This is in response to Jon's Next Right post titled Reform the Republican Political Culture. It began as a terse little comment on a break and grew into a short novella over lunch, so I'm publishing it separately for those who wish to engage in political philosophy.
It's difficult to take The Anonymous Liberal seriously when she or he puts forth the following syllogisms summarized in Jon's column:
Premise: The GOP is corrupt and incompetent
Premise: The reason the Republican Party continues to bleed members has much more to do with the general attitude of the party's political and intellectual leaders than anything else
Conclusion: Until corrupt, incompetent Republicans lose the attitude of general combativeness, they will just continue to turn people off
Next:
Premise: [The voters] watch TV and see a very intelligent, charismatic President who says a lot of "very reasonable sounding things" and "exudes competence" (quotes mine)
Premise: They [the same voters?] see a bunch of angry conservatives and Republicans who insist the same ["reasonable-sounding" "competence-exuding"] President is some sort of evil communist who's going to destroy the country
Conclusion: Republicans are coming across as a bunch of obnoxious, unreasonable a-holes [which invalidates any criticism or dissension because the "tone" and "source" are all wrong]
Then it's Jon's turn:
Premise: People accurately perceive the [obnoxious, a-hole?] state of the Republican Party
Premise: The leaders of the Right must change and embrace reform, regardless of how Democrats behave
Conclusion: The first priority for the Right cannot be to defeat democrats [emphases mine, based on sheer incredulity]
I disagree. Let me start with my observation that our entire government is corrupt and incompetent - and that includes not only the GOP and DNC but also independents, that precious group of "no-flies-on-me-bro" fame.
The first priority for the Right should be to continue its role as the vocal loyal opposition, followed by the priority of reformthroughout the government. I appreciate Jon's ideals and in fact share quite a few of them, but there are some serious flaws with all of these propositions. Anonymous Liberal has created a straw man that basically states "until conservatives behave with appropriate contrition and cease acting as though a perfectly reasonable President is flawed, they have no credibility." In the liberal reality tunnel, this straw man is attacked early and often. However, conservatives on the Right, Center and even, I might add, on the Left, all share an intersection in their reality tunnels that the President does not necessarily appear to be entirely reasonable regardless of how much confidence he exudes. In fact, he appears to be just about as unreasonable in his own Presidency as Bush was in his. And for those of us who sport first, second and third degree burns from the previous Bush years (in which I'd include both Bushes), we are most assuredly twice shy today. Let me provide a very recent example of Bush-trauma-induced trepidation, courtesy of the potentially unconstitutional Chrysler controversy:
Creditors to Chrysler describe negotiations with the company and the Obama administration as "a farce," saying the administration was bent on forcing their hands using hardball tactics and threats.
Conversations with administration officials left them expecting that they would be politically targeted, two participants in the negotiations said.
Although the focus has so been on allegations that the White House threatened Perella Weinberg, sources familiar with the matter say that other firms felt they were threatened as well. None of the sources would agree to speak except on the condition of anonymity, citing fear of political repercussions.
The sources, who represent creditors to Chrysler, say they were taken aback by the hardball tactics that the Obama administration employed to cajole them into acquiescing to plans to restructure Chrysler. One person described the administration as the most shocking "end justifies the means" group they have ever encountered. Another characterized Obama was "the most dangerous smooth talker on the planet- and I knew Kissinger." Both were voters for Obama in the last election.
Repeatedly, the Obama administration has favored its political supporters by interfering in the marketplace and now it extends that to judicial processes with a dangerous and politically jaundiced decision. Obama's favoritism toward the union in these negotiations is a clear example of political expediency imposing grave economic costs. Specifically, Chapter 11 makes the potential deal with Fiat to provide small car designs to be built in Chrysler factories much less likely. Hence, the company that emerges from Chapter 11 will be much smaller than the one that would have emerged through the task force's mediation, because the company that emerges from bankruptcy may not have small cars to make at a time when the market wants them. More of Chrysler's car assembly plants will be permanently shuttered. This outcome was precipitated by the Obama Administration's failure to deal firmly with the union. In the end, retiree benefits may have been protected but only at the cost of greater job losses among current autoworkers.
"Obnoxious conservative a-holes" being watched on teevee may, in fact, have every right to be angry, and to express that anger in an appropriate manner such as the right to assemble and present their opinions in other venues. It's Jon's highlight of an affront to these people that I wish to address, and certainly not his critique of the mutually agreed robust failure of Republican leadership.
When we take the time to speak with average conservative Americans, we discover that a great many of us are actually very repentant about having stood by and abetted the politically dangerous and in some cases unconstitutional Bush overreaches which have beautifully set the table for the Obama administration to cook up a veritable feast of progressivism and potentially totalitarian corporatism. Jon supports Anonymous Liberal by marginalizing the concerns that American conservatives have over a repeat of history here: AL writes: "When you've just been voted out of power for manifest incompetence and your opponents are led by a very popular and reasonable-sounding person, you don't have the luxury of acting smug and uncompromising all the time. You have to acknowledge error and show some humility."
Even Anonymous Liberal doesn't make any firm commitments to Obama's competency - he (or she) continually alludes to style traits such as "confidence", "popularity" and being "reasonable-sounding". Anonymous Liberal omits substance while focusing on appearance, image, and "perception". Robert Anton Wilson stated that the past 2500 years of philosophy from Plato and Confucious to present have combined to illustrate that the notion of perception beiing reality constitutes Naive Realism. In other words, the whole "perception is reality" meme is patent bull crap. There are as many realities as there are observers. The perception challenge is to have the awareness, energy and/or skepticism to rise above the magic of good marketing, which includes repeating a lie so often that everyone believes it.
If conservatives are so wrong about the President, then fine - let's bring Anonymous Liberal over to The Next Right to participate in an educational presentation and/or debate highlighting this President's achievements while citing specific examples of Republican peccadillos other than the conclusion that conservatives are obtuse, flawed, rude and have no appreciation of the young, popular President's hip style. I would argue that the style-over-substance presentation is brilliantly designed to place observers into a mass trance that distracts them from noticing disturbing events which are occurring in Washington and the State capitals. Perhaps conservatives simply aren't subject to it because of a different set of internal beliefs. Rather than honoring and respecting conservative beliefs as a diverse and different point of view in an open dialogue, they're consistently minimized, marginalized and perhaps may ultimately be shut down because they don't align with the beliefs of the central power structure.
We've seen Jon's outrage and passion against idiocy on the Right, now where is his outrage and passion at the behavior of this administration and the intolerance on the Left? Even the moderate center/right columnist Michael Barone refers to the current regime as the "Gangster Government". The Chrysler senior creditors are literally in fear of their lives, of being outed as were the AIG executives, of having the daylights scared out of their families by drive-by protesters accompanied by the propaganda arm of the media, while Jon and Anonymous Liberal render images of retrograde "teabaggers" appearing out of touch and inappropriately vexed because they exhibit a pathological fear of a [legitimate historically cyclic] encroachment of government totalitarianism and are trying to sound an alarm over it. Hmmm...
Even though I completely agree with Jon about the sorry state of Republican leadership, I urge him to become - and remain - equally exercised about the fact that civility and reform are greatly needed on both sides of the aisle. Both parties are in need of a complete overhaul, but it's our Constitution and economy which is in the process of being overhauled while Jon urges inward reflection by a group of men and women in GOP leadership roles who have absolutely no intention of complying with such advice, no matter how sage - and we both know it.
