10.28.2010: Stop Playing us, Barack ...
From The American Spectator....
Playing You to the Bitter End
By Peter Ferrara on 10.27.10 @ 6:08AM
In July 1953, after President Eisenhower had been in office for just six months, the U.S. economy tumbled into recession. He didn't barnstorm around the country talking about how President Truman had driven the economy into a ditch, and how it was such a struggle to get the economy out of the ditch. Somehow, by May 1954, just 10 months later, the economy was back in recovery mode, before Barack Obama was even born.
In April 1960, the American economy tumbled into recession again. There was no trillion dollar stimulus package producing record shattering deficits and national debt. Yet, somehow, in February 1961, just 10 months later, the economy was back in recovery mode, again before Barack Obama was even born. Spurred by the across the board Kennedy tax rate cuts, the economy boomed for a then record 106 months.
In December 1969, the U.S. economy cycled into recession once again, in President Nixon's first year in office. Somehow, by November, 1970, just 11 months later, the economy was in recovery once again, even though Barack Obama was only 9 years old.
In November 1973, the worst recession of the entire postwar era up until then began. It took 16 months for the economy to recover, starting in March 1975. Over the next four quarters, the economy came roaring back, with real economic growth of 6.2%. For 1976, the unemployment rate was 7.7%.
"The Failed Economic Policies of the Past"
In July 1981, after President Reagan had been in office just six months, the economy fell into arguably a worse recession than in 1973-75. Yet President Reagan continued to back the strong dollar monetary policies of the Federal Reserve that slew the roaring inflation of the 1970s, caused by the same monetary policy strategy that current Fed Chairman Ben Bernanke just announced last week.
In just two years, over 1979 to 1980, prices had risen by 25%. The strict monetary policy Reagan supported cut the annual inflation rate in half by 1982, and in half again by 1983, to just 3.2%. Inflation has not been heard from since.
Reagan did not adopt a trillion dollar Keynesian stimulus spending package either. In his first year, he adopted instead the much vilified Reagan budget cuts that reduced federal spending by close to 5%. Barack Obama was in college at the time, palling around with Marxist Professors as he tells us in his autobiographies, no doubt joining in the condemnation of those budget cuts.
Moreover, instead of raising tax rates as President Obama is doing, Reagan cut tax rates sharply. Instead of enacting sweeping, costly, new regulatory burdens as President Obama is doing, Reagan dramatically slashed regulatory costs on the economy.
By November 1982, despite the continued, contractionary, monetary policies that eliminated the historic inflation, the economy recovered, after 16 months of recession. In the first four quarters of recovery, the economy roared back with 7.7% real growth. After that 16 month recession, unemployment fell every year for the rest of Reagan's term, reaching 5.3% by 1989.
The economy continued to grow without interruption for a then peacetime record 92 months, shattering the previous peacetime record of 58 months by nearly three years. During this nearly eight-year recovery, the economy grew by almost one-third, the equivalent of adding the entire economy of West Germany, the third largest in the world at the time, to the U.S. economy. In 1984 alone, real economic growth boomed by 6.8%, the highest in 50 years. Nearly 20 million new jobs were created during the boom, increasing U.S. civilian employment by 20%.
In July 1990, the economy finally fell into recession again, probably because of the Bush/Democrat, tax-raising budget deal. Yet, even without a trillion dollar stimulus package, and even though Barack Obama was still just teaching Saul Alinsky classes for ACORN, the economy recovered only eight months later in March 1991. The unemployment rate in 1991 was 6.8%.
The stock market boomed again starting on Election Day, 1994, with a Republican Congress taking power for the first time in 40 years. The economy continued to grow without recession for 10 full years, until March 2001, just two months after President Bush II took office. Bush did not barnstorm the country telling voters that President Clinton had driven the economy into a ditch, nor did he adopt a trillion dollar stimulus spending package. Instead, he led enactment of the Bush tax cuts, what President Obama calls the failed policies of the past, and the recession ended in eight months, by November 2001, despite the detrimental economic effects of 9/11.
