Fed Chairman Ben Bernanke says bank nationalization is unlikely:
Stress tests of big US banks that start this week are unlikely to lead to any of them being seized by regulators and nationalised outright, Federal Reserve chairman Ben Bernanke told Congress on Tuesday.
His comments provided the clearest signal yet that US authorities hope to support major banks as going concerns in the private markets, taking equity stakes as necessary to shore up their capital in what would amount to partial nationalisations.
Stocks rose in response, with the S&P 500 index rising 4 per cent from the previous session’s 12-year lows. Both Citigroup and Bank of America rose about 21 per cent to lead the market higher.
Asked whether the stress tests will lead regulators to move in to take outright control of some banks under powers used to deal with failing institutions, the Federal Reserve chairman said: “No, I don’t think so.”
He made it clear that he does not believe that outright nationalisation makes sense today.
“I do not see any reason to destroy the franchise value or to create the huge legal uncertainties of trying to formally nationalise a bank when it just is not necessary.”
He said the authorities had other ways to “exert adequate control to make sure they are doing what is necessary to become healthy and viable”.
Obama has been trying to play down nationalization for the last week as well, though some would argue that a partial nationalization has already taken place.
You have to wonder if nationalization would cause a run on banks. Wall Street was clearly worried about the prospect. Stocks tanked last week even as Obama was denying plans to nationalize, but they jumped when Bernanke said nationalization was unlikely.
Despite Obama basically telling us last night that the Era of Big Government is back and on steroids, Wall Street was has been skeptical of his plans. For the first time in months, I’m proud of Wall Street.
Sen. Harry “the SURGE has failed” Reid is again in the analysis business:
Senate Majority Leader Harry Reid (D-Nev.) said on Monday that the banking industry is “very close” to being stabilized and the nation’s economy is starting to rebound.
“We tend to talk about the negative. … Things are beginning to turn and I think the American people are going to feel that very soon,” Reid said during an appearance on MSNBC’s “Morning Joe” show.
Cancel the “stimulus” and cut the deficit by 789 billion.
Fiscal responsibility somewhat restored (well, except for Social Security, Medicare and Medicaid).
Chrysler said the only reason it was back asking for more money so soon was that the car market was worse than it had expected two months ago.
This cavalier approach to the public purse raises a very big question. If Chrysler is really on track for a turnaround and all it needs is some financing to get over a bad patch in sales and debt markets, why doesn’t Cerberus Capital Management, which owns 80 percent of the company, put up the money itself? Why should taxpayers have to take the risk? That’s what private equity funds like Cerberus are supposed to do.
Cerberus and Daimler, which retained a stake in Chrysler, have promised to convert $2 billion in loans to Chrysler into equity, which should help reduce its debt. But Cerberus said giving fresh money would violate its fiduciary duty to investors, breaking company rules limiting how much it can commit to any given investment.
We suspect these rules would be more pliant if Cerberus deemed Chrysler to be a good deal.
It seems the secretive private-equity fund is willing to gamble on Chrysler’s survival with the taxpayer’s dime, but not its own.
The real question is, if it is violative of Cerberus management’s fiduciary duty to bail out its own company, why is it fiscally responsible for the federal government to do so?
And what does it say when the leader of liberal opinion has more qualms about a bailout than the federal government? Nothing good I would think.
Taxes, as the saying goes, in that both are certain to come to us all. The corollary is that once government spending outpaces tax receipts by a significant enough amount, then taxes will inevitably rise. Or, at least, that should be the corollary.
The first of several stimulus packages has just passed but it is just the beginning of our efforts to address our immediate and long-term economic problems.
After 2010, the federal operating budget will face trillion-dollar deficits as far as the eye can see. They have to be addressed for the long-term prosperity of our country and our future credit-worthiness in the world.
Eventually every American has to dig in and pay more taxes to help our country and our fellow citizens. We must put in place the laws and mechanisms to steadily increase taxes after 2010. We have to owe up to our massive public and private financial messes. Cutting federal earmarks and waste will not eliminate even half the annual deficits. The federal budget gap will require increasing taxes by over $500 billion by 2011. Fiscally irresponsible and spoiled children hate to hear this news but it’s our only choice for our collective long-term prosperity.
