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Views on the News

January 24, 2009

 

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It is ironic that Martin Luther King dreamt of “one day in a nation where they will not be judged by the color of their skin but by the content of their character” but the new President was elected primarily because of the color of his skin, since very little was actually known about his character or his ideas.  If truth be told, Obama’s character could not have been judged based on his sparse record of achievement, so the only clue was the unbroken string of Marxist, socialist, anti-American mentors.  His only real achievements on his resume were writing two autobiographies and getting elected to a series of Chicago political offices.  The combination of the hype and propaganda surrounding the man and the hype and propaganda regarding the economic crisis we are in present a unique hazard for an unchecked, unexamined and unopposed expansion of government power and a radical shift in the foundations of our America’s political culture.  Barack Obama, more than any other politician in American history, is a product of, and partner with, the media.  In this election, the Mainstream Media (MSM) dispensed with all pretext of fairness and ran interference for Obama.  The MSM protected him from attack, examination, rumor, fact, his own positions, inexperience, and history, and gleefully promoted him as Hope Incarnate, a panacea for what ills all the world.  One of the most disturbing things I have ever seen was the MSM, in the days after the election, marveling at how little they really knew about that enigma, Barack Obama.  In short, America has an unknown leader that the MSM will not criticize and the Congress will not check, ruling during a crisis that has killed all restraint, at the head of a narcissistic cult of personality tied up in the untouchable subject of race.  The defining passage of Obama's speech included a "we" in every sentence, and it was soon apparent that he was not talking about "We the People" but "We the Government."  Obama’s inaugural speech was like “musak” and a harbinger of things to come: flat, full of platitudes and clichés, over-hyped, un-impressive, and basically forgettable!

 

A common characteristic of all authoritarian regimes is the need to control their populace by some crisis, real or imagined. Could it be that the genuine financial crisis we now face will give Obama and the Left a ready-made excuse to regulate, tax, socialize and otherwise control our lives in unprecedented ways?  According to White House Chief of Staff Rahm Emanuel, this is certainly a crisis too great for the Left to waste.  This could be a once in a lifetime opportunity to push their agenda wholesale upon the American people.  It is not the present economy that most disturbs people, because it's bad but not unprecedented.  Despite recent increases, the unemployment rate, 7.2% in December, remains below the average peak unemployment of 7.6% during the previous 10 post-World War II recessions.  What unsettles people is the vague notion that we're headed into something new, menacing and enduring.  Unemployment, predicted to reach 9% or more, will remain high.  Expansion will resume grudgingly, if at all.  Income gains will be slight or nonexistent.  Precisely this specter explains why the word "depression" is so routinely deployed, even though we're a long way from the bread lines of the 1930s.  However the Great Depression also signifies a period when we lost control.  For all the New Deal programs, the Depression lasted a decade and ended only with World War II.  Even in 1940, unemployment averaged almost 15%.  It's the worry that government won't triumph over today's economy that justifies, for many people, the bleak analogies.  Obama proposals, if enacted, could conceivably grow the total government spending to more than 40 percent of the GDP.  Obama seems to believe we can borrow our way out of a crisis that was created by borrowing in the first place, but it is a house of cards.  The combination of top heavy Democratic majorities in Congress and a mood of public fear bordering on panic over the financial crisis and the looming depression will speed his legislation through a compliant Senate and House.  We are headed either for a Democrat lead national bankruptcy or inflation so great that the dollar becomes worthless.

 

