Free Markets, Free People

Bruce McQuain


Suddenly We Have Problems (Update)

Funny how this works, eh?  

February, 2005:

Your lack of details is no surprise–an essential component of the government’s PR blitz is the obscuring of details because, in fact, Social Security faces no immediate crisis. President Bush is lying to us, again.Despite the president’s sky-is-falling forecasts, the system’s trustees give Social Security another four decades of soundness; the nonpartisan Congressional Budget Office gives it five. Many independent economists believe the program will stay healthy closer to six or seven more decades.

January of the same year:

It all sounds awful, but is it really so bad? Is there a Social Security crisis?

Most Democrats say no. They contend the president is trying to scare people into supporting his plan for drastically changing the program.

“The future is not as bleak as some people would have the public believe,” says Peter Diamond, an economics professor at the Massachusetts Institute of Technology. “Social security is not bankrupt in the usual sense of the term — not going broke, not going ‘flat bust.’”

[...]

But professor Diamond says, yes, in 2042, benefits will have to be cut, but retirees then would still get more money than today’s retirees.

“We’ve got 35 or more years to phase in very slow changes that people can certainly adapt to and live with,” he says.

And Medicare?

From the majority Democratic Congress of last August:

“The Medicare trigger was cooked up by Republicans behind closed doors as a political ploy to foster an unfounded panic about the strength of Medicare’s finances,” said Rep. Pete Stark (D, Calif.), chair of the House Ways and Means Subcommittee on Health. “We must turn off the trigger and reject Republican attempts to arbitrarily limit Medicare financing.”

Stark and other Democrats argue that Medicare’s trend to require an increasingly larger portion of its funding to be in the form of general tax revenues has no bearing on the program’s long-term solvency. Although Democratic lawmakers support some of the Bush bill’s provisions, they take issue with his proposal to ease the drain on tax dollars in part by charging wealthier seniors more for their Medicare drug benefit premiums.

Yet what is going to happen today?

On Monday, Obama will bring together more than 130 lawmakers, heads of advocacy groups and economists in the White House State Dining Room to lay out the bad news – a federal deficit of at least $1.3 trillion, the largest as a share of the nation’s economy since World War II. The fiscal summit is meant as a first volley in the battle to address runaway costs for Medicare, Medicaid and Social Security.

Runaway costs? But, but … I thought Republicans were trying to scare everyone? I thought Bush had lied? You mean they were right?  My goodness, you mean that it may have been the Democrats who were being disingenuous.

Heh … that can’t be so, can it?

Hope and change.

UPDATE:  Apparently Democrats are still pushing the “there’s nothing wrong with Social Security” meme.  From the Joe Scarborough show, and interview with budget director Peter Orszag, who will be chairing today’s “Fiscal Responsiblity Summit” (yes, it’s okay to laugh):

JOHN HEILEMANN: Peter, it’s John Heilemann from “”New York”" magazine. there’s a report in “”the New York Times”" today, this goes back to a question that Joe kind of hinted at a minute ago, which is that Barack Obama considers doing a White House task force on Social Security reform to announce today and he got pushed back from Democratic leaders in the House and Senate. is that report true? Is the question of Social Security reform still on the table for you guys, how important is it?

PETER ORSZAG: Well, I want to come back to the point that was raised earlier, which is that Medicare and Medicaid are the primary drivers of our long-term fiscal problem. We want to address that first. we want to get health care done this year. Social Security is also an issue and after we’ve dealt with health care I think it probably does make sense to try to get Social Security on sounder ground also, but let’s get the big problem fix first.

HEILEMANN: Peter, did you guys back down or not?

ORSZAG: I don’t think it’s constructive to get into the back and forth of discussions in, you know, in internal discussions. i think the important point is, the president is committed to addressing the largest problem that we face which is Medicare and Medicaid.

JOE SCARBOROUGH: Peter, please understand, it may not be constructive, but it’s an awful lot of fun. Did Nancy Pelosi tell you to back off of Social Security and Medicare and Medicaid reform?

ORSZAG: You guys are wild having fun like that. We want to get — I really want to focus on — SCARBOROUGH: Peter, it’s all we got.

MIKA BREZEZINSKI: He fits the show. Answer the question, Peter. You got an answer for us?

