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Obama's Boundaries for Year One

by Alan Peel | November 15, 2008 at 10:53 PM
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Going in to the first year of his Presidency is something that any President needs to handle delicately. Jimmy Carter failed to do it, Ronald Reagan and George W. Bush did it almost flawlessly, and Bill Clinton went with the flow of Congress and it cost Congress. For all the things that the United States is facing in economic policy, foreign policy, and cultural divisions, President-elect Barack Obama needs to act as if he is walking on eggshells. If not, the first year could take away his aura of almost messianic appeal. 

In looking at a number of things that the Democrat-led Congress and Obama are eyeing as policy they would like to implement, there are eight things that Obama cannot sign in to law or else he could make the Republican takeover of Congress in 1994 look like a blip on the radar screen by 2012, if not 2010. Here are the nine policy changes Obama and the Democrats cannot pursue if they hope to expand their majorities or hold on to them over the next two to four years:
 
#1: Any Tax Increase
 
Everyone knows that the economy is in a slowdown. Despite Obama’s calls for “trickle-up” economic policy, reducing taxes on the highest of income groups always appears to lead to greater economic expansion. John F. Kennedy took the top from 90 percent to 70 percent and Ronald Reagan took the top rate from 70 to 20. The end result both times was an economic expansion and greater tax revenues. However, Obama might tempt his fate by going against this approach.
 
The three areas where Obama would want to raise taxes would be on the so-called “rich” by raising income tax rates to the Clinton-era top brackets of 36 and 39.6 percent, eliminating the cap on FICA taxes, and to raise the capital gains tax rate. Any of these three would turn this current recession in to a full-blown depression. As I mentioned in an earlier post, tax increases were the last of the four things that pushed the economy of the 1930’s in to the Great Depression.
 
One of the reasons that the stock market has shed anywhere from 11.7 percent to 14.8 percent of its value in the eight trading days since the Presidential election came to a close (depending on which market you’re evaluating) is that Obama has not addressed his plans on taxes for the foreseeable future. Even the Wall Street Journal has called on Obama to hold a press conference, give a speech, or issue a press release that says he will not increase taxes for the “foreseeable future”. If this does not happen, the stock market will continue to shed its value while waiting with baited breath as to what Obama intends to do as President.
 
If a tax increase comes, it would not be felt until at least the next year. However, the effects of the tax increase would be long lasting in that it would take a potential economic recovery in 2010 in to a second recession that would likely come before the Congressional midterm elections. If the economy is still an issue, 2010 could go for the Democrats the same way it went for Republicans in the middle of economic woes in 1970 and 1982 and Democrats in 1978.
 
#2: Trillion-Dollar Deficit Budget
 
If anyone has been paying close attention, there have been calls for President-elect Obama to increase deficit spending once he takes office. It appears all but certain that unless strict budget discipline is imposed by Congress and Obama, the deficit could hit $1 trillion by the end of the year. All of a sudden, a party that had promised to restore fiscal responsibility and budget discipline by way of PAYGO budgeting would be well on their way to losing all credibility on the matter.
 
It was one thing for Obama to slam President Bush on doubling the size of the deficit during the Presidential Debates against John McCain, but it would be another to not practice what he preaches. By the time of the midterms in 2010, there is no more George W. Bush to blame for unbalanced budgets. Either the deficit is reducing in size as Obama said he would like to do or it is increasing in size as Congressional Democrats would be willing to let happen.
 
When it comes to a budget battle, the home-field advantage belongs to Congress because of the ability it has to draft its own budget and to get members to vote for it based on a number of pork-barrel projects and other giveaways. It also makes it harder for the President if he decides to wage a budget battle with Congress as it will trickle in to other areas on matters of public policy.
 
About the only way out for Obama would be to severely cut military spending. Doing so in a time of two-theater military engagements would cause a great deal of harm to the military. Even the blue-dog Democrats will attempt to stop him (until they get pork or tax cuts they desire). In the end, reducing military spending by increasing runaway earmarks could actually accelerate the size of the deficit at an even faster pace.
 
Chances are that if spending is increased and tax revenues start to run dry thanks to a faltering economy, Obama will have no choice but to become the first President to sign a trillion-dollar budget in to law. If it happens, there will be wrath from the voting public who had expected better from the Democrats on budget matters.
 
#3: The Employee Free Choice Act
 
Speaking of bolstering the unions, the biggest thing that Obama and the Congressional Democrats can do to help their base is to pass the Employee Free Choice Act. What this bill intends to do is to boost union membership by automatically creating a union shop thanks to more than 50 percent of a company’s employees signing a union card.
 
By doing this, it forces an already harmonious relationship between owners and workers in to a more tension-fuelled environment by forcing upon big and small business alike in to pro-union collective bargaining agreements with the government as an arbiter. The problem with this is that workers will get more benefits and wages and job protection while hurting any company’s bottom line with pro-union bureaucrats fighting business at the same time.
 
Also, this would end secret-ballot elections in union elections. Instead, all union elections could be open-ballot votes with union bosses seeing how particular members of their membership voted. In effect, it would turn a union election in to the equivalent of a Saddam Hussein-era Iraqi election with members ostracized and ridiculed for not voting the union line. In a sense, it makes “employee free choice” sound Orwellian.
 
President Bush was smart to veto this bill in 2006, but it will take the filibuster efforts of 41-plus Republicans (which could be in doubt) to stop this bill dead in its tracks. If Obama is all about jobs, he will reject this bill because it will actually kill jobs instead of creating them.
 
Already, there are economists predicting an unemployment rate of as much as 7.3 percent by May 2009 and 9 percent by the end of 2010. If this bill becomes law, we will be talking depression-level unemployment by the time the midterms arrive.
 
#4: Bailouts of American Automakers
 
Rasmussen Reports released the results of a poll showing that 73 percent of Americans fear the United States Government running out of money. If the automaker bailout goes in to effect, Obama will increase that number further thanks to the bailout itself and the number of failing companies in the business community also calling for a bailout.
 
The airlines, cities, and states are all getting ready to get in to line to see how much money the government will give them in the form of a bailout. If this goes through, then Congress will be hard pressed to find a way out of telling all of them “no” directly to their faces.
 
If nothing else, the bailout isn’t for General Motors, Ford, or Chrysler, but it’s for the establishment of the United Auto Workers union to an effort to keep their negotiating leverage. If a Chapter 11 bankruptcy (which is needed) were to ever come about for any of the big three, then it would zap the UAW’s power away thanks to a conservator who would dramatically scale back their pay and benefits.
 
Chances are good (and I’ll be the first to make this prediction) that if the automakers are bailed out now, they will be back for more cash before the Presidential election in 2012 because of the unions and their bad business models. If bankruptcy happens, it could actually save an entire sector of the economy from an even bigger calamity.
 
