Tuesday, September 22, 2009

Why Stimulus Did Not Work: Economic Advisers

First, I must say a few words about the current recession as the president's programs are directly related.

This recession was caused by the US Congress. There no doubt about that fact. It was a multistage, multi-year bipartisan effort. They refused to alter any of the Fannie Mae and Freddie Mac legislation that was propping up an unrealistic boom in real estate sales and was the underlying cause of overpriced properties. Also, it was the US Congress that overreacted during a previous economic scandal: Enron. This resulted in the mark to market rule that arbitrarily forced financial institutions report their asset loses without regard to the effect. Along with congress, the FTC, SEC, and DoJ, failed to provide proper oversight of the mortgage securities exchange market. Of course, since this president was a member of congress, he did not inherit anything. He helped create it.

As an aside, I do not let President Bush off the hook for his part in this. While his administration attempted several times to influence congress to change the mortgage rules, they did not stress the problem enough nor did they take their concerns to the American people in any memorable way. President Obama wants his version of health care to become law, so he has made speeches to the American people more than 30 times. (This should be a lesson to politicians everywhere)

What made the president go along with this form of "economic stimulus" after promising to cut "pork" and earmarks and cut the deficit?

The answer has two parts:

1. The President has no personal knowledge of the capitalist system.

2. His advisers told him it would work, and his advisers have no practical knowledge or experience in the capitalist system.

When you look at the president's White House biography, you learn that he has no experience working for or managing any private sector enterprise. None. He has never created jobs nor held one in the private sector. You learn that he has always worked in "jobs" that rely on the generosity of others. He "worked his way through collage" on someone else's dime, did community work for some churches, was handed the job of President of the Harvard Law Review, went to Chicago to work as a community organizer registering voters, taught in Chicago school system, then state senator followed by US senator for a short period. That led to being President of the United States of America. Oh, I forgot, but does being hired as a lawyer for ACORN count as a private sector job?

No private sector work and no paying his own way. It is only natural that he would embrace a public policy that grabs money from those who earn it and ensure his own future by handed it off to his supporters. You know, "spreading the wealth".

So, knowing nothing about capitalism, how does arrive at his decisions to nationalize health care, authorize an economic stimulus package and tout his vague plans to help create jobs in America? How does he run a one year deficit 4 times his predecessor's worst fiscal year? And then, say he's not finished yet, he wants to add another $1 -2 trillion dollars to the deficit. Trillions he and the country do not have. He either doesn't know what he's doing or is trying to deepen the economic crisis to make Americans dependent on him. After all, it worked for FDR with 3 terms.

President Obama and the legacy media always refer to the Stimulus package as if the president sat down and wrote it. We know that is not correct as his "recovery and reinvestment" plan was put together by the US Congress. His involvement was limited to assuring them he would sign it. I'm of the opinion that to this day, he does not know what is in it.

The Obama stimulus package has proven to be exactly what its opponents warned of; An 8000 part pork package that is the envy of leftists in governments everywhere. It is a conglomeration of old and new lobbyist's "gimmes" pulled out of the drawer and patched together by unwitting Democrat staffers and lobbyists as payback for political support. In this respect, it is very similar to the Wall Street and autoworker bailouts. Additionally, no one has been able to identify any significant help that it has or will provide in any quantifiable way.

For a few months, the White House and their sycophants have been saying that the stimulus "brought the economy back from the precipice".

The fact is it has not.

We can know this as nothing has changed. Well, there is the exception of the White House/sycophant talking points; that has changed, but the economy has not. The White House predicted a maximum unemployment rate of 8% when selling Stimulus and it is now, a short 6 months later, approaching 10% (9.7%).

While they claimed it would save jobs, it has actually prolonged the pain as millions of Americans continue to lose their jobs, closely followed by losing their homes and their American dream. Not to mention the continued decimation of millions of retirement accounts. All of which was unnecessary.

The White House's surrogates and the president were touting last week's employment numbers; bragging that the 150 union employees that went back to work is a positive sign of recovery and that we are losing jobs at a slower rate. In the case of union employees, common sense might tell us that the Obama administration just spent $4 billion on their "Cash for Clunkers" (CfC) program which artificially spiked vehicle sales for about 2 weeks. As it is now, the car sales markets are even more depressed than they were before CfC.