ORSZAG: Again, Social Security is, you know, does face a long-term deficit, it does need to be addressed, but it’s much smaller than the problems than Medicare and Medicaid and the health system. i think it makes sense to focus there first.

It doesn’t take a rocket scientist to see through Orszag’s rather poor attempt to obfuscate the issue. Apparently they did back down. Medicare and Medicaid only remain on the table because they are a means to an end – what the Democrats like to euphemistically refer to as “health care reform”. That, by the way, does not refer to making either Medicare or Medicaid more efficient, less costly or less wasteful, it instead refers to expanding both programs. That, in the era of Democratic rule is considered to be “fiscally responsible”.

~McQ


Arnold Schwarzenegger: Dope Of the Week

Where to start with this joker:

California Republican Gov. Arnold Schwarzenegger suggested that his party is out of touch with average Americans on the issue of health care.

“You’ve got to listen to the people. If the nation is screaming out loud, ‘We need health care reform. We want to have universal health care. We want to have everyone insured. We want to bring the costs down. We want everyone to have access.’ I mean, that’s what they want; that’s what you do,” Schwarzenegger said on ABC’s “This Week.”

Arguing that California Republicans were out of touch with the majority of Californians who wanted to raise taxes to fix the state’s budget crisis, Schwarzenegger said it is “the same nationwide.”

He said Republicans need to embrace what the people want, even if it means accepting tax increases that go against their party principles:

“Even though it maybe is against your principles or philosophy, you still have to go, because that’s what the people want you to do,” he said.

A) Healthcare: the nation isn’t screaming any of that out loud. A definite minority want it. But just as large a minority don’t want any part of it. A third minority isn’t sure one way or the other.

B) If the purpose of government is to simply give the people everything they want, then there’s no reason for a budget, a legislature or a governor. Just put everything to a direct vote via referendum, write a program that can figure the cost of each “yes” referendum, figure the tax necessary to fund the approved program and assess the tax. If you must have a legislature or governor, they would only write the law and rubber stamp it based on the referendum (per the Schwarzenegger “philosophy” only unanimous approvals allowed) and the “governor” is there to do nothing more than to sign it into law – period. Once taxes reach 100% nothing else can be signed into law and the legislature is in permanent recess and the governor is no longer needed (hey I can be just as absurd as Schwarzenegger).  

Oh, wait, I forgot – you have to have a governor and a legislature to pile up trillions of dollars of debt “giving the people what they want” and drive the state into bankruptcy – my bad. 

C) Why have principles if you’re not supposed to live by them/act on them. Why run on them, tell voters they’ll be your guide and get elected because of them? Schwarzenegger has gone from a somewhat entertaining RINO to an outright idiot.

“Even though it may be against your principles or philosophy” do it anyway because that’s what the people want? This guy would obviously rather be liked than principled (if he ever was really principled). Principles are a hindrance to his pursuit of approval (see what steroids will do to your brain?). And my guess is, he’d label this nonsense as “leadership”.

Lord help California. Schwarzenegger makes Gray Davis look great.

~McQ


With Hat In Hand …

Pretty sad when you have the Secretary of State soliciting funds for debt instruments:

US Secretary of State Hillary Clinton has urged China to keep buying US debt as she wrapped up her first overseas trip, during which she agreed to work closely with Beijing on the financial crisis.

Ms Clinton made the plea shortly before leaving China, the final stop on a four-nation Asian tour that also took her to Japan, Indonesia and South Korea, where she worked the crowds to try to restore America’s standing abroad.

In Beijing, she called on authorities in Beijing to continue buying US Treasury bonds, saying it would help jumpstart the flagging US economy and stimulate imports of Chinese goods.

“By continuing to support American Treasury instruments the Chinese are recognising our interconnection. We are truly going to rise or fall together,” Ms Clinton said at the US embassy here. 

Of course, its absolutely necessary that China (and the rest of the world) continue to buy these bonds and fund this spending debacle or taxes will have to be raised dramatically (and not just on the ‘rich’) and/or more money will have to be printed. That’s not to say that both of those won’t be done anyway whether China continues to buy or not.  My guess is it’s only a matter of time. Don’t forget, health care reform legislation and environmental legislation are yet to come. Both may end up taking even more out of the private side of the economy than the so-called “stimulus” did.

