Excerpts from Obama’s radio interview while he was part time state senator, part time lecturer. What is interesting here is that Obama takes wealth redistribution as a matter of course, and that the real question is how best to bring redistribution about - through judicial or administrative channels. Obama doesn’t question that wealth redistribution is not a fundamental principle of the founding fathers. Instead, Obama apparently sees wealth redistribution as the next step in a continuing civil rights movement. The Obama tax plan for Americans clearly represents this wealth redistribution philosophy.
Technorati Tags: civil rights, Joe the plumber, judicial system, wealth redistribution
Going though all the documentation on Obama’s campaign website is not unlike watching Obama give a speech or during a debate; word-smithing & pretty presentation abound in Obama’s platform documents. Obama tells us what he thinks people want to hear - like all politicians - but you don’t have to read between the lines to recognize that Obama’s opinion of the average American is pretty low.
Here’s a look at the Economic Agenda - Mortgage & Home-Ownership, published by Obama:
(1) Create a government entity to track & regulate the mortgage industry -
- Problem: Democrats notoriously blocked Fannie & Freddie examination & oversight, leading to this very problem. That Obama can create an entity that appropriately regulates the mortgage industry is pretty doubtful, especially with Pelosi & Reid at the helm.
- Corollary: Another big spending idea (over $100 million) of Obama’s.
- Cost: Set-up another government agency & maintain national database, according to Obama, about 200 million.
(2) Mandate that every loan should come with a clear-cut schedule of borrower payments to lenders (“HOME”=Homeowner obligation made explicit). Only those buyers who wish to remain blissfully ignorant of what they will owe every month can ignore the numerous mortgage calculators readily available on mortgage websites, or simply don’t ask their lender (if the lender hasn’t spelled it out for them already).
- Problem: This doesn’t weed out speculators. And besides, this idea of HOME already exists. A lot of people who signed ARMs with interest rates that would increase after a couple years did so thinking that they would re-finance their ARM mortgage to a conventional mortgage. Problem was, after a couple years, market values decreased & re-financing was impossible. These homeowners knew that they would have to pay more when the rate increase kicked-in, they just incorrectly bet on the real estate market continuing its upward trend.
- Cost: Enforcing this as part of the Stop Fraud Act (100s of millions).
(3) Create a Foreclosure Emergency Fund - A government fund to pay mortgages for “innocent” homeowners. Really, Obama lays it on thickly here. “Barack Obama will establish policies to help Americans currently facing foreclosure through no fault of their own”?? Clearly, Obama doesn’t believe in personal responsibility, and (to him) Americans are as innocent - and ignorant - as when they were born. Constantly referring to Americans as “innocent homeowners” and “victims” isn’t only fallacious, it’s insulting.
- Problem: Obama even suggests that your neighbor’s foreclosed home will increase the likelihood that you will be driven to foreclosure too. A foreclosed home may drive down market values, but as long as you’re paying your mortgage, you won’t go through foreclosure! We can only suppose that Obama believes birds of a feather flock together - that you are just as ignorant & vulnerable as your neighbor. Obama is playing victim by association with us (but didn’t he discount this association argument where Wright/Ayers are concerned?).
- Cost: Unknown - likely billions of dollars, judging from other relief funds.
(4) Give Bankrupt Homeowners Protection from Mortgage Payments - Revise law toward decreasing/eliminating mortgage payments of bankrupt homeowners.
- Problem: Bankruptcy protects you from creditors & outstanding debts - it wasn’t designed to provide a free ride/free home for you. Who is going to cover the cost of the unpaid mortgage? You can already walk away from your mortgage without being held accountable for the amount outstanding (other than a credit report ding). Obama calls the current law a “bankruptcy loophole” - but this idea encourages bankruptcy filings to stay in the house payment-free. This only exacerbates the current housing crisis.
- Cost: Unknown - hundreds of millions? Makes the housing crisis worse.
(5) Refundable Universal Mortgage Credit - Obama plays more class warfare: “like so much in our tax code, this [itemized mortgage interest tax deduction]tilts the scales toward the well-off.” Are Americans on two opposite sides? Obama would have us think so.
- Hitch: A mortgage interest tax deduction is pretty basic, something rote to a filer from H&R Block, but perhaps Obama thinks a $50 filing fee is only for the wealthy.
