Wait Til Next Year

Well the debate over the debt ceiling is over, and the pundits are circling the corpse, hoping to grab one last juicy meal and perhaps take a dump on those they disparage before the entire thing become indigestible. (In case they were wondering, it long since has.)

And while these 'experts' hold forth on who won and who lost, and political opponents use the latest terms of rhetorical abuse on each other; let me put my two cents in. We lost!

In yet another sad example of what passes for leadership in Washington DC, the compromise reached allows the government to borrow more immediately with a promise to cut spending at some future date (probably never). Also in this rather vague future will be yet another commission (now coming to be known as the 'Super Congress') to analyze spending and revenue (taxes) in the hopes of approaching some level of fiscal sanity.

Of course none of what's proposed is or ever will actually be a spending cut, but instead merely a reduction in the expansion that naturally takes place each year with the federal budget. In a process known as 'baseline budgeting', such increases are part of the rules used to provide legislators political cover for the expansion of government (kind of like the rules that hide pay increases for members of Congress) and give it the impression of fiscal responsibility. As a lifelong Cubs fan, this kind of subterfuge reminds me of every baseball season that I have experienced since my birth. Those of us supporting Chicago's North Side team understand what real Conservatives across the country are now gaining great insight into; discovering that they were backing teams with players that should never have been brought up from the minors, dealing with athletes who failed to produce when put into the starting line up, and suffering under managers who can't seem to effectively use the available talent that they can put on the field. In a broken record of incompetence, futility, and failure; every major policy debate in this country looks like a season of baseball in Wrigley Field that goes through the same sorry process as every one before.

The whole thing begins with such promise of course. Expectations of victory are raised, promises are made, and predictions are issued as to the outcome of the season. Early successes often buoy spirits and bring supporters to their feet, but sooner or later the cracks in the lineup begin to appear. An ace pitching staff now seems incapable of throwing a pitch (an idea) over the plate, consistent sluggers start fanning at easy pitches or swinging at balls out of the strike zone, smart base runners stumble and come up short of the bag after getting a great jump, and sure-handed fielders seem to drop every ball (question) sent in their direction by opponents or the media.

Determined not to allow dejection (or reality) set in, Cubs fans (and voters) set aside these minor setbacks; sure in the knowledge that the team will come back and the early promise of triumph will be realized. No matter how horribly each opportunity to win is passed up or squandered, the people in the stands continue to cheer. In true Cubs fan fashion, past mistakes and disappointments are forgotten and yet another chance is granted ... only to be rewarded with disenchantment and disappointment.

The Cubs are currently 15-1/2 games out of first in their division (groan), but real Cub fans will never let such facts dampen their ardor, nor will consistent disappointment (for over 100 years) dissuade them from the hope of victory some day. Strangely enough the losing seems to do nothing more than bring out renewed hope for a brighter future. Failure in the past (even consistent, mind-numbing, soul-stealing failure) cannot and will not be seen as a prediction of future performance. In politics lately, we Conservatives see much the same thing. Sure we lost the game on TARP, on Obamacare, on the Budget, and now on the the Debt Ceiling; but have no fear, there will be another chance for legislators to disappoint us and snatch defeat from the jaws of victory when the next major government debate comes before them. No matter how horribly this team fails to meet expectations however, most of us will remain optimistic. Sure we didn't win this one (or the one before, or the one before that), but wait til next year.

Just The Facts

Growing up as a child, one of the first police shows that I remember watching was "Dragnet". Sgt Joe Friday (Jack Webb) and Officer Bill Gannon (Harry Morgan) never failed to get to the bottom of the case by looking for "just the facts". 


I find a comparison almost ludicrous today while looking at political perspectives. Don't get me wrong. I know that both parties have been guilty of taking liberties with the facts from time to time, but it certainly seems that the guilty party in recent days has been the political left. Take for example, unemployment numbers. Some of the liberal standard bearers like to crow over decreasing (or at least stable) unemployment based on those not claiming benefits. When the right points out that unemployment numbers don't include people whose benefits have run out or who have given up looking for a job in a climate providing far too few, they are criticized for ignoring or slanting the facts out there or of a misinterpretation of the facts presented. 


