Archive for October, 2008

And I thought California was bad.

Wednesday, October 29th, 2008

California has been run by the Democrats for a decade now. Gerrymandering has virtually guaranteed election of the legislators. The only contested elections anymore are the primaries and, even here, there is a “gentleman’s agreement” about who will run. California has a huge budget deficit and, before the national financial meltdown, Governor Schwartzenegger (a Democrat with a Republican label) was trying to get a bailout from the feds. Well. it turns out that California is not the only Democrat dominated state to have run off the rails.

New York is looking at a deficit of over 40 billion dollars!

Gov. Paterson grimly declared yesterday that New York faces a historically unprecedented four-year, $47 billion budget deficit, $20 billion higher than projected just three months ago – and will need some form of federal bailout.

It seems that Democrats can’t run a state without running it into the ground. I wonder how they will do with the federal government ? This is not reassuring.

With the state’s finances souring, Gov. David A. Paterson in July took an important step to control the spiraling costs of government: a hiring freeze for state agencies.

But since the July 30 freeze was declared, 31,684 people have been hired by agencies, according to a Buffalo News analysis of payroll records provided by the state comptroller’s office.

The records do not include hiring at hundreds of state authorities whose payrolls are not maintained by the comptroller.

Another Democrat hiring freeze. There was a time when the Democratic Party was a responsible political party with the ability to manage the government. The Second World War was managed by a government controlled by Democrats. There was even a committee, called the Truman Committee, that was a watchdog over waste and incompetence in government. The days when the Democrats could be trusted with government are over. They can still win elections, and appear to be doing so with the Obama campaign, but the governance is another matter.

California once had a Republican governor named George Deukmejian who insisted that the state not spend every penny of income during good economic times. The next Republican governor, Pete Wilson, raised taxes during the California recession in 1991 and managed to prolong the recession in California after the rest of the country recovered. Another lesson that will be forgotten if Obama is elected. Now we have Schwartzenegger, a movie actor whose politics seem to be a mixture of strong talk and weak action. At least he seems to be keeping out of trouble as compared to New York governors. Spitzer resigned in disgrace after a scandal about a hooker. His successor, David Patterson, has his own tax scandal. Patterson, himself, has a sex scandal. No wonder their finances are screwed up.

Casey Stengle used to say, “Can’t anybody here play this game?”

Maybe it is 1929 again

Tuesday, October 28th, 2008

The world financial crisis has been blamed on the mortgage market in the US although it seems to be as bad in Europe and Asia, especially Japan. This seemed a bit odd as European markets should not have been as exposed to sub-prime American mortgages as American financial institutions are. It turns out that they have generated their own problems with little contribution from us.

French President Nicolas Sarkozy has been leading the way with the finger pointing, kicking American capitalism and calling for an end to the “hateful practices of the past.” Super Sarko has demanded that the upcoming economic summit to be hosted by US President George W. Bush be held in New York because, he said, “that’s where everything started.”

Newspaper headlines cheer that, suddenly, “Europe looks pretty smart.” Dutch newspaper Trouw announces that “European capitalism is better suited to meet the challenges of the present financial crisis.” German weekly Der Spiegel features the Statue of Liberty with an extinguished torch as “the price of arrogance.” German Chancellor Angela Merkel and her Finance Minister Peer Steinbruck tell us that the financial crisis is an American affliction. London’s The Daily Telegraph talks about “emboldened Europeans” eager to ambush Bush to impose a “European vision” for new financial market regulation.

Is this true ?

Well, maybe not. What have sub-prime mortgages got to do with Iceland, for example ?

Bayerische Landesbank, a state-owned regional bank, has put out its hand for a E5.4 billion ($11 billion) bailout from the German Government after writing down E2.6 billion in investments during the first half of this year, much of that related to sub-prime mortgages.

Indeed, the most recent data from the Bank for International Settlements should wipe the smirk from many European faces. Western European banks lent three-quarters of a total $US4.7 trillion ($7.5trillion) to emerging markets in eastern Europe, Latin America and Asia: a bursting bubble that surpasses the US sub-prime mess. Again, in Germany alone, financial institutions lent $US21.3 billion to Icelandic banks now collapsing, accounting for more than a quarter of all foreign lending to Iceland and more than five times the level of British lending, Iceland’s next biggest creditor country.

Iceland is in trouble because the big US air base at Keflavik and other US installations have closed.

Germany’s economic newspaper Handelsblatt speared European self-righteousness by listing eight German myths about the financial tsunami. Editor Bernd Ziesemer pointed out that the German Government’s bank bailout is almost the same size as the US package: “The truth is the most awful weapons of mass financial destruction came from London and Frankfurt.” Aggressive German financiers were busily inventing and packaging up derivatives that Europeans would prefer to frame as a curse of American capitalism.