Despite Bush's "failed economic policies of the past," the economy continued to grow for another 73 months. After the rate cuts were all fully implemented in 2003, the economy created 7.8 million new jobs and the unemployment rate fell from over 6% to 4.4%. In response to the rate cuts, business investment spending, which had declined for nine straight quarters, reversed and increased 6.7% per quarter. That is where the jobs came from. Manufacturing output soared to its highest level in 20 years. The stock market revived, creating almost $7 trillion in new shareholder wealth. From 2003 to 2007, the S&P 500 almost doubled.
The End of Prosperity
On January 3, 2007, the day the Democrat Congressional majorities, including then Senator Barack Obama, took power, the unemployment rate was 4.6%. George Bush's "failed policies of the past" had set a record of 52 straight months of job creation, which we can only dream about now until Barack Obama, Nancy Pelosi, and Harry Reid are removed from power. GDP in the previous quarter was 3.5%, double today's most recent growth.
The deficit in the last budget adopted by Republican Congressional majorities was $161 billion for fiscal 2007. After four years of Democrat Congressional control and two years of President Obama, the deficit today is nearly 10 times as much, and Obama's own budget projects trillion dollar deficits as far as the eye can see. The Republicans did lose control of spending, with the federal budget as a percent of GDP rising from 18.2% in 2001 to 20.7% by 2008, an increase in the relative size of the federal government of one-seventh. But Obama and the Democrats saw this misfeasance and raised it several times, increasing federal spending to 25.4% of GDP today, an increase in the relative size of the federal leviathan of almost another fourth, in just the last two years.
Yet, listen to President Obama on the campaign trail, where he is propagandizing America at taxpayer expense full time rather than doing his job, and the present recession is somehow entirely different from every one of those previous recessions. Somehow America was never going to recover from this recession without President Obama and his magic pixie dust. Without him, the economy was going to continue spiraling downward until there were zero jobs remaining.
Yet, instead of recovering after 10 months, or 16 months at most, as in these previous recessions, the latest unemployment report shows that 33 months after this recession began, the economy was still losing jobs, with another overall decline of nearly 100,000 jobs. That makes 400,000 jobs lost since May, with the Bureau of Labor Statistics correcting for another 366,000 jobs lost as of March not previously recognized.
Even accepting that the recession technically ended last summer, still a record, instead of the economy booming back, as in the other recessions above, we are in another downward growth spiral. Instead of 7.7% real growth in the first four quarters of the Reagan recovery, or the similar boom in the Kennedy recovery, or even the 6.2% real growth in the first four quarters of the Ford recovery, real growth is spiraling down from 5% in last year's fourth quarter, to 3.7% in the first quarter, to 1.7% in the second quarter. And still losing jobs 33 months after the recession began is not a record President Obama can be proud of, contrary to his self-justifying, self-glorifying, campaign rhetoric.
This pitiful economic performance is the plainly foreseeable result of an economic program based on the fundamental misconception that economic growth results from more government spending, surging welfare, and record shattering deficits and national debt, which are the foundational principles of the long discredited Keynesianism at the core of Obamanomics. What President Obama is treating us to is effectively a historical reenactment of the 1970s, if not the 1930s, so we can all see first hand how those economic tragedies happened. All the more so now that Bernanke has embraced the monetary policy fallacies of the 1970s in trying to use inflation to stimulate economic recovery. The resulting declining dollar means we are all getting poorer, as everything we buy from overseas will be more expensive as a result, meaning a declining standard of living for America.
If it wasn't for President Obama and his literally New Left economic policies, the above discussion of the history of past postwar recessions shows that we should be enjoying a second year of booming economic growth by now, with steadily declining unemployment. Instead, besides more than a year of near double digit unemployment, America suffers with more citizens in poverty than in the entire previous 51 years of Census Bureau poverty records. September saw a record 100,000 additional home foreclosures, with a record number now on food stamps as well. Under Obamacare, soon we will enjoy 85 million Americans on Medicaid.
What these numbers are telling us is that it is Obama's own supporters who are suffering the most. Unemployment among African Americans has been at Depression levels for a year, with the September rate at 16.1%. Hispanics are suffering almost as much with over a year of double digit unemployment at 12.4% in September. The Obama youth are spanked the most, with teenagers suffering 26% unemployment, which has persisted for a year as well.
