The stimulus package the U.S. Congress is completing would raise the government’s commitment to solving the financial crisis to $9.7trillion, enough to pay off more than 90 percent of the nation’s home mortgages.
The Federal Reserve, Treasury Department and Federal Deposit Insurance Corporation have lent or spent almost $3 trillion over the past two years and pledged up to $5.7 trillion more. The Senate is to vote this week on an economic-stimulus measure of at least $780 billion. It would need to be reconciled with an $819 billion plan the House approved last month.
Again, that’s “trillion” with a “T”. In order to grasp the magnitude of that much spending, understand that you can reasonably round the number to $10 Trillion and thereby assume an extra $300 Billion, which is about the amount of TARP funds already pushed out the front doors of Congress. It’s also about one third of the amount being debated in Congress right now. In other words, the stimulus funds are pennies compared to amount of money already spent and/or promised.
Here’s another way to look at it (my emphasis):
The $9.7 trillion in pledges would be enough to send a $1,430 check to every man, woman and child alive in the world. It’s 13 times what the U.S. has spent so far on wars in Iraq and Afghanistan, according to Congressional Budget Office data, and is almost enough to pay off every home mortgage loan in the U.S., calculated at $10.5 trillion by the Federal Reserve.
It’s a lot of money. So why is it that we’re only privy to the debate (if it can be called that) over a measly 10% of the spending?
“We’ve seen money go out the back door of this government unlike any time in the history of our country,” Senator Byron Dorgan, a North Dakota Democrat, said on the Senate floor Feb. 3. “Nobody knows what went out of the Federal Reserve Board, to whom and for what purpose. How much from the FDIC? How much from TARP? When? Why?”
The pledges, amounting to almost two-thirds of the value of everything produced in the U.S. last year, are intended to rescue the financial system after the credit markets seized up about 18 months ago. The promises are composed of about $1 trillion in stimulus packages, around $3 trillion in lending and spending and $5.7 trillion in agreements to provide aid.
Many of us were disappointed with the spending habits of “compassionate conservativism” and lamented how it merely approximated socialist government policies with a friendly face. Of course, the alternative to Bush was real-deal socialist spending and a weakening of our national security.
Now we’re getting the full-on brunt of a dour-visaged collectivist government, employing a magician’s sleight of hand, and it makes the compassionate conservatism look positively stingy in comparison. While we argue over $800 Billion, another $9 Trillion is quietly being shoveled out the backdoor with little to no accountability.
When Congress approved the TARP on Oct. 3, Fed Chairman Ben S. Bernanke and then Treasury Secretary Henry Paulson acknowledged the need for transparency and oversight. The Federal Reserve so far is refusing to disclose loan recipients or reveal the collateral they are taking in return.
There’s no doubt that the Bush administration greased the skids, but Obama is running a rocket sled of spending, and there does not appear to be any end in sight.
One has to wonder when Atlas will finally shrug.
I‘m not much of a fan of Saturday Night Live anymore. The overly partisan commentary was bad enough, but when Will Ferrell left, there wasn’t much reason to stick around anymore. Despite all that, however, I think Seth Meyers pretty much nailed it on the Michael Phelps pot smoking non-story:
In this podcast, Bruce, Michael, and Dale talk about the stimulus bill, and President Obama’s unforced errors.
The Direct link to the podcast can be found here.
The intro and outro music is Vena Cava by 50 Foot Wave, and is available for free download here.
As a reminder, if you are an iTunes user, don’t forget to subscribe to the QandO podcast, Observations, through iTunes. For those of you who don’t have iTunes, you can subscribe at Podcast Alley. And, of course, for you newsreader subscriber types, our podcast RSS Feed is here. For podcasts from 2005 to 2007, they can be accessed through the RSS Archive Feed.
Many progressives thought that Pres. Obama had abandoned them after the election, but I’ll bet they’re singing a different tune today:
President Barack Obama on Wednesday imposed a $500,000 cap on senior executive pay for the most distressed financial institutions receiving taxpayer bailout money and promised new steps to end a system of “executives being rewarded for failure.”
The limit would apply to top-paid executives at the most distressed financial institutions that are negotiating bailout agreements with the federal government.It also would apply to other banks that receive aid, but they could get around the limits by publicizing to shareholders plans to exceed the salary cap.
