Don't Get Fooled Again

• By: admin
• On: 04/30/2010 08:55:21
• In: Hard Left

By Robert Romano

It must be tough being a Senate Republican these days. There really is no deal that can be reached with Senate Democrats that can be trusted, no law passed that won’t be broken, and no compromise reached that won’t be betrayed. Nothing is sacred anymore, especially the word of a Senator.

On Wednesday, after being assured that by Senator Chris Dodd (D-CT) that provisions for an unlimited bailout-takeover fund would be removed from his legislation, Senate Republicans lifted their objections to bringing the financial takeover legislation to the floor of the Senate.

In a statement, Senator Richard Shelby (R-AL), who had been engaged with deliberations with Dodd, said, “I appreciate Chairman Dodd’s assurance that my concerns relating to ending bailouts will be included in his bill. I take him at his word.”

Apparently convinced that a major breakthrough had been achieved, Senate Minority Leader Mitch McConnnell (R-KY) issued a statement saying, “The time afforded by my Republican colleagues and Sen. Ben Nelson was instrumental in gaining assurances from the Chairman that changes will be made to end taxpayer bailouts and the dangerous notion that certain financial institutions are too big to fail.”

Only there’s a big problem with this approach. Dodd never removed the bailout provisions. They’re still in there, on pages 277 through 284 of the substitute amendment offered by Senators Dodd and Blance Lincoln (D-AR), there is the unlimited bailout-takeover authority and fund administered by the FDIC.

At least Dodd had the courtesy to betray Shelby to his face, on the Senate floor. After Republicans lifted their objections to proceeding to debate, thinking they had a deal to remove the bailout provisions, Dodd promptly took to the floor to say, “We haven’t sealed anything, but we’ve had great conversations as two people of good will can have that I think will allow us to get there.”

And then, Dodd only promised to allow Republican amendments to be heard and debated. So much for his word!

Of course this is not the first time where the trust of Congressional Republicans has been betrayed when it comes to the never-ending bailout regime in Washington.

Don’t forget the grand compromise that brought House and Senate Republicans on board to the 2008 bailout. That “compromise” included in the Troubled Asset Relief Program was some form of an insurance program for so-called toxic assets. That part of it was never even enforced by either the Bush or Obama Administrations even though it clearly was stated in the law.

The $700 billion program was supposed to purchase mortgage-backed securities, but as noted by the Washington Times, only $30 billion was ever devoted to the purchase of the securities. Instead, the money wound up being used as a bank recapitalization fund for which is was never intended. Most of that money was promptly paid back, as apparently the banks that were “bailed out” were well-capitalized after all.

Banks and financial institutions instead opted to use a Federal Reserve program, which was never authorized by Congress, and lacked the same level of disclosure and oversight as TARP. The Fed wound up purchasing some $1.25 trillion of Fannie Mae and Freddie Mac’s mortgage-backed securities.

Is that what Congressional Republicans intended? Probably not. But that wasn’t the end of it. After the Senate explicitly defeated a bailout for GM and Chrysler using the TARP, then-President George Bush went ahead and extended the loans anyway to the bankrupt automakers from the Treasury program.

After that, Barack Obama abused the government ownership of the two companies to redistribute their ownership from the bondholders who kept them afloat to the labor unions that had put them in the red in the first place.

These experiences, by now, should be highly educational for the Senate Republican Caucus.

But they are not the only lessons that need to be learned. Senate Republicans would also do well to remember, and never forget, that the tea parties were born because of the bailouts and government takeovers in the first place. That, the GOP’s political misfortunes of 2008 can largely be attributed to their embracing the Wall Street bailout-takeover regime that Senate Democrats now seek to institutionalize permanently.

Public outrage over the bailouts and takeovers, and then the phony “stimulus,” and then the carbon cap-and-tax, and then ObamaCare, and on and on, have all spilled over to create the nation’s newest and most potent political force in the country. Thus far, this uprising of the American people has not abated, and the anger will only grow the more power government seizes.

Especially with the Dodd bill, which both Goldman Sachs and Citigroup wholeheartedly embrace. The Dodd bill creates moral hazard of the first order by giving the implied taxpayer backing to some 60 financial and insurance companies with over $50 billion in consolidated assets. The FDIC will levy assessments on these companies that the American people will pay for with higher costs of financial products and other fees to finance the unlimited bailout-takeover fund, or what the Senate is calling an “orderly liquidation fund.”

As ALG News has previously reported, the bill would also give unlimited authority to the government to seize any company in the country (financial or not) deemed “too risky”, and either keep their assets (i.e. nationalize) or redistribute to favored political constituencies, like labor unions.

