Commentary Magazine


Topic: Fannie Mae

Obama Makes it Too Easy on His Critics

In a recent interview with Rolling Stone magazine, the president was asked about the tone and tenor of the debate that’s going to take place during the campaign. Obama answered, in part, this way:

[The GOP’s] vision is that if there’s a sliver of folks doing well at the top who are unencumbered by any regulatory restraints whatsoever, that the nation will grow and prosperity will trickle down. The challenge that they’re going to have is: We tried it. From 2000 to 2008, that was the agenda. It wasn’t like we have to engage in some theoretical debate – we’ve got evidence of how it worked out. It did not work out well, and I think the American people understand that. Now, the burden on me is going to be to describe for the American people how the progress we’ve made over the past three years, if sustained, will actually lead to the kind of economic security that they’re looking for. There’s understandable skepticism, because things are still tough out there… The fact of the matter is that times are still tough for too many people, and the recovery is still not as robust as we’d like, and that’s what will make it a close election. It’s not because the other side has a particularly persuasive theory in terms of how they’re going to move this country forward.

So Obama wants a debate based not on theoretical claims but on empirical achievements.

Wonderful. Why don’t we accommodate the president?

Read More

In a recent interview with Rolling Stone magazine, the president was asked about the tone and tenor of the debate that’s going to take place during the campaign. Obama answered, in part, this way:

[The GOP’s] vision is that if there’s a sliver of folks doing well at the top who are unencumbered by any regulatory restraints whatsoever, that the nation will grow and prosperity will trickle down. The challenge that they’re going to have is: We tried it. From 2000 to 2008, that was the agenda. It wasn’t like we have to engage in some theoretical debate – we’ve got evidence of how it worked out. It did not work out well, and I think the American people understand that. Now, the burden on me is going to be to describe for the American people how the progress we’ve made over the past three years, if sustained, will actually lead to the kind of economic security that they’re looking for. There’s understandable skepticism, because things are still tough out there… The fact of the matter is that times are still tough for too many people, and the recovery is still not as robust as we’d like, and that’s what will make it a close election. It’s not because the other side has a particularly persuasive theory in terms of how they’re going to move this country forward.

So Obama wants a debate based not on theoretical claims but on empirical achievements.

Wonderful. Why don’t we accommodate the president?

Annual economic growth was three times higher under President Bush than under President Obama. Under Bush, the unemployment rate averaged 5.3 percent; under Obama, it has never been under 8 percent. In the wake of a recession that began roughly seven weeks after President Bush took office, America experienced six years of uninterrupted economic growth and a record 52 straight months of job creation that produced more than 8 million new jobs. We saw labor-productivity gains that averaged 2.5 percent annually — a rate that exceeds the averages of the 1970s, 1980s, and 1990s. Real after-tax income per capita increased by more than 11 percent. And from 2000 to 2007, real GDP grew by more than 17 percent, a gain of nearly $2.1 trillion. As for the deficit, it fell to 1 percent of GDP ($162 billion) by 2007. Indeed, before the financial crisis of 2008 – which I’ll return to in a moment — Bush’s budget deficits were 0.6 percentage points below the historical average.

As for the Obama record, as I point out in this essay in the current issue of COMMENTARY, President Obama has overseen the weakest recovery on record. He is on track to have the worst jobs record of any president in the modern era. The standard of living for Americans has fallen more dramatically during his presidency than during any since the government began recording it five decades ago. Unemployment has been above 8 percent for 40 consecutive months, the longest such stretch since the Great Depression. Home values are nearly 35 percent lower than they were five years ago. The United States has amassed more than $5 trillion in debt since January 2009, with the president having submitted four budgets with trillion-dollar-plus deficits. Prior to Obama, no president had submitted even a single budget with deficits in excess of a trillion dollars. In addition, government dependency, defined as the percentage of persons receiving one or more federal benefit payments, is the highest in American history. And a record 46 million Americans are now living in poverty.

On Obama’s record, then, it’s not like we have to engage in some theoretical debate. We’ve got evidence of how it worked out. It did not work out well, and I think the American people understand that.

Now unlike Obama, some of us are willing to concede that things need to be placed within a proper context. Obama took the oath of office in the wake of a financial collapse that made every economic indicator much worse; it’s only fair to take that into account. But even here, in characterizing what happened, Obama insists on presenting a distorted picture of reality, pretending that it was wholly the fault of his predecessor and the GOP. In fact, it was a complex set of factors that involved everything from credit default swaps to the Federal Reserve to policies in which both parties were complicit. But this much we know: Democrats bear the majority of the blame for blocking reforms that could have mitigated the effects of the housing crisis, which in turn led to the broader financial crisis.

As Stuart Taylor put it in 2008:

The pretense of many Democrats that this crisis is altogether a Republican creation is simplistic and dangerous. It is simplistic because Democrats have been a big part of the problem, in part by supporting governmental distortions of the marketplace through mortgage giants Fannie Mae and Freddie Mac, whose reckless lending practices necessitated a $200 billion government rescue [in September 2008]. … Fannie and Freddie appear to have played a major role in causing the current crisis, in part because their quasi-governmental status violated basic principles of a healthy free enterprise system by allowing them to privatize profit while socializing risk.

The Bush administration warned as early as April 2001 that Fannie and Freddie were too large and overleveraged and that their failure “could cause strong repercussions in financial markets, affecting federally insured entities and economic activity” well beyond housing. Bush’s plan would have subjected Fannie and Freddie to the kinds of federal regulation that banks, credit unions, and savings and loans have to comply with. In addition, Republican Richard Shelby, then chairman of the Senate Banking Committee, pushed for comprehensive GSE (government-sponsored enterprises) reform in 2005. And who blocked these efforts at reforming Fannie and Freddie? Democrats such as Christopher Dodd and Representative Barney Frank, along with the then-junior senator from Illinois, Barack Obama, who backed Dodd’s threat of a filibuster (Obama was the third-largest recipient of campaign gifts from Fannie and Freddie employees in 2004).

So Obama and his party bear a substantial (though not exclusive) responsibility in creating the economic crisis that Obama himself inherited. And even if you set all this aside, Obama entered office knowing what he faced, including a deficit and debt that was exploding. And rather than promote policies that accelerated economic growth and began to address our fiscal entitlement crisis, Obama went in exactly the opposite direction.

One other observation: historically, the worse the recession, the stronger the recovery (it’s referred to as the “rubber band effect.”) What is noteworthy about Obama’s economic record is how, in an environment in which one would expect the recovery to be unusually strong, it has been historically anemic. It seems to me, then, that “the other side” has quite a persuasive theory when it comes to moving the nation forward, at least compared to the theory being advanced by the current occupant in the White House.

Sometimes it seems as if Barack Obama is making it too easy on his critics.

Read Less

The Obama Campaign’s False Premise

In my critique of President Obama’s 17-minute campaign documentary, “The Road We’ve Traveled,” I took issue with the claim, now taken as a truism by Obama supporters, that he inherited the worst economy since the Great Depression.

I argued that the economy Ronald Reagan inherited was sicker, and I want to elaborate on that assertion.

Read More

In my critique of President Obama’s 17-minute campaign documentary, “The Road We’ve Traveled,” I took issue with the claim, now taken as a truism by Obama supporters, that he inherited the worst economy since the Great Depression.

I argued that the economy Ronald Reagan inherited was sicker, and I want to elaborate on that assertion.

In his superb biography of the Reagan presidency The Age of Reagan, Steven Hayward reminds us that the nation’s economic conditions “began slipping toward near panic in the two weeks after the 1980 election.”

Prime interest rates were around 19 percent. Inflation was in double digits, with forecasts that food prices would rise by more than 10 percent in the coming year and energy prices by 20-40 percent. Unemployment stood at 7.4 percent (it would eventually rise to 10.8 percent in the early years of Reagan’s presidency). Housing starts were in free fall. And auto sales were down 10 percent from the previous year.

