Tuesday, January 27, 2009
Tim Geithner is now too big to fail. The economic crisis is too dangerous to let a man who is too big to fail sit on the sideline. Geithner must be “Superman.” He must have powers that are extraterrestrial, as there is no one else in the financial sector that has the ability to put the economy back on track again according to President Obama and members in the Senate who approved of his nomination.
Well folks, all I can say is if you liked the way the economic crisis has been handled under the Bush Administration, you will no doubt be thrilled with what’s to come. For those who expected change, brace yourselves for a difficult dose of reality. Real change would have been a free-market solution. Instead, Geithner will continue policy that will further erode the free market and expand the power of the government.
Tim Geithner has not sat idly on the sidelines for the past year. He has already had extensive involvement in the government’s response to the financial mayhem. Based on Geithner’s record, he seems to think that bailouts are the solution. He advocated the rescue of Bear Stearns and played a key role in the rescues of American International Group (AIG), Bank of America and Citigroup. It’s a good thing that top executives in these companies put the funds to good use. AIG felt lavish executive retreats were necessary. Bank of America paid huge bonuses to Merrill Lynch executives. Citigroup partnered with the New York Mets baseball team by paying a $400 million naming-right expenditure to call the stadium where the Mets play “Citi Field.” Some may rightfully argue the cost/benefit of such a decision, and it would be a legit argument if the company did not receive federal money. Besides, I thought the credit markets were frozen!
Based on the testimony Geithner gave at his confirmation hearing, I am left wondering what exactly those “superpowers” are.
Geithner said, “Senators, the ultimate costs of this crisis will be greater, if we do not act with sufficient strength now. In a crisis of this magnitude, the most prudent course is the most forceful course.” He says Obama’s stimulus plan “will meet that test.” (1)
It is interesting that the scare tactics continue in an effort to give the government an excuse to spend trillions of dollars and hold stakes in our largest banks; when in reality, this “crisis” isn’t even close to what was experienced in the 1970’s. Has Geithner seen Obama’s stimulus plan? Perhaps he could explain how the same tax incentives that were part of Bush’s plan last year and the massive government spending that includes handouts to states to fund safety-net programs as well as free contraceptives would stimulate the economy. The aim is to stimulate the economy isn’t it? It’s possible that Speaker Pelosi was thinking about a different kind of stimulation…
Geithner mentions the Senate’s passage of the second Troubled Asset Relief Program (TARP) tranche, but says “we have to fundamentally reform this program” to ensure there’s enough credit to support the recovery. He also says the nation needs “investments” in infrastructure, a strategy “to get us back as quickly as possible to a sustainable fiscal position” and then “comprehensive financial reform” so the world will “never again face a crisis of this severity.” (1)
It seems that Citigroup didn’t have a problem getting credit. Nowhere in his testimony does Geithner mention repeal of the Community Reinvestment Act – the act which played a key role in the housing debacle. This act forced banks through government mandates to loan money to people who could not afford to repay which led to the birth of the subprime mortgage market. Instead of overusing the word “crisis,” his plan should focus on transparency and prudent lending standards.
Geithner may not wish to tip his hand at the moment, but I would expect to see proposed changes to the Financial Accounting Standards Board Statement Number 157 which has failed in the attempt to value illiquid assets and has earned the phrase “mark-to-make-believe accounting.”
As for infrastructure spending…there is an idea that’s never been tried before. His expertise in economics should reveal to him that most of the benefits of infrastructure spending are delayed and could take effect during an inflationary period. In addition, the money is rarely used for what it was intended, and we don’t see real economic growth when the government spends money. History has proven that the government cannot spend the country out of recession. This kind of spending can make our dollar worthless, however!
Geithner’s responsibilities also include oversight of the Internal Revenue Service (IRS). It is comical that we entrust a person who has evaded taxes to be in charge of the IRS. Geithner claims his mistakes were innocent. However, if they were innocent, should America have confidence in a man who has difficulty using Turbo Tax (a software that people with no accounting/financial background can easily use), has difficulty understanding IRS Publication 503, and doesn’t realize he has to pay Social Security tax, Medicare tax and employed an immigrant housekeeper who lacked proper work papers?
