Views on the News

July 11, 2009


Views on the News*

Obama and the Democrat Congress must learn to put the country first before politics if they ever want the economy to recover, since everything they plan will only make the economy worse. The Dow has been tanking again, and new figures show the U.S. economy shedding jobs at an accelerating rate. What makes no sense is the approach adopted by the Democrats. In the middle of a crisis created by debt, the solution chosen is to run up the debt. The Democrats are debating not one, but two new programs of unprecedented size, without the slightest understanding of the economic consequences. One is a vast new "health care" plan, to be sold almost entirely on emotion, with President Obama's snake-oil skills. The only clear goal is to effectively nationalize the U.S. medical system, by making every part of it report to government bureaucracies. The other new program is the "cap and trade" legislation. Now that the "global warming" scare has been proven to be a hoax, the U.S. government is going to war against carbon fuels, through a program that can only kill jobs, both directly and through outsourcing of American economic activity to places with lower environmental standards; while igniting protectionist trade wars over the latter. The scheme will cause gas and electricity prices to skyrocket, triggering a massive inflation of energy prices harming those on fixed incomes most, and it will have no significant impact on the environment. The unemployment rate today is 9.5% -- nearly 20% higher than the Obama White House said it would be with the stimulus in place. Obama rushed the stimulus through Congress saying we couldn't afford to wait, but now his administration is waiting to spend the money. Ronald Reagan tried to “starve the (government) beast” as a strategy to control government growth, while Obama has adopted a strategy to “choke the (government) beast” with so much spending that something / anything will happen.


James Pinkerton at Fox News thinks the economy is shaping up to be Barack Obama's Katrina, because Obama will get the blame for his slow response to the current recession.   Unemployment is 9.5 percent and rising fast, certain to go higher than 10 percent.   "We misread how bad the economy was," said Vice President Joseph Biden. This excuse is hard to accept considering throughout his presidential campaign and the early months of his presidency, Obama repeatedly compared the recession to the Great Depression when one-third of the workforce was unemployed. What is the federal government doing about it, and where are the jobs that were promised? The problem the Democrats have is that even if you want to build something, you can't do it, without plowing through years' worth of lawyers and environmental-impact-statement-writers, nor without enduring endless hearings and lawsuits where every last NIMBY gets a whack at the project.  The only people being stimulated are white-collar lobbyists and litigators. To be sure, Obama's federal government will spend a lot of money.   On May 27, more than three months after President Obama signed the American Recovery and Reinvestment Act of 2009 into law, a grand total of $2 million of stimulus money had spent in Michigan, the hard-hit state with the nation's highest unemployment rate.  Only $55 billion of the $400 billion in non-tax-break stimulus money has been spent.  Critics of spending-stimulus programs warned of such delays last year when Obama was selling his idea to the nation, and later when it was about to be sent Congress, projecting that the lion's share of the money would not be spent until 2010 when many economists said the recession would be over. Obama is finding out that its deeds, not words, that matter. Was there waste, or fraud, or abuse in all this New Deal spending? Sure.  But there was also a huge renaissance in public works around the country, from the Triborough Bridge in New York to the Golden Gate Bridge in California. And New Deal programs such as the Rural Electrification Administration and the Tennessee Valley Authority literally lit up (as well as cooled) life for tens of millions of Americans. By contrast, today's Democrats are not really interested in building things.  They are demonstrably more interested in bailing out banks, and keeping environmentalists happy.  Bankers, of course, deal in intangibles; they make money without regard to where physical goods  are manufactured--although bankers know that goods are likely to be cheaper in China, so that's their preference.   The environmentalists, of course, oppose just about everything; they are working to pastoralize the United States; creating meadows and forests, but not jobs. And if that's the goal, so what if unemployment rises?  So what if the real economy contracts? That's a small price to pay for elite Democrats, who hold those other, non-productive green objectives closer to their hearts. Thus the "cap-and-trade" legislation, which passed two weeks ago in the House of Representatives, is a perfect exemplar of the modern Democratic mindset: The green environmentalists are happy, because carbon-based energy production is restricted, and greenback-minded Wall Streeters are happy, too, because traders will make billions trading trillions' worth of funny-money carbon contracts. But there is a catch: People don't have jobs now, and they won't get them in the future if Obama spends money that doesn't stimulate--and then seeks to choke off what remains of the productive economy through environmental regulation.


