Black Activists Turn On Democrats

Looks like the Democrats have finally gone once too often to that well. Every year they play the race card and hand out free stuff. Looks like the community that suffers the most from identity politics has decided to get off the Democrat merry-go-round.

The African American community is the most reliable vote the Democrats have.  This is also the poorest, least educated, most brutalised and most incarcerated community in America.  They live primarily in Democrat run hell holes like DC, Detroit, Chicago and Camden.  It is precisely in these Democrat run jurisdictions where the overwhelming majority of the brutality occurs.  The abuse is economic, educational, judicial and systemic.  For 50 years the inner city has been the domain of the Democrat party.  Democrat rule now is a byword for decay, corruption and neglect.

If the sentiment of this video is widespread, the party of Obama is going to be in for a real stormy ride this Tuesday.  The Democrats with their progressive, agenda of controlling your wallet, your diet, your fuel, and your life may have come to its end.  People want opportunity, not hand outs after all.  Free abortion is not a substitute for a path to prosperity.

New House Majority Leader: Kill Ex-Im Bank

The primary defeat of Eric Cantor continues to reverberate in unexpected ways, as his incoming successor as Majority Leader tells Fox News that he supports shutting down the Export-Import Bank (Washington Examiner):

On “Fox News Sunday,” host Chris Wallace asked McCarthy if he agrees with “conservatives who say that the Export-Import Bank is a form of crony capitalism and it should be put out of business — allowed to expire.”

McCarthy responded by tying Ex-Im to “one of the biggest problems with government,” using taxpayers’ “hard-earned money,” to do things the private sector can do. McCarthy supported Ex-Im’s reauthorization in 2012, but he argued on Fox News Sunday that this was a vote to “wind down the Ex-Im Bank.”

Wallace put the question more directly: “You would allow the Ex-Im Bank to expire in September?”

McCarthy immediately said “Yes. Because it’s something that the private sector can be able to do.”

That’s a dramatic change in view from Cantor, and a refreshing one. If McCarthy is serious about it (and that bizarre explanation for his 2012 vote should give us some pause), it would strike a strong blow against corporatism.

Ex-Im’s defenders have three months to save their special interest, and they will throw everything including the kitchen sink to do so. McCarthy’s stance is to be praised, and we should help him hold his newfound ground.

Cross-posted to the right-wing liberal

On the Bank Bailout, the Buckley Rule, and Ed Gillespie

There has been increasing talk among Virginia Republicans about “the Buckley Rule,” and how it should impact decision on the nomination for U.S. Senate. There are, however, two problems with the application (usually from Ed Gillespie supporters): the rule isn’t quite what they think it is; and even if it did, Gillespie still wouldn’t qualify.

First of all, the rule itself is repeatedly “both misquoted and misapplied” as Neal Freeman noted in his account of when the rule was first promulgated (National Review). He should know; he was there. Buckley came up with the rule during the 1964 Goldwater-Rockefeller nomination battle. Despite what we may think, Rockefeller had his defenders on the right. He trailed LBJ by less than Goldwater, and his anti-Communism was rock-solid and unquestionable (Goldwater himself noted in his autobiography that before he decided to run himself, he was leaning to Rockefeller). It took months for NR itself to make a decision:

These intramural arguments, as I say, were protracted, begun in the winter and carrying on into the early spring. WFB sat at the head of the table, encouraging others to speak, keeping his own counsel. In early June, after Rockefeller had won the Oregon primary and Goldwater had won California, after all of us had had our say, after rumors had begun to creep out of 35th Street that NR might shift its support to Nelson Rockefeller — the equivalent, today, of word leaking out of 15th Street that the Washington Post might endorse Michele Bachmann — Bill, who rarely proposed, decided that it was time to dispose. With each of us in our assigned seat and with six pairs of eyeballs staring at him unblinkingly, Bill announced that “National Review will support the rightwardmost viable candidate.”

Victory for Team Goldwater! We all knew what “viable” meant in Bill’s lexicon. It meant somebody who saw the world as we did. Somebody who would bring credit to our cause. Somebody who, win or lose, would conservatize the Republican party and the country. It meant somebody like Barry Goldwater.

Indeed, NR did endorse Goldwater. More to the point, one year after this, Buckley himself chose to run for Mayor of New York – despite having no shot at winning – against the Republican establishment’s candidate, John Lindsay….

in the general election.

