RTCS

Views on the News

April 28, 2012

Views on the News*  

Mitt Romney will win in November, and the reason is simple: because of President Obama’s record, since he is running against the greatest Presidential failure since Jimmy Carter.  Obama took over in the throes of a reeling economy, and he made it worse.  His stimulus plan was taken hostage by Democrats in Congress, who loaded it up with pork and precious few sources of actual economic stimulus.  Then, $787 billion later, our deficit reached record heights while our economy listed.  Although the Obama administration says we are in recovery, it’s the kind of recovery no one can believe in.  Americans don’t feel it, jobs have not increased at nearly the pace that was promised, and sluggish growth speaks of the added weight of debt and an unpredictable business climate as investors worry about what burdens will be heaped upon them next by a bureaucracy modeled after a Western European social democracy.  No President in the modern era has been re-elected with unemployment above 8%.  Add to this the fact that our President has displayed absolutely no seriousness about addressing the debt, which led to the first downgrade of our credit in history, and you have economic conditions that give voters great worry, not encouragement.  What we see is a college professor, like many of his tenured colleagues, who learned the wrong lessons from Franklin D. Roosevelt’s handling of the Great Depression.  Government intervention didn’t end the Depression; it prolonged it.  The Keynesian model of throwing money at the problem failed then and is failing us now.  Americans have lost faith in a President who refuses to take on the deficit in a serious manner, who rammed government-run health care down their throats and has failed to revitalize the economy.  Romney offers a better alternative: a thoughtful, deliberate leader versus an ideological interventionist, and an effective executive who has experience as a turnaround artist versus an inexperienced manager overwhelmed by the morass of the bureaucracy.

(“It’s Romney versus Carter” by Joe M. Allbaugh dated April 23, 2012 published by The Washington Times at http://www.washingtontimes.com/news/2012/apr/23/its-romney-versus-carter-35771927/ )

The 2012 Presidential election is more than six months away, but if I had to put money down now, I’d bet that Mitt Romney will win an easy victory after a relatively predictable, issue-focused, and not-too-nasty campaign.  Indeed, I’d bet Romney will win precisely if he runs such a campaign.  A majority of Americans continue to believe that our nation is on the wrong track.  Similarly, there are large and growing majorities of Americans who disapprove of the President's signature accomplishment, healthcare reform.  Across all demographic groups, the number one issue is the economy and the number of Americans who approve of the way the President is handling the economy is abysmal.  But if he allows the race to degenerate into name-calling and gotcha gimmicks, he could lose because Democrats are better than Republicans at the small and nasty stuff.  If Romney can speak to Americans’ sense that it’s a big moment, with big challenges, and if he can make this a big election rather than a petty one, then he can win - perhaps big.  Romney needs, over the next six months, to convince some number of swing voters he can and should be the next President.  The easiest way to do this is by behaving like a President.  If you want to seem Presidential, be Presidential.  It shouldn’t be hard since Romney already looks Presidential, after all.  Romney can visit the troops in Afghanistan and our ally Israel.  Instead of giving rebuttals and prebuttals to Obama’s speeches, Romney can give serious speeches about the Constitution and the Supreme Court, the case for limited government and the threat of bankruptcy and penury, about undoing ObamaCare and what will replace it.  President Obama has failed to pass a big tax reform, failed to master the federal budget, failed to reform our out-of-control entitlements.  The next President, Mitt Romney, can explain that he will step forward to do all of these things.  He can make clear he is ready to deal with the full spectrum of topics a President has to handle, rather than acting as a candidate who says he’s going to focus on just one issue (e.g., jobs) because “that’s what the voters care about.”  Romney might even consider offloading his entire opposition research and instant response operation to the Republican National Committee.  Let the RNC and the super-PACs put out the statements denigrating the Democrat candidate.  Romney should treat his opponent with respect not contempt, sobriety not snark, and good humor not sarcasm.  Romney should run for President rather than run against Obama.  Others can take care of making the anti-Obama case, focused on the past.  He needs to make the case for his future Presidency.  Romney needs to hold the swing voters who defected from Obama in 2010, because they know the case against Obama, so they need to hear the case for Romney, and if Romney can make that case, he has a very good chance to win.

