Chris Dodd is an Idiot, So Now the House Wants to Throw the Constitution Out the Window

Okay, I understand everyone is upset about this whole AIG bonus mess. I am too. It’s Chris Dodd’s fault - blame him - he intentional took the measure that would have made these bonuses illegal OUT of the bill. Shocking I know.

The House is now passing measures that would ‘punish’ these executives by taxing the money by 90-100%.

One problem. That’s not constitutional. You cannot single out a group of people for taxable punishment under Article 1 Section 9 of the Constitution, “No Bill of Attainder or ex post facto Law shall be passed.” Even if the public is ticked off because their law makers are less than literate of their own bills, much less the constitution.

Sorry. The actual answer is for the government to STOP unconstitutionally using tax payer funds to bail out private institutions.

The Fed Votes for Stagflation!

Not a good idea.

The Fed is pumping money into the economy to try and free up credit – to the tune of a trillion dollars. The laws of supply and demand will tell you, and yes the apply even and especially to money, that the more of something there is, the less valuable it becomes.

This move is very short sited and it begs for inflation.

One more time here… drop tax rates across the board by 30%, cut the capital gains tax rates in half, cut government spending in every department by 10%, and then another 10% in two years. You wouldn’t need to keep pumping money into the system if the government itself wasn’t sucking up all of the money and the credit. STOP pumping money into the system! STOP spending like drunk monkeys! The Fed and this administration are beginning to look like teenagers who found the key to the ‘mini-bar’ while mom and dad were out of the room.

I’ve said it before and I’ll say it again, look out for rising inflation, rising interest rates, and rising unemployment. It’s a bad combination. The Chinese are warning us to stop spending because they are worried about the $727 billion they have of our debt. The price of oil hit a high for 2009. When are these people going to wake up from their Keynesian dream and realized that our economy is in the toilet and we are about to get flushed!

Outrage

There was a fury of outrage yesterday. Even being slightly sheltered from news on Mondays, I heard about the whole AIG bonus fiasco.

I wasn’t very surprised.

Don’t get me wrong, I was irritated. Not as much as the cash hungry swindlers at AIG, but at our government. This is what happens when the government plays in the private sector. Corruption and waste. When will we realize that a swelling federal government BREEDS waste like rabbits.

Now, I can almost understand the argument from AIG that they were obligated by contract to pay these bonuses which will actually top out at 400 million, and that after all they want to retain their top notch people. I would argue however that given the condition of their company, maybe these people really aren’t that “top notch” and really eliminating some of these people should have been written into the loan agreement in the first place.

Come to think of it, why weren’t a lot of things written into the $173 BILLION dollar loan to AIG? Are you telling me that the average Joe is having trouble getting a $30 thousand dollar loan to buy a car without copious amounts of paperwork, fact checking, and verifications, but our government is willing to hand out $173 BILLION dollars to a company that has a proven track record of mismanagement, without even specifying that certain measures would have to be taken and guaranteed? I would think things like executive pay cuts and rescinding all bonuses until a percentage of the loan is paid back would be REALLY high on the list of things to include?

How can we be irate with AIG with out first being furious with our own moronic and fiscally irresponsible government (not leaving anyone out here, it was the Bush Administration that bailed AIG out)?

Now think about this. We have bailed out AIG, Citigroup, Bank of America, and a host of smaller banks to the tune of a TRILLION dollars or more. Bailed out Freddie and Fannie for HUNDREDS OF BILLIONS of dollars. Allotted $787 BILLION dollars for a ridiculous stimulus package that has no hope of stimulating the economy, in fact would have been more beneficial to the economy in the long term if it were never passed. Signed up for an 8% increase in the federal budget for the rest of the fiscal year. Passed that same budget extension with over $7 BILLION in pork projects.

But OUR President is proposing a plan that will begin charging veterans for medical care through their private insurance.

Veterans, dealing with issues related to their service, having letters sent to their private insurance company for compensation to the VA hospital for their treatment.

