Spare us the righteous indignation

The President's announcement that he'll crack down on evil CEO's and executives who are abusing their power and making too much money might be a worthwhile expenditure of his time in other circumstances. He promises to cap compensation to $500,000 until all federal loans are paid up, and he's taking 'the air out of golden parachutes'.  When Mr. Obama came out swinging the other day, declaring an end to what he considers to be Wall Street greed, he received loud applause and his minions in the media gave three cheers to the whole concept that big business was finally getting their comeuppance.  His fiery words ignited passion across the airwaves as America felt at least a little better, knowing the fat cats were finally getting their due.  The problem is, this bold new policy is not retroactive, and the righteous indignation is hollow. 

The stimulus package that Democrats will likely push through in the next few days does not provide for the bail out of any major corporations, banks or businesses.  I have not read the entire bill because my computer freezes up when I try to scroll through it (that may be why many legislators have failed to read it in it's entirely, as well).  Had the president imposed his policy retroactively to the banks and companies bailed out last fall, it would have had some viability.  Right now, he's talking about what will happen in the future.  He's apparently going to get tough at some point, but what has happened in the past is not important.

We learned yesterday that $78 billion of our hard-earned tax money used to bail out banks in October has been wasted.  The Treasury bought up stocks in failing banks and paid prices far above the value of those stocks and thus, the American taxpayer got taken to the cleaners. At the time, polls revealed approximately 70% of Americans were against bailing out any failed organization. Our voices were ignored.  Our new Secy of the Treasury, Timothy Geithner, apparently was involved in the entire bail out process, working hand in glove with Henry Paulson. We've been told he must be confirmed for his new position because no one else is qualified.  I think we expected someone with requisite qualifications to correct our problems, not make them worse and create more waste and debt.  Still, we are asked to have the utmost confidence in the direction our leadership is moving on economic matters.

The President is talking about applying his compensation rules from this point forward, so that must mean he has plans to do more bailing out of banks and major business that he hasn't told us about yet.  Is $500,000 now the standard for a year's worth of hard work? If so, will other hard working Americans get their pay raised to that level? What method was used to arrive at this amount? Will it go up when the economy improves or down if it doesn't improve? Will the salaries of other employees working for bailed out companies be mandated by the federal government, as well? Why didn't the president go back to the executives of the bailed out banks, insurance companies and automakers and require them to turn over any 2008 earnings above $500,000 to the Treasury Department in repayment?  We learned not to ask questions during the campaign, so I'm not expecting clarification any time soon.

Goldman-Sachs has apparently decided to back out of the socialist trend of our government taking over the financial sector and claims they will pay back all the money they received from the government.  Some are criticizing them, saying they just want to be able to pay their executives whatever they choose.  That's possible, but perhaps they also want to turn back a portion of the tidal wave of government take-over of every aspect of our lives.

Tax, spend and waste with fearmongering and class warfare as a political agenda. Righteous indignation, indeed.

Dems' thinly disguised power grab

“You never want a serious crisis to go to waste” said Rahm Emanuel, President Obama’s chief of staff. One look at the so-called “Stimulus Package” that doesn’t stimulate but is the biggest aggregation of special interest pork in the history of the Republic tells you exactly what he means. Consider two facts: One, the amount of money this bill would shovel out the front door of the Treasury is- adjusted for inflation- Five times the total amount of money spent by FDR in his first three years in office.

Two, given that all this money must be borrowed, and hoping that the Chinese and others will continue to purchase U.S. debt, the rarely mentioned interest payments alone-347 billion dollars- are the largest single budgetary line item in our history.

The tipoff on what the Democrats are up to is revealed in the way they (aided by the media echo chamber) relentlessly describe the country’s economic condition as the “Worst since the Great Depression”.

The truth however is very different. Our economy while certainly bad is only the “Worst since the Carter Administration”. In that period unemployment touched double digits, inflation hit 12%, interest rates an astonishing 21 %, and gasoline prices-adjusted for inflation- were higher even than the recent four dollars per gallon. Today these key indicators of economic hardship are nowhere near as bad as the Carter years.

So, why are Democrats desperately determined to utterly ignore the Golden Age of Jimmy and rush all the way back to the Great Depression as the proper benchmark for today’s economic crisis?

There are two reasons. First, using the Great Depression as a comparative allows Democrats to cast George Bush in the villainous role of Herbert Hoover, and even better lets Obama masquerade as the Second Coming of the liberal God FDR.

Now for Democrats it just wouldn’t do to describe Bush as merely “the worst President since Carter”, particularly since that would get people thinking that maybe Barack Obama is the new Ronald Reagan.