#5: Repealing Abortion Restrictions with the Freedom of Choice Act
 
To the best of my (or anyone else’s) knowledge, there is not a single state that has successfully restricted abortion by way of a constitutional amendment. If the Freedom of Choice Act ever becomes law, it would result in abortion on demand sans restrictions and even allow for the federal government to directly pay for as many abortions as possible.
 
One of the ways in which Obama and the Democrats succeeded in winning elections was by neutralizing the values-based voters of the conservative persuasion. This was done by their rhetoric of sounding like Reagan on issues such as abortion, faith, and gay marriage (more on this later) and sounding genuine about it. Even President-elect Obama did this in his run for President.
 
What also helped was the complicity of the mainstream media in not probing Obama or other Democrats on social issues. If this one flies under the radar (the media hopes), this will all be forgotten by the midterms and 2012. Instead, there are a number of voting groups that would know better.
 
For one, the Catholic voters went for Obama by the margin of 53 percent to 45 percent while Protestants only went for McCain by a 53 to 45 percent margin. What could be important is the Catholic vote, which made up 26 percent of the electorate versus the Protestant vote (55 percent). For years, Catholics were a reliable part of the Democrat Party base until Roe v. Wade when the Democrats took up the feminazi’s struggle on abortion and kicked Catholics to the curb on the matter. Despite this, Catholic voters went for Obama this year.
 
However, what Obama could not afford to do would be to legislate against abortion bans and encourage more abortion. Catholic clergy (priests and nuns) would not stand for it and would relay their message from their lecterns. If the Catholic vote were to go 75 percent to a Republican, that would be more than 25 million votes, or a projected increase of 10 million votes for the GOP. This switch alone would be enough to defeat Obama in his reelection bid unless he could get some 1.5 million votes elsewhere.
 
#6: Repealing the Defense of Marriage Act
 
From what has been taking place in California in regards to the passage of the gay marriage ban in that state might set the stage for this action taking place. In order to throw the far-left base of Obama’s supporters a bone, there might be a move to repeal the Defense of Marriage Act (DOMA) that was signed in to law by President Clinton in 1996. Should this happen, it could galvanize a majority of voters who oppose gay marriage.
 
Again, this goes back to the plans of Obama and the Democrats to sound like moderates or conservatives on social issues, but their rhetoric ultimately becoming lip service. Far-left politicians on social issues have a hard time being elected when they become an issue in a campaign and when they proclaim left-of-center social policy approaches.
 
In districts where conservatives outnumber liberals by substantial margins, this would not play well at all. If the issues of gay marriage and abortion become the forefront in these campaigns, it almost always favors the Republicans. It would be wise to back off this for quite some time until at least what Obama would hope to be his second term. If not, there will be major electoral losses and Obama would have to reinstate a gay marriage ban in order to save himself from being attacked along social policy lines.
 
#7: “Comprehensive” Immigration Reform
 
This was tried back in 2007 by John McCain and Ted Kennedy and we all know how it turned out. In the end, there were not enough votes to break the filibuster and bring “comprehensive” immigration reform to the floor of the United States Senate. One of its supporters who tried to break the filibuster was then-Illinois Senator Barack Obama who supported this bill.
 
The major point at which the American public and most Senators began to oppose the bill was that amnesty would be granted to all illegal immigrants currently here in the United States and to their immediate families living outside the country. It also drew opposition because of the reduction in the length of the border fence.
 
Obama, who also expressed his support to give driver’s licenses to illegal immigrants during the Democrat primaries, has said he wants to sign it in to law. If there are not enough votes to sustain the filibuster, it will likely pass and another 20 million illegal immigrants and their immediate family members will be put on a “path to citizenship”.
 
Amnesty was tried in 1986 when Ronald Reagan made it happen with his idea that it was the “right thing to do”. Sadly, we have come to the realization that amnesty is not the answer, but a band-aid for a gaping wound.
 
#8: Reinstating the Off-Shore Drilling Ban
 
Later this month, OPEC will meet to discuss further cuts in oil production in an effort to raise prices. This comes as there was the expiration of the off-shore drilling ban and George W. Bush’s executive order ending a ban on the practice. However, as any economist will tell you, when you cut supply, you increase the price.
 
The same would likely take place here as OPEC will almost certainly cut production dramatically in order to start making money the same way they were back in the summer. Iran alone has called for a cut of up to 1.5 million barrels per day. Of course, the Democrats and Obama will become useful idiots by attempting to restrict domestic oil exploration.
 
All of this will actually increase energy prices as the calls for more oil exploration become louder and louder by the day. In the end, it could prove to be fatal as Obama tries to make plays to extreme environmentalists and sacrifices the pocketbooks of average Americans to make a play to his base.
 
#9: Brining Back the Fairness Doctrine
 
There’s an old expression of “if you can’t beat them, join them”. However, in the liberal lexicon, the expression goes “if you can’t beat them, silence them.” Sadly, liberals support free speech only when it appeals to liberalism. The return of the Fairness Doctrine (aptly called the Censorship Doctrine by Sean Hannity) would only impose on AM and FM radio so-called balance as determined by government bureaucrats.
 
Former Clinton advisor Dick Morris has predicted that it will happen, but will be overturned by the Supreme Court “in two years”, but talk radio is effectively dead if this happens. Their targets are the successful conservative talk radio programs because of the failure of liberal talk radio programs. In other words, they are going to destroy success in order to prevent failure which is a long way of saying the attempt is an equal outcome.
 
This will put the United States on par with Venezuela and Russia in terms of restricting free speech on the radio. Meanwhile, television, newspapers, and the internet will not fall under this kind of regulation. In other words, one might call it the Hush Rush Act of 2009. All of this would be designed to end any voice of opposition even as Obama and the Democrats put the United States in the fast lane on the highway to hell.
 
All of these in some way could be plays to the Democrat Party or liberal bases, but they would all begin to antagonize the center, center-right, and right-wing elements of the country to where they take it out on either Obama or on Democrats in Congress. If this becomes the case, it will take either a Republican majority in both houses of Congress to bring Obama to the center following the 2010 midterms or the complete overhaul of Democrat majorities and Obama in 2012.
 
If nothing else, the GOP needs to get to work to offer opposition and alternatives or to be prepared to electorally defeat the Democrats within the next four years.

 

Chicken Little or Nostradamus

by Alan Peel | November 10, 2008 at 3:43 PM
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Saturday morning, I turned on “Bulls and Bears” on the Fox News Channel and I heard one of the strangest stock investments to make for the next four years. Believe it or not, this guy said that the economy was going to be so bad that the best investment he could come up with was Molson Coors Brewing Company. In other words, his message was to keep plenty of booze handy because this is going to be an economy that will drive even the most ardent teetotalers to drinking.

