On the Hook

If there is anything that would inspire me to renew my posting, another nail in the coffin of liberty would sure do it. And the nail was certainly hammered home this week, with the House passing (by a disturbingly wide margin) legislation aimed at "rescuing" those borrowers of unaffordable home loans whose irresponsibility got the best of them. American taxpayers could be on the hook for upwards of $300 billion dollars under the proposed legislation, which was packaged together with federal backstop funding for mortgage giants Fannie Mae and Freddie Mac to ensure passage.

You can read about the particulars of the bill here.

As for my thoughts on this disgrace:

Our leaders in Washington are spineless. They seem to have no problem with offering hundreds of billions of our tax dollars to reward the small percentage of individuals who made bad financial decisions in taking out loans that they could not afford. It is inflation, tighter lending, and the inevitable falling of home prices that lie at the heart of our current economic troubles. This legislation, at least as it pertains to bailing out homeowners, does nothing to address those underlying problems. Home prices will continue to fall, inflation will continue to soar, and lending will continue to tighten regardless of how many homeowners are “saved” from their own incompetence. The only thing that the FHA provision of this bill does is put those of us who made wise decisions on the hook to the potential tune of $300 billion dollars.

What makes it even more disturbing is that a truly necessary provision (the backstopping of Freddie and Fannie) was packaged with the initial bailout bill to force the passage of both. Like the homeowner “rescue” provision, the backstopping of Freddie and Fannie is a symptom of this nation’s growing reliance on the federal government. If these two giants were never given implicit government backing in the first place, they would never have grown so large and unregulated, and in turn, their failure would not have proven so potentially catastrophic to the overall financial system.

Yet unlike the bailout of reckless borrowers, this provision IS necessary to address one of the underlying causes of our economic troubles, by preventing further tightening in the credit markets. It is a shame that in order to pass this necessary provision, American taxpayers were forced to cough up billions of unnecessary dollars to reward irresponsible borrowing that will have no effect on the economy at large.

This is just another disturbing reminder of the death of individual responsibility in this country and the despotic growth of the federal government. I may not be surprised by this one, but I sure as hell am saddened by it.

The Democrats "Big Oil" Dilemma

With gas prices currently hovering around $4 a gallon across the country, everybody is looking for someone to blame. If your an economist, you will probably blame the growing oil appetite of emerging middle classes in India and China, along with supply constraints in oil-producing nations and a weak dollar. If your looking for a domestic cause, you may blame the Strategic Petroleum Reserve or investor speculation in commodities markets. But one thing is for certain: if your a Democrat, you will blame oil companies, regardless of the fact that they have little to do with the painful prices at the pump.

Now, there is no dispute over the fact that oil companies are hauling in record profits. But just because oil companies are making more does not necessarily mean that they are the reason you are paying more for fuel. I think I would "put my lot in with economists" on this one, and I have yet to come across a legitimate economist who cites oil companies as the culprit behind higher prices. Actually, "culprit" is the wrong word to use, as the higher prices are a result of the natural forces of supply and demand, over which policy makers in Washington have little control.

Yet for some reason, despite the economic reality behind higher gas prices, Democrats have not ceased from placing the blame squarely on the shoulders on "Big Oil". It hasn't stopped Barack Obama from arguing for a windfall profits tax on the profits of oil companies, and it has failed to halt Congressional Democrats in their attempt at grandstanding by calling oil company executives before committee. The reason that it has not stopped them is because it is politically unpopular to tell the American people truth: there is not much that can be done.

As a result of their unwillingness to make this known, Sen. Obama and his colleagues in Congress have sought to make it seem as though they are doing something by punishing those who are supposedly benefiting most from the rising prices. Parading oil executives before a bloodthirsty committee must seem to be a win-win strategy : not only does it appeal to the Democrats image as a crusader for the little guy, but it also puts the Democrats in good standing among environmentalists.

