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George W. Bush Archive

Saturday

5

December 2009

1

COMMENTS

Third Time Is Not The Charm On Stimulus

Written by , Posted in Economics & the Economy

The jobless rate is currently at 10% (or higher if you count the discouraged), so clearly we need a little government job promotion, right?  Barack Obama thinks so, and is set to unveil his latest “plan.”  But not so fast! Haven’t we done this before?

This will be the third time government has acted to “create jobs” since the beginning of 2008.  Why should we believe it will be any more successful now than it has been in the past?government-waste

In early 2008, President Bush teamed up with Nancy Pelosi to pass a $150 billion (then considered a lot of money) stimulus package.  This “booster shot” to the economy, consisting primarily of rebates to individual taxpayers, was supposed to head off recession.  At the time, the unemployment rate was under 5%.

A year later, Pelosi found herself with a new dancing partner in Barack Obama. President Obama’s subsequent stimulus package dwarfed that of President Bush.  Passed when the unemployment rate was not yet 8%, it was promised that the $800 billion stimulus would hold joblessness below a peak of 9%.  This package also failed, and today the unemployment rate is in double digits.

Leave it to government to insist we continue down a path with such a sterling record of failure.  It is time to abandon the Krugman-championed policies of Keynesian economics.  Government cannot create jobs by taking money out of the economy, funneling it through a wasteful bureaucracy, then directing it to the most politically connected and favored industries.  No economy has ever been successfully powered by such a model.

The best thing Democrats can do is to stop threatening to destroy so many industries via regulation and government control.  This would reduce the uncertainty hampering investment.  If they combined that by lowering the rates of the most destructive taxes, such as the corporate and capital gains taxes, an improved job market would follow.  Otherwise, we can continue banging our collective heads against the wall while insanely expecting an outcome other than pain.

Monday

1

June 2009

0

COMMENTS

General Motors Bankruptcy Is A Triumph Of Capitalism

Written by , Posted in Free Markets

The primary benefit of a free market system is that it rewards companies that are capable of meeting our needs and demands, while punishing those that do not.  Economist Joseph Schumpeter famously referred to this process as “creative destruction.”

The collapse of General Motors and Chrysler is evidence of the process in action.   As Greg Mankiw recently noted on his blog, the 2009 Consumer Report ranked Chrysler dead last, recommending zero percent of tested cars for purchase.  General Motors came in next to last, with 17% recommended.  At the top was Honda with a score of 95%.

Standing in the way of this capitalist process was the administration’s of both George W. Bush and Barack Obama. Obama in particular has gone above and beyond in his counterproductive effort to prevent GM and Chrysler from facing the consequences of producing shoddy products. He opened the corporate welfare spigot in a flawed effort to save the floundering companies, but to no avail. Like the grim reaper, bankruptcy knows when the time has come for a business to be put to rest, either to be reborn again as a new company (even if it’s under the same name), or for good.

Democrats who pushed for passage of corporate welfare bills to prop up the automakers portrayed bankruptcy as an unacceptable course.  Gov. Rendell flat out called it “a disaster to put them in Chapter 11.” Obama seemed to share this aversion to bankruptcy when he asserted a need to “figure out ways to put the pressure on the automakers the way a bankruptcy court would.  Demand accountability, demand serious change, but do so in a way allows them to keep the factory doors open.” Yet despite the efforts of Obama, the GM and Chrysler of yesterday that ranked at the bottom of the 2009 Consumer Report will finally be laid to rest. Having eventually realized that the best way to “put pressure on the automakers the way a bankruptcy court would” is to let an actual bankruptcy court do it, Obama should now get out of the way and let the free market make the ultimate decision on the survival of their new incarnations as well.

Thursday

23

April 2009

0

COMMENTS

Criminalizing Politics Is Undemocratic

Written by , Posted in Energy and the Environment, General/Misc.

The subject of torture is suddenly unavoidable.  I suspect this is a deliberate effort to distract from poor economic news and the recent tea party backlash against big government.  Be that as it may, the narrative needs to be addressed.

America, and Americans by and large, do not believe in torture.  This has always been true, and it’s no more true today than it was in the Bush administration.  Any government that seeks to avoid torture must, by necessity, define just what torture is.  The Bush administration sought to do this.  Now the Obama administration, not happy with the prior definition, seeks to adopt its own.  It’s to be expected that, when a new party comes into power, issues such as this will be readdressed and new positions taken.  But Obama is going one step further.  Not only does he find the Bush definition wrong, he wants to label it criminal.

This is a frightening development for anyone who supports our democratic system.  The United States has enjoyed a long track record of peaceful transitions that most of the world can only dream about.  A large part of the reason for this is that we do not seek to criminalize political differences.  When your average Latin American military junta assumes power, the first order of action is to jail everyone in power previously.  The United States is better than that. It used to be, anyway.