I'll leave you with a few more RAW quotes: "the greatest conspiracy theory in the world is the conspiracy of stupidity." "Stupidity has a place in the universe, and we should appreciate it." Over time, stupidity will create the level of failure required to actually prompt a rebuild - and there's Jon's recipe for actual, painful reform - on both sides of the aisle - in a nutshell.
The following notes were taken in a conference call introducing Rob Simmons and his campaign to defeat Senator Chris Dodd in 2010 to the online community:
Former U.S. Representative Rob Simmons has had a full career of public service. He served with the Army in Vietnam, 10 years with CIA, 10 years in the CT general assembly, and 6 years in Congress from 2001-2007. His Senate experience goes back to being staffer for Senators John Chaffee (1979) and Barry Goldwater (1981). Rob promotes free enterprise as a fundamental value of all Americans, which he finds at great jeopardy with Newsweek’s recent publication of an article saying “We’re All Socialists Now.”
He’s running a very competitive race with Chris Dodd, reflecting Chris’ failure to treat his public office as a public trust - something Rob has believed in all his life. Chris obtained a $75K sweetheart mortgage deal from Angelo, moved to Iowa in frivolous attempt to run for President, flip-flopped famously on AIG bonuses, then purchased a cottage in Ireland which he reported to cost $100K but is actually worth $1M, obtained from a pardoned felon.
Dodd has lost tremendous support (he has a 50-34% lead in the April 2, 2009 Quinnipiac Poll). Rob is a fiscal conservative, staff service in Senate and Congress, can hit the ground running and get the job done.
Questions:
Brian Faughnan (Weekly Standard, RedState): “What are your issues and themes for the race notwithstanding Senator Dodd?”
Rob Simmons: The state of the economy is the main issue. Unemployment has gone up 5% in the last year, businesses’ tax burdens will increase at both the state and fed levels. I’m a fiscal conservative and a believer in free enterprise, which has brought more quality and progress than any other system devised. I don’t use the word capitalism, I use the word free enterprise to define the economic system that gives the average citizen the opportunity to realize economic dreams and support the economy.
Sean Hackbarth (The American Mind, The Next Right): How do you reach out to groups not normally voting for Republicans?
Rob Simmons: This is a huge issue for GOP. I prefer the term “include” to “reach out”. Reaching out suggests not including or embracing. I get a tremendous amount of information and inspiration from young people from diverse ethic and ideological backgrounds. I’m scheduled to go on Spanish language radio very soon and will talk about how free enterprise lifts immigrants out of poverty and into ownership. I also have close links to the African-American community in New London. J.C. Watts was a friend in Congress and campaigned for me.
Gigi aka lagomorph (Lagomorphic Tendencies, The Next Right): How do you feel about the centralization of power in a central banking system, and are you in favor of auditing the Federal Reserve?
Rob Simmons: I’m a cross between a Jeffersonian and a Hamiltonian, so I’m not against a central bank per se. People don’t trust the system to correct itself, there’s negative rhetoric regarding financial services sector, class warfare and allegations of greed, but an audit and transparency are tremendously important. I would structure the transparency in a way that’s useful, not harmful. Because of my intelligence background, I advocate using transparency and investigation not as a criminal prosecution, but as a useful tool.
Nansen (Washington State GOP, Top Conservative on Twitter): What’s the biggest obstacle do you have to raising money?
Rob Simmons: Chris Dodd name recognition is the biggest obstacle. It is well recognized in CT, and surely he’ll shake down the people he oversees (Fannie Mae, Freddie Mac, etc), which is a violation of the public trust. Rob will reach out across the country to raise money. If your IRA or 401K is half what it was a year ago, or you’re confronted with job loss or foreclosure, he has to bear some of that responsibility along with Barney Frank, who was a professor of mine at the Kennedy School at Harvard. I can raise enough money to shed light on Dodd’s failures.
Sean Hackbarth: How do you avoid the RINO tag?
In previous campaigns I was accused of poisoning children, positioning a nuclear waste dump near a playground, and being a war criminal. In each case my campaign pushed back. I was Barry Goldwater’s chief of staff on the Senate Intelligence Committee for 4 years. I’m strong on national security, defense, and fiscally conservative. I carry a copy of Senator Goldwater’s “Conscience of a Conservative” with me at all times. Government has proved to be the chief instrument of thwarting men’s liberty. If you believe in freedom and liberty, they go hand in hand with personal responsibility and we have to shift the burden of personal responsibility upon individuals. This is as controversial now as it was in Barry Goldwater’s time. There’s always been an historic struggle between liberty and authority. I don’t want the government telling me, my wife, or my family what to do. This is consistent with conservative values.
In conclusion:
Rob Simmons: I’d like to thank everyone for participating. Trying to connect with a diverse group of people around the country is important. I’m not the most versed in online technology, but I did develop an Army protocol for open source intel to produce intelligence products. I’ve run a virtual office and virtual military organization, and my campaigns have been able to attract people virtually (without face time) with whom I can develop successful strategies.
The moment I read that, I was reminded of Joe Scarborough's question to Daniel Hannan this week about whether the egregious folly of the British Labour government would lead to a resurgence of the conservative movement in Great Britain around the 6th minute of this video, in which Daniel was somewhat less than optimistic.
Daniel Hannan interviewed by Joe Scarborough and Richard Haass on MSNBC, 3/30/09
Partial Transcript
Richard Haass of the Council on Foreign Relations (ironically enough) asks Daniel whether the G20 could do something on a World Trade Agreement as stimulus in the run-up to the summit.
Daniel: "What I'd really like to see them do [at the G20] is move against non-tariff barriers to trade, and by non-tariff barriers I mean things like nationalizing banks, subsidizing car industries, and having Buy America type clauses, in other words, restrictions on government tender that are intended to redirect things toward the home market - and I'm talking to you, Mr. President. The one thing we could all do is to try and avoid the mistakes that were made in the 1930's when the crash was followed by turning in to protectionism which then condemned the world to years of recession and ultimately to Fascism and war."
Joe: "Daniel, as we move forward, do you suspect that there will be a conservative counterbalance in Great Britain? Do you think the conservatives will most likely beat back Gordon Brown in the next election?"
Daniel: "I'm pretty sure that we're going to win the next election because people are very angry about what's happened but in terms of the kind of wider intellectual rebirth of conservatism, I'm not naturally sanguine by temperament and I'm not particularly optimistic about this. Last time that this happened, there had been a real consensus behind free trade. You go back to the Hoover and Coolidge and and Harding administrations, free trade and laissez-faire seemed as embedded then as it was in the 90's now, and how quickly things turned when there was a crash. And it basically condemned us to 40 years of Corporatism, and Keynesianism, and State Intervention, and it was only when people had seen where that ends, with total exhaustion, with stagnation, with inflation and with massive debt. It was only then that people were really ready for the remedies. And I just hope that the generation that we live in doesn't have to go through that entire process, that we can kind of short-circuit it, and realize early on before we get to a complete calamity, that you can't carry on forever spending money."
Patrick and Daniel are both correct...
I think that Patrick's point is well taken, as is Daniel's. To Patrick's point, I've already seen conservative Republicans and Libertarians on blogs, Facebook and Twitter greatly stirred by this "transformational moment". To Daniel's point, I'm daily more and more convinced that the average voter is neither conservative nor libertarian, and more inclined to read TMZ.com rather than RealClearPolitics.com, watch American Idol rather than Meet The Press, and blithely go along down the road to Fascism and another war. They may vote for a few more Republicans than Democrats in 2010, but that hardly encourages me after witnessing so-called GOP rising stars Eric Cantor, Paul Ryan and 83 other Republican "conservatives" vote to support the constitutionally questionable punitive ex de facto 90% tax against AIG bonuses. The real rising star of the Congress appears to me to be Judd Gregg, who's sadly retiring.
