Oct
9
This Just In
Filed Under Uncategorized | 1 Comment
In addition to his inexplicable Nobel Peace Prize, President Barack Obama was awarded the Heisman Trophy, selected most likely to succeed at New Brighton High School in Bethesda, Maryland, won the Next Food Network Star contest, and won the Conn Smythe trophy.
Sep
14
Quote Of The Day
Filed Under Liberalism | Leave a Comment
From Warren Meyer’s Coyoteblog, regarding Van Jones:
Apparently, as one of Obama’s 129 czars, this guy whose job it is to redistribute billions of dollars from one group of individuals to another and issue diktats to be followed by private citizens and businesses, is *gasp* a communist. Well, no sh*t. All of these various czars have communist roles so why is it surprising Obama might have picked a communist to hold one of them. The only surprise was that Van Jones was dumb enough to admit it in print rather than hiding it in leftish double-speak like most of the rest of the administration.
Communism in the Obama administration (and the Democrat Party, for that matter) is not a question of presence, but degree.
Regarding Van Jones’ Truther Pledge issue, I think he was screwed no matter what the case actually was. Either he believed George W. Bush was directly responsible for killing thousands of Americans on September 11th, or he doesn’t read what he signs, content that the cause being pushed has something to do with criticizing Republicans. Both are unacceptable.
Jun
11
Salaries, Caps, and Incentives
Filed Under Economics | Leave a Comment
Via Drudge, it appears Democrats both in the legislative and executive branches are eyeing government-imposed limits to executive pay, whether they are on the receiving end of government money or not. President Obama and many in his party hold to the fallacious notion that “excessive” executive compensation were a large component in the ongoing financial crisis.
Were there certain members of management in the financial sector that were rewarded lavishly for track records that were less than deserving? Of course. Then again, the same argument could be made for many a legislator…
But where such command-and-control policies such as executive pay caps go awry is their basis on the idea that the government can make decisions better than the people can regarding their own money. In this case, we’re talking about shareholders in the companies in question. In the end, CEO’s and their ilk are being paid with the shareholders’ money, and they decide (through elected boards of directors and more specifically compensation committees) how much their managers should be paid. To impose government controls on what management can be paid and how such matters should be decided is nothing less than the federal government telling the shareholders that they are too stupid to allocate their own money.
I am in no way advocating that those who drive their companies into financial ruin be rewarded. What I am advocating is that these people be shown the door by their employers, the shareholders who gained their equity and voting rights with their own hard-earned money, not the the Fed, the President, or Barney Frank.
An interesting spin on the issue is this story (also featured on the Drudge Report) of the suggestion of the feds capping union boss pay. Fat chance.
What I see as the more interesting undercurrent in this debate is the recognition by liberals that people do, in fact, alter their behavior when considering incentives. They realize that if CEO’s are rewarded for short-term results, they’ll get short-term plans. They follow the incentives. So how can the government crack down on pay for companies in financial trouble when the government was the one who rewarded bankrupt auto companies with huge taxpayer-financed takeovers?
If people respond to incentives, then what exactly are we rewarding with welfare?
If people will act in a way to gain money, will they not do the opposite when a behavior takes away money, as in taxation?
Cigarette taxes are meant to curtail smoking.
Carbon taxes are meant to curtail energy use and emissions.
Wouldn’t taxes on working, saving, investing, and employing have similar effects?
Perhaps the liberals believe government incentives somehow fall into another category. Perhaps raising taxes is good?
Then why wait to raise taxes? If its good, why not do it right away? If you’re not doing it now because its not good, are you promising that you will be doing something harmful to the economy in the future?
There seem to be a lot of inconsistencies with those currently in power as to whether people respond to incentives or not. But in the end, it is the American economy that will suffer for their ignorance.
Jun
2
GM Bankruptcy: Mission Accomplished
Filed Under Economics | 6 Comments
General Motors declared bankruptcy.
Let that sink in a little bit.
Words that would be considered ludicrous a decade or so ago yesterday became a reality, as GM filed for chapter 11. Congratulations to all of my American readers, who share ownership in a 60% stake in the automaker:
Monday, U.S. President Barack Obama defended government intervention in GM as the auto maker enters Chapter 11 bankruptcy, saying the actions are part of a “viable, achievable plan that will give this iconic company a chance to rise again.”
Under the plan, the government would own 60% of the new GM, but Mr. Obama said auto executives “will call the shots and make the decisions about turning this company around.” He said the government would refrain from playing a management role in all but the most critical areas. “Our goal is to help GM get back on its feet…and get out quickly,” he said.
Obama also described the government ownership, and therefore control, of the company as “unwelcome.”
But is this recession-era takeover really “unwelcome”? Or is Obama just refusing to let a good crisis go to waste?
When looked at critically, the GM bankruptcy and government takeover accomplishes many goals that make up the Obama agenda:
- Being able to dictate priorities in auto manufacturing will allow Obama to enforce his CAFE standards and help keep the “green” lobby
- As Rush pointed out (via The Other McCain), the restructuring deal put together by the Obamunists will put through plenty of protectionist measures that will do great economic harm, but keep in line with Obama’s positions on trade. RSM states later, “The sharp rise in long-term bond rates is only “puzzling” to people who know less about market economics than I do, and I’m a liberal arts major. But the list of people who know less than me, however, unfortunately includes the man Obama insisted must be in charge of the Treasury.”
- How does the UAW taking disproportionate ownership in GM play to the Obama agenda? Hmmm: “We’re ready to play offense for organized labor. It’s time we had a president who didn’t choke saying the word ‘union.’ A president who strengthens our unions by letting them do what they do best: organize our workers,” - Barack Obama, April 2nd, 2008
I’m sure there could be nothing more musical to the collective ears of Toyota, Honda, and Nissan than the fact that their largest American competitor is being run by a labor union and the federal government. But for what its worth, Moonbattery has a good idea for the next GM ad.
