Voters are right to think our addiction to federal deficit spending is killing our economy. A thorough new study from Carmen Reinhart of the University of Maryland and Kenneth Rogoff of Harvard University takes a look at the relationships among rising debt, inflation and economic growth for 44 developed and developing countries. The findings bode poorly for a spending-crazy Washington.
From 1946 through 2009, growth of developed countries (including the United States) stood at an annual rate of just shy of 4 percent when debt was no greater than 30 percent of gross domestic product. The picture gets bleaker for those countries holding debt above 30 but below 90 percent — economic growth slowed down but still hovered around 3 percent to 3.5 percent per year. When debt rose to over 90 percent of GDP, average growth went negative. Reinhart and Rogoff found that when this worst-case scenario occurs in the U.S., economic growth rates go negative and the inflation rate goes to above 5.5 percent. According to the Heritage Foundation’s Bill Beach, the International Monetary Fund and the Congressional Budget Office both predict U.S. sovereign debt is fast approaching 100 percent of GDP.
There’s never been a better time for President Obama to put an end to the idea that he may be the next President Carter. He can head off inflation by taming federal spending and working with Congress to cut programs. And once that’s done, he can cut taxes to stimulate the economy. Sadly, he won’t. Obama sent a letter last week to leaders of the G-20, airing concerns over the decision of European leaders to start imposing austerity measures: “We should reaffirm our unity of purpose to provide the policy support necessary to keep economic growth strong.”
Unity of purpose is the problem. For Greece and Spain to face financial disaster, politicians first had to give monopolistic unions lavish pensions and a hearty social welfare state. Austerity measures were the hard-bought, politically unpopular solution, so much so that protests against the measures turned to riots.
Congress passed rules earlier this year to prevent itself from spending money it doesn’t have. But the same majority Democrats who voted for Pay-Go simply override those rules whenever they have to pass an actual spending bill. And on Saturday, Obama ripped opponents of his second stimulus, saying that they are endangering the jobs and unemployment benefits of millions of Americans. It’s time to face reality and start cutting spending.
(Reuters) – The U.S. debt will top $13.6 trillion this year and climb to an estimated $19.6 trillion by 2015, according to a Treasury Department report to Congress.
The report that was sent to lawmakers Friday night with no fanfare said the ratio of debt to the gross domestic product would rise to 102 percent by 2015 from 93 percent this year.
“The president’s economic experts say a 1 percent increase in GDP can create almost 1 million jobs, and that 1 percent is what experts think we are losing because of the debt’s massive drag on our economy,” said Republican Representative Dave Camp, who publicized the report.
He was referring to recent testimony by University of Maryland Professor Carmen Reinhart to the bipartisan fiscal commission, which was created by President Barack Obama to recommend ways to reduce the deficit, which said debt topping 90 percent of GDP could slow economic growth.
The U.S. debt has grown rapidly with the economic downturn and government spending for the Wall Street bailout, the wars in Afghanistan and Iraq and the economic stimulus. The rising debt is contributing to voter unrest ahead of the November congressional elections in which Republicans hope to regain control of Congress.
The total U.S. debt includes obligations to the Social Security retirement program and other government trust funds. The amount of debt held by investors, which include China and other countries as well as individuals and pension funds, will rise to an estimated $9.1 trillion this year from $7.5 trillion last year.
By 2015 the net public debt will rise to an estimated $14 trillion, with a ratio to GDP of 73 percent, the Treasury report said. (Reporting by Donna Smith; Editing by Kenneth Barry)
Remember all of those bold statements that the so called “Troubled Assets Relief Program” (TARP), the Bailout of Wall Street Bill, was a one time deal and our federal government should and will never do it again. Secretary of the Treasury Tim Geithner testified in January of this year before the House Committee on Oversight and Government Reform:
Many Americans look at what happened with AIG, and the rest of the financial rescue, and simply ask: Why was it necessary? Why was it fair for the government to take taxpayer money and put it into an institution that had mismanaged itself to the edge of collapse? The answer is that it was not fair, and it was not something our government should ever have to do. But those Americans, those families and business owners who played by the rules and played no role in giving rise to this recession, should understand that if the government had failed to act, that failure would have unleashed substantially greater damage upon them.