In 1929, a large part of the collapse was due to profligate lending to Latin American countries, countries that had no reason for us to expect them to repay their debt. Similar things happened with the Mexican bailout under Clinton.

Before we embrace European solutions as our saviour, remember that in the past decade, Europe has had the distinction of stagnant job growth: unemployment in France and Germany has not fallen below 7 per cent. With European governments addicted to regulation and with work practices mired in rigid inflexibility, it could be that the US will recover much more quickly from a recession that many European countries. In that vein, beware of sniggering Europeans peddling myths about the demise of American capitalism and the need for a new inspiring European solution. The triumphalism behind talk of a new grand European model of economics may turn out to be short-lived.

Unless Obama is elected to “spread the wealth.” Then Laffer’s article in the Wall Street Journal may sound prophetic.

Financial panics, if left alone, rarely cause much damage to the real economy, output, employment or production. Asset values fall sharply and wipe out those who borrowed and lent too much, thereby redistributing wealth from the foolish to the prudent. This process is the topic of Nassim Nicholas Taleb’s book “Fooled by Randomness.”

Somebody once said “government is the problem, not the solution.”

To alleviate the obvious hardships to both homeowners and banks, the government commits to buy mortgages and inject capital into banks, which on the face of it seems like a very nice thing to do. But unfortunately in this world there is no tooth fairy. And the government doesn’t create anything; it just redistributes. Whenever the government bails someone out of trouble, they always put someone into trouble, plus of course a toll for the troll. Every $100 billion in bailout requires at least $130 billion in taxes, where the $30 billion extra is the cost of getting government involved.

If you don’t believe me, just watch how Congress and Barney Frank run the banks. If you thought they did a bad job running the post office, Amtrak, Fannie Mae, Freddie Mac and the military, just wait till you see what they’ll do with Wall Street.

Oh well. I’m getting a bumper sticker for next year. “Don’t blame me, I voted for McCain.”

Maybe I won’t need it.

Is America really going to do this ?

Sunday, October 26th, 2008

Melanie Phillips, author of Londonstan, an analysis of the Islamization of England, has a column on the coming American election.

The impact of the financial crisis on the American presidential election has somewhat obscured the most important reason why the prospect of an Obama presidency is giving so many people nightmares. This is the fear that, if he wins, US defences will be emasculated at a time of unprecedented international peril and the enemies of America and the free world will seize their opportunity to destroy the west.

I share her fears.

McCain ?

I do not trust McCain; I think his judgment is erratic and impetuous, and sometimes wrong. But on the big picture, he gets it. He will defend America and the free world whereas Obama will undermine them and aid their enemies.

Here’s why. McCain believes in protecting and defending America as it is.

I have not been an admirer of McCain on certain issues, like immigration and campaign finance reform where he has been suckered by Obama’s flood of illegal funds. On the other hand…

Obama tells the world he is ashamed of America and wants to change it into something else. McCain stands for American exceptionalism, the belief that American values are superior to tyrannies. Obama stands for the expiation of America’s original sin in oppressing black people, the third world and the poor.

Obama thinks world conflicts are basically the west’s fault, and so it must right the injustices it has inflicted. That’s why he believes in ‘soft power’ — diplomacy, aid, rectifying ‘grievances’ (thus legitimising them, encouraging terror and promoting injustice) and resolving conflict by talking. As a result, he will take an axe to America’s defences at the very time when they need to be built up. He has said he will ‘cut investments in unproven missile defense systems’; he will ‘not weaponize space’; he will ‘slow our development of future combat systems’; and he will also ‘not develop nuclear weapons,’ pledging to seek ‘deep cuts’ in America’s arsenal, thus unilaterally disabling its nuclear deterrent as Russia and China engage in massive military buildups.

On militant Islam ?

Obama assumes that Islamic terrorism is driven by despair, poverty, inflammatory US policy and the American presence on Muslim soil in the Persian Gulf. Thus he adopts the agenda of the Islamists themselves. This is not surprising since many of his connections suggest that that the man who may be elected President of a country upon which the Islamists have declared war is himself firmly in the Islamists’ camp.

On Israel ?

Most revolting of all is Samantha Power, a very close adviser whom Obama fired for calling Hillary a ‘monster’ but who says she still expects to be in Obama’s administration. Not only has Power has advocated the ending of all aid to Israel and redirecting it to the Palestinians, but she has spoken about the need to land a ‘mammoth force’ of US troops in Israel to protect the Palestinians from Israeli attempts at genocide (sic) — and has complained that criticism of Barack Obama all too often came down to what was ‘good for the Jews’.

Yet older Jews are voting for Obama in Florida and elsewhere.

The future is very troubling and this woman, who has been unsparing in her criticism of British weakness, is very worried. So am I.

Michael Yon is the most reliable source of information on the war in Iraq and now the war in Afghanistan. What does he say ?

