AMERICAN CONSERVATISM IN 2008 AND BEYOND

http://www.archives.gov/exhibits/charters/constitution_transcript.html
Article I. Section 2. Representatives and direct taxes shall be apportioned among the several states which may be included within this union, according to their respective numbers, which shall be determined by adding to the whole number of free persons, including those bound to service for a term of years, and excluding Indians not taxed, three fifths of all other Persons.

http://www.archives.gov/exhibits/charters/constitution_transcript.html
Article I. Section 8. The Congress shall have power
To lay and collect taxes, duties, imposts and excises, to pay the debts and provide for the common defense and general welfare of the United States; but all duties, imposts and excises shall be uniform throughout the United States,

http://www.archives.gov/exhibits/charters/constitution_transcript.html
Article I. Section 9. No capitation, or other direct, tax shall be laid, unless in proportion to the census or enumeration herein before directed to be taken.

http://www.archives.gov/exhibits/charters/constitution_amendments_11-27.html
Amendment XIII (1865)
Section 1. Neither slavery nor involuntary servitude, except as a punishment for crime whereof the party shall have been duly convicted, shall exist within the United States, or any place subject to their jurisdiction.

http://www.archives.gov/exhibits/charters/constitution_amendments_11-27.html
Amendment XVI (1913)
The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several states, and without regard to any census of enumeration.

http://www.archives.gov/exhibits/charters/bill_of_rights_transcript.html
Amendment X
The powers not delegated to the United States by the Constitution, nor prohibited by it to the states, are reserved to the states respectively, or to the people.

A tax is uniform, within the meaning of the constitutional provision on that subject, when it operates with the same effect in all places where the subject of it is found, and is not wanting in such uniformity because the thing taxed is not equally distributed in all parts of the United States.

The executors protested on the grounds (1) that the provisions of the act were unconstitutional, (2) that legacies amounting to less than $10,000, were not subject to any tax or duty, (3) that a legacy of $100,000, taxed at the rate of $2.25 per $100, was only subject to the rate of $1.12 1/2

....

The provision in Section 8 of Article I of the Constitution that "all duties, imports and excises shall be uniform throughout the United States" refers purely to a geographical uniformity, and is synonymous with the expression "to operate generally throughout the United States."

Fannie Mae Eases Credit To Aid Mortgage Lending
By STEVEN A. HOLMES
Published: September 30, 1999

In a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders.

The action, which will begin as a pilot program involving 24 banks in 15 markets -- including the New York metropolitan region -- will encourage those banks to extend home mortgages to individuals whose credit is generally not good enough to qualify for conventional loans. Fannie Mae officials say they hope to make it a nationwide program by next spring.
Fannie Mae, the nation's biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits.

In addition, banks, thrift institutions and mortgage companies have been pressing Fannie Mae to help them make more loans to so-called subprime borrowers. These borrowers whose incomes, credit ratings and savings are not good enough to qualify for conventional loans, can only get loans from finance companies that charge much higher interest rates -- anywhere from three to four percentage points higher than conventional loans.

''Fannie Mae has expanded home ownership for millions of families in the 1990's by reducing down payment requirements,'' said Franklin D. Raines, Fannie Mae's chairman and chief executive officer. ''Yet there remain too many borrowers whose credit is just a notch below what our underwriting has required who have been relegated to paying significantly higher mortgage rates in the so-called subprime market.''

Demographic information on these borrowers is sketchy. But at least one study indicates that 18 percent of the loans in the subprime market went to black borrowers, compared to 5 per cent of loans in the conventional loan market.

In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980's.

''From the perspective of many people, including me, this is another thrift industry growing up around us,'' said Peter Wallison a resident fellow at the American Enterprise Institute. ''If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry.''
Under Fannie Mae's pilot program, consumers who qualify can secure a mortgage with an interest rate one percentage point above that of a conventional, 30-year fixed rate mortgage of less than $240,000 -- a rate that currently averages about 7.76 per cent. If the borrower makes his or her monthly payments on time for two years, the one percentage point premium is dropped.

Fannie Mae, the nation's biggest underwriter of home mortgages, does not lend money directly to consumers. Instead, it purchases loans that banks make on what is called the secondary market. By expanding the type of loans that it will buy, Fannie Mae is hoping to spur banks to make more loans to people with less-than-stellar credit ratings.

Fannie Mae officials stress that the new mortgages will be extended to all potential borrowers who can qualify for a mortgage. But they add that the move is intended in part to increase the number of minority and low income home owners who tend to have worse credit ratings than non-Hispanic whites.