If TARP “was not fair” and not “something our government should ever have to do,” then why is Congress trying to impose the TARP model on small business? Congress will consider legislation this week to establish TARP, Jr. for small businesses to be administered and run by none other than Secretary of the Treasury Tim Geithner. The House is considering H.R. 5297, the Small Business Lending Fund Act that provides “temporary authority to the Secretary of the Treasury to make capital investments to eligible institutions in order to increase the availability of credit for small businesses.”
The legislation creates a federally run new bureaucracy called the “Small Business Lending Fund. ” To qualify a financial institution has to have less than $10 billion in assets and the new creation would have up to $30 billion in new investment authority. This allegedly temporary program is set up “without further appropriation of fiscal year limitation,” i.e. not temporary, to purchase “preferred stock and other financial instruments” from small business as a means to infuse money into local banks with the condition that they lend to failing small business. Local banks will be lending in exchange for equity small business, therefore these banks will be using federal monies to buy equity in companies. This is an idea born from socialism and one that will harm the free market for small business, because failure will be rewarded by federal subsidies while success will be punished.
The bill also creates a “Small Business Credit Initiative” with $2 billion of your tax dollars to be given to states that have created programs to provide funds to banks to bailout small businesses in trouble. This would provide an incentive for states to adopt the crony capitalism programs of the federal government exemplified by the federal takeover of General Motors and the activities of Fannie Mae and Freddie Mac. Setting up a system with private profits, yet socialized losses, will diminish capitalism and the American free market system. This legislation, TARP, Jr., extends the failed and free market offensive TARP model to small business. Considering that the original TARP program was “not fair, and it was not something our government should ever have to do,” Congress might want to heed the advice of Secretary Geithner of January 2010 and pause before creeping a few more steps toward American socialism.
From the G.M. bondholders, to the Black Panthers at polling stations, to ACORN to the mobs showing up at the homes of private citizens, Obama is running a Hugo Chavez-style thuggocracy.
This past Sunday, in one of the most aggressive and offensive intimidation tactics to date, hundreds of members of the largest union – the SEIU – stormed the front yard of Bank of America deputy general counsel Greg Baer’s home. The angry mob had bullhorns, signs and even broke the law by trespassing to bully Baer’s teenage son, the only one home at the time, who locked himself in the bathroom out of fear.
This is what unions do. They pressure politicians into spending too much. They push government into bad policy decisions. They sacrifice the private sector for the public sector. And now, they trespass and break the law only to scare the children of private citizens to get their way.
If you think the unions are working along, think again.
These protests, the ones storming Wall Street bank lobbies and now the private homes of bankers, are likely being carefully coordinated with the White House to increase their profile against the financial fat cats and help pass disgraced Connecticut Senator Chris Dodd’s financial regulatory bill.
Remember, when the White House visitor records were finally made public, it was SEIU boss Andy Stern who was the most frequent guest.
There are also no coincidences in politics. The bill passed the Senate last night.
From the G.M. bondholders, to the Black Panthers at polling stations, to ACORN to these assaults on private citizens, Obama is running a Hugo Chavez-style thuggocracy. Like Chavez, he gets non-official “allies” to act as his henchemen and do the intimidation work. Obama provides the narrative and tells the story of “greed” while the SEIU provides the muscle. This is about power, not prosperity.
This time it’s gone too far.
Unions see the writing on the wall. The goose that laid the golden egg is bleeding on the operating table – and they’re the ones who killed it. They are bankrupting local and state governments, and putting a strain on the federal budget. Unions have also put us at a major trade imbalance. The stimulus has gone to create more public sector union jobs. These jobs cost on average, 30K more than their private sector equivalents.
Take New York State, for example, once upon a time there was manufacturing, a robust Wall Street engine of growth, Fortune 500 companies aplenty. That “Empire State” is no more. The unions lobbied to ensure that these companies were taxed to death and made it extremely challenging to do business — so much that it became easier to do business in communist China.
Let’s be clear, I’m not defending Bank of America. I’m defending the American tax payer from organized labor who has bled them dry and the politicians who have been too weak to stand up to their gangster ways.
Unsurprisingly, the SEIU has made no apology for their behavior toward Baer’s family. Their spokespeople argue that the protest was over home foreclosures under Bank of America’s watch, but that still doesn’t give them the right to break the law. It also doesn’t allow them a carve out like they demanded in the health care bill for their costly Cadillac insurance plans. It’s absurd that in a recession, the unions feel they deserve special treatment because they are connected to the party in power. If that’s what they’re arguing they need to stand up and say it.
