RTCS

Views on the News

April 25, 2009

 

Views on the News*  

In our recent election, many Americans voted for a Savior, not a president.  Americans were enamored with the idea of making history in this election, and in that sense we have gotten what we wanted.  While Obama's policies periodically, and embarrassingly, leaked out before November 4, during the campaign itself he actually tried to hide most of those policies.  Instead, he won with the American people using empty slogans: "Hope."  "Change."  "Hope and Change."  "We are the Change."  Obama successfully abandoned substance and won convincingly with a content-free message. Unfortunately, Barack Obama is the wrong man, and this is definitely the wrong time.  Security measures like The Patriot Act, the Military Commissions Act, recent revisions of the Posse Commitatus Act, and National Presidential Directive 51 have all served to strengthen our national security in the short term, but with long-term threats to our individual liberties and great risk of abuse in the wrong hands.   Now we have handed this power over to the most unabashedly leftist radical ever to hold Presidential office.  Barack Obama has shown remarkable skill in manipulating domestic events and creating artificial crises to enhance his own power.  And what he plans to do with that power, evidenced by his own words and actions, is alarming.  Obama's most transparent strategy is to cement American citizens' economic dependence on the government, and therefore on him.  His tax policies and private sector takeovers ensure jobless rates that will rival those of the Depression era, greatly increasing the number of individuals who will look to government for their survival.  In order to achieve his dream for America, Obama has deepened and prolonged an otherwise fixable economic crisis, creating menacing conditions for social disintegration and chaos.  We knew before Obama was elected that he had an “empty resume;” we suspected that he was long on platitudes and short on core principles as an “empty suit;” but now we are asking whether he is a teleprompter filled puppet with an “empty head?”

 

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George Orwell’s “1984” offers definitions that describe modern day liberalism and many of its beliefs and explaining the disconnect between liberal words and observed actions.  “To deny objective reality and all the while to take account of the reality which one denies” describes “double think” in Orwell’s allegory of Communism.  This is how Congress can restrict access to national energy sources – oil, natural gas, and coal, while claiming it wants the USA to be “energy independent.”  “The power of holding two contradictory beliefs in one’s mind simultaneously, and accepting both of them” is another example would allow a belief in “global warming” despite the fact that the planet has been cooling for a decade.  “To tell deliberate lies while genuinely believing in them, to forget any fact that has become inconvenient, and then, when it becomes necessary again, to draw it back from oblivion for just so long as it is needed” is an Orwell quote that describes present day environmentalists.  This describes anyone who says that carbon dioxide, CO2, is responsible for a warming that is not occurring or that this gas could cause it.  Obama demonstrated this Orwellian trait when he signed an emergency bill entitled “recovery and reinvestment” when it is a massive liberal wish list of spending that contained little for recovery and less for reinvestment.  Now Treasury Secretary Geithner wants to covert TARP money in the form of non-voting preferred stock into common stock with full voting rights as a form of back-door nationalization of major banks.  With bank profits up and financial institutions trying to give back their money, there is no need for the conversion of the government stock from preferred to common, except to advance the political socialist agenda of this   dministration.  Socialism requires that your individual liberties be subordinated to the needs of the political state.  Whatever its proclaimed intentions for the betterment of society, socialism must diminish your range of individual political and economic freedoms, transferring them to state bureaucrats who promulgate regulations.  Central planning necessary for reducing unemployment, imposing socialized medicine and “green” environmental regulations, along with compelling businesses to permit labor union takeovers of their workforces, cannot become effective without subordinating the rights of individuals to the goals of state planners.  Obama may not like the term socialism but calling what he is doing corporate capitalism or state capitalism or government-directed capitalism just mislabels this huge change from the American economic tradition.