Now, I will admit that like a lot of others, I do see a light at the end of the economic tunnel with Barack Obama being elected. However, I also hear the sounds of a locomotive coming from that general direction. For Obama’s sake and for our country’s sake, I would prefer that the economy be in a boom. Sadly, I don’t see it happening.

Last night, I was reading on the causes of the Great Depression and there is a real possibility that we could get a miniature version of a depression. In looking at the signs and the symptoms of the Great Depression, I couldn’t help but notice how each of the signs and symptoms are going to create an even worse economic crisis. All four of them adversely affected the business community and ultimately affected the American public. Consider them the four horsemen of the economic apocalypse: Tight credit (pestilence), stock market dives (war), price destabilization (famine), and tax increases (death).

The first thing that happened was a tightening in the credit market. Back in the 1920’s, lending was such a fast and loose practice that there was speculation on the part of investors to make money off of debt. The end result was a deflation in debt caused by liquidation that ultimately tightened the credit market.

Compared to today, we are now in a state where the economy is seeing a tightening credit market. It’s harder to get loans because the banks are trying to get their balance sheets in order after the collapse of the subprime loan market.

The second thing that happened was the fall of the stock market. In 1929, the Dow Jones Industrial Average dropped 68.90 points, or a drop of 23 percent. It wouldn’t be until 1954 until the full drop was recovered. This was the kind of equity crunch that firms had difficulties with for years.

Back on May 19 of this year, the market closed for the last time over 13,000. Since then, the market has dropped from 13,028.16 to 8,943.81 for a total percentage drop of 31.4 percent. Granted it was over a period of almost six months, but it’s been enough to drive down stock prices and create tightening of equity.

The reason that these first two items, debt and the stock market, is because of the importance the two of them have in the life of a business. In order for firms to expand, they need to have cash. To generate cash, aside from sales and profits, they need to be able to acquire loans or to generate a higher stock price. As this environment is now and may be for the next four years, it will be harder for firms to generate more money.

The first is the possible increased tightening of the credit market. President-elect Obama has proposed loan forgiveness and a freeze on foreclosures. This will create an environment where a loan officer may as well take his paid vacation time because the banks won’t lend unless under threat of the government to commit financial suicide.

The second is that the Democrats want to take over 401(k) funds from individuals who have them. By the government taking over the 401(k)’s, it will create less incentive to buy stock. Instead of allowing for your retirement to be the result of successful investing yielding in high rates of return, the rate of return is a fixed four percent per year before inflation. If inflation above four percent, you actually lose the inflation-adjusted value necessary to retire more comfortably.

By comparison, if someone had opened a 401(k) fund and invested in the Dow Jones Industrials Index Fund on October 20, 1987, your value would have increased by 314.3 percent. In other words, that would be an average gain of almost 15 percent per year or 3.75 times the rate of return of the government’s 401(k) rate of return. Sadly, the government is the only entity that can make bad business decisions and still stay in business all these years later.

The third of these problems was price destabilization. Because of the deflation of debt and the stock market crash, prices wildly deflated as a result of the United States loaning gold to Germany to industrialize in order to pay France who needed the money to pay debt to the United Kingdom and the United States. This was in response to the early 1920’s hyperinflation in the Weimar Republic.

However, the current situation could be increased inflation due to higher energy prices from the proposals of Obama, a contraction of oil supply by OPEC, and the desire to implement cap-and-trade programs that have the goal of reducing global warming, but will have the effect of reducing industry.

Inflation will be further fueled by record-high deficit spending by the next Congress when it convenes in January. With the bailouts being proposed, a second stimulus package in the works, increases in government spending for programs, fighting two wars, and an economy that is providing less tax revenue, a deficit of $1 trillion will probably become a reality before the mid-term elections if not by this year.

The increases in regulations and the increases in wages that will result from the increase in the minimum wage from $7.25 to $9.50 (the inflation-adjusted figure of the original minimum wage is less than $4) that Obama and the Democrats want will result in increased job losses and reduced production. When you have fewer goods in the marketplace, the price has nowhere to go but up.

Finally, there is the last of these: increased taxes. Following the prior three things happening to the economy, Herbert Hoover and the Republican Congress in 1930 enacted the Smoot-Hawley Tariff Act that raised taxes on imported goods (tariffs) to record levels despite the pleas and protests of over 1,000 economists and a number of business executives including Henry Ford who called it “economic stupidity”.

Despite these pleas and protests, Hoover signed Smoot-Hawley in to law and the goods imported from Europe alone decreased by half of what they were before the act. Also, there was a backlash where a number of other nations increased their tariffs on American goods.

The other tax increase was in 1932 with a Democrat-led Congress and Hoover. This time, it raised the top marginal tax rate was raised from 25 percent on those making $100,000 or more to a top rate of 63 percent on those making $1,000,000 or more (by comparison, the rate on $100,000 to $149,999 was raised to 56 percent). On top of that, the corporate tax rate was increased from 12 to 13.75 percent (an increase of almost 15 percent).

The end result was a jump in the unemployment rate from 7.8 percent in 1930 to 25.1 percent in 1933. It would not be until 1943 when the unemployment rate dropped below 10 percent.

By comparison, President-elect Barack Obama is proposing an increase in the capital gains tax from 15 percent now to anywhere from 20-28 percent (which would make buying in to the stock market a less desirable proposition), closing corporate tax loopholes that will ultimately increase the tax burden on corporate America (a tax rate that is already the second highest in the world), and raising the top effective income tax rates from 33 and 35 percent now back to the Clinton-era levels of 36 and 39.6.

What makes matters worse is that high taxes at the state level have devastated the state of Michigan perhaps more so than any other economy. Along with Oregon, the state has one of the two highest unemployment rates of any state in the country because of high tax burdens.

I bring up Michigan because of the incompetence of Governor Jennifer “Jenny No Jobs” Granholm who was right behind Obama during his Friday press conference. Granholm has done more to drive jobs away from her home state as governor. It was because of a bad Republican year in 2006 that she was able to get reelected, but her political career will officially end when she leaves office because of how damaged she has left Michigan with tax increase after tax increase.

As it stands now, the unemployment rate under “Jenny No Jobs” rose to 8.7 percent in September, more than two full percentage points higher than the unemployment rate above the national unemployment rate for October. Overall, the Granholm administration in Michigan has cost the state 143,000 jobs since she took the helm in 2003 (an average of more than 21,000 jobs a year).

What’s scary is that Obama is embracing Granholm’s high tax, no jobs approach to economics. This is why Obama’s economic policies will fail Americans. It will not provide jobs, sustainable growth, or stable prices. Instead, it will provide unemployment, higher taxes, more regulations, and more big government.