Making matters worse, shareholders whose assets are liquidated, even if the company was not even insolvent, would have no recourse to federal courts, as the bill makes it illegal to sue over the assets of any government takeover.

As if that was not bad enough, the legislation addresses none of the root causes of the crisis: Fannie, Freddie, the Federal Reserve, the FHA, and HUD that weakened credit standards and pumped the system with easy money to inflate the housing, securities, and derivatives bubbles to catastrophic proportions in the first place. Now that those bubbles have popped, the bailouts have not ended, and the unbridled deficit-spending is ongoing in earnest, the nation’s credit rating and ability to repay its debts is threatened.

And Senate Democrats now want to institutionalize the system that nearly brought the global economy to its knees and has spawned the sovereign debt crisis with limitless deficit-spending.

In short, it’s a really, really bad bill. And should Republicans now fail to stop it, they could be sealing their permanent political destruction — because they will have directly aided and abetted the bankruptcy and sovereign default of the United States of its debt obligations.

Taxpayers cannot afford another 60 or so Fannie Mae’s.

Republicans must realize that none of their amendments or ideas will be of any consequence to the final outcome of this “debate.” After all, Republican ideas in TARP were never enforced. Congressional intent for the TARP bill was never followed as it was transformed into a recapitalization fund. Congressional rejection of the GM and Chrysler bailouts was overridden by executive caprice.

Have Republicans learned their lesson yet?

Should Republicans, for example, help to pass an amendment that the FDIC can only put into receivership financial companies, and not non-financial entities, what assurance can they offer the American people that it will ever be followed?

Should they pass an amendment that Fannie and Freddie’s assets must be sold privately by 10 percent every year, or sold off altogether, what assurance can they give the American people that it will even happen?

Should there be an amendment requiring Federal Reserve assets acquired through that agency’s lending program to be moved onto the nation’s balance sheet, what assurance can be offered that the Fed will ever comply?

There is none.

And there is no deal they think they have with Senate Democrats that can ever be trusted again, as seen with the latest betrayal by Senate Majority Leader Harry Reid and Chris Dodd. The American people have no faith — none — that any compromise will result in anything but the most horrendous, unintended outcome.

The American people are generally a decentralized force politically, which is what makes them so potent when activated with national issues. And they will never forgive Republicans should they now go along with the Dodd bill. No matter how good the deal seems at the time, the American people will never believe it, nor will it ever be followed.

The American people have had enough with the bailouts and government takeovers, and their trust in government has been shattered. So, Senate Republicans must take care that they don’t get fooled again. Because the American people are no longer fooled.

Robert Romano is the Senior Editor of ALG News Bureau.

Bailouts for Dummies

• By: admin
• On: 04/30/2010 08:52:47
• In: Economy

By Rick Manning

The Dodd – Goldman Sachs financial services takeover bill can be intimidating to understand for many people, including myself. However, when all the smoke clears it really comes down to four basic points:

1. Congress would set up a permanent bailout fund that is financed through increased charges to banks, which will be paid for by financial institution customers and savers. This permanent bailout fund would allow Congressmen and Senators to avoid voting on whether to bailout a specific company like Chrysler, GM, Citigroup or Goldman Sachs, instead shuffling the decision off to unelected political appointees.

Not surprisingly, Goldman Sachs and Citigroup have both announced that they support the Dodd financial takeover bill since it institutionalizes the very too big to fail philosophy that led to the TARP bailouts in the first place.

2. Political appointees and unelected bureaucrats can also declare any company to be a financial institution. This means these political bureaucrats can decide that any company needs to be taken over by the government using the bailout fund. This extreme power gives these unelected authorities the ultimate coercive power over business and America’s economy.

The government takeovers of GM and Chrysler under TARP are a good example of the Obama Administration’s trial run for this power.

You might remember that Obama took care of his labor cronies through a political deal that benefitted the United Auto Workers union at the expense of those private individuals and banks who lent GM and Chrysler money through loans and bonds purchased. Ownership of both auto companies was redistributed to the politically powerful union leaving no doubt about how the bailout-takeover authority will be yielded.

3. When the government decides to take over a company, that company is not allowed to fight it in court. So, if you own shares of a company, and the government takes control of that company, you as an owner of the company cannot challenge the decision to take your property in a court of law. Sounds more like a third world dictatorship than America - doesn’t it?