So clearly, those who use the Buckley rule as an electability argument have it wrong. However, even if they had it right, Ed Gillespie has a problem that sinks his electability: his support for TARP (a.k.a. the Bank Bailout).

Gillespie supporters will, of course, take issue with this. They will tell you (and me) that the key issue in 2014 isn’t the bank bailout, but the failures of the Obama Administration. As it happens, the critique against the Administration has three planks: government has grown massively large and costly; the economic “recovery” is so sluggish as to be hardly felt; and the president’s dangerous habit of assuming the Affordable Care Act is an American Enabling Act giving him legislative powers to change the law on the flyThe problem is that pro-TARP candidates are unable to use any of these arguments.

If Ed Gillespie tries to criticize the president and Mark Warner for reckless spending and government enlargement, Warner can throw the $700 billion bank bailout back in his face, but Mark Warner cannot accuse Shak Hill of supporting hundreds of billions in spending for America’s biggest banks.

Likewise, any attempt by Gillespie to discuss the economy will be trumped by Warner mentioning the 2008 financial crisis – and then remind everyone that Gillespie agreed the crisis was exceptional because of his support for the bank bailout. Only Shak Hill can remind voters that the bank bailout and hysteria ginned up by Washington to get it enacted made things worse, not better.

Finally, there is the fact that after TARP was enacted, Bush’s Treasury Secretary Henry Paulsen rewrote the law at whim. That he had the authority to do so was bad enough, but Warner can play it simple and demand to know why Bush can change the law at whim but not Obama. Only Shak Hill can address this issue with the hypocrisy charge being thrown back in his face.

In short, Shak Hill can deliver the conservative message in 2014 far batter than Ed Gillespie can. As a result, he is a more “viable” candidate than Ed, and in my opinion, a more electable one, too.

Cross-posted to the right-wing liberal

Nancy Pelosi: locked out of her own argument

The Congressional Budget Office’s report on what Obamacare – given the president’s numerous rewrites and delays to the policy, I can now comfortably retire the term “Robertscare” – will do to the labor force (the equivalent of 2 million Americans leaving the workforce), Nancy Pelosi actually celebrated the news (Hot Air):

“What we see is that people are leaving their jobs because they are no longer job-locked,” House Minority Leader Nancy Pelosi (D-Calif.) told reporters after House votes Tuesday afternoon. “They are following their aspirations to be a writer; to be self-employed; to start a business.”

While many of her critics lamented (and loudly) Pelosi and her allies for their devaluing of work, far fewer noticed that her own argument is completely wrong (to be fair, Hot Air’s Mr. Glass did).

As it happens, I have some friends who are writers, and they tell me that it involves quite a bit of hard work (no real surprise there). They also greatly enjoy it. More to the point, however, they don’t have rags-to-riches stories of their success. They started small, with short stories, and then moved up to novels. Writing, like any other career, has its well-worn paths.

What they didn’t have was a health-insurance subsidy that would disappear between, say, story five and story six, or between the sale of copy number 1000 and copy number 1001. That’s what Pelosi et al seem to miss: the subsidy-loss effect impacts all industries: manufacturing, services, and the arts she seems to prize.

The subsidy – and its clawback at certain income levels – doesn’t give workers the freedom to change jobs that would otherwise be blocked: it prevents people from advancing any career.

Of course, you’d have to understand microeconomics to get that, and economics of any kind just isn’t the Democrats’ strong suit.

Cross-posted to the right-wing liberal

The Republican Party, TARP, and Ed Gillespie (plus some personal news)

For those wondering where I’ve been for the past three weeks, I was recently married (Sunday, the 12th, to be exact). For those interested, meet the new Mrs. Liberal.

Anyhow, while I’ve been on my honeymoon, Ed Gillespie made it official – he is running for the U.S. Senate. Whether he wins the nomination or not is an open question (I’ll admit it may not be wide open at this point); for what it’s worth, I do think he would be a better Senator than Mark Warner. However, as I have discussed before wedding planning dominated my time, Ed has one fatal flaw to the party: his support for TARP (a.k.a., the Bank Bailout).

I should note that I have considered TARP a policy mistake practically since its conception, and I have maintained that view over the years. I have also explained why Republican nominees who support TARP are badly handicapped against their opponents: because they essentially agree with the Democrats’ excuse for the poor economic performance of the Obama Administration (i.e., the “2008 crisis” did it).