Barack Obama is willing to leave open the possibility that Bush administration officials may be tried for drawing a line in a slightly different place than Obama draws it.  Not, mind you, for wantonly and maliciously running torture dungeons where any and all practices were acceptable, but for approving a single tactic which Obama did not like, and which is routinely conducted on our own soldiers for training.  Peaceful democracies are not supposed to handle complicated legal and moral issues by jailing those who take opposing positions.  If Obama wants to elevate the game to that level, he should keep in mind that his entire economic agenda is flagrantly unconstitutional; whereas if he has his way on waterboarding, we might just have to start calling it criminal as well.

Monday

9

March 2009

0

COMMENTS

All Government Decisions Are Political

Written by , Posted in Waste & Government Reform

President Obama has, to much liberal fanfare, undone the Bush era decision not to prohibit federal funding of embryonic stem cell research.  He then, with a straight face, attacked Bush for putting politics ahead of science.

It’s laughable that someone could seriously claim that politics has no place in science when he just finished using a political act to influence science.  Yes, Bush made a political decision regarding science when he decided not to fund embryonic stem cell research (and he also made a moral decision – an issue which Obama and the left wants to pretend doesn’t exist).  But Obama is just as political when he decides to fund it as Bush was when he decided not to.

Government is inherently political.  If politicians are deciding what scientific endeavours deserve funds, those decisions will inevitably be political.  Federal funding is what brings politics into science. The only way to truly remove politics from science would be to remove government from science.  Every indication is that Obama wants to do the opposite.  He has all kinds of pet projects that he – based on his ideology – thinks are worthy, from embryonic stem cells to “green energy” and global warming research.  He wants to take more money from the private sector, thus diminishing the capital it has to allocate to research, and decide himself where it should go.   That won’t remove the influence of politics from science, it will enhance it.

Thursday

29

January 2009

0

COMMENTS

A Last Minute Attack On Free Trade

Written by , Posted in Free Markets

The Washington Post reports on some regulatory parting shots the Bush administration took on free trade.

In its final days, the Bush administration imposed a 300 percent duty on Roquefort, in effect closing off the U.S. market. Americans, it declared, will no longer get to taste the creamy concoction that, in its authentic, most glorious form, comes with an odor of wet sheep and veins of blue mold that go perfectly with rye bread and coarse red wine.

The measure, announced Jan. 13 by U.S. Trade Representative Susan C. Schwab as she headed out the door, was designed as retaliation for a European Union ban on imports of U.S. beef containing hormones. Tit for tat, and all perfectly legal under World Trade Organization rules, U.S. officials explained.
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Besides, they said, Roquefort is only one of dozens of European luxury products that were attacked with high tariffs. The list includes, among other things, French truffles, Irish oatmeal, Italian sparkling water and “fatty livers of ducks and geese,” which apparently is how Washington trade bureaucrats say foie gras.

While none of these particular barriers are going to have significant economic impact in America, this is simply bad policy.

Playing tit for tat with trade barriers may have emotional appeal, but it makes little sense practically, as we’re hurting ourselves almost as much as them when we do it.  Moreover, we’re just encouraging others when they play these games.  There’s little chance these tarrifs will get Europe to rethink their beef policy, and cutting off our nose to spite our face does not constitute good policy.

Friday

16

January 2009

1

COMMENTS

Dumbing Down 'Disaster'

Written by , Posted in Liberty & Limited Government

On Tuesday President Bush declared Barack Obama’s inauguration a federal disaster, a move designed to allow more money to funnel into a city that’s about to be up to the neck in hope and change.  But the move also provided a fitting end to Bush’s presidency, as he declared more such disasters than any previous President. It also provides, I suspect, a strong foreshadowing of the disastrous presidency about to begin.

Tuesday

9

December 2008

0

COMMENTS

Bush: The Democrat's Useful Idiot

Written by , Posted in Free Markets, Labor Unions, Liberty & Limited Government

Having already decimated the free market ideology with his reckless acceptance of liberal economics, President Bush is set to deliver another blow to rational, limited government by preparing to compromise on a $15 billion bailout for the Big Three automakers.

Democrats have been frantic to get this passed while Bush is still in office. One has to wonder just why that is when Obama has already pledged support for a bailout. The democrats desperately want Bush involved because they need political cover for what is essentially a handout to the UAW. The public is against a bailout, so Democrats need a useful idiot to take the blame with them. Bush, it seems, is their man. Rather than force the democrats to wait only a month and a half until they control all branches of government, and thus would have take full political blame, Bush has once again muddied the political waters and stolen a winning issue from republicans.