4. Finally, the Dodd-Goldman Sachs bill doesn’t actually deal with any of the root causes of the collapse of the home mortgage market. For example, government policies forced government sponsored mortgage giants Fannie Mae and Freddie Mac to underwrite mortgages to people who were less likely to pay them back. Congress then built the house of cards even higher by ordering private banks to make similar if not even more risky loans if they wanted to expand across state lines, or merge with other banks to stay competitive.

Not surprising to anyone even remotely paying attention, many of the people who didn’t actually qualify for loans, eventually couldn’t repay them, and the house of cards which made up the entire home mortgage industry collapsed.

Now, the same Congressional scoundrels largely responsible for forcing the financial services industry into accepting the idiotic idea that if you lend a crack dealer $300k for a home mortgage that you will get paid back, are ‘fixing the problem’. Feel better yet?

In sum, the Dodd-Goldman Sachs bill doesn’t fix anything. Instead, it perpetuates the very problem it claims to want to solve — leaving the very root causes in place while insulating the politicians responsible for building the house of cards from the consequences of their political rather than market based decisions. Crazy, isn’t it?

Rick Manning is the Director of Communications for Americans for Limited Government, and the former Public Affairs Chief of Staff for the U.S. Department of Labor.

The Consent of the Governed

• By: admin
• On: 04/30/2010 08:51:01
• In: Hard Left

By David Nace

Adams, Franklin and Jefferson made it very clear when they wrote the Declaration of Independence. Governments derive their just power from the consent of the governed. On March 23, 2010, when the President signed the healthcare reform bill, the United States government lost its just power to govern.

Our republic is founded on the principle that every individual has certain inalienable rights and the purpose of the government is to protect those rights against the infringement by others. This insures the individual is insulated against actions from a majority or even a mob that threatens to take away those rights. However the government is given no such protection. It only exists because it represents the consent of the governed.

Regardless of what poll you look at, it is abundantly clear that the Obama Administration did not have the support of the American people when it forced its version of health care reform upon the American public. In poll after poll, 60% of the American public opposed Obamacare. This was made abundantly clear to legislators during the August recess and in the millions of letters, telephone calls and emails that were sent since then. However, the Obama administration, in conjunction with a group of special interests that would benefit from the legislation, including ; organized labor, pharmaceutical manufacturers, hospital associations and trial lawyers choose to proceed with the legislation over the objections of the American public. These objections were so strong that Obama, Pelosi and Reed had to resort to the reconciliation process reserved for budget bills and bribes to individual legislators to obtain its passage.

In a country where the government exists to protect the rights of the people, why would the Internal Revenue Service be enlisted to force people to participate in a program or face fines for nonparticipation? Clearly this violates the concept that inalienable rights belong to the people not to the government.

Americans, our government no longer enjoys the consent of the governed. Just as 2009 was the year that Americans rediscovered the Boston Tea Party, will 2010 be the year that Americans rediscover the words of the Declaration of Independence and again assert their independence from a government that no longer derives its just power from the consent of the governed?

David Nace, an Executive Vice President of a Pennsylvania construction and engineering company, is a Liberty Features Syndicated writer for Americans for Limited Government.

Too Hot Not to Note: Coulter: Washington Takes Break From Porn Surfing to Bailout Wall Street

• By: admin
• On: 04/30/2010 08:48:12
• In: Economy

ALG Editor’s Note: In the following featured column from Human Events, Ann Coulter lays waste to the Dodd-Goldman bill:

Coulter: Washington Takes Break From Porn Surfing to Bailout Wall Street

By Ann Coulter

Democrats have decided that in order to prevent Wall Street from starting more financial meltdowns, wrecking the economy and leaving the American taxpayer holding the bag, we need to give more oversight authority to the same government employees who were busy surfing Internet porn as private investors frantically tried to warn them about Bernie Madoff.

The Democrats' financial "reform" bill also includes a $50 billion bailout fund -- that's million with a "B" -- that will save the Democrats from the unpleasant task of having to go on record voting for another Wall Street bailout.

Under the Democrats' bill, the FDIC will distribute the bailout money to Wall Street bankers without Congress having to take any action at all. (In the House version, the slush fund for the Democrats' Wall Street friends is $150 billion.)

True, the billions of dollars will be doled out to banks for the purpose of "dissolving" them. So what? They'll come back under a new name. But the guilty parties will lose no money for making bad bets -- although if the bets paid off, they'd take all the profits. That's what Democrats mean by "accountability."

Not surprisingly, the only politicians opposed to a permanent bailout fund for bankers are the politicians not owned by Wall Street -- that is, most Republicans, and one socialist, Bernie Sanders of Vermont.