In summary, Geithner’s appointment further illustrates that there is no real change in Washington. In addition to Geithner’s tax problems, there is a very questionable record of “expertise.” He’s played a pivotal role in managing TARP funds. It’s quite clear that the first half of TARP funds were misspent. As President of the New York Federal Reserve Bank, his supervision of corporate giants like Citigroup was questionable. Although Geithner talked about holding such institutions to the highest regulatory standards, the record shows that New York Fed relaxed the standards as the company bet big on subprime mortgages and had massive risk exposure to other perilous investments.
So why is it that we have so much confidence in people such as Geithner to fix a problem when they have shown poor judgment and played a role in causing the problem? Answer: the elite financial club has its benefits.
Monday, January 26, 2009
"We know better now. Apparently some of us don't."
Over at his Washington Post blog, Daniel Froomkin assails my Post oped and comments at NRO, declaring:
In a Washington Post op-ed yesterday, former Bush speechwriter Marc A. Thiessen made the outrageous and unsupported charge that banning Bush's "enhanced interrogation techniques" would "effectively kill a program that stopped al-Qaeda from launching another Sept. 11-style attack."
Wrote Thiessen: "Information gained using those techniques is responsible for stopping a number of planned attacks — including plots to blow up the American consulate in Karachi, Pakistan; to fly airplanes into the towers of Canary Wharf in London; and to fly a hijacked airplane into the Library Tower in Los Angeles."
But as I've repeatedly noted, it's never been proven that any of these attacks were anything more than a fantasy, nor that they were averted due to CIA interrogation.
Thiessen was at it again today on the National Review Web site: "The CIA program he is effectively shutting down is the reason why America has not been attacked again after 9/11. He has removed the tool that is singularly responsible for stopping al-Qaeda from flying planes into the Library Tower in Los Angeles, Heathrow Airport, and London's Canary Warf, and blowing up apartment buildings in Chicago, among other plots. It's not even the end of inauguration week, and Obama is already proving to be the most dangerous man ever to occupy the Oval Office."
But Thiessen is making this stuff up, people.
ME: With all due respect, Froomkin is speaking from a pinnacle of near-perfect ignorance. In the summer of 2006, I was asked to prepare a speech revealing the details of the CIA program. I sat down with the people who actually ran the program—the people responsible for breaking up the plots—and, over the course of several months, we painstakingly reconstructed how the questioning of these terrorists led to the disruption of plots. Let me give some details on just one example—the West Coast plot.
A few months after 9/11, a terrorist named Abu Zubaydah was captured. He was a close associate of Osama bin Laden, and ran a camp in Afghanistan where some of the 9/11 hijackers had trained. And he helped al Qaeda leaders escape from Afghanistan after the start of Operation Enduring Freedom, including the future leader of al Qaeda's Iraqi branch, Abu Mussab al Zarqawi.
Zubaydah was captured in a gun battle and severely injured. The CIA arranged medical care, saving his life. After he recovered, Zubaydah provided what he thought was nominal information—including that KSM's alias was "Muktar," something our intelligence community did not know. But he soon ceased all cooperation. It was clear to his interrogators that he had received interrogation resistance training, and the traditional methods were not working. So the CIA employed alternative interrogation techniques. And Zubaydah started talking.
He provided information that led to the capture of Ramzi bin al Shibh—one of the key plotters of the 9/11 attacks and a close associated of KSM. Bin al Shibh was the mastermind behind a plot for a follow-on attack to hijack airplanes in Europe, and fly them into Heathrow airport. Now he was off the street and the Heathrow plot was setback.
Together, bin al Shibh and Zubaydah provided information that led to the capture of KSM.
Once in custody, KSM refused to cooperate, until enhanced interrogation techniques—including waterboarding—were used. Then he began to talk.
He gave us information about another terrorist in CIA custody named Majid Khan. KSM told us that Khan had been tasked to deliver $50,000 to a Southeast Asian terrorist named Zubair—an operative with the terrorist network Jemmah Islamiyah, or JI.
Confronted with this information, Khan confirmed KSM's account and gave us information that led to the capture of Zubair.
Zubair then provided information that led to the capture of a JI terrorist leader named Hambali—KSM's partner in developing the West Coast plot. Their strategy was to used Southeast Asian operatives, since KSM knew we would be on the lookout for Arab men.
Told of Hambali's capture, KSM identified Hambali's brother "Gun Gun" as his successor and provided information that led to his capture.