I may be Chicken Little or Nostradamus depending on the outcome. For the time being, I will be monitoring not whether or not those who voted for Obama will have buyer’s remorse, but when.

 

Obama Swallows Poison Pill, Spares GOP from Pyrrhic Victory

by Alan Peel | November 7, 2008 at 3:17 PM
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The outcome of the election, as reported by the media, was one of a historic victory by Barack Obama and the Democrat Party. However, I want to put a look on this going forward as opposed to going backwards. My take on it is that Obama and the Democrats have swallowed the poison pill of a bad economy and John McCain and the Republicans were spared from a Pyrrhic victory.

Defined, a poison pill is that of a strategic move in politics or business designed to increase the likelihood of negative results as opposed to positive ones during a takeover. By winning the 2008 Presidential and Congressional elections, President-elect Barack Obama and the Democrats have willfully swallowed a big poison pill left behind by George W. Bush.

Meanwhile, a Pyrrhic victory comes from King Pyrrhus, the ruler of Eprius, who won a series of battles that his army won in 280 and 279 BC against the Romans but the casualties they took on were devastating. Had John McCain been elected President, it would have been one such victory that would have been enough to strengthen Democrat majorities in the House and Senate while setting up the Democrats for a landslide win in 2012. For that, McCain and the Republicans spared themselves what would have been a costly victory.

The good news for the Republicans is that there are a number of ways that Obama can consume poison pills and do so happily while fooling himself by proclaiming it as an “engine of change”. Believe me, that the Republicans will be more than happy to keep supplying the poison pills. All of this with the GOP’s rise back to the top by 2012.

Had the roles been reversed with McCain winning and a Democrat-led Congress to work with, the Democrats would have blocked many of McCain’s economic policies and would force him to cross the aisle for the policies they wanted, which would have made McCain the second-comings of Herbert Hoover and Jimmy Carter.

In the end, it would have made John McCain’s Presidential win that very Pyrrhic victory that would have lengthened the minority of the Republicans in government and turned John McCain’s legacy from that of “Maverick” John McCain the war hero to John S. McCain the failed President. Instead, Obama and the Democrats took a tighter grip on power that could ultimately give the public one reason to vote Republican.

What Obama and the Democrats are proposing could be a prescription for an unmitigated economic disaster that could lead to GOP victories in 2010 and 2012. Those victories also assume that the Republican leadership in Congress and party back in working order.

If nothing else, it would be highly unlikely that Obama governs from the political center. Back in 1992, then-President-elect Bill Clinton was told by House Democrats that they would pull support for centrist positions of his if he tried to get Republicans to vote for his proposals. They told Clinton that if he stayed within the confines of the Democrat Congressional and Senatorial Caucuses, they would deliver other policy proposals. That ended in 1994 with a Republican landslide in the House and Senate elections.

Before that, Jimmy Carter decided that he was not going to govern from the left in the early stages of his presidency. The end result was a clear alienation of his own party that led to Carter vetoing in four years more than double the bills that George W. Bush did in eight years. By the time Carter tried to woo the liberal base of his party, it was too late. Thanks to not governing from the left and his ineptitude, Ronald Reagan defeated him in a 44-state landslide in 1980 in an election that was over one hour before the polls closed on the west coast.

President-elect Obama is now in a bad spot electorally. If the economy goes from bad to worse post-2009, Obama and the Democrats will not have Bush to blame. Instead, they will have to answer the question “What have you done for me lately?” If they’re not careful, the Republicans will start by making significant electoral gains in 2010 and could regain power back from the Democrats in 2012. That would be the final, fatal poison pill.

There was no secret by the Obama campaign about their desires to raise the capital gains tax from 15 percent to anywhere between 20 to 28 percent. The last time an increase in the capital gains tax was implemented was back in 1986 when the tax code was reformed under Ronald Reagan to make the capital gains rate the same as the top rate of 28 percent. When implemented, capital gains tax revenues dropped 44 percent because selling stock became less desirable.

What could make matters worse is the desire of Obama and the Democrats to raise the top marginal income tax rate from the current 35 percent rate to that of the 39.6 percent it was back in 2000. There are a number of serious consequences that would arise from a tax increase in an economic slowdown or an economic recovery. According to Obama’s proposals to repeal the Bush tax cuts for the top five percent of wage earners ($153,542 in adjusted gross income or more) and Obama’s proposed removal the income cap on FICA taxes could impose a federal tax rate of 54.9 percent.

As for the rest of the Bush tax cuts, they will be set to expire on January 1, 2011. If there is now tax cut extension put in to place, an economy that could be poised for a recovery would instead suffer a contraction. George W. Bush will not anywhere close to the scene of the crime (he’ll probably be getting ready to go fishing in Texas by this time) to be blamed and Obama would take the hit. In other words, Obama will be the first President to run for reelection on the heels of a recession since George H.W. Bush lost to Bill Clinton in 1992.

Spending can also get out of hand with the Democrats wanting more money for more spending programs. John Kerry has called for a new New Deal and Barney Frank has called for more spending, deficit be damned. This, combined with Speaker Nancy Pelosi’s push for funding for embryonic stem cell research (which is more throwing good money after bad since embryonic stem cell research has produced no cures while over 80 cures have been found via adult stem cell research) and Ted Kennedy’s push for socialized health care will be enough to generate our first-ever trillion-dollar deficit.

Once the recession is over, the next monster the economy will become hyperinflation that has gone unseen since the 1970’s. The contributors will be record deficit spending, energy prices run amok, and artificially increasing wages.

Obama has proposed raising it from the $5.15 it was back in 2006 when the economy was actually good to the $7.25 per hour wage that it will be next summer to $9.50 by 2011. The dirty little secret about labor pricing in economics is that if you inflate wages against the will of employers, you actually create more unemployment—like what is happening right now.

If you look at the inflation-adjusted number of the original minimum wage when it was implemented in late 1938, today’s minimum wage would only be $3.64 an hour. The $9.50 an hour that Obama would attempt to implement would be the 1938 equivalent of 68 cents. In other words, when adjusted for inflation, non-skilled workers—mostly high school teenagers, people working for the first time, and those looking to start a business by learning a trade—are making more than 2.61 times more than what they were making 70 years ago.

In some ways, inflation was made worse by the Carter administration in the 1970’s by increasing the minimum wage every year he was in office. When Carter took office, the federal minimum wage was $2.30 an hour. That figure went up to $2.65 an hour in 1978, $2.90 an hour in 1979, $3.10 an hour in 1980 and to $3.35 an hour when he left office in January 1981. By comparison, the Reagan administration never passed a minimum wage increase and one would not take effect for more than nine years.

