Category Archives: Pork
Surprise! Debt-ceiling deal gives Obama a blank check: Loophole will allow government to spend WITHOUT LIMIT until February
It’s the ultimate sweetheart deal for a free-spending federal government: Wednesday night’s debt deal didn’t actually raise the limit on America’s credit card, but instead removed it entirely until February 7, 2014.
Whether through legislative sleight-of-hand or something less sinister, the law of the land now permits the U.S. to run up new debts for 16 weeks without consequences, and forbids the Treasury Department from enforcing the debt limit that ordinarily keeps spending from spiraling out of control.
Some observers noted on Wednesday that when Congress burned the midnight oil to debate a deal that would save the U.S. from crashing through its existing $16.7 trillion debt ceiling and risking a credit default, there was no debate over exactly how far to raise it.
House and Senate negotiators only discussed how long the agreement would last.
The result has left the Treasury free to accumulate as much debt as it needs to until the deal expires, The Daily Caller noted on Thursday.
The Bipartisan Policy Center estimated that if the government had extended its debt ceiling in this fashion through the end of 2014, as one Republican proposal suggested, the federal government’s debt would have ballooned by $1.1 trillion.
At that rate, the national debt will likely grow by at least $282.5 billion on its own by the time Feb. 7 rolls around, bringing the total close to an even $17 trillion.
But there’s no guarantee it won’t grow even faster, especially if the legislative initiatives President Obama outlined Thursday morning were to cross the finish line by year’s end, as he demanded in his first public remarks since signing the debt-limit hike law shortly after midnight.
Obama said he wants Congress to give him a new budget deal, a 5-year farm bill and a comprehensive reform of America’s immigration laws, all before New Year’s Day.
Any one of those three could be a colossal budget-buster. Under ordinary circumstances, a hard-and-fast debt limit might serve as a check against runaway spending; but with no ceiling, Democrats could raid the Treasury to give the president what he wants, without fear of practical roadblocks getting in the way.
Republicans, too, could take advantage of the spending loophole. Senate Minority Leader Mitch McConnell demonstrated on Wednesday that he’s willing to accept expensive pot-sweeteners in exchange for a tidy solution to a messy problem.
When Obama signed the debt-bailout package into law, it included more than $2 billion in new spending for a dam project in McConnell’s home state of Kentucky, answering for some the thorny question of why the Senate’s top Republican would be so eager to make Democrats look good by negotiating a deal when tea party conservatives in the House were refusing to do so.
According to the conservative Heritage Foundation, Obama and Congress have already used the trick of ‘suspending’ the debt ceiling for a fixed period of time once before – running from February to May of this year.
That deal added $300 billion to the national debt in 102 days. The deal that went into effect Thursday covers 114 days.
The only requirement for that earlier agreement was that the Democrat-led Senate produce a formal budget for the first time since President Obama took office, which it did.
‘No savings were accomplished,’ says Heritage.
‘Suspending the debt is less transparent to the American people,’ the group explains, adding that ‘a calendar date is not nearly as scary to constituents as a figure in the trillions of dollars.’
The coming battles over a year-long federal budget, including Democrats’ demands for new taxes and an expected Republican push for spending cuts, could actually reduce deficit spending; but with no credit limit holding them back, lawmakers could see a perfect storm for committing to hundreds of billions in new earmarked projects calculated to please constituents back home.
The farm bill, too, is likely to rack up record spending on programs like food stamps, which fall under the Department of Agriculture’s budget: The Obama administration has already doubled the number of Americans receiving these entitlements since January 2009.
But immigration could require the biggest blank check of all.
While Obama and congressional liberals want to put 11 million illegal aliens on a path to citizenship, conservatives have consistently argued that the nation’s borders must first be secured. That, Democrats have countered, is simply too expensive to contemplate since it would likely involve building thousands of miles of new high-tech fences and staffing the Mexican border with thousands of guards whose salaries no one has contemplated yet.
Capitol Hill sources tell MailOnline that without a fixed debt ceiling over their heads, everyone in Congress might suddenly find it workable to give both parties what they want.
‘I can’t speak for the whole Republican caucus, of course,’ said a policy staffer to a conservative GOP House member, ‘but some of us want a border fence badly enough that we’ll look the other way if it adds a few hundred billion to the national debt.’
‘And once that’s in place, the biggest impediment to a citizenship path disappears.’
Since President Obama took office, new deficit spending has added about $43,000 to the national debt for every household in America.
That reflects a 60 per cent increase in the debt from where it sat on his first Inauguration Day, at $10.3 trillion.
At current rates of growth, Obama will leave office with national debts twice the size of those accumulated by all the previous U.S. presidents combined.
Read more:
Leaked Emails: Boehner Worked With Reid to Save Lawmaker Subsidies
House Speaker John Boehner Monday called on colleagues to ban an exemption lawmakers and staff receive for health insurance, but he and his aides had worked for months with Democratic leaders to save the subsidies, leaked documents and emails show.
The documents were provided to Politico, which revealed Tuesday morning that Boehner and aides were working closely with Democratic rivals to protect the payments.
Roll Call had earlier reported that Democrats were mulling divulging the private communications between Boehner Chief of Staff Mike Sommers and Reid Chief of Staff David Krone as proof that Boehner was trying to protect the payments.
The revelations are sure to cause more friction between Boehner and more conservative members of the House of Representatives, who have been pressing for all Obamacare exemptions for Congress to be scrapped.
The documents show Boehner and his aides discussed the matter with the offices of Senate Majority Leader Harry Reid, House Minority Whip Steny Hoyer, and others. Further, the documents show that Senate Minority Leader Mitch McConnell knew of the discussions.
A possible legislative solution was drafted, the documents show, and they continued to push for a solution from the Office of Personnel Management (OPM).