The “most distressed financial institutions” will not include those which have already received TARP funds, such as AIG and Citigroup. However, those firms are already subject to caps on executive pay under the statute authorizing the bailout last Fall. And because these companies have all come to the government “with hat in hand,” in Obama’s words, not too many people outside of Wall Street are upset. Yet, Obama does not seem content to stop with these “distressed” companies:
The administration also will propose long-term compensation restrictions even for companies that don’t receive government assistance, Obama said.
Those proposals include:
• Requiring top executives at financial institutions to hold stock for several years before they can cash out.
• Requiring nonbinding “say on pay” resolutions — that is, giving shareholders more say on executive compensation.
• A Treasury-sponsored conference on a long-term overhaul of executive compensation.
This is exactly the sort of creeping socialism that many of us were worried about with Obama’s election. Mind you, McCain would not have been much better, but this sort of heavy handed government interventionism would not have been proposed by his administration, much less tolerated by most Republicans in Congress.
Obama’s proposals are somewhat tolerable with respect to the bailed out companies since they are being funded with tax payer dollars. If these companies are going take the money, then they should have to abide by whatever rules are attached to the funding no matter how onerous. But trying to impose such draconian restrictions on companies that are not being bailed out is nothing more than a direct assault on freedom.
Even if you think that no executive should be paid more than $X more than the lowest paid employee of a firm, or are just angry at the seemingly wasteful and lavish life styles of Wall Street bankers, you still have to find this sort of proposed legislation abominable. Why? Because no matter what you think about executive compensation, the owners and operators of these companies think otherwise. It’s their decision to make about how their companies are run and how well their employees are paid. Unless, of course, you would just fine and dandy with some government bureaucrat deciding that you are overpaid for your position, and that no matter how hard you work you can never make more than $Y.
The only people who would ever agree to such slavery are those who have no ambition and little, if anything, to offer the world in terms of work product. They are not the people who invent the items, create the ideas, or provide the services that make our lives better over time. That is not to say that their efforts are not appreciated, nor that they shouldn’t be rewarded. But neither should we base the engine of wealth creation on their hopes and dreams of sinecure.
Beyond the egregious assault on freedom these proposals represent, there is also a huge question as to their efficacy, regardless of whether the firms are troubled or not (my emphasis):
Compensation experts in the private sector have warned that intrusions into the internal decisions of financial institutions could discourage participation in the rescue program and slow down the financial sector’s recovery. They also argue that it could set a precedent for government regulation that undermines performance-based pay.
“One of the big questions is whether it will make it more difficult to recruit and retain executives at these companies,” said Claudia Allen, chair of corporate governance at the Chicago-based law firm of Neal, Gerber & Eisenberg.
The $500,000 cap “is a very tight limit,” she said.
Timothy J. Bartl, vice president and general counsel for the Center On Executive Compensation, said the president’s actions are a unique situation given the government’s role bailing out troubled institutions.
“We do not view it as something that ought to be extended beyond this circumstance,” he said.
I don’t think there’s any legitimate doubt that these will be the effects. Indeed, here are some of the reactions to Obama’s proposals:
Goldman Sachs said yesterday it wants to repay $10 billion it got from Treasury under the TARP to signal the firm is healthy and to escape limitations that came with that infusion of money. “Our financial condition is sound and, subject to approval from regulators, we hope to repay TARP money as soon as practicable,” said Lucas van Praag, a spokesman for New York- based Goldman Sachs.
JPMorgan CEO Jamie Dimon said Feb. 3 that the firm didn’t need capital and didn’t ask for TARP funding. The lender accepted the $25 billion it received from the first capital injection at the request of the government and to help stabilize the banking system, he said.
Goldman has to get permission to repay the government? Does that make sense? Only if the reason the funds were distributed in the first place was to give the federal government control over the market place. I think that’s exactly what Bush (“I’ve abandoned free-market principles to save the free-market system”) and Paulsen had in mind with TARP, and I think Obama is prepared to carry the ball even further into socialist territory.
