RTCS

Views on the News

June 11, 2011

Views on the News*

In the world of Barack Obama everything he inherited was someone else’s fault, unless he believes past policies offer him some advantage and thus are to be claimed as entirely his own, but the voting public no longer buys this excuse. The stock market is sliding. Gas and food prices are soaring. The housing market is as bad as it has been for the last three years. Unemployment is back over 9%. Economic growth is anemic. The national debt has risen $5 trillion in just three years. This year’s $1.6 trillion budget deficit is not stimulating anything but uncertainty and despair. Medicare and Social Security are not sustainable at present rates of payouts. Record numbers of Americans draw food stamps and unemployment insurance. An unpopular ObamaCare has not even been implemented yet, and the administration has already granted 1,400 exemptions from it. While blaming the American people for their malaise, so too Barack Obama has made almost everything worse and is getting angrier at other people and events in the process. The administration’s massive borrowing, new regulations, promised higher taxes, opposition to new oil leases and pipelines, takeovers (from GM and Chrysler to health care), and rhetorical assault on the successful in private enterprise have turned a bottoming-out recession into a near-permanent slump. Those with capital do not want to invest in new workers or equipment because they believe the President does not like them, in the sense that he will raise taxes to take away their hard-won profits, or will impose some sort of new regulation, like ObamaCare or prohibitions against opening factories in right-to-work states, to make profits impossible. Meanwhile, Obama serially faults the Bush policies of 2008, not his own of 2009–11, something that becomes ever more difficult as the Bush administration’s average unemployment rate, GDP growth, deficits, and gas prices now seem not all that bad. And to the degree that economists fault Bush for the financial meltdown of 2008, they have cited his excessive federal spending, government intrusion into the housing market, and chronic budget deficits, just those areas where Obama has trumped Bush and turned his misdemeanors into felonies. Sometimes Obama’s obsession with Bush’s ghost is more implicit. Take national security. He has quite boldly embraced and expanded all the Bush protocols he once trashed, largely because he has discovered that Guantanamo, tribunals, renditions, preventive detention, the Patriot Act, and Predator drones keep terrorists away from the United States. Obama has not changed the Bush-Petraeus plan for Iraq, but has never explained why he once denounced what he now advocates. Now the President has dropped his former multicultural reaching-out to the theocracy in Iran and the dictatorship in Syria. When George Bush was President, promoting democracy was derided as an arrogant neoconservative imposition of our values onto different cultures. Now pushing democracy in the Arab world is called advocacy for human rights. Obama knows the media are invested in his success, so he feels no urgency to explain to the public why policies enacted years ago deserve blame for their failures and receive no praise for their successes. By 2 to 1, Americans say the country is pretty seriously on the wrong track, and nine in 10 continue to rate the economy in negative terms. Nearly six in 10 say the economy has not started to recover, regardless of what official statistics may say, and most of those who say it has improved rate the recovery as weak. The first question Americans are going to ask is, “Are they better off today than they were three or four years ago, and if the answer to that is no, Obama is going to have a very, very difficult time winning reelection.”

(“’Are You Better Off Than Before Obama?’” by Henry J. Reske and Ashley Martella dated June 5, 2011 published by News Max at http://www.newsmax.com/Headline/ReincePreibis-faithandfreedomcoalition-RepublicanNationalCommitee-GOP/2011/06/05/id/398881

“Bush Did It! Bush Didn’t Do It!” by Victor Davis Hanson dated June 8, 2011 published by National review Online at http://www.nationalreview.com/articles/269040/bush-did-it-bush-didn-t-do-it-victor-davis-hanson )

A number of new economic stats have been pointing to a sputtering economy, maybe even an inflation-prone, less-than-2%-growth recession, and only drastic changes can reverse the damage done and restart this economy. Gross domestic product grew a paltry 1.8% during the first quarter, and most economists expect something similar in the second quarter. Anemic” is the adjective being tossed around by the mainstream media.

·    In the lackluster May report, the unemployment rate edged up to 9.1 percent from last month’s 9% and March’s 8.8%.

·    Large numbers of people who were formerly looking for work give up every month in this economy, so the numbers aren’t as bad as they could be.

·    In reality the under-employment rate, including those who want to work fulltime but only can find part time work, is closer to 18%.

·    Housing continues its downward plunge with house prices well below 2002 levels.

·    The dollar has lost 10% of its value against major currencies; 39% of its value against gold.

·    Inflation has reared its ugly head with prices going up dramatically in stores and gas prices approaching new highs.

