fissures in the woodwork are too
deep to be glossed over with varnish and furniture polish. And if things look
bad now, they can only get worse in the months to come. President Obama is glib, even eloquent, to a
fault — that is his saving grace and his special curse. Americans felt
so embittered and let down with such inarticulate Republican dolts and
mediocrities as the Bushes that Obama’s soaring rhetoric seemed to
promise a new day in presidential politics. Who was not moved by the
announcement in his inaugural address of the death of Washington’s
favorite pastime, petty political bickering and partisanship? It was one of
those singular moments in history when the will to do good was high. Never
has the mood for meaningful change been so puissant. Even the eyes of
stalwart unbelievers on the right misted over with the afflatus and the
exaltation of noble aspirations. Yet, what was Obama’s first piece of
legislation but the now infamous stimulus bill? The stimulus package was by any measure a
steaming pile of liberal special-interest philanthropy, a spoils-system
largesse that would have made Andrew Jackson blush, and one that was doubly
irresponsible in this hour of economic crisis. It was a reversal so cool,
casual, and blasé, so destructive and so encompassing, that it raised
political cynicism to a historic level. What an unmitigated fraud! What a
blatant, bald-faced deception! What an unimaginative, slimy-green, mildewed
piece of liberal policy-making! Call it the audacity of political
manipulation. Psychologists doing research on the subject of
leadership have found that the people who aspire to positions of power the
most aggressively are frequently those least qualified temperamentally and
intellectually to wield it. (No surprise — history has been telling us
this for centuries.) And so it is with Obama. Those around him, and even his
bitterest adversaries, tell us that he is a very intelligent man. But the
facts seem to indicate that he is rather stupid, at least with regard to his
duties as the leader of the world’s leading republic and superpower.
His early opponents complained correctly that he lacked seasoning and policy
experience, that his intellectual accomplishments were essentially academic,
and that his personality tended to be narcissistic. And now the crows have
come home to roost. On his July 28 broadcast, Fox News commentator
Glenn Beck called President Obama a racist with a deep-seated hatred of white
people. In response, Geico pulled its sponsorship of Beck’s show,
leading several other advertisers to defect as well. For what it’s
worth, President Obama is not a racist. Racism implies some firmly held
beliefs, however noxious and misguided. Obama has no convictions at all. He
believes in nothing but himself. He is a narcissist and an opportunist who
dreamed of being president. To achieve this he campaigned as a centrist and
after he was elected emerged, willy-nilly, as a leftist. He is neither a good
man nor a bad man. He is a cipher, a man devoid of principle. There is
something wanting in Obama — that essential, indispensable component of
humanity that separates men of honor from ordinary mortals. Who would have
guessed that beneath all his oratory he was hollow to the core? For those mystified by how Obama could sit in the
congregation of Reverend Jeremiah Wright and listen to his lunatic
race-baiting and other filthy claptrap for 20 years, the answer is now at
hand. They need wonder no longer. — William B. Fankboner 11/8/2009:
Obamacare Endorsements: What the Bribe Was As the suicidal Democratic congressmen proceed to
rubber-stamp the Obama healthcare reform despite the drubbing their party
took in the ‘09 elections, the president trotted out the endorsements
of the AMA and the AARP to stimulate support. But these – and the other
endorsements – his package has received are all bought and paid for. Here are the deals: — The American Medical Association (AMA)
was facing a 21 percent cut in physicians’ reimbursements under the
current law. Obama promised to kill the cut if they backed his bill. The cuts
are the fruit of a law requiring annual 5 percent to 6 percent reductions in
doctor reimbursements for treating Medicare patients. Bravely, each year
Congress has rolled the cuts over, suspending them but not repealing them. So
each year, the accumulated cuts threaten doctors. By now, they have risen to
21 percent. With this blackmail leverage, Obama compelled the AMA to support
his bill...or else! — The AARP got a financial windfall in return
for its support of the healthcare bill. Over the past decade, the AARP has
morphed from an advocacy group to an insurance company (through its
subsidiary company). It is one of the main suppliers of Medi-gap
insurance, a high-cost, privately purchased coverage that picks up where
Medicare leaves off. But President Bush-43 passed the Medicare Advantage
program, which offered a subsidized, lower-cost alternative to Medi-gap. Under Medicare Advantage, the elderly get all
the extra coverage they need plus coordinated, well-managed care, usually by
the same physician. So more than 10 million seniors went with Medicare
Advantage, cutting into AARP Medi-gap revenues. Presto! Obama solved their problem. He eliminates
subsidies for Medicare Advantage. The elderly will have to pay more for
coverage under Medigap, but the AARP -- which
supposedly represents them -- will make more money. (If this galls you, join
the American Seniors Association, the alternative group; contact
sbarton@americanseniors.org. This e-mail address is being protected from spambots. You need JavaScript enabled to view it .) — The drug industry backed ObamaCare and,
in return, got a 10-year limit of $80 billion on cuts in prescription drug
costs. (A drop in the bucket of their almost $3 trillion projected cost over
the next decade.) They also got administration assurances that it will
continue to bar lower-cost Canadian drugs from coming into the U.S. All it
had to do was put its formidable advertising budget at the disposal of the
administration. — Insurance companies got access to 40
million potential new customers. But when the Senate Finance Committee
lowered the fine that would be imposed on those who don’t buy insurance
from $3,500 to $1,500, the insurance companies jumped ship and now oppose the
bill, albeit for the worst of motives. The only industry that refused to knuckle under
was the medical device makers. They stood for principle and wouldn’t go
along with Obama’s blackmail. So the Senate Finance Committee
retaliated by imposing a tax on medical devices such as automated
wheelchairs, pacemakers, arterial stents, prosthetic limbs, artificial knees
and hips and other necessary accoutrements of healthcare. So these endorsements are not freely given, but bought and
paid for by an administration that is intent on passing its program at any
cost. © 2009 Dick Morris & Eileen McGann 11/8/2009: The Man Who Predicted the Depression by Mark Spitznagel Ludwig von Mises was
snubbed by economists world-wide as he warned of a credit crisis in the
1920s. We ignore the great Austrian at our peril today. Mises’s ideas on
business cycles were spelled out in his 1912 tome “Theorie des Geldes und
der Umlaufsmittel” (“The Theory of Money
and Credit”). Not surprisingly few people noticed, as it was published
only in German and wasn’t exactly a beach read at that. Taking his cue from
David Hume and David Ricardo, Mises explained how the banking system was
endowed with the singular ability to expand credit and with it the money
supply, and how this was magnified by government intervention. Left alone,
interest rates would adjust such that only the amount of credit would be used
as is voluntarily supplied and demanded. But when credit is force-fed beyond
that (call it a credit gavage), grotesque things start to happen. Government-imposed
expansion of bank credit distorts our “time preferences,” or our
desire for saving versus consumption. Government-imposed interest rates
artificially below rates demanded by savers leads to increased borrowing and
capital investment beyond what savers will provide. This causes temporarily
higher employment, wages and consumption. Ordinarily, any random
spikes in credit would be quickly absorbed by the system—the pricing
errors corrected, the half-baked investments liquidated, like a supple tree
yielding to the wind and then returning. But when the government holds rates
artificially low in order to feed ever higher capital investment in otherwise
unsound, unsustainable businesses, it creates the conditions for a crash.