Cruising down the Highway to Hell
I'm deeply concerned that we're much more likely to be on the Highway to Hell, and the vehicle we're cruising in at increasing speed is the UN's own Agenda 21. Clintonista "science advisor" Nina Fedoroff told the BBC One Planet program recently that humans had exceeded the Earth's "limits of sustainability". Ut-oh...
If you're at all interested in economics and civil liberties and you've not familiarized yourself with the Clinton era UN Department of Economic and Social Affairs Division for Sustainable Development document known as Agenda 21, I suggest you do so immediately. I would go so far as to recommend that Glenn Beck revisit his ill-named 9/12 Project and rename it to the much more appropriate Pre-Agenda 21 Project.
In case you miss the Orwellian nuance in the official document, I invite you to download Jacqueline Kasun's excellent analysis of the Agenda 21 "vision" titled Doomsday Every Day: Sustainable Economics, Sustainable Tyranny and learn much, much more about what Herman Daly, Maurice Strong, and John B. Cobb, Jr. have in mind for you. I guarantee that the illogical frenzy of the Obama agenda policy cram-down will become crystal clear when you do. In computer programming we have an analogy for an agenda of this nature - we call it "the main driver".
Sustained by foundation money and federal grants, rarely mentioning Agenda21, salaried environmental activists are convening unsuspecting local citizens to engage in the “visioning” process to plan for the sustainable community in their future. Vice President Gore’s Clean Water Initiative and the administration’s American Heritage Rivers Initiative are nurturing the process by encouraging local “watershed councils” to make comprehensive plans for their regions.
Probably not many of these souls have read the works of Herman Daly or Maurice Strong, the Rio documents, or the modern college textbooks in sustainable economics. If they had, they might be less eager to help.
This is in response to several good questions and comments regarding the role of the Fed and Goldman Sachs in the AIG debacle that came up in David Farrar's post titled Why Are We Punishing AIG's Employees.
While Congress (and by "Congress" I most certainly refer to Republicans and Democrats) has taken their eyes off the ball repeatedly by (a) neglecting the issue of transparency with the TARP, (b) slamming through the Stimulus Package and Omnibus Budgets without careful, cautious scrutiny, (c) careening toward the slippery slope of out-and-out Corporatism and Fascism, most recently by utilizing the tax code as a form of retribution to satisfy their so-called angry mob constituents, and (d) completely avoiding discussion of how the Fed is funneling trillions into failing financial institutions completely independent of legislative oversight, it's becoming more and more obvious to me that there is something very rotten here in the States United.
I'm not outraged by Jim Cramer's crappy investment advice on CNBC, or by incompetency bonuses at AIG, Merrill Lynch, et al. No, no, no. I have bigger fish to fry. I am utterly, completely outraged that in the past twelve months since the Bear Stearns bailout, we've devolved from a free Republic to an Ochlocracy while the media has either been in collusion as a propaganda arm of the Corporatists at worst, or ignorantly asleep at the switch at best. With the exception of a C-SPAN interview with Paul Kanjorski in January 2009, there has been absolutely no media coverage of either the massively devastating 9/15/08 run on American mutual funds, or the $1T run on British banks between March and the end of 2008.
I was flipping through channels on the remote during my workout yesterday morning to catch the latest news on our pitchfork-wielding Congress when I ran into a seemingly innocuous interview with Matt Taibbi about an article he'd just written for Rolling Stone titled The Big Takeover - The global economic crisis isn't about money - it's about power. How Wall Street insiders are using the bailout to stage a revolution. It was a fairly brief interview with a loop of professional protestors in the background (those are the ones who carry mass-produced signs, not home-made ones, with professonal slogans, not colloquialisms, and are usually bused in by the local unions or, in the case of AIG executive protests, Communist Front Groups like the Connecticut Working Families Party - not mentioned by name in this article, interestingly, but notice that they were bused in with professional protest signs). But Matt said something that immediately made me perk up my ears: He mentioned The Accounting and Auditing Act of 1950, which prevents the Federal Reserve from being audited by Congress in section 31, USC 714(b).
I will start by giving absolutely mad props to Taibbi for providing the hard-hitting investigative journalism that the Rolling Stone used to be known for back in the gonzo days of Hunter S. Thompson, Tom Wolfe and P.J. O'Rourke. Taibbi stands alone in the media for actually pursuing the story down the rat-holes of international finance and emerges with many nuggets of truth covered in the slime, feces, cronyism, incompetency and corruption of a world-class conspiracy. He exposes a culture of investment elites whose shenanigans and psycopathy rival (and are in some cases were inspired by) the immortal villains of the 1980's: Michael Milken, Ivan Boesky, Charles Keating, et al.
So what exactly do I mean by "world class conspiracy"? If you don't have time to read the thousands of words in Taibbi's article, I'll share a few hundred words of the pertinent details with you, h/t George Washington's Blog excerpt titled We Not Only Have a Shadow Banking System, But also a Shadow Government:
While the rest of America, and most of Congress, have been bugging out about the $700 billion bailout program called TARP, all of these newly created organisms in the Federal Reserve zoo have quietly been pumping not billions but trillions of dollars into the hands of private companies (at least $3 trillion so far in loans, with as much as $5.7 trillion more in guarantees of private investments). Although this technically isn't taxpayer money, it still affects taxpayers directly, because the activities of the Fed impact the economy as a whole. And this new, secretive activity by the Fed completely eclipses the TARP program in terms of its influence on the economy.
No one knows who's getting that money or exactly how much of it is disappearing through these new holes in the hull of America's credit rating. Moreover, no one can really be sure if these new institutions are even temporary at all — or whether they are being set up as permanent, state-aided crutches to Wall Street, designed to systematically suck bad investments off the ledgers of irresponsible lenders.
"They're supposed to be temporary," says Paul-Martin Foss, an aide to Rep. Ron Paul. "But we keep getting notices every six months or so that they're being renewed. They just sort of quietly announce it."
None other than disgraced senator Ted Stevens was the poor sap who made the unpleasant discovery that if Congress didn't like the Fed handing trillions of dollars to banks without any oversight, Congress could apparently go fuck itself — or so said the law. When Stevens asked the GAO about what authority Congress has to monitor the Fed, he got back a letter citing an obscure statute that nobody had ever heard of before: the Accounting and Auditing Act of 1950. The relevant section, 31 USC 714(b), dictated that congressional audits of the Federal Reserve may not include "deliberations, decisions and actions on monetary policy matters." The exemption, as Foss notes, "basically includes everything." According to the law, in other words, the Fed simply cannot be audited by Congress. Or by anyone else, for that matter.
Stevens isn't the only person in Congress to be given the finger by the Fed. In January, when Rep. Alan Grayson of Florida asked Federal Reserve vice chairman Donald Kohn where all the money went — only $1.2 trillion had vanished by then — Kohn gave Grayson a classic eye roll, saying he would be "very hesitant" to name names because it might discourage banks from taking the money.
"Has that ever happened?" Grayson asked. "Have people ever said, 'We will not take your $100 billion because people will find out about it?'"
"Well, we said we would not publish the names of the borrowers, so we have no test of that," Kohn answered, visibly annoyed with Grayson's meddling.