·    The S & P will lower our credit rating as a nation and I suspect Obama will use this event to pressure a debt ceiling increase without negotiating serious deficit and debt reduction.

·    Obama keeps giving away money and perqs to Foreign Banks, Big Labor, and our Enemies while Americans need work.

People are losing confidence and expecting things to get worse. In a larger sense, the failure to ignite small-business job creation has to be laid at the doorstep of the Obama administration, and the economic policies that threaten higher taxes and regulations virtually across the board. This lost national output is the Obamanomics growth tax caused by too much tinkering, too much debt, and too much spending. It is not as though we don’t know how to solve the current economic mess. All we need to do is to replace the destructive policies of the Left with pro-growth policies for the future:

·    Repeal Obama's scheduled 2013 tax increases for virtually every federal tax which threaten to turn the recession into a depression.

·    Cut the capital gains tax to zero to promote investment in the U.S. and job creation.

·    Cut the corporate tax rate from the highest in the world to match Ireland at 12.5 percent so that American companies can compete anywhere in the world.

·    Adopt 100% expensing so American companies can write off new equipment to make sure American workers are the most productive in the world.

·    End the death tax permanently so family businesses and farms can focus on job creation.

·    Repeal Sarbanes-Oxley to free up new businesses to grow.

·    Repeal the Dodd-Frank law which is killing small banks and crippling small businesses and homeowners.

·    Adopt an American energy program to keep the $500 billion we spend on foreign oil each year here in the U.S. putting Americans to work.

·    Repeal ObamaCare to stop the destruction of small business jobs.

Based on American economic history, recovery from the recession should have occurred some time during 2009. Prior American history has also shown that the deeper the recession the stronger the recovery. President Obama's economic policies have been so disastrous that they have prevented any real recovery from getting off the ground, at what is now three and a half years since the recession began. It is time to end the Obama recession by replacing the President’s job-killing policies with proven solutions for prosperity.

(“Obama’s Jobs Recession” by Larry Kudlow dated June 3, 2011 published by The Daily Caller at http://dailycaller.com/2011/06/03/obamas-jobs-recession/

“Holy Smokes Bullwinkle: U.S. Hiring Slows, Paltry 54,000 Jobs Added in May” by William R. Mann dated June 3, 2011 published by Canada Free Press at http://canadafreepress.com/index.php/article/37198

Jobs Slump – It’s the Policy, Stupid” dated June 3, 2011 published by Investor’s Business Daily at http://www.investors.com/NewsAndAnalysis/Article/574400/201106031900/Editorial-Jobs-Slump-Its-The-Policy-Stupid.aspx

The Danger of the Obama Recession Turning into the Obama Depression” by Newt Gingrich dated June 8, 2011 published by Human Events at http://www.humanevents.com/article.php?id=44002

The Coming Crash of 2013” by Peter Ferrara dated June 8, 2011 published by The American Spectator at )

 

There is no economic case for quantitative easing, nor has there ever been one because quantitative easing is simply a political gimmick.  Despite an $800 billion-plus stimulus package accompanied by a promise that it would keep unemployment under 8 percent and two rounds of Quantitative Easing (QE1 and QE2) designed to stimulate demand, instead, the dollar has devalued, leading to the inflation demonstrated in food and fuel. Yet this administration appears grimly determined to inflict even more Keynesian economic, government pump-priming “solutions” on the country. QE2 has created a massive new bubble in dollar-based financial assets, from stocks to gold, but it has had zero visible effect on the real economy. Quantitative Easing ends in June, but the ending seems in doubt despite Fed statements regarding its imminent demise.  There will likely be a face-saving pause, after which a new "crisis" will be discovered or imagined.  The recent plunge in the stock market is a likely excuse if it continues, although nowhere in the Fed's charter does it suggest that "pumping" financial assets is a proper role.  QE made matters worse in the sense that it prevented adjustments in relative prices and the liquidation of misallocated resources.  These adjustments are necessary for any recovery to occur.  The political case for inflation or loose money is simple.  It covers over (temporarily) the seriousness of underlying economic problems.  It has been used in this country since the 1930s, when Keynesian economics provided "legitimacy" for interventions.  Similar interventions have been documented for more than a thousand years in other countries.  Nowhere has quantitative easing worked other than to defer problems for an eventually bigger day of reckoning. Look at some of the outcomes resulting from QE2:

·    The working labor force dropped as a percentage of the total labor force.

·    The unemployment rate was virtually unchanged.

