More Tax and Spend But Where Are The Jobs?

So the news these days is that the stock market is rallying after the passage of healthcare and the stimulus bill is finally bringing us out of the recession. Newsweek (or is it News Weak? I never can remember) ran a story recently that America is back; claiming the recession is over. Well, if we are actually recovering from the recession, where are the jobs? The increase we see in the Dow has nothing to do with the stimulus bill and while it is on the rise, it is not because companies are hopeful about healthcare savings but because they are trying to mitigate the negative effects the tax increases will bring in the future.

There are massive new taxes on the way because of the healthcare bill in addition to the increases business will see after the Bush tax cuts expire at the end of 2010. Corporations operate under different tax rules than private citizens and are able to shift their losses around to offset earnings where it will provide the most benefit. In fact, corporations can amend previous returns and move losses back three years or use them as far as twenty years into the future to offset future income. That is what we are seeing this year in the Dow. Companies know their taxes will be substantially higher in 2011 and are posting their income in 2010 when the taxes aren’t great, but they aren’t as insane as they will be next year. Once the tax cuts disappear and the new tax impositions from the healthcare bill are in place, the losses and expenses from this year will be used to offset the tax liabilities in 2011 and that will have a drastic effect on the Dow Jones.

Reagan made the same mistake when he took office. He promised tax cuts to rouse the economy but rather than make them immediate, he phased the cuts in, which allowed companies to post losses during the years of higher taxes; biding their time until the tax cuts took affect. Once the tax cuts were in place, the economy soared, ushering in one of the largest peace-time expansions of the GDP in history but before those cuts were actually made, the economy lagged and jobs suffered. Conversely, businesses are now taking advantage of the temporarily lower tax rates knowing that those rates are guaranteed to rise sharply in 2011. Furthermore, business is counting on the November 2010 elections to restore some sanity to government. While the Republicans cannot secure enough seats to repeal healthcare, they can certainly block the funding needed to implement it; stalling the healthcare legislation until 2012 can bring in a new Congress and a new President.

The President can try to put a happy face on the prospects Democrats are facing this election but he knows that a vote for the healthcare bill was a vote for their own retirement. Going into the healthcare vote, Republicans were no more liked than Democrats were but the scandalous way this legislation was forced through Congress against the will of the people has severely damaged the Democrats. While people are not quite sure they can trust Republicans right now, Republicans do have the distinct advantage in not being Democrats. The President has been trying to label Republicans as “the Party of no” but the Democrats have labeled themselves “the Party of sit down and be quiet you silly people”. In the whole grand scheme of things there is an awful lot you can do to Americans before they get truly angry but ignoring them just isn’t an option.

The frightening part about the President’s predicament is that it has fostered another sense of urgency in the White House and now every program and policy the President really wants is going to be desperately rushed in much the same way that TARP, the Stimulus and Healthcare was. Don’t forget that TARP had to be done right then and there or banks were going to fail, throwing America into a new depression. Well, TARP passed and Tim Geithner, Ben Bernanke and the President claimed credit for averting financial disaster but isn’t it funny that as soon as executive salaries were capped in the companies that accepted TARP money, those silly companies discovered that they actually did have liquidity and paid the TARP money back as fast as humanly possible. Well, most of them did. Curiously, the only ones that couldn’t pay the taxpayers back, and in fact, still needed more money, were the government’s own Fannie Mae and Freddie Mac. Imagine that!

Then there was the Stimulus Bill. We had to pass that one without thinking about it because joblessness was on the rise and without this critical infusion of money, the unemployment rate would get as high as 8%. Well, we passed that without thinking about it and unemployment climbed above 10% before stagnating at a miserable 9.7%. Recovery.gov still has no idea how much of your money was wasted on frivolous projects like amphibian underpasses so that frogs and salamanders can safely cross the road or funding studies about the drinking habits of Indonesian transgender prostitutes. Billions are listed as being given to Congressional districts that do not exist and since the government cannot say with any accuracy how many (if any) jobs were actually created, the White House has had to claim that the Stimulus Bill saved two million jobs knowing full well there is no way to substantiate a “saved job”.