                                                                                                                                                           

The message at the Tea Parties was one of great skepticism about the efficacy of the government's remedies and great apprehension about the expense.  The Tea Party protests showed that there are many people across the country (in all 50 states) that are not satisfied with the kind of "change" the election of the Obama administration brought them.  We learned that when liberal unions bus people to protests and when some liberal groups even pay people to protest, the media does not deem that influence worth reporting.  Instead of discouraging the protesters, the shabby media treatment only confirmed what they already knew about media bias and in the process the liberal media showed that bias clearly enough for even those who pay just passing attention to politics to see.  The scale of the federal response to the crises has come as a frightening surprise to many Americans, who suspect the cure will be worse, and less transitory, than the disease.  The protests stemmed from anger about taxes under Obama, even though his tax plan calls for cutting income taxes for most Americans, and not raising them on the rest until 2011.  Their true dismay is about the mushrooming of federal outlays, which the demonstrators regard as a future tax increase in the making.  Obama claims that he will cut the deficit in half, to $533 billion, by the end of his first term, but the CBO says the deficit will then resume its upward trajectory, reaching $1 trillion by 2018 and nearly doubling the national debt over the next decade.  The realism about expenditures is the encouraging thing about the protests.  The Tea Party’ers took the view that whatever Washington plans to provide, they don't want -- not at this price, anyway.  The country has gotten into a painful fiscal predicament because both parties have let us believe we can have more and more goodies from Washington at no additional cost.  Some of the best signs and slogans seen at the Tea Parties:

o   Free markets not free loaders!

o   When Obama runs out of rich people to tax, he’ll be coming after YOU!

o   Barney Frank—Bernie Madoff…And the Difference Is?

o   My neighbor bought a Big House, and all I got was his Lousy Payments

o   Don’t take my money; take my work ethic!

o   Time to read the bill before you sign it.

o   Honk if I am paying Your Mortgage!

o   Stop spending my grandson’s future.

o   Read my lipstick—Give me my money and keep the change!

o   Simply with Fair Tax—Tax consumption not production!

o   If Obama screws up Health Care, where will All the Canadians Go?

o   Attention Washington: You have run out of our money!

o   Give me liberty not debt!

o   Please don’t tell Obama what comes after a trillion!

o   I voted for hope and change and all I got was higher taxes and more debt.

o   If I don’t pay my taxes, can I get a bailout or cabinet position?

o   Obama Lied and My 401K Died!

o   If only Obama would bow to the Constitution!

o   War on Achievement is Not the Answer!

o   Stop using taxpayer money as petty cash to buy votes!

o   Save Trees! Stop Printing Money!

o   In God We Trust—In Obama We Doubt!

Like Bernie Madoff's investors, we now face the bleak truth that the comfortable future we expected is gone.  Everything the federal government is doing will be forcibly extracted from our future earnings.  Now is the time for Republicans to capture the Tea Party spirit into a new “Contract with America” to transform America back to its conservative roots, before a third party emerges to marginalize conservatives into irrelevancy.

 

There are two types of people in the world: demand-siders and supply-siders, which separates them in vastly different ways about life, human interaction, and politics.  Demand-siders tend to be pessimistic, fret about greed, worry about leaving people behind, see everything as win-lose, and worry about running out of resources.  Demand-siders believe government can fix all of these issues.  Supply-siders tend to be optimistic, get excited about others’ achievements, have faith that people can succeed, and believe things can always get better.  Supply-siders believe government often impedes success.  While demand-siders think that stimulating demand by taking from one group and giving to another group is a wise policy, they paradoxically also have a zero-sum view of the world.  Demand-siders think that when the rich get richer, the poor get poorer, but also think that taxing the rich more makes everyone better off.  Supply-siders believe human interaction is not about materialism, but motivated by the fire of invention, innovation, and creativity.  Supply-siders get excited about the future and remain mostly optimistic because they believe in human ingenuity.  Supply-siders look for ways to encourage risk-taking, wonder where the next invention will come from, and believe that opportunity is endless.  No supply-sider I know enjoys watching people lose their jobs or witnessing industries wither, but they know that it is inevitable.  Moreover, supply-siders know that the more government intervenes in the process, the longer the pain will last.  Demand-siders believe in central control because they have an “add-’em-up” view of economic output.  In the end, supply-siders have faith in individuals, especially in times of crisis, while demand-siders have faith in government. What do you think?