Other clues into his lack of knowledge include the president's remarks in Elkhart, Indiana, on February 9th, 2009, when he said,
"We have inherited an economic crisis as deep and as dire as any since the Great Depression."
The fact is in February our recession was the worst economic crisis since the Carter administration 1979. If it were as bad as the Great Depression, unemployment would be at 12%-19%, not 8%.

O.K, who was it that said to 'look to those who he surrounds himself with if you want to know about them?' Oh that's right, the president said it in one of his campaign speeches.

His economic advisers must have advised him that all the pork would be a good thing. The problem that his advisers are real-world-clueless as well.

The president's economic advisers would be the Council of Economic Advisers and the National Economic Council (along with his political advisers). These are folks who also have little or no actual experience in the private sector.

They study, analyze, teach and advise. But actually doing it? It never happened.

The evidence is clear. Simply look to the White House web site the president's economic advisers:

National Economic Council (from the White House)
"The National Economic Council (NEC) was established in 1993 to advise the President on U.S. and global economic policy. It resides within the Office of Policy Development and is part of the Executive Office of the President. By Executive Order, the NEC has four principal functions: to coordinate policy-making for domestic and international economic issues, to coordinate economic policy advice for the President, to ensure that policy decisions and programs are consistent with the President's economic goals, and to monitor implementation of the President's economic policy agenda."
"Lawrence H. Summers is the Director of the National Economic Council and was appointed by President Barack H. Obama on November 24, 2008."

White House biography about Lawrence H. Summers
"Until January, he was the Charles W. Eliot University Professor at Harvard University. He served as the 27th president of Harvard University from July 2001 until June 2006. From 1999 to 2001, he served as the 71st United States Secretary of the Treasury following his earlier service as Deputy and Under Secretary of the Treasury and as Chief Economist of the World Bank. Summers has taught economics at Harvard and MIT. His research contributions were recognized when he received the John Bates Clark Medal, given every two years to the outstanding American economist under the age of 40, and when he was the first social scientist to receive the National Science Foundation’s Alan T. Waterman Award for outstanding scientific achievement. He is a member of the National Academy of Science and has written extensively on economic analysis and policy publishing over 150 articles in professional economic journals. Lawrence Summers received his B.S. from MIT and his Ph.D. in economics from Harvard. He and his wife Elisa New, a professor of English at Harvard, have six children."

Council of Economic Advisers (from the White House)
"The Council of Economic Advisers (CEA) is a group of three respected economists who advise the President of the United States on economic policy.[1] It is a part of the Executive Office of the President of the United States, and provides much of the economic policy of the White House. The council prepares the annual Economic Report of the President."
President Obama's CEA:

The current Chair of the CEA is Christina Romer, the two other current members of the CEA are Austan Goolsbee and Cecilia Rouse. The two nominees were confirmed on March 10, 2009

White House biography for Christina Romer
"Romer was the Class of 1957-Garff B. Wilson Professor of Economics at the University of California Berkeley. Before teaching at Berkeley, she taught economics and public affairs at Princeton University from 1985-1988.

Until her nomination, she was co-director of the Program in Monetary Economics at the National Bureau of Economic Research and served as Vice President of the American Economic Association, where she was also a member of the executive committee."more...

White House biography for Austan Goolsbee
"Goolsbee was the Robert P. Gwinn Professor of Economics at the University of Chicago Booth School of Business. He was an economic adviser to Barack Obama’s 2004 Senate race before becoming a senior economic adviser to Senator Obama’s 2008 Presidential campaign." more...
White House biography for Cecilia Rouse
"Rouse is currently on leave from Princeton University, where she is the Theodore A. Wells '29 Professor of Economics and Public Affairs. She has been a senior editor of The Future of Children and the Journal of Labor Economics" more...
Zero real world experience

It appears that there is approximately zero real world experience at working with and understanding the American version of capitalism and forces effecting free markets in this administration. And because of that fact, the rest of us who are not well connected, such as Wall Street executives, powerful lobbyists, or any object of this administration's favor, will be picking up the tab.