~McQ


Signing On To The “Name And Shame” Policy

Gotta love this chutzpah:

Invoking his own name-and-shame policy, President Barack Obama warned the nation’s mayors on Friday that he will “call them out” if they waste the money from his massive economic stimulus plan.

“The American people are watching,” Obama told a gathering of mayors at the White House. “They need this plan to work. They expect to see the money that they’ve earned — they’ve worked so hard to earn — spent in its intended purposes without waste, without inefficiency, without fraud.”

This from a guy who just signed into law the biggest waste, fraud and abuse bill ever concocted by our so-called representatives in Washington DC.

~McQ


A New Voice

I‘m going to let him do his own intro (kind of me, eh Jason?) but we’re pleased to have Jason Pye joining QandO as one of our bloggers. Jason comes from great libertarian stock, was the former chair of the Georgia LP and was the New Media guy for the Barr campaign.

He’s a freedom and liberty guy who has much in common with the rest of us.

Welcome aboard Jason.

~McQ


Ah, Chu

Yup, nothing like the best qualified for the job:

Energy Secretary Steven Chu may be a Nobel laureate Ph.D. in physics, but his first forays into energy policy suggest he’s a neophyte when it comes to the ways of Washington.

At a forum with reporters on Thursday, the head of the department that has traditionally taken the lead on global oil-market policy, was asked what message the Obama administration had for the Organization of Petroleum Exporting Countries at its meeting next month.

“I’m not the administration,” the Cabinet secretary replied. “I will be speaking and learning more about this in order to figure out what the U.S. position should be and what the president’s position is.”

Chu, who is still without a deputy, said he feels “like I’ve been dumped into the deep end of the pool” on oil policy.

He may be a Nobel laureate, but it is obvious that he isn’t at all prepared for the job of Energy Secretary. How, given his obvious lack of knowledge about oil, can he put a comprehensive energy plan together for the US? Well, he wasn’t brought in to consider oil – he’s going to be the “green guy”. Oil, coal and other Neanderthal energy sources aren’t really something he’s concerned himself with. But now, he is the man.

Makes you feel all warm and fuzzy, huh? Knowing all of that certainly reassures you that his priorities are going to be what is best for the US and not best for the agenda, doesn’t it?

~McQ


Bagram/Gitmo – What’s The Difference Again?

Promises, promises:

Detainees being held at Bagram Air Base in Afghanistan cannot use US courts to challenge their detention, the US says.

The Justice Department ruled that some 600 so-called enemy combatants at Bagram have no constitutional rights.

Most have been arrested in Afghanistan on suspicion of waging a terrorist war against the US.

The move has disappointed human rights lawyers who had hoped the Obama administration would take a different line to that of George W Bush.

Prof Barbara Olshansky, the lead counsel in a legal challenge on behalf of four Bagram detainees, told the BBC the justice department’s decision not to reform the rules was both surprising and “enormously disappointing”.

Uh, just for clarification, that’s Eric Holder’s Justice Department making the ruling. The Eric Holder who works for Barack Obama.

So the big one-two this week is the declared Obama human rights policy (the US won’t let human rights get in the way of economics, the enviroment or security concerns) and detainees held by the US in Bagram (but not Gitmo).

Heh … old boss/new boss.  At least Glenn Greenwald will have something to write about for a while, won’t he?

Wow, this governing is much harder than just flapping your gums about stuff, isn’t it?

“Just words …”

~McQ


The Beginnings Of The Problem We’ve Been Warning About

What if we wanted to borrow a bunch of money and no one would lend it to us? How would that affect the “stimulus” or bailout? The government would have to either raise taxes or print money, wouldn’t it? One leads to an extended recession and the other leads to the same thing plus inflation.

Guess what?

Asian investors won’t buy debt and mortgage-backed securities from Fannie Mae and Freddie Mac until they carry explicit U.S. guarantees, similar to those given on bonds issued by Bank of America Corp. or Citigroup Inc.

The risks are too great without a pledge that the U.S. will repay the debt no matter what, according to Hideo Shimomura, chief fund investor in Tokyo for Mitsubishi UFJ Asset Management Co., and other bondholders and analysts in Japan, China and South Korea interviewed by Bloomberg. Overseas resistance may hamper U.S. efforts to hold down home-loan rates and shore up the nation’s largest mortgage-finance companies.

