Blue Collar Muse

Robert Romano at Americans for Limited Government has an excellent piece on the effectiveness of Obama’s proposed tax plans.  You’ve been bombarded with TV ads telling you Obama will cut taxes - even more than McCain.  It’s only necessary (and fair) to raise taxes on the top 5% of earners to generate enough Government revenue to effectively “spread the wealth around.”  The question, ‘The $5 Trillion Question’, is, will it work?  Let’s see Bob’s take on the issue …

THE $5 TRILLION QUESTION
-by Robert Romano,
Editor ALG News Bureau
Americans for Limited Government

A lot of attention has been placed in recent days to Barack Obama’s plans to raise taxes on the top 5 percent of wage earners. The Illinois Senator assures the American people that he, as President, will not raise taxes on everybody else—just those at the tippy-top of the income spectrum.

Never mind that upwards of 38 percent of Americans do not even pay income taxes. Or that the top 5 percent of wage earners are employers and investors who contribute significantly to the economy.

Let’s simply consider the claim that, somehow, only the top 5 percent are going to have their taxes raised. As my favorite arithmetic teacher would say, “Let’s do the math.”

The federal budget for Fiscal Year 2008 wound up being $2.98 trillion, with a deficit of $454 billion. For the sake of argument, let’s add to that the $850 billion bailout package that Congress enacted on October 3rd. After all, it was conveniently passed just three days after the annual deficit was calculated.

Again, hypothetically, let’s also assume that the Treasury makes no money back on the Troubled Asset Relief Program. Then the total budget for the year would jump to $3.93 trillion, with a deficit of $1.3 trillion.

Let’s also assume that, for the sake of argument, the budget does not shrink next year. After all, the federal government did just acquire about $5 trillion in risk from Fannie Mae and Freddie Mac. It stands to reason that in these troubling times, some of those debts are going to go sour, and there will be more bailouts next year. So, let’s assume the same amount just to keep things simple.

Now, methodology aside, Senator Obama is proposing approximately $1 trillion in new federal spending. You know, all those new welfare entitlement programs. Whammo. The budget then jumps to $4.93 trillion—nearly a whopping $5 trillion!

So here’s the $5 trillion question: Where does the Senator think he’s going to get the money to pay for all of that new spending?

Read the rest of Bob’s excellent piece at ALG …

Blue Collar Muse

Popularity: 88% [?]

Now that our Representatives in DC are done abasing themselves before political logic at the altar of “Being seen doing something, no matter how destructive, is better than being seen doing nothing!”, let’s take a look at what just happened.

Stripped to essentials, you and I are being forced to buy something the current owners don’t want and which destroyed individuals and companies which owned even some of it. Government believes the magic pixie bailout dust which will ensure success is assuming responsibility for all of it.

Wall Street holds a bag full of bad mortgages. So bad, owning them has already destroyed companies with even a mix of good and bad ones. Government is going to buy just the bad ones! But Government has no money with which to purchase mortgages, good or bad, that doesn’t come from taxpayers. Your Government is buying, in your name and with your money, mortgages the mortgage experts know are bad, don’t want and wish they had never made.

“Unknown” is the best description for the prices taxpayers will pay for these mortgages.  It is currently unclear how the value of the bad mortgages will be determined.  Wall Street will want as much as possible to reduce their losses. Government has little incentive to realistically assess their value.  This would seem to assure a good deal for Wall Street and a lousy deal for Main Street. The Director of the Congressional Budget Office, Peter R. Orszag, told Congress that in plain terms in a recent hearing. (Orszag’s comments appear between 22:30 to 23:00)

Government believes it will perform better than the Market. 337 legislators with nothing at stake but re-election feel better qualified to risk taxpayer’s money and future than the 200,000,000 taxpayers either opposed to or unsure of the plan.  By what measure are they more qualified?  By virtue of being able to ignore the people and impose their will on them.  But being powerful doesn’t make one right.

Bailout opposition drops dramatically if one assumes Government is making a sound investment. Tell taxpayers they’ll get their money back when the homes they’re buying are re-sold and many more favor the deal. But will that actually happen? All we have are assurances on that point.  Government doesn’t know it will work out well, they hope and assume it will.