In this economy, you can’t punch someone without feeling it yourself. Punch the bank, they stop making loans, thus hurting the private sector. Punch the private sector, you hurt the markets. Hurt the Street and you hurt the pensions funds, in fact, the very same ones unions are going gangster to protect.
We now know, there is nothing they won’t do, nobody the unions won’t intimidate. And the president, who promised to preside over an administration free from special interest influence, should be held accountable. As long as we continue to feed the unions, the country will continue to decline. It’s time to stand up to this behavior with the same muscle they’ve used to bully our country all these years and send a message loud and clear: we will not be intimidated.
Andrea Tantaros is a conservative columnist and FoxNews.com contributor.
By now, you’ve probably seen the mob-scene that developed on the front lawn of the private residence of Greg Baer, deputy general counsel for corporate law at Bank of America. This was planned for some time by the SEIU as part of a larger national event, their Showdown on K Street, which was shared with National People’s Action and thousands of other activists from MoveOn.org and other left-wing groups.
Prior to the main event on K Street in Washington DC, SEIU and company made a little pit stop. According to Fortune magazine Washington editor Nina Easton, 14 busloads of riled up protesters unloaded on Baer’s private property and stormed up to his doorstep, while his teenage son was home alone. Easton is a neighbor of Baer’s and had called to check on her neighbor’s son when she heard and saw all the commotion outside. Easton writes,
“Waving signs denouncing bank “greed,” hordes of invaders poured out of 14 school buses, up Baer’s steps, and onto his front porch. As bullhorns rattled with stories of debtor calls and foreclosed homes, Baer’s teenage son Jack — alone in the house — locked himself in the bathroom. “When are they going to leave?” Jack pleaded when I called to check on him.
Baer, on his way home from a Little League game, parked his car around the corner, called the police, and made a quick calculation to leave his younger son behind while he tried to rescue his increasingly distressed teen. He made his way through a din of barked demands and insults from the activists who proudly “outed” him, and slipped through his front door.
“Excuse me,” Baer told his accusers, “I need to get into the house. I have a child who is alone in there and frightened.”
Imagine what you would have done if your child were inside that house and that mob was on your front lawn as you tried to reach him.
Amazingly, the SEIU has actually taken aim at Easton for reporting on this incident. Their defense? Easton’s husband is a Republican strategist and has a lobbyist as a client – oh, the horror! (Especially considering that the SEIU itself is also a lobbyist). In their post “Nina Easton & the Bank Lobbyists: Too Close for Comfort,” SEIU’s crack Googlers researchers break the case wide open:
“The really interesting question here is: why is Ms. Easton so angry? And why has she decided to use her position as a member of the media to air her own personal rant at the people who showed up to share their foreclosure stories?
Nina Easton’s husband’s firm has Business Roundtable as a client, a special interest group that counts giant banks like Bank of America as members.
One Google search clears it up pretty quickly. Her husband is Russell Schriefer, Republican strategist and consultant to several big corporate interest groups. In fact, her husband’s client list includes the Business Roundtable, a special interest group that counts Bank of America and other Wall Street banks among its members.
Ms. Easton’s husband used to be a corporate lobbyist himself, before he started his own consulting firm for Republican politicians and corporate interest groups like the Business Roundtable and the Chamber of Commerce. Now, according to his website, he helps garner positive media for “a wide range of corporate clients including Fortune 500 companies and national associations.”
Wow. Amazing. That kind of muckraking puts my time working at LexisNexis to shame. Perhaps I should take SEIU’s employment recruiters up on one of their recent job offers sitting in my email inbox. (really, they are hiring, and they did email…can you imagine that job interview?)
But what’s even more interesting, to use SEIU’s phrase, is the labor union’s odd relationship with its own business and advocacy partners. They specifically mention above their disdain for Business Roundtable, for their part as what they term as a Republican corporate interest group. But, just like Bank of America – which is a lender to SEIU, mortgage partner to ACORN, and is also the leading lending partner to SEIU advocacy partner, Center for Responsible Lending – one of SEIU’s own partners is also Business Roundtable.
“Today, three of the nation’s leading consumer, business and labor organizations announced that they will work together to urge action from political leaders in a partnership called Divided We Fail. AARP, Business Roundtable and SEIU will use the influence of their over 50 million combined memberships to amplify the message that attaining health and long-term financial security is vital for all Americans and these issues must be included in the national political debate.
