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Views on the News

February 14, 2009

 

Views on the News:          

The Mainstream Media has abandoned their role as an objective news source and has become the Obama political bureau parroting Democrat talking points instead of investigative reporting.  It has taken precisely two weeks for the illusion that brought Obama to power to be exposed for the nonsense that it so obviously was.  President Barack Obama has done more in the first three weeks of his presidency to validate the suspicions of his critics than thought possible.  Three months ago Barack Obama was elected on a promise of hope and change.  After less than a month in office his message has turned to one of gloom and doom.  Worse yet Obama’s rhetoric is sprinkled liberally with comparisons that go to the extreme for the most part unsupported by facts: the biggest, the worst, the fastest, the most sweeping, the most dangerous, the most urgent or the first in history, and often predicts dire consequences if certain paths they are mapping are not followed.  His approval ratings have dropped significantly, and many voters must surely wonder why the reality of the Obama presidency has not matched the promise of the Obama campaign.  Some may even be experiencing a bit of buyers’ (or voters’) remorse.  The transformational candidate who was going to sweep away pork-barrel politics, lobbyists and corruption has been up to his neck in sleaze.  Obama has been appointing one tax dodger, lobbyist and wheeler-dealer after another.  Transition succession of missteps: Bill Richardson, Tim Geithner, Nancy Killefer, Tom Daschle reveals arrogance and insensitivity by liberal elites.  Now Senator Judd Gregg, a token Republican nominee for the Secretary of Commerce, has declined because he was not willing to sacrifice his integrity for a Cabinet position.  Initial executive orders (Guantanamo, interrogation, abortion) were quick to satisfy leftist campaign promises, but not well thought out lacking any implementation guidance.  Promises broken from day one with declaration against lobbying but appointments of long time lobbyists in key positions and vows to wait to sign bills but rush to sign the SCHIP expansion.  Obama has started by trashing his own country through grossly misrepresenting its history and grovelling to America’s enemies such as Iran, which has flicked him aside with undiluted contempt.  A Gallup poll found that Obama's executive order "allowing U.S. funding for overseas family planning organizations that provide abortion" was decidedly unpopular with only 35% approved, while 58% disapproved.  Obama supports the Freedom Of Choice Act (FOCA), which would provide unlimited, unrestricted taxpayer funding of abortion but only 9% of the public agrees with him.  Of all his objectionable actions, nothing rivals his falsely labeled "stimulus" bill, which he is trying to force upon us with fear and deception.  Stimulus has been revealed as a Christmas tree of political payback which was such an overreach that no amount of rhetoric could hide its partisan government expansion intent.  Vows to begin a new era of bipartisanship were refuted by the stimulus created without Republican input and loss of Blue dog Democrats in the House vote.  Bottom line is that Obama is more of the same politics as usual by liberals drunk with power in the new administration and American public is waking up to reality with an election hangover.  Obama may well ram a few more things thru Congress but that will be the end of his sweep.  In a matter of three short weeks President Obama has gone from upbeat and optimistic to gloomy and fatalistic.  Instead of bringing change to Washington, much of what voters have seen has been politics as usual.  Just three weeks ago, 83% of Americans approved of the way Barack Obama was handling his job, but a new USA Today/Gallup poll found 63% job approval, which translates to a 19-point drop in his first three weeks.  The stock market is also sending a message by dropping over 1,700 points since Obama’s election, but apparently this message is too subtle for our leftist leaders.  Some may be experiencing voters’ remorse, but if they had been paying attention to his record instead of his campaign promises, they would have known what they were getting all along.

 