The basic pattern of the Bailout Depression continues: the more the government tries to stimulate it, the more depressed the economy gets.  The current financial situation was created by a perfect storm of mutually reinforcing trends and major policy mistakes: loose monetary policy (years of negative real interest rates in a growing economy); socially engineered housing policy; poorly implemented regulation; the rapid growth of leverage, opaque and technically deficient derivatives, and the shadow banking system; lax investor diligence and bank supervision; poor governance and misaligned incentives; and outright fraud.  The low interest rates subsidized massive short-term borrowing, led investors to reach for yield, increased demand for allegedly safe securitized mortgages, drove up housing prices, and reinforced the ever-looser lending standards championed by government.  Loans for subprime mortgages, credit cards, autos, commercial real estate, and private-equity financings were made on the projection or hope by banks, businesses and households that strong economic growth, rising housing prices and easy short-term credit would continue forever.  However according to the latest report in the New York Times, after hundreds of billions of dollars in spending, the bailout is not working.  The banks who were supposed to be saved by the first round of bailouts are actually in worse shape and need more federal cash to fill the black holes that are their balance sheets, warning that they are simply too big to fail.  However, whatever 'devastating' consequences these banks are dreaming up and pushing on Capitol Hill regarding their own collapse will be nothing compared to the collapse of our currency if we keep debasing it through these foolish bailouts.  The world will not come to an end without this or that bank.  Congress should give Obama the Bailout funds, weapons in the war against the depression, but ought to attach an amendment prohibiting the federal government from using the leverage the funds give it, and any equity it may acquire in these companies as a result of these funds,  to influence corporate lending, hiring, management or other practices.  The crucial difference between the approach favored by House Republicans and former Speaker Newt Gingrich (R-Ga.) and the bailout that was passed in October of last year was that the Republicans contemplated using insurance and loans, not outright grants, to shore up endangered companies.  One key reason for their resistance to giving away grants was the realization that the Democrats would demand that the “taxpayers get something back” for all the capital they were giving banks.  Inevitably, they realized, federal aid would come with a demand for government-owned stock in the companies receiving the assistance.  Now that the feds have become stockholders in our major banks and insurance companies, the question is: What will they do with this power?  "More accountability" means more government management of the banks; more restrictions means more measures designed to reduce the profitability of the banking industry and drive out the best talent.  Hanging in the balance will be whether the United States continues to follow free-market economics or chooses to emulate the no-growth, government-dominated economies that prevail in Western Europe.  Will we cash in our capitalist system for a socialist democracy? We want bailouts, not a government takeover in disguise.  When will the bailout get around to fixing the root causes so this will not happen again and punish those who enabled by their willful lack of fiduciary oversight of Fannie Mae and Freddie Mac?  The shady, negligent, and criminal behavior by the crooks who oversaw Fannie Mae and Freddie Mac are Senator Dodd and Congressman Frank.  If these thugs had any personal or professional ethics, they would have resigned.  If their behavior wasn't malicious, reprehensible and criminal enough, these same elected bandits are now bilking taxpayers by making us pay to clean up their horrendous ethical and soulless behavior.

 

We all know how we got into this economic mess; that we spent too much, borrowed with abandon and acted like the bills would never come due. The prescription for getting out is certainly not spending even more, borrowing even more and acting like the bills will NEVER come due?  President-elect Barack Obama’s proposed $775 billion stimulus package, being sold as a cure-all for the ailing economy, is little more than a checklist for funding the pricey social-services agenda that he promised during his campaign.  Some experts say that the Trojan horse of pork and welfare spending will ultimately worsen the recession and drive the nation deeper into debt, according to financial experts.  Here are just a few of the programs and projects that have been included in the House Democrats’ proposal:

This legislation appears to blanket government programs in spending with little thought toward real economic results, job creation or respect for the taxpayer!  Less than half of Americans support this proposal according to polls, and many view it as yet another bailout like the unpopular one for bankers last fall.  Just as New Deal spending programs did nothing to lift the United States out of the Great Depression, Obama's proposed "stimulus" package will simply dig us into a deeper financial hole.  Obama's proposed stimulus promises to create 3 million new jobs, but even if it reached that implausible goal, the price tag would be over $300,000 per job.  When questioned about jobs creation in the Democrat bill, the spokesman admitted, ”We don’t have any estimate of the economic effect that this legislation would have on our economy, whether it would create any growth in our economy at all.”  The Congressional Budget Office released a report indicating that Obama's idea from the 1930s of trying to stimulate the economy in the short term with hundreds of billions in increased infrastructure spending will not work because most of the money cannot possibly be spent in the short term, since much if not most of it will still not be spent by 2012.  The most pernicious of Obama’s proposals will be the massive Make Work Pay refundable tax credit. Dressed up as a tax cut, it will be a national welfare program, guaranteeing a majority of American households an annual check to "refund" taxes they never paid. And it will eliminate the need for about 20% of American households to pay income taxes, lifting the proportion that need not do so to a majority of the voting population. Unlike the Bush stimulus checks, this new program will be a permanent entitlement, a part of our budget that can only go up and never down. Politically, it will transform a majority of Americans from taxpayers, anxious to hold down government spending, into tax eaters, eager to reap new benefits. Obama warns that unless his stimulus package is passed, we would face something on the dimensions of the Great Depression (during which America endured up to 24 percent unemployment and up to 13 percent contraction of gross domestic product in a single year), but the question remains is whether these changes will in fact cause this economic collapse he fears, rather than avoid it?