I remind people of this only because the narrative that no president has faced more daunting challenges than Mr. Obama is false. That doesn’t mean that Obama didn’t face substantial problems when he took the oath of office. He did; but they were not unprecedented by any means.

Moreover, unlike Reagan, the economy Obama inherited was in large part an economy of his (and his party’s) own making. I say that because, in the words of AEI’s Peter Wallison, the “sine qua non of the financial crisis was U.S. government housing policy” — and that “far from being a marginal player, Fannie Mae was the source of the decline in mortgage underwriting standards that eventually brought down the financial system.”

Would it be too indecorous to point out that the Bush administration warned as early as April 2001 that Fannie and Freddie were too large and overleveraged and that their failure “could cause strong repercussions in financial markets, affecting federally insured entities and economic activity” well beyond housing?

In fact, President Bush’s plan for reform would have subjected Fannie and Freddie to the kinds of federal regulation that banks, credit unions, and savings and loans have to comply with. In addition, Republican Richard Shelby, then chairman of the Senate Banking Committee, pushed for comprehensive GSE (government-sponsored enterprises) reform in 2005. And who blocked these efforts at reforming Fannie and Freddie? Democrats such as Senator Christopher Dodd and Representative Barney Frank, along with the then-junior senator from Illinois, Barack Obama, who backed Dodd’s threat of a filibuster (Obama was the third-largest recipient of campaign gifts from Fannie and Freddie employees in 2004).

In other words, Democrats bear the majority of the blame for blocking reforms that could have mitigated the effects of the housing crisis, which in turn led to the broader financial crisis. So Mr. Obama and his party bear a substantial (though not exclusive) responsibility in creating the economic crisis that Obama himself inherited.

Just for the record.

Oh, and one other point: When Ronald Reagan inherited what really was the worst economy since the Great Depression, he actually took steps to revive it; and his efforts led to an extraordinary period of sustained economic growth. That allowed Reagan to run on his “Morning in America” theme and win re-election while carrying 49 states.

Mr. Obama, on the other hand, has helped produce the weakest recovery since the Great Depression, with many economic indicators getting worse, not better, under his watch. Which is why Obama, unlike Reagan, should lose his bid for re-election.

Read Less

Mortgage Settlement is Bank Robbery

It is notorious that politicians only care about two things, tomorrow’s headline and the next election. If you want a good example of what that leads to consider the bank “settlement” announced yesterday by President Obama and a bunch of state attorneys general.

The headline is great, the noble politicians forcing the big bad bankers to cough up $26 billion to help the downtrodden. It probably won’t hurt on November 6th either. Of course the money doesn’t come from the big, bad bankers. It comes from their shareholders, for the most part perfectly ordinary citizens saving for their retirement. In other words, it’s an income transfer from the disfavored to the favored for the benefit of politicians claiming to act for the benefit of the people.

Read More

It is notorious that politicians only care about two things, tomorrow’s headline and the next election. If you want a good example of what that leads to consider the bank “settlement” announced yesterday by President Obama and a bunch of state attorneys general.

The headline is great, the noble politicians forcing the big bad bankers to cough up $26 billion to help the downtrodden. It probably won’t hurt on November 6th either. Of course the money doesn’t come from the big, bad bankers. It comes from their shareholders, for the most part perfectly ordinary citizens saving for their retirement. In other words, it’s an income transfer from the disfavored to the favored for the benefit of politicians claiming to act for the benefit of the people.

To be sure, there were mistakes made and sloppy procedures allowed when the banks were faced with an unprecedented avalanche of defaulting mortgages. And these lapses were dealt with in the usual—and proper—way. Bank regulators moved in, audited the books, required the banks to change their procedures, and fined the banks a total of $394 million.

This settlement is wholly a political, not a regulatory act. Corporations are largely defenseless against such a move, as the mainstream media can be counted on to be pro-government and anti-bank. When Ohio Attorney  General Richard Cordray said that the banks were “a business model based on fraud,” the media reported it straight. All too often, the media’s idea of being fair and balanced is to offer the banks an opportunity to prove that they did not commit fraud—in 30 words or less, please. But how many banks have been indicted for fraud over the mortgage mess? Exactly none.

Of the $26 billion, only $1.5 billion will go to homeowners who actually lost their homes through improper foreclosure procedures. That money will be shared by about 750,000 families, each receiving a less-than-princely $1500 to $2000. Most of the rest will go to people who will have their total mortgage debt reduced or have their mortgages refinanced at lower interest rates. Even the New York Times reporters covering the story, were not much impressed: “Economists do not expect a big boost for the economy, in part because the banks have three years to distribute the aid. Some experts questioned whether the accord would do much to stabilize the housing market and its glut of millions of foreclosed homes.”

And Fannie and Freddie, whose business models were at the heart of the mortgage crisis? Well, they’re now back in the hands of the government. Sticking it to them would cost not stockholders but the government money. So while they hold about half the total number of mortgages outstanding, they get a pass. If your mortgage is held by Citibank, you might get a windfall. If it’s held by Fannie Mae, tough luck.

In short, welcome to a glimpse of the wonderful world President Obama would like to see the United States transformed into. It will be a world where the few will act as self-appointed and largely unaccountable fiduciaries for the many.

Read Less

Flotsam and Jetsam

This is what desperation looks like: “Forget the myth of an Obama recovery. The past week has been disastrous for the White House and America’s increasingly disillusioned Left. No wonder the angry and desperate Vice President Joe Biden is talking about ‘playing hell’ if his party suffers defeat in November.”

This is what old-style politics sounds like: “White House senior adviser David Axelrod said the U.S. Chamber of Commerce has the burden of proving false the charge by Democrats that the business group is funneling foreign money to Republican campaigns. Axelrod was pressed by CBS’ Bob Schieffer on Sunday for evidence that the foreign campaign contributions benefiting the GOP is more than ‘peanuts.’  ‘Do you have any evidence that it’s not, Bob?’ Axelrod said on ‘Face the Nation.’  Ed Gillespie responded that it “was ‘an unbelievable mentality’ for Axelrod to assert charges about foreign contributions without backing them up.” It’s all too believable, unfortunately.

This is what a wave election looks like: “Democrats are buying advertising in places they hadn’t previously reserved it, a strong indication the battlefield is expanding. That includes New England, which hasn’t a single Republican House member. A new ad by the Democratic Congressional Campaign Committee began airing this week in the Massachusetts district covering Cape Cod, where Democratic Rep. Bill Delahunt is retiring and ex-police sergeant Jeff Perry is posting a strong GOP challenge.”

This is what a lousy TV appearance looks like: “Alexi Giannoulias, the Illinois Democrat running for President Obama’s old Senate seat, said Sunday that he wants to “reform” the president’s health care overhaul, and that the $814 billion stimulus was imperfect but that it prevented Americans from standing in soup lines. Giannoulias, who appeared on NBC’s ‘Meet the Press’ to debate Republican Mark Kirk, was on the defensive throughout the debate regarding Obama’s policies, as well as his past work for his family’s community bank and its ties to mob figures.”

This is what an eloquent first lady’s writing looks like: “Though some Afghan leaders have condemned the violence and defended the rights of women, others maintain a complicit silence in hopes of achieving peace. But peace attained by compromising the rights of half of the population will not last. Offenses against women erode security for all Afghans — men and women. And a culture that tolerates injustice against one group of its people ultimately fails to respect and value all its citizens.” Yeah, I miss her too.

This is what the GOP sounded like in 2006. “The chairman of the Democratic Congressional Campaign Committee brushed off various members’ ads touting opposition to President Obama and Speakers Nancy Pelosi (D-Calif.), saying that it simply shows the party is a big tent unlike the right.”