All to save $540 MILLION dollars.

Now who is it that we should be outraged at again?

Cap and Trade: Good Intentions are Not an Excuse for Bad Policy

A CBO report came out this morning talking about the financial impact to families of a Cap and Trade system imposed on CO2 emissions. The results of their analysis aren’t surprising, in fact the CBO backs up a good portion of what I have said before about taxing or restricting CO2 emissions.

Let me just start off by saying that I don’t agree with global warming induced by CO2 emissions on a scientific basis. I think that the climate models used were extremely flawed and from reports I’ve read don’t take into account things as complex as global energy distribution and things as simple as historical records, sun spots, and the cooling effect of rainfall and natural disasters (such as volcanoes).

Basically, I am not willing to concede that we need to limit CO2 emissions and at this point in time think that any efforts to do so would be a huge burden on our economy, at a time when we don’t need it and can’t afford it.

Given that, let’s consider CO2 emissions. We don’t know how much CO2 affects global temperatures and how significant that change is to the earth. We really don’t know what appropriate levels off reduction are. Is a 10% reduction sufficient, 15, 20, 25%? At what point do you ban things like soda, beans, and grass? Do you put limits on livestock? Do you tax livestock owners? A recent report I read said that one moose puts out more CO2 than one car. Do we start reducing wild animal herds? You can see where I am going. If you don’t know what really 'needs' to happen because you don’t really understand the complex global system that God put in place, or all of the million variables that can contribute or retract from the issue, then you can’t really say how much impact any change will have. Basically you are trying to make a significant restriction on energy and United State production capacity without even knowing if it makes ANY difference at all!

According to the CBO’s report, a reduction of 15% in CO2 emissions “…could cost the average household roughly $1,600 (in 2006 dollars), ranging from nearly $700 in additional costs for the average household in the lowest one-fifth (quintile) of all households arrayed by income, to about $2,200 for the average household in the highest quintile.”

Does this make sense to anybody? Do you understand now that when President Obama says that 95% of Americans will not see one dime of increase in their taxes he is lying? Not misleading. Lying.

Any action we take in this area is going to adversely affect poorer people in this US and in countries abroad. Production of all grain, produce, dairy, and meat will be more expensive. Shipment of any products to stores will cost more. Every drop of gas will be more expensive.

Not only is there going to be a significant cost to lower income families, the increased cost is actually part of the GOAL of the program. The CBO says,

“Price increases would be essential to the success of a cap-and-trade program because they would be the most important mechanism through which businesses and households would be encouraged to make investments and behavioral changes that reduced CO2 emissions. Those increases, however, would impose a larger burden, relative to their income, on low-income households than on high-income
households.”

When you hear “Cap and Trade” you need to have your mind translate that into ONE THING, “TAX INCREASE”. They will claim that this is for the environment, but it is absolutely for money. They will claim that they are doing this for “the children” and “future generations” but what they are really doing is hurting poor children and hamstringing the potential of future generations.

There may very well be some good intentions behind cutting CO2 emissions, even if the science does not back it up. But remember, good intentions don’t always make good policy. Our lawmakers had good intentions when they started requiring a percentage of corn crops to be directed towards ethanol. The effect was higher global prices on corn. People were starving in Latin America because they couldn’t afford to buy tortillas or grain for their livestock. There were riots in the streets! Good intentions are not an excuse for bad policy.

Cap and trade means higher prices, higher taxes, a drain on lower income families, and lower revenues for businesses. I would hope after what we have seen in the last six months everyone would know how that works out, but just in case you are THAT DENSE, lower revenues means falling stock prices, 401Ks, layoffs, and more jobs transferred to India, China, and eventually Africa, where a cap and trade system does not apply.

The US needs to say NO to cap and trade... while we're at it I think I need to say no to that second cup of coffee...