·    Housing prices continued their downslide.

·    Growth in the economy slowed from 2.6% to 1.8% in the most recent quarter.

·    The rise in the stock market of 26%, according to Mr. Arends, was primarily a result of the deterioration in the value of the dollar.

·    Those who owned stocks had gains, but gave part of the gains back due to the rise in prices, especially of imported goods.

·    Wage gains trailed reported CPI inflation meaning the poor became worse off.

·    Non-investors in the stock market were made worse off as a result of higher prices.

·    The US government further added to the debt burden of the public with virtually nothing to show for it other than speculative financial markets.

·    The US dollar continued to lose value relative to other fiat currencies.

·    Precious metals and other hard assets continue to increase in dollar value.

·    The latest job report (May) showed only 54,000 private jobs created, of which reportedly half were jobs at McDonald's.

Supporters claim QE2 created 700,000 new jobs, but each new job cost $850,000 to create.  To put this dubious (desperate) employment claim in perspective, the US economy normally creates about 1.5 million jobs during a six-month period.  That is double what is claimed for the stimulus and generally occurs without any help from the government or the Fed.  That amount of growth is necessary merely to keep pace with normal growth in the labor force. Despite centuries of economic wisdom and experience, the US government has pursued Keynesian nostrums for about 80 years.  These policies failed during the Great Depression, despite the myths created by statist historians.  While Keynesianism is bad economics, it is good politics.  It enables politicians to cover up economic problems at least for a while.  That is Keynesianism's great appeal -- it is a political rather than economic appeal. After all, governments do not solve problems; they either create them or hide them, and Keynes provided the toolkit to do both. The last three years have been an attempt to bury monstrous economic problems with government interventions.  There is nothing to show for squandering all these resources other than an increasingly insolvent government, an increasingly impoverished population, and a woefully imbalanced economy.  It is time to face up to the fact that eight decades of Keynesian politics has hollowed out the economy, leaving us with massive distortions, imbalances, and unserviceable debt, and any more of the same medicine will only make each of these conditions worse.

(“Government Assisted Economic Suicide” by Monty Pelerin dated June 6, 2011 published by American Thinker at http://www.americanthinker.com/2011/06/government-assisted_economic_suicide.html

The Un-Recovery” by Arnold Ahlert dated June 6, 2011 published by Front Page Magazine at http://frontpagemag.com/2011/06/06/the-un-recovery/ )

 

The Congressional Budget Office (CBO) says the real cost of the federal government guaranteeing the business of failed mortgage giants Fannie Mae and Freddie Mac is $317 billion, not the $130 billion normally claimed by the Obama administration. The CBO said a “fair value” accounting of guaranteeing the two defunct mortgage companies, known as Government Sponsored Enterprises (GSEs), was more than twice as high as the Office of Management and Budget had accounted for. The total of those cash payments is $130 billion, and is normally reported as the cost of the bailout of the GSEs to date. However, the CBO said that merely counting the cash payments, and not the cost of federal subsidies granted to the GSEs, obscures their real costs. Essentially, the CBO is accounting for the cost of the federal government guaranteeing the loans bought and securitized by the GSEs. Currently, Fannie and Freddie rely on explicit federal guarantees to continue to secure below-market financing rates. Because Fannie and Freddie are insolvent, the federal government must make up their losses when the loans they have guaranteed lose money in default. However, the CBO counts not only the amount of federal funds spent to keep the GSEs operating but the cost to the federal government to subsidize the mortgage guarantees issued by Fannie and Freddie. In other words, the CBO counts as a federal spending commitment the subsidy given by the government to the GSEs. Typically, federal accounting does not use fair value accounting because it is argued that because the government can print its own money, its risk is zero, and the CBO says that even though the government can print money, technically by issuing Treasury bonds, this merely transfers the risk to the taxpayer, who will eventually have to pay off the bonds issued by the government and the CBO expects these costs to rise by an average of $4 billion per year.