This is what “hope and change” looks like? “President Obama’s new National Security Advisor spent the decade prior to joining the White House as a legal advisor to powerful interests including Goldman Sachs and Citigroup, and as a lobbyist for Fannie Mae, where he oversaw the mortgage giant’s aggressive campaign to undermine the credibility of a probe into its accounting irregularities, according to government reports and public disclosure forms. … While housing sales were still booming, internally these were troubled years for the company. In a report first noted by ABC News in 2008, Donilon is described as someone who lobbied for and helped paint a rosy picture of Fannie Mae’s financial health to the company’s board. He did so at a time when Fannie Mae faced accusations that it was misstating its earnings from 1998 to 2004.”

This is what a flaky candidate sounds like: “Jerry Brown: Mammograms not effective.”

This is what desperation looks like: “Forget the myth of an Obama recovery. The past week has been disastrous for the White House and America’s increasingly disillusioned Left. No wonder the angry and desperate Vice President Joe Biden is talking about ‘playing hell’ if his party suffers defeat in November.”

This is what old-style politics sounds like: “White House senior adviser David Axelrod said the U.S. Chamber of Commerce has the burden of proving false the charge by Democrats that the business group is funneling foreign money to Republican campaigns. Axelrod was pressed by CBS’ Bob Schieffer on Sunday for evidence that the foreign campaign contributions benefiting the GOP is more than ‘peanuts.’  ‘Do you have any evidence that it’s not, Bob?’ Axelrod said on ‘Face the Nation.’  Ed Gillespie responded that it “was ‘an unbelievable mentality’ for Axelrod to assert charges about foreign contributions without backing them up.” It’s all too believable, unfortunately.

This is what a wave election looks like: “Democrats are buying advertising in places they hadn’t previously reserved it, a strong indication the battlefield is expanding. That includes New England, which hasn’t a single Republican House member. A new ad by the Democratic Congressional Campaign Committee began airing this week in the Massachusetts district covering Cape Cod, where Democratic Rep. Bill Delahunt is retiring and ex-police sergeant Jeff Perry is posting a strong GOP challenge.”

This is what a lousy TV appearance looks like: “Alexi Giannoulias, the Illinois Democrat running for President Obama’s old Senate seat, said Sunday that he wants to “reform” the president’s health care overhaul, and that the $814 billion stimulus was imperfect but that it prevented Americans from standing in soup lines. Giannoulias, who appeared on NBC’s ‘Meet the Press’ to debate Republican Mark Kirk, was on the defensive throughout the debate regarding Obama’s policies, as well as his past work for his family’s community bank and its ties to mob figures.”

This is what an eloquent first lady’s writing looks like: “Though some Afghan leaders have condemned the violence and defended the rights of women, others maintain a complicit silence in hopes of achieving peace. But peace attained by compromising the rights of half of the population will not last. Offenses against women erode security for all Afghans — men and women. And a culture that tolerates injustice against one group of its people ultimately fails to respect and value all its citizens.” Yeah, I miss her too.

This is what the GOP sounded like in 2006. “The chairman of the Democratic Congressional Campaign Committee brushed off various members’ ads touting opposition to President Obama and Speakers Nancy Pelosi (D-Calif.), saying that it simply shows the party is a big tent unlike the right.”

This is what “hope and change” looks like? “President Obama’s new National Security Advisor spent the decade prior to joining the White House as a legal advisor to powerful interests including Goldman Sachs and Citigroup, and as a lobbyist for Fannie Mae, where he oversaw the mortgage giant’s aggressive campaign to undermine the credibility of a probe into its accounting irregularities, according to government reports and public disclosure forms. … While housing sales were still booming, internally these were troubled years for the company. In a report first noted by ABC News in 2008, Donilon is described as someone who lobbied for and helped paint a rosy picture of Fannie Mae’s financial health to the company’s board. He did so at a time when Fannie Mae faced accusations that it was misstating its earnings from 1998 to 2004.”

This is what a flaky candidate sounds like: “Jerry Brown: Mammograms not effective.”

Read Less

The Blue Dogs Won’t Just Be Playing Dead

The Blue Dog Democrats fancy themselves as fiscal conservatives. It is those other Democrats, they tell us, who are responsible for all the debt, the out-of-control spending, etc. Chris Chocola of the Club for Growth says that this is bunk:

In the House of Representatives, the 54 members of the Blue Dog Coalition are the self-described fiscal conservatives in the Democratic caucus. Unfortunately, the description doesn’t fit. …

[T]he Blue Dogs became Mrs. Pelosi’s lap dogs, voting with her 80% of the time on economic issues. Every one of them voted for the bailout of Fannie Mae and Freddie Mac. Sixty-three percent voted for the $700 billion Troubled Asset Relief Program; 91% voted for the stimulus package in February 2009; 85% voted for the cash-for-clunkers program; 74% voted for President Obama’s debt-tripling 2010 budget; 73% voted for the auto bailout; and 54% voted for the federal takeover of health care.

But now their voting records have caught up with them, and it is precisely these Democrats who are at extreme risk in the midterms. You hear pundits bemoan how the “moderate” Democrats will be lost, leaving the party controlled by the extreme left. Listen, that’s been the story for a while now. Had they pushed back against Nancy Pelosi, neither they nor their party would be headed for a thumping. It seems that the Blue Dogs’ obedience to their liberal leaders may cost them their political careers.

The Blue Dog Democrats fancy themselves as fiscal conservatives. It is those other Democrats, they tell us, who are responsible for all the debt, the out-of-control spending, etc. Chris Chocola of the Club for Growth says that this is bunk:

In the House of Representatives, the 54 members of the Blue Dog Coalition are the self-described fiscal conservatives in the Democratic caucus. Unfortunately, the description doesn’t fit. …

[T]he Blue Dogs became Mrs. Pelosi’s lap dogs, voting with her 80% of the time on economic issues. Every one of them voted for the bailout of Fannie Mae and Freddie Mac. Sixty-three percent voted for the $700 billion Troubled Asset Relief Program; 91% voted for the stimulus package in February 2009; 85% voted for the cash-for-clunkers program; 74% voted for President Obama’s debt-tripling 2010 budget; 73% voted for the auto bailout; and 54% voted for the federal takeover of health care.

But now their voting records have caught up with them, and it is precisely these Democrats who are at extreme risk in the midterms. You hear pundits bemoan how the “moderate” Democrats will be lost, leaving the party controlled by the extreme left. Listen, that’s been the story for a while now. Had they pushed back against Nancy Pelosi, neither they nor their party would be headed for a thumping. It seems that the Blue Dogs’ obedience to their liberal leaders may cost them their political careers.

Read Less

Finally, Barney Frank Confesses

You must remember the denials, the hissy fits, and the outrage. In the wake of the 2008 financial meltdown, Democrats — and Barney Frank specifically — screamed that it was outrageous to hold them responsible for promoting home ownership to everyone and anyone, regardless of creditworthiness, or for their cozy relationship with Fannie Mae and Freddie Mac. Well, getting a jump on his Day of Atonement, Barney Frank has decided to come clean:

For years, Frank was a staunch supporter of Fannie Mae and Freddie Mac, the giant government housing agencies that played such an enormous role in the financial meltdown that thrust the economy into the Great Recession. But in a recent CNBC interview, Frank told me that he was ready to say goodbye to Fannie and Freddie.

“I hope by next year we’ll have abolished Fannie and Freddie,” he said. Remarkable. And he went on to say that “it was a great mistake to push lower-income people into housing they couldn’t afford and couldn’t really handle once they had it.” He then added, “I had been too sanguine about Fannie and Freddie.”

When I asked Frank about a long-term phase-out plan that would shrink Fannie and Freddie portfolios and mortgage-purchase limits, and merge the agencies into the Federal Housing Administration (FHA) for a separate low-income program that would get government out of middle-income housing subsidies, he replied: “Larry, that, I think, is exactly what we should be doing.”