There are, however, even greater problems for TARP-backing Republicans when they get into office. Whatever arguments may roil the GOP, there is near universal recognition that spending needs to be reduced in general, and entitlement spending in particular. However, any pro-TARP Republican who talks about entitlement reductions and/or reductions in anti-poverty programs (no matter how inefficient or counter-productive said programs might be), will get slammed as a friend of the rich and a hypocrite for supporting the $700 billion bailout. While many, many Democrats also supported the bailout, they aren’t talking about these cuts. We Republicans are, and thus we suffer the consequences of cynical voters and lack of trust when we say America can’t afford spending X on entitlements or Y on discretionary spending when our spokesmen voted for $700 billion for the nation’s biggest banks.

I will admit that TARP, as a stand-alone issue, doesn’t resonate with voters as it did in 2008. However, its effects still scar the political landscape. Its damage still affects Republican politicians who supported it (such as Romney and Ryan in 2012)…

…which brings us to Gillespie. Whatever else one may say of him, as White House Counsel during 2008, he was at the forefront of defending TARP (see here). He is the epitome of the TARP-stained Republican pol. He will find his ability to maneuver on political issues far more restrained than he or his supporters believe.

In short, I do not think he will defeat Warner. More to the point, whether he does or not, his nomination and (if it happens) election will keep the party stuck in its TARP-supporting past, when it must instead highlight the TARP opponents in the party in order to re-establish trust on spending with the voters.

I have many friends who are fond of Gillespie (and some who aren’t); I don’t know the man personally. I do, however, know his stance on TARP, and that is enough for me to say that if he were nominated, the party – and the country – will lose more than it gains.

Cross-posted to the right-wing liberal

House. Republicans. Don’t. Get. It.

The moment I saw the headline of this Corner post (House GOP Strikes Food Stamps Pact), my heart sank. After reading said post, it’s still “underwater.”

Now, to be fair, the “pact” – which is in fact a policy idea that hasn’t yet been run through the entire caucus – isn’t bad. Essentially, it restores the 1990s welfare-reform requirements on food stamps for able-bodied adults without children (work 20 hours a week, or be limited to three months of aid every three years). The numbers folks say it could save about $20 billion (although I think that’s over multiple years).

However, and I can’t say this enough, any attempt to deal with the recent explosion in food stamps without addressing the market-distorting farm policies is merely treating the symptoms while the disease runs unchecked. So long as the government continues with policies that drive up the price of sugar, milk, corn, and everything fed on corn (i.e., meat), more people will need government assistance than would be the case in a true free market for food.

Whatever one thinks of the particular policy change (and, again, I think it has some merit), any farm/food-stamp bill that doesn’t get rid of Pitchfork Corporatism still says the same thing to suburban and urban consumers: Drop Dead.

Cross-posted to the right-wing liberal

Single-payer, the left’s health care nirvana – doesn’t exist

As the nation careens toward the true launching of Robertscare (a.k.a. Obamacare) – and even here, there is a disconnect between the insurance exchanges to launch on October 1 and the subsidies for them, which don’t start until January 1 – there is talk that the entire edifice will crash in a mess of incompetence, fraud, and confusion. This has led many to wonder if and when the left will claim that the only real way to fix health care is to go to a “single-payer”, government monopoly system, one that they claim exists in the United Kingdom and Canada – and that most in the center-right decry as “socialized medicine”.

I should note the theoretical advantages of single-payer: the federal government could, in theory, have monopsonistic power that would enable it to drive down health care prices and costs; health insurance would cease to be a cost for many businesses; and citizens would no longer have the uncertainly of health care cost to impact their future spending and investment decisions. These are not only the defenses that are used by the single-payer backers; they are also cited as the reasons the UK and Canada have “single payer.” Less knowledgeable folks on the left will even assume the rest of continental Europe has single payer – and cite the above as reasons for it.

Of course, each of the reasons has their drawbacks – drawbacks which completely undermine the theoretical advantage. In practical terms, Medicare already gives the feds monopsony power – and they handed that market power to the AMA, thus making that group a monopolist (and revealing the failure of the monopsonist argument in the first place). Firms liberated from the cost of health insurance will end up stuck with the tax bill for the government-run system; a trade that will hardly improve business climate. Finally, as Medicaid recipients are already discovering, insurance from health care cost is not the same thing as access to care.

