Obama Budget Voted Down; 97-0

The Hill:

The Senate voted unanimously on Wednesday to reject a $3.7 trillion budget plan that President Obama sent to Capitol Hill in February.

Ninety-seven senators voted against a motion to take it up.

Democratic aides said ahead of the vote that the Democratic caucus would not support the plan because it has been supplanted by the deficit-reduction plan Obama outlined at a speech at George Washington University in April.

So, the Senate leadership is kicking its constitutional duties over to the executive branch based on another platitudinous Obama speech that negated his own budget presented two months earlier. Let me repeat that Democrat's have not allowed a budget to pass in over two years and counting. That's change you can believe in!

The Democrat party has backed itself into a corner as it has moved so far left that any plan to the right of the extreme People’s Budget presented in April by the radical Congressional Progressive Caucus will get no real support from the base. That’s the only Democrat plan that’s been presented and even though it was dead on arrival, the People’s Budget (Read Here) was received favorably by a significant number of Democrats and members of the Media.

But that budget - dripping with Marxist anger - was too honest about the left’s intentions and is so politically toxic and economically insane that it makes any PR problems with Ryan’s plan look insignificant by comparison. Democrats know they can’t put together any major plan that will get party support and wont send voters running to the GOP alternative.

Republican’s need to realize they’re in a good position here if they take their last chance to grow a set and take an unequivocal stand. If not now, when? Ryan, and now, Pawlenty, are leading and treating Americans like adults who have to make hard choices. It remains to be seen if the rest of the party will follow.

The Path to Prosperity (Episode 2): Saving Medicare, Visualized

Rarely do you see a politician who is willing to treat the electorate like adults and give them the hard truth despite the political consequences. At least Paul Ryan will be able to say he tried his best if Americans don't listen to him. You can see Episode 1 here.



This stands in stark contrast to Senate majority "leader" Harry Reid, who just said: “There’s no need to have a Democratic budget, in my opinion... It would be foolish for us to do a budget at this stage.” Democrats haven't passed a budget in well over two years, preferring instead to hide from responsibility or demonize opponents purely for political purposes. Meanwhile, we get closer to driving off the financial cliff with every passing day.

Speaking of cliffs, this is how Democrats insult our intelligence and demonstrate just how serious they are about an impending economic disaster:

The Media's Top 10 Worst Economic Myths of 2008

The media has a leftist agenda to be sure. But what makes them truly dangerous is their constant socialist, anti-free enterprise propaganda based on lies and convenient myths. The Business Media Institute has compiled the 10 worst of 2008:

10. Capitalism is dead or dying.
9. Gas at $4-a-gallon, blame the oil companies.
8. Fannie’s failure
7. Barack Obama sends stocks soaring, but not sinking.
6. Alternative energy: All gain, no pain
5. The economy has a fever and the only prescription is more bailouts.
4. Attack of the Killer Tomatoes
3. Oil prices will skyrocket to $200 a barrel, gas to $15.
2. Welcome to 1929: Great Depression II
1. America needs a new, New Deal.

Number 1 is the most important now as Obama and his congressional sidekicks get ready to repeat the failed dictatorial and socialist policies of FDR. They are banking that Americans will believe the most enduring economic myth of all - that FDR knew what the hell he was doing. He didn't.

Here it is:

1. America needs a new, New Deal.
Media myth: Time magazine and other media outlets pushed the idea that Obama must be the next FDR, but they are misrepresenting the impact of the New Deal.

Imagine the classic image of FDR sitting in his car grinning, with a cigarette perched from his mouth. Now imagine it had the face and hands of president-elect Barack Obama instead of FDR.

No, it wasn’t a dream – it was the cover of Time magazine on Nov. 24 which made it clear the media had crowned Obama the new FDR and wanted him to institute a new New Deal.

The photo illustration of Obama and FDR came with a headline that declared: “The New New Deal: What Barack Obama can learn from F.D.R. – and what the Democrats need to do.”

But even before Obama was elected, journalists were looking for FDR. CNN’s Wolf Blitzer asked before the election, “who’s gonna be FDR as opposed to Herbert Hoover?”