Hmm. You mean it wasn’t all George W. Bush’s fault? You mean conservative economists and pundits who pointed to the role of Democrats and their Freddie and Fannie clients had it right? You mean the White House meme – that a vote for Republicans (who unsuccessfully tried to rein in Freddie and Fannie) would be reckless — is hooey?

Now imagine if George Bush came forward to say, “I was wrong on Iraq.” Do you think, just maybe, that would be front-page headlines? Just asking.

You must remember the denials, the hissy fits, and the outrage. In the wake of the 2008 financial meltdown, Democrats — and Barney Frank specifically — screamed that it was outrageous to hold them responsible for promoting home ownership to everyone and anyone, regardless of creditworthiness, or for their cozy relationship with Fannie Mae and Freddie Mac. Well, getting a jump on his Day of Atonement, Barney Frank has decided to come clean:

For years, Frank was a staunch supporter of Fannie Mae and Freddie Mac, the giant government housing agencies that played such an enormous role in the financial meltdown that thrust the economy into the Great Recession. But in a recent CNBC interview, Frank told me that he was ready to say goodbye to Fannie and Freddie.

“I hope by next year we’ll have abolished Fannie and Freddie,” he said. Remarkable. And he went on to say that “it was a great mistake to push lower-income people into housing they couldn’t afford and couldn’t really handle once they had it.” He then added, “I had been too sanguine about Fannie and Freddie.”

When I asked Frank about a long-term phase-out plan that would shrink Fannie and Freddie portfolios and mortgage-purchase limits, and merge the agencies into the Federal Housing Administration (FHA) for a separate low-income program that would get government out of middle-income housing subsidies, he replied: “Larry, that, I think, is exactly what we should be doing.”

Hmm. You mean it wasn’t all George W. Bush’s fault? You mean conservative economists and pundits who pointed to the role of Democrats and their Freddie and Fannie clients had it right? You mean the White House meme – that a vote for Republicans (who unsuccessfully tried to rein in Freddie and Fannie) would be reckless — is hooey?

Now imagine if George Bush came forward to say, “I was wrong on Iraq.” Do you think, just maybe, that would be front-page headlines? Just asking.

Read Less

President Obama, You’re No Abraham Lincoln

According to a new Rasumussen Reports survey, more likely voters now believe Barack Obama’s policies are to blame for the continuing bad economy than blame President Bush (48 vs. 47 percent). That gap will, I think, widen in the months ahead. In addition, the effort by Obama to blame his predecessor for everything from traffic congestion to nasal congestion is backfiring on Obama. The president’s incessant whining makes him look small-minded and petty, and also weak and overmatched by events.

The feeling one gets in watching Obama is not that he is engaged or energized or feels joy in his job; it is that he thinks things are just so darn hard and that the hand he’s been dealt is so darn unfair. He is therefore always in search of scapegoats. Given his habitual complaining, Obama might consider looking for guidance from Lincoln, who faced problems that make what Obama faces look like a stroll in the park. “He did not deal in blame,” William Lee Miller writes of Lincoln in President Lincoln: The Duty of a Statesman. Lincoln didn’t pin blame on James Buchanan even though, unlike Obama (whose actions as senator, when he joined in the effort to stop the reform of Freddie Mac and Fannie Mae, contributed to the financial crisis in 2008), Lincoln had plenty of grounds for doing so. America’s 16th president instead “grappled with what to do … in the terms that the issue[s] came to him.”

Now no one, aside from the New Yorker and a few other liberal magazines and commentators, ever mistook Obama as the second coming of Lincoln. But the degree to which Obama embodies the opposite qualities of Lincoln is fairly striking. Lincoln was a man of unusual grace, large spirited, without self-pity, a man who did not demean or demonize others. Obama is the antithesis of all that. The public sees it, and they aren’t terribly impressed by it.

According to a new Rasumussen Reports survey, more likely voters now believe Barack Obama’s policies are to blame for the continuing bad economy than blame President Bush (48 vs. 47 percent). That gap will, I think, widen in the months ahead. In addition, the effort by Obama to blame his predecessor for everything from traffic congestion to nasal congestion is backfiring on Obama. The president’s incessant whining makes him look small-minded and petty, and also weak and overmatched by events.

The feeling one gets in watching Obama is not that he is engaged or energized or feels joy in his job; it is that he thinks things are just so darn hard and that the hand he’s been dealt is so darn unfair. He is therefore always in search of scapegoats. Given his habitual complaining, Obama might consider looking for guidance from Lincoln, who faced problems that make what Obama faces look like a stroll in the park. “He did not deal in blame,” William Lee Miller writes of Lincoln in President Lincoln: The Duty of a Statesman. Lincoln didn’t pin blame on James Buchanan even though, unlike Obama (whose actions as senator, when he joined in the effort to stop the reform of Freddie Mac and Fannie Mae, contributed to the financial crisis in 2008), Lincoln had plenty of grounds for doing so. America’s 16th president instead “grappled with what to do … in the terms that the issue[s] came to him.”

Now no one, aside from the New Yorker and a few other liberal magazines and commentators, ever mistook Obama as the second coming of Lincoln. But the degree to which Obama embodies the opposite qualities of Lincoln is fairly striking. Lincoln was a man of unusual grace, large spirited, without self-pity, a man who did not demean or demonize others. Obama is the antithesis of all that. The public sees it, and they aren’t terribly impressed by it.

Read Less

A Pernicious New Tax, A Disastrous Bill

A friend who works in finance writes:

Just hours before finishing the 2,000-page Dodd-Frank financial reform bill at 5:40am Friday morning, leaders of the Democratic majority snuck in a wholly new, unprecedented, and very damaging tax on U.S.-based institutions that provide critical capital to small and large businesses across the country.

Specifically, a new Financial Stability Oversight Council (will impose an “assessment” on almost all types of financial institutions with more than $50 billion in assets (excluding banks that have deposit insurance, as well as Fannie Mae, Freddie Mac, and other types of “government-sponsored enterprise”) as well as hedge funds that manage more than $10 billion.

Collection of the tax will begin at yet-to-be-determined time prior to September 2012.  The funds will be placed in a “Financial Crisis Special Assessment Fund” at Treasury and cannot be removed for 25 years, after which time they will be used to pay down the deficit.

The insidious maneuver is the clearest indication that supporters of the Dodd-Frank bill will gladly sacrifice the growth and prosperity of the U.S. economy if it means they can spitefully “stick it” to U.S. financial institutions one more time. With unemployment figures lingering at recent highs and a growing recognition that previous so-called “stimulus” measures have failed to have a meaningful impact on the U.S. economy, the Democratic majority’s new tax will confiscate nearly $20 billion from institutions that lend money and provide equity capital to all types of businesses — including start-ups, large manufacturers, healthcare providers, and small family-owned businesses.

In its wildest dreams, the government could not conceive of a more anti-stimulative policy: To take $20 billion from the firms whose role it is to allocate money to the fastest growing and most productive, job-creating firms, and have that money lie dormant in a vault at the U.S. Treasury for two-and-a-half decades.

And it gets much worse. The criteria used to determine how much any given firm will owe are so nebulous that it is impossible for a firm to calculate its share of the tax.  For instance, included among the sixteen or so factors used to calculate an individual firm’s tax obligation are the following:

  • “the nature, scope, and mix of the company’s activities;”
  • “the extent and nature of the company’s transactions and relationships with other financial companies;”
  • “the amount and nature of the company’s financial assets;”
  • “the company’s importance as a source of credit for households, businesses, and State and local governments and as a source of liquidity for the financial system”
  • “the company’s importance as a source of credit for low-income, minority, or underserved communities and the impact the failure of such company would have on the availability of credit in such communities;”
  • “such other risk-related factors as the Council may determine to be appropriate.”

