Where’s Lumpy?

My friend Todd has his new blog up and running at http://wheninthecourse.net.  Todd has given me some blog fodder inspiration in recent days, and I am grateful.  In today’s post he delivers some Thomas Jefferson and Abraham Lincoln quotes proving that the so-called “Party of Jefferson” sure isn’t…and the so-called “Party of Lincoln” isn’t either.

While out on the campaign trail, Senator McCain, fresh from his jaunt to DC to actively promote the socialization of Wall Street’s losses, was painting Senator Obama red, this article on Workforce.com hit cyberspace:

Powerful House Democrats are eyeing proposals to overhaul the nation’s $3 trillion 401(k) system, including the elimination of most of the $80 billion in annual tax breaks that 401(k) investors receive.

House Education and Labor Committee Chairman George Miller, D-California, and Rep. Jim McDermott, D-Washington, chairman of the House Ways and Means Committee’s Subcommittee on Income Security and Family Support, are looking at redirecting those tax breaks to a new system of guaranteed retirement accounts to which all workers would be obliged to contribute.

A plan by Teresa Ghilarducci, professor of economic-policy analysis at the New School for Social Research in New York, contains elements that are being considered. She testified last week before Miller’s Education and Labor Committee on her proposal.

At this point, some silly neo-liberals have done nothing more than ask a comically deluded, out-of-touch, ivory tower technocrat to testify.  I’d like to think that they wouldn’t seriously consider such a move, even if they gain control of both houses of Congress, and the White House, in January.  I know such a move would be political suicide on a grand scale, and in so doing render 2010 a repeat of 1994.

At that hearing, the director of the Congressional Budget Office, Peter Orszag, testified that some $2 trillion in retirement savings has been lost over the past 15 months.

Yep, that’s what happens when the market tanks.  Those of us who value our 401K’s see this as an opportunity to buy low.  See, we’re comfortable taking that risk, and we knew what we were getting into.  We don’t need Ms. Ghilarducci’s help, no matter how piously intent she might be about saving us from ourselves:

Under Ghilarducci’s plan, all workers would receive a $600 annual inflation-adjusted subsidy from the U.S. government but would be required to invest 5 percent of their pay into a guaranteed retirement account administered by the Social Security Administration. The money in turn would be invested in special government bonds that would pay 3 percent a year, adjusted for inflation.

The current system of providing tax breaks on 401(k) contributions and earnings would be eliminated.

Well whoop-de-do.  Employers and employees will give up their tax breaks for a measly $600/year for bonds issued by a government that’s $10 trillion in debt on paper, and several times that figure in debt counting unfunded liabilities?  For this we get 3 percent a year, which trails a rate of inflation that will inevitably accelerate as they print money to cover this debt?  Oh, but it’s OK:  the Social Security Administration will take care of us.  They’ve done such a great job so far.

Waiter, I’ll have whatever Ms. Ghilarducci is drinking.

“I want to stop the federal subsidy of 401(k)s,” Ghilarducci said in an interview. “401(k)s can continue to exist, but they won’t have the benefit of the subsidy of the tax break.”

As a good collectivist, Ms. Ghilarducci presupposes that wealth created by the citizenry belongs first to the state, then to the citizen that created it.  Under this nonsensical but prevalent view, any fiscal restraint the state exercises in confiscating its share is derided as largesse.  How ideologically confused can she be to claim Fedzilla is subsidizing me by allowing me to keep what I earned?  Well, let’s see:

“I want to spend our nation’s dollar for retirement security better. Everybody would now be covered” if the plan were adopted, Ghilarducci said.”

There it is: “our nation’s dollar” that she “want(s) to spend.”  The inanity boggles the mind.  Every dollar earned belongs first to the laborer, technician, software developer, physician, teacher, and yes, plumber that earned it, and not to some federally-subsidized academic hack and the politicians that invite her to testify.

Hat tip once again to my friend Todd, who I’ll pingback and link to as soon as he gets his blog up and running.  Til then, keep the tips coming, buddy!

