America, You Asked For It!

Political News and Commentary from the Right

Fred Thompson: Ask not what your country can spend for you,…

…but what you can spend for your country.

If you’re one of those who believes all the government “experts” and politicians touting the bailouts and stimulus packages, you can learn something from this lecture by Sen. Fred Thompson.

If you’re like me and already believe the current and soon-to-be administrations’ policies are going to leave our children with a crushing debt that will be impossible for them to repay, you’ll enjoy the wit and sarcasm Thompson uses to present our argument.

The video is more than 8 minutes long, so you may want to let it load then come back and replay it.  But it’s well worth the wait.  Enjoy.

The only thing that’s ever going to get our economy back on track is for Americans to once again embrace the idea of personal responsibility.  If you screw up, you suffer the consequences.

To hear the politicians today, you’d think there’s chaos in the streets and people dropping dead like flies in a fumigated apartment.

If we’ll learn from the mistakes that brought us to this point, and commit ourselves to not repeating them, our economy will come back stronger than ever.  There’s no doubt it’s going to be painful for some, especially those who’ve grown accustomed to spending more than they earn.  But if we choose this path, our economy will be fundamentally sound, not a castle built on sand.

It’s really simple.  We either bear this burden now, or we push it down the road for our children to inherit.  Then the problem will be many times worse than it is.

Do we want our children to inherit an economy that can be toppled by the slightest breeze?  Or, do we want to leave them a solid foundation on which to build their future?


Related Posts

The Generational Theft Act of 2009–Michelle Malkin

December 22, 2008 Posted by | Economy | , , , , , , , , , | 1 Comment

American Express Not So Friendly With American Bailout Money

by Bill Smith at ARRA News Service

The Religious Freedom Coalition reported that in November, 2008, just days after receiving billions of our tax dollars for a bail-out, American Express canceled credit lines of all their small business customers, making it impossible to buy inventory for Christmas and causing layoffs. At the same time American Express canceled the credit lines of non-profit organizations, including nonprofits like the Religious Freedom Coalition.

Today, Standard & Poor’s cut its rating on American Express Co by one notch due to increasing financial pressure on consumer lenders, the rating company said. S&P cut its ratings for American Express by one step to “A,” or five steps above junk, from “A-plus.” The outlook is negative, suggesting more cuts may come.

American Express states its Corporate Responsibiliy as follows:

…(Read full article)


And this is exactly what concerns us about all of these bailouts. The government’s intention and the companies’ intentions for the money don’t coincide.

December 20, 2008 Posted by | Bailout | , , , | Leave a comment

Bonuses? No. Retention Pay? Yes! Huh???

This is why I’m so opposed to the bailouts for the banks, auto companies, or any other industry:

St. Regis Resort

St. Regis Resort--Where AIG executives blew $400K of taxpayer money!

American International Group Inc., whose bonuses and perks drew fire from lawmakers after the insurer accepted a federal bailout, will make special retention payments that more than double the salaries of some senior managers, according to a person familiar with the matter.

View full article.

According to the article, AIG has so far taken $162 billion in assistance from the U.S. taxpayer to save it from the decisions made by these incompetent managers. But, because they know bonuses will bring heat from Congress and the public (you, me, and everyone else who is paying for their incompetence,) they’ve decided that we’re so stupid we won’t recognize bonuses if they rename them “retention pay.”

If that’s not arrogant enough for you, there’s this. CEO Edward Liddy says this retention pay is necessary to keep good employees! His words, “We have to hold on to the talented people running our businesses..” Exactly what does it take to qualify as “talented” to this guy?

Seems to me that these upper level employees should be encouraged to leave! Didn’t they play a role in the near death of the company? Where is the responsibility, the accountability in this company? Where did these idiots get their business degrees?

I guess Liddy doesn’t read the papers, and none of his “talented” employees have informed him there’s really no place to go at the moment. I mean, didn’t he hear Obama say the country has shed 2,000,000 jobs this year? Who’s going to hire these talented incompetent bozos?

The company’s retirement services chief, Jay Winthrob, will get $3 million in retention pay, compared with his annual salary of $775,000. It’s incredible how stupid these people think we are, that we’d buy this retention pay is different than bonuses.

