RTCS

Views on the News

June 6, 2009

 

Views on the News*

Whether Obama knows it or not, his decline has already begun: domestically he overreached and internationally his naivete has already begun to erode American interests. Obama’s popularity has already begun to slip with his disapproval rating matching his approval rating. His economic policies including bailouts, stimulus, and budget deficits have doomed this country to out-of-control spending for the foreseeable future. The deficit is the liberal’s wolf in sheep's clothing, so conservatives must be forewarned. The most dangerous prospect is not straightforward tax hikes, but split-the-difference compromises promising spending cuts for tax increases.  This enormous shortfall and the prevailing political climate of compromise-at-any-cost present the liberals with a golden opportunity to advance their larger sociopolitical agenda. Hopefully conservatives have the intestinal fortitude to stand firm on principles and do everything possible to help President Obama’s policies to fail! All we need now is someone besides Rush Limbaugh articulating what is wrong with Obama’s policies and better alternatives to address the underlying problems.

 

There is a significant gap between Obama’s personal popularity and the popularity of his policies. On Guantanamo, spending, bailouts and even his Supreme Court nominee the public doesn’t “take Obama’s word for it.” They are making independent judgments and don’t like a significant portion of the agenda. The “problem” is that the country hasn’t really moved to the left. The split of voters on ideology on election day didn’t register much of a shift. And while the Republican Party is in a rough patch there’s plenty of evidence on everything from abortion to guns to spending that we remain a center-right country. Obama is not center-right, and voters aren’t really inclined to buy. Obama doesn’t make much of an effort to engage on the merits. The Republicans, he kept saying during the stimulus debate, had “no ideas,” even though they did but he rejected them out of hand. In short, if you are selling what voters aren’t predisposed to accept, and you don’t give them well-argued reasons to change their minds, they likely will remain wary of your policies. Up until now, with large Democratic majorities and a fawning media, that hasn’t been a problem. Now there is nothing Obama can do to distract from the fact that over 2.5 million less people are working than when he took office which proves his economic policies are not working. It is not clear whether Obama even has the ability or even the interest to persuade Congress and the country on healthcare and cap-and-trade (two bitterly contested issues with no pre-made consensus) or on the remainder of his agenda? Recent polls show that twice as many voters cared about making health care and health insurance more affordable as about expanding coverage for the uninsured. Reforming health care is only the fourth most important priority (on a list of eight), behind improving the economy, stabilizing Medicare and Social Security, and reducing the federal budget deficit. Obama is having personal problems as indicated by his use of the first person singular pronoun “I” 34 times on his speech announcing nationalization of General Motors. When Obama’s Congressional majorities shrink in 2010, as they are wont to do in the first mid-term election, his agenda faces tough sledding.

 

The digital world has undermined the media business model and newspapers have been unable to develop a new business model that works for them in this new age. People are reading more news and commentary as the news business spirals down, just not in traditional newspapers. Pundits and politicians are horrified at the prospect of losing their captive channel. With few exceptions, most notably the Wall Street Journal, the newspaper industry fell into the classic trap of underestimating the power of the internet. Not only can the internet do a better and more timely job distributing news but it demolished barriers to entry for news gatherers, editors, and commentators. Publishers failed to prepare and most will fail to adapt. Meanwhile the economic lifeblood of newspapers, namely classified ads, fled to the web. In that fertile soil classifieds harnessed the power of interactivity unencumbered by the economics of physical distribution. The world of the written word will always need news gatherers and news editors, and the market for commentators has never been better. There is no reason to believe that news practitioners have to be employees of vertically integrated corporations housed in antiquated factories run by industrial-age guilds squirting black pigment onto bleached tree slices. Trying to keep that broken business model alive is a fool’s game. Check any public opinion poll and you will see that journalists have largely worn out their welcome. Long gone are the days when reporters were trained to stick to the who, what, when, and where of a story. Rare is the reporter that even bothers to get the facts straight, absorbed as they are promoting their point of view. Anyone who has actually been interviewed by a reporter only to watch their words get twisted to fit a pre-conceived agenda knows that “journalistic integrity” is a cultural myth. When was the last time you found an editor that restricted editorials to the editorial page? After years of denying the impact of bias on thie decline, the Washington Post has tried to be more fair and balanced and has been able to reverse their decline in circulation. Breaking the present system and allowing it to rebuild itself as an interconnected ecosystem of independent full and part-time news agents, specialty aggregators, and freelance commentators is the best thing that can happen to the news business. Life will go on and business models will adapt, and news will continue to be gathered and distributed long after paper newspapers pass the way of the town crier.

