January 2010

Inexperienced AND Clueless

by Bill O'Connell on January 2, 2010

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“The Obama administration’s $75 billion program to protect homeowners from foreclosure has been widely pronounced a disappointment, and some economists and real estate experts now contend it has done more harm than good.” – New York Times, January 2, 2010

“The Treasury Department publicly maintains that its program is on track. “The program is meeting its intended goal of providing immediate relief to homeowners across the country,” a department spokeswoman, Meg Reilly, wrote in an e-mail message.” — same article, NYT

Hot on the heels of Janet Napolitano’s performance at the Department of Homeland Security, that things worked just swell and then, er, no it was a catastrophic failure, we have another example of this administration’s ineptitude.  Let’s not let the marketplace work by flushing out the bad loans, have banks face up to the reality of their bad lending decisions, allow housing prices to reach a market level, all in a reasonably short time, no, let’s get another massive, taxpayer funded program in place to gum up the works and drag this out for years. 

A Habit of Ignoring History

In 1929 Hoover mishandled the economy in a similar way bringing in the leaders of major industries and jawboning them to keep up production even in the face of falling demand so that jobs would not be lost.  The businesses went along until that policy hit their financial statements in the form of plunging profitability.  Stock prices fell sharply and more disastrous policies followed, first by Hoover and more by Roosevelt.

In 1920-21 there was a very steep and serious recession.  However, companies cut wages and government didn’t interfere.

“The annual unemployment rate peaked at 11.7 percent in 1921, but it had fallen to 6.7 percent by the following year, and was down to an incredible 2.4 percent by 1923,” Murphy writes. “That is how a market with flexible wages and prices quickly corrects itself after a Fed-induced inflationary boom.”

 

Roosevelt’s policies followed Hoovers’ with more and more government interference.  Throughout the Great Depression the programs didn’t work, government grew tremendously leaving us saddled with that legacy.  On the other hand Reagan in the 1980s pursued a policy of cutting taxes and shrinking government.  Roosevelt needed World War II to end the Great Depression, Reagan ushered in 25 years of unprecedented economic growth.  Which one does Obama choose to follow?  That’s right, Roosevelt.  Brilliant!

Inexperience on Full Display

President Obama rides into town with no executive experience, but with wondrous rhetorical skills and a hard left agenda.  He jams through a stimulus package that doesn’t stimulate.  His security policy is to undo everything that worked under Bush to keep us safe.  One of the first things Janet Napolitano does is  release a report saying that the real threat is from our returning military that might become right wing zealots,  Meanwhile Islamic terrorists, correct that, isolated extremists, continue to plot to kill us.  Now the New York Times points out that the Emperor’s mortgage program, Making Home Affordable, has no clothes.

“Whatever the merits of its plans, the administration has clearly failed to reverse the foreclosure crisis.” — NYT

When asked by a Congressional Oversight Panel what the administration was going to do in the face of this lasting not a year or two but for many years into the future, Treasury Secretary Tim Geithner said:

“What to do about it,” he said. “That’s a hard thing.” — NYT

Sounds like the seeds of another government program to fix the other government program.  Just like FDR did all through the 1930s.  Trying to stop the market with government programs is like trying to stop the tides.  You may divert it and you may end up with water in places you didn’t want it, but you are not going to stop it.

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New Year’s Day 2010 – A New Decade of Hope and Change

by Bill O'Connell on January 1, 2010

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The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.  – Tenth Amendment of the Constitution of the United States of America

 The Tenth Amendment

The Tenth Amendment of the Constitution is an interesting piece of work.  The way the Constitution is written is to explicitly state what the national government could do, and thereby exclude it from doing everything else.  When some of the Founding Fathers advocated a Bill of Rights the federalists strongly objected.  Why?  First, they thought it was redundant.  If, for example, the Constitution did not say the national government could regulate speech then having a First Amendment guaranteeing the Freedom of Speech made no sense.  The national government was only permitted to do precisely what the Constitution said it could do. 

 The second objection concerned having the opposite intent of the original writing of the Constitution.  You see, if the constitution has a provision that says what the national government cannot do (First Amendment barring free speech for example) it implies that the national government can do anything else that is not prohibited, which is exactly what the federalists did not want the Constitution to say.  It wanted to specifically enumerate the powers granted to the national government and no more.  So they compromised by adding the Tenth Amendment, which spelled out that distinction.  To quote Hamilton in Federalist 84:

 “Why, for instance should it be said that the liberty of the press should not be restrained, when no power is given by which restrictions may be imposed?”

The Federal Government’s Runaway Growth 

The federal government has expanded enormously particularly with FDR and the New Deal.  The Supreme Court has paid scant attention to the Tenth Amendment in curbing that expansion.  Perhaps it is time they gave it a closer look and more weight in their decisions.

 Below is what the Constitution says Congress has the Power to do.