He Thinks You're Stupid
Print out the transcripts of President Obama's campaign appearances like I do to see just how stupid and gullible he thinks the American people are, or at least his own political base, which he is trying to rally. What exactly is he saying in context when he ascribes the recession over and over to the failed Republican policies of the past? He is saying that tax rate cuts cause recessions.
This is not even sound Keynesian economics, which would at least recognize tax rate cuts as pro-growth, as President Kennedy's Keynesian advisers did. It is not even good Marxism, as Karl Marx never said anything so inane. This intellectually dishonorable nonsense, peddled more explicitly by various George Soros-funded, Baghdad Bob-style propagandists, follows more in the tradition of Jim Jones, and the Jonestown school of economic policy.
Or take this quote from President Obama's Saturday campaign appearance in Minnesota, "Our thinking was we're going to come in, and even though the other folks caused it [the financial crisis], we're going to be part of the solution, not part of the problem. We're not going to play politics; we're not going to point fingers…." This is actually pretty sick political rhetoric, coming in the middle of a campaign speech which is all about playing politics and pointing fingers, after two years of playing politics and pointing fingers, for which he obviously expects historical acclaim as a political genius. Just four lines later, there he is pointing political fingers again, saying, "In other words, their political strategy was based on amnesia. (Laughter). Based on the premise that people would not remember that they were the folks who were responsible for the devastation to our economy."
Are Republicans responsible for Barney Frank's decision to "roll the dice some more" with federal "affordable housing" policies? Are Republicans responsible for President Clinton's subprime mortgage bubble up Fannie Mae and Freddie Mac? Are Republicans responsible for Janet Reno's discrimination lawsuits against banks that would not provide mortgages to people who could not afford them? Are Republicans responsible for ACORN's extortion of banks for billions in low income housing loans?
These, in fact, are all policies that Barack Obama supported throughout his political career, going all the way back to his own ACORN days. No one so close to the radical left front group ACORN as President Obama was should ever have been allowed anywhere near any federal office, let alone the presidency of the United States. But the next time President Obama is talking about the folks "who were responsible for the devastation to our economy," he should be looking in the mirror.
To distract African Americans from their long-term depression-level unemployment, he and his political machine tries to tell them the Tea Party is racist. To distract Hispanics from their own Obamanomics beat-down, he sues the state of Arizona for its policy of enforcing current federal immigration laws, while explicitly prohibiting profiling.
And thinking his own political base will not notice, he has even embraced George Bush's terrorism policies. Now that he is elected, we have Obama's own surge in Afghanistan under General Petraeus. We continue to have troops in Iraq two years after Bush signed the peace treaty ending the war there. Guantanamo is still open. And the ACLU is suing to stop Predator drone assassinations in Pakistan, including against American targets.
Of course, I myself would be trying to win the War on Terrorism. But I was never deluded into supporting Obama. I would also not be sitting idly by watching Iran rapidly develop nuclear weapons and missiles, in a historical reenactment of the Nazi prewar arms buildup, after promising the easily deluded during his 2008 campaign that he would employ "tough diplomacy" to stop this developing nuclear terrorism. But that is something his supporters are going to have to live with now, or not.
Peter Ferrara is director of entitlement and budget policy at the Institute for Policy Innovation, a policy advisor to the Heartland Institute, a senior fellow at the Social Security Institute, and general counsel of the American Civil Rights Union. He served in the White House Office of Policy Development under President Reagan, and as Associate Deputy Attorney General of the United States under the first President Bush. He is a graduate of Harvard College and Harvard Law School. He is author of The Obamacare Disaster, from the Heartland Institute, and President Obama's Tax Piracy.
Wait, there's more...
Barney Frank Still Doesn't Get It
By Peter J. Wallison
Published October 27, 2010
It's unusual for Barney Frank to create confusion. The outspoken chairman of the House Financial Services Committee usually doesn't waffle about his positions -- or what he thinks about other's ideas -- and he's intelligent enough to see inconsistencies in his views.