In a discussion of economic stimulus packages, ABC’s George Stephanopoulos said on Oct. 19 that he thought Obama “would want to do something like what FDR did in 1932.”

Guests and experts also sounded the call. On CNN, Jeffrey Sachs of the Earth Institute at Columbia University called for a revamped New Deal more than once. Sachs was a favorite expert of CNN in October appearing on 10 of the first 23 days of the month.

But what news reporters, anchors and guest didn’t tell viewers is that according to several economists FDR’s New Deal actually prolonged and deepened the Great Depression.

In a 2004 study, two University of California, Los Angeles (UCLA) economists found that FDR’s policies lengthened the suffering of the Depression by seven years. The two economists specifically blamed anti-free market measures including the National Industrial Recover Act (NIRA) and later the National Relations Act.

Another free-market economist who has written about FDR’s negative impact on the economy is Robert Higgs. Higgs told the Business & Media Institute that a new, New Deal would be disastrous. “I cannot imagine a worse course of action, short of outright socialization of the entire economy. The measures comprised in a new New Deal will not hasten general economic recovery, but will only bulk up the power of government and transfer income to privileged interest groups at the expense of taxpayers and consumers,” Higgs said.”

Dear Baltimore Sun: Politicians Aren't Business Experts

Why the hell are we allowing the incompetence of the Big Three to be "fixed" by people who are not only more incompetent, but completely unqualified? Oh, and they're doing it with our money. Insanity? You bet it is.

From BMI


Dear Editor:

You opine that Detroit automakers "need to explain in detail to Congress how they intend to eliminate thousands of uneconomical dealerships, swiftly bring their labor costs closer to what Toyota pays its workers in this country, and quickly produce more energy-efficient cars that Americans will want to buy" ("Selling American cars," Dec. 4).

No. These companies deserve investment funds only if they're able to make cars that will sell AND can demonstrate this ability to private investors. Congress is manned by people who specialize in winning popularity contests called "elections." These are not people expert in judging business models, or at pondering the pros and cons of different retail-distribution methods, or equipped to accurately discern the nuances of consumer demands for automobiles, or even – judging from their track record – aware of the most elementary principles of finance and economics.

If, say, you're looking for someone to manage your 401(k), would you entrust that job to Sen. Mikulski or Rep. Hoyer? Of course not, for that's not what they do. So why entrust them and other politicians with the job of investing on a vastly larger scale?

Sincerely,
Donald J. Boudreaux

Don Boudreaux is the Chairman of the Department of Economics at George Mason University and a Business & Media Institute adviser.

Arrogant, Ignorant and Dangerous

The most frustrating thing about watching congress strut around telling us they're going to solve a financial crisis they created is the fact that they no nothing about the subject. They repeat politically expedient myths and lies about market economics and the equally ignorant public nods their heads at any simplistic explanation of a complex problem.

Look back at the oil bubble of this past summer. One of the favorite scapegoats was speculators in oil futures. It was said they were driving up prices for profit at the expense of the public although none of these demagogues criticised them when the price plummeted. It was never explained or understood that futures traders were just predicting future supply and demand and that all trades require a buyer and a seller.

John Lott warns us not to trust control of our economic lives and individual decisions to government force run by by people who wouldn't know a balance sheet from a bed sheet:

"Politicians pose as the ultimate experts. They may never have worked in an industry or studied an issue before, but after few months of time on a topic they know everything: the types of cars that should be produced, the science of global warming, and how much doctors should charge for different types of surgery...

Outside of studying law, few in Congress even have backgrounds that are closely related to some of the issues covered by government. Just take the Senate this year, almost half, 45, are attorneys. Only one doctor, four farmers, 13 business people, seven teachers, four professors (all law, and three are listed as just adjuncts), and virtually all the others list their past experience as professional politician. No members of the Senate are scientists or economists. One member of the Senate played professional sports, and another owned a professional sports team...

...Harry Reid says Congress will give the automobile companies another $25 billion when they provide a “viable plan.” But how is Congress going to evaluate what a “viable plan” is better than the shareholders and bankers whose money is at stake? The auto companies presumably have to turn to Congress for money because others don’t think that they are good investments.

Would you want to invest in a company that congressmen tell you is a viable investment, or in companies where shareholders and banks are willing to put their own money?"