Every time you think the auto companies might deserve a bailout, think of AIG. The reason they’re in this mess is they’re incompetent, but they don’t even realize it. The storyline will be the same for any entity tapping the struggling U.S. taxpayer’s wallet.

Call, write, or email the White House, your Senators and Representatives today and stop this madness. Contact information for these folks is available in the links on the right side of this page.

Stop the madness!

December 9, 2008 Posted by | Bailout, Economy | , , , , , , , | Leave a comment

Is the well finally going dry?

Surely everyone heard about the bigwigs of Detroit cruising into Washington a couple of weeks ago on private jets–with their hands out. The Big 3 American auto companies are apparently on the road to financial ruin and now they feel entitled to taxpayer money to keep them going. You can’t blame them for trying. I mean, they’re reading the same stories on the bailout of the financial industry that you and I are.

In this November 24 article, Bloomberg had the cost of the bailout calculated at ~$7.7 trillion! Now, everybody wants to share in the bounty–states and cities want in, why shouldn’t everyone share in our children’s future earnings? So in march the auto executives to plea for their share–$34 billion. Since we’re throwing so much money around, why not?

Michael Rosen believes we must bail them out in this November 20 article on Biztimes.com, because they are the backbone of American manufacturing, because their collapse could turn the current recession into a “full-blown depression,” and because we did it for the financial industry. Do you think we find ourselves on a slippery slope?

Let’s address these points one at a time.

First, bankruptcy doesn’t mean close the door, turn out the lights, walk away and never look back. The U.S. steel industry used much the same argument a few years back when it sought government bailouts. This article describes the 20+ year journey of the industry from bailout to bailout until finally it reached the end of its rope–and fell, hard. Company after company went bust, and only then did the changes occur that once again made the industry competitive–and profitable.

Second, our economy is on the skids and these bailouts aren’t going to help it recover–in fact, they’re more likely to impede its recovery. Most people balked at economist Robert Parks’ 60% chance of a coming depression when this article was published in March, but now his predictions seem to be coming to pass. From the article…

…he sees a further steep fall in housing prices, continued major deficits in the federal budget and in the international trade balance, a tumbling dollar, and a weak stock market leading to a genuine depression with 30 to 35 percent unemployment, greater poverty, more loss of homes, plunging bond and stock prices, even some starvation.

Though things aren’t quite as glum as this prediction yet, several of his predictions have already come to pass. It makes one wonder if his prophecy is yet to be fulfilled. The fact is, bailouts will only prolong the agony by delaying the inevitable. Bailouts don’t address the underlying problems that created this mess.

Finally, bailing out the auto industry because we did so for financials is ridiculous. We made (continue to make) one mistake so we’re obligated to make another? Does this argument make any sense at all?

The Bush administration, in an apparent attempt to prevent the current crisis from defining his legacy, is spending money like Richard Pryor in the 1985 movie, Brewster’s Millions. Indeed, he’s perfectly willing to spend more as evidenced in this AP article.

“Obviously I don’t like the idea of people losing jobs, or being worried about their 401(k)s. On the other hand, the American people got to know that we will safeguard the system. I mean, we’re in. And if we need to be in more, we will.”

 

So, just how far are we willing to go? How much of our children’s future labor are we willing to commit to this effort to sustain these mismanaged beasts and their incompetent managers? Apparently, even our elected officials are beginning to ask these questions. Finally we’re seeing some encouraging signs on this front. From this AP article on Newsweek:

The Senate’s Democratic leader said there still weren’t enough votes to tap the $700 billion federal bailout fund to prop up the foundering Big Three.

Maybe, just maybe, reason is beginning to prevail in our nation’s capital.


Some interesting notes related to this story:

According to The Corporate Law Society, GM CEO Rick Wagoner’s salary is $15.7 million and Ford CEO Alan Mulally’s is $22 million. That’s excellent compensation for running these two companies into the ground!

According to CNSNews.com, it costs over $70 per hour to employ a U.S. auto worker when benefits are included. Is it any wonder a new car costs so much?

According to CBS News, there are approximately 3,500 auto workers currently being paid an average of $50,000 per year while not working.