Everyone looks smart for a while, but eventually the whole monstrosity
collapses under its own weight through a credit contraction or, worse, a
banking collapse. The system is
dramatically susceptible to errors, both on the policy side and on the
entrepreneurial side. Government expansion of credit takes a system otherwise
capable of adjustment and resilience and transforms it into one with
tremendous cyclical volatility. “Theorie des Geldes” did
not become the playbook for policy makers. The 1920s were marked by the brave
new era of the Federal Reserve system promoting inflationary credit expansion
and with it permanent prosperity. The nerve of this Doubting-Thomas,
permabear, crazy Kraut! Sadly, poor Ludwig was very nearly alone in warning
of the collapse to come from this credit expansion. In mid-1929, he
stubbornly turned down a lucrative job offer from the Viennese bank
Kreditanstalt, much to the annoyance of his fiancée, proclaiming “A
great crash is coming, and I don’t want my name in any way connected
with it.” We all know what
happened next. Pretty much right out of Mises’s script, overleveraged
banks (including Kreditanstalt) collapsed, businesses collapsed, employment
collapsed. The brittle tree snapped. Following Mises’s logic, was this
a failure of capitalism, or a failure of hubris? Mises’s solution
follows logically from his warnings. You can’t fix what’s broken
by breaking it yet again. Stop the credit gavage. Stop inflating. Don’t
encourage consumption, but rather encourage saving and the repayment of debt.
Let all the lame businesses fail—no bailouts. (You see where I’m
going with this.) The distortions must be removed or else the precipice from
which the system will inevitably fall will simply grow higher and higher. Mises started getting
some much-deserved respect once “Theorie des Geldes”
was finally published in English in 1934. It is unfortunate that it required
such a disaster for people to take heed of what was the one predictive,
scholarly explanation of what was happening. But then, just Mises’s
bad luck, along came John Maynard Keynes’s tome “The General
Theory of Employment, Interest and Money” in 1936. Keynes was dapper,
fresh and sophisticated. He even wrote in English! And the guy had chutzpah,
fearlessly fighting the battle against unemployment by running the currency
printing press and draining the government’s coffers. He was the anti-Mises.
So what if Keynes had lost his shirt in the stock-market crash. His book was
peppered with fancy math (even Greek letters) and that meant rigor,
modernity. To add insult to injury, Mises wasn’t even refuted by Keynes
and his ilk. He was ignored. Fast forward 70-some
years, during which we saw Keynesianism’s repeated disappointments, the
end of the gold standard, persistent inflation with intermittent inflationary
recessions and banking crises, culminating in Alan Greenspan’s “Great
Moderation” and a subsequent catastrophic collapse in housing and
banking. Where do we find ourselves? At a point of profound insight gained
through economic logic, trial and error, and objective empiricism? Or right
back where we started? With interest rates at
zero, monetary engines humming as never before, and a self-proclaimed
Keynesian government, we are back again embracing the brave new era of
government-sponsored prosperity and debt. And, more than ever, the system is
piling uncertainties on top of uncertainties, turning an otherwise resilient
economy into a brittle one. How curious it is that
the guy who wrote the script depicting our never ending story of
government-induced credit expansion, inflation and collapse has remained so
persistently forgotten. Must we sit through yet another performance of this
tragic tale? Mr. Spitznagel is the founder and chief investment officer of the hedge fund Universa Investments LP, based in Santa Monica, Calif. 11/6/2009: What
America Makes Best - Editorial Commentary - Daniel Griswold AS
AMERICANS WERE TRYING TO SHAKE off the worst economic downturn since the Great
Depression, the consulting firm IHS/Global Insight recently delivered a bit
of humbling news: China will surpass the United States as the world’s
leader in manufacturing by 2015. Critics
of U.S. trade policy trumpeted the news as another sign that we are losing an
economic war to China. But China’s emergence as the world’s top
manufacturer is nothing to worry about. Manufacturing long ago ceased to be
the chief benchmark of economic might and success. It is time we adjusted our
economic and political thinking and understanding. Americans
will not stop making things. The IHS/Global Insight study projects that
America’s manufacturing, as measured in value-added terms, or the value
of goods manufactured after subtracting the cost of imported inputs, will
resume its growth after the recession and reach new highs. A Lot of Stuff America
remains a manufacturing powerhouse. As recently as 2007, American factories
produced 5,250 complete civil aircraft, 15,341 complete civil-aircraft
engines, 81 million metric tons of raw steel, 10.7 million motor vehicles,
and 25.6 million computers. That same year, “Made in the U.S.A.”
was stamped on 44.5 million household refrigerators and
refrigerator-freezers, washing machines, dishwashers, water heaters,
household gas and electric ranges, and clothes dryers, according to the U.S.
