The Federal Government – Too Big to Succeed

We continue to get bombarded almost daily by examples of political corruption and stupid political decisions. Objective media outlets will expose the real negative consequences, while the spin machines of the left and right will continue to be blinded by their own ideologies. What should frighten all of us is the collective damage these actions are wreaking on both our economy and the political foundation of our country.

The healthcare bill is nothing more than further erosion of our liberty through a greater expansion of the federal government into our personal lives. Let’s not forget the collateral damage imposed by an even larger destructive debt burden. No one argues that Medicaid, Medicare, and Social Security are filled with fraud that totals over $100 billion each year (conservatively). When future projections of tax revenues and expenses for these three programs are considered, many people are not aware that we are already trillions of dollars in the hole. Stupidity is giving government bureaucrats more control over our economy when they have failed so miserably with these social programs. While having all of these expansive social safety nets can certainly make some people feel good, the perverse incentives and entitlement mentality they create are not good for the long term “psychological” strength of the country.

The absurd decision to have a civilian trial of KSM’s “crime” is not much more than a thinly veiled disguise of putting the Bush administration and the US intelligence network on trial for political purposes and some sick liberal catharsis. It doesn’t matter that it will be a media rant platform for extremists Muslims, and a symbol of weakness. The hypocrisy is astounding – liberals say they are concerned about terrorists rights in a civilian vs. a military court, but we continue to use Predator drones to bomb suspected terrorists camps in the Middle East when they haven’t yet been tried in a court of law. The disconnect in their thinking between a war and a criminal activity can’t be any clearer. To apply this disjointed logic, we should be using Predator drones to take out suspected gang member hideouts in LA or the organized crime offices in Chicago. Hmmm…maybe there is something there after all.

Cap-and-trade is feel-good legislation based on no conclusive scientific evidence; China and India can’t be any firmer in their position – they will not agree to any treaty that will force them to cut CO2 emissions. Decreasing real pollution is a worthy cause, but cap and trade, or any climate change legislation, will result in additional competitive disadvantages, and it will be economically devastating for many US industries.

The misappropriation of billions in bailouts and stimulus funding will result in more debt, bigger government, and continued corruption. Once the rhetorical window dressing of saving the world economies is stripped away, the taxpayer bailouts of well-connected financial institutions has nothing to do with free market principles and everything to do with more of the same corruption that helped create the financial meltdown. Much of the same holds true for the GM bailout which was accomplished by throwing out the rule of law and by political pay-off to unions. As an added benefit, all of the bailouts’ have unintended consequences (or intended consequences) of expanding the reach of the federal government.

There is an insidious shifting of the massive and destructive credit explosion from the private sector to the government. It is being orchestrated by swapping the massive and politically driven easy consumer credit explosion that fueled 100%+ debt-to-equity home equity loans, NINJ (no income, no job) loans, etc. with massive infusions of government credit through federal bailouts, stimulus programs, federal reserve and treasury inflationary liquidity policy, and general spending programs. The consequences of this will not be good.

The cumulative effect of allowing politicians to become more powerful than what was ever intended by our Constitution is difficult to comprehend and assess since so much of this has been a slow, and some would say deliberate, deterioration in our governing principles. While it would be easy to blame Obama and the current Democrat majority, we started down this path in the early 1900’s, sent it into hyper drive with FDR, and escalated it further with Lyndon Johnson. Republicans in recent years have not helped since they have done little to stop this deterioration; while Reagan was able to reverse the trend, Bush 1 and 2 abandoned many of the core principles of Reagan’s and the Founding Fathers’ limited government philosophy. This failure of the Republican party has not only resulted in the continued move to bigger and more intrusive government – it is also playing a major role in the destruction of the political entity that was a balance to the Democrats’ nanny-state.

