Views on the News

November 27, 2010

Views on the News*

Democrats are still looking for explanations for their stunning rejection in the midterms, citing everything from voting rights violations and Middle America’s racist orientation to Americans’ inability to perceive the underlying genius of President Barack Obama’s economic policy, but failed to consider is the albatross of contemporary liberalism. Liberalism once embraced the mission of fostering upward mobility and a stronger economy, but liberalism’s appeal has diminished, particularly among middle-class voters, as it has become increasingly control-oriented and economically cumbersome. Modern-day liberalism, however, is often ambivalent about expanding the economy, preferring a mix of redistribution with redirection along green lines. Its base of political shock troops, public-employee unions, appears only tangentially interested in the health of the overall economy. The liberal attachment to economically regressive policies such as cap and trade, cost the Democrats mightily throughout the American heartland. Populism, a traditional support of liberalism, has been undermined by a deep suspicion that President Barack Obama’s economic policy favors Wall Street investment bankers over those who work on Main Street. Obama also emphasized an urban agenda that promoted nationally directed smart growth, inefficient light rail and almost ludicrous plans for a national high-speed rail network. These proposals appealed to the new urbanist cadre but had little appeal for the vast majority of Americans who live in outer-ring neighborhoods, suburbs and small towns. The failure of Obama-style liberalism has less to do with government activism than with how the administration defined its activism. Rather than deal with basic concerns, it appeared to endorse the notion of bringing the federal government into aspects of life, from health care to zoning, traditionally controlled at the local level. Often eager to micromanage people’s lives, contemporary liberalism tends to obsess on the ephemeral while missing the substantial. Measures such as San Francisco’s recent ban on Happy Meals follow efforts to control the minutiae of daily life. This approach trivializes the serious things government should do to boost economic growth and opportunity. In contrast, contemporary liberals seem more concerned about controlling soda consumption and choo-chooing back to 19th-century urbanism and this poverty of ambition hurts Democrats outside the urban centers.

(“How Liberalism self-destructed” by Joel Kotkin dated November 19, 2010 published by Politico at http://www.politico.com/news/stories/1110/45376.html )

Week after week, Obama has used his bully pulpit to attack American corporations, big and small, accusing them of everything from intentionally failing to create jobs to reporting excess profits, which in this President's mind would seem to be any profit at all. Then there is the inscrutable charge that corporate America is conspiring to "steal our democracy."  Fully half of his recent radio addresses in recent months have been devoted to the purported conspiracy of business against democracy. In all of these addresses the claim is the same:  corporate America is out to crush workers, extract sinful profits from his labor, and distribute these profits -- presumably as stock dividends and executive compensation -- to a small class of exploiters whom Obama simply calls "the rich." We have heard the same scenario verbatim ever since 1848, when Marx and Engels published "The Communist Manifesto." What surprises is not just the anachronistic nature of the Obama's message: it is the crass and boorish quality of his discourse. At the heart of his political identity lies a deep-seated antipathy toward capitalism and toward its modern embodiment, the successful corporation.  Small businesses, of course, are OK, as Obama asserted when he said "These are the people who will help us grow our economy and create jobs." But Big Insurance, Big Oil, Big Banks, and the rest should be viewed as enemies of the people, since the President believes that they do not create jobs and do not produce goods or services of value. They are and always have been merely greedy thieves, exploiting the worker and destroying the environment, and by their very nature are evil. Successfully demonizing business, making it ripe for manipulation and plunder, takes a well planned effort sustained across multiple fronts. Start with a broad cultural assault equating profits with theft. Follow up using the highest corporate tax rates in the developed world to confiscate and redistribute profits to favored constituents. Force companies to divert precious resources into satisfying complex and ever-changing regulations. Then inflict a cost that can't be passed along to customers or shareholders by criminalizing a broadening catalog of business practices. Then make a big show of selective enforcement so that every senior executive goes to bed wondering, am I next? In a democratic capitalist nation in which the private sector affords jobs for three-fourths of its citizens, one would imagine that the President would act as a booster of the free market, not as its chief nemesis. Does Obama really believe that a system of state capitalism in which profits are strictly regulated, and minimized, will produce dynamic growth, enough to create jobs for the 30 million workers now unemployed or underemployed and for the millions of new workers entering the job market each year? Capitalism as the root of all evil was the vision of Lenin, Mao, and Castro, and of every other Marxist ruler over the past century, but socialism has never before worked, and it never will, no matter how many radio addresses the President devotes to the subject.