It is true that people don’t want to hear this, and I don’t think that is limited to “fiscally irresponsible and spoiled children.” Indeed, the inevitable raising of taxes was one of the arguments against the stimulus package, so I’m not sure to whom Pascal is referring.
A number of prominent publicly-minded millionaires and billionaires including Warren Buffet have recommended higher income taxes on themselves and their friends for several years. Certainly Mr. Buffet has been right more than most politicians and it’s time to effectuate his recommendations. Their altruistic economic view may simply be a rational response for their long-term preservation and that of the nation as a whole.
Actually, their view is not altruistic at all. The very rich, with the financial means to hire the very best in tax advice, are quite skilled at arranging their affairs so as to minimize their tax burden. When Warren Buffet clamors for raising taxes on the rich, you can be sure that he does not intend to pay as much as he possibly can to the federal government. However, those in the middle income brackets surely will. Buffet and brethren simply hope that those taxpayers will somehow be mollified by the fantasy that “the rich are paying their share too.”
On to the plan:
The Bush tax cuts should expire by their own terms by 2010 and marginal income taxes will return to the rate of 39% for incomes over $250,000. Additionally, and instead of capping executive pay, we should create a new marginal tax rate of 49% for earning over $1 million.
That is actually a somewhat more reasonable plan than some that have be floated, but still a pipe dream in terms of raising tax revenues to cover the trillions in spending contemplated (and as yet revealed) over the next four years. Even if the rich were to pay every possible penny of their income above $1 Million in taxes at that rate, how long to do you suppose they would do it for? If you had a choice of living quite comfortably and making around a million dollars, knowing that you’d keep something close to 70% – 75% of the money, would you really continue working hard enough to earn more than that if you knew you would only receive 50 cents on the dollar?
If there are any short-term tax cuts, they should be combined with long-term tax increases. The 2009 FICA payroll tax for social security is a 6.2% tax rate on every dollar earned up to a gross annual income of $106,800. For more than a decade, everyone has agreed that to save social security (without increasing the retirement age, the tax rate, or lowering the average monthly benefits of just under $1,000 per person) the best solution is to raise the taxable income limit so the wealthy contribute more to the entire system. We could provide both a short-term economic stimulus to the majority of Americans and save social security for the long term.
Let’s lower the FICA social security tax rate for rest of 2009 and all of 2010 to 5.5% but raise the income limit to $250,000. In 2011, let’s raise it to 5.75% and set the income limit to $500,000. By 2012, the rate would be 6% and the taxable income unlimited. This would simply parallel the 1.45% FICA tax for Medicare and Medicaid imposed on all earned income. Its rate will probably have to be raised to 2% after 2010 to pay for existing programs and any expansions of benefits.
Again, not an entirely unreasonable plan considering the alternatives. But what’s never mentioned when someone suggests raising the income level for FICA is that, while more tax revenue would be raised, federal liabilities would also be increased. That’s because the government is simply taking more money now and promising to pay more benefits upon retirement. That does nothing to reduce the burden of current spending, which was supposed to be the point of the tax increases.
As near as I can tell, this part of the plan would have the effect of hastening the looming entitlements crisis in exchange for perhaps pushing the current one off down the road a bit. The end result looks more like a perfect budgetary storm as the bills we’re racking up today and the entitlements we’ve promised in the future, begin to overlap.
Across the political spectrum, most people agree that our various transportation, water/sewer, and electrical grid infrastructures have been long neglected. Infrastructure spending is the best use of government stimulus money because more jobs are created both quickly and over the long term. Just to modernize our existing infrastructures systems will cost at least 2 trillion dollars over the next 10 years. Furthermore, we must also invest in new energy technologies, mass transit and high speed rail lines – all of which will cost billions more. We can’t put off such spending and we have to be honest about paying for them over the foreseeable future without resorting to further borrowing.
This is a part of the supposedly Keynesian argument that government spending provides a greater multiplier than private spending. Of course, as Bruce has pointed out before, if that were the case then why have private spending at all?
