Patterico's Pontifications

9/20/2008

Four More Years of the Bush Economic Legacy

Filed under: 2008 Election,Economics — DRJ @ 10:10 pm



[Guest post by DRJ]

In July 2007, CATO reported that President George W. Bush’s annual budgets increased federal spending from $1.863 trillion in fiscal year 2001 to $2.918 trillion in 2008. The budgets include increases in discretionary and non-discretionary spending. The budget forecast for fiscal year 2009 is $3.016 trillion in spending, and the financial bailouts may make that forecast look like wishful thinking.

Fortunately the US economy is strong and President Bush has been committed to tax cuts, so GDP has grown despite 9/11, the Iraq and Afghanistan wars and Hurricane Katrina.

The Presidential candidates have each offered their own economic plans. The National Taxpayers Union Foundation reviewed McCain’s discretionary spending proposals in June 2008 and estimated his policies will require $68.517 billion in annual spending. The NTU also analyzed Obama’s discretionary spending proposals and found that they would result in $343.586 billion in annual spending — more than 5 times as much as McCain’s.

James Pethokoukis at US News had previously analyzed Obama’s spending proposals and found similar numbers, estimating Obama’s policies would add a minimum of $1 trillion dollars in spending over 4 years, and far more if all Obama’s policies are implemented.

Last week, Obama acknowledged that tax increases on the wealthy could hurt a weak economy and he would consider postponing his proposed tax hikes. That’s good news for those taxpayers but bad news for Obama’s spending forecasts, which increase even more with less tax revenue to offset them.

Do you want four more years of the massive spending of the Bush economic legacy, but without the saving grace of the tax cuts? Then vote for Barack Obama.

— DRJ

Why the Bailouts Don’t Bother Me (Much)

Filed under: Economics,Government — DRJ @ 5:53 pm



[Guest post by DRJ]

In our continuing effort here at Patterico.com to bring you both sides of every issue, and sometimes 3-4 sides, here is my counterpoint to Patterico’s post expressing concern about the recent Fannie Mae, Freddie Mac, AIG, and TARP bailouts. Unlike many conservative-minded bloggers, I’m not a libertarian although I used to be. Now I’m a pragmatic conservative and these are my views on the bailout:

John McCain was right when he said there are problems but the fundamentals of the economy are strong. Here’s how New York Mayor Michael Bloomberg expressed it:

“I do agree that fundamentally America has an economy that is strong,” he said. “America’s great strength is its diversity, its hard work, its good financial statements, its broad capital markets, its enormous natural resources” and its work ethic, he said at an afternoon press conference devoted to reassuring New Yorkers that the city’s finances and its economy are intact.

“I’d rather play America’s hand than any other country,” he said. “Without problems? No.”

In my view, the bailouts primarily resulted from dramatic expansions in personal and business credit since the 1980’s coupled with a housing bubble that has been building since the 1990’s, all of which were aggravated by recent weakening in business and consumer confidence. This crisis in confidence led to a system-wide “run on the bank” as investors redeemed their assets from investment funds to hold until the market stabilized.

This is not unlike bank runs from the early 1900’s that were ultimately remedied by increased banking oversight and the creation of the FDIC in 1933. These were not solutions that made libertarians happy because they involve government intervention but, as a conservative, I believe stabilizing the banking system is an appropriate and vital function by government to protect the economy. The alternative would have been a return to a limited, insular economy where people hoarded assets.

I think recent developments are a recognition that people don’t put their wealth solely in banks anymore. Fifty years ago, the average family owned a house, a car, and furniture and put its savings in banks. Few people other than the wealthy purchased stocks and bonds. Today’s families put their money in a broad range of investment vehicles. It’s no longer enough to protect business and consumer confidence in the banking system. Government oversight that brought stability and confidence to banking are now necessary for the broader investment markets.

Of course, it would have been better if Congress had addressed the economy with thoughtful and incremental adjustments over time, as opposed to the all-or-nothing approach to regulation and deregulation (on just about every topic) that it currently favors. But it’s been clear for years, perhaps even for decades, that American politicians won’t solve big problems until they become crises and, so far, Americans have been unable or unwilling to change that. See, for example, Medicare and Social Security.