- Cost: Ultimately, this is another $500 refund check going to 10 million people - that’s 5 billion dollars…but it’s just a drop in the well compared to his tax plan. See the next installment on Obama’s Plan for the middle class.
Technorati Tags: Foreclosure, Housing, tax policy
Greg Mankiw (if you’ve ever taken macro, you know this prof) received a note critiquing the critics of Paulson’s Plan. It’s important to hear from the folks in the field, no matter how much you may distrust what they have to say. Note follows with my bolding.
Academic economists don’t like the Treasury plan, but nearly all of the Wall Street economists are for it. You don’t have to be all that cynical to say that the Wall Street economists are talking their book. But I’d like to think that there is at least in part a sense in which they are more attuned to the reality of the situation in credit markets — that last week we were a day or two away from a breakdown of the financial system.
Here are three common critiques from the academics and journalists and what they are missing:
1. “Treasury must overpay for this to work because otherwise you are not injecting new capital, only adding liquidity.”
Treasury is talking with the experts you would expect — prominent academics who have designed auctions. It’s complex because there are so many different MBS (Mortgage-backed Securities), but Treasury is committed to get the market price as best as it can. It will not intentionally overpay. But the assertion that the plan will not boost capital is wrong. If Treasury gets the asset prices exactly right next week when the reverse auction starts, those prices will be higher than the prices that would have obtained before the program was announced. That difference means that by paying the correct price next week we will be injecting capital relative to the situation ex-ante. Treasury does not need to overpay. And the taxpayer can still see gains — say if the announcement and enactment removes some uncertainty about the economy and asset performance, but not all. Then prices could rise further over time. But the main point is that it is not necessary to overpay to add capital. I think Krugman is a leading purveyor of the “they must be intending to overpay” assertion.
2. “Taxpayers will be better off if Treasury gets warrants.”
This is essentially the assertion made in David Leonhart’s column in the NY Times on Wednesday. And it again illustrates that we would all be better off if high schools taught the Modigliani-Miller theorem. MM implies that the price of the asset (again,assuming the auction gets it right) will adjust to offset the value of any warrants Treasury receives. In this case of a reverse auction, imagine that the price is set at $10. If Treasury instead demands a warrant for future gains of some sort, then the price will rise in the expected amount of the warrant — say that’s $2. Then the price Treasury pays for the asset will be $12. Some people might prefer to get $12 in cash and give up a warrant worth $2 in expected value. Fine, that’s a choice to be made. But the assertion that somehow warrants are needed is simply wrong.
3.”The plan should be to inject capital instead.”
This is the Luigi Zingales criticism. Again, that’s a fine plan and might be a good idea. But that’s a complement to an asset purchase plan, not a substitute — and it’s one allowed by the Treasury proposal and indeed envisaged in some cases. But that will take much longer to implement than an asset purchase. That’s why it’s a complement not a substitute — Treasury needs to act now. The particular ideas from Zingales et al that there should be a forcible capital injection are pure ivory tower, unfettered by the practicalities of legality, enactment, or implementation.
Technorati Tags: Bailout, Economy, Paulson, Treasury
No response to the financial market turmoil has provided a quick and easy answer to quell the general apprehension out on the street. Obama and McCain stuck to their brands, with varying and questionable success.
Obama, ever cautious, deliberated — preferring to address the “worst financial crisis since the Great Depression” as a bench warmer. Obama’s nuanced views apparently rendered him incapable of providing his supporters with the “common sense, practical leadership, & economic stewardship” that they needed. His criticism of McCain & the Bush Administration - doing “nothing as the crisis hits” - would be leveled at Obama’s own reaction by conservative critics.
And McCain? His maverick persona may have gotten the better of him this past week. McCain certainly was no shrinking violet. And supporter or no, rightly or wrongly, McCain puts his position out there for voters to sink their teeth into - as many in the media did this past week.