Leading Democrat politicians openly gush about how the current economic pain has opened the door of opportunity for them to expand the powers of the federal government.  Liberals openly celebrate what they perceive as a once-in-a-lifetime opportunity to enact sweeping new legislation, create new government programs, and assert ever-greater economic control over the American people.  Obama himself recently stated, “This painful crisis also provides us with an opportunity to transform our economy.”  Congressman Barney Frank (D-Mass.), enthusiastically predicted that 2009 would be the “best year” for new public policies since FDR’s New Deal, which is ironic.  Obama has also said “Don’t come to the table with the same tired arguments and worn ideas that helped create this crisis.”  One irony is that he is one of the main culprits in having blocked Republican attempts to reform Fannie Mae and Freddie Mac several years ago.  The result was this year’s catastrophic bankruptcy of the two mortgage-lending giants, which was one of the key events that helped to plunge the country into its current economic woes.  Barack Obama said in October that there would be time after the election to identify and punish those responsible for contributing to the country’s financial woes, but instead of being punished for his malfeasance, Barney Frank is being rewarded with a lead role in reshaping economic policy.  There is a second irony in Mr. Frank’s gushing adoration of the New Deal.  If 2009 is to be the “best year” for public policy since the New Deal, it suggests that Mr. Frank celebrates both the current economic pain and the economic devastation of the Great Depression as being exactly what “the doctor” ordered - lots of pain for lots of Americans, so that Frank and Company can initiate some radical public-policy surgery.  Clearly, Frank favors legislation that enlarges the public sector over legislation that helps the private sector to thrive.  One of the many striking similarities between today’s crisis and the Great Depression is that Democratic spin-masters are engaged in an all-out propaganda campaign to blame the 2008 financial panic on market behavior rather than on the government intervention that actually caused it.  If those in power have the same dislike for markets and the same exaggerated faith in government that FDR had, and if the New Deal is to be the model for legislation in 2009, then we shouldn’t be surprised if we end up with similarly painful economic conditions.  We the people” are seeking cures from economic doctors with a well-known history of malpractice.

 

The first Bank Bailout was passed before the details were understood and then floundered in implementation and now we are presented with a second Bank Bailout with no details... what do we expect to happen?  The first iteration of the Troubled Asset Relief Program (TARP) last year was to buy these bad loans and derivatives, but it didn't work.  Nothing was bought when it became clear that paying face value was a taxpayer giveaway to banks, but paying market prices for this stuff would cause huge equity write-downs, wiping out banks which would be left with negative equity and effective insolvency.  The next round of TARP injected money onto bank balance sheets first, boosting their equity so they could absorb the write-downs to come when the toxic junk was bought later, and it didn't work.  The $45 billion to Citi and Bank of America wasn't nearly enough.  Instead, $306 billion and $118 billion loan guarantees were extended to cover the bad debt, which unfortunately, the market believes still weighs down banks' balance sheets.  Now with TARP 2.0, renamed a friendly Financial Stability Plan, the idea is to entice private capital to buy these bad loans and derivatives in an effort to set the "market price."  The new plan raises as many questions as it answers, such as what constitutes a bad asset; how does the government value the asset; should the asset be purchased for a premium, thus further exposing taxpayers, or a discount, thus causing greater write downs for already weak financial institutions?  The latest Bank Bailout plan involves several components.  One of the main features is the “bad bank,” which is designed to purchase toxic assets from banks and, therefore, remove them from the balance sheets.  The plan includes $500 billion to establish a "Public-Private Investment Fund" to purchase "toxic assets" from banks.  The initial $500 billion could probably grow to as much as $1 trillion.  Financing for the bad bank will come partially from TARP funds and partially, we are told, from the private sector, although the administration has provided little detail as to how that would work.  All of these questions are better answered by the market, not the Treasury Department.  The government also plans to inject new cash into the financial sector in return for preferred shares that will convert into common shares in several years.  The plan expands Federal Reserve's Term Asset-Backed Securities Loan Facility (TALF) program from $200 billion to $1 trillion.  Although the Obama administration has not indicated what this will entail, there is talk of capping borrowers’ monthly payments at 31 percent of their gross income and the government sharing losses with lenders in the event the debtor defaults and the lender has to write down the loan.  In this “new era of responsibility,” the government takes responsibility for everyone’s poor decisions.  This new plan represents Washington’s latest effort to use the root causes of an economic crisis to fix that very same economic crisis.  The government is prodding the financial industry to start the credit machine again, making the same mistakes again, despite the reluctance of banks to make loans to potentially unqualified borrowers.  Rather than allowing the market to establish the value of certain assets and which parties are adequately solvent, the government is trying to convince America that there is a shortcut known as the printing press.  Among the public, there seems to exist a growing sentiment that (a) the economic situation is outrageous, (b) nobody in Washington really knows what they are doing or how to fix the problem, and (c) the government is spending a lot of money bailing out irresponsible parties.