The Democrats' defense of Wall Street's golden parachute is to say Senate Republican leader Mitch McConnell used a "talking point" formulated for him by pollster Frank Luntz in opposing the bailout fund.

As Frank Rich explained in The New York Times, the bailout fund is not a bailout fund because "Sen. Mitch McConnell went on CNN to flog his big lie that the Senate reform bill somehow guaranteed bank bailouts -- a talking point long ago concocted for the GOP by its favorite spin strategist, Frank Luntz."

In other words, it must be a lie because ... because Frank Luntz told McConnell what to say and then McConnell said it on CNN!

Yes, and Steve Jobs gets his best ideas from parishilton.com.

Sen. McConnell doesn't need Frank Luntz to explain anything to him, least of all the financial reform bill. A fifth-grader could find out about the permanent bailout fund simply by reading the bill.

You will notice that neither Rich nor any of Wall Street's defenders specifically deny the existence of a permanent bank bailout fund in the Democrats' bill. They just say McConnell used a "talking point" to denounce it. (You might say this has become a "talking point" for Democrats defending the bill.)

Wall Street's defenders also crow that the money in the bailout fund won't come from taxpayers! (There's a newfound sympathy.) No sir, it will come from "the banks."

That's like saying that the original bailout money didn't come from the taxpayers -- it came from the government! Where do Democrats imagine banks and the government get their money?

Banks, like the government, are entities that spend money they collect from human beings. We'll all be charged up front to cover Gordon Gekko's future bad bets.

In other words, the Wall Street slush fund will be paid for by a group of despicable fat cats recently discovered by the Democrats known as People Who Have Bank Accounts. Damn them!

Another idea, based on the ancient concept of personal responsibility, comes from financial writer James Grant. He proposes that the bankers -- are you sitting down? -- take their own losses.

Let them keep their humongous salaries, Grant writes, but if their bank fails, "let the bankers themselves fail. Let the value of their houses, cars, yachts, paintings, etc. be assigned to the firm's creditors."

There's nothing wrong with speculation, creating derivatives or selling them, especially to sophisticated investors. The problem is that when the bets go bad, the speculators keep being back-stopped by the government -- i.e., "by me and people like me."

Strangely enough -- for a bill that allegedly sticks it to Wall Street -- during the Senate Banking Committee hearing this week, Goldman Sachs chairman Lloyd Blankfein endorsed the Dodd bill. Someone should have asked him who from Goldman wrote it.

In 2008, Goldman employees gave a record-breaking $1,007,370 to the Obama campaign.

This year, the "securities and investment" industry has already given twice as much money to the Democrats as to the Republicans.

ABC News reports that "the five biggest hedge fund donors all gave almost all their donations to Democrats." Among the biggest recipients of hedge fund money were Senators Harry Reid (Democrat), Chris Dodd (Democrat) and Charles Schumer (Democrat).

Even with the evidence right in front of their eyes, people still believe that it's the Republicans who are in Wall Street's pocket.

How out of touch with reality would a comedy writer have to be to write the following joke for Jay Leno this week: "The head of Goldman Sachs was going through security and was asked to empty his pockets -- and five Republican senators fell out."

Why didn't Barack Obama or Chuck Schumer fall out? Why not Rahm Emanuel, who worked for Goldman? Or Greg Craig, who used to work for Obama but just took a job with Goldman?

The fact that anyone laughed at that joke proves that Republicans have a serious PR problem.

Goldman: Creeping Socialism Finds A Convenient Enemy

• By: admin
• On: 04/29/2010 10:04:15
• In: Economy

By Howard Rich

In its quest to ram perpetual bank bailouts and draconian new government regulations through the U.S. Congress under the guise of “financial services reform,” the administration of Barack Obama and its allies have seized upon a convenient new enemy – Goldman Sachs.

Armed with a government lawsuit tailor-made to stoke populist headlines, Obama and his allies want to further force Washington’s tentacles into a financial industry that it ostensibly “rescued” using trillions of dollars borrowed from future generations of U.S. taxpayers.

“If we don’t change what led to the crisis, we’ll doom ourselves to repeat it,” Obama said recently in an article conveniently headlined “Charges Against Goldman Sachs Boost Case for Financial Reform.”

Never mind that Goldman Sachs actually supports the bill. In typical Washington fashion, Obama’s proposed “reforms” do nothing to address government’s starring role in the most recent debacle. Nor do they protect taxpayers from future raids on the public treasury. In fact, the legislation Obama is championing would maintain (and even expand) the same federal regulatory conditions and incentives that led to the collapse of the housing market in the first place – while making taxpayer-funded bailouts for financial institutions a permanent part of public policy.

