Free Markets, Free People

Obama Administration

How Do You Spell “Chutzpa” in Korean?

Because the Secretary General has it – and demonstrates again why we ought to let the Third World Debating Club on the Hudson find a new home:

A day after his White House meeting with President Barack Obama, U.N. Secretary-General Ban Ki-moon called the United States a “deadbeat” donor to the world body while making the made the rounds on Capitol Hill.

[…]

“He used the word ‘deadbeat’ when it came to characterizing the United States. I take great umbrage (over) that,” Ileana Ros-Lehtinen, the panel’s senior Republican, said after an hour-long, closed-door meeting. “We certainly contribute a whole lot of U.S. taxpayer dollars to that organization. We do not deserve such a phrase.

Interviewed after the session, Ban said he had wanted to draw attention to the fact that the U.S. agrees to pay 22 percent of the U.N.’s $4.86 billion operating budget, but is perennially late with its dues — and now is about $1 billion behind on its payments.
That figure is “soon to be $1.6 billion,” Ban emphasized. Asked if he’d used the word ‘deadbeat’ during the meeting, he replied, “Yes, I did — I did,” then laughed mischievously.

The ultimate deadbeat institution which can, unsurprisingly, find more ways to waste money than the US government, calls the country that pays 22% of its cost and host to the parasites that represent their backwater potentates the “deadbeat” ?

Ban certainly demonstrates a lot of respect for the country and the new administration doesn’t he?  So far this new relationship with the world is going swimmingly, as the UK can attest.

But there’s a glimmer of hope apparently. Ban has given Obama some budget advice:

Obama seeks a 9.5 percent increase in international affairs spending, which Yeo said would be enough to cover not only next year’s U.S. dues to the U.N., but also $1 billion in arrears.

Amazing. And we’ll end up handing it all over, just watch.

~McQ

Looking At The First 50 Days – A Lack Of Leadership (UPDATE)

Both Camille Paglia and Howard Fineman give an assessement (although not presented as a 50 day assessment).

Paglia says, “free Obama from his advisors“:

Yes, free the president from his flacks, fixers and goons — his posse of smirky smart alecks and provincial rubes, who were shrewd enough to beat the slow, pompous Clintons in the mano-a-mano primaries but who seem like dazed lost lambs in the brave new world of federal legislation and global statesmanship.

Heads should be rolling at the White House for the embarrassing series of flubs that have overshadowed President Obama’s first seven weeks in office and given the scattered, demoralized Republicans a huge boost toward regrouping and resurrection.

The advice he has received certainly hasn’t been the best, and Paglia makes the point eloquently. She primarily goes off on two things that have hurt the administration’s reputation – the “stimulus” bill and the mishandling of the Gordon Brown visit. Both poorly done. And she’s not at all impressed with, nor does she think anyone else has confidence in what she calls “a shrill duo of slick geeks (Timothy Geithner and Peter Orszag) as the administration’s weirdly adolescent spokesmen on economics” .

President Obama — in whom I still have great hope and confidence — has been ill-served by his advisors and staff. Yes, they have all been blindsided and overwhelmed by the crushing demands of the presidency. But I continue to believe in citizen presidents, who must learn by doing, even in a perilous age of terrorism. Though every novice administration makes blunders and bloopers, its modus operandi should not be a conspiratorial reflex cynicism.

Notice another assessment that uses “overwhelmed”. Paglia charitably tries to write it off as something “every novice administrations” goes though. But is it really?

Paglia interestingly uses the Limbaugh kerfuffle as the ultimate case in point of how his staff has let him down. But she notes he wasn’t particularly smart about it either:

This entire fracas was set off by the president himself, who lowered his office by targeting a private citizen by name. Limbaugh had every right to counterattack, which he did with gusto. Why have so many Democrats abandoned the hallowed principle of free speech? Limbaugh, like our own liberal culture hero Lenny Bruce, is a professional commentator who can be as rude and crude as he wants.

Another bit of grumbling is being heard from Howard Fineman.  In an article entitled “The Turning Tide“, Fineman notes “Obama still has the approval of the people, but the establishment is beginning to mumble that the president may not have what it takes.”

Not just the establishment -many in the big mushy middle who became enthralled with the cult of Obama without understanding the Obama agenda are now displaying a little buyer’s remorse.

