Blue Collar Muse

I’m traveling today so I’m taking the liberty of simply cutting and pasting the text of an email I got from my good friend Fred Thompson.  Actually, I’ve never met the man, it just sounds cool to say it like that since he emailed me personally and all.  FDT writes a regular column at TownHall and this was his from a day or so ago.

The Danger of Government Guarantees

I’ll bet it came as a surprise to most folks that the financial stability of the world as we know it depends upon the survival of a couple of outfits called Fannie Mae and Freddie Mac. Yet that’s what the so-called experts are telling us. Moreover, we taxpayers are now being asked to guarantee Fannie and Freddie’s tab, one that could make the $124 billion S&L bailout of the late 1980s look cheap.

So how did we get stuck with this bill? Well, Congress wanted to “do something” about what it saw as a “housing problem.” To them that meant that they should create an even bigger problem.

So Congress passed laws that made it easier for hopeful home-buyers to buy houses … even when they couldn’t afford them. Then the Fed and other regulators helped, in the form of easy money and loose credit standards for mortgages.

Not surprisingly demand for houses grew, home prices rose, lenders financed additional questionable mortgages, fueling even higher prices and so on. You get the picture. This is called a bubble.

Then an amazing thing happened – apparently impossible to foresee. Home prices did not continue to rise forever! Home prices came down and easy money dried up, causing the above mentioned cycle to reverse. In other words, the bubble burst.

So you’d think the in-over-their-heads homebuyers and the mortgage bankers would take the hit, and the market would right itself. No reason for an international meltdown here, right?

Not so fast my friends. Years earlier Congress established Fannie and Freddie as purchasers of these mortgages, which they could bundle up, repackage and sell to investors, freeing up more mortgage money. As government creations tend to do, the two companies grew until they either owned or guaranteed about half the nation’s $12 trillion dollars in mortgages.

Fannie and Fred were “government sponsored enterprises” which means heads they win, tails you lose. If they make money stockholders, creditors and Fannie and Freddie employees – some making millions annually – get the benefit. But now that mortgages have hit the skids, with mounting losses, the taxpayers potentially face trillions in exposure. This is because there is an “implicit” (read “actual”) government guarantee of Fannie and Freddie’s obligations and both are now too big to be allowed to fail. This is called the “bailout phase,” which will probably lead to a bigger bubble in the future.

Lost in this immense, complex mess is the root problem most people are missing: the government is gradually becoming the guarantor of seemingly every important aspect of American secular life, creating incentives and bureaucracies that cause failure and invite fraud.

In Fan and Fred’s case, it was in no one’s interest to turn off the bubble machine. Just the opposite. The system induced borrowers to take on financial obligations they could not afford and lenders to lower lending standards. Fannie and Freddie went along because their managers’ compensation depended on the firms’ short term financial performance. And investors continued to buy complex security packages they didn’t understand, because the securities were viewed as government-backed.

Heavy campaign contributions by those benefiting from this scheme induced Members of Congress to avert their gaze from the ugly mess that was unfolding.

You’d think we’d have learned by now: when the backstop of the federal treasury makes it easier for politicians, lenders, borrowers, welfare recipients, government contractors, or anyone else, to serve their own self interest at the expense of the taxpayer, many will do just that.

That is why we continue to see self-dealing, moral lapses, outright fraud and lack of management and oversight in a wide array of programs and government-sponsored entities, from housing to Medicare, education and the Small Business Administration, all costing taxpayers billions, even trillions of dollars.

Our Founding Fathers knew more than a little bit about human nature. It is one reason why in the Constitution, the federal government was given certain delineated powers and no others. I hate to burst another bubble, but our government simply doesn’t have the authority or the capability to be the guarantor or insurer of our every need or desire. Isn’t it time we started sending that message loud and clear to the big enablers in Washington?

Blue Collar Muse

Popularity: 33% [?]