December 4, 2008 Posted by | Economy | , , , , | 1 Comment

Bush says he was not ready for war upon taking office

Greatest regret was faulty intel on Saddam’s weapons
By DEB RIECHMANN, Associated Press

In a surprisingly candid admission, President George W. Bush said that when he was elected to the White House he was not prepared to wage war and that one of his biggest regrets as president was the inaccurate intelligence upon which he based his decision to attack Iraq.

During an interview airing Monday night on ABC’s World News, Bush also expressed regret about the global economic crisis and said Barack Obama’s election was a repudiation of his policies and the Republican Party.

He also expressed remorse that the global financial crisis has cost jobs and harmed retirement accounts and said he’ll back more government intervention if needed to ease the recession.

“I’m sorry it’s happening, of course,” Bush said. “Obviously I don’t like the idea of people losing jobs, or being worried about their 401(k)s. On the other hand, the American people got to know that we will safeguard the system. I mean, we’re in. And if we need to be in more, we will.”

The U.S. economy fell into a recession in December 2007, the National Bureau of Economic Research reported on Monday. Many economists believe the current downturn will last until the middle of 2009 and will be the most severe slump since the 1981-82 recession.

On the war in Iraq, Bush said the biggest regret of his presidency was the “intelligence failure” regarding the extent of the Saddam Hussein threat to the United States. With the support of Congress, Bush ordered the U.S.-led invasion of Iraq in March 2003 — a decision largely justified on grounds — later proved false — that Saddam was building weapons of mass destruction.

Asked if he would have ordered the U.S.-led invasion if intelligence reports had accurately indicated that Saddam did not have the weapons, Bush replied: “You know, that’s an interesting question. That is a do-over that I can’t do. It’s hard for me to speculate.”

During a discussion about what Americans should know about what it is like to be president, Bush was asked what he was most unprepared for going into the office.

“I think I was unprepared for war,” he said. “In other words, I didn’t campaign and say, ‘Please vote for me, I’ll be able to handle an attack.’ In other words, I didn’t anticipate war. Presidents — one of the things about the modern presidency is that the unexpected will happen.”

On the presidential election, Bush called Barack Obama’s victory a “repudiation of Republicans.”

“I’m sure some people voted for Barack Obama because of me,” said Bush, who leaves office with low approval ratings. “I think most people voted for Barack Obama because they decided they wanted him to be in their living room for the next four years explaining policy. In other words, they made a conscious choice to put him in as president.”

As he leaves office, Bush said he felt responsible for the economic downturn because it’s occurring on his watch, but he added: “I think when the history of this period is written, people will realize a lot of the decisions that were made on Wall Street took place over a decade or so” before he became president.

He said he would like to see “instant liquidity” in the markets given the extent of the financial rescue plan, yet he understands that fear has paralyzed the markets.

“It is hard for the average citizen to understand how frozen the system became and how over-leveraged the system became,” Bush said. “And so what we’re watching is the de-leveraging of our financial markets, which is obviously affecting the growth of the economy.”

Last week, the Bush administration and the Federal Reserve pledged $800 billion to break through blockades on credit cards, auto loans, mortgages and other borrowing. The latest moves raised U.S. commitments to contain the financial crisis to nearly $7 trillion — though no one thinks the government will actually spend that much.

The figures include loans that are expected to be repaid, loan authorities to back mortgages, purchases of stock in banks, guarantees to support loans among banks and pledges backing other transactions.

“This economy will recover,” Bush said in the interview conducted last Wednesday at the Camp David, Md., presidential retreat. “And when it recovers, many of the assets backed by the government now will be redeemed, and we will — could conceivably — make money off of some of the holdings.”

Later in the interview, he said: “I can’t guarantee that we’ll get all our money back, but it’s conceivable we could.”

December 3, 2008 Posted by | Bush | , , , , , , , , , | Leave a comment

The Bailout Gets Bigger…

After today’s announcement that Citigroup is being bailed out by the U.S. government, I thought I’d try to get a list of all the companies receiving money from this massive socialist program. Here’s what I have so far in order from greatest to least money received.