 

The root cause of the current financial crisis was caused by government intervention in the free market, causing the housing bubble to burst and the financial companies, starting with Fannie Mae, Freddie Mac, and AIG, that enabled them to begin to implode, and sparked by the pre-election oil shock.  Beware of geeks bearing formulas, which is the key lesson learned from the financial crisis.  The "quants" who devised the risk models that induced so many financial institutions to buy mortgage-backed securities thought they had reduced risk down to zero.  Congress is poised, at least if the Obama administration gets its way, to pass major new laws on carbon emissions and on health care whose success depends on geeks bearing formulas.  The risk models of the financial geeks, the climate models of the environmental geeks and the medical models of the health-care geeks are all ultimately forms of social science. But social science ultimately is not science but art.  The climate modelers work with historical data that do not necessarily predict future weather patterns. The medical statisticians cannot know the human factors that prompt a sensitive clinician to make lifesaving decisions.  Geeks with formulas can help us understand the world better and make informed decisions.  Unfortunately the collapse of our financial institutions tells us that we'd be fools to rely on quants completely in ordering our great institutions.  Once again Obama wants to repeat this reliance on “quants” to “predict” and to act to address future bubbles.  Government has no business picking winners and losers in any private industry.  When has the federal government overseen or operated anything more efficiently than the private sector?  There is also no reason to believe that the “quants” who inaccurately modeled the economy in the past will be any more accurate predicting how the economy will act in the future.

 

The unprecedented explosion of the US fiscal deficit raises the specter of high future inflation.  According to the Congressional Budget Office, the president’s budget implies a fiscal deficit of 13% of gross domestic product (GDP) in 2009 and nearly 10% in 2010.  Even with a strong economic recovery, the ratio of government debt to GDP would double to 80% in the next 10 years.  There is ample historic evidence of the link between fiscal profligacy and subsequent inflation.  The key fact is that inflation rises when demand exceeds supply.  Deficits have reached a level that economists haven’t really studied before.  Budget gaps are a kind of Ponzi scheme, when the federal government spends more money than it collects in tax revenue.  The plan is to pay this additional spending back with future taxes, just as with any Ponzi scheme, but there will inevitably come a time when the con is exposed, along with all the participants’ losses.  Obama’s press extravaganza to focus on $100 million budget tuning is an insulting distraction from the sheer volume of the impending deficit since it impacts less than one tenth of a percent of the deficit!

 

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Obama’s new health care insurance program would be modeled on the generous, and expensive, plan currently enjoyed by federal employees.  Americans could sign up for this public option through a new National Health Insurance Exchange.  The Exchange would serve as a government-run clearinghouse that connects private and public insurance providers with individual customers who may not have easy access to health insurance, like those who work at small businesses or the self-employed.  Customers would naturally gravitate toward plans that provide the most benefits for the lowest cost.  The trick is that legislators will impose a host of burdensome regulations on policies sold through the Exchange that will drive up costs for companies that participate.  Democrats have indicated that insurers will have to comply with "community rating" (no risk pools) and "guaranteed issue" (no reflection of pre-existing conditions) regulations in order to sell their policies through the Exchange.  Most patients would simply avoid purchasing insurance until they got sick.  After all, if you can’t be turned down when you are sick, why should you bother wasting money on insurance when you don't need it?  Insurance premiums would gradually become more and more expensive, because the only people in the insurance pool would be ill.  The average state-level community rating ordinance increases insurance premiums by over 10 percent.  The average guaranteed- issue ordinance drives up premiums a whopping 227 percent.  Another trick employed is for Exchange officials to also impose a battery of benefit mandates, which would require insurance plans to cover certain procedures that are hardly critical components of a good health insurance policy, like acupuncture, chiropractic services, or hair prostheses.  Such mandates will also drive up insurance prices.  All this government meddling will force private insurers to raise prices to levels that will simply not be competitive with the public plan.  After all, the government-run public plan won't have to resort to unpleasant options like hiking prices to cover its costs.  It will be able to tap the public purse to keep prices artificially low.  Understandably, customers will flock to the lower-priced government alternative.  Private insurers will slowly exit the marketplace as they find themselves "crowded out," or unable to compete with a government plan that has tilted the rules in its favor.  Before long, the government "public option" would be the only game in town.  Americans overwhelmingly indicated that they're not interested in moving toward a Canadian-style, government-run, single-payer healthcare system, replete with waiting lists and rationed care.  Among the first lessons medical students learn is "First, do no harm."  If congressional Democrats ram their healthcare reform plan through Congress without allowing for the debate it deserves, the American public will be quite harmed indeed.  It is imperative that the free market be allowed to operate in health care unimpeded by government social intervention such as “community rating” and “guarantee issue.”  Obama’s universal health care proposal would increase costs by perhaps $1 trillion.  Spending hundreds of billions more now on healthcare will hurt job creation during a period of already high unemployment.  Obama administration’s plan to add 47 million people to the health-insurance rolls may kill hopes for any sustained economic recovery.