So, as I waited to be interviewed on a TV show last August, I was surprised and pleased to hear Mr. Frank concede that he had erred: "I hope by next year we'll have abolished Fannie and Freddie" he said, referring to the two government sponsored enterprises (GSEs), "... it was a great mistake to push lower-income people into housing they couldn't afford and couldn't really handle once they had it." Then he added, "I had been too sanguine about Fannie and Freddie."
I have been a long-term critic of Fannie and Freddie, and Congressman Frank had been their principal supporter in Congress. Not only did he now seem to be withdrawing his support, but he was doing it for the right reason. He had finally recognized, it appeared, that forcing Fannie and Freddie to make loans to people who could not really afford to repay them was not good either for the taxpayers (who will probably have to pay $400 billion to bail out Fannie and Freddie) or to the borrowers themselves.
Indeed, until that startling TV moment, it seemed that Barney Frank would never slacken in his effort to use Fannie Mae and Freddie Mac as a source of financing for loans to low income borrowers.
Beginning in 1992 and continuing through 2007, Fannie and Freddie were required to meet affordable housing goals established by the Department of Housing and Urban Development. For most of these years, Frank was the staunchest defender of this policy.
We're In Denial, America, About Our President An "affordable" housing mortgage was a loan made to a borrower who was at or below the median income in the area where the home was located. A special sub-goal also required the GSEs to make loans to borrowers who were at or below 60 percent of the median income. These requirements were gradually tightened over time, so that by 2007, 55 percent of all mortgages Fannie and Freddie acquired had to be "affordable" under this standard.
There are only so many borrowers with good credit who are at or below the median income in the areas where they live, and there was a lot of competition for Fannie and Freddie.
The Federal Housing Administration (FHA), a government agency, also needed loans to borrowers who were at or below the median income, and under the Community Reinvestment Act (CRA) -- also beginning in the early 1990s -- banks were required to make loans to borrowers who were at or below 80 percent of the median income in their areas. So there was a competition among all these entities to find low income borrowers who were willing to take out home mortgages, and by 2008 half of all mortgages in the U.S. -- 27 million, a completely unprecedented number -- were subprime and other high risk loans. Of this total, the federal government was responsible -- through Fannie and Freddie, FHA, and the CRA -- for 19 million of these deficient and risky loans.
When the housing bubble started to deflate in 2007, these mortgages began to default at unprecedented rates, weakening the financial institutions that held them, forcing Fannie and Freddie into insolvency, and causing the financial crisis and the subsequent recession.
So imagine my astonishment when I heard Barney Frank admit that pushing low income people into home they couldn't afford was a "great mistake." I thought: well, there's a testament to the power of democracy. Barney Frank was finally being seriously challenged for re-election, and this has caused him to rethink positions he had previously held inviolable.
But alas, it was not to be. On September 29, just before Congress recessed for the election, a few Democratic members of Congress introduced legislation that would extend the CRA to all financial institutions -- not just banks. And Barney Frank declared that this bill would be his top priority in the lame duck session after the election.
This was very confusing. If Frank thought it was a "great mistake to push low income people into homes," why would he favor extending the CRA to the entire financial system? That would mean insurance companies, auto finance companies, credit card firms and securities firms would be required to provide credit and other services -- not just mortgages -- to the same people who couldn't afford to repay their mortgages.
Here's my guess: despite my initial impression, Barney Frank actually doesn't get it. Instead, his real views had only been imprisoned for the election. When the idea of extending CRA came along, they escaped.
Peter J. Wallison is the Arthur F. Burns Fellow in Financial Policy Studies at the American Enterprise Institute.
And one of the comments to this article....
And here's a little history regarding how the Dimorats grew the disaster in the housing market that ultimately triggered the financial meltdown of our economy from... anamericanmirac 5 hours ago
Under President Jimmy Carter, the Community Reinvestment Act (CRA) was passed. It required federal financial institutions to encourage banks to give home loans to persons with little credit and low income. Economist Russell Roberts said that the CRA played a major role in creating the sub-prime mortgage crisis in the U.S.
Under Bill Clinton, the CRA was expanded and Clinton set targets for low-income home ownership at the Department of Housing and Urban Development and at Fannie Mae and Freddie Mac. Banks were forced by the federal government to provide bad loans to unqualified people.