Furthermore, I really don’t understand how government spending on infrastructure and energy technologies creates jobs.
In the infrastructure realm, once a government project is done, then the job disappears. If the job is done quickly, efficiently and completed on time then it’s not government work the job just disappears that much more quickly. And after that? How does a brand new bridge create a job after it’s built? Even worse, what happens if the project turns out like the Big Dig in Boston (which seems to be much more likely)? Sure people will have jobs for longer, but the supposed benefit of the structure will shoved further into the future and the taxpayers will be on the hook for a lot more than they signed on for. How does that sort of project stimulate the economy?
With respect to new energy technologies, I’m all for it. But with the government choosing which technologies to fund, how do we know we’re getting the best there is to offer? That’s not typically the case where government picks winners and losers. And just because something is “green” does not mean that it is efficient, beneficial to the economy, and/or capable of saving anyone money in the short (or long) term. In fact, it probably means the opposite of one or all of those things. Instead, why doesn’t government get out of the way and allow nuclear power plants to be built, thus saving taxpayers billions of research dollars. That’s technology that we already have, and it’s green. Otherwise, these sorts of proposals are little more than a massive wealth transfer from one group of people to the politically favored few. There is nothing stimulative about that.
Across Europe, the average tax per gallon of gasoline ranges from $4 to $6. The U.S. federal gasoline tax is a paltry 18.3 cents per gallon with each penny raising $850 million to $1 billion per year depending upon how much Americans drive. Only when gasoline hit $4 a gallon during last summer did we start taking mass transit, buying hybrids, shunning gas guzzlers, demanding more energy-efficient cars and buildings, and seriously considering alternative solar, wind and nuclear power, and our own oil and gas reserves. The best and only way to ensure long-term energy independence is to have a serious financial incentive that hits everyone.
OK, if we accept the premise that less fuel consumption is better for Americans, then Pascal has a good point here. Of course, I’m not sure why gas station owners or truck salesman are any less deserving of being stimulated than other Americans, but that seems to be a staple of these plans. Moreover, Pascal’s plan doesn’t look all that much different than how transportation projects are already funded at the federal level.
While we should not enact excessive gasoline taxes, we can at least impose an additional and modest oil import fee on foreign barrels of oil.
More importantly, we should increase the federal gasoline tax from 18.3 to 75 cents per gallon, by monthly increments of about 5 cents per gallon over 12 months. The overall U.S. gasoline price per gallon by the end of 2010 should still be around $3.00 but the U.S. would have $70 billion a year to pay for our many needed transportation and energy infrastructure projects. This would be the responsible, mature, and intelligent solution for raising the necessary funds for these projects.
Presumably, Pascal means that we would charge this import fee to the American refiners who distribute gasoline in the country. And Pascal does suggest that he thinks this would be a tax on everyone, which in addition to the increased gas tax it would be. Strangely, this is the sort of protectionist measure one sees where domestic industries are beset by low-cost foreign competitors, yet domestic production is practically forbidden. Instead, Pascal wants to drive demand for gasoline down, so he advocates raising the costs of gasoline indirectly. Would that have the effect of increasing demand for more domestic oil? Perhaps. But it would certainly raise costs for all Americans, whether we all buy hybrids (which are much more expensive) or not, and again I don’t see how raising prices is stimulative.
Overall Mr. Pascal’s tax proposal is not altogether outlandish, and certain elements of it are almost certain to come to pass. What’s so horrible is that these sorts of plans are only necessary (and inevitable) because the government has been spending far more than it takes in for quite some time now. Even if you think that the Bush tax cuts “cost” the federal government money, you have to admit that the one thing that every administration has had in common, whether Republican or Democrat, is that federal spending never decreases. Regardless of whether tax-and-spend is better/worse than cut-taxes-and-spend, the situation we find ourselves in today is precisely because spending never seems to drop, not because tax rates go up and down.