The outcome of the upcoming U.S. elections will have a profound impact on the war. Meanwhile, the day to day fighting continues. If Senator Obama is elected, I expect to spend a great deal of time covering the fighting. Judging by his words, Senator Obama must be watched closely or we might see some terrible decisions. I expect 2009 to be the worst year so far in the Af-Pak war, which has serious potential to eventually become far worse than Iraq ever was. If Senator McCain is elected, I’ll breathe easier in regard to the war.

Michael Totten is another reliable source of the Middle East…

Senator Barack Obama hopes to be the first American president to engage in diplomatic negotiations with the Islamic Republic regime in Iran. He even says he’s willing to meet with Iran’s President Mahmoud Ahmadinejad without preconditions. Surely he must understand that what he’s proposing is a radical departure from foreign policy as practiced by both parties. Franklin Roosevelt didn’t meet with Adolf Hitler or Emperor Hirohito, Harry Truman didn’t meet with Kim Il Sung, Ronald Reagan didn’t meet with any Soviet leader until after glasnost and perestroika were in place, Bill Clinton didn’t meet with Saddam Hussein or Iran’s Mohammad Khatami and Ayatollah Akbar Hashemi Rafsanjani, and no American president met with Fidel Castro.

In any case, whether Obama’s wish to engage Ahmadinejad is mainstream or radical, and whether it’s foolish or wise, may not even matter. It isn’t likely to happen. Obama may not care about preconditions, but the Iranian governmentcertainly does. Mehdi Kalhor, Iran’s Vice President for Media Affairs, told the Islamic Republic News Agency that “as long as U.S. forces have not left the Middle East region and continues its support for the Zionist regime, talks between Iran and U.S. is off the agenda.”

Samantha Powers may have the solution for that objection.

UPDATE: The Economist endorses Obama but, typically, misrepresents his positions on Iraq and Iran in order to make him seem wiser than he is. The press is desperate to elect Obama for their own reasons and they are not good ones.

How McCain chose Sarah Palin for VP

Friday, October 24th, 2008

There is an article in the New York Times magazine on the McCain campaign that should have waited until after the election for publication but it has the story of the Palin nomination. There has been a lot of nonsense written about this. This looks like the definitive version.

On Sunday, Aug. 24, Schmidt and a few other senior advisers again convened for a general strategy meeting at the Phoenix Ritz-Carlton. McInturff, the pollster, brought somewhat-reassuring new numbers. The Celebrity motif had taken its toll on Obama. It was no longer third and nine, the pollster said — meaning, among other things, that McCain might well be advised to go with a safe pick as his running mate.

Then for a half-hour or so, the group reviewed names that had been bandied about in the past: Gov. Tim Pawlenty (of Minnesota) and Gov. Charlie Crist (of Florida); the former governors Tom Ridge (Pennsylvania) and Mitt Romney (Massachusetts); Senator Joe Lieberman (Connecticut); and Mayor Michael Bloomberg (New York). From a branding standpoint, they wondered, what message would each of these candidates send about John McCain? McInturff’s polling data suggested that none of these candidates brought significantly more to the ticket than any other.

“What about Sarah Palin?” Schmidt asked.

After a moment of silence, Fred Davis, McCain’s creative director (and not related to Rick), said, “I did the ads for her gubernatorial campaign.” But Davis had never once spoken with Palin, the governor of Alaska. Since the Republican Governors Association had paid for his work, Davis was prohibited by campaign laws from having any contact with the candidate. All Davis knew was that the R.G.A. folks had viewed Palin as a talent to keep an eye on. “She’d certainly be a maverick pick,” he concluded.

The meeting carried on without Schmidt or Rick Davis uttering an opinion about Palin. Few in the room were aware that the two had been speaking to each other about Palin for some time now. Davis was with McCain when the two met Palin for the first time, at a reception at the National Governors Association winter meeting in February, in the J. W. Marriott Hotel in Washington. It had not escaped McCain’s attention that Palin had blasted through the oleaginous Alaska network dominated by Frank Murkowski and Ted Stevens, much in the same manner that McCain saw himself doing when he was a young congressman. Newt Gingrich and others had spoken of Palin as a rising star. Davis saw something else in Palin — namely, a way to re-establish the maverick persona McCain had lost while wedding himself to Bush’s war. A female running mate might also pick off some disaffected Hillary Clinton voters.

After that first brief meeting, Davis remained in discreet but frequent contact with Palin and her staff — gathering tapes of speeches and interviews, as he was doing with all potential vice-presidential candidates. One tape in particular struck Davis as arresting: an interview with Palin and Gov. Janet Napolitano, the Arizona Democrat, on “The Charlie Rose Show” that was shown in October 2007. Reviewing the tape, it didn’t concern Davis that Palin seemed out of her depth on health-care issues or that, when asked to name her favorite candidate among the Republican field, she said, “I’m undecided.” What he liked was how she stuck to her pet issues — energy independence and ethics reform — and thereby refused to let Rose manage the interview. This was the case throughout all of the Palin footage. Consistency. Confidence. And . . . well, look at her. A friend had said to Davis: “The way you pick a vice president is, you get a frame of Time magazine, and you put the pictures of the people in that frame. You look at who fits that frame best — that’s your V. P.”