Company

$$ Received

   
American International Group Inc $40 Billion
Citigroup $20 Billion
Bank of America Corp $15 Billion
Merrill Lynch & Co $10 Billion
Morgan Stanley $10 Billion
Goldman Sachs $10 Billion
Synovus $973 Million
Popular Inc $950 Million
E*Trade Financial Corp $800 Million
M & T Bancorp $600 Million
Associated Banc-Corp $530 Million
Webster Financial Corp $400 Million
South Financial Group $347 Million
East West Bancorp $316 Million
Sterling Financial Corp $303 Million
Citizens Republic Bancorp $300 Million
Susquehanna Bancshares Inc $300 Million
Cathay General Bancorp $258 Million
FirstMerit Corp $248 Million
Trustmark Corp $215 Million
First Midwest Bancorp Inc $193 Million
Pacific Capital Bancorp $188 Million
Boston Private Financial Holdings $150 Million
Western Alliance Bancorporation $140 Million
CVB Financial Holdings $130 Million
Signature Bank $120 Million
Iberiabank Corp $115 Million
Taylor Capital Group $105 Million
Sandy Spring Bancorp $83 Million
Columbia Banking System Inc $76.9 Million
Independent Bank Corp $72 Million
Superior Bancorp $69 Million
Nara Bancorp $67 Million
Wilshire Bancorp $62 Million
Great Southern Bancorp $60 Million
Center Financial Corp $55 Million
Ameris Bancorp $52 Million
Home Bancshares Inc $50 Million
Fidelity Southern Corp $48.2 Million
Capital Bancorp $42.9 Million
Southern Community Financial Corp $42.75 Million
Heritage Commerce Corp $40 Million
Porter Bancorp Inc $39 Million
Peoples Bancorp $39 Million
First Defiance Financial Corp $37 Million
Encore Bancshares Inc $34 Million
Severn Bancorp $30 Million
Bancorp Rhode Island $30 Million
Tennessee Commerce Bank Corp $30 Million
Intermountain Community Bancorp $27 Million
LNB Bancorp $25.2 Million
VIST Financial Corp $25 Million
Wainwright Bank & Trust Corp $22 Million
Indiana Community Bancorp $21.5 Million
Unity Bancorp $20.6 Million
First PacTrust Bancorp Inc $19.3 Million
HopFed Bancorp Inc $18.4 Million
Bank of Commerce Holdings Inc $17 Million
First 1st Financial Services Corp $16.3 Million
Pamrapo Bancorp Inc $11.4 Million
Broadway Financial Group $9 Million
American River Bankshares $8 Million
Central Federal Corp $7.23 Million
Capital Pacific Bancorp $4 Million

I’ll update this list as it grows.

It’s absolutely outrageous! And, this is in addition to the billions it will take to bailout Freddie Mac and Fannie Mae. It makes it really difficult to argue against government handouts and entitlement programs when we’re stepping in to finance irresponsible business practices by overpaid CEOs. We may not have to worry about Obama screwing anything up. Our entire capitalistic economy may be nothing but a memory by January 20.

Here’s a CNN report on Bush’s defense of the bailout.

 

Everyone should be outraged. If you’re as angry as I am, send this link to the White House, your representatives and your senators by following the links below.

