GOVERNMENT & POLITICS

News from the Swamp: Bailout update

Monday’s 228-205 House vote rejecting the Bush administration’s $700-billion life preserver for the economy produced shock, anger and fear in the Swamp, on Wall Street, and around the world. Those privy to a split-screen television on Monday could simultaneously watch the nay votes tally up on C-Span while the Dow Jones Industrial Average sank faster than Katie Couric’s ratings. Before the day was done, the Dow was down 778 points, the largest one-day point drop in its history (though only the 17th worst loss in terms of percentage).

President George W. Bush, who has given more public face time during this financial crisis than he has in many months, stood before the American people last week during prime time and this past Monday morning to assure the people that the plan was right for the markets and right for the country. But as a lame duck with historically low approval ratings, the president has little political muscle. He may be the first leader in the White House with an MBA, but that buys him nothing with many members of his own party who look to distance themselves from him at every opportunity. The groundswell of opposition to the bailout didn’t serve to encourage House members, either. Among the 95 Democrats and 133 Republicans who voted against the House legislation, many did so because they want to win re-election in November.

The Senate, on the other hand, passed the once-three-page proposal as a 451-page behemoth known as the Economic Stabilization Act by a vote of 74-25. Among the items added to the bill that are completely unrelated in any sense to troubled credit markets is $150 billion in tax breaks for families and businesses, including $8 billion in relief for those hit by natural disasters; $12 billion in credits and incentives for all manner of “green” energy projects from solar energy to electric cars and idling reduction for dishwashers; exemptions for children’s wooden practice arrows and for businesses that employ residents of Indian reservations (read: casinos); an extension of the duty suspension on wool products and a wool research fund; and a provision making it easier for film and TV companies to deduct for domestic production. Nothing attracts flies like emergency spending.

Furthermore, one of the key provisions added is a temporary increase in the limit of federal insurance for bank deposits from $100,000 to $250,000. Yet doing this on top of the bailout may create incentive for more of the same from troubled banks, while more than doubling taxpayer losses when banks fail.

According to economist Stephen Moore, after the FDIC limit was increased from $40,000 to $100,000 in the last year of the Carter administration, ostensibly to ease concerns about ailing thrift lending institutions, “It ended up incentivizing brokers to ship ‘hot’ money in $100,000 chunks to whatever desperate thrift was paying the highest rate. When the savings and loan crisis hit in 1989, taxpayers were on the hook for $150 billion in losses.”

How did the Senate, which is prohibited by the Constitution from doing so, get all of these tax provisions into the bill? Simple, they took a previous House bill, the Paul Wellstone Mental Health and Addiction Equity Act of 2007 that mandates that health insurers treat mental health the same as physical health, and tacked the rest of the bailout on as an amendment to it. Our colleague, James Taranto of The Wall Street Journal quipped, “So the bailout ended up attached to a measure that extends benefits to people suffering from depression and is named after a lawmaker who died in a crash. Never let it be said that the U.S. Senate lacks a sense of humor.”

Nancy Pelosi says she will not bring the bill up for a vote in the House unless she has the votes to pass.

For further information about this financial crisis, see Mark Alexander’s essays: Economics 101: Crisis of Confidence (a comprehensive but quick reading analysis of the current financial crisis), Bailout v. Workout—The continuing crisis (an update on the crisis), and Drive-by Observations on the continuing crisis (a supplement of current opinion on the continuing crisis, updated daily).

On cross-examination

“Think $700 billion to bail out Wall Street is expensive? Just wait. The mortgage meltdown is cheap compared with the coming fiscal firestorm fanned by unfunded Social Security and Medicare costs. Together, these programs hold unfunded obligations totaling $41 trillion—60 times larger than the proposed Wall Street bailout.” —Brian Riedl, Heritage Foundation

This week’s ‘Alpha Jackass’ award

“[It was tempting to oppose a bailout and] stick a finger in the eye of the bankers and the tycoons whose greed brought us to this crisis, but after the rush of righteousness fades, what then? We can take a cut at Wall Street, but Wall Street won’t feel the brunt of the pain.” —Sen. Chris Dodd (D-CT), chairman of the Senate Banking Committee and one of those on Capitol Hill who are chiefly responsible for the current crisis

Palin v. Biden

The presidential campaign has been almost an afterthought this week in the midst of the Wall Street/Capitol Hill crisis, but Thursday night, the vice-presidential candidates squared off in their first and only debate. Many conservatives, admittedly or not, were apprehensive about the performance of Alaska Gov. Sarah Palin after two less-than-stellar interviews with network anchors. Indeed, the prevailing sentiment was “just don’t blow it.”