So it’s not surprising that Washington politicians fiddled for decades on these issues but it’s noteworthy how quickly Treasury, the Federal Reserve, and to a lesser extent the SEC moved in recent days. This may have transpired in days but the Bush Administration was clearly prepared even if Congress was stunned. (Note: I’m not a Bush apologist. The Bush Administration asked for or allowed massive discretionary spending for 7+ years, making this bailout much harder to pay for than it should be. However, it’s also hard to overstate how unprepared the Democrats obviously were to deal with this issue. Think Ray Nagin during Hurricane Katrina.)

I want to make it clear that I agree with this Investor’s Business Daily editorial. The problem isn’t deregulation vs regulation. The problem is the need for modern oversight and regulations that keep up with what’s happening in the markets. Despite the affinity for “change” expressed by many liberal Democrats, their representatives and senators in Congress have been committed to the status quo when it comes to modern banking and investment oversight.

Do I wish this wasn’t necessary? Absolutely, but I’m not surprised that conservatives like Paulson and Bernanke would opt for a solution that values financial stability and reinforces business and consumer confidence. And, finally, I hope the Congressional legislation that results from this includes as much emphasis on transparency as it does on oversight.

— DRJ

L.A. Times: The President Can’t Fire the SEC Chairman; Federal Court Decision: Yes He Can!

Filed under: 2008 Election,General,Law — Patterico @ 4:30 pm



An L.A. Times article — the same one I criticized earlier today, asserts that the President can’t fire an SEC Chairman:

On Thursday, [McCain] said he’d fire the chairman of the Securities and Exchange Commission, Christopher Cox [if McCain were President]. (A president appoints but can’t fire an SEC chief, though he can apply pressure to resign. The White House said President Bush had confidence in Cox.)

Oh really?

Via Jonathan V. Last at the Weekly Standard comes a link to a federal court decision that certainly seems to say otherwise. The case is Free Enterprise Fund v. Public Company Accounting Oversight Board, 537 F.3d 667, 668-69 (D.C. Cir. 2008), and here is the relevant quote:

“Members of the [Securities and Exchange] Commission, in turn, are appointed by the President with the advice and consent of the Senate and subject to removal by the President for cause; its chairman is selected by and serves at the pleasure of the President.”

Last’s correspondent adds:

The courts have never said that Congress can completely prevent a president from firing officials of an independent agency. At best, Congress can limit the president to firing such officials only “for cause,” and the term “for cause” is generally interpreted pretty broadly.

This one may be worth an e-mail to the Readers’ Rep.

What do these reporters do — just listen to what the Obama campaign claims, and take it at face value?

Don’t answer that.

UPDATE: Jake Tapper says the President can’t fire the SEC Commissioner. Jake Tapper, I love ya, man. But as between you and the Circuit Court of Appeals for the District of Columbia, I’m going with the judges on this one.

UPDATE x2: I e-mailed Tapper about this, and he says he’ll look into it. Meanwhile, you may read a more fleshed-out argument that the President may fire the SEC Chair, here.

That $700B Bailout

Filed under: General — Patterico @ 3:47 pm



The New York Times has the story about how the government decided to present a plan to buy $700 billion of troubled mortgage assets.

I can’t see how this bailout makes anyone happy, except for the people being bailed out.

On the left, there is the sentiment that fat cats are being relieved of the responsibility for their poor decisions, at the expense of taxpayers. Lefties regret this because they could use that money for other socialistic programs they want to pursue, like taking over the health care system.

On the right, many economically libertarian folks like myself are also appalled that the free market isn’t being allowed to do its magic in punishing bad decisions — which means rewarding people who made good decisions, and thus maximizing efficiency in the system as a whole. And we’re depressed at a creeping socialism that no longer seems to be creeping.

One thing seems certain: it isn’t helping John McCain. He had better get himself a winning strategy on this issue, or he can kiss this election goodbye.