Monday

8

December 2008

0

COMMENTS

Delusional Editorial

Written by , Posted in Foreign Affairs & Policy

I recently sent the following letter to the New York Times:

To the Editor:

You recently took to your editorial pages to fire yet one more shot at President Bush (“The Deluder in Chief,” editorial, Dec. 7). Your assertion that the President “knew or should have known” that intelligence was faulty is not supported by the facts. Not only did every major intelligence service share our conclusions, but they were widely accepted by prominent Democrats.  Dr. Susan Rice, appointed by President-elect Obama to be U.N. ambassador and now falsely remembered as an early critic of the war, said in 2003 that, “I don’t think many informed people doubted that [Saddam has WMD’s].”

There is a strong argument that the Iraq war has made us less secure, or that what benefits may come are not worth the high costs. But your editorial goes further, and insists on perpetrating the “Bush lied, people died” mantra of the radical left. This is a sophomoric argument, and the self-proclaimed “paper of record” should not so easily distort and twist that record.

Sincerely,

Brian Garst

Sunday

16

November 2008

0

COMMENTS

Bush Too Late To Defense Of Capitalism

Written by , Posted in Free Markets

In a speech the other day President Bush offered this eloquent defense of capitalism:

Like any other system designed by man, capitalism is not perfect. It can be subject to excesses and abuse. But it is by far the most efficient and just way of structuring an economy. At its most basic level, capitalism offers people the freedom to choose where they work and what they do, the opportunity to buy or sell products they want, and the dignity that comes with profiting from their talent and hard work. The free market system provides the incentives that lead to prosperity — the incentive to work, to innovate, to save, to invest wisely, and to create jobs for others. And as millions of people pursue these incentives together, whole societies benefit.

Free market capitalism is far more than economic theory. It is the engine of social mobility — the highway to the American Dream.

This is all very well and good, but the sad reality is that President Bush has done more to undermine market capitalism than any Democrat ever could.  By operating falsely under the flag of free markets, Bush’s massive $700 billion government assault into the market has amounted to, in the eyes of many, a surrender of the market ideology.  At least now that the statists are taking power, the right people, and more importantly the right ideology, will finally be blamed for the failures of big government.

Wednesday

24

September 2008

5

COMMENTS

What Really Happened In The Financial Market

Written by , Posted in Free Markets, Liberty & Limited Government, Waste & Government Reform

The False Explanation

You’re going to hear a lot of stories in the coming days, and probably have heard a few already. Following the high profile collapse of the giants in the financial sector, there are going to be a number of groups jumping to advance their agenda by telling you falsehoods about who is to blame. Socialists, statists, anti-capitalists and all manner of other market and freedom haters are already jumping to lay blame at the feet of capitalism. Yet many of these people have themselves played a part in this mess. The Obama campaign is already out to make “deregulation” a dirty word, and has released an ad making two false claims: first, that deregulation had anything to do with the financial crises and, second, that allowing competition in health care would create a similar situation. Even the New York Times, criticizing the ad for its falsehoods, acknowledged that “[deregulatory changes] were viewed by many as having benefited consumers by encouraging competition, and those changes have not been linked to the current crisis.” But in order to advance the socialist regulatory agenda, it is constantly necessary to demonize the free market.

The most hypocritical market-basher, by far, is long-time Democratic Party embarrassment Barney Frank. Frank has been making the rounds dispensing his distorted account of what has happened. For instance, he attributed AIG’s troubles to “lack of regulation,” and self-righteously declared, “the private market screwed itself up and they need the government to come help them unscrew it.” On the overall financial meltdown he says, “Some private-sector people made irresponsible decisions because there wasn’t adequate regulation.” Not quite. There was inadequate regulation, but of government, not the private-sector. It is government policy and government sponsored entities Fannie Mae and Freddie Mac that are the drivers of this meltdown. And when it came to regulating their behavior, Barney Frank was a chief roadblock.

Freddie and Fannie became a half-way house for democrats heading out of government.

In 2003 President Bush attempted to address the problem created by Fannie and Freddie’s insulation from market incentives. The President proposed an agency to oversee the quasi-governmental companies. Democrats, bought and paid for by F&F, were strongly opposed.

Granted, I would have preferred that President Bush had chosen market incentives over regulation by cutting Fannie and Freddie loose from government altogether. But, and this is a big but, if government is going to insist on socializing risk, it’s better that it also provide even a crude form of accountability (and crude is all the accountability government can muster compared to markets), to make up for it. Leaving F&F roaming free as part-private and part-governmental, with the dueling and often contradictory missions it implies, without either market or government forms of accountability, was the worst possible solution. It’s also the one Barney Frank demanded when he opposed Bush’s effort and declared that, “[Fannie and Freddie] are not facing any kind of financial crisis,” before also concluding, “The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.” And that is exactly what led us to this mess: the government’s reckless demands for “affordable housing.”