 

Obama is an embarrassment as he meets with foreign dignitaries on his self loathing “O’pology Tour” or “Speak Softly, and Carry a Big Apology” accomplishing nothing of substance, but positioning himself for later capitulation.  President Obama’s two overseas trips to Europe and Latin America make him appear more like a diplomatic tourist than the leader of the free world.  He met heads of state, made speeches, attended summits, conducted town hall meetings, but accomplished nothing that furthers U.S. interests abroad.  Apparently that new approach includes criticizing America, groveling to dictators and rogue leaders, allowing others’ agendas to trump ours, forgetting history, and a willingness to sacrifice Americans and their money while giving allies a pass.  Obama is trading an attempt for personal popularity with national respect, with no prrof that this trade will ever be successful.  French President Nicholas Sarkozy describes Obama’s ideas as unoriginal, unsubstantial and overrated.  Cuba’s Fidel Castro has blasted the new U.S. president for showing signs of “superficiality.”  It really does sound fantastic and silly that anyone could really believe that the United States has brought terrorist wrath upon itself by doing anything other than allying with Israel.  It's even more ludicrous to believe that if we just start being nicer, we could improve our international image and make ourselves safer, especially when you consider that being nicer entails lowering our guard and playing into the enemy's hands on a number of fronts.  But this is precisely the kind of silliness that is driving Obama's foreign policy.  From the beginning, Obama has been apologizing to the world for the "arrogance" and brutality of the United States; bowing before, kissing and warmly accepting America-bashing books from foreign kings and dictators; flirting with nuclear disarmament while rogue nations rush, undeterred, to join the nuclear club; contemplating serious defense budget cuts across the board, which could jeopardize essential weapons systems; and now releasing internal CIA memos detailing enhanced interrogation techniques, which have demonstrably prevented attacks and saved lives.  His so-called new tone in international relations should make Americans uncomfortable and explains why he has failed to deliver anything of substance from his travels or his fledgling foreign policy.  The net effect of this strategy is to weaken U.S. global perception, undermine American leadership, and energize our potential enemies.  We have a return of Jimmy Carter’s post-national idealism with the Teflon delivery of Bill Clinton, but this time with the charismatic face of a Ronald Reagan.

 

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President Obama and Defense Secretary Gates are forcing a “cramdown” of our Pentagon budget that sells our military’s ability to defend America dangerously short.  Obama and Gates are asking the Pentagon to pay for the war under the base budget, that covers basing, personnel and weapon system spending, instead of the supplemental war appropriation.  Meanwhile Obama has proposed a supplemental of about $83 billion to pay for the war this year.  The meaning of these numbers is that if the war continues in Afghanistan or Iraq or anywhere else, or if any other conflicts break out, the Pentagon will have to offset the cost of the fight by cutting other spending.  Obama and Gates are imposing a cramdown on our military leaders: they will have to sacrifice defense equity, such as new aircraft, ships, satellites, and every other weapon they rely on, to pay for whatever war effort continues beyond 2010.  Apparently Obama also thinks the way to address the grave and growing danger of nuclear proliferation is unilateral disarmament and hope that other countries follow his lead.  Meanwhile Obama has made plans: to cut billions from our anti-missile defense programs, especially those designed to protect our homeland against EMP and other attacks; to forego deployment in Europe of missile defense radars and interceptors as NATO has twice agreed to do; and to resuscitate preposterously out-dated Cold War notions of U.S.-Russian "stability" by imposing new bilateral restrictions on defenses.  The CIA interrogation memorandums were released despite substantial protest from the four most recent and the newly appointed Director of CIA, but Obama was determined to discredit his predecessor, George W. Bush and continue to politicize the issue.  If the implications were not so serious, the discrepancy between Mr. Obama's plans and real world conditions would be hilarious.

 

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* There is so much published each week that unless you go out of your way to find it, you will miss important breaking events.  I package the best of this information into my “Views on the News” each Saturday morning for your reading pleasure and to fill in factual vacuums. 

 

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

 

Week’s Best Articles:

 

David Coughlin

Hawthorne, NY