Dems Will Make It Worse

There are two types of economists. Those that don't know and those that don't know they don't know. Peter Schiff however, now looks like a genius after he correctly predicted with great certitude, the current economic mess we find ourselves in. What's more amazing is that he not only called what would happen but was dead on as to the why. As a side note, he must be having a lot of fun watching the other so-called experts rudely dismissing him while making now laughable predictions of their own.

Now Schiff is predicting further disaster as Obama promises to crank up the presses in a futile attempt to prop up an economy that needs to fall. (Video Below) Democrats are offering more government solutions from the same government that tripped everything up in the first place.

We will have more government spending on inefficient make work projects that take money from the private sector or borrow more on the country's already maxed out credit. Nancy Pelosi and Harry Reid will pass protectionist policies and block free trade deals that will result in retaliatory tariffs overseas. This will be on top of even more uncompetitive new regulations, labor laws and tax increases.

Buckle up and pucker your sphincters folks. It's going to be a wild ride.

Much thanks to Hot Air

Fred Thompson Warns of a Left Wing Government

A lot of us have been warning of what an unrestrained Democrat Congress along with an Obama Presidency would mean. The RNC now does it as well using Fred Thompson's considerable communication skills. Sadly, this also reminds me of what could have been had Fred run a more energetic campaign.

More at Hot Air

Cuba Claims Huge Gulf Oil Reserves

BBC-The state-owned Cuban oil company says the country may have more than 20bn barrels of oil in its offshore fields - more than double the previous estimate.
Cubapetroleo's exploration manager said drilling in the offshore wells would
begin as early as the middle of 2009. Such reserves would place Cuba among
the top 20 oil producing nations. MORE

No word yet on whether US enviro-nuts will be running to Havana and filing lawsuits to stop the drilling. Don't worry. Nancy Pelosi is going to save the planet by preventing drilling on our side of the Gulf.

Recovering Without Washington

Did you know we had a major recession in 1920? Did you also know that the Government did virtually nothing in response and that we recovered quickly and stronger than ever? Amity

Shlaes reminds us in this column that markets are usually best left to sort themselves out. Her widely acclaimed book, The Forgotten Man also describes in great detail how government meddling actually prolonged the Great Depression by several years.

"In 1919, as in 2007, the country was on a roll. Unemployment was 1.4
percent. The Dow Jones Industrial Average hit 119, almost double what it had
been in 1917. The young Fed and the Treasury had been inflating the money supply
in order to pay off World War I debt.
Then the Fed began raising the
discount rate. Also, gold was leaving the U.S., another contractionary
force...

The recession was sharp. Unemployment moved up to 5.2 percent in 1920
and 11 percent in 1921. The Dow lost almost half its value. Political anxiety
was part of the story. A wave of strikes was hitting the country...

Washington, for its part, didn't do much bailing. Nor did it attack Wall
Street, as Democratic House Speaker Nancy Pelosi and, for
that matter, Republican presidential candidate John McCain, are
doing...

Recovery arrived as suddenly as recession had. By 1923,
unemployment was down again, to 2.4 percent. The Dow climbed back, although
taking longer to do so. The economy spent the rest of the decade growing in
exemplary fashion. "

Don't Blame Bush for This One

The White House has issued a timeline of its efforts to reign in Fannie Mae and Freddie Mac. They were blocked or ignored until it was too late by a Democrat Party (and some cowardly Republicans) more interested in class warfare and racial politics than doing their job:


2001
April: The Administration's FY02 budget declares that the size of Fannie Mae and Freddie Mac is "a potential problem," because "financial trouble of a large GSE could cause strong repercussions in financial markets, affecting Federally insured entities and economic activity."

2002
May: The President calls for the disclosure and corporate governance principles contained in his 10-point plan for corporate responsibility to apply to Fannie Mae and Freddie Mac. (OMB Prompt Letter to OFHEO, 5/29/02)

2003

January: Freddie Mac announces it has to restate financial results for the previous three years.