To be sure, there is nothing evil per se about deficit spending. Whether it’s bad or not depends on where the money is going, and how the costs are intended to be recouped. But at some point the piper must be paid, and when that time comes one would hope that all the spending had created some wealth with which to pay him.Obviously taking money from Peter and giving it to Paul (minus a transfer fee, of course) won’t accomplish that goal. And neither does building a new bridge from Paul’s house to Peter’s. Indeed, unlike people, the government can’t work harder in an effort to “do something” and create wealth, because that’s not what governments do. The only things that government is any good at is making rules and enforcing (some of) them. Although those two actions can protect wealth and the opportunities to create wealth, neither action actually creates wealth.
Thus, we’re left with the unshakable propositions that (1) government spending necessitates taxes, (2) deficit spending necessitates tax increases, (3) tax increases necessitate higher prices, (4) higher prices produce less consumer spending, (5) less consumer spending results in less business revenues, (6) less business revenues means fewer jobs and less wages, (7) fewer jobs, less wages and less business revenues means less tax dollars, and (8) fewer jobs, less wages, less business revenues and less tax dollars means … more government spending is necessary?
If you believe that last one, then I have a bridge I’d like to build you. It will be ready for use immediately upon the check clearing.
We touched on the fact that there are some tax protests popping up around the country in last night’s podcast.
William Jacobson says:
The beginning of a protest movement against Barack Obama’s redistributive policies is underway. Though still small, every movement starts somewhere. While called the “Tea Party” after the Boston Tea Party, this movement is similar to movements throughout history where the producers of society refuse to have their property and income confiscated.
We all agreed that at this particular moment the movement is mostly a creature of the right-wing. That’s not to say it will stay that way, but certainly it is partly outrage over the so-called stimulus bill and partly an opportunity to engage in a little payback for the last 8 years of the left’s shenanigans.
Will it gain supporters? Will it gain power? I frankly don’t know at this point. But as Debra Saunders points out, if you think it is bad here, in terms of the financial crisis, you ought to be in Europe.
And what is going on in Europe? Well if the UK is any indication, things may be heating up rather quickly there:
Police are preparing for a “summer of rage” as victims of the economic downturn take to the streets to demonstrate against financial institutions, the Guardian has learned.
Britain’s most senior police officer with responsibility for public order raised the spectre of a return of the riots of the 1980s, with people who have lost their jobs, homes or savings becoming “footsoldiers” in a wave of potentially violent mass protests.
Interestingly the Brits would be late-comers to the European protest movement:
In recent weeks Greek farmers have blocked roads over falling agricultural prices, a million workers in France joined demonstrations to demand greater protection for jobs and wages and Icelandic demonstrators have clashed with police in Reykjavik.
So, will the burgeoning tax-protest movement here take hold and grow?
If Europe is any indication (you know, the Europe that was supposed to be so much better off than we are according to some?), yes, it might. In fact, if, as promised, the situation here gets worse and worse, I think we can pretty much count on it.
Will it have an effect? Well that’s an excellent question.
I’ll ask one in return.
Have you seen the deficit?
Someone is going to have to pay for all of that.
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.
I’d like to take a moment to welcome Pennsylvania Gov. Ed Rendell to the Keynesian Skeptics Society:
Pennsylvania Gov. Ed Rendell (D) backed the $787 billion stimulus but said Saturday that he isn’t sure whether it will actually fix the economy.
Rendell, at the National Governors Association meeting in Washington, said Saturday that all governors are committed to making sure that the stimulus is used for measures that can boost their states out of the recession. But he said that most governors will be watching to see what kind of effect it has on the economy.
Rendell said he’s optimistic but that “80 percent are waiting to see if this works.”
“It’s a good first step, but the challenges in infrastructure are enormous and we hope that the administration and the Congress will work with us to meet those challenges,” he said. “We’ve just scratched the surface of the infrastructure needs in this economy in the stimulus bill.”
Asked whether another stimulus will be needed, Rendell said, “I think we should see how this works first.”
It’s not a good first step, it’s really a step back. Keynesianism has been tried and failed.
The federal government has already committed $9.7 trillion to solving this crisis and more money spending is on the table. Where does it the end?
“The principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale.” – Thomas Jefferson
Here is a look at the Dow Jones since January 20th, when Barack Obama assumed the presidency. I’m not saying this is all his fault, but it’s clear that his mortgage bailout plan and the “stimulus” package have been met with skepticism on Wall Street.
