September 22, 2010

Administrations Threatening Private Health Insurers

Health care premiums are likely to go up as a result of the recent health care and insurance overhaul enacted by the Obama Administration. The Heritage Foundations' Kathryn Nix explains:

Starting this year, Obamacare prohibits plans from placing lifetime limits on coverage, severely limits rescissions, and requires all plans to cover children up to age 26. Plans also have to fully cover preventive services and are prohibited from denying children due to pre-existing conditions. The list goes on. Since extra benefits cost more, it makes sense that insurance premiums would climb as a result of the new law. Insurers cited increases between 1 and 9 percent.

The administration's response? Health and Human Services Secretary Kathleen Sebelius announces that "there will be zero tolerance for this type of misinformation and unjustified rate increases."

What will "zero tolerance" means? Why is it "misinformation" on the part of private health insurers? Just what constitutes a "justified" price increase. And who decides that?

Well, Secretary Sebelius is clear on at least one of those issues. She decides what prices health insurers can set and if they don't fall in line, there'll be "zero tolerance" for them!

GOP "Don't Ask, Don't Tell" Filibuster Makes Some Sense

I complained of Republicans blocking a vote on the repeal of "Don't Ask, Don't Tell" yesterday -- something I'm strongly in favor of. But as it turns out, that's not the whole of the story.

Over at Redstate, Dan McLaughlin explains how Democrats tied a vote on immigration reform onto a vote on defense appropriations -- which included "Don't Ask, Don't Tell." The so-called DREAM Act is somewhat related to defense in that it would allow illegal aliens to earn citizenship by serving in the military or enroll in college, but it's understandable that Republicans didn't appreciate having to say "yes" to both at once.

I'm all in favor of freer immigration as well and the DREAM Act sounds like a smart idea but this unnecessary trick on part of the Democrats makes no sense. If they want to repeal "Don't Ask, Don't Tell", why attach it to a vote on immigration reform which they could perfectly expect Republicans to filibuster?

But now, they have a chance to portray Republicans as both anti-gay and anti-immigration, all that just a few weeks before the midterm elections which are likely to turn out disastrous for them anyway.

September 21, 2010

Senate Republicans Block "Don't Ask, Don't Tell" Repeal

Politico reports today that the effort to repeal the military's "Don't Ask, Don't Tell" policy went down to defeat this afternoon, with Senate Democrats and Republicans squaring off in a procedural vote.

In the face of a promised filibuster by Sen. John McCain (R-Ariz.), Democrats could not convince a single GOP senator to cross over and provide the 60th vote needed to begin debate on a defense spending bill containing the repeal measure.

This is extremely unfortunate. "Don't Ask, Don't Tell" is arbitrary government discrimination, pure and simple. There isn't a shred of evidence to support the preposterous assertion forwarded by some Republicans that allowing gay men and women to serve openly would somehow diminish "moral" or even the military's effectiveness. To the contrary, in practically all developed countries, gay men and women can serve openly and do so with success.

Tom Ricks of Foreign Policy offered a piece of sensible advice a couple of days ago, citing the unfortunate dismissal of three combat veterans under "Don't Ask, Don't Tell."

Collectively, they represent almost a decade of combat experience, a big handful of Purple Hearts and Bronze Stars, service as aide-de-camps to general officers and as platoon leaders and company commanders in combat, and the investment of millions of dollars in taxpayer funds. They have offered blood, sweat, and tears in defense of a nation that discriminates against them for no good reason.

This policy must end.

OMB Director Candidate Says Deregulation Didn't Cause Crisis

The Huffington Post reports that former Citigroup executive Jacob Lew, the administration's nominee to lead the Office of Management and Budget, told Senate Budget Committee this Thursday that deregulation was not exclusively to blame for the financial meltdown and recession.

Lew was asked by Senator Bernie Sanders of Vermont whether he believed that the "deregulation of Wall Street, pushed by people like Alan Greenspan [and] Robert Rubin, contributed significantly to the disaster we saw on Wall Street."

Lew answered that "the problems in the financial industry preceded deregulation," and after discussing those issues, added that he didn't "personally know the extent to which deregulation drove it, but I don't believe that deregulation was the proximate cause."

The Huffington Post can hardly believe it, stressing that experts and policymakers, "including US Senators, commissioners at the Securities and Exchange Commission, top leaders in Congress, former financial regulators and even Obama himself have pointed to the deregulatory zeal of the Clinton and George W. Bush administrations as a major cause of the worst financial crisis since the Great Depression." The article further alleges that "experts agree on most of the several factors that led to the crisis," and since they agree, evidently, the argument requires no further explanation.