Further, Boehner and Reid asked for a meeting with President Barack Obama to lobby him for help, the documents show. The meeting never happened, but a senior Boehner aide was able to speak to White House Chief of Staff Denis McDonough about the Speaker’s wish to retain the employer subsidy.
Obamacare requires lawmakers and staff to join insurance exchanges, and the debate over whether they should continue collecting the employer contribution from the federal government has been the source of many heated discussions.
The OPM ruled that lawmakers and their staff could not receive employer payments once they went into the subsidies. The office reversed its decision, saying the employer payments could continue.
But Boehner put the issue into the government shutdown debate, attaching an amendment ending the subsidies to a House GOP funding bill.
Boehner spokesman Michael Steel told Politico the White House should solve the problem, and that “we always made it clear that House would not pass any legislative fix.”
He said Boehner was aware that Reid and the White House had been discussing the issue and that the speaker’s “fix is repealing Obamacare.”
Boehner’s office said the leak shows how concerned Democrats are.
“Any emails from Mr. Sommers will reflect the Speaker’s position: he voted against ObamaCare, and he wants to repeal Obamacare,” Steel said. “If the Senate Democrats and the White House want to make a ‘fix’ to the law, it would be their fix. The Speaker’s ‘fix’ is repeal. This is just a desperate act by Harry Reid’s staff to protect their own subsidy.”
Reid communications director Adam Jentleson, meanwhile, said his boss worked closely with Boehner and was grateful for his help.
Roll Call reported the communications could back up Democrats’ claims that Boehner’s decision to add an amendment revoking the contributions was a shot at vulnerable Senate Democrats up for reelection in 2014, such as Kay Hagan of North Carolina or Mark Pryor of Arkansas.
A Small President on the World Stage
At the U.N., leaders hope for a return of American greatness.
By PEGGY NOONANThe world misses the old America, the one before the crash—the crashes—of the past dozen years.
That is the takeaway from conversations the past week in New York, where world leaders gathered for the annual U.N. General Assembly session. Our friends, and we have many, speak almost poignantly of the dynamism, excellence, exuberance and leadership of the nation they had, for so many years, judged themselves against, been inspired by, attempted to emulate, resented.
As for those who are not America’s friends, some seem still confused, even concussed, by the new power shift. What is their exact place in it? Will it last? Will America come roaring back? Can she? Does she have the political will, the human capital, the old capability?
It is a world in a new kind of flux, one that doesn’t know what to make of America anymore. In part because of our president.
“We want American leadership,” said a member of a diplomatic delegation of a major U.S. ally. He said it softly, as if confiding he missed an old friend.
“In the past we have seen some America overreach,” said the prime minister of a Western democracy, in a conversation. “Now I think we are seeing America underreach.” He was referring not only to foreign policy but to economic policies, to the limits America has imposed on itself. He missed its old economic dynamism, its crazy, pioneering spirit toward wealth creation—the old belief that every American could invent something, get it to market, make a bundle, rise.
The prime minister spoke of a great anxiety and his particular hope. The anxiety: “The biggest risk is not political but social. Wealthy societies with people who think wealth is a given, a birthright—they do not understand that we are in the fight of our lives with countries and nations set on displacing us. Wealth is earned. It is far from being a given. It cannot be taken for granted. The recession reminded us how quickly circumstances can change.” His hope? That the things that made America a giant—”so much entrepreneurialism and vision”—will, in time, fully re-emerge and jolt the country from the doldrums.
The second takeaway of the week has to do with a continued decline in admiration for the American president. Barack Obama‘s reputation among his fellow international players has deflated, his stature almost collapsed. In diplomatic circles, attitudes toward his leadership have been declining for some time, but this week you could hear the disappointment, and something more dangerous: the sense that he is no longer, perhaps, all that relevant. Part of this is due, obviously, to his handling of the Syria crisis. If you draw a line and it is crossed and then you dodge, deflect, disappear and call it diplomacy, the world will notice, and not think better of you. Some of it is connected to the historical moment America is in.
But some of it, surely, is just five years of Mr. Obama. World leaders do not understand what his higher strategic aims are, have doubts about his seriousness and judgment, and read him as unsure and covering up his unsureness with ringing words.
A scorching assessment of the president as foreign-policy actor came from a former senior U.S. diplomat, a low-key and sophisticated man who spent the week at many U.N.-related functions. “World leaders are very negative about Obama,” he said. They are “disappointed, feeling he’s not really in charge. . . . The Western Europeans don’t pay that much attention to him anymore.”
The diplomat was one of more than a dozen U.S. foreign-policy hands who met this week with the new president of Iran, Hasan Rouhani. What did he think of the American president? “He didn’t mention Obama, not once,” said the former envoy, who added: “We have to accept the fact that the president is rather insignificant at the moment, and rely on our diplomats.” John Kerry, he said, is doing a good job.
Had he ever seen an American president treated as if he were so insignificant? “I really never have. It’s unusual.” What does he make of the president’s strategy: “He doesn’t know what to do so he stays out of it [and] hopes for the best.” The diplomat added: “Slim hope.”
This reminded me of a talk a few weeks ago, with another veteran diplomat who often confers with leaders with whom Mr. Obama meets. I had asked: When Obama enters a room with other leaders, is there a sense that America has entered the room? I mentioned de Gaulle—when he was there, France was there. When Reagan came into a room, people stood: America just walked in. Does Mr. Obama bring that kind of mystique?
“No,” he said. “It’s not like that.”
When the president spoke to the General Assembly, his speech was dignified and had, at certain points, a certain sternness of tone. But after a while, as he spoke, it took on the flavor of re-enactment. He had impressed these men and women once. In the cutaways on C-Span, some delegates in attendance seemed distracted, not alert, not sitting as if they were witnessing something important. One delegate seemed to be scrolling down on a BlackBerry, one rifled through notes. Two officials seated behind the president as he spoke seemed engaged in humorous banter. At the end, the applause was polite, appropriate and brief.