Putting those fears to rest, Gov. Palin performed admirably, putting seasoned politico Joe Biden on the defensive on multiple occasions. She was calm and cool and did what Ronald Reagan was so good at—talking not to Biden or moderator Gwen Ifill but straight to the American people.

The exchange regarding taxes was a case in point. Class warrior Biden called for “simple fairness,” claiming that because the “middle class is struggling,” the “rich” need to pay more taxes. Indeed, “the super wealthy… don’t need any more tax breaks,” he declared. Who is Biden to decide how much money people need? Gov. Palin hit back by correctly labeling Biden’s “fairness” as redistribution of wealth. She also pointed out that a lot of small businesses fit into that category of those making $250,000 a year or more. We would add that the top 25 percent of income earners pay 86 percent of all federal income taxes. But that’s still not “fair” according to Joe Biden.

A side note: Wall Street Journal editor John Fund laments that the PBS moderator does not pass the objectivity sniff test: “Gwen Ifill… has written a glowing portrait of Barack Obama that will be published on Inauguration Day. Obviously, her sales will be higher if Mr. Obama wins—a glaring conflict of interest for a supposedly neutral moderator.” The title? The Breakthrough: Politics and Race in the Age of Obama.

This week’s ‘Braying Jackass’ award

“[T]he ideology of that judge makes a big difference. That’s why I led the fight against Judge [Robert] Bork. Had he been on the court, I suspect there would be a lot of changes that I don’t like and the American people wouldn’t like, including everything from Roe v. Wade to issues relating to civil rights and civil liberties.” —Joe Biden, admitting to a litmus test for judges

McCain v. Obama

As for last Friday’s presidential debate, it featured Barack Obama and John McCain sparring on both the economics of the federal financial system bailout and foreign policy. With pundits in the tank for Obama declaring the affair a draw, it’s our belief that McCain won the day. Certainly on foreign affairs, Sen. McCain showed his superior grasp of the issues, while successfully revealing his opponent to be a naive dabbler who would meet with our enemies without preconditions. Obama tried to pretend he meant lower-level diplomacy, but the transcript from a previous debate in the Democrat primary tells a different story. He also used former Secretary of State Henry Kissinger for cover. That turned out to be a mistake, because Kissinger, a longtime friend of McCain’s, issued a statement saying, “I would not recommend the next president of the United States engage in talks with Iran at the presidential level.”

We give Obama the award for the best “me too” moment. After John McCain spoke about wearing a bracelet given to him by the mother of a soldier killed in Iraq, Matthew Stanley, Obama noted that he had his own bracelet given to him by Tracy Jopek, mother of Ryan Jopek, another soldier killed in Iraq. It was later revealed, though, that Mrs. Jopek had asked Obama not to talk about the bracelet in future speeches or debates when she contacted his campaign back in February. But much like his promise to accept public financing for his campaign, Barack Obama’s pledge to Tracy Jopek became another victim of his quest for our nation’s highest office.

Campaign watch: Obama’s idea of change

The Obama camp has a lot of explaining to do regarding its recent attempts to stifle free speech and the open exchange of ideas. With blatant disregard for the First Amendment, the Obama campaign’s general counsel, Bob Bauer, sent a letter to several TV stations, strongly suggesting that they refrain from airing a National Rifle Association ad entitled “Hunter.” Basing his argument largely on an assessment by factcheck.org, Bauer claims that the ad is false and that it would be unethical to air it.

“Unlike federal candidates, independent political organizations do not have a ‘right to command the use of broadcast facilities’,” Bauer writes. “Moreover, you have a duty ‘to protect the public from false, misleading or deceptive advertising’.” The NRA, however, argues that in this case, factcheck.org is wrong and has asked that the media disregard Bauer’s request.

Another disturbing report has come from St. Louis’ KMOV-TV that the Obama camp has recruited prosecutors and sheriffs for its Truth Squads. Goon Squads may be more apropos. The squads are charged with informing the public that Obama is a Christian and will cut taxes for anyone earning less than $250,000 a year. In addition, they are letting folks know that they will, according to KMOV-TV’s report, “respond immediately to any ad statements that might violate Missouri ethics laws.” While it is up for debate whether someone could actually be prosecuted or sued for criticizing Obama, there is little doubt that this tactic is a form of intimidation.

Censorship. Now that’s change we can believe in.