With the theoretical arguments thus debunked, one might ask why any nation would have “single payer.” The answer is simple: in the democratic world, no one actually has single payer.

In continental Europe, for example, all nations use some sort of public-private mixture for health care, just as we do. Most believe Europe’s health systems are more government-controlled (I’m not so sure, given what I now know about Medicare’s power), but none of them claim to have the government-monopoly system credited to London or Ottawa.

This leaves those two capitals, which supposedly fund and directly control health care in their respective countries. The trouble with that assumption is that it is not true. Contrary to political myth, Canada’s provinces decide health care allocation. Ottawa subsidizes the provinces, but does not make spending decisions for them. Thus, health care in Canada can vary from province to province. I would argue that the most dramatic example is Ontario, which charges its residents a health insurance premium, meaning that in Canada’s largest province, “single payer” health care isn’t even “free.”

Unknown to nearly all Americans, the British health care system is also provincially directed as a result of the 1990s devolution. There is not one “payer” in the UK, but rather four. The only province with health care under federal control is in England – and that’s only because England has no provincial assembly of its own.

So what does this mean for the United States? One of two things: If the (Un-)Affordable Care(-less) Act fails, and the left gets what it wants, the American health care system will be more radical and government-directed than that of any democracy on Earth. If instead, the (U)ACA “succeeds” – or, as more likely, wheezes through – our system will become somewhat more government-directed than it is now.

Either way, so long as the corporatist relationship between the federal government and the AMA remains intact, things in health care will get worse, and worse, long before they get better.

Cross-posted to the right-wing liberal

My reaction to the fiscal cliff debacle: the GOP caved, and will again

So while I was on vacation, the Republicans did what I expected them to do in the “fiscal cliff deal” – they caved.

They did not attempt to explain why tax increases are a bad idea. Instead, they tried to minimize the damage as much as they could, and yet even in doing that they have managed to make things worse.

It is now abundantly clear that the Republicans in Washington are terrified only of being “blamed” when the plans for ever-larger government goes off the rails. They will have the same fear – and thus cave in the same manner – when the debt-limit and sequestration debates arise over the next two months.

Meanwhile, the president – having gotten a deal that reduces 10 cents in spending for every dollar in projected revenue increases (One News Page) – keep in mind that the actual revenue raised will be smaller, most likely far smaller – is demanding even higher taxes (Forbes).

From a national perspective, it is difficult not to demand a new party on the right to replace the Republicans.

Yet locally, it is a very different story. The entire Republican delegations in Virginia and Maryland voted against this debacle (House Vote). Even recently defeated Congressman Rob Bartlett voted no. Given that in Virginia, the number of Republican Congressmen is eight (to Maryland’s two), this is a much bigger deal south of the Potomac. It shows there may yet be a future for conservatives in the GOP in the Old Dominion.

Cross-posted to the right-wing liberal

It really is Bush’s fault – Part 4: TARP

I have put up three posts explaining why the current state of the economy is genuinely the fault of George W. Bush (although not for the reasons usually aimed at him). I have mentioned the damaging effects of temporary tax cuts, loose money, and rampant spending.

However, it was the Troubled Asset Relief Program that encased the Bush-the-Younger record in Fringe-like amber.

Now, I have spent more than four years ripping TARP (a.k.a. “the bank bailout”), but it needs repeating: TARP misdiagnosed the problem (which was actually paper losses created by the mark-to-market rule), followed that up with the wrong solution (a massive government buy-back of “toxic” mortgage-backed securities), destroyed political accountability by giving the Treasury Secretary the right to switch gears with no oversight (he promptly redid the entire thing as a bank capitalization, and in some cases forced banks to sell the government stock to do it), and due to the aforementioned mistakes completely destroyed what was left of American confidence in the economy (healthy banks were forced to take TARP money, making the entire banking sector look sick, while Administration officials from Bush on down expressed levels of near-complete panic).

One can certainly talk about Treasury Secretary Henry Paulsen’s role in this debacle, or the fact that neither major candidate for president bothered to seriously challenge the “consensus” – although there were some in Washington who did challenge it. However, it was President Bush who essentially set the tone for the discussion by declaring the $700-billion bailout was a necessary – free market be damned. He holds to that position to this day.

