“No Man’s life liberty or property is safe while the legislature is in session”.

- attributed to NY State Judge Gideon Tucker

Friday, February 13, 2009

Judd Gregg's Principled Choice

There's great cause for conservative joy and celebration today. Senator Judd Gregg of New Hampshire took a principled stand and declined to join Wonderboy's cabinet.

Gregg is a very classy, old-style, respectable man and Senator. He was much too gracious to speak the truth about what happened. But it's easy to read between the lines.

Between voting against the stimulus package, being repulsed by its excess and inappropriateness, and seeing his prospective department's main responsibility, the census, gutted and moved to Rahm Emanuel's office as a political activity, Gregg realized he was being played for a token conservative sucker.

So, rather than the First Rookie playing with Mitch McConnell's head, as a Wall Street Journal editorialist wrote a few weeks ago, it's exactly the reverse. One of the smartest, most conservative Republicans in the Senate reversed course, handed Wonderboy a huge defeat, and heads back to bolster a sane, principled GOP minority.

What Gregg didn't say, but is now obvious, is Wonderboy's bait wasn't enough, and his pretense at building a bipartisan cabinet is, and always was, a sham.

It's another well-deserved blunder and black eye for the First Rookie.

Wednesday, February 11, 2009

More Lies From Wonderboy About Modern Economics

It is mystifying to me how the major media in this country have let the First Rookie get away with so many baldfaced, clear cut lies about economics.

For example, Wonderboy asserted recently that Republicans are only offering 'tax cuts for the rich,' which have 'been discredited as a failed solution.'

This is false. First, marginal tax rate cuts have worked, and those include rate cuts for those earning higher incomes, regardless of their net worth. That is, income does not equal wealth.

Only yesterday, Robert Barro, a Harvard economist, was quoted in the Wall Street Journal observing that the Kennedy/Johnson tax rate cuts of 1963-64, the Reagan cuts of 1981 & '83, and the Bush tax rate cuts of 2003 all stimulated economic growth very quickly.

Another outright lie by Wonderboy is that FDR's New Deal actually alleviated poverty, created lasting employment, lowered the unemployment rate, thus 'succeeding' in pulling America out of the Great Depression. He further opined, to paraphrase him,

'I thought the debate was over on whether the New Deal worked.'

As I wrote in this post, Amy Schlaes and Lee Ohanian have both written extensively, with empirical evidence, on the failure of FDR's New Deal to do any of those things. It went even further, promoting cartels, restricting economic output, competition, and scaring away private capital from equity markets and investments for nearly a decade, not the least because of the taking of substantial elements of the power generation industry from private owners, and subsidized competition with the remainder by the TVA.

Then the First Rookie claimed that 'only government remains with the resources to solve our economic problems.'

Wrong. Wrong. Wrong. Completely wrong.

Government's resources come directly from the citizens. Especially in this era of global flow of capital and linked, floating exchange rates, the ability, as in FDR's era, to print money with impunity, has vanished.

Instead, as Hayek noted, and Dick Armey observed recently in a Wall Street Journal editorial, Keynes' government spending idea never explained how government makes its choices. Unlike individuals who, each to his own ability, behave rationally, seeking efficiency of result from spending or investment, government behaves politically, not economically.

If government has resources, it has them because of us, the citizens. Why not take the same spending amounts in the stimulus bill and, instead, simply reduce/eliminate taxes on corporations and persons for an amount of time necessary to return that much money to citizens?

Then people will choose, economically, individually, how to invest or spend the huge sums now being printed and allocated by.....politicians.

So much of the President's statements on economics is wrong that one wonders if it is deliberate. As my business partner noted, if Wonderboy utters economic falsehoods long enough, the less-well-educated, lower-income segments of our society will simply believe these lies.

Maybe that's what he wants. What would you expect when you elect a lawyer with no practical world experience whatsoever?

Geithner's Disappointing Plan & Testimony

Watching Tax Cheat Tim Geithner testify before Congress yesterday was a supreme disappointment.

Can this guy be the same one as the one about whom I wrote in this post? The one Paul Volcker swore is the only guy in the country who can function as Treasury Secretary?