Why does the minimum wage matter? It is the only real way to create a trickle-up economic effect. It will increase wages across the board by an even bigger percentage than that of a minimum wage increase. Employers will respond to higher taxes and higher wages with higher job cuts. We will be longing for the days of a 6.5 percent unemployment rate.

Then there is the credit crisis as we are facing as banks are more reluctant to give loans for any reason. Obama wants to give selected homeowners the ability to refinance during a 90-day foreclosure freeze. That will lead to a freeze on lending for either the same length of time to one that’s even longer. That is, unless of course, Congress decides to force banks to lend (which is what got many of the banks in this mess in the first place).

With the shrinking equity from Wall Street and the reduced lending of the banks (barring mandatory lending against the better interests of the banks), businesses will be harder-pressed for cash which will lead to more layoffs and less production of goods. When inflation by contraction (stagflation) on this scale happens, more Congressional bailouts won’t be enough to save corporate and small-business America.

Speaking of bailouts, there will be a push to bailout the automotive industry to the tune of $250 billion. For once, I agree with Congressmen like Dennis Kucinich. It is only on the issue of equating this to corporate welfare. However, he and his fellow far-leftists in the Democrat Party will likely acquiesce thanks to all of the additional goodies thrown in the form of pork-barrel spending projects to win votes just like what Nancy Pelosi did with her first Iraq spending bill that George W. Bush promptly vetoed.

The end result is a Democrat Party and an Obama administration overwhelmed with political poison pills gladly accepted on their part from the Republicans. By 2012, Obama will likely go down as one of America’s worst presidents and could make Americans long for the days of—dare I say—George W. Bush. At that point, the American public will vote probably for Republicans…any Republican.

 

Dear Blue States: A Reply From the Red States

by MichaelTurk | October 29, 2008 at 1:43 PM
in

Despite being three years old, the "Dear Red States" Craigslist posting from 2005 is suddenly circulating again.  I guess it must be election season that has revived this.  But I figured I'd take a quick shot at a response.

Dear Red States... We've decided we're leaving. We intend to form our own country, and we're taking the other Blue States with us.

Hot Damn.  Thanks.  You're like people who have stayed long after the rest of the party goers have gone home. We've been hoping you'd finally leave, but we're too polite to simply throw you out.

In case you aren't aware, that includes Hawaii, Oregon, Washington, Minnesota, Wisconsin, Michigan, Illinois and all the Northeast. We believe this split will be beneficial to the nation, and especially to the people of the new country of New California.

To sum up briefly: You get Texas, Oklahoma and all the slave states. We get stem cell research and the best beaches.

Well, actually, Minnesota, Michigan, Wisconsin and Washington are typically considered "swing states", but you can have them.  Congratulations. You got two states too cold to live in, a failing automotive industry, and Washington.

As for the beaches, we got the entire gulf coast and the Atlantic up to North Carolina.  You got the rocky coast of the northwest and the Jersey Shore (whose tourism board just recently announced their new slogan "Guidos in Speedos").  Again.  Congrats.

We get the Statue of Liberty. You get Dollywood. We get Intel and Microsoft. You get WorldCom. We get Harvard. You get Ole' Miss. We get 85 percent of America 's venture capital and entrepreneurs.

I don't mean to quibble with your argument, but Bank of America is the nation's largest and one of the few solvent banks.  It's located in North Carolina.  We'll take that.

I also suspect that most of the corporate CEOs that built that wealth will move in with us since better than 75% of them vote Republican.

You get Alabama. We get two-thirds of the tax revenue; you get to make the red states pay their fair share.

You can have the tax revenue.  We'll give the other 1/3 back to the people since they know how to spend it better than your army of bureaucrats.

Since our aggregate divorce rate is 22 percent lower than the Christian Coalition's, we get a bunch of happy families. You get a bunch of single moms.

Please be aware that Nuevo California will be pro-choice and anti-war, and we're going to want all our citizens back from Iraq at once. If you need people to fight, ask your evangelicals. They have kids they're apparently willing to send to their deaths for no purpose, and they don't care if you don't show pictures of their children's caskets coming home. We do wish you success in Iraq, and hope that the WMDs turn up, but we're not willing to spend our resources in Bush's Quagmire

Since our troops will be coming home in a year under President Bush's plan anyway, that's fine with us.  

You're also likely impose strict gun control while we a) have a tendency to support regime change and b) own a lot of guns. In addition, since most of America's nuclear arsenal sits in silos in the red states, if we ever decide we want New California back...  Well, let's just say, "Sleep tight!" 

With the Blue States in hand, we will have firm control of 80% of the country's fresh water, more than 90 % of the pineapple and lettuce, 92 % of the nation's fresh fruit, 95 %of America's quality wines (you can serve French wines at state dinners) 90% of all cheese, 90% of the high tech industry, most of the U.S. low-sulfur coal, all living redwoods, sequoias and condors, all the Ivy and Seven Sister schools, plus Harvard, Yale, Stanford, Cal Tech and MIT.

You got me there.  Let's just hope that all the Asian students who are attending those schools will let you mow their lawns when they graduate.

While I will miss the pineapple, I think I speak for my red state family when I say we're ok giving up the wine and stinky cheese.  After all, we still have all the Jack Daniels from Tennesee, all the Coors and Budweiser beer products from Colorado and Missouri, most of America's steak, and all the cigars we can roll with that North Carolina tobacco.

You also seem to forget that a) we will get most of America's total acreage.  We get America's strategic oil reserve, we get all the oil in Texas and Alaska.  With a much smaller population, we'll have enough energy to last generations.  If we run short, we have no problem drilling off the coast of New California since we know we won't run into you there. Even if we do, like I said, we have all the guns.

That is a shame about the condors.  I hear they're good eatin'.

With the Red States, on the other hand, you will have to cope with 88 % of all obese Americans (and their projected health care costs), 92% of all U.S. mosquitoes, nearly 100 percent of the tornadoes, 90% of the hurricanes, 99% of all Southern Baptists, virtually 100% of all televangelists, Rush Limbaugh, Bob Jones University, Clemson and the University of Georgia.

I can live with that.

We get Hollywood and Yosemite, thank you. Additionally, 38 % of those in the Red states believe Jonah was actually swallowed by a whale, 62% believe life is sacred unless we're discussing the death penalty or gun laws, 44% say that evolution is only a theory, 53% that Saddam was involved in 9/11, and 61% of you crazy bastards believe you are people with higher morals then we lefties.

By the way, we're taking the good pot, too. You can have that dirt weed they grow in Mexico .

Peace out,
Blue States

Ugh! You get Hollywood?  Bummer.  You've just taken on a huge sector of the economy that creates little of actual value, yet gets paid better than most CEOs.  But we're willing to accept that since you have agreed to permanently dispose of Paris Hilton, Rosie O'Donnell, and Britney Spears.  Thanks for taking care of that for us.