In other words, Washington has learned absolutely nothing.

“The American public has a lot to be angry about, but the spark for that rage was the bank bailouts,” writes Mark A. Calabria, director of financial regulation studies at the Cato Institute.

And yet as Calabria and others have astutely observed, government’s solution to the sub-prime mess is to encourage the same loose lending practices that created it – particularly as it relates to government-owned behemoths Fannie Mae and Freddie Mac, whose toxic assets helped sink Bear Stearns at the beginning of the current downturn. Accordingly, Obama’s reforms “wouldn’t bring stability to our financial system, but (would) further erode market discipline — while asking us to put all our faith in the same regulators who have failed repeatedly,” Calabria writes.

Ironically, the beleaguered Wall Street firm that Obama has selected to play the role of whipping boy in this process is a familiar “enemy,” having pumped $4.4 million into the coffers of Democratic candidates in 2008 (compared to $1.4 million for Republican candidates). Apparently, Goldman Sachs forgot the old adage about “not feeding the tiger in the hopes of being the last one eaten.”

All of this leads us to a fundamental question that must be asked (and answered) about our economy moving forward: Specifically, is it government’s job to assume the risk associated with bad business decisions? Or if you prefer to get even more Orwellian about it: Is it government’s job to arbitrarily restrict free market exchanges in an effort to prevent bad decisions from being made in the future?

If the government’s answer to either of those questions is “yes,” then it is embracing a Soviet-style command economy and repudiating the free market principles on which this nation was founded.

Finally, in assessing Obama’s populist push on “financial reform,” it would be wrong not to briefly mention the flimsiness of the federal case that’s at the forefront of literally tens of thousands of international headlines. At the heart of the SEC’s complaint against Goldman Sachs is the allegation that the firm misled a German bank into buying toxic assets at the behest of a savvy hedge fund manager. This simplistic salvo ignores two salient facts – Goldman’s $90 million loss on the deal as well as clear and compelling evidence that the German firm knew exactly what it was getting into.

In fact, just a year before the Goldman deal, the German bank referenced in the SEC filing was concluding similar agreements with other companies and bragging about its expertise in evaluating the very sort of “corporate loan portfolios” that it now claims it was misled into purchasing.

But as much as Obama and his allies are picking a fight against a convenient enemy, this debate isn’t about defending Goldman Sachs – it’s about defending the free market from additional government intervention.

The author is chairman of Americans for Limited Government.

A New ObamaCare horror story

• By: admin
• On: 04/29/2010 10:03:22
• In: Health Care

By Rick Manning

America is discovering in horror just what Nancy Pelosi meant when she famously stated during the health care debate that, “we have to pass the bill so you can find out what is in it, away from the fog of the controversy.”

The past couple of days the news has been filled by reports that the Obama Administration’s own actuary for the Center for Medicare Services estimates that costs of the law are anything but revenue neutral and that they far exceed the ‘estimate’ provided to the public by the Administration. While many are chasing the question of if Obama knew about the higher estimates, when he knew, and if he suppressed them until the vote occurred, there is another massive problem discovered within the law.

Businesses will have to file 1099 forms with both the IRS and send them to the company that provided the services or sold the product for every expenditure that exceeds $600. If you react to this sentence the way my wife, who has run a small business did, you are saying, “that can’t be right, 1099s are only for contract employees.”

Well forget everything you thought you knew about 1099 forms, because Obama’s health care law has changed it.

In practical terms, here is what the new law means. Joe’s Plumbing prints up 100 color presentations at FedEx Kinko’s for a trade show in New Orleans, where they are staying at a Holiday Inn for six days.

At a minimum, Joe’s Plumbing will have to contact FedEx Kinko’s, the airline, Holiday Inn, the rental car company, and the organization sponsoring the trade show and get taxpayer identification numbers from them so they can comply with this tax law. The company will then have to send out 1099 forms to each of these vendors and dozens, hundreds or thousands more vendors, depending upon the size of the company, thus adding significant compliance costs to every business in America. Everyone from a company’s accountant, to building supplier, to carpet cleaner to janitorial service will be trading 1099 forms.

Yes, that’s right, trading 1099 forms, because at the same time, Joe’s Plumbing will also be receiving 1099 forms from every one of their business customers who spent more than $600 with them over the course of the year, which they will be required to keep and reconcile against their books.

Do you have any wonder why Joe’s Plumbing might be more than a tad bit irritated? The new Obama health care takeover just took a guy with a pipe wrench, pvc pipe and a plunger and forced him into Dante’s eighth circle of hell – tracking and filing IRS paperwork.