Anyone who has even a passing notion of the economic history of this country (and some others) would know that excessive spending will do nothing to help the economy grow, and most likely holds it down. They would also know that the way government can stimulate the economy is to lower the cost of doing business. Lowering taxes worked for Presidents JFK, Ronald Reagan, Bill Clinton and George W. Bush.

But, no, the economic advisers, the US Congress and the President himself, have no plans to lower taxes or fees on any American. Instead, he imposes a 35% tariff on imported tires from China, raises excise taxes, and threatens to raise taxes (2.5%) on middle/lower income Americans, and even more on those who actually produce the jobs (while lowering their charitable deductions. This is nearly exactly what President Hoover did to "help" American workers in 1930. He added tariffs on imports and increased taxes on anyone with an income during The Great Depression.

Hmmm. Maybe it wasn't intended to improve the economy?

With any luck the president will fail to enact any more of his that-sounds-good policies.

Move it Right

Thursday, September 17, 2009

Constitutional Birthday, 17 September 1787

Say "Happy Birthday!" to the US Constitution. It is 222 years old today.

On 17 September 1787 in Philadelphia, Pennsylvania, the Constitution of the United States of America was born (completed & signed), having been written primarily by James Madison and debated in secret by the invited members of the several states. But it wasn't until the 9th state, New Hampshire, ratified it on 4 March 1788, that it became the supreme law of the land.

On that day the US government started operating under the new rules and began the work of ensuring laws enacted under the Articles of Confederation were in compliance with the new constitution.

But some weren't satisfied with the lack of specificity in some areas, so it was agreed that it would be amended to specify the people's rights and the government's limits. This brought about the first 10 amendments, known as the "Bill of Rights".

The US Constitution's premise is that the government has limited power on loan from the people and that the people of the United States are endowed by there creator with certain inalienable rights. The primary purpose of the central, or federal, government is to protect the people's rights by way of securing the nation from its enemies, both foreign and domestic, providing a system of laws and courts, and promoting the general welfare. It is a shame that it has moved way beyond.

Today, in 2009, we have a serious constitutional crisis. And this is a real crisis, not one made up by politicians, although it was created by politicians. This crisis is signaling the end of constitutional law in this country in favor of the politics of 'what-have-you-done-for-me-lately'?

When I say "-me-", I mean those who take, but lament when asked to be responsible. For example, just look at Wall Street. The movers and shakers made many very bad choices and when the bottom fell out of their schemes, they went crying to President Bush's Treasury Secretary, the former CEO of Goldman-Sachs, for relief. The Bush administration allowed Lehman Brothers Holdings Inc. to fail, then along with the US Congress bent over backwards proclaiming the financial meltdown was imminent, we were in a crisis and this country would fail, jobs would be lost, and millions of Americans would lose their homes. They said we needed to put a stop to it, with money. Money we don't have. Money we won't have. Hope Dollars.

Did this huge transfer of hope dollars on loan from China make a difference? Did it prevent anyone from losing their home? The short answer is: No, it didn't do anything to help the situation. It did, however, transfer a huge amount of money to executives of the financial institutions who support the politicians in Washington.

Is this fair? Is this the founders idea of America? Is this the contract the people made with the government? Again, the answer is an indisputable "no".

It is not fair and it is not the government's job to pick winners and losers. The US Constitution is about equal protection under the law and we are not seeing fairness from our elected officials.

After the "Wall Street Bailout" they decided that the economy was going to fail anyway and they did exactly zero to help defaulting mortgage holders, they chose to help out out GM and Chrysler instead. We then learn that they gave a third share in the auto companies to the very union that is the primary cause of the US automaker's problems.

So who did they help? I would say they helped themselves and their supporters at the expense of everyone else.

This pattern is repeating itself with the Stimulus Bill, Cap & Trade, and health care reform. None of which qualifies as legitimate constitutional programs. This kind of legislation becomes law due to the fact that politicians are not concerned with topics they do not understand. They display a complete lack of understanding of everything except what their hired marketers tell them.