February: The Office of Federal Housing Enterprise Oversight (OFHEO) releases a report explaining that "although investors perceive an implicit Federal guarantee of [GSE] obligations," "the government has provided no explicit legal backing for them." As a consequence, unexpected problems at a GSE could immediately spread into financial sectors beyond the housing market. ("Systemic Risk: Fannie Mae, Freddie Mac and the Role of OFHEO," OFHEO Report, 2/4/03)

September: Fannie Mae discloses SEC investigation and acknowledges OFHEO's review found earnings manipulations.

September: Treasury Secretary John Snow testifies before the House Financial Services Committee to recommend that Congress enact "legislation to create a new Federal agency to regulate and supervise the financial activities of our housing-related government sponsored enterprises" and set prudent and appropriate minimum capital adequacy requirements.

October: Fannie Mae discloses $1.2 billion accounting error.

November: Council of the Economic Advisers (CEA) Chairman Greg Mankiw explains that any "legislation to reform GSE regulation should empower the new regulator with sufficient strength and credibility to reduce systemic risk." To reduce the potential for systemic instability, the regulator would have "broad authority to set both risk-based and minimum capital standards" and "receivership powers necessary to wind down the affairs of a troubled GSE." (N. Gregory Mankiw, Remarks At The Conference Of State Bank Supervisors State Banking Summit And Leadership, 11/6/03)

2004

February: The President's FY05 Budget again highlights the risk posed by the explosive growth of the GSEs and their low levels of required capital, and called for creation of a new, world-class regulator: "The Administration has determined that the safety and soundness regulators of the housing GSEs lack sufficient power and stature to meet their responsibilities, and therefore…should be replaced with a new strengthened regulator." (2005 Budget Analytic Perspectives, pg. 83)

February: CEA Chairman Mankiw cautions Congress to "not take [the financial market's] strength for granted." Again, the call from the Administration was to reduce this risk by "ensuring that the housing GSEs are overseen by an effective regulator." (N. Gregory Mankiw, Op-Ed, "Keeping Fannie And Freddie's House In Order," Financial Times, 2/24/04)
June: Deputy Secretary of Treasury Samuel Bodman spotlights the risk posed by the GSEs and called for reform, saying "We do not have a world-class system of supervision of the housing government sponsored enterprises (GSEs), even though the importance of the housing financial system that the GSEs serve demands the best in supervision to ensure the long-term vitality of that system. Therefore, the Administration has called for a new, first class, regulatory supervisor for the three housing GSEs: Fannie Mae, Freddie Mac, and the Federal Home Loan Banking System." (Samuel Bodman, House Financial Services Subcommittee on Oversight and Investigations Testimony, 6/16/04)

2005: April: Treasury Secretary John Snow repeats his call for GSE reform, saying "Events that have transpired since I testified before this Committee in 2003 reinforce concerns over the systemic risks posed by the GSEs and further highlight the need for real GSE reform to ensure that our housing finance system remains a strong and vibrant source of funding for expanding homeownership opportunities in America… Half-measures will only exacerbate the risks to our financial system." (Secretary John W. Snow, "Testimony Before The U.S. House Financial Services Committee," 4/13/05)

2007

July: Two Bear Stearns hedge funds invested in mortgage securities collapse.

August: President Bush emphatically calls on Congress to pass a reform package for Fannie Mae and Freddie Mac, saying "first things first when it comes to those two institutions. Congress needs to get them reformed, get them streamlined, get them focused, and then I will consider other options." (President George W. Bush, Press Conference, The White House, 8/9/07)

September: RealtyTrac announces foreclosure filings up 243,000 in August – up 115 percent from the year before.

September: Single-family existing home sales decreases 7.5 percent from the previous month – the lowest level in nine years. Median sale price of existing homes fell six percent from the year before.

December: President Bush again warns Congress of the need to pass legislation reforming GSEs, saying "These institutions provide liquidity in the mortgage market that benefits millions of homeowners, and it is vital they operate safely and operate soundly. So I've called on Congress to pass legislation that strengthens independent regulation of the GSEs – and ensures they focus on their important housing mission. The GSE reform bill passed by the House earlier this year is a good start. But the Senate has not acted. And the United States Senate needs to pass this legislation soon." (President George W. Bush, Discusses Housing, The White House, 12/6/07)


2008
January: Bank of America announces it will buy Countrywide.

January: Citigroup announces mortgage portfolio lost $18.1 billion in value.