(“President Romney” by William Kristol dated April 30, 2012 published by The Weekly Standard at http://www.weeklystandard.com/articles/president-romney_640520.html )

This has not been a spring of promise and renewal for the Obama administration; rather, it has been one of threadbare political tactics and demagoguery dying on the vine and the reality of three years of Barack Obama taking root in the American consciousness.  A centerpiece of Obama's re-election strategy is class warfare personified by the promotion of the Buffett Rule -- legislation to compel Americans earning $1 million or more annually to pay a minimum 30% in income taxes regardless of the income source.  Every week brings forth a new story about another government-funded "alternative energy" company going into bankruptcy.  The loss to the American taxpayers is now into multi-billions of dollars.  Further, nearly all these companies and their investors have a direct or indirect connection to either the Democratic Party or the Obama White House and re-election team.  The scandal at the General Services Administration (GSA) revolving around lavish and unconscionable spending on parties reveals more than just the greed and ineptitude of various government bureaucrats.  The GSA debacle and the irresponsible funding of now-bankrupt "green companies" have brought to the fore the undeniable truth that the federal government itself has become not only “too big to fail,” but a leviathan impossible to control.  In fiscal 2012, the federal government is slated to spend in excess of $3.8 trillion.  So the President proposes a budget that accelerates spending to $5.8 trillion within ten years and seizes more control over the economy through regulations, mandates, and a further expansion of the bureaucracy.  The result: the national debt will be $26 trillion by 2022, as compared to $10.6 trillion when Obama took office in January of 2009, and waste, fraud, and abuse will be more rampant than ever.  The backdrop for all this is the ongoing economic malaise and intractable unemployment situation.  The published unemployment rate of 8.2% in March does not include those who have dropped out of the job market.  If the labor force participation rate (that part of the overall civilian population in the labor force) were the same as when Barack Obama became President, the actual unemployment rate would be 10.6% -- as those not in the labor force have increased by nearly seven million.  The American people, regardless of the statistics reported by the government or the propaganda put out by the Obama White House, know, through their own day-to-day experience, that the economy is not improving, nor will it anytime soon.  Hanging over this landscape is a trifecta of potential economic crises: the never-ending European debt debacle, an ongoing housing depression, and skyrocketing energy costs.  Meanwhile, a global disaster resulting from Obama's mishandling of the Middle East could be ignited at any time.  These myriad factors are why Barack Obama has focused all his attention since Labor Day on campaigning for re-election.  And why he has reverted to the now-threadbare tactic of pitting American against American using race, ethnicity, religion, or income as a catalyst.  Predictably the citizenry will soon tire of the rhetoric and falsehoods.  Similar to 2008, the Obama re-election campaign is being built on a flimsy foundation of image and propaganda, but it will not succeed, as the record and inevitable campaign faux pas (which have already begun) of a no longer unknown candidate will be their Achilles heel, and actions and events have shown this to be the springtime of discontent and the beginning of the end of the Obama regime.

(“Obama’s Springtime of Discontent” by Steve McCann dated April 23, 2012 published by American Thinker at http://www.americanthinker.com/2012/04/obamas_springtime_of_discontent.html )

 

The Republican Party establishment has withstood the TEA Party revolution and now speaks of the TEA Party in the third person and as one constituency in the larger Republican coalition, sort of like defense hawks or fiscal conservatives.  Little has actually changed in the Grand Old Party since the TEA Party movement helped Republicans capture the U.S. House majority two years ago and announced that they were a powerful force in American politics.  GOP elders sympathize with the movement’s ideas and want to channel whatever energy the decentralized groups offer for November.  They belief is that TEA Party people are good people and they have the right values.  TEA Party elements will unite with Republicans to defeat President Barack Obama, but he stressed the two movements were not one and the same.  No one here thinks that the RNC will stop being a stronghold of the elites.  The RNC in general is very conservative, but by definition to many, establishment.  It’s not a philosophical battle as often as it’s an anti-establishment battle.  The TEA Party is not as well organized as in 2010 but the ideas continue to resonate with the base.  No one questions that the TEA Party has been a net-plus for Republicans and it’s a symbiotic relationship as the TEA Party puts a spring in the step of the old lumbering elephant.

(“GOP elite holds off the tea partiers” by James Hohmann dated April 21, 2012 published by Politico at http://www.politico.com/news/stories/0412/75428.html )