Home ownership has, in fact, exploded among minorities during the economic boom of the 1990's. The number of mortgages extended to Hispanic applicants jumped by 87.2 per cent from 1993 to 1998, according to Harvard University's Joint Center for Housing Studies. During that same period the number of African Americans who got mortgages to buy a home increased by 71.9 per cent and the number of Asian Americans by 46.3 per cent.

In contrast, the number of non-Hispanic whites who received loans for homes increased by 31.2 per cent.

Despite these gains, home ownership rates for minorities continue to lag behind non-Hispanic whites, in part because blacks and Hispanics in particular tend to have on average worse credit ratings.

In July, the Department of Housing and Urban Development proposed that by the year 2001, 50 percent of Fannie Mae's and Freddie Mac's portfolio be made up of loans to low and moderate-income borrowers. Last year, 44 percent of the loans Fannie Mae purchased were from these groups.

The change in policy also comes at the same time that HUD is investigating allegations of racial discrimination in the automated underwriting systems used by Fannie Mae and Freddie Mac to determine the credit-worthiness of credit applicants.
http://query.nytimes.com/gst/fullpage.html?res=9c0de7db153ef933a0575ac0a96f958260&sec=&spon=&pagewanted=2

On another front, we are continuing to see our government federalize and take over or propose taking over more and more of the economy while expanding government to unprecedented proportions

Economist Discusses Causes of Global Economic Downturn
Says countries must find right mix of capitalism, government intervention
A trader on the New York Stock Exchange works at his post just a day ahead of the global financial summit in Washington.By Meghan Loftus
Staff Writer

Washington " Trouble in housing markets, regulatory structures and capital flow have contributed to the global economic downtown, according to James Barth of the Milken Institute.

Barth, during an America.gov webchat November 12, explained some of the problems that precipitated the downturn in the U.S. financial markets, in particular the subprime mortgage crisis. These mortgages, which were extended to individuals with questionable creditworthiness, often were securitized, meaning they were pooled into securities and then were sold internationally. When the loans declined in value due to the inability of homeowners to pay their loans, the securities declined in value also, spelling trouble for investors.

“Firms that have too little capital and too many assets are at serious risk of insolvency should those assets decline in value by even a relatively small amount,” said Barth. “Financial regulatory authorities have to, therefore, reassess the appropriate amount of capital that should be required for financial institutions.”
More here:
http://www.america.gov/st/econ-english/2008/November/20081114180033EMsutfoL0.7829096.html

Is the real cause of our Economic Downturn "Excessive Greed" or "Excessive Benevolence"?
Bruce Anderson in The Independent:

Anderson writes: “Excessive benevolence is much more to blame than excessive greed.” Going on to elucidate that “In the late 1990s, a Democrat-controlled Congress virtually compelled US banks to advance mortgages irrespective of the applicants' financial status. Racial factors played a role in this; a large percentage of sub-prime borrowers were Black or Hispanic. But everything was underpinned by economic optimism. The assumption was that the economy would just keep on growing, so that even the poorest families could have their stake in the American dream.”

Certainly, blame should be apportioned to many individuals outside of the US government, but the fact remains that the nascent cause of the current trouble was anti-redlining laws instituted in the US in 1977 and strengthened in 1995, along with the enormous expansion of the money supply that took place under the auspices of Fannie Mae and Freddie Mac (backed by the Department for Housing and Urban Development). Even as the severity of the credit bubble was becoming increasingly evident, such socialistic polices were advocated by many in Congress, suggesting that poorer people should be given even more opportunities to borrow.

Bad government policies sowed the seeds that made this current crisis. It is time that the press at large acknowledged this, instead of confusing cause with effect. Government’s must learn their lesson and not be allowed to introduce such utopian policies again. Once again the problem was too much government, not too little.
http://answers.yahoo.com/question/index?qid=20081014191947AAjie6Z

. . . .Now that we are clear, what contributed to the US economic crisis? The subprime mortgage crisis. Lenders were issuing mortgage loans to borrowers that had less than adequate credit rating. The ability to take out mortgage loans coupled with rising house prices enticed the borrowers to commit to mortgage contracts in hopes of benefiting from the rising trend of house prices, and the ability to refinance at better rates if required. However, housing prices began to decline in 2006-2007 which made it difficult for the borrowers to refinance their mortgages causing them to default on their obligations. During 2007, an estimated 1.3 million US property was involved in default (foreclosures), up 76% from 2006. . . .
http://bus442.wordpress.com/2008/03/26/us-economic-downturn-cause/

Patiently or patently explaining to me something that isn't so won't make it so no matter how many times it is explained. Wishful thinking that enables us to transfer blame and culpability to somebody else never fixed a problem either.

