Friday, October 24, 2008

Pop Culture Politik.

I find it interesting that, much like Bono made charity popular (One Campaign, Red Campaign), Obama is playing into the vanity of Americans and has turned political activism into a fad. This is unfortunate because I find in almost every conversation I have had with Obama supporters, unreasonable and irrelevant decision making leads to their support. It is ingenious what the Obama campaign has done, but very much like his policy, it is unethical.

Monday, October 20, 2008

Who Are the Villains of the Mortgage Mess?

http://www.cato.org/pub_display.php?pub_id=9719

by Daniel J. Mitchell

This article appeared in the Los Angeles Times on October 14, 2008.

In this current mess, one problem is identifying the heroes and villains in Congress. Many analysts conveniently dodge this question and instead make the rather novel claim that the turmoil in financial markets somehow is the result of deregulation. Yet the financial services industry is probably the most heavily regulated sector of the American economy, saddled with hundreds of laws, thousands of regulations and a plethora of government agencies. If red tape were the answer, this problem never would have happened.

Many lawmakers want more rules and regulation governing disclosure, ostensibly to protect consumers. But the existing policies already have created a jumble of legalese that even highly sophisticated borrowers have trouble grasping, so it is far from apparent how this would help. A far better approach would be sweeping deregulation, replacing all the current clutter with a simple, easy-to-understand disclosure form, such as the one proposed by Alex Pollock of the American Enterprise Institute (PDF).

Back to identifying the heroes and villains. To assign blame, it is first necessary to understand what caused the problem. At the risk of oversimplification, let's touch on three main causes of the financial turmoil and identify the culprits in the political world:

Daniel J. Mitchell is a senior fellow specializing in tax issues and author of The Flat Tax: Freedom, Fairness, Jobs, and Growth.

More by Daniel J. Mitchell

Problem No. 1-- easy-money policy from the Federal Reserve: In an ideal world, the Federal Reserve provides the liquidity needed to enable commerce but avoids excess liquidity to avoid either rising prices (which happens when excess money bids up consumer prices) or bubbles (which happens when excess money bids up asset prices). The Fed clearly failed in this regard, as evidenced by unsustainably low interest rates earlier this decade.

Culprits: Almost every single politician deserves a share of the blame. The political class likes easy money. In the early stages, inflation feels good. Voters feel like they have more money in their pockets and borrowers (who always outnumber lenders) like the artificially low interest rates. And that is why very few voices were raised against the Federal Reserve's policy.

Problem No. 2 -- corrupt subsidies from Fannie Mae and Freddie Mac: These government-sponsored enterprises were created explicitly to distort the flow of capital and encourage over-investment in residential real estate. Responding in part to campaign contributions (a clear conflict of interest), politicians dramatically expanded the power of Fannie and Freddie in recent years, thus creating widespread systemic risk because of the implicit (now explicit) government guarantee.

Culprits: Many politicians from both parties were recipients of campaign contributions from the Fannie and Freddie slush funds, though Democrats had their hands much deeper in the cookie jar. The Bush administration has a very dismal economic record, but the White House does deserve some credit for having tried to rein in Fannie and Freddie earlier this decade. Opponents, led by Democrats Barney Frank in the House and Chris Dodd in the Senate, blocked reforms that would have saved huge amounts of money for taxpayers.

Problem No. 3 -- the Community Reinvestment Act: Politicians imposed numerous regulatory burdens on financial institutions, but "affordable lending" requirements such as those imposed as a result of the Community Reinvestment Act were among the most perverse. In effect, banks were extorted into making loans to people who were not credit worthy. This added to the bubble and expanded systemic risk. It's also worth noting that poor people were victimized by this government policy, because many of them were lured into houses they could not afford.

Culprits: President Carter presumably deserves some of the blame because many of these policies were first imposed during his dismal reign, primarily with support from Democrats. But the so-called affordable-lending requirements were expanded during the Clinton and the current Bush administrations, so the GOP is not without blame.

Sunday, October 19, 2008

Pro-Obama Youth..