L.A. Times Distorts McCain’s Initial Reaction to Financial Crisis

Filed under: 2008 Election,Dog Trainer — Patterico @ 3:19 pm



The L.A. Times advocates for Obama by utterly distorting John McCain’s initial reaction to last weekend’s financial crisis:

McCain acted first but suffered several false starts. On Monday, he declared that “the fundamentals of our economy are strong.” On Tuesday, he said that the economy, while strong, was in “crisis” and that he opposed a federal bailout of insurance giant AIG. On Wednesday, after the federal government announced that it would take over AIG, he said the action was unavoidable.

What a doddering old fool! On Monday, he didn’t even realize there was a crisis! It took him until Tuesday to acknowledge a crisis!

Except, of course, that is a complete distortion of his comments — as you can tell by looking at his full remarks:

You know that there’s been tremendous turmoil in our financial markets and Wall Street. And it is, it’s – people are frightened by these events. Our economy, I think, still, the fundamentals of our economy are strong but these are very, very difficult times. And I promise you, we will never put America in this position again. We will clean up Wall Street. We will reform government.

That is the statement of a man who understands there is a big problem. But there are seven words in the middle of that paragraph that, if you take them completely out of context, make McCain seem like an out-of-touch buffoon.

So, of course, that’s what Obama did — and, of course, the L.A. Times simply follows suit, because the paper is in Obama’s pocket.

What’s more, they ignored his lengthy clarification — which also took place on Monday, after Obama had pulled those seven words out of context:

Today we are seeing tremendous upheaval on Wall Street. The American economy is in crisis. Unemployment is on the rise and our financial markets are in turmoil. People are concerned about our economic future. But let me say something: this economic crisis is not the fault of the American people. Our workers are the most innovative, the hardest working, the best skilled, most productive, most competitive in the world.

My opponents may disagree, but those fundamentals of America are strong. No one can match an American worker. Our workers sell more goods to more markets than any other on earth. Our workers have always been the strength of our economy, and they remain the strength of our economy today.

McCain said all that Monday. But all the L.A. Times tells you is that he said “the fundamentals of our economy are strong.” This is strong evidence of a deliberate attempt to mislead readers.

You can’t trust anything this paper says without checking with other sources, people. I know most of you know that, but it never hurts to remind you.

L.A. Times Claims Obama More Honest than McCain

Filed under: 2008 Election,Dog Trainer,General — Patterico @ 2:47 pm



All week, I’ve been meaning to write about this Los Angeles Times article from last weekend, which claimed that McCain has been more dishonest than Obama:

For weeks, John McCain and his campaign have made claims contradicted by reality: Barack Obama favors sex education for kindergartners and insulted Alaska Gov. Sarah Palin; Palin sold her state plane on EBay and turned down federal money for the “bridge to nowhere.”

Obama has argued that McCain doesn’t understand voter concern about the foundering economy and — attention, Michigan voters — has refused to support loan guarantees for the auto industry.

If any of those statements rings true, then a campaign adage has proved itself again: Repeat something often enough, and it becomes real, even when it isn’t.

Political innocents may wonder why a candidate like McCain, whose campaign is premised on what he calls “straight talk” — and to a lesser extent Obama — have veered from the flat truth.

The answer is simple: because it works.

Obama has veered from the truth less than McCain, eh?

First, let’s look at one of the alleged untruths from McCain: that “Barack Obama favors sex education for kindergartners.”

Here is a direct quote from the bill that Obama voted for:

Each class or course in comprehensive sex education in any of grades K through 12 shall include instruction on the prevention of sexually transmitted infections, including the prevention, transmission and spread of HIV.

Sounds like comprehensive sex education for kindergarteners to me!

Now, it is true that the bill also specifies that any classes must be “age and developmentally appropriate.” Does that mean that we’re only talking about not letting bad people touch your privates? Byron York interviewed one of the sponsors of the bill, who said that the bill “absolutely” dealt with more than simply education about inappropriate touching. And his view seems borne out by the text of the law — which, again, specifies teaching about STDs, even to kindergarteners. As Allahpundit notes, this “leav[es] us to wonder what sort of information on AIDS and syphilis is ‘developmentally appropriate for five-year-olds.” Alas, legislators’ and educators’ views on that may be different from those of parents of kindergarteners.