There are some great ideas for Private Sector involvement. That few investors are clamoring to be let in on the action is telling. However, if profiting from bad mortgages was the sure thing Government needs it to be to garner public support, we wouldn’t need the Bailout. The Private Sector would be lined up to do it.  That they’re not undermines the Government’s contention this is a low cost, no cost, or even profit making venture.

Interestingly, the Bailout isn’t about the Housing Market at all.  It’s about the Credit Market.  Holding bad mortgages is a threat to financial health.  In today’s volatile market, even the hint of weakness spells disaster.  No one knows how much in bad mortgages anyone else is holding so no one is extending credit.  The borrower may be destroyed in mere hours by a loose word or a breeze on their house of cards. The Government solution is to buy up all the bad mortgages.  Freed from worry about risk, lenders will begin extending credit again.  This is exactly the solution the Market would have imposed had it been allowed to with some differences in implementation.

The Market would not make taxpayers responsible for the sins of others.  It would have relaxed tension in the Credit Market by making those responsible for bad lending decisions endure the consequences.  This would dump bad loans on the market at a low price for investors to see as good investments which they then begin buying.  As the Market cleansed itself confidence between surviving lenders, demonstrating unquestionable financial soundness by virtue of their survival, would increase and the Credit Market would loosen. This is essentially identical to Government’s plan while taking a little longer. Government is underscoring the soundness of Market principles without being willing to permit Market processes.

By far the worst result of the Bailout is deeper Government intrusion into the Private Sector. The crisis was not a failure of the Market. The Market expects there will be downturns, corrections or cutbacks at times. No one likes them, but only certain forms of Government abandon responsible behavior to avoid them.

We used to have wise and responsible Government; limited and small, it taxed little and meddled less. That allowed a Free Market in a truly Private Sector to transform a wilderness into the world’s richest economy in mere decades. The inertia of that Economy carried us forward despite the low speed, high drag baggage of Woodrow Wilson’s Socialism, FDR’s New Deal and LBJ’s Great Society.

But even that powerful engine is not immune to the braking action of constant friction.  Today Government spends hundreds of billions monthly in unconstitutional entitlements. Crying that a minority will fail in their quest for success, it impedes the majority’s quest, ignorant that a single success does more than a single failure can wipe out. Left alone, we would provide far more for the least of us than the pittance Government doles out for votes. But that garners no power for Government.

Barack Obama and Democrats have already told us what they intend if elected. They plan even more Government regulation and control, weakening even further the economic engine that is Capitalism. They won’t be satisfied until the engine stops altogether.

I’m not convinced we’ve reached the point of no return in our rush to self destruction at the hands of Socialists and Central Planners. But neither am I convinced we have not. The bailout is a huge step in that direction. Granting Democrats control of all 3 branches of Government would be another. And I’m not sure Americans and the GOP is up to the challenge of stopping it. For now, work like it all depends on you and pray like it all depends on God. In the final tally, it does.

Blue Collar Muse

Popularity: 77% [?]

My friend, Jon Henke, has posted up a great video from the National Republican Congressional Committee. In a post brilliant in it’s brevity and simplicity, Jon merely posts this video:

Unfortunately, there were far too many Republicans who voted for this abomination. As my friend notes, We’re All Homeowners Now. Good luck getting any benefit out of that mortgage you own, though. It’s yours to pay for and someone else’s to enjoy.

Thank you Democrats. To those Republicans who voted “Yea”, nice to know that Smaller Government, Lower Tax platform you all are so well known for is so personally inspiring to you.

Blue Collar Muse

Popularity: 55% [?]

You’d think after Chuck Schumer’s ignorance was plastered all over the news for leaking his letter to the Office of Thrift Supervision and personally creating the run on IndyMac Bank that destroyed IndyMac in just 3 business days that Democrats would learn to keep their mouths shut.

You would think after reports on tight credit, volatile markets and rest of the panic and doom-and-gloom scenarios for which Democrats bill themselves as the saviors of the Country and the Economy, they might realize people pay attention to what they say, however ignorant it is.

You would think one of the biggest providers of stupid Senatorial sound bites, Harry “The War is Lost” Reid (D-NV), would have learned to keep his pie-hole closed when asked about things he has no knowledge of. You’d think so, but you’d be wrong.