In fact, this is the worst January on record for a president in a century:
[F]rom Nov. 4, 2008 through Feb. 12, 2009, the DJI overall fell 18% — a larger drop than during the Sept-Oct plunge. In January, when the Obama plan, promising far greater deficits than the two much smaller “emergency stimulus” plans signed by Pres. George W. Bush in 2008, was unveiled, the market tanked – the worst January performance in 113 years.
More pointedly, key political victories for the Team Obama spending plan have not been viewed as buying opportunities on Wall Street. A string of negative market reactions began with the December 18 announcement of a stimulus bill of $700 billion (Dow down 2.5%), continued with the January 7 announcement that the actual plan would be “on the high side” (-2.7%) and continued with last week’s 61-36 Senate vote supporting the Administration’s fiscal plan. The White House victory and the new bank bail-out plan announced the following day by Treasury Secretary Geithner were met with a 5% wipe-out in the DJI, and a decline in Treasury bond yields, indicating a “flight to quality.”
Markets don’t react well to a president saying things like, “Potentially we’ve got trillion-dollar deficits for years to come.” Investors realize that deficits matter:
If historic U.S. budget deficits are any indication, the economy is already “stimulated.” The predicted 2009 federal deficit stood at 8.3% of GDP before Obama’s package sent it to about 12%. This is a stunning level of debt, double the previous post WWII high when Reagan’s 1983 budget deficit amounted to 6% of GDP.
We do, however, know the accounting trends: our government faces massive new spending increases as Baby Boomers retire and their Social Security and Medicare bills come due. Market investors are wary of new spending, guaranteeing either future tax increases or inflation, as a run-up to the demographically guaranteed spending spiral. The quest for “shovel-ready” projects makes one think, Where’s Senator Ted Stevens when we need him? In any event, this fiscal bridge to nowhere is not spurring markets.
Government deficits are nonetheless being sold as doctor’s orders, an elixir that – while it looks ugly and tastes bitter – will propel us back to economic health. Yet the best forecast currently on the table is the one made by investors risking their own money. They are shorting the “stimulus.”
As the CBO has already predicted and common sense would indicate, whenever you take a dollar out of the economy through spending or borrowing, it is one less dollar that can be invested. Economists call it “crowding out” because it lessen the money available to the private sector for investing and borrowing, which can result in higher interest rates if the deficit is large enough or inflation if the Federal Reserve is printing money to offset economic problems, which they are today, as Steven Entin noted in a presentation on Keynesian economics at the Cato Institute.
Sounds like the 70′s all over again.
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.
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.
David Brooks does his usual NYT spin job:
Our moral and economic system is based on individual responsibility. It’s based on the idea that people have to live with the consequences of their decisions. This makes them more careful deciders. This means that society tends toward justice — people get what they deserve as much as possible
That’s the rumor. The reality, as we’ll see, doesn’t conform with the rumor. The why is in a single word: ‘justice’. What Brooks talks about here are the supposed foundations of our civilization and way of life. Individual responsibility and justice. Individuals are responsible for their condition (through their choices) and expected to live with them. Their condition isn’t anyone else’s fault or problem barring force or fraud. A just society understands that and, as is necessary, holds them responsible for their choices. Lessons are only learned when one has to live with the consequences of one’s choices. But what a just society doesn’t do is penalize those which have made the right or proper choices in their lives. It doesn’t require such people to prop up or rescue those who have made poor choices. Such a society would see that as “unjust” and work against the concept of individual choice and individual responsibility.
A just society is where everyone is afforded the same opportunities and held to the same standards of behavior and the law. Success, however, is left up to individual effort and ability. In a just society you are free to do, within reason, whatever you desire to do, but you’re expected to live with the consequences.
With that preface, let’s look at Brooks’ next couple of paragraphs:
Over the last few months, we’ve made a hash of all that. The Bush and Obama administrations have compensated foolishness and irresponsibility. The financial bailouts reward bankers who took insane risks. The auto bailouts subsidize companies and unions that made self-indulgent decisions a few decades ago that drove their industry into the ground.