As far as retaining talented executives, why would any of them stay? If you were making $10 Million per year including your bonuses (not uncommon), why would you stay somewhere that’s forcing you take a 95% pay cut? Of course, many will say good riddance to bad rubbish, and perhaps their right. It’s not like a firm that goes crawling for a federal handout was performing all that well. Except that (a) it’s far from clear that bad management led to the current crisis (although, surely that had something to do with it), and (b) even if it were clear, not every executive or potential executive was responsible. If you are a rising star in your investment bank who has put in exhaustingly long hours to get ahead in hopes of a big payday in the future, why would you stick around where you know your options are limited? These are very smart, industrious and capable people. There are plenty of places where they can go and not be subject to such pay strictures, and that is where they will end up.
Moreover, a part of the proposed regulations practically eliminates the fabled “golden parachutes” for executives:
Obama said that massive severance packages for executives who leave failing firms are also going to be eliminated. “We’re taking the air out of golden parachutes,” he said.
This displays a fundamental misunderstanding of what golden parachutes are. Contrary to popular belief, they are not generous giveaways to failed executives, but instead incentives for failed executives to get out of the way and allow new management. Without these sorts of incentives, management becomes entrenched and complacent. If a proposed takeover threatens to take away the goodies they can vote themselves, then they will forego such proposals and keep cashing in. In order to align management’s interests with the shareholders, golden parachutes were introduced to incentivize firm managers to sacrifice their jobs when the best interests of the company warrant it. Since one of the major problems that everyone seems to have with Wall Street is the failure of effective management, one would think the new rules would make it easier to bring in new blood, not harder.
But none of that matters to Obama:
Mr. Obama said the cap strikes the right “balance” between fair compensation and proper stewardship of taxpayer funds. “This is America. We don’t disparage wealth. We don’t begrudge anybody for achieving success. And we believe that success should be rewarded. But what gets people upset –and rightfully so–are executives being rewarded for failure, especially when those rewards are subsidized by U. S. taxpayers.
“For top executives to award themselves these kinds of compensation packages in the midst of this economic crisis is not only in bad taste, it’s a bad strategy — and I will not tolerate it as President.”
Again, it’s hard to generate much sympathy for executives who’ve come begging to Washington. But at the same time, what point is there to heavy handed measures that don’t do anything more than satisfy some people’s jealousy and outrage? Shouldn’t these proposals be designed to put people back to work?
Given the vaunted status of tax cheats amongst the Democrats, you’re all shocked, I’m sure:
House Ways and Means Chairman Charles B. Rangel predicted, on C-SPAN’s Newsmakers program that aired Sunday, Feb. 1, 2009, that his multitude of ethics woes would soon disappear. “I think that next Tuesday you will see a break in this and as soon as the Ethics Committee organizes they ought to be able to dismiss this,” National Journal’s CongressDaily quoted the Rangel as saying.
If so, it’s hard to imagine that the Select Committee on Ethics will have devoted anything more than a cursory glance at the various issues raised. Consider just one aspect, for which documents are in the public record: Rangel’s financial disclosure forms. We took a look at his filings going all the way back to 1978, the first year members were required to disclose information on their personal finances, and found 28 instances in which he failed to report acquiring, owning or disposing of assets. Assets worth between $239,026 and $831,000 appear or disappear with no disclosure of when they were acquired, how long they were held, or when they were sold, as the operative House rules at the time required.
This is all according to Charlie, of course. Much like the Obama team clearing itself of any inappropriate behavior in the Blagojevich troubles, taking Charlie’s word here would not be advisable. However, he seems to know that something is coming, and considering that Speaker Pelosi made little to no effort to support the investigation, we shouldn’t be surprised if Rangel walks away from this with his Chairmanship still intact.
Most ethical Congress ever!
Despite the increasing amount of skepticism about Anthropogenic Global Warming (AGW) openly expressed by climate scientists, apparently nothing is going to dissuade the Obama administration from its alarmism on the topic:
California’s farms and vineyards could vanish by the end of the century, and its major cities could be in jeopardy, if Americans do not act to slow the advance of global warming, Secretary of Energy Steven Chu said Tuesday.
In his first interview since taking office last month, the Nobel-prize-winning physicist offered some of the starkest comments yet on how seriously President Obama’s cabinet views the threat of climate change, along with a detailed assessment of the administration’s plans to combat it.
Chu warned of water shortages plaguing the West and Upper Midwest and particularly dire consequences for California, his home state, the nation’s leading agricultural producer.