Some will then go on to point out that the number of jobs created (or saved) since they gained control of both the White House and the Congress have increased. When their opposition points out that many of those jobs touted were either government jobs or temporary govt jobs in the Census Bureau, they are decried for failing to properly give credit to the Administration for its success. When the right goes on to further complain that the bulk of the increase is in public rather then private sector jobs (and adding to the cost of government), the left miraculously shifts its perspective and castigates its opponents for not recognizing the fact that most of the public sector jobs described were temporary ones in the Census Bureau and that they no longer exist. 


Hidden in the double speak about these phantom Census jobs however, is the fact that there have still been far too many jobs being created in the last 20 months which been full-time positions for an expanding government bureaucracy (far more than those created in the private sector). 


This kind of fact selection with unemployment numbers is not new to many on the left however, and shows the same myopic vision used during the often referred to and oft-lauded progressive thinking of the New Deal era. For those who take the time to track the facts, they will find that unemployment numbers were actually showing a gradual improvement after the stock market crash of 1929, and that the economy may have recovered on its own if not for the Smoot-Hawley Act of 1930. This particular bit of government intervention in the economy was a tariff intended to raise the price of imported goods in order to drive up purchases of goods 'made in America', which would in turn produce more employment. 


In fact, while Smoot-Hawley did raise the price of foreign products; it had the unintended consequence of causing a trade war with the rest of the world, which led to an even larger and deeper economic crisis. This and subsequent interference on the government's part not only didn't reduce the problem of unemployment in the US, but in fact saw it increase to double digit levels in this country, and helped drag the crisis out until it was finally ended by the economic stimulus of WWII. 


Another example of such selective facts may be when some on the left point to the reduction of the federal deficit during the Clinton years. They use this debt reduction as proof that progressive principles and increased taxation lead to a reduction of the national debt. The inconvenient facts however, are that the decreases in the deficit actually occurred during the last years of the Clinton Administration, when control of Congress was taken by Republicans in 1994. The fulfillment of their "Contract with America" contributed to both welfare reform and overall reduced government spending, and is far more likely the cause of any deficit reduction. 


Similarly, some of the progressive persuasion will point to the fact that the national debt went up during the Bush Administration, but will carefully avoid the facts surrounding one-time spending related to 9/11 and the subsequent war on terror. Equally absent from the facts cited are that spending and the deficit increased dramatically beginning in 2007 when politicians with a more liberal viewpoint took control of Congress. Nor will anyone on the left acknowledge that even while the country was going through the darkest days of the financial crisis in 2008, that deficit spending came in at $800 billion (including the much ballyhooed TARP money loaned out and mostly since repaid). 2010 deficit spending however, now that we are coming out of this crisis (according to those same progressive thinkers) will exceed $1.4 trillion. Equally absent from these so-called facts is that the CBO expects the deficit in 2011 to come in at over $1.1 trillion under the current levels of spending in this progressively led Congress, even if the Bush tax cuts are allowed to expire. 


There are of course more examples of such tainted and obfuscated facts, but there is not time or space to list all of them. We can use even these brief specimens however to illustrate that while those on both sides of the aisle can play fast and loose with the facts, that these days it is those on the left that find it far easier to argue their point of view when using only selected facts. Once such a selection process has occurred, considerable creativity in interpretation can likewise be used in order to reach a pre-determined conclusion guaranteed more by a point of view than those facts. While not alone in their guilt in such matters, the left appears to have taken such selective inattention to facts and interpretive creativity to a new level lately, and done so with particular glee. It likewise seems that they are incapable of providing any current argument based solely on 'just the facts'.

Money For Nothing

"That ain't workin', that's the way do it. Money for nothin' and your chicks are free." 
- Dire Straits 


While I'm not sure what the "chicks are free" part of this lyrics from a song first released on the 1985 Dire Straits "Brothers in Arms" album means in relation to the banking bailouts, the "money for nothin" part certainly strikes a chord (pun intended) these days. You can't help but think about it when considering the furor made over the year end bonus packages of bank executives by the Pay Czar and President. 


