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Views on the News

Views on the News*

January 23, 2016

 

Seven years after American voters made history electing the country’s first black President, racial tensions have worsened.  Signs of Obama’s failure are on our streets, in our campuses and among our leaders, left and right.  Ferguson” is shorthand for African-American fury objecting to insensitive white cops harassing young blacks.  The “Black Lives Matter” movement has spilled into American campus culture, as privileged kids attending the world’s finest universities bemoan their alleged oppression, bullying anyone who challenges them.  This black backlash has prompted a white backlash, personified by Donald Trump.  Every justifiable police shooting called “racist,” every Halloween costume labeled politically incorrect, every reasonable thought censored makes Trump look like America’s last honest man.  Amid this tension, Obama has been disturbingly passive, even during America’s first serious race riots since 1992.  He acts like a meteorologist observing the bad weather, not a President able to shape the political climate.  Even though only 9% of black voters chose George W. Bush in 2000, his Presidency’s biggest controversies dodged race, focusing on terrorism, the Iraq war and the economic meltdown.  Bush’s outreach to Arab-Americans after 9/11 calmed many African-Americans, just as Trump’s anti-Muslim demagoguery today offends many blacks.  Bush integrated his administration naturally, appointing Secretary of State Colin Powell and National Security Adviser Condoleezza Rice because of their smarts, not their race.  Gallup reported that “Americans rate black-white relations much more negatively today than they have at any point in the past 15 years.”  White optimism dropped 27% in the last two years, with black optimism down 15%.  Obama calling for unity in his State of the Union was feeble, too little, too late after seven years of divisive talk.   

(“How Obama has turned back the clock on race relations” b Gil Troy dated January 17, 2016 published by New York Post at http://nypost.com/2016/01/17/how-obama-has-turned-back-the-clock-on-race-relations/ )

Is it too early to mention the "R" word, or will just the mention of recession spook the market?  Stocks are diving, retail sales are slumping, and economic bellwether Wal-Mart is shuttering 154 U.S. stores, and meanwhile, China's markets are in free fall.  The S&P 500 has skidded 8% since January 1st, its worst start ever.  $2.3 trillion in shareholder wealth has been wiped out, a huge hit that will be felt across the economy.  Even before the market decline, however, clouds were gathering.  Retail sales fell 0.1% in December and were up just 2.2% year over year.  Wal-Mart has announced that it is closing 269 stores, 154 of them in the U.S., can only be bad news.  China’s stock market index has plummeted more than 40% since the middle of 2014 as the nation's once-booming export- and investment-driven economy goes bust. Around the world, factories and businesses built to satisfy China's insatiable demand for raw materials and capital goods have fallen silent.  The Atlanta Fed's widely followed gauge of current economic output suggests fourth-quarter annualized GDP growth was just 0.8% or so, within spitting distance of recession territory.  As we start 2016, a recession is a real possibility.  Add to that the likelihood of three or four Fed rate hikes this year, and the economy's brakes will be on.  What really ails the economy right now is a lack of business investment.  That's real stimulus. Investment creates consumption by making products to consume, and the income with which to buy them.  Unfortunately, orders for nondefense capital goods, a proxy for business investment, have fallen 11 straight months, averaging a 3.4% year-over-year decline every month in 2015, a sign of extraordinary weakness.  Obamanomics has created the most anti-business environment in postwar history.  Businesses face a record level of regulation, a world-high 35% tax rate, higher minimum wages, hostile legislators who routinely demonize profits and success, an erratic Fed and growing uncertainty about the U.S.' political future.  Recessions don't just happen; they're made, and it looks like we're making one now. 

(“Is U.S. Heading Toward Recession?” dated January 15, 2016 published b Investor’s Business Daily at http://news.investors.com/ibd-editorials/011516-790183-us-economy-loses-momentum-going-into-2016.htm )