 

The so-called "stimulus plan" cooked up mostly by House Democrats is, in reality, a plan to stimulate government and make it an even greater presence (and burden) in our lives.  The appeal to speed and urgency by President Obama is an invitation to overlook details of the bill, which would accelerate the transformation of America from a capitalistic system that exalts the individual to a socialistic system that exalts the state.  There are two Americas: a poor America on socialism; and a wealthy America on capitalism.  A vast sea of perhaps well intentioned government programs, all initially set into motion in the 1960's, that were going to lift the nation's poor out of poverty.  A benevolent Uncle Sam welcomed mostly poor black Americans onto the government plantation.  Those who accepted the invitation switched mindsets from "How do I take care of myself?" to "What do I have to do to stay on the plantation?"  Instead of solving economic problems, government welfare socialism created monstrous moral and spiritual problems.  The kind of problems that are inevitable when individuals turn responsibility for their lives over to others.  The legacy of American socialism is our blighted inner cities, dysfunctional inner city schools, and broken black families.  Instead of poor America on socialism becoming more like rich American on capitalism, rich America on capitalism is becoming like poor America on socialism.  There is some kind of irony that this is all happening under our first black president on the 200th anniversary of the birthday of Abraham Lincoln.  Worse, socialism seems to be the element of our new young president.  This plan is more than a prescription for short-term spending-it's a strategy for America's long-term growth and opportunity in areas such as renewable energy, health care, and education.  Perhaps more incredibly, Obama seems to think that government taking over an economy is a new idea.  Or that massive growth in government can take place "with unprecedented transparency and accountability."  Trillions of dollars later, black poverty is the same, but black families are not, with triple the incidence of single parent homes and out of wedlock births.  This stimulus bill will add to the growing number of people dependent on government and, thus, politicians, who will never show them the way out of poverty, but give them only enough money to sustain them in poverty and then tell them if they don't vote for Democrats, those nasty Republicans will take their checks away.

 

The “stimulus” bill is a welfare “spendathon,” a massive down payment on Obama’s promise to “spread the wealth.”  The Democrat-crafted stimulus package is nothing short of a disgrace, since it spends money on all sorts of things we don't need right away, creates new permanent spending programs and flushes literally trillions of dollars down the government spending drain.  The federal government runs over 50 means-tested welfare programs, including Temporary Assistance to Needy Families; Medicaid, food stamps; the Earned Income Tax Credit (EITC); the Women, Infants, and Children food program; public housing; Section 8 housing; the Community Development Block Grant; the Social Services Block Grant; and Head Start.  A Rasmussen poll reported that just 37% favor the pending plan, 43% are opposed, and 20% aren't sure, and in the last two weeks, public opposition has grown by nearly 10%.  A Gallup Poll now found 37% wanted Congress to make "major changes" in the legislation before passing it, and 17% wanted the plan killed because they think it is too costly and won't work.  An IBD/TIPP survey finds 77% of Americans favor individual tax cuts, 67% favor business tax cuts and 63% favor capital gains tax cuts to kick-start the economy, and a Rasmussen survey found pretty much the same thing.  The so-called economic-recovery plan, which tips the scale at nearly $1 trillion (when borrowing costs are included), is the single most expensive piece of legislation in American history. It is heavy on spending and light on much-needed income-tax cuts.  Obama characterizes tax cuts as government spending, as though allowing people to keep their own money were an act of government largesse.  But what is really turning so many citizens against this legislation is the mountain of wasteful, special-interest spending it contains.  Both the House and Senate bills were loaded with an appalling amount of pork-filled, waste-ridden giveaways that will do little to nothing to create jobs or get this economy growing again:

When asked about these and other earmarked items, President Obama pushes aside their costs, saying they amounted to "less than 1% of the total package." Incredibly, he believes Democratic lawmakers were "remarkably disciplined" in putting the legislation together, but the president's 1% is based on both the spending and tax-cut portions of the House bill.  When these and other dubious expenditures are applied to just the $500 billion in spending, they consume a sizable share of the bill's funding.  Very little of the bill involves immediate stimulus or anything that might be actually stimulative; only a little over 10% of the money gets spent this fiscal year, and about 30% gets spent next fiscal year.  According to a Congressional Budget Office (CBO) report, the Obama-Pelosi bill will stimulate the gross domestic product by between 1.2% and 3.6% by the end of 2010.  However it would actually reduce the gross domestic product in the longer term, with government spending ‘crowding out” private investment.  About 30% of the money goes to transfer payments.  Only $20 billion would be spent over the next 18 months on highway construction; and about 20% of the bill doesn't get spent until 2012-19.  This stimulus bill is worse than just more big government, pork-barrel projects, expansion of the welfare system, and bailout of irresponsible state governments. It’s the road to perpetual debt.  Some think we might cover that debt with huge tax hikes.  Even House Speaker Nancy Pelosi’s most audacious tax hike plans (going beyond the lapse of the Bush tax cuts) would not cover all the new spending.  Tax increases would strangle any economic recovery.  Yet rumors abound that Obama and his allies will use the extra debt as justification for letting the Bush tax cuts expire and adding higher new taxes on top.  The hypocrisy is breathtaking.  Obama and other liberal Democrats claim that Republican objections to their debt plan have no credibility because the GOP spent way too much when it was in power.  If it’s true that the GOP overspent, how does that justify a spending spree that goes far beyond what Republicans did?  Borrowing is the centerpiece of how to pay for the enormous new spending.  Even before the “stimulus” spending, Bloomberg News calculates that government has already spent $9.7 trillion in the name of economic recovery.  The accumulating debt, over $4 trillion, is too staggering to imagine to anyone outside the Obama administration.  Democrats chastised Bush daily for leaving a huge deficit, but they plan to treble it in their first year.  The goal of this “stimulus” is "spreading the wealth," and growing the Democrat base not reviving the economy.

 

The stimulus bill abolishes welfare reform, that was so successful getting people back to work under President Clinton, and seeks to increase the welfare roll and government dependence.  It is clear that the original goal of helping families move to employment and self-sufficiency and off long-term dependence on government assistance has instead been replaced with the perverse incentive of adding more families to the welfare rolls.  States will once again be paid a bounty for expanding their welfare rolls.  The stimulus bill contains a half dozen or more new welfare entitlements or expansions to benefits in existing programs.  The pretense that these welfare expansions will lapse after two years is a political gimmick designed to hide their true cost from the taxpayer.  If these welfare expansions are made permanent--as history indicates they will--the welfare cost of the stimulus will rise another $523 billion over 10 years.  Once the hidden welfare spending in the bill is counted, the total 10-year cost of welfare increases will not be $264 billion but $787 billion.  The overall 10-year fiscal burden of the bill (added to the national debt) will not be $814 billion but $1.34 trillion.  To this figure must be added the interest on the debt issues to finance this spending deluge.  This one-year spending explosion will not be a byproduct of unemployment generated by the recession but the result of a deliberate expansion of welfare eligibility and benefits by President Obama and Congress.  A major new welfare program in the stimulus bill is Obama's "Make Work Pay" refundable tax credit.  At a cost of around $23 billion per year, this credit will provide up to $500 in cash to low income adults who pay no income taxes, for the first time, giving significant cash to able-bodied adults without dependent children.  Since most of these individuals have little apparent need for assistance, the new credit represents "spreading the wealth" for its own sake.  Even without the stimulus bill, means-tested welfare spending in the U.S. is already at a historic high and growing rapidly.  The stimulus bill is a Trojan horse that deliberately exploits anxiety about the current recession to conceal the destruction of the foundation of welfare reform and a massive expansion of the welfare system.  

 