But Fineman’s critique has to do with how the “establishment”, which he contends still holds enormous power, views the Obama presidency to this point. As with most of the elite media, he waves off the popular sentiment which is, for the most part favorable, and essentially claims it is the “establishment” which will make or break this president. By that, of course, he means the elite media, the money men and politicos. However, that said, his assessment is interesting:

They have some reasons to be concerned. I trace them to a central trait of the president’s character: he’s not really an in-your-face guy. By recent standards—and that includes Bill Clinton as well as George Bush—Obama for the most part is seeking to govern from the left, looking to solidify and rely on his own party more than woo Republicans. And yet he is by temperament judicious, even judicial. He’d have made a fine judge. But we don’t need a judge. We need a blunt-spoken coach.

For all his rhetorical skill, that’s something Obama can’t pull off. He comes off as preachy, and with his lack of experience, no one with any sense would accept him as a coach who’s been there, done that and is now helping the rest of us achieve certain results. He just doesn’t have the authority of experience to sell that. And what is going on around him, such as the poorly handled nomination process, makes any attempt by him to assume that role even less authoritative. Even those he does have on board, such as the “shrill duo of slick geeks” as Paglia calls them, do more to hurt his image than help it.

Fineman goes on implicitly giving credibility to the belief that Obama may not be up to the job:

Obama may be mistaking motion for progress, calling signals for a game plan. A busy, industrious overachiever, he likes to check off boxes on a long to-do list. A genial, amenable guy, he likes to appeal to every constituency, or at least not write off any. A beau ideal of Harvard Law, he can’t wait to tackle extra-credit answers on the exam.

In the meantime events pop up and multiply, issues expand and reality barrels on. And the “establishment” is getting antsy. Because what the establishment isn’t seeing from their chosen son is something he’s never had reason or cause to display – leadership. What Fineman dances around with this “beau ideal of Harvard Law” and “blunt coach” characterizations is Obama doesn’t seem to understand the basic tenets of leadership. It has nothing to do with jetting around the country on the perpetual campaign, or excellent but basically empty speeches. It means taking charge of the process and spending less time in Columbus, OH and more time leading Congress and his cabinet heads in the direction he wants to see things go.

Instead he’s essentially turned foreign policy over to Hillary Clinton and his domestic agenda over to a Congress which simply cannot control itself while he and his staff pick rhetorical fights with talk-show hosts.

Fineman lays out a list of things to this point which aren’t playing particularly well among the “establishment”. Again, these are Fineman’s list:

-The $787 billion stimulus, gargantuan as it was, was in fact too small and not aimed clearly enough at only immediate job-creation.
-The $275 billion home-mortgage-refinancing plan, assembled by Treasury Secretary Tim Geithner, is too complex and indirect.
-The president gave up the moral high ground on spending not so much with the “stim” but with the $400 billion supplemental spending bill, larded as it was with 9,000 earmarks.
-The administration is throwing good money after bad in at least two cases—the sinkhole that is Citigroup (there are many healthy banks) and General Motors (they deserve what they get).
-The failure to call for genuine sacrifice on the part of all Americans, despite the rhetorical claim that everyone would have to “give up” something.
-A willingness to give too much leeway to Congress to handle crucial details, from the stim to the vague promise to “reform” medical care without stating what costs could be cut.
-A 2010 budget that tries to do far too much, with way too rosy predictions on future revenues and growth of the economy. This led those who fear we are about to go over Niagara Falls to deride Obama as a paddler who’d rather redesign the canoe.
-A treasury secretary who has been ridiculed on “Saturday Night Live” and compared to Doogie Howser, Barney Fife and Macaulay Culkin in “Home Alone”—and those are the nice ones.
-A seeming paralysis in the face of the banking crisis: unwilling to nationalize banks, yet unable to figure out how to handle toxic assets in another way—by, say, setting up a “bad bank” catch basin.
-A seeming reluctance to seek punishing prosecutions of the malefactors of the last 15 years—and even considering a plea bargain for Bernie Madoff, the poster thief who stole from charities and Nobel laureates and all the grandparents of Boca. Yes, prosecutors are in charge, but the president is entitled—some would say required—to demand harsh justice.
-The president, known for his eloquence and attention to detail, seemingly unwilling or unable to patiently, carefully explain how the world works—or more important, how it failed. Using FDR’s fireside chats as a model, Obama needs to explain the banking system in laymen’s terms. An ongoing seminar would be great.
-Obama is no socialist, but critics argue that now is not the time for costly, upfront spending on social engineering in health care, energy or education.