Update: Thanks to The Other McCain for featuring this post in the “headlines” section on their right-hand sidebar. Readers: Welcome to Zoominac!
May
7
Thanks For Clarifying That
Filed Under Economics | Leave a Comment
The official website of the POTUS, whitehouse.gov has a blog up that details all the wonderful things that The One is doing to make our lives better. With Obama’s recent initiative to eliminate off-shore tax havens generating some feedback, the Obamablog sought to address it with a little Q&A in this post, including the following clarification:
kylekunkler: Ending deferral (when US already has 2nd highest corporate tax) will only hurt US MNCs and cost jobs! http://tinyurl.com/coofnd
Jason Furman: Kyle, you are correct that the United States has the second highest statutory tax rate in the world, the official rate published in the tax code. But the United States also has more loopholes and special tax preferences than many other countries. As a result, the United States has a much lower effective tax rate. If you look at corporate taxes as a share of GDP they are below those of most major economies. The result is a tax code that is complicated, inefficient and unfair. One of major causes of these problems is the way that we tax – or more often do not tax – the foreign earnings of American companies. The administration’s plan is intended as a major, first step in addressing this problem.
Oh, I get it. Thank you for clearing that up, Mr. Furman! While the United States is supposed to have the second highest rate (statutory), all the loopholes that Obama will get rid of are keeping the actual rate paid (effective) down. But no need to worry, Obama’s brilliant plan will get rid of all those loopholes and tax havens to make sure your fears are perfectly legitimate, Kyle. Thanks for asking!
The article that the questioner cites is actually a very interesting one from Bloomberg, explaining one of the tactics that businesses use to avoid paying taxes:
Once the assets were in the haven, the U.S. parent company borrowed from the subsidiary. The interest payments were deductible in the U.S. and tax-free in the haven, the GAO said.
So the administration’s plan is to simply make this practice illegal or at least more difficult. But my main objections to that logic are:
- Companies will now have even more incentive to move their operations overseas altogether, as opposed to just a portion.
- Other countries may see this as a quasi-protectionist measure and attempt to restrict international trade.
- Just like the old laws, any attempt at government restriction will be easily manipulated by powerful and wealthy elites, like large corporations. The new laws will only hurt those not powerful enough to gain access. Such is the problem with big government.
Just because the government tries to restrict actors in the economy, like multinational corporations, from acting in their own self-interest does not mean that they will stop trying. As we can see, even with complicated laws in place, the companies still found a way around it. Whether it be regulations, taxes, fees, or counterproductive subsidies, government action will always force the private sector to allocate more resources to compliance and evasion (as the Bloomberg article illustrated) than to more worthwhile activities. And people wonder why productivity of American workers has declined over the years! Individuals are still working just as hard (if not harder), but at tasks like creative accounting and compliance that don’t produce anything like an assembly worker does.
P.S.: And that’s still not addressing the hypocrisy of an administration full of tax cheats shaming those who used legal channels to avoid paying taxes.
Mar
30
I was over at the Crapperty File at CNN looking for some blog bait, and one of Jackie Boy’s questions was “How would you change income tax laws?“ There’s no question that Cafferty himself is a statist moonbat, and his audience is usually a bunch of incoherent, class-warfare morons. However, the answers to this question were overwhelmingly not what I expected. While there were a plenty of responses such as this from Bob:
Changes that should be made include returning to a 39% top tax rate, having hedge fund managers’ compensation taxed as regular income instead of being taxed at the 15% capital gains rate, taxing adjusted gross income under $200,000 at a 10% rate and to top it off, remove the income “cap” on wages taxed for Social Security.
And this from Kenny:
Anything over $5 million a year, I would impose a 90% tax on. Simply put, if you can’t live on five million each and every year, you’re doing something so incredibly stupid you don’t deserve that kind of money anyway!
Many of the responses took a very level headed, equal-treatment tone. Libertarian Neal Boortz somehow managed to infiltrate this group quite a bit. Take this from Anna:
That’s an easy one. Set a percentage – say 10%. Set that percentage for EVERYONE. No loopholes. No deductions. Straight percentage. No matter what your income, everyone pays the same percentage. No one should complain. And the taxes can be collected on a rotating basis. Like getting a yearly inspection. That way, you always have money coming in.
… this from Stan:
I would create a Federal Sales Tax. The benefits are that it would be easy to administer, streamline the IRS, encourage savings, eliminate the underground economy, and be fair to all. Some will argue it penalizes the poor/lower income because they spend 100% of their economy out of necessity. However, the benefits far outweigh the downside.
Or this outright endorsement of the Fair Tax from Micehlle[sic]:
This is such a no-brainer to me. Do away with the IRS and implement the Fair Tax. This will tax people based upon what they spend, not what they make. If every American citizen had the money the IRS withholds from their paycheck, talk about an economic stimulus. Plus, this would significantly broaden the tax base as it will force people to stop living under the radar and pay their fair share.
If Geithner and many, many others in Washington can’t figure out the 67,000 pages of our Tax Code, how should any average Joe be expeceted[sic] to?
The Fair Tax was an official proposal by Libertarian radio host Neal Boortz and Georgia Congressman John Linder, and outlined in The Fair Tax Book. In a nutshell, the Fair Tax as proposed by Boortz and Linder would replace all federal taxes with a national sales tax of 23% of the final bill of sale, equivalent to a 30% conventional sales tax. The Fair Tax’s biggest advantages are that it treats everyone equally, is much easier to file and predict, and does not feature loopholes and deductions that politicians can use to control your behavior and help their buddies save money. It is a knife in the heart of class politics, and makes the cost of government very transparent in everyday life, as opposed to some figure on your paycheck stub, or an expense to be paid by “other people” or “the rich.”