Grayson pressed on, demanding to know on what terms the Fed was lending the money. Presumably it was buying assets and making loans, but no one knew how it was pricing those assets — in other words, no one knew what kind of deal it was striking on behalf of taxpayers. So when Grayson asked if the purchased assets were "marked to market" — a methodology that assigns a concrete value to assets, based on the market rate on the day they are traded — Kohn answered, mysteriously, "The ones that have market values are marked to market." The implication was that the Fed was purchasing derivatives like credit swaps or other instruments that were basically impossible to value objectively — paying real money for God knows what."Well, how much of them don't have market values?" asked Grayson. "How much of them are worthless?"
"None are worthless," Kohn snapped.
"Then why don't you mark them to market?" Grayson demanded.
"Well," Kohn sighed, "we are marking the ones to market that have market values."In essence, the Fed was telling Congress to lay off and let the experts handle things. "It's like buying a car in a used-car lot without opening the hood, and saying, 'I think it's fine,'" says Dan Fuss, an analyst with the investment firm Loomis Sayles. "The salesman says, 'Don't worry about it. Trust me.' It'll probably get us out of the lot, but how much farther? None of us knows."When one considers the comparatively extensive system of congressional checks and balances that goes into the spending of every dollar in the budget via the normal appropriations process, what's happening in the Fed amounts to something truly revolutionary — a kind of shadow government with a budget many times the size of the normal federal outlay, administered dictatorially by one man, Fed chairman Ben Bernanke. "We spend hours and hours and hours arguing over $10 million amendments on the floor of the Senate, but there has been no discussion about who has been receiving this $3 trillion," says Sen. Bernie Sanders. "It is beyond comprehension."
Count Sanders among those who don't buy the argument that Wall Street firms shouldn't have to face being outed as recipients of public funds, that making this information public might cause investors to panic and dump their holdings in these firms. "I guess if we made that public, they'd go on strike or something," he muses.
And the Fed isn't the only arm of the bailout that has closed ranks. The Treasury, too, has maintained incredible secrecy surrounding its implementation even of the TARP program, which was mandated by Congress. To this date, no one knows exactly what criteria the Treasury Department used to determine which banks received bailout funds and which didn't — particularly the first $350 billion given out under Bush appointee Hank Paulson.
The situation with the first TARP payments grew so absurd that when the Congressional Oversight Panel, charged with monitoring the bailout money, sent a query to Paulson asking how he decided whom to give money to, Treasury responded — and this isn't a joke — by directing the panel to a copy of the TARP application form on its website. Elizabeth Warren, the chair of the Congressional Oversight Panel, was struck nearly speechless by the response.
"Do you believe that?" she says incredulously. "That's not what we had in mind."
Another member of Congress, who asked not to be named, offers his own theory about the TARP process. "I think basically if you knew Hank Paulson, you got the money," he says.
This cozy arrangement created yet another opportunity for big banks to devour market share at the expense of smaller regional lenders. While all the bigwigs at Citi and Goldman and Bank of America who had Paulson on speed-dial got bailed out right away — remember that TARP was originally passed because money had to be lent right now, that day, that minute, to stave off emergency — many small banks are still waiting for help. Five months into the TARP program, some not only haven't received any funds, they haven't even gotten a call back about their applications.
"There's definitely a feeling among community bankers that no one up there cares much if they make it or not," says Tanya Wheeless, president of the Arizona Bankers Association.
Which, of course, is exactly the opposite of what should be happening, since small, regional banks are far less guilty of the kinds of predatory lending that sank the economy. "They're not giving out subprime loans or easy credit," says Wheeless. "At the community level, it's much more bread-and-butter banking."
Nonetheless, the lion's share of the bailout money has gone to the larger, so-called "systemically important" banks. "It's like Treasury is picking winners and losers," says one state banking official who asked not to be identified.
This itself is a hugely important political development. In essence, the bailout accelerated the decline of regional community lenders by boosting the political power of their giant national competitors.
Which, when you think about it, is insane: What had brought us to the brink of collapse in the first place was this relentless instinct for building ever-larger megacompanies, passing deregulatory measures to gradually feed all the little fish in the sea to an ever-shrinking pool of Bigger Fish. To fix this problem, the government should have slowly liquidated these monster, too-big-to-fail firms and broken them down to smaller, more manageable companies. Instead, federal regulators closed ranks and used an almost completely secret bailout process to double down on the same faulty, merger-happy thinking that got us here in the first place, creating a constellation of megafirms under government control that are even bigger, more unwieldy and more crammed to the gills with systemic risk.
In essence, Paulson and his cronies turned the federal government into one gigantic, half-opaque holding company, one whose balance sheet includes the world's most appallingly large and risky hedge fund, a controlling stake in a dying insurance giant, huge investments in a group of teetering megabanks, and shares here and there in various auto-finance companies, student loans, and other failing businesses. Like AIG, this new federal holding company is a firm that has no mechanism for auditing itself and is run by leaders who have very little grasp of the daily operations of its disparate subsidiary operations.
In other words, it's AIG's rip-roaringly shitty business model writ almost inconceivably massive — to echo Geithner, a huge, complex global company attached to a very complicated investment bank/hedge fund that's been allowed to build up without adult supervision. How much of what kinds of crap is actually on our balance sheet, and what did we pay for it? When exactly will the rent come due, when will the money run out? Does anyone know what the hell is going on? And on the linear spectrum of capitalism to socialism, where exactly are we now? Is there a dictionary word that even describes what we are now? It would be funny, if it weren't such a nightmare
Exactly. Now how, you may ask, does Goldman Sachs fit into the AIG puzzle? To quote a conversation on Cavuto today, "AIG is pimping for Goldman Sachs", (playfully referred to as Government Sachs by Michael Hirsh at Newsweek) because they are said to be the most exposed by AIG's potential default on covering the defaults. You can find a tidy list of indictments against Goldman Sachs in A Little Reality's blog post titled Is AIG an International Criminal Conspiracy?
J.P. Freire is one funny guy. Here's a sample of a little note he penned to Chas Koch thanking him for funding the #teaparty movement.
Dear Charles G. Koch Foundation,
We wanted to let you know how excited we were to hear of your willingness to fund our tea parties. Because we are avid readers, we read Playboy magazine (large print edition, of course) so that we can have the latest news updates, be it aspiring actresses and their hobbies, or a few good jokes to quicken happy hour conversation.
Imagine our surprise that you decided to let Playboy know of your decision to pay us before you ever let US know! I mean, there we were, sitting in our respective cardboard box homes, thinking up protest ideas, and wondering if anyone would ever pay us for it! I turned to a friend and said, “I could really use a home. Or a Lexus.” And then my friend said, “We should both get Lexuses.” We then debated the plural form of Lexus. It’s Lexii, by the way. But you knew that, because you probably know Latin. Most foundations know Latin. It’s science.
Anyway, we made a list of stuff we want, and we’ve put it all under the header of “How to move the conservative movement forward.” Turns out, all you have to do is heap cash on activists who will invariably misuse that money. You know, like ACORN. And that is the reason for this letter. We want to make sure your money goes to the right people and is used correctly. That is, to us and for whatever we want. You know how we’re going to limit government? A 60 inch plasma. It’s called getting the message out, and I don’t see how you can do that with just a 13 inch broken television I found in the dumpster next to my box.
J.P. organized the D.C. teaparty, and you can read the rest of the letter here, and see all the videos and pics at Michelle Malkin's Goin' Galt post. Who knew that conservatives would become the counterculture?
Honest, I had no idea it would go this well. I thought I’d have to hire hobos to walk around and talk about freedom. Turns out, you guys actually showed up!