 

Socialism is creeping into the United States federal government structure at an accelerating pace.  2009-2010 will rank with 1913-1914, 1933-1936, 1964-1965 and 1981-1982 as years that will permanently change our government, politics and lives.  Just as the stars were aligned for Wilson, Roosevelt, Johnson and Reagan, they are aligned for Barack Obama.  Simply put, we enter his administration as free enterprise, market-dominated, laissez-faire America.  We will shortly become a socialist democracy in which the government dominates the economy, determines private sector priorities and offers a vastly expanded range of services to many more people at much higher taxes.  Obama will accomplish his agenda of "reform" under the rubric of "recovery."  Using the electoral mandate bestowed on a Democratic Congress by restless voters and the economic power given his administration by terrified Americans, he will change our country fundamentally in the name of lifting the depression.  Obama’s stimulus packages won't do much to shorten the downturn -- although they will make it less painful -- but they will do a great deal to change our nation.  In the name of a largely unsuccessful effort to end the depression, Roosevelt passed crucial and permanent reforms that have dominated our lives ever since, including Social Security, the creation of the SEC, unionization under the Wagner Act, the federal minimum wage and a host of other fundamental changes.  Obama's record will be similar, although less wise and more destructive.  He will begin by passing every program for which liberals have lusted for decades, from alternative energy sources to school renovations to infrastructure repairs to technology enhancements.  Freed of any constraint on the deficit -- indeed empowered by a mandate to raise it as high as possible -- Obama will do them all rather quickly.  It is not his spending that will transform our political system; it is his tax and welfare policies.  In the process, he will create a permanent electoral majority that does not pay taxes, but counts on ever expanding welfare checks from the government.  The dependency on the dole, formerly limited in pre-Clinton days to 14 million women and children on AFDC, will now grow to a clear majority of the U.S. population.  Will he raise taxes? Why should he?  With a congressional mandate to run the deficit up as high as need be, there is no reason to raise taxes now and risk aggravating the depression.  Obama will raise spending and increase the deficit so that conservatives cannot cut taxes.  When the economy is restored, he will raise taxes with impunity since the only people who would have to pay them would be rich Republicans.  In the name of stabilizing the banking system, Obama will nationalize it.  Using TARP funds to write generous checks to needy financial institutions, his administration will demand preferred stock in exchange.  Preferred stock gets dividends before common stockholders do.  With the massive debt these companies will owe to the government, they will only be able to afford dividends for preferred stockholders -- the government, not private investors.  Devoid of private investors, these institutions will fall ever more under government control.  It is the health care system that will experience the most dramatic and traumatic of changes.  Without a lot more doctors, nurses, clinics, equipment and hospital beds, health resources will be strained to the breaking point.  As government imposes ever more draconian price controls and income limits on doctors, the supply of practitioners and equipment will decline as the demand escalates.  Price increases will be out of the question so the government will impose health care rationing, denying the older and sicker among us the care they need and even barring them from paying for it themselves.  Obama will also move to change permanently the partisan balance in America.  He will move quickly to legalize all those who have been in America for five years, albeit illegally, and to smooth their paths to citizenship and voting.  He will also enact the check-off card system for determining labor union representation, repealing the secret ballot in union elections.  The result will be to raise the proportion of the labor force in unions up to the high teens from the current level of about 12 percent.  Finally, he will use the expansive powers of the Federal Communications Commission to impose "local" control and ownership of radio stations and to impose the "fairness doctrine" on talk radio.  The effect will be to drive talk radio to the Internet, fundamentally change its economics and retard its growth for years hence.  But none of these changes will cure the depression that the Democrats caused and prolonged for political advantage.  It will end when the private sector works through the high debt levels that triggered the collapse in the first place.  And then, the large stimulus package deficits will likely lead to rapid inflation, probably necessitating a second recession to cure it. So Obama's name will be mud by 2012 and probably by 2010, as well and the Republican Party will make big gains and regain much of its lost power. But it will be too late to reverse the socialism of much of the economy, the demographic change in the electorate, the rationing of health care by the government, the surge of unionization and the crippling of talk radio.