Repeatedly "Wall Street greed" and "inhuman capitalism" are attacked for a recession that started in one of the single most regulated sectors of the US economy: the housing market. The past decade experienced President George W. Bush's attempt to bring about his "ownership society" and the country today is witnessing the results of this experiment. Through consistent all time low interest rates set by the Federal Reserve and through an enormous increase in size and influence of the government-sponsored Fannie Mae and Freddie Mac enterprises, Washington promoted homeownership by artificially extending credit to people that, put simply, could never dream of affording their own house---let alone pay back their loans.

That is not to say that the private sector is free from blame entirely. But consider that Fannie Mae and Freddie Mac, supposedly privately owned, were publicly chartered and represented the archetype of unfair competition. Consider the Community Reinvestment Act of 1977 that "encouraged" banks to lend to uncreditworthy borrowers and sought to end "discriminatory" credit practices against low-income neighborhoods. And consider that the very banks who let themselves be pressured into participating in this madness were "bailed-out" by the government with billions of dollars of taxpayers' money. Was this a free market at work?

In a truly free market, failure is possible and consumers are aware of the risk---with the result that they rationally and voluntarily assume less of it. What the US economy needs is not more government oversight. What is needs is more personal responsibility.

Obama Denies Vilifying Business

President Barack Obama denied vilifying businesses at a CNBC town hall event in Washington DC on Monday. He praised the free market system instead, claiming that he wants government to "get out of the way" of innovation and job creation.

The president has been criticized fiercely in recent months from both within the business community and the Republican opposition about his apparent war on capitalism. On health care and financial reform as well as BP's oil spill in the Gulf of Mexico this summer, Obama used strong language to denounce private health insurers, banks and the embattled energy conglomerate. He alleged that medical insurance companies were driven by a "business mentality" that supposedly prevented them from caring about patients. He complained of "fat cat bankers" on Wall Street who awarded themselves "excessive" bonuses while knowingly perverting the financial system and leaving the country on the brink of economic collapse. And he publicly lambasted BP's Chief Executive Tony Hayward. Indeed, the president interpreted the Gulf oil spill as the result of "of a failed philosophy that views all regulation with hostility---a philosophy that says corporations should be allowed to play by their own rules and police themselves." The lesson to be learned, he said, "is that we need better regulations, better safety standards, and better enforcement."

On Monday, the president reiterated this sentiment, noting that "basic rules of the road" have to be in place so that "consumers, workers, ordinary folks out there aren’t taken advantage of by sharp business practices." He added: "I don't think there's anything in there that's inherently anti-business."

The administration previously urged businesses to stop complaining. After passing a health care reform bill that puts insurers at a disadvantage and is expected to cost business dearly; after threatening the high tech sector with antitrust investigations in spite of it being nearly the only profitable and certainly the only free market left in America; after using BP's oil spill last April to impose an unlawful moratorium on deepwater drilling throughout the Gulf of Mexico and launch an attack on Big Oil altogether; and after hammering out a financial reform scheme that leaves the prime instigators of the recession, the semi-government entities Fannie Mae and Freddie Mac untouched at the cost of multibillion dollar tax hikes and regulation on the part of private banks, the president and his administration are evidently trying to assure businesses by saying---it could have been a lot worse. "There's a big chunk of the country that thinks I've been too soft on Wall Street," said Obama.

Wall Street isn't convinced. Nearly half of financial workers polled recently by CNBC said that increased regulation under the Obama Administration is bad for the economy. Just 34 percent believes that the new regulations have had a positive effect.

The president knows though that "what sets America apart" is that it has "the most dynamic free market economy in the world. And that has to be preserved," he believes.

We benefit from entrepreneurs and innovators who are going out there and creating jobs, creating business. Government can't create the majority of jobs. And, in fact, we want to get out of the way of folks who've got a good idea and want to run with it and are going to be putting people to work.

That's not how things look for the average businessman however, no matter the president's championing of small business. Instead, a government knows best mentality appears to pervade in Obama's America and although the president can hardly be blamed for it entirely, his party is largely responsible for implementing superfluous regulations on every level of government. Companies of any size and character are confronted with an array of laws and taxes throughout the country so dazzling that no small businessowner can reasonably be expected to know which apply to his field of work and how.

The president may not be to blame entirely for this positively anti-business environment but it is the very notion that he professed last Monday---that some "rules of the road" are necessary to protect the common man from ferocious business practices---that inspires lawmakers in every state to enact laws that limit the entrepreneur's freedom and his ability to innovate and create jobs.

When government believes that it is morally empowered to regulate people's business activities, its willingness to do so will be limited by political expediency alone. In the wake of the recession, the Democrats in power have had the political capital to extend regulation in many, indeed major sectors of the US economy. A majority of American voters now appears to realize that government simply can't micromanage the nation's economy nor spend it into recovery. The president, for one, has already begun to adopt a more conciliatory tone.