There's an interesting article by David Brooks reflecting so many of the topics I've been engaged in today titled A Moderate Manifesto:
You wouldn’t know it some days, but there are moderates in this country — moderate conservatives, moderate liberals, just plain moderates. We sympathize with a lot of the things that President Obama is trying to do. We like his investments in education and energy innovation. We support health care reform that expands coverage while reducing costs.
But the Obama budget is more than just the sum of its parts. There is, entailed in it, a promiscuous unwillingness to set priorities and accept trade-offs. There is evidence of a party swept up in its own revolutionary fervor — caught up in the self-flattering belief that history has called upon it to solve all problems at once.
So programs are piled on top of each other and we wind up with a gargantuan $3.6 trillion budget. We end up with deficits that, when considered realistically, are $1 trillion a year and stretch as far as the eye can see. We end up with an agenda that is unexceptional in its parts but that, when taken as a whole, represents a social-engineering experiment that is entirely new.
The U.S. has never been a society riven by class resentment. Yet the Obama budget is predicated on a class divide. The president issued a read-my-lips pledge that no new burdens will fall on 95 percent of the American people. All the costs will be borne by the rich and all benefits redistributed downward.
The U.S. has always been a decentralized nation, skeptical of top-down planning. Yet, the current administration concentrates enormous power in Washington, while plan after plan emanates from a small group of understaffed experts.
The U.S. has always had vibrant neighborhood associations. But in its very first budget, the Obama administration raises the cost of charitable giving. It punishes civic activism and expands state intervention.
The U.S. has traditionally had a relatively limited central government. But federal spending as a share of G.D.P. is zooming from its modern norm of 20 percent to an unacknowledged level somewhere far beyond.
Brooks goes on to discuss the eery feeling that moderates have as they're wedged somewhere between unchecked liberalism and Rush Limbaugh's brand of conservatism, hoping they can "try to tamp down the polarizing warfare that is sure to flow from Obama’s über-partisan budget".
I think he nails the increasingly grim national mood of so many moderates and centrists who voted for Obama nicely. I call it Buyer's Remorse.
The following is taken from both press releases and video of the GOP Reaction to Peter Orszag's briefing on the White House FY2010 Budget by Paul Ryan (R-WI), House Budget Committee Ranking Republican, and Judd Gregg (R-NH), Senate Budget Committee Ranking Republican.
Paul Ryan: "In his Tuesday address to Congress, President Obama gave an eloquent commitment to addressing today’s greatest challenges: the ongoing financial crisis, mounting job losses, unrelenting health care costs, and an unsustainable path of Federal spending and looming entitlement crisis.
"The President’s opportunity to fulfill his rhetoric came today – in his first budget submission to Congress. Regrettably, the reality of the President’s budget falls far short of his inspiring words; it is simply a continuation of the misguided notion that America can spend, tax, and borrow its way to prosperity.
"Despite his call for ‘fiscally responsibility,’ the President’s budget promotes an ever larger, more expensive Federal Government as the first , and seemingly only, answer to our nation’s problems.
"When you take a look at this budget, it's a spend, tax, and borrow our way into prosperity budget. It proposes bigger government with higher spending, higher taxes and higher debt as a means to produce more prosperity in America.
"My favorite movie of all time is a Clint Eastwood/Sergio Leone classic: The Good, The Bad and the Ugly. And I believe that it's important that if good things are being done, highlight those. So we broke this budget down into the Good, the Bad and the Ugly.
The Good:
Acknowledgement of the entitlement crisis (no solution provided yet, but at least it's been acknowledged)
Budgets for AMT fix
Means-Test Medicare Part D Premiums
The Bad:
Increases '09 spending to $3.9 Trillion
Increases non-defense appropriations by 9.3% (raising total percentage of deficit to GDP to 27%, which is huge)
War funding gimmick - disingenuously includes amount spent on Iraq War at its 2008 height during the surge and subtracts the difference between this amount and the amount spent when we draw down troops from Iraq, calling this difference a "savings".
The Ugly:
$1.4 Trillion Tax Increase in a Recession
$1 Trillion Entitlement expansion
2009 Deficit of $1.9 Trillion
Doubles the national debt
"If there's anything that economists on the Left and the Right agree on, that supply siders, Keynesians and classic economists can agree on, you don't raise taxes in a recession. This budget is raising taxes in a recession. This budget is going to have a $1.4 Trillion tax increase. Tax increases on small businesses, on investment that creates jobs, tax increases that are going to hurt states that are cold states where we have to pay for heating our homes, and states that have a lot of manufacturing. It will put us at a huge disadvantage against our foreign competitors.
"The deficit this year goes to $1.8 Trillion alone. This doubles the debt within 8 years. And so if you take a look at all of these numbers and you include the taxes that are going to hit families and all the new spending on health care, let's recognize one thing and Senator Gregg said it very well. We already spend 2.5 times per person on health care spending versus all other industrialized countries. Can't we spend what we're spending now more effectively, why do we have to spend all this additional money? Let me put it a different way. We're already projected to spend $4.5 Trillion on health care spending for people under the ages of 65.
"I would argue that if we reformed our health care system to put patients and doctors in control of their health care, bring the market back into health care, we could have universal accessibility to health care coverage. Instead, we're going down the path of having the government run health care, of having us raise taxes, borrow more money and spend even more money on top of this to do this. We could work together on Social Security and get that fixed. We could take that as a trust-building, confidence-building exercise and move into the health care areas, but we've got to check ideology at the door. If it's a plan to nationalize the health system then we're not going to want to participate in that. We had a nice talk on Monday, but it's got to follow with action and there's not much action on that in this budget.
"I want to work with the President in a bipartisan way to move this country forward. We want to have bipartisanship, but that requires collaboration. But in good conscience, we can't work with the other side if they insist on dramatically growing government, on dramatically increasing taxes, and dramatically borrowing more money because that will give our kids in the next generation a dramatically more expensive government, much higher taxes and an inferior standard of living. And that, I fear, is the trajectory which we are on. This puts on the path to much bigger government permanently and that's not the right direction." Judd Gregg: "He's Clint Eastwood, I'm Eli Wallach."
[Asked by a reporter about creating another financial rescue package for the financial system] "I'm willing to give them the benefit of the doubt on that one. We're in such a difficult fiscal situation that if they come to us and make a legitimate case that in order to stabilize this economy and specifically the financial sector, and they need more TARP dollars or whatever they want to put the new title on it as, I'm certainly going to be listening. And that's a reflection of my willingness to be bipartisan and recognize that we're in a pretty rough sea and we all need to be in the boat rowing towards shore and the initiatives to stabilize the financial industry have to be done in a bipartisan way.
"On the issue of financial stability, until they've probably completed the stress test exercise of going through the major banking system and deciding where the capital needs are, and what sort of reconstruction has resulted from the initial efforts here, and as the TALF [Term Asset-Backed Securities Loan Facility, an effort to expand lending to US consumers] money kicks in which will relieve, significantly I believe, some of the pressure on the financial industry, they're not going to know [how much the total health care spending will entail aside from the $636 Billion down payment].
"On the issue of health care, it looks to me like they're talking over $1 Trillion, the $636 Billion is really what they could figure out to answer how they're going to cover it, they're really talking over $1 Trillion or more. "There are procedurally some good decisions here from a standpoint of technical budgeting actions. They've taken steps which were appropriate such as not including AMT revenues when we know we're not going to get them, and then we end up spending them; such as the doctor's fix, accounting for that; such as scoring the war. So those are good things to do and I think that reflects the fact that Peter Orszag is down there and and he's an honest and fair broker of what the baseline should be relative to numbers.