With the Healthcare Bill we all watched in horror as the legislative process was subverted into a corrupt and underhanded push to pass something nobody wanted. Harry Reid, Nancy Pelosi and Barack Obama all blamed the Republicans for trying to stonewall the legislation when the bare fact is that the resistance that nearly derailed the bill was entirely on the other side of the aisle. Reluctant Democrats had to be bullied, threatened and bought off just to get the votes they needed to push this through. Once Scott Brown had been elected to the Senate, it was thought that the bill would finally die the death it deserved but the Senate Bill was taken behind closed doors once more where Pelosi and Obama abused House Democrats. They would use the same tactics Harry Reid used, forcing them to vote for the Senate Bill so they could ram it through under reconciliation; requiring only a simple majority in the Senate, effectively negating Scott Brown’s vote.

Now that the healthcare bill has passed all the nasty little details are emerging. The Medicare cuts, the tax increases and the admission by Senate Finance Committee Chairman Max Baucus, that the healthcare bill is designed to “correct a mal-distribution” of wealth in America. For those of us that warned about the redistributive goals of the bill, a healthy “told you so” might certainly be warranted but what good would that do now? Then there are the unintended consequences to deal with. America’s largest corporations are reporting that they will loose hundreds of millions in profits because of the healthcare bill; something that Henry Waxman fumed over, demanding that these companies appear before his committee and explain themselves. Waxman claimed that a report prepared prior to the passage of the bill said these companies would see a decrease in healthcare costs amounting to roughly three-thousand dollars per employee and he insisted upon knowing why they were not taking those savings into consideration. As it turns out, the report to which Henry Waxman was referring had nothing to do with the Senate healthcare bill and was based on a limited and incremental approach to healthcare reform similar to what the Republicans had proposed.

I suppose the funniest story came out last week when the Congress found out that the healthcare bill they all told us they read contained a little secret none of them knew about. Unless they act to correct the bill, Congress and their staff members are all going to lose their health insurance and will be forced into the exchange market. The only problem for them is that the way the law is written, they must lose the insurance now and the market they have to purchase from won’t even exist until 2014.

Despite the President’s promise that jobs are going to be his priority in the coming year his next race to get something past the Senate is on the financial reform bill. This bill places drastic and dangerous limits on American financial institutions placing them at a severe disadvantage when competing against foreign banks that are curiously not mentioned in this “much needed” reform bill. Even though Harry Reid said it may not be possible in an election year, the President insists that immigration reform is right behind his Financial Reform Bill. Also tucking into the White House fast track to destroy the country is the infamous Cap and Trade massive energy tax. The Senate is threatening to unveil their copy of that scam as early as the end of next week. So I have to ask the same question I started this article with….Where are the jobs?

Paul

Dollars, Debt and Dingbats - Should We Change Our Money?

On March 3, 2009, Representative Patrick McHenry (R-NC) proposed legislation that if adopted, would replace the image of Ulysses S. Grant with Ronald Reagan on the fifty dollar bill. After all, both of these Presidents represented the strength and resolve of the United States and both presided over periods of great economic expansion after overcoming the devastating affects of particularly unprofitable wars. Admittedly, I have always admired Ronald Reagan as a President and as a man. I think he reflected the highest examples American ideals and brought the United States out of the despair and embarrassment of the Carter years. Reagan instilled a new sense of dignity for America and a feeling of pride in our accomplishments and what his economic policies did not do, this new pride in being American did.

While Conservatives immediately joined the chorus call to immortalize Reagan, the Progressive left burst out in a cry of frustration. Representative Brad Sherman (D-CA) dismissed the idea and noted that the place of honor on American currency should be reserved for figures in American history that are well known for their contributions to the nation and unfortunately, many of Reagan’s policies are still considered far too controversial to consider this legislation seriously.

Well, that really doesn’t surprise me; especially in a day and age when White House advisors like Anita Dunn (former Obama communications director) and Ron Bloom (Obama’s current manufacturing Czar) don’t think it’s particularly controversial to quote the deadly Chinese dictator, Mao Zedong. In fact, I would suspect that Brad Sherman doesn’t have nearly as much of a problem with the policies of Zedong as he does with Reagan’s but then again, when was the last time California actually acted like part of the United States instead of a foreign irritant?