What does such an outcry say about the American populace? First of all, we are not nearly as liberal as the past two elections would suggest. Call me crazy, but somehow Obama running on tax cuts and bombing Pakistan doesn’t suggest a liberal mandate to me.
Nor is the American public strictly conservative. What I do think are viable positions in American politics are a simplification of the tax code and equal liability. Sure, there are nuts out there that demand that everyone making over a certain amount is “too rich for their own good” or “too greedy,” but most people will be willing to have inequality in exchange for prosperity. The key for fiscal conservatives and libertarians is to show how harmful progressive taxation is on business and jobs. I think it is already clear that complicated tax rules favor the political elite and those that can afford the best lawyers.
Another winning point that fiscal conservatism needs to champion is America’s disgust with deficits. We have allowed the fallacious belief to persist that budget deficits are a result of tax cuts cutting federal revenue too short. As I have shown earlier with a nifty chart, revenue is not the problem. Spending is. However, the Republicans lost the ability to attack spending as an issue when they wasted money like sailors in port in the six years they were in power.
The national debt and federal budget deficit is a result of rampant spending that far outpaces a healthy revenue stream. The liberals know the best way to make higher taxes palatable for the average voter is to use deficit reduction as an excuse. The Democrat mantra is not tax-and-spend; it is spend-and-tax.
The fiscally conservative/libertarian/Republican agenda can win again if it can demonstrate to America that progressive income taxes don’t work and that spending and deficits are only excuses to confiscate more of our income. Success is staring us in the face.
Mar
19
On the Obama ‘Town Hall’ (Rally)
Filed Under Economics | 2 Comments
Yesterday, President Obama held a rally in California (he called it a town hall) to garner support for his budget. While a lot of topics were covered, I want to focus on one important part:
Let’s talk tax policy for a second, because, again, some on the other side have said, oh, Obama, he’s a tax-and-spend Democrat — tax and spend. Well, it turns out, yes. You know, what I’ve said is we should return to the tax rates that we had under Bill Clinton, which means — which means this: which means that for people who are making more than $250,000 a year, they would pay instead of 36 percent, they’d pay 39 percent. Like, a 3 percent increase on their tax rate.
Now, these folks can afford it. They were rich — they were rich back in the ’90s. It’s not like suddenly they’re going to have to go to the poor house. But what that does is it allows us to pay for health care reform for a lot of people who are out there working every day but are just one illness away from bankruptcy.
Now, that’s — I don’t think that’s unreasonable. I don’t think that’s socialism. I think that’s part of understanding that we’re all in this together and that if the middle class is working well, if working people are doing well, then everybody does well. (Applause.) Then they can buy products and services, and businesses will succeed. That’s the philosophy that we are pursuing in this budget; that’s why I need your support.
This is where The One shows that class-envy is at the center of his politics. “These folks can afford it,” he says. Is affordability the qualifier we look at when determining tax policy? If I happen to have an extra $10 at the end of the week, does that mean I have any less claim to it than if I needed it?
Then Obama tries to pass the fallacy that if we tax one individual and give to another, it will stimulate the economy. How does this make sense? If Jack is buying $500 worth of goods and Jill is buying $100 worth of goods, does that make any difference than if they were both buying $300 worth of goods? No. Progressives and Socialists care little about economic growth. They care about shared misery. In a capitalist society, some folks are more adept at finding new products and services, and get richer than others. If we try to ’spread the wealth around,’ these producers will have less capital and incentive to drive this innovation and prosperity. Is equality (if it could be achieved) worth sacrificing all of the benefits we reap from the innovations of the “rich”? Yes, Bill Gates is ridiculously wealthy, but aren’t our lives much better off because of the PC revolution (Mac fans can substitute Jobs for Gates and the iPod for PC)?
Mar
16
Health Benefits May Be Taxed
Filed Under Healthcare | 1 Comment
It appears the “change” we will be getting from President Obama is change from his own campaign rhetoric.
From GOP 4 Liberty:
Remember back to the October 8th Presidential debate. The one where Barack Obama chided John McCain’s health care plan by saying what John McCain ““doesn’t tell you he’s going to tax your employer-based health-care benefits for the first time ever.” Obama argued that this would lead to ““the largest middle-class tax increase in history.”
Today, March 15th, four months after Barack Obama won the election and almost two months after taking the oath office, the administration seems to be considering that idea themselves.
Jackie Calmes and Robert Pear of the NY Times tells us,
“At a recent Congressional hearing, Senator Ron Wyden , an Oregon Democrat whose own health plan would make benefits taxable, asked Peter R. Orszag, the president’s budget director, about the issue. Mr. Orszag replied that it “most firmly should remain on the table.”
Mr. Orszag, an economist who has served as director of the Congressional Budget Office, has written favorably of taxing some employer-provided health benefits and using the revenue savings for other health-related incentives. So has another Obama adviser, Jason Furman, the deputy director of the White House National Economic Council.”…
…When Senator Max Baucus, Democrat of Montana, advocated taxing benefits at a recent hearing of the Finance Committee, which he leads, Treasury Secretary Timothy F. Geithner assured him that the administration was open to all ideas from Congress. Mr. Geithner did, however, allude to the position that Mr. Obama had taken as a candidate.
The Congressional Budget Office says that including health benefits in taxable income could mean $246 billion in additional revenue for a single year. Stopping short of full taxation, as Mr. Baucus and others suggest, would mean less new revenue.
During the campaign, Senator McCain’s plan was to indeed tax employer-paid health benefits, but raise the deduction of private health insurance premiums to a greater rate than previously allowed. This lowered the total tax liability of dollars used to fund health insurance, and gave the individual the deduction as opposed to the corporation. This would mean the individuals who are making decisions about health care costs are the ones actually receiving it. As we have seen in almost every other area of consumption, a competitive free market allows individuals to demand better products at lower prices. Yet with employer paid health insurance, incentivized by the tax deduction, the consumer (the patient) could to a limited degree make a choice in regards to quality of service, but was unaware of the price. Medical professionals would oftentimes refuse to discuss costs with the patient, as the insurer would be the one paying, and provider would get the money. Naturally, prices began to rise to a point where millions of Americans can not afford health insurance.