The stimulus package handed tens of billions of dollars to states that spent profligately during the prosperity years. The Obama housing plan will force people who bought sensible homes to subsidize the mortgages of people who bought houses they could not afford. It will almost certainly force people who were honest on their loan forms to subsidize people who were dishonest on theirs.
While Brooks properly chastises the banks, automakers and state governments, he leaves out one of the most irresponsible of entities which played as large a role as any other contributor to this current financial debacle – the federal government. If ever there was an enabler for all of this, it is Washington DC. Much of what happened can be laid directly at the feet of the Fed. The financial implosion didn’t start on Wall Street but with the insolvency of the quasi-governmental entities Freddie Mac and Fannie Mae. Yet they’ve not been in the spotlight of Congressional hearings or had the millions paid their top execs complained about and capped. Where’s the justice in that?
So to get back on topic after that brief aside to assail writers like Brooks for excusing the Federal government from their condemnations (and you’ll see why he did so in a moment), the reason that Brooks seems so angry in this part of his op-ed is he is giving lip service to some foundational American ideals and pretending to be outraged that they’re being violated just before he pulls the rug out from under them. It is obvious to Brooks and anyone with the IQ of a melon that those who are running the show in DC have absolutely no desire for a “just” society based on individual responsibility anymore but he wants to break it to you gently. That’s the old America. The new America is one based in “fairness” and collective responsibility. At this point, Brooks wants you believing he’s an “old America” kind of guy.
So he relates the fact that many in America are still mired in their old fashioned belief in justice and are, consequently, a little ticked about this payoff to the irresponsible among us. People are complaining about it. And after a reasonably good, but disingenuous start, it is here where Brooks pulls the mask off completely:
These injustices are stoking anger across the country, lustily expressed by Rick Santelli on CNBC Thursday morning. “The government is promoting bad behavior!” Santelli cried as Chicago traders cheered him on. “The president … should put up a Web site … to have people vote … to see if they want to subsidize losers’ mortgages!”
Well, in some cases we probably do. That’s because government isn’t fundamentally in the Last Judgment business, making sure everybody serves penance for their sins. In times like these, government is fundamentally in the business of stabilizing the economic system as a whole.
Irresponsibility is not really penalized in New America. New America is driven by the belief that it is our collective responsiblity to those in need, regardless of how they got there or what it entails, to satisfy that need. So when the life vest of your money (via taxes and debt you will be taxed to repay) is offered to someone drowning as a result of their own irresponsible choices, you are expected to accept that as your duty and not complain about it.
You see, per Brooks, government isn’t in the justice business, it’s in the “economic stabilization” business.
Really? Since when?
And since when did the economic stabilization business involve rewarding incompetence and irresponsibility while punishing their opposites? Isn’t such a policy of rewarding incompetence and irresponsibility a huge moral hazard, not to mention self-defeating? Why would someone change their behavior if there is no real punishment for their present behavior? Isn’t government picking “winners” and “losers” even while Brooks claims government isn’t in the “Last Judgment” business?
In fact it is and has been in the “Last Judgment” business for a while. And in the case here, the judgment made by government is that it is only fair to pick up those who’ve fallen short at the expense of those who haven’t. It has made the judgment that their need is far greater than the need of those who have played by the rules and done their part – after all those who have done the right thing are relatively better off than those who haven’t aren’t they? If, as Obama claimed at the Greek Temple, “we are our brother’s keepers” (well except in a real, Obama-family sense), then the “last judgment” was made then and is now merely being implemented.
We are, apparently, no longer a nation which seeks justice and equal opportunity. That’s Old America. New America seeks fairness as its highest goal. And in the New America, that means an equality of outcome where new “rights” are invented which entitle us to our desires, even at the expense of others.
Brooks goes on to apologize and attempts to minimize the horrific damage being done to America as we used to know it. He serves his purpose and spins the utter destruction of Old America and the emergence of New America as something which just had to be done by our new leader and his benevolent band of brothers, all of whom have your best interest at heart.
It’s enough to make you sick.