Divided We Fail is a national effort designed to engage the American people, elected officials and the business community to find broad-based, bi-partisan solutions to the most compelling domestic issues facing the nation – health care and the long-term financial security of Americans.”
Ouch, talk about biting the hand that feeds you.
The current circumstances are also rather interesting because recently, Tea Party and 912 Project groups have been protesting Bank of America, too. For SUPPORTING the financial regulatory reform bill currently in Congress. You know, the one that Big Labor is supporting with Democrats – the one that proposes the big banks and government spy on your bank accounts and report your loan info to a big government database for all to see? Yeah, that bill. Bank of America lobbyists have been busy lobbying Democrats and donating money to Democrats.
I think the folks at SEIU may be a bit confused over there – first they storm private property and intimidate a teenage child, then they bite the hands that feed them, and they overlook all the money flowing into the Democratic coffers on this bill and selectively go after only seemingly Republican targets. Only, their targets aren’t Republican at all. This one in particular – definitely not a Republican, as Easton describes Baer:
“Instead, a friendly Huffington Post blogger showed up, narrowcasting coverage to the union’s leftist base. The rest of the message these protesters brought was personal-aimed at frightening Baer and his family, not influencing a broader public.
Of course, HuffPost readers responding to the coverage assumed that Baer was an evil former Bush official. He’s not. A lifelong Democrat, Baer worked for the Clinton Treasury Department, and his wife, Shirley Sagawa, author of the book The American Way to Change and a former adviser to Hillary Clinton, is a prominent national service advocate.”
Just imagine if the union of We the People mobilized its own protests to put a stop to the tactics of domestic terrorism of today’s leftist unions.
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Also be sure to catch this related post from LaborUnionReport titled “The SEIU, the NPA & Organized, Premeditated Intimidation“.
The really interesting question here is: why is Ms. Easton so angry? And why has she decided to use her position as a member of the media to air her own personal rant at the people who showed up to share their foreclosure stories?
bizroundtableb.jpg
Nina Easton’s husband’s firm has Business Roundtable as a client, a special interest group that counts giant banks like Bank of America as members.
One Google search clears it up pretty quickly. Her husband is Russell Schriefer, Republican strategist and consultant to several big corporate interest groups. In fact, her husband’s client list includes the Business Roundtable, a special interest group that counts Bank of America and other Wall Street banks among its members.
Ms. Easton’s husband used to be a corporate lobbyist himself, before he started his own consulting firm for Republican politicians and corporate interest groups like the Business Roundtable and the Chamber of Commerce. Now, according to his website, he helps garner positive media for “a wide range of corporate clients including Fortune 500 companies and national associations.”
What would happen if U.S. businesses stopped paying federal payroll taxes? What wou;d happen if we went along with the idea thrown about by Neal Boortz and allow people to understand how much money the federal government takes from them each paycheck? Would they get the idea of how great of an idea the fairtax is if they got 100% of their paycheck for a month or two? Would the federal government get the idea of how angry the American people are if they were starved from their monthly allowance from all American businesses?
Right now, we are looking at becoming Greece, or worse, Bangkok. What is the solution, civil disobedience? What are your thoughts, your ideas?
There is a facebook page: what if Businesses stopped paying federal payroll taxes?
Under the Obama administration, the Democrats are unleashing a bevy of unpalatable surprises for women, including massive up-front government expansions and enormous tax increases that produce problems for American women and their families. As Rep. Michele Bachmann, Minnesota Republican, recently said, “The government now owns 51 percent of the private sector.” In just 18 months, the current administration has produced extraordinary “change”; indeed, it threatens a huge transformation of America. The majority of citizens not only disapprove of these changes and transformations, they actively oppose them. Citizens have picketed, protested, held town hall meetings to express their opposition, and responded to poll after poll indicating their overwhelming opposition to the actions of the Democrat majority and the socialist agenda of the president. Yuval Levin called the new law a “ghastly mess” and traced its development: It “began as a badly misguided technocratic pipe dream and was then degraded into ruinous incoherence by the madcap process of its enactment.”