The second, and far more ominous reason is that by invoking the “Great Depression” and the economic horror stories associated with it (e.g. 25% unemployment) the Democrats hope to create a climate of fear and anxiety among our citizens that will in turn facilitate their radical agenda of a massive power transfer that will transform all the major sectors of our economy- education, environment, energy, health care, labor relations etc. Only by persuading the public that the economic crisis is truly calamitous and catastrophic in scope can the Democrats justify and sell the sweeping, even revolutionary changes they have in mind.

Needless to say, these sweeping changes are not talked about openly. Democrats long ago learned the imperative of a “stealth strategy” (i.e. say one thing while planning to do another).

In broad stroke the true liberal goal is the transformation of America into a statist social welfare society along European lines. Remember, these are the people who tried to impose Hillary Care, still praise the rationed Canadian health care system, and even find good things in Fidel Castro’s approach to public health.

The means of achieving this Brave New World are simply put, redistribution of wealth and income. Remember Barack Obama’s unguarded remark to Joe the Plumber: ”Aren’t things better for everybody when you spread the wealth around?”

Up until now these Democratic goals have been hidden behind vague promises-e.g. affordable health care for all, tax cuts for 95% of us. Now, with the “stimulus” the Democrats have been compelled to put in writing for the first time a list of specifics. The result is an appalling compendium of “good ideas” put together by Nancy Pelosi and friends,that is only a down payment on the even bigger and better ideas that will soon follow.

Now if the economic crisis is as catastrophic as the Democrats would have us believe, then it logically follows that these good ideas must be signed into law real fast, at least fast enough to insure that the public has no real chance to look at them, and Congress has no chance to debate or significantly alter the most expensive piece of legislation in history.

There will however be ample time-one day- for our grandchildren to ask us incredulously: “What were you thinking”?

William Moloney’s columns have appeared in the Wall St. Journal, USA Today, Washington Post, Washington Times, Philadelphia Inquirer, and The Baltimore Sun.

Why the stimulus won't work

The reason the so-called stimulus bill will not achieve the goals set for it is twofold: Ideology plus the Democrats' lack of understanding of how the economy works. Democrats do not seem to grasp the concept of the “money multiplier effect”. It’s important what you spend money on, not just the spending in itself. Spending needs to actually increase the size of the economy, and not merely be a transfer money from one sector to another.

** To “soak the rich” in the name of “fairness” shrinks the economy. Every $100 the government takes in taxes, only $65 ever makes it back into the economy, the rest is absorbed in bureaucracy. Punitive tax rates also discourage business (and jobs) formation, making the viability of proposed projects harder to achieve. That is why government to an economy is like mistletoe to an oak tree: it burdens the tree and leaches out its vitality. Yet the “economics challenged” Democrat public sector types will raise taxes to “get the corporations who have millions” and mumble “Justice! ” with great satisfaction.

** Vast portions of the spending have been earmarked for things like “bailing out the States”, (keeping the mistletoe healthy but not the tree) extending Medicare benefits (40% of which is absorbed in paperwork and HIPPA Compliance reporting requirements), more unemployment benefits, repairing Federal office buildings or constructing parks and public recreation centers. Infrastructure spending is beneficial, but it will take years. It addresses years of neglect and deterioration rather than adding to our capital stock. In all these cases once the money is spent the economic activity peters out. The ultimate result is filled medical waste bins behind hospitals, more housing project sewage, cleaned up Federal office buildings, fewer potholes, and empty new parks and recreation centers. None of this spending results in sustained increased economic activity! English major Democrat activists fail to understand or grasp this. They think any spending will do.

** The Government spending multiplier effect is typically less than one: $100 taken in taxes goes to $65 in spending which quickly peters out once the contractors finish their government projects. And another aspect: sometimes it takes government contractors months to get their money: (the layer of bureaucracy that “safeguards” the public purse must be satisfied). The “stimulus” then languishes in slow pay Accounts Receivable, pushing some contractors into bankruptcy.

** Real stimulus is in starting businesses. When a business starts, it generates jobs and demand for goods and services. The spending ripples through the economy sometimes at a ratio better than ten to one! Every dollar spent on a business results in ten dollars of economic activity in the economy. But this would entail “tax breaks for the rich”, ideologically unacceptable to the Marxist Progressives who now run the country. They cannot tolerate money NOT funneling though their hands and the power that goes with it. Yet with no understanding of the “multiplier effect”, they will continue pour resources into projects that will increase the size of government (the leaching mistletoe) and shrink the economy. Democrats are setting the stage to break the Japanese record for “stagflation “and misery. They will blame everything and everyone but themselves.