Contact the White House

Contact your Representative

Contact your Senator

Before we become the USSA, the United Socialist States of America, let’s clog their phone lines and email systems and fill their mailboxes to let them know just how outraged we are!     American International Group Inc $40 Billion Citigroup $20 Billion Bank of America Corp $15 Billion Merrill Lynch & Co $10 Billion Morgan Stanley $10 Billion Goldman Sachs $10 Billion Synovus $973 Million Popular Inc $950 Million E*Trade Financial Corp $800 Million M & T Bancorp $600 Million Associated Banc-Corp $530 Million Webster Financial Corp $400 Million South Financial Group $347 Million East West Bancorp $316 Million Sterling Financial Corp $303 Million Citizens Republic Bancorp $300 Million Susquehanna Bancshares Inc $300 Million Cathay General Bancorp $258 Million FirstMerit Corp $248 Million Trustmark Corp $215 Million First Midwest Bancorp Inc $193 Million Pacific Capital Bancorp $188 Million Boston Private Financial Holdings $150 Million Western Alliance Bancorporation $140 Million CVB Financial Holdings $130 Million Signature Bank $120 Million Iberiabank Corp $115 Million Taylor Capital Group $105 Million Sandy Spring Bancorp $83 Million Columbia Banking System Inc $76.9 Million Independent Bank Corp $72 Million Superior Bancorp $69 Million Nara Bancorp $67 Million Wilshire Bancorp $62 Million Great Southern Bancorp $60 Million Center Financial Corp $55 Million Ameris Bancorp $52 Million Home Bancshares Inc $50 Million Fidelity Southern Corp $48.2 Million Capital Bancorp $42.9 Million Southern Community Financial Corp $42.75 Million Heritage Commerce Corp $40 Million Porter Bancorp Inc $39 Million Peoples Bancorp $39 Million First Defiance Financial Corp $37 Million Encore Bancshares Inc $34 Million Severn Bancorp $30 Million Bancorp Rhode Island $30 Million Tennessee Commerce Bank Corp $30 Million Intermountain Community Bancorp $27 Million LNB Bancorp $25.2 Million VIST Financial Corp $25 Million Wainwright Bank & Trust Corp $22 Million Indiana Community Bancorp $21.5 Million Unity Bancorp $20.6 Million First PacTrust Bancorp Inc $19.3 Million HopFed Bancorp Inc $18.4 Million Bank of Commerce Holdings Inc $17 Million First 1st Financial Services Corp $16.3 Million Pamrapo Bancorp Inc $11.4 Million Broadway Financial Group $9 Million American River Bankshares $8 Million Central Federal Corp $7.23 Million Capital Pacific Bancorp $4 Million

Source: Bailoutsleuth.com

November 26, 2008 Posted by | Economy | , , , , , | Leave a comment

A promise that won’t be kept?

But this is a good thing! Jim Kuhnhenn, of the Associated Press reports in this article that Obama may already be backing off an oft-repeated campaign promise–to increase taxes on Americans earning more than $250,000. Perhaps Joe the Plumber got through after all. For those who may have missed it, here’s the video that put Joe in the spotlight.

After that the Obama campaign continued to charge forward with its call for a tax increase on everyone except those earning less than $250,000. The campaign even embarked on a smear campaign against Joe the Plumber, the American citizen. His background was investigated, his integrity was publicly questioned by Obama himself when he said “How many plumbers do you know that make a quarter million dollars a year ?”

This weekend, Obama introduced his team of economic advisers and, according to the AP, specifically stated that he would move forward with the tax cuts for those making less than $250,000 a year. Noticeably though, he avoided any mention of the oft-repeated campaign promise of raising taxes on others. When pressed on the issue following Obama’s remarks, aides reportedly said there will be no tax increases in the immediate future. This is the first good change I’ve had to report and its a change conservatives have been calling for in Obama’s platform.

I don’t make $250,000 a year (Heck, I don’t even make 20% of that.) and I know many of you don’t either, but historical evidence shows tax increases don’t stimulate the economy and don’t increase government revenues in the long term. Take a look at this chart which compares the top tax rate with U.S. tax receipts.

federal spending, economic crisis, taxes, deficit,
Click to view larger image.

Source (Tax Receipts): Tax Policy Center
Source (Tax Rate): TruthAndPolitics.org

It’s clear from the graph that tax cuts tend to temporarily reduce tax receipts, but the long-term growth in those receipts that follows the short dip more than compensate. Compare the relatively stagnant growth rate when tax rates were at their highest with the booming growth as these tax rates were stepped down to their current levels. That’s all well and good, but how does the top tax rate effect the growth of the overall economy? For that, let’s look at the next chart which compares the U.S. Gross Domestic Product with the top tax rate.

economic crisis, credit crisis, obama, change,
Click to view larger image.

* Source (Tax Rate): TruthAndPolitics.org
**Source (GDP): Whitehouse.gov

It’s apparent from these graphs that higher taxes stifle economic growth. When taxes are kept low, it leaves capital in the hands of consumers who know best how to spend their money. We don’t need more taxes, we need government to cap spending. If our federal government capped spending for 5 years, there would likely be a huge budget surplus available to pay down the mounting U.S. National Debt. We haven’t gotten there yet, but perhaps one day we’ll have a President who will demand Congress act as responsibly as the American people are required to act–paying their bills as they go.

If Obama has reversed himself, this is a victory as conservatives have been harping on the dangerous effects on the economy if he did push through his vaunted tax policy. Let’s keep up the pressure and maybe the next four years won’t be as bad as we originally imagined.