 

Republicans need to become identified as the party of the middle class by embracing basic conservative principles and abandon the scorched-earth rhetoric.  Republicans must develop economic policies that are more relevant to today's middle class.  Republicans need to modulate the social and cultural message; not jettison; not reverse; modulate.  Republicans have to adopt an environmental ethic of their own, recognizing a global shift in consciousness on environmental issues.  Republicans need to regain their historic advantage as the party of competence.  Republicans need to continue to be champion of limited government.  If Obama was really open to ideas that work, he would look very close at a Flat Tax to replace the entire maze of confusing, complicated, counterproductive federal taxes.  Federal tax codes today are wildly dysfunctional and extremely unpopular, and replacement with a single rate for business net sales and personal income tax rates of about 12% would allow all other federal taxes to be completely eliminated without any loss in revenue.  Conservative realists understand that doing nothing would be far less destructive to our long-term financial health than throwing good money after bad under the illusion that the government mint is a panacea.  Republicans must have the courage to stand tough against the further socialization of our health care system and offering market reforms instead, even against the demagogic claims that they are without compassion for the "uninsured."  If not, they will be contributing not only to the permanent demise of America's health care system but also to possibly the end of America's free market tradition.  Since Obama has forsaken the need for a honeymoon period and instead has embarked on a fast start, Republicans must respond in kind rejecting false need for bipartisanship to pass of harmful legislation as a weapon to intimidate principled opposition.  Congressional Republicans have nothing to lose by standing up for their principles saying NO! loudly and often to the avalanche of legislation that Obama plans to unleash as soon as possible.

 

No previous president has been treated as brutally, viciously, and unfairly as George W. Bush.  Bush 43 endured a deliberate and planned assault on everything he stood for, everything he was involved in, everything he tried to accomplish.  Those who worked with him suffered nearly as much (and at least one, Scooter Libby, was convicted on utterly specious charges in what amounts to a show trial).  His detractors were willing to risk the country's safety, its economic health, and the very balance of the democratic system of government in order to get at him.  They were out to bring him down at all costs, or at the very least destroy his personal and presidential reputation.  At this they have been half successful, at a high price for the country and its government.  Bush is the sole American chief executive, perhaps the sole leader in world history, to have had a personality disorder named after him, the immortal Bush Derangement Syndrome.  Few at this point recall that this was an actual psychological effort at diagnosing the president's effect on the tender psyches of this country's leftists.  Congress may have a terminal case of Bush Derangement Syndrome with Democrat House leadership Congressmen Steny Hoyer and John Conyers releasing a report documenting a litany of alleged “abuses” by President Bush and his administration.  Totally ignoring the Democrat genesis of the housing bubble and financial collapse, Congressmen Hoyer and Conyers want to blame everything on the prior administration.  Bush hatred involves a number of factors that will be debated by historians for decades to come.  One component that cannot be overlooked is ideology, specifically the ideologization of American politics.  It is no accident that the three most hated recent presidents are all Republican.  These campaigns are yet another symptom of the American left's collapse into an ideological stupor characterized by pseudo-religious impulses, division of the world into black and white entities, and the unleashing of emotions beyond any means of rational control.  The demonization of Bush, and Reagan, and Nixon, is the flip-side of the messianic response to Barack Obama. 

 

If you are sick and tired of government and politics as usual, read my web site with its individual issue analysis and recommendations at: http://www.returntocommonsensesite.com Remember this site is updated every Saturday. Individual issue updates this week include:

 

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David Coughlin

Hawthorne, NY