Views on the News

May 9, 2009


Views on the News*  

Despite everything Obama has done to prolong the recession as cover for his social engineering programs, recovery is beginning long before any of the so-called stimulus spending begins.  Historically a full economic recovery should now be in full swing.  Obama is arguing that the way to promote economic growth is by massively increasing welfare, federal spending, federal deficits, and the national debt, to record levels, along with higher tax rates and more costly regulatory burdens.  He has methodically infiltrated private industry using "crisis" as his access and the government as a controlling entity to rectify problems.  Since Inauguration Day, Obama's Cloward-Piven chaos agenda has systematically advanced nationalization as the remedy to every crisis from banking to global warming.  Another strategy Obama is using to prolong the recession is “cap and (tax) trade,” since this plan punishes prosperity, slows economic growth, and increases unemployment.  Obama’s budget request includes seven significant changes in the tax code and essentially declares war on domestic oil and natural gas production!  Out of control Democrat spending still threatens any recovery and the looming inflation associated with this spending may undermine this recovery yet!  Fear, uncertainty, and doubt are weapons used by the Obama administration to keep Americans off balance and undermine any consumer confidence.  Several leading economic indicators hint at the recovery beginning: growth in the real money supply, increasing interest yield curve, and improvement in the consumer confidence.  Data on home sales, manufacturing and service sector have all been better than expected.  The Dow Jones Average seems to have hit bottom and threatening to remain above 8000 on a consistent basis.  Several trailing indictors continue to show weakness, but do not preclude recovery: GDP decline confirms recession, unemployment claim are still approaching 10% and mortgage delinquencies are still high.  If the economy hasn’t exactly turned around, at least the pace of the decline is slowing.  Now that there is proof that the economy is recovering, why doesn’t the Congress repeal the so-called “stimulus” spending, before its impact overwhelms the economic recovery, since it obviously was not needed in the first place and can only do harm at this point.



The explosive rise of the United States budget deficit and debt burden will lead to serious inflation down the road.  The Congressional Budget Office predicts that government debt will peak around 54% of GDP in 2011. More pessimistic estimates predict the ratio could surpass 80%, unless there are significant spending cuts or tax increases.  A country that continuously expands its debt as a percentage of GDP and raises much of the money abroad to finance that, at some point, it’s going to inflate its way out of the burden of that debt.  Inflation becomes a tax on everybody that has fixed dollar investments.  The latest Obama policy distraction is the administration focus on the less than one half of 1% of the overall spending cuts, of which 80 of the 121 proposed cuts were previously announced.  In addition half of these cuts come from Defense, where Obama is trying to replicate President Clintons “hollowed out” military unable to respond adequately to any national threat.  Lest we forget the budget still retains more than $8 billion over the next few years to ACORN , the left-leaning ‘community organizer” group that has shaken down the government for years.  The only good news is that the economy works very well over time and appears to already begun recovering, even though it gets gummed up periodically by the government.


The reigning sentiment in Washington is barely bridled hostility to and distrust of the private sector and abiding faith in the efficacy and righteousness of government.  Congress, President Obama, and regulators are bent on moving economic decision-making power from the private sector into the public realm.  President Obama, flitting from crisis to crisis without ever quite managing to solve one, has alighted upon credit cards.  White House economic adviser Larry Summers piled on, accusing credit-card companies of getting Americans addicted to credit.  Finding credit-card statements difficult to read, Obama proposes to put the wordsmiths of the federal government in charge of reforming them.  He also proposes to manage interest rates and fees, the size of the type on bills, the content of card issuers’ websites, and the ease of comparison-shopping among competing cards.  Senate Banking Committee Chairman Chris Dodd even proposes that the government has a role rating credit cards from one to five stars.  There is no reason for the government to step into this area.  Every stage in the card-payments value chain, issuance, the networks, acquiring, and processing, is vigorously competitive.  Greater government control and the politicization of credit cards will put a damper on innovation and delivery of revolving credit, and will ill serve consumers and hamper economic revival.