November 25, 2008 Posted by | Economy | , , , | Leave a comment

Weekly Radio Address 11-22-08

It appears the President-elect’s radio addresses will continue to be posted to YouTube. Here’s this week’s address.

 

The address is primarily a rehash of his Emergency Economic Plan laid out in his Blueprint for Change. I previously analyzed the plan in this post. However, the campaigning Obama has evolved into the soon-to-be-in-office Obama. Gone is the Obama who, if elected, would immediately turn the tide and repair our diseased economy. Welcome to the elected Obama who now says we’re going to feel more pain, things will get worse before they get better. Well, at least we now know he is facing the reality of the situation.

He goes on to say that he’s already directed his economic advisers to come up with a plan to create 2.5 million jobs by January 2011. In his Blueprint for Change, he states he already has a plan to save 1 million jobs that might soon be lost and he states he already has a plan to create another 7 million jobs over the next 10 years. That was the if-you-elect-me-I-will Obama. The soon-to-be-in-office Obama now says details of the plan will be worked out in the next few weeks.

This sounds so Roosevelt-esque. I’ve said it before though, and I’ll say it again, Roosevelt’s New Deal didn’t get us out of the Great Depression. It did put people to work and boost morale, but real economic recovery didn’t begin until WWII. Take a look at this chart.

economic crisis, credit crisis, obama, change,
Click to view larger image.

The market peaked in October 1929 and didn’t reach that peak again until November 1954. That’s during a time when people took whatever job they could find. Our economy is in for a long hard road I’m afraid, and New Deal style programs aren’t going to solve the problem.

It remains to be seen if Americans today will take a job “rebuilding our crumbling roads, schools, and bridges” after they’ve lost their jobs in air conditioned work spaces. Most people who’ve tried to hire folks from the unemployment office to work manual labor can tell you things are different today. I’ve tried and been told “it’s not worth it.” For this program to really work, there will have to be an ultimatum–take the job or no check! The options will have to be work or starve.

The President-elect refers to schools that are failing our children. I teach in the schools and I can tell you there are teachers who are failing our children, but the problem is much deeper than that. I won’t make excuses for bad teachers and administrators, but I will say that many good teachers are driven from the schools by apathetic children and uncooperative, unmotivated parents.

If you haven’t been in a high school lately, take a walk through and look at the shape your local school is in. If you see graffiti or property destroyed, guess who is causing the destruction. The students, because so many of them have no respect for themselves, authority, or anything else. Now, guess where that attitude comes from. The parents, who have become so accustomed to government handouts that they don’t respect themselves or anyone else. I’m all for ensuring teachers are doing their jobs, but if you want to really fix the problem with schools you’re going to have to change the culture of the students, and their parents. That’s not going to happen with more government handouts.

Obama says he wants cooperation between Democrats and Republicans. In the past, bipartisanship generally means the minority party succumbs to the will of the majority. Call me a cynic, but I don’t think that’s going to be one of Obama’s changes.

Brace yourselves ladies and gentleman for a long, hard road on the economic front. We the people have overspent to get ourselves into this mess, buying things we couldn’t afford and over-leveraging ourselves to a point that demands a swift kick to the backside. Our political leaders should have seen it coming, and most probably did, but they looked the other way because their only concern was getting re-elected. How we survive this mess, and if we survive it is up to us. Obama can’t save us, no politician can. He’s bracing us for this now that the election is over.

“It’s going to get worse before it gets better.”

I do believe that.

November 24, 2008 Posted by | Obama | , , , , | Leave a comment

Weekly Radio Address

It appears this will be a weekly occurrence, President-elect Obama’s weekly radio address has been posted on YouTube. I’ll post them all here under the topic heading, “Radio Address.” Here’s the video:

Our President-elect began by praising President Bush for initiating a meeting of the G-20 nations’ leaders to address the ever-growing global economic crisis. I don’t know what they’re going to accomplish. I’m going to hazard a guess that there will be a lot of finger-pointing and laying of blame. Most of those fingers will likely be pointed at the U.S., laying the blame on our country.

This is one pill the Democrats have always had a hard time swallowing–when you’re the most powerful nation on the face the Earth, the majority of the rest of the world is going to hate you. How many times have we heard them say we need to restore our world standing, make the world like us again? Ultimately, I expect these leaders to devise a plan to spend a lot more money on a lot more government programs and come away without really accomplishing a thing.