Some citizens pay less (many pay nothing) and demand more from government, while others receive less and pay more of their earning to government so they can "spread the wealth". This gives rise to the 'Vote for me to keep your benefits flowing' politics and self aggrandizement that we see at the national level (and Charlie Crist). When you throw in many well funded lobbyists into the mix, hard working Americans are on the bottom of the list of "interest groups" that politicians are interested in being responsible to.

The pattern no doubt started immediately after ratification but has become epidemic in a political system set up and managed by politicians that has become an incumbency protection game of twister, with each party trying more and more ways to lock up the vote. They employ gerrymandering districts, voter registration, opinion polls, and campaign donations from anyone or anything that will give.

We should use this constitutional anniversary to start a new American rights movement to bring this country back where it belongs: a free market society where you receive what you earn and the government is looking out for your welfare as opposed to their own bank accounts.

Lately, the Tea Parties and other grass roots protesters have kicked the ball into play. But under the playing field has been landscaped by politicians and it will be very, very hard to change.

Happy Birthday, US Constitution.

Move it right.

Thursday, September 10, 2009

Public Option Oregon Style: We'll Gladly Help You Die

The term "Death Panels" has been used by conservative talk radio and other conservatives, and most famously by former Alaska Governor and vice presidential candidate Sarah Palin. Many leftists are giving the Governor credit for coining the term, but it was actually Betsy McCaughey (former Lieutenant Governor of the State of New York) who coined the term. I wonder how far off the mark they are when I see stories like this one from Oregon.

"Health plan covers assisted suicide but not new cancer treatment"

The article shows that government run health care does make life and death decisions. In this article we learn that Oregon has a "death Panel" and they are using it.
"Her doctor offered hope in the new chemotherapy drug Tarceva*, but the Oregon Health Plan sent her a letter telling her the cancer treatment was not approved.

Instead, the letter said, the plan would pay for comfort care, including "physician aid in dying," better known as assisted suicide."
The story goes on to state that a evil big pharmaceutical is helping her with the medication. Makes wonder who has any empathy, big pharma or elected government officials.

The term "Death Panels" used in association with ObamaCare has even gotten the President's attention and he and his minions are insulting opponents and saying,
"We are closer to achieving that reform than we have ever been and that's why we're seeing some of the divisive and deceptive attacks. You've heard some of them. Ludicrous ideas. Let me give you just one example, this notion that somehow we are setting up death panels that would decide whether elderly people would live or die. That is just an extraordinary lie. This is based on a provision in the House legislation that would allow Medicare to reimburse you if you wanted counseling on how to set up a living will or other end-of-life decisions. Entirely voluntary. It gives you an option that people who can afford fancy lawyers can already exercise." - Mr. Obama
HR 3200, Section 1233, has provisions requiring government certified health care personnel visit the elderly every five years and counsel them on how to prepare in the event they are unable to communicate their end of life issues. Death panels? Maybe, maybe not. But since no one in the US Congress, the press or the president himself, can say that it is not going to be the ultimate purpose of these counselors.

It is especially questionable in light of this administration's re-posting of the end of life and disability advice for veterans pamphlet, "Your Life Your Choices". An atrocious document reportedly created by that famous supporter of the military, President Clinton. It was removed from the VA web site by the Bush administration. Now it's back. This pamphlet is a self study guide to allow you to determine how much of a burden you are to your family and the taxpayers and what you can do about it. Who needs death panels, eh?

Look, President Obama says that he will reduce the cost of health care. But he demands that any plan congress comes up with includes a 'no rescission' and 'no denials due to preexisting conditions'. These will balloon the cost of healthcare insurance.

So where is his savings coming from? He says reducing fraud, waste and abuse, but that is small change compared to entire Medicare/Medicaid system. We don't know if he means cutting all fees and services, but we do know he intends to cut some. Already in the works: An Obama administration plan to cut Medicare payments to heart and cancer doctors by $1.4 billion next year.

What effect do you think that will have? Will more cardiologists and oncologists be poring out of med school? That along with his recent insults to all doctors everywhere. More likely it will mean fewer doctors to service the (revised number) 30 million new patients.

Can you say "rationing"?

I believe it's important to look at government sponsored programs with a very critical eye. Those who have been paying attention know that most "do good" legislation has its unintended consequences and end up hurting more than it helps. Just look at welfare that makes dad unnecessary. That has led to a 70% out of wedlock birth rate in the inner cities.