Originally published at the Atlantic Sentinel, September 21, 2010.

September 16, 2010

Fact Checking the President on Tax Policy

Elizabeth MacDonald of the Fox Business Network fact checks President Barack Obama on tax policy, disputing his claims that his tax cut will benefit the whole of the middle class whereas Republicans would favor tax relief for "millionaires and billionaires." Some excerpts:

Taxpayers making $250,000 or more are considered middle class in many urban areas with a high cost of living, and are not as the President said “millionaires and billionaires.”


Small businesses will be hurt by the tax hike on the upper bracket.

And from Ray Hennessey:

At the heart of why the administration does not want every American to be treated equally is an idea that spreading the wealth around – better known as wealth redistribution – helps make the economy better.

If you succeed, you should throw back some of that success to those who don’t, thus making them succeed, too. But there’s no basis in economic theory that supports that.

In fact, wealth redistribution is the destruction of wealth. If you work hard, succeed and make an income that hits some kind of arbitrary level, you are expected then to kick that back to the government so that the public sector can then make sure that those who perhaps have not worked hard or succeeded get an income, too.

So your wealth is capped. More importantly, that approach kills initiative, entrepreneurism and work ethic – all pillars on which this country is built. Why work hard to build your wealth when you will be forced to just give it to others?

Fannie and Freddie: Banks Should Return the Favor

From the AP wire:

WASHINGTON — The nation's largest banks have an obligation to pay some of the cost for bailing out mortgage buyers Fannie Mae and Freddie Mac because they sold them bad mortgages, a government regulator said Wednesday.

Edward DeMarco, the acting director for the Federal Housing Finance Agency, said the banks this summer have refused to take back $11 billion in bad loans sold to the two government-controlled companies [...]

Really? Private banks have an obligation to help out the so-called government "sponsored" monstrosities that were largely responsible for bringing down the financial system and starting the recession America is still in? Really? They need to "return the favor"?

Is this a bad joke?

September 13, 2010

The Pragmatist

With his approval ratings hovering around 50 percent and the opposition likely to win significantly in November's midterm elections for Congress, Barack Obama should begin to wonder what went wrong along the way. With a message of "hope and change" the president won almost ten million more voters than his opponent in the 2008 elections but has since become divisive and controversial.

The president's mistake is to be pragmatic when he shouldn't but stand on principle when he can't afford to.

The political left, including elements in his own party, have reason to complain about the president's aloofness to legislative achievements as health care and financial reform. Though praised as monumental and far reaching, Obama failed to effectively sell both overhauls to the public. His administration never managed to counter the Republican narrative of "government takeovers" and is now suffering the consequences in the polls.

A waning approval rating may have discouraged the administration from pursuing principle on issues that were more straightforward. When a federal judge, last month, dismissed California's ban on same sex marriage as arbitrary and unconstitutional, the White House remained silent, no matter its careful attempts at repealing the military's infamous policy of "don't ask, don't tell" toward gay servicemen and -women.

When the Governor of Arizona signed a controversial immigration bill into law last April, one that many allege not only legalizes but encourages racial profiling, the president merely voiced disapproval but didn't take advantage of the situation to make the case for freer immigration to America.

Most recently, with the planned construction of a Muslim community center in Lower Manhattan, New York inspiring a newfound resentment with Islam throughout the country, Obama at first appeared to defend religious freedom only to retreat the very next day, noting that the project---which opponents have successfully dubbed the "Ground Zero mosque"---really isn't any of his business as president.

This president is perfectly adamant about reforming the US economy, favoring a greater involvement for government in regulating and overseeing industry and trade in spite of a majority of Americans opposing his policies in this regard. But whenever he has a chance to assert leadership on values---including marriage, immigration and faith---Obama refrains from spearheading the national debate but lets his popularity suffer instead.

Obama's declining appeal with voters both right and center should not be blamed entirely on unpopular legislation. What has Americans worried and confused is that their president exhibits no clear principles but prides himself on being "pragmatic" and "willing to compromise." That's fine for any lawmaker but a president should lead on ideas, not just listen to them.

Originally published at the Atlantic Sentinel, September 13, 2010.

September 12, 2010

Michelle Obama: Don't Go Into Corporate America!

The New York Times' David Brooks quotes Michelle Obama in the context of America's changing attitude toward capitalism.

"Don't go into corporate America," she told a group of women in Ohio. "You know, become teachers. Work for the community. Be social workers. Be a nurse. ... Make that choice, as we did, to move out of the money-making industry into the helping industry." As talented people adopt those priorities, America may become more humane, but it will be less prosperous.