Truthfully, I oppose this legislation. Not because Ronald Reagan was controversial or undeserving, but because of the state of our economy. Considering the twelve trillion dollar National debt that President Obama says he will double in ten years, the face of United States currency isn’t the place of honor that it once was. In fact, I believe that if our former Presidents could communicate from beyond the grave, most would have already sued to have their names and images removed from the paper currency that may very well spell the end of America or at the very least, a free America.

Out of all the Presidents gracing the face of our money I found it funny that one is a perfect match while yet another is wholly inappropriate. The largest denomination ever printed for U.S. currency was the one-hundred thousand dollar bill. Issued in 1929, the $100,000 bill had borne the image of Woodrow Wilson who was not the first Progressive President but he is certainly the one that did the most damage to our nation. We can thank Wilson for the Progressive income tax that would become the foundation of power for future Progressives. That tax would allow Progressives to expand the scope and power of the Federal government beyond what is allowable in the Constitution; giving them limitless funds to create the political machines to do so. The $100,000 bill did not represent the vigor of Capitalism but rather, it was representative of the abstract views Progressives held on the economy as well as the amount of money they felt would be needed to fulfill their vision of government control. I can think of no better President to place on the $100,000 bill than Woodrow Wilson. Not as a place of honor but in recognition of how little that $100,000 is worth after a hundred years of Progressivism.

A bust of Franklin Delano Roosevelt appears on the face of the American dime, or ten cent coin. The ten cent denomination was first authorized by the coinage act of 1792 and would be minted in six previous styles before we would arrive at the familiar Roosevelt dime in 1946. At first I considered FDR appropriate for the face of the dime since the Tin Pan Alley song “Brother, can you spare a dime” written by Yip Harburg and Jay Gorney in 1931, was synonymous with the Great Depression; a Depression used by FDR as a lever to drive the nation further into the socialist morass of Progressive ideology.

For decades, Liberal college Professors have been teaching that FDR led us out of the Depression through a myriad of social programs and public works projects; making this the accepted theory of what ended the Great Depression. Now that their students have become teachers as well, this popular myth is currently being spread in elementary, intermediate and high schools across America to continue the indoctrination of our youth into the Progressive mindset. Unfortunately, the social programs FDR encouraged with the passage of Social Security are in the process of bankrupting America and his public works programs had as much effect on the Depression as Obama’s stimulus bill has been having on the current recession.

What actually ended the Depression was World War Two. America’s industries mobilized to provide war goods, the armies of the unemployed were now the armies of the American Republic and once the industrial centers of Europe and Asia were destroyed, it would be twenty years before you could buy anything from anywhere but America. Let us not forget the 406,000 brave Americans killed during the war and the more than 600,000 that were wounded. These men would not be returning to work and would never again, be counted among the unemployed. To praise FDR for ending the Depression ignores the bravery and sacrifice of those that shed their blood for democracy; negating their contribution to the end of one of America’s greatest financial crises. In short, Franklin Roosevelt’s contributions to America, to use another popular phrase from history, “weren’t worth a dime”.

In 1969, Richard Nixon signed an executive order that would cease the printing of high denomination bills leaving the one-hundred dollar bill as the most valuable United States paper currency still in print. The Federal Reserve began retiring the large bills and today, relatively few remain in circulation. Nixon ended the printing of high denomination bills to thwart organized crime’s efforts in counterfeiting and to complicate the use of cash in the illegal drug trade. Modern electronic money transfers and the abandonment of the gold standard eliminated the need for large denomination bills for banking and corporate transactions.

There are currently no plans to deviate from the seven denominations still in print making the face of these bills a rare place with which we can honor only the most notable people in American history. In that light, I understand Representative McHenry’s desire to replace Grant with Reagan as an example of an American legend that more people could remember and relate to. However, the value of American currency continues to decline in relation to the policies of the current administration. So where is the honor now that America’s currency is considered by the world market as a symbol of America’s folly? The things that Ronald Reagan held dearest cannot be found on the face of the injured currency of a demoralized nation. The hard work, perseverance and strength of convictions that he believed in have been diluted by the current course taken by an out of control government to seize power from a frightened people.