This strategy of making villains out of profitable oil companies may very well help Democrats in an election year when economic issues are at the top of the list for most voters, but in reality the issue of oil profits is much more complex. Despite what many grandstanding Congressional Democrats, Barack Obama, and frustrated voters seem to believe, oil executives are not the only ones benefiting from the higher profits so frequently derided. These companies are all publicly-traded, with pension funds and 401k's heavily invested in them. As a result, when profits are soaring for a company like Exxon, it is not just those at the top who benefit. This is the dilemma for Democrats.

All individuals with pension funds invested in oil companies benefit from these rising profits, including many of the labor unions and "working class voters" that lie at the heart of the Democratic coalition. For instance, the National Fraternal Order of Police and its 342,000 members have pension funds heavily tied into oil companies such as Exxon and have seen the value of officers' pension funds soar in recent years. Now I don't know about you, but providing police officers with a comfortable retirement isn't a bad thing.

So when Congressional leaders call oil executives before committee to read them the riot act, they may want to consider the diverse group of shareholders gaining from higher profits by oil companies. They may also want to consider there own hypocrisy. After all, these same Democrats deriding the profitability of Big Oil and threatening incentive-killing taxes on profits, just passed a farm bill that provides direct taxpayer subsidies to farmers who are rolling in cash. Unlike the profits of oil companies, the subsidies and record profits of wealthy farmers aren't shared with anyone. To me, lambasting profitable oil executives on one day and providing direct taxpayer handouts to similarly profitable farmers on the next day is nonsensical, given the Democrats supposed commitment to the average taxpayer. But hey, it is an election year. Nothing makes sense.

Appeasement

Much has been made on the left of President Bush's recent remarks before the Israeli Knesset in which the President attempted to explain his views on the futility of negotiating with the Iranians, which he compared to "appeasing the terrorists". The President was blamed for aiming his comments squarely at all-but-certain Democratic nominee Barack Obama. Some claimed such overseas politicking broke an unwritten rule of foreign policy, despite their silence over Nancy Pelosi’s trip to Syria in 2007 solely for the purpose of political grandstanding Others attacked the substance of Mr. Bush's remarks, citing the Reagan-Gorbachev talks, along with this Administration's own negotiations with Libya and North Korea, as evidence of the President's supposed unwillingness to see the potential fruits of diplomacy. Yet, contrary to what Barack Obama and his campaign surrogates on the editorial boards across the country want to believe, there is indeed merit to what the President said.

Negotiation (or diplomacy) is a “technique”, not a policy. That is the central distinction that many critics of the remarks fail to see. The President was not saying that any negotiating with adversaries is akin to appeasement, he was saying that Obama’s expressed willingness to hold direct executive negotiations with Mahmoud Ahmadinejad without precondition is a futile technique when dealing with the Iranians at the current time.

The three adversaries that the Obama camp has trumpeted as evidence of the successful track record of negotiations -- North Korea, Libya, and the Soviet Union -- were politically weak at the time that talks commenced, looked to be on the verge of reform, and showed a willingness to make concessions. The desperate state that these three nations were in at the time led to an opening in which the U.S. could negotiate from a favorable position of strength. That is, the technique of negotiation was likely to be the best option capable of achieving a certain end. Iran, by contrast is currently at a position of growing strength, extremity, and influence on the world seen. U.S. troops in Iraq and Afghanistan are being killed daily by advanced explosive devices manufactured in Iran and supplied by the Iranian government to fuel the insurgency in those nations. Iran is also training and funding Hamas in Gaza and Hezbollah in Lebanon, both of which are gaining (or have already gained) control in those areas. Furthermore, Iran has tighetning economic bonds with two veto-wielding permanent UN Security Council members -- China and Russia -- making international action impotent. This strength is evidenced by Iran’s failure to show any willingness to negotiate. When Ahmadinejad’s stated foreign policy toward Israel is that it should be "wiped off of the map", that hardly seems to be a negotiable position.

In other words, the Iranians are unlike the three nations touted by Sen. Obama in that they, not the United States, are the ones in a position of strength. Therefore, any negotiations that are conducted between the two in such a climate are likely to be fruitless, in that the U.S. could hardly be expected to achieve much without giving up much more. Just look at the troubles that the United States has faced in the six-party talks with North Korea, which was much weaker than Iran is today when talks began under President Clinton. These “negotiations” have dragged on for years without any major concessions by Kim Jong Il. During this time the North Koreans were able to build and test a nuclear weapon and spread their materials and know-how to Syria and God knows who else. Good job, diplomacy.