Of course on the other side of these points are those that argue that the stimulus bill was poorly designed and will do nothing to stimulate the economy while ballooning the debt and inviting hyper-inflation as a result. They’d also argue that $275 home-mortgage-bailout rewards bad behavior and that when Obama claimed the pork laden, 9,000 earmark omnibus spending bill was the “last administration’s business” he gave up any hope of being in the same county as the “moral high ground”. Etc., etc.

In essence, the first fifty days can be summed up fairly easily in three words: lack of leadership. And leadership ability isn’t something the tooth fairy delivers one night along with the quarter for your tooth. That is what has the “establishment” mumbling in their martinis.

I had to laugh, however, at how Fineman ended his piece:

Other than all that, in the eyes of the big shots, he is doing fine. The American people remain on his side, but he has to be careful that the gathering judgment of the Bigs doesn’t trickle down to the rest of us.

Talk about “side-steppin'” and damning with faint praise.

But I have to wonder if Fineman’s title, “The Turning Tide” isn’t somewhat of a threat to the Obama administration if it doesn’t get its act together and do so quickly. As in-the-tank as the media was for Obama, they’re now realizing that it was their credibility they sold short if he isn’t successful. But there is only so much, in this era of the new media, they can do to spin what is happening positively. Fineman is issuing a warning of sorts – we can do this for a little while longer, but at some point it is going to turn, and it won’t be pretty.

The narrative that is now building is one of an administration overwhelmed, still in a campaign mode and rudderless. It began with the UK’s Telegraph last week and it seems to be gaining momentum.  Unless Obama and the administration can do some pretty fancy work over the next 50 days, he may emerge from his first 100 days with that being the conventional wisdom.  If so, he’s going to have a long 4 years ahead of him.

UPDATE: Interesting Gallup Poll – totally average:

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~McQ

Brooks On Capitalism

David Brooks had started down the road to Damascus when he was called back into the fold by Dear Leader. His Op-Ed in today’s NYT is the result.

Most of Brooks’ offering is a rather transparent attempt to shame congressional Republicans into supporting Pres. Obama’s agenda:

The Democratic response to the economic crisis has its problems, but let’s face it, the current Republican response is totally misguided. The House minority leader, John Boehner, has called for a federal spending freeze for the rest of the year. In other words, after a decade of profligacy, the Republicans have decided to demand a rigid fiscal straitjacket at the one moment in the past 70 years when it is completely inappropriate.

The G.O.P. leaders have adopted a posture that allows the Democrats to make all the proposals while all the Republicans can say is “no.” They’ve apparently decided that it’s easier to repeat the familiar talking points than actually think through a response to the extraordinary crisis at hand.

There are myriad problems with Brooks’ line of reasoning, including many in just to two foregoing paragraphs (e.g. How much input did Republicans have into the recent legislation? By “adopted a posture” is he referring to “not having control of either the House or the Senate”?), but I wanted to focus in on a couple of points in particular.

After some platitudinous admonitions, Brooks launches into his prescription for Republicans to save capitalism:

Third, Republicans could offer the public a realistic appraisal of the health of capitalism. Global capitalism is an innovative force, they could argue, but we have been reminded of its shortcomings. When exogenous forces like the rise of China and a flood of easy money hit the global marketplace, they can throw the entire system of out of whack, leading to a cascade of imbalances: higher debt, a grossly enlarged financial sector and unsustainable bubbles.

I really don’t know what point Brooks thought he was making, but he failed miserably on any score. First of all, “exogenous forces” cannot be “weaknesses” and/or “shortcomings” with capitalism since, by definition, they come from outside that system. At best, examining such forces can be used to understand better ways of protecting capitalism from them. In the context of the entire Op-Ed piece, however, it appears that Brooks is pitching the tired line that capitalism must be reigned in so that people don’t get hurt. That’s like diagnosing the problem with house, finding termites, and then thinking of ways to protect the termites from the house.

Furthermore, Brooks cites a “flood of easy money” (which, of course, is caused by government) as an example of an exogenous force, and then lists the following “shortcomings” of capitalism: “higher debt, a grossly enlarged financial sector and unsustainable bubbles.” What do any of those things have to do with capitalism? If anything, these are once again a failure of government skewing incentives.