Keep the change, Mr. President

Will Obama deliver on his oft-repeated promise of “change"? Probably not, and let's hope not. For one thing, his chosen team largely recreates that muddled, discredited Clinton administration. Recall that officials of Clinton’s administration initiated the unsound Freddie/Fanny loan policy that brought us the current mortgage crisis. Similarly, Obama’s “new New Deal” gravely threatens America’s injured economy. As explained by economics professor Thomas DiLorenzo, FDR’s New Deal substantially worsened and prolonged the Great Depression. Applying those failed Big Government concepts to today’s crisis makes no sense. When a scheme doesn’t work, you don’t repeat it.

You’re smarter than that. The Dems apparently aren’t.

Big Government cannot promote a healthy, thriving economy. What the “nanny state” offers is theft disguised as “redistributing the wealth” by which the deceptive nannyists mean taking your hard-earned income, keeping or wasting most of it, and doling out a pathetic pittance to recipients of their choice.

If you believe that you deserve the earnings of your bright ideas and plain hard work, you must equally uphold that for others as well. In his first inaugural address, Thomas Jefferson stated, “… a wise government … shall not take from … labor the bread it has earned.”

Jefferson illuminated another severe flaw in Clinton/Obama nannyism. By its very nature, Big Government is a profound insult to every one of us. We are, according to the nannyists, too stupid to formulate sensible decisions. By definition, nannyists deem us inferior. Jefferson described “two parties: Those who … distrust the people and want to draw all powers from them … [and those] who identify themselves with the people, have confidence in them….”

So, after all, we will all be better off if Obama’s oft-promised “change” doesn’t materialize. We don’t need a repetition of Dems’ insulting and economically destructive nannyist policies.

Colorado Dems flunk basic econ

As Obama pledges to use taxpayer money to hand out cash and prizes in the name of jump-starting the economy, Colorado Democrats seem to be taking notes. But perhaps they should start taking a basic college economics course. Their chosen model just won't work. A quick read through the daily papers and opening day remarks by the state's leading Democrat lawmakers revealed their plans to increase government regulation and taxation, two actions all but guaranteed to worsen the state’s economic prospects.

Here’s just a quick sample of their plans. Democrats want to mandate new business regulations. Rep. Mark Ferrandino, a Denver Democrat, is introducing legislation to force banks to give loan defaulters a “temporary timeout” to renegotiate their loans. Rep. Andy Kerr of Lakewood hopes to force businesses to grant a week of unpaid leave so parents can go to school events.

The trouble with these nice sounding ideas is that they will increase government intrusion into private businesses and increase costs that are in turn be passed on to consumers.

Democrats also want to increase the size of government. Only the state’s projected $604 million budget shortfall restrains their ambitions. According to the Rocky Mountain News, a $13 billion price tag for start-up costs is the only thing stopping some Democrats from moving forward with a socialized medicine scheme.

Even so, Rep. Mary Hodge of Adams County thinks a smaller version is doable. Never mind that government takeover of healthcare is a prescription for long lines, escalating costs, deficit spending, and loss of personal freedom.

To improve education, Rep. Karen Middleton of Aurora suggests that we should increase government bureaucracy by creating an "Office of Dropout Prevention and Student Reengagement." State Rep. Debbie Benefield of Arvada wants the government to guarantee every student has access to a high-quality teacher. I’m guessing parental choice isn’t what she has in mind rather the creation of yet another government teacher training program or teacher salary initiative. On the welfare front, legislation is poised to create an “Economic Opportunity Task Force” (at least it’s not a blue ribbon panel) to develop a “strategic, integrated and comprehensive plan to help lift families out of poverty.”

Bear in mind that every dollar spent on state bureaucracy is one not spent by entrepreneurs to create jobs, charitable organizations to provide real help, or individuals to invest in their own future.

Democrats think they can create jobs, stimulate growth, and generate prosperity through the creation of more government programs, hand-outs, and regulations. Unfortunately, they missed the lessons of the 20th Century, subtle as they were, like the Great Depression, 70's stagflation, and the collapse of centrally planned economies.

“There are severe limits to the good that the government can do for the economy, but there are almost no limits to the harm it can do,” observed Nobel laureate economist Milton Friedman. The direction sought by the majority party this legislative session points to darker days ahead.

Krista Kafer is a Denver-based education consultant, frequent cohost on Backbone Radio, and regular columnist for Face the State.com, from which this is reprinted by permission.