Does Barack Obama really think that similar negotiations would achieve anything more with Iran today -- a nation in a much stronger position to negotiate than North Korea ever was? At this height of Iranian influence, when the rhetoric of Ahmadinejad is increasingly extreme and U.S. troops are being killed by weapons manufactured and supplied by Iran, is that really the context in which direct presidential negotiations without preconditions would be an effective policy technique? I believe those are the questions that were at the core of what the President was trying to get to in his remarks before the Knesset, and I believe that they were spot-on. When a candidate -- even an infallible one like Barack Obama -- advocates a policy on the very real threat of Iranian nuclear weaponry that contains no technique other than weak diplomacy, one is definitely justified in questioning the naïveté of such a position. For someone who is supposed to have great judgment in the arena of foreign affairs, Sen. Obama's views on dealing with Iran certainly don't seem to show it.

The Real Barack Obama

One of the biggest appeals of Barack Obama's candidacy to young and independent voters is his stated commitment to "post-partisanship" and his promise of a presidency run by the people rather than by special interests. After all, how else can you explain how a first-term senator with little experience in getting things done and with no major legislative accomplishments to speak of, has catapulted to become the leading contender for President . When Barack Obama states that he is the one to lead us into a new era of politics, it appeals to a desire than many of us have for a fundamental shift in the way Washington represents the people. My only concern is can we believe Sen. Obama when he says this?

The answer is a resounding no. Barack Obama's brief time in the Senate and several positions that he has staked out on his way to the nomination reveal that he is much more partisan and entrenched with special interests than his stump speech would have us believe.

Not only does Sen. Obama lack a legislative history of bipartisanship that may have provided some credence to his post-partisan claims, he is in reality one of the most reliably partisan voters in the Senate. Since being elected in 2004, the junior senator from Illinois has voted with his party 96.7% of the time, according to the Washington Post's Congressional database. Tellingly, he voted against the nomination of Chief Justice John Roberts -- going against the 3/4 of senators who voted for Roberts' confirmation, a majority that included 22 Democrats. Not quite as "post-partisan" as he makes himself out to be, is he?

Moreover, not only has Obama the legislator not lived up to the bipartisan hype sparked on the campaign trail, but his other trademark issue -- an end to the reign of special interests --is similarly hard to discern from his actions. Indeed, he has built a successful run at the Democratic nomination around support for the very polices and pieces of legislation that appeal directly to these groups.

In pursuit of votes in Iowa, he became a large proponent of the ethanol subsidies that have led directly to higher food prices. More recently, Sen. Obama has voiced support for the farm bill currently sitting on President Bush's desk which gives direct taxpayer handouts to undeserving farmers who have seen their incomes skyrocket due to such rising food prices. While appeasing the farmers groups that have supported this legislation may provide Senator Obama with votes in key Midwestern states that he hopes to win in the general, it does little to reflect his supposed concern for an American public facing higher food prices. Similar pandering to entrenched special interests can also be seen with labor unions, where Sen. Obama has pledged to appoint federal judges who would end much of the oversight of labor that has been used to root out corruption and illegal practices.

The support that Obama has gained from both labor unions and farmers groups have proved instrumental to his success in many of the primary states where these groups hold substantial sway. At the same time, he has been getting the votes of independents and young people who believe him when he says that he is committed to ending the reign of special interests in Washington and working on behalf of the American people. This is truly remarkable. Sen. Obama is receiving the support of both those who have thrived off of the old-style Washington politics dominated by special interests AND those who wish to see an immediate end to such politics. The only thing that can explain Obama's ability to draw together such a diametrically opposed coalition of support is a fundamental divergence between his words and actions.

While some may try to explain his appeal to traditional special interests as a mere function of the primary process (where a candidate is forced to the extreme in order to gain the nomination), such pandering is exactly the type of Washington-as-usual politics that he has pledged to leave behind. On the two traits that have come to define him as an appealing candidate -- bipartisanship and an end to politics as usual -- Barack Obama is not what he appears to be. When faced with the facts, it is hard to believe that he is committed to reforming a broken Washington when he is courting the same interests, voicing support for the same polices, and engaging in the same type of partisanship than led to it breaking in the first place.