President Obama and his team are delivering a “New Socialism” that doesn’t need to directly capture property, but is dependent on centrally controlled industries.  Obama is content to control the economy through taxation and regulation and the attitudes of our citizens by the establishment of a culture through the power institutions of our society: the media, the education establishment, and powerful business interests.  The first part of their “New Socialism” began with the financial crisis.  The “stimulus” bill was not designed to grow the economy or create private sector jobs, but rather to throw money at long-deferred liberal government spending programs.  Some stimulus money is conditioned on states changing their laws to permanently expand government programs.  The next step toward institutionalizing Obama’s “New Socialism” is rooted in the asserted threat of global warming.  Contrary to conventional liberal wisdom there is no consensus as to the nature, consequences or solutions to global warming.  The left’s warning of the “apocalypse” to come is designed to scare our citizens into accepting control over their daily lives.  The truth is that we should be aggressively pursuing new oil and gas resources right now during this respite from high gas prices.  Energy is readily available including Alaska oil production, offshore oil production, Utah oil fields and nuclear power.  All of these options are being stopped while the “New Socialism” focuses exclusively on green energy.  This liberal focus on “green energy” and “green jobs” are another means of taking control, for there is no free market involved, only government controlled “green energy” and government-created “green jobs.”  The “cap and trade” programs are not designed to address “global warming,’ but is actually a stealth tax to fund the expanded social spending.  A third example of the “New Socialism” is the broad expansion of the welfare state.  A key goal of the “New Socialism” is to brush aside the idea of citizen independence and to make people dependent on the government.  If we tax away all marginal ability to save and invest, if we destroy jobs through high corporate taxes, if we “cap and trade” energy, if we impose giant new taxes and drive up the prices of everything citizens need through inflation there is no choice but to become a dependent on state programs.  A fourth program of Obama’s “New Socialism” is national healthcare.  Private, high quality health care cannot compete with taxpayer subsidized national health care.  The agenda of the left is finally being implemented because the current financial crisis makes our citizenry less secure and more accepting of this agenda.  America is at a crossroads redefining the relationship between our citizens and our country which may end up subordinating the liberty of the individual to the state, if we don’t watch out.  Our Declaration of Independence was a recitation of the abuses of excessive government power.  Our Constitution was a brilliantly crafted system of checks and balances to prevent that abuse by limiting government's authority over individuals, including in the economic realm, where we're guaranteed our constitutional rights to liberty and property, to freedom from expropriation, and to freedom of contract.  It is incumbent upon federal policy makers to ensure that the extraordinary actions of the past months are understood to be temporary, and constructed so that they are self-liquidating.  Since government programs do not on their own go away, there has to be a deliberate design to eliminate them, and a relentless adherence to execution of that plan, to truly have an exit strategy from government ownership and management of major sectors of our private industry.




President Obama's vision of the socialized future is, apparently, an economy guided, steered and commanded by the federal government.  Some of the companies will remain private.  Washington will take others over.  But all will look to the White House, as to an orchestra conductor, for signals as to how and when and where to proceed.  The markets won't control decisions. Washington will.  Under the law, secured lenders have the first claim on the assets of the debtor in the event of non-payment.  The Obama administration is attempting to muscle past this law.  These proposed restructurings are power grabs, pure and simple, setting aside basic property rights in favor of rewarding the United Auto Workers for the support the union has given the Democratic Party.  This is a violation of one of the basic principles of bankruptcy law, which is that secured creditors, those who loaned money only on the contractual promise that if the debt was unpaid they'd get specific property back, get paid off in full before unsecured creditors get anything.  The positions of lenders are eviscerated to give control to the union trust and the government.  These emergent restructured companies are given market preference through taxpayer financing and government warrantee guarantees.  So these are political restructuring run by the White House, not a rule-of-law bankruptcy-court reorganization.  Unfortunately Obama’s restructuring proposals may very well violate the fifth amendment covering the seizure of private property and receipt of just compensation.