Schmidt, to whom Davis quietly supplied the Palin footage, agreed. Neither man apparently saw her lack of familiarity with major national or international issues as a serious liability. Instead, well before McCain made his selection, his chief strategist and his campaign manager both concluded that Sarah Palin would be the most dynamic pick. Despite McInturff’s encouraging new numbers, it remained their conviction that in this ominous election cycle, a Republican presidential candidate could not afford to play it safe. Picking Palin would upend the chessboard; it was a maverick type of move. McCain, the former Navy pilot, loved that sort of thing. Then again, he also loved familiarity — the swashbuckling camaraderie with his longtime staff members, the P.O.W. band of brothers who frequently rode the bus and popped up at his campaign events, the Sedona ranch where he unwound and grilled wagonloads of meat. By contrast, McCain had barely met Palin.

That evening of Aug. 24, Schmidt and Davis, after leaving the Ritz-Carlton meeting, showed up at McCain’s condominium in Phoenix. They informed McCain that in their view, Palin would be the best pick. “You never know where his head is,” Davis told me three weeks later. “He doesn’t betray a lot. He’s a great poker player. But he picked up the phone.” Reached at the Alaska State Fair, Palin listened as McCain for the first time discussed the possibility of selecting her as his running mate.

These machinations remained thoroughly sub rosa. McCain’s close friend, Lindsey Graham, the South Carolina senator, continued to argue passionately for Lieberman — “a McCain-Plus ticket,” he would say. McCain, referring to Romney, at one point said that “Mitt’s been awfully helpful with fund-raising,” according to a senior aide who was present during the discussion. “And he’d bring us Michigan.” Pawlenty’s name frequently came up in internal discussions, says that aide. But as for Palin, says another: “She just wasn’t one of the names. I mean, we heard more about Bloomberg.”

On Tuesday, Aug. 26, Schmidt picked up the phone around noon and called Jon Berrier, an old friend and partner at Schmidt’s consulting business in Northern California. Berrier was asked to get on a plane to Anchorage, check into a hotel, await further details and tell no one. The next morning, Davis White, who oversaw all of McCain’s travel logistics, met Berrier for breakfast in Anchorage. White informed Berrier that they would meet Palin at a private airstrip that afternoon, and that White would fly with Palin to Arizona to meet with Schmidt and Salter that evening — and then, the following morning, with McCain. If McCain offered the vice-president slot to Palin, White told Berrier, then Berrier would surreptitiously fly Palin’s husband, Todd, and their children to Ohio on Thursday evening, and a public announcement would be made there the next morning. The final decision wasn’t to be made until Thursday morning, but they should proceed as if it was going to happen.

Palin and her assistant, Kris Perry, met Schmidt and Salter on Wednesday evening in Flagstaff, at the house of Bob Delgado, the chief executive of Hensley & Company, Cindy McCain’s beer distributorship. McCain’s speechwriter had never spoken with Palin before. A senior adviser said: “Salter was always a big Pawlenty fan — son of a truck driver, salt of the earth, genuine guy. Just thought he was a good, honest addition to the McCain brand as opposed to, say, Romney.” That so much momentum had been building in Palin’s favor was likely a surprise to Salter, says one of the few individuals privy to the vice-presidential selection process: “Mark was new to it, and so it was important to us to make sure that he was in on the situation that was brewing.”

For two hours, Salter and Schmidt asked Palin questions based on the vetting material. Salter says they discussed her daughter’s pregnancy and the pending state investigation regarding her role in the controversy surrounding the state trooper who had been married to her sister. The two advisers warned her that nothing was likely to stay secret during the campaign. Salter says that he was impressed. “The sense you immediately get is how tough-minded and self-assured she is,” he recalled three weeks after meeting her. “She makes that impression in like 30 seconds.”

Now all three of McCain’s closest advisers were on board. The next morning was Thursday, Aug. 28. Salter and Schmidt drove Palin to McCain’s ranch. According to Salter, the senator took the governor down to a place where he usually had his coffee, beside a creek and a sycamore tree, where a rare breed of hawk seasonally nested. They spoke for more than an hour. Then the two of them walked about 40 yards to the deck of the cabin where the McCains slept. Cindy joined them there for about 15 minutes, after which the McCains excused themselves and went for a brief stroll to discuss the matter. When they returned, McCain asked for some time with Schmidt and Salter. “And we did our pros and cons on all of them,” Salter told me. “He just listened. Asked a couple of questions. Then said, ‘I’m going to offer it to her.’ ”

Late that same evening, a McCain spokeswoman, Nicolle Wallace, and the deputy speechwriter, Matthew Scully, were ferried to the Manchester Inn in Middletown, Ohio. Schmidt instructed them to turn off their cellphones and BlackBerrys. Then he opened the door of Room 508 and introduced them to McCain’s running mate. The two aides were surprised. Palin and Scully spoke for about 45 minutes, and the governor handed him a copy of the speech she had intended to give as one of the Republican convention’s many guest speakers. With this scant information in hand, Scully began his all-night drafting of Palin’s first speech to a national audience.