The Latest Bailout: An Update

Well, it seems as though Harry Reid and Nancy Pelosi are not the only ones tuning out the American public (see previous post). In response to Sen. John McCain's outspoken opposition to the new farm bill -- which he rightly derides for being a product of this Congress' continual wasteful spending -- Democratic presidential not-so-hopeful Sen. Hillary Clinton responded with this gem, courtesy of the AP:

"When Bear Stearns needed assistance, we stepped in with a $30 billion package. But when our farmers need help, all they get from Senator McCain and President Bush is a veto threat"

"Need help", huh? Yea, it's a real shame that farm income has risen only 56% over the past two years. Sure, what's $300 billion dollars to American taxpayers. It's not like they are facing higher food prices or anything...oh wait.

To compare Bear Stearns to the farm bill is just ludicrous. In Bear's case, the Fed was faced with an imminent systematic crisis to the financial markets that threatened to shut down Wall Street overnight. While it was certainly unprecedented, the $30 billion move to rescue Bear was worth it, given the ramifications of a collapse and the immediacy of the threat.

As for the farm bill, their is neither an immediate threat to American agriculture nor any extensive ramifications for withholding subsidies. A permanent disaster-relief fund that is added to annually can provide the means to meet any systematic threat to agricultural when and if it arises. The money should be there for when farmers need it, and only when they need it. Throwing unwarranted subsidies at thriving commodities for another five years is just plain wasteful. About as wasteful, in fact, as all that money continuing to be spent by Hillary Clinton's dying, debt-laden campaign.

The Latest Bailout

First it was Bear Stearns. Then it was America's "underwater" homeowners. Now there is a new and even more costly bailout being considered in Washington, one which, while being completely unnecessary and counterproductive, has faced little opposition in Congress despite having a price tag of $300 billion.

What struggling group of Americans is Congress seeking to support with our tax dollars in its time of need? What group is struggling so mightily that its bailout legislation has received veto-proof support? The answer may surprise you -- America's farmers. Yes, that's right, the same farmers who have seen their income explode by 56% over the past two years due to rising demand for corn, soybeans, and other food staples that has pushed prices through the roof. The same farmers who are already rolling around in the dollars of American consumers who are faced with skyrocketing prices at the grocery store. The same...well, you get the picture. The new farm bill, which passed the House with a bipartisan veto-proof majority and is well on its way to a similar fate in the Senate, will grant renewed subsidies to the one group of Americans benefiting from the state of the economy.

Don't worry though, because our ever-responsible Congress has limited subsidies to only those farmers who really need it. After all, the Pelosi-Reid Congress was elected on a promise of reform and fiscal discipline regarding wasteful spending. To that noble end, they have set an upper income limit at which point a farmer is cut off from taxpayer funds. That limit: wait for it....$750,000. Yep, four zeroes. And that's not all. According to the Wall Street Journal, through fancy accounting, farmers can claim incomes of up to $2.5 million and still receive a nice little check from America's taxpayers.

The New Deal-era farm bill has been historically used to provide a safety net for family farms vulnerable to sudden swings in the economy and vital to America's food supply. Yet that safety net is clearly no longer needed, and family farms are not even receiving the bulk of the aid. Of course, some disaster relief money is necessary to protect farmers in truly difficult times. However, while the new farm bill does contain money specifically for the creation of such a disaster-relief fund, the majority of the $300 billion is devoted to unwarranted subsidizing of the booming industry for agricultural commodities, along with money earmarked for urban lawmakers and wary fiscal hawks in an effort to buy their votes.

Democrats in Congress, despite their hawkish rhetoric on spending, have many first-term members from farm districts to protect in the 2008 elections. The same is true of Republicans in Congress whose seats are already being threatened by legitimate challenges from conservative Democrats gearing up for November. Due to this electoral calculus, both parties have forsaken their promise of spending reform in favor of saving their collective ass by handing out taxpayer money to undeserving farmers in their districts.

