The Rise of Obama

This excerpt is from The Lonely Conservative it gives a brief chronicle of how Obama ended up as Commander-in-Chief. See the whole post here.

Obama was being groomed for decades.

They helped him get into Columbia, and then into Harvard (according to Percy Sutton).

They got him his lawyering intern-job where he met Michelle – the daughter of a long-time Chicago machine member.

They got him his first “community organizer” job – also in Chicago.

They ran him on the New Party line – a socialist party backed by the SEIU.

They got him on the Democrat Party ballot for state senator (a stepping stone job if ever there was one) – and got his opponents off the ballot to guarantee a win in his state senate run.

(More on the ruthlessness with which Obama’s supporters cleared the path for him here).

(More here and here.)

While in the Illinois State Senate, Obama never took on the machine or achieved any important legislation.

He never did anything of import in the Illinois Senate – except for defending and voting for infanticide.

Obama’s suporters – including the SEIU and ACORN – did the same thing for his US Senate run as they did for his Illinois state senate run (and Obama won a SURPISE landlside… hmmm…) – and they even got rid of the GOP candidate who might’ve given Obama a run for the money.

THEN… then they got him an important time slot at the Kerry Convention. AND THIS IS WHERE THE TIMING GOT PUSHED WAY WAY UP:

His Kerry-speech won him enormous attention and extraordinary accolades they didn’t expect, and this is when they started to think they might be able to stage a run for the POTUS in 2008 – as a trial run, practice – never expecting to win.

Obama Destroying America

The Lonely Conservative posted an interview between Jennifer Harper and Jon Voight about the Obama Administration. The partial text is below or click here for full text.

“We are witnessing a slow, steady takeover of our true freedoms. We are becoming a socialist nation, and whoever can’t see this is probably hoping it isn’t true. If we permit Mr. Obama to take over all our industries, if we permit him to raise our taxes to support unconstitutional causes, then we will be in default. This great America will become a paralyzed nation.”

Be outraged, Mr. Voight advises. [...]

“The real truth is that the Obama administration is professional at bullying, as we have witnessed with ACORN at work during the presidential campaign. It seems to me they are sending down their bullies to create fist fights among average American citizens who don’t want a government-run health care plan forced upon them,” Mr. Voight says. “So I ask again. Is President Obama creating a civil war in our own country?”

Of course, years of socialist government in England have not produced anything resembling a totatlitarian state. But those who argue that this has disproved the thesis of the Road to Serfdom have really missed one of its main points; that the most important change which extensive government control produces is a physiological change, and alteration in the character of the people. This is necessarily a slow affair, a process which extends not over a few years but perhaps over one or two generations. The important point is that the political ideals of a people and its attitude toward authority are as much the effect as the cause of the political institutions under which it lives. This means, among other things, that even a strong tradition of political liberty is no safeguard if the danger is precisely that new institutions and policies will gradually undermine and destroy that spirit. The consequences can of course be averted if that spirit reasserts itself in a time and the people not only throw out the party which has been leading them further and further in the dangerous direction but has also recognized the nature of the danger and resolutely change their course. There is not yet much ground to believe that the latter had happened in England.

The truth is scary!

Obama Speaks At Town Hall Meeting

The following videos show some clips of Obama talking at a town hall meeting on health care...any one notice anything odd? Why does no one disagree with him...all the other town hall meetings on this topic have had disagreement. Enjoy!

Political Stimulus

Have you been wondering where all of the $787 billion was being spent? I have wondered who was getting all that money - and now I know...

We were promised that this time if we gave Congress and the President the check book it would be different. Only the necessities they said - we will use this money to help those hurt by this recession. The goal was to stimulate the economy by sending money to the places and people hit the hardest. I don't know what is more sad that fact that we believed him or that I am not surprised by the outcome.

The only thing getting stimulated by the stimulus are the supporters of Obama. States that voted for him, cities that voted for him, states and cities that might vote for him next time. They all got huge piles of money- even if their economies were doing ok. Well that's politics folks- spend 1 year making promises and 4 years breaking them. Fox News has an interesting article on the political stimulus of America.

New Regulation Comrade

It seems like the announcements of new regulation come out of Washington about as fast as the national debt rises, and that's a tough pace to match. There are still lots of unknowns about how the U.S. will look after this recession ends, but one thing is clear - the government will be taking a much larger role in virtually everything. Given our government's track record I don't find this to be encouraging. Let's take a brief look at what is going out there in the political jungle.