(“True Cost of Fannie, Freddie Bailouts: $317 Billion, CBO Says” by Matt Cover dated June 6, 2011 published by Cybercast News Service at http://www.cnsnews.com/news/article/true-cost-fannie-freddie-bailouts-317-bi )

 

Everybody knows that if you don’t pay to maintain and repair something, you limit its life, whether it is a car, and appliance, or your health, and withholding care will shorten its lifetime too. People need medical care to avoid becoming clunkers - disabled, worn out, parked in wheelchairs and nursing homes. For nearly a half century, Medicare has enabled seniors to get that care. The Obama administration is changing that by launching a new “efficiency” measure that will discourage hospitals from expending resources on older patients.  Hospitals will be evaluated based on “spending per Medicare beneficiary.” Hospitals that spend more than average on a patient with a particular diagnosis get whacked with demerits, starting July 1st. Financial penalties will follow in October 2012. The Obama administration claims the new initiative will reward “efficiency, ” but hospitals will earn points for spending less, regardless of what happens to the patient.  That could mean rewarding skimpy care. In the early 1990s, HMOs tried a similar cost-cutting method,  withholding payments from doctors and hospitals who failed to meet targets for lowering cost per patient. It set up a conflict of interest between medical professionals and their patients. As the medical tragedies accumulated, state lawmakers deemed the “withhold” too dangerous to patients and outlawed it. Now the Obama administration is reviving this dangerous tool and using it against the most vulnerable patients, the elderly. When Medicare started in 1965, the law forbade the federal government from interfering in treatment decisions. Doctors decided what patients needed, and Medicare paid for each treatment on a fee-for-service basis. Though this protection from government interference has been whittled away a bit, the new Obama initiatives are drastic.  They destroy Medicare as we’ve known it. Americans know Medicare is running out of money in a decade and it’s better to have an honest conversation about how to extend its financial solvency (including raising the eligibility age, and enlisting competition among private insurers) rather than impose hidden rationing while dishonestly claiming to “save Medicare as we known it

(“New Medicare ‘Efficiency’ Measure Deadly to Seniors” by Betsy McCaughey dated June 3, 2011 published by News Max at http://www.newsmax.com/McCaughey/hmo-medicare-seniors-RichardFoster/2011/06/03/id/398743 )

 

Since the beginning of the post-World War II era there has been one constant that has been the stabilizing force in the world: the stature, power, and influence of the United States, but in a matter of a few short years the Obama Presidency has deliberately and overwhelmingly eroded America's pre-eminence, which has resulted in global instability and domestic unease. The global and domestic landscape is one of turmoil, indecision, and uncertainty.  Everywhere one looks there is chaos and potential disaster, whether in the financial, economic, or political sphere.  Barack Obama assumed the office of the Presidency as a man brought up and steeped in 1960's radicalism, which advanced the doctrine that America, as the lone Western superpower, represented the evil nature of colonialism and capitalism's exploitation of the masses -- whether there was any truth in this assertion or that the United States was guilty of these sins was irrelevant.  No nation or culture in history has done more to advance the well-being of mankind than the United States and Western civilization. However to the Marxist mindset of the radical left, only they, utilizing the vehicle of a massive central government, could control mankind's nature and create a fair society.  It is the ideal philosophy for those who, so enamored with themselves, can wallow in their self-importance and rule with a heavy hand the same masses they claim to protect.  Under no circumstances, therefore, can these revolutionaries defend or profess admiration for their country; instead they must not only transform the United States into a villain, but destroy any vestiges of its accomplishments in order to permanently retain control over the populace and exact revenge for the alleged transgressions of the West. It is now inarguable that the 1980's were the high-water mark of competent and viable American international leadership in the post-World War II era.  Today, during the Obama years, the international scene is led by arguably the least competent and most easily intimidated, as the majority of world leaders consist of those whose principal interests are themselves and the trappings of office.  Unfortunately our President does not believe in American Exceptionalism and is determined to allow chaos, both domestic and international, to metastasize and change the United States and world forever.  This mindset, combined with a lack of forceful leaders of other nations, will result in another financial catastrophe, the rise of a hegemonic China, an inevitable military conflict in the Middle East, and the spread of radical Islam.  The ultimate goal of the fall of Western civilization will be realized, but at a massive and bloody cost, and the handwriting is on the wall and we need to wake up!

(“Obama and the End of Western Civilization” by Steve McCann dated June 8, 2011 published by American Thinker at http://www.americanthinker.com/2011/06/obama_and_the_end_of_western_civilization.html )

Congress is demanding that President Obama either seek Congressional authorization to continue US involvement in the NATO-led Libyan operation or determine the best way to withdraw from the conflict. The War Powers Resolution comes into effect “in any case in which United States Armed Forces are introduced into hostilities or into situations where imminent involvement in hostilities is clearly indicated by the circumstances.” The plain words of the statute apply to Libya, and the 60 day authorization deadline passed last month. In addition to demanding a rationale for going to war, the House resolution supplies a list of 21 questions on Libya where the House is seeking clarification on the war:

·    The President’s justification for not seeking authorization by Congress for the use of military force in Libya.