Reid stated in a recent news conference that he had heard a major insurance company with a household name was on the verge of insolvency.  Today, news is out that three different insurance companies fitting this description, “… a major insurance company — one with a name that everyone knows …” had major stock selloffs following comments by Harry Reid that can only be described as “Look at me, I’m important and have insider information!!!!”

The LA Times reports the following on Harry Reid’s foolish pronouncement,

But with investors already on high alert after the Federal Reserve’s rescue of insurance titan American International Group Inc. on Sept. 16, and with the credit crunch still making funding difficult for even the largest U.S. financial companies, Reid’s comments were the equivalent of pouring gasoline on a grease fire.

MetLife plunged $7.19, or 15%, to $40.96; Hartford dived $12.20, or 32%, to $25.91; and Prudential slid $7.15, or 11%, to $57.65.

And no one can blame short sellers, because all three of the stocks are covered by the Securities and Exchange Commission’s temporary ban on short sales of financial issues.

Investors are so skittish that even a reference to an industry, let alone a specific company is enough to trigger volatile trading. Harry Reid doesn’t understand that. That he later backtracked with these words,

A statement from his office said that Reid was “not personally aware of any particular company being on the verge of bankruptcy” and that “he has no special knowledge about nor has he talked to any insurance company officials.”

reveals his ignorance even further.

In the midst of a financial crisis, the Senate Majority leader repeats a rumor he heard and for which he admits he has absolutely no basis for believing. This fantasy, created and employed to make himself and his position more authoritative, results in a sell-off which majorly impacts 3 of the largest companies in the country, threatens the jobs and investments of perhaps millions of ordinary Americans. But we’re supposed to have faith and confidence in Senator Reid and the rest of his Democratic (and more than a few ignorant Republicans) associates in the Senate.

Harry Reid doesn’t understand even “throw-away” comments in this financial atmosphere can ignite firestorms. Yet he expects a $700 billion bailout, quickly cobbled together, haphazardly grafted onto unrelated legislation and then passed through a Democrat controlled Senate so Senators could look authoritative and responsive - this is safe? Reid and Company don’t understand how today’s minor words impact tomorrow’s Market. But their major overhauls of Constitutional strictures and Economic reality are going to be just fine? See for yourself how small a spark can set off such a huge fire in this 18 second video.

Democrats caused our current financial mess with ill-advised but well-intentioned legislation like “The Community Reinvestment Act”. Their bailout solution is just as well-intentioned and just as ill-advised. There is a reason the Founders put incredible limits on the scope and power of the Federal Government’s authority. Not the least of which is that the Government should not have the power to destroy a company or an Economy with a throw away comment in a press conference. Only the people intimately involved with that company should have that authority; those working there and who invest in it.

Someone please inform Democrats, in DC and all across the US, of this. It’s too bad Nancy Pelosi couldn’t turn off Harry Reid’s microphone and shut off the power to the media’s gear for this press conference like she did to her House colleagues a while back. Somebody needs to get control of out of control Democratic, self serving blathering before it does more than savage a company or three and wreak havoc on the citizen’s finances. Next time around, Democrats might find the right words to destroy the entire Economy.

Blue Collar Muse

Popularity: 56% [?]

Hat tip to Eric Odom for the news that Politivity.com has just released another great video (embedded below) exposing the Democratic corruption, neglect and destruction wrought on the Housing Market and now, the broader American financial market, via their deception, manipulation and mismanagement of the Market in general and Fannie Mae and Freddie Mac in particular. The Truth seems to be gaining some traction. This is not a Free Market, deregulation, Republican problem. It’s a selfish, personal enrichment, bait and switch, deceptive Democratic Party problem. And Barack Obama is in it up to his neck.

In addition to noting the now familiar players Barney Frank, Franklin Raines and Tony Rezko, the video introduces us to two more top Obama advisors who got millions to serve the public and failed miserably to do so. Valerie Jarrett, CEO of Habitat Co. and Allison Davis, a former law firm associate of Obama, failed so poorly to provide good housing options with the money they received to do precisely that, that many of the housing units they oversaw were declared uninhabitable.

But they did manage to donate and raise hundreds of thousands of dollars for Obama and his political campaigns. They did manage to do quite well for themselves at the expense of the people they were supposed to serve. And Democrats like to point to heartless, corporate, Right Wingers as the culprits in taking advantage of the less fortunate and less powerful; enriching themselves at the expense of the little guy. Mr. Pot, meet Mr. Kettle!