There will be a recession in the United States and much of the rest of the world in 2016.  Central banks, including the Fed, the European Central Bank and the Bank of Japan, as a result of their low-interest rate policies and selective financial asset buying, have replaced the free market in determining credit allocation.  Their policies subsidized government debt and borrowings by major corporations, at the expense of more entrepreneurial organizations that are the major job creators.  Economists estimated that this misallocation of credit has cost the United States perhaps 1.5% gross domestic product growth for each of the last several years, which would explain much of the slow-growth economy.  Historically, it is known that most recessions, including the Great Recession, were caused by mistakes in monetary policy, which were often reinforced by bad tax and regulatory policies and not by “greedy bankers and businesspeople.”  The growing amount of financial, labor and environmental regulation is slowly strangling the economy.  Some of these increasing costs have been offset by the drop in oil prices, but that is about to end.  Obama administration seems to be determined to kill most fossil fuels while totally disregarding the impact on economic growth and jobs.  The President talks compassion but has left much of the Appalachian coal country an economic and human wasteland, and it is getting worse.  The number and uncertainty of all the new financial regulations are obscene.  The regulations stemming from the Dodd-Frank bill alone have now exceeded 19,000 pages, much of it written in bureaucratic gobbledygook, ensuring that financial institutions can never know whether or not they are in compliance, and making it impossible for smaller institutions to digest.  The new rules on international financial transfers and accounts are shutting down much productive investment and commerce.  A number of the mistakes made before the Great Recession are being repeated because policymakers chose to learn the wrong lessons.  There is no longer a major growth engine in the world to bail everyone else out. Growth will probably continue to slip in China.  Japan and Europe are stagnant at best, and the big oil-producing countries are running out of money to buy goods and services from the rest of the world.  The drop in oil prices has been good for consumers, but that benefit has been more than offset by a rise of the price of medical insurance owing to ObamaCare.  Russia and Iran desperately need a higher price of oil, and the best way of achieving that is to have some of Saudi Arabia’s production turned off.  Well before the end of this year, the price of oil will rise, and that, combined with ever-increasing regulatory costs, the continued misallocation of credit by the central banks, and the China slowdown, will mean negative economic growth for the United States and many other countries. 

(“The recession of 2016” by Richard W. Rahn dated January 18, 2016 published by Washington Times at http://www.washingtontimes.com/news/2016/jan/18/richard-rahn-the-recession-of-2016/ )

Six years after promising to "repeal and replace" ObamaCare, House Republicans are finally getting serious about proposing a plan to replace the Democrats' controversial health care law.  House Speaker Paul Ryan has announced he'll bring a bill to the floor sometime before the 2016 elections.  This announcement came at about the same time that the House put the first full-fledged ObamaCare repeal bill on Obama's desk, which was quickly vetoed.  Admittedly, any "replace" bill is unlikely to make it past the Senate, where Democrats are well positioned to block the measure, but Ryan and his colleagues want to move a "replace" bill anyway, if only to give voters a clear picture of what an all-GOP government would do to reform health care in 2017.  There's no dearth of ideas to choose from on the political right, from new tax credits and deductions to optional block grants and expanded Health Savings Accounts (HSAs).  The real challenge will be resisting the temptation to choose "all of the above."  Republicans should ask four basic questions about each health care reform idea: Is it constitutional?  Is it necessary?  Is it affordable?  Will it work?  That is, will it reduce health care costs and thus the number of uninsured Americans?  Only proposals with a "yes" next to all four questions should make the cut.  Here are some specific dos and don'ts:

·    Don't pass a 2,000-page bill no one has read - Follow regular order.  Move multiple bills.  Permit lots of time to read them.  Allow plenty of amendments.  Legislate.

·    Don't focus on covering the uninsured - Focus instead on reducing health care costs.  Trying to "get more people covered" usually leads to proposals to expand Medicaid, a broken program that often ill serves the poor.

·    Don't disrupt the employer-based system - Half the U.S. population gets its health benefits through the workplace, thanks to generous federal tax subsidies created in the 1940s.  Those subsidies are wasteful, distortive, and redistributive, but because most American are more or less satisfied with their existing arrangements, it's risky to mess with them.

·    Don't create Obamacare Lite - "Obamacare Lite" means a modified government-run system with basic features: 1) subsidies to help individuals purchase health insurance, 2) mandates on individuals to purchase health insurance, and 3) mandates on insurers that prevent market pricing of health insurance (e.g., guaranteed issue & community rating).

·    Don't increase the deficit – No need to make a bad situation worse.

·    Do follow the Constitution - Because the Tenth Amendment leaves health insurance regulation to the states, Republicans should resist such popular but unconstitutional ideas as forcing health insurance to be sold "across state lines" and imposing federal medical malpractice reforms on the states.  

·    Do make health insurance voluntary - Whatever else it does, Congress should repeal ObamaCare's infamous mandate to buy health insurance and Medicare's draconian penalty for refusing to enroll in Medicare.  In America, insurance should be voluntary.

·    Do promote HSAs - Health savings accounts, created in 2003 and today enjoyed by 17 million Americans, are the best available tool for promoting patient-driven health care.  Expand them aggressively.