So, what kind of IRS rules will be put into place to set the framework for how all these tax forms must be filed and stored?

Actually, bombshell number two is that the IRS will not be setting these rules. Instead, those noted tax experts at the U.S. Department of Health and Human Services will be writing and overseeing these tax regulations. Why? Who knows? It is the Alice in Wonderland world of the Obama health care bill.

U.S. Representative Dan Lungren (R-CA) has taken the first steps in alleviating this paperwork chokehold on America’s small business by introducing legislation to repeal this new burden.
Let’s hope that America’s businesses tell their Members of Congress to repeal what Lungren calls the “rat” tax, but what many observers believe should rightfully be called the preparation for the liberal Shangri-la of the VAT tax.

After all, once businesses are tracking every transaction over $600 and filing IRS paperwork on it, how much harder will it be for Congress to just say, add 10% to each bill and send it our way, extending taxation to every level of business unseen to unwary consumers who suddenly just see retail prices rise without knowing the increase is a new, hidden tax.

The requirement goes into effect January 2012. Better get a CPA on retainer. And stock up on toner and paper.

Rick Manning is the Director of Communications for Americans for Limited Government, and the former Public Affairs Chief of Staff for the U.S. Department of Labor.

Harmful Regulations Video Contest: California Dust Bowl

• By: admin
• On: 04/29/2010 10:02:28
• In: Energy Crisis, Global Warming Fraud, and the Environment

As ALG News has previously reported, in response to an EPA video contest seeking to gather films promoting government regulations, Americans for Limited Government/NetRight Nation and the Fr33 Agents Network have announced our own contest — against government regulations.

The reward is $2,500 for the best video highlighting the harm caused by government regulations. The above video is an ALG-produced example is just how easy it is to put together a video with a cheap video camera, in this instance covering Congress’ protection of the delta smelt fish at the cost of farm production in California. In fact, the regulations have caused a drought!

After you’re done, just plug the camera into your home computer, drag and drop the file onto my desktop and then upload it to your YouTube account. It's pretty easy! So there is no reason that you shouldn't be able to make a video for the contest and possibly win $2,500!

Here are the rules to enter:

1.Create a video promoting how government regulations have harmed business in your area. Get creative. Examples: a video showing the rising cost of food prices due to government subsidies or the FDA preventing the release of life saving medications. Think outside the box and show us how government regulations are harming you!

2. Post your video to YouTube. Send the link to Adam@netrightnation.com.

3. Two weeks from now, on May 11, we will post the top selection of videos that have been entered. We will also announce the judges for the contest that will narrow down the field to the best video entry in the coming week. Also, we will post your video submissions as they come in.

4. We will announce a winner on May 18 and they will receive the $2,500 cash prize that has not been stolen from the taxpayer!

Too Hot Not to Note: Flaws of health-care overhaul grow more apparent every day

• By: admin
• On: 04/29/2010 09:56:34
• In: Health Care

ALG Editor’s Note: In the following featured editorial from the Columbus Dispatch, it turns out Nancy Pelosi was correct when she said of ObamaCare “We have to pass the bill so you can find out what is in it”:

Flaws of health-care overhaul grow more apparent every day

Almost daily, the ill effects of the health-care overhaul passed by Congress last month are becoming apparent. As employers and government bureaucrats analyze the law's effect on bottom lines for the private sector and for government, the alarm bells are ringing.

The tragedy is that these ill effects could have been and should have been calculated before the law was passed, not after.

In fact, many of them were prophesied before passage of the bill, but the prophets were ignored by President Barack Obama and the Democratic majority in Congress. That's because their uppermost goal was not to pass the best health-care bill possible but merely to pass anything that could be called "health-care reform" and could be claimed as a political victory by a president desperate for one.

The latest analysis of the bill's likely effects comes from the Office of the Actuary in the federal Centers for Medicare and Medicaid Services. The report by Chief Actuary Richard S. Foster says that, far from reducing the cost of health care, the overhaul will add $311 billion to the nation's health-care costs over the first decade the law is in effect.

That's just for starters. The report also warns that the $575 billion in Medicare reductions that are supposed to help pay for the overhaul are unrealistic. If the cuts are not implemented by Congress, then hundreds of billions of dollars will be added to the national debt.

In the extremely unlikely event that Congress allows the Medicare cuts to occur, then
15 percent of hospitals and other care facilities that rely on Medicare reimbursements would become unprofitable, meaning that they might drop Medicare patients.