In fact, when the government does its darnedest to make the cost of borrowing money historically low, people would be really stupid not to take advantage of that. We all know that rates fluctuate, and that the cost of money will be more expensive when they go back up. Logically therefore, it only makes sense to borrow when the Fed turns the money spigot on and then to find some sort of an asset to grow that money in. That, of course, is what leads to bubbles as everyone has barrels of money but not as many clear ideas of what makes a good investment. Instead of taking the time to really investigate what opportunities are available, and which ones fit a particular person’s portfolio, the herd mentality takes over and we all tend to keep up with the Jones and Smiths whether that means buying tulip bulbs or a run-down house we intend to flip.

The bottom line, however, is that these sorts of scenarios start with government intervention into the market place. In addition to turning on the money spigot, the federal government was also encouraging lenders to make high-risk loans, and for the Freddie Mac and Fannie Mae to buy them up, securitize them and sell them into the derivatives market. Again, that’s all fine and dandy (until it it all goes to hell), but it has nothing to do with “weaknesses” and “shortcomings” of capitalism, and everything to do with government sticking its big fat honker where it doesn’t belong.

More Brooks:

If the free market party doesn’t offer the public an honest appraisal of capitalism’s weaknesses, the public will never trust it to address them.

The “free market party”? Who does he think he’s kidding here? The Republicans haven’t acted like a free market party since … well … it’s been so long I can’t remember.

Moreover, I simply can’t fathom how Brooks thinks a “free market party” would ever be able to reconcile itself to joining hands with Obama on his completely anti-capitalist agenda.

Power will inevitably slide over to those who believe this crisis is a repudiation of global capitalism as a whole.

Earth to Brooks: that’s already happened. Look who the president is for crying out loud, or take the time to read your own newspaper. Each and every day we hear about how the excesses of capitalism caused this crisis, and how the “libertarian” policies of Bush (HA!) have landed us in this awful spot. Capitalism didn’t get a trial, Mr. Brooks, it was rounded up, convicted and summarily shot as soon as the latest grand experiment in government do-goodism failed (again).

Charles Freeman And The Obama Administration – What Is Going On? (UPDATE)

What is going on with the Charles Freeman nomination, and is it an indicator of a overwhelmed administration losing control?  Who, exactly, is in charge there?

Frankly, approaching 45 days into this administration, the transition process, at least as it pertains to critical nominations, has been an unmitigated disaster.  But it is the Freeman nomination which begs the question “who is in charge”.  Charles Freeman has been nominated for the chairmanship of the National Intelligence Council (NIC), the organization in charge of preparing our most sensitive intelligence estimates.

Obama’s Director of National Intelligence Dennis C. Blair apparently never ran the nomination by the White House.  That means Freeman has never been formally vetted.  Now this may all fall back on Blair, but you have to wonder what sort of guidance or lack thereof provided him with the belief that this was the way things worked?

More importantly, why did Blair decide Freeman was the man for the job?   A former ambassador under George H. W. Bush,  to Saudi Arabia and senior envoy to China, Freeman is seen by many as having very serious conflicts of interest which were apparently ignored.    Freeman was also a board member the China National Offshore Oil Corp (CNOOC) owned in majority by the Chinese government and other Chinese government agencies. And there are other financial ties which are suspect. Freeman is president of the nonprofit educational organization Middle East Policy Council (MEPC), which paid him $87,000 in 2006, and received at least $1 million from a Saudi prince. You can read about the ramifications of those connections here.

But its not just who Freeman has been connected with, but some of the statements he’s made that make one wonder about his objectivity and, frankly, his moral and ideological foundation.  This is a person who remarked that the Chinese government had shown too much “restraint” when putting down the Tiananmen Square protests in 1989. And in testimony before the 9/11 Commission, he advocated the use of a national identity card.  After all the wide-spread panic from the left concerning the Bush years and the claim that he was leading us down the path to totalitarianism, this seems like the type of person the left would really find unacceptable for a position.

Then there is the Congressional side of the question.  Jennifer Rubin asks:

Does Diane Feinstein think Freeman is an acceptable pick? It is interesting to note how lacking in — what’s the word? ah yes — “oversight” the government is now that Congress and the White House are controlled by the same party. Imagine if George W. Bush had nominated someone whose earnings depended on the largess of the House of Saud or who advocated crushing Chinese dissidents — indeed faster than the Chinese government.

And she further asks, is this the type of person who will give the administration “the “unpoliticized” advice they are looking for?”