We have already seen that the Obama administration is willing to take over companies in the name of the greater good. The administration has been working to overhaul our financial regulatory system. Apparently among the proposals is an expanded ability to seize companies. This would give the government the explicit authority to seize companies critical to the economy. This sort of a regulation could conceivably give the government the ability to seize any company depending on the definition of "critical." If they seize enough of them pretty soon we are a defacto centrally planned economy.

Along with the power to seize companies the Obama administration is talking about dramatically changing the regulatory system that exists in America today. The proposals include adding regulation to hedge funds and the credit default swaps market. Tighter scrutiny over the derivatives market and over short-selling. Basically all the usual scapegoats for a bear market. If President Obama accomplishes what he hopes to, the government will be inserted into every single aspect of the financial system right down to compensation decisions. What we are going to end up with is a government that makes all the decisions in our banks, insurance companies, and mortgage lenders. We have seen where this will lead - just look at Fannie Mae or Freddie Mac. The future of America as a free nation is at stake - the outcome doesn't look promising.

The Welch Insight

There is an interesting piece by Jack and Suzy Welch in Business Week. They attempt to answer the question - Is Obama trying to do too much? The short answer is yes. They do a great job of pointing out that the problem with Obama's recent efforts at climate change, health care, and regulation is that it is all too fast and too easy. Having control of both the White House and Congress is a recipe for bad policy because big problems/issues get addressed but there is little debate. It is admirable that the President is willing to tackle these issues, but in the end if we do not leave time for debate and consideration the result will be mess that a future administration has to clean up. You should definitely read this article.

Climate Change and What It Will Cost You

It’s official, the House has just passed the largest tax increase in American history! Late last week the House passed a landmark monstrosity of a bill to create a cap and trade system for carbon emissions in the U.S. The bill was passed by a very narrow 219-212 according to Fox News. The bill calls for substantial reductions in CO₂ emissions and will impact virtually every sector and industry in the nation. It will regulate the emissions of power plants, steel plants, refineries, even farms and livestock production. The bill will require companies to have permits to emit greenhouse gases like CO₂. The number of permits will be set by the government and initially 85% will be given away to companies and 15% will be auctioned off (more on this later). The companies that hold these permits will get a right to emit a certain volume of greenhouse gas, if they do not use it all they can sell those rights to other companies that need them. Every year the government will reduce the volume gradually until we hit 80% below 2005 levels of emission by 2050.

The kicker here is that because the initial amount is immediately below current emissions companies will either have to buy permits to emit or invest in clean technology. Both of which will add cost to the services they perform, cost they will pass on to their customers. Even if a company commits to clean technology they will have to buy permits for some time since these projects typically can take years to complete. This will mean that consumers will face higher prices for electricity, natural gas, propane, gasoline, and even some food products. According to the Fox News article the CBO estimated that this will cost consumers about $175 a year initially in added costs for various services. Over time these costs will filter through and if the decreases in the permitted emission volume outpace the advance of clean technology then these costs will increase dramatically. The Wall Street Journal also has an interesting article about this bill.

This bill will insert government regulation into virtually every aspect of our economy. The bill’s impact won’t even be evenly distributed across the nation. Coastal states and states with a lot of hydro-electric or nuclear power sources will not see as large of an impact. Also, states that specialize in knowledge or white-collar industries (think computers and medicine) will not be hit as hard – these tend to be coastal states too. In the Mid-West, South-West, Appalachian States, and Texas where the industries are concentrated in agriculture, heavy industry, manufacture, and oil and gas and where electricity is primarily from coal or natural gas the impact will be much worse. This tax will fall disproportionately hard on the states that by and large are the hardest hit by the changing landscape of our economy. Not to mention the fact that this will put our manufacturers at a competitive disadvantage to those in countries without such regulation, like China, India, Vietnam, and Korea.

This will have profound impact on how long it takes us to get out of this recession and also on how fast our economy grows afterward. The result will be a slowing growing economy, a poorer citizenry, and sharply higher energy costs. Luckily it is not certain that it will pass the Senate, so call your Senator and let him/her know what you think. If you want to read more click on the links below:

-Lonely Conservative “Climate Bill Defies Economics.”