Department of Commerce. Add
to that pile of U.S.-made goods 1.61 billion square yards of carpet and rugs;
28.1 million short tons of chlorine gas, sodium hydroxide, hydrochloric acid,
commercial aluminum sulfate, sodium sulfate, finished sodium bicarbonate, and
sodium chlorate; 1.5 billion gallons of paint and allied products; and $123
billion worth of pharmaceuticals. That’s a lot of stuff for a nation
that supposedly doesn’t make anything anymore. Americans
make fewer shirts, shoes, tables and toys than in decades past, because we
have traded up the value chain to a more sophisticated array of goods that
play more to our strengths as a nation with an educated workforce and plenty
of capital per worker. And we are producing all those upper-end goods with
fewer workers, because those still employed in U.S. manufacturing have become
so much more productive. High Productivity It
is one of the Big Lies of the trade debate that we have been giving up
middle-class manufacturing jobs to flip burgers at McDonalds and run cash
registers at Wal-Mart. Since the early 1990s, two-thirds of the net new jobs
added to our economy have been in service sectors, such as education, health
care and business, financial and professional services. Average wages are
higher in those service sectors than in manufacturing. The
American middle class today earns its keep in the service sector. Knock on
the doors of middle-class suburbs and you will meet teachers, managers,
carpenters, architects, engineers, computer specialists, truck drivers,
accountants and auditors, police officers and fire fighters, insurance and
real- estate agents, registered nurses, physical therapists, dental
hygienists and other health-care professionals, and self-employed business
owners. Those are the occupations that now form the backbone of the American
middle class. Those are the jobs our children should aspire to fill. A
major reason why manufacturing is relatively less important in what Americans
produce is that it is less important in what we consume. It appears to be an
iron law of human development that, as incomes rise, we spend a smaller share
on goods, such as food and manufactured products, and a higher share on
services. In
1950, Americans spent two-thirds of their personal consumption income on
durable and non-durable goods and one-third on services. Today we spend 60%
on services and 40% on goods. The share of personal income Americans spend on
food, clothing and shoes has dropped since 1950 from 38% to 18%, and the
share spent on durable goods such as motor vehicles and furniture has dropped
from 16% to 11%. About
half the increase in spending on services has been for increased medical care
in the form of doctors, dentists, and other professionals, and hospitals,
nursing homes, and health insurance. The increasing share of gross domestic
product for health care is often considered a problem, but it is also a sign
of growing wealth. We
have increased the share of our spending on housing, recreation, education
and research, religious and charitable activities, domestic and foreign air
travel, and “personal business,” brokerage charges, investment
counseling, and bank, financial, and insurance services. This also signals
growing wealth. Free Choices Those
who mourn the relative decline of U.S. manufacturing should blame not foreign
competition, but the evolving preferences and resulting spending habits of
their fellow Americans. As
usual, the American people are far ahead of their politicians in
understanding this transition. The federal government maintains trade
barriers against imports such as shoes, T-shirts and sugar, even though the
number of Americans working in those sectors is a tiny fraction of those in
the service sector who must pay higher prices as a result of those barriers.
That same government has spent $50 billion to cushion the decline of General
Motors and Chrysler, even though the combined domestic workforce of those two
companies is less than 200,000. The $50 billion will be paid largely by the
112 million of us who work in the service economy. The
biggest threat to the American economy and our standard of living isn’t
the rise of Chinese manufacturing, but politicians and economists who base
policies on nostalgia rather than the aspirations of middle-class Americans
striving to better themselves in a more open, dynamic and service-oriented
economy. DANIEL
GRISWOLD is director of trade-policy studies at the Cato Institute in
Washington and author of the book Mad about Trade: Why Main Street America
Should Embrace Globalization (Washington: Cato Institute, 2009.) 11/6/2009: Regarding your
editorial “The Worst Bill Ever” (Nov. 2), and considering the
1,990-page health-care bill monstrosity, I think James Madison was prescient
when he wrote the following in the Federalist Papers: “It will be of
little avail to the people that the laws are made by men of their own choice,
if the laws be so voluminous that they can not be read, or so incoherent that
they can not be understood; if they be repealed or revised before they are
promulgated, or undergo such incessant changes that no man who knows what the
law is today can guess what it will be tomorrow.” Perhaps we should listen to the
wisdom of our founders. —Edward M. Levy 11/6/2009: There
is a No-Cost Path to Cheaper Health Care by John Shadegg If
your car isn’t working as well as it should, the next logical step
would be to take it to a mechanic, right? And if that mechanic tells you he
can fix it with a simple, inexpensive repair, most people would get the
repair—not junk it and buy a new car! Unfortunately, that’s
exactly what our Democrat-led Congress is doing in its efforts to “reform”
our nation’s health-care system. It
is true that many Americans cannot find affordable health coverage. However,
it is the government-imposed barriers that make coverage expensive,
especially for the working poor in America. Fixing these problems would cost
the taxpayer absolutely nothing, yet congressional Democrats refuse to
consider these no-cost solutions. The
already high cost of insurance is often increased by excessive state regulations.
States have passed more than 1,800 benefit mandates, requiring insurance
companies to cover services from hair prostheses (wigs) to infertility
treatments to acupuncturists to massage therapists. These state mandates
raise the cost of insurance, which, in turn, increases the number of
Americans who are priced out of the health-insurance market. You
may be thinking, what if I don’t need a hair prosthesis or infertility
treatments? Tough luck. Instead of having a choice in coverage you do need, you’ll
likely be paying for health insurance at an exorbitant cost to cover things
you may never use or desire. The
solution: Allow American families to purchase health coverage across state
lines. According to a study by the University of Minnesota, 12 million more
Americans would be able to buy coverage if this simple solution were enacted
into law. Another
no-cost solution? Give Americans the option to take the cash their employer
uses to purchase health care and let them buy a plan on their own. If they are
happy with their current plan, let them keep it. If not, let them take their
business elsewhere and buy their own health coverage. This would force the
insurance industry to innovate and control costs, or face losing business to
companies that do. Americans
should also be able to purchase their health insurance on the same
tax-advantaged basis as their employers. If your employer purchased health
insurance on your behalf today, he would be able to do so with pre-tax
dollars. However, in today’s market, if you go it alone, you won’t
get any tax incentive to purchase your own health care. This would be a
simple remedy to our still antiquated tax code, which favors big government
and punishes individuals. Allowing
insurance portability and fixing the tax code is just a cost-savings start.