Rep. Barney Frank (D-MA) is Chairman of the Financial Services Committee in the House of Representatives. In 2003, he said of Fannie Mae and Freddie Mac: "These two entities – Fannie Mae and Freddie Mac – are not facing any kind of financial crisis. The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing." In the late 1980s and early 90s, Frank was engaged in a sexual relationship with Herb Moses, who was Fannie Mae's assistant director of product initiatives! Bill O’Reilly exposed Frank's involvement in the mortgage crisis: YouTube - O 'Reilly - Barney Frank Had Affair with Fannie Mae Exec. Frank looked the other way, while our economy was being destroyed by federal policies created in Clinton and Carter Administrations. (Freddie Mac and Fannie Mae help fund the homosexual agenda.
In 2008, Freddie gave $20,000 to a Parents and Friends of Lesbians and Gays (PFLAG) event; Fannie Mae gave nearly $19,000 to the same event. Freddie has donated $125,000 and Fannie donated $80,000 to homosexual groups since 2005.)
Senator Christopher Dodd (D-CT) is head of the powerful banking committee in the Senate. He and Barney Frank consistently resisted attempts by the Bush Administration to closely regulate Fannie Mae and Freddie Mac. Dodd also got preferential treatment from Countrywide on two mortgages. Countrywide was one of the biggest subprime providers.
Barney Frank and Christopher Dodd received thousands of dollars in contributions from Fannie Mae and Freddie Mac over the years. Dodd has received $133,900 since 1989; Frank received $40,100. (While in the Senate, Barack Obama received $105,849).
As long ago as 2003, President Bush was trying to get the House and Senate to carefully monitor the actions of Fannie Mae and Freddie Mac. His efforts were rejected by Democrats. Franks also gave false Senate testimony that Freddie and Fannie were economically healthy and that he did not foresee problems with them at the same time they were starting to experience serious problems.
Obama associates headed Fannie Mae and Freddie Mac during the years that the crisis was getting out of control. Obama friend Franklin Raines ran Fannie Mae and collected $50 million from it. Obama friend Jamie Gorelick worked for Fannie Mae and earned $26 million; Jim Johnson, formerly Obama’s vice president search committee chairman, hauled in millions from his work with Fannie Mae as CEO.
ACORN, the socialist group that routinely engages in voter fraud, was involved in pushing for risky loans to people with bad credit histories or little money for down payments. ACORN intimidated banks in Chicago and elsewhere to give risky loans! Obama actually trained ACORN workers when he was a community organizer in Chicago! ACORN used provisions of the Community Reinvestment Act to delay or halt efforts of banks to merge or expand until they had lowered their credit standards! They also threatened to "go public" with accusing the banks of being racist for not loaning to poor, inner-city people and that they would organize a very vocal boycott against them.
The financial mess we face now was created by Democrats and friends of Barrack Obama over the past two decades.
And one more for the road... er, The Ditch...
Op-Ed: The Road to the Ditch
By John Gibson
President Obama loves his car-in-the-ditch analysis of our crashed economy. He repeats it constantly, and has added this: "We're huffing and puffing trying to get the car out of the ditch, and the Republicans are standing around watching sipping on a Slurpee."
That Slurpee bit is supposed to connect him to Middle America. Well, maybe.
But the real problem isn't the Slurpee gag: The problem is the road to the ditch.
The financial collapse which led to our present enervating recession was the housing collapse and bank failures. Toxic mortgages, foreclosure crisis, Mr. Fix-It bailouts -- the entire sorry tale is Democrat from way down the road to the crash site
It starts with Jimmy Carter and his Community Reinvestment Act, by which the heavy hand of government "encouraged" banks to loan to marginal borrowers.
That push was ramped up under Bill Clinton. Clinton's HUD Secretary, Andrew Cuomo (yes, the same one) created regulations which forced the government-sponsored mortgage entities Fannie Mae and Freddie Mac to step up loans to minorities under the logic of the affordable housing movement: every American should be a homeowner. It turns out affordable housing didn't mean inexpensive homes poor people could afford, but instead, easy credit to buy homes they could not afford.