In closing, let me simply say thank you again. I think this arrangement will work out beautifully.

Democrats changing the Party, not the problem

by Jon Henke | October 29, 2008 at 12:37 PM
in

Howard Dean, 2008:

Democratic National Committee Chairman Howard Dean said Monday that he’s looking forward to one party controlling all aspects of government, despite GOP charges that it would be a disastrous Nov. 4 outcome.  “Republicans had a chance to rule. They failed miserably. I think it’s time to give the other party a chance,” Dean said on MSNBC.

Howard Dean, 2005:

We need more than one party in charge. And the vote on Tuesday is going to be critical to decide whether American democracy still allows those of us who didn't vote for the president to have any say in running the country whatsoever.
[...]
Someday, the Democrats will be back in charge again. Do we want a Democratic Party that's in charge of everything? Well, you know, I suppose it's my job to say yes. But the truth is, as an American, it's better when parties share power. It's better when even those people who didn't win the election have something to say.
[...]
[There] is a culture of corruption and abuse of power in Washington. This is what happens when one party is in charge of everything.

Change! 

The History Of One Party America

by Matthew Gagnon | October 26, 2008 at 10:32 PM
in

NOTE:  Cross Posted at Political Capital

It has become very obvious over the last month or two that Barack Obama is on the verge of a monumental landslide, and the democrats in congress are poised to push the envelope on supermajorities as well.  We are looking at a one party state, and not only that - its one that has been thirsting for power and will have a great deal of it in January.

Because of this reality, I think it is more than appropriate that we consider what has happened in the past when one party has taken over control of all levels of government.  This is important, because whenever one party gets beat that badly, they always feel as though the world is ending, and they will be permanently relegated to irrelevance.

What is interesting, though, is that this is hardly the case.  When you look back at history, one party dominance does not maintain itself for very long, and it often leads to utter disaster for the party that commands said unbridled power.

Why is that?  Perhaps its because the party in power over-reaches, believing they have more support of the American people than they actually do - as detailed here.  Perhaps it is because the minority party ends up looking at themselves in the mirror and diagnosing their issues, actually addressing the problems that caused them to be so roundly defeated - as I recommended here.  Perhaps its a little of both.

But one thing is for sure - one party controlling the government is not something that the American people tend to like very much.  Lets take a gander at some examples.

The change we need: Defeat the Democrat majority in Congress

by Freedoms Truth | October 18, 2008 at 11:49 PM
in

America, the land of the free as we used to know it,  is at risk of becoming just a memory should Obama win big and carry his liberal Democrat friends with him into office.

National Journal rated Obama the most liberal Senator in 2007. Obama in his state Senate years was careful, via cowardly 'present' votes, to hide his
liberalism, but he still has a stark record of extreme positions - so extreme on abortion, he voted against a bill to protect born-alive victims of botched abortions; so extreme
on gun control, he supported the DC gun ban that was ruled Unconstitutional (of course, Obama's favorite Justice Ginsburg voted against the 2nd amendment in that case).
Voting against death penalty for gangland murderers. Obama's record is liberal:
http://travismonitor.blogspot.com/2008/10/obamas-ratings-and-record.html
Proabortion extremist: Planned Parenthood - 100% Support, National Right To Life - 0% Support,  NARAL - 100% Support
Population Connection - 100% Support (These are the ‘Zero Growth’ freaks)
Anti-taxpayer tax-and-spend liberal: Americans for Tax Reform - 0% Support, Citizens Against Government Waste - 13% Support
Very Liberal: ACLU - 83% Support ,
Anti-gun-owner:  Gun Owners of America - 0% Support, NRA - “F” Rating
Pro-amnesty open-borders extremist: Federation for American Immigration Reform - 0% Support US Border Patrol - 8% Support
Supports Big Unions: Unions - 82% - 100% Support, NEA - 100% Support

The Democrats are the STATUS QUO party in Congress. Since liberal Democrat Nancy Pelosi became speaker after 2006 elections, the price of oil rose, the stock market fell,
unemployment rose, the economy sputtered. The Democrats' threats of tax increases and their attacks on businesses and markets and energy producers have had a toll on the economy.
The Democrats tried and failed to lose the war in Iraq, but they have managed instead to break promises to cut earmarks (they made it worse), and have spent over $1 trillion
and counting on bailouts this year alone. They want more - money from the taxpayer to new govt welfare cases, with a slice for their special interests on the side;
Like the 'alternative energy bill' that somehow included $50 billion in new taxes yet had a hidden $1 billion gift to trial lawyers.

The Democrats' earlier support for the creation of CRA (Community Reinvestment Act), sowed the seeds for subprime lending. Barack Obama, did legal work on behalf
of ACORN to sue banks to force them to engage in subprime lending. that subprime lending ballooned, and the leaders in it, like Countrywide, gave sponsors like Sen Chris
Dodd, sweetheart deals as thank yous; when Republicans warned about Fannie Mae supporting these risky schemes in 2005, the Democrats stopped them. The chicken's have
come home to roost on the flawed idea of giving homes and mortgages to people who cannot really afford them. Democrats instigated this financial crisis as much as anyone
else.

But these policy errors and bad actions are just the preview. Here is what the Obama/Democrat majority will deliver:

  • Regulation overdrive that will kill jobs
  • Special interest giveaways to groups like ACORN
  • Government takeover of health-care, shifting as many a 50 million more people into a Government run plan (See below, Obama ultimately wants single payer aka 100% Socialized medicine!)
  • pork barrel-overspending, like the $200 billion farm bill the Pelosi Congress passed, and the $1+ TRILLION in bailouts this year; Pelosi wants another bailout for $300 billion, on top of the $700 billion for wall street, $300 billion housing bailout and $100 billion govt check giveaway - when will it end?
  • Pro-abortion extremism, including taxpayer funded abortions and 'Freedom of Choice' Act, which will override state desires to protect unborn life
  • Amnesty for illegal aliens, and drivers licenses for illegal aliens, which Obama supports
  • No drilling in ANWR or offshore, and an anti-energy policy that won't allow full exploration offshore; it means higher energy prices
  • Trade policies that are the worst since Herbert Hoover (who created a depression out of similar policies)
  • Higher taxes that will kill jobs; Obama in the past year proposed higher payroll taxes, higher income taxes, and raising the capital gains taxes from 15% to 25%. Now in the general election, Obama has flipflopped on it, but he will surely flipflop back in order to make taxpayers pay for his $800 billion in spending promises that he can't keep without higher taxes.
  • Job-killing 'cap-and-trade' CO2 regulations
  • Attacks on free speech, with "fairness doctrine" attacks on talk radio, and political correctness attacks on free speech( Missouri DAs investigating people who say bad things about Obama)
  • Attacks on the ballot box,  by ending the secret ballot for union elections, and by opposing voter ID laws
  •  Gay marriage:  Obama opposes Cali prop 8, in effect signalling that he supports gay marriage, andObama and the Democrat platform calls for the repeal of DOMA to take gay marriage nationwide;  they will enforce ENDA, gay rights in the workplace and a tort lawyers dream and HR dept nightmare, and the result will be attacks on religious organizations and groups that dare to take an opposing moral position; gays openly in the military
  • Appointment of liberal activist Judges, who will be handpicked to overrule the people and legislate liberal social policy from the bench.
  •  

Here's what the WSJournal says is in store with that Obama/Democrat majority, with more details on :

http://online.wsj.com/article/SB122420205889842989.html?mod=rss_opinion_main

- Medicare for all.  ... A strongly Democratic Congress is now likely to lay the final flagstones on the path to government-run health insurance from cradle to grave.