Pro-Obama Youth Should Be Careful What They Wish For
by Michael D. Tanner
This article appeared in the New York Daily News on August 28, 2008.


The sea of young people we'll see cheering Barack Obama's speech in Denver Thursday night is just a tiny slice of a nationwide movement. According to a recent poll by Harvard University's Institute of Politics, Obama leads John McCain by an astonishing 23 points, 55% to 32%, among voters younger than 25.

It is easy to see why. Obama is young. He seems to brim with hope and optimism. He "gets" 21st century culture. In contrast, John McCain is old, very old, and more than a little bit cranky. Heck, he's even unfamiliar with the Internet.

Yet if you look at the policies advocated by the two candidates, Obama's appear almost perversely designed to hit those young supporters in the pocketbook.

Looking at how voters in one state repeatedly voted against their economic interests, one political scientist asked, "What's the matter with Kansas?" With respect to young voters and Obama, we might pose this question: "What's the matter with kids today?"

Take health care, for example. Obama supports an idea known as "community rating," a requirement that insurers must charge everyone the same premium regardless of their health status. That means young and healthy people will pay the same premium as older and sicker people. Essentially, those high premiums on young people will be subsidizing the premiums for older people.

Moreover, Obama would prohibit low-cost, high-deductible policies, and would insist that every insurance policy include all sorts of costly benefits. These regulations will, on balance, make it much harder for young people just starting out in their first jobs to afford insurance.

No government program treats young people worse than Social Security. Social Security taxes are already so high, relative to benefits, that the program has simply become a bad deal for younger workers, providing a low, below-market rate of return. In fact, over the course of their careers, many young workers will end up paying more in taxes than they receive in benefits.

Worse, the program is facing future unfunded obligations in excess of $15.3 trillion. This means young people will face either massive future tax increases or benefit cuts when it comes time for them to retire.

Yet Obama — who just a few months ago took justifiable pride in his willingness to keep all options on the table — now opposes both benefit cuts and allowing younger workers to privately invest even a small portion of their Social Security into personal accounts that can build value over time.

Medicare's anticipated future debt is even greater, an astounding $70 trillion by some estimates. Yet Obama not only opposes most Medicare reform proposals, he actually wants to increase benefits under the Medicare prescription drug program. That is yet another cost that will be passed along to young voters.

According to the Congressional Budget Office, unless spending is brought under control, the federal government will eventually consume as much as 35% of our GDP. Paying for a government that size would require raising both the corporate tax rate and top income tax rate from their current 35% to 88%, the current 25% tax rate for middle-income workers to 63%, and the 10% tax bracket for low-income workers to 25%. The impact on workers, businesses and the economy at large would be catastrophic.

Far from restraining the growth of government, Obama is proposing program after program of new spending. According to the most recent tally from the National Taxpayers Union, he has laid out $343 billion per year in new government spending.

Yes, Obama may end the war in Iraq sooner than John McCain — but there is no end in sight to these other federal spending commitments.

Barack Obama has brought millions of young people into the political process. He has given them belief in a better tomorrow. He owes them something more: policies that will actually make our fiscal future more secure.


http://www.cato.org/pub_display.php?pub_id=9616

Fruition

Politicain:

"We have had a mission.

And it now is accomplished..

Blood still on the ground..
But I feel accomplished.."

We've got all these henchmen
Causin all this tension

Not fighting the good fight
just worryin about their pension.

Afraid cause no people are standing in line
to buy a new car, to "improve" their lives

Failing to have Just priorities

Worried about buying cars
instead of children we could feed.

I don't know
maybe it's just me
but I think we've got it all wrong,
I think there's more to see

Wake up man!
This "stimulous" package
Won't help a thing
Just cause more wreckage

And leave our problems to our children

And leave our children with a message:
"You do what you want
you will succeed,
Make bad choices
there's no such thing
as Consequence.

Responsibility for your actions has no precedent.

And even though one day it'll come to fruition...
We didn't suffer.. we just expanded your mission.."





-P



Educate the Vote.