According to an Investor's Business Daily/TIPP poll, some 25% of households include someone who is unemployed and looking for work.  The Great Recession has visited us with reduced income, declining home equity, and a growing contraction in credit.  For the 80% of Americans born after World War II, this is their Depression.  They have 5.5 million fewer jobs than at the recession's start in 2008, despite the most stimulative fiscal and monetary policy in our history.  Employment has been below the pre-recession peak for over 50 months.  It's the longest time since the Great Depression that payrolls have not made a new high.  We need at least 125,000 jobs each month just to provide for new entrants in a rising population.  Discouraged workers dropping out of the labor force make the unemployment rate look fractionally better, but the 8.2% headline masks the misery.  Look instead at the more relevant U-6 statistic, which counts the number of people who have applied over the last six months.  U-6 also includes those who are involuntarily working on a part-time basis.  That U-6 unemployment is now in the range of 15%.  Since 2008, some 3 million people have dropped out of the job market.  If they hadn't, the unemployment rate would be about 10.8%.  America's great job creation machine is sputtering badly.  It is now estimated that structural unemployment has risen from 5% before the crisis to close to 7% today.  The anemic recovery has not yielded job vacancies.  Hiring today is at about 70% of the 2006 level.  Given the increase in unemployed totals, job seekers are only about one third as likely to find work as in 2006.  The process of making stuff fosters innovation, leading to new products.  When companies go from prototype to mass production, they scale up, figure out where they can build factories affordably, and hire people by the thousands.  But many enterprises in America have discovered they cannot compete in engineering or manufacturing with their Chinese or Indian counterparts, which are equally, if not more, productive with workers willing to accept significantly lower wages.  The paradox is that the low labor costs which attract work abroad are now being visited on the American worker.  In the past six months, according to a Bloomberg study, 70% of job openings have been in mostly low-wage sectors, including healthcare, leisure, hospitality, and retail.  Some 7.7 million workers are stuck in part-time jobs, their pay inadequate for entry into the middle class.  Each month more Americans lose hope, permanently alienated from the workplace, and their savings exhausted.  Real, authentic job creation will not come from Washington. It has to come out of the energy and spirits of the private sector.  We are not going to create jobs until they are in a state of mind to do so.  They are not yet, and in part that's because of policy uncertainty that has depressed or confused them.  Millions of people who had good private sector jobs now have to depend on the government for life support.  The consumer remains constrained as well by the ratio of total household debt to after-tax earnings.  It was down to 117% last year from a peak of 131%, but is still above the pre-bubble rate of 70%.  We are still in an era of deleveraging, rising savings rates, home price deflation, and squeezed real income, all of which will continue to affect consumer spending.  There is no doubt that the next Presidential term will start with a rate of unemployment that is far higher than what President Obama inherited when he took office but the programs that he has put in place have failed.  America has a history of comebacks, of pulling itself out of a hole, and it happens when we're led with energy and conviction and not by government regulation.

 (“President Obama’s Economic Programs Have Failed” by Mortimer B. Zuckerman dated April 20, 2012 published by US News & World Report at http://www.usnews.com/opinion/mzuckerman/articles/2012/04/20/mort-zuckerman-president-obamas-economic-programs-have-failed )

 

Medicare is bleeding cash, a fact disguised by creative accounting, since the dramatic use of general revenue transfers has hidden Medicare's true insolvency from the public and masked Medicare's contribution to the national debt.  According to the 2012 Trustees Report, in 2010 Medicare took in $273.9 billion in payroll taxes and beneficiary premiums, but spent $568.3 billion in medical services, which translates into a $294.3 billion cash shortfall.  Since LBJ passed Medicare legislation in 1965, the program has run cash deficits every year except 1966 and 1974.  Advocates of the status quo argue that Medicare receives "general revenue transfers," but that's government-speak for raiding the Treasury to spend other tax revenues.  A structural reform is required to ever achieve a positive cash flow balance: 

·    For Medicare Part A (hospitals), the cash deficit was $95 billion, so to balance this deficit, payroll taxes on employers and workers would need to be increased by 52%.

·    For Medicare Part B (physicians) and Medicare Part D (drugs), the cash shortfall was a combined $213 billion, so to balance this deficit, the overall cost of insurance premiums for seniors would need to be increased from $1,709 to $7,589 per senior.

It is plain that these sharp increases are not viable, but despite this, President Obama steadfastly defends maintaining Medicare's existing financing structure.  Since taking office, Obama has overseen a Medicare cash-flow deficit of more than $847 billion.  This includes $582 billion in red ink accumulated since the passage of the President's signature health-care reform law, which siphoned $732 billion in Medicare funding over the next 10 years to programs that do not improve the program's solvency.  Between 2001 and 2010, cumulative Medicare cash flow deficits totaled just over $1.5 trillion, or almost 28% of the total federal debt accumulated in the hands of the public during the past decade.  A sensible solution would be allowing Medicare beneficiaries the option of a defined contribution program.  Seniors would be budgeted an annual contribution, which could be adjusted to reflect costs associated with their health status and financial wherewithal.  For the federal budget, the result is a capped exposure to Medicare, one that would adjust to reflect the number of seniors and inflation.  Transition to a defined contribution model would be great news for the nation's spending outlook, and even better news for the exploding debt and the threat it carries to the nation's economic health, and most importantly, it would secure Medicare for future generations.