 Article I. Section 8. The Congress shall have Power To:

  • Lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defense and general Welfare of the United States;
  • To Borrow Money on the credit of the United States;
  • To regulate Commerce with foreign Nations, and among the several states, and with the Indian tribes;
  • To establish an uniform Rule of Naturalization, and uniform Laws on the subject of Bankruptcies throughout the United States;
  • To coin Money, regulate the value thereof, and of foreign Coin, and fix the Standard of Weights and Measures;
  • To provide for the Punishment of counterfeiting the Securities and current Coin of the United States;
  • To establish Post Offices and post Roads;
  • To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries;
  • To constitute Tribunals inferior to the supreme Court;
  • To define and punish Piracies and Felonies committed on the high seas, and Offenses against the Law of Nations;
  • To declare War, grant Letters of Marque and reprisal, and make Rules concerning Captures on Land and Water;
  • To raise and support Armies, but no Appropriation of Money to that Use shall be for a longer Term than two years;
  • To provide and maintain a Navy;
  • To make Rules for the Government and Regulation of the land and naval Forces;
  • To provide for calling forth the Militia to execute the Laws of the Union, suppress Insurrection and repel Invasions;
  • To provide for organizing, arming, and disciplining, the Militia, and for governing such Part of them as may be employed in the Service of the United States, reserving to the States respectively, the Apportionment of the Officers, and the Authority of training the Militia according to the discipline prescribed by Congress;
  • To exercise exclusive Legislation in all Cases whatsoever, over such District (not exceeding ten Miles square) as may, by Cession of particular States, and the Acceptance of Congress, become the Seat of the Government of the United States, and to exercise like Authority over all Places purchased by Consent of the Legislature of the State in which the Same shall be, for the Erection of Forts, Magazines, Arsenals, dock-Yards and other needful Buildings; — And
  • To make all Laws which shall be necessary and proper for carrying into Execution the foregoing Powers, and all other Powers vested by this Constitution in the Government of the United States, or in any Department or Officer thereof.

 Does anybody see anything there about minimum wages?  miles per gallon?  housing subsidies?  urban development? education? energy?  James Madison summed it up thus in Federalist 45:

“The powers delegated by the proposed Constitution to the Federal Government are few and defined.  Those which are to remain in the State Governments are numerous and indefinite.  The former will be exercised principally on external objects, as war, peace negotiations, and foreign commerce;….The powers reserved to the several states will extend to all objects, which, in the ordinary course of affairs, concern the lives, liberties and properties of the people, and the internal order, improvement, and prosperity of the state.”

To see how far we have come from Madison’s and the other Founding Fathers views can be seen in the New Deal era court case Wickard v. Filburn(1942).  Roscoe Filburn was a farmer during the Great Depression who was growing wheat to feed his chickens.  The Federal Government had imposed limits on how much wheat a farmer could grow based on acreage in order to prop up wheat prices.  The amount of wheat that Filburn was growing exceeded this number, however, Filburn intended to use the wheat entirely on his own farm.  Not only was the wheat not going to leave his home state, it was not going to leave his farm!  But the Supreme Court ruled that by growing more wheat than allowed, Filburn would not have to buy additional feed in the open market and by not doing so the lack of his consumption of wheat on the market would adversely affect the price of wheat, therefore he was violating the Federally imposed limits.  Now if that doesn’t set off Tenth Amendment alarm bells, I don’t know what could.

Federal Government Sprawl

Here are the cabinet level departments of the Federal Government.  Those in bold seem, in my opinion, to be consistent with the enumerated powers above.  Those in italics seem, again in my opinion, to be a national government overstepping its Constitutional bounds.  It is not that each and any of these things should not be done at all, but according to the Tenth Amendment should be at the discretion of the states or local government.

  •  Department of Agriculture
  • Department of Commerce
  • Department of Defense
  • Department of Education
  • Department of Energy
  • Department of Health and Human Services
  • Department of Homeland Security (Incorporate in Department of Defense) 
  • Department of Housing and Urban Development
  • Department of Justice
  • Department of Labor
  • Department of State
  • Department of the Interior
  • Department of the Treasury
  • Department of Transportation
  • Department of Veteran Affairs (Incorporate into Department of Defense)

 Federalism

 One of the brilliant ideas of federalism is the ability to vote in two ways.  One, is at the ballot box and the other is with your feet.  If my state puts forth a bad idea and the majority of the citizens of my state agree with the bad idea, I have the freedom to move to another state.  However, if we keep moving all these bad ideas up to the national level, my right to vote with my feet is taken away.  If states like California and New York choose to follow polices that lead to their bankruptcy, so be it, but let’s not force those policies on Texas and Florida or force the citizens of those states to pay for the mistakes of Californians and New Yorkers.

Since George Washington, who had four cabinet positions, we have added thirteen new cabinet departments and eliminated two and the ones eliminated did not go away, they simply became part of other government entities (e.g., Navy into Defense; Post Office into Postal Service).  In other words our government is telling us that they have not solved a single problem for which one of these agencies were created since 1789, otherwise why wouldn’t that cabinet department be shut down, after ceremoniously giving all the key players well deserved gold watches?  But Government encroachment marches on with the Obama Administration poised to devour one-sixth of the U.S. Economy into the Department of Health and Human Services.  They tell us they know how to solve that problem.  With their track record do you believe them?  Perhaps it’s time to dust off the Tenth Amendment, and start putting a scalpel to the federal government rather than tying a bib around its bloated neck.

Let’s look to 2010 as the year we start taking back our government.  Polls show how far out of touch our elected leaders are from the views of their constituents.  It’s time to retire them from office.  Let’s keep up the hard work and countdown to November 2010.

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