Don't Ask Whether TREASURY DEPARTMENT Appointees Paid Taxes

Personally it makes me physically nauseous to hear Representative Frank speak, but what he is saying in this clip is extremely important. He is addressing a complaint by a Democratic senator that appointments to the Treasury Department are being held up because they are being too heavily scrutinized for things like tax evasion.

Scrutinizing Treasury Department nominees because they haven't paid their taxes.

Yes, that sounds like typical "gotcha" political games.

The problem is that Representative Frank, much like Representative Rangel and Senator Dodd, don't want any politician to be scrutinized for tax evasion, lest they be thrown under the bus for the same.

Despicable.

Even worse is that Andrea Mitchell caved to him.

****Update: I couldn't get the video to work, so here is the link.

Missed Opportunity

President Obama missed a golden opportunity yesterday. In a closed door signing the President approved the $410 BILLION budget extension.

The president could have used this as a perfect moment to show his commitment to fiscal responsibility, struggling minority school children, and a renewed opposition to earmarks… but he didn’t. Instead he claimed that this was just last years mess that needed to be taken care of and then he could move on with his own rules and his own budget.

The problem is that the $410 BILLION check has his name on it.

Opinion polls would have risen across the board if President Obama would have rejected the 8% increase built into the budget extension. At a time when taxpayers are hurting and watching their savings accounts dwindle under job losses or pay cuts, it would have been a morale boost to see the federal government take a 5-10% cut in their normal operating budget. An 8% increase is just a slap in the face and a very clear message that Washington is out of touch with what is going on in the country.

President Obama recently talked about education and claimed that he wants all children to have the same opportunities that he had. Unfortunately Democrats slipped a bone to the teachers unions into the monster spending bill and killed a highly successful voucher/scholarship program that had allowed 1700 poor Washington DC kids to attend private schools. The program allowed for 1700 ‘scholarships’ of $7800 to be given to children at public schools, who could turn around and take that money to a private school to help pay their tuition. DC schools are notoriously bad and many of the children and parents who participated in the program did so not only to improve their child’s education but because they feared for their child’s safety at the public school. $7800 may seem like a lot of money to be spending on one child, but it is about HALF what the DC public schools spend per child. President Obama could have not only been a savior to these 1700 children, but could have increased his own position as an education reformer by rejecting this bill because of this amendment.

Anyone who pays any attention knows that Washington is broken. President Obama could have made a strong statement to the nation that he is serious about fixing it by vetoing the over 8000 earmarks that are included in this bill that added over $7 BILLION to the cost. It would have sent a message to the American people that he actually cares about their concerns and that it is not going to be “business as usual” in Washington.

Unfortunately for him, and for us, President Obama did not veto this horrible budget extension. Instead he tried to limit his personal responsibility in the matter and claim that this is just an extension of what happened last year. With opinion polls still hovering around 60% (though falling) the president could have used his position to pressure congressional leaders of his own party to make the obviously needed changes to this bill, but he didn’t. The funny thing is that it would have stopped the slide in his polls and probably sent them slightly in the other direction.

This was a missed opportunity.

By any measure it was a mistake.

Words

Words matter. Whether you are a bus boy or the President of the United States; your words matter.

During the campaign, Senator Obama never missed an opportunity to lambast President Bush and his administration. He derided them for “cronyism” and claimed that lobbyists will not ‘find a home’ in his administration. Of course he didn’t mention that they wouldn’t be looking for a home – just a job.

One of his first executive orders, issued on Jan 21st set up the standards for what President Obama called the highest ethical standards of any administration. Dozens of lobbyists have already entered the Obama administration, some of them working in the very arenas where they have recently been paid lobbyists. It’s always nice to know that ethical standards can be waived. Personally I have no problem with people being lobbyists. I think it’s a matter of free speech. I’m against bribes, kickbacks, gifts, and goodies for politicians, but I have no problem with a company or industry representative making their case to a law maker. But what good does it do to set up these “ethical standards” when you are just going to turn around and waive them whenever it seems appropriate? How is this any different than previous administrations?