All of that being said, it is heartening to see a program recently aired on television (yes – Fox News Channel) where a panel of Americans, who happen to be conservative blacks, support the principles of our Founding Fathers. They realize just how devastating big government can be since it is greatly responsible for many of the problems in the black community. Fostered by Democrat party beliefs, the black community is an example of how ineffective and destructive the government has been when it tries to socially engineer a desired result for people they believe to have been wronged. Look at any of the big cities where taxes have increased to support massive social programs – is there one city where it has been successful? The fact is, wherever government has been the savior for the common man, the common man has paid the price. All one needs to do is look to National Socialists (Nazis), Lenin and Stalin Communism, Mao Communism, or the communist dictator regimes of Africa and South America to see the millions that died in pursuit of the socialist utopia.

The long standing social engineering programs are eroding traditional values and familial strength. Entitlement programs, outcome-based education, affirmative action, and perverse social-based education initiatives (sex education; racial, sexual orientation, and gender diversity sensitivity; etc.) continue to increase almost unabated even though there is an occasional backlash. Again, more intrusions by big government. A similar erosion of our economic strength is also occurring. The explosion in federal regulations, or the enforcement of existing legislation, many times is nothing more than more feel good policies based on emotions and not facts or scientific rigor. It is killing U.S. businesses by putting them at a greater disadvantage in global competition.

These are just some of the assaults that we must deal with almost daily. The taxpaying citizen who understand basic economics and a little history of world governments knows the direction we are going is wrong. While we rely on our elected officials to represent out interests, this is not happening since we have allowed politicians the power to redistribute “wealth”. Not too difficult to imagine that the tyranny of the majority (the tax recipients) over the minority (the taxpayers) – some will say we are already there. This concern was recognized by Plato, Alexis de Tocqueville, John Stuart Mill, and James Madison. Either a revitalized Republican party based on limited government must emerge, or there must be the creation of a viable third party. It is up to us to support and encourage either one.

Monday, September 21, 2009

• Bailout Nation: Obama Open to Newspaper Relief (Hill)
• McChrystal: More Forces or Mission Failure (WP)
• Key Figure in Blagojevich Corruption Probe Found Dead (Fox)

They Left Fannie Mae, But We Got the Legal Bills

Precisely one year ago, we lucky taxpayers took over Fannie Mae and Freddie Mac, the mortgage finance giants that contributed mightily to the wild and crazy home-loan-boom-turned-bust. In that rescue operation, the Treasury agreed to pony up as much as $200 billion to keep Fannie in the black, coughing up cash whenever its liabilities exceed its assets. According to the company’s most recent quarterly financial statement, the Treasury will, by Sept. 30, have handed over $45 billion to shore up the company’s net worth.

It is still unclear what the ultimate cost of this bailout will be. But thanks to inquiries by Representative Alan Grayson, a Florida Democrat, we do know of another, simply outrageous cost. As a result of the Fannie takeover, taxpayers are paying millions of dollars in legal defense bills for three top former executives, including Franklin D. Raines, who left the company in late 2004 under accusations of accounting improprieties. From Sept. 6, 2008, to July 21, these legal payments totaled $6.3 million.

With all the turmoil of the financial crisis, you may have forgotten about the book-cooking that went on at Fannie Mae. Government inquiries found that between 1998 and 2004, senior executives at Fannie manipulated its results to hit earnings targets and generate $115 million in bonus compensation. Fannie had to restate its financial results by $6.3 billion.

(Read the remainder of Gretchen Morgenson’s column at nytimes.com, September 6, 2009)

Little Green Cars

Get ready folks: America is about to own a car company. As of Monday, we the taxpayers will own more than 70 percent of GM. Whether the company will be formally renamed Government Motors remains to be seen. But that’s what it will be.

Instead of putting the failed car enterprise into bankruptcy six months ago — where Carl Icahn or Wilbur Ross could have bought it — the Bush administration chose Bailout Nation. Under Team Obama, that bailout has morphed into full-scale government ownership. Twenty-billion dollars of TARP money is already invested in GM, with another $50 billion on the way. And that number could easily double unless GM car sales miraculously climb back to 14 million this year. That’s highly unlikely, with car sales presently hovering around 9 million a year.

In other words, taxpayers are not going to get their money back. Yes, we the people will be left holding the bag for the mistakes of GM’s management and labor leaders over the last four decades. Read more