(“Medicare Bankruptcy Looms Without Major Reforms” by Douglas Holtz-Eakin and Jim Nussle dated April 24, 2012 published by Investor’s Business Daily at http://news.investors.com/article/608990/201204241754/no-one-is-doing-anything-about-looming-bankruptcy-of-medicare.htm )

 

The State Department declaring the global war on terror over is no surprise, even with Islamism thriving worldwide, because the Obama administration never believed there was such a war on terror.  The Taliban is regaining control in Afghanistan, Islamofascist Iran is building the atomic bomb for its ruling ayatollah, and in Egypt a leading presidential contender says a council of Muslim scholars should advise Parliament on how best to impose Shariah law.  Hadn't you heard that Osama bin Laden was killed and buried at sea, the man who was literally the living embodiment of terrorism for so many simple-mindedly dovish liberal Democratic politicians?  The State Department believes that we have killed most of al-Qaida, so now that people have come to see legitimate means of expression, people who once might have gone into al-Qaida see an opportunity for a legitimate Islamism.  This American foreign policy statement is dangerously naïve:

·    Al-Qaida has proved surprisingly resilient in the past and could easily be so in the near future, especially if it sees U.S. weakness, which it certainly has these past three years, and various victories for the greater cause of Islamism.

·    The notion that those tempted by Islamic fundamentalism now "see legitimate means of expression" because a couple of nasty rulers like Moammar Gadhafi in Libya and Hosni Mubarak in Egypt are gone under-estimates the difficulty of cultivating anything approximating Western-style values of liberty in traditionally Islamic lands.

·    Suggesting that there can be such a thing as "a legitimate Islamism" will go down in history as one of the most outrageously stupid assertions ever to come from a government institution responsible for a great deal of stupidity over the decades.

Islamism by definition seeks the annihilation of non-Muslim, Western cultural influences.  America withdraws from Afghanistan and Iraq before the job is done, and our policy against a nuclear Iran amounts to finger-crossing.  Heaven forbid another Islamist attack on the homeland, but should one take place we can rightly blame the kind of complacent, self-congratulatory thinking our State Department has now revealed lies behind U.S. policy.

(“Terror Defeated? Ask Afghans, Iranians and Egyptians” dated April 24, 2012 published by Investor’s Business Daily at http://news.investors.com/article/609044/201204241902/state-department-wrong-war-on-terror-is-not-over.htm )

 

Almost daily we read of America's "waning power" and "inevitable decline," as observers argue over the consequences of defense cuts and budget crises, yet much of the new American "leading from behind" strategy is a matter of choice, not necessity.  Apparently, both left-wing critics of U.S. foreign policy and right-wing Jacksonians are tiring of spending blood and treasure on seemingly ungrateful Middle Easterners -- after two Gulf wars, the decade in Afghanistan, and various interventions in Lebanon and Libya.  So much of our sagging profile abroad is simply a growing realization that the Middle East is, well, the Middle East: You can change the faces, but the regimes end up mostly the same as innate reflections of the volatile mix of tribalism, vast infusions of oil money, radical Islam, and generations of dependency.  Can decline be better measured by our vast debt of $16 trillion, growing yearly with $1 trillion deficits?  Americans know that with a new tax code, simple reforms to entitlements, and reasonable trimming of bloated public salaries and pensions, we could balance our federal budgets.  The budget crux is not due to an absence of material resources, but a preference for not acting until we are forced to in the 11th hour.  The manifest symptoms of decline -- frustration with the Middle East, military retrenchment, exorbitant energy costs and financial insolvency -- are choices we now make, but need not make in the future.  As America re-examines its military, entitlements, energy sources and popular culture, it will learn that our "decline" is not due to material shortages, but rather arises from moral confusion over how to master, rather than being mastered by, the vast riches we have created.

(“Decline or Decadence?” by Victor Davis Hanson dated April 26, 2012 published by Town Hall at http://townhall.com/columnists/victordavishanson/2012/04/26/decline_or_decadence )

 

* 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.  Updates have been made this week to the following issue sections:

·  Politics at http://www.returntocommonsensesite.com/intro/politics.php

·  Homeland Security at http://www.returntocommonsensesite.com/dp/homelandsecurity.php

·  Taxes at http://www.returntocommonsensesite.com/dp/taxes.php

·  Defense at http://www.returntocommonsensesite.com/fp/defense.php

·  Terrorism at http://www.returntocommonsensesite.com/fp/terrorism.php

 

David Coughlin

Hawthorne, NY

www.ReturnToCommonSensesite.com