Hambali's brother then gave us information that led us to a cell of 17 JI operatives that were going to carry out the West Coast plot.
Of course, according to Froomkin, I just made all that up.
This is just one of the many plots stopped by this program. According to our intelligence community—not, me, not President Bush, but our intelligence community—without this program, al Qaeda would have succeeded in striking the homeland again. I supposed if the 9/11 plot had been thwarted, people like Froomkin would be telling us how it was never really close to execution and how could men armed with nothing more than box cutters hijack four airplanes simultaneously and fly them into buildings?
We know better now. Apparently some of us don't.
I second Marc Thiessen's conclusion. According to many liberals I debate, all we're doing is getting revenge, not saving lives. This story should be common knowledge among American citizens.
Now, that President Obama is in the White House, free speech seems to have lost its glamor on the left. Thousands of liberals across hundreds of conservative message boards flocked to tell the rest of us to get behind the new president and, sometimes using harsher language, to leave the dissent behind. The countless celebrities that backed our new president now pledge to “serve” him and to be better Americans because their man is in office. The double standard is both disgusting and unsurprising.
The reality is there is a line between legitimate dissent and seditious, destructive speech. Of course, both are protected by the First Amendment and no one should ever be prosecuted for their private views (that's something for the left to do. Wilson and FDR did it in spades), but it doesn't change the nature of the division. Its one thing to be against the policies of the president: tax hikes, the war, social programs, etc. One can blather on about taxing the rich or the lazy poor or how we shouldn't be in this country or that. Such speech is welcomed and helps keep all of us reasonable in the political sphere. Yet, there are things people say that are made specifically to not only de-legitimize our country's elected leadership, but to destroy the morale of a large section of the nation and its armed forces. The eight years of “Bush stole the election”, for instance, or the disgusting accusations from Democratic congressmen of heinous torture and massive war crimes committed by our spies, soldiers and private citizens in Iraq and Afghanistan without any evidence to back it up. That speech is morally wrong, most of all in a time of war against an covert enemy. Again, this does not mean it shouldn't be protected speech, but one can have full free speech while being seditious and immoral as well.
The issue for conservatives is how are we to dissent against a president we may not like in any which way. There is already a faction, backed by the sketchy evidence that President Obama may not be a natural born citizen, that has taken upon itself to declare him illegitimate. This is the wrong way to go. First off, there is no evidence of Obama's illegitimacy other than his mismanagement of publicizing his birth certificate. Secondly, when has it been a core value of patriotic conservatives to actively try to destroy the office of the President? Is it in the best interests of the nation to spread rumors about how the nation voted in an impostor that had does illegal things to gain the presidency? Doesn't it sound like the exact same arguments the left had when Bush won the 2000 election? Are we so partisan?
In no way am I saying dissent against Obama should be stifled. Not in the least. What I am saying is that we should not fall to the scum floor that liberals have been laying on since Bush took office. We conservatives pride ourselves on our patriotism and our reason. What we say in criticism of the president should reflect that pride. We should go after his economic ideas, his weakening of our defenses with the end to harsh interrogation, his past radicalism and the similarities he has to the old, fascistic Progressive movement. Going after ghosts of illegitimacy just leaves the door open for the liberals, the leftists and the new Progressives to malign us with their smug airs of intellectualism.
“My country, right or wrong” isn't something that changes with the president.
Wednesday, January 7, 2009
We’ll begin with the tax proposals. Obama’s plan includes the following: On the individual side, he proposes a $500 individual tax credit ($1,000 for couples). On the business side, the proposal consists of an extension of the Net Operating Loss (NOL) carryback feature to 5 years (currently 2 years), tax credits to businesses that create jobs or avoid layoffs, increasing the amount that allows small businesses to write off a wide range of expenditures up to $250,000 (currently $175,000) and doubling the renewable energy tax credit.
Fiscal conservatives understand that tax cuts only work when they are coupled with spending restraints – not when they are used as an inducement to win bipartisan support. Speaking of inducement; when the tax code is used to encourage behavior, the result is never what was intended.
The problem with Obama’s individual tax credits is 1) checks of this nature were part of the Bush plan in early 2008, which failed to “stimulate” the economy; and 2) if this credit is made a permanent part of the tax code, many of the recipients are people who already have no federal income tax liability which basically makes it a form of welfare.
