Trickle Up Poverty (17 page)
The Fallout: An Ongoing Takeover
On December 24, 2009, the same day the Senate passed its version of the budget-crippling Obama healthcare legislation, the Treasury Department, following the directive in an executive order issued by the president, and after already having allocated some $900 billion in special loan and rescue funds, announced that there would be no limits on the loan guarantees it would provide to Fannie Mae and Freddie Mac for the next three years. This came in the face of tens of billions of dollars in losses during the year by the two agencies and with the likelihood that those losses could mount well into the trillions before the bleeding was stopped.57
That same week, Fannie and Freddie revealed compensation packages for their executives. Fannie CEO Michael Williams and Freddie CEO Charles Haldeman Jr. will each receive as much as $6 million in annual salary and bonuses. This announcement came during the time when Obama had been mounting a furious attack on the pay packages of the officers of banks and brokerage houses.
I thought Obama wanted to end the practice of “rewarding failure.”
The government seized control of Fannie and Freddie in September, 2008, and has yet to produce a plan to divest itself of them. Barack Obama, Congress, and the Treasury Department are on their way to doing what would have once been thought impossible: overspending budgets that are now, for all practical purposes, unlimited.
The housing crisis that was such an important factor in the economic collapse of 2008 isn’t getting much better. The value of the roughly 75 million owner-occupied homes in America has declined by nearly $5 trillion since then, and more than 10 million homeowners are “underwater,” with their mortgages being greater than the value of their homes.58 One of Obama’s “solutions” to the collapse of the housing market that left tens of millions of homeowners underwater on their loans was to institute a $75-billion mortgage relief program called Making Home Affordable. The program was designed to enable lenders to modify the terms of loans so that homeowners could stay in their houses.
Of course, the program, which eliminates the market’s ability to foreclose on houses that their owners really can’t afford and shouldn’t have been able to purchase in the first place, is essentially delaying and making more difficult a real housing recovery. It was supposed to enable as many as four million people to restructure their loans, but it’s helped only about 66,000 homeowners while nearly three million home foreclosures were made.59 It’s another of the misguided leftist policies that Obama has instituted in order to further the government’s ability to worm its way into our lives, to convince us that we can’t solve our problems without the intervention of the federal government.
Like so many of Obama’s programs and trickle up poverty policies, it rewards bad behavior on the part of both lenders and those paying on their mortgages. And like all Obama’s bailouts, it’s we, the American taxpayers who do behave responsibly and who do pay taxes, who bear the burden of the government’s ill-advised and irresponsible largesse. Obama essentially confiscates our money in order to undermine the very economic system that we’ve helped to build and to which we contribute.
It doesn’t stop there, though.
Barney Frank seems hell-bent on creating a repeat of the Fannie-Freddie disaster to which he contributed so heavily in the late 1990s. Once again, Frank is vowing to force those agencies to write sub-prime loans, pretty much guaranteeing a delay in the housing market recovery. The good news is that the American people seem to be catching on to the utter economic and social devastation the Soviet-Democrats’ policies promise to cause.
Obama Tilts the Playing Field … To the Left
Capital markets function effectively because they allow investors to assume the risk and reap the rewards (or the failure) associated with buying and selling stocks and other assets. When the playing field is not level, when the government steps in and guarantees loans and dictates the terms under which the markets can operate, those risks and rewards are dramatically skewed in the direction of those making the rules. Allowing hedge fund traders to steal trillions of dollars from Americans who invested in good faith in the companies that were raided by the short sellers is a prime example of how this administration manipulates capital markets. When it changes the rules, when it grants small groups of people the ability to manipulate capital markets, it’s the everyday investor who suffers.
In October, 2008, less than a month before the election, then-candidate Barack Obama made Joe “The Plumber” Wurzelbacher a household name. As you well know, when responding to his question, Obama said, “Right now everybody’s so pinched that business is bad for everybody and I think when you spread the wealth around, it’s good for everybody.”60 As is his practice, Obama was lying to Wurzelbacher, as he has lied to the American people since he appeared on the national stage. He and his confederates are implementing a plan to do nothing less than steal from middle America and redistribute the wealth to their powerful cronies, exactly the opposite of what they would have you believe they stand for.
Among the ways the Obama administration seems determined to steal from the middle class and spread the money to the poor and the wealthy is through increasingly confiscatory tax policies, many of which target the middle class. As early as June, 2008, during the presidential campaign, Obama’s team released an economic plan that included not renewing the Bush tax cuts (effectively raising the highest marginal tax rate from 35 percent to 39.6 percent), phasing out personal exemptions and deductions and removing the $102,000 cap on paying social security taxes for those with incomes over $250,000 annually.61
And the alternative minimum tax will, in 2010, be applicable to people whose annual incomes are as low as $47,000. In fact, his administration’s new legislative and policy initiatives threaten to raise taxes even beyond the 56 percent rate increases proposed during the campaign.
As its spending has spiraled further and further out of control, the Obama administration has been forced to find even more ways to raise revenue through increased taxation. Cutting spending seems never to have been an option. In February, 2010, an eighteen-member blue ribbon panel, headed by former Republican Senator Alan Simpson and former Clinton White House official Erskine Bowles, was commissioned by the president to explore ways to reduce the deficits this administration was amassing. Within weeks, former Treasury Secretary Paul Volcker was floating the idea of implementing a Value Added Tax (VAT) similar to the ones that are so effectively limiting growth in many European countries. The intention behind Volcker’s floating the idea of a U.S. VAT was clearly to pave the way for the panel to propose that as a way to reduce deficits.