I mentioned “fiscal responsibility” and have blogged about it in the past, but lets talk numbers. The budget projections that Obama gave have us in red ink for the next 10 YEARS, even though he optimistically thinks that the recession will end next year. His budget plans to increase our almost $11 TRILLION dollar national debt by $2 TRILLION in the next FOUR YEARS. So according to his estimates we will be out of the recession next year and so at least two years of his administration should be normal US growth years, but he plans to overspend during those two years and the four years after that if the American people are willing to re-elect him. Does that make any sense? Would you invest a single dime in a company that gave that kind of financial outlook?

Of course, these are just words on a teleprompter. Considering his little glass buddies seem to find there way into any presentation, whether it is a cabinet appointment announcement or the State of the Union, maybe we should be asking the person who loads up the teleprompter what all of these words really mean.

Foreign Policy without Strength

The economic meltdown that the US is feeling right now is going to be long and painful as the business world comes to realize that President Obama’s policies are distinctly anti-business, anti-growth, and decisively anti-private sector. This has a good part of the country reeling for the shock of 401Ks, IRAs, and 529s, not to mention the stock and options in their own companies plunging. But for a moment let’s put the global financial crisis on hold and look at something that hasn’t been getting as much attention, a dramatic shift in foreign policy.

Rahm Emanuel, Hillary Clinton, and President Obama have all said that a crisis is a terrible thing to waste. Unfortunately those who consider themselves our enemies were listening and agreeing. President Obama has backed off of the “missile shield” that was revived and pursued by the Bush administration. This is the evolution of what was once known as SDI or the Strategic Defense Initiative. It was a crippling technological blow in the arms race with the Soviet Union during the Cold War and one of the main reasons Gorbachev conceded in vast arms reduction agreements. At the time the US was only proving the theories behind the program, which President Reagan envisioned would be a series of satellites that would protect EVERY country on earth, even the Soviet Union. What was once spaced based, is now a terrestrial based network, with actual proven systems being installed in different places around the globe. The idea is similar to the proven Patriot systems that became a CNN favorite during the first gulf war. High on the list are eastern European NATO and former Soviet block countries that fear an increasingly aggressive Russia, combined with a nuclear armed North Korea, and a nuclear ambitious Iran.

Unfortunately the few budget cuts that President Obama has been eyeing are centered around defense spending. The missile defense shield in particular seems to be on the chopping block. For eastern European nations that watched Russia roll into Georgia during the summer, this can’t be very comforting. President Obama’s new tone and policy toward Russia appears to endanger their very safety and sovereignty. Nations that still have the memories of Soviet rule cringe at the prospects of a resurgent Russia under the ambitious Putin. President Obama showed little understanding of the area as a candidate and even less discernment of Putin’s intentions. The currently friendly gaffe’s at ‘resetting’ US/Russian relations and a retraction of commitments on the missile shield tell the world and Russia that the Obama administration will accept a position of weakness in any negotiations. Hardly the trump card that played so well for President Reagan.

On the Korean peninsula, President Obama’s team appears almost indifferent to North Korea’s intent to launch a “peaceful satellite” into orbit. The reality is that they appear to be running a test on a new long range rocket, in violation of a useless UN Security Council resolution.

Iran as well has been establishing a long range missile program with help from the Russians. This is also a concerning development when combined with the near completion of their first nuclear weapon.

Doesn’t a missile shield sound like a good idea about now?

Continuing their overtures of a desire to negotiate from a weakened US stance, President Obama mentioned that we need to appeal to the moderates in the Taliban to help bring about peace in Afghanistan. A local official who worked with the Taliban and now with current President Karzai was dumfounded by the thought that any moderates existed in the radically Islamic Taliban organization. By their very definition they are radicals.