Given what we know, I’d say no.  However, this nomination is just one more in what can only be characerized as a shambles – Commerce, HHS, Treasury, questions about his housing czar and nominees for other Treasury posts jumping ship – that is the nomination process.  

This points to a very inexperienced administration learning on the job in one of the more turbulent times in our history. That is not a good thing, folks, but exactly what was predicted given his lack of a resume. We’ve now seen the result of a campaign based on vacuous slogans. A campaign that was part demonization of the opposition and part beauty pageant. A campaign in which few focused on what the responsibilities of the office entailed and whether the candidate had the qualifications to fulfill them. We’re now “enjoying” what that brings.

UPDATE: Politico reports that Charles Freeman has withdrawn his nomination. Heh … that’s the fastest reaction I’ve ever had to one of my posts.

~McQ

Duh!

Warren Buffet on the economy and the effort of the government to “stimulate” it:

While praising efforts by Federal Reserve Chairman Ben Bernanke and others to stimulate the economy, he said the economy “can’t turn around on a dime” and that their efforts could trigger higher inflation once demand rebounds.

“We are certainly doing things that could lead to a lot of inflation,” he said. “In economics there is no free lunch.”

Funny how, when someone like Warren Buffet – who has been a supporter of Obama – says things like ‘trigger inflation’ and ‘no free lunch’, people who were previously playing the denial game (massive spending is necessary and good) suddenly figure there may be a problem.  Meanwhile the laws of economics have continued to function despite the denial.

For the most part the press has ignored Buffet’s words and they’ve been downplayed by the administration.  But perhaps if those who’ve been in denial are willing to consider Buffet’s warnings, they’ll be open to listening to others.  Such as warnings about the double talk that’s been coming out of the Obama administration the past few weeks.  For instance:

Confidence (too little) and uncertainty (too much) define this crisis. Obama’s double talk reduces the first and raises the second. He says he’s focused on reviving the economy, but he’s also using the crisis to advance an ambitious long-term agenda. The two sometimes collide. The $787 billion “stimulus” is weaker than necessary, because almost $200 billion for extended projects (high-speed rail, computerized medical records) take effect after 2010. When Congress debates Obama’s sweeping health care and energy proposals, industries, regions and governmental philosophies will clash. Will this improve confidence? Reduce uncertainty?

A prudent president would have made a “tough choice” — concentrated on the economy; deferred his more contentious agenda.

Instead he’s decided he’s not going to let a “good crisis” go to waste and pursue his very expensive agenda which has nothing to do with the economic crisis (or alleviating it). All the while he preaches about crisis, catastrophe, sacrifice, tightening belts and doing with less even as he plans to expand government beyond anything we’ve ever seen.

It is an amazing performance.

~McQ

Intellectually Incurious

Yesterday on the podcast, we talked about Pres. Obama’s attitude towards certain aspects of his presidential responsibilities.  Apropos of that discussion, he is receiving some criticism for his indifference to the markets.

Some Wall Street economists think President Obama could have voiced some sympathy about the plight of frightened shareholders when he compared the stock market’s plunge to an election tracking poll that “bobs up and down, day to day.”

They worry that the president is underestimating the important role the stock market plays in the economy’s performance, and that the markets’ precipitous slide is actually a vote of no confidence in the administration’s handling of the economy. There’s also a suspicion that Mr. Obama and his advisers think only wealthy people own stocks.

“There is some of that feeling that rich people are the ones who have stocks. He does have somewhat of that feeling. But you’ve got to remember that most people who own stocks aren’t rich,” said David Wyss, chief economist at Standard & Poor’s, the influential Wall Street financial research and forecasting firm…

…Mr. Wyss and some of his colleagues on Wall Street – where investors have lost trillions of dollars in savings and the market is not so much bobbing as dropping straight down – think Mr. Obama could have shown more concern for the markets, which represent the economy and signal its future direction.

During Mr. Bush’s tenure, there was constant criticism that he was “intellectually incurious”, e.g., he showed a lack of interest in the portions of his job he wasn’t required to be engaged in on a regular basis.  I wouldn’t dispute those criticisms, of course, but it seems to be a trait that Pres. Obama shares with his predecessor.