Obama birth certificate suit update

As we reported in September, Philip Berg, a Pennsylvania attorney and a Democrat, filed for declaratory and injunctive relief against Barack Obama and the DNC claiming that Obama’s birth certificate and citizenship are in question and demanding sufficient proof. Rather than just produce the documents, however, Obama’s legal team is trying to get the suit dismissed. As we have noted in the past, part of Obama’s trouble comes via his associations and this case is another indictment itself. One of the attorneys Obama hired is Joe Sandler, an attorney for CAIR, a.k.a. the Council on American-Islamic Relations, the Leftist “civil liberties” group that specializes in stifling free speech. We’re sure there’s nothing to it, but…

NATIONAL SECURITY

Russia and Venezuela get together

That chill in the air isn’t just October ushering in autumn. Recent moves by Russia in Latin America have brought the temperature of international relations down quite a few degrees, bringing a new Cold War that much closer to reality. Last week, Venezuelan dictator Hugo Chavez visited Russia for the second time. The agreements reached between the two countries include deals for Russian assistance in Venezuela’s efforts to build nuclear reactors, as well as the start of a Russian-Venezuelan energy consortium that would more fully develop and sell Venezuelan oil and gas resources. Russian companies are already developing oil fields in Venezuela, but this new agreement will allow the Russians to expand their petroleum development into larger geographical areas, including oil fields in Ecuador and Bolivia.

Other recent Latin America/Russian cooperative efforts include Venezuela’s purchase of nearly $4.5 billion worth of weapons, including fighter jets and combat helicopters, from Russia, as well as a Russian loan to Bolivia to purchase additional weapons, and a Bolivian agreement to purchase five Russian defense helicopters as a “first step” in strengthening the ties between the two countries. On top of that, there will be a large joint Russian/Venezuelan navy exercise later this year.

All of this activity is a clear indication that Moscow is seeking once again to establish a Western Hemisphere beachhead to counterbalance the United States and the West just as it did in the Cold War days of the 1970s and 1980s before being confronted and stopped by President Ronald Reagan. The U.S. will need to work closely with its Latin American allies to slow or stop this creeping Russian influence and militarism in the Western Hemisphere. The world is dangerous enough for the U.S. without having to fight Cold War II in our own backyard.

Department of Military Readiness: Humvees

The Associated Press reports, “The Pentagon is inching closer to replacing the Humvee—once called the ‘jeep on steroids’ and currently the vehicular backbone of U.S. military operations in Iraq—with the latest lightweight tactical vehicle under development.” Currently, the Pentagon is holding a multi-billion-dollar competition among four teams to supply a lighter and more agile vehicle that can also better withstand roadside bombs and other explosives. The teams are Northrop Grumman Corp. and partner Oshkosh Corp.; the U.S. subsidiary of BAE Systems PLC and its teammate Navistar International Corp.; General Dynamics Corp. and Humvee maker AM General; and Lockheed Martin Corp. and Armor Holdings.

The Pentagon set fairly strict technical specifications for the vehicles, creating quite a challenge for engineers. It must have a V-shaped hull like the larger MRAP (mine-resistant, ambush-protected vehicles), be able to travel 90 miles per hour and be easier to transport than either Humvees or MRAPs. It must be light enough that a C-130J aircraft could transport at least two of them. The AP also reports, “Each team is being asked to build a family that will include an infantry vehicle, a general purpose vehicle and a utility vehicle to support various Army and Marine Corps missions. The services are expected to order 65,000 vehicles, which will not enter initial production until 2013.”

Profiles of valor: USMC LCpl McLeese

On 16 September 2004, United States Marine Corps Lance Corporal Justin McLeese was riding in a convoy traveling to a compound in central Iraq when his Humvee flipped off the road in the rough, gravel terrain. He was thrown 20 feet from the vehicle but immediately went back to help those trapped inside. McLeese pulled two fellow Marines from the wreckage, including his platoon sergeant. The platoon then lifted the Humvee off the ground to save a third Marine stuck underneath.

It was in Fallujah later that year, though, where McLeese really proved his mettle. As his team was clearing numerous buildings in the city on 11 November, they engaged and killed four enemy fighters. One insurgent had faked his death, however, and tried to engage the Marines from a nearby room. McLeese acted quickly, eliminating the threat with a shotgun blast. Two days later, upon entering another building in Fallujah, McLeese was hit numerous times by enemy fire. Despite his wounds, he continued to fight alongside his comrades until he was fatally wounded by an IED explosion. For his courage and tenacity under fire, McLeese posthumously received the Bronze Star.