Excerpt of a review of Jim Powell's FDR's Folly:

. . . .This book will probably draw unfavorable comment from the mainstream press and from academia, if it receives any attention at all. His critics will charge that Powell, a CATO Institute senior fellow and editor of the libertarian Laissez-Faire Books, is not an unbiased or objective historian. (Only liberals can write objective history.) But Powell has a thorough knowledge of the pertinent literature and draws heavily from the work of economic historians like Michael Bernstein and economists like Milton Friedman. He is no John Flynn, the erstwhile FDR supporter whose exposé of "the Roosevelt myth," in a book of the same name, drew liberal ire for its vituperation of the president.

Powell's main contribution is to explain how the New Deal prolonged the Depression. He points first to New Deal banking laws. The prohibition of branch-banking"the failure to allow banks to establish branches throughout the country"contributed to the banking panic and bank failures during the early 1930s. Most banks were undercapitalized institutions that should remind readers of the two-bit Bailey Building and Loan in Frank Capra's "It's A Wonderful Life." Economic rationality suggested that capital reserves be sufficient to provide depositors a guarantee that deposits would be safe. Powell argues that government regulation of banking, the New Deal's solution to the banking crisis, was unnecessary. Instead, permitting banking institutions with sufficient capital reserves to open branches and to invest their reserves would have solved the problem. Canada, which allowed branch-banking, suffered hardly any bank failures during the Depression.

Powell indicts federal monetary policy, as well. He accepts the argument, developed by economist Murray Rothbard in America's Great Depression, that the Federal Reserve system contributed to the Depression in the first place. And the Banking Act of 1935, which created the Fed's Open Market committee and further strengthened its role in shaping monetary policy, helped spark the 1938 Roosevelt recession, the third worst economic collapse in American history.

Powell's book serves also as a superb defense of the Supreme Court's famous "four horsemen of reaction," George Sutherland, Willis Van Devanter, James McReynolds, and Pierce Butler. The conservative members of the Court, famous, or infamous, for declaring unconstitutional the National Industrial Recovery Act and the Agricultural Adjustment Act, are stoutly defended by Powell. All four, joined at times by Charles Evans Hughes and Owen Roberts, "did a splendid job articulating vital principles of economic liberty"fac[ing] enormous political pressure from a popular president." Rather than being reactionaries"horse-and-buggy conservatives"the four were well-regarded practitioners of the law who served ably on the Court.

At its strongest, FDR's Folly is a powerful synthesis of the economic damage wrought by the New Deal. The book shows how New Deal farm programs helped large landowners at the expense of tenant farmers and sharecroppers; how the National Industrial Recovery Act contributed to monopoly and to the development of cartels within industries, undercutting recovery; how Social Security slowed the recovery, taxing workers, removing money from the wider economy, and contributing to higher unemployment; and how African-Americans were hurt by the Agricultural Adjustment Administration and the Wagner Act's sponsorship of unions.

Many of these arguments are well known. New Left historians in the 1960s, like Stanford University's Barton Bernstein, reached similar conclusions about the New Deal's failure, for example, to address issues of black poverty (of course, Bernstein is also critical of Roosevelt for saving capitalism). Powell does not claim that Roosevelt was a socialist. Rather, he was an opportunist, concerned with cementing his political power and little interested in how his programs affected the very constituencies he relied on for votes.

For all its strengths, FDR's Folly does not come to grips with the man's political understanding and ambition. Although the New Deal failed economically, politically it was a stunning success. FDR's liberalism dominated American politics for the next four decades. Only in the '60s and '70s, when the failures of modern liberalism were apparent for all to see, did conservatives begin to make headway against the liberal establishment. But conservatives have still not proven that they can mobilize a public commitment to decreasing the size of government comparable to FDR's commitment to increasing it.
http://www.claremont.org/publications/crb/id.835/article_detail.asp

Oh I have no doubt that you guys think you're ever so much better informed, wiser, and smarter than those who do that stuff for a living. But do you have anything other than opinion to dispute them?

Not to belabor my previous point:

Quote:

Patiently or patently explaining to me something that isn't so won't make it so no matter how many times it is explained. Wishful thinking that enables us to transfer blame and culpability to somebody else never fixed a problem either.

See what I was saying, Debra. These Ican info sessions just give me a tingle. It's so refreshing to hear a new point of view instead of that same old claptrap that's offered up by those conservatives who just don't have the insight into the workings of the Constitution that Ican has.