In a worst case, Chu said, up to 90% of the Sierra snowpack could disappear, all but eliminating a natural storage system for water vital to agriculture.
“I don’t think the American public has gripped in its gut what could happen,” he said. “We’re looking at a scenario where there’s no more agriculture in California.” And, he added, “I don’t actually see how they can keep their cities going” either.
What the Obama team has not gripped yet is that there is no scientific proof (much less a “consensus”) that humans have anything beyond a negligible effect on the climate. As McQ alerted us to yesterday, there is not even a scientific basis for the claims being made by Chu:
We [Keston C. Green and J. Scott Armstrong] have concluded that the forecasting process reported on by the Intergovernmental Panel on Climate Change (IPCC) lacks a scientific basis….
Since the publication of our paper, no one has provided evidence to refute our claim that there are no scientific forecasts to support global warming.
The lack of any scientific foundation isn’t about to stop political maneuvering, however:
He stressed the threat of climate change in his Senate confirmation hearings and in a video clip posted on Obama’s transition website, but not as bluntly, nor in as dire terms, as he did Tuesday.
In the course of a half-hour interview, Chu made clear that he sees public education as a key part of the administration’s strategy to fight global warming — along with billions of dollars for alternative energy research and infrastructure, a national standard for electricity from renewable sources and cap-and-trade legislation to limit greenhouse gas emissions.
He said the threat of warming is keeping policymakers focused on alternatives to fossil fuel, even though gasoline prices have fallen over the last six months from historic highs. But he said public awareness needs to catch up. He compared the situation to a family buying an old house and being told by an inspector that it must pay a hefty sum to rewire it or risk an electrical fire that could burn everything down.
“I’m hoping that the American people will wake up,” Chu said, and pay the cost of rewiring.
Chu, who is not a climate scientist, seems to working from the same playbook as our (former) car mechanic. He too was hoping we’d pay him the cost of some expensive repairs that could potentially cause serious problems if left untended. And just like with the AGW scare, a second opinion revealed that there wasn’t anything actually broken. Unfortunately, while we opted not to pay for the unnecessary repairs to our car, when it comes to the federal government we don’t get that choice. Chu’s “hoping” for us to pay for the Obama administration’s alarmism is pretty much the same thing as telling us the bill is in the mail.
Note also that while the L.A. Times story managed to find studies supporting Chu’s theories, and to quote parties in favor of his prescriptions, no mention was made of skeptics until the last paragraph, and that was reserved for a politician:
Global warming skeptics were not swayed. “I am hopeful Secretary Chu will take note of the real-world data, new studies and the growing chorus of international scientists that question his climate claims,” Sen. James Inhofe (R-Okla.), the top Republican on the Environment and Public Works Committee, said in a statement. “Computer model predictions of the year 2100 are simply not evidence of a looming climate catastrophe.”
It’s a shame that the best the LAT could do for a view contrary to that of Chu and AGW scientists was to get a quote from a statement put out to the public by Sen. Inhofe. Maybe if they had had some basic research skills, they could have located and quoted from the publicly available Green & Armstrong Report. Or perhaps, they might have employed their vaunted J-School talents such as picking up a phone and calling a source.
The funny thing is, I distinctly recall being told over and over again how the Bush administration had politicized science, much to the detriment of us all. Why even the LAT reported such grave concerns. Whatever happened to that concern anyway?
Plus ça (hope and) change, plus c’est la même chose.
According to this report, Wells Fargo is prepared to put some money back into the federal coffers:
Good news out of the failing financial sector, finally. Wells Fargo Bank reports it will pay back the federal government $371.5 million in its first quarterly bailout installment.
Wells Fargo is believed to be the first major bank receiving TARP (Troubled Assets Relief Program) to do so.
In an internal memo obtained by The Remmers Report, Wells Fargo said the quarterly dividend of $14,861.11 per share is payable Feb. 15. The feds purchased 25,000 shares of Fixed Rate Cumulative Perpetual Preferred Stock last September and is the only holder of record of the Series D preferred stock.
“Since credit began contracting 18 months ago, Wells Fargo has made almost half a trillion dollars in new loan commitments and mortgage originations,” said Chief Financial Officer Howard Atkins. “Last quarter alone, we made $22 billion in loan commitments and $50 billion in mortgage originations. That’s more than $70 billion or almost three times the amount of the U.S. Treasury’s investment in Wells Fargo. We believe we’re leading our industry in lending to creditworthy customers during this difficult economy.”
