Republican capitalize on CBO numbers

The following is my comment that I submitted to this blog post on MSNBC's First Read Blog listing a few quotes from John McCain, John Thune, and John Boehner about the CBO estimates for Obama's montrous budget. You have to read through some of the comments (almost all liberal) to get an idea of what I was responding to.

Obama and the Democrats are proving that while there are enough moderate Republicans that even under a Republican president and Congress, spending can go up if there is not the political will to fight off Democrats' attacks and find places to cut spending, Democrats are 10 times worse when it comes to big spending. Trusting Democrats to limit spending is truly putting the fox in charge of the hen house.

The Iraq and Afghanistan wars have cost approx $100 billion per year, which is chump change compared to the TRILLIONS that Obama is planning to spend, and much less than the other increases in spending over the past 8 years. Through 2007, annual spending had gone up by about 1 Trillion dollars while federal revenues increased by $700 Billion. The deficit was actually down around something like $150 until the housing market collapse.

The Bush tax cuts spurred the economic growth that led to the significant increase in government revenue. You can't call raising more government revenue through lower tax rates generational theft. Indeed, higher taxes that stunt economic growth "steal" a ton of money from future generations. Most of the comments here act like tax rates have no effect on economic growth.

Honestly, it really irks me when people say something like, "Well, we didn't hold down spending with Republicans in charge. Lets give the Democrats a chance." The problem was not the Republican party as a whole, but a lack of Bush using the veto pen, and the moderate Republicans who would never go along with cutting spending. As soon as you single out something to cut spending on, you are instantly targeted by those who benefit from that spending. Name one area in any government budget that doesn't seem like a good idea at some level.

Have you ever thought about how hard it is politically to try to cut housing subsidies, welfare payments, unemployment benefits, social security benefits, food stamps, health insurance like medicaid or medicare, funding for national parks, or even something like the National Endowment for the Arts? I'm not saying Republicans couldn't have done a better job, but come on, does anyone seriously think that Democrats do a better job of holding the line on spending than Republicans.

For those most upset about increased federal spending over Bush's tenure, the obvious answer was to vote for more conservative Republicans and for John McCain.

At the end of the day, during Bush's tenure, there were only 2 years where Republicans had a big enough Senate majority (55-45) in order to be able to pass stuff through without Democratic support, and even then there were enough moderate Republicans that we couldn't even get to 50 on no-brainers like ANWR & making tax cuts permanent, much less hold the line on spending.

Again, the obvious answer for those concerned about spending was to vote a few more conservative Republicans into the Senate, and then press Bush hard to cut spending, or if that failed, wait and elect John McCain.

MUST READ: Krauthammer on AIG

Charles Krauthammer sums up the Obama administration's performance so far, and places the triviality of the AIG bonuses in some much needed perspective.

Obama Ducks Responsibility for AIG

Did anyone catch this from the other day? Someone sent me a link to a new Republican ad about the AIG bonuses. Near the end, Obama actually says, quote:

Listen, I'll take responsibility. I'm the president. It's my job to make sure that we fix these messes even if I don't make them.

Do I really need to comment about this blatant double-speak? It double-speaks for itself.

Contrast this to President Bush. Whenever Bush said he took responsibility for something, he never tried to dodge responsibility at the same time. Frankly, Bush was way too quick to always say he took responsibility, which many people would take as an admission of guilt. Bush's biggest political problem was always that he was too much of a stand-up guy. Full pardon for Scooter Libby? No, he had to respect the DC jury's verdict. Put public pressure on Gov. Blanco in Louisiana to allow federal assistance faster during Katrina? Nope, he respected the Constitution, kept the dispute private, and then fell on his sword to "take responsibility" for something that truly was not his fault. He would not insert politics into a disaster like Katrina, but his political opponents had no qualms about doing so, and his entire second term and Republican control of Congress was sacrificed as a result (sure, there were other major factors like Iraq, but Katrina was the pivotal moment that Bush lost another 10-15% in support).