During the evening, Scully also traded e-mail messages with Matt McDonald, who had just gotten the news from Schmidt that the vice-presidential pick was someone who did not quite fit the campaign’s current emphasis on “readiness.” The story line, Schmidt informed McDonald, was now Change. The two of them, along with Rick Davis, talked through this rather jolting narrative shift. What they decided upon was workable, if inelegant. First, define the problem as Washington, not Bush. Second, posit both McCain and Palin as experienced reformers. And third, define Obama and his 65-year-old running mate, Senator Joe Biden, as a ticket with no real record of change. McDonald in turn transmitted this formulation to Scully and Salter, who was busily drafting McCain’s announcement speech.

The spunky hockey mom that America beheld the next morning instantly hijacked Obama’s narrative of newness. (“Change is coming!” McCain hollered, almost seeming startled himself.) And five days later, in the hours after Palin’s stunningly self-assured acceptance speech at the G.O.P. convention, I watched as the Republicans in the bar of the Minneapolis Hilton rejoiced as Republicans had not rejoiced since Inauguration Night three and a half long years ago. Jubilant choruses of “She knocked it out of the park” and “One of the greatest speeches ever” were heard throughout the room, and some people gave, yes, Obama-style fist bumps.

When the tall, unassuming figure of Palin’s speechwriter, Matthew Scully, shuffled into the bar, he was treated to the first standing ovation of his life. Nicolle Wallace confessed to another staff member that she had cried throughout Palin’s speech. Allowing his feelings to burst out of his composed eggshell of a face, Schmidt bellowed to someone, “Game on!”

Obama’s tax plan explained.

Friday, October 24th, 2008

The Wall Street Journal today explains the Obama tax plan. We have all been saying it is not a tax cut if the recipient has no income tax obligation. Obama has also talked about lifting the income maximum on FICA deductions. Social Security was enacted by Roosevelt as a self funded retirement plan. He specifically insisted that workers contribute to the program in order to receive a pension after age 65. Wikipedia has a pretty good summary of the history. Congress kept expanding the pool of beneficiaries since the trust fund had surpluses in the early years. Nobody ever accused Congress of being concerned with the future beyond the next election.

The income subject to FICA tax was capped, just as benefits were capped. I collect Social Security and the amount I receive is about 10% of my after tax income when I was working. The amount of tax I paid was also much smaller than the income tax I paid so I have no complaint. Now that will all change.

Barack Obama proposes a Social Security payroll tax cut for low earners. Workers earning up to $8,000 per year would receive back the full 6.2% employee share of the 12.4% total payroll tax, up to $500 per year. Workers earning over $8,000 would receive $500 each, with this credit phasing out for individuals earning between $75,000 and $85,000.

Low wage earners would pay no FICA if they earn less than $8,000 per year. They would have to file a tax return. At about $80,000 per year, the full FICA would be paid by each person. The employer’s share would be paid for all, even those who do not pay the employee contribution. When Obama advisors try to explain this plan, they have trouble because it doesn’t add up.

Austan Goolsbee, the University of Chicago economic professor who serves as one of Sen. Obama’s top advisers, discussed these issues during a recent appearance on Fox News. There he stated that the answer to the first question is that these Americans are getting an income tax rebate. And the answer to the second is that the money would not actually come out of Social Security.

“You can’t just cut the payroll tax because that’s what funds Social Security,” Mr. Goolsbee told Fox’s Shepard Smith. “So if you tried to do that, you would undermine the Social Security Trust Fund.”

Now, if you have been following this so far, you have learned that people who pay no income tax will get an income tax refund. You have also learned that this check will represent relief for the payroll taxes these people do pay. And you have been assured that this rebate check won’t actually come out of payroll taxes, lest we harm Social Security.

You have to admire the audacity

Well, audacity is what he is selling.

This tax cut would make an already progressive Social Security program even more redistributive. Under current law, a very low earner receives an inflation-adjusted return on his Social Security taxes of around 4%. That’s a good return, given that government bonds are projected to return less than 3% above inflation. A high-earning worker, on the other hand, receives only around a 1.5% rate of return. Under Sen. Obama’s proposal, returns for very low earners would rise to around 6% above inflation — about the same return as on stocks, except with none of the risk. Compounded over a lifetime’s contributions, the difference in the “deal” offered to workers of different earnings levels would be extreme.