The president spoke of Iran and nuclear weapons—”we should be able to achieve a resolution” of the question. “We are encouraged” by signs of a more moderate course. “I am directing John Kerry to pursue this effort.”
But his spokesmen had suggested the possibility of a brief meeting or handshake between Messrs. Obama and Rouhani. When that didn’t happen there was a sense the American president had been snubbed. For all the world to see.
Which, if you are an American, is embarrassing.
While Mr. Rouhani could not meet with the American president, he did make time for journalists, diplomats and businessmen brought together by the Asia Society and the Council on Foreign Relations. Early Thursday evening in a hotel ballroom, Mr. Rouhani spoke about U.S.-Iranian relations.
He appears to be intelligent, smooth, and he said all the right things—”moderation and wisdom” will guide his government, “global challenges require collective responses.” He will likely prove a tough negotiator, perhaps a particularly wily one. He is eloquent when speaking of the “haunted” nature of some of his countrymen’s memories when they consider the past 60 years of U.S.-Iranian relations.
Well, we have that in common.
He seemed to use his eloquence to bring a certain freshness, and therefore force, to perceived grievances. That’s one negotiating tactic. He added that we must “rise above petty politics,” and focus on our nations’ common interests and concerns. He called it “counterproductive” to view Iran as a threat; this charge is whipped up by “alarmists.” He vowed again that Iran will not develop a nuclear bomb, saying this would be “contrary to Islamic norms.”
I wondered, as he spoke, how he sized up our president. In roughly 90 minutes of a speech followed by questions, he didn’t say, and nobody thought to ask him.
Tax writers promise 50 years of secrecy for senators’ suggestions
By Bernie Becker
The Senate’s top tax writers have promised their colleagues 50 years worth of secrecy in exchange for suggestions on what deductions and credits to preserve in tax reform.
Senate Finance Committee Chairman Max Baucus (D-Mont.) and the panel’s top Republican, Sen. Orrin Hatch (Utah), assured lawmakers that any submission they receive will be kept under lock and key by the committee and the National Archives until the end of 2064.
Deeming the submissions confidential, the Senate’s top tax writers have said only certain staff members — 10 in all — will get direct access to a senator’s written suggestions. Each submission will also be given its own ID number and be kept on password-protected servers, with printed versions kept in locked safes.
The promise of confidentiality was revealed just two days before the deadline for senators to participate in the Finance Committee’s “blank slate” process, which puts the onus on lawmakers to argue for what credits and deductions should be kept in a streamlined tax code.
A Finance Committee aide said Baucus and Hatch were trying to prove to colleagues that they were making secrecy a priority. Officials on the panel circulated the news to senators in a memo that was dated last Friday.
“The letter was done at the request of offices to provide some assurance that the committee would not make their submissions public,” the aide said. “Sens. Baucus and Hatch are going out of their way to assure their colleagues they will keep the submissions in confidence.”
Keeping the submissions confidential for a half century, the aide added, was “standard operating procedure for sensitive materials, including investigation materials.”
The lengths Baucus and Hatch have gone to reassure their colleagues underscores the importance the tax writers are placing on the blank-slate plan, and it shows they are working hard to ensure that all 100 senators engage in the process.
Baucus told The Hill he fully expects more senators to participate in writing because of the secrecy guarantee.
“Several senators have said to me how important that is to them,” Baucus said. “It’s quite significant.”
It also illustrates the enormous pressure being brought to bear by K Street lobbyists, who are working furiously to protect their clients and the tax provisions that benefit them.
The move raises the stakes for Baucus and Hatch, who stand to lose credibility if the submissions start to leak out despite their vow to keep them in the vault.
Baucus announced this week that the Finance panel would mark up a tax reform bill this fall, after he has a chance during the August recess to consider his colleagues’ submissions. He suggested that the senators who take part in the blank-slate process would have greater influence.
From the start of the process, senators have expressed concerns that Baucus and Hatch wouldn’t be able to keep their proposals private. Given the enormous amount of money on the line — more than $1 trillion a year in tax expenditures are up for possible elimination — blowback from interest groups and businesses could easily derail the process.
The blank slate, some senators argue, forces them to choose sides on tax breaks that can have fervent backers back home and make them appear to be favoring special interests.
Hatch stressed that he still expects a fair number of GOP senators to give him oral suggestions, and Sen. Richard Burr (R-N.C.) told The Hill that he thought all Republicans would decide against putting ideas down on paper.
“We’re getting a lot of input regardless,” Hatch said. “All I want is input. I don’t care how they do it, whether it’s in writing or whether it’s personally.”
Under the confidential procedures set by the Finance panel, other committee staffers will only be allowed to handle senators’ suggestions if supervised by at least of the 10 authorized staffers.
Both the Democratic and Republican sides will receive a copy of a submission, and authorized staffers are supposed to log when copies of those proposals are made, who made them and how many.
The submissions can be released publicly, the memo says, if they’re scrubbed of any way of identifying the senator behind them.
But the confidentiality agreement might not be enough to get some senators off the sidelines.
Many have questioned whether it makes sense to move forward on the blank-slate approach when Democrats and Republicans have yet to resolve their long-standing differences about revenue.
While Republicans want the additional revenue from a simplified code to be used solely for lowering tax rates, Democrats want some of the windfall to go toward paying down the deficit.
Sen. Ben Cardin (D-Md.) stressed that he didn’t think any leaks would come out of the committee, even as he said he didn’t think it would have much impact on what senators actually write.
“If anything comes out, it’s certainly not going to be attributable to the leadership of the committee or the staff,” Cardin said. “It’ll be some other way it comes out, which is always possible.”