A Government Created Mess

In 1977 a Democratic Congress, working with a Democratic President, produced the Community Reinvestment Act (CRA). The CRA forced banks to make unsound loans to poor, uncreditworthy borrowers, all in the name of liberal fairness. Required to keep extensive records of their minority lending practices, banks became targets of racial shakedown artists. If they weren’t satisfied with a bank’s submission to their extortionist demands, they could have them denied the right to expand or merge with other banks.

In 1994 Clinton revamped the CRA and kicked off a new wave of reckless lending. This is where Freddie and Fannie jumped in to corner the market on bad loans, loans which wouldn’t have ever been made if rules requiring money down and sufficient sources of income hadn’t been thrown out the window in the name of racial equality.

Another contributing government factor was the loose monetary policy pursued by the Fed. By keeping interest rates too low, the Fed contributed to an influx of dollars into the market. When money is created faster than productivity warrants, it results in a misallocation of resources in certain assets, creating “booms.” Former vice president and economic advisor at the Federal Reserve Bank in Dallas, Gerald P. O’Driscoll Jr., blames the Fed for not properly weighing the costs of their inflation targeting methods:

In a vibrant market economy with technological innovation and ever new profit opportunities, the monetary policy that maintains price stability in consumer goods (or zero price inflation) requires substantial monetary stimulus. That stimulus will have a number of real consequences, including asset bubbles. These asset bubbles have real costs and involve misallocations of capital. For example, by the peak of the tech and telecom boom in March 2000, too much capital had been invested in high-tech companies and too little in “old economy firms.” Too much fiber optic cable and too few miles of railroad track were laid.

The Democrats’ Revolving Door

While government policy was meddling with the financial markets, government officials made themselves quite comfortable in the financial sector. Freddie and Fannie became a half-way house for democrats heading out of government. Franklin Raines, currently Barack Obama’s financial advisor and former Clinton era budget director, spearheaded Fannie Mae into countless Enron-style accounting manipulations and scandals. Foreshadowing the left’s current strategy to peg their failures on advocates of free markets, Raines derided those who pointed out his companies risky and shady practices as “ideologues” trying to “undermine” Fannie Mae.

Jim Johnson, also a former Fannie CEO and a board member of Goldman Sachs, is a policy advisor who was chosen by Obama to lead his vice-presidential selection team. Johnson was forced to fall on his sword when it was revealed he and several other prominent democrats received special perk loans from Countrywide Financial’s CEO Angelo Mozilo. With no banking or financial experience whatsoever, Jamie Gorelick, former Deputy Attorney General under Clinton, was appointed Vice Chairman of Fannie Mae in 1997, and got fat off of Raines’ accounting scandals. Rahm Emanual, the 4th highest ranking democrat in the House, was similarly shuffled onto Freddie’s board after leaving the Clinton White House.

Meanwhile, their Democratic colleagues who remained in government were assured their part of the take. Chris Dodd, now Chairman of the Senate Banking Committee, raked in the most from Freddie and Fannie, at $165,000. Perhaps these donations are what Dodd had in mind when, in July, he referred to Fannie and Freddie as “fundamentally sound and strong.” Number 2 on the graft list is Barack Obama, who took in over $125,000 in his short tenure in the Senate. The government’s pet mortgage lenders further feathered their nests by opening “partnership offices” in the district of key members of Congress, where they could funnel millions of dollars to their supporters. The bribes paid off. Compared to IndyMac, which didn’t offer democrats any protection money and was thrown to the wolves by Chuck Schumer, Fannie and Freddie are now looking at billions in taxpayer support.

It’s not hard to see why, when President Bush sought to counter Fannie and Freddie’s government created incentives for recklessness, he was fought by Democrats at every turn. According to the White House, 17 attempts at reform were blocked by democrats. Government’s inability, thanks to Democratic cronyism, to replace the market checks which it destroyed by demanding reckless behavior on the one hand, and subsidizing risk with an implied guarantee on the other, provided the perfect financial storm for disaster.

One would think it would be difficult for those on the left to so easily absolve themselves of any responsibility, while simultaneously blaming those who attempted to stop them from creating this disaster, but that is exactly what they’ve done. Phil Gramm, who sought to relax the Democratic created requirements that banks issue risky subprime loans, has been tagged a “deregulator,” which is, in their view, automatic proof of guilt. Barack Obama blames the problem, as he does everything, on “Bush-McCain,” even as he found room in his campaign for those actually responsible and belongs to a party which protected Fannie and Freddie from reform. In short, the left is trying to rewrite history even as it’s being made. The ink hasn’t yet dried on the reporting of their government sponsored mess, and already they are blaming those who believe in freedom and oppose their interventionist programs. They think the failures of government should justify yet more government. They are wrong and their lies shouldn’t be allowed to disguise this fact.