The background noise you hear is the flushing sound of Obama’s popularity as it disappears down the American Presidential toilet! Depending on which Presidential approval rating you follow, Obama’s overall approval rating has dropped to a new low (Quinnipiac at 49% to Rasmussen at 56%), with his approval index (difference between strongly approve and strongly disapprove) dropped from 0% to -5%. Obama’s economic approval rating has also dropped from 57% to 46%. Meanwhile 54% of Americans favoring smaller government with fewer services to larger government with more services. 58% of Americans worry more about keeping the budget deficit down versus 35 percent worried more about boosting the economy. Other polls show a resistance to specific Democratic proposals. 60% of voters now oppose the passage of a second economic stimulus plan this year. 58% of voters agree that reforming health care, while important, should be done without raising taxes or increasing the deficit. 56% of Americans are unwilling to pay more in taxes or utility rates to generate cleaner energy and fight global warming. Gallup reported earlier this week that 39% of Americans say their views on political issues have grown more conservative. It's interesting that on these issues and many others independents are responding more like Republicans than Democrats. This apparent recoil against big-government policies has not gone unnoticed by Americans.


The root causes of the housing crisis can be directly linked to over-zealous government intervention implementing social progress into the housing industry. The House Oversight and Government Reform Committee released a report highlighting the government contribution to the housing crisis. The seeds of the meltdown began with the well-intentioned goal that everyone have a home even if they can’t afford it, but it led to one of the biggest Ponzi schemes ever. Fannie Mae and Freddie Mac were the chief culprits in the housing crisis because they encouraged people who could not afford payments to borrow money. The Community Reinvestment Act and other federal programs fed the housing bubble that burst in 2007 and led to the economic downfall in 2008. Government sponsored enterprises (GSE) that were not subject to the same oversight as other publicly traded firms “privatized their profits but socialized their risks.”

    With an implicit subsidy to American homeowners in the form of reduced mortgage rates, Fannie Mae and its sister government sponsored enterprise, Freddie Mac, squeezed out their competition and cornered the secondary mortgage market.

    Congress, by statute, allowed them to operate with much lower capital requirements than private-sector competitors. They "used their congressionally-granted advantages to leverage themselves in excess of 70-to-1."

    The two GSEs were the only publicly traded corporations exempt from SEC oversight, and all their securities carried an implicit AAA rating regardless of the quality of the mortgages.

    The Department of Housing and Urban Development set quotas for GSE investment in affordable housing.

    Encouraged by an inaccurate 1992 Boston Federal Reserve Bank study charging racial discrimination in mortgage lending, the two GSEs were strongly pressured to "lower their underwriting standards, particularly on the size of down payments and the credit quality of borrowers."

    In 1992, Congress directed HUD to establish multiple quotas requiring mortgage quotes for low-income families.

    In 1995, the Clinton administration issued a National Homeownership Strategy, loosening Fannie and Freddie's lending standards and insisting that lenders "work collaboratively to reduce homebuyer downpayment requirements."

    The administration complained that in 1989 only 7% of mortgages had less than a 10% downpayment, resulting in by 1994 more than 29% of mortgages has less than 10%..

    Reduced underwriting standards spread into the entire U.S. mortgage market to those at all income levels.

    A complete decoupling of home prices from Americans' income fed the growth of the housing bubble as borrowers made smaller down payments and took on higher debt.

In the short run, this government intervention was successful in its stated goal, raising the national homeownership rate.  The ultimate effect was to create a “mortgage tsunami” that wrought devastation on the American people and economy.” A big contributor was the Clinton administration’s National Homeownership Strategy directive to “lift America’s homeownership rate to an all-time high by the end of the century.” The Clinton strategy further said that Freddie Mac and Fannie Mae should reduce down-payment requirements and “called for increased use of ‘flexible underwriting criteria,’ which it said could be achieved in concert with ‘liberalized affordable housing underwriting criteria.” Fannie Mae and Freddie Mac made 54% of the “subprime” mortgage loans from 2002 to 2007. The lowered lending standards were the cause of the housing crisis and did not exempt the Republicans or the Bush administration from blame. Borrowers quite naturally responded to the incentives they were given, irrespective of their socioeconomic status, and risky lending spread to the wider mortgage market. Responsibility for the erosion of mortgage lending standards, which began with government affordable housing policy, rests squarely on the policy makers who advocated these ill-conceived policies.