February: Assistant Secretary David Nason reiterates the urgency of reforms, says "A new regulatory structure for the housing GSEs is essential if these entities are to continue to perform their public mission successfully." (David Nason, Testimony On Reforming GSE Regulation, Senate Committee On Banking, Housing And Urban Affairs, 2/7/08)

March: Bear Stearns announces it will sell itself to JPMorgan Chase.

March: President Bush calls on Congress to take action and "move forward with reforms on Fannie Mae and Freddie Mac. They need to continue to modernize the FHA, as well as allow State housing agencies to issue tax-free bonds to homeowners to refinance their mortgages." (President George W. Bush, Remarks To The Economic Club Of New York, New York, NY, 3/14/08)

April: President Bush urges Congress to pass the much needed legislation and "modernize Fannie Mae and Freddie Mac. [There are] constructive things Congress can do that will encourage the housing market to correct quickly by … helping people stay in their homes." (President George W. Bush, Meeting With Cabinet, the White House, 4/14/08)

May: President Bush issues several pleas to Congress to pass legislation reforming Fannie Mae and Freddie Mac before the situation deteriorates further.

** "Americans are concerned about making their mortgage payments and keeping their homes. Yet Congress has failed to pass legislation I have repeatedly requested to modernize the Federal Housing Administration that will help more families stay in their homes, reform Fannie Mae and Freddie Mac to ensure they focus on their housing mission, and allow State housing agencies to issue tax-free bonds to refinance sub-prime loans." (President George W. Bush, Radio Address, 5/3/08)

** "[T]he government ought to be helping creditworthy people stay in their homes. And one way we can do that – and Congress is making progress on this – is the reform of Fannie Mae and Freddie Mac. That reform will come with a strong, independent regulator." (President George W. Bush, Meeting With The Secretary Of The Treasury, the White House, 5/19/08)

** "Congress needs to pass legislation to modernize the Federal Housing Administration, reform Fannie Mae and Freddie Mac to ensure they focus on their housing mission, and allow State housing agencies to issue tax-free bonds to refinance subprime loans." (President George W. Bush, Radio Address, 5/31/08)

June: As foreclosure rates continued to rise in the first quarter, the President once again asks Congress to take the necessary measures to address this challenge, saying "we need to pass legislation to reform Fannie Mae and Freddie Mac." (President George W. Bush, Remarks At Swearing In Ceremony For Secretary Of Housing And Urban Development, Washington, D.C., 6/6/08)

July: Congress heeds the President's call for action and passes reform of Fannie Mae and Freddie Mac as it becomes clear that the institutions are failing.

Obama Ally Slanders Palin's Daughter

Until someone proves otherwise, I will have to assume that the Obama campaign is behind the vile and cruel attack on Sarah Palin's teenage daughter. That's the rules of evidence we're using, right? Now they've backed off (sort of), but the damage is already done.

The Daily Kos is and has been intimately involved in Democrat campaigns for years. Democrat candidates routinely court its founder and his lunatic readers. Barack Obama, Nancy Pelosi, John Kerry and other Democrats have written for the site.

If the Obama campaign and the Democrat party doesn't denounce and disassociate themselves from this punk and his gang of thugs, then we'll have to believe they support his slanders.

Democrats didn't say much when the Daily Kos suggested that Pat Tillman was murdered or when they celebrated the execution and mutilation of contractors in Iraq, so I'm not expecting much now from these hypocrites now.

Congress Moves to Do Nothing on Oil

First it was the Oil company profits, then it was OPEC. Speculators are the latest scapegoat offered to the ignorant masses in order to cover up congress' incompetence and cowardice.

On Tuesday, Sen. Byron Dorgan, a Democrat from North Dakota, called that "excessive, relentless speculation."
In 2000, 37 percent of the people in the oil futures market were speculators, Dorgan said. Now, speculators make up 71 percent of the market.
"They've broken the market," Dorgan said.