How about enacting restrictions on runaway medical malpractice litigation
such as pre-litigation review panels and loser-pay provisions for frivolous
suits? Making any one of these changes to our health-care system wouldn’t
cost taxpayers a single cent and could save us billions over the long term. These
ideas considered separately or enacted together will reduce costs for those
who have health-insurance coverage and enable others to afford it. The
savings could be used to fund high-risk pools for individuals with
pre-existing conditions, and to provide tax credits and vouchers so no
American goes without basic health coverage. But
rather than consider these common sense proposals, congressional Democrats
are insisting we push through a new trillion-dollar government controlled
scheme. Proponents
of ObamaCare can’t cite one shred of evidence that giving politicians
and Washington bureaucrats more power and control will produce better quality
health care or lower costs. In fact, the Congressional Budget Office admitted
it has had no time to study exactly how much the bill will increase premiums
for average Americans—something it routinely does for health-care
legislation that is moving through Congress. Does
anyone believe the billions in new taxes as well as hundreds of pages of new
rules and regulations being proposed will lower the cost of health care in
America? But not knowing how much this will harm families didn’t stop
Congress from advancing one of the most sweeping pieces of legislation our
nation has ever seen. That’s scary and irresponsible. Why
aren’t we trying, or even debating, these no-cost solutions that insert
choice into the health-care reform equation? Before Congress acts and passes
an expensive, untested, new health-care system, the American people need to
be heard. —Mr.
Shadegg is a Republican congressman from Arizona. Printed in The Wall Street
Journal, page A23 11/6/2009: The
Return of the Inflation Tax Health-Care
Bill Doesn’t Index for Inflation; Hits Young and Rising Middle Class
Hard - WSJ.com All
of those twenty-somethings who voted for Barack
Obama last year are about to experience the change they haven’t been
waiting for: the return of income tax bracket creep. Buried in Nancy Pelosi’s
health-care bill is a provision that will partially repeal tax indexing for
inflation, meaning that as their earnings rise over a lifetime these
youngsters can look forward to paying higher rates even if their income gains
aren’t real. In
order to raise enough money to make their plan look like it won’t add
to the deficit, House Democrats have deliberately not indexed two main tax
features of their plan: the $500,000 threshold for the 5.4-percentage-point
income tax surcharge; and the payroll level at which small businesses must
pay a new 8% tax penalty for not offering health insurance. This
is a sneaky way for politicians to pry more money out of workers every year
without having to legislate tax increases. The negative effects of failing to
index compound over time, yielding a revenue windfall for government as the
years go on. The House tax surcharge is estimated to raise $460.5 billion
over 10 years, but only $30.9 billion in 2011, rising to $68.4 billion in
2019, according to the Joint Tax Committee. Americans
of a certain age have seen this movie before. In 1960, only 3% of tax filers
paid a 30% or higher marginal tax rate. By 1980, after the inflation of the
1970s, the share was closer to 33%, according to a Heritage Foundation
analysis of tax returns. These
stealth tax increases—forcing ever more Americans to pay higher tax
rates on phantom gains in income—were widely seen to be unjust. And in
1981 as part of the Reagan tax cuts, a bipartisan coalition voted to index
the tax brackets for inflation. We
also know what has happened with the Alternative Minimum Tax. Passed to hit
only 1% of all Americans in 1969, the AMT wasn’t indexed for inflation
at the time and neither was Bill Clinton’s AMT rate increase in 1993.
The number of families hit by this shadow tax more than tripled over the next
decade. Today, families with incomes as low as $75,000 a year can be hit by
the AMT unless Congress passes an annual “patch.” The
Pelosi-Obama health tax surcharge will have a similar effect. The tax would
begin in 2011 on income above $500,000 for singles and $1 million for joint
filers. Assuming a 4% annual inflation rate over the next decade, that
$500,000 for an individual tax filer would hit families with the
inflation-adjusted equivalent of an income of about $335,000 by 2020. After
20 years without indexing, the surcharge threshold would be roughly $250,000. And
by the way, this surcharge has also been sneakily written to apply to
modified adjusted gross income, which means it applies to both capital gains
and dividends that are taxed at lower rates. So the capital gains tax rate
that is now 15% would increase in 2011 to 25.4% with the surcharge and repeal
of the Bush tax rates. The tax rate on dividends would rise to 45% from 15%
(5.4% plus the pre-Bush rate of 39.6%). As
for the business payroll penalty, it is imposed on a sliding scale beginning
at a 2% rate for firms with payrolls of $500,000 and rising to 8% on firms
with payrolls above $750,000. But those amounts are also not indexed for
inflation, so again assuming a 4% average inflation rate in 10 years this
range would hit payrolls between $335,000 and $510,000 in today’s
dollars. Note that in pitching this “pay or play” tax today,
Democrats claim that most small businesses would be exempt. But because it
isn’t indexed, this tax will whack more and more businesses every year.