“Well, you’ve sure got a lot to write about these days!” It almost never fails. When I tell people I’m a blogger and political activist, they almost always respond with those words. And it’s true. What I don’t have is a lot of time to write about the lot that I have to write about! And so it is today. I only recently finished listening to the speeches from last night by Fred Thompson and Joe Lieberman. They were powerful!

Media Lizzy has the complete texts of each speech posted are her site. Fred Thompson’s remarks are here. Joe Lieberman’s endorsement of John McCain is here. Video of Thompson can be found in my VodPod widget in the left sidebar. Video of Lieberman is here.

Both men gave what I believe to be outstanding speeches. The consensus on the Right is that had Thompson spoken like that early on and consistently, there may well have been a different nominee for the GOP. The tone of their remarks, however, were quite different.

The highlights for Thompson came as he spoke about McCain’s military service. Especially moving were his descriptions of McCain’s time as a POW. He did not argue that such an experience made him qualified to lead the Free World. He simply described what John McCain endured as a POW. It was, perhaps, the quietest portion of any convention speech ever. Literally, it was pin-drop-hearing quiet. What emerged was a portrait of a man of character. Character forged in a hellish nightmare we can only imagine. Character tested day after endless day. Character that it was impossible to know would be created in a man who would one day run for President. Enduring what he endured, McCain was just another POW who might or might not return to his country. If he did, who knew he would choose politics? He could just as easily gone into Real Estate or selling cars. My point is that he did not have to be the man he was in captivity. He chose to be that man when no one knew. And while it isn’t enough to qualify him for President, it speaks volumes for the character of the man seeking the office.

Fred Thompson said it this way, “For five-and-a-half years this went on. John McCain’s bones may have been broken but his spirit never was. Now, being a POW certainly doesn’t qualify anyone to be President. But it does reveal character. This is the kind of character that civilizations from the beginning of history have sought in their leaders. Strength. Courage. Humility. Wisdom. Duty. Honor. It’s pretty clear there are two questions we will never have to ask ourselves, “Who is this man?” and “Can we trust this man with the Presidency?””

Lieberman followed Thompson and, for me, the fact that he was speaking at all far overshadowed his remarks. What he said was truly powerful. He said things like, “I’m here to support John McCain because country matters more than party. … because John McCain’s whole life testifies to a great truth: being a Democrat or a Republican is important. But it is not more important than being an American. … Vote for the leader who, since the age of 17, when he raised his hand and took an oath to defend and protect our Constitution, has always put our country first.”

It was this synthesis of Left and Right, of Democrat and Republican that I found so fascinating, especially compared to what emerged from the DNC. Lieberman, the Democrat at the RNC, spoke overlooking a sea of Americans holding signs reading “Service” and “Country First!” Obama and Democrats at the DNC spoke to Democrats holding signs reading “Obama!” Lieberman, the Democrat at the RNC, heard Americans chanting “U-S-A!!” Obama and Democrats at the DNC heard Democrats chanting “O-bam-a!!” Lieberman, the Democrat at the RNC, called on all Americans to do what is right for the country and not merely what is best for a political party. Obama and Democrats at the DNC spoke mainly of their pride in being Democrats and not their joy at being Americans.

And who is this Joe Lieberman? It is important to answer the question properly. He is not just one of the lone voices on the Left who gets it right on the war, although he is that. He is not just a Democrat who got thrown under the bus when he publicly broke with his Party on the war, although he is also that. He is not just a Democrat who speaks with authority on reaching across the aisle because he did so at great cost to himself, although he is that, too.

What Joe Lieberman is, more importantly than all of those things, is the running mate of Al Gore in 2000. And the import of that is not that he was a former member of the Democratic ticket now endorsing the GOP nominee. The import of Lieberman’s endorsement is this. Had the Left been successful in winning the White House with Gore/Lieberman in 2000, then Lieberman’s 2008 speech at a national convention would have stood a good chance of being an acceptance speech as the Democratic nominee! Instead, he comes humbly to support a man not in his party, but one he feels is best for his country. I don’t know about you but I find that stunning!