This would limit the availability of care for millions of seniors in the Medicare program at a time when doctors and hospitals already will be stretched thin by the addition of millions of other Americans clamoring to use the health insurance the overhaul will provide. (And to quantify the anticipated shortage of doctors, the American Academy of Family Physicians predicts a shortage of 39,000 family physicians by 2020.)

The report notes that there are many overhaul effects that simply cannot be calculated but that could have a dramatic impact on the cost of medical care.

For example, by extending Medicaid coverage to 18 million people and offering government subsidies to 16 million others to pay for health insurance, the overhaul will drive up demand for health-care services.

The report says this increase "could result in higher total expenditures or in some of this demand being unsatisfied. Alternatively, providers might tend to accept more patients who have private insurance (with relatively attractive payment rates) and fewer Medicare or Medicaid patients, exacerbating existing access problems for Medicaid enrollees."

The actuary notes that a new, long-term-care benefit called the CLASS program that was included in the overhaul will become unsustainable in 15 years, and its deficits will be added to the national debt.

Meanwhile, Monday's New York Times reports that congressional Democrats are acknowledging that companies such as AT&T, Caterpillar, Deere and Verizon were correct for making filings to the Securities and Exchange Commission detailing the large earnings hit they will take as a result of tax changes in the health-care overhaul.

Initially, Democratic leaders suspected that these companies were simply trying to undermine the new law by exaggerating its harm. U.S. Rep. Henry A. Waxman of California, chairman of the House Energy and Commerce Committee, intended to subpoena these companies and subject them to a public lashing before Congress.

But after analysis of data substantiated the companies' SEC filings, he is now saying in effect, "Um, never mind."

The Times also reported that AT&T documentation shows that it spent $4.7 billion on medical costs for employees and retirees in 2009, an amount far higher than it would pay in penalties imposed by the health-care overhaul if the company dropped health-care coverage altogether. Those employees presumably then would seek government-subsidized health-insurance paid for by taxpayers.

Underlining the law's perverse incentive, documents provided to Congress by Caterpillar included an e-mail from a company executive saying that provisions of the overhaul could "drive many employers to just drop coverage for retirees altogether, and let the government foot the whole bill."

Of the ostensible goals of the overhaul - to expand coverage, to curb costs and to pay for the program without adding to the deficit - only the first has any chance of being achieved under this law.

And even the expansion of coverage may turn out to be an empty promise if there are too few doctors and hospitals willing to accept inadequate reimbursement for Medicare and Medicaid patients.

As the weeks roll by, more and more unintended and should-have-been-anticipated consequences of this ill-conceived law will be revealed.

This should be no surprise, considering that the law was slapped together behind closed doors without proper testimony and vetting by health-care, financial and insurance experts, and is a patchwork of political and special-interest deals rammed through Congress using procedural gimmicks.

The nation deserved something much, much better than this.

Republicans Strike Back?

• By: admin
• On: 04/28/2010 09:38:29
• In: Economy

By Robert Romano

Senate Majority Leader Harry Reid has scheduled another procedural vote for today on the Dodd financial takeover bill. This follows two failed votes on proceeding to the bill this week that are solely designed to bully one or two Republicans into supporting the measure without making any significant concessions.

Senate Republicans must not take the bait. As Americans for Limited Government President Bill Wilson said yesterday, “Republicans can wield the upper hand in this debate by holding the majority to account for covering up for the real villain of the crisis: government.” And so far, that is exactly what the Senate minority is doing.

Yesterday, Republican after Republican came to the floor to criticize not only what is in the bill — which, as ALG News has previously reported, is horrendous — but what is not.

Senator Pat Roberts (R-KS) said of the Dodd bill, “it sends a signal that the government will bail out institutions just as it did with Fannie Mae and Freddie Mac, the two troubled mortgage giants that have received $125.9 billion in direct government funding and now have an unlimited U.S. credit line. Yet there’s no mention of Fannie or Freddie in this bill.”

Senator Roberts is exactly right. A text search of the Dodd bill will find that they are not at all included, despite the fact that Fannie Mae and Freddie Mac weakened mortgage underwriting standards and mislabeled high-risk mortgage-backed securities, defrauding investors. All told, the GSE’s brought some $1.835 trillion of these risky assets onto their books, out of the $4.7 trillion in mortgage-backed securities. That’s about 39 percent.

“Failure to deal with Fannie and Freddie keeps taxpayers on the hook for more bailouts of these entities,” Roberts continued. Again, he’s right. “Too big to fail” cannot end while the government maintains the bailed-out firms like Fannie and Freddie with no end in sight and an unlimited credit line.