(“No Business, No Jobs” by Jeffrey Folks dated November 22, 2010 published by American Thinker at http://www.americanthinker.com/2010/11/no_business_no_jobs.html

Criminalizing the Act of Doing Business” by Bill Frezza dated November 22, 2010 published by Real Clear Politics at http://www.realclearmarkets.com/articles/2010/11/22/criminalizing_the_act_of_doing_business_98764.html )


The President's commission on deficit reduction claims that any added revenues will be used to reduce the $8 trillion to $10 trillion deficits in the coming decade, but history teaches us that this never happens because Congress will simply spend the money. The draft recommendations call for closing popular tax deductions, higher gas taxes and other revenue raisers to drive tax collections UP to 21% of GDP from the historical norm of about 18.5%. A Congressional Joint Economic Committee study (known as the $1.58 study) found that every new dollar of new taxes led to more than one dollar of new spending by Congress, and subsequent revisions of the study over the next decade found similar results. The entire post World War II era through 2009 found each dollar of new tax revenue was associated with $1.17 of new spending. Politicians spend the money as fast as it comes in, and a little bit more. The only era in modern times that the budget has been in balance was in the late 1990s, when Republicans were in control of Congress. The growth rate of federal spending was dramatically reduced from 1995-99, and the economy roared. In the last four years Democrats have demonstrated that they can spend money faster than they can print it. Senate Republican Leader Mitch McConnell, when asked what the party will do once it assumes control of Congress vows, "We will vote to freeze and cut discretionary spending." What is important is not so much what is said but what is omitted. The four biggest items in the federal budget are Social Security, Medicare, Medicaid, and defense, and those programs escape any mention from McConnell. They make up about 60% of the federal budget. Domestic discretionary outlays, by contrast, account for only about 16%. If Republicans focus entirely on those, they will be sending a clear and quite believable message: The GOP is not serious either! Congress, both parties, must break the culture of spending because America can not survive spending the way it has over the last 50 years.

(“Higher Taxes Won’t Reduce the Deficit” by Stephen Moore and Richard Vedder dated November 21, 2010 published by The Wall Street Journal at http://online.wsj.com/article/SB10001424052748704648604575620502560925156.html?mod=WSJ_Opinion_LEADTop

Will Republicans Get Serious on Spending” by Steve Chapman dated November 22, 2010 published by Reason Magazine at http://reason.com/archives/2010/11/22/will-republicans-get-serious-o )

In the topsy-turvy world we now inhabit, letting states file for bankruptcy to shed some of their obligations could save American taxpayers a great deal of money, and although it isn’t perfect, but it’s far superior to any of the alternatives currently on the table. California has a deficit that could reach $25.4 billion next year, and Illinois’s deficit for the 2011 fiscal year may be in the neighborhood of $15 billion. There is little evidence that either state has a recipe for bringing down its runaway expenses, a large portion of which are wages and benefits owed to public employees. The constitutionality of bankruptcy-for-states is beyond serious dispute. Although bankruptcy would be an imperfect solution to out-of-control state deficits, it’s the best option we have, at least if we want to have any chance of avoiding massive federal bailouts of state governments. So long as a state can’t be thrown into bankruptcy against its will, and bankruptcy doesn’t usurp state lawmaking powers, bankruptcy-for-states can easily be squared with the Constitution. If the bankruptcy framework treads gingerly on state prerogatives, as it must to be constitutional, it may be exceedingly difficult for a bankruptcy court to impose the aggressive measures a state needs to get its fiscal house in order. Since the successful 1994 filing for bankruptcy by Orange County, California, after the county’s bets on derivatives contracts went bad, municipal bankruptcy has become increasingly common. Vallejo, California, is currently in bankruptcy, and Harrisburg, Pennsylvania, is mulling it over. The experience of these municipal bankruptcies shows how bankruptcy-for-states might work, what its limitations are, and why we need it now. Given that a new bankruptcy chapter for states would clearly be constitutional, and the entrance hurdles could easily be adjusted, the ultimate question is whether its benefits would be great enough to justify the innovation. Liquidation simply isn’t a realistic option for a city or state. With liquidation off the table, the effectiveness of state bankruptcy would depend a great deal on the state’s willingness to play hardball with its creditors. The principal candidates for restructuring in states like California or Illinois are the state’s bonds and its contracts with public employees. Ideally, bondholders would vote to approve a restructuring. The bankruptcy law should give debtor states even more power to rewrite union contracts, if the court approves. The risk that politicians won’t make as much use of their bankruptcy options as they should does not mean that bankruptcy is a bad idea. For all its limitations, it would give a resolute state a new, more effective tool for paring down the state’s debts. Many governors might find alluring the possibility of shifting blame for a new frugality onto a bankruptcy court that “made him do it” rather than take direct responsibility for tough choices. With the Presidential election just two years away, the pressure to bail out California, Illinois, and perhaps other states is about to become irresistible. The appeal of bankruptcy-for-states is that it would give the federal government a compelling reason to resist the bailout urge.

(“Give States a Way To Go Bankrupt” by David Skeel dated November 29, 2010 published by The weekly Standard at http://www.weeklystandard.com/articles/give-states-way-go-bankrupt_518378.html )

Aviation security has bedeviled us since 2001, in part because we have reacted to past incidents instead of planning strategically for the future, so we continue to simply react to the last breach of airport security and will always lag behind terrorists' innovations. A serious strategic review should examine all options, select the best strategy, then monitor, analyze and reassess it regularly. There should also be a quadrennial Homeland Security Department review. We need to deal with as many of the non-terrorists as possible before they arrive at airport checkpoints. A national, voluntary "trusted passenger" program would do that by advance background checks and biometric identity documents, which could be reviewed, renewed or revoked at any time. Privacy and civil liberties could be protected by strong privacy legislation and oversight by an independent board. The entire airport screening process as presently implemented is a clear violation of the rights of the individual under the Fourth Amendment which requires that people be secure in their persons and property from unreasonable searches and seizures. The attitude of the Transportation Safety Authority is that anyone who enters an airport with the intent to travel is a criminal suspect, and needs to prove their innocence before they may board a plane. There is no presumption of innocence and no requirement of probable cause to perform a search as would be required in normal law enforcement situations. Israel has avoided acts of air travel terrorism for the last 30 years, even though Israel is an even bigger target than the United States. Their answer comes in two parts. The first is profiling: They look for people who might be terrorists and subject them to increased scrutiny if their behavior implies something out of the ordinary. We need to develop a much broader profiling program that gives primacy to patterns of activities and behaviors. This profiling would not key primarily on race, ethnicity or nationality, but it would not totally ignore them either. Rather, it would rely primarily on intelligence and law enforcement and on consular, airline and other information related to an individual's recent and long-term behavior. Meanwhile, security also has people entering the airport to test the security. They may be carrying fake bombs or have an artificial terrorist profile created for the purpose. If anyone fails to catch these fake terrorists they are fired with no second chances and no retraining. Generally speaking it takes a passenger one half hour from the front door to the airline gate. There is no reason why we can't do the same thing here; no reason except that it reduces the level of bureaucracy and the amount of public show that makes it look as if the government is doing something. Citizen activism to remove current abusive procedures must now be a priority and It may be a good idea for the incoming Congress to defund Homeland Security until the scanners are removed and reasonable procedures are returned to the nation's airports.