Controversy and secrecy surrounded the passage of Obamacare, but the incident with Joe Wurzelbacher, a plumber in Holland, Ohio, kept echoing in reports and analyses of the bill. Barack Obama, the candidate, said, “I think when you spread the wealth around, it’s good for everybody.” That off-the-cuff remark stayed in critics’ minds, even when the president and the Democrat-controlled Congress suppressed open debate and the media focused on other aspects of the bill. Now that the bill has been rammed through and the president has signed it, Democratic politicians, from Sen. Max Baucus to Vice President Joseph R. Biden, are remarkably open about the real purpose of the bill – to spread the wealth around.
The trouble is, women and families are the ones who bear the brunt of Obamanomics’ income redistribution. With the specifics of the legislation a closely-guarded secret known only to the liberal elite in Congress while it was under deliberation, it was not immediately clear that women and families were the ones bearing the brunt of the new taxation hidden in Obamacare. Supporters didn’t talk about the bill’s marriage penalty – the fact that it will redistribute wealth from married couples to cohabiting couples. They also didn’t mention the fact that people on Medicare and Medicaid, disproportionately women, would receive less care and possibly worse care. Plus, nobody talked about the fact that the bill penalizes those employers that hire low-income workers, primarily single mothers and housewives needing a second income. So, instead of encouraging single mothers to marry the father of their children and to become financially independent by facilitating job growth, Obamacare creates another avenue of dependency through health insurance subsidies.
Another issue lies with the impending tax increases and the growing burden on Americans to comply with the federal tax code. According to the Internal Revenue Service’s Taxpayer Advocate Service, “The Code has grown so long that it has become challenging even to figure out how long it is.” Their best estimate is that it contains approximately 3.7 million words. The Tax Foundation reported that IRS regulations currently have nearly 7 million words – an 18.7 percent increase since 1995 and, amazingly, almost nine times the total number of words in the King James Bible.
Carrie L. Lukas, in her article, “The Tax Man Cometh,” reports that in addition to losing about 30 percent of our income for federal, state and local taxes (more than the typical family spends on food, clothing and housing combined), Americans spend nearly 4 billion hours in complying with income tax laws. The cost of all this time is estimated at $110 billion. Further, Ms. Lukas reports, Americans paid nearly $30 billion for expert help in preparing their tax forms, including software programs and hiring tax preparation professionals. Do you remember that, among all the broken promises, last year President Obama pledged on Tax Day to “make it easier, quicker and less expensive for you to file a return, so that April 15th is not a day that is approached with dread every year”? Yet, over the past five years, the time individuals spent filling out tax forms increased a full hour due to the confusing and complex process. For corporations, the process is equally burdensome, costing $159.4 billion. Ms. Lukas explains that “for every dollar the government raises in revenue from corporations, companies have to pay out more than $1.50.”
Compliance with the IRS regulations is a major burden on American citizens. Further, the Tax Freedom Day group acknowledges that the average American works for the government from Jan. 1 to April 8 – a full 99 days – in order to pay his or her taxes. And we haven’t seen anything yet. Unless Congress takes action or the results of the 2010 election shift the power dynamics in Congress after November, Americans face unprecedented tax increases from 2010 through 2013.
We would do well to remember that our society has suffered grievously from programs and policies that meant well but failed miserably – and on a colossal scale – as is documented by an abundance of data and the obvious social trends in America. With Obamacare and tax increases, we face yet another ill-advised call for a return to the old, failed social-welfare policies of entitlement, and it is distressing to contemplate the lapse back into the old ways of victimhood these new initiatives seem destined to rekindle for the nation’s women and families.
Janice Shaw Crouse, author of “Children at Risk” (Transaction, 2009), is executive director of Concerned Women for America’s Beverly LaHaye Institute.
The U.S. needs more immigrants and a value-added tax to help reduce the deficit, former President Bill Clinton said Friday.
Clinton said the country was “mortgaging out a lot of our sovereignty” by using foreign creditors to pay for an “exploding” debt.
His recipe? More growth and revenue, fueled by immigrant workers and a controversial value-added tax.
“I think we’re going to have to have more taxpayers, which is why I favor, in a disciplined way, immigration reform and letting more immigrants come to the country,” Clinton told CNBC. “I think it would make more jobs for people who are unemployed, not fewer.”
Second, Clinton said, more tax revenue could be collected by imposing a value-added tax, which taxes products at each stage of the manufacturing or distribution process.
“I think they ought to look at a progressive value-added tax, just because — and I think it’s important the American people understand this — most of our competitors have tax systems like this,” Clinton said.