Hopefully, in the few days left before the election, the general public will be broadly educated as to the character and intentions of the people the Democratic Party is backing for office. If entrusted with political and legislative authority, these men and women will assume, not without reason, they are free to continue their deceptive and manipulative ways. The irony is that the folks most hurt by this will be the ones least able to fend them off and the very ones these powerless citizens believe have their interests at heart.

Popularity: 55% [?]

UPDATE: An eActivist reading the bill is turning up loads of Pork!  Follow the Twitter feed for live updates as found! Hat tip to Eric Odom from Thanks to Palin and @ericjodom Twitterfeed for the 411.

UPDATE: The text of the 451 page bill the Senate will vote on tonight can be found here.

One of the more memorable phrases from recent political history is “DOA”. A politician announced, during a recent session of Congress, there was no need to even bother sending the bill over for a vote because it was “DOA”, Dead on Arrival. The phrase immediately made its way into the modern political lexicon as even a cursory Google search reveals.

Congress generally knows when a bill is destined to fail due to internal opposition. For instance, the GOP understood on the front end that Democrats would abandon all pretense of constitutional integrity to prevent even a vote on several judicial nominees a few years ago. The President’s nominees were DOA. DOA legislation becomes more interesting, however, when the pressure to kill the bill comes, not from the opposition Party, but from the American people.

The Dubai Ports deal, The Immigration Reform Bill and even Harriet Meiers nomination to the Supreme Court were all killed by “We the People”; not Harry Reid or Mitch McConnell. Thankfully, when their best revival efforts failed, Congressional Doctors bowed to the inevitable, pulled the plug and let the bills die with dignity.

Like E.F. Hutton, when the People speak, Congress usually listens. Which makes the Congressional response to the Bailout Package even more puzzling. Public opposition is running at near 80%! Americans may disagree on what needs doing, but they are clearly and almost unanimously agreed a Bailout isn’t the solution. It seemed as if Congress listened. Despite arm twisting and a surprising level of Congressional support for a Bailout, in a vote that was too close, the Bailout was defeated and the patient flatlined. But if you thought that was the end of the matter, you’d be wrong!

It appears Congress, whether moved by arrogance, hubris or another inexplicable motive has chosen not to listen to the people. Worse, it appears they may be abandoning Constitutional restrictions to do. Unwilling to permit the $700 billion monster they created to solve the problem remain dead, Congress is trying to raise it from the dead like the fictional Frankenstein.

The straight up or down vote failed and there isn’t enough electricity to resurrect the monster in that fashion. So they are trying another well known and highly effective tactic from the Congressional medical bag to revive the patient, attach the dead bill to a live bill that everyone likes and use the life force from the popular bill to revive the chances of the dead one.

Quinn Hillyer over at The American Spectator Blog is reporting that the Senate is trying to do exactly this! Quinn also notes such a tactic is unconstitutional as bills such as the Bailout need to originate in the House and not the Senate. Hopefully, should such a legislative abomination be presented in the Senate, it will be defeated. Should it be passed, I echo Quinn’s hope that even more House members will vote against this bill than did against the last one.

I’m not sure what it is going to take for Congress to get the message that America doesn’t want a Bailout solution. Congress can propose a different fix or they can let the Market correct itself. But the Bailout idea has been called as DOA and it needs to be left alone. For good measure, I encourage each of you to call or write your Congressmen and add a “Do Not Resuscitate!” note to the patient’s chart. The wishes of the family, the People, must be honored in this matter.

Blue Collar Muse

Popularity: 38% [?]

From the guy who gave us last week’s viral video “Burning Down the House” (1Million+ views), comes another great piece of YouTube goodness.   Democrats in the House, many of whom are playing major roles currently in both defending the Democrat’s involvement in the implosion of the housing market and blaming the GOP and the Free Market for the financial woes, are simply shown here talking about how wonderful Freddie and Fannie are.  This at a time when the GOP was calling for investigation, oversight and change at the agencies.  These people have no shame!

Blue Collar Muse

Popularity: 39% [?]

Just got this in from Leslie Carbone. The House voted 205-228 to defeat the $700 billion bailout plan. A big Tennessee thank you to 228 courageous members of the US House!

But get your helmet and armor. There’s sure to be return fire on this one.

Blue

Popularity: 27% [?]