Mr. Obama wants to build a public insurance program, modeled after Medicare and open to everyone of any income. According to the Lewin Group, the gold standard of health policy analysis, the Obama plan would shift between 32 million and 52 million from private coverage to the huge new entitlement. Like Medicare or the Canadian system, this would never be repealed.

The commitments would start slow, so as not to cause immediate alarm. But as U.S. health-care spending flowed into the default government options, taxes would have to rise or services would be rationed, or both. Single payer is the inevitable next step, as Mr. Obama has already said is his ultimate ideal.

- The business climate. "We have some harsh decisions to make," Speaker Nancy Pelosi warned recently, speaking about retribution for the financial panic. Look for a replay of the Pecora hearings of the 1930s, with Henry Waxman, John Conyers and Ed Markey sponsoring ritual hangings to further their agenda to control more of the private economy. The financial industry will get an overhaul in any case, but telecom, biotech and drug makers, among many others, can expect to be investigated and face new, more onerous rules. See the "Issues and Legislation" tab on Mr. Waxman's Web site for a not-so-brief target list.

The danger is that Democrats could cause the economic downturn to last longer than it otherwise will by enacting regulatory overkill like Sarbanes-Oxley. Something more punitive is likely as well, for instance a windfall profits tax on oil, and maybe other industries.

- Union supremacy. One program certain to be given right of way is "card check." Unions have been in decline for decades, now claiming only 7.4% of the private-sector work force, so Big Labor wants to trash the secret-ballot elections that have been in place since the 1930s. The "Employee Free Choice Act" would convert workplaces into union shops merely by gathering signatures from a majority of employees, which means organizers could strongarm those who opposed such a petition.

The bill also imposes a compulsory arbitration regime that results in an automatic two-year union "contract" after 130 days of failed negotiation. The point is to force businesses to recognize a union whether the workers support it or not. This would be the biggest pro-union shift in the balance of labor-management power since the Wagner Act of 1935.

- Taxes. Taxes will rise substantially, the only question being how high. Mr. Obama would raise the top income, dividend and capital-gains rates for "the rich," substantially increasing the cost of new investment in the U.S. More radically, he wants to lift or eliminate the cap on income subject to payroll taxes that fund Medicare and Social Security. This would convert what was meant to be a pension insurance program into an overt income redistribution program. It would also impose a probably unrepealable increase in marginal tax rates, and a permanent shift upward in the federal tax share of GDP.

- The green revolution. A tax-and-regulation scheme in the name of climate change is a top left-wing priority. Cap and trade would hand Congress trillions of dollars in new spending from the auction of carbon credits, which it would use to pick winners and losers in the energy business and across the economy. Huge chunks of GDP and millions of jobs would be at the mercy of Congress and a vast new global-warming bureaucracy. ...

- Free speech and voting rights. A liberal supermajority would move quickly to impose procedural advantages that could cement Democratic rule for years to come. One early effort would be national, election-day voter registration. This is a long-time goal of Acorn and others on the "community organizer" left and would make it far easier to stack the voter rolls. The District of Columbia would also get votes in Congress -- Democratic, naturally.

Felons may also get the right to vote nationwide, while the Fairness Doctrine is likely to be reimposed either by Congress or the Obama FCC. A major goal of the supermajority left would be to shut down talk radio and other voices of political opposition.

- Special-interest potpourri. Look for the watering down of No Child Left Behind testing standards, as a favor to the National Education Association. The tort bar's ship would also come in, including limits on arbitration to settle disputes and watering down the 1995 law limiting strike suits. New causes of legal action would be sprinkled throughout most legislation. ...

The unflappable demeanor of Senator Obama makes it seem like he is a 'nice guy'. But Obama is lying about himself. Obama is raised and trained on Alinsky leftism; Obama had a Communist mentor Frank Davis Marshall; Obama showe an extreme racial consciousness bordering on animosity in his memiors; Obama was the colleague of radical Bill Ayers (and the point is not that Ayers was a terrorist bomber in the 1960s, the point is that Ayers is as radical
today in his views as he was back then, toasting socialist despots Huge Chavez just last year); Obama for 20 years sat in a Black Liberation Theology church who pastor preaches a political worldview based on the radical Black Panthers. The real Barack Obama has been steeped in the most radical and extreme left ideology of any person to have a chance at the White House.

Any voter who doesn't know the real history of Obama has let the Obama campaign and media bamboozle him or her. Obama's campaign is a $500 million hollywood production, a fiction designed to bamboozle foolish uninformed voters, and the liberal media is complicit in
keeping people as uninformed as possible of the real Barack Obama. As part of that fiction, Obama's left-liberal positions and views have been airbrushed aside, and he's
running on focus-group-tested pablum.

Normally, political realities will restrain such an extremist, but the liberal Democrats think they have the kind of majority coming that will reshape things further. Only twice before has a President on the Democrat side won with overwhelming majorities. In the 1930s and 1960s. Both times we got the most signification shifts towards big Government in our history - The New Deal and the Great Society. Our problems will not be solved by more Government - we need LESS Government. Our only chance to stop this radical and dangerous shift is to vote against every Democrat and for Republicans in the coming election.

If you want to save America ... you have one duty -  spread the word and warn others: Maybe it is too late to stop the manifestly unqualified and extreme Barack Obama from becoming President.  But in that event, we don't have to give Obama a liberal Congress to go with it!  The change we need is to defeat the Democrats in Congress. Defeat Nancy Pelosi and her earmark, pork-barrel, corrupt trial-lawyer leftwing-special interest ACORN-supporting buddies in Congress.

Michelle Bachmann and the Politics of Division

by Chuck Adkins | October 18, 2008 at 6:37 PM
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I write this article neither as a Liberal nor as a Conservative. I write this article as an American. I write this as a Caucasian American who holds to a set of Moderate to Right-Libertarian political views.   I write this as someone who is quote worried about the direction our Nation is taking. I write this as someone who is heartsick over the deep divisions in the world of politics.