Washington, Lincoln, Franklin, etc.; we should probably removing the images of these revered men from all of our currency and replacing them with something a little more representative of reality. As long as the Federal Reserve is printing cash as if it were play money, perhaps the picture of that little old man and his top hat found on Monopoly money would be more appropriate. Better still, since the Obama administration plans on doubling our national debt over the next decade further crippling the dollar, maybe we should just use his picture on all of it. After all, Obama really loves the look of his own image and since his advisors already like to quote Mao, it wouldn’t hurt to have money that looks a little more Chinese.

Paul

Obama's Recession

Any discussion about who is ultimately responsible for the recession would not be complete without a clear definition what a recession is. In economics, a recession is a business cycle featuring a general slowdown in economic activity over a period of time; usually two fiscal quarters or longer. The other criterion for identifying a recession is an increase in unemployment of greater than 1.5%. It is clear based on the generally accepted criteria that the recession began under George Bush with the third quarter of 2008 showing a 2.7% decrease in GDP and the decline jumping to 5.7% in the forth quarter of 2008 and a corresponding increase in unemployment from 5.8% to 7.2% over the same period.

Except for the last two quarters of 2008, unemployment during the Bush administration had cyclically fluctuated between four and six percent just as it had during most of the Clinton administration. Clinton stepped into office with unemployment at 7.3%; remaining at or near that level until October of 1993. Of course the banking system was still generally believed to be in good shape then and since we found out that most of the deregulation that nearly collapsed the system had not occurred yet, it probably was. I find in curious that the real reduction in unemployment during the Clinton years did not take place until he abandoned his plans for healthcare reform. Apparently, the business community had the same reservations about the future of their profitability with Clinton-care as they do with Obama-care. While Clinton did not lower taxes, his advisors did convince him to reduce the capital gains tax and that made the risk of investment more palatable.

Obama has not enjoyed a reprieve from high unemployment because the threat of his agenda has kept the business community from investing in labor or expansion. The measly incentives he proposed to help small business during his State of the Union Address lost weight and credibility when juxtaposed against his assertions in the same speech that he intended to follow through with healthcare, cap and trade and the hair-brained scheme of debt forgiveness for student loans for anyone that could avoid paying them for twenty years (ten, if you were employed in the service of the government).

There is nothing in the President’s agenda that does not take from those that earn wealth only to be given to those that don’t and that is what is killing new job creation. In fact, it took all eight years of the Bush administration for unemployment to rise 3%; Obama nearly achieved that in his first year in office. The President may have inherited a large national debt, high unemployment and a sagging economy; but he did not inherit the agenda proposals that have made all of these indexes far worse. That agenda is all his (or at least, it belongs to whoever is pulling his strings).

For all the damage that his proposals have wrought on the economy and no matter how many people tell him that this is what has stalled business, he still intends to follow through. I haven’t decided if that is just stubbornness on his part or if these are the marching orders from his number one White House visitor, Andy Stern. I think it is fair to question his motives and when you follow the money and the intent of the people that are pressing heavily for these socialist programs like Andy Stern, some interesting things happen.

Obama has recently made some very impassioned speeches where he says that he promised healthcare would pass and that is exactly what he is going to do. Well, he promised to close Guantanamo Bay in the first year and it is still open. He promised transparency in his administration; that healthcare debates and meetings would take place on C-Span. Not only have the meetings on healthcare barred C-Span coverage but congressional Republicans have been barred as well. He said there would be no more back room deals and then offered $300 million to Mary Landrieu for her vote and only God knows how much for Ben Nelson. Bernie Sanders got billions for community health services but in all fairness, that was to expand national programs and not just those in Vermont. All of that money and more had been handed out in closed door, back room deals.

Obama also said there would be no middle class tax increases. Those of us that watch this nonsense knew that was a lie of semantics from the start. His plans and programs, not to mention the FY2011 budget, call for a whole host of new taxes on goods and services; taxes that will be passed on to you by the businesses they affect. He could stand firm on his promise of not taxing you directly while taking it from business knowing they were taking it from you. Now apparently he is going to make the same mistake George H.W. Bush made. Remember “Read my lips – no new taxes”? Bush reneged on that and Clinton never let you forget it during the campaign.