This would change Social Security from self-funding to a welfare program funded by high income earners. It would also add to the deficit that is looming for the program due to the Baby Boom Generation retirement.

Moreover, this payroll tax cut plan would reduce Social Security’s tax revenues by around $710 billion over the next 10 years. If made permanent, the Obama tax cut would increase Social Security’s long-term deficit by almost 60% and push the program into insolvency in 2034, versus 2041 under current projections.

To fill the hole in Social Security’s finances, Mr. Obama would increase income taxes on high earners and pour that money into Social Security. This would be the first time that income tax revenues have been used to finance Social Security, which has always relied on its own dedicated payroll tax to differentiate itself from other government programs. Filling the gap with higher taxes on high earners would further increase Social Security’s progressivity, pushing it closer toward a welfare-program approach.

This means high taxes for anyone over the $85,000 income level. It also means that FICA, which is charged to pre-income tax income, will become a much greater burden for the self-employed, who pay both halves. Joe the plumber again.

This will be a job killer and discourage a lot of people who might otherwise start small businesses. I wonder if he plans to lift the cap on benefits, as well. Don’t bet on it.

A Preview of the Obama-Pelosi era

Thursday, October 23rd, 2008

Barack Obama has been very vague about his policy plans for his presidency if he should win the election. Now, I know his supporters will complain that he has laid out an agenda such as “tax cuts for 95% of the people” although even his supporters are skeptical that his tax increases will be limited to the over 250,000 income group. Others doubt that anything like a tax cut will be enacted. Bill Clinton was elected in 1992 promising a “middle class tax cut,” which was discarded even before his inauguration as he claimed that the deficit was worse than he had thought. That was that.

We do have a few clues, however. This week, Argentina announced government seizure of private pension plans, much like the seizure of bank deposits a few years ago. That could never happen here. Could it ?

Well, maybe it could.

House Democrats Contemplate Abolishing 401(k) Tax Breaks
Powerful House Democrats are eyeing proposals to overhaul the nation’s $3 trillion 401(k) system, including the elimination of most of the $80 billion in annual tax breaks that 401(k) investors receive.
House Education and Labor Committee Chairman George Miller, D-California, and Rep. Jim McDermott, D-Washington, chairman of the House Ways and Means Committee’s Subcommittee on Income Security and Family Support, are looking at redirecting those tax breaks to a new system of guaranteed retirement accounts to which all workers would be obliged to contribute.

That almost sounds like Bush’s plan to privatize Social Security, but with a difference.

A plan by Teresa Ghilarducci, professor of economic-policy analysis at the New School for Social Research in New York, contains elements that are being considered. . . .
Under Ghilarducci’s plan, all workers would receive a $600 annual inflation-adjusted subsidy from the U.S. government but would be required to invest 5 percent of their pay into a guaranteed retirement account administered by the Social Security Administration. The money in turn would be invested in special government bonds that would pay 3 percent a year, adjusted for inflation.

There’s one difference. Obama refers to “gambling with the stock market” so the government would “invest” the funds.

The current system of providing tax breaks on 401(k) contributions and earnings would be eliminated.
“I want to stop the federal subsidy of 401(k)s,” Ghilarducci said in an interview. “401(k)s can continue to exist, but they won’t have the benefit of the subsidy of the tax break.”

They will end private pensions and substitute yet another government pension system. We already have one with Social Security.

“I want to spend our nation’s dollar for retirement security better. Everybody would now be covered” if the plan were adopted, Ghilarducci said.

She has been in contact with Miller and McDermott about her plan, and they are interested in pursuing it, she said.

“This [plan] certainly is intriguing,” said Mike DeCesare, press secretary for McDermott.

“That is part of the discussion,” he said.

While Miller stopped short of calling for Ghilarducci’s plan at the hearing last week, he was clearly against continuing tax breaks as they currently exist.

Does this sound like socialism ? It does to me. Pete Du Pont has some predictions for the agenda.

Where is the money coming from ?

Thursday, October 23rd, 2008

UPDATE: The best summery, including a description of the whitewash by the MSM is Atlas Shrugged, which has many links to details of the story.

Barack Obama has recorded unprecedented contributions the past few months. Most, apparently, are internet based. This story makes me wonder what is happening. How is the credit card company processing these items ? I use my middle initial in my name on credit cards as a way to avoid possible fraud. If my middle initial is not included in the name field, the charge is rejected. Then we hear this.

Mary T. Biskup, of Manchester, Missouri. Biskup got a call recently from the Obama campaign, which was trying to figure out why she donated $174,800 to the campaign — well over the contribution limit of $2,300.

The answer she gave them was simple. “That’s an error.”