Pres. Obama appears to be fascinated by aspects of politics such as “green jobs” and health care that aren’t actually part of the president’s core portfolio, while being uninterested in the foreign and military policies that are essential parts of the president’s purview.At the moment, we’re in the midst of an economic crisis–and I use the word intentionally–that stems from a credit bubble collapse.  The stock market is a predictor of future earnings and profitability for private sector firms.  As such, it tells you things about the expectations investors (which at this point includes more than half of the population) have about the future income that their investments will produce.  What the collapse in the stock market tells us is that investors are voting with their money that future earnings will be substantially lower, meaning that firms all across the country will be less profitable.

What happens on a day-to-day basis, of course, may be subject to a variety of market whims and fancies, but long-term trends do indicate the direction of the economy.  The market is a leading indicator.  So when there are several straight weeks of decline in stock prices, the market is telling us something.

This seems not to be a reality that the president comprehends.

Instead, the president’s main focus seems to be on health care, green jobs, more policemen and prosecutors, and the like.  All of which may be wonderful things, and none of which will happen if the economy implodes. To the extent the current crisis forces him to concentrate on economic policy, he appears to resent it.

Similarly, the president has made missteps in foreign policy this week.  The Obama Administration apparently attempted to sell our Eastern European allies down the river by offering to shut them out of missile defense if the Russians cooperate on nuclear non-proliferation in Iran–until they got caught out on it.  That was a  major misstep.It was quickly followed by two minor missteps.

First was Sec. Clinton presenting the Russian foreign minister with a button which was supposed to say, in Russian, “Reset”, to symbolize the new engagement with the world the Obama Administration was supposed to bring about.  What the button actually said was “overcharge” in Russian.  On top of this, it’s generally a bad idea, symbolically, to present the Russians with a button to push of any sort, considering that the major foreign policy goal of the last half of the 20th century was to prevent the Russians from pushing “the button”.

Second was the treatment of Gordon Brown, the prime minister of the UK, during his visit.  Rather than pulling out all the stops to showcase the visit of the head of government of what, by nearly any measure, is the United States’ most important ally, Mr. Obama treated it as if the Deputy Agriculture Minister of Azerbaijan had showed up on the White House’s doorstep.  In what may be a first in my lifetime, the various press organs in Britain, from the commies at The Spectator Observer, to the staid tories of The Times of London all agreed that Pres. Obama’s treatment of Mr. Brown amounted to an egregious snub of the United Kingdom.

In addition to the above, one has to note the retention of Sec. gates at the DoD, along with the retention of the great majority of the Bush Administration’s positions on executive privilege and the prosecution of the Global War on Terror.

What all of these things add up to is a picture of a president who is essentially uninterested in military policy, or foreign policy, or, really, economic policy, and who in effect simply ignores them to the extent he is able, and delegates their operation to his subordinates.  What he cares about is government, and its ability to intervene in the marketplace, and to provide goods and services.  It is in those areas where his interest and attention actually lie, and the remainder of the executive branch can, as far as he’s concerned, operate on auto-pilot.

Take all of the above together, and it appears to present an emerging picture of a man who is truly intellectually incurious, and who wishes to ignore, to the extent possible, those aspects of the president’s job that he doesn’t find personally appealing.

Sadly, he appears to be fascinated by aspects of politics such as “green jobs” and health care that aren’t actually part of the president’s core portfolio, while being uninterested in the foreign and military policies that are essential parts of the president’s purview.

Cap-And-Trade – The Impact And The Politics

It is time to get real about what the promised cap-and-trade tax means to the average American.

Politicians love cap and trade because they can claim to be taxing “polluters,” not workers. Hardly. Once the government creates a scarce new commodity — in this case the right to emit carbon — and then mandates that businesses buy it, the costs would inevitably be passed on to all consumers in the form of higher prices. Stating the obvious, Peter Orszag — now Mr. Obama’s budget director — told Congress last year that “Those price increases are essential to the success of a cap-and-trade program.”

Essentially Congress will be creating a new commodity literally out of thin air. It will only create a certain amount of that commodity and so create instant scarcity. As we all know, scarcity drives up prices. The next year, the plan is to remove a portion of the created commodity from the market creating even more scarcity and driving prices for the commodity even higher.

Imagine steel as the commodity. Imagine steel prices going through the roof. Do you suppose they might effect the price of, say, automobiles? Metal buildings? The price of building a bridge or sky scraper?