So why not be in favor of the presidents plan? Unlike McCain’s plan, President Obama will not be offsetting the tax increase on health benefits with an expanded deduction on private insurance premiums. The government will be pocketing the money, which will be used to fund an enourmous federal beuracracy that will create millions more consumers who make decisions with no heed to price, rasing costs for everyone. Private insurers will be forced to raise premiums, making health insurance unnaffordable for many more people, which will be used as an excuse to add to the government largesse. This is nothing but a concerted effort to force citizens into poverty, and to use it as an excuse for government control.
I included the following on my Quotes page that relates to the effects of government spending on costs:
There are four ways in which you can spend money. You can spend your own money on yourself. When you do that, why then you really watch out what you’re doing, and you try to get the most for your money. Then you can spend your own money on somebody else. For example, I buy a birthday present for someone. Well, then I’m not so careful about the content of the present, but I’m very careful about the cost. Then, I can spend somebody else’s money on myself. And if I spend somebody else’s money on myself, then I’m sure going to have a good lunch! Finally, I can spend somebody else’s money on somebody else. And if I spend somebody else’s money on somebody else, I’m not concerned about how much it is, and I’m not concerned about what I get. And that’s government. And that’s close to 40% of our national income.
-Milton Friedman
This article from 2005 also highlights a lot of the issues I discussed.
Mar
9
A Not So Looney Toon
Filed Under Economics | Leave a Comment
LibertarianRepublican featured the following video from 1948 about a salesman peddling a little “Ism” to some American groups:
As the video shows, this “Ism” could be socialism, communism, or just collectivism in general. This is one of the better and more straightforward videos explaining the difference between individualism and collectivism, and the supreme dangers of the latter. The main points of the video were:
- It is very hard to define “American.” Whether it is a teenager, a senior citizen, mothers, fathers, blacks, whites, and everything in between, an “American” can best be described at an individual level instead of as a member of a group.
- Someone seeking power, like the hat-wearing politician or the snake oil salesman, will often employ a strategy of lumping people in groups (labor, management, farmers) and prescribing collectivist solutions rather than allowing individual decisions. Such practices are especially effective in a time of duress.
- Visions of “utopia” will come at the cost of freedom, and any attempts to slow or stop utopian programs will be met with charges from interest groups of slowing progress (much like what happened with the bailout and stimulus bills).
Regarding capitalism specifically:
- “Capitalists,” “investors,” and “speculators” are very often regular, hard working people who use their hard earned savings to fund further growth.
- This capitalist-fueled growth provides jobs and prosperity for many new generations of people.
- Like in the case of Doakes Motors in the video, entrepreneurs, capitalists, workers, and consumers are all better off by having the freedom to voluntarily cooperate with each other motivated by their own self-interest.
- Society is better off collectively by allowing individuals to experiment and take on risk to develop new products and services for a profit. Socialism may say they support the masses, but what system is built on the premise that everyone, even a lowly mechanic like Joe Doakes (or Henry Ford, or Michael Dell, or Eli Whitney, or Oprah Winfrey) may be the next innovator who changes the world?
Nowadays, we can see how prophetic a cartoon like this is. As “John Q. Public” warned:
“When anybody preaches disunity, tries to pit one of us against the other, through class warfare, race hatred, or religious intolerance, you know that person seeks to rob us of our freedom and destroy our very lives.”
See anything like that here?
It is true that from 250 up – from 250 – 300 or so, so for that additional amount, you’d go from 36 to 39%, which is what it was under Bill Clinton. And the reason why we’re doing that is because 95% of small businesses make less than 250. So what I want to do is give them a tax cut. I want to give all these folks who are bus drivers, teachers, auto workers who make less, I want to give them a tax cut. And so what we’re doing is, we are saying that folks who make more than 250 that that marginal amount above 250 – they’re gonna be taxed at a 39 instead of a 36% rate.
Step 1: Divide the public (business owners vs. workers like bus drivers, teachers, auto workers). Step 2: Make promises (”tax cuts,” healthcare, “green jobs). Step 3: Go after the villians (entrepreneurs, the wealthy).
Mar
6
Government = Force
Filed Under Libertarianism | 3 Comments
This story on CNN highlights the largest knowledge gap about government that is so dangerously prevalent today:
WASHINGTON (CNN) — President Obama will ask wealthy Americans to deal with a tax increase and pay higher Medicare premiums to help fund a $634 billion health care “reserve fund” aimed at reforming the system, according to senior administration officials familiar with the budget being unveiled Thursday.
President Obama will not “ask” anyone about higher taxes. He will force them to pay it. The founding fathers understood this concept very well when designing our government, yet we have seem to thrown it aside. Every action undertaken by government is through the use of force. No exceptions. Even if the action is good, even if it is just, even if it benefits literally every single human being, it is still a mechanism of force.
Force is the very reason free people decide to institute a legitimate government. In an anarchist society, there are people that would use force and fraud against their fellow humans. We use government to use force against them. If someone is trying to rob me, the government’s duty is to force that person to stop. If I sign a contract with someone and they violate the terms, it is the government’s duty to force them to comply with the agreed-upon terms.
If people were doing things by their own free will, force (and therefore government) would not be necessary. However, this is not the case in the real world, and the government must be present to force some people to do things. People exchange goods voluntarily through business. People help each other voluntarily through charity. People spread values voluntarily through families and community. People force others to do things involuntarily through government.
Every time action is proposed by the government, it is an act of force and should be treated as such. That is why it bothers me so much when, like the story above, it is suggested that the government is “asking” something. Nonsense. They are telling us what to do. As I illustrated in the paragraph before last, this force can be justified when someone is also using force against me. But to do anything other than this on the part of the government is a clear violation of one’s rights and against the charter of government decided upon when free men instituted the organization. This charter is the constitution.
