Right Wing Nut House



Filed under: Bailout, Chicago East, Financial Crisis, Media, OBAMANIA!, Politics — Rick Moran @ 9:28 am

The game of softball has two incarnations. Most of the country plays the 12″ variety that features a fairly hard ball that the player needs a leather glove in order to catch it.

But around these parts, when one says “Let’s play softball,” we are talking about a great big 16″ “mushball” that you don’t need a mitt to catch it and is easy to hit. Much more conducive to playing spinoff games like “Beer Ball” and other variations, the game is marked by the painlessness involved in catching the ball due to its lumpen shape and forgiving texture.

Hence, the term “softball question” which apparently has its origins in questions asked certain Machine politicians in Chicago in the 1970’s. The exact date and origin of the term are unknown but anecdotally, I recall the great Chicago columnist Mike Royko using the term to describe the witlessness of Chicago beat reporters at City Hall who were a most incurious lot when it came to Machine corruption. This may have been unfair of Royko due to Mayor Richard J. Daley’s notorious hatred of reporters and the vengeance he would take against any who crossed him.

But the reference is to the 16″ variety which, unlike the more popular 12″ game is played with a true “soft ball” and is seen mostly in Chicago and its surrounding suburbs and ex-urbs.

No doubt Barack Obama is very familiar with the 16″ variety of the game. And after last night, he is now intimately familiar with the term “softball question:”

Question: Thank you, Mr. President. Earlier today in Indiana, you said something striking. You said that this nation could end up in a crisis without action that we would be unable to reverse.

Can you talk about what you know or what you’re hearing that would lead you to say that our recession might be permanent when others in our history have not? And do you think that you risk losing some credibility or even talking down the economy by using dire language like that?

Batter up! Play ball!

Announcer: Here’s Obama at the plate. So far the president is 0 for 3 with two strikeouts and a weak pop-up to the second baseman. He’s also been credited with a sacrifice when he lifted a medium deep fly ball to left field that advanced catcher Hillary Clinton to third.

Here’s the first pitch … it’s an underhand delivery from Jen Loven of the Associated Press who couldn’t decide whether to rush to the plate and kiss the batter or simply grovel at his feet. Obama takes a mighty swing…and misses!

Obama: That’s why the figure that we initially came up with of approximately $800 billion was put forward. That wasn’t just some random number that I plucked out of — out of a hat. That was Republican and Democratic, conservative and liberal economists that I spoke to who indicated that, given the magnitude of the crisis and the fact that it’s happening worldwide, it’s important for us to have a bill of sufficient size and scope that we can save or create 4 million jobs.

I doubt too many conservative economists recommended a bill that contained such a lopsided ratio of spending to tax cuts. He is either being disingenuous or lying. I have seen plenty of conservative economists say we need a stimulus bill but of “sufficient size and scope?” That’s one on me and it would be helpful if the President could give us the names of those economists. Not just to check his story but also to scream at any fools who would have recommended such idiocy.

But back to the game…

Announcer: Obama steps out of the box for a moment. He adjusts his immaculate uniform - evidently his cup is slightly out of place. He daintily spits into his government-funded, Taiwanese built spitoon that he insists on bringing with him to the plate (life must be hell for Barak ever since his wife forced him to quit smoking and switch to chewing tobacco). Time is called as Obama insists that the spitoon be emptied and out comes a stimulus funded worker, the Designated Spit Chucker, to take care of the problem.

Obama steps back in. The rookie looks nervous as his spikes paw at the dirt. He squeezes the bat and awaits the pitch from Karen Boeing of Reuters. Here it comes …oooooh a brushback pitch that narrowly misses Obama’s enormous ear:

Question: Thank you, Mr. President. I’d like to shift gears to foreign policy. What is your strategy for engaging Iran? And when will you start to implement it? Will your timetable be affected at all by the Iranian elections? And are you getting any indications that Iran is interested in a dialogue with the United States?

Obama gives us all a lesson in how to say absolutely nothing in 1000 words or less.

And my expectation is, in the coming months, we will be looking for openings that can be created where we can start sitting across the table, face-to-face diplomatic overtures, that will allow us to move our policy in a new direction.

There’s been a lot of mistrust built up over the years, so it’s not going to happen overnight. And it’s important that, even as we engage in this direct diplomacy, we are very clear about certain deep concerns that we have as a country, that Iran understands that we find the funding of terrorist organizations unacceptable, that we’re clear about the fact that a nuclear Iran could set off a nuclear arms race in the region that would be profoundly destabilizing.

So there are going to be a set of objectives that we have in these conversations, but I think that there’s the possibility at least of a relationship of mutual respect and progress.

As long as Obama is willing to grovel at the feet of the Iranian government by “apologizing” for all the naughty things we’ve done in Iran without them having to apologize for their support of Hezbullah and Hamas, then I have no doubt that a relationship of respect and “progress” (whatever that means) can be achieved.

Just tell our diplomats to be careful what they say. Iran has already committed one act of war in taking and holding our personnel as hostages. No doubt they would probably find it efficacious to have a repeat performance.

Let’s pick up the game where we left off…

Announcer: Obama is getting up slowly and dusting himself off after the high heat put him on his ear. He glares at the pitcher but restrains his inclination to go after her with a bat. Obama appears to be disgusted that his uniform is dirty and may call for his valet to brush him off. I believe - yes - he is asking the ump for permission but Nester is having none of it. He points to the box and orders Obama to resume.

Obama looks determined now. His steely gaze is concentrated on Chip Reid of NBC as he goes into his windup. Here’s the pitch…it’s an eephus pitch that Obama slams deep to left. Back she goes…back…back…IT’S OUTA HERE!

Thank you, Mr. President. You have often said that bipartisanship is extraordinarily important, overall and in this stimulus package, but now, when we ask your advisers about the lack of bipartisanship so far — zero votes in the House, three in the Senate — they say, “Well, it’s not the number of votes that matters; it’s the number of jobs that will be created.”

Is that a sign that you are moving away — your White House is moving away from this emphasis on bipartisanship?

And what went wrong? Did you underestimate how hard it would be to change the way Washington works?

Not only does Reid set the ball on a tee for the president, he actually gets him started toward trashing his opposition while being able to appear “bi-partisan:”

As I said, the one concern I’ve got on the stimulus package, in terms of the debate and listening to some of what’s been said in Congress, is that there seems to be a set of folks who — I don’t doubt their sincerity — who just believe that we should do nothing.

Now, if that’s their opening position or their closing position in negotiations, then we’re probably not going to make much progress, because I don’t think that’s economically sound and I don’t think what — that’s what the American people expect, is for us to stand by and do nothing.

There are others who recognize that we’ve got to do a significant recovery package, but they’re concerned about the mix of what’s in there. And if they’re sincere about it, then I’m happy to have conversations about this tax cut versus that — that tax cut or this infrastructure project versus that infrastructure project.

But what I’ve — what I’ve been concerned about is some of the language that’s been used suggesting that this is full of pork and this is wasteful government spending, so on and so forth.

First of all, when I hear that from folks who presided over a doubling of the national debt, then, you know, I just want them to not engage in some revisionist history. I inherited the deficit that we have right now and the economic crisis that we have right now.

There may be some lonely back bencher (Ron Paul) who may want to “sit back and do nothing” about the economic crisis but to try and say that this opinion is even a minority opinion in the GOP is a lie and he knows it. And this is even worse:

Number two is that, although there are some programs in there that I think are good policy, some of them aren’t job-creators. I think it’s perfectly legitimate to say that those programs should be out of this particular recovery package and we can deal with them later.

But when they start characterizing this as pork, without acknowledging that there are no earmarks in this package — something, again, that was pretty rare over the last eight years — then you get a feeling that maybe we’re playing politics instead of actually trying to solve problems for the American people.