As a result, the American people still have not recovered their confidence in the economy – or themselves. Limited government suffered a political hammer-blow from which it still hasn’t rebounded. Bush’s successor has essentially received a free pass whatever the economy does, because if it was so bad that the Republicans (led by Bush) violated their political principles, it’s certainly can’t be a normal recession.

Except that it was a normal recession, created by the burst of a bubble that had been fueled by loose money, rampant spending, and tax cuts with a time-limit that made them purely Keynesian in character. A bubble is merely concentrated inflation, and in the case of the “aughts,” the concentration came in resources (including land). Contrary to popular belief, this is more the norm than the exception for economic downturns (the recessions of 1819, 1837, 1854, 1857, 1873, 1893, 1929-34, and 1990-91 all had their cause in some bubble bursting – usually land).

In short, the economic record of the Bush era was one of Keynesian stimuli and government expansion on an unprecedented scale, with just enough of an appearance of conservatism to discredit the entire limited-government/supply-side point of view by the end of 2008. As a result, government’s size, scope, cost, and borrowing are all dramatically higher; the economy is weaker; and conservatives are forced to shoulder blame for policies that caused this – policies that were the actual antithesis of what they would actually recommend.

This is the Bush economic legacy – one which has haunted the country for years, and perhaps decades.

Cross-posted to the right-wing liberal

It really is Bush’s fault, Part 3: Spend-and-spend

Mark Shields once joked in 1992: “for years, the Democrats were the tax-and-spend party, and the Republicans were the borrow-and-spend party.” The 1990s in general clouded the issue, but, sadly, in the aughts that comparison came back with a vengeance.

The Congressional Budget Office detailed the disaster that was Bush the Younger’s domestic spending record a couple years ago. I noted it here. The trouble actually began long before 9/11, Afghanistan, or Iraq. In President Bush’s first three years… (CATO):

…real non-defence (sic) discretionary outlays will rise 18.0% in his first three years in office (FY2002-FY2004). That growth far exceeds the first three years of any recent presidential term, including Ronald Reagan’s first term (-13.5%), Reagan’s second term (-3.2%), George H. Bush’s term (11.6%), Bill Clinton’s first term (-0.7%), and Clinton’s second term (8.2%).

Keep in mind, this was just with the proposed FY2004 budget. The actual budget was worse.

It was in FY2004 (late fall of 2003, to be exact) that the President pushed Medicare Part D through Congress – a major expansion of the entitlement program that came as the warnings about Medicare’s sustainability even without Part D were growing.

Two years later, Bush added deliberate market intervention into the mix with an Energy Bill that vastly increased subsidies, tariffs, and regulations to favor corn-based ethanol – a policy that so badly skewed the corn market that it caused grain shortages throughout the world during his second term in office.

How bad did the spending binge get? Look at it this way: between FY2001 (Clinton’s last budget) and FY2007, federal revenue rose over 25% – yet we still fell from a surplus of over $100 billion to a deficit of over $150 billion, because spending rose by more than 40%.

The final year of the Bush Administration (2008) also included TARP, but that fiasco requires a s segment in this series all its own. Even by that point, however, the Keynesian high from temporary tax cuts, reckless spending, and monetary mayhem had run its course, leaving trouble in its wake.

Cross-posted to the right-wing liberal

It really is Bush’s fault, Part 2: Monetary mayhem

This is the second in a continuing series reviewing the economic policies of President George W. Bush. In the first post, I discussed why the temporary nature of the 2001/2003 tax cuts drained them of any deep economic benefit. While that fiscal policy was bad enough (without the permanence, it was pure Keynesian opium), monetary policy for much of the Bush the Younger Administration was just as bad.

From 2002 to 2005, interest rates were kept well below what would have normally been the case in the 1980s and (most of) the 1990s. Because the Federal Reserve does this largely via buying U.S. Treasury notes, the effect merely compounded the inflationary effect of the temporary tax cuts. As I noted yesterday, the inflation of the aughts was especially notable in resources – including land, which average Americans saw as the housing bubble.

Of course, when it comes to monetary policy, there is precious little an incumbent president can do – except when the Fed Chairman’s term is up. Bush had a unique opportunity to make it clear that ad hoc monetary policy engineered by Alan Greenspan in 2002 was not his policy, and make a change.

Instead, Bush quickly renominated Greenspan for another term in 2004.