The fact that more investors are participating in the market has nothing to do with the current price spike. If anything, it reflects increasing investor recognition of underlying supply and demand issues economic idiots like Dorgan continue to ignore. Futures speculators can make just as much money betting the market will go down as up. Additionally, the purchase of a contract requires a seller. That seller is obviously standing pat on the current price. Further, the fact that most of the new money in oil futures is coming from pension funds and other large investment pools is obviously lost on congressional demagogues.

Harry Reid complains about Republicans coming to their senses:

"Forty-seven different Republican senators have spoken at one time or another on the need to do something about speculation," Reid said. "That was before they heard from the oil companies, and I guess some people on Wall Street.
"Now, suddenly, they don't think speculation's a big deal."


The Horror! You mean Republicans listened to the people who actually do this for a living? How dare they? Don't they understand that facts get in the way of Democrats no growth Euro-Socialist agenda?

One of things Republicans heard was this:

"Yes, speculation is a big deal, said Sen. John Ensign, a Republican from Nevada, but he warned that curbing speculation in the United States could mean that foreign markets will take over."

That's right. Democrats either don't understand or don't care that oil is traded on futures markets throughout the world and that hamstringing American trading will just chase capital to friendlier places.

Then we have the venal T. Boone Pickens mucking up the conversation with his dishonest promotion of wind power that is really designed to protect and expand the publicly funded subsidies and tax breaks for his huge investment in that technology.

Another Senate panel heard Tuesday from Texas oilman T. Boone Pickens. He warned lawmakers that the smart response to the oil price shock is not to drill more, but to expand solar and wind power.

And when congress listens to a real expert and economist like Fed Chair Ben Bernanke, they just stick their fingers in their ears and shout "la la la":

Bernanke: Another concern that has been raised is that financial speculation has added markedly to upward pressures on oil prices. Certainly, investor interest in oil and other commodities has increased substantially of late. However, if financial speculation were pushing oil prices above the levels consistent with the fundamentals of supply and demand, we would expect inventories of crude oil and petroleum products to increase as supply rose and demand fell. But in fact, available data on oil inventories show notable declines over the past year.

Then a Democrat asks for advice he can ignore:

Question from Senator Tom Carper (D-DE): "The third factor that we keep coming back to is the role that speculation is playing. We've touched on this at least indirectly here today. Just give us some advice. I think we're going to debate -- seriously debate, probably before the beginning of next month, legislation dealing with speculation to try to curb the excesses that may be occurring there. If you could give us some advice, it would be timely and much appreciated."

Bernanke:

Well, I think, as I said, based on the evidence that's available, I would not estimate that speculation or particularly manipulation is a significant part of the rise in oil prices. That said, the CFTC and others are looking at the data and trying to evaluate that. These are very difficult matters. We don't want to do anything that will stop the futures markets from having their legitimate functions, serving their legitimate functions of providing liquidity and hedging.
So, you know, my advice would be to go slow and carefully and to take the insights that you get from the CFTC and others who are directly -- associated directly overseeing these activities. I would -- despite the concerns -- and I fully understand the concerns about high gas prices -- I don't think it's likely that you can have a big effect on gas prices with short-term moves in the futures markets. And I would urge careful and deliberate action in this area.

Mel Martinez, the feckless and pusillanimous GOP Senator from my state obviously doesn't like what he's hearing. So he'll rephrase the question, hoping for a different answer:

And a question from Senator Mel Martinez (R-FL): "I wonder if you might dwell just for a moment on the speculation side as to why you don't see that as a fundamental part of the problem, but then also what we could do to be more helpful in the area of transparency and oversight."

Bernanke:
Well, there would be -- there are a number of pieces of evidence against the view that speculation is a primary force. I mention in my testimony the absence of hoarding or inventories that you would expect to see if speculation was driving prices above the supply/demand equilibrium. There are a number of studies which show that there is little or no connection between the open interest taken by noncommercial traders in futures markets and the movement -- subsequent movements in prices. It's also interesting to note that there are many commodities, or at least some commodities, that are not even traded on futures markets, like iron ore, for example, which have had very large increases in prices. So I think the evidence is terribly weak.

In short, we have a corrupt, incompetent and craven congress holding the future of our economy and national security in their hands, doing everything in their power to stand in the way of the people's economic and political needs and desires. They can try to place blame wherever they want, but they and the thinking American public know exactly where it belongs.