The Waxman-Markey climate change and energy bill (Clean Energy and Security Act) has not been clear on what it is the Legislation is trying to accomplish. Lamar Alexander has written an excellent article questioning what kind of America we hope to create in the next 20 years?

·    We want an America in which we have enough clean, cheap and reliable energy to create good jobs and run a prosperous industrial and hi-tech society.

·    We want an America in which we are not creating excessive carbon emissions and running the risk of encouraging climate change.

·    We want an America with cleaner air -- where smog in Los Angeles and in the Great Smoky Mountains is a thing of the past, and where our children are less likely to suffer asthma attacks brought on by breathing pollutants.

·    We want an America in which we are not creating "energy sprawl" by occupying vast tracts of farmlands, deserts, and mountaintops with energy installations that ruin scenic landscapes. .

·    We want an America in which we create hundreds of thousands of "green jobs" but not at the expense of destroying red, white and blue jobs.

·    We want an America where we are once again the unquestioned champion in cutting edge scientific research and lead the world in creating the new technologies of the future.

None of these goals are met by the current Waxman-Markey Bill.


What started out as an effort to address climate change by reducing carbon emissions has ended up as a huge tax burden on the economy, a $100 billion a year job-killing national energy tax that will create a new utility bill for every American family. This tax burden is relieved only by the vague hope that all this can be overcome by mandating increased use of a few alternative energy sources defined as "renewable." Renewable energies such as wind and solar and biomass are intriguing and promising as a supplement to America's energy requirements. Yet the Waxman-Markey Bill proves once again that one of government's biggest mistakes is taking a good idea and expanding it until it doesn't work anymore. Trying to expand these forms of renewable energy to the point where they become our prime source of energy has huge costs and obvious flaws that may be impossible to overcome. There's a better option. Let's take another long, hard look at nuclear power, since nuclear is already out best source for large amounts of cheap, reliable clean energy. It provides only 20% of our nation's electricity but 70% of our carbon-free, pollution-free electricity. It is already far and away our best defense against climate change. France gets 80% of its electricity from 50 reactors and has among the cheapest electricity rates and the lowest carbon emissions in Europe to show for it. Japan is building reactors from start to finish in four years. The refusal of China and India to go along with the carbon-dioxide limits should be the death knell for the Cap and Trade bill currently being considered by the Senate. Even if a worldwide agreement made sense, an agreement without China, India and other developing countries can be counterproductive. Democrats in the House of Representatives tried to stop this flight of manufacturing with a provision that would tax imports from countries that don't regulate their carbon emissions. The Obama administration correctly warned that this provision would lead to a trade war, which would completely dislocate the economy. Nuclear power is the obvious solution to both our energy supply and environmental problems. The obstacles are political not technological, and social not economic.


The establishment of Medicare was the culmination of decades of efforts by progressive liberals, and was seen as a stepping stone to government funded health care for all.  Many people assume that the establishment of Medicare in 1965 was the result solely of Lyndon Johnson's Great Society legislation.  Today President Obama theorizes that a “public option" will increase competition, lower costs, and provide better medical care for larger numbers of people: 

·    A government health care option will increase competition: In order to determine whether this is the case, we must review whether government involvement has ever increased competition in the past.  We must remember that the force of law attends government involvement and that the force of law gives an advantage to the government.  For instance, Medicare and Medicaid employ price-fixing, which is illegal for any private organization.  The government decides on the worth of medical services and the providers of those services must comply.  The government therefore utilizes unfair practices to establish a monopoly, transferring costs to the private sector, artificially magnifying the cost of private insurance and hiding the true cost of government coverage. When Medicare was passed senior citizens were promised that Medicare would not prevent them from utilizing private primary insurance if they wanted to. This assurance was false. Private primary health insurance has become all but impossible for persons over 65 to obtain. Medicaid recipients, as well as and those on military health plans, are significantly restricted in their choices. This lack of choice has stifled competition. Contrary to the claims of the current administration, every time government has gotten involved in health care, competition has been suppressed by practices that would be prosecutable if carried out by private companies.  Far from promoting competition, a government plan will eventually eliminate private health care, thereby eliminating all competition.