I’m sorry but $4.2 billion for “neighborhood stabilization activities” - much if which would go to ACORN and other partisan Democratic organizations smacks of a Hugo Chavez type of political program where organizing people at the neighborhood level, getting them dependent on those government programs earmarked for the purpose, and then when election day rolls around, actually paying ACORN and their sister organizations to get the grateful citizens to the polls would cement the Democratic majority in many states where big cities make up a sizable segment of the vote.

Here are 49 other “destimulating facts” about the bill (many of which I agree with Obama should be included but many others we can clearly do without).

It’s not that we expected the press to challenge Obama and ask him tough questions. There’s no opportunity for follow-up and the president calls on the reporters like a teacher calling on students in class. The modern presidential press conference has become a drama starring the President of the United States and featuring recognizable talking heads from the various networks, bit players from the dead tree media, and a cast of hundreds of extras. It is a political speech disguised as a press conference and the transparent willingness of the press to play their designated roll was nauseating.

No questions about Gitmo? What about Obama’s keeping some Bush era policies on rendition and the Terrorist Surveillance Program? Poor Glenn Greenwald has his panties in a twist because Obama won’t let the terrorists free in downtown Washington with an apology for inconveniencing their jihad by incarcerating them for a few years.

The fact is, there was not one question that discomfited him, not one challenge to a decision he has made. No questions about his cabinet picks who have backed out or his breaking his pledge not to put lobbyists in positions where they would have jurisdiction over the areas where they lobbied, or any questions on breaking his promise to wait 5 days before signing a bill into law in order to get feedback from his adoring public.

Announcer: Obama is circling the bases in triumph, women are swooning in the stands, men are weeping, and reporters are running next to him trying to get his autograph. Our hero-savior-president has triumphed and his enemies have been temporarily silenced.

Ain’t softball a grand game?



Filed under: Bailout, Financial Crisis, Government, PJ Media, Politics — Rick Moran @ 8:15 am

The chances of deep sixing the stimulus monstrosity and starting over again are as near to absolute zero as you can get in politics. The reputations of Speaker Pelosi, Harry Reid, and the president himself are on the line and a defeat of the conference report in the senate (still a possibility after the House tries to restore many of the cuts made by the senate), would be very damaging to that triumvirate, especially the president.

But if ever there were a case where the leaders of the Democratic party should swallow their pride and take the hit on their credibility by tearing up this piece of legislation and starting over, this is it.

Not much of a chance of that happening what with Obama going on national TV tonight and a cloture vote scheduled in the senate tomorrow. So Obama will probably ratchet up the fear mongering to heights not seen since Democrats ran commercials accusing Republicans of wanting to kill poor children and force old people to eat dog food. It is one thing to tell us the truth about our dire economic straits. It is quite another to try and make people believe that only by passing his $900 billion panic panacea will we avoid “catastrophe.”

And what are the consequences of all these dark nostrums being purveyed by a candidate who usually spoke in optimistic and hopeful language on the campaign trail?

Brad Blakeman, a senior aide to Mr. Bush from 2001 to 2004, said the new president’s language is immature.

“It’s not presidential. An American leader needs to be hopeful and optimistic - and truthful. Everything he says is parsed; everything he says is searched for deep meaning. When he goes to ‘DefCon 5′ on the economy and says that we’re on the brink of catastrophe, it’s absolutely insane.”

With his fiery rhetoric, the new president runs the risk of terrifying consumers and investors, which could depress the economy even further. While the economy is bad, it is a far cry from Great Depression levels, when as many as 30 percent of Americans were unemployed, compared with the 7.6 percent now.

Every president must walk a rhetorical tightrope when talking about the economy, a lesson Mr. Bush learned quickly, being bashed just after taking office for delivering somber news. The United States was just entering a mild recession - it had been in one, it turns out, for about nine months - and the new president said so.

Liberals went berserk.

“Every time we turn around, this guy is bad-mouthing the economy. Is that lifting our spirit or dumping on it in order to sell his tax cut?” liberal comentator Bill Press said on CNN. Newsweek’s Jonathan Alter, in an article headlined “Thanks Ever So Much, President Poor-Mouth,” said, “Even if Bush turns out to be right in his predictions of gloom, that doesn’t mean he was right to make them.” The New York Times lectured Mr. Bush, saying that presidents were supposed to be “cheerleaders for the nation’s economy.”

Of course, when Bush began to tout his economic accomplishments in the lead up to the 2004 election, he was skewered for being too Pollyanish and for not being “realistic.” So much for being a “Cheerleader” for the nation’s economy.

I made this point in my PJ Media column today:

That’s right. The candidate of “Hope and Change” has decided to be a president who espouses “Fear and Loathing.” Fear of financial Armageddon unless we do as we are told and blindly give in to his $900 billion panic panacea for the economy and loathing of the opposition — an opposition Obama unfairly portrays as opposing him out of spite and because a popular talk radio host is telling them what to do.

It is a far cry from the way Franklin Roosevelt and Ronald Reagan handled economic crises that in some ways were more dire than what Barack Obama is facing today. Both men came to office at a time when the American spirit was limping and lost. Both men were confronted with unprecedented economic problems (double digit inflation and interest rates in 1981 were an impossibility according to the books).

And yet, both men eschewed fear mongering and sought to lift the people out of themselves in order to bring back hope and allow the natural optimism of the American people to come to the fore. Arguments rage to this day whether FDR’s massive spending helped or hurt the economy. And Reagan’s tax cuts began a spiral of deficits that, save for a brief period in the 1990s, fostered a climate of “let the kids pay for it” on Capitol Hill.

But few can argue that FDR and the Gipper didn’t succeed in changing the dynamics of the crisis they were facing by inspiring the people to believe in themselves again and that better times were ahead.

Obama does not want Americans to believe in themselves. He wants them to believe in him…”

Now let’s be realistic and grant President Obama some leeway in this matter. A leader uses every tool at his disposal in order to succeed in getting the public behind him. And fear mongering is one way - the dirty, easy way - to accomplish that goal. A much better way to is to inspire hope and optimism in the future, “lifting the people out of themselves” as I say in my column. But if Obama can’t find the words then he is left with trying to scare us into supporting him.

The problem is that if the stimulus doesn’t work - and there are many smarter than you or I who say it won’t in its present form - then the American people will feel betrayed. If catastrophe occurs after warning that the way to avoid it was to pass his stimulus bill, only the true Obamabots will stick with him because he will have lost everyone else. He has promised relief if the bill is passed and when it is not forthcoming, his credibility will take a hit from which it will never recover.

The risks for Obama are considerable. He and the Democrats will have no one else to blame if the package fails to boost the economy. Obama himself has said his first term can be judged on whether it succeeds, whether it creates or saves the 3 million to 4 million jobs he promises.

And if the economy fails to show marked signs of improvement — a possibility indeed — Republicans will have a megabillion-dollar “I told you so” in their pockets, just in time for the 2010 midterm elections and Obama’s own reelection bid in 2012.

Sen. John Cornyn of Texas, chairman of the National Republican Senatorial Committee, said the fallout from a Democrat-only bill will be “squarely in the president and the Democratic leadership’s lap.”

The flip side of that risk belongs to Republicans. The economy may very well create 4 million new jobs in the next few years. It would create 3 million in the worst of times anyway. Obama has set the bar so low that if he succeeds (even if the unemployment rate continues to go up) the GOP is toast in 2010.