-Fox News “House GOP Warns…”

Gasoline, Obama, and Your Wallet

Gas is on the rise again and so is oil. The one truly remarkable thing about the current recession is how high the price of oil and gasoline have remained despite huge decreases in demand. This signals that the market still views supplies as tight and costs as high. As soon as the economy began to show any signs of life the price of oil and gas started to trend up again. The question on every one's mind now is how high can it go. I think that oil in the $150 a barrel range is probably a little too high to be sustainable - it would encourage a huge expansion in supply that would ultimately drive prices down. A better long-term guess is approximately $100 a barrel. Gasoline on the other hand will probably rise much faster and stay much higher compared to historical price trends with oil.

There are three major reasons behind this. First, refinery capacity has not changed significantly for many years in the U.S. The cost of building new refineries or expanding existing ones has increased enormously thanks to regulation making it unprofitable to expand. This results in the U.S. importing more of its gasoline at a higher cost (shipping gasoline is expensive because it is well flammable). Second, strict environmental and formulary regulations and requirements have added a significant cost to producing gas. On top of the federal requirements there are regional requirements that make it impossible for gas produced in one part of the U.S. to be sold in another. This means supply cannot readily shift to areas of increased demand or reduced refinery capacity. That can lead to huge price swings in certain regions, anyone remember hurricane season on the gulf coast. Third, Americans have in a large way pulled back from our conservation efforts when gas fell from $4 to $1.50. We have short memories and that means big swings in price are needed to get us back on a gas diet. These three factors will be the primary drivers behind the market price of gas going up and up as the economy recovers.

I wouldn't get too worked up though because even if we managed to open new refineries (try to get Obama's EPA to approve that one), relaxed regulations, and/or undertook new efficiency efforts our President would like to tax gas up to $5.00 a gallon as part of his environmental agenda. Personally I'd rather give my money to Exxon that Obama.

Chrysler R.I.P. The Dealers Get Railroaded?

In The American Thinker an angry Dodge dealer writes of his frustration. (See this week's Monday Must Read.) While I wholeheartedly agree that the government's involvement in the operations and restructuring of Chrysler is absolutely against everything that makes this nation great, I don't agree with the argument that in a free market society this cannot happen, or should not.

First, if the gentlemen were to check his franchise agreement I would imagine that the contract states something to the effect that Chrysler/Dodge retain ownership of the brand name of the franchise and are leasing it to the dealer. Furthermore, I would also imagine that the agreement spells out certain circumstances and processes by which the automaker can end the contract. If this is true then his outrage at the seizure of his franchise is really just a result of poor contract reading.

Second, even if the contract does not say so our bankruptcy laws currently allow most contractual arrangements to be modified and/or nullified by the court. This modification does hurt some stakeholders, like this unfortunate dealer, but in the long run it is necessary for our economy to be able to clean house and re-tune companies worth saving and liquidate the rest.

Having said these things I think it is outrageous that the government exerted pressure on the bondholders and other parties to accept huge losses in both the GM and Chrysler restructurings. These proceedings should have been allowed to run their natural course without government involvement. The real problem now is that with, the government calling the shots, decisions are made that are not ideal from an economic standpoint.

There is a post on The Lonely Conservative that suggests the closure of dealerships may not be based on economics alone. The post suggests that the Obama administration may be targeting for closure those dealers that donated exclusively to the GOP during this last election cycle. Some of the dealerships supposedly closed for this reason were very profitable! I don't know how much truth there is in this, but if it is true then watch out because this is a window into the true nature of Barrack Obama and Team.

It is truly an outrage to close profitable dealers for political reason, and if the gentleman whose dealership is losing its franchise has been a victim of this then he has every right to be angry. He did not mention in his letter if his dealership is profitable or not....

If it is then perhaps he has a strong case that his dealership should not be closed. If not, then he needs to go take an economics course before complaining that this is against the free market.

Education Anyone?

In "The Lonely Conservative" there was an interesting post about Obama's proposal to end the Washington D.C. school voucher program. (Click here to read it or watcht the video below.) This program was actually showing promise, student test scores were up and the cycle of under performance seemed to be broken. It is interesting that Obama would decide to scrap such a successful program so quietly, perhaps it is related to the teacher's union opposing the program (they were big Obama supporters during the campaign).