Biskup, a retired insurance manager who occasionally submits recipes to the local paper, says someone used a credit card to donate the money in her name. No charges ever showed up on her credit card statement.

“We’re not out a penny,” Biskup said. “I gather that someone has hacked into something using other people’s credit cards and putting my name on it.”

How did the Obama campaign get any money from this transaction if the credit card was never debited ? Yet it appears that they did get the money. Even the pro-Obama media is getting interested.

The Obama campaign has shattered all fund-raising records, raking in $458 million so far, with about half the bounty coming from donors who contribute $200 or less. Aides say that’s an illustration of a truly democratic campaign. To critics, though, it can be an invitation for fraud and illegal foreign cash because donors giving individual sums of $200 or less don’t have to be publicly reported. Consider the cases of Obama donors “Doodad Pro” of Nunda, N.Y., who gave $17,130, and “Good Will” of Austin, Texas, who gave more than $11,000—both in excess of the $2,300-per-person federal limit. In two recent letters to the Obama campaign, Federal Election Commission auditors flagged those (and other) donors and informed the campaign that the sums had to be returned. Neither name had ever been publicly reported because both individuals made online donations in $10 and $25 increments. “Good Will” listed his employer as “Loving” and his occupation as “You,” while supplying as his address 1015 Norwood Park Boulevard, which is shared by the Austin nonprofit Goodwill Industries. Suzanha Burmeister, marketing director for Goodwill, said the group had “no clue” who the donor was. She added, however, that the group had received five puzzling thank-you letters from the Obama campaign this year, prompting it to send the campaign an e-mail in September pointing out the apparent fraudulent use of its name.

What is going on ?

Obama spokesman Ben LaBolt said the campaign has no idea who the individuals are and has returned all the donations, using the credit-card numbers they gave to the campaign. (In a similar case earlier this year, the campaign returned $33,000 to two Palestinian brothers in the Gaza Strip who had bought T shirts in bulk from the campaign’s online store. They had listed their address as “Ga.,” which the campaign took to mean Georgia rather than Gaza.)

If the credit card numbers are fraudulent, how do they return the money ? If the credit card is never debited, as in the first case above, where did the money come from ? In at least one case, the credit card was debited, so there are cases on conventional fraud benefiting Obama.

Steve and Rachel Larman say a strange credit card charge appeared on their statement this month — a $2300 donation to Barack Obama’s presidential campaign. The Larman’s say they don’t want this to be about their political affiliation, but they say they’re not about to give the Obama campaign any help from their pocketbook.

They said they notified Chase, their credit card bank, to report the fraud.

“(They) said that they had seen-they were familiar with this,” said Steve Larman. “It was fraud, they believe through telemarketing but they were going to be doing some more investigations.”

This is a mystery that will never be solved if Obama is elected. Here is part of the answer. You turn off address verification to facilitate anonymous donors. You’re supposed to refund the money but I wonder if that will ever happen. Not if the Democrats run all three branches of government.

More here. When we laughed at the 200,000 Germans cheering Obama and said they could not vote, the joke was on us.

Now if it’s against the law for customers to do business with you anonymously, then facilitating anonymous transactions goes beyond just being a business decision. But if the consequences of looking the other way are no more than having to refund the money several months down the road, then maybe you’re happy to take the money as an interest free loan in the meantime.

They are donating millions to Obama by credit card and laughing at us rubes. We thought our elections were ours to decide. Obama knew better.

More on the story here.

The Washington Post has a story this morning which, as expected, goers easy on the Obama campaign. It does have cautionary words about the chances of ever investigating the fraudulent contributions.

How the FEC might attempt to tackle these problems is unclear. Both parties have filed formal complaints calling on the agency to investigate their rival. Only McCain will automatically be subjected to an audit, because his campaign accepted funds from the Treasury. There is no requirement that Obama’s books be audited, and FEC-watchers predicted that it could be tough to find the four votes needed to approve an audit, given that the panel comprises three Republican and three Democratic appointees.

Under current law, there is also very little policing of small-dollar contributions. The false donations uncovered by news outlets or by rival campaigns have all involved more than $200, because those contributions must be disclosed in published reports. The campaigns are not required to share any information about donors who give less than $200. And they are not required to even keep records of donors who give less than $50 — they can even give cash.

I guess this is the last of this story we’ll see if Obama wins the election.

The essence of Palin hatred

Saturday, October 18th, 2008

This essay is marvelous in its ability to explain something that has puzzled me. Why the irrational hatred of Sarah Palin ? He has found the key.

Noam Scheiber has a particularly grave case.