What the First Lady is saying: Don't be so selfish, you smart people. Don't obsess about making money. Dedicate your life to those less fortunate instead. Because that's virtuous.

In "The Morality of Making Money" at the Atlantic Sentinel I previously contested this sentiment, citing Ayn Rand who considered money representative of productiveness and freedom. Making money, according to Rand, rests on the axiom "that every man is the owner of his mind and his effort."

A virtuous man, a man who makes money honestly and purposefully, is a proud man. Pride, consequently, is one of the defining values of Objectivism. "It means that one must earn the right to hold oneself as one's own highest value by achieving one's own moral perfection," wrote Rand in "The Objectivist Ethics," The Virtue of Selfishness (1964). One must strive relentlessly for accomplishment and success to pursue happiness and the will to "make money," to create one's own wealth, is the indispensable articulation of this code.

September 8, 2010

Even Castro Doesn't Believe in Communism Anymore

From the Associated Press wire:

HAVANA – Fidel Castro told a visiting American journalist that Cuba's communist economic model doesn't work [...]

The fact that things are not working efficiently on this cash-strapped Caribbean island is hardly news. Fidel's brother Raul, the country's president, has said the same thing repeatedly. But the blunt assessment by the father of Cuba's 1959 revolution is sure to raise eyebrows.

Jeffrey Goldberg, a national correspondent for The Atlantic magazine, asked if Cuba's economic system was still worth exporting to other countries, and Castro replied: "The Cuban model doesn't even work for us anymore" Goldberg wrote Wednesday in a post on his Atlantic blog.

On Cuba, the state controls well over 90 percent of the economy, paying workers salaries of about $20 a month in return for free health care and education, and nearly free transportation and housing.

Little wonder, after sixty years to trying that, the country is desolately poor and backward and even Fidel Castro can't pretend otherwise.

September 5, 2010

Should Washington Leave Social Security Alone?

Ezra Klein likes to think so. In Newsweek he urges lawmakers not to mess with Social Security in order to restore balance to the federal budget.

Popular wisdom has it has Social Security is financially unsustainable. Klein disputes that. He notes that, over the next 75 years, the program's shortfall will equal approximately 0.7 percent of GDP. That isn't a crisis, he attests. "It's a question of priorities."

Both Democrats and Republicans in Washington agree that raising the retirement age is part of the solution. "We live longer, and so we should work longer," writes Klein. But he doesn't agree. "Most people," he believes, "by the time they're in their 60s [...] want to retire." Evidently, because they want to, they should be able to. "We have more than enough money to buy ourselves some leisure time at the end of our lives. At least if that's one of our priorities."

What Klein conveniently neglects to consider is that it's not people buying themselves some leisure time at the end of their lives; people working today are forced by their government to pay for other people's leisure with the thin and evermore uncertain assurance that there'll be workers just like them, paying for their retirement in the future.

But let's take up Klein's challenge and pretend that organizing people's pension plans is a "priority" of government. All we need to solve now is find out how to pay for it! According to polling data, some two thirds of people oppose raising the retirement age. Instead, a little over 60 percent are in favor of eliminating the cap on payroll taxes so that workers who are better off pay the tax on their full income. Presumably, that 60 percent wouldn't be the ones affected by what amounts, effectively, to a tax increase.

It's always easy to spend other people's money and Ezra Klein is no exception. His solution to fixing Social Security's long term unsustainability is to have the rich pay more. It takes him three pages to cloud that proposition in praise of Social Security's efficiency and egalitarianism along with complaints of Washington's detachment from ordinary Americans but that doesn't change the fundamental premise of his argument: that the more you make, the more you pay.

September 1, 2010

The Return of the $1,000 Down Mortgage

In case you assume people learn from their mistakes, read this story in The Washington Independent.

In the states of Idaho, Massachusetts and Wisconsin, the National Council of State Housing Agencies along with Fannie Mae---the government "sponsored" enterprise that just recently had to be saved from bankruptcy with billions in federal aid but continues to purchase mortgages from lending banks---have launched a pilot program called "Affordable Advantage." (California, Colorado and Pennsylvania have similar schemes in place.) The gist? With just $1,000 down, people can get a mortgage to buy a home there.

Given the dangers of these types of mortgages and the specter of the housing bubble, where unconventional loans wreaked disaster, it is also raising questions from wary housing experts and legislators.

You think?

At Voices for Reason, Alex Epstein reminds us that this is exactly the sort of policies that brought about the recession in the first place. "The idea that it is the government's job to 'promote homeownership' or create 'stimulus' is the root cause of the financial crisis." While millions of Americans are still out of work or struggling to make ends meet, government agencies are already hard at work, preparing the way for the next recession.