In the meantime, while Cuba is in a state of potential transition with the eminent death of Fidel Castro who currently holds sway over the government through his aging brother Raul, President Obama is talking of lifting sanctions against the country. Wouldn’t the lifting of sanctions be a great tool and popular selling point for an anti-communist opposition that may have a chance with Fidel’s death and an aging and apparently more moderate Raul? Why cut off the one leg that they may have to stand on?

I once heard then Senator Obama described as “Jimmy Carter without the wisdom”. With President Obama taking strength out of our position on foreign policy, that statement may be more true than the joke it was meant to be.

Obvious or Discrete, but Always Intentional

It may not come from him directly, but his advisors are certainly the type. Rahm Emanuel in particular is definitely conscious of the implications. In some cases the actions are bold, in some case more discrete, but they all seem to have one aim.

A second term.

Watch the actions. Read the fine print. Think of the implications.

While the whole stimulus debacle was going on something very subversive and intentional happened. Did you catch it? Oversight of the upcoming 2010 stimulus was moved into the White House, actually, put under the direction of Chief of Staff Rahm Emanuel himself.

Why should we care?

There are several ways to perform a census. Do you count each person? Do you perform a statistical sampling? If so, what is your process for picking your sample? Will the same process yield accurate results in all areas? Do you count residents that don’t currently reside in their district?

Census counts determine the number of Representatives a state will have in the House and how many votes they will have in the electoral college. In 2000, Mormon missionaries out in the field were not counted and Utah missed having an additional representative by a few hundred people. Of course the Clinton administration was running the 2000 census. Why would they want to add another Representative to conservative leaning Utah? If the number of Representatives in a state changes, then the district lines in the state have to be redrawn. If you have three districts that can go either way, then you would want to redraw the lines so that you can move two of those districts solidly into your column. If you can weaken a solid holding of your opponent, then you redraw the lines to include some faithful areas from your party that aren’t needed in another strong district. Instead of being a nonpartisan, scientific enumeration of Americans, it becomes a partisan chess match.

Of course when it comes to the general election the country is very closely split 50/50, so how do you try and edge that to 55/45? How would you convince at least 5% of the people that they need to swing in your favor?

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Obama’s new budget plan increases the number of Americans who pay no direct, personal income tax from 38% to 50%. Now he can tell 12% of the population that he is the reason they are getting a bigger paycheck, a bigger income tax return, or even a “refundable tax credit” on taxes that they never paid.

In only six weeks on the job, President Obama has made two strong moves to try and secure a second term for himself and future majorities for his party. I can’t say they are good moves for the country, but I would definitely have to say that the President and his advisors are forward thinking when it comes to self preservation.

Greed

Greed.

It’s an ugly, hideous word. It defines and describes some of the very worst parts of our fallen human nature. Greed is the excessive or rapacious desire, esp. for wealth or possessions. Many of us have looked at CEOs and big company executives and condemned them for their greed in accepting and rewarding themselves with tens of millions of dollars in bonuses and income, even while the companies that they are responsible for lie in ruins and exist now only after receiving a taxpayer bailout.

Rightly so.

In my own industry, the CEO of the company is rarely someone who has worked his way up through the ranks. In fact most of the ‘engineering’ companies that I know are actually run by businessmen; people who have never even studied engineering.

This is a problem.

The culture has moved away from the idea that captains of industry are men who rose to their levels through monumental achievements, sacrificial hard work, and an inspirational spirit that naturally entitles them to leadership. Modern CEOs and company presidents are educated at prestigious universities; enter the corporate structure as a junior executive, and ‘claw their way to the top’ at corporate cocktail parties and company junkets. They never go through challenges that really prove their mettle. They are not refined in the daily fire of production, or purified through the technical challenges of a crisis. They’re young. They’re ambitious. They’re wooed by big money and a fancy life. They feel deserving of their high pay because of their title, rather than their battle scars. This is a mistake that corporations are paying for; a mistake that as taxpayers, we are paying for. It is a path that is an affront to our history and contrary to our best interests.

What’s the answer?