Now that Obama has blown through four years worth of Bush deficit spending in his first year in office, the nation is crying for fiscal conservatism. Fiscal conservatism for most of us in this country means cutting spending to live within our means. For a tax and spend Progressive, fiscal conservatism means making sure you have enough tax revenue to cover your planned spending. It was announced this week that the President is considering a middle class tax increase now that the Congress has passed “Paygo”. Paygo simply means Pay as you go; a mandate that Federal spending increases have to be offset by a decrease in spending elsewhere or an increase in taxes. So now, in a recession, the President wants to tax the middle class twice; once directly and then again by turning overtaxed businesses into tax collection middlemen. That is why they are trying to sell us on the notion that the recession is finally easing.

There was a modest gain in GDP and a slight easing of unemployment last month. Both of which are easily explained by the billions spent in stimulus money and the increase in government employment as they ramp up for the 2010 census. Neither of these small increases are the result of real economic growth and neither will be lasting. So now that he is planning to raise taxes to show his fiscal conservatism, where are the corresponding spending cuts? Well, the President of semantics has the answer to that too. He increased discretionary spending 25% in 2009 and will add another 20% in 2010 but he promises to freeze discretionary spending in FY2011. Mr. President that is not a spending cut; that is freezing your insane increases so they can’t be cut.

Early in the Twentieth Century, America had a similar crisis. After World War I, America was faced with a deep recession brought on mostly by huge increases in the personal income taxes imposed to pay for the war. By 1920 we had slipped into depression and unemployment had topped 12% but unlike this President, the drastic steps that were needed were actually taken. Congress halved government expenditures and slashed taxes to nurture the economy. The result was a period of unprecedented growth not seen since the creation of America and that brought the country out of depression within two years when unemployment had dropped to just over 3%.

Until there is a recognition that government is the problem and not the solution there will be no meaningful progress in spending cuts, debt reduction or economic development. If there is ever going to be an epiphany in Washington on this, it certainly will not begin with this President. If America can elect a Congress this November that can put an end to Obama’s agenda that will be a good start. They might even be coerced by an active and involved electorate to propose legislation to finally restrain the wasteful ways of Washington. The bad news is that unless those daring individuals are elected in numbers sufficient to override a Presidential Veto; that new legislation will have to wait until a responsible President can be elected in 2012.

None of this would be needed if Washington actually obeyed the Constitution and had not ignored the Tenth Amendment for the past hundred years. Tomorrow, we will discuss what our government would look like if we had a Federal Government that actually resembled the intentions of the founding fathers.

Paul

Obama Didn't Inherit the Recession - He Hired It

In continuation of Friday’s article, we were discussing whether or not the Obama administration could continue to call this recession the “Bush” recession. The answer is no and the Obama administration has to face the fact that the statute of limitations for blaming Bush has run out and he now owns the economy; especially since his administration has already used all of their “Ivy League” experimental theories to correct it. As much as they would like to enter the 2010 campaign cycle with as much emphasis as possible on the “mess” that Obama inherited, there are several of those pesky little facts out there that all of Obama’s rhetoric will not change. As it turns out, Obama didn’t just inherit the recession, he hired it.

#1- President Obama has retained people within his administration that were previously key policy makers whose actions contributed to the current recession.

#2- Much of the small business community has sited major parts of Obama’s agenda that have shaken the confidence of business in the health of the economy under Obama’s leadership and in their ability to remain profitable should those agenda items become law.

#3- The actions taken by this administration to correct the faltering economy were, and continue to be, centered on government control, government spending, and the monetization of debt complicated by the dangerous misreporting of economic indicators.

We already discussed Tim “Turbo-Tax” Geithner, Obama’s current Treasury Director; specifically how his actions while he was Chairman of the New York Federal Reserve and a member of the Washington “Group of Thirty” have been considered by many economists as directly impacting the economy in ways that have severely damaged the banking industry. We also discussed that Rahm Emmanuel, Obama’s current Chief of Staff was on the board of Freddie Mac during the period that Freddie Mac was plagued with scandals involving campaign contributions and accounting irregularities. Obama torpedoed a Freedom of Information Act request to obtain communication and e-mail records that might have helped an investigation implicate his dear friend and Chief of Staff.