 For the first time, since I have been Blogging, I feel the need to speak out against those who hold similar political views as mine. I am referring to the comments that were made by Rep. Michelle Bachmann. Rep. Michelle Bachmann on an appearance on MSNBC’s Hardball said that there were persons in the United States Congress, who held to Anti-American views.  She also said that these people should be investigated.

Before I get into why I disapprove of this, let me make some things clear. Contrary to popular belief, my Politics is not as far right as some. In fact, I tend to lean towards the center on some issues. I am a moderate on many issues. Although, when it comes to our Military, My disdain of the Islam Religion, Our Nations Constitution, and a few other things, I am much to the right of some. However, on other issues, I tend to be more of a Libertarian. For example, I do not believe that it is the Governments right to tell a woman what to do with her body. 

Now personally on a personal level, I object to Abortion on grounds that it is murder, this is because I am a Christian and I believe that life begins at conception. Nevertheless, on a Political Level, I believe that the United States Government does not have the right to dictate to woman what she can and cannot do with her body. Furthermore, I do not believe that the State Government should dictate to a woman what she can and cannot do to her own body.  

This is because I believe in personal freedom. I also reject the Conservative Christian idea of turning America into a Theocracy.  I also believe in a full wall of separation of Church and State.  However, just as well, I believe the woman should be given all the alternatives to terminating a pregnancy, however, if she decides to do so, that is between her and God. Let God be the judge of that woman. I reject the browbeating that the far right gives to those who decide to perform such an action. That sort of abject nonsense goes against the very core freedoms in our Constitution.  Those that cannot separate between the political and spiritual realms should not involve themselves in politics at all.  

Now do my personal political views of mine make me Anti-American? I think the sane and logical answer to that would be no. Now in the interest of full disclosure, I have little or no use for the far left. I will spare you the reasons for that. I will simply say that I did not leave the Democrat Party, it left me, long ago, especially during this election cycle. However, for me to sit here and write that Democrats were Anti-Americans would be a lesson in abject foolishness.  Frankly, Rep. Michelle Bachmann’s comments yesterday did nothing to raise the level of political discourse in this country whatsoever.  Rep. Michelle Bachmann was essentially doing a poor imitation of Ann Coulter or at worst channeling Joseph McCarthy. I am fully aware that it was written recently that Joseph McCarthy was correct on some matters; it, in fact, was the destructive behavior of Senator McCarthy that ruined his career.    

It is this writer’s opinion that channeling Senator Joseph McCarthy in this desperate hour would be a total and unequivocal disaster to the Republican Party’s cause.  It is not lost upon me that the political landscape of the Democratic Party has changed a great deal in the last eight years, Mrs. Katrina Vanden Heuvel ‘s response to the remarks being a perfect example of this. However, the channeling of McCarthyism will do nothing to further the Conservative cause. In fact, it will alienate more than it will help.

Democrats Want to Abolish Tax Breaks for 401(k)

by ouztstopia | October 16, 2008 at 4:32 PM
in

The Democrats must be really confident about their chances next month.  They are already discussing abolishing the tax breaks for 401(k) contributions. 

http://www.investmentnews.com/apps/pbcs.dll/article?AID=/20081012/REG/31...

 

Gov't Dems Caused Housing Crisis, Including Obama

by Blue Collar Muse | September 26, 2008 at 2:49 PM
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I've been nearing a medical crisis of my own involving High Blood Pressure as I've read account after account of Democrats doing their best to lay the blame for the current financial crisis at the feet of Free Marketers. Reality based insight into the Governmental basis for the meltdown and solutions for the problem are simply ignored in an orgy of blame the Market and the GOP so we can extend Government control over yet another vast segment of the Economy.

Unfortunately for Leftists whose only hope lies in the "Pay no attention to the man behind the curtain!" strategy, the truth is starting to emerge. Every day that passes without a bailout gives us more opportunity to get the Truth out. That Truth is that any bailout plan arising from Congress will simply be asking the same people who screwed the thing up in the first place to come in and fix it.

I found the video below following a Tweet from Buzz Brockway who tips the hat to Moe Lane over at RedState. For those of you interested in understanding exactly what caused the housing bubble; why it resulted in the mess we're in; and, who NOT to trust to fix it, play the video below. It will be the best use of the next 10 minutes of your life. Then call your Representatives and Senators.

Then I flipped over to my email and found this gem from a friend.

The following quotes are from the New York Times five years ago. Republicans proposed increased oversight and regulation of Fannie and Freddie, but Democrats fought it.

"The Bush administration today recommended the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago. Under the plan, disclosed at a Congressional hearing today, a new agency would be created within the Treasury Department to assume supervision of Fannie Mae and Freddie Mac, the government-sponsored companies that are the two largest players in the mortgage lending industry. The new agency would have the authority, which now rests with Congress, to set one of the two capital-reserve requirements for the companies. It would exercise authority over any new lines of business. And it would determine whether the two are adequately managing the risks of their ballooning portfolios." Democrats pushed back. "Among the groups denouncing the proposal today were the National Association of Home Builders and Congressional Democrats who fear that tighter regulation of the companies could sharply reduce their commitment to financing low-income and affordable housing".

"These two entities, Fannie Mae and Freddie Mac, are not facing any kind of financial crisis", said Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. "The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing."

Representative Melvin L. Watt, Democrat of North Carolina, agreed. "I don't see much other than a shell game going on here, moving something from one agency to another and in the process weakening the bargaining power of poorer families and their ability to get affordable housing," Mr. Watt said.

Given the above, the following would be great questions for Barack Obama either tonight or in the Economic Issues debate at Belmont University next month.

1. Why did you stand silent in 2005 and vote with the other Democrats to block very financial reforms which would have prevented the current crisis in the financial markets?

2. One of the primary reasons so many bad mortgage loans were made in the first place is that "community organizers" like ACORN, for which Obama worked, spent decades pressuring banks and bank regulators to do more to make mortgages available to people without much in the way of income, assets, or credit. These campaigns often were couched in racially inflammatory terms. Does Obama still think that banks should have made these loans?

3. Why did you not favor punishment for the former CEO of the bankrupt Fannie Mae, Franklin Raines, a man who personally made $90 million over a few years while cooking the books Enron-style at Fannie Mae? And why did you have Jim Johnson, former Fannie Mae Chairman, helping you pick you VP before the pure embarrassment made him resign?

4. How can you blame John McCain and the Republicans for this mess when you yourself supported the easy credit policies and refused the needed reforms for these programs?

5. How can you blame John McCain and the Republicans for this mess when you yourself supported the easy credit policies and refused the needed reforms for these programs?

Blue Collar Muse

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