I also hate it when politicians express a “vision” they have for America. Republican visions often include Judeo-Christian values and a strong America abroad. Communist … ahem, Democrat visions involve mass charity and communal values. In and of themselves, these points may have merit. Western culture (of which Judeo-Christian religion is a large component) is CLEARLY superior to most other cultures. Western culture values property, the rule of law, and individuality. These tenants, as history has shown, lead to increased prosperity and human rights, unlike other parts of the world where forced abortions, beheadings, and female circumcision are the norm. Conversely, charity is a value that is and should be encouraged in society. People are largely a product of their own decisions, however everyone at some point needs a helping hand, including your humble blogger. I have been on the giving and receiving end of kindness towards others regardless of compensation, and it is something I believe America excels at.
But can we, let alone should we, use the force of government to achieve these ends? Are we winning hearts and minds for Western culture by dispersing our military all over the world? Can we legislate morality? Is it really “charity” when we force someone to redistribute their earnings to those who didn’t create the wealth? No. The difference between taxes and charity is the difference between rape and making love. The ends are similar, but he means are in no way congruent.
The only “vision” a politician should have is a list of things which they will force people to do. After all, a politician is essentially auditioning for a job as the operator of the force machine. What should they use this machine for? All of the government’s funding comes from taxes taken by force (I sure don’t know anyone who just writes checks to the Treasury out of the goodness of their own heart). Every action and regulation perpetrated by the government is forcing someone to do something they would not otherwise do (if they would, the government would then not be necessary). Therefore, in true libertarian form, I suggest the government should only use this force to prevent other, illegitimate force.
The “vision” of a politician may involve spreading a religion, or cultural values, or having the wealthy help pay for the expenses of the poor, but these actions should all be voluntary. If these are the ends the person wants to achieve, then perhaps they should join the clergy or the Red Cross. There is a line between thinking something should be accomplished, and using force to make it so. Once we allow a segment of our lives to be under the jurisdiction of force, it will be up to whoever is in power at the particular moment to decide the standards by which force will be implemented.
I would like to finish with a quote from one of our founding fathers:
“Government is not reason, it is not eloquence — it is force! Like fire, it is a dangerous servant and a fearful master. Never for a moment should it be left to irresponsible action.”
-George Washington
Feb
23
Because It Worked So Well Last Time…
Filed Under Economics | 2 Comments
This week President Obama introduced his plan to use the resources of the federal government to attempt to stabilize the housing markets and, hopefully, the economy at large. The plan uses two strategies: allow homeowners who are current but have negative equity to refinance into a lower-rate loan under Fannie Mae and Freddie Mac, and to use incentives to “encourage” mortgage holders to modify loans where the borrowers are already behind on their payments. Why did I put “encourage” in quotes, you ask?
But the administration is also wielding a big stick. It will work with Congress to amend bankruptcy laws to allow judges to modify mortgages, a step community advocates say is badly needed but that the financial industry abhors.
If lenders don’t do what the government “encourages,” they could be in for some nasty surprises.
In bankruptcy cases, President Obama favors judges having leeway to reduce or “cramdown” the principle of the mortgage or rewrite the terms unilaterally. This blatant disregard for the rule of law will not only void agreements made volutarily by the the lender and borrower, it will greatly discourage banks from wanting to enter the mortgage market if they know that a contract can be voided at the will of a bankruptcy judge. Then again, that may not be a problem when all of the banks are owned by the government.
When Communism Now! covered the plan, they were glad to see that the bankruptcy courts would now be extorting lenders. Said guest Josh Zinner (emphasis mine):
So many people are underwater. They owe more on their mortgage than their house is actually worth. And this plan right now would do little for them. In bankruptcy, what a judge could do is cram down the amount owed down to the value of the property, and then a judge would be able to modify the terms of the mortgage—reduce interest rates, freeze interest rates on adjustable mortgages, adjustable-rate mortgages, extend the terms of loans.
…
The reason it’s critical is that right now there’s really no stick to mortgage servicers. There’s nothing to force them to do these modifications that are in everybody’s best interest, and they’re not doing them. If they’re facing an impending bankruptcy filing, that’s going to change dramatically, and it will cause them to do a lot more modifications within the parameters of the plan. So these changes are really critical for this plan to work.
Those on the left excuse such actions by being in ‘everybody’s best interest’. The CNN article quoted Obama in his speech in Arizona:
“In the end, all of us are paying a price for this home mortgage crisis,” Obama said. “And all of us will pay an even steeper price if we allow this crisis to deepen — a crisis which is unraveling homeownership, the middle class, and the American Dream itself. But if we act boldly and swiftly to arrest this downward spiral, every American will benefit.”
The question I pose is, if such actions really are in “everybody’s best interest,” then why the hell aren’t they doing them in the first place?
First of all, I realize that banks cannot profitably foreclose on every loan that falls behind and that voluntary loan modification is indeed in their best interest. If banks are failing to do so in these cases, its probably because they know they can wait for a plan like the one listed above to pay off their poor lending decisions.
However, in many cases it is not in their best interest. Its important to remember that, save a select minority of cases, these mortgages were agreed to voluntarily by the lender and borrower, and that the lender is the one that paid for the house. Borrowers have no right to demand that the bank or anyone else pay for their decisions. Whether a mortgage modification is in the best interest of the lender is the decision of - the lender! Not a borrower, a judge, or a politician.
The first part of Obama’s plan will have Fannie Mae and Freddie Mac take on even more loans, that, by definition, are significant credit risks because the program targets loans that exceed the actual value of the home. Not only is this taking on a risk in gross dollar terms, but a homeowner will have less incentive to keep up payments on a home that has no or negative equity rather than in a home that they do have equity. As we have seen, over the last decade especially, is that not only are Freddie Mac and Fannie Mae inept at assessing credit worthiness, their sheer size makes any problems they have for the reasons stated above particularly harmful.