So who, in the final analysis, is going to end up paying for this increase in steel prices? Why the final consumer, of course. Naturally, with steel, in some cases you can choose to consume (buy a new car, rent an office or approve the bridge) or not consume. However, with the CO2 tax on all industry, to include manufacturing, service, transportation and energy, you have little choice in the matter of consumption. You will be picking up the tab for this.

That brings us full circle to the promised tax cut for 95% of America and my promise that what government gives with one hand it takes with another, making the tax cut illusory at best:

Hit hardest would be the “95% of working families” Mr. Obama keeps mentioning, usually omitting that his no-new-taxes pledge comes with the caveat “unless you use energy.” Putting a price on carbon is regressive by definition because poor and middle-income households spend more of their paychecks on things like gas to drive to work, groceries or home heating.

After all the caterwalling the left does about “progressive taxation” they are about to implement the most regressive tax I can imagine. And as I’ve pointed out, the tax is pervasive, touching just about all aspects of life. Food prices will rise. Energy prices will go through the roof.

The Congressional Budget Office — Mr. Orszag’s former roost — estimates that the price hikes from a 15% cut in emissions would cost the average household in the bottom-income quintile about 3.3% of its after-tax income every year. That’s about $680, not including the costs of reduced employment and output. The three middle quintiles would see their paychecks cut between $880 and $1,500, or 2.9% to 2.7% of income. The rich would pay 1.7%. Cap and trade is the ideal policy for every Beltway analyst who thinks the tax code is too progressive (all five of them).

Of course there is talk of subsidizing those at the lower end of the economic ladder so the impact of rising prices is lessened. Naturally that also negates the impact of the cap-and-trade system. In the end, your tax dollars subsidze the system while increased prices are passed along by so-called polluters. As the price of permits rise over the years, permit holders pay the increasing cost, pass it along and you again subsidize it. The rich can afford it, the poor will be subsidized, so who will get squeezed? Why that middle class that Obama and Biden are so concerned with.

Economically, estimates are that we’re going to have a miserable year in ’09 and possibly ’10. But we may begin to see a recovery really start to take hold in ’11, just in time for the 2012 presidential election. The smart politicians in Washington plan to delay cap-and-trade implementation until 2012. The reason should be obvious. If cap-and-trade has the expected impact on the economy, we could very well see the recovery stall and head back into recession. But politically the timing would be perfect. The mirage of recovery would be just enough to keep the current administration in power for another 4 years, before the economy wrecker of cap-and-trade begins to do its work.

~McQ

Dear Obama: Really?

The NYT’s White House reporters got an exclusive interview with Pres. Obama, and one of the pressing questions on their minds was what his ideology is.  They asked if, given his spending priorities, he is a socialist, to which he said no, and when they asked if he was a “liberal” or a “progressive” or any other one-word answer, he declined to comment.  I can understand him saying that.

But then, after the interview, the president called the reporters back, like he’d thought up a really good zinger after the fact:

It was hard for me to believe you were entirely serious about that socialist question. I did think it might be useful to point out that it wasn’t under me that we started buying a whole bunch of shares of banks. It wasn’t on my watch. And it wasn’t on my watch that we passed a massive new entitlement – the prescription drug plan without a source of funding. And so I think it’s important just to note when you start hearing folks thro[w] these words around that we’ve actually been operating in a way that is entirely consistent with free-market principles and that some of the same folks who are throwing the word ‘socialist’ around can’t say the same.

Q. So who[se] watch are we talking about here?

A. [*Chuckle*] Well, I just think it’s clear by the time we got here, there already had been an enormous infusion of taxpayer money into the financial system. And the thing I constantly try to emphasize to people is that if, coming in, the market was doing fine, nobody would be happier than me to stay out of it. I have more than enough to do without having to worry the financial system. And the fact that we’ve had to take these extraordinary measures and intervene is not an indication of my ideological preferences, but an indication of the degree to which lax regulation and extravagant risk-taking has precipitated a crisis.

This is bittersweet, because on the one hand, he clears up any misconception that Bush was effectively conservative (or as John Kerry claimed, extreme libertarian).  He says, to his credit, that buying up shares of banks and passing a massive new entitlement (or at least one financed by borrowing) are inconsistent with free-market principles.

I like how Obama says that the financial bailout wasn’t on his watch, when he voted for it as a Senator.  But he’s right about Bush.  With Obama’s help, a Republican president did dump mountains of wealth into the thermal boreholes of the most heavily regulated sector of the economythat’s the financial sector, dear reader, although health care is way up there.  And afterward, Bush was frank enough to admit that he had “abandoned free-market principles,” although he had the monumental cheek to say he had done so “to save the free-market system.”