I was completely surprised to hear Obama say one thing though, Americans are going to have to sacrifice as we work ourselves out of this crisis. That said, I think his definition of sacrifice is different than mine. In my opinion, that sacrifice will involve driving older cars, living in smaller homes, eating out less, giving up luxury items like boats and other toys, not going on vacation, buying off-brand groceries and clothes, etc. I have all ideas his definition is to pay more taxes.

In fact, he rehashes part of his plan to work through this crisis that will require massive increases in government spending. His ideas sound similar to FDR‘s work programs of the Great Depression. The difference between then and now is the work ethic of the American people. In FDR’s time, we didn’t have the entitlement programs that encourage people not to work. It was either work or starve.

One thing I hear mentioned over and over is a plan to create jobs by rebuilding our transportation system. In my experience, there are a lot of people in this country who would rather sit at home, watch Oprah and draw a government check than work on a road construction crew. It’s hard, hot, and physical work.

He states that we’ve neglected rebuilding this infrastructure for far too long, but haven’t we all been inconvenienced by road construction on busy freeways? I’m just not buying this idea that we haven’t been addressing the problem of crumbing roads. I know in my state we’ve seen plenty of road construction that seemingly never ends.

I hope he can inspire the American people to truly make the sacrifices that will be required to not only survive this crisis, but to emerge from it with the same can-do spirit that our elders had. That spirit involved not only a willingness to work and achieve, but a desire to do so. In my opinion, that’s what we’ve lacked in this country for a long time. We have far too many people too willing to accept a hand-out instead of accepting a job. I’m afraid that spirit will never return as long as there’s a government check in the mailbox.

Another problem we’ll have to address if he implements this New Deal style program is the illegal alien situation. What good is it going to do American workers if the majority of these jobs go to illegals? And, if he implements it on anything close to the scale he’s indicating, we’re likely to see an increase in the number of illegals flooding our country in response. If this occurs, the problem will be compounded, not resolved.

I fear his recovery plan is flawed. Let’s not forget that Roosevelt’s measures didn’t end the Great Depression. In fact, the only thing they accomplished in the short term was to improve Americans’ morale. What finally pulled us out of the Depression was WWII and our role in the subsequent rebuilding of Europe and Japan. Hopefully it won’t take that to get us out of this mess.

Well, he’s going to get his chance. Let’s see what he can do.

November 16, 2008 Posted by | Obama | , , , | Leave a comment

Plan to Protect Homeownership

Here we go again with the next section of Obama’s Blueprint for Change. This time we’ll scrutinize his plan to “protect homeownership.” From the blueprint, here’s how Obama plans to

Protect and Promote Homeownership.

Create a Universal Mortgage Credit: Many middle class Americans do not receive the existing mortgage interest tax deduction because they do not itemize their taxes. As a result, primarily wealthy Americans benefit from this homeownership incentive. Obama and Biden will ensure that middle-class Americans get the financial assistance they need to purchase or keep their own home by creating a 10 percent universal mortgage credit that gives tax relief to Americans who have a home mortgage.

First question. Why do these middle class Americans they speak of not itemize their taxes? Because their deductions don’t exceed the standard deduction. That means all their tax deductible expenses–including mortgage interest–sum to less than the standard deduction. They get to deduct more than they’ve spent on tax deductible items already! In other words, they are already getting this tax break and more!

How about this 10% universal mortgage credit? According to this Mortgage News Daily article, this will effectively reduce the interest rate on mortgages by 10% for qualified taxpayers. If this is indeed the case, we’re again talking about reducing taxpayers to taxfilers by reducing their tax burden to less than zero. Can you say Robin Hood? The blueprint goes on to say this will provide 10 million homeowners with an approximate savings of $500 per year, helping them remain in their homes. While $500 might make a mortgage payment for some, I think it’s a stretch to say that $500 will prevent someone losing their home.

Close Bankruptcy Loophole for Mortgage Companies: While investors who own multiple homes and people with vacation homes can renegotiate those mortgages in bankruptcy, current Chapter 13 law requires ordinary families to stick with the original terms of their home loans—regardless of whether the loan was predatory or unfair.