VAT taxes in many European countries are as high as 20 percent, and because they are a stealth tax, added on incrementally at every stage from acquisition of raw materials to manufacture to wholesale and retail distribution of a product or the provision of a service, they end up substantially increasing the cost of many goods and services to the consumer. In many countries, the VAT adds as much as 20 percent to the costs paid by consumers, with low-and middle-income families being hit the hardest.
Another of Obama’s tactics for advancing his socialist vision for America is to bring more and more people under the umbrella of government employment and away from the private sector. One way of doing this is to pay public employees significantly higher wages and provide them greater benefits than their private sector counterparts. In fact, that’s exactly what has happened. In December, 2009, the average compensation of those working in private industry was $27.42 an hour, including $19.41 per hour in wages and $8 per hour in benefits. Government workers earned an astonishing $12.18 per hour more than those in the private sector, with an average hourly wage compensation of $26.11 and an additional $13.49 in benefits, for total compensation of $39.60 per hour.
That’s 44 percent higher than the private sector average.62
But it’s not only workers who profit so handsomely from being employed in the public sector. According to USA Today, at the beginning of the recession, “the Transportation Department had only one person earning a salary of $170,000 or more. Eighteen months later, 1,690 employees had salaries above $170,000,” at a cost to taxpayers of nearly $300 million. There was, in fact, an increase of more than 400 percent of government employees making over $150,000 annually during that time, from 1,868 to more than 10,000. This explosion of high salaries has boosted the pay of the average federal worker to $71,206 annually, while the private sector equivalent is $40,331.63 So much for the myth of people sacrificing earning power to work for the federal government.
With nearly 40 percent of public sector workers unionized, as opposed to less than 10 percent of private sector workers, and with the number of public sector employees increasing while the private sector struggles to correct a loss of more than 7.3 million jobs and a stubborn unemployment rate that stays around 10 percent, we’re witnessing another component of the socialist takeover of labor by the Obama administration. More workers are hired for public sector jobs as the bureaucracy grows by leaps and bounds, and they’re better compensated, thanks in no small part to the fact that more of them are unionized.
Under Obama’s Thumb
In March, 2010, as Pelosi, Reid, and Obama were hammering through their socialized medicine scheme to bring another 15 percent of the American economy under Barack Obama’s control, Florida Democratic Representative Alcee Hastings explained the process: “There ain’t no rules around here—we’re trying to accomplish something. And therefore, when the deal goes down, all this talk about rules, we make ‘em up as we go along.”64 In other words, with the Obama administration, we’re being treated to raw Chicagostyle politics, where threats, intimidation, arm-twisting, and outright lies are used to coerce legislators into getting with the program, and laws and the Constitution be damned.
None of this bothers the Obamanics who are convinced this president can do no wrong.
In every major area where he’s trying to remake the economy and bring it under federal control, Barack Obama has resorted to using underhanded (and often illegal) strategies to make it happen. Where he can’t advance his agenda through passing federal law, he resorts to executive order or to using other means, such as tapping the EPA to administer energy policy and calling on the FCC to try to implement so-called “net neutrality,” to get his way, even if he can’t force these egregious affronts to America through the legislative process.
In fact, Obama himself is playing the revolutionary role to perfection as he trots out his deadly proposals to remake the U.S. economy into something that resembles a third world tyrant’s dream. In short, Obama doesn’t like individual freedom very much, and he will do anything he can to reduce your power and your control over your life to the point where the central government makes every important decision for you.
Assuming control over the economy is one of the ways he plans to do this.
Assuming control over Wall Street is another.
Assuming control over the auto industry is yet another power grab.
Since he took office, President Obama has led the biggest takeover of the American economy by the government since the administration of Franklin Delano Roosevelt. And he’s done it with money confiscated from middle-class Americans.
And their children.
And their grandchildren.
And their grandchildren’s children.
With government entitlement programs such as Social Security, Medicare, and Medicaid facing bankruptcy, this president has decided to go ahead and break the bank. The so-called stimulus legislation and bailouts of the financial and auto industries, government institutions like Fannie Mae and Freddie Mac, and individuals who exercised or were lured into bad judgment by government policies designed to institutionalize irresponsible financial behavior are not affordable, sustainable, or wise governing.
The title of Michael J. Boskin’s March 6, 2010, Wall Street Journal op-ed piece proposes, “Obama’s Radicalism Is Killing the Dow.” It’s worth asking, Is that, in fact, the President’s intention? When we watch the bumbling and thus far ineffective responses of the Obama administration to the financial downturn, it’s difficult to come up with an explanation as to why they’ve been unwilling to address the root causes of our economic problems. The president veers dramatically from calling it a crisis that’s about to turn into a catastrophe to uttering soothing words of encouragement about better economic times ahead. In light of this, the further question becomes, “What’s at the bottom of the administration’s apparent ineptitude?”
Those of us who have at least a rudimentary understanding of capitalism often can’t comprehend the liberal mentality. On the one hand, Obama presents himself as something of an economic rube. And, being a very left-leaning Democrat, the president may simply not understand how a market economy works. The president has referred to the Dow Jones Industrial Average as a “poll,” comparing the Dow, it appears, to political opinion surveys the like of which he and his advisors use to triangulate their political positions, or to People Magazine questionnaires that try to determine which celebrity is the most popular.
His remark seems to indicate that he simply doesn’t realize that the DJIA is connected in a very real way to a market that collectively renders its judgment, on a moment-to-moment basis, about the state of the economy, and that it does this by tracking a representative sampling of the worth of thousands of companies whose stock is traded publicly. The president, in his ignorance about how capital markets work, seems unaware that such averages as the DJIA are in reality much more than simply “opinion polls,” that in fact there are dozens of other such polls in the form of capital markets around the world that actually provide measures of economic activity on which the global economy depends to function.