·    Do create optional block-grants - Congress should make an offer to the states:  "You can remain under Obamacare, with all of its enormous costs and problems, or you can opt out of Obamacare and receive your state's share of its subsidies (including the Medicaid expansion money) in the form of a large, flexible block grant.  You would use the grant to help your poor and sick citizens afford health care, however you deem best.  If you want, you can even fold your entire traditional Medicaid program into the block grant, to give yourself even more flexibility and control."  That's a sweet deal for the states.  Most would certainly take the block grant over the status quo.  And as a result, we'd probably cover more people than ObamaCare does.  And because everything about the proposal is optional, it would be very hard to oppose.  

Poof! ObamaCare would be voted out of existence, without a single Republican losing his or her political scalp. 

(“Obamacare Replacement Made Easy” by Dean Clancy dated January 20, 2016 published by American Thinker at http://www.americanthinker.com/articles/2016/01/obamacare_replacement_made_easy.html )

 

Every President is entitled to the confidence of the nation that he means well, and that includes Barack Obama, even when he retreats to his other home in a universe far, far away.  He just doesn’t understand what’s going on here on Planet Earth, where the rest of us live.  Obama said “The United States of America is the most powerful nation on Earth, period.  We spend more on our military than the next eight nations combined.”  That’s rich, from the man who has starved the military for resources and has set out to inflict mortal damage on the great fighting machine by remaking it to answer the sighs and whispers of feminist wishes and dreams.  President Obama knows nothing of the American fighting man, having never worn the uniform, having never heard shots fired in anger, relying on the word of senior officers who would rather switch than fight, and he has no understanding why a commander who betrays the spirit and grit of his men is worse and weaker than a cipher.  Iran’s seizure of two small U.S. Navy boats in distress and humiliating the crew in violation of international law, would have outraged any previous president, Democrat, Republican or Whig.  Obama answered only with craven thanks to the mullahs in Tehran, who lost no time to rub the President’s nose in submission and humiliation.  His countrymen were outraged even if their president was not.  They did this because they know they can get away with it, knowing Barack Obama is weak, and they don’t think he would do anything about it.  The mullahs know how badly Obama wants the deal he made with Tehran to curtail its nuclear-weapons program.   Most men, Presidents or plain citizens, would never allow such humiliation of their country to go unchallenged.  The mullahs are learning that they can get away with anything for the next 372 days, but then it’s a new President and a new regime. 

(“The befuddled president without a clue” by Wesley Pruden dated January 14, 2016 published by The Washington Times at http://www.washingtontimes.com/news/2016/jan/14/wesley-pruden-befuddled-obama-without-a-clue/ )

 

The war against radical Islamic terrorism could go on much longer than anyone is expecting, and the enemy may not give the U.S. any choice but to fight it.  Former Speaker of the House Newt Gingrich believes that combating the terrorist forces within radical Islam will take as many as 100 years.  He noted that the choice to go to war had already been made by the enemy, and the U.S. will have no choice but to respond in a massive way.  Gingrich believes that the reality of the threat posed by Islamic radicalism and the terrorism it spawns requires a very difficult, and bloody, form of vigilance.  We are having a difficult time coming to grips with how large this problem is … this is a clash of civilizations,” he said.  Despite current disagreements over how to confront radical Islamic terrorism, Gingrich is optimistic that leaders will come to his point of view, if only because things will get to a point where they have no choice but to do so.  There are two schools of thought.  The first is a small, but crucial “intellectual pattern … which has always been worried about security … has always thought America was worth defending, and needed defending.”  The other much larger portion is a growing bloc whose view is “if I think you are going to come and try to kill me, I’d like to kill you before you come and try to kill me.” Gingrich refers to this mentality as the “Roman model of defense,” the idea that “I really don’t want to fight you, but if I do have to fight you I am going to wipe you out.” He points to the U.S. bombing of large population centers in Germany and Japan as an example of how the U.S. has genuinely wished to avoid war, but reacts to threats with tremendous force.  Gingrich believes that the same mentality that has led the U.S. to fight and win against its adversaries before should be the mentality applied to the question posed by radical Islamic terrorism.

(“Why America Needs to be Ready for a ‘100-Year War’ With Radical Islam” by Russ Read dated January 16, 2016 published by The Daily Caller at http://dailycaller.com/2016/01/16/why-america-needs-to-get-ready-for-a-100-year-war-with-radical-islam/ )

 

There is so much published each week that unless you search for it, you will miss important breaking news.  I try to package the best of this information into my “Views on the News” each Saturday morning.  No updates this week to the issues sections.

 

David Coughlin

Hawthorne, NY

http://www.returntocommonsensesite.com/