 

The economy did better than expected in the first quarter of 2009, driven almost entirely by an unexpected upswing in consumer spending, according to new data released by the Commerce Department’s Bureau of Economic Analysis (BEA). Durable goods orders and property sales have bounced back and house prices have stabilized. These numbers indicate that the recession may have bottomed out even before most of the federal stimulus money is even spent. Consumer spending accounted for the better-than-expected outlook, actually increasing 1.08% in the first quarter, after falling 2.99% in the fourth quarter of 2008. The better-than-expected numbers may be a sign that the recession is beginning to bottom out. The increased consumer spending, focused on auto purchases, and a reduction in business inventories, showed the economy was beginning to right itself. The only thing government could do now was get in the way, adding that the biggest risk comes from government pumping more money into zombie banks who should have gone bankrupt long ago. TARP funding and bankruptcy talk and trying to stabilize companies who should be bankruptcy court, it all springs back. As of May, the current recession officially became the longest since World War II. The National Bureau of Economic Research dates the recession as starting some time during December 2007. The logic behind Obamanomics is dubious at best. Based on the stimulus package and Obama's budget, he is essentially arguing that the way to promote economic growth is through higher welfare spending, massively increased federal spending and record deficits and debt. Borrowing a trillion dollars out of the economy through the stimulus package to put a trillion dollars of federal spending back in does not add anything to the net economy. Most importantly, it does nothing to change the basic incentives that govern the economy, and unfortunately the problem with fiscal stimulus is that it arrives too late. Nothing in Obama's entire economic package increases incentives for economic growth, or for savings and investments in particular. Even Obama's tax cut for 95% of Americans is not pro-growth, since it is really just a $400 per worker tax credit, less than $8 per week, which is economically the same as sending each worker a $400 check. Borrowing $400 from someone else to give you $400 again does not add anything to the economy on net. More importantly, Obama has proposed a massive new tax through his cap-and-trade anti-global-warming plan, imposing probably close to $2 trillion in increased costs to the U.S. economy. Consumers will pay for this through increased costs of electricity, gasoline, home heating, oil, food and any product that uses energy. These will more than offset Obama's $400 tax credit, resulting in an effective net tax increase for 100% of Americans. This added cost burden will ultimately chase remaining manufacturing out of the country. All of Obama’s liberal spending is being paid for by printing more money which drives the dollar down and Treasury rates up. The steepening yield curve mean investors are worried about the deterioration in the U.S. fiscal outlook, or the potential for a collapse in the U.S. dollar as the Fed floods the world with newly minted currency as part of its quantitative easing program. The real question is whether President Obama's economic policies are promoting recovery, or delaying it for political reasons?

 

 

The United States has $101 trillion in retirement and health care obligations over the next 75 years, but at current tax rates we'll have only $53 trillion to pay for it all. The stimulus plans and bailouts will add $9 trillion to our national debt over the next 10 years alone. Add to that an expected $1.1 trillion spent over the same time to fund a government takeover of our health care system and you have the makings of an epic financial tragedy. Total federal debt will soar from 41% of GDP to 82% in just 10 years. Over the next half-century, Americans will owe $63 trillion - 4.5 times our current GDP of $14 trillion. It is as if every household will have a huge implicit mortgage, except, unlike a real mortgage, it's not backed up by a house. Even the nation's president, in a moment of unguarded frankness last week, admitted that "we are out of money." Was that supposed to inspire confidence, or was it merely a prelude to asking for a spate of new taxes to pay for it all, turning the U.S. economy from a vibrant, job-creation machine into a stagnant, European-style welfare state? The current administration already has proposed or is mulling as many as 10 new taxes, everything from a European-style VAT (a national sales tax) to intrusive new taxes on beer, fast food, cigarettes and other sinful indulgences, to cap and trade, which is nothing more than a federal tax on energy. Russia's Pravda, the former house organ for the Soviet communist regime: "The American descent into Marxism is happening with breath taking speed."