The uncertainty created by these completely ambiguous factors will invariably lead firms subject to this tax to reserve amounts that are several times what it may ultimately owe.  This will keep considerably more than the $20 billion from being put to productive use in the economy.  Banks, insurance companies, and investment funds are already hesitant to lend to businesses.  The tax will ensure that those capital providers sit indefinitely on the sidelines. Further, the imposition of last minute, middle-of-the-night tax increases make businesses even more apprehensive because they have no idea what government “surprises” lay in the future.

Can it get even worse?  Of course.  The largest hedge funds have achieved their size because they have demonstrated consistent success over one or more decades.  As responsible safe havens of capital, these investment funds attract a disproportionate amount of the money that public and private pension funds dedicate to the hedge fund sector.  The Dodd-Frank tax will flow directly from the investors of these hedge funds and punish hundreds of thousands (even millions?) of pensioners.

Similarly, the millions of investors and customers of the companies in the $50+ billion institutions will also feel the pain of the Dodd-Frank tax. Messrs Dodd and Frank seem to believe that you can punish a business without harming the millions of investors, customers and suppliers connected to that business. They suspend disbelief to not recognize that businesses are merely formal collections of people organized to provide services and goods to other people. Punitive measures against corporations do not impact the faceless corporation itself, but the millions of people whose livelihoods revolve around the services and goods provided by the corporation.

The Dodd-Frank tax also comes with exceptionally onerous information sharing obligations that allow regulators to perform on-site inspections and rummage through all of the firm’s books and records. There are no limitations; regulators are allowed to view anything deemed “necessary to determine appropriate risk-based assessments.” These burdensome requirements alone are sufficient to encourage financial institutions to pack up and move overseas.

Putting aside the tax issues for a moment, I see another cynical purpose for the new tax. The initial versions of both the House and Senate bills had bailout funds that would be stacked with money in advance of the next economic crisis. The money would sit patiently (and unproductively) and wait for a future economic crisis, at which time it would be used to support creditors of floundering Too Big To Fail firms. Due to public revulsion of bailouts, these “pre-crisis funds” ($150 billion in the House bill and $50 billion in the Senate bill) were eliminated in the final bill. However, it seems increasingly clear that the new Dodd-Frank tax is merely a clandestine attempt to reinstitute the pre-crisis fund.

The Dodd-Frank tax is being imposed on the exact same collection of businesses that were targeted in the House bill, and the assessments are being calculated based on the exact same criteria in the House and Senate bills. In fact, the only difference between the pre-crisis fund and the Dodd-Frank tax is a line that says the “Fund shall not be used in connection with the liquidation of any financial company under Title II [Orderly Liquidation Authority].”

But if it walks like a duck, swims like a duck, and quacks like a duck…you know the rest.  There is no getting around the fact that in both form and substance, the Dodd-Frank tax is the pre-crisis fund’s clone.  The meager line about not being used in an orderly liquidation can easily be removed by a future Congress or merely be ignored when the next crisis arrives.  Does anyone truly believe that if there’s a pool of money sitting at Treasury, that it won’t be used during an economic crisis? Besides, government funds are fungible and forever being misappropriated. How many times has government dipped previously “untouchable” pools of money, such as Social Security, to pay for a misguided government adventure?

This is noxious and injurious economic policy that will transform the fundamental relationship between business and government.  It will transfes billions of productive, job-creating dollars out of the economy, delaying additional growth for years.  And it is an insidious bait-and-switch tactic designed to re-insert, when no one is looking, a bailout fund that was previously rejected by the Senate and reviled by the public.

A friend who works in finance writes:

Just hours before finishing the 2,000-page Dodd-Frank financial reform bill at 5:40am Friday morning, leaders of the Democratic majority snuck in a wholly new, unprecedented, and very damaging tax on U.S.-based institutions that provide critical capital to small and large businesses across the country.

Specifically, a new Financial Stability Oversight Council (will impose an “assessment” on almost all types of financial institutions with more than $50 billion in assets (excluding banks that have deposit insurance, as well as Fannie Mae, Freddie Mac, and other types of “government-sponsored enterprise”) as well as hedge funds that manage more than $10 billion.

Collection of the tax will begin at yet-to-be-determined time prior to September 2012.  The funds will be placed in a “Financial Crisis Special Assessment Fund” at Treasury and cannot be removed for 25 years, after which time they will be used to pay down the deficit.

The insidious maneuver is the clearest indication that supporters of the Dodd-Frank bill will gladly sacrifice the growth and prosperity of the U.S. economy if it means they can spitefully “stick it” to U.S. financial institutions one more time. With unemployment figures lingering at recent highs and a growing recognition that previous so-called “stimulus” measures have failed to have a meaningful impact on the U.S. economy, the Democratic majority’s new tax will confiscate nearly $20 billion from institutions that lend money and provide equity capital to all types of businesses — including start-ups, large manufacturers, healthcare providers, and small family-owned businesses.

In its wildest dreams, the government could not conceive of a more anti-stimulative policy: To take $20 billion from the firms whose role it is to allocate money to the fastest growing and most productive, job-creating firms, and have that money lie dormant in a vault at the U.S. Treasury for two-and-a-half decades.

And it gets much worse. The criteria used to determine how much any given firm will owe are so nebulous that it is impossible for a firm to calculate its share of the tax.  For instance, included among the sixteen or so factors used to calculate an individual firm’s tax obligation are the following:

  • “the nature, scope, and mix of the company’s activities;”
  • “the extent and nature of the company’s transactions and relationships with other financial companies;”
  • “the amount and nature of the company’s financial assets;”
  • “the company’s importance as a source of credit for households, businesses, and State and local governments and as a source of liquidity for the financial system”
  • “the company’s importance as a source of credit for low-income, minority, or underserved communities and the impact the failure of such company would have on the availability of credit in such communities;”
  • “such other risk-related factors as the Council may determine to be appropriate.”

The uncertainty created by these completely ambiguous factors will invariably lead firms subject to this tax to reserve amounts that are several times what it may ultimately owe.  This will keep considerably more than the $20 billion from being put to productive use in the economy.  Banks, insurance companies, and investment funds are already hesitant to lend to businesses.  The tax will ensure that those capital providers sit indefinitely on the sidelines. Further, the imposition of last minute, middle-of-the-night tax increases make businesses even more apprehensive because they have no idea what government “surprises” lay in the future.

Can it get even worse?  Of course.  The largest hedge funds have achieved their size because they have demonstrated consistent success over one or more decades.  As responsible safe havens of capital, these investment funds attract a disproportionate amount of the money that public and private pension funds dedicate to the hedge fund sector.  The Dodd-Frank tax will flow directly from the investors of these hedge funds and punish hundreds of thousands (even millions?) of pensioners.

Similarly, the millions of investors and customers of the companies in the $50+ billion institutions will also feel the pain of the Dodd-Frank tax. Messrs Dodd and Frank seem to believe that you can punish a business without harming the millions of investors, customers and suppliers connected to that business. They suspend disbelief to not recognize that businesses are merely formal collections of people organized to provide services and goods to other people. Punitive measures against corporations do not impact the faceless corporation itself, but the millions of people whose livelihoods revolve around the services and goods provided by the corporation.

The Dodd-Frank tax also comes with exceptionally onerous information sharing obligations that allow regulators to perform on-site inspections and rummage through all of the firm’s books and records. There are no limitations; regulators are allowed to view anything deemed “necessary to determine appropriate risk-based assessments.” These burdensome requirements alone are sufficient to encourage financial institutions to pack up and move overseas.

Putting aside the tax issues for a moment, I see another cynical purpose for the new tax. The initial versions of both the House and Senate bills had bailout funds that would be stacked with money in advance of the next economic crisis. The money would sit patiently (and unproductively) and wait for a future economic crisis, at which time it would be used to support creditors of floundering Too Big To Fail firms. Due to public revulsion of bailouts, these “pre-crisis funds” ($150 billion in the House bill and $50 billion in the Senate bill) were eliminated in the final bill. However, it seems increasingly clear that the new Dodd-Frank tax is merely a clandestine attempt to reinstitute the pre-crisis fund.