American schools are so far behind the rest of the developed world that it is not only embarrassing, but actually threatens to undermine our competitiveness and economic success. The D.C. voucher program was proving that school vouchers could work not just to send public school students to private schools, but also in spurring public schools to catch up. I think it is telling that most congressmen send their children to private schools.

Oh, well, what is the educational future of America's youth when compared to political campaign spoils!

Chrysler R.I.P.

Well it has happened: a U.S. automaker is likely headed into bankruptcy. The fact that Chrysler or even G.M. for that matter would end up bankrupt is not really all that surprising. The U.S. auto industry has been hurting since the late 70s and has never really managed to forge a lasting turnaround. The reasons are plentiful: failure to adapt to changing customer demands, slow response time, lack of innovation where it matters, poor quality, inefficient manufacturing, failure to adopt new technologies rapidly, competitive issues from U.S. taxes and regulation, poor financial management, poor strategic leadership, and the UAW.

The major culprit here is in fact the UAW. The complexity of union labor rules and sheer cost of all the benefits and concessions mean that the average UAW worker is paid well above the market wage - bleeding the automakers dry. The fact of the matter is that the price American consumers are willing to pay for a new vehicle simply cannot sustain such lavish pay and benefits. If the UAW does not learn this lesson soon G.M. and maybe Ford (though it is in a much better position) will fare the same.

Honestly, I think bankruptcy is probably the only way G.M. or Chrysler will ever survive in the long term (though for Chrysler it will probably not be as an independent company). Only under court protection can they clear off some of the toxic and crushing liabilities they are carrying. Even after bankruptcy the automakers would face a long and difficult road. If they cannot change their culture and persuade the union to be a team player any gains will be short lived.

The thing that really irritates me is that if we were going to let Chrysler and G.M. end up in bankruptcy court anyway couldn't we have let it happen before giving them billions of dollars in taxpayer loans? I mean seriously how did they go from too big to fail a few months back to dead meat today? It seems to me that the current administration doesn't so much have a plan as a motto: "Just throw billions of dollars at the problem and if that doesn't work then walk away and let them fight it out in court, all the while saying 'We told you so'." There is a nice little video showing all the politicians vow not to let the automakers fail on "The Lonely Conservative."

I think part of the problem is that at his fundamental core President Obama is a socialist and he despises capitalism (which, by the way is, what made America great). His goals during this recession seem more about promoting his agenda and lending money to every business enterprise he can find so that later he can gag them when he rams universal health care and tax hikes down our throats (just ask the CEO of BofA, if only he could tell you).

Check out this brief article too.

And as a parting thought think about this - Is America still free and are companies "private" if we all owe the government for our houses, jobs, and cars?

Obama and Fox News

The video below show's President Obama making a thinly veiled poke at Fox News . Maybe the news coverage is getting to him? Also, see this article on The Lonely Conservative.

Obama's Foreign Policy

The recent extended foreign policy trip by President Obama has so many implications, most of them negative, for America in the near future. This clip of an interview of Newt Gingrich by Sean Hannity does a pretty good job of summing up the issues.

It is incredible that an American President would so clearly imply that America is at fault for most of the current global economic crisis. Obama apologized his way across Europe and got nothing in return. Perhaps the most ridiculous part is Obama's bow to the King of Saudi Arabia. Now I for one don't really see it as a problem if an American President wants to bow to the leader of another nation out of respect. Particularly in Saudi Arabia where this is the custom. The thing that really pushes my buttons is the fact that Obama's administration seems to feel they must lie about this and blame the height differential. Seriously, I don't buy that - but check it out for yourself.

The Truth About The Obama Budget

Stanford's Michael Boskin hits the nail on the head when he describes Obama's proposed budget. Probably one of largest misconceptions about the state of the federal budget and taxes is the notion that Obama will lower taxes for 95% of Americans (ostensibly those making less than $250,000 a year). And yes, technically what Obama is proposing will not directly raise taxes on those making less that $250,000. The catch is that even though you don't directly pay the Treasury you will pay for the added cost of government under Obama. If you really ask yourself, how would you prefer to be taxed: openly or indirectly? I prefer openly simply because it is a lot easier to sneak in tax hikes if the public doesn't know they're being taxed! How is Obama secretly taxing us, you ask? First, consider one of Obama's biggest domestic policy promises - expanded health care coverage. The current government health care program, Medicare, is not funded through income taxes, but a payroll tax which falls disproportionately on lower income individuals. How could this be true? Simple payroll taxes are paid by all individuals that have a job, and by their employer, and it is a flat rate not based on income (currently ~7.65%). Since this tax is not part of your federal income tax return it is also never refunded to you in part or whole. Making it the largest tax paid by low income earners. If Obama's health care plans involve increases in these taxes they will fall disproportionally on working middle-class Americans and their employers. You may be saying to yourself "Wait a minute, no one has talked about raising the payroll tax rate." You're right Obama hasn't proposed it, but it is a logical way to pay for the health care proposals that he is pushing for - especially since most American know little about this tax. So in the interests of posterity I thought it should be mentioned, but I digress.