 

GM was saved in December and again in March, and the feds will rescue it a third time in a “pre-negotiated” (some say illegal) bankruptcy that is already costing at least $50 billion, and that's for starters. The government has just pumped into GM more than five times what the company was worth to its owners over the last decade. (Will U.S. taxpayers ever get their money back?)

Federal Judge Richard A. Posner argued that a further bailout may be justified, if GM's failure to attract private investment stems from continuing problems in the overall credit market and not its own inefficiencies. (isn’t this nationalization by another name?) Judge Posner also said "We should be concerned lest GM (“Government Motors”) become a kind of economic Vietnam, where the federal government throws good money after bad, year after year, in a vain quest for victory." (sound like Amtrak or the Post Office to you too?) Even after the government divests itself of its formal ownership stake, the reality is that GM will remain a government-sponsored enterprise (GSE), Fannie Motors might be a better “nom de ridicule.” All three Detroit automakers now share the same GSE structure (public mission, private ownership) that failed Fannie and Freddie. The United States may recover most of its planned $50 billion investment in General Motors within five years, according to a preliminary Treasury Department estimate that foresees the company, now on the brink of bankruptcy, rebounding over that time to become a strapping global competitor. (have political forecasts ever even been close to accurate?) Non-political management of this new entity will be impossible as the business decisions must not only be driven by market forces but also pass a political correctness hurtle. Government Motors will have three conflicting # 1 goals: turning a profit, building cleaner cars, and creating American jobs, which also conflict with the President's professed desire to "get out quickly," and with his promise of "a hands-off approach." "Dealergate" is a term referring to a collection of evidence indicating that dealership termination decisions at bankrupt Chrysler may have been based on factors other than maximizing the chances that the company, post-bankruptcy, will be viable and profitable. It looks like just about all the dealers who are losing their Chrysler franchises have links to the Republican Party. All 789 of the dealerships the company wants to close were reviewed and it was found that "owners contributed at least $450,000 to Republican presidential candidates and the GOP, while only $7,970 was donated to Sen. Hillary Clinton's campaign and $2,200 was given to Sen. John Edwards' campaign, and Obama received only a combined total of only $450 in donations." A separate but very relevant “Dealergate” issue should be whether minority-owned dealerships were unfairly spared at the expense of non-minority dealers. The last thing a bankrupt, taxpayer-underwritten Chrysler needs as it struggles to emerge from bankruptcy and regain viability is a less than optimal dealer network. Has our political class grown so petty that it would use the power of government to punish the political opposition? Renaming “socialism” as a more politically correct “state capitalism” does little to cover up the government ownership and management of private sector firms. State capitalism has introduced massive inefficiencies into global markets and injected populist politics into economic decision-making. State capitalism ultimately adds costs and inefficiencies to production by injecting politics, and often high-level corruption, into the workings of markets. Economists and consumers are united in saying that a government-owned GM will mean bad news for consumers making them less likely to purchase a car made by the reorganized company, not for emotional reasons, but rather for reasons that are attributable to how public enterprises are ran and that is there is a lack of focus on the consumer.