The news has been filled lately with stories about how banks are returning to profitability and paying back TARP money that was loaned to them by the government, fulfilling the prophecy by political leaders that the original investment is thereby justified. I think that I've made myself clear about not liking the government stepping into the employee compensation process, but one has to wonder how such compensation could have been earned in such difficult times. How did these corporations justify an expenditure for lavish salary packages at a time when the economy has been mostly stagnant? Obviously, the payment of these bonuses must be predicated on the successful management of their respective organizations.


It appears that under the guidance of these so-called over compensated managers that even in these difficult financial times banks, unlike many other businesses, were able to make profits. It seems that these talented financial wizards were able to play the system now managed rather closely by the Federal Reserve and the Federal Government, like a cheap fiddle. The Federal Reserve has been lending money to financial institutions recently at an effectively 0% lending rate in order to stimulate the economy and prime the system with capital. The banks, instead of lending this money out to people and small businesses as intended, used this all but "free money" to buy out the now discounted assets of other financial organizations. They also used it to buy the debt incurred by the very government that they were being bailed out by and borrowing from, at interest rate returns of up to 4%. 


So what we are basically seeing here is that banks borrowed money from the government to buy loans that the government was forced to make in some part to finance the money that they were both giving and loaning to the banks. The end result of this nonsensical "Capital Carousel" was that these supposedly incompetent bank executives were able to cash in and make a profit on the even more incompetent leadership and policies of the government claiming the wisdom and ability to know how best they should operate. 


This may appear to be nothing more than trickery and deserving of little praise, but you have to give these managers credit (sorry, poor choice of words) for being able to manipulate the system handed to them to the advantage of their employers. 


You may not like these people, but you have to admit that they are probably smarter than (or in cahoots with ) the government employees who were supposed to monitor and control them. You don't have to admire these people, but they may therefore be worthy of some sort of credit and compensation. It may not be rock and roll, but I believe that even Dire Straits founding member Mark Knopfler would agree that if ever anything did, this may qualify as "Money for nothin'".

Judge Ye Not Chrysler, Lest GM Also Be Judged

Justice Judith Bader Ginsburg issued a writ today, stalling the sale of major assets by Chrysler to Fiat. This writ was issued based on a case brought before The Court by a group of pension and construction funds in Indiana who stand to lose millions of dollars from lost investment in Chrysler secured bonds (or loans).  
Normally such secured credit holders are the first to be paid off in bankruptcy proceedings, but in the case of Chrysler, these bond holders were in fact placed at the end of the line (or not in the line at all). The interesting part about the action brought on behalf of these pensions funds is the two-prong attack:  

1. Why were normal bankruptcy procedures bypassed in this situation by the lower courts, and was it do due to improper pressure brought to bear by the government?
2. The funds used by the federal government to prop up Chrysler prior to bankruptcy and the reason that the federal government has had so much to say about how reorganization would work were taken from the TARP funds.  

For those of you who can't remember all the way back to the last months of the Bush Administration, TARP funds were originally designed to buy toxic assets from banks (hence the name Toxic Asset Relief Program). While actually never used to buy any toxic assets, the funds were generally understood to be used for the bailout of the banking industry. Congress, recognized that TARP funds might not be able to be used for bailing out automobile makers however when that situation appear imminent, and tried to get a separate bailout package passed for that purpose. They were unsuccessful in doing so. 

Ignoring the legislative defeat however, the Administration at the time simply decided to take the money from TARP anyway. Since the fund had no real Congressional oversight in place, they were able to apply it where and how they saw fit. If the Supreme Court now rules that TARP funds were used improperly for one bailout, then obviously they would have been used improperly for both. 

If this turns out to be the case, how will both companies give back money that has already been spent to a government that doesn't want it? An equally interesting part of this is case is not just what happens to these bond holder pension funds and to Chrysler as a result, but what impact this could have on the bankruptcy re-emergence of General Motors, whose bond holders were likewise given short shift when asset reallocation was performed and approved. Not only could this case re-establish the rule of law where these auto bankruptcies are concerned, it could also prove a serious roadblock to the Obama Administration's continued attempts to take oversight control of operation and reorganization of private sector companies. (Can you say medical insurance?)  

We will all be waiting and watching with great interest ...  

Update:

The Court turned down hearing the petition and more's the pity. There seems to be no brakes on this runaway train of government.