Still, Sen. John Thune (R-S.D.), who said that all Republicans were meeting one-on-one with Hatch, added that the two top tax writers were taking a chance.
“I think that, unfortunately for them, people around here tend to believe that anything in Washington — there are no secrets,” Thune said. “But they’re doing their best.”
“That should be somewhat reassuring,” Thune added. “I think people will feel a little bit more freedom.”
Tim Geithner Has Allowed Zombie Money To Drive The Markets, And This Poses Gargantuan Risk
by Raúl Ilargi Meijer
On January 25, Timothy Geithner will step down as US Treasury Secretary. A lot of people will say and write a lot of things about him at that point, and it sounds like a good idea to be ahead of the game and provide some perspective.
There are voices claiming (there will be many more, promise) that Geithner pulled us out of the recession and the crisis, and saved the economy. That seems presumptuous. It may just as well be true that Geithner has fooled us into thinking that. Just because the stock markets are pulling through so far doesn’t mean, let alone prove, that the economy has recovered or been saved. You would need something better, more substantial than that. While acknowledging that relatively strong stock market numbers are at least in potential a great way indeed to fool people about the economy.
And going forward we can wax nostalgically about everything Tim has done, and about where the economy is now compared to 4 years ago, but when all else is said and done, there is still just one question that counts: what happened to the debt? What has Geithner done when it comes to debt? As long as you don’t know what happened to the debt, you won’t know the true state of the economy.
Well, Americans still have higher personal debt levels than they ever had before (in fact, the best anti-gun law would be to ban paying for them with credit) and government debt has grown exponentially. Those things at least we know to an extent; when it comes to bank debt, we don’t know much of anything. Tim has made sure of that. He’s handed trillions of dollars in our money to Wall Street and we haven’t received anything in return. Well, yes, we have the semblance of a somewhat stable stock market, but is that worth all that extra debt? Moreover, we still don’t know what happened to the debt that caused the crisis in the first place, because Tim made sure it has been kept hidden from view. And how’s that a good thing again?
Look, you can save banks that are in deep debt trouble, and perhaps that’s not necessarily such a bad thing, since letting them fail outright would have been a risky proposition. But you can’t make the choice to save banks and not at the same time restructure those debts and expose and prosecute the bankers who put their firms into a situation that necessitated saving them in the first place, and were paid big bonuses for doing it. That is not alright by any stretch of the imagination, either ethically or economically. Because the money used to save them comes from outside of the financial system; it comes from the taxes that everybody pays. And that means it has to be accounted for. But it never was.
The only reason the policy – if you can call it that – of handing banks trillions in cheap credit appears to work is because its consequences cannot be felt immediately, but are pushed forward into the future. That doesn’t absolve us from having to ask what happened to the debt, though, but we still have no answer to that question, and Tim Geithner carries a substantial part of the blame for that.
If you’re interested only in yourself, and you’re just looking to make a quick buck, sure, things may look good. And if you think you can best achieve your goals by things staying the same, by keeping the system going as it is, yeah, you’re likely to think that Tim Geithner has done a swell job, because from that point of view he has saved you.
But if you care about anything that goes beyond just today, and beyond the few square miles that make up your world, if you care about your family, your friends, your kids and their future, Tim Geithner is not your man. He set up the system so it would continue to provide fast money for the horses with blinders, but he’s done it with money that everyone else is on the hook for. Just not today, not right away.
And that plays perfectly to our proverbial human short – term – attention span: Hey, look at the markets, they’re doing fine. We’re in recovery. We left the crisis behind. We made it.
But what’s that bulge under the carpet there in the corner? Is that perhaps what happened to the debt? We tell ourselves we love our children. That what we need to do is put aside money for their education. That what they need for their futures is money. And that’s it. It’s not about the world we leave for them. It’s not about the debt we leave for them. But it should be. The education we buy for our kids today will mean very little if and when they will be forced to pay back all our debts. We should face up to the responsibility for it ourselves. We don’t. We prefer the cloud cuckoo land illusion that Tim Geithner has spun before our eyes. We prefer to let our kids deal with reality.
The main problem from a purely technical point of view with the way Geithner has gone about business is that it’s to a large extent zombie money that drives markets today, money that would not have existed if debts had been properly restructured. If anytime in the future, either driven by markets or governments, banks are forced to restructure their debt after all, this poses a gargantuan risk to both the financial system and the overall economy. And we’ll have Geithner to thank for that. Not only him, there’s Ben Bernanke, Alan Greenspan, Hank Paulson and many more. Still, Geithner has had the option and the power to do the right thing, for four long years, and declined.
Obama said this about Tim Geithner recently: “When the history books are written, Tim Geithner is going to go down as one of our finest Secretaries of the Treasury…” And that the “unofficial” saying at the Treasury is “no peacocks, no jerks, no whiners” and “Few embody that ideal better than Tim Geithner.”.
That says much more about Obama than it does about Geithner. The reality is that Obama will go down as one of the worst American presidents in history. Because four more years of the above will sink the US economy to levels not even imagined today, and Obama will be seen as an accomplice if not the main perpetrator of a whole series of – financial – crimes against the people. The president that brought the country to its knees.
That is inevitable precisely because Geithner and Obama have done nothing at all for four years to restructure bank debt. All they’ve done in that time is keep the existing financial system, which was then and is now as bankrupt as any industry has ever been, standing upright. Or more correctly: appear to be standing upright. What the president and his Treasurer have done is feed zombies. With – future – human flesh. With the future prospects of our children. Obama has said that what Wall Street did was unethical but not illegal, but that is up to the courts to decide, not the president, and not Congress.