Is it increased federal regulation? Is it hard limits on the pay of corporate executives? Is it a crushing and punitive tax system?

How can the government be the answer to this problem, when the political model of the government varies little if at all from that of our flawed corporate giants?

How can government be the answer when their lust for power and sense of entitlement surpasses even those of the most brazen CEOs?

Government can not cure this disease because the government is showing even more advanced indicators of this debilitating plague.

So what is the answer?

The people.

Not because we are free from the illness of greed and entitlement, but because our position has slowed the progress of it.

Our country needs a mental check. What are our motives? What are our values? Do we work to gain ‘more stuff’ or do we labor to build something great and provide for the health and well being of those we love? Do we honor our word? Do we hold ourselves responsible for our commitments and decisions? Do we seek to help others? Do we reach out to the hurting, or complain that the government isn’t doing enough?

This is a time for the people of this country to ask some difficult questions of themselves and of their leadership. Will we vote for those who are bent on power because they are flashy and exciting? Or will we stand by the candidates who seek their positions out of a sense of responsibility; that fear their own motives and question their own real purposes?

If we follow our eyes and make personal and political judgments based on feelings and scorn the wisdom that calls out for out attention, we will be like a tree that upon rising to the splendor of all that it could be, suddenly pulled up its roots and abandoned the fertile soil from which it rose, only to topple at the next wind of adversity.

A glimpse of what is to come?

Reports are coming out that President Obama plans to repeal policies put in place by the Bush administration which helped safeguard and protect doctors whose personal ethics prohibited them from performing abortions. The purpose of the policy was to ensure that doctors and on a larger scale hospitals, would not be coerced of forced into performing or providing abortions.

Religious based medical institutions in particular are concerned with President Obama's campaign promise to sign the Freedom of Choice Act, which would mandate that they provide abortions or shut their doors. Several of the bishops who oversee Catholic Healthcare have already said that they will shut their doors before they would allow abortions to be performed. However, the official position of the board is that they will neither provide abortions or shut their doors but would act in "civil disobedience".

So what happens if the administration is able to push forward with Universal Health Care?

In a single payer system, much like Canada and the UK, the government is the only entity permitted to provide medical services. Would we see CH closing their doors?

As you hear more about universal health care, keep that in mind. It would seem however, that along with the budgeting that has already taken place and the vast expansion of current government medical coverage, this fight could come very quickly. The spin will look something like this current statement from the administration:

"This policy of potentially allowing providers to refuse to provide contraception or family planning runs counter to the [Obama] administration's goal of reducing abortions and unwanted pregnancies," the official said. "It also could lead into other areas of medical care."

The question that I've asked before, and ask again, if you pay for abortions, remove all restrictions to abortions, and now even force objecting doctors to provide abortions, how can you honestly say that you are trying to reduce the number of abortions?

CBO revisits the "stimulus"

A new CBO report came out this morning analyzing the macroeconomic benefits of the “stimulus” package that was passed.

The results are not surprising, basically the conclusion is that we just wasted $800 BILLION.

In principle, the legislation’s long-run impact on output also will depend on whether it permanently changes incentives to work or save. However, according to CBO’s
estimates, the legislation will not have any significant permanent effects on those
incentives.

The long term effect on GDP is negative and following the CBO’s logic, will be more severely negative at a more rapid pace given the new budget proposals by the administration, which increase the deficit drastically. Basically the faster we accumulate debt the faster we will see a negative effect of government borrowing/spending. The negative effect will be reflected in lowering the GDP. The CBO points out that the reduction in GDP shouldn't necessarily impact employment figures, but will probably be reflected in underemployment or reduced wages.

The reduction in GDP is therefore estimated to be reflected in lower wages rather than lower employment, as workers will be slightly less productive because the capital stock is slightly smaller.

Smaller GDP and lower wages… what a stimulus!

Congrats! Your government just wasted nearly a TRILLION dollars of YOUR money.