“If you have a value-added tax … you lower the income taxes, corporate and personal, and you put a little revenue collector on every stage of sales in a product or service, but if it is exported, you don’t pay the last price,” he added.
Such a tax would be “not easily evadable” and would make the U.S. more competitive, Clinton said.
Finally, Congress needs to reduce healthcare costs and show more fiscal discipline.
“We can’t keep doubling the cost of health are after inflation every decade,” Clinton said. “So my view is, control spending on an annual basis, work on healthcare costs, get more taxpayers and try to have the most competitive possible tax system. And eventually you’ve got to really enforce these pay-as-you-go rules.”
Clinton suggested Democrats hadn’t been as fiscally conservative as they should be, repeating his argument from earlier in the interview that the debt was “exploding.”
“I simply don’t think we can afford to keep exploding this debt. And I think you’re going to — the Democrats, we’re more socially progressive, but we’re also going to have to be fiscally conservative, I think. I just don’t think that it’s fair for America to take any other course.”
For the past hundred years, America has been slowly moving away from the principles of its founding. The ideals of liberty, individual achievement, limited government, and the equality of opportunity have been slowly supplanted by calls for security, class warfare, excessive regulation, and the equality of outcome. The passage of stimulus acts, bailouts, government takeovers of two U.S. automakers, and the health care overhaul prove that our movement away from 1776 has accelerated.
Passage of the health care bill has sparked a revival of small-government thinking, causing many to predict significant Republican gains in Congress this fall. But despite some short-term success, this small-government revival is doomed to fail. The depressing truth is that the only way to regain the full measure of those freedoms proclaimed in our Founding Documents is for our current federal government to completely collapse under the weight of its own excesses.
Often, one carefully articulated analogy can succinctly convey a very complex idea. In our case, that analogy is addiction. Over the past hundred years, we have slowly allowed a monstrous system of dependence to develop until nearly every citizen relies upon government money, and thus is an addict. This has come about because the hard logic of the Founders has been replaced by the seductive ease of emotional arguments. All too often, the debate is over not if government should do something, but what it should do. This almost imperceptible shift in our national philosophy is a manifestation of our addiction.
While the citizen-addict is hooked on government largesse, the politician-addict is hooked on something far more sinister: power. Their drug is available in Washington, D.C. Just as a dealer will go to any length to continue selling his wares, politicians will stop at nothing to retain their power. These two groups of addicts are locked in mutual co-dependence, where the politician-addict seeking re-election buys off the citizen-addict with more spending. Then the citizen-addict, seeking yet another free lunch from Washington, reelects the politician-addict. The result is endless, ever-expanding government programs and our current fiscal nightmare.
The persistence of these programs has nothing to do with their success. They continue because we are more concerned that our actions are deemed compassionate than whether our programs are actually successful. If we truly wanted to help people save for retirement, we would not establish a program with a meager 1.23% rate of return while simultaneously supporting a monetary policy of systematic inflation. Yet these and other ineffective or even counterproductive programs continue. Such willful blindness to economic reality cannot be sustained indefinitely. The Congressional Budget Office has recently stated that our national debt will constitute 90% of our gross domestic product — that is 20.3 trillion dollars — in just ten years. What is even more shocking is that these debt numbers do not include the unfunded liabilities of Medicare and Social Security, which currently rest at 107 trillion dollars. Sadly, this trend cannot be stopped.
If Republicans take control of the House and Senate, and if they repeal the health care bill, then they will not be able (or likely even try) to reform Medicare or Social Security. These programs alone will bankrupt our nation. Yet they are untouchable because a large number of Americans have come to depend upon these benefits. They have become unknowingly hooked. Senior citizens have organized their financial futures around the twin promises of Social Security and Medicare and will naturally resist any change to either. George W. Bush knew this when he attempted his overhaul of Social Security. That is why his plan to privatize retirement savings was voluntary and would have excluded those over 55. Nevertheless, it was easy for the politician-addicts to scare the citizen-addicts, and his plan was defeated.
“They that can give up essential liberty to obtain a little temporary safety, deserve neither liberty or safety.” This quote by Ben Franklin is often used by civil libertarians in opposition to government security programs such as the Patriot Act. But this sentiment is equally applicable to those who would give up economic liberty to obtain economic safety. The economic attitude of the nation has shifted. We are no longer a nation of self-sufficient, rugged individualists; we are now a nation of addicts, hooked on a politician’s promises of economic safety.