I don’t know if Obama remembers this, but it seems Congress enacted legislation to keep borrowers from abusing the bankruptcy system recently, let’s see…I think it was the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. Though this legislation targeted those who would have filed Chapter 7 (allowing debt to be discharged rather than restructured,) it was deemed necessary because of abuse by debtors. Now suddenly, culpability for borrowers’ inability to pay their debts has shifted to lenders! Obama voted against the Act, but it’s interesting to note that Biden voted for it. So it seems at least the Vice-President elect recognized the system was being abused by borrowers.

And what’s meant by a predatory or unfair loan? Were some borrowers forced to sign a mortgage they didn’t want? Does this mean any loan can be classified as such if a borrower becomes unable to pay? Unless a borrower was dragged into a dark room and physically forced to sign an agreement while protesting the terms, it would seem the responsibility lies with the borrower. I distinctly recall being flabbergasted by advertisements to sell 125% home equity loans and interest-only loans, telling my wife how absolutely insane it was for anyone to accept such terms. Any responsible borrower would have thought the same thing and refused these “unfair” or “predatory” terms. Anyone with a brain should have known that housing couldn’t continue to appreciate at the abnormal rates of the last few years.

So, who is ultimately responsible for borrowers not being able to repay these loans? The borrowers themselves, that’s who! Should the mortgage companies have known these loans weren’t likely to be repaid? Certainly, but our politicians–Democrats and Republican–encouraged this irresponsible behavior because it artificially inflated our economy and kept them in office. Whether you like Bill O’Reilly or not, he nailed it when he pinned part of the blame for the current mess with Fannie Mae and Freddie Mac on Barney Frank. Here’s the exchange if you missed it:

I’m not saying Republicans don’t share the blame, but the Democrats also deserve to shoulder some. We the people also deserve to shoulder the blame because we were stupid enough to continue putting these same idiots back in office time and again!

The blue print continues with Obama’s plan to

Prevent Future Crises in the Housing Market

Mandate Accurate Loan Disclosure: Barack Obama and Joe Biden will enact laws to ensure that all prospective home buyers have access to accurate and complete information about their mortgage options. Obama and Biden will create a Homeowner Obligation Made Explicit (HOME) score, which will provide potential borrowers with a simplified, standardized borrower metric (similar to APR) for home mortgages.

What, exactly, is keeping borrowers from discovering this information now? Every time I’ve ever borrowed money, this information was readily available. Now, let me state that I’ve always had good credit. I’ve always been conservative when it came to borrowing money, never borrowing more than I needed and always having a conservative plan for repayment that left a considerable cash flow cushion. That’s not rocket science, it’s called acting responsibly! Continually placing the blame on corporations and refusing to let delinquent borrowers suffer the consequences of being irresponsible only encourages more irresponsible behavior.

Combat Mortgage Fraud and Sub Prime Loans: Barack Obama introduced comprehensive legislation over two years ago to fight mortgage fraud and protect consumers against abusive lending practices. Obama’s STOP FRAUD Act provides the first federal definition of mortgage fraud, increases funding for federal and state law enforcement programs, creates new criminal penalties for mortgage professionals found guilty of fraud, and requires industry insiders to report suspicious activity. This bill also provides counseling to homeowners and tenants to avoid foreclosures.

Here we go again, blaming the mortgage companies while avoiding placing any blame whatsoever on irresponsible consumers of credit. According to the Summary of Obama’s STOP FRAUD Act, it would have amended Federal Law to make it a crime for any mortgage professional to defraud a person or business obtaining a secured loan. Isn’t such fraud already against the law? The FBI Financial Crimes Division seemed to think it was in this report dated May 2005. So this bill Obama touts in his blueprint would have really resolved nothing. As for the counseling provided to homeowners and tenants, does anyone really think irresponsible behavior is going to be changed through counseling? There are free credit counseling services available now. A quick Google search for “Free Credit Counseling” yields these links.

There’s really nothing substantial in this part of Obama’s plan. If anything, it’s likely to encourage more irresponsible borrowing by refusing to hold people responsible for their mistakes. The title makes it sound good though, doesn’t it?

Plan to Protect Homeownership.  Sure.

November 12, 2008 Posted by | Obama | , , , | Leave a comment