But the real problem remains the rank cynicism of Obama in carrying on with business as usual despite his promises to change things in Washington. His personnel problems, his refusal to even listen to Republicans who pointed out some $150 billion in pure pork in the stimulus bill, and his ceding responsibility for the crafting of the bill to Nancy Pelosi and David Obey - two of the most far left liberals in the House - all show a leader both unsure of himself and a betrayer of the public’s faith in him. Couple this with his exaggerated rhetoric and dire predictions regarding the bail out measure and you have a president whose biggest boosters are even starting to ask questions about his competency.

After a distinctly rocky start to his presidency, he has admitted he “screwed up” and is returning to one thing in his political career that he has perfected – campaigning. In Elkhart, Indiana, today and Fort Myers, Florida, tomorrow, Mr Obama will try to seize back control of the political agenda with question-and-answer sessions with voters in two of the swing states that gave him victory.

Already, however, he is struggling, and the product he is now selling is not himself but a near-trillion-dollar economic “stimulus” package loaded with pet Democratic spending projects that has awakened slumbering Republicans in Congress and is now supported by barely a third of Americans. In between the Indiana and Florida stops, he will return to the White House for a prime-time press conference in which he will appeal directly to citizens and seek to rekindle the magic of his campaign.

Which President Obama will turn up remains to be seen. Last week, he began as a wide-eyed bystander buffeted by events as he lost his key confidant, Tom Daschle, amid an uproar over $128,000 in unpaid taxes for a chauffeur and limousine. Mr Obama and his advisers believed the oversight did not matter because the over-arching virtue of the new White House could not be doubted. He was wrong and seemed out of touch in believing that ordinary people would not notice the contrast between the practice of politics as usual and his campaign slogans against it.

The White House is now in damage-control mode. After Robert Gibbs, Mr Obama’s spokesman, was lampooned by Jon Stewart on The Daily Show as a non-answering automaton in the mode of President George W Bush’s press secretaries, former campaign strategist David Axelrod was dispatched to television studios to make the stimulus case. However, this was tinkering around the edges.

As Jimmy Carter found out to his detriment, these early weeks and months in the White House set the tone for the entire term of office. Carter spun his wheels for 3 months, causing even the Washington Post to ask who was in charge. Carter first tried an energy package which got bogged down in committee. He then tried a little stimulus of his own but he allowed the process to get so out of control that he eventually scrubbed the whole plan. In short, nothing was done. Carter had wasted the first three months of his presidency and could never get the momentum back. He was basically judged a failed incompetent before the cherry blossoms had bloomed in the tidal basin.

Obama goes before the press tonight to try and save his stimulus and perhaps even his presidency. He may eventually get his bill. But it will almost certainly be a straight party line vote with one or two Republicans in the senate jumping ship. And then?

More bailouts as Treasury Secretary Geithner will be forced to go back to Congress this week and beg for more TARP money to save our banking system. And then it will be the automakers turn again in the spring, and the the states again next fall, and who knows what other industries who are too big to fail or who are generous with their donations to Democratic candidates will be able to milk the taxpayer in this crisis.

Will every bailout bill be a “catastrophe” if we don’t support it? How often can Obama go to the well and drink from the cup of fear and loathing before the people simply tune him out and identify as him as just another partisan politician?

Sooner than he could possibly dream.



Filed under: Bailout, Financial Crisis, Politics — Rick Moran @ 10:34 am

With all the brouhaha over the stimulus bill, a far more important plan is being formulated under most of the media’s radar by the Obama administration that will radically alter the banking system in the country while perhaps staving off a depression.

The first $350 billion of the TARP program has done absolutely nothing to improve the economy as banks have hoarded the cash rather than even slightly freeing up credit that would help get the economy moving again.

The problem is that all those mortgage backed securities and credit derivatives that grew out of the housing boom have lost so much value no one knows what - if anything - they are worth. So the Treasury Department has hit upon a risky, radical idea that would take those assets off the hands of banks and in one fell swoop, put their balance sheets in the black.

That is just one of the ideas that Mr. Geithner has come up with to deal with the potential catastrophe that is staring us in the face; bank failures in the thousands that would very likely pull the economy into the depths of a depression.

The risk, many economists say, is enormous.

 ’Bad Bank’: The prospects for the creation of a so-called “bad bank” have gone back and forth in recent days. A government-funded “bad bank” would buy toxic assets from bank balance sheets. But there are many hurdles.

 For example, how much would the government pay for those assets — pay too much, the taxpayer takes a hit; pay too little, and the banks do. Plus, many analysts believe that to be truly effective, a “bad bank” would need far more money than is available.

 However, the Wall Street Journal reported Saturday that Treasury may use private sector money for the bulk of the financing. And speaking on “Fox News Sunday”, Summers said Geithner believes he can bring “substantial private capital” to the plan.

The government would also have to purchase shares in the bank:

 Many believed that the bad bank model would have required far more resources than presently available under the Troubled Asset Relief Program, or TARP.

 In order for the bad bank plan to work successfully, the government would not only need to price and buy the bad paper, a difficult task in itself, but it would have to make large purchases of common stock to make up for the markdowns of the toxic paper on bank balance sheets.

This seems to be the major hurdle for newly installed Treasury Secretary Timothy Geithner and Senior Economic Adviser Larry Summers.

 Buying so much stock also could trigger a de facto nationalization of the banks.

There is also a plan to insure a bank’s assets:

Insuring assets: The Treasury Department has already done this for Citigroup and Bank of America. Here’s how the Citi arrangement — announced last fall - works, for example: Citi is on the hook for the first $29 billion in losses on the covered assets, which includes mostly loans backed by residential and commercial mortgages. Citi covers 10% of losses above that amount, with the government shouldering the rest.

In a bailout scheme announced last month, the United Kingdom used the same approach.

Such a plan helps ease the pain on banks, but will not force the banks to fully recognize the extent to which assets their holding have lost value — an important step in the recovery process.

Or, the Administration may simply use the $350 billion to bail out banks on a case by case basis:More bank injections: This idea isn’t dead yet. Banks still need capital, and TARP fund still has some cash. Treasury may make more direct investments, though they would surely come with more strings attached, such as a requirement that banks boost lending, for example.

How about some really bitter medicine for the patient? Some debt/equity swaps:

Debt/equity swaps: Geithner could also require that debt holders in banks needing assistance “swap” their stake for stock. Existing shareholders would be wiped out and current creditors would give up some of their debt claims in exchange for ownership of the restructured firm. In addition to being fairer, swapping debt for equity would reduce the amount of debt weighing on the economy.

Now for the scary part; many economists don’t believe that any of this will work, that somehow those toxic assets are going to have to be bought up and removed from the balance sheets of banks. The cost will be $3-4 trillion (some believe that it may be double that figure).

The point is, the banking crisis is far from over and may yet take us down unless something is done. One thing is for sure, that $350 billion in TARP money isn’t enough. Eventually, Geithner is going to have to come before Congress and present a bill for saving the banks.

At that point, we may have no choice but to bite the bullet and mortgage the future in order to save it.



Filed under: Bailout, Financial Crisis, Government, History, Politics — Rick Moran @ 9:07 am

“Those who cannot remember the past, are condemned to repeat it,”
(Essayist, philosopher, novelist, and non-historian George Santayana)

One of the things I find fascinating about the debate over the stimulus bill is that proponents claim that they have learned the lessons of history both from FDR’s New Deal and the more recent Japanese “Lost Decade” in that while massive government spending didn’t work to bring those economies out of a serious tailspin, this stimulus bill will do the trick.

The reason? The sheer size of the monstrosity will act like a defibrillator and shock the economy back to life. Proponents advance the idea that neither FDR or the Japanese were bold enough in their spending on infrastructure to do any good. What is needed is truly gargantuan government outlays over a long period of time.