The sales pitch is pure deception. As
for the Senate, instead of the 5.4% surcharge, the Finance Committee bill
raises taxes on “high-cost” health care plans. But this too uses
the inflation ruse. The Senate bill indexes its tax proposal for the
inflation rate plus one percentage point. But that is only about half as high
as the rate of overall health-care inflation, i.e., the rate of increase in
health-care premiums. So the Joint Tax Committee has found that a Senate tax
that starts in 2013 by hitting 13.8 million Americans will hit 39.1 million
by 2019. The
return of the inflation tax demonstrates once again the stealth radicalism
that animates ObamaCare. In the case of inflation indexing, Democrats would
repeal a 30-year bipartisan consensus that it is unfair to tax unreal gains
in income, thus hitting millions of middle-class Americans over time with tax
rates advertised as only hitting “the rich.” Oh, and the House
vote on this exercise in dishonest government will come as early as Saturday. Printed
in The Wall Street Journal, page A24 11/6/2009: The
AMA Wants a Unicorn, Too In a cameo in the White House briefing room
yesterday, President Obama trumpeted the American Medical Association’s
endorsement of the House health-care plan. “These are men and women who
know our health-care system best and have been watching this debate closely,”
he said of the doctors lobby. Actually, what they’ve been watching is a
formula that automatically cuts Medicare reimbursements to
physicians—by 21.5% next year—and have made it clear that they’ll
endorse virtually anything, no matter how damaging to medicine, as a quid pro
quo for eliminating this cut. They didn’t get even that. Democrats
amputated the “doc fix” from ObamaCare because preventing the
cuts will cost more than $200 billion and pushes the price tag well above $1
trillion. They claim they’ll instead pass a separate bill with the fix,
adding all of that to the deficit. President J. James Rohack
was careful to note that the AMA was endorsing both bills as a package, and
on a conference call with reporters he wouldn’t say if he would pull
support if ObamaCare passes and the doc fix doesn’t. Yet that’s
what his political gullibility is likely to get his members. A Democratic
revolt last month already killed the two-bill deception in the Senate in a
sudden onset of fiscal sanity. In the stampede to pass ObamaCare, Democrats
won’t give even a passing thought to leaving the AMA
behind—especially now, given that the group has shown how cheaply it
can be bought. Unmentioned by Mr. Obama was that 20 other physician
groups came out against his health-care takeover yesterday, which they wrote “will
threaten patient access and harm quality.” Led by the American College
of Surgeons, these doctors argued the Senate’s bill “will do
little to fix” health care’s “underlying problems, and may
make them worse.” The letter was signed by groups representing
neurological and orthopedic surgeons, urologists, anesthesiologists,
gynecological oncologists and others. Mr. Rohack will also face
an uprising among his own members at a meeting in Houston this weekend. But
presumably Mr. Obama would say that all these men and women don’t know
our health-care system “best.” Printed in The Wall Street Journal, page A24 11/6/2009: Three
Decades of Subsidized Risk by Charles Gasparino I recently sat down with legendary investor Ted
Forstmann to discuss why, on the one-year anniversary of the financial
meltdown, the press has largely ignored the role of government in creating
the meltdown—and possibly setting the stage for another one—by
allowing Wall Street to borrow cheaply and easily during the past three
decades. “I guess reporters think writing about greedy
investment bankers is more interesting,” Mr. Forstmann laughed. Mr. Forstmann knows a thing or two about greedy
investment bankers: He’s been calling them on the carpet for years,
most famously during the 1980s when he fulminated against the excesses of the
junk-bond era. He also knows that blaming banking greed alone can’t by
itself explain the financial tsunami that tore the markets apart last year
and left the banking system and the economy in tatters. The greed merchants needed a co-conspirator, Mr.
Forstmann argues, and that co-conspirator is and was the United States
government. “They’re always there waiting to hand out
free money,” he said. “They just throw money at the problem every
time Wall Street gets in trouble. It starts out when they have a cold and it
builds until the risk-taking leads to cancer.” Mr. Forstmann’s point shouldn’t be taken
lightly. Not by the press, nor by policy makers in Washington. But so far it
has been, and the easy money is flowing like never before. Interest rates are
close to zero; in effect the Federal Reserve is subsidizing the risk-taking
and bond trading that has allowed Goldman Sachs to produce billions in
profits and that infamous $16 billion bonus pool (analysts say it could grow
to as high as $20 billion). The Treasury has lent banks money, guaranteed
Wall Street’s debt and declared every firm to be a commercial bank, from
Citigroup with close to $1 trillion in U.S. deposits, to Morgan Stanley with
close to zero. They are all “too big to fail” and so free to
trade as they please—on the taxpayer dime. The conventional wisdom as perpetuated in the media
is that these bailout mechanisms are unique, designed to ameliorate a
once-in-a-lifetime financial “perfect storm.” They are unique,
but only in size. A quick look back at the past three decades will
demonstrate what Mr. Forstmann meant when he said the government has been ready
to hand out free money nearly every time risk-taking led to losses. The first mortgage market meltdown of the mid-1980s,
spurred by the Fed’s supply of easy money, was among the most painful
market upheavals in the history of the bond market. The pioneers of the
mortgage bond market, Lew Ranieri of Salomon
Brothers and Larry Fink of First Boston (the same Larry Fink now considered a
sage CEO at money management powerhouse BlackRock), lost what were then
unheard-of sums of money. (Mr. Fink concedes to losses of over $100 million.) “What happened then was a dry run of what was
to come,” Mr. Fink recently told me, as he looked back on the market he
created, which would eventually lie at the heart of the most recent financial
crisis. Wall Street took excessive risk in mortgage bonds amid the easy money
supplied by the Fed—and lost. When the crisis began, the Fed under then
Chairman Alan Greenspan slashed interest rates—as it would do after
Orange County, Calif., declared bankruptcy in 1994 because of bad bets on
complex bonds; and again in 1998 when the hedge fund Long-Term Capital
Management (LTCM) blew up; and of course in the bond-market crisis of 2007
and 2008. The lower rates each time lessened the pain of the risk-taking gone
awry, and opened the door for increased risk down the line. Easy money wasn’t the only way government
induced the bubble. The mortgage-bond market was the mechanism by which
policy makers transformed home ownership into something that must be earned
into something close to a civil right. The Community Reinvestment Act and
projects by the Department of Housing and Urban Development, beginning in the
Clinton years, couldn’t have been accomplished without the mortgage
bond—which allowed banks to offload the increasingly risky mortgages to
Wall Street, which in turn securitized them into triple-A rated bonds thanks
to compliant ratings agencies. The perversity of these efforts wasn’t merely
that bonds packed with subprime loans received such high ratings. It was also
that by inducing homeownership, the government was itself making
homeownership less affordable. Because families without the real economic
means to repay traditional 30-year mortgages were getting them, housing
prices grew to artificially high levels. This is where the real sin of Fannie Mae and Freddie
Mac comes into play. Both were created by Congress to make housing affordable
to the middle class. But when they began guaranteeing subprime loans, they
actually began pricing out the working class from the market until the banking
business responded with ways to make repayment of mortgages allegedly easier
through adjustable rates loans that start off with low payments. But these
loans, fully sanctioned by the government, were a ticking time bomb, as we’re
all now so painfully aware. A similar bomb exploded in 1998, when LTCM blew up.
The policy response to the LTCM debacle is instructive; more than anything
else it solidified Wall Street’s belief that there were little if any
real risks to risk-taking. With $5 billion under management, LTCM was deemed
too big to fail because, with nearly every major firm copying its money
losing trades, much of Wall Street might have failed with it. That’s what the policy makers told us anyway.