Now, some may note that Bush might not have wanted to “rock the boat” in an election year. Except that in a much more obviously political position, he did just that in the same year when he appointed Porter Goss – a longtime critic of American intelligence operations – as CIA Director. So Bush the Younger was clearly up for taking risks. Unfortunately for the American economy, fixing a growing monetary mess wasn’t on Bush’s agenda.

As a result, not only did the bubble/credit cycle continue to spin out of control, but when it burst, the Fed’s already low interest rates couldn’t go much lower – and the Fed resorted to qualitative easing (now three times) under Greenspan’s successor – Ben Bernake, whom Bush nominated to replace Greenspan.

In other words, two men were largely responsible for the Fed going off the rails on monetary policy, and thus unintentionally making it nearly impotent today…and President Bush appointed both of them.

Cross-posted to the right-wing liberal

Norquist tells Republicans to hold the line on taxes

I have burned quite a bit of bandwith explaining why increasing taxes, as a matter of policy, is simply a bad idea. As I expected once the full results of Election 2012 became clear, there will be far fewer people – inside and outside the Republican Party – who share my view than ever.

As it happens, at least I won’t be alone; Grover Norquist has made it clear he opposes any tax increase – either by rates or by deduction elimination (NRO – Corner):

If any politician who has signed the Americans for Tax Reform pledge votes for a tax plan that doesn’t raise rates, but does change the current deduction structure in such a way that the government gets more revenue, he has violated the pledge, says Grover Norquist.

“If you raise taxes, it’s a problem with the pledge,” Norquist tells National Review Online. “Romney’s plan was always revenue-neutral — I’m in favor of getting rid of deductions and credits and reducing rates, as long as it’s revenue-neutral. That’s always been the Republican position.”

He also rejects the notion that a politician could not violate the pledge by allowing the Bush tax cuts to expire as they are scheduled to do at the end of the year. “Not an option,” Norquist responds. “There will be a vote to continue all tax cuts.”

So Norquist has drawn the line, and I’m glad he has. I expect a whole slew of Republicans will cross it anyway; it’s been my assumption since the 7th that the House Republicans, by and large, will cave. I also expect that the focus will be on Grover’s pledge, with the usual suspects demanding that promises to the voters be broken – apparently only rubes are supposed to believe what politicians say during campaigns.

That said, raising taxes is still a bad idea, period. It’s nice to hear someone else say it.

Cross-posted to the right-wing liberal

We Call it Mini-Tank

Tim, this is great.  Let me show you how we have reduced the Department of Defense budget.  We made the tanks smaller.

 

We use short people to drive them.  The great news is short people eat less so we don’t have to feed them as much.  You will learn all about this stuff when you join me in the Senate.  We will be such an awesome team.  We can shrink everything and save this country.  Just look at what our buddy Terry has done with cars.  Sure it may look like a clown car, but it’s going to save the world.  We can do the same thing with the military.  Just keeping making things smaller and all our problems will be solved.

Apple Faces A New Threat

Apple faces a new threat.  But it isn’t from Google or Amazon or Barnes & Noble.  No, it is from your friendly neighborhood federal government.

The U.S. Justice Department has warned Apple and five of the biggest U.S. publishers that it plans to sue them, accusing them of colluding to raise the prices of electronic books, the Wall Street Journal said, citing people familiar with the matter.

While Apple hired a high-power D.C. lobbying firm last month, that probably isn’t enough.  A major tactical mistake by Apple was closing its D.C. Government Affairs office back in the ’90s and not maintaining a strong presence here.  Just wait until the Justice Dept. sees this headline:

Apple’s new iPad can max out your data plan in 10 minutes

How long until you think Eric Holder and the Obama Justice Department launches an unwarranted investigation into Apple, Verizon and AT&T over this because someone starts to whine that they are entitled to unlimited streams of data at 4G speeds for little to no cost?

(If you’re reading this, Apple, check out my profile on LinkedIn.  I’d be more than happy to help you get set up with a new D.C. office of your own.)

How Republicans Can Win Florida in November

Florida, with its 27 electoral votes, is critical for any Republican hoping to win this fall’s Presidential election. A key issue in the Sunshine State that should be emphasized is the Fed’s continued subsidy of the banks at the expense of ordinary savers. The Fed, by “Quantitative Easing,” (printing money to buy the bonds the Treasury is issuing to fund Obama’s record deficits) has kept interest rates at record lows. Some argue this will help to revive the housing industry. If so, it has failed miserably, since new home sales were at record lows last month.