Paul Krugman has been advancing this theory as have those who are responsible for pushing the plan forward. Treasury Secretary Geithner:

In a nutshell, Japan’s experience suggests that infrastructure spending, while a blunt instrument, can help revive a developed economy, say many economists and one very important American official: Treasury Secretary Timothy F. Geithner, who was a young financial attaché in Japan during the collapse and subsequent doldrums. One lesson Mr. Geithner has said he took away from that experience is that spending must come in quick, massive doses, and be continued until recovery takes firm root.

Moreover, it matters what gets built: Japan spent too much on increasingly wasteful roads and bridges, and not enough in areas like education and social services, which studies show deliver more bang for the buck than infrastructure spending.

“It is not enough just to hire workers to dig holes and then fill them in again,” said Toshihiro Ihori, an economics professor at the University of Tokyo. “One lesson from Japan is that public works get the best results when they create something useful for the future.”

There is $80 billion in funding for education over the next two years in the current stimulus bill But when you consider the current budget of the entire Department of Education is $59.2 billion, one begins to see the truly massive size of this “stimulus.”

This $80 billion will go to:

Education for the Disadvantaged
Impact Aid
School Improvement Programs
Innovation and Improvement
Special Education
Rehabilitation Services and Disability Research
Student Financial Assistance
Student Aid Administration
Higher Education
Institute of Education Sciences
School Modernization, Renovation, and Repair
Higher Education Modernization, Renovation, and Repair

Building new schools and rehabbing old ones is probably legitimate spending on infrastructure that will pay off immediately and long term. Student aid? With the credit crunch, another legitimate outlay.

Special education is underfunded nationwide but why include it in a “stimulus bill?” Because otherwise the amount being asked - $13 billion - would never make it out of committee much less survive as a separate entity. Hence, they tack it on to the stimulus and threaten “catastrophe” for the economy unless we pass it.

What about spending for higher education? If one dime goes to Harvard we should scream bloody murder. There’s a school with a multi-billion dollar endowment. If they want improvements in their campus or if they want to invite some performance artist who will smear feces all over himself and spout rancid poetry, fine. Let them do it on their own dime.

Ditto for most of the bigger schools out there who have rich and generous alumni. Something is wrong if these institutions get any money from the taxpayer when they are sitting on massive amounts of money in the form of endowments and building funds.

And as far as this stimulus funding “School improvement programs,” do we really want the guy who ran the Annenberg Schools Project in Chicago - a massive waste of $100 million in private funds that didn’t improve Chicago schools one iota - telling America how to improve their schools? And let’s not even bring up his Education Secretary, a former Superintendent of those same Chicago Schools. His stellar credentials include running a school system where barely half the kids graduated from high school and where reading comprehension skills were so bad that it was estimated 30% of high school graduates were functionally illiterate.

The point being, what kind of “lesson” did these jamokes learn from the Japanese and New Deal efforts to jumpstart the economy using government funds? Maybe we should ask the Japanese:

Most Japanese economists have tended to take a bleaker view of their nation’s track record, saying that Japan spent more than enough money, but wasted too much of it on roads to nowhere and other unneeded projects.

Dr. Ihori of the University of Tokyo did a survey of public works in the 1990s, concluding that the spending created almost no additional economic growth. Instead of spreading beneficial ripple effects across the economy, he found that the spending actually led to declines in business investment by driving out private investors. He also said job creation was too narrowly focused in the construction industry in rural areas to give much benefit to the overall economy.

He agreed with other critics that the 1990s stimulus failed because too much of it went to roads and bridges, overbuilding this already heavily developed nation. Critics also said decisions on how to spend the money were made behind closed doors by bureaucrats, politicians and the construction industry, and often reflected political considerations more than economic. Dr. Ihori said the United States appeared to be striking a better balance by investing in new energy and information-technology infrastructure as well as replacing aging infrastructure.

Japan’s experience also seems to argue for spending heavily to promote social development. A 1998 report by the Japan Institute for Local Government, a nonprofit policy research group, found that every 1 trillion yen, or about $11.2 billion, spent on social services like care for the elderly and monthly pension payments added 1.64 trillion yen in growth. Financing for schools and education delivered an even bigger boost of 1.74 trillion yen, the report found.

I can see spending money on some of these education projects, but $80 billion over two years? Sounds to me like an invitation to massive waste. But then, this payoff to the teachers unions (who love to tinker with new ways to make our children ignorant) isn’t necessarily meant to jumpstart the economy but will pay off in the long term. And as Rahm Emanuel has said, “Why waste a crisis?” Use fear mongering to scare people into supporting a bill that spends hundreds of billions in tax monies on programs that otherwise would either not get passed or not receive half the amount earmarked for them in this stimulus bill.

Another huge outlay in this bill is money to the states. This would be funneled through a variety of departments so it is hard to put a number on the total amount but it is well over $300 billion. A lot of this will be targeted monies to education and health care programs. Some of it will be of the “no strings attached” variety which has politicians like Mayor Daley of Chicago licking his chops. Along with money for extended unemployment benefits which is needed in this economy (Note to my rightie friends: There are no jobs out there at the moment - MacDonald’s isn’t even hiring), a case can be made to include a large portion of these funds in a stimulus bill to deal with the crisis.

Here’s the problem: If Mr. Keynes is in charge of our fiscal policy - and he clearly is - what does this mean for the future?

Beyond that, proponents of Keynesian-style stimulus spending in the United States say that Japan’s approach failed to accomplish more not because of waste but because it was never tried wholeheartedly. They argue that instead of making one big push to pump up the economy with economic shock therapy, Japan spread its spending out over several years, diluting the effects.

After years of heavy spending in the first half of the 1990s, economists say, Japan’s leaders grew concerned about growing budget deficits and cut back too soon, snuffing out the recovery in its infancy, much as Roosevelt did to the American economy in 1936. Growth that, by 1996, had reached 3 percent was suffocated by premature spending cuts and tax increases, they say. While spending remained high in the late 1990s, Japan never gave the economy another full-fledged push, these economists say.

They also say that the size of Japan’s apparently successful stimulus in the early 1990s suggests that the United States will need to spend far more than the current $820 billion to get results. Between 1991 and 1995, Japan spent some $2.1 trillion on public works, in an economy roughly half as large as that of the United States, according to the Cabinet Office. “Stimulus worked in Japan when it was tried,” said David Weinstein, a professor of Japanese economics at Columbia University. “Japan’s lesson is that, if anything, the current U.S. stimulus will not be enough.”

In other words, prepare yourself for Stimulus II and probably III, IV, and V. This is the US of A and by God, we don’t do anything half-assed.

It apparently doesn’t matter that this kind of spending didn’t work in the 1930’s or in Japan in the 1990’s. But we are going to plunge ahead anyway and in what can only be termed a radical departure from sanity, we are going to ignore Mr. Santayana - who after all wasn’t even an historian - and double or triple down holding 16 while the dealer has a Jack up. Even if we win, we lose because it ain’t our money we’re betting with. And if we lose, the bottom falls out and the US probably defaults.

Santayana should have stuck to poetry and philosophy.



Filed under: Bailout, Blogging, Financial Crisis, Government, Liberal Congress, Politics — Rick Moran @ 8:04 am

Previous to the elevation of Pope Obama I to the throne of St. George, ideological battles were marked by some pretty tough accusations being flung by the right against the hard left. Among the charges were that the hard left was actually praying for failure in Iraq as well as hoping for an economic downturn, believing that this would bring them electoral success.