Larry Kudlow was right. Geithner took months to come up with....what? A modified version of Bill Seidman's 'bad bank' RTC of twenty years ago?

Surely, for all the fuss made over Geithner's brilliance, we are right to have expected much, much more from him.

As I have felt all along, Geithner seems to be just an operator, rather than a Treasury Secretary with foresight and vision. Not that Hank Paulson was so much better during the crisis of last year. But he did at least articulate a revamping of financial regulatory authorities that made some sense.

In a measure of how disappointed investors were in Geithner's so-called "plan," the S&P500 plunged nearly 43 points, or almost 5%.

Nice job, Tim.

Of course, the $64,000 question- or, in the age of Wonderboy, is that now the $64B question- is how and at what price impaired assets will be sold into the public-private trust? Geithner hasn't answered that.

Neither did he provide any estimate of the total cost of his new plan, when asked by a GOP Senator. He sort of punted, admitting it was important to know the total cost to taxpayers, but also admitting he had no idea.

This is change we want, eh?

I don't think so. I think we're in serious trouble, getting deeper as Wonderboy's Tax Cheat continues to be overwhelmed by his job at Treasury.

Tuesday, February 10, 2009

The Political Costs of Economic Illiteracy

I had a very disturbing conversation last night with a friend and squash partner.

J is a lifelong Democrat and resident of the Garden State, as well as a practicing attorney. I, on the other hand, consider myself to still be moving through a period of living in New Jersey, and, because independents can't vote in primaries, am a registered Republican. Not so much because I trust them, but because I know I can't and don't trust the Democrats- especially in this state.

I began by gently needling J about Wonderboy's cabinet nominees' tax cheats, and the various waivers on lobbyists that our First Rookie wants in his administration. Then I moved on to the bloated, ill-considered 'stimulus' bill.

J retorted with his usual lead, that of hating former President Bush and anything he did. J excoriated the greed of financial institution CEOs, which, he is convinced, is the only reason we have any economic problems whatsoever. From there, he moved on to claiming that the Bush era saw a lack of regulation, which happens to be factualy so far from the truth as to not even be funny.

Then J claimed that Wonderboy's stimulus of nearly $1T was payback for Bush overspending on Iraq. Hey, J's liberal, so he has to get a whack in on Iraq. And that 'some economists even say we should spend more.'

Oh boy.

I like J. He's a nice guy, very ethical and principled. But he is economically misinformed. In effect, economically illiterate.

He refuses to acknowledge research in the past decade that conclusively proves FDR's own New Deal failed to revive the American economy. He also probably doesn't know, and wouldn't believe, that Chris Dodd and Kent Conrad took bribes from lenders like Countrywide to let them securitize low-doc and no-doc, low-downpayment mortgages via Fannie Mae and Freddie Mac.

What's sad is that his final comment was something to the effect that,

'We both have our scripts. And we believe them. So there's no point talking about these topics.'

Were that it was so simple.

Instead, it's more like this. I understand economics, have read and observed economics for several decades, and note that socializing economies does not bring about long term productive growth and wealth creation. J just believes what the latest Democratic candidates tell him is true.

Even when it's not.

For example, Wonderboy evidently had a lot of fun declaring FDR's New Deal successful, saying something like,

'I thought we all knew what the New Deal accomplished.'

Then he wrongly referred to Republicans objections to his wasteful spending by saying that

'Tax cuts for the rich have been tried and failed. The Republicans are advocating failed solutions.'

That's just false. Even JFK's economic advisor, Walter Heller, cut marginal rates to stimulate economic growth in the early 1960s.

While we're at it, let's understand that there's a lot to the Ayn Rand view that the productive, creative entrepreneurs in American become wealthy because they succeed economically. And by succeeding, create jobs, tax revenues, etc.

Which do you think will create more value in the American economy: cutting taxes for a successful entrepreneur with capital and income, or; sending checks to jobless poor who can only spend the money, rather than invest it to create more value?

Unfortunately, J won't think about any of these ideas. I guess he just listens to Democrats and figures they'd never lie. And they know all the economic facts, too. Which they would accept, even if the facts did not support the large spending programs they intend to create and propagate for decades to come.