The chief beneficiaries of the Fed’s policies are the banks that were instrumental in causing our problems. By allowing them to borrow, from the Fed or from ordinary people, at extraordinarily low rates, they are able to make much larger profits on any loans that are “performing” – that is, on any loans where people are actually making payments. This will let the banks gradually recover from their losses on defaulting mortgages.
Great, we need a healthy banking system, so who loses? Florida’s many seniors do – those who rely on the earnings from their savings are subsidizing the banks. Consider your prudent great aunt and uncle who, after a lifetime of hard work and thrift retired to Florida with a social security benefit of $2000 a month and $1,600,000 in savings. Concerned with security, they opt for safe, no risk investments. They put their money in a five year Treasury bond yielding 0.75%, which earns them $1,000 a month, giving them $3,000 a month to live on. Now $3,000 a month isn’t poverty, they should be able to get by, but $1,600,000 puts them in the 1% in terms of wealth! I suspect they planned to be able to live a little better than what $3,000 a month gives them.

How about a more normal Florida retired couple with savings of $200,000 (still putting them in the top 40% of wealth!)? They would get $1500 a year – a little more than $100 a month. Their lifetime of saving might let them go to Denny’s twice a month in their “golden years.” But wait –If they only get the average social security payment of $1,177 a month, we are talking about real poverty, not Denny’s but the pet food aisle instead.
It is unconscionable for the Fed to force people like this to subsidize the banks and the Treasury. If a Republican candidate promised to pressure the Fed to stop printing money and to allow interest rates to rise, senior voters – 18% of the Florida population and a far higher percentage of voters – would reward him with their votes. And they deserve this benefit – a just reward for years of thrift while everyone else (including all levels of government) spent all they could borrow. This could well be the key to attracting them to the Republican standard in greater numbers. I suspect even a few non-seniors might support a move to reduce subsidies to the banks, while rewarding saving for the future. It would also make explicit the “tax” savers are paying to the Treasury in terms of low interest received on government bonds,
which might put some pressure on the government to reduce spending.

The Fed recently announced that it sees keeping interest rates low for the next several years. How much have you saved for retirement? Multiply it by 0.75%, or even 1.90% (if you are willing to give the Treasury your money for 10 years). Bet you can’t live on that amount!

The Obama plan: less money for charities, higher gas prices, and more plane crashes

While I was starting a new job and working through some health issues, the president revealed his “recovery plan.” I put the scare quotes up because after seeing how he plans to raise the revenue to cover it, it doesn’t look to “recover” anything I’d want to see.

The Richmond Times-Dispatch reported on the tax-hike details:

. . . White House Budget Director Jack Lew said Monday afternoon that the proposed offsets would come largely through limits on itemized deductions for individuals who earn more than $200,000 a year and families that earn more than $250,000, creating $400 billion in additional revenue.

The administration also is recommending closing oil and gas loopholes and changing the depreciation rules for corporate airplanes to cover the difference.

Let’s take this one disaster at a time, shall we?

Limiting itemized deductions for wealthy Americans: Among the many itemizations this backdoor tax hike would hit is . . . wait for it . . . charitable giving (Boston Globe). So, one of the upshots of the president’s plan includes taxing donations to charity. When you tax something, you get less of it. Thus, the president’s plan means less money going to charity.

“Closing oil and gas loopholes”: Actually, the RTD should know better. The “loopholes” are actually standard deductions that every business takes. It’s just that people get angrier at oil and gas companies when they take them. As a result, their taxes will go up, meaning their costs will go up and their production will go down. Less gasoline on the market means higher gas prices.

Finally, my favorite, “changing the depreciation rules for corporate airplanes“: specifically, extending the depreciation schedule from five years to seven for corporate planes. This would be a tax increase on corporations that own planes (faster depreciation means greater tax savings up front and overall), but it also reduces the incentive to buy new planes rather than hang on to older ones. Older planes mean more malfunctions, and more plane crashes.

So let’s recap the Obama plan

  • Less money to charity
  • Higher prices at the pump
  • More plane crashes

I’m not sure what kind of plan that is, but it’s no recovery plan.

Cross-posted to the right-wing liberal

What we know so far

As we approach Tuesday’s opening bell on Wall Street, here’s what we know (and don’t know) regarding the reaction to the S&P downgrade.