In an article entitled How US mortgage debt could cause a global financial crisis, Dan Denning states:
In the US, Fannie Mae (FNMA) and Freddie Mac are Government Sponsored Enterprises (GSEs) which buy residential mortgages and repackage them to sell on as mortgage-backed bonds.
Denning then reviewed statements from former Treasure Secretary Henry Paulson:
The large size of GSE mortgage portfolios (about US$1.5 trillion), coupled with the lack of market discipline at correctly pricing the risk of GSE debt, multiplied by the interconnectivity of the world’s financial institutions has led to a possibility ‘without precedent.’ Henry adds that ‘Financial markets across the board would likely become very illiquid and volatile as firms with significant losses attempted to unwind their positions.’
Paulson is later quoted as saying:
“Has it been so long that we have forgotten Fannie Mae’s significant financial troubles in the late 1970s and early 1980s? During this time period, Fannie Mae’s balance sheet looked a lot like a savings and loan. As interest rates rose, Fannie Mae’s cost of funds rose above the interest rate it was earning on its long-term, fixed-rate mortgages. Like many S&Ls, Fannie Mae became insolvent on a mark-to-market basis. It lost hundreds of millions of dollars.”
So the risks of Fannie Mae and Freddie Mac taking on loans that are inherently dangerous could have lare-scale effects throughout the American and global economy. But what is so interesting about the above article?
It was written in July of 2006.
The current conundrum we are in was not only foreseen and preventable, but directly attributable to the overleveraging of government sponsored enterprises (GSE’s) Freddie Mac and Fannie Mae. I thought the Obama administration was all about ‘change’ and not repeating the mistakes of the Bush administration. Please. Obama is Bush on steroids. In addition, having the government refinance such loans is just a ‘bailout’ for the ’speculators’ who own the mortgages. Didn’t Obama vow not to protect these evildoers?
The following well-circulated video from 2004 is an example of the kind of big-government, Democrat-Party-style policies that led to this mess.
Obama’s plan would only increase an unsustainable, government-fueled housing bubble.
I’ll close with Dan Denning’s last line, in response to Paulson’s remarking of the hundreds of millions of dollars lost by Fannie Mae in the 1980’s:
If the same thing happens today, you can replace ‘hundreds of millions’ with ‘trillions.’
Feb
16
Gay Mexicans Should Vote Republican
Filed Under Civil Liberties | 3 Comments
Group identity politics seem to be all the rage now, especially with the Democrat Party in charge in Washington. No longer viewed as individuals, people are now seen as members of large, homogeneous groups, rife with societal grievances and ripe for political exploitation. The American population can be split along any lines imaginable in regards to race, skin color, ethnicity, religion, age, sexual orientation, geographical distribution, income, occupation, etc.
Many affiliated with the Republican Party see the last two elections as the party’s “failure” to “reach out” to groups in this manner. Much has been made about the impact of the Hispanic vote given recent demographic changes. Immigration and social welfare issues are seen as very important to these groups, and those who espouse collectivist ideals want to tailor the conservative movement to accommodate such groups.
Another growing political trend has been the rise of the gay rights debate. Many have likened the movement to legalize gay marriage to the civil rights movement of the 1950’s and 1960’s.
For reasons that are beyond my understanding, the Democrat party has been seen as the allies to immigrant and homosexual rights proponents, while the evil Republicans are seen as the enemies of liberty to these disadvantaged groups.
Regarding the issues of gay rights and immigration, I am a strict libertarian. Regarding the former, I cannot see how being homosexual is harming anyone else, and therefore do not support laws discriminating against it. As for marriage, I don’t believe it is any of the government’s business.
When it comes to immigration, I believe that it is not government’s job to manage demographics over a given geographical area (in other words, immigration quotas), nor is it a function of the state to manage our ‘culture’. As long as you are not a criminal, terrorist, or have an extremely dangerous communicable disease, come on in. Just don’t live off of my dime (which will be the idea of this post). Coyoteblog has a very good piece concerning immigration here.
Arguing my side of these two points would be more than this post is intended for. What this post is meant to do is illustrate that both the Democrat and Republican parties are enemies to the freedoms of gays and immigrants, and that people who already agree with me should vote for the lesser of two evils and for what will realistically bring about the reforms we support. So, if I grouped people into political identities instead of free-thinking individuals, I would, as my (I think rather catchy) title says, urge that gay Mexicans should vote Republican.
It’s easy to say the Republican party is against gay rights and immigration. Democrats are generally for relaxing immigration standards, while Republicans are generally for strict immigration enforcement and sometimes reducing immigration altogether. Proponents of legalizing gay marriage tend to be Democrats or liberals, whereas Republicans oppose gay marriage and support a constitutional ban.
The first thing I can’t stand is why Democrats seem to have the default support of immigrant and gay-rights groups when they differ very little from Republicans. For instance, as this article points out, all of the major 2008 Democrat presidential candidates opposed gay marriage, although they supported civil unions. Then-candidate Barack Obama:
“When you’re a black guy named Barack Obama, you know what it’s like to be on the outside,” said the Illinois senator at the nationally televised forum in Hollywood. “And so my concern is continually to make sure that the rights that are conferred by the state are equal for all people.”
The love may have been flowing at a forum specifically for gay rights, but political realities bogged down Obama when he actually became president. Homosexual blogger Perez Hilton lamented Obama’s decision to cut out of an HBO broadcast a prayer by a gay bishop and also to invite Rick Warren to attend the inauguration. Over a picture of Obama, the blogger scribbled “He’ll let u down too.”