Nathan at NathanContraMundi recently posted a long interview with Dr. Ron Paul.  Topics include the founding fathers, the rule of law, the current economic meltdown, and getting out of Iraq.  Definitely worth a read, so head on over.

I’ve heard a lot of second-guessing Dr. Paul’s decision not to run as a third-party candidate;  had he run, this election would be a lot more interesting.  My read: he realized it was a lost cause, that his time and energy was better spent staying above the fray and educating the public.  His time hasn’t come yet.

Dr. Paul expresses faith in the next generation to question the statist status quo and to return to the classical liberal principles on which this country was founded.  I certainly know a lot of young people running around yammering “Change!  Change!” without any idea what they’re talking about.  They think the United States is a democracy, they don’t understand the role of the Constitution, and they drool at you through blank stares when you mention concepts like “the rule of law.”  Most of them lack the attention span to read the books Dr. Paul recommends (Bastiat, Rothbard, Hayek, etc.) at the end of the interview.  They’re voting for Obama because “he’s cool” or “he’s not Bush.”  There’s a ringing endorsement for you.

On the other hand, I know a lot of young (and old) people who are reading those books and the founding documents, and who do recognize that McCain/Obama is a false choice.  I’m going to do my part and take another spin through some of those books and share my thoughts here in a future series of posts, probably to be called “Ron Paul’s Reading List.”

A Yahoo Finance article entitled “Bailout Nation:  More Gov’t Control of JPMorgan, Citi, BofA Coming” reports that rather than spend all their our bailout cash to make loans and prop up an economy based on ridiculously cheap credit, the big banks are battening down the hatches and saving that money for a rainy day.  The article ends with this:

So when policymakers and politicians say the taxpayer monies injected into the banks is going to be used to make loans, “they are lying to us,” Whalen says, using the kind of candor others are afraid of or can’t afford.

See also this from ClusterStock.

Maybe injecting capital into the banks was a better use of taxpayer money, but the abrupt change of course calls Paulson’s credibility further into question.  He changes course on the economy more than John McCain, and neither one seems to have a real clue.  I feel all warm and fuzzy, don’t you?

Details emerged yesterday of a stealth lobbying campaign by Freddie Mac to kill legislation aimed at curbing Freddie and Fannie’s appetite:

Freddie Mac secretly paid a Republican consulting firm $2 million to kill legislation that would have regulated and trimmed the mortgage finance giant and its sister company, Fannie Mae, three years before the government took control to prevent their collapse.

In the cross hairs of the campaign carried out by DCI of Washington were Republican senators and a regulatory overhaul bill sponsored by Sen. Chuck Hagel, R-Neb. DCI’s chief executive is Doug Goodyear, whom John McCain’s campaign later hired to manage the GOP convention in September.

Freddie Mac’s payments to DCI began shortly after the Senate Banking, Housing and Urban Affairs Committee sent Hagel’s bill to the then GOP-run Senate on July 28, 2005. All GOP members of the committee supported it; all Democrats opposed it.

In the midst of DCI’s yearlong effort, Hagel and 25 other Republican senators pleaded unsuccessfully with Senate Majority Leader Bill Frist, R-Tenn., to allow a vote.

We generally tend to get our panties in a twist when private-sector concerns influence legislative action or inaction that benefits their bottom line.  Why do we give Fannie and Freddie a free pass?  Weren’t they also independent entities with no guarantee of Federal assistance?  So said Barney Frank back in 2003.  Oh, right, he lied.

Further down in the article we have this (emphasis mine):

On Friday night, Hagel’s chief of staff, Mike Buttry, said Hagel’s legislation “was the last best chance to bring greater oversight and tighter regulation to Freddie and Fannie, and they used every means they could to defeat Sen. Hagel’s legislation every step of the way.”

“It is outrageous that a congressionally chartered government-sponsored enterprise would lobby against a member of Congress’s bill that would strengthen the regulation and oversight of that institution,” Buttry said in a statement. “America has paid an extremely high price for the reckless, and possibly criminal, actions of the leadership at Freddie and Fannie.”