This brings me to the second method by which Obama is raising taxes on individuals. This one is both downright underhanded and a little complicated so bear with me. As Boskin's article points out, Obama is going to add at least $6.5 trillion, yes trillion, to the national debt. Let me put this in perspective: there are ~300 million Americans so $6.5 trillion comes out to about $21,500 per person. And make no mistake every single dollar borrowed today must be paid back by our children and grandchildren, with interest. The real kicker here is that the savings rate in this nation is less than 5%. This means that most of the trillions of dollars we are borrowing are coming from other nations. Paying interest on this $6.5 trillion isn't really a problem if most of the bonds are held by U.S. citizens because we just paying ourselves on our debt. It is the fact that we are paying interest to foreign nations that really drains wealth out of this country. It gets even better, though. As the Federal government continues to borrow the debt service becomes more and more burdensome, in turn the credit worthiness of the government begins to deteriorate. The parties buying U.S. sovereign debt demand higher and higher interest rates to offset the increasing riskiness of Treasuries. Let me be clear, the current debt load is not extreme enough to have huge impacts on the credit rating of the Federal government, but it does have small impacts. Those increases result in higher borrow costs for the U.S. government which translates into more tax dollars needed just to pay the interest (or more debt). These costs alone do affect taxpayers indirectly, but the largest impacts come from other channels. The interest rates prevailing on U.S. government bonds are the benchmark rates for most market interest rates (including the prime rate that is the basis for mortgage and auto loan rates). As the U.S. government's borrowing costs rise so do the costs for every single American. This is the real tax that we will pay for Obama's massive debt addiction. We will pay it every day on our mortgages, car loans, credit card bills, and inflation.

The scary part is that the $6.5 trillion doesn't include the trillions of additional dollars the Federal Reserve and Treasury have pledged for the economic bailout. The next time you pay your mortgage think about the real cost of all this debt and whether it is worth it or not.

Down the Path of Britain

Check out this Fox News interview.

General Motors (A Division of the U.S. Treasury)

Ok, seriously I don't even know where to begin to explain what went wrong here. The major U.S. car makers have been getting their butts kicked by foreign manufacturers for years. Basically everybody involved with these companies was to blame. Until recently these problems were left to GM to solve since they are, after all, GM's problems. This is one of the hallmarks of the American economic system, and one of our greatest strengths. The creativity and rapid advancement that stems from such individual economic freedoms is what made America great. The flip side of this is that every once in a while our economy will stumble, and the current deleveraging was a long time coming. What really makes this recession unique is the willingness on the part of Americans to tolerate such huge changes in the scope of government involvement in our lives and economy.

A case in point is that the government went from basically making loans to GM and Chrysler to forcing the resignation of GM's CEO in very short order. It is shocking that such a thing could happen in the U.S. without huge public debate or outrage, but it did and with barely a whisper of protest. Don't worry, it gets even worse - the article linked to in this post's title details the horrors of government intrusion. Barely had 24 hours passed on Obama forcing Waggoner out and now there is talk of dictating who can serve on the board of directors. It's now official folks: General Motors is a de facto state owned and operated company! The really incredible part of all this is that by replacing Waggoner Obama is implying that he believes that his administration is better suited to pick leaders to run companies than shareholders. I doubt very much that Obama has the industry knowledge possessed by, oh I don't know, Waggoner! Not to mention the fact that the President's track record of nominating leaders is not very good - just look at his nominations for cabinet positions. This is just one more brick in what is turning out to be a fairly short road to socialism and this administration is barely 60 days old.



The precedents set with GM and the current economic stimulus and bailout plans will have long reaching and I fear disastrous consequences for the long-term vitality of our economy.