The Dodd-Frank tax is being imposed on the exact same collection of businesses that were targeted in the House bill, and the assessments are being calculated based on the exact same criteria in the House and Senate bills. In fact, the only difference between the pre-crisis fund and the Dodd-Frank tax is a line that says the “Fund shall not be used in connection with the liquidation of any financial company under Title II [Orderly Liquidation Authority].”

But if it walks like a duck, swims like a duck, and quacks like a duck…you know the rest.  There is no getting around the fact that in both form and substance, the Dodd-Frank tax is the pre-crisis fund’s clone.  The meager line about not being used in an orderly liquidation can easily be removed by a future Congress or merely be ignored when the next crisis arrives.  Does anyone truly believe that if there’s a pool of money sitting at Treasury, that it won’t be used during an economic crisis? Besides, government funds are fungible and forever being misappropriated. How many times has government dipped previously “untouchable” pools of money, such as Social Security, to pay for a misguided government adventure?

This is noxious and injurious economic policy that will transform the fundamental relationship between business and government.  It will transfes billions of productive, job-creating dollars out of the economy, delaying additional growth for years.  And it is an insidious bait-and-switch tactic designed to re-insert, when no one is looking, a bailout fund that was previously rejected by the Senate and reviled by the public.

Read Less

Obama’s Financial Failure

It’s impossible to know with certainty at this point because we’re only about 30 percent through President Obama’s first term, but I suspect he will be judged quite harshly by history and his countrymen for not simply avoiding but dramatically accelerating the major domestic concern facing the United States: our unsustainable and soon-to-be debilitating deficit and debt.

I don’t lay all, or even most, of the blame on President Obama for the debt he faced upon taking office. While his party, like the GOP, was clearly complicit in the situation, and Obama’s own actions in the Senate (especially blocking reforms of Fannie Mae and Freddie Mac, which played a role in the collapse of the housing market) contributed to what went wrong, much of the river of red ink he inherited was due to a financial and credit implosion for which he wasn’t chiefly responsible.

What I do hold President Obama responsible for is that he took office when it was clear that our debt and deficit had reached crisis proportions. While that situation wasn’t the case when he decided to run for the presidency, it was the situation when he assumed the presidency. And rather than rethink the core purpose of his presidency, he decided to pursue his agenda in a state of denial, as if the financial collapse that began in September 2008 never happened, as if our ominous new fiscal reality had never occurred.

At the moment when history demanded one thing of Mr. Obama, he did another.

What the president should have done, in the wake of market collapse, was to create his own Nixon-to-China moment: trimming and reforming our middle-class-welfare state. It is the type of thing that a Democratic president and a Democratic Congress have much greater latitude to do than a Republican president and a Republican Congress. Instead, Obama used this moment to create a new middle-class entitlement, ObamaCare, at precisely the moment when our other ones are falling into bankruptcy. On top of that, of course, was the president’s $860 billion-plus stimulus package, his $410 billion omnibus spending bill, and his decision to spend hundreds of billions of TARP (Troubled Asset Relief Program) repayment dollars rather than to pay down the deficit.

Consider where we are and where we are headed. The deficit in 2009 was $1.4 trillion — the equivalent of 10 percent of the nation’s economic output and the highest percentage since the end of World War II. The president’s 2011 budget will generate a combined $9.75 trillion in deficits over the next decade. Our publicly held debt, which was $6.3 trillion when Obama entered office, now totals $8.2 trillion. According to the CBO, it’s headed to more than $20 trillion in 2020, equaling 90 percent of the estimated gross domestic product that year. (As a reference point, nations that comprise the European Union are required to keep their debt levels below 60 percent.) Interest rates alone would consume some $900 billion per year, almost five times what they were last year. In addition, the total unfunded liability (the gap between projected assets and benefit obligations) for Medicare and Social Security is $43 trillion; in five years, the total is estimated to grow to $57 trillion. (For more, see this, this, and this.

Confronting figures like this, Mr. Obama should have made spending restraint and entitlement reform his top domestic priority. And yet the president has taken us in exactly the opposite direction, engineering the passage of ObamaCare (over its first ten years of full implementation, it will cost at least $2 trillion). That is the equivalent of dropping plane loads of lighter fluid onto a fire that is raging out of control.

Why Mr. Obama made this fateful decision is hard to tell. He is a person of unusual ideological rigidity. The president is undeniably committed to expanding the size, scope, and reach of government. Like any 21st century Man of the Left, his ambition is to make more and more citizens wards of the state, to create greater dependency on the federal government. That, at least, is what Obama’s actions indicate his intentions to be. But whatever his motivations, the results are what matter. Whether or not we can ever undo the fiscal damage that is being inflicted on us is an open question. It will require us to take steps that we as a society have been exceedingly reluctant to take, including means-testing entitlements and increasing the retirement age. It will require fiscal self-discipline, restraint, and what Adam Smith called “self-command.” (For an enlightening analysis of Smith, see this essay by Ethics and Public Policy Center colleague and National Affairs Yuval Levin.

This is what this moment demanded of this president and this Congress. Instead, we got the opposite. Rather than tapping the fiscal brakes and eventually nudging us into reverse, they have hit the accelerator and are leading us over a cliff. I suppose there are worse things for the political leadership of a nation to do, though it’s hard to come up with them just now.

I have little doubt that Obama, having helped to engineer this fiscal calamity, will, later in his term, try to portray himself as a model of fiscal rectitude and Republicans as the party unconcerned with the mind-bending levels of deficit and debt he’s saddled us with. I am skeptical this trick will work. Family members are surely happy if a gambling addict gives up habit, but they aren’t about to be lectured on financial responsibility by a person whose gambling ruined the family finances.

The majority of the Obama presidency is still before us. Nevertheless, it’s not too early to say that on this vital front, Barack Obama has been, and will eventually be judged to be, a significant failure. He not only missed history’s calling, he mocked it. He placed his own statist ambitions above the needs of the nation he was elected to serve. Soon enough, and perhaps on a scale he cannot now imagine, Obama and his party will be held accountable for having done so.

It’s impossible to know with certainty at this point because we’re only about 30 percent through President Obama’s first term, but I suspect he will be judged quite harshly by history and his countrymen for not simply avoiding but dramatically accelerating the major domestic concern facing the United States: our unsustainable and soon-to-be debilitating deficit and debt.

I don’t lay all, or even most, of the blame on President Obama for the debt he faced upon taking office. While his party, like the GOP, was clearly complicit in the situation, and Obama’s own actions in the Senate (especially blocking reforms of Fannie Mae and Freddie Mac, which played a role in the collapse of the housing market) contributed to what went wrong, much of the river of red ink he inherited was due to a financial and credit implosion for which he wasn’t chiefly responsible.

What I do hold President Obama responsible for is that he took office when it was clear that our debt and deficit had reached crisis proportions. While that situation wasn’t the case when he decided to run for the presidency, it was the situation when he assumed the presidency. And rather than rethink the core purpose of his presidency, he decided to pursue his agenda in a state of denial, as if the financial collapse that began in September 2008 never happened, as if our ominous new fiscal reality had never occurred.

At the moment when history demanded one thing of Mr. Obama, he did another.

What the president should have done, in the wake of market collapse, was to create his own Nixon-to-China moment: trimming and reforming our middle-class-welfare state. It is the type of thing that a Democratic president and a Democratic Congress have much greater latitude to do than a Republican president and a Republican Congress. Instead, Obama used this moment to create a new middle-class entitlement, ObamaCare, at precisely the moment when our other ones are falling into bankruptcy. On top of that, of course, was the president’s $860 billion-plus stimulus package, his $410 billion omnibus spending bill, and his decision to spend hundreds of billions of TARP (Troubled Asset Relief Program) repayment dollars rather than to pay down the deficit.