Clinton's Treasury Secretary was Democrat Robert Rubin, aided by Democrat Lawrence Summers, now on the Obama economic team. Rubin and Summers honchoed the effort to repeal the Depression Era Glass-Steagall Act, allowing investment banks to use federally insured depositor cash to back millions of mortgages while easing underwriting standards at the same time. No money down? No problem.
In addition, Rubin pushed through the Commodity Futures Modernization Act, which allowed the creation of mortgage-backed securities. Liar loans packaged as investments and sold to pension funds.
Democrats in the New York State Insurance regulators allowed AIG to insure mortgage-backed securities with an invention known as the Credit Default Swap.
We all know what happened to those "improvements" in the financial system. When the economy fell apart, the trail of tears led right back to these financial shenanigans. Democrats created a mortgage casino which led to chaos. But because the housing bubble stirred up so much action at the banks, Democrat Rubin took home $100 million from his post-Treasury job at Citibank (which was eventually saved by a bailout.)
Democrats used Republican Phil Gramm to front their greedy back room plot, and nowadays tend to say it was all Gramm. It’s true Republican Gramm was in the picture, but look closely: He's surrounded by Democrats.
Later, when Fannie and Freddie -- the places where the buck actually stopped -- started to give off a strong odor of stinking loans and the threat of large losses the taxpayer would have to cover, Democrats blocked reform. In 2003 when Republicans ran D.C. they pushed for HR2575 -- the Secondary Mortgage Market Interprises Regulatory Improvement Act, which would have strengthened an independent regulator for the government-backed mortgage giants Fannie and Freddie.
The "party of no" in those days was the Democrats, who used cloture rules to keep the act from moving to a vote in the Republican-controlled Senate. When the Democrats came back in control in 2006 it was like hiring Democrat chocoholics in the taxpayer candy store. Eighteen attempts by George W. Bush and John McCain to prod the Democrat-controlled Congress to exert control over Fannie and Freddie were rejected summarily by Democrats.
Democrat Barney Frank said, "I don't think we face a crisis, I don't think that we have an impending disaster... Fannie Mae and Freddie Mac do very good work and they are not endangering the fiscal health of this country."
Democrats Maxine Waters said, "These GSE's have more than adequate capital for the business they are in: providing affordable housing... We should not be making radical or fundamental change. If there is anything to fix or improve, it is the (regulators)."
Bush administration regulators got a tongue lashing from Democrats for even issuing warnings that disaster was possible. Rep. Gregory Meeks, Democrat of New York, huffed: "I am just pissed off at (the regulators) because if it wasn't for you I don't think that we would be here in the first place." Democrat Meeks thought the hearings by Bush regulators were a waste of time. "I think there has been nothing that was indicated is wrong, you know, with Fannie Mae...the question that then presents is the competence of your agency has with reference to deciding and regulating these GSE's."
Fannie and Freddie are Government Sponsored Entities, or GSEs.
Rep. David Scott, Democrat of Georgia, told the regulators that home ownership for African Americans trailed the rate of whites by 30 points, and "Clearly, the mission of Freddie Mac and especially Fannie Mae is to close that gap."
At these hearings, Fannie Mae's Chairman and CEO Franklin Raines, a Democrat, and former Clinton official, told oversight committee members that the mortgages Fannie was buying were solid gold. "These assets are so riskless that their capital for holding them should be under two percent." In other words, if banks had two dollars they should be able to loan one hundred dollars. The "assets" Fannie was purchasing from the banks were not that solid: They were junk.
For this type of brilliant forecasting, Raines was compensated $90 million during his tenure. When Jamie Gorelick, Democrat, took over and continued Raines' nothing-can-go-wrong-here policies, she earned $26 million. She was followed by Democrat Jim Johnson, who was at or near the wheel when the car went into the ditch in 2007. He took home a paltry $21 million. After all Fannie needed to be bailed out with $150 billion on his watch.
OK, the car crashed. But when you backtrack, what do you find? Democrats.
Blame Bush? Next time Obama asks if you really want to go back to the policies of the people who drove us into the ditch, remind yourself "We already did that."
Democrats crashed the car, and they are the last people that should be driving the tow truck.
First rev: 10.28.2010