"On the other side, though, when we get to substance I have some very severe reservations about where this budget is taking us and the issue really comes down to this: where is the restraint in spending? You know this budget doubles the debt of the Federal Government in five year, triples the debt of the Federal Government in ten years, runs up obviously massive deficits over this period and never really gets us back to a point where we're on a glide path toward getting control over the costs that we're passing on to the next generation - the costs that our children and our grandchildren are going to have to pay to operate the government.
"The problem with this is that it's done in the context of not addressing the true fiscal problems that have as a country which is the looming fiscal tsunami of the Baby Boom generation retiring and the entitlement costs that they're going to incur and the fact that we're going to end up passing on to our children a government that they can't afford and a nation that won't be as strong as we were given by our parents. There are massive tax increases in this bill, in this proposal, $1.4 Trillion by our calculation, that's a BIG number. Massive new spending in this bill, just in the health care area $1.4 Trillion.
"The representation that the deficit is being cut in half in four years is a nice representation but it's really not the heavy lifting that's needed here. In fact, if you go to the current. In fact if you go to the current law baseline, the deficit would go to $140-150 Billion in the fifth year. So actually just under current law, the deficit would end up being dramatically less than where they're going, which is to a $500 Billion + deficit in the fifth year. That number is very, very large, obviously, but more disturbing is the fact that it goes on forever. "
Itemized Deductions Raise Small Business Taxes by 5-6% and Will Affect More Layoffs.
In response to a question about a panel under President Bush which looked at reducing itemized deductions, and which were roundly rejected by Congress under Bush, Judd Gregg had this to say: "I hope they will be rejected, but you've got to remember that the President's panel, which was co-chaired by Senator Mack, was doing a comprehensive reform and they basically suggested that a lot of deductions be eliminated in exchange for a significant rate cut. Rate cut! This has the practical effective of being a major rate increase. Not only are they taking the top rate from 35% to 39%, then with this language relative to the deductibility of itemized deductions, you're essentially kicking it up well over 40%, probably 41$, we haven't scored it yet. But you're basically taking the top rate up in the 40% range. Now who does that affect? Most people say somebody else is paying that, I don't really care. It's basically small business people in this country who pay that type of rate because they are sole proprietorships or they're Subchapter S corporations so if you have a restaurant or a small software company that's growing, or you have a garage, or you're got an automobile dealership, or you're a realtor, you're a sole proprietor and you're getting hit now with a tax rate that's going to jump from 35% to 41%. Where do you pay for that? You lay people off, you don't hire people or you don't expand. I think it's extremely dampening on the economy to have that kind of tax increase, especially in a recession.
Paul Ryan added, "70% of the jobs in this country on average come from small business. The majority of people who file at that top rate are those small businesses. And we're saying that in this recession we're going to raise taxes on the engine of economic growth and job creation in America? That's what's so galling about this budget: the notion that you raise taxes on the people most likely to create jobs in a recession. It just boggles our mind that they would actually try and pursue this type of an economic agenda at this particular time. We understand that they want higher taxes but we know one thing always works the wrong way. Raising taxes in a recession causes job loss and prolongs recessions."
Carbon Taxes Will Not Be Paid By Corporate America
Judd Gregg: "Remember there's another tax increase in here. This will affect average Americans because it will mean less economic activity as Congressman Ryan has pointed out. You've got a tax on people's electric bills in here. This carbon tax isn't going to be paid by Corporate America, it's going to be passed to the consumer. And so everybody to gets an electric bill in this country who happens to be in a region which has coal-fired plants or other plants which are subject to the carbon limitation tax, are going to be paying a big tax on their energy bills. If you're going to do that for the sake of addressing global climate change because you want to reduce emissions, that should be immediately returned to the taxpayers, dollar for dollar. That carbon tax should go directly back to help support the people who are paying their electric bills. It shouldn't be used to expand government willy-nilly on somebody's special project, and that's the way it's structured here. They're taking the tax and expanding government. That's wrong."
Paul Ryan: "On the whole cap and trade thing, we are not giving 95% of the people a tax cut when we're raising their energy prices. We're going to say it's going to cost you more because of government to heat your home, to put gas in your car, to take your kids to school, to manufacture things. And so when you take a look at the Make Work Pay Credit, that's about $13 a week. We're going to be raising, dramatically, energy prices for consumers - for families, for manufacturers, for small businesses, for the elderly - and I think it's going to cost more than $13 a week that they're going to get in a rebate. "
Who Cares About Taxes That Won't Take Place Until 2011?
Paul Ryan: "We're telling small businesses around America 'if you're thinking of investing, if you're thinking of hiring, if you want to get out of this recession just know this: your taxes are going to go up.' Businesses don't turn around on a dime, they plan for the future. They think about what's the after-tax rate of return on capital, what's my investment horizon look like? So we're saying to businesses, your money's going to cost more, we're going to have higher taxes on pensions, higher taxes on 401K's, because we're going to tax the equities that go into those things. And we're going to say that every new small business, every small business out there that is hoping to hang on in this recession, if we get out of this recession we're going to hit you with higher taxes. That's going to hurt investment, that's going to hurt job creation.
Where Will We Be at the End of Obama's First Term?
Judd Gregg: "Of course it depends on the economy, obviously, and a recovery occurring. I happen to believe personally, myself, that if we were to step forward jointly as a Congress in a bipartisan way and take on some of the big issues - let's start with Social Security because we know how to solve it, and put in place a plan that solves Social Security and makes it fiscally solvent for the next 50 years, and follow that with something substantive in the area of Medicare. That if we did those two things, and did them jointly, in a bipartisan way, we would create a massive amount of confidence in the American people in in the world community which is buying our debt and stabilizing our currency in our economy, and we would see a much faster economic recovery. But neither of those issues are taken on in this proposal and it's regrettable because the opportunity is there. And until we address this looming fiscal tsunami, and I'm sorry to keep using the term but that's what it is, it's just going to wipe out our children's chances of having a successful future. We aren't going to be able to say that we're going to be able to stabilize the Federal Government. It's just going to grow dramatically to the point where it can't be afforded any more. "
Paul Ryan: "I completely agree with that. The most frustrating thing about this budget is the fact that it's a missed opportunity to work in a bipartisan way to fix the entitlement crisis. If we all got together and fixed the fiscal crisis, the entitlement crisis, imagine the confidence that would bring to the markets, imagine the confidence that would bring to our currency, and to the future projection of our economy. I think you could probably come up with a good argument that the inflation assumptions and the economic growth assumptions in this are a little more rosy than the blue chip consensus forecast. We're going to look more into that but I think you ought to look at the inflation numbers here, you ought to look at the GDP forecast, they're off from the blue chips. If the blue chips are right and if this forecast is wrong, then the budget's going to look much worse than they're projecting."
Can the President Pay for His Policies By Raising Taxes?
Paul Ryan: "Pay for what? We still have a huge deficit at the end of the window. The Congressional Budget Office January Baseline shows that the baseline deficit on its own goes down by three-quarters. So claiming credit for cutting the deficit in half over four years is kind of the equivalent of standing outside at 5:30 in the morning and claiming credit for the sun that's about to rise."