Consider where we are and where we are headed. The deficit in 2009 was $1.4 trillion — the equivalent of 10 percent of the nation’s economic output and the highest percentage since the end of World War II. The president’s 2011 budget will generate a combined $9.75 trillion in deficits over the next decade. Our publicly held debt, which was $6.3 trillion when Obama entered office, now totals $8.2 trillion. According to the CBO, it’s headed to more than $20 trillion in 2020, equaling 90 percent of the estimated gross domestic product that year. (As a reference point, nations that comprise the European Union are required to keep their debt levels below 60 percent.) Interest rates alone would consume some $900 billion per year, almost five times what they were last year. In addition, the total unfunded liability (the gap between projected assets and benefit obligations) for Medicare and Social Security is $43 trillion; in five years, the total is estimated to grow to $57 trillion. (For more, see this, this, and this.

Confronting figures like this, Mr. Obama should have made spending restraint and entitlement reform his top domestic priority. And yet the president has taken us in exactly the opposite direction, engineering the passage of ObamaCare (over its first ten years of full implementation, it will cost at least $2 trillion). That is the equivalent of dropping plane loads of lighter fluid onto a fire that is raging out of control.

Why Mr. Obama made this fateful decision is hard to tell. He is a person of unusual ideological rigidity. The president is undeniably committed to expanding the size, scope, and reach of government. Like any 21st century Man of the Left, his ambition is to make more and more citizens wards of the state, to create greater dependency on the federal government. That, at least, is what Obama’s actions indicate his intentions to be. But whatever his motivations, the results are what matter. Whether or not we can ever undo the fiscal damage that is being inflicted on us is an open question. It will require us to take steps that we as a society have been exceedingly reluctant to take, including means-testing entitlements and increasing the retirement age. It will require fiscal self-discipline, restraint, and what Adam Smith called “self-command.” (For an enlightening analysis of Smith, see this essay by Ethics and Public Policy Center colleague and National Affairs Yuval Levin.

This is what this moment demanded of this president and this Congress. Instead, we got the opposite. Rather than tapping the fiscal brakes and eventually nudging us into reverse, they have hit the accelerator and are leading us over a cliff. I suppose there are worse things for the political leadership of a nation to do, though it’s hard to come up with them just now.

I have little doubt that Obama, having helped to engineer this fiscal calamity, will, later in his term, try to portray himself as a model of fiscal rectitude and Republicans as the party unconcerned with the mind-bending levels of deficit and debt he’s saddled us with. I am skeptical this trick will work. Family members are surely happy if a gambling addict gives up habit, but they aren’t about to be lectured on financial responsibility by a person whose gambling ruined the family finances.

The majority of the Obama presidency is still before us. Nevertheless, it’s not too early to say that on this vital front, Barack Obama has been, and will eventually be judged to be, a significant failure. He not only missed history’s calling, he mocked it. He placed his own statist ambitions above the needs of the nation he was elected to serve. Soon enough, and perhaps on a scale he cannot now imagine, Obama and his party will be held accountable for having done so.

Read Less

Obama, the Overmatched President

In Howard Fineman’s column in Newsweek we read this:

President Barack Obama begins and ends each workday at the White House by going over a to-do list with his chief of staff, Rahm Emanuel. The two were reviewing things recently when Emanuel reminded him of the sheer size of the administration’s workload, which includes fending off the Great Recession and dealing with terrorists in Iraq, Afghanistan, and now, evidently, Yemen. “You know, Mr. President,” Emanuel said, “Franklin Roosevelt had eight years to deal with the economy before he had to lead a war. You have to do it all at once.”

Perhaps Barack “No Drama” Obama has been replaced by Barack “Melodrama” Obama. It would be beneficial to us all if the president and his staff eased up just a bit on the whining, blame-shifting, and feeling sorry for themselves (not to mention the comparisons to FDR). They should become, to borrow an old-fashioned word, more manly.

Memo to the President: You face stiff challenges, as do all presidents. But for the record, a recession is not a depression and the war in Afghanistan is not comparable to World War II. The most difficult actions that had to be taken on the economic front were ones done by your predecessor, before you were sworn in – and a good deal of the responsibility for what went wrong rests with the party you represent (see blocking reforms of Freddie Mac and Fannie Mae). The Iraq war you inherited is going pretty well (no thanks to the policies you advocated when you were in the Senate); our presence there is winding down. And al-Qaeda, while still a lethal threat, has been significantly degraded and weakened thanks to the policies of the last eight years. Here is the truth you do not want to hear but need to be told: You took a difficult situation you inherited and, in several respects, made things worse rather than better.

If the burdens of the office are too much for Mr. Obama, he should never have sought it in the first place — and he might consider not seeking it next time. For now, though, the office is his. We don’t need to hear how overworked and overwhelmed and overmatched he is. Unfortunately we see evidence of that almost every day.

In Howard Fineman’s column in Newsweek we read this:

President Barack Obama begins and ends each workday at the White House by going over a to-do list with his chief of staff, Rahm Emanuel. The two were reviewing things recently when Emanuel reminded him of the sheer size of the administration’s workload, which includes fending off the Great Recession and dealing with terrorists in Iraq, Afghanistan, and now, evidently, Yemen. “You know, Mr. President,” Emanuel said, “Franklin Roosevelt had eight years to deal with the economy before he had to lead a war. You have to do it all at once.”

Perhaps Barack “No Drama” Obama has been replaced by Barack “Melodrama” Obama. It would be beneficial to us all if the president and his staff eased up just a bit on the whining, blame-shifting, and feeling sorry for themselves (not to mention the comparisons to FDR). They should become, to borrow an old-fashioned word, more manly.

Memo to the President: You face stiff challenges, as do all presidents. But for the record, a recession is not a depression and the war in Afghanistan is not comparable to World War II. The most difficult actions that had to be taken on the economic front were ones done by your predecessor, before you were sworn in – and a good deal of the responsibility for what went wrong rests with the party you represent (see blocking reforms of Freddie Mac and Fannie Mae). The Iraq war you inherited is going pretty well (no thanks to the policies you advocated when you were in the Senate); our presence there is winding down. And al-Qaeda, while still a lethal threat, has been significantly degraded and weakened thanks to the policies of the last eight years. Here is the truth you do not want to hear but need to be told: You took a difficult situation you inherited and, in several respects, made things worse rather than better.

If the burdens of the office are too much for Mr. Obama, he should never have sought it in the first place — and he might consider not seeking it next time. For now, though, the office is his. We don’t need to hear how overworked and overwhelmed and overmatched he is. Unfortunately we see evidence of that almost every day.

Read Less

The Health-Care Backlash

Here are some thoughts on where things stand in the aftermath of the certain passage of the Senate health-care bill.

1. Few Democrats understand the depth and intensity of opposition that exists toward them and their agenda, especially regarding health care. Passage of this bill will only heighten the depth and intensity of the opposition. We’re seeing a political tsunami in the making, and passage of health-care legislation would only add to its size and force.

2. This health-care bill may well be historic, but not in the way the president thinks. I’m not sure we’ve ever seen anything quite like it: passage of a mammoth piece of legislation, hugely expensive and unpopular, on a strict party-line vote taken in a rush of panic because Democrats know that the more people see of ObamaCare, the less they like it.

3. The problem isn’t simply with how substantively awful the bill is but how deeply dishonest and (legally) corrupt the whole process has been. There’s already a powerful populist, anti-Washington sentiment out there, perhaps as strong as anything we’ve seen. This will add kerosene to that raging fire.

4. Democrats have sold this bill as a miracle-worker; when people see first-hand how pernicious health-care legislation will be, abstract concerns will become concrete. That will magnify the unhappiness of the polity.