(“Show Me Your Papers!!!” by Steven D. Laib dated November 20, 2010 published by Intellectual Conservative at http://www.intellectualconservative.com/2010/11/20/show-me-your-papers/

”To find the needles, reduce the haystack” by Thomas E. McNamara dated November 21, 2010 published by Los Angeles Times at http://www.latimes.com/news/opinion/commentary/la-oe-mcnamara-airport-screening-20101121,0,3755067.story )


Social Security is not an insurance program, not an invested retirement pension, not a normal thing at all, but just another government tax-and-spend handout. We don’t legally own our promised benefits since Congress may change them at any time. Social Security was set up as a pay-as-you-go redistribution system; falling into the trap of “Ponzi Scheme” fraud was inevitable. This October, the Congressional Budget Office (CBO) released its Long-Term Projections for Social Security and like the two long-term projections before it, this projection finds Social Security in even worse shape than expected. The main conclusion is that by 2014 the Social Security Trust fund will be running perpetual cash flow deficits, three years ahead of what was predicted last year. While part of the acceleration in the onset of Social Security deficits is due to the impact of the recession on tax revenues, all projections show that these unsustainable deficits will continue into the future. According to the Social Security Trustees Report, the extra payroll taxes collected from taxpayers since 1983 amount to $2.5 trillion and should last us until 2037. The problem is that Treasury no longer has the money. It was spent as part of the general fund on education, wars, and loans to people who can’t get loans in the private sector. To pay back Social Security, the federal government will have to either raise taxes or borrow even more from domestic and foreign investors. The bottom line is that by 2014 Social Security will be broke. For this reason, Social Security reform is needed now. The people who will depend on Social Security need time to adjust to a systematically reformed system; they should not have to scramble in response to a crisis caused by political procrastination. The best way to sell major reforms to Social Security is to tell the truth about the program: explain why its original structure had programmed in DOOM from the start; and explain how politicians made it worse, and then transformed it in the ’80s so that now it scuttles its very function, as a safety net with FICA withholding takes so huge a percentage of many workers’ income that it sucks away their ability to save for their own future. Only by mastering the facts, insisting on the full context, and placing blame where it belongs (on nearly all past politicians plus most current career politicians), can we begin to unravel the mess that is today’s self-mocking titled program, “Social” “Security.”

(“Reach for the Low-hanging Fruit” by Veronique de Rugy and Jakina Debnam dated November 12, 2010 published by Reason Magazine at http://reason.com/archives/2010/11/12/reach-for-the-low-hanging-frui

Reform without fraud?” by Paul Jacob dated November 21, 2010 published by Town Hall at http://townhall.com/columnists/PaulJacob/2010/11/21/reform_without_fraud )


Vowing to change a region that has resisted the best efforts of Presidents and Prime Ministers past, Barack Obama dove head first into the Middle East peace process on his second day in office and proved just as inept as his predecessors. He was supposed to be different. His personal identity, his momentum, his charisma and his promise of a fresh start would fundamentally alter America’s relations with the Muslim world and settle one of its bitterest grievances. The settlements were pushed by a bunch of left-wingers who were out of sync with the realities and were out of government too long. The irony is that Obama went directly back to the place where George Bush the father left off. Two years later, he has managed to forge surprising unanimity on at least one topic: Barack Obama. A visit here finds both Israelis and Palestinians blame him for the current stalemate, just as they blame one another. Instead of becoming a heady triumph of his diplomatic skill and special insight, Obama’s peace process is viewed almost universally in Israel as a mistake-riddled fantasy. Far from becoming the transcendent figure in a centuries-old drama, Obama has become just another frustrated player on a hardened Mideast landscape. The President who hoped to dramatically remake the regional landscape has, in the end, simply become one more in a long line of failures.

(“View from Mideast: Obama’s a problem” by Ben Smith dated by November 22, 2010 published by http://www.politico.com/news/stories/1110/45471.html )


* 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:

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


David Coughlin

Hawthorne, NY