·    United States political and military objectives regarding Libya, including the relationship between the intended objectives and the operational means being employed to achieve them.

·    Changes in United States political and military objectives following the assumption of command by the North Atlantic Treaty Organization (NATO).

·    Differences between United States political and military objectives regarding Libya and those of other NATO member states engaged in military activities.

·    Specific commitments by the U.S. to ongoing NATO activities regarding Libya.

·    The anticipated scope and duration of continued United States military involvement in support of NATO activities regarding Libya.

·    The costs of United States military, political, and humanitarian efforts concerning Libya as of June 3, 2011.

·    The total projected costs of United States military, political, and humanitarian efforts concerning Libya.

·    The impact on United States activities in Iraq and Afghanistan.

·    The role of the United States in the establishment of a political structure to succeed the current Libyan regime.

·    An assessment of the current military capacity of opposition forces in Libya.

·    An assessment of the ability of opposition forces in Libya to establish effective military and political control of Libya and a practicable timetable for accomplishing these objectives.

·    An assessment of the consequences of a cessation of United States military activities on the viability of continued NATO operations regarding Libya and on the continued viability of groups opposing the Libyan regime.

·    The composition and political agenda of the Interim Transitional National Council (ITNC) and its representation of the views of the Libyan people as a whole.

·    The criteria to be used to determine United States recognition of the ITNC as the representative of the Libyan people, including the role of current and former members of the existing regime.

·    Financial resources currently available to opposition groups and United States plans to facilitate their access to seized assets of the Libyan regime and proceeds from the sale of Libyan petroleum.

·    The relationship between the ITNC and the Muslim Brotherhood, the members of the Libyan Islamic Fighting Group, al-Qaeda, Hezbollah, and any other group that has promoted an agenda that would negatively impact United States interests.

·    Weapons acquired for use, and operations initiated, in Libya by the Muslim Brotherhood, the members of the Libyan Islamic Fighting Group, al-Qaeda, Hezbollah, and any other group that has promoted an agenda that would negatively impact U.S. interests.

·    The status of the 20,000 MANPADS cited by the Commander of the U.S. Africa Command, and Libya’s SCUD–Bs and chemical munitions, including mustard gas.

·    Material, communication, coordination, financing and other forms of support between and among al-Qaeda operatives, its affiliates, and supporters in Yemen, the Horn of Africa, and North Africa.

·    Contributions by Jordan, the United Arab Emirates, Qatar, and other regional states in support of NATO activities in Libya.

Now there is a resolution before the Senate pressuring the President to seek Congressional consent for continued U.S. military involvement in Libya. With Gaddafi still in power (and no UN authorization to remove him), the rebels still unable to dislodge him, and the humanitarian cost of this humanitarian adventure rising daily in dead civilians and destroyed infrastructure, the failure of President Obama to articulate a clear national interest in assisting NATO in this intervention is starting to catch up to him. When asked what would happen if the White House doesn’t comply with the resolution, an aide to the speaker pointed out that when the 14 day deadline is reached, the defense appropriations bill will be on the floor at that time. If Congress wishes, it could cut funding for the Libya operation then. NATO has extended the Libyan mission another 90 days, but with Gaddafi showing little sign of weakening, and NATO still refusing to commit ground forces to oust him, it is probable when this 3 month extension is up, another will be forthcoming, so a clear justification is needed even more today.

(“Showdown Over Libya” by Rick Moran dated June 3, 2011 published by Front Page Magazine at http://frontpagemag.com/2011/06/03/congress-and-white-house-in-showdown-over-libya/

Obama’s nonwar in Libya” dated June 3, 2011 published by The Washington Times at http://www.washingtontimes.com/news/2011/jun/3/obamas-nonwar-in-libya/ )

 

* 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:

·  Responsibilities at http://www.returntocommonsensesite.com/intro/responsibilities.php

·  Budget at http://www.returntocommonsensesite.com/dp/budget.php

·  Crime at http://www.returntocommonsensesite.com/dp/crime.php

·  Economy at http://www.returntocommonsensesite.com/dp/economy.php

·  Employment at http://www.returntocommonsensesite.com/dp/employment.php

·  Energy at http://www.returntocommonsensesite.com/dp/energy.php

·  Immigration at http://www.returntocommonsensesite.com/dp/immigration.php

 

David Coughlin

Hawthorne, NY

www.ReturnToCommonSensesite.com