Tonight, the world gets a first glimpse at history in the making. Sarah Palin speaks to the GOP faithful, the lurking Left and the waiting world. 24 years ago, Geraldine Ferraro was the first woman nominated for VP. Like Obama/Biden, the Mondale/Ferraro ticket was incredibly liberal and went down in flames of historic proportions to a second Reagan/Bush term. For many reasons, most of them realized via hindsight, McCain/Palin have a far better chance of producing an historic “first woman as VP” result than Mondale/Ferraro ever did. A good start to that chance begins in just a couple of hours with her acceptance speech. The rest of the road will be played out over the next 60 days in a sprint to the Oval Office.

Only one side can win that race. It is my sincere hope that the side that emphasizes Country over Career, People over Party and Results over Rhetoric prevail in that race. If not, buckle in for a very rough ride.

Blue Collar Muse

Popularity: 35% [?]

Heading into Michigan and South Carolina, and enjoying an uptick in interest and momentum following Thursday night’s GOP debate hosted at FOXNews, over the weekend the Thompson campaign released Fred’s plan to reduce Federal Spending. It’s not a particularly long read and it is thin on implementation. However, as a good overview on how Fred would address and approach spending and the budget process in general it’s quite good.

I’m including just the bullet points here. Each one has a paragraph or more of explanation at Fred’s official site. For the detail on the bullets, click through to Fred’s campaign.

THOMPSON PLAN TO REDUCE FEDERAL GOVERNMENT SPENDING

In 2007, the federal government’s spending rose to an astounding $2.8 trillion– the equivalent of $22,000 per household. Growth in federal government spending, however, rarely translates into better services for the American people. Solutions for many public policy problems are best found in the private sector, and then at the State and local level–not in Washington, DC. Indeed, the federal government loses billions every year due to ineffective programs, poor management, waste, and fraud. And, the problem is getting worse. Within the next five years, federal spending is expected to reach more than $3.2 trillion, or about 20 percent of our economy; more than half of this amount is mandatory spending for entitlements. Increasing government spending is not the answer to our country’s problems. It is time to get it under control with better solutions and better management of our federal government.

Balance the Budget and Eliminate Underperforming Programs

Congress has consistently refused to balance the budget and address the deficit. In fact, federal spending continues to grow at rates double inflation. This rate of growth in federal spending is not sustainable and must be brought under control. The following actions will result in better control of the growth of non-defense discretionary spending:

1. Limit Non-Defense Federal Spending to Inflation.

2. Implement a One-Year Hiring Freeze Pending Completion of Federal Government Strategic Assessment.

3. Conduct a Comprehensive Cost-Benefit Analysis of All Federal Programs.

Enact Meaningful Earmark Reform

Congressional earmarks add up to tens of billions of dollars each year. In Fiscal Year 2006 alone, the cost to the American taxpayer was more than $64 billion. Even more disconcerting is the fact that many earmarks do not benefit the America people but only serve to support special interests. To accomplish real and meaningful earmark reform, the following actions must be taken:

1. Provide President with Line-Item Veto Authority.

2. Direct Agencies to Ignore “Soft” Earmarks.

3. Propose Legislation on Earmark Procedures.

Eliminate Improper Government Payments and Prosecute Fraud

Many government agencies cannot pass an audit. In 2007 alone, the government made more than $50 billion in improper payments. On top of that, fraud costs the American taxpayer tens of billions of dollars a year. Government regulations also reduce innovation and competitiveness. The following policies would address these problems:

1. Eliminate Improper Payments.

2. Increase the Prosecution of Fraud.

3. Hold Executives Accountable.

4. Propose Regulatory Improvement Legislation.

Reform Entitlement Programs

Entitlement spending is threatening to engulf the American taxpayer in a tidal wave of additional costs, as millions of Americans begin retiring over the next several years. In fact, spending on Social Security, Medicare, and Medicaid is growing so fast that within 40 years it will consume the entire federal budget. This is unsustainable. The following initiatives will help restore the fiscal solvency of these programs:

1. Save and Protect Social Security.

2. Ensure Future Viability of Medicare and Medicaid.

Popularity: 31% [?]