Monday, February 9, 2009

The One and Only Abe Lincoln

Much has been made of the current President's alleged connections to the Railsplitter, Abe Lincoln.

In his recent review in the Wall Street Journal of four new books about various facets of Lincoln, John A. Barnes dismisses several of those connections as misunderstood or simply misguided.

From three of the books, Barnes conveys Lincoln's crucial trial experiences prior to his political career, as well as his shrewd choice of secretaries and the management of his Navy admirals, as contributing to his successes as President.

From Barnes' discussion of the books, we are reminded that Lincoln's speeches and debates were framed as a result of his trial work, rather than, as the current President, less messy and gritty legal work. He writes, further, of Lincoln's skill at trial,

"He was a grizzled trial veteran who handled contested wills, railroad tax tangles and even murder cases. The experience taught him, Mr. White argues, an appreciation for the other fellow's point of view. Until the Civil War, Lincoln subscribed to Southern newspapers, and he kept reading them in the White House whenever they became available. He refused to lay the blame for slavery exclusively at the feet of Southerners, saying that Northerners would feel the same about the practice if the two populations changed places."

The book entitled "Lincoln and His Admirals" paints the President as curious about naval technology and a driving force in pushing his naval forces to innovate and master new technologies, such as amphibious campaigns, ironclads and steam power. Barnes notes,

"Lincoln was fascinated by maritime technology and frequently visited the Washington Navy Yard to see the latest weapons and engines."

One doesn't sense any particular curiosity in our sitting President, nevermind his obvious hands-off approach to things that aren't conceptual, political or academic.

Barnes closes his review with this passage,

"For Lincoln, of course, life in Washington during war was almost all work and no play. To read more about him is to realize how few of our current political leaders even begin to approach his level of intelligence, rhetorical skill, natural wit and capacity for empathy. It also reminds us how ridiculous it is make comparisons between Lincoln and anyone today."

Just so. As a native of Lincoln's Illinois, I have no trouble distinguishing the mature, skilled, veteran leader with a young, unaccomplished carpetbagger from the South Side of Chicago.

Sunday, February 8, 2009

Governing vs. Running For President

Kim Strassel of the Wall Street Journal wrote a superb piece in Friday's edition spotlighting the First Rookie's attempts to crawl away from the bright promises of being the most ethical President and administration that ever was.

As Strassel put it in her column,

"The knock on Candidate Obama was that he put style ahead of substance. Who knew what he was going to do (and who cared)? It was all about how he was going to do it -- with bipartisanship and ethics and a new era of "responsibility." Now comes the reckoning. President Obama is being judged not on the what, but the how.

Mr. Daschle didn't get done in by his taxes. What Mr. Daschle didn't survive was his boss's own pronouncements about rich people and special interests. As the media dug into Daschle taxland, it discovered that (wow) he was a rich person, routinely paid by special interests to help them navigate the giant federal government.

Wait, wait, cried Mr. Obama, let's focus on the what -- namely, my health-care agenda, to which I believe Mr. Daschle is integral. No, no, roared the mob, we want to talk about the things you used to talk about, namely, how you could ever justify this. He couldn't. Next up: Leon Panetta and Hilda Solis.

His first full day in office, Mr. Obama imposed the "most sweeping ethics reform in history," barring officials from working on issues on which they'd lobbied in recent years. What followed was a succession of waivers granting several top officials immunity from the rules."

I guess that's the downside of running without any record to speak of. You grasp at concepts like ethics and change, without regard for implementation at a later time.

That time is now, and Wonderboy is faltering badly on that implementation. As Strassel reminds us,

"His promises to change the way Washington worked weren't throwaway lines tacked to an otherwise meaty agenda. They were his agenda. From now until 2012, he'll be flyspecked for every interaction with a special interest, lobbyist, wealthy individual, or Republican. The problem with lofty aspirations is that at some point they meet reality."

And can you think of a harder test for such lofty goals than the biggest pork barrel, graft-inducing Federal spending bill to ever come down the pike?

Yeah, this is gonna be good to watch! A novice Democratic President unraveling within six months of his election.

No, not Jimmy Carter. Just the latest version of the party's ill-prepared Oval Office resident.