Let’s talk about some new people. Barack Obama’s choice for Director of the Office of Budget and Management (OMB) is Peter “Loverboy” Orszag. If you recall, the OMB gave the Senate Healthcare Bill a failing grade on maintaining the “budget neutrality” that the President required of any bill he would sign. Of course a quick closed door meeting between Obama and his Budget Director fixed that and within days, the OMB reevaluated the plan and Viola! It was budget neutral! Thank God for Orszag! It is critically important to economic recovery that the business community can trust the estimates of government. After all, to be able to expand and chance the hire of new employees, business must be able to accurately estimate little things like future tax liabilities and the burden that new regulations will have on the cost of manufacture, labor and energy. Can you imagine if people began to mistrust the government; especially in the area of official reports and estimates? The ramifications would be astounding. Why you could dump hundreds of billions into the economy and never create a single job!

Orszag is another one of those intellectual theorists that has never held a real job. While he was not a “Rhodes” Scholar like Bill Clinton, he was a Marshal Scholar and after earning a degree in economics from Princeton, Orszag traveled to England where he obtained his Masters Degree and Doctorate in economics from the London School of Economics. He sites several people that he considers “Mentors” including Joseph Stiglitz. Stiglitz was not your average apple pie and baseball American and was himself, a proponent of globalist economic policy, market socialism and what he called a “more sustainable and just global economic order”. In addition to Stiglitz, Orszag also considered Robert Rubin an important influence in his life.

Yes, that is the same Rubin that spent 26 years at Goldman Sachs as a board member and Co-Chairman before joining the Clinton administration as Assistant to the President for Economic Policy. After leaving the Clinton administration, Rubin became Director and Senior Counselor of Citigroup and would eventually serve as interim Chairman between November and December 2007. In January of 2009, Citigroup announced his resignation after having been criticized for his performance. Rubin became one more name on the list of individuals that had brought the financial system to ruin before leaving with more than $100 million dollars in cash and stocks.

The current Director of the White House's National Economic Council for President Barack Obama is Lawrence Summers. “Larry” began his academic career at MIT where he studied physics but soon switched to economics, earning an B.S. in 1975. He attended graduate classes at Harvard where he earned his Ph.D. in 1982. At age 28, Summers became one of the youngest tenured professors in Harvard’s history. Like Orszag, Summers is a theoretician when it comes to work and has spent his life either teaching, in government or governmental organizations like the dreaded World Bank. While all of that sounds impressive, I still don’t know how we let people teach what they have never been involved in….like where business actually fits into a market economy. Summers early career was as an “academic economist” and he was responsible for providing research data for economic studies.

As a researcher, Summers has made important contributions in many areas of economics, primarily public finance, labor economics, financial economics, and macroeconomics. Some of Summers' early papers concluded that corporate and capital gains taxes are an inefficient form of taxation. Cutting the capital gains tax rate, Summers found, could help the economy grow. One of Summers' prominent findings in labor economics is that unemployment insurance and welfare payments are a major contributor to unemployment, and therefore should be scaled back. Since the Obama administration has taken a course contrary to these proven economic strategies, it is apparent that Larry’s career in politics and as a professor at Harvard, has caused him to trade his lust for truth for the comfort of being part of the ruling elite.

Of course there is a down side to losing your “religion” and Summers would find out that when you ignore what you know is right and true because it is unfashionable, bad things are bound to happen. As Treasury Secretary, Summers led the Clinton Administration's opposition to tax cuts proposed by the Republican Congress in 1999; a 180 degree reversal from the data he provided for other economists earlier in his career. Summers supported the Gramm-Leach-Bliley Act in 1999, which lifted more than six decades of restrictions against banks offering commercial banking, insurance, and investment services (by repealing key provisions in the 1933 Glass-Steagall Act). After passage, Summers announced: "Today Congress voted to update the rules that have governed financial services since the Great Depression and replace them with a system for the 21st century," "This historic legislation will better enable American companies to compete in the new economy. Unfortunately for Summers, the deregulation under the Glass-Steagall Act is widely known to have created the conditions that directly led to the sub-prime mortgage crisis; the precursor to the financial meltdown of 2008.