·    A government option will decrease costs: It is naďve to believe that increased government intervention will lower the cost of medicine. All past evidence indicates that the reverse is true.  In 1965, the government promised that Medicare part A would cost $9 billion by 1990. The actual cost was more than $66 billion -- over seven times projected costs. There has never been a single large federal social program that has come in at budget or has performed as predicted. Democrats have tried to pin the rising cost of medical care on the private sector. It is, however, government interference and government regulations that have caused the high cost of medical care in the past and that will continue to increase the costs of medical care in the future.  Medicare increases the cost of medical care by shifting federal administrative overhead to the private sector and through oppressive regulation. These practices will undoubtedly accelerate under "Obamacare." The CBO estimated the House version of the helath overhaul at $1.6 trillion, and the proposed legislation will cover only about one third of his claimed 45 million uninsured. If historical precedents and evidence are any indication, the actual costs of the plan could be seven times higher than this estimate. The independent HIS Network scored the House initial draft at $3.5 trillion. Adding to the fiscal nightmare, Mr. Obama is planning on cutting benefits for Medicare and Medicaid in order to transfer funding to his new health plan. This is another example that government does not contain costs, but shift costs from one program to another. The effect of Obama's program will be to increase taxes on small businesses and further worsen unemployment. This loss of jobs will result in driving people into the government-funded plan. Increasing the costs of the plan would create a vicious cycle of unemployment, increasing costs, rising taxes, and unending dependence on government.

·    A government option will improve health care and cover more people: Mr. Obama's claim of 45 million Americans without medical insurance is completely unfounded.  His health care plan will initially cover about 13 million people. However, nearly 100 million people will be eligible for the proposed government option.  As mentioned above, nothing about the plan would promote increased competition.  Once the government has a monopoly on all health care in America and the costs to the government have skyrocketed, the government will do what it has always done: use its power to ration services and increase taxes.  This will result in inferior medical care for the American people. Once this rationing occurs, there will be no turning back.  The government will be in complete control, as it is with Medicare and Medicaid.  We need only ask Medicare or VA patients about the difficulties they face in trying to obtain payments for their medical care to understand what the end result will be.  Denial of payment for care is simply rationing by another name.  Furthermore, the evidence shows that government funded health care initiated at the state level, such as the programs in Massachusetts and Oregon, have failed miserably. We will likely have to consider the morgue as an integral part of any government health care system in the future.

Insurance, whether private or a government Ponzi scheme like Medicare, means third parties pay the bills and when someone else pays, costs always go up. Albert Einstein once defined insanity as doing the same thing over and over again expecting different results.  Obama's theories are undeniably refuted by historical fact and therefore his projections are unreliable and even dangerous.  Most Americans believe health care is a serious problem, but 77% are satisfied with “the quality of health care you receive!” There is overwhelming evidence that his health care plan will result in a fiscal and medical care disaster, and his plan would result in a wider unconstitutional expansion of government control over our lives.