If you leave the decision making in a time of crisis to those who stand to profit most from keeping things as they are, it would perhaps be foolish to expect them to not try and do just that. Thing is, they can do so only by throwing others under the bus. And since this crisis is the biggest, the most widespread and the worst we’ve ever seen, it means just about everyone else will end up under that bus. Even the majority of those who think they would be better off keeping the system going: be careful what you wish for.
Timothy Geithner is a Robert Rubin protégé. Under Bill Clinton, then Treasury Secretary and Citigroup made man Rubin, assisted by Greenspan and Larry Summers, set the terms for US government (non) policy for derivatives that stands to this day.
Geithner certainly never touched it after he and Summers took over the Obama finance team. And now he will be succeeded by Jack Lew, who was director of the White House Office of Management and Budget when Rubin and Summers were there. Lew isn’t just a revolving door man, he does you one better: he went from K Street lobbyist to Citigroup director to the White House, rinse and repeat, pocketing a million dollar bonus from Citi three months after it received billions in taxpayer bailouts.
Once again, if we let them, it would perhaps be foolish to expect them to not try and do these things. Jack Lew’s nomination tells us all we need to know about Barack Obama’s intentions. Which are to let the bankers and their shareholders continue to hide their debts, and continue to use the zombie money they thus seem to have to make leveraged wagers whose profits they can pocket and whose losses they can pass on to you.
And you can continue to play the game as well as long as it lasts. So you can, if you’re lucky, hold on to your job and your home and use your money to pay for your children’s education. If you do, it might be a good idea to take a look at what it is they learn. Make sure they’re never tempted to look under the carpet. Or they may turn against you.
Related articles
- Geithner Says Debt Limit Steps May Run Out by Mid-February – Bloomberg (bloomberg.com)
- Geithner warns clock is ticking on debt (upi.com)
- Geithner leaving Treasury post: Trouble for Obama? (capitolhillblue.com)
- Geithner gives Congress notice: Four to six weeks until default (dailykos.com)
It’s Not a “Fiscal Cliff” … It’s the Descent Into Lawlessness
The “fiscal cliff” is a myth.
Instead, what we are facing is a descent into lawlessness.
Wikipedia notes:
In many situations, austerity programs are imposed on countries that were previously under dictatorial regimes, leading to criticism that populations are forced to repay the debts of their oppressors.
Indeed, the IMF has already performed a complete audit of the whole US financial system, something which they have only previously done to broke third world nations.
Economist Marc Faber calls the U.S. a “failed state“. Indeed, we no longer have a free market economy … we have fascism, communist style socialism, kleptocracy, oligarchy or banana republic style corruption.
Let’s look at some specific examples of our descent into lawlessness.
Lawless Looting and Redistribution of Wealth
The central banks’ central bank – the Bank for International Settlements– warned in 2008 that bailouts of the big banks would create sovereign debt crises … which could bankrupt nations.
That is exactly what has happened.
The big banks went bust, and so did the debtors. But the government chose to save the big banks instead of the little guy, thus allowing the banks to continue to try to wring every penny of debt out of debtors.
Treasury Secretary Paulson shoved bailouts down Congress’ throat by threatening martial law if the bailouts weren’t passed. And the bailouts are now perpetual.
The bailout money is just going to line the pockets of the wealthy, instead of helping to stabilize the economy or even the companies receiving the bailouts:
- Bailout money is being used to subsidize companies run by horrible business men, allowing the bankers to receive fat bonuses, to redecorate their offices, and to buy gold toilets and prostitutes
- A lot of the bailout money is going to the failing companies’ shareholders
- Indeed, a leading progressive economist says that the true purpose of the bank rescue plans is “a massive redistribution of wealth to the bank shareholders and their top executives”
- The Treasury Department encouraged banks to use the bailout money to buy their competitors, and pushed through an amendment to the tax laws which rewards mergers in the banking industry (this has caused a lot of companies to bite off more than they can chew, destabilizing the acquiring companies)
And as the New York Times notes, “Tens of billions of [bailout] dollars have merely passed through A.I.G. to its derivatives trading partners”.
***
In other words, through a little game-playing by the Fed, taxpayer money is going straight into the pockets of investors in AIG’s credit default swaps and is not even really stabilizing AIG.
Moreover, a large percentage of the bailouts went to foreign banks (and see this). And so did a huge portion of the money from quantitative easing. Indeed, the Fed bailed out Gaddafi’s Bank of Libya), hedge fund billionaires, and big companies, but turned its back on the little guy.
A study of 124 banking crises by the International Monetary Fund found that propping up banks which are only pretending to be solvent often leads to austerity:
Existing empirical research has shown that providing assistance to banks and their borrowers can be counterproductive, resulting in increased losses to banks, which often abuse forbearance to take unproductive risks at government expense. The typical result of forbearance is a deeper hole in the net worth of banks, crippling tax burdens to finance bank bailouts, and even more severe credit supply contraction and economic decline than would have occurred in the absence of forbearance.
Cross-country analysis to date also shows that accommodative policy measures (such as substantial liquidity support, explicit government guarantee on financial institutions’ liabilities and forbearance from prudential regulations) tend to be fiscally costly and that these particular policies do not necessarily accelerate the speed of economic recovery.
***
All too often, central banks privilege stability over cost in the heat of the containment phase: if so, they may too liberally extend loans to an illiquid bank which is almost certain to prove insolvent anyway. Also, closure of a nonviable bank is often delayed for too long, even when there are clear signs of insolvency (Lindgren, 2003). Since bank closures face many obstacles, there is a tendency to rely instead on blanket government guarantees which, if the government’s fiscal and political position makes them credible, can work albeit at the cost of placing the burden on the budget, typically squeezing future provision of needed public services.
In other words, the “stimulus” to the banks blows up the budget, “squeezing” public services through austerity.
Numerous top economists say that the bank bailouts are the largest robbery and redistribution of wealth in history.