On Wall Street there’s general agreement that the implosion of LTCM
would have tanked one of the biggest risk takers in the market, Lehman
Brothers, a full decade before its historic bankruptcy filing. Officials at
Merrill, including its then-CFO (and future CEO) Stan O’Neal, believed
Merrill’s risk-taking in esoteric bonds could have led to a similar
implosion 10 years before its calamitous merger with Bank of America. We’ll never know if LTCM’s demise would
have tanked the financial system or simply tanked a couple of firms that bet
wrong. But one thing is certain: A valuable lesson in risk-taking was lost.
By 2007, the years of excessive risk-taking, aided and abetted by the belief
that the government was ready to paper over mistakes, had taken their toll. With so much easy money, with the government always
ready to ease their pain, Wall Street developed new and even more innovative
ways to make money through risk-taking. The old mortgage bonds created by
Messrs. Fink and Ranieri as simple securitized
pools had morphed into the so-called collateralized debt obligations (CDOs),
complex structures that allowed Wall Street banks as well as
quasi-governmental agencies Fannie Mae and Freddie Mac to securitize ever
riskier mortgages. Mr. O’Neal, the man considered most responsible
for Merrill’s disastrous foray into risk-taking, told me in an
interview last year that in the fall of 2007, when he saw that the firm’s
problems were insurmountable, he had a deal to sell Merrill to Bank of
America for around $90 a share. But Merrill’s board rejected it,
believing he would be selling out cheaply. The CDOs would eventually recover,
they argued, as the Fed pumped life into the markets. Likewise, nearly to the minute he was forced to file
for bankruptcy, former Lehman CEO Dick Fuld
believed the government wouldn’t let Lehman die. After all, government
largess had always been there in the past. All of which brings me back to Mr. Fortsmann’s
comment about policy makers helping turn a cold into cancer. What if the Fed
hadn’t eased Wall Street’s pain in the late 1980s, and again
after the 1994 bond-market collapse? What if policy makers in 1998 had
allowed the markets to feel the consequences of risk—allowing LTCM to
fail, and letting Lehman Brothers and possibly Merrill Lynch die as well? There would have been pain—lots of it—for
Wall Street and even for Main Street, but a lot less than what we’re
experiencing today. Wall Street would have learned a valuable lesson: There
are consequences to risk. —Mr. Gasparino is a
CNBC on-air editor and the author, most recently, of “The Sellout: How
Three Decades of Wall Street Greed and Government Mismanagement Destroyed the
Global Financial System,” just published by Harper Business. Printed in The Wall Street Journal, page A25 11/4/2009: Obama
and the Liberal Paradigm By John Steele Gordon The sheep are quite
capable of looking out for themselves. Someone tell the Democrats. Valerie
Jarrett, senior adviser to President Barack Obama, recently explained the
White House war on Fox News as an example of “speaking truth to power.”
Much of the American political world collapsed in laughter, pointing out that
her boss was president of the United States, the most powerful man on earth.
His every word is news around the world. Fox News is a cable channel rarely
watched by more than a few million people at a time. How could she have so
blithely said something completely out-of-sync with reality? Simple:
She’s a liberal. [Today, being a liberal
appears to me to be a form of mental illness, a complete inability to see
reality.] As a
liberal she carries around in her head the liberal paradigm of how the world
works and what needs to be done to make it work better. There’s nothing
wrong with that. We all use paradigms to make sense of what we see around us
and couldn’t get along without them. Unfortunately, the basic liberal
paradigm hasn’t shifted in a hundred years, while the world we live in
has changed utterly since the late 19th century, when modern liberalism was
born. What
is that paradigm? The basic premise is that the population is divided into
three groups. By far the largest group consists of ordinary people. They are
good, God fearing and hard working. But they are also often ignorant of their
true self-interest (“What’s the matter with Kansas?”) and
thus easily misled. They are also politically weak and thus need to be
protected from the second group, which is politically strong. The
second group, far smaller, are the affluent, successful businessmen,
corporate executives and financiers. Capitalists in other words. They are the
establishment and it is the establishment that, by definition, runs the
country. They are, in the liberal paradigm, smart, ruthless and totally self-interested.
They care only about personal gain. And
then there is the third group, those few, those happy few, that band of
brothers, the educated and enlightened liberals, who understand what is
really going on and want to help the members of the first group to live a
better and more satisfying life. Unlike the establishment, which supposedly
cares only for itself, liberals supposedly care for society as a whole and
have no personal self-interest. Thus
the liberal paradigm divides the American body politic into sheep, wolves,
and would-be shepherds. The shepherds must defeat the efforts of the wolves. 11/4/2009: Dismantling
America by Thomas Sowell Thomas
Sowell: “Just one year ago, would you have believed that an unelected
government official, not even a Cabinet member confirmed by the Senate but
simply one of the many ‘czars’ appointed by the President, could
arbitrarily cut the pay of executives in private businesses by 50 percent or
90 percent? Did you think that another ‘czar’ would be talking
about restricting talk radio? That there would be plans afloat to subsidize
newspapers -- that is, to create a situation where some newspapers’
survival would depend on the government liking what they publish? Did you
imagine that anyone would even be talking about having a panel of so-called ‘experts’
deciding who could and could not get life-saving medical treatments? Scary as
that is from a medical standpoint, it is also chilling from the standpoint of
freedom. If you have a mother who needs a heart operation or a child with
some dire medical condition, how free would you feel to speak out against an
administration that has the power to make life and death decisions about your
loved ones? Does any of this sound like America? How about a federal agency
giving school children material to enlist them on the side of the president?
Merely being assigned to sing his praises in class is apparently not enough.
How much of America would be left if the federal government continued on this
path? ... How far the President will go depends of course on how much
resistance he meets. But the direction in which he is trying to go tells us
more than all his rhetoric or media spin. Barack Obama has not only said that
he is out to ‘change the United States of America,’ the people he
has been associated with for years have expressed in words and deeds their
hostility to the values, the principles and the people of this country. ...
Nothing so epitomizes President Obama’s own contempt for American
values and traditions like trying to ram two bills through Congress in his
first year -- each bill more than a thousand pages long -- too fast for
either of them to be read, much less discussed. That he succeeded only the
first time says that some people are starting to wake up. Whether enough
people will wake up in time to keep America from being dismantled, piece by
piece, is another question -- and the biggest question for this generation.”