I know this was a widespread meme on the right because I wrote similar stuff myself. Was it true? On some level, I’m sure it was. The almost gleeful portrayal of our struggles in Iraq - dwelling obsessively on whatever negative news was coming out of that bloody country at the expense of the small steps being taken in the right direction marked most hard left blogs as being uninterested in presenting a balanced and realistic view of the war to their readers but rather a partisan, hateful, picture that included George Bush as a horned devil, our servicemen as barbarians, and Republicans as bloodthirsty war mongers.

There was also a celebratory mood on hard left blogs whenever some piece of dire economic news hit the wires. The belief that the Republicans would be brought down only through failure and tragedy was widespread on the left and even some of the less radical liberal sites were not immune from advancing this theme.

Not that much has changed today: Except, the accusations are now coming from the other side:

It occurred to me while reading Politico’s interview with Dick Cheney, that the GOP’s plan to regain political viability in the short term rests on two disaster scenarios: the failure of the financial rescue efforts (stimulus, TARP, and other bailouts) to stave off complete economic collapse and a new mass casualty terrorist attack — both of which they are positioning themselves to blame Obama for.

Without one of those two, they have to figure it’s going to be a long time wandering in the political wilderness. Now think about the curdling effect, the blight on the soul that comes with rooting for such disasters to befall your country. The rot is now eating at the party’s very core.

The more things change…

As proof that there is so little original thinking on both sides that arguments over policy can be interchangeable with minimal substituting, here is Elana Schor writing at Josh Marshall’s TPMDC on charges made by the right that Obama will “cut” defense spending:

The short answer is no. But conservative columnist Tony Blankley still does his part today to flog an already tired line of faux-skepticism about the Obama administration’s alleged plans to “cut” defense spending in the upcoming budget.

Blankley claims that while total Pentagon spending for next year is in line for an 8% increase, the wild card of continuing Iraq and Afghanistan expenses raises the specter of a defense cut under Obama. It’s almost as if he hasn’t been keeping up with TPM alum Spencer Ackerman, who demolished this talking point as hogwash two days ago.

(Robert Kagan was the first right-leaning pundit out of the gate on this one.)

The tale is a simple one: Pentagon officials, aiming to start budget negotiations from a wildly advantageous point, submitted a spending estimate that wasn’t completely vetted by the departing Bush administration. The Obama folks knocked the number down to a more realistic number — that still reflects a higher military budget.

Sound familiar? Substitute the words “food stamps” for “military spending” and you have the exact same argument being made by Republicans when Democrats accuse them of trying to force the poor to live in the street and eat dog food. “Spending is going up in actual dollars. It’s only the projected increase that is being cut,” was the conservative defense of the meaningless reductions in projected outlays for social programs from Reagan through Bush 43.

It’s eerie, isn’t it? Now that the world has been turned upsisde down and “bottom rail is on the top,” there has been an almost seamless transition to both sides using the same arguments their opponents used in previous years over the same or similar issues. It’s even weirder that the towering irony of the whole thing has gone over the heads of both sides without even musing their hair.

Now, I can be as partisan as the next blogger when the situation calls for it so it’s not like I am washing my hands of responsibility in the matter. I can play the game as well or better than any lefty out there. But besides the bodaciously delicious irony of the whole thing, there is a troubling revelation that needs to be discussed; the paucity of ideas and lack of original thought by both sides in debate over the weighty issues of the day.

Political debate - or what passes for debate in this world of media talking points and one line zingers - accomplishes nothing today. It isn’t just the rancorous partisanship that prevents a serious discussion of the weighty problems that confront us. It is the failure of the political class to project their ideas outside of the extremely superficial and predictable framework of simple minded ideology that has us talking past one another instead of communicating back and forth. There is no effort to stand for a while in our opponent’s shoes or even examine an issue for points of commonality upon which any compromise is to be based.

At bottom, this is a failure of imagination. No one is asking either side to abandon principles or betray one’s party. But what real political debate accomplishes is that both sides must constantly re-examine and justify their positions, bringing fresh insight to bear that might lead to a closing of the gap between the two sides and form the beginnings of a political understanding.

As superficial and half hearted as it has appeared to me, President Obama should still be commended for reaching out to Republicans on his stimulus bill. I think it is not enough but is that his fault? He seems constrained by his own base who view any outreach effort as both a waste of time and dangerously naive. But what Obama appeared to be doing was trying to alter the framework of ideology that grips both parties and makes our politics so poisonously partisan. He opened the door - with the chain still on to be sure - not to give in, not to dictate, but to listen. It seems such a small thing but in the end, it forced him to rethink his own position on the bill and find additional justifications for it. It was a political act that served a higher purpose.

Did it do any good at all? Republicans have their own base to worry about and clearly, there will be little or no middle ground to be found on the stimulus bill. Nor should there be. It would take a great leader to abandon what has been crafted by the president’s allies in Congress and start over. What the Democrats are doing with the stimulus is actually proposing 4 or 5 bills that have been combined for reasons not having to do with legislative logic or stimulating job growth but because the president feels he can leverage his enormous popularity to pass items unrelated to jumpstarting the economy and because those unrelated items would have a hard time being made into law at a later date. The president is using this primal legislative thrust of the stimulus to make an end run around not only the GOP but the American people as well.

But the bill is out there and Obama is committed. And when a president invests as much in something as Obama has invested in the stimulus, he will do everything in his considerable power to pass it. It may end up being an exercise in partisanship but he can’t worry about that now. His credibility as a leader is on the line and any stumble so soon out of the box - as Carter’s stumbles on energy during his first months - could doom his presidency to irrelevancy.

So despite a manful effort to force the GOP to rethink their position on the stimulus, in the end Obama is trapped by history and his own needs as a leader. It will be interesting to see how the president reaches out to Republicans in the future. Will this experience have soured him on the whole idea of “post partisanship?” Or will he gamely make the effort on future issues like health care and card check?

That will depend on how much he really believes that he can change the tone and tenor of debate and get the two sides to listen to one another.



Filed under: Bailout, Blogging, Financial Crisis, Government, Media, Middle East, Politics — Rick Moran @ 7:57 am

The pages of punditdom are full today of breathless questions about the Obama White House. Is Obama an incompetent empty suit as the right was charging all those months? What happened to the candidate who so confidently talked of hope and change, igniting a grass roots political effort this nation has never seen? Is the Obama Administration already “in trouble” - whatever that means?

Rule Number 1 for success as a serious commentator on politics is never get too far ahead of the pack. In this respect, it appears that many of my fellow bloggers - especially on the right side of the sphere - are sipping some heavy duty koolade. A couple of missteps by the newbies at 1600 Pennsylvania Avenue and we’re already talking about an “Epic Fail” for the Obama presidency? Let’s hope not. If Obama “fails” it will mean this nation will go into an economic tailspin the likes of which haven’t been seen since Clark Gable was the bees knees and Al Jolsen could wear blackface and sing about his “Mammy.”

Actually, I am exaggerating a bit. But there is no doubt the subtext of many analyses is that Obama is not inspiring much confidence so far and that in some areas - personnel selection, Congressional relations, and foreign policy - he has shown a troubling lack of basic competence. In vetting his cabinet, controlling the debate on his stimulus bill, and moving to assure the rest of the world, Obama has stumbled, froze, and failed to engender confidence in his leadership overseas.

It must be pointed out that there is nothing new in this, that a new president and his people have to get the kinks out of their operation as they power up. Talk of “hitting the ground running” is all well and good but, as Theodore H. White pointed out in his brilliant Making of a President series, all Administrations eventually face a period as Obama and his people have faced the last 72 hours. That is, the “well oiled machine” of the campaign runs smack into the reality of governing a nation. New faces and personalities with new responsibilities take time to mesh. This is made especially obvious in their Congressional outreach operation and the seemingly incomprehensible surrender of the process on the stimulus bill to Nancy Pelosi and Harry Reid. The Democrats loaded up what is essentially an infrastructure and jobs bill with so much outrageous pork having nothing whatsoever to do with stimulating anything (except perhaps the saliva glands of Democratic constituencies) that Republicans in the House were able to safely band together and reject it. Support for that monstrosity in its current incarnation is dropping like a stone, a fact not lost on Senate Republicans or Democrats.