As for whether Obama insulted Sarah Palin with his “lipstick on a pig” comment, I have already written about how the “fact-checkers” have declared this utterly subjective claim to be objectively false — even as Obama’s audiences, and some leftist commenters here, clearly perceived it as an insult . . . and reveled in it.

(more…)

NYT Editors Allow Article To Include Quotes From Wall Street CEOs That NYT Sources Admit They Weren’t In The Room To Hear

[Posted by WLS]

This correction published in the New York Times yesterday should cause the hair on the back of your neck to stand up — and not simply because the reporting of these “quotes” might have impacted the market.

Here’s what the correction says:

An article about the effect of the Wall Street crisis on Morgan Stanley and Goldman Sachs cited two sources who were said to have been briefed on a conversation in which John J. Mack, chief executive of Morgan Stanley, had told Vikram S. Pandit, Citigroup’s chief executive, that “we need a merger partner or we’re not going to make it.”

On Thursday, Morgan Stanley vigorously denied that Mr. Mack had made the comment, as did Citigroup, which had declined to comment on Wednesday. The Times’s two sources have since clarified their comments, saying that because they were not present during the discussions, they could not confirm that Mr. Mack had in fact made the statement. The Times should have asked Morgan Stanley for comment and should not have used the quotation without doing more to verify the sources’ version of events.

This correction immediately took my thoughts to this review by Jack Goldsmith of New York Times’ reporter Eric Lichtblau’s book “Bush Law: The Remaking of American Justice.”

Lichtblau was the reporter who broke the story of the Terrorist Surveillance Program, and the story on the cooperation of the international bank consortium SWIFT in tracking terrorist financing through international banking transactions. His book recounts his reporting on both these subjects in detail, as well as his and James Risen’s struggle with the New York Times’ editors to get his blockbusters published on the front page of that paper.

Goldsmith’s is an extremely thoughtful article, and those interested in the implications of the New York Times‘s decisions to reveal classified intelligence programs on its front page should take time to read and consider Goldsmith’s thoughts. I only came across this article in the last few days — it was published in The New Republic back in August — but it’s very sobering in its analysis.

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Washington Post Elbows Its Way Past Time Into The Lead In The Race For The Title of “Least Journalistic Integrity”

Filed under: 2008 Election,General,Media Bias — WLS @ 1:02 pm



[Posted by WLS]

Washington Post “Fact-Checker” Michael Dobbs takes on his own newspaper’s account of Barack Obama’s connection to Franklin Raines as portrayed by the McCain’s new ad.

Dobbs’s verdict?

He says the Post‘s article, editorial, and one other reference to the Obama-Raines connection were all based on one reporter’s interview with Raines — and yet while the characterization of the paper was never challenged by Obama or Raines, the verdict is that the McCain campaign is:

…clearly exaggerating wildly in attempting to depict Franklin Raines as a close adviser to Obama on “housing and mortgage policy.”

According to Dobbs’s “investigation” — his conversation with business writer Anita Huslin who wrote the piece in July, his review of Raines statement issued by the Obama campaign last night (I thought he didn’t have any connection with the campaign?? He couldn’t release his own statement?), and conversations with the Obama campaign — the situation is as follows:

So what evidence does the McCain campaign have for the supposed Obama-Raines connection? It is pretty flimsy, but it is not made up completely out of whole cloth. McCain spokesman Brian Rogers points to three items in the Washington Post in July and August. It turns out that the three items (including an editorial) all rely on the same single conversation, between Raines and a Washington Post business reporter, Anita Huslin, who wrote a profile of the discredited Fannie Mae boss that appeared on July 16. The profile reported that Raines, who retired from Fannie Mae four years ago, had “taken calls from Barack Obama’s presidential campaign seeking his advice on mortgage and housing policy matters.”