Why was this illegal? Well, the top white collar fraud expert in the country says that the Bush and Obama administrations broke the law by failing to break up insolvent banks … instead of propping them up by bailing them out.
And the Special Inspector General of the Tarp bailout program said that the Treasury Secretary lied to Congress regarding some fundamental aspects of Tarp – like pretending that the banks were healthy, when they were totally insolvent. The Secretary also falsely told Congress that the bailouts would be used to dispose of toxic assets … but then used the money for something else entirely. Making false statements to a federal official is illegal, pursuant to 18 United States Code Section 1001.
So breaking the rules to bail out the big, insolvent banks, is destroying our prosperity.
Lawless Justice System
A strong rule of law is essential for a prosperous and stable economy, yet the government made it official policy not to prosecute fraud, even though criminal fraud is the main business model adopted by the giant banks.
The perpetrators of the biggest financial crime in world history, the largest insider trading scandal of all time, illegal raiding of customer accounts and blatant financing of drug cartels and terrorists have all gotten away scot-free without any jail time.
There are two systems of justice in America … one for the big banks and other fatcats, and one for everyone else.
While Iceland prosecuted its top criminal bankers, and thus quickly got through its financial problems and now has a vibrant economy, the American government has done everything it can to cover up fraud, and has been actively encouraging criminal fraud and attacking those trying to blow the whistle.
The rule of law is now as weak in the U.S. and UK as many countries which we would consider “rogue nations”. See this, this, this, this, this, this, this, this, this, this and this.
This is a sudden change. As famed Peruvian economist Hernando de Soto notes:
In a few short decades the West undercut 150 years of legal reforms that made the global economy possible.
Moreover, U.S. government personnel are on the take. They have become so corrupt that regulators are literally sleeping with industry prostitutes … while they pimp out the American people.
The corruption of government officials is staggering, and the system of government-sponsored rating agencies had at its core a model of bribery.
We’ve gone from a nation of laws to a nation of powerful men making one-sided laws to protect their own interests … in secret. Government folks are using laws to crush dissent. It’s gotten so bad that even U.S. Supreme Court justices are saying that we are descending into tyranny.
It’s not a “fiscal cliff” … it’s an attempt to rape America … just like Greece and Ireland have been plundered.
Economics professor Randall Wray writes:
Thieves … took over the whole economy and the political system lock, stock, and barrel. They didn’t just blow up finance, they oversaw the swiftest transfer of wealth to the very top the world has ever seen. They screwed workers out of their jobs, they screwed homeowners out of their houses, they screwed retirees out of their pensions, and they screwed municipalities out of their revenues and assets.
Financiers are forcing schools, parks, pools, fire departments, senior citizen centers, and libraries to shut down. They are forcing national governments to auction off their cultural heritage to the highest bidder. Everything must go in firesales at prices rigged by twenty-something traders at the biggest and most corrupt institutions the world has ever known.
Economics professor Michael Hudson agrees … saying that the banks are trying to roll back all modern laws and make us all serfs.
Professor Hudson explained in 2008:
You have to realize that what they’re trying to do is to roll back the Enlightenment, roll back the moral philosophy and social values of classical political economy and its culmination in Progressive Era legislation, as well as the New Deal institutions. They’re not trying to make the economy more equal, and they’re not trying to share power. Their greed is (as Aristotle noted) infinite. So what you find to be a violation of traditional values is a re-assertion of pre-industrial, feudal values. The economy is being set back on the road to debt peonage. The Road to Serfdom is not government sponsorship of economic progress and rising living standards, it’s the dismantling of government, the dissolution of regulatory agencies, to create a new feudal-type elite.
Foreign Policy magazine ran an article entitled “The Next Big Thing: Neomedievalism“, arguing that the power of nations is declining, and being replaced by corporations, wealthy individuals, the sovereign wealth funds of monarchs, and city-regions.
Indeed, this isn’t the “Great Recession”, it’s the Great Bank Robbery. The big banks have pillaged and looted the rest of the world.
A lawless justice system is ruining the economy.
Lawless Central Bank
The non-partisan Government Accountability Office calls the Fed corrupt and riddled with conflicts of interest. Nobel prize winning economist Joseph Stiglitz agrees, saying that the World Bank would view any country which had a banking structure like the Fed as being corrupt and untrustworthy. The former vice president at the Federal Reserve Bank of Dallas said said he worried that the failure of the government to provide more information about its rescue spending could signal corruption. “Nontransparency in government programs is always associated with corruption in other countries, so I don’t see why it wouldn’t be here,” he said.
Moreover, the Fed has broken the law by withholding information from Congress, letting unemployment rise in order to keep inflation low, and otherwise exceeding its authority under the Federal Reserve Act.
Acting in a lawless and unaccountable fashion is hurting the economy.
Lawless Attack on Democracy
The ability of the people to participate in their government’s decision-making is vital for a nation’s prosperity. But we no longer have democracy or a republican form of government in America.
The big banks own Washington D.C. politicians, lock stock and barrel. See this, this, this and this. Two leading IMF officials, the former Vice President of the Dallas Federal Reserve, and the the head of the Federal Reserve Bank of Kansas City, Moody’s chief economist and many others have all said that the United States is controlled by an “oligarchy” or “oligopoly”, and the big banks and giant financial institutions are key players in that oligarchy.
Laws are being passed in secret, and not even Congress knows what’s going on.
In other words, not only the justice system, but the entire system of American representation has been corrupted, thus harming the economy.
Lawless Infringement of Freedom
Personal freedom and liberty – and freedom from the arbitrary exercise of government power – are strongly correlated with a healthy economy, but America is descending into tyranny.
Authoritarian actions by the government interfere with the free market, and thus harm prosperity.