This is why America is lost. Too many Americans are hooked for us to return to a sound economic footing via the normal political processes. Our efforts to moderate the most radical agendas — welfare reform, for example — serve only to delay the inevitable. In fact, many of those reforms are quietly undermined as the slow march towards collapse continues. We cannot alter our current trajectory; expansive government, greater entitlements, and ever-increasing taxes are our fate. Attempts by responsible citizens at reform will be only partially successful, not changing the fundamentals of our dilemma.
The addict analogy carries through to recovery. For most addicts, recovery can begin only once they have descended so far in their addiction that they lose everything, a process often called “hitting bottom.” Sometimes there is no recovery, and hitting bottom means death. But for others, hitting bottom is a tremendous learning experience, and they emerge as better people. America is addicted. The decline has begun, and now our nation must hit bottom.
Detoxing America will cause social, political, and economic strife of a sort unimaginable, and yet it is a process we must endure. Hitting bottom is our only hope for a national rehabilitation. It is our only chance for a true reacquaintance with those principles that made this the greatest nation on earth: liberty, individual achievement, limited government, and the equality of opportunity.
Demosthenes is a lawyer whose current employment prohibits taking a public position on political issues.
The financial reform bill is finally in its home stretch in the Senate, but Americans have yet to fully engage on the issue. In fact, in recent weeks as I’ve worked with various grassroots leaders across the country to discuss the bill, its impacts on our economy and on us as American citizens, I must admit, it’s probably the first time I’ve ever found myself frustrated at the progress of activism.
It’s a complex issue, and let’s face it, not exactly an exciting one either. But that’s precisely what the left is counting on. So, whenever I find myself feeling frustrated that others might not share my same level of fervor on the issue, I remind myself of its complexity and lackluster appeal. And then, I proceed directly to the source – the bill itself.
I hone in on a few key points in three categories that resonate with most activists I know: Big Labor, Big Government, and Big Brother. Put those together in the context of Big Banks, and they spell out big disaster.
As the left goes on demonizing Wall Street and big bankers on one hand, Democratic lawmakers on the other hand are busy making sweetheart backroom deals with them up on Capitol Hill, promoting their legislation to the public as “consumer protection.” But really, such measures are nothing more than payback to the likes of three-way mortgage entitlement partnership stronghold of the Bank of America, Center for Responsible Lending and Fannie Mae.
Meanwhile Democrats and Obama allies like Organizing for America are also using the issue as a shameless fund-raising opportunity.
The banks actually SUPPORT this bill – so don’t let that “Main Street Not Wall Street” message fool you, no matter which side of this issue you’re on.
Once many people learn about some of what’s in the bill, their reaction of immediate remorse followed by outrage is completely understandable. Remorse – for some – for not having engaged their grassroots groups earlier. Outrage over just how much this bill would push the country head first toward socialism. That’s right, I said the “s” word. Let’s stop pretending and just call it for what it is, shall we? Even old school Democrats I talk to feel the same outrage and see the “s” word coming as the result of this bill. Facing down the inevitable is the only way we’re going to be able to tackle what the radical left has snuck into this thing. All the while, they have been counting on the apathy of average citizens on BOTH sides, and on the burnout of Tea Party and other patriot group activists.
The reality is this: If we sit back and allow this bill to pass the Senate in its current form, then we deserve the destruction of our privacy, our liberties and of our free market system that will follow. WE will be the only ones to blame. Because as bad as we all thought the Health Care bill was for our freedoms, the Financial Reform bill makes Health Care pale in comparison. No level of remorse could suffice if we failed to engage every last patriot, every last Paul Revere and Sam Adams , during these final days of the legislation.
I’ve found that one way to help other activists digest this bill has been to put all of the actual financial details aside and focus solely on some of the parts of the bill that demonstrate the erosion of our personal liberties and the free market system as we know it.
Big Labor: Dismantling the Free Market System
Under the American Financial Stability Act of 2010 (S 3217), several provisions tucked away in the bill will give labor bosses unprecedented powers that, especially if abused, could threaten the very structure of our free market system.
* Financial institutions and other covered businesses could be required by law to give labor unions “Proxy Access”, enabling union bosses to potentially abuse the system to force unrelated agenda items, like unionizing the firm’s employees, before the shareholders
* New regulations will control how board of director elections are conducted – at private corporations!
o The SEC would be granted the power to force the names of outside nominees onto the corporate ballot (as reported by Politico)
o Directors running in an uncontested election would now be required to win a majority of votes cast, rather than only by the current plurality(as reported by Politico)
* Similar rules will also determine whether an individual may serve as both the CEO and Chairman of the Board – at a private corporation!
