AMERICAN CONSERVATISM IN 2008 AND BEYOND

http://www.ncpa.org/sub/dpd/index.php?Article_ID=20035&utm_source=newsletter&utm_medium=email&utm_campaign=DPD
How to Shut Down Fannie and Freddie
Although Fannie Mae and Freddie Mac played a central role in causing the recent economic crisis, they are absent from the reform plans of Congress and the Obama administration, says Emil W. Henry, the CEO of Henry, Tiger, LLC, and an assistant secretary of the Treasury from 2005 to 2007.
The Treasury doesn't need Congress or an academic assessment in order to tackle the most important reform goal: eliminating the government sponsored enterprises (GSEs) and moving their activities to the private sector. Secretary Geithner himself can immediately reshape the mortgage markets -- by withholding his approval of new debt issuances by the GSEs. That's the best way to begin curtailing the GSEs, and it can be done unilaterally.
• If the Obama administration is serious about addressing the GSEs, it should re-establish a rigorous process to review all GSE debt issuance.
• That process should require the GSEs to provide Treasury with full financial data and justification for issuances, including statistics that show the creditworthiness of the agencies after each offering.
• In addition, the Treasury secretary should have to approve all new debt issuances personally.
The administration should also announce that in 2012 the Treasury will begin to deny a portion of GSE debt issuances with the goal of reducing their debt 50 percent by 2015 and 100 percent by 2018. This eight-year period of adjustment would allow the private markets ample time to provide secondary market liquidity, says Henry.
Large banks may be wary of this solution because the federalization of the GSEs has offered them a stable vehicle for off-loading their mortgages. Policymakers, meanwhile, will worry about impairing the recovery if a private market is slow to materialize. But the alternative is keeping the flawed system whereby liquidity depends upon distorted price discovery, permanent subsidization and the economic judgments of bureaucrats.
Source: Emil W. Henry Jr., "How to Shut Down Fannie and Freddie," November 11, 2010.

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The Politics of Budget Cutting
Cutting borrowing and spending is inevitable if America is to avoid a Greece-like implosion. But as the blood sport begins, we should remember the strange politics that govern the process, says Victor Davis Hanson, a classicist and historian at the Hoover Institution.
First, no one ever reduces government in good times, when we would be far better able to limit spending, and the public needs less assistance -- it only happens after the economy falters and the money runs out.
Second, raising taxes has limits, as we see from the California meltdown.
• There, a 10 percent state income tax on upper incomes and a sales tax of nearly 10 percent did not result in balanced budgets, but instead sent many high earners and businesses out of state, and made the ones that stayed stop hiring and buying equipment.
• Employers will prefer to shut down or hide rather than take risks while they feed the ever-growing state beast.
Third, politicians promise the easy cutting of generic "waste and fraud," "foreign aid" or "unnecessary wars."
• The problem, however, is that waste, wars and aid probably account for less than 5 percent of the federal budget this year.
• In contrast, more than 60 percent of yearly spending is devoted to Social Security, Medicare, Medicaid and defense expenditures not directly related to war.
Fourth, self-interest governs the entire debate, says Davis Hanson.
• Roughly half the public pays no income tax and roughly half of Americans receive all of their income or a large part of it from the federal government.
• Beneficiaries vote for higher taxes on others and more benefits for themselves.
• Benefactors obviously prefer fewer payouts for others and lower taxes on themselves.
Fifth, there is always a "you go first" element to budget cutting. The party that imposes discipline is demagogued, even as its opportunistic opposition usually claims credit for the improved economy that follows from the responsible policies of others.
Source: Victor Davis Hanson, "The Politics of Budget Cutting," National Review Online, November 11, 2010

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Job-Killing Environmentalists
President Barack Obama seems more concerned with appeasing environmental extremists in his administration than he is with the lost jobs of Americans, says Jon Basil Utley, associate publisher of the American Conservative.
Below are three areas where the environmental extremists hope to wreak havoc on the American economy:
Carbon Dioxide.
• Human activity accounts for less than 4 percent of global CO2 emissions and CO2 itself accounts for only 10 percent or 20 percent of the greenhouse effect.
• Water vapor accounts for most of the other 80 percent.
• The Christian Science Monitor recently published an analysis of how the Environmental Protection Agency's (EPA) plans for reducing carbon dioxide could cause the loss of over a million jobs and raise every family's energy costs by over $1,200.
Factory Boilers.
• The EPA wants new, more stringent limits on soot emissions from industrial and factory boilers.
• This would cost $9.5 billion according to the EPA, or over $20 billion according to the American Chemistry Council.
• A study released by the Council of Industrial Boiler Owners says the new rules would put 300,000 to 800,000 jobs at risk as industries opted to close plants rather than pay the expensive new costs.
Ground Level Ozone.
• The EPA has asked the U.S. government to enact new smog regulations for ground-level ozone that will cut levels to .006 to .007 parts per million -- this comes less than two years after standards were set at .0075 particles of pollutants per one million.
• The New York Times reports that the agency quotes the price tag of such a change at between $19 billion and $100 billion per year by 2020.
It's time for Congress to investigate what the EPA and its reckless agenda is costing American workers, businesses and taxpayers, says Utley.
Source: Jon Basil Utley, "Job-Killing Environmentalists," Reason Magazine, November 10, 2010.