While such politically-motivated moves may shock gays who are liberals like Perez Hilton, it doesn’t shock conservatives or libertarians like me. We realize that statists like the Democrat party employ a strategy of lumping people into groups, promising them things in order to gain power, and rob freedom from everyone, including the groups they claim they’re helping.
Another dark side of statism is that it gives legitimacy to government control of things like marriage and immigration, because costly social welfare programs give the federal government a vested interest in restricting such things. Case in point, the rise of welfare, Medicare and Medicaid, and Social Security have only strengthened the argument to limit the amount of people eligible for American citizenship and equal recognition under the law.
I understand that xenophobia has always and will always exist. However, as civilization progresses, we begin to become more tolerant and see people as individuals, not as members of stereotypical groups whose needs and qualities are all alike. Then how are issues like immigration and gay marriage still significant in modern political discourse?
Take immigration, for example. In a completely free country with a government as the constitution intended, citizenship would mean little more than where you lived. The only argument against open immigration would be that some ethnic groups are undesirable. As I said, such a xenophobic stance has become less and less popular. But what legitimizes an argument towards limiting immigration? Massive (and massively expensive) government entitlement programs like welfare, Medicare and Medicaid, and Social Security, all programs supported by the statist Democrat party. We cannot expect citizens who have been paying into such programs for decades to accept immigrants taking benefits after being here for a fraction of the time. Not only is it not right morally, it is not fiscally feasible. Libertarians like me cannot accept open immigration, as it would bankrupt taxpayers. The Republicans are completely right when they say that immigration restriction and reform are top priorities. Without governmental largess created by Democrats, there would be no need to restrict these freedoms, and xenophobic policies would begin to politically ring hollow in a nation of immigrants. LBJ and FDR did more to restrict immigration than Tom Tancredo could ever hope to.
The argument that Democrat big-government programs are an enemy to civil rights causes is even more blunt when dealing with gay marriage. The error of gay-marriage proponents, with whom I agree, is that their strategy is to make gay marriage acceptable in society. Unfortunately, not only do we have no right to force our viewpoints on others, such a task is not plausible. A Quinnipiac University poll gave the following three choices:
1. Same-sex couples should be allowed legally to marry
2. Same-sex couples should be allowed legally to form civil unions but not marry
3. Same-sex couples should not be allowed to obtain legal recognition of their relationships
The results of the poll show that 62% opposed legalizing gay marriage. The respondents had varying degrees of support for a either a constitutional ban on gay marriage or allowing some civil rights to gay couples. However, these are all the wrong questions. The question should be why the hell the government has a vested interest in who the hell gets married anyway. That answer is simple - Social Security.
Social security not only pays disability, unemployment, and a contributor’s own retirement benefits, it will also pay spousal benefits. In the event of a spouse’s death, the survivor will receive either their own benefit amount, or half that of their deceased spouse’s, whichever is greater. Because of government control of retirement, the feds have a vested interest in what kinds of relationships are recognized as marriage.
Take the following example: There are two relationships, one homosexual, the other heterosexual. In each, one member makes a very good living at their job, so that the other one has no need to work and devotes their time to a local charity and has no reported earnings. After 30 years of marriage, the high-earning member dies in a car accident. The difference between the two relationships? Well, under the current system that the Democrats favor, while the heterosexual survivor would receive half of their spouse’s benefit to live on, the homosexual survivor would be out of luck and the government would pocket their partner’s sizable contributions. If the government would get out of the business of running people’s retirements and left it to private accounts, similar to what Republican George W. Bush tried to implement, the homosexual earner could have designated their partner as the beneficiary in case of death. In a 401(k), you can designate whomever you wish as a payee if you kick off, including your mother, brother, dog, live-in girlfriend, or even a charity. With Social Security? No dice.
But wait, wail the “progressives,” if we legalized gay marriage, wouldn’t that get rid of the problem? Yes, but as that poll cited earlier, its going to be a bit of a stretch politically. The truth of the matter is that that which you give the government control of will also be under the control of whoever is in power and the political whims of the day. It’s all well and good when your guy is in power, but it won’t always be that way. A much wiser policy is to give others, government included, as little control over your own life and earnings as possible.
In the cases of both immigration and gay rights, Republicans are the party of less government control. The knee jerk reaction of freedom advocates, from libertarians like myself and progressives, may be to try to change the view of the world. But that is not a prudent course. It is best to allow a system where people are allowed control over themselves, and themselves alone. While Republicans may be doing things for reasons we disagree, they may be the right course of action after all.
Postscript: Pajamas Media had a great piece explaining why Dick Cheney was the most pro-gay VP in history. In the article, he is quoted as saying:
We live in a free society, and freedom means freedom for everybody. We shouldn’t be able to choose and say you get to live free and you don’t. That means people should be free to enter into any kind of relationship they want to enter into. It’s no one’s business in terms of regulating behavior in that regard. The next step then, of course, is the question you ask of whether or not there ought to be some kind of official sanction of the relationships or if they should be treated the same as a traditional marriage. … I think different states are likely to come to different conclusions, and that’s appropriate. … We ought to do everything we can to tolerate and accommodate whatever kind of relationships people want to enter into.
I guess those evil Republicans (even Cheney!) aren’t so bad, are they?
Feb
13
Something Stimulating This Way Comes
Filed Under Uncategorized | 1 Comment
Today the House passed a $787 billion stimulus bill that could become law if the Senate takes it up today. With the arrogance that comes from being avowed statists, Obama and the Democrats completely ignored a pledge to allow taxpayers to review where their money is being spent. I guess this bill was ‘too important’ for public scrutiny. Oh well.
The speed and fearmongering used to pass this bill would make the PATRIOT Act blush.
Feb
10
Anatomy Of A Collapse
Filed Under Economics | Leave a Comment
From Newsbusters:
CONTRARY TO A VIEW POPULARIZED DURING THE 2008 presidential election season, the current economic crisis was not the result of deregulation.
The Bush administration made many mistakes, but deregulation was not one of them.