The fact that so many items have already been dropped from the measure shows that the White House simply didn’t think this thing through very thoroughly. Allowing liberal Democrats to lard up the bill with goodies for teachers, unions, feminists, and other loyalists and then using the economic crisis to try and ram it down the throats of the country has been exposed and it doesn’t make the Administration look very good. The Senate could pull Obama’s chestnuts out of the fire and radically alter the package, reducing its cost substantially while doing a better job of targeting tax cuts and infrastructure improvements where it will do the most good. If that occurs, the Administration would do well not to fight it but rather embrace the alterations in the Senate and then try and convince Pelosi and House Democrats to go along with the changes.

At least the stimulus bill is salvageable. But what about the rash of personnel problems being experienced by the Obama White House? Two cabinet nominees have already withdrawn with another presidential appointee Nancy Killefer also walking the plank. That doesn’t include a tax dodging Treasury Secretary and an Attorney General who has proven adept at playing politics at the Justice Department when it suits the goals of the man in the Oval Office. (See Marc Rich and Puerto Rican terrorists.) There has also been a rash of appointments where the president has gone back on his promise not to hire lobbyists for his administration. Politico counts 12 former lobbyists so far which gives a whole new meaning to “Hope and Change” - as in, “I hope no one will notice what a hypocrite I am by hiring all these lobbyists who won’t change much of anything.”

Amazingly, the only appointee who has had relatively smooth sailing so far is - Hillary Clinton? But don’t worry. With Bill Clinton on the loose, something is bound to pop up to embarrass everyone. The smart money is on women trouble but I’d lay odds that it will be a money issue that explodes in Obama’s face.

Perhaps even more troubling than the withdrawals and the reasons for them is the fact that the Obama people apparently knew of both Geithner and Daschle’s tax problems before announcing their names. This wasn’t a matter of bad vetting, just a tone deaf approach to the process. How could they possibly think that no one would care that the Treasury and HHS Secretaries are tax scofflaws.

And while we’re on the subject of insensitivity, the Administration’s response to the suffering of people in the Midwest as a result of the winter storm may not have reached the Katrina level of “Heckuva job, Brownie” but has certainly not been Obama’s finest hour. His aide David Axelrod brags about how warm the Oval Office is while people are shivering in unheated homes? The president dines on exotic steak while some can’t get out of their driveways to go to the grocery store? He has chosen to remain virtually silent on the tragedy, quite rightly fearing comparisons with Katrina. Meanwhile, a week after the storm winds stopped, there are still tens of thousands without power in Kentucky alone. The National Guard has just now made it to Western Kentucky and officials are going door to door to hand out welfare checks.

My ironic post on the storm’s aftermath and the failure of FEMA to alleviate suffering in a timely manner scooted over the head of most lefties without even musing their hair. The feds are not to blame for this suffering, Mother Nature is. But I found the schadenfreude irresistable in that it was the left who chose to politicize natural disasters and Obama will almost certainly have his own “Katrina moment” eventually.

And Obama’s initial steps into the foreign policy arena have not been without a slip or two. His interview with Al-Arabiya TV - the first interview he granted following his inauguration - was chock full of moral equivalence and a curious detatchment about Iran’s ambitions, undercutting his own sanctions policy at the UN in the process.

But the reported rift between Obama and the military brass may prove most damaging in the long run. Obama cannot simply say “I won” to Petreaus and the Chiefs - especially since he promised to listen to the commanders before committing to a hard timetable for withdrawal from Iraq. Well, he apparently thinks it better that he keep a campaign promise to the anti-war crowd than follow the advice of his generals. This is his prerogative, of course. And it may end up being a tempest in a teapot. But the potential for trouble between Obama and the military when we have a war to win yet in Afghanistan does not bode well for the future.

But given all these pratfalls and miscalculations, Obama is still in good shape with the people who elected him. They are much more willing to stick with him than right wing pundits and mainstream media critics who seek to create a little news by trying to rain on the president’s honeymoon. He still has plenty of time to right the ship. And admitting mistakes is a good first step.

But if the president continues to stumble over the next few weeks, then he can expect the tenor of the criticism directed against him to change. America doesn’t have time to break in a new president. Fairly, or unfairly, Obama will not have the luxury of a long, leisurely shake down cruise for his Administration. He has already lost a significant amount of goodwill with his faux pas. Given the enormous challenges we face, it would behoove the new Administration to get its act together sooner rather than later.


As usual, Ed Morrissey and I are on something of the same wavelength this morning.



Filed under: Bailout, Government, Politics — Rick Moran @ 5:31 pm

My latest PJ Media column is up. It’s on Mayor Daley’s efforts to expand O’Hare Airport - unnecessarily in the opinion of almost everybody - by getting a slice of the bail out money Congress just passed.

Now that Governor Rod Blagojevich is, politically speaking, pushing up daises, attention in the Land of Lincoln is going to be drawn to efforts by Chicago’s Mayor Daley to latch on to a portion of the coming “stimulus package” in order to fund his dream of expanding O’Hare Airport.

Never mind that no one wants to pay for it — including the city, the county, the state, the airlines, the taxpayers, or, until now, the federal government. Never mind that the FAA’s own studies show that the expansion will not relieve the heavily congested runways or mitigate the problem with delays. Never mind that getting around the expanded airport would be a nightmare for passengers, some of whom would be forced to take an hour-long shuttle ride from one parking lot to the American Airlines terminal. Never mind that an airplane that lands on the northern runway will have to taxi 45 minutes to get to the United terminal. And never mind that hundreds of residents from tiny Bensenville, IL, have already been forcibly removed from their homes despite the fact that the next phase of the expansion is in financial limbo and may never be completed.

No one contests the idea that the traffic problems at O’Hare are serious and must be addressed. Anyone who has spent an hour on a runway waiting to take off or circled the airport for even longer waiting to land cannot deny that what once was “the busiest airport in the world” has become a quagmire of delays, impossibly long lines for security, and a traffic nightmare guaranteed to give even the most even tempered driver a severe case of road rage.

But Hizzoner, for personal, political, and financial reasons, insists that expanding O’Hare is just the ticket. And when Mayor Richard Daley gets it in his head that something is absolutely necessary for his beloved city, he can be a fearsome force with which to tangle. You don’t cross Daley in Chicago unless you’re on pretty solid footing, which is why he has a legion of opponents who are making his life miserable by trying to block the expansion.

Read the whole thing before commenting please.



Is it smart politics to vote against what will be a wildly popular economic bailout package that may approach a trillion dollars? Further, is it really necessary in order to “save” the economy?

Politicians are always torn between doing what they know is right and what they know is politically safe. Many times, there is a happy convergence between the two schools of thought and the politician comes out a winner. For Republicans, this happens whenever tax cuts are up for a vote or votes on issues like welfare reform or military spending.

But what happens when an issue like the bailout package comes before you - a bill that most GOP conservatives worth their salt know deep down in their gut is the wrong approach to getting the economy out of a recession and will push the federal deficit toward the magic number of a trillion dollars?

To liberals like Paul Krugman (and probably some Republicans), the deficit doesn’t matter:

It’s politically fashionable to rant against government spending and demand fiscal responsibility. But right now, increased government spending is just what the doctor ordered, and concerns about the budget deficit should be put on hold.