Realism" in foreign policy has purportedly returned to power after 16 long years in exile. Obama and his allies in and outside government take great care to distinguish their approach to the world from the unbridled idealism that supposedly characterized George W. Bush's administration. American foreign policy makers should always be aware of our country's limits and conscious of its capabilities. It is always good to have people at the helm who understand that American primacy undergirds an international system that has produced more wealth, and more peace, for the world's people than any other in human history, and who therefore seek to promote that system and protect against threats to its stability. The “realists” in power have adopted a policy of inaction in foreign affairs. Today's “realists” clutch to their belief that the only obstacle to an accommodation with the thugs who rule Iran was George W. Bush. Then Obama told Americans that their government's historical legacy of "meddling" in Iranian affairs cautioned against intervention in the current crisis. Today's “realists” are so afraid of America's shadow, so convinced that the nation is in relative decline, that they counsel inaction even when solidarity with the Iranian opposition would accelerate the demise of Iranian theocracy and hence improve America's regional power position. The “realists” recognize those moments when American interests and American ideals intersect. The “realists’” lackadaisical attitude in the face of democratic fervor is partly a consequence of their view that a regime's character is largely irrelevant to its foreign policy. It is partly confirmation that Obama's team is more interested in restricting the scope of American ideals, interests, and ambitions than in capitalizing on moments when history might shift decisively in our favor.


Obama’s diplomatic overtures continue to be symbolic and downplay the danger in utopianism. Obama has a grating habit of describing any position not his own as “ideological,” as if his is the only sober, practical understanding of the problems we face. It appears that engagement is talk and more talk. This raises the awkward question of what talk ultimately means. The administration has made it clear that spreading freedom is so much ideological foolishness. If all we offer are words that threaten or encourage, words that offend or endear, but are not backed by serious policy options, the verbal exercise is meaningless. Some have described “soft power,” diplomatic encouragement, as critical to our interests. Unfortunately this power is beyond soft when the words aren’t supported with action; it is marshmallow power. You can push it, bend it or discard it, for in the end it doesn’t have any bearing on the actions of an opponent. To engage is to be involved, interlocked, but the Obama administration is participating in a one-way arrangement. It sure seems like Obama has an ideological problem with democracy. Both President Obama and Secretary of State Clinton have put ideology first on Honduras siding with the leftists and ignoring the legal removal of Manual Zelaya after he violated multiple articles in their Constitution. President Obama went to Moscow desperate for the appearance of a foreign-policy success. He got that illusion of success in this “preliminary” agreement, at a substantial cost to America's security since he promised to give up our plans for missile defense systems. The series of signing ceremonies in a grand Kremlin hall and the litany of agreements, accords and frameworks implied that the United States benefited from all the fuss, but really didn't. America got nothing of real importance, but the government of puppet-master Vladimir Putin got virtually all it wanted.


Taxed Enough Already (TEA) Parties are alive and well with 2,000 TEA Parties from coast to coast and maturing as a political phenomenon. Tea Party Organizers knew they had done 2 momentous things.  This movement has awoken the “sleeping giant” of American Conservatism.  The silent majority is now chanting “Silent, No More!” The April 15 Tea Parties showed the movement could no longer be ignored by the administration, so they set out to minimize, ridicule, belittle and do all they could to discredit, defang or emasculate the Tea Party movement.  There is no way to hide that there were a lot of angry and informed people out there who were going to hold their feet to the fire and demand accountability. The next phase in this movement is to move from protest to political action.  Each person of like mind must become educated, not only in the facts but in tactics and processes by which they PERSONALLY can respond.  An informed activist must know how to effectively translate that information into action.  Most importantly, they must communicate their ideas, their frustrations, their anger and their praises to their elected officials.  They must do so clearly, frequently, and in such a manner as to put them on notice that they are being scrutinized and will be held accountable come election time. How can you get started?

·         VOTE!!  Not just once every 4 years but EVERY TIME the polls are open, whether for the presidential election or for school board or zoning proposals!

·         GET INFORMED.  Avail yourself of the available resources. New Media and Technology.  Networking with others of like mind.

·         GET ACTIVE.  Call, write, email, fax and visit your elected officials.  Pester them till they know your name!  Give them a piece of your mind.  Make sure they know they’re being watched, and will be held accountable.  Write letters to the editor.  Post to blogs.  Let people KNOW what is on your mind.

·         EVANGELIZE!  Grow the movement by encouraging others to join it!  That means being prepared to explain what is wrong, why it’s wrong, and what you are doing about it.  If you can get someone to understand what’s happening and how it will affect them, you’re half way to changing their mind!

·         BECOME A RESOURCE!  Share your knowledge.  Share your experiences.  Provide money and materials where you can.

Remember, only you can prevent the nation from going up in smoke!


* 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