By the way, Chris Dodd is quite the white liar in this clip too. Notice that he repeatedly says that the restrictions on bonuses were in the original bill, when he knows full well that he stripped them from the bill during conference at the request of the Treasury department, who correctly noted that it would be illegal to break the retention bonus contracts.

It is also a bad idea. While I don't like the idea of part of my taxes going to pay for bonuses at a failing company at the heart of the financial crisis, please hear me out on why I think they should be allowed to stand.

First, AIG is far from the most culpable entity in the financial crisis. They were basically the insurance company that is taking the hits when the disaster struck. Think of the case of a hurricane, where insurance companies can end up paying out a lot of money as a result. Some insurance companies promise more coverage than they can deliver given a large enough disaster and large enough insurance claims. That is what happened to AIG here. One could make a credible argument that AIG's insurance offerings to the huge investment banks is one significant factor that encouraged the investment banks to over-leverage themselves as far as they did. To the extent that is true, go ahead and cast blame at AIG, but basically I see them the same way as I see insurance companies that misjudge risk and oversell insurance policies to beachfront homeowners in Florida.

Second, AIG needs to be able to retain its valuable employees. It is simply not fair to blame the entire Financial division at AIG for the decisions a few executives likely made. My understanding is that most all of the executives that were most responsible for misjudging risk and overselling their financial products have been let go. You simply cannot lose all the employees in a division of a company and expect the company to be able to continue to function well, and we REALLY need AIG to be able to continue to function, at least for now. How well would the company you work at function if 80% of the employees left all at once? When AIG started to realize how bad of shape all the investment banks were in, and that they themselves were headed for insolvency as a result, they were afraid many of their employees would leave the company. How many employees would stay at the company and have their reputations sullied by their continued association with AIG if they were not promised additional compensation in return? In early 2008, AIG offered retention bonuses to anyone who would stay until March 2009, and more bonuses for those who would stay until 2010. We just hit the round of bonuses that were due on March 15, 2009, and the bonuses were paid as promised. It is important to realize that the bonuses were NOT performance bonuses, they were retention bonuses. These valued employees that may have had little if any responsibility for the financial crisis were promised bonuses if they would stay on at AIG. They fulfilled their part of the contract, and their contracts should be honored. It is VERY DANGEROUS to go down the road of breaking contracts. Government is supposed to help enforce voluntary contracts, not force companies to break them.

Third, the government is using AIG as the linchpin for the world financial system. If AIG collapsed completely, or if it was unable to continue to function, the entire world financial system could collapse. This has wide ranging political and economic ramifications that greatly affect the U.S. Our government is basically backstopping AIG so AIG can make good on its insurance claims made by banks all over the world. Unless you want the government to inject capital directly into foreign banks by some yet-to-be-determined formula or risk worldwide financial system failure by letting foreign financial institutions collapse, you have to let AIG continue to fulfill its role with government backing, no matter how distasteful this may be. And for AIG to continue to fulfill its roll, you need the employees with the technical know how to stay with the company. Thus the point of the retention bonuses.

Fourth, when we are talking about avoiding chaos with $185 Billion (with a B), $165 Million (with a M) is a relatively minor concern. Why should I be outraged about $165 Million when we are talking about government bailouts in the TRILLIONS, new government spending in the TRILLIONS, and an increased federal budget that will lead to TRILLIONS in deficits over the next several years. And those are three DIFFERENT instances of TRILLIONS, not 3 different ways to describe the same Trillion. $165 Million is a bargain if it means the $185 Billion was managed 0.1% better than it otherwise would be.

At the end of the day, both Congress and the White House knew about the bonuses well in advance, and thought it would be illegal to require AIG to break those contracts, and knew that would cause unneccessary employee turnover at the embattled company at exactly the wrong time. AIG is being run by a former CEO who came out of retirement and is working for a penny a year. He felt that he was contractually obligated to pay the bonuses, and though he said in Congressional testimony that he would have structured the bonuses differently, he expressed concern that he could lose people that he needs to help run the company.