Krugman may be half right. Government spending increases during a recession are inevitable and the fall off in revenue due to reduced business activity as well as the increase in the numbers of citizens forced on to the public dole as a result of job loss means a rise in the federal deficit. This much is unavoidable and repeating Herbert Hoover’s mistake in trying to hold the line on spending by increasing taxes is a non-starter. Even Obama knows that much in that he has put his tax increase plans on hold for a couple of years - much to the chagrin of his class warrior base.

But a trillion dollars? And beyond that incomprehensible number is the political fallout that would occur if the GOP were to fight against the stimulus package in the first place.

Such a move might please the Republican base which makes up about 30% of the electorate. But the last I checked it takes more than 50% to be successful in elections. And if the GOP wants to make inroads against the Democrats in the House and Senate, they are going to need considerably more than 50% of the electorate to vote for them in order to climb out of the huge hole they have dug for themselves.

So the smart political move would be to go with the flow and vote for Obama’s giveaway, right? Not so fast, says Nate Silver who lays out the political choices for GOP lawmakers quite nicely:

1) Try to pressure Obama into some kind of compromise, and vote for that compromise;
2) Let the stimulus pass as the Democrats choose to construct it, over your strong objection;
3) Yield to Obama, and vote for the stimulus in the name of national unity.

The third choice probably isn’t very appealing to you. It might be appealing to Newt Gingrich, who is telling you that you don’t have the credibility right now to pick a fight. Better off rebuidling and rebranding the party for the long term. But rebuilding and rebranding means someone other than you is in charge — someone, for example, like Newt Gingirch. So that option is out.

So let’s think through the other couple of choices. First thing first: if the economy improves substantially by the midterm elections, you’re screwed. It won’t matter whether you voted for the stimulus or voted against it, and it won’t matter whether you achieved some kind of compromise or you didn’t. If, by the summer of 2010, GDP growth has miraculously recovered to 4% per year, that’s all the public is going to think about. Obama Save Economy!! Me Vote Democrat!! They aren’t going to care about whether you snuck some sort of capital gains tax cut in there.

But let’s say that the economy still sucks in 2010 — which, frankly, is a pretty good bet. That’s going to work much, much better for you if you’ve voted against the stimulus. Not only can you pin the blame on the donkeys, but you can campaign on tax cutting and fiscal responsibility — the stimulus will “prove”, once and for all, the wisdom of conservative economic principles. And then think about this: the Democrats are going to be trying to spend $800 billion in taxpayer dollars as quickly as they can possibly get away with it. Somewhere along the way, they’re going to wind up funding a Woodstock Museum or a Bridge to Nowhere. Somewhere along the way, an enterprising contractor is going to embezzle a bunch of stimulus money, or cook up some kind of pay-to-play scheme. Maybe if you’re really lucky, this will happen in your Distrct. Better to keep the whole thing at arm’s-length and make sure that Democrats get the blame for that.

The Hobson’s Choice facing Republicans is fighting against a popular president and his very popular giveaway plan in which case if the economy improves by 2010 (more on this later), the GOP is toast or accepting the rationale of the Obama White House and voting in favor of the package in the name of national unity as a result of an “emergency” in which case you will get absolutely no credit from the American people and your base will desert you. The third choice is equally unpalatable; try to inject some sanity in the giveaway by dint of minor amendments, warn of catastrophe, and then vote for it anyway.

In other words, if you stand up for your beliefs and fight the bailout (a certain losing proposition at this point given the Democratic majorities in the House and Senate), your only hope is if the plan doesn’t work and the economy is still in the tank by 2010-12. But if you follow your political instincts and vote in favor of the plan - even if you are able to get Obama to modify some of the parameters - the American people will still see the package as a Democratic triumph. You only consolation by taking door #3 is that the GOP base won’t desert you entirely - probably.

More to the point, can an honorable politician of any ideology or party deny the president what he deems necessary to help people in what his advisors and many experts are telling him is an extremely serious economic crisis? And what does it say about the GOP as a party whose only real hope for gains in 2010 is if the president’s plan doesn’t work and millions suffer the consequences?

Or will they? We are in a serious recession, the depth of which is unknowable at the moment. A Republican Administration has already pumped trillions into the financial sector (without much effect on credit markets and all to the detriment of a free market economy). Few are asking would we have been better off - or just as badly off - if Bush and his gorgon Paulson (and bailout enabler Fed Chair Bernanke) had simply tweaked the system rather than drowning it in money. If the Bushies had allowed several larger Wall Street banks to go under or facilitated some mergers while letting others go down the drain, how much worse off would we be?

Stock market lower? Perhaps. Credit tighter? Hard to see how that would be possible. More job losses? Again, we’re bleeding half a million jobs a month so it would be difficult to imagine that pace getting much worse.

Then there’s all that worthless paper - mortgage backed securities, credit derivatives, and loans that have been foreclosed. There are trillions of dollars of this worthless toilet paper sitting in banks around the world - had been sitting there for months as the housing bubble burst and began to drag the economy toward recession. What changed that caused this bailout mania?

Panic took hold. The Panic of 2008 will be remembered for the scramble to inject “liquidity” into the financial sector so that the business of American business could continue. Gigantic corporations asked the government to sheild them from the results of their poor business decisions and the ebb and flow of the free market by claiming to be “too big to fail” and the government obliged them by throwing trillions of dollars in their direction. No one knows where this money went. No one knows how it was spent. We are told that by saving these companies, we avoided a “meltdown.” If it not be heresy, might I inquire as to just what proponents of these bailouts think we are experiencing now if not a “meltdown?”

In effect, we just spent $7 trillion or so (most of that printed up by the Fed and pumped into the “system” in ways that are so arcane, not even the deacons of high finance can explain it adequately) just to avoid what we are, in fact, going through right now. We don’t know how much worse it would have been without this massive bailout. Such prognostication is impossible. Indeed, even asking the question “How much bang did we get for those $7 trillion bucks?” will bring down criticism for even daring to think that perhaps - just perhaps - much of this massive giveaway was - dare I say it - unnecessary?

But with the GOP’s credibility at close to absolute zero, no one in the Republican party seems willing to make the case that before we pump another trillion dollars into the economy in free money, it might be a good idea to pause and reflect on exactly what we are doing. Forget the deficit for the moment. How is this bailout mania - the result of a feeding frenzy due to the smell of unearned cash available to those who whine the loudest and have the best lobbyists - affecting the ability of the free market to function?

For all the ignorant words written in opposition to the free market in recent months, no one has yet figured out a better way to deliver goods and services to the consumer so cheaply and efficiently, create wealth and jobs, innovate in cutting edge industries like energy, pharma, and bio-tech, while proving itself over time as the most spectacular engine for liberty and the fairest system in the history of industrialized civilization for distributing the economy’s bounty.

No, it is not perfect. Far from it. But this hybrid beast that is emerging as a result of such massive government intervention in the economy is an unknown animal. And if this is to be the end of the “American System” don’t you think we should like, you know, have a debate about it or something? Right now, the new Obama Administration is riding the crest of a wave of panic that gripped this country in late summer and early autumn. And the idea of making nation-changing decisions because Wall Street has been spooked or people are anxious about the future without the benefit of a full fledged debate is even scarier than anything the economy could ever elicit from me.

And now, at the exact moment that this country needs a strong, united Republican party who could come up with free market alternatives to this giveaway society being created by the Democrats and stand up for what they know is right, the GOP is busted, broken, toothless, and out of ideas.

It is not simply going to be good enough to scream “NO” into this hurricane wind of “hope and change.” The GOP must vigorously make the case that the need for this bailout has not been thoroughly examined or thought through adequately. They have a responsibility to try and apply the brakes to this juggernaut that has swept the country over the last few months as politicians have responded to panic by panicking themselves. Most importantly, they must do what minority parties are supposed to do; offer sound, reasonable, achievable ideas to counter what is coming from the majority.