 

At the heart of the American Clean Energy and Security (ACES) Act is a “Cap-and-Trade” proposal for limiting the emissions of carbon dioxide by American industry and consumers. Scientists agree that CO2 emissions around the world could lead to rising temperatures with serious long-term environmental consequences. The central fact of the cap-and-trade proposal is that it will increase the price of energy. If energy prices don't go up, the goal of getting energy producers, manufacturers, and consumers to shift away from carbon generating fuels (coal, oil, and natural gas) toward low-carbon sources of energy (nuclear, solar, wind, conservation) will not be achieved. The proposed legislation would have a trivially small effect on global warming while imposing substantial costs on all American households. While Americans express support for regulations to reduce greenhouse gases, 77% in a recent ABC News/Washington Post poll declared themselves either "very concerned" or "concerned" that "federal regulation of greenhouse gases could substantially raise the price of things you have to pay for." To get political support in key states, the legislation abandoned the auctioning of permits in favor of giving permits to selected corporations. Companies would buy permits from each other as long as it is cheaper to do that than to make the technological changes needed to eliminate an equivalent amount of CO2 emissions. Companies would also pass along the cost of the permits in their prices, pushing up the relative price of CO2-intensive goods and services such as gasoline, electricity and a range of industrial products. Americans should ask themselves whether this annual tax of $1,600-plus per family is justified by the very small resulting decline in global CO2. Since the U.S. share of global CO2 production is now less than 25% (and is projected to decline as China and other developing nations grow), a 15% fall in U.S. CO2 output would lower global CO2 output by less than 4%. Its impact on global warming would be virtually unnoticeable. Fearing the electoral consequences of honesty, Congress is trying to hide the fact that they are increasing energy prices by distracting the American people with a torrent of rebates, subsidies, and tax incentives, along with plenty of happy talk about renewable energy and creating "green jobs." The result is that Congress has devised a complicated and inefficient scheme where distributing a "free" commodity actually makes products and services more expensive than it would otherwise have to be. The proposal to give away most of the permits only makes a bad idea worse. Taxpayers and legislators should keep these things in mind before enacting any cap-and-trade system. The proposed cap-and-trade system would be a costly policy that would penalize Americans with negligible impact on global warming.

 

Senate Republicans must not allow the Sotomayor nomination to be rushed because this is a nominee who deserves every bit of investigation and scrutiny that the process allows, for she is not a child of poverty; she is a child of grievance. Obama is a militant proponent of using the power of the state to even the score for minorities and/or the economically less fortunate. Identity politics is the view that one's political significance and the political rights one deserves spring from gender, ethnicity, cultural inheritance and life experiences. Sonia Sotomayor is the liberals’ equivalent of Harriet Miers. Only her most ardent supporters would claim she is of Supreme Court caliber or intellect.  If the U.S. Senate rejects race-based justice, Sonia Sotomayor will never sit on the Supreme Court, because that is what Sonia is all about. According to The New York Times, the salient cause of her career has been advancing persons of color, over whites, based on race and national origin. Judge Sotomayor is a member of the National Council of La Raza (“the Race”), one of the most radical activist groups pushing for legalization and citizenship for illegal immigrants. In the quote that has attracted so much attention, Sotomayor said, “I would hope that a wise Latina woman with the richness of her experience would more often than not reach a better conclusion than a white male who hasn't lived that life." There is no way to recast Sotomayor’s comment to make it better or even remotely appropriate for a judge to make. Sotomayor’s fondness for racial and ethnic quotas is thus established, which may explain the short shrift she gave white New Haven, Connecticut firefighters in the Ricci v. DeStefano case. Sotomayor wrote the Circuit’s opinion in that case, all 134 words of it, summarily denying the appeal, without addressing any of the constitutional issues it raised.  Judges aren’t supposed to allow their personal experiences or biases to filter the facts.  The job of a judge, on which the American legal system depends, is to shun personal biases and experiences, even in like circumstances, to see the important facts on which the case depends. Sotomayor does not shun her personal biases; she embraces them, and consequently she has a history (60%) of her liberal opinions being overturned upon appeal. How can any Republican senator vote to elevate to the Supreme Court a judge who, all her life, has believed in, preached and practiced race discrimination against white males, without endorsing the Obama-Sotomayor view that diversity trumps equal justice, and race-based justice should have its own seat on the high court? She doesn’t, as every good judge must, work earnestly to ensure that her background doesn’t affect the judgments she renders, so that makes her unfit to serve on the Supreme Court.