U.S. News and World Report notes:
The Fraser Institute’s latest Economic Freedom of the World Annual Report is out, and the news is not good for the United States. Ranked among the five freest countries in the world from 1975 through 2002, the United States has since dropped to 18th place.
The Cato institute notes:
The United States has plummeted to 18th place in the ranked list, trailing such countries as Estonia, Taiwan, and Qatar.
***
Actually, the decline began under President George W. Bush. For 20 years the U.S. had consistently ranked as one of the world’s three freest economies, along with Hong Kong and Singapore. By the end of the Bush presidency, we were barely in the top ten.
And, as with so many disastrous legacies of the Bush era, Barack Obama took a bad thing and made it worse.
But the American government has shredded the constitution, by subjecting us to indefinite detention, taking away our due process rights, deploying drones above our heads, spying on all Americans, and otherwise acting in attacking our freedoms.
Indeed, rights won in 1215 – in the Magna Carta – are being repealed.
Economic historian Niall Ferguson notes, draconian national security laws are one of the main things undermining the rule of law:
We must pose the familiar question about how far our civil liberties have been eroded by the national security state – a process that in fact dates back almost a hundred years to the outbreak of the First World War and the passage of the 1914 Defence of the Realm Act. Recent debates about the protracted detention of terrorist suspects are in no way new. Somehow it’s always a choice between habeas corpus and hundreds of corpses.
Of course, many of this decades’ national security measures have not been taken to keep us safe in the “post-9/11 world” … indeed, many of them started before 9/11.
And America has been in a continuous declared state of national emergency since 9/11, and we are in a literally never-ending state of perpetual war. See this, this, this and this.
In fact, government has blown terrorism fears way out of proportion for political purposes, and “national security” powers have been used in many ways to exempt big Wall Street players from the rule of law rather than to do anything to protect us.
So lawlessness infringement of our liberty is destroying our prosperity.
Lawless Initiation and Prosecution of War
It is well-documented that war destroys the economy.
Top U.S. government employees lied us into war, and used illegal torture, assassinations and other crimes of war in prosecuting the wars they unnecessarily started. They were – at a minimum – criminally negligent for failing to stop 9/11 (and see this).
In the name of fighting our enemies – the U.S. has directly been supporting Al Qaeda and other terrorist groups for the last decade. See this, this, this, this and this.
Our use of torture has also created many more terrorists than it has prevented.
Security experts – including both conservatives and liberals – agree that waging war in the Middle East weakens national security and increases terrorism. See this, this, this, this, this, this, this and this.
Indefinite detention, drone-strikes on innocent civilians, occupation of foreign countries, and most of America’s other tactics in the “war on terror” increase terrorism.
Terrorism feeds the cycle of war … and is thus harming our economy. (and because terrorism spooks people, they spend less, which further harms the economy).
So lawlessness in starting and prosecuting war is destroying our prosperity.
Postscript: We’re not facing a “fiscal cliff”. We’re facing a descent into lawlessness. Stopping the fraudulent schemes, endless bailouts and imperial adventures is the place to start.
Related articles
- Descent Into Lawlessness (theburningplatform.com)
Socialism in the USA, the tipping point has been reached
November 7, 2012
By: David Light
The far left, socialists and communists have attacked the USA from within for years and, with this election, have succeeded in changing our once great Republic, into a Socialist state. The tipping point has been reached.
Many factors contributed to our demise, the indoctrination of our youth being just one of them. Radicals of the sixties became entrenched in our colleges and universities and left leaning unions corrupted our K-12 school teachers (not all, but enough). Curriculums were changed, substituting social welfare subjects for history, thus eliminating any reference our children may have had of the greatness of our Country’s past and the meaning of our Constitution, our Republic and our capitalist society.
The conscious willingness by our leaders to refuse to protect our borders has destroyed the fundamental of assimilation that was the hallmark of our formal immigration policy. We have now become a come one, come all squatter society that is creating a drain on our once great economy. By failing to restrict voting to citizens only, the far left has created just another block to pander to.
The administration has spent millions advertising their mortgage bailouts, free phones, food stamp, disability and welfare programs in order to create an ever increasing entitlement society, the basis of a Socialist state.
This election has also been a tipping point for the left leaning media. Not even pretending to perform investigative reporting on Fast and Furious, and the Benghazi attack, and actually hiding damaging information from the public, they have become just another arm of the far left establishment. A candidate fighting and beating an incumbent is extremely difficult, but at the same time, by having your campaign being sabotaged by the MSM, it becomes nearly a hopeless task.
We now have entrenched in our national political structure, far left ideologues who are students of Cloward-Piven, and Saul Alinsky, proponents of the theory of doing whatever it takes to achieve a goal. For months the President’s campaign bombarded the airways in the swing states with character assassination ads and the President lied repeatedly in the debates with no rebuke from the media. No one will ever know the effects of the Romney votes that mysteriously came up Obama on a number of touch screens across the country or other shenanigans perpetrated by the myriad of voter registration organizations formerly known as ACORN.
And, although the House of Representatives is still in the hands of the opposition party, it has been weakened by the seemingly unlawful acts of Harry Reid in the Senate who has blocked every attempt by the House to get a budget passed, a legal requirement that would negate the necessity for continuing resolutions raising the debt ceiling in order to keep the government running. This tactic is being used to demonize those heartless Republicans when they fight to keep our taxes and spending down. Additionally, the President has taken it upon himself to create legislation through Executive orders and EPA and other agency regulations, thus circumventing Congress, a tactic many believe is unconstitutional.
Can any of this be reversed? No one knows, but the tipping point has been reached.