[Read
entire article] 11/4/2009: We’re
Governed by Callous Children by Peggy Noonan “Our
Federal Government, from the White House through Congress, and so many state
and local governments, seems to be demonstrating every day that they cannot
make things better. They are not offering a new path, they are only offering
old paths -- spend more, regulate more, tax more in an attempt to make us
more healthy locally and nationally. And in the long term everyone -- well,
not those in government, but most everyone else -- seems to know that won’t
work. It’s not a way out. It’s not a path through. ... When I see
those in government, both locally and in Washington, spend and tax and come
up each day with new ways to spend and tax -- health care, cap and trade,
etc. -- I think: Why aren’t they worried about the impact of what they’re
doing? Why do they think America is so strong it can take endless abuse? ...
We are governed at all levels by America’s luckiest children, sons and
daughters of the abundance, and they call themselves optimists but they’re
not optimists -- they’re unimaginative. They don’t have faith,
they’ve just never been foreclosed on. They are stupid and they are
callous, and they don’t mind it when people become disheartened. They
don’t even notice.” [Read
entire article] 11/4/2009: Unhealthy time change Although
daylight-saving time was sold politically as an energy-conservation measure,
it does no such thing. Studies conducted in Indiana prior to 2006, when that
state operated under three different time regimes, show either no difference
in energy consumption or a small increase in power usage during the months
after clocks were moved one hour ahead. The
annual ritual of springing forward and falling back thus possibly produces no
energy savings and may be counterproductive. It also requires those who live
in places where daylight-saving time is observed to waste time twice a year
adjusting their clocks and watches. Yet
the costs of switching between daylight-saving and standard time go far beyond
the hassles of “losing” an hour in the springtime and “gaining”
it back in the fall. ...Adding
to the bill, some students of daylight-saving time suggest that accidents
involving pedestrians spike immediately after the return to standard time as
well, because drivers have not yet adjusted to commuting home in the dark. There
are few, if any, measurable benefits from switching to daylight-saving time
in the spring and back to standard time at the end of October. But time
shifting imposes some very real costs. Those costs, we now suspect, are not
limited to feeling out of sorts temporarily or investing effort in adjusting
clocks rather than doing something more enjoyable or productive. The
twice-a-year ritual of time travel actually kills.
11/3/2009:
Election 2009: Republicans
Win Governor’s Races in New Jersey and Virginia Republicans
swept to victory in two critical governor’s races today, with
independent voters helping deliver twin setbacks to Democrats who hoped to
consolidate gains scored by President Obama last year. GOP victories
in Virginia and New Jersey were fueled by unease over the economy and growing
skepticism of government, according to exit polls. Obama
carried both states last year. But the GOP gubernatorial candidate racked up
huge margins among independent voters, notwithstanding the White House’s
efforts to boost the Democrats. Republican
Bob McDonnell won the race in Virginia, beating Democrat Creigh Deeds. It
marks the first time Republicans won a governor’s race in the state
since 1997. And
in New Jersey, Gov. Jon Corzine, D-N.J., was defeated in his reelection bid
by former federal prosecutor Chris Christie. The heavily Democratic state was
considered the party’s best chance to steal a victory in a tough
electoral climate. 11/2/2009: A Loan
in the Dark: The Los Angeles Times
reports on California’s latest effort to mismanage the state’s
finances: Starting Sunday, cash-strapped
California will dig deeper into the pocketbooks of wage earners--holding back
10% more than it already does in state income taxes just as the biggest
shopping season of the year kicks into gear. Technically, it’s
not a tax increase, even though it may feel like one when your next paycheck
arrives. As part of a bundle of budget patches adopted in the summer, the
state is taking more money now in withholding, even though workers’
annual tax bills won’t change. Think of it as a forced,
interest-free loan: You’ll be repaid any extra withholding in April.
Those who would receive a refund anyway will receive a larger one, and those
who owe taxes will owe less. Tax refunds are evil,
because they fool people into thinking they’re “getting”
something from the government, when in fact all they’re receiving is
their own money, months late. If the private sector tried this--say, your
insurance or power company “borrowed” money by tacking $20 on to
your monthly bill and refunded it, without interest, the following year--it
would be a pretty clear case of fraud. 11/1/2009: The
Worst Bill Ever Epic new
spending and taxes, pricier insurance, rationed care, dishonest accounting:
The Pelosi health bill has it all. Speaker Nancy Pelosi has
reportedly told fellow Democrats that she’s prepared to lose seats in
2010 if that’s what it takes to pass ObamaCare, and little wonder. The
health bill she unwrapped last Thursday, which President Obama hailed as a “critical
milestone,” may well be the worst piece of post-New Deal legislation
ever introduced. In a rational political
world, this 1,990-page runaway train would have been derailed months ago.
With spending and debt already at record peacetime levels, the bill creates a
new and probably unrepealable middle-class entitlement that is designed to
expand over time. Taxes will need to rise precipitously, even as ObamaCare so
dramatically expands government control of health care that eventually all
medicine will be rationed via politics. Yet at this point,
Democrats have dumped any pretense of genuine bipartisan “reform”
and moved into the realm of pure power politics as they race against the
unpopularity of their own agenda. The goal is to ram through whatever
income-redistribution scheme they can claim to be “universal coverage.”
The result will be destructive on every level—for the health-care
system, for the country’s fiscal condition, and ultimately for American
freedom and prosperity. • The spending surge. The Congressional Budget Office figures the
House program will cost $1.055 trillion over a decade, which while far above
the $829 billion net cost that Mrs. Pelosi fed to credulous reporters is
still a low-ball estimate. Most of the money goes into government-run “exchanges”
where people earning between 150% and 400% of the poverty level—that
is, up to about $96,000 for a family of four in 2016—could buy coverage
at heavily subsidized rates, tied to income. The government would pay for 93%
of insurance costs for a family making $42,000, 72% for another making
$78,000, and so forth. At least at first, these
benefits would be offered only to those whose employers don’t provide
insurance or work for small businesses with 100 or fewer workers. The
taxpayer costs would be far higher if not for this “firewall”—which
is sure to cave in when people see the deal their neighbors are getting on “free”
health care. Mrs. Pelosi knows this, like everyone else in Washington. Even so, the House
disguises hundreds of billions of dollars in additional costs with budget
gimmicks. It “pays for” about six years of program with a decade
of revenue, with the heaviest costs concentrated in the second five years.