 

In foreign affairs Barack Obama is a soft power president, but the world keeps asking him hard power questions. George W. Bush launched a military offensive in the Middle East, but Barack Obama is launching a charm offensive. One of Obama’s first acts as President was to announce the close of Guantanamo Detention Facility without any plan for what to do with the existing prisoners. Now polls reveal that a large majority of Americans oppose closing Gitmo and furthermore do not want the inmates moved to prisons in the United States. Obama’s preferred tools of diplomacy, engagement and charm do not seem to be of much use with Kim Jong-il of North Korea, either. The president’s charisma and rhetorical skill are real diplomatic assets. The danger is more subtle, and in the coming months it will become increasingly obvious that soft power also has its limits. It is that President “Yes-we-can” has raised exaggerated hopes about the pay-off from engagement and diplomacy. Obama delivered a surprisingly good speech in Cairo but undermined his credibility by exaggerating that the United States, with slightly more than 2 million members, is one of the largest Muslim countries in the world. There was much that was good and praiseworthy in the President's Cairo address. His celebration of human rights, his condemnation of violent extremism and his denunciation of the anti-Semitism that infests so much of the Middle East were welcome and eloquent. Obama unwittingly validated much of Bush's security agenda and foreign policy with artfully repackaged versions of themes President Bush sounded with his freedom agenda. With Bush, it was "axis of evil," and "a struggle between good and evil," while Obama was all about "a new beginning" and "mutual respect" between the United States and an Islamic world of 1.2 billion. Though he made a number of important points in his Cairo speech about fighting terror, religious tolerance and women’s rights and democracy, the speech was constructed and delivered as a series of moral equivalencies that undermine both the search for peace as well as the equally necessary drive to reform the Islamic world.

 

* 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:

·         “Obama’s Age of Moral Equivalence” by Jonathan Tobin dated June 4, 2009 published by Commentary Magazine at http://www.commentarymagazine.com/blogs/index.php/tobin/68492 .

·         “’Legacy of Debt’ Gives Fiscal Stimulus Bad Name” by Caroline Baum dated June 5, 2009 published by Bloomberg at http://www.bloomberg.com/apps/news?pid=newsarchive&sid=amkTORldgMYA .

·         “The Prism of Obama” by Jonah Goldberg dated June 5, 2009 published by Town Hall at http://townhall.com/columnists/JonahGoldberg/2009/06/05/the_prism_of_obama .

·         “Breaking Bibi” by Pat Buchanan dated June 5, 2009 published by Town Hall at http://townhall.com/columnists/PatBuchanan/2009/06/05/breaking_bibi .

·         “The President’s can’t-we-get-along formula is beginning to feel familiar” by Hosh Greenman dated June 5, 2009 published by New York Daily News at http://www.nydailynews.com/opinions/2009/06/05/2009-06-05_the_presidents_cantwegetalong_formula_is_beginning_to_feel_familiar.html .

·         “The Myth of Low Cost Obama Care” by Frank S. Rosenbloom dated June 5, 2009 published by Intellectual Conservative at http://www.intellectualconservative.com/2009/06/05/the-myth-of-low-cost-obama-care/ .

·         “Voters put President’s approval index at 0” dated June 5, 2009 published by World Net Daily at http://www.worldnetdaily.com/index.php?fa=PAGE.view&pageId=100279 .

·         “Banking on Delusion” by Phillip I. Levy dated June 6, 2009 published by The American Magazine at http://www.american.com/archive/2009/june/banking-on-delusion .

·         “Sotomayor and the Ugliness of Identity Politics” by Brian Garst dated June 6, 2009 published by American Thinker at http://www.americanthinker.com/2009/06/sotomayor_and_the_ugliness_of.html .

 

David Coughlin

Hawthorne, NY