BUSINESS & ECONOMY

Income Redistribution: MA to drop income tax?

For the second time this decade, Massachusetts voters will decide whether to repeal the state’s onerous income tax. Such a repeal would save the average taxpayer approximately $3,600 every year and prevent the state revenue department from confiscating about $12.5 billion from taxpayers. The state’s current budget is nearly $28 billion.

Predictably, state bureaucrats and teacher unions are rallying to fight this direct threat to their income streams. Dire and conflicting predictions of reductions in state services and a tripling of property taxes have issued from supporters of the income tax. Liberals also complain that the repeal would hurt poor and otherwise disadvantaged populations, a refrain that accompanies every call to cut or freeze tax levels.

One reason liberals are liberals is that they don’t understand the connection between oppressive taxes and prosperity. States that have eliminated income taxes ultimately experience significantly higher tax revenues due to their stronger economies. The irony that liberals deny governments higher tax revenues via higher taxation is lost on Democrats. We’re hopeful, however, that Bay State residents will choose to cut their tax burden to experience the greater freedom accompanying such a reduction.

Obama’s Social(ist) Security Plan

Leave it to the Democrats to draw exactly the wrong conclusions from self-evident economic lessons. Case in point: risk assessment and Social Security. Attacking Sen. McCain while campaigning in Florida, the Anointed One declared, “If my opponent had his way, the millions of Floridians who rely on it would have had their Social Security tied up in the stock market this week… Millions of families would’ve been scrambling to figure out how to give their mothers and fathers, their grandmothers and grandfathers, the secure retirement every American deserves.”

These misleading remarks, carefully crafted in the wake of the continuing, Democrat-created subprime meltdown, were targeted at McCain’s plan to address the pending Social Security train wreck. The plan calls for phasing in voluntary private accounts to supplement Social Security, whose unfunded liabilities over the next 75 years total approximately $30 trillion (yes, that’s a “t”). Under this plan, workers could choose to invest up to one-third of their Social Security funds in private accounts, and these accounts would automatically reapportion funds from high-growth stocks to stable, secure bonds as retirement nears. Risky? Hardly.

In contrast, Sen. Obama offers a true throw-Granny-under-the-bus plan. His strategy? More of the same, of course—namely, “protecting” Social Security by soaking the “rich” (read: the middle class) through even higher Social Security taxes. According to Democrat math, the historical 10-percent return offered by the stock market evidently pales in comparison to the one-point-something percent return tendered by the current system. However, even this meager sum has been made possible only by the contributions from the huge Baby Boomer bubble in the workforce that itself is now entering the retirement zone and beginning to draw on the system. Barring a major overhaul of the current Social Security system, America’s rising retirement numbers, coupled with congressional inaction and/or non-fixes like those proffered by candidate Obama, will inevitably unite to make a mere $700 billion “Mulligan” look like the product of savvy business decision-making by comparison. Now that’s risk.

Around the nation: No gas in the Southeast

Long lines at the pump and empty gas stations with no fuel have been a common sight here in the Southeast this week as gas shortages from hurricanes Ike and Gustav continue. “The pipelines were ready to receive product quickly after the hurricanes. It was a question of having power to deliver product from existing storage either at terminals or refineries,” said the president and CEO of the Association of Oil Pipelines. Because refineries lacked power after the storms, delivery delays have been further prolonged, leaving motorists searching for fuel.

Southern drivers lucky enough to find it have had to pay higher prices at the pump. AAA reports that the national average for regular unleaded fuel is $3.63 per gallon, but in Atlanta drivers are paying around $4.03. Higher prices haven’t stopped motorists from filling up whenever they can. “Motorists reacted by engaging in some panic buying,” said Geoff Sundstrom, an analyst for AAA. “They start topping off their gas tank, they come in with a boat or an RV that they don’t intend to use, or they’re driving up with six fuel cans and trying to fill those.” Fortunately, AAA predicts the shortages will begin easing this week. Maybe we won’t have to walk to the office after all. Who needs exercise, anyway?

CULTURE

Faith and Family: ADF update

Two weeks ago we reported that the conservative Alliance Defense Fund (ADF) was planning to recruit pastors to defy IRS regulations on tax-exempt status by issuing endorsements for the presidential election from the pulpit. The idea is to challenge the 54-year-old ban on such activity by provoking an IRS investigation and then suing in federal court on First Amendment grounds. An ADF press release stated that the participating pastors “will reclaim their constitutional right [and] from the pulpit, they will advise their congregation what scripture says about today’s issues, apply[ing] those issues to the candidates standing for election just like their forefathers did 150 years ago.” Or, as columnist Cal Thomas noted, “The release might have added, ‘and just as many in some African-American churches do today, but without the pressure by the IRS, which many white conservative churches and institutions feel’.”