I believe the President does not know anything about free markets, capitalism, competition, or health care, as he has no experience in any of those areas. He must rely on what he is told by his advisers, who also have no experience in these areas.

President Obama's health care reform ideas, if passed are going to lead to more unintended consequences that he is unable to see. It will mean higher taxes, higher health care costs, and if it's managed by government, it will bankrupt the country. Then again, most of the cost of health care comes later in life and dead people cost nothing. Hmm... Death panels???

*Tarceva, an FDA approved drug, is used for cancer treatment.

Sunday, September 6, 2009

More on Health Care Reform: Competition

It seems that Team Obama's understanding of what competition is needs some real world examples. Interestingly, Senator Waxman seems to know that there are at least 52 insurance companies that provide health care insurance. We know this because Mr. Waxman send them a letter, dated August 17th, 2009, demanding payroll information from all of them.

So do we need a another insurance company to provide "competition"?

The short answer is we don't need it at all.

Common sense says that 52 companies competing against each other makes for plenty of competition. In their defense, no one has ever accused the US congress of having common sense. Besides, anyone who believes that a government program would be competitive is either ignorant of how government works or they are trying to trick everyone. Since I can't believe Obama's people are ignorant, our problem reveals itself.

FYI: None of those 52 private sector insurance companies can print their own money to cover the unintended consequences of their self-serving policies. The US government can.

See my original post, Healthcare Reform: Competition, dated 8/12/09, for more on competition.

Thursday, September 3, 2009

Dear Ms. Pelosi: Helping with the Public Option

The Speaker asked for help, so I offered a suggestion HERE.

And here is my suggestion. What are the odds that it will be read, let alone considered?

Dear Speaker Pelosi,

You asked for suggestions for a better plan than the Public Option. I believe I have it figured out. We can have a public option without affecting federal deficits, making it truly budget neutral. The answer is quite simple actually.

Just craft it so that the premiums, co-pays, etc., are paid for by insured. To accomplish this, you would have to hire experienced actuaries to work out cost v. risk & payouts, just as private sector insurance companies do. This would cover the costs and make the public option truly competitive. And, according to the President, competitiveness is the watch word for a public option.

Naturally, the public option health care insurance budget would have to be free of taxpayer dollars or it would no longer be competitive. Subsidizing it with tax dollars would be unfair business practices as the private sector cannot print money or force it from the general public, and we wouldn't want that. Maybe just some seed money to get it started, but other than that: Off limits.

So, I hope you like my idea and will consider it for inclusion with health care reform.

Sincerely Yours,
Feel free to copy and send this yourself.

Tuesday, September 1, 2009

Dear Governor Crist: An Open Letter

Dear Governor Crist,

I was very disappointed to see the tricks you are playing to grab Senator Martinez's U.S. Senate seat for yourself. I can only believe that self-promotion is and always has been the motivating factor for your campaign and election to Governor of our great state and for appointing an unknown to the the vacated seat. Even though I know very little about George LeMieux, I'm sure he is just a "placeholder" for you as the Wall Street Journal wrote yesterday.

FYI: The US Congress has created an economic crisis in the great state of Florida and elsewhere. This state needs a governor who is dedicated to helping his/her state, as opposed to someone who is in it for their own self-aggrandizement. Your conniving move shows that your attention is focused elsewhere and not on the betterment of Florida. If you had cared about Florida as much as you care about yourself, you would have taken the high rode and appointed a well known Republican who might have a chance at keeping the senate seat. Then you would follow up by running against Senator Bill Nelson in 2012.

Although I am a registered Republican and voted for you for governor, I'm afraid you have received the your last vote from me. I would go so far as to say that if Senator Reid, Nevada's Mr. Doom & Gloom (who is going to lose in Nevada in 2010), were to establish Florida residency and campaign for Senator Martinez's senate seat, I would vote for him over you for the sole purpose of moving you out of public office.

With any luck, you will lose your Senate bid and in doing so, lose your governorship as well.

Tell us Governor, will you be appointing someone to as a placeholder for the governor's mansion while you're running a senate campaign?

Respectfully yours,

A Florida Voter.