It is ironic that initially Wells Fargo signalled (sic) Treasury it did not want TARP funds and when it did, negotiated the takeover of financial giant competitor Wachovia.
The payment would represent only about 1.5% of the TARP funds given to Wells Fargo, but it’s a start I guess.
If there is one sure way to roll back any gains the US has made in the War on Terror over the past eight years, it would be to shift the focus from military and intelligence gathering, to a crime fighting stance. That is exactly the position the Obama DOJ appears to be taking:
The Justice Department, probably more than any other agency here, is bracing for a broad doctrinal shift in policies from those of the Bush administration, department lawyers and Obama administration officials say.
Eric H. Holder Jr., whom the Senate is expected to confirm on Monday as the nation’s 82nd attorney general, plans to take the oath of office that evening to demonstrate a quick start, which will include overseeing the creation of a new detention policy for terrorism suspects.
Mr. Holder will have to contend with that and other issues rapidly. Lawyers inside and outside the department say he will face crushing time constraints. Chief among them is a pledge by President Obama to close the detention facility at Guantánamo Bay, Cuba, within a year. Mr. Holder and a department task force must find a solution to the question of what to do with the remaining prisoners there and any apprehended in the future.
“This will be a sea change of what went on before,” said an Obama administration lawyer, noting that the principal authority over detention policies will move from the Defense Department under the Bush administration to the Justice Department.
What to do with the GITMO prisoners is a piddling concern compared to how the administration plans to fight terrorism. Released prisoners can potentially be tracked. The hands of national security however, once tied, are difficult to free. Fighting terrorism as if it were an issue of law enforcement will potentially, and dangerously, bind our hands in that endeavor:
The department has to decide by next month whether it will reverse course from the Bush administration, which had repeatedly invoked the so-called state secrets doctrine to shut down legal challenges to several lawsuits dealing with national security. Officials also face a February deadline on whether to extend habeas corpus rights to detainees at Bagram Air Base in Afghanistan.
Above are two prime examples of how the policy switch advantages the enemy at the expense of the citizens. In the first, the folly of fighting terrorism through the courts could not be clearer. It is nearly impossible to build a public case based on state secrets. In the law enforcement model, the prosecution is not allowed to have secrets, and defendants are entitled to see the evidence against them as well as to confront all witnesses. That is because our nation is founded on the principle that the people, from whom the government derives its power, should enjoy the benefit of presumptions and the government should be required to make its case. When trying to confront our nation’s enemies, however, we do not want to allow them the same benefit. By engaging them in courtroom battles rather than in military/intelligence ones, we do just that.
Specifically, allowing state secrets to become part of a legal case allows the enemy to see what cards we’re holding. It is a surefire way to devalue our national intelligence. Indeed, any time sensitive information is available to more than a few people it eventually becomes public, and lawyers sworn to secrecy are no different (see e.g. Lynne Stewart). Yet, despite these dangers, the Obama DOJ may be considering backing off the positions staked out by the previous administration:
The case dealing with the state secrets doctrine, which allows the government to rebuff lawsuits by invoking national security concerns, involves al-Haramain Islamic Foundation. A federal trial judge in San Francisco ruled that the government could not invoke the doctrine to block a lawsuit by al-Haramain, which has asserted that the government illegally listened in on its conversations.
The Bush administration used the doctrine to block more than two dozen lawsuits. In timing that was a bit of a surprise, the Justice Department lawyers who have handled the lawsuit filed a motion with the court an hour before Inauguration Day that held to the same position.
Some Obama administration figures regarded the filing before midnight on Jan. 19 as a rear-guard action to make it more difficult to reverse course.
The Justice Department has to file a new brief by Feb. 13. Jon B. Eisenberg, who represents al-Haramain, said the schedule meant that “Holder and company have to decide pretty quickly if they want to keep opposing this case with the state secrets doctrine.”
If the DOJ opts to forego the state secrets doctrine as a defense, then it will be left with two undesirable choices: (1) make national intelligence discoverable in a court of law, or (2) drop the case altogether and set the defendant free. Neither choice is satisfactory, but both are the inevitable outcome of pursuing terrorism under the rubric of law enforcement.