But on the other hand, Obama claims that his team’s been operating in a way that is “entirely consistent with free-market principles“!  I feel like launching into one of those “Really!?!” segments from SNL, only less funny and more desperate.

Really, Mr. President?  And you’re not shoveling piles of taxpayer money into the financial system?  You’re not planning any massive expansions of entitlement spending?  Really? And you’re going to come up with a source of funding for all of this?  Without taxing anyone but the top two five percent?  Really.

Really, Mr. President, all you’ve talked about since this crisis started is how everyone in the private sector needs a regulatory cavity search deep enough to do a ventriloquist act.  As if what we really need is more Sarbanes-Oxley, SEC and FASB rule changes because it was our lax regulation that all those businesses ran overseas to escape.

And if I’m putting together a line-up of who caused the “extravagant risk-taking” like the massive overborrowing that inflated the residential real estate bubble, shouldn’t my first suspects be Fannie & Freddie, the Fed and government subsidies?

Your response to this crisis is to borrow more money to subsidize energy, public transportation, public education and state-mandated health care, and really, isn’t that what the free market is all about?  Thanks for the assurances that you’re not in favor of bigger government.

Your budget, the stimulus, that second stimulus you hinted at, and rescuing all those giant institutions, some of them for the second and third time: these are all entirely consistent with free-market principles?  I mean, really.

Someone help me out.  Exactly which free-market principles has the president adhered to, either in his campaign promises or in his actions in office?  Tell me why Obama is not mistaken or lying.

Too Tired For Diplomacy or Foreign Affairs? Not Interested? Or Overwhelmed By The Job?

Or, perhaps, “all of the above”. From the UK Telegraph:

Sources close to the White House say Mr Obama and his staff have been “overwhelmed” by the economic meltdown and have voiced concerns that the new president is not getting enough rest.

British officials, meanwhile, admit that the White House and US State Department staff were utterly bemused by complaints that the Prime Minister should have been granted full-blown press conference and a formal dinner, as has been customary. They concede that Obama aides seemed unfamiliar with the expectations that surround a major visit by a British prime minister.

But Washington figures with access to Mr Obama’s inner circle explained the slight by saying that those high up in the administration have had little time to deal with international matters, let alone the diplomatic niceties of the special relationship.

Allies of Mr Obama say his weary appearance in the Oval Office with Mr Brown illustrates the strain he is now under, and the president’s surprise at the sheer volume of business that crosses his desk.

A well-connected Washington figure, who is close to members of Mr Obama’s inner circle, expressed concern that Mr Obama had failed so far to “even fake an interest in foreign policy”.

And here we were led to believe Mr. Obama was this cool, multitasker under full control and able to handle everything the job entailed.

That’s what we were led to believe.

Some of us, however, said that of all the jobs on the planet this wasn’t the one for OJT.  This isn’t a job where one aspect of the duties can be ignored to concentrate on others.

Guess which group looks more prescient at the moment?

~McQ

Stray Voltage

Apparently Timothy Geithner isn’t the financial “rock star” he was touted to be if his handling of the Asian crisis 10 years ago is any indication.

While Obama may have “inherited” the financial problems, the bear market is all his.

Speaking of lay-offs, this isn’t going to make our jet jocks feel very secure.

The new slogan of the Democrats – never let a good crisis go to waste.  So this is a “good” crisis?

Take a look at this page and tell me where are the promised tax money from rich folks is going to come from.

Stray Voltage

Stray Voltage

If you don’t believe government is contemplating some pretty heavy care rationing when and if they get control, read this little beauty carefully.

Even George McGovern finds the pending card check legislation desired by unions to be “fundamentally wrong” and undemocratic.

Grey wolves “delisted” from endangered species list.

No time for Gordon Brown, but plenty of time for Brad Pitt.  Wonder if Pitt got a 25 volume DVD set too?

Is Obama preparing the way for a massive defense spending cut?

George W. Obama?

Even Paul Krugman is getting a little antsy about the apparent lack of focus of the Obama administration on the financial crisis.

It appears Hugo Chavez recognizes a kindred spirit when he sees one.

The Senate is one vote short of passing the omnibus spending bill with 9,000 earmarks.  All I wonder is which Republican will cave first?

~McQ