Scheiber’s attempt to understand Sarah Palin, detailed in the New Republic, took him all the way to Wasilla, as strange to him as Ethiopia to Evelyn Waugh. Scheiber spoke to various people from Palin’s past, all of whom have two things in common: Every one of them is smarter than Palin and none of them has been heard of since their encounter with her. Scheiber’s pet specimen among what he calls “the more urbane members of the community” is a Dartmouth graduate who reads Civil War histories, self-published a book, and not only does but “savors” the New York Times crossword puzzle. This sort of résumé wouldn’t get your niece an unpaid internship on L Street–but for a Rhodes Scholar lost in Alaska, the Dartmouth degree, the Civil War buffery, the Times crossword puzzle all take on huge significance. Unable to comprehend how Palin could have outpaced the Wasilla gentry, poor Scheiber clings for dear life to these sad fragments of class dignity.

While Palin threatens class solidarity, Obama is emollient. The more urbane members of the Hyde Park community are cleverer than their Wasilla counterparts and believe that they have captured Obama for their class–just as Richard Stern persuades himself that the still-radical couple he dines with are merely Unitarians in a hurry. But the man who may be president is cleverer still.

Obama and his surprising choice for vice president have spent most of their career working on their own images, smoothing out the rough edges, trying out devices, rhetorical and cosmetic, to make the nicer sort of people feel comfortable with them. Obama wrote his own life, and then wrote it again; Biden practiced for years in front of a mirror to overcome his childhood stutter. Carefully composed, Obama holds the upper-middle class in his steady hands, and has no need of Stern’s help to assure our anxious electorate that he will not shock their class sensibilities.

Sarah Palin and even John McCain refuse to pay tribute to this would-be aristocracy. Uniforms, to the New York gentry, signify doormen who are servants. No one would consider a military officer as a member of their class.

The Republicans, alas, are stuck with this election’s true and unrepentant revolutionaries. McCain and Palin have each refused, by sheer cussedness, to fulfill the social expectations of others. This may make them poison to undecideds who suffer, more than most, from class anxiety. But do not despise the undecideds. Even conservatives can contract Scheiber Syndrome. Think of David Brooks, Christopher Buckley, David Frum, Peggy Noonan, and George Will. The symptoms? Curiously amplified, obsessively repeated, sometimes elaborately stage-whispered doubts about the Republican ticket.

There is no cure, but there is an etiology. All share a dreadful secret–their writing is driven by an anxiety to be tastemakers to the gentry, not merely thinkers and entertainers. There is nothing more anxious-making than striving to create taste for the classes, not masses, or even to keep up with it.

At last an explanation that makes sense to me.

Joe the Plumber

Friday, October 17th, 2008

I’m getting tired of posts about Obama but here’s one more. Maybe the last. There is an absolute frenzy going on about a guy who was playing with his kid in his front yard when Obama, trailed by TV cameras, walked up to him and started a conversation. There was no Rove plot to station Joe on a “rope line” because there was no rope line. Obama walked up to him. Joe made a comment about taxes and Obama’s answer has caused an earthquake. It wasn’t the question that caused the problem, it was the answer.

Feel free to ignore the rest of the ad but note the question and the answer. I’m sure Obama wishes he had said, “No, I won’t,” and walked away. Instead, he made a revealing statement that got him into a lot of trouble with middle class voters.

“Spread the wealth around.”

Joe wishes Obama had just walked by now, as well, because the enraged Obama supporters are doing everything they can to punish this “disrespectful insect” who would dare to question The One.

The LA Times is on the case. That post refers to an LA Times story denigrating the plumber and informing the readers that he even had a small tax lien. Mysteriously during the night, that story disappeared and was replaced with another story about the Al Smith dinner.

Anyway, I would advise any ordinary people, who might be approached by Obama on the campaign, to run as fast as you can away from the candidate. I can’t give Obama advice but this sounds a little late.

Obama has an interesting take on the matter.

I don’t know if I believe this story

Thursday, October 16th, 2008

UPDATE: David Pryce-Jones doesn’t believe it either.

This is an interesting story although pretty hard to believe. A group of Somali pirates hijack an Iranian ship before it enters the Suez Canal. They force it back to a small Somali port and hold it for ransom. They force open cargo containers, which are found to contain only sand. Then 16 pirates die mysteriously in the next few weeks.

Within a period of three days, those pirates who had boarded the ship and opened the cargo container with its gritty sand-like contents, all developed strange health complications, to include serious skin burns and loss of hair. And within two weeks, sixteen of the pirates subsequently died, either on the ship or on shore… …At this writing, the MV Iran Deyanat is at anchor, watched closely by American, French and Russian naval units.

[Russian sources claim she] was an enormous floating dirty bomb, intended to detonate after exiting the Suez Canal at the eastern end of the Mediterranean and in proximity to the coastal cities of Israel. The entire cargo of radioactive sand, obtained by Iran from China (the latter buys desperately needed oil from the former) and sealed in containers which, when the charges on the ship are set off after the crew took to the boats, will be blasted high into the air where prevailing winds will push the highly dangerous and radioactive cloud ashore

Now what ?

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