Tax, Regulate, and Subsidize

"The government's view of the economy could be summed up in a few short phrases:  If it moves, tax it.  If it keeps moving, regulate it.  And if it stops moving, subsidize it."

- Ronald Reagan

It certainly seems that this former President was at the top of his game in saying this, and that what was true over thirty years ago remains equally true today.

 
What brought these comparisons about was the recent revelation by JP Morgan Chase, that poor monitoring of a worse strategy of investment cost the bank some $2 billion of its own money in the last six weeks.  Now there was a day when $2 billion was real money, but those days are almost as far behind us as the Presidency of Ronald Reagan.  After all, JP Morgan Chase is a bank worth almost $2.3 trillion; which is a bit more formidable sum to consider, unless of course, you're a national government.

There are those now calling for the bank's CEO Jamie Dimion to resign from the Federal Reserve Board (if not from the bank), including a former Obama adviser and now Senatorial candidate in Massachusetts Elizabeth Warren.  Of course you all remember Ms. Warren's latest claim to fame, that of being 1/32 Cherokee Indian.  Now that claim has come into serious question, if not disrepute (in a distraction that radio personality Mark Steyn cleverly calls Fauxcahontas).  My math skills may be a little rusty, but Warren's potential error on her pedigree seems to be something on the order of 3% and JP Morgan's on the order of .01%.  But let's set that, along with her campaign pontifications aside.

We could take up instead those made by White House press secretary Jay Carney, using his pressroom podium as a bully pulpit to speak on why this situation is justification for the 'Dodd-Frank Wall Street Reform and Consumer Protection Act', and to make the case that its perhaps additional federal regulations of the banking industry should be taken up at the federal level.  Of course Mr Carney fails to point out that the type of trading being done by the bank was not covered under Dodd-Frank and that it was the bank and not federal regulators that caught the problem, but it's seldom that the a political candidate's spokesperson will let the facts get in the way of a bit of campaign rhetoric. So maybe we should set aside the statements of Mr Carney as well in the spirit of fairness (to what I don't know).

Since some are setting the federal government up as a fiscal watchdog, let's look instead at the numbers of a couple instances of recent money loss under federal oversight.  In it's most recent quarter of operation (admittedly 12 weeks and not 6), the US Post Office lost $3.2 billion.  What's more, it lost $3.3 billion in the fourth quarter of 2011, and $3.1 billion in the third quarter last year.  In fact, according to Business Insider, it has lost some $20 billion since 2007. Billions of dollars lost through the execution of a lousy strategy and poor monitoring that sound vaguely familiar, if considerably more egregious; and all of this oversight was performed by Congress.

But let's face it people even $20 billion is chump change in the great scheme of things (pun intended).  After all, isn't Congress responsible for oversight of the national budget?  Now, of course the Senate hasn't seen fit to exercise its responsibility of passing a budget in over 1100 days (3 years for those of you not using the Mayan calendar).  Even though the Senate has a clear Democratic majority however, I'm sure that the fault must lie with the Republicans. The House, to its credit, has passed a couple of budgets since evil Republicans, with their nefarious ringleader Congressman Paul Ryan, started proposing draconian cuts; but nothing has seemingly come of these efforts as in a spirit of bi-partisan compromise that does little more than allow the madness to continue.

So in the first fiscal quarter of 2012, the national debt has gone up not $2 billion, $3 billion, or even $20 billion; but a staggering $320 billion (at least according to the Congressional Budget Office).  In fact, at the time that this was posted, the National Debt stood in excess of $15.7 trillion dollars.  So let me get this straight.  The government that loses millions in green energy projects, billions each quarter on the Post Office, and hundreds of billions each quarter in the deficit increase of the federal budget would like greater control on how private businesses spend or invest their own money and show no outrage (or interest for that matter) over their own apparent fiscal irresponsibility. 

OK, then.  Well it certainly seems (based on these facts) as though the government has made its case, and earned that right to impose further controls using Sec of State Hilary Clinton's 'suspension of disbelief' view of the world.  (Sorry, the sarcasm key got stuck and this just typed itself.)

We are after all, certainly taxing the profits made by banks like JP Morgan Chase already, and have increasingly sought to regulate them.  There are those in Congress and the White House who would like even more regulation on 'too big to fail' banks. You know, perhaps with enough government regulation, we might just be able to move beyond stage two of former President Reagan's quote and the bailouts that have already occurred and truly begin to permanently subsidize banks with taxpayer dollars.