On the business side, there is a catch to the NOL carryback feature. Write-offs are retroactive to expenditures made as of January 1, 2009. In other words, businesses have to invest the money in order to receive the credit. The problem with giving tax credits to businesses that hire or avoid layoffs is that businesses who were already planning on hiring will be the only ones to benefit from the credit. Troubled businesses that are forced to let workers go will not be saved by a small tax credit. Chalk this up to Obama’s lack of private sector experience. Apparently, he hasn’t looked into the costs of TOTAL compensation for a worker.
Many of these tax credits are nothing more than extensions of the credits already enacted by the Bush Administration, yet we were led to believe that John McCain was Bush’s third term! In all seriousness, it is most unfortunate that the Obama Administration will not play the card that the Bush Administration missed – addressing the fact that the United States has the SECOND HIGHEST corporate income tax rate in the world. Instead of playing games with tax credits that have ridiculous stipulations, reducing the corporate income tax rate would bring relief to ALL sectors of business while simultaneously encouraging business to come back to the United States. More businesses in the United States leads to job opportunities and will curtail jobs being lost to tax-friendly overseas environments. In addition, businesses would have fresh capital to grow and expand.
Moving on to the spending side of this turkey….
Most of the spending in Obama’s plan is nothing more than welfare to individual states. Up to $200 billion is being proposed to expand the federal share of Medicaid which makes one wonder exactly how that will stimulate the economy. A majority of the remainder will be used to spur the growth of federal infrastructure spending. When was the last time infrastructure spending has pulled the economy out of recession? Another problem with infrastructure spending is that the money is rarely spent on what it was intended. When money of this nature is allocated to states, it’s time for politicians to become famous. It’s time for a new community center or a face lift for a school. There is no political publicity in road and bridge repair. Besides, if they actually were fixed, then it removes politicians’ ability to complain that there is a lack of funding! Lastly, infrastructure spending does not happen immediately as there are numerous federal mandates (government red tape) that require strict compliance. It is very likely that the economy could be in an inflationary expansion period by the time the spending proposals take effect.
In short, the Obama plan grossly misses the mark. In addition, the $800 billion price tag is abhorrently understated. Obama’s plan will end up well over the $1 trillion mark if Congress approves. Reckless government spending at time where our national debt is creeping up to 70 percent of our gross domestic product can make the last bout of inflation look mild. Let's not forget that "crisis" is a friend of the state. The scare tactics being used as a means to inject billions of dollars of "artificial" money into the economy will only pave the road for bigger problems in the future.
Tuesday, January 6, 2009
May it be going to work, doing an assignment, washing the car, doing taxes, etc. Whatever it may be, we've all had many times where our motivation for doing something was solely based on our mental discipline. Our duty to do something right, morally or otherwise, pushes us beyond our instinctual and emotional limits and finish the job we set out to do.
In a society geared towards individuality, we have the tendency to forgo personal responsibility and rely on blaming outside influences. Your kid acts out? It's a disease and not your parenting. Your eating habits suck? It's Big Food's fault and not your patronage of fast food joints. Your grades are low? It's the school's fault and not your twenty missing assignments. I know first-hand. I was and still am at points flawed in the sad skill of deflection of responsibility.
In this society that is geared towards maximum individuality, we are missing our societal discipline more so than ever before. The blame for the recession (which is well documented on this blog) being the most recent of a string of irresponsibility being passed around to anyone but the individual.
Since the invasion of Iraq, we have slowly given in to selfish views on how to fight it and the greater War on Terror. Arguments for surrenderer have always had a tinge if selfishness. When I was a leftist, I know my arguments came out of a childish and paranoid fear of a greater war and absolute power in the hands of a few. The war has had little impact on the real material wealth of the country in compared to other wars and events, so there is no basis in the greater economy (as many leftist love to argue about).
It comes down to personal beliefs and the need for the individual to be right, even if its against the best interests of their country. Sometimes the personal goes too far. There is an unhealthy love of individual righteousness in many people instead of a healthy love of simple individuality.
There are times in our lives when our discipline will mean the world to someone or to a group or to a town or even to our country. There will be times we have to temporarily put aside our personalities and our individuality and step up to help someone else.
You don't have to give up your individuality forever.
Your rights won't disappear with your duty as a citizen of a free nation.
Your duty as a citizen protects your rights.