5. The collateral damage to Obama from this bill is enormous. More than any candidate in our lifetime, Obama won based on the aesthetics of politics. It wasn’t because of his record; he barely had one. And it wasn’t because of his command of policy; few people knew what his top three policy priorities were. It was based instead on the sense that he was something novel, the embodiment of a “new politics” – mature, high-minded and gracious, intellectually serious. That was the core of his speeches and his candidacy. In less than a year, that core has been devoured, most of all by this health-care process.

Mr. Obama has shown himself to be a deeply partisan and polarizing figure. (“I have never been asked to engage in a single serious negotiation on any issue, nor has any other Republican,” Senator McCain reported over the weekend.) The lack of transparency in this process has been unprecedented and bordering on criminal. The president has been deeply misleading in selling this plan. Lobbyists, a bane of Obama during the campaign, are having a field day.

President Obama may succeed in passing a terribly unpopular piece of legislation – but in the process, he has shattered his carefully cultivated image. It now consists of a thousand shards.

6. This health-care bill shouldn’t be seen in isolation. It’s part of a train of events that include the stimulus package, the omnibus spending bill (complete with some 8,500 earmarks), and a record-sized budget. In addition, as Jim Manzi points out in the new issue of National Affairs:

[Under Obama] the federal government has also intervened aggressively in both the financial and industrial sectors of the economy in order to produce specific desired outcomes for particular corporations. It has nationalized America’s largest auto company (General Motors) and intervened in the bankruptcy proceedings of the third-largest auto company (Chrysler), privileging labor unions at the expense of bondholders. It has, in effect, nationalized what was America’s largest insurance company (American International Group) and largest bank (Citigroup), and appears to have exerted extra-legal financial pressure on what was the second-largest bank (Bank of America) to get it to purchase the ­country’s largest securities company (Merrill Lynch). The implicit government guarantees provided to home-loan giants Fannie Mae and Freddie Mac have been called in, and the federal government is now the largest de facto lender in the residential real-estate market. The government has selected the CEOs and is setting compensation at major automotive and financial companies across the country. On top of these interventions in finance and commerce, the administration and congressional Democrats are also pursuing both a new climate and energy strategy and large-scale health-care reform. Their agenda would place the government at the center of these two huge sectors of the economy…

Together, these actions tell quite a tale. Mr. Obama has revived the worst impressions of the Democratic party – profligate and undisciplined, arrogant, lovers of big government, increasers of taxes. The issues and narrative for American politics in the foreseeable future has been set — limited government versus exploding government, capitalism versus European style socialism, responsible and measured policies versus reckless and radical ones.

Barack Obama is in the process of inflicting enormous damage to his presidency and his party. And there is more, much more to come.

Here are some thoughts on where things stand in the aftermath of the certain passage of the Senate health-care bill.

1. Few Democrats understand the depth and intensity of opposition that exists toward them and their agenda, especially regarding health care. Passage of this bill will only heighten the depth and intensity of the opposition. We’re seeing a political tsunami in the making, and passage of health-care legislation would only add to its size and force.

2. This health-care bill may well be historic, but not in the way the president thinks. I’m not sure we’ve ever seen anything quite like it: passage of a mammoth piece of legislation, hugely expensive and unpopular, on a strict party-line vote taken in a rush of panic because Democrats know that the more people see of ObamaCare, the less they like it.

3. The problem isn’t simply with how substantively awful the bill is but how deeply dishonest and (legally) corrupt the whole process has been. There’s already a powerful populist, anti-Washington sentiment out there, perhaps as strong as anything we’ve seen. This will add kerosene to that raging fire.

4. Democrats have sold this bill as a miracle-worker; when people see first-hand how pernicious health-care legislation will be, abstract concerns will become concrete. That will magnify the unhappiness of the polity.

5. The collateral damage to Obama from this bill is enormous. More than any candidate in our lifetime, Obama won based on the aesthetics of politics. It wasn’t because of his record; he barely had one. And it wasn’t because of his command of policy; few people knew what his top three policy priorities were. It was based instead on the sense that he was something novel, the embodiment of a “new politics” – mature, high-minded and gracious, intellectually serious. That was the core of his speeches and his candidacy. In less than a year, that core has been devoured, most of all by this health-care process.

Mr. Obama has shown himself to be a deeply partisan and polarizing figure. (“I have never been asked to engage in a single serious negotiation on any issue, nor has any other Republican,” Senator McCain reported over the weekend.) The lack of transparency in this process has been unprecedented and bordering on criminal. The president has been deeply misleading in selling this plan. Lobbyists, a bane of Obama during the campaign, are having a field day.

President Obama may succeed in passing a terribly unpopular piece of legislation – but in the process, he has shattered his carefully cultivated image. It now consists of a thousand shards.

6. This health-care bill shouldn’t be seen in isolation. It’s part of a train of events that include the stimulus package, the omnibus spending bill (complete with some 8,500 earmarks), and a record-sized budget. In addition, as Jim Manzi points out in the new issue of National Affairs:

[Under Obama] the federal government has also intervened aggressively in both the financial and industrial sectors of the economy in order to produce specific desired outcomes for particular corporations. It has nationalized America’s largest auto company (General Motors) and intervened in the bankruptcy proceedings of the third-largest auto company (Chrysler), privileging labor unions at the expense of bondholders. It has, in effect, nationalized what was America’s largest insurance company (American International Group) and largest bank (Citigroup), and appears to have exerted extra-legal financial pressure on what was the second-largest bank (Bank of America) to get it to purchase the ­country’s largest securities company (Merrill Lynch). The implicit government guarantees provided to home-loan giants Fannie Mae and Freddie Mac have been called in, and the federal government is now the largest de facto lender in the residential real-estate market. The government has selected the CEOs and is setting compensation at major automotive and financial companies across the country. On top of these interventions in finance and commerce, the administration and congressional Democrats are also pursuing both a new climate and energy strategy and large-scale health-care reform. Their agenda would place the government at the center of these two huge sectors of the economy…

Together, these actions tell quite a tale. Mr. Obama has revived the worst impressions of the Democratic party – profligate and undisciplined, arrogant, lovers of big government, increasers of taxes. The issues and narrative for American politics in the foreseeable future has been set — limited government versus exploding government, capitalism versus European style socialism, responsible and measured policies versus reckless and radical ones.

Barack Obama is in the process of inflicting enormous damage to his presidency and his party. And there is more, much more to come.

Read Less




Welcome to Commentary Magazine.
We hope you enjoy your visit.
As a visitor to our site, you are allowed 8 free articles this month.
This is your first of 8 free articles.

If you are already a digital subscriber, log in here »

Print subscriber? For free access to the website and iPad, register here »

To subscribe, click here to see our subscription offers »

Please note this is an advertisement skip this ad
Clearly, you have a passion for ideas.
Subscribe today for unlimited digital access to the publication that shapes the minds of the people who shape our world.
Get for just
YOU HAVE READ OF 8 FREE ARTICLES THIS MONTH.
FOR JUST
YOU HAVE READ OF 8 FREE ARTICLES THIS MONTH.
FOR JUST
Welcome to Commentary Magazine.
We hope you enjoy your visit.
As a visitor, you are allowed 8 free articles.
This is your first article.
You have read of 8 free articles this month.
YOU HAVE READ 8 OF 8
FREE ARTICLES THIS MONTH.
for full access to
CommentaryMagazine.com
INCLUDES FULL ACCESS TO:
Digital subscriber?
Print subscriber? Get free access »
Call to subscribe: 1-800-829-6270
You can also subscribe
on your computer at
CommentaryMagazine.com.
LOG IN WITH YOUR
COMMENTARY MAGAZINE ID
Don't have a CommentaryMagazine.com log in?
CREATE A COMMENTARY
LOG IN ID
Enter you email address and password below. A confirmation email will be sent to the email address that you provide.