As we all know, the financial crisis isn’t a band-aid fix, and taxpayers will bear the brunt of any solution passed. Therefore, it is especially vital to consider economic and tax policies of both candidates with the inevitable burden of the financial market bailout. NBC did a brief rundown earlier this year:
Obama’s fairness doctrine, which Biden famously muddied with patriotic language, is income redistribution and welfare advancement on a scale we haven’t seen in decades. But it’s nothing new - America has taken this pony ride before. Stephen Moore’s article looking at income mobility in America points out our past:
Q. Are high tax rates on the rich a good way to redistribute income?
A. No. History teaches us that high tax rates are the worst way to redistribute income to the poor and the middle class. I recently reviewed IRS tax return data by income group going back to 1972. The results are jaw-dropping. In 1972, when the highest tax rate on the rich was 70 percent and the top capital gains tax rate was 35 percent, the richest 1 percent of Americans paid 17 percent of the income tax burden. Today, with a top income tax rate of 35 percent and capital gains at 15 percent, they pay 39 percent. With higher income tax rates the rich shelter more of their income through tax carve-outs, they invest less in the United States and more abroad, and they work less. The Robin Hood strategy has almost always failed because it means less income, not more, to take from the rich and give to the poor.
Contrary to what Obama (and some Democrats) would have us believe, the “poor” are not stuck in poverty, and the “middle class” are not on the verge of collapse. Quality of life and consumption standards have improved across all economic strata.
Q. Have the income gains by the rich come at the expense of the middle class and the poor?
A. Since 1983, every income group has seen an advance in after-tax income (see graph 1). Yes, the gains of the very rich have increased the fastest. But that is in part because of a statistical illusion. When poor people earn more over time, they move into the middle class or the upper class and are no longer classified as poor. Consider someone who was earning $20,000 a year and saw her income move to, say, $50,000 as she moved up the career ladder. That 150 percent gain in income isn’t apparent, because we no longer categorize her as poor. But every penny of income gain by a rich person is counted, because there is no higher income class she can move into.
Another problem with comparing the distribution of income from one point in time with another is that up to 1.5 million new immigrants enter the United States every year. A fairly high percentage of these immigrants start at the bottom of the income ladder, replenishing the people who are at the bottom rungs. This creates the impression that poor people do not make significant progress in the American labor force.
Q. Is there really a ‘war against the middle class’ in America as claimed by people such as CNN’s Lou Dobbs?
A. Well, if the middle class is fighting a war, they’ve been winning. Graph 2 shows the income range needed to be considered in the middle class in the United States (between the 40th and 60th percentiles in income for families). In 1967 the average middle-class pre-tax income was about $40,000; in 2005 it was about $60,000. And this does not include the increased generosity of non-wage and non-salary benefits such as healthcare, pensions, flexible workweeks, and more family leave, vacation, and holidays.
Most economists agree that when these income numbers are adjusted by a more accurate inflation measure—one that takes full account of the improved quality of the products we now have access to, such as cell phones, laptop computers, and new medical technologies, for example—the purchasing power of the American middle-class family is about one-third higher today than in the 1970s.
The Census Bureau family income data indicate that in 1967 one in 20 families had an income of $100,000 or more (in today’s dollars). In 2005 one in six families did. There are three times as many families earning more than $75,000 a year today than there were in 1967.
The challenge for the future administration is to provide real economic growth. The tax burden of the financial bailout cannot be alleviated through mere tax increases. In this fragile economic period and highly sensitive consumer confidence, the economy cannot afford to withstand the sophist’s “fair” and “patriotic” tax policy totally devoid of historical perspective.
Technorati Tags: class warfare, Economy, McCain, Obama, tax policy
Obama is getting plenty of practice from the bully pulpit. He’s not arguing for freedom or democracy, however. Instead, Obama’s campaign threatens heckling cries of “Unpatriotic!” if you don’t give more money to the government and “Racist!” if you vote for John McCain. With swarms of MSM helping Obama spread his word, it’s easy to feel like fodder amongst thousands of ants.
ACORN makes Code Pink look like tea-time
What many voters don’t fully understand because MSM doggedly glosses over is that Obama has basically grown up in an ant farm that acts in relentless concert to propel radical goals. ACORN, an activist group acting under the non-partisan guise of voter registration, has schooled Obama in radical anti-capitalism, re-distributionist philosophy and militant political tactics. See Stern or Malanga to understand how ACORN operates.