The House also pretends Medicare payments to doctors will be cut by 21.5%
next year and deeper after that, “saving” about $250 billion.
ObamaCare will be lucky to cost under $2 trillion over 10 years; it will grow
more after that. • Expanding Medicaid, gutting private
Medicare. All this is particularly
reckless given the unfunded liabilities of Medicare—now north of $37
trillion over 75 years. Mrs. Pelosi wants to steal $426 billion from future
Medicare spending to “pay for” universal coverage. While Medicare’s
price controls on doctors and hospitals are certain to be tightened, the only
cut that is a sure thing in practice is gutting Medicare Advantage to the
tune of $170 billion. Democrats loathe this program because it gives one of
out five seniors private insurance options. As for Medicaid, the House
will expand eligibility to everyone below 150% of the poverty level, meaning
that some 15 million new people will be added to the rolls as private
insurance gets crowded out at a cost of $425 billion. A decade from now more
than a quarter of the population will be on a program originally intended for
poor women, children and the disabled. Even though the House will
assume 91% of the “matching rate” for this joint state-federal
program—up from today’s 57%—governors would still be forced
to take on $34 billion in new burdens when budgets from Albany to Sacramento
are in fiscal collapse. Washington’s budget will collapse too, if
anything like the House bill passes. • European levels of taxation. All told, the House favors $572 billion in new
taxes, mostly by imposing a 5.4-percentage-point “surcharge” on
joint filers earning over $1 million, $500,000 for singles. This tax will
raise the top marginal rate to 45% in 2011 from 39.6% when the Bush tax cuts
expire—not counting state income taxes and the phase-out of certain
deductions and exemptions. The burden will mostly fall on the small
businesses that have organized as Subchapter S or limited liability
corporations, since the truly wealthy won’t have any difficulty
sheltering their incomes. This surtax could hit ever
more earners because, like the alternative minimum tax, it isn’t
indexed for inflation. Yet it still won’t be nearly enough. Even if
Congress had confiscated 100% of the taxable income of people earning over
$500,000 in the boom year of 2006, it would have only raised $1.3 trillion.
When Democrats end up soaking the middle class, perhaps via the
European-style value-added tax that Mrs. Pelosi has endorsed, they’ll
claim the deficits that they created made them do it. Under another new tax,
businesses would have to surrender 8% of their payroll to government if they
don’t offer insurance or pay at least 72.5% of their workers’
premiums, which eat into wages. Such “play or pay” taxes always
become “pay or pay” and will rise over time, with severe
consequences for hiring, job creation and ultimately growth. While the U.S.
already has one of the highest corporate income tax rates in the world,
Democrats are on the way to creating a high structural unemployment rate,
much as Europe has done by expanding its welfare states. Meanwhile, a tax equal to
2.5% of adjusted gross income will also be imposed on some 18 million people
who CBO expects still won’t buy insurance in 2019. Democrats could make
this penalty even higher, but that is politically unacceptable, or they could
make the subsidies even higher, but that would expose the (already ludicrous)
illusion that ObamaCare will reduce the deficit. • The insurance takeover. A new “health choices commissioner”
will decide what counts as “essential benefits,” which all
insurers will have to offer as first-dollar coverage. Private insurers will
also be told how much they are allowed to charge even as they will have to
offer coverage at virtually the same price to anyone who applies, regardless
of health status or medical history. The cost of insurance,
naturally, will skyrocket. The insurer WellPoint estimates based on its own
market data that some premiums in the individual market will triple under
these new burdens. The same is likely to prove true for the
employer-sponsored plans that provide private coverage to about 177 million
people today. Over time, the new mandates will apply to all contracts,
including for the large businesses currently given a safe harbor from
bureaucratic tampering under a 1974 law called Erisa. The political incentive
will always be for government to expand benefits and reduce cost-sharing,
trampling any chance of giving individuals financial incentives to economize
on care. Essentially, all insurers will become government contractors, in the
business of fulfilling political demands: There will be no such thing as “private”
health insurance. *** All of this is
intentional, even if it isn’t explicitly acknowledged. The overriding
liberal ambition is to finish the work began decades ago as the Great Society
of converting health care into a government responsibility. Mr. Obama’s
own Medicare actuaries estimate that the federal share of U.S. health dollars
will quickly climb beyond 60% from 46% today. One reason Mrs. Pelosi has
fought so ferociously against her own Blue Dog colleagues to include at least
a scaled-back “public option” entitlement program is so that the
architecture is in place for future Congresses to expand this share even
further. As Congress’s
balance sheet drowns in trillions of dollars in new obligations, the
political system will have no choice but to start making cost-minded
decisions about which treatments patients are allowed to receive. Democrats
can’t regulate their way out of the reality that we live in a world of
finite resources and infinite wants. Once health care is nationalized, or
mostly nationalized, medical rationing is inevitable—especially for the
innovative high-cost technologies and drugs that are the future of medicine. Mr. Obama rode into office on a wave of “change,” but we doubt most voters realized that the change Democrats had in mind was making health care even more expensive and rigid than the status quo. Critics will say we are exaggerating, but we believe it is no stretch to say that Mrs. Pelosi’s handiwork ranks with the Smoot-Hawley tariff and FDR’s National Industrial Recovery Act as among the worst bills Congress has ever seriously contemplated. |
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Read Blogs from Prior Months
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Other Information about Dale F. Ogden
Dale F. Ogden for Governor
of
California 2010
www.dalefogden.org
Dale F. Ogden & Associates
Actuaries
& Management Consultants
www.usactuary.com
Dale F. Ogden, Libertarian, for
California Insurance
Commissioner, 2006
Dale F. Ogden, Libertarian, for
California State Senate, 2004
Dale F. Ogden, Libertarian, for
California Insurance
Commissioner, 2002
Dale F. Ogden, Libertarian, for
California State Assembly,
2000
Dale F. Ogden, Libertarian, for
California Insurance
Commissioner, 1998