We’ve also paid a pretty high price for electing men and women so easily bribed to the Senate.  Their names are here (emphasis mine):

Nine of the 17 targeted Republican senators did not sign Hagel’s letter: Sens. Mitch McConnell of Kentucky, Christopher “Kit” Bond and Jim Talent of Missouri, Conrad Burns of Montana, Mike DeWine of Ohio, Lamar Alexander of Tennessee, Olympia Snowe of Maine, Lincoln Chafee of Rhode Island and George Allen of Virginia. Aside from the nine, 20 other Republican senators did not sign Hagel’s letter.

If any of these belong to you, you might want to call them up today and ask them what their asking price was.

Hat tip to my buddy Todd for this:

WASHINGTON–A government source tells FOX Business that the Treasury Department and the Federal Deposit Insurance Corp. are considering “options for direct borrower assistance” under the new $700 billion economic-stabilization plan.

The structure and form of assistance has not been determined. But analysts and housing advocates have said the government could use some of the money under the new Troubled Asset Relief Program, or TARP, to fund a new entity or plan for directly refinancing mortgages for qualified homeowners struggling to make their monthly payments.

I’m going to take some time off from working and blogging, take out a second mortgage, finish my basement, build a deck and a swimming pool.  I’ll blow my income on booze and risky investments, default on the loan, and call up Fedzilla for assistance.

How would I be behaving less responsibly than someone who racked up this much debt on their first mortgage?  Does it matter that the house, the deck, the basement, and the swimming pool came as a package deal?

From this CNN article on the proposed $150 billion “stimulus package”:

“The only good sign on jobs for the year has been that state and local governments have been adding jobs, which only mildly offset the great loss in the private sector,” Frank said. “If we do not go to the aid of state and local governments now, they will now become an added factor to the job loss rather than something of a mitigating factor.”

Right: Fedzilla needs to give more money to state and local governments, so they can hire more people, so more people can have jobs and make money, so Fedzilla can tax them, so Fedzilla can give more money to state and local governments, so they can hire more people, so more people can have jobs and make money, etc. etc.

Remember this “always chasing rainbows” anti-cocaine PSA from the eighties?

And meanwhile no wealth is created, and government gets larger and larger.

In this US News and World Report piece, Rick Newman writes:

John McCain and Barack Obama both promise that widespread tax cuts will be one major way they’ll revive the economy and help lift consumers’ sagging spirits. They differ, of course, on who should enjoy the largesse. McCain wants to cut estate and corporate income taxes, and extend broad-based tax cuts that were enacted earlier this decade. Obama agrees about extending some of those Bush era tax cuts, while offering lots of other relief to people earning less than $250,000 and raising taxes on the wealthy.

McCain’s and Obama’s fiscal policies are both suspect.  Both favor the redistribution of wealth at the point of the sword; the only thing they disagree on is who benefits, and they seem to be converging politically on that point.  Mr. Newman is right about that, but then he uses that word “largesse.”

American Heritage Dictionary defines “largesse” as “Liberality in bestowing gifts, especially in a lofty or condescending manner.”  It is not “largesse” for the state to reduce the amount of wealth they take from one segment of the population to give to another.  The state creates no wealth and generates no revenue; it has no gifts to give.

Rick Newman is as guilty as the bulk of the American population for mistaking fiscal restraint for largesse.  We speak of the government as if it were some magnanimous jolly Santa Claus, but we forget that the presents he leaves one house were taken from the last one he visited, minus his own cut for sleigh upkeep and for paying off the reindeer union.  When he suggests he might take a little less from us this year, we praise him for his generosity with words like “largesse?”

A nation of sheep begets a government of wolves.

-Edward R. Murrow

From the Washington Post yesterday:

The Maryland State Police classified 53 nonviolent activists as terrorists and entered their names and personal information into state and federal databases that track terrorism suspects, the state police chief acknowledged yesterday.