A Senate Republican alternative plan obtained by ALG News to the Dodd bill would begin to bring an end to government ownership of the companies. It would require the GSE’s to “reduce their portfolio holdings by 10 percent of the prior year’s holdings” and the President to submit a plan to reform the GSE’s within six months of the bill’s passage.

Although this particular provision holds some promise, it is meager in comparison to an outright requirement that the firms be sold off by the government. That must be included so that there is no mistake that, at the end of the day, the government will not be in the mortgage market.

Further, there needs to be protection such that the $4.7 mortgage-backed securities are not simply purchased by the Federal Reserve or the Treasury.

Why? Because under the Republican alternative, “Fed lending that leads to the Fed holding assets on its balance sheet for a maximum period of time shall be moved on-budget and counted as new budget authority, receipts, or deficits or surpluses for purposes of the budget of the U.S. government.” The Federal Reserve has already bought $1.25 trillion of Fannie and Freddie securities. And under this provision, after a period of time, they would be transferred to taxpayers explicitly, being added directly to the national debt.

That would leave the government in charge of the mortgage industry.

Overall, moving Fed assets onto budget is actually a very good provision in comparison to current law, because it would restore honesty to accounting to the Federal Reserve and the U.S. budget. Under current law, the Fed has purchased the $1.25 trillion of securities with printed money in its program that replaced the Troubled Asset Relief Program. But, this did not appear on the government’s balance sheet as it should.

New law should require those specific securities to be sold on the private market, and the Fed should be restricted from making any further intrusions into the mortgage market. The goal must be to get government out of housing finance altogether, and very explicit restrictions will need to be placed to prevent the GSE’s from surviving in some other form under some other agency’s regulatory umbrella.

Other parts of the Republican plan do not directly address the Federal Housing Administration’s weakened down payments policies, nor do they repeal the Department of Housing and Urban Development Community Reinvestment Act regulations that forced banks to make risky loans to low-income Americans in the first place.

A final version of the GOP plan may include such provisions (such as in their title addressing underwriting standards), and they should, because they were an integral part of how so many bad mortgages were given out. Excluding that exempts another root cause of the crisis from reform.

Another critical aspect missing is reining in the Federal Reserve’s easy money policies. Specifically, its lower-than-justified interest rates allowed the credit bubble to inflate to appalling proportions in the first place. It is solely up to Congress to protect the American people from another government-inflated bubble by reining in the excesses that fueled it.

According to research by Stanford economics professor John Taylor, “the Fed's target for the federal-funds interest rate was well below what the Taylor rule would call for in 2002-2005. By this measure the interest rate was too low for too long, reducing borrowing costs and accelerating the housing boom.” By not placing restrictions on the Federal Reserve to wield interest rates policy as a mechanism for inflating asset bubbles, there will be nothing in place to prevent it from happening again.

There are other parts of the GOP alternative plan which accept many of the premises of the Dodd bill, like putting the FDIC as receiver of failing financial companies. Why not use bankruptcy courts? These are not depository institutions. They are investment firms, hedge funds, insurance companies and other non-banks. And the government should be in no position to seize them.

There is good reason for this. According to the Washington Times, “the government's non-bank rescues have become the biggest drain on taxpayers, including the burgeoning bailouts of mortgage giants Fannie Mae and Freddie Mac, insurance giant American International Group, and Detroit's General Motors and Chrysler.” This can only be remedied by ending the bailouts, and allowing companies to enter bankruptcy that belong there.

At the end of the day, there are some good ideas in the Senate Republican alternative, but it does not go far enough to addressing the root causes of the crisis. The American people are really expecting a comprehensive alternative plan that will end “too big to fail,” reinstate risk to the markets, strengthen credit standards, and restore the faith of the American people that the government does not have aspirations upon the private sector.

Robert Romano is the ALG Senior News Editor.

Harmful Regulations Video Contest

• By: admin
• On: 04/28/2010 09:34:58
• In: Uncategorised

By Adam Bitely

The EPA has decided to start a video contest, seeking to gather films promoting government regulations. The prize is $2,500 of stolen cash from the taxpayer.

What?! Well, two can play at this game — except we will not be robbing any taxpayers.

Americans for Limited Government/NetRight Nation and the Fr33 Agents Network have announced that we will host our own contest. The reward is $2,500 not stolen from the tax payers. Here are the rules to enter:

1.Create a video promoting how government regulations have harmed business in your area. Get creative. Examples: a video showing the rising cost of food prices due to government subsidies