Obama, for his part, instead of taking true responsibility for knowingly allowing the bonuses to go forward, or showing true leadership by bucking popular opinion when popular opinion is uninformed and misguided and explaining why the bonus payments were allowed to procede, is just following the political winds and trying to duck responsibility. This is both dishonest and cowardly.

If you're ready to grab your pitchfork, consider first for yourself whether you've heard any analysis like this at all, or whether you are just following the stampede to crucify AIG.

MUST SEE: Media Malpractice DVD

This is a rare opportunity to get a comprehensive look at various news outlets' treatment of an event over a several month period. I just ordered my copy of the DVD.

Click the image to see the trailer, get more info, and order the DVD.

Thoughts on embryonic stem cell research

1) Bush did not make embryonic stem cell research illegal, he merely ordered that federal funding would not be available for future embryonic stem cell lines, so that our tax money would not be promoting the harvesting of embryos. Privately funded research could still move forward.

2) My understanding is that embryonic stem cell research has been highly unsuccessful so far, resulting mosty in cancerous tissue, while adult stem cell research, which does not require embryos to be destroyed, has proved very promising. Although researchers have found a way to use adult stem cells to replace the need for embryonic stem cells, the flat-earth Democrats are still stuck in the past.

Government Spending

Every dollar that is spent by the goverment must first be taxed, printed, or borrowed. All 3 public revenue sources suck vitality from the private economy through reduced incentives for economic activity (taxed), increased inflation (printed), or reduced private investment capital (borrowed).

Obama Makes Up Health Care Stat

Is a bankruptcy really caused every 30 seconds by the cost of health care?

That is one of the outrageously misleading claims President Obama made in his remarks at his Health Care Summit yesterday.

I haven't had a chance to check out the others, but this one is patently false.

First off, lets calculate what this would mean. A bankruptcy every 30 seconds would mean approximately 1 million bankruptcies in a year. In the latest statistics on bankruptcies, the number grew from about 700,000 in 2007 to just over 1 million in 2008.

So to believe Obama's claim that a bankruptcy is caused every 30 seconds by health care costs, you would have to believe that 100% of bankruptcies are caused by high health care costs.

This leads to the question of what percentage of bankruptcies were caused by a major illness. Supporters of increased government involvment in health care like tax-dodging Tom Daschle have repeatedly claimed that about half of bankruptcies are caused by high health care costs.

The claim seems to be based on a Harvard study published in 2005 of over 1700 bankruptcies from 2001. The authors of that study, titled "Illness and Injuries As Contributors to Bankruptcy", very clearly intended to maximize the number of bankruptcies that could be claimed to have a medical cause.

The report is convincingly refuted by Gail Heriot, a University of San Diego professor of law, in 2005 right after it was published.

Even though the authors claimed that 54.5% of bankruptcies had a medical cause, buried in the report itself is the fact that only 27% of the bankruptcies even had unreimbursed medical expenses greater than $1000 over the 2 years prior to the bankruptcy!

Only 28.3% of those studied claimed themselves that their bankruptcy was substantially caused by illness or injury. The report failed to examine how many of those 28.3% actually had crushing amounts of medical expenses that could be considered the primary cause for the bankruptcy.

Careful examination of the study thus leads to the conclusion that no more than a quarter, and probably much lower, of bankruptcies in 2001 were truly caused primarly by excessive health care costs. Obama's statistic is off by at least a factor of 4.

You might say, "Well, even if it is 200 thousand instead of 1 million bankruptcies that are caused by bankruptcies, that is still a lot." True it is still a lot, but a further question is how many of the people that filed for bankruptcy had health insurance, and how many were uninsured, because only the uninsured would really be helped by universal health insurance coverage.

The fact is that the great majority of all bankruptcies are caused by lost wages, and the greatest effect that illness or injury has is in limiting the ability to work. This factor will not be fixed by more generous health insurance.

If Obama is worried about the number of bankruptcies, he needs to ask himself how many more Americans he will push out of work and possibly drive into bankruptcy when his oppressively higher taxes, which he will try to enact in order to pay for his health care proposals, hobble the economy.