… I asked Huslin to provide the exact circumstances of the quote. She explained that she was chatting with Raines during the photo shoot, and asked “if he was engaged at all with the Democrats’ quest for the White House. He said that he had gotten a couple of calls from the Obama campaign. I asked him about what, and he said ‘oh, general housing, economy issues.’ (‘Not mortgage/foreclosure meltdown or Fannie-specific,’ I asked, and he said ‘no.’)”

By Raines’s own account, he took a couple of calls from someone on the Obama campaign, and they had some general discussions about economic issues. I have asked both Raines and the Obama people for more details on these calls and will let you know if I receive a reply.

In other words, McCain’s characterization of the article is exactly as it was written. But once the Obama campaign provides him with more self-serving propaganda with which he can call the McCain campaign a liar, he’ll get back to us.

Where is the criticism of Huslin for putting a casual comment by Raines during a photo shoot in the first paragraph of her story suggesting he’s a player in the Obama campaign? If Dobbs is going to bang on the McCain campaign for relying on Huslin’s own words, why not bang on Huslin — since it appears that it was her, and not McCain, that made more out of the relationship that was warranted . . . that is, taking the Raines and Obama denials at face value.

Is the McCain camp expected to be clairvoyant? Should they have solicited confirmation of the Washington Post‘s claims from the Obama camp or Raines himself? Do they need to start calling reporters to ask if they really meant what they said in their articles??

Maybe Dobbs would prefer the McCain campaign to ad to the little blurb at the end of every ad something like:

I”m John McCain, and I approve this message. But the Obama campaign disagrees and here is their statement in response ….”

I’m giving Washington Post 2 points for this beauty — it not only takes down the McCain campaign as a liar by giving him two “Pinocchio Noses,” it extricates itself from any responsibility whatsoever for McCain’s actions whatsoever.

Score:

Washington Post 2 — Time 1.

— WLS

P.S. BY PATTERICO: And another “fact-checking” site loses my respect. Add it to Snopes and “Politifact” as another example of a site that has lost any credibility, due to its becoming a fact-bending organ of pro-Obama nonsense. And to think that I’d praised these fact-checking sites just a few weeks ago.

A Little Known Perk of Office in the US Congress — Unlimited Free Parking. Just Ask Charlie Rangel How.

Filed under: Government — WLS @ 11:28 am



[Posted by WLS]

Rules of the House of Representatives forbid long-term storage of vehicles in the House garage. The limit is 90 days.

According to the New York Post, Ways and Means Committee Chairman Charlie Rangel has stored a silver 1972 Mercedes Benz in the House parking garage since at least sometime in 2004 when he surrendered the special Congressional license plates issued for it. According to unnamed House aides, it has sat under a car cover in a coveted parking spot close to the elevators “for years.”

IRS regs advise that anyone with such a spot is deemed to have “imputed income” equal to the value of that spot. The spaces are valued by the House at $290 a month. That’s roughly $3500 per year, and if it’s been there 4 years, Rangel has realized an imputed income of $14,000 in free parking.

I have a suspicion that income was not reported on his tax returns either.

— WLS

Obama Takes His Habit For Voting “Present” On The Campaign Trail With Him

Filed under: 2008 Election — WLS @ 11:26 am



[Posted by WLS]

A nice little nugget from Jonathan Martin’s Blog over at Politico on the subject of Obama’s position re the AIG bailout:

Obama, on the trail in New Mexico, had this to say of McCain:

“And today he accused me of not supporting what the Treasury and the Federal Reserve Bank did with AIG despite no evidence whatsoever that that’s what I had said.”

To recap, when I wrote earlier today that Obama supported the bailout, I quickly was instructed by his staff that this was not the case. He just didn’t oppose it, I was told.

Now he’s so adamant about not opposing the Fed’s move that he’s complaining about McCain’s portrayal.

Where, I wonder, is the line between not opposing and, ya know, supporting.

Just so we’re clear:

1. Obama didn’t support the Fed/Treasury bailout of AIG

2. Obama didn’t oppose the Fed/Treasury bailout of AIG.

“Hit the pound key on your touch-tone phone to vote ‘Present’.”

— WLS


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