Obama is not satisfied leading the Executive branch and the Legislative branch, so he has now committed himself to rewriting the Constitution with his Supreme Court nominees.  President Obama has made "empathy" with certain groups one of his criteria for choosing a Supreme Court nominee is a dangerous sign of how much further the Supreme Court may be pushed away from the rule of law and toward even more arbitrary judicial edicts to advance the agenda of the left and set it in legal concrete, immune from the democratic process.  There are things that courts are not supposed to see or recognize when making their decisions such as the race you belong to, whether you are rich or poor, and other personal things that could bias decisions by judges and juries.  Judges are supposed to be neutral arbiters of the cases that come before them, ruling on the merits of the claim rather than the sympathy evoked by one party or the other.  Obama's emphasis on empathy in essence requires the appointment of judges committed in advance to violating the judicial oath to do equal justice to rich and poor.  Despite pledging to uphold the Constitution, Obama is not afraid to rewrite it to meet his needs and his long-term goals for the judiciary were revealed in 2001, when he complained that the very activist Earl Warren court had limited itself to changing some of our laws but had failed to order "redistributive change" of our economic system by breaking "free from the essential constraints that were placed by the Founding Fathers in the Constitution."  The American justice system is based on our Constitution, but Obama calling himself a "citizen of the world" sees no problem expanding the justification to include international laws also.  The biggest danger is that they will undermine or destroy the very concept of the rule of law-- what has been called "a government of laws and not of men."  The reason the statue of Justice wears a blindfold is to objectively interpret existing laws, while “empathy” is required by Legislators when they make laws, not by Justices on the Bench.


Irrevocably sinking Washington's claws deep into a health care area constituting 17% of the economy is too great an opportunity for this liberal Administration to pass up.  President Obama and the Democratic leaders of Congress have made it clear that health care reform is their top legislative priority this year.  Only 5% of voters cite health care as either the top issue facing the country, as the biggest problem facing their daily lives or even as the greatest fear they have for themselves or their families.  The basic aim of the Obama plan is to add another health care entitlement to the unaffordable ones we already have in Medicare and Medicaid.  Medicare is going bankrupt faster than AIG, and faces an unfunded liability of $84 trillion, according to the Medicare trustees.  Both Medicare and Medicaid are heavily subsidized by privately insured patients, to the tune of $90 billion a year.  The President will propose that the government set up its own health insurance company, a Medicare-for-everyone system, to provide competition with the private carriers. However this won't be competition; it will be a de facto government takeover.  Proponents will claim the price controls in the public plan will keep costs down, though they would be hard-pressed to provide any evidence for that claim. Federal reimbursement in these two programs is far below cost, which is why an increasing number of doctors are refusing to treat or are substantially cutting back on the number of Medicare and Medicaid patients they see.  Today’s “public plan” is clearly intended to be transitory, rather than a final program. It doesn’t help that Medicare and Medicaid are also rife with fraud.  Fully 55% of American voters say, if given the choice, they would opt for a private health care solution over a government solution.  Unlike private insurers, the government refuses to spend real resources on routing out the wrongdoing: overbilling, over-testing and charging for visits not made or tests not given.  In recent years many employers have been able to reduce health care costs by emphasizing prevention, empowering patients and utilizing the latest information technology.  Since World War II, the U.S. health care system has relied heavily on employers to insure their workers.  Today, about 132 million of the 190 million Americans who have health care coverage get it through work.  Companies have been able to cut health care costs by using "consumer-driven" strategies, such as offering workers insurance policies with high deductibles and low premiums.  The high deductible encourages patients to be more cost-conscious, while the low premium makes coverage more affordable.  Employers often pair such plans with free preventive care and Health Savings Accounts (HSAs).  An employee with an HSA contributes tax-free dollars into his or her personal account, and then withdraws money as needed to pay for routine health expenses.  This system allows patients to receive routine care without a gatekeeper denying them certain benefits and gives employees more responsibility for their own health care choices.  The biggest problem with the public plan is it will be in direct competition with the private sector.  A federal government insurance company, with its subsidies, will attract more and more people from private plans.  Health care decisions would increasingly be made in Washington and subject to political pressures that take into account neither patient needs nor economic realities.  When pitted head to head, large majorities of voters (69%) choose a private run health care system that doesn’t cover all Americans, but protects everyone’s fundamental right to make their own health care choices, over a government-run system that covers everyone but restricts certain health care options (18%).  Instead of overtly running providers out of business, the federal government will take them over through mandating what they can and cannot do, as well as "reinsuring" private carriers for costs above certain levels.  So far President Obama already expanded Medicaid and SCHIP, created a new federal agency to undertake “comparative effectiveness” research into medical treatments and procedures, and “invested” in health information technology, spending roughly $200 billion over ten years.  Obama’s budget proposal includes a reserve fund of $634 billion for health care reform over the next 10 years, but most experts expect the real costs will exceed $1 trillion.  In effect, President Obama says that we are spending $2.4 trillion on health care, but we are not getting value for our spending, so we should add another additional $193 billion annually by 2019 in new health care spending!