Similarly, extending habeas corpus rights to prisoners detained on the battlefield is an exercise in futility. Of course, that ship sailed with the ruling in Boumediene v. Bush. I’m not sure what argument the government could make that any prisoners under the control of the U.S., regardless of where they are being held, are not entitled to some sort of habeas proceeding. And since the very procedures deemed constitutionally valid by the Supreme Court in Hamdi were struck down as inadequate in Boumediene, I don’t know what options are actually left to the Obama administration other than the unsavory prospect of field executions.
Again, these are the inevitable results of waging war as if we were fighting crime. The two arenas are decidedly distinct, and the tactics and strategies of one do not translate well into the other. If we insist on treating terrorists as criminals, cloaked with the protections of our Constitution and privy to the secrets that ensure our security, then we invert the promise of a national defense. The end result is to allow the enemy to be in control of our security interests rather than the other way around.
Heroes are the uncommon breed, devoid of the frailties that steer normal humans away from potentially deadly situations. Possessed of the deepest sense of devotion to family, friends and comrades, these are the people who mortgage their own lives for the future of others. Heroes are the ones who make our lives better through their own vigilance, fortitude and strength of will. They are the guardian angels of our very hopes and dreams. This is the story of one the greatest among them [HT: The Whistler].
Ed. note: This post was originally saved on the old template. I reposted it here simply to avoid readers having to click over to the prior siteIf Obama is the messiah, does that make Bill Ayers Lazarus? By that I mean, is there any doubt Ayers would be wasting away in obscurity without Barack Obama? Instead, the unrepentant terrorist turned ill-qualified college professor has regained whatever notoriety he had lost:
Ayers, co-founder of the ’60s Weather Underground radical anti-war group, drew an angry and vocal group of protesters who condemned his appearance at St. Mary’s Soda Center, where he drew cheers and boos from the crowd of about 500.
The controversial author and education professor at the University of Illinois was repeatedly characterized as an “unrepentant terrorist” by GOP vice presidential candidate Alaska Gov. Sarah Palin during the presidential campaign.
“I was going to propose that Sarah Palin and I have a talk show called ‘Pallin’ Around,’ ” Ayers said in his opening comments, which got laughs. Then, looking around at the standing-room-only crowd, he added: “Had it not been for the recent presidential campaign, there would be 22 of you here.”
That may actually be a little high. Even in Berkeley I doubt he would have generated more interest beyond a few professors who remembered him from the glory days.
Ayers is in California on a tour to promote a new book on race relations that he wrote with his wife, Bernardine Dohrn, a fellow former leader in the underground movement who is now a Chicago lawyer and law professor. Ayers said he plans to return to the Bay Area with Dohrn later this month to speak before the Middle East Children’s Alliance in Berkeley.
His appearance at St. Mary’s “Against the Grain” lecture series to explore the topic of “Trudging Toward Freedom” drew sharp criticism from conservative and religious groups.
According to the report, some of those angered by Ayers’ appearance adopted the typical lefty tactic of disrupting his speech. It’s stupid when lefties do it and stupid here as well, regardless of how odious the speaker is.
Ayers delivered a wide-ranging address on social justice and education, but his effort outraged some 150 protesters – most marched outside, and others sat in the audience and occasionally disrupted his speech with yelling before they were escorted away.
“I don’t know what they’re protesting actually, but if the last few months are any indication, they’re protesting a cartoon character that shares my name and likeness, but it’s not me,” he told The Chronicle before his speech, adding that the McCain-Palin campaign had attempted to turn him into a “monster.”
Historical revisionism at its best. Whatever. Ayers will always be able to fool the useful idiots who simply want to believe the worst about America. Generally these are the ones who believe that capitalism is the literal incarnation of evil and hate America for being the nation most identified with it. To these people, Ayers is a hero for attacking the heart (as they see it) of the hated enemy.
To those who live in reality, however, Ayers is nothing more than a petty man of little worth and even less integrity. He is the egotistical embodiment of the Boomers’ worst aspects, and a failed terrorist to boot. He may enjoy some renewed interest amongst the useful idiots, but he’ll never have any political worth other than being a liability.
Certainly Bill Ayers should worship the ground that Obama treads upon. Absent his Presidency, Ayers would have no public life whatsoever.