Wall Street has gone mad. How else does one explain a panic that leads to a rally in the one asset that S&P downgraded – namely US debt? The wise investor would be looking abroad for a capital refuge (and finding it next door in Canada). Instead, the financial bigwigs, gurus, and minions revealed themselves to be the same herd of lemmings that dutifully ran off the cliff in 2008 because Pauslen and Bernake told them to do so. It is as maddening as it is frightening.

The president is suffering badly from overexposure: The debt-ceiling debate reminded me somewhat of the 1995-96 budget battle between Congress and Clinton, which was exactly what the Democrats wanted – except that it reminded me what Clinton did differently from Obama. For starters, Clinton actually presented a plan to balance the budget (albeit in 10 years) without raising taxes. The argument became balancing in 2002 versus balancing in 2005; a far cry from this debate. Moreover, Clinton practically withdrew into a shell for the first half of 1995, in part to retool his message and his Administration. I’ve seen none of that from this president. Thus, he was in a far weaker position yesterday, and as such, his speech went over like a lead balloon.

Closer to home, corrosive populism infects both parties. OK, I will freely admit that moments like these bring out my inner High Federalist, but I can only say this to Cato the Elder and my good friend Shaun: when you find yourself in agreement with Michael Moore, step away from your keyboards. Yes, S&P had egg on its faces when it misread the Collateralized Debt Obligations (although the panic in re the CDOs vastly underestimated their worth in the other direction – and given the mark-to-market fiasco, that was the more damaging mistake), but are you really going to rip them because they fixed their mistake and are now more cautious? S&P specifically made clear what would avoid a default – and Washington refused to provide it. You can blame the Democrats for not willing to cut spending deeper (as I would); or you can be angry at the GOP for ruling out tax increases (paging Mr. Gross . . . Mr. Larry Gross), but you cannot blame S&P for essentially backing up their words with actions (admittedly an event so rare in politics that it is difficult to digest).

Looking ahead, watch Andrew Cuomo. The Governor of New York cut more from his state budget ($10B) than will be cut from this year’s federal budget ($7B and change), while charging to the forefront on the same-sex marriage issue. He has thus perfectly positioned himself to the president’s left on social issues and to his right on fiscal issues. Someone is going to notice. Obama may get a quixotic opponent from the left; he can swat that aside easily. It will be much tougher to dispatch Andrew Cuomo, should the Governor decide to give it a shot (it’s still too early to tell what all of this will do to the Republican field – especially as said field appears to be incomplete).

Cross-posted to the right-wing liberal

“PRINCE WILLIAM COUNTY HAS ONLY ITSELF TO BLAME FOR RATING DOWNGRADE RISK”

Bob Pugh for Coles Supervisor

Contact: Bob Pugh
Bob Pugh for Coles Supervisor

http://www.bobforsupervisor.org

FOR IMMEDIATE RELEASE

PRINCE WILLIAM COUNTY HAS ONLY ITSELF TO BLAME FOR RATING DOWNGRADE RISK

Prince William County (July 30, 2011) – A press release yesterday endorsed by leaders in several jurisdictions, including Prince William County, states, “Moody’s decision to place our bond ratings on review for possible downgrade was made because of federal inaction, and in no way reflects the continuing strength and good fiscal management of our local communities.”

This statement is not altogether correct. Continue reading

Apple Dethrones U.S. Government

Something to consider:

The U.S. Government had an operating cash balance of $73.8 billion as of close of business on July 28.

Apple, Inc. had $76.2 billion in cash and marketable securities at the close of the 2nd Quarter on June 30.

In other words, the world’s largest tech company has more cash than the world’s largest sovereign government.

That’s because Apple collects more money than it spends, while the U.S. government does not.

Poverty In America

No wonder the federal government is going bankrupt.  Just look at how they define poverty in America today:

Data from the Department of Energy and other agencies show that the average poor family, as defined by Census officials:

● Lives in a home that is in good repair, not crowded, and equipped with air conditioning, clothes washer and dryer, and cable or satellite TV service.

● Prepares meals in a kitchen with a refrigerator, coffee maker and microwave as well as oven and stove.

● Enjoys two color TVs, a DVD player, VCR and — if children are there — an Xbox, PlayStation, or other video game system.

● Had enough money in the past year to meet essential needs, including adequate food and medical care.

The accompanying chart is very enlightening.  Even 0.6% of people the government says are living in poverty have a jacuzzi while 18% have a big screen TV.