As a first step to nationalize health care, the stimulus bill creates a new bureaucracy, the National Coordinator of Health Information Technology, to make sure your doctor is treating you the way the Federal government thinks is appropriate and cost effective.  This provision could lead to restrictions on patients’ access to treatments and physicians’ and other providers’ ability to deliver care that best meets the needs of the individual patient.  While your doctor is chiefly concerned with keeping you alive and healthy, the government is intent on saving money.  A late add to the stimulus bill was a provision to create a national database and a plan for the utilization of an electronic health record (EHR) for each person in the United States by 2014.  Medicare currently pays for treatments considered safe and effective.  The stimulus bill includes instead a cost-effectiveness standard set by the new Federal Coordinating Council for Comparative Effectiveness Research.  A federal health care board proposed and envisioned by several leading Democrats will result in comparative effectiveness research being used to ration health care in America. Rather than patients and doctors making decisions about what treatments or drugs make sense for you and your loved ones, a federal health care board will control which health care options are available.  The liberal approach assumes that “Seniors should be more accepting of the conditions that come with age instead of treating them.”  Americans, he urged, should follow the example of Europeans and accept “hopeless diagnoses” instead of trying experimental treatments that could save their lives.  It approves or rejects all treatments depending on the number of years it decides the patient is likely to benefit from it.  Treatments for older patients are approved less often because the agency believes they won’t live long enough to justify the cost.  This is a self-fulfilling projection since denying the treatment could result in early death.  What is really sad is that AARP refuses to acknowledge the shortcomings of this comparative effectiveness approach and is shilling for this Democrat genocide of seniors.  Comparative Effectiveness Research, shamelessly concealed in the stimulus bill, marches America toward that dreaded future when our most private medical decisions are made by far-off elites in Washington, D.C.

 

Obama’s policies involving political payback instead of finding genuine solutions are now demonstrating to all of us that the vagueness of his campaign speechmaking was merely the work of a hollow wordsmith after all.  The stimulus plan almost certainly will do little to boost employment, but it will give a huge boost to inflation.  We desperately want to believe that presidents can take steps to manage the economy back to low unemployment and prosperity.  We therefore demand action, even if such action always leads to inflation that makes economic problems worse.  Chalk the misperception up to President Franklin Roosevelt (FDR).  He was the first president to operate on the hubristic presumption that a president could plan and successfully manage the entire economy to prosperity by imposing the liberal-progressive ideology of social justice.  Once again no real Republicans voted for the Senate stimulus bill showing party solidarity with their House compatriots.  Senators Susan Collins, Olympia Snowe, and Arlen Specter are not labeled “Republicans In Name Only (RINOs)” for nothing so they can not be counted as real Republicans.  CBS News survey reported that 55% of the nation believed the relief package should focus primarily, if not entirely, on tax reductions.  Tucked within the House economic stimulus bill is a clause requiring state and local public works agencies to buy American iron and steel for their reconstruction projects, and the Senate expanded it to all manufactured goods.  When this logic was used during the 30s the result was a trade war with Europe, which increased its tariffs on U.S. products, ultimately, U.S. exports and imports decreased by more than 50% in a single year, transforming the recession into the Great Depression.  Senator Claire McCaskill (D-Mo.) admitted that some of the spending in the $819-billion stimulus passed by the House last week had nothing to do with stimulating the economy but represented important federal spending priorities needed to “make-up for a starvation diet under the Bush Administration.”

 

Obama is already lowering expectations so voters will not hold him accountable when the American economic performance does not live up to his inflated program projections.  Even while calling for the urgent passage of the $800 billion-plus economic stimulus package, the Obama administration and its liberal allies are laying the groundwork to neutralize criticisms should it fail.  "[B]y the midterm elections we're probably not going to see an economy that's better than now," former Clinton Labor Secretary Robert Reich conceded. "I mean, not that the stimulus program will have failed, but that the stimulus program, even if it succeeds, will not actually kick in. It will not get the economy better than it is now. Without the stimulus, the economy could be far worse in two years than it is now."  Obama wrote in a Washington Post op-ed that if Congress didn't pass the stimulus package: "Our economy will lose 5 million more jobs. Unemployment will approach double digits. Our nation will sink deeper into a crisis that, at some point, we may not be able to reverse."  Obama said "Recovery will likely be measured in years, not weeks or months."  If the economy is still in trouble as the 2010 elections approach, Democrats will argue that eight years of Republican rule left the country in such awful shape that Democrats will need more time to clean up the mess.  If unemployment is in the 7% to 9% range, they'll say, without their policies, it would have been 12%, or perhaps higher.  Recessions normally end after about two years and this one is supposed to have started in December of 2007, so the question is how long Obama needs to elongate this recovering economic recession to justify his socialism expansion?  The worst of all the horrible things about Obama's "stimulus" bill is that even if it worked to stimulate the economy beyond the President's wildest expectations, it would cause a further explosion of the national debt, which would become a worse "catastrophe" than the one this bill promises to alleviate.

 

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