Summers also testified before Congress that there was no need to require additional regulation of the institutional OTC derivatives market, a move that would later lead to the near collapse of AIG. The work that Summers did for the Clinton administration in fact, created the conditions that would nearly drive the nation into depression a mere ten years later. Upon leaving the Clinton administration, Summers became the President of Harvard University. He decided to invest University funds using the loopholes he created through deregulation. Of course interest swaps and hedge funds can’t be maintained forever and his financial wheeling and dealing would end up costing the University over $1 billion dollars and cost him his job, forcing his resignation in 2006.

Now the Obama administration is shaping the financial direction of the nation under the advice of the actual architects of the financial meltdown that nearly bankrupted the entire financial system of the United States if not the world. One could argue that the Bush administration should have taken reasonable steps to restore the needed regulations which could have prevented the crisis and he probably would have if his administration hadn’t received the assurances of the Federal Reserve and Congress that everything was fine.

So in summary, the Obama administration is blaming the Bush administration for a recession that was brought on by financial deregulation enacted by the Clinton administration under the advice of people that Obama just rehired to direct the financial direction of the country under his administration. The question that remains unanswered is why Obama thinks that any of this is a good idea.

Paul

Is it really Bush's Economy or Obama's?

The New York Times inadvertently validated my assertions that Republicans would be wise to recognize the anti-incumbent fever sweeping the nation but in order to keep their credentials as a liberal member of the Robert Gibbs Propaganda Club, found it necessary to embellish the story with their own pro-Obama flavor. The Times reported that a recent Times/CBS poll shows the President with an edge over Republicans in the upcoming election, totally missing the point. All of Congress is entering the election cycle with its lowest approval rating ever and that should be hard to ignore unless of course, you have the additional armor of being the Liberal media’s intellectually elite shock troops.

Of course the poll was crafted in such a way that you had to agree that Bush was totally at fault for our current economic woes; exonerating the President from all responsibility. I will be the first to admit that Bush’s economic strategies were an abject failure and while he was tough on terror, he was no better than a run of the mill, liberal spending Democrat when it came to economic and public policy. What the poll ignores is the duplicity of Obama’s closest advisors in perpetuating that failure which deepened the recession.

It began with the appointments to his cabinet. Tim Geithner had studied international economics in college and his early career placed him in the International Affairs Division of the U.S. Treasury and as an attaché to the United States Embassy in Tokyo. He was also deputy assistant secretary for international monetary and financial policy, senior deputy assistant secretary for international affairs, assistant secretary for international affairs and the Under Secretary of the Treasury for International Affairs.

One would think that resume would have qualified him to be Obama’s Secretary of the Treasury but there are some disturbing issues hidden in his resume too. In 2002 he left the US Treasury to join the Council on Foreign Relations as a Senior Fellow in the International Economics department. He was also the director of the Policy Development and Review Department at the International Monetary Fund; an organization that rarely has the economic interests of the United States at heart but instead, finds itself regularly aligned with the United Nation’s desire to redistribute the wealth of Western democracies to developing nations.

The friends (and enemies) that Geithner made while traipsing around the world seems to have shaped quite a few of his views and it is his “citizen of the world” mindset that made Geithner necessary to Obama’s cabinet. While going through the confirmation process it was found that Geithner had some tax “difficulties” of his own and he dismissed those difficulties, blaming his lack of expertise in using the personal tax preparation program “Turbo Tax” for the discrepancies. Really? A man studied in international economics that just happened to have an early career in the Treasury Department couldn’t figure out how to use a $19.95 computer program to pay his taxes? Well, the Senate bought that excuse so I will let that rest. Not because I believe him, but because there are bigger problems with Geithner than that.

Geithner was President of the New York Federal Reserve in 2003 and Vice Chairman of the Federal Open Market Committee component. In 2006, Geithner became a member of the Washington financial advisory panel “The Group of Thirty” where in 2007, he worked to reduce the capital required to run a bank. Do you see a red flag there? Geithner also arranged the rescue and sale of Bear Stearns and also supported his friend and Goldman Sachs CEO, Henry Paulson, in his bid to promote the bailout of AIG. While billions in taxpayer funds were flowing into Bear Stearns and AIG, Geithner curiously ignored Lehman Brothers, letting them slip into bankruptcy. But hey, friends are friends and all that. The bottom line is that there are number of private economists that say Geithner’s actions severely damaged the United States economy while he played fast and loose with taxpayer funds; favoring friends and destroying enemies.