Despite the bipartisan support for the farm bill, the ultimate responsibility for this monstrosity lies with Nancy Pelosi and Harry Reid, who are reneging on the promises that vaulted them to power in 2006. They are merely continuing the same type of irresponsibility with taxpayer money that turned voters off from Republicans two years ago. If this long primary season has taught us anything, its that a still-frustrated American electorate is yearning for real change. Yet while it is clear that the voters have spoken, as the farm bill weaving its way through Congress now shows, its is equally clear that our representatives in Congress continue to tune them out

Racism in the Presidential Election? Hardly.

Ruben Navarrette has written a piece for CNN.com in which he claims that Hillary Clinton's recent comments to USA Today are evidence of racism in 2008 election:

At least in West Virginia, Clinton chose her words more
carefully than she did last week when she blurted out to USA Today that "Sen. Obama's support among working, hard-working Americans, white Americans, is weakening again" and how whites who had not completed college were supporting her.

Clinton sounded less like George Washington and more like George Wallace. Imagine a presidential primary where, after more than 16 months, almost two dozen debates, hundreds of speeches, millions of dollars, and countless chicken dinners, the rationale for electing someone boils down to this: Vote for me. I'm white. I can win because other whites will vote for me.

Why, this could be the new affirmative action. Whatever happened to merit?

Navarrette's logic is not only faulty, it is unprofessional. Hillary Clinton never once said that she was electable due solely to her support among white voters. What she said was that Sen. Obama was unelectable in a general contest due to his weakness among white voters, working-class voters, and older Americans in the primaries. I don't know if I necessarily agree with her logic (both parties will be united come November -- the fight is over independents), but this is hardly the racist rant that Navarrette makes it out to be. Sen. Clinton is merely stating what the exit polls show: the majority of white primary voters favor her. Pointing out that fact is no more racist than Sen. Obama pointing out that he has the support of over 90% of black voters, along with well-educated Dems and young people. Since when did the voting patterns of white Americans become off-limits, when dissecting the election-day tendencies of black Americans and Hispanics have become commonplace.

It is hard not to view Navarrette's contortion of Sen. Clinton's comments into racism as somehow an attempt to rationalize the fact that many people are not voting for the media's anointed candidate. He is so perfect, their logic goes, why could anyone not vote for him? It must be racism!

This point is further hammered home by the lip-service that Navarrette pays to the idea of "merit" in American politics. If he had merely made his point about Sen. Clinton's comments regarding race, and proceeded to discuss the need for an election based on merit , I would have lauded his commitment to such an ignored issue. Yet, like many Obama supporters, Navarrette ends his column by engaging in the same type of racism that he attached to Sen. Clinton:

Over the decades, black Americans have had plenty of opportunities to vote for white people for president. And they have done so. But this is the first time that white Americans have a chance to vote for an African-American with a shot at the presidency. And what are they doing?

Many are responding quite well. Obama won the votes of many -- to borrow a phrase -- "hardworking white Americans -- in Wisconsin, Minnesota, Iowa, Nebraska and Wyoming. But, elsewhere, as Obama said in a recent interview, people may need to get their head around the concept of an African-American even seeking the presidency, let alone winning it.

That's understandable. There are places in this country where white Americans are still raised to think of black Americans as inferior. And then comes someone like Obama who has performed off the charts -- from Harvard Law School to the U.S. Senate and now, possibly, on to the White House. It's going to take some time to get used to all that, especially for people who never thought they thought they'd see the day that an African-American would be elected president.

"Responding quite well" to what? Is it merit? Yea, right. From what I can tell, Navarrette is making the argument that many Obama supporters have: that Sen. Obama's potential to be the first black presidential candidate should be a decisive factor in the minds of voters. How is that merit? Voting based upon the color of one's skin or how warm and fuzzy a particular candidate's ascendancy to the White House would make you feel (i.e. by assuaging your white guilt) is truly a disgrace. If we were to truly have an election based on merit, there would be no contest among the Democrats. Sadly, as Navarrette's twisted logic shows, that is not the case this year.