Well, Cyclo, I guess you need to lump me in with Okie and Georgeob. If a member of Congress adds (earmarks) $1 via amendment to a $200 piece of legislation that passes, the total is not $201? Instead it is still $200 but with $1 going towards the earmark. Are you sure?

Much Ado About Earmarks: What Will The GOP's Ban Actually Do?
Evan McMorris-Santoro | November 16, 2010, 12:50PM

Senate Republicans are expected to join their House colleagues in banning the time-honored practice of earmarking in a behind-closed-doors meeting later today. Much has been made in recent days of the proposed moratorium on porking up a Congressional spending bill with federally-funded goodies for your home state or district (or seeing to it that your constituents get their fair piece of the government money pie, depending on your point of view). The president wants earmarks gone. The tea party -- led by Sen. Jim DeMint (R-SC) -- wants earmarks gone. And now, the Republicans want them gone, too.

But what will the GOP's proposed ban actually do?

In many ways, the battle will now simply shift to what exactly counts as an earmark.

For instance, noted earmark opponent Rep. Michele Bachmann told the Star-Tribune yesterday that "advocating for transportation projects for one's district in my mind does not equate to an earmark."

The proposed earmark moratorium that Senate Republicans will vote on today would essentially be enforced only through politics -- it has no real force of law. It's similar to the ban adopted by the House GOP, which, according to Steve Ellis at Taxpayers for Common Sense, is pretty comprehensive all told. Only four members of the House GOP caucus earmarked after their caucus moratorium, despite the fact that any of them could have.

"I don't know what the enforcement mechanisms might be," Ellis, who's an advocate of the ban, said of the expected Senate GOP moratorium. "But I would imagine that all would go along."

Republican Sens. Tom Coburn (OK) and DeMint are expected to try and pass a ban with the force of law behind it through the Senate as well. Past attempts to do that have failed on the Senate floor.

Still, according to the experts and advocates I talked to over the past couple days, the symbolism of banning earmarking -- even if it's non-binding with plenty of loopholes -- cannot be denied. Americans have come to consider them the scourge of the budget process, the worst in Congressional corruption. But when it comes to actually doing something serious to save the country from financial ruin, they say ending earmarking will have little or nothing to do with getting the federal budget back on track.

"There are many people in this country who think that getting rid of deficits means getting rid of earmarks," sighed James Horney of the Center on Budget and Policy Priorities. "In reality it has very little to do with deficit reduction."

Horney's logic is simple: earmarking, he says, is generally used to direct money Congress already thinks it should be spending on things like bridges and scientific research. Get rid of earmarks and you don't kill the spending, you just divert it somewhere else.

"What really needs to happen is we need to have a really serious debate about what's important for the federal government to do," Horney told me.

Democrats and Obama have already taken strides to reform earmarking, and House Republicans under soon-to-be Speaker John Boehner have voluntarily banned the practice in their ranks.

"I don't think there's any evidence that it has reduced the amount of spending," Horney told me. "It comes down to how you allocate specific funding to specific programs and I don't think that reducing or reforming earmarks will do very much to change that."

Even advocates of the earmark ban, like Ellis, agree that ending the practice will not be the end to reckless government spending.

"A moratorium is a means to end," Ellis said. Still, he was much more excited about the potential of a ban to really change things than Horney was.

"It will save billions," he said. "Not one-for-one to be sure, but significant sums of cash."

Ellis says Congress builds in extra funds to appropriations bills in anticipation of money being earmarked away from legislative priorities. Eliminating earmarking would in turn eliminate the need for that extra cash, he said.

"Also, in some cases a less important project with a powerful backer will get more funding than a critical project in a freshman's district," he said. "There is an opportunity cost to that as well. Money that is wasted on one lawmaker's boondoggle isn't available for other more pressing national priorities."

To be sure, Ellis says his group is "very excited about this brave new world without earmarks." (That's not going to happen entirely, of course: Democrats have shown little interest in banning earmarking, and they're still in the Senate majority.) But Ellis also told me that a ban will probably just require spending reform advocates like him to keep an even closer eye on what happens in Congress.

"Of course there will be efforts to evade and game the system -- whatever it is," Ellis told me. "But then we have got to ramp up efforts to expose and stop it."

No one here has disputed the dollar amount associated with earmarks or how they work with respect to authorization and appropriations bills - most merely redirect already authorized money, though some do indeed involve new appropriations.

The argument against them has centered on two aspects of earmarks;
(1) Their use has grown very fast in recent Congresses and that process appears to be continuing.
(2) They contribute to the corruption of the legislative process and the actions of career legislators themselves, and they short-circuit the normal administration and Congrressional committee oversight of such appropriations.

The article you pasted acknowledged all of this and added very little beyond it.

Oh, I agree that legislators of both parties will seek to find ways around the new awareness. That's just the predictable outcome of legislative venality and patronage seeking. However, the thing was getting out of hand and even a temporary severe cutback will be a welcome improvement to what was a worsening problem that was increasingly corrupting the legislative process. It fosters the state of mind that gave us the Nebraska compromise.

There you go about being a lover of money and save the rich from taxes again the umpteenth time.

the surviving banks are paying out record bonuses, despite the fact that they owe their lives to government largesse


deregulation by the ruling elite in order to increase the power of finance capitalism at the expense of the working population

Murcowski.