If that isn’t bad enough, we have Rahm Emmanuel. Emmanuel is noted for having an explosive temper that manifests itself in ways that could be considered damaging for a White House Chief of Staff. Emmanuel had worked on a number of Democratic campaigns including the Presidential campaign of Bill Clinton. While working on the Clinton campaign, he reportedly sent a dead fish in a box to a pollster that was routinely late in providing much needed poll results. In another incident after the 1996 election, Emanuel was so angry at Clinton’s campaign enemies that he stood up at a dinner with colleagues from the campaign, grabbed a steak knife and began rattling off a list of what he considered traitors, shouting 'Dead!” and plunging the knife into the table after each name was called out. It sounds like Rahm’s parents let him watch way too many violent movies as a child.

Unlike many of his current colleagues, Rahm Emmanuel actually had a real job before entering politics and the seedier world of investment banking. Unfortunately for Rahm, his job at a Chicago Arby’s ended suddenly when he lost part of his finger in one of the machines. Considering Geithner’s qualifications as Treasury Secretary include imploding the US Economy as head of the NY Federal Reserve, I am really surprised that Emmanuel wasn’t named to head OSHA or the Department of Health and Human Services; especially when considering his impeccable safety record. However, it is Emmanuel’s cut-throat Chicago style of politics that is the real criteria for his position as Obama’s Chief of Staff. As Chief of Staff, he is one of the orchestrators of the administration’s “blame Bush” campaign and one of the crafters of the Obama “evil greedy banker” policy. He should know; after all, he was an evil greedy banker himself.

Rahm Emmanuel was an advisor to Bill Clinton; a position he resigned from in 1998 to pursue a career in investment banking with Wasserstein Perella. In his two and a half years at Wasserstein Perella, he earned a reported $16.2 million dollars. As an additional favor to his friend, President Clinton named Emanuel to the Board of Directors for the Federal Home Loan Mortgage Corporation ("Freddie Mac") before he left office in 2001. Emmanuel’s position earned him at least $320,000, including later stock sales. Obviously a political appointment, Emmanuel was not assigned to any of the board's working committees; a Board that met no more than six times per year.

During Emmanuel’s time on the board, Freddie Mac was plagued with scandals involving campaign contributions and accounting irregularities. Imagine that? The Obama Administration subsequently rejected a request under the Freedom of Information Act to review Freddie Mac board minutes and correspondence during Emanuel's time as a director. The Office of Federal Housing Enterprise Oversight (OFHEO) later accused the board of having "failed in its duty to follow up on matters brought to its attention." Thanks to Obama’s stonewalling of the Freedom of Information Act request, we will never know the depth of Rahm Emmanuel’s participation in those scandals or how much his actions may have damaged the fiscal stability of Freddie Mac. We can only assume that if Obama’s friend and Chief of Staff were not implicated, that the FOI request would probably have been granted.

Emanuel resigned from the board of Freddie Mac in 2001 when he ran for Congress; eventually filling the seat vacated by another Chicago criminal, former Illinois Governor Rod Blagojevich. Blagojevich is currently on trial for Federal Corruption charges stemming from an investigation that alleges that he (Blagojevich) tried to sell the U.S. Senate seat vacated by Barack Obama when he became President, for cash or favors. Emmanuel kept his Congressional seat until his appointment by Barack Obama to the position of Chief of Staff.

The part that I cannot figure out is how this administration claims insulation from the current financial crisis when so many of Obama’s key appointees played major roles in bringing about the near collapse of the economy? Factually, if the Democrat controlled Congress that Bush was plagued with from 2006 forward, had actually performed their required function of providing oversight for the Federal administration structure, perhaps corrective action would have been taken by Bush that could have mitigated the economic implosion of 2008. Like I said before; friends are friends and enemies are enemies and the Democrats in Congress would have had to crucify some of their own to do that and there was no need to sacrifice them if you had a Republican President you could blame instead.

Monday – Why hasn’t the economy shown signs of recovery? The truths Obama can’t blame on Bush.

Paul