It goes downhill from there.  To summarize, these are people who committed no crime, and they were sent a letter by the Maryland State Police Superintendent, Col. Terence B. Sheridan, admitting as much.

In a legislative hearing, Col. Sheridan and his predecessor, Thomas E. Hutchins, blamed the classification in part on the limitations of the tracking database:

Both Hutchins and Sheridan said the activists’ names were entered into the state police database as terrorists partly because the software offered limited options for classifying entries.

Every time privacy advocates protest the use of these databases to keep tabs on the public, they get dismissed as nervous nellies by the lovers of big government.  This is crystal clear proof of the danger of placing technology in the hands of buffoons. The result:

The police also entered the activists’ names into the federal Washington-Baltimore High Intensity Drug Trafficking Area database, which tracks suspected terrorists. One well-known antiwar activist from Baltimore, Max Obuszewski, was singled out in the intelligence logs released by the ACLU, which described a “primary crime” of “terrorism-anti-government” and a “secondary crime” of “terrorism-anti-war protesters.”

I’m not familiar with Obuszewski, but when being “anti-government” or “anti-war” gets hyphenated with “terrorism” we have a problem.  Databases can’t tell the difference between nonviolent, legal dissent, and apparently the Maryland State Police can’t either:

“I don’t believe the First Amendment is any guarantee to those who wish to disrupt the government,” he said. Hutchins said he did not notify Ehrlich about the surveillance. Ehrlich spokesman Henry Fawell said the governor had no comment.

No, it’s not, but what counts as “disrupting the government?”  If they disrupted the government, shouldn’t they be charged with a crime first?  Is there no need for those formalities anymore?

HT to TheZoo.

Robert Nozick’s “Anarchy, State, and Utopia” occupies a cherished place on my bookshelf.  In this Forbes.com editorial, Cato’s Richard Epstein cites Congress’ lame-brained and ultimately doomed push to manufacture increased rates of home ownership as an example of what Nozick calls “patterned principles of justice.”  Here’s Epstein:

Believers in patterned principles hold that there is some preordained social order that is more just than others. Accordingly, the function of the state is to use the levers of powers to manipulate behavior to achieve the desired outcomes. These patterned principles stand in opposition to historical principles of justice, which are content to establish the rules of the game and then let the legal moves by individual players determine the social outcomes. For Nozick, the key rules were rules of justice in acquisition (to set up the initial property rights) and justice in transfer, whereby those rights (and others derived from them) could be exchanged or combined through voluntary transactions.

Further down:

Congress, alas, is a pattern junkie. In his perceptive Wall Street Journal op-ed, How Government Stoked the Mania, Russell Roberts noted that the current congressional fixation called for a relentless increase in homeownership relative to renting, with certain minimum fractions allocated to low-income families. Pray tell, what patterned principle dictates that we should have 12% of all mortgages made to low-income borrowers in 1996, 20% in 2000, 22% in 2005 and 28% by 2008?

And finally:

The grand objectives articulated by Congress–and to be fair, by Republicans who preach the virtues of the “ownership society”–are not freebies that can be satisfied at no real cost. Quite the contrary. Once Congress set in place a destructive lending policy, we could count on private parties to issue bad loans from which they profited, knowing that dear old Fannie and Freddie would happily pay face value for paper that everyone knew was worth a whole lot less.

But Congress lived in a dream world. It forgot that the quality of the paper would deteriorate as its ambitious social objectives let its underwriting go south. So, too late in the game, we learn from yet another case where Congress should have done good by doing nothing at all. Let people rent or buy in unsubsidized markets and then watch with supreme indifference what residential patterns emerge. That distribution would have been a lot less toxic than the brew generated by our fevered political leaders. So says our frustrated libertarian.

And so says this one.  This echoes my point in this earlier post.  Why is “ownership society” a good thing?

Wait, this is a democracy, and a “good thing” is what the majority says it is, you say?  Democracy is a sheep and two wolves voting on what to have for dinner.  We live, by the grace of God, not in a democracy, but a constitutional republic…

…if we can keep it.  Color me skeptical.