ACORN uses intimidation to terrorize its targets. From Kurtz’s article on ACORN*:
“Acorn protesters have disrupted Federal Reserve hearings, but mostly deploy their aggressive tactics locally. Chicago is home to one of its strongest chapters, and Acorn has burst into a closed city council meeting there. Acorn protesters in Baltimore disrupted a bankers’ dinner and sent four busloads of profanity-screaming protesters against the mayor’s home, terrifying his wife and kids. Even a Baltimore city council member who generally supports Acorn said their intimidation tactics had crossed the line.”
Stern notes ACORN’s pride in its bullying tactics, as ACORN leaders
“point out that intimidation works. They proudly reel off the increased memberships that follow in the wake of high-profile disruptions, and clearly imply that the same public officials who object most vociferously to intimidation are the ones most likely to cave as a result.”
Mr. Obama goes to school
Two accomplishments that Obama most often cites from community service days are cleaning up asbestos at an apartment complex and starting a voter registration initiative. It was inevitable that Obama would develop a relationship with ACORN. Between ACORN and the Chicago political modus operandi, Obama’s formative years embraced intimidation tactics and political machination.
A rundown:
- Madeline Talbot, leader at Chicago ACORN, enlists Obama (between college & law school) to train her staff.
- ACORN requests Obama as legal representation in “motor voter” case.
- Obama (post law school) in partnership with ACORN organizes “Project Vote.”
- Obama enlists ACORN volunteers for State Senate, (failed) Congress, US Senate campaigns.
- Obama hires Daley-team to run State Senate election, kicks other 4 contenders (including incumbent) off the ballot, and wins by running unopposed (How did Obama’s legal team invalidate thousands of signatures? See article & video for more).
- Obama directs millions in grants to ACORN.
Presidential race - an ACORN practicum
Despite flowery rhetoric over past months, clearly Obama is succumbing to his own charges against McCain; these days, “more of the same” intimidation, “more of the same” blackmail, “more of the same” political mudslinging the core of Obama’s message. His rearing at ACORN has taught Obama well.
Obama has repeatedly waged phone-jamming campaigns to stop discussions about his relationship with Weatherman terrorist Bill Ayers and ACORN. Most recently, his “Obama Action Wire” has rallied thousands of phone-jammers against writers David Freddoso & Stanley Kurtz’s appearances on WGN radio. These are ACORN tactics at their most typical. Perhaps more interesting is that Obama introduced legislation against phone-jamming tactics a couple years ago. Obama waging political warfare is like drawing up the Geneva Conventions, then flouting them at the first opportunity.
Biden hasn’t managed to get much press amongst the political contenders, but this week his threat to Americans was steeped in ACORN-based philosophy. That Americans should subscribe to mass re-distribution of wealth is patently UNpatriotic. The American Dream is chucked to the wayside as ACORN anti-capitalism and mass welfare abound in the Obama presidential platform. Biden hopes that intimidating Americans with patriotism will fill government coffers to distribute as Obama sees fit.
Now, Obama has his political soldiers and MSM liberals blackmailing voters by crying racism & threatening riots if Obama doesn’t win. A vote for Republicans is a racist vote - and America will be asking for trouble if McCain wins in November.
This obviously begs the question, was it racist of Democrats to deny Jesse Jackson (arguably, a real community organizer) the nomination on multiple occasions? Were liberals racist when they excoriated Clarence Thomas? What about the liberal racism that undermined Michael Steele’s bid for Maryland governor? Please.
It is absolutely dishonest to cry racism when the philosophical & experiential differences between Obama & McCain are so obvious. The total lack of integrity when threatening race riots in an effort to extort Democratic votes certainly gives a more nuanced, sinister interpretation to this “empty suit.”
Obama’s history up to now could be characterized as that of a “Unifier,” as long as we remember that, in his world, there really has been only one agenda. Obama successfully worked his way into Chicago political ranks, not as an agent of change, but as a minion of Mayor Daley. During his time in the US Senate, Obama has maintained a one party mentality (that he cites a widely-accepted, politically insignificant nuclear non-proliferation treaty as reaching across party lines is laughable), rarely straying from the liberal position.
The most powerful son of ACORN has done them proud. Obama is taking his honed bullying & blackmail tactics to the ultimate national stage. ACORN is planting their teams in cities across the US to intimidate voters. Voters better watch out - lipstick on a pig may not be pretty, but lipstick on an “empty suit” is uglier still.
Technorati Tags: ACORN, Biden, Obama, Racism, Welfare