Suggested by the author:
- The MSM, Barack Obama, Saul Alinsky, and the price of denial
- Election 2012: President Barack Obama wins re-election
- Newark Mayor Booker softens criticism of Obama campaign tactic
- Democrat Nazi tactics asking Americans to spy and dig up dirt on Republicans
Related articles
- The tipping point has been reached (republicmainstreet.wordpress.com)
- Who Is Barack Hussein Obama? And What Is He Really Up To? (americanthinker.com)
- Obama’s Banker’s Policy Strategy Is To Put All Of America Into Jail: Barry Taught “Destroy Middle Class”! (politicalvelcraft.org)
- Rep. Allen West Ascribes Saul Alinsky Conspiracy Theory to Lower Unemployment Rate (redalertpolitics.com)
- Welcome To The New United Socialist Paradise States Of America (buzzfeed.com)
- Obama Taught “Destroy Middle Class” (righttruth.typepad.com)
Obama’s Real Second Term Plan
You won’t recognize this country after his second term — the obvious reason he’s not telling you what he has in mind for it.
By Ned Ryun on 10.26.12 @ 6:08AM
Mitt Romney said it best in the last debate when he informed the President that, “attacking me isn’t an agenda,” which prompted the Obama campaign to immediately release what they call a plan for the second term. This 20-page repackaging of speeches notwithstanding, President Obama remains perhaps the only president in history to run for reelection who not only can’t talk about his record but also can’t discuss his real agenda for a second term.
Now it’s not that he can’t because he doesn’t have any ideas about what he wants to do. He does have big plans, but his vision of the future is profoundly different from that of most Americans. The America that Obama sees when he sits on the Truman Balcony at night and dreams about the next four years is radically altered reality for everyone. It should scare every American — unless you happen to be getting Obama’s free cell phone service.
Obama would like everyone to believe that his second-term policies will address what he sees as the great inequalities and unfairness inherent in the American system. He wants to level the playing field. What he can’t tell you — and what most Americans are realizing — is that leveling out America will reduce freedom, opportunity, income, innovation, and upward mobility in favor of a government-driven economy. With a government-driven society will come statism, and collectivism follows right on the heels of statism, which will destroy America.
Here’s the stark proof, keeping in mind that this is a mere snapshot of the “remaking” Obama has in store that will affect millions of American families and businesses. The President’s proposed budget projects will have federal spending soaring to $5.820 trillion per year, making Obama the biggest government spender in the history of the world. With all the talk from the President about spending cuts to satisfy independent voters, the sum of all of Obama’s spending over the next ten years could total more than $40 trillion that we simply don’t have.
We can’t afford Washington’s spending now. Do we really think only the wealthy will foot the bill for such dramatic increases in government expenditures? The President’s proposals will drive $100 billion in tax hikes next year and more than $2 trillion in tax increases over the next 10 years hitting every American.
With more than 40 million Americans on food stamps, welfare is the fastest-growing portion of the budget under Obama. Food stamp usage is up a staggering 46% and the cost of the program has increased by 72%. Over the next four years, the President is preparing to increase spending on these programs to enable the government to increase benefits and provide for an increasing share of the population.
The slow creep of dependency will see a smaller middle class and a larger dependent class of not just the poor but individuals and families who once could afford to live without the government’s help, but due to inflation, lower wages, fewer jobs, and higher taxes must turn to the government for some form of assistance.
When it comes to crippling regulations to burden private enterprise, the Obama Administration is leading the charge to squash industry in favor of increasing government’s power and reach.
New greenhouse gas regulations will cost $300 to $400 billion per year and increase gas prices. The President’s insane “cow tax” will hit more than 37,000 farms and ranches and 90% of American livestock production. Obama’s attempt to stop hydraulic fracking for natural gas has more than a dozen federal agencies developing new, expensive regulations to prevent energy companies from drilling. His war on the coal industry will continue, costing as much as $110 billion over the next two decades and killing more than 300,000 jobs in Ohio, West Virginia, Pennsylvania, and Missouri. So much for energy independence, and so much for job creation.
Despite the President’s assurance that costs won’t go up and jobs won’t be lost over Obamacare, the 16,000 IRS workers who will administer the tax provisions of the program will be very busy hitting millions where it hurts. According to the Heritage Foundation, the Congressional Budget Office analysis found that nearly 80 percent of those who’ll face tax penalties would be making between $55,850 and $115,250. They will all see their taxes go up starting next year.
Obama will add a $123 billion surtax on investment income, and new taxes on dividends despite the fact that more than half of all Americans invest in the market in one fashion or another. The $86 billion increase in the Medicare Payroll Tax is also coming down the pike, along with a $60 billion tax increase for health insurance companies.
In another uniquely-Obama effort to allegedly reduce healthcare costs, the President is also going to increase taxes by $32 billion on people who already have comprehensive healthcare coverage — because they have coverage. Of course, people who have coverage now that’s not up to the government’s standards will find their plans eliminated and forced to purchase more expensive coverage. He’s even going to tax medical device manufacturers to the tune of $20 billion because apparently that will help make Americans healthier.
In Obama’s America, religious schools, hospitals and charities will be labeled as non-religious employers specifically because they serve the common good of society. Churches and other faith-based institutions will be forced to provide services and even hire employees based on government mandates rather than their own, deeply-held values and beliefs. If they don’t, Obama’s government will gladly step in with an expensive government backfill for the services.
Here’s the good news — we can prevent Obama’s America from becoming a reality. We can stop statism and collectivism from taking us from “one out of many” to one of the many nations whose governments’ thirst for power and control led to the decline of great societies and nations. The choice is ours November 6, and the results of the election, whichever way they go, will resonate for generations to come.
Related articles
- Obama Doesn’t Have a Jobs Plan (humanevents.com)
- President Obama’s plan to reduce the cost of college and reform higher education is still largely a mystery (redalertpolitics.com)
- Obama’s need for lies, propaganda, and derision (constitutionclub.org)
Continents of the World
Mb50's "Liquid Mud" Rant 