* Government and labor unions will have “say on pay” for the annual salaries and bonus compensation of executives and other employees. Essentially, like Obama himself, they can determine at what point “someone has made enough money”
I don’t think anyone’s against shareholders having their proper say and representation in the corporate management process. But that’s not really what’s behind these pieces of the legislation. We’ve seen how today’s labor bosses are abusing their powers and using the shareholder resolution as a hostage weapon to bully corporations into unionization and special union concessions. Just read my prior post, “SEIU’s Secret Weapon: If Obama’s Plan Fails, Brandish the Shareholder Resolution” for a taste of that tactic.
It’s been known for some time that labor bosses are now organizing on a global scale, and as such, have taken to the Participative Management style common in European workplaces. In the U.S., private corporations might typically achieve a similar democratic process of employee participatory management when the company enters into a direct employee ownership plan. The difference here however is that we’re talking about companies that do not belong to the labor unions – these are companies in which the union might have a pension fund investment, or perhaps some of its workers unionized on premise. These are private companies that the unions attempt to overtake through such smaller connections to earn a place on the board, and then change it from the inside out until a Participative Management environment is achieved. If that achievement were to occur, US corporations would quickly fold and restructure under a more socialist model. Eventually, the free market system would erode away as labor unions take over the boards of once privately owned corporations.
For weeks now, Ive been searching for the resources to help me describe this threat in simple terms, and just as fate would have it, my friend Peter List over at LaborUnionReport and RedState pens the perfect post describing this with clarity and precision, in his post titled “Changing America Forever: Behind the AFL-CIO’s Push for Financial Reform.”
Big Government: Power, Control and Everlasting Entitlements
* A new agency, the Consumer Financial Protection Agency, or CFPA, would serve as massive bureaucracy that would control everything from defining the types of loans consumers may be permitted to purchase, to expanding redlining provisions and subsequent mortgage entitlement programs. (And let’s not forget that the head of this agency would be Eric Stein, who ran the Center for Responsible Lending, and before that worked at Fannie Mae)
* The CFPA’s authority goes far beyond banks or financial institutions. This new bureaucracy would have the power to regulate hundreds of thousands of businesses. Examples of small businesses that would be subject to CFPA oversight (as outlined by the US Chamber of Commerce):
o A nonprofit organization that provides financial literacy education
o A software company that creates products to help consumers manage their money
o An advertising company that provides services relating to financial products
o Utilities companies, retailers and even doctors that extend credit to their customers.
* The Consumer Financial Protection Agency, or CFPA, created in the bill would be housed within the Federal Reserve, an already secretive and unchecked force of power in our financial system that insists on going unaudited
* A government agency will have unlimited executive bailout authority, including the power to pick and choose which companies are saved and which are left to fail. This creates serious potential for abuse, as private corporations could literally live or die based upon political decisions
* This bill contains the same language used by groups like the Center for Responsible Lending in the redlining laws and changes to the Community Reinvestment Act in 1995 for special research centers and programs “that promote awareness and understanding of the access of individuals and communities to financial services, and to identify business and community development needs and opportunities”
And we all know what happened as the result of those redlining laws and subsequent CRA changes in 1995.
Big Banks: Empowered by Big Government, Become Big Brother
Finally, in order to justify all these entitlement programs, all this forced unionization, all this takeover of private companies’ boards of directors, the government needs research. Not to worry, the bill creates vehicles for that, like the “Office of Financial Research” and a national database for the collection of your personal bank account and loan information, and various deposit account data.
Fannie Mae and Bank of America will be so thrilled when this passes the Senate (as will ACORN and SEIU). Thanks, of course, to years of lobbying by organizations like the Center for Responsible Lending. After all, they pioneered the use of banking research to mandate mortgage entitlements. Just imagine all the new entitlements that will be created once they can analyze all of that *new* banking information and data on what we’re purchasing. Someone will find some injustice somewhere in there. You can count on that.
If you haven’t been as interested in all the complex language about things like financial derivatives and credit default swaps in this bill, then all of this above should be plenty for you to be concerned about.
U.S. Constitutional Free Press 