This will not happen to the leaderless, dispirited crew of Republicans on Capitol Hill. In this respect, it won’t matter politically whether they vote for the bailout or not. They have already proven themselves to be emasculated by the voter and their own timidity and cowardice when it comes to standing up for their core principles.



Filed under: Bailout, Financial Crisis, Government, Politics — Rick Moran @ 10:18 am

I think Franklin Roosevelt said something eerily similar about the New Deal:

US President George W. Bush said in an interview Tuesday he was forced to sacrifice free market principles to save the economy from “collapse.”

“I’ve abandoned free-market principles to save the free-market system,” Bush told CNN television, saying he had made the decision “to make sure the economy doesn’t collapse.”

Bush’s comments reflect an extraordinary departure from his longtime advocacy for an unfettered free market, as his administration has orchestrated unprecedented government intervention in the face of a dire financial crisis.

“I am sorry we’re having to do it,” Bush said.

But Bush said government action was necessary to ease the effects of the crisis, offering perhaps his most dire assessment yet of the country’s economy.

“I feel a sense of obligation to my successor to make sure there is not a, you know, a huge economic crisis. Look, we’re in a crisis now. I mean, this is — we’re in a huge recession, but I don’t want to make it even worse.”

Let’s get something clear. What Bush and Obama are doing has nothing to do with “saving” the free market” and everything to do with saving the hides of politicians who are responding to the cries of frightened people by overturning sound economic principles in favor of corporate handouts to failing companies who gambled and lost and now want the taxpayer to subsidize their recklessness and incompetence.

And just what does Bush call this economy if not “collapsed?” He is pumping $8 trillion into the economy and I would like to know what difference it has made? The credit markets are no better, unemployment is skyrocketing, businesses from Main Street to Wall Street are either failing or hanging on by a thread. Negative growth, prices deflating, and consumer confidence is the lowest it has been since records have been kept.

Tell me, what good has all this free money done? What has it prevented? Worse? It is hard to see how things could be much worse. If Bush had allowed market forces to work as they should have, we would have seen bankruptcies, mergers, reorganizing, and a general winnowing out of winners and losers. Yes, people would be no better off - they would still be losing their jobs, companies would still be closing their doors, unemployment would still be skyrocketing.

But the seeds of recovery would already have been sown. Successful companies would know how to weather this storm and emerge on the other side even stronger. Once recovery began, it would be rapid and robust.

All of this bailout money has delayed the inevitable. It is not steering the economy to a soft landing. It is not saving one single job. Even the auto bailout is delaying the inevitable collapse of car companies that make few products that people want to buy and who refuse to face the fact that their labor costs and business plan are outdated, outmoded, and out of luck. Eventually, we are going to have to nationalize The Big Three completely or keep pumping tens of billions of dollars down a black hole of failure, cowardice, and incompetence.

George Bush is a fool if he think he has “saved” anything.

This blog post originally appears in The American Thinker



Filed under: Bailout, Blogging, Financial Crisis, GOP Reform, Politics, RNC, conservative reform — Rick Moran @ 1:35 pm

Patrick Ruffini and Mindy Finn have a nice write up in today’s Washington Post regarding their new web effort Rebuild the Party.com. The website features a list of endorsers that constitutes a who’s who of the rightysphere as well as a plan they would like to see the GOP adopt that, includes the recruitment of 5 million new Republican online activists, reorganizing the RNC, developing a new fundraising model, and rebuilding the grass roots infrastructure of the party.

All ambitious goals to be sure. But are they achievable?

Everybody agrees the GOP must become more web savvy and that a better connection has to be made to conservatives online. Few would also argue with the notion that efforts must be made to catch up to the Democrats in online fundraising and organization. But then we have the problem with the Republican party itself and its refusal to get serious about the kinds of reforms that would make a conservative like me proud to belong once again.

If Ruffini wants me to promote candidates, raise money, and urge volunteers to work for campaigns he better put a burr under the ass of the party leadership and get them busy on changing just about everything about the organization that contributed to its defeat these last two elections. These are not just technical adjustments or changes around the edges. We are talking about fundamental alterations in people, policy, and ideology that would make the Republican party worth getting excited about again.

Republicans are about ready to fall into a couple of traps that losing parties apparently can’t avoid when the dust settles following a debacle such as they have experienced the last two election cycles. The first is the belief that the reason for being rejected by the voters is that their candidates weren’t “pure” enough ideologically and that only by pushing forward “true conservatives” can the GOP find its way back.

I don’t dispute the necessity for putting up more conservatives for office. But the idea that you can have some kind of lock step litmus tests to determine who a “true” conservative might be is nuts - and counterproductive. There are plenty of competitive congressional districts where one of those “true” conservatives would get slaughtered by most Democrats. When 70% of the country does not identify itself as “conservative,” you are deliberately setting up the GOP for defeat if you advocate only “real” conservatives receive support.

There are candidates that would be completely acceptable to the vast majority of conservatives who would fail some of the litmus tests given by the base. A party that seeks to diminish its ranks by making membership dependent on a rigid set of positions on issues is a party doomed to maintaining its minority status. The Democrats made the exact same mistake in 2000 and it cost them in 2002 and 2004.

Only when they stopped listening to people like Kos and recruited dozens of candidates that reflected the realities of their specific district did they break through in 2006 and 2008. These candidates were not hard left ideologues but much more pragmatic in their politics. That didn’t mean they were “conservative” or even “moderate.” It means they were attractive candidates with decent name recognition, well funded, well organized, and in tune with local concerns. And they wiped the floor with our guys.

The other trap the GOP appears to be springing on itself is the idea of “me-tooism.” “If you can’t beat ‘em, join ‘em” may have worked for Bugs Bunny, but to see Republicans seeking to alter the disastrous Bush/Obama policies on bailouts only by proposing less money or nibbling around the edges rather than uniting to oppose these fundamental alterations in American society only proves that the vast majority of them are not worthy of conservative support. On this, the most important issue that has come before the Congress in a generation, the GOP is failing the test.

Pat believes that changes in the party can be effected by uniting the conservative community online and forcing the GOP to make necessary alterations. I believe he is being overly optimistic. What should come first, party reform or rightroots activism? What good would all of Pat’s great ideas be if they came to fruition and the GOP was still a party of pork-loving, deficit embracing, open border hugging, lobbyist kissing corrupt hacks? Is Ruffini saying that by initiating the kind of activism he is looking for online that the party will, either naturally or by osmosis, magically reform itself into an organization that conservatives would feel justified in backing?

This, is not an insignificant point. As is stands now, the rightroots are more conservative than they are Republican. And the noises being made by many GOP officeholders are not encouraging. The transformation of our economy into some kind of quasi-socialist managed disaster is going on with barely a peep from Republicans. Yes there are some like Senator Inhofe who are trying to hold the line. But if the GOP is interested in employing the conservative online community in a bid to help the party back to power, it would be helpful if a few more congressmen and senators joined the fight, proving that they were worthy of conservative support by acting like, well, you know, conservatives.

In the end, despite the undoubted genius of Ruffini and his friends, I can’t see him making much headway until the Republican party rediscovers its fundamental philosophy and its primary purpose for existing; to elect honest and ethical candidates who espouse conservative values . Not litmus tests but rather shared principles of governance with room for disagreement and debate.

Can Ruffini’s template for conservative activism and organization goad the GOP into that kind of a reformation? I think Pat is counting on that happening. But from where I’m sitting, it would appear to be an uphill battle to motivate online conservatives to join a cause where their activism would be exploited by those who don’t share their principles or care for their opinions.

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