On Sunday, dubbed “Pulpit Freedom Sunday,” 33 pastors from around the country followed through on the plan. But as we said two weeks ago, the pulpit is not the ideal place to be politicking. Again, Cal Thomas points out, “No matter how hard they try to protect the gospel from corruption, ministers who focus on politics and politicians as a means of redemption must minimize their ultimate calling and message.” He concludes, “Whether the law is repealed, or not, churches and ministers would do better to keep their attention focused on the things above, rather than the things below, because politics can be the ultimate temptation and pollute a far superior and life-changing message.”

Climate change this week: Rationing meat

Eat less meat, drink less milk, and while you’re at it, dust off your grandmother’s pressure cooker. It’s not the newest weight-loss fad but rather the latest prescription for saving the planet from a climate crisis, this according to global warming alarmists who have found the food industry as a whole—and the livestock industry in particular—guilty as charged of emitting greenhouse gases into the environment.

Never fear, though—it’s Ration Man to the rescue! A new report issued by the UK’s Food Climate Research Network urges eating fewer meat products, cutting dairy consumption, cooking in bulk and using means such as pressure cookers to conserve energy, and perhaps the most cutting-edge recommendation of all: eating less, rather than more, than is needed to maintain a healthy body weight.

But according to the report’s author, Tara Garnett, a public campaign is not enough. Government must save the day by placing caps on greenhouse gas emissions to force changes in food consumption. Of course, the restrictions apply mainly to “the rich” —those in developed countries. After all, we must abide by the “principle of global equity,” which Garnett enthusiastically cites.

One can only wonder if Al Gore’s excitement over civil disobedience extends to those who want to have their meat and eat it, too.

From the ‘Non Compos Mentis’ File

Former Congresswoman Cynthia McKinney, one of our favorite yahoos from Capitol Hill, is now running for president (yes, of the United States) on the Green Party ticket. And yes, this is the same Cynthia McKinney who assaulted a Capitol Hill Police Officer and lost her seat in Congress… twice. McKinney has said some pretty outrageous things over the years, but we can’t think of anything that compares to the whopper she told to a small gathering over the weekend: “I had a woman—in the wake of Hurricane Katrina, I had a woman—I have never really said this in public, out loud, in front of a lot of cameras, and there’s a lot in this room now. But I had a mother to call me because her son had a very gruesome task. Her son’s charge by the Department of Defense was to process 5,000 bodies that had received a single bullet wound to the head, and these were mostly males. And her son was afraid to talk because he had signed a silence agreement, so he only complained to his mother. But the data about these individuals was entered into a Pentagon computer, and then reportedly the bodies were dumped in a swamp in Louisiana. This is as a result of the tragedy of Hurricane Katrina.”

McKinney didn’t stop there, either. “Now, I have no, no—and I have verification from insiders who wish to remain anonymous at the Red Cross that this is—this is true. I suspect that these were prisoners, and so, you know, this—this investigation of the whole prison-industrial complex is extremely important, and it should not end with just a question of the nature of prisons in our country, but also these 5,000 souls also need some justice, too.” Thank goodness Congress is working on that mental health bill—Cynthia needs help.

And last…

As the stock market faces uncertainty and our entire economy hangs in the balance, few folks are willing to sink their money into just any ol’ stock. Even in times like these, however, there are some excellent securities in which to invest. Here’s a short list of some of the securities high on our staff’s list of recommendations: The Rock River Arms Tactical CAR A4, the PTR-91 KF, the Robinson Armament XCR-L in 6.8 SPC, the Springfield Armory M1A Scout Squad, and our current favorite (though not available until later this year), the FN Herstal SCAR in either 5.56 NATO or 7.62 NATO. Indeed, we in our humble editorial shop think these “stocks” look pretty good—but you’d better get ‘em while they last. Remember, this is not an economic crisis; it’s a gun-buying opportunity.

Veritas vos Liberabit—Semper Vigilo, Fortis, Paratus, et Fidelis! Mark Alexander, Publisher, for The Patriot’s editors and staff. (Please pray for our Patriot Armed Forces standing in harm’s way around the world, and for their families—especially families of those fallen Soldiers, Sailors, Airmen, Marines and Coast Guardsmen, who granted their lives in defense of American liberty.)