…
Our present crisis began in the 1970s, during the Carter administration, with passage of the Community Reinvestment Act to stem bank redlining and liberalize lending in order to extend home ownership in lower-income communities. Then in the 1990s, the Department of Housing and Urban Development took a fateful step by getting the GSEs to accept subprime mortgages. With Fannie and Freddie easing credit requirements on loans they would purchase from lenders, banks could greatly increase lending to borrowers unqualified for conventional loans. In the name of extending affordable housing, this broadened the acceptability of risky loans throughout the financial system.
The risk lurking in the GSE portfolios was acknowledged in the Bush administration’s first fiscal-year budget, released in April 2001. It stated that Fannie and Freddie were “a potential problem” because “financial trouble of a large GSE could cause strong repercussions in the financial markets, affecting federally insured entities and economic activity.”
The above quotes are from an editorial by Scott S. Powell. You should read both pages completely. When Barack Obama is using fearmongering to crush dissent and warning Republicans to not bring “old,” “failed,” or “rejected” free market policies that “got us into this,” he is lying. And he knows it.
Feb
9
‘We Have To Be Willing To Be Led’
Filed Under Liberalism | Leave a Comment
I know this is a little late, but it was too important to go undocumented. The day after the inauguration of The One, Communism Now! covered the blind followers that have sprung up in droves to usher Barack Obama to new and dangerous levels of power.
The socialist radio show had a correspondent on the ground in Washington D.C. to get their take on the election of The One and his upcoming administration. From the transcript:
TAMMY BOUDREAUX: Hi. My name is Tammy Boudreaux. I’m from Houston, Texas. I’m a huge supporter of Obama, like many of us here. And he has a huge fan base in Texas, so don’t let that fool you. Yeah, I’m here to celebrate and participate in our future potential of becoming better.
Fan base? Is Obama a politician or Pearl Jam?
OBAMA SUPPORTER 1: Change has to occur, so something’s going to happen. How much, how much happens, we don’t know. But I think he got a pretty good stamp to do quite a few things, running off a change during his march to the White House. So he’ll be able to do some stuff. Will he be able to do everything he promised? No, and I don’t expect him to, either.
What??? I didn’t get it either.
OBAMA SUPPORTER 2: And we’ve got to realize we’ve got to give him patience, you know? Got to give him patience, make sure everything—these issues that we’re dealing with are all major issues, in and of themselves, and we’ve got like five major issues. And it’s going to take five years, four years to even tackle one of these issues, and the main issue right now being the economy. We’ve got to figure out and give patience to him and not put too much expectations on him.
I wonder if these people gave George W. Bush this kind of leniency after inheriting an economy in recession from Slick Willy and a major homeland terrorist attack in his first year?
Basically the above quote means that the Presidency of the most powerful nation on Earth is Obama’s by birthright and he should not be held to any standards or promises made throughout the campaign. But we shouldn’t be surprised. Liberalism is based on the idea that regular people are totally incapable of running their own lives. These talents are only held by a small elite who will dictate their marching orders from a distant capitol. And inevitable failures by statist liberals are simply the result of obstructionist jerks out there that, for some reason, feel the need to make their own decisions. Think I’m getting a little worked up? “Obama Supporter 1″ illustrated my point:
Oh, and the major thing is, he’s just the general, but we’re the army, so he can lead us, but we also have to be willing to be led and be able to go out there and do the hard work also.
Pardon my French, but Fuck That.
I ask my readers, are you “willing to be led”? Is Obama your “general”? Because I don’t know about you, but I am not some mindless drone who needs a dictator telling me what to do. I exist for my family and myself, not some self-serving politician in Washington. And I vote for candidates who will be careful stewards of my tax dollars, preserve my liberty and freedom, and in general represent and serve me. Not the other way around.
Another Obamunist showed what kind of values The One will bring to the White House:
LYND ROBSON: My first name is Lynd, Robson, and I’m from Montana, but I just moved to Washington. And I was part of the ’60s generation, the baby boomers. And, you know, it’s just wonderful to hear this generation and Barack Obama speaking to what we—the values of that time, which have somehow dissipated into the ozone, and he’s brought them back. And it’s just fabulous
Maybe we’ll soon have government sponsored LSD parties out on the South Lawn!
Drone # 4 gave us a peek at what will happen to those who dare defy the view that we are one conglomeration of humanity whose individual units and desires are secondary to the concept of unity:
OBAMA SUPPORTER 4: What I’m hoping is there’s going to be a change that is going to really reform the country. Right now, I think even at the grassroots level, a lot of people have given up or shifted their thinking. And I’m hoping this is the beginning of a shift of thinking that—where communities are going to come together and stop thinking about themselves as individuals and stop thinking that, hey, we’re going to improve life by making it better for our children, so our children can have more, better than we have, but rather, thinking in terms of things in terms of quality of life for entire communities.
Couldn’t have said it better myself. “Stop thinking about themselves as individuals..”. Same tired old Liberal mantra: we’ve been living too good, and now its time to submit to the State and start sacrificing before it’s too late! I’m so glad we’ve now got Change!
CLIFF FRASIER: My names Cliff Frasier, originally from Massachusetts, live in New York City now. And I’m going to the inauguration, because I worked for SEIU during the election, the labor union Service Employees International Union, and we worked a lot on the Obama election. And so, I want to be there. I want to be part of celebrating his victory and with all the other people who helped make this happen. And I just couldn’t imagine sitting in New York and not being here.
Thanks for the input Cliff. Now that Obama is beholden to you and your unionized ilk, maybe he’ll help Blago get that SEIU job he was hoping for.
Idiot #5 offered some intelligent commentary to close the segment:
OBAMA SUPPORTER 5: Obama! Obama! Obama! Obama!
I guess the good folks from How Obama Got Elected, these voters, and Peggy Joseph were not alone. God save the Republic.