This shows a real lack of confidence in foreign investors.  If you want to view it this way, this is a de facto downgrading of the credit rating of the two FMs. And, as pointed out in the final sentence, this may trip up efforts to hold down interest rates for home owners. It certainly means trouble for the plan to refinance Freddie and Fanny and for the mortgage bailout plan.

And as the problem deepens, the effort to borrow money for the FMs will only get harder. My guess is that’s just a prelude to the same problems being encountered more broadly as the government tries to borrow the promised stimulus money. This is a very dangerous, and in my estimation, unnecessary road we’re traveling. The law of unintended consequences is setting up an ambush the likes of which we’ve never seen before.

~McQ


Jindal Turns Down Federal Funds Because Of Unconstitutional Mandate

That is how the headline should have been written.  

However, Think Progress chose to characterize it this way: “Jindal Rejects $90 Million In Recovery Funding That Would Have Benefited 25,000 Louisiana Residents“. Says Think Progress:

Today, however, Louisiana Governor Bobby Jindal announced his intention to oppose changing state law to allow his Lousiana citizens to qualify for the second two unemployment provisions.

So why did Louisiana Governor Bobby Jindal do what he did?  Well here’s what his office says in a press release:

The Governor said the state will not use a portion of the stimulus package that requires the state to change its law to expand unemployment insurance (UI) coverage to qualify for up to $32.8 million of the federal stimulus funding because it ultimately would result in a tax increase on Louisiana businesses.

Sounds like a governor who feels he and his legislature should be deciding their law and not the federal government.

Isn’t that what he’s elected to do? Doesn’t that sound like a perfect 10th amendment defense? Someone point out to me where the Constitution specifies that the federal government can reach down and, without debate or legislative or executive input, force a change of state law as a requirement to receive the aid.

Think Progress says:

But it is not clear why participating in the expanded unemployment insurance program would result in tax increases for business. By Jindal’s own estimate, the recovery package would have funded his state’s unemployment expansion for three years, at which point the state could — if it chose to do so — phase out the program.

Here’s a better idea – pull the requirement at a federal level. Why isn’t that the Think Progress position instead?

TP quotes a real expert in this area to close out the post:

As New Orleans Mayor Ray Nagin suggested earlier today, perhaps Jindal’s presidential ambitions are “clouding” his judgement. “I think he’s been tapped as the up-and-coming Republican to petition a run for president the next time it goes around. So he has a certain vernacular, and a certain way he needs to talk right now,” Nagin said.

Leave it to Mr. “Chocolate City” to see it that way instead of understanding Jindal’s position is the right position for his state. You have to wonder how Nagin would feel if Jindal told him the state would only pay for levee repair if he changed the law in New Orleans and did something the state required, even if it wasn’t in the city’s best interest?

We’d hear him hollering “no way” clear to Atlanta.

~McQ


“What good is it if you kill one of his people, and he kills a thousand of yours?”

Osame bin Laden takes a verbal shellacking from one of the founders of al Qaeda who is none to pleased with bin Laden, Iraq and 9/11:

Sayyid Imam al-Sharif, who goes by the nom de guerre Dr Fadl, helped bin Laden create al-Qaeda and then led an Islamist insurgency in Egypt in the 1990s.
But in a book written from inside an Egyptian prison, he has launched a frontal attack on al-Qaeda’s ideology and the personal failings of bin Laden and particularly his Egyptian deputy, Ayman al-Zawahiri.

Twenty years ago, Dr Fadl became al-Qaeda’s intellectual figurehead with a crucial book setting out the rationale for global jihad against the West.

Today, however, he believes the murder of innocent people is both contrary to Islam and a strategic error. “Every drop of blood that was shed or is being shed in Afghanistan and Iraq is the responsibility of bin Laden and Zawahiri and their followers,” writes Dr Fadl.

The terrorist attacks on September 11 were both immoral and counterproductive, he writes. “Ramming America has become the shortest road to fame and leadership among the Arabs and Muslims. But what good is it if you destroy one of your enemy’s buildings, and he destroys one of your countries? What good is it if you kill one of his people, and he kills a thousand of yours?” asks Dr Fadl. “That, in short, is my evaluation of 9/11.”

Heh … welcome to reality Dr Fadl.

Oh, and an excellent if obvious evaluation.

~McQ