An "Obama Doctrine" is emerging with four distinct characteristics: Cosmopolitanism, Soft Power, Appeasement and Global Meliorism.  The first characteristic is “Cosmopolitanism.”  This is defined as Americans becoming more and more governed not by the federal and state governments, but by rules set by international authorities, such as the United Nations, the World Trade Organization, customary international law and global treaties and regimes.  The only time the United States would engage other nations would be when we are directly threatened.  The goal is to make the United States more like the rest of the world.  Such an individual is more than ready to identify America's faults (real or alleged) and apologize for them, but has little to say in defense of American virtues.  The second characteristic is “Soft Power.”  The belief is that America has the ability to get what they want through attraction rather than coercion or payments.  It arises from the attractiveness of a country's culture, political ideals and policies.  When our policies are seen as legitimate in the eyes of others, our soft power is enhanced.  It means making America a better place by lightening our "carbon footprint" and becoming "greener," by pursuing greater economic "justice" and redistributing wealth, and by abandoning arrogant notions of American "Exceptionalism" and becoming a decent, non-threatening Social Democracy.  The third characteristic is “Appeasement.  Appeasement is the policy of settling international quarrels by admitting and satisfying grievances through rational negotiation and compromise, thereby avoiding the resort to an armed conflict, no matter the cost.  The fourth characteristic is “Global Meliorism.”  This bi-partisan American tradition is defined as the socio-economic and cultural expression of an American mission to make the world a better place.  Foreign aid programs are used as bribery to win friendship with anti-American regimes.  Unfortunately this Obama Doctrine is based on weakness and emboldens our enemies.


Republicans have been branded as the “Party of No” by Rahm Emanuel, devoid of constructive alternatives to the legislation that they oppose, but Democrats dismiss any alternatives from the “Party of Yes” when they are offered.  Opposing Obama across-the-board on his sweeping domestic initiatives makes sense on substance and politics. There is some truth in that since there is much to which saying "no": a stimulus program that hasn't got much to do with stimulating the economy; a budget that threatens the nation with financial ruin and future generations with an inheritance inscribed in red ink; massive and, worse still, irreversible federal intrusions into key segments of the economy; and a foreign policy aimed at grasping the hand of Hugo Chávez while turning a cold shoulder to Benjamin Netanyahu.  Never has there been a better opportunity for Republicans advocating smaller and less intrusive government to set forth their stark differences with the liberal vision of the all-powerful state while at the same time reorienting their party on a path away from eight years of Bush fiscal profligacy.  It appears as if the new administration rolled into town and could barely decide what aspect of government and social structure should be overhauled first, so it started off by doing everything at once.  The limping economy, meanwhile, takes a back seat to massive social-engineering proposals, unfathomable spending programs, and an aggressive repudiation of the policies and actions of President Bush.  A pork-laden budget is rammed through while whole industries appear to be sliding toward some form of nationalization.  Haphazard and seemingly arbitrary bailout programs indicate significant economic policy disarray.  Republicans are simply standing back waiting for this ambitious new administration to self-destruct.  After all, some cracks are already appearing in its agenda.  This week the Wall Street Journal analyzed recent Treasury Department data.  It showed that in February banks that had received the largest amounts in bailout funds had actually reduced their lending by nearly one-fourth from October levels, the month that TARP money first became available.  As this spinning-top of an administration is starting to wobble, Republicans should begin to lay the foundation of their case for limited government.  They should be at the ready as the grim reality of monumental deficits and out-of-control spending begins to sink in to a notoriously fickle American electorate.  The most important need for conservative Republicans is to find their voice; because they are still invisible without a way to convey their contrasting message.  Senator Jeff Sessions on the Judiciary Committee may be the first Republican to stand up the Obama’s rush to transform the Supreme Court by questioning nominees on qualifications.  I sure hope the Republicans (“Party of Yes”) do not pass up this opportunity to articulate a comprehensive “Contract with America II” that articulates the policy differences and alternatives that will deliver a much better future for America!


* 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:


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David Coughlin

Hawthorne, NY