Judd Gregg: "No, it's worse than that. We're taking four steps back in the deficit fight and then taking only two steps forward. Whereas if we were to stay on the basic course we're on we would take three steps forward. If you're quadrupling the budget deficit and then you cut it in half, you're not getting very far. In fairness, a lot of this deficit that they're getting this year is a function of an economy that's in a difficult, difficult situation so I've not said that the deficit that they're getting this year is an outrageous event. The issue is, five years out why aren't we doing something more constructive about this, why aren't we getting our hands around this? Instead, five years out we're exploding tax burden, we're exploding costs. "
Paul Ryan: "If we did nothing the deficit would drop faster than it is in this budget. They're simply presiding over the baseline. They're inflating the baseline with this war cost gimmick and a baseline that has higher taxes and higher spending. Saying that you're cutting the deficit in half over four years sounds fiscally conservative but when you actually look at the math it's fiscally irresponsible." Judd Gregg: "One of the areas I think we could do something on but it's clearly not going to occur under the budget as proposed is budget enforcement mechanisms. Interestingly enough if we went back to the statutory PayGo that they're talking about that has sequester, this budget would be subject to $5.4 Trillion of sequester. " Paul Ryan: "But what's interesting is they're shoving all this money into the baseline and then turning on PayGo. It's like commit all these fiscal crimes, and then after these crimes have been committed, then outlaw the crimes afterwards - and that's exactly what's happening here with respect to PayGo."
How Would Republicans Address Energy Policy, Education and Health Care?
Judd Gregg: "There are a lot of ways to do that, and I guess that's where our philosophical differences lie. On the issue of energy, we drill more in the United States, create more incentives for production. At the price of oil today there's tremendous incentive for production and I think it could be quite profitable as long as you allow people to pursue it. The problem is that we're not allowed to drill in the places where there's energy in this country. It's sort of unfortunate. Build nuclear plants. They're quite cost-effective and they're clean, but there's a disincentive to build a nuclear plant in this country. "In the area of health care, there are a lot of different things you can do that don't necessarily involve increase in the cost. When you're spending 17.5% of GDP on health care, which is about 6% more than the closest industrialized country, you've got a lot of money in the system and that money should be allocated in a more efficient way which is why I hope they're successful on this initiative which would try to do that. "We funded education in a pretty robust way from a Federal level, and I think you're going to find it's going to be difficult for the Education Department to spend all the money they've got right now."
Paul Ryan: "We will bring a full budget alternative to the floor when it's scheduled for the floor time. So just stay tuned and we will tell you what we believe in and how we would do things differently."
The Seeds of Economic Unrest are Planted... er... Astroturfed?
We can see that fiscal conservatives have valid reasons for concern, anger, even outrage - as explained articulately by Senator Gregg and Congressman Ryan (watch the C-SPAN video here). We're witnessing classic tensions between the haves and want-to-haves such as labor and management, Main Street middle class and Wall Street fat cats, water carriers such as credit borrowers who "played by the rules" and water drinkers who "borrowed more than knew they could afford". The lines are being drawn in the sand of Main Street little people vs. Wall Street fat cats, company owners and managers vs. workers, big government rescue vs. self-determination. I'm reminded of this quote from former GE management innovator Lemuel R. Boulware:
Companies don’t provide job security - customers do.
In a market-driven society, no matter how much government intervenes to force recovery through economic engineering such as taxation, regulation, wage and price controls, and social engineering such as persuasion and intimidation to comply with their new world order, it won't succeed unless people sincerely want to buy what government is selling. Lately it appears that some newly skeptical "customers" are experiencing Buyer's Remorse for their pro-Obama votes.
American citizens have a right to expect that our investment in government should be managed competently, diligently and wisely. We are rightly suspicious, skeptical and potentially outraged by endless high deficits and taxes in spite of Peter Orszag's best efforts to be an "honest and fair broker".
This month in a Playboy.com article titled Is Rick Santelli High on Koch, authors Mark Ames and Yasha Levin of the website Exiled Online, a sort of nihilist Ace of Spades HQ (with apologies to Ace of course), express their sincere belief that they have exposed the tentacles of a libertarian oligarchy (which seems oxymoronic, but it's their term not mine) ostensibly engaged in duping a tiny handful of ignorant real people (mixed with well-compensated Hollywood extras and/or student interns at the Ayn Rand Institute?) posing as tax revolt protestors into astroturfed faux grassroots Tea Party events launched by Rick Santelli's rant sponsored by evil Koch corporate overlords.
...if you read the Santelli article [at Playboy.com], you know these tea party protests were never about attracting real supporters. They were about creating the perception that these supporters exist.
Apparently Levine and Ames haven't completed their exhaustive research yet to indict Michelle Malkin for her fake tea party photo album, or World Net Daily's false list of national tea parties, or all the trumped-up YouTube videos such as this one of the poseur libertarian Republican community organizers of the Seattle Tea Party (probably filmed in the same back lot as the Moon Landing...
.
Let's just say for a moment that the Koch family, Cato Institute and the Sam Adams Alliance are helping to sponsor these protests by contributing funding, training, networking and technology resources. In that case, I concur with Mister Mxyzptlk's pithy comment on the Astroturf Revolution Dispatch's monument to Yasha Levine's stealth infiltration of the Santa Monica Tea Party:
...do you not get the idea of “what’s good for the goose is good for the gander”? For eight years the PR machine funded by big money Democrats has created well timed and carefully planned events to protest the actions of the Bush Regime. Now the right is using those techniques against the Obama Regime and it’s your side that’s whining about it. That’s how the game is played. Get over it.
Another Boulware quote that seems appropriate:
We have simply got to learn, and preach, and practice what’s the good alternative to socialism. And we have to interpret this to a majority of adults in a way that is understandable and credible and attractive.
Rick laments that "the problem is that mass movements based on populist rage have generally led to untoward and unanticipated consequences. History is littered with these populist outbreaks – especially those that happen as a result of great cultural and economic changes being enacted by a perceived elite." He goes on to list the example of George Wallace's 3rd party run in the 1960's as the most recent example of such a movement, and concludes that "tapping in to the rage of taxpayers by exploiting their fears then, would almost certainly result in unanticipated problems for the GOP." I find the argument that George Wallace's appeal to white working class males outraged over civil rights compares to Rick Santelli's appeal to outraged taxpayers specious at best, and offensive at worst.
In any event, a far more successful example of a taxpayer revolt based on populist rage comes to mind, officially titled the "People's Initiative to Limit Property Taxation" and affectionately known to many of us as "Prop 13".
Proposition 13 was a political earthquake whose jolt was felt not just in Sacramento but all across the nation, including Washington, D.C. Jarvis's initiative to cut California's notoriously high property taxes by 30 percent and then cap the rate of increase in the future was the prelude to the Reagan income tax cuts in 1981. It also incited a nationwide tax revolt at the state and local levels. Within five years of Proposition 13's passage, nearly half the states strapped a similar straitjacket on politicians' tax-raising capabilities. Almost all of those tax limitation measures remain the law of the land today.
Patrick confirms the power of populist outrage, but I have another perspective on the fall of the Republicans in 1996, in which he states:
Republicans got more negative once in office and paradoxically ran a more negative campaign in a Presidential than in a midterm -- when the President is not on the ballot and the bar is lower. Also, populist anxiety from the early 1990s had begun to fade. Republicans were caught with their proverbial pants down by overstaying their populist welcome.
I believe that a straight line can be drawn from the chord struck by Rick Santelli and the "Rant of the Year" to the fall of Republicans again and again until we find ourselves completely and utterly rejected by the majority of Americans. It starts with a reassessment of The American Form of Government, which is a Republic and not a Democracy. I invite everyone to please take a moment to review this video, which I believe has a uniquely clear perspective on why we tend to think of America as a "center-right" nation. It's not because Americans tend to vote Republican or are right-wing Christians, it's because Americans tend to prefer to be left alone by the government more than any other nation on earth. It's in our DNA.
After watching this video, I became convinced that rather than asking ourselves to go from Rick Santelli to "HopeandChange" we should instead be asking ourselves how to go from Rick Santelli to Limited Government, Fiscal Responsibility and Free Markets.
We all remember 9/11. We know exactly where we were when the first and second towers were attacked. But how many of us remember the particular events of 9/15? Where were you and I the morning when the American economic system was struck?
In response to consistent claims by Democrats that the Republicans caused this economic crisis, I developed a rough sequence of events which I thought lent themselves to helping us understand the bipartisan involvement in this recession. It turns out I was missing a most significant event. This event came to light in an interview between Rep Paul E. Kanjorski (D-PA) and C-SPAN's Washington Journal in which Kanjorski was explaining his support of the first bailout of Wall Street. Here's a portion of that transcript, h/t Townhall.com:
"I was there when the Secretary (of the Treasury Hank Paulson) and the Chairman of the Federal Reserve (Ben Bernanke) came those days and talked to members of Congress about what was going on. It was about Sept. 15. Here's the facts, we don't even talk about these things.
"On Thursday at about 11 o'clock in the morning, the Federal Reserve noticed a tremendous drawdown of money market accounts in the United States to the tune of $550 billion, as being drawn out in the matter of an hour or two.
"The Treasury opened up its window to help. It pumped $105 billion into the system and quickly realized that they could not stem the tide. We were having an electronic run on the banks. They decided to close the operation, close down the money accounts and announce a guarantee of $250,000 per account so there wouldn't be further panic out there, and that's what actually happened."
Kanjorksi continued:
"If they had not done that, their estimation was that by 2 o'clock that afternoon, $5.5 trillion would have been drawn out of the money market system of the United States, would have collapsed the entire economy system of the United States and within 24 hours the world economy would have collapsed.
"Now we talked at that time about what would happen if that happened. It would have been the end of our economic system and our political system as we know it. And that's why when they made the point we've got to do things quickly, we did."
Townhall's Diana West goes on to say that these are staggering revelations. Given their sudden appearance out of the blue, you have to wonder, first, could they possibly be true? If so, why weren't we the people told about this $550 billion electronic run on the banks? The Google archive has retained some news about the money market run, but it was seriously downplayed in this article from Boston.com:
The panic sweeping the world's financial system hit Boston stalwarts Putnam Investments and State Street Corp., yesterday while the mutual fund industry struggled with billions of dollars in withdrawals from money market funds by investors worried about losing their cash.
The article describes the frenzy of withdrawals, but describes the amounts much differently than Kanjorski.
"There's a crisis of confidence in the system," said Putnam chief executive Robert Reynolds.
On Wednesday, investors pulled nearly $90 billion out of money market mutual funds -among the largest single-day withdrawals - and as much as was pulled out during the entire preceding week. Analysts said most of the withdrawals were from corporations and other institutions. The sellers are trying to replace those money market fund holdings with even safer securities such as US Treasury bills, even though they are now paying interest rates as low as 0.071 percent.
While often treated like bank accounts, money market mutual funds are investment vehicles, and therefore can lose money. They also do not have the $100,000 per account FDIC insurance coverage provided to savings, checking, and so-called money market demand accounts available at banks. In addition to paying interest, money market funds attempt to keep their share prices steady at $1, so the value of the deposits remains intact.
Because of the run on money market mutual funds, the Bush administration is now proposing to provide them with FDIC-like insurance protection, The Wall Street Journal reported.
Kanjorski goes on to describe how the Fed and the Treasury dealt with this run by implementing just such an FDIC-like protection on that very day, September 15, when Paulson came to discuss the tremendous drawdown with members of Congress because they realized that was the only way to "stem the tide".
The key in Kanjorski's interview is the "electric run on the banks" to the tune of $500 Billion within an hour. If they hadn't taken action, by 2 pm that afternoon, $5.5 Trillion would have left the banks and the entire global economy would have completely collapsed. The implications of that are truly staggering.
On October 20, nearly a month later, Daniel Gross at Newsweek wrote an article called The Anatomy of Fear in which he described a panic-worthy act by James Cramer, CNBC star, ex-hedge-fund manager, mascot of the 1990s tech boom and the recent bull market, fond of saying "There's always a bull market somewhere". On October 6, 3 weeks after the run on money market accounts, Cramer admitted to the "Today" show's Ann Curry that "somewhere" was now nowhere to be found. "Whatever money you may need for the next five years, please take it out of the stock market right now, this week," he pleaded. "I do not believe that you should risk those assets in the stock markets."
We could understand Cramer's comments precipitating a run on all sorts of investements, but what exactly drove the tremendous volume of electronic transfers on September 15? I could find no documented news the week of September 15 that would prompt such a run, with the possible exception of the Lehman Brothers failure. But why the run on money market funds and not CD's, stocks, bonds or mutual funds? Rush Limbaugh discussed his theories on February 10, 2009, including the fact that Kanjorski is a Pelosi loyalist. Rush said:
It's amazing this was said on C-SPAN on Thursday, January 27th, and nobody picked up on it. We got it from a website called LiveLeak. They were rummaging through things, and they found this. Now, let's assume for a second here that elements of this are true. Let's assume that there was a $550 billion run, electronic run on the banks and money market accounts in one to two hours. The question is who was doing this? Who was withdrawing all this money? And the next question is why? That's where my mind starts exploding, and this is dangerous to have these explosions going this way. Could it have been George Soros? Could it have been a consortium of countries -- Russia, China, Venezuela -- countries that are eager to have Barack Obama elected because they know that will make it easier for them to continue their own foreign policies in the world? In the meantime, five-and-a-half billion dollars in one to two hours, that can probably be confirmed. The five-and-a-half trillion is speculation based on the rate at which money was coming out. We could check that the Fed stopped the trading windows, they closed the window. We do know they were pumping money into the system left and right. And remember when the Federal Reserve loaned elements, $2 trillion and we weren't told who got the money? And we still haven't been told who got the money.
No wonder Barack Obama says "You can't just listen to Rush Limbaugh and get things done." Obviously Barack Obama and Nancy Pelosi don't listen to Rush Limbaugh, and they've quite possibly managed to get some astonishing things done.
I've begun to see a meme this week proposing the President's policies are fascist rather than socialist. In 1935, Mussolini wrote the following in The Doctrine of Fascism. Compare and contrast his policies to our current Administration's:
The Fascist conception of the State is all-embracing; outside of it no human or spiritual values can exist, much less have value. Thus understood, Fascism is totalitarian, and the Fascist State--a synthesis and a unit inclusive of all values--interprets, develops, and potentiates the whole life of a people. (p. 14)
The Fascist State lays claim to rule in the economic field no less than in others; it makes its action felt throughout the length and breadth of the country by means of its corporate, social, and educational institutions, and all the political, economic, and spiritual forces of the nation, organised in their respective associations, circulate within the State. (p. 41)
In 1935 Mussolini wrote the following in Fascism: Doctrine and Institutions:
The Corporate State and its Organization (p. 133)
The corporate State considers that private enterprise in the sphere of production is the most effective and usefu [sic] [typo-should be: useful] instrument in the interest of the nation. In view of the fact that private organisation of production is a function of national concern, the organiser of the enterprise is responsible to the State for the direction given to production.
State intervention in economic production arises only when private initiative is lacking or insufficient, or when the political interests of the State are involved. This intervention may take the form of control, assistance or direct management. (pp. 135-136)
Last but not least, here's Paul Kanjorski's interview with C-SPAN on January 26, 2008:
