Sunday, February 1, 2009

U-N-I-T-Y

We are moving from surface to substance in a short amount of time. President Obama, using eerily similar language to former president Bush, urged the Stimulus Package to go through congress as fast as possible. Let's see if this first major act of legislation unifies the country the way Obama-believers have advertised.

"We won the election. We wrote the bill." - Nancy Pelosi

"Never let a serious crisis go to waste. What I mean by that is it's an opportunity to do things you couldn't do before." - Rahm Emanuel (aka Karl Rove)


In a vote that nearly went right along party lines, it is clear that Obama's intention for a new era that transcends red and blue politics is nothing more than lip service. In fact, President Obama appears to be a classic mega-Democrat who can't wait to spend as much of your money as possible. All of this while we as a country are at record debt levels. In fact, the legislation is so out of whack with common sense fiscal concern, that it did not receive one Republican vote, while losing 11 Democrats as well. This might be a good time to point out that although about 70 million people voted for Obama, over 60 million voted against him.

Since the bill is still split in both houses, the exact numbers are not yet known. But what started out being advertised as a stimulus package to create essential jobs by reinvesting in infrastructure and transportation has been porked into a giant buffet of Democratic pet social spending projects. In fact, only about 12% of the approx $900 Billion of your money is going to infrastructure and transportation.

A huge chunk, $252 billion worth, is just flat out income-transfer from rich to poor. That might make people feel kinder about themselves, by taking from one group and giving to another, but it will do nothing for our economy. It would be more fun and probably more efficient to just drop that money randomly out of helicopters as little bags of cash. But this bill can be sliced and diced any which way you want, and still some people will believe the government has the power to "get us out" of this recession - a recession caused by lack of saving, mal-investment, hyper consumption and failed government regulations. There is a longer-term picture here, which the WSJ points out:
The larger fiscal issue here is whether this spending bonanza will become part of the annual "budget baseline" that Congress uses as the new floor when calculating how much to increase spending the following year, and into the future. Democrats insist that it will not... The likelihood is that this allegedly emergency spending will become a permanent addition to federal outlays -- increasing pressure for tax increases in the bargain.
Obama promised to go through the budget "line by line" and eliminate programs that don't work. I am waiting with baited breath for this to happen.

It is understandable that the frustration this country felt under the Bush administration has flip-flopped into support for the Obama administration. People want to feel better about their federal government. So, it is no surprise that Obama's initial approval ratings are almost exactly the inverse of the outgoing president's. We've gone from scapegoat to idol.

When friends of mine write stuff like, "Did anyone else see Obama's speech? Awesome. So exciting to have a President speaking idealistically in terms I can relate to and believe make sense. Makes patriotism seem cool again like when I was in kindergarten...," I understand and appreciate the sentiment. But after the speeches have been rendered, the hangovers endured and the Obama babies have been born, will our country be better off in reality?

And don't get me wrong, Obama's deceit on overcoming old barriers is nothing new, Republicans have done it too (perhaps less convincingly). Actually, any time I hear the phrase "bi-partisan legislation", I run for cover knowing something awful is about to happen. But the blind optimism of so many Obama worshippers is discomforting. It's one thing if you really like big government programs. That's fine, that's your opinion and your business. But I think it is more likely that a bunch of common sense moderates are about to soon discover they're at a party with a bunch of people they didn't know as well as they thought they did, and they'd rather just go home and tend to their families.

Up next, in another move of hope and reform, Obama is pushing through FOCA - the Freedom of Choice Act. This little piece of legislation, although a slight gray area as to how it will be interpereted, is without a doubt the most heavy-handed, anti-moderate, anti-middle ground piece of abortion legislation to ever descend from our centralized, ever-growing-in-power federal government. This bill has the potential to not just over-rule the natural and constitutionally-stated power of the states to make their own laws, but it could get down to the level of over-ruling individual physicians' discretion. It has the potential to close down every Catholic hospital in the country.

The federal government has a clear responsibility over the federal budget (deficit and debt), the national border and the use of our military. So far, nothing has changed in these areas, showing that the intelligence that attracted so many to Obama may not be enough. What may be needed is a clear understanding of our founding principles and the discipline to uphold them.
"Don't go chasing waterfalls
Please stick to the rivers and the lakes that you're used to
I know that you're gonna have it your way or nothing at all
But I think you're moving too fast" - TLC, Waterfalls

17 comments:

kevin said...

here's my take:
unification will not mean that conservatives vote for liberal policies and vice versa. and when that doesn't happen, it is definitely not an implication that obama is a liar or has been elected under false pretenses.

"In a vote that nearly went right along party lines, it is clear that Obama's intention for a new era that transcends red and blue politics is nothing more than lip service."

this confuses me. obama didn't write the legislation, and he can't make republicans vote for it (and he can't make pelosi write it in a certain way). however, he did take a trip last week to personally appeal to congress how important this bill would be to our country. republicans were reported to be quite impressed by the gesture and they expressed their concerns to a president who did more listening than talking. this was not a normal political move, and i respect obama for it.

i don't blame the republicans for voting against this bill, and i think it's crap when people accuse them of being callous or uncaring towards the common person's situation (are the 11 Democrats who voted no equally callous?). the bill was supposedly crafted with no republican input. if it doesn't work, the right has positioned themselves to be in an 'i told you so' position. they certainly do need to do something to remain relevant in this political climate.
i do think it's extremely valid to question how this boost will actually become the norm for our future budgets. that's a problem.

about the bill - seriously - no one knows what's gonna happen. we just don't. our country's current situation is uniquely crumby and i don't think it's nuts that something massive is in order, esp given that the building blocks of our economy has been destroyed. it's not like macy's bought too many vacuum cleaners and they have to lower the price and take a loss and then supply and demand will balance out. our banks are going out of business and unemployment continues to rise. i'm not saying i know this stimulus will work, but i'm saying that people aren't insane or anything for proposing/supporting it. further, bush and co put through over 600b to fix things last fall, and it didn't really work. proposing an 800b stimulus makes obama a mega democrat who can't wait to spend as much of our money as possible? i think that's unfair and leading.

now - i've read the breakdown of the money, but i don't understand your 252 billion number. can you explain what you mean? do you mean the tax breaks? i figured that'd be the only part you agreed with...

hopefully people caught last weekend's 'this american life'. not only was there a fascinating segment on an extreme mormon group, but they rehashed the keynsian/anti keynsian debate. i thought it was pretty fair, and it basically concluded that we're about to conduct a super expensive experiment, and no one knows how it's gonna turn out (nor do we know what would happen if we didn't conduct it).

my comments are getting exceedingly long. you know you're annoying when your own comments bug you.

Roller said...

Kev, your comments are lengthy but still concise. no need to shorten.

If there is one thing I have learned from this post, it's that a Bush-Obama love child would be a really handsome man.

Marty said...

ahhh waterfalls...I wonder what Left Eye would have to say about all this political and economic turmoil...

Ryan said...

I've always had an affinity for Lisa Left Eye Lopez, for my whole life, because we share the exact same birthdate, and she's the only chick I've ever thought was legitimately hot with an eye patch.

Kronkie, my numbers come from the article I found on the WSJ, that breaks down the bill into arbitrary categories. If you want a more detailed explanation, it's there.

I suppose if you're willing to respect Obama simply because he listens and not admit his call for unity is a lie when he does nothing of substance with what he hears, then nothing can prove you wrong. Safe and boring place to be, a world of gestures and sweet nothings being thrown around a room of real money.

And don't hide behind the semantics of who is doing the writing. Obama is not only pushing this bill, he's selling that it needs to get through yesterday. Same way Bush did.

"no one knows what's gonna happen" Yes, I do. In the spirit of Austin, I can see the future. Our nation's situation is not uniquely crumby, it's happened before and it will happen again. We are guaranteeing that this recession will be longer and future recessions worse by spending more money we don't have on non-investments. I'm sure there are some good investments in the bill, but early reports have it at 12%.

A more meaningful debate would be how to most efficiently invest in infrastructure, and should the federal gov't be at the center of that effort?

"further, bush and co put through over 600b to fix things last fall, and it didn't really work. proposing an 800b stimulus makes obama a mega democrat who can't wait to spend as much of our money as possible? i think that's unfair and leading."

I never try to be fair. It's a waste of time unless I find myself as mediator in some dispute, which I'm not. I think you misused the word "leading", I'm trying to bring this above red and blue. If you want, I can call Obama a mega-Republican, that certainly fits the bill too. If the $700b TARP under Bush didn't have the desired effect on the economy (although it did bail out a bunch of rich crooks), then why believe this bill will work differently?

Trickle up works just as good as trickle down when the federal government manages it.

My original article disputes entirely the notion that Obama is a unifier and that he is a substantial reformer. He is not and has not unified the country except only in the minds of the people who feel groovy about him, and his reforms thus far have been superficial while his substance has shown love to expanding the power and reach of the federal government.

So far, he has expressed interest in trying to control the economy, the climate and our nation's fetuses from a central authority - a throne. I wait for him to tackle the serious problems the federal government has unarguable, direct control over -- the budget, the border and the military. I reserve the right to then be proven wrong.

I wonder if a Cheney/Biden love child would be a better looking VP?

kevin said...

ray - if you're not careful, dad and i are really going to start to question if you really are a liberal anymore. we're worried about you.

from the language in your posts, it appears that you have given up on obama. it just surprises me, given the fact that he's not even a month into the job. you seem so disillusioned that he hasn't unified the country in the last 3 weeks.

he's trying to 'control the economy' and expand the federal gov't. others might say that he's doing what most economists think is the right move - putting through a stimulus package with the hopes of helping a truly crippled economy. we could go back and forth on what the number should be, but i'd rather talk about how much we should pay manny. with a national disaster potentially in front of us, obama is in a crappy spot. he's trying to keep us from the next depression, so i'll be ok if he puts the unification speeches on the backburner for a bit.

i don't think that this bill has revealed obama in some harmful new light, as if he's now discovered to be a wolf in sheep's clothing. this stimulus has been talked about for months, and there's nothing too surprising or new about it. mccain would have put forth a huge proposal too, just as bush did.

instead of going back and forth about obama, i'm more interested in what you think would work better. the economists i've heard on the radio have different opinions, but there's always an admitted element of guessing to their approach because they realize this is unique, and messing with the economy is a hairy task.

i know about 2 paragraphs worth of facts on hoover, but wasn't his obsession with balancing the budget one of the main reasons our depression was so bad? he raised taxes and increases tariffs/import taxes and that pushed us past the point of no return. i normally would agree with that approach - you gotta have a balanced and responsible budget. but you also have to pick your timing wisely. all economies are not created equal.

this is an interesting topic, because i'm a conservative who experiments with elements of libertarianism in my free time. however, i also believe that you shouldn't carry a balance on your credit card, but i'd allow for it in the case of an emergency/unplanned circumstances.

what i'm saying is that i'm not convinced that entrenched ideologies should be stuck to in every situation. if the banks are frozen and people are out of work, and the cycle is only reinforcing itself, maybe a shock to the system is in order.

Coovo said...

First of all, you can't use that subject line and not give a shout out to the Queen. Definitely my favorite Queen Latifah song. Definitely the only Queen LAtifah song I know. Maybe I'll buy it itunes now that I'm rich with student loans.

I don't know how you McCabes are able to keep your thoughts straight while writing in this little box. i have trouble achieving that on the larger one for posting.

I can't really make comment on the financial issues because I don't fully understand them, but find it interesting that you use the word deceit when talking about Obama and others.

I picture Obama walking off the inauguration stage with his staff, "I can't believe they bought it. Someone get me my plunger."

I know there are plenty of factors that go into this, but he did just nominate a republican senator for Commerce Secretary.

I don't think we should expect to see Congressmen singing on the capital steps. I think the U-N-I-T-Y we will see is the effort to accomplish things. Less dragging of the proverbial feet. Much less bickering in the press about the differences between red and blue sections of Congress. And hopefully less blame.

I do think Queen Latifah opening for the state of the Union is the best idea ever.

Ryan said...

Kev, I'm bashful now because of your compliment. I try not to operate under any illusions, and you're the first person to notice.

I agree with you that it's a waste of time to continue hammering Obama for what he is, although I think it's important that we all continue to hold all politicians accountable for what they say they are going to do vs. what they actually do vs. what they should be doing as dictated by the Constitution.

As for all those economists, they are where they are because they are taught that they can control the economy. The Keynes approach is to model the economy so as to control it. It's self-selecting! Of course they all want to fix the economy, that's what they get paid to do.

That's like asking a general if he thinks he can take a hill.

Yes, your points on hoover are good ones, raising taxes in this case would severely stifle our economy even worse. So you might say, then lower taxes.

But I'm pushing for real reform here, not just temporary stuff. As to what we *should* do here, it's easy, reform the entire tax code into a flat tax with no loopholes so that everyone's effective tax rate is the same as their stated tax rate. that would pump tons of money back into the economy and the government while eliminating almost all the smoke and mirrors taht cause so many of the bad decisions.

Second, eliminate all increases in spending. If the Gov needs to invest in bridges ,then it should, but it should to it because the bridges need improvement, not because of an artificial effort to "create jobs", which only the natural economy can do.

That's it. It's that simple. But politicians in both parties don't want to admit that they can't truly jump start the economy so it won't happen.

Although the Repubs are playing politics now, there are very few true conservatives in the party who have the principled understanding to do this stuff. Your point about McCain wanting to do the same thing is dead on. He may phrase it more as tax cuts, but there's not much difference between the govt mailing welfare checks or tax rebates out.

I have very little hope right now that anything causing very little harm, let alone any good, will be done.

There is so much sentiment of "It's OUR TURN MUTHA-F-ers!!!!!!!!!" out there that the cycle is just deepened.

Eventually, the Dems will mess it up bad enough so that people will think the neocons (noncons) in the Republican party will have better answers.

But they will just have slightly different addresses to mail out checks to.

P.S. Balancing the budget in and of itself is not an immediate concern -- you showed the possible bad effect. Any dollar spent - whether having been borrowed or saved - will only be spent well if it is on something needed. The federal government is just really bad at determining what is needed, so they waste our money instead, thus contributing more to our problems than they solve, thus deepening recessions, etc.

Ryan said...

Coov, I've thought about your comments on what it means to Unify, and other people's comments.

I'd like to see a little more gridlock. The less the gov't does, the better for us.

kevin said...

i am a huge fan of the flat tax, and think people will one day look back at our current hilarious tax code and question how the populous put up with a tax system that no one understands. it would be my number 1 priority if i were in office.

awesome fact: our tax code is over 16,000 pages, and if you order a copy from the gov't, it comes in 20 volumes and costs only $974.

fairtax.org is the most researched tax code ever put together (more so than ours today), and signed off by hundreds of economists.

btw, ray - i totally had a flashback to the bald guy in princess bride when wesley puts the poison in a cup and tells him to pick, and he says, "but it's so simple!"
i'm glad you have confidence in your answer. i've found that that's just as important as getting the right one. i think your solution would help us, but i'm not sold on "eliminate all increases in spending". too black and white for my tastes. some of those segments in the stimulus seem like great ideas to me. nothing wrong with cherry picking.

but most tax reforms (such as fairtax) are revenue neutral, and i don't think our crazy tax code and its effects are responsible for broken banks/credit markets.

i think it would be a fantastic change, but too slow to stop our plunging situation.

also - the anti keynsians ran DC for the last quarter century. just because it's all liberal now, doesn't mean they've disappeared. their answer is to tweak the economy not through gov't spending, but through manipulating the federal funds rate. but the plane crashed on their watch, and they're at 0% now on the rate, so what now? things are still going downhill...

i like the direction of your idea, but i'm not sure it's textbook anti keynsian. we did keynsian from the 40s to the 70s, and it eventually broke. the other guys did theirs til a few months ago, and that's broken too.
i'm not sold on the size of the stimulus, but i don't think it's a horrible idea. if it passes, i'll hope for the best.

ps - coov - the secret is to not reread any of your comment. then concentration isn't important in the first place.

Ryan said...

"our tax code is over 16,000 pages, and if you order a copy from the gov't, it comes in 20 volumes and costs only $974. "

That's an incredible find. Thanks.

Never linked the tax code to the current mess we're in.

"the anti keynsians ran DC for the last quarter century"

That's just simply not true. Keynesians have run D.C. at least since the 60s in both parties, ever since our education system homogenized and began teaching it as gospel (also read about Bretton-Woods). "Keynesian" just means that you can model and run or manage the macro economy from the centralized seat of power. "Fiscal" policy relates to tax issues controlled by Congress, whereas "Monetary" policy relates to the interest rate you mentioned, controlled by the Fed. Fiscal and monetary policies could both be Keynesian.

My ideas would be anti-keynesian in that with a flat tax and no loopholes, we would remove the power of Congress to covertly suck up to the rich and overtly bribe the poor and middle classes against each other, in the name of being anti-rich (this is how the Dems and GOP stay in power while not really improving anything).

I would also be in favor of destroying the Fed and having interest rates determined by the thousands of transactions among local and regional banks in a free market. That would manage our risk much better than it has been. Chairman Greenspan should be deported for his role in this mess. Instead, he got a book deal.

There would always be downturns in the economy, but they would be comparatively gentle and brief - moderation in all things! None of these ridiculous crashes that are falsely attributed to free markets.

"Too slow to stop our purging situation" Remember, the purge and the hangover are part of the cure. I'm not totally against taking an NSAID to get through it, but that assumes I'm not an alcoholic or addicted to NSAIDS. Our federal government is an alcoholic on our money and is addicted to pain killers as solutions.

We're the enablers.

Coovo said...

Great comments guys. But we're way off point now. The question at hand is what effect will a Queen Latifah live concert have on the state of politics. I say it will be bigger than the New Deal.

I'm with you on the flat tax.

kevin said...

ry - greenspan got a book deal because the free market allowed it to happen.

after researching more, i take back the keynesian rule from the 70s.

the austrian school of economics (whaddup RP!!) was founded by a guy named Hayek who criticized the hell out of Keynes. not only that, but he was worried about one of the things we agree on: "Hayek claimed that what starts as temporary governmental fixes usually become permanent and expanding government programs, which stifle the private sector and civil society. Keynes himself described the critique as "deeply moving", which was quoted on the cover of the Road to Serfdom."

hayek was also opposed to land wars in asia.

Coovo said...

All hail the Queen.

Anonymous said...

Classic. The statement around here, and many places for that matter, is once you give something, you can't take it back. Our society is full of "deserving" people. Once their request has been granted, even if it understood to be a one time offer, it really isn't (understood). The next year, they ask for at least the same ammount, if not more. Inevitably, there is some constituency involved and some politicians will agree, increase the funding and so on. This is one of the fundamental differences between the parties and one that plants me firmly on the right. In my mind, democrats see us as mindless babies incapable of helping ourselves and unable - because of some invisible oppressive force - to put the work in on our own to elevate our situations. Republicans, on the other hand, see government involvement as a hinderance, and believe that effort and focus can elevate people. Additionally, higher taxes - end recipient being those same
mindless masses - eliminate the pool of cash available for individual giving. If I make 1000 a month and need 500 to live and am taxed 400, it is unlikely that I am going to give my final 100 away. If I'm making the same amount, live on the same 500, but am only taxed 200 I am going to give away some of my surplus. This is not to say there are not deserving causes out there. When I give away my money, I can give it to a group (local or national) that I know and appreciate. I can give it to a group where I can track how much goes to the cause and how much goes to administration. If a new cause comes up, is persuasive, efficient and effective, I can choose to support that new group. Just as businesses are forced to stay fresh and flexible or face their end, charitable organizations should behave in the same way. I have personally pulled back on my charitable giving, not that there was a lot to begin with. I feel it is important to give
what I can to issues that I feel strongly about. Land conservation and environmental groups get some of my money as does DePauw. The fringe $50 "they seem fine" groups have been trimmed.

This is a direct quote from one of my co-workers yesterday. "You should just stop paying your mortgage, eventually that debt will be forgiven and you can refinance your house for the deflated value." Wow. While this is not going to happen, imagine if it did. Think of all the eyes seeing this potential windfall in the future. Is that temptation going to be resisted. Is that going to force the current lending climate to worsen? I don't know those answers, but I know that we can't be the only people having that discussion.

I was in favor of the initial bail out for financial institutions. Many of our customers rely on credit and loans to make payroll and to maintain general operations. To some degree this is due to extensions in terms of payment - standard payment terms are close to 60 days now versus 30 or better. You understand as an econ guy that if you are paid slower, you in turn pay slower. That process is debilitating and can kill a company. The second potential bail out - the big three - was perhaps too close for me to be objective about. GM is our largest customer and makes up about 15% of our annual sales volume. Trying to replace that would be very difficult obviously. While I was skeptical about management, the bail out did give them some leverage to chip away at the enormous boat anchor that is the UAW and more specifically their contract. Eliminating the job bank - also a topic of discussion in our meeting this morning - could/should be an
enormous benefit. At this point, any UAW worker who is laid off is allowed to sit in this pool and petition for placement in another UAW opening somewhere else. While this process goes on, they get 80% of their previous pay. GM is also offering a buyout for hourly workers - $25k cash and $20k towards a new GM vehicle to leave their job. This is not very appealing in terms of a buyout, but its likely to be utilized because the job bank parachute is gone. Unfortunately, its likely that those with the least tenure - in otherwords the younger, lower cost employees - are the ones likely to take it as they would be the first to get the axe. The next thing I'd like to see go is their maintenance agreements. GM has a truck plant if Fort Wayne. Its a highly efficient plant and should be safe from any potential closings. This plant, along with the other GM facilities we service have maintenance agreements. If we (an outside contractor) are
working in their facility, their maintenance people have to be paid for this time. When things are good, this generally isn't a problem. When things are not good, and plants completely shut down over Christmas of July 4th, if we go in to do projects, the maintenance people get paid as well.

Its a crazy world and it sure would be nice if $1 trillion would fix it, but it won't. This "stimulus" package is just another shotgun blast to a bucket which is already full of holes.

Coovo said...

I knew I should have voted for Anonymous instead of Obama . . . or McCain . . . or Nader.

It's always interesting to try to guess who anonymous is. At first I thought it was Bernsie. I hadn't even begun to read. Just a lot of words. Then I thought Barnett when I saw DePauw and credit. But I think Jim usually signs his name and I doubt GM is a customer. Now I'm going to have to get out my 1996 SAE DePAuw fan club letters to get a better gauge of the possibilities. If it's Fruchi, I still have your bachelor party shirt, even though the pit stains are way gross.

kevin said...

i have a strict rule to never talk about abortion (unless i'm really drunk and angry and surrounded by women). as the most divisive issue in our country, it will be interesting to see what obama does. he is unapologetically pro choice, that is for sure. but he somehow managed to steal some unstealable votes last november - the evangelicals. republicans better run if that group migrates left. but obama managed to get some votes from pro lifers, and he did so by working to reduce the amount of unplanned pregos and abortions (similar to what rudy g ran on).

here's an interesting short article about obama's abortion strategy and how he's attempting to appeal to both sides. lots of things i never knew...
Here's the Article

Marty said...

i need more posts....i'm out of comments.....maybe one about whether you would work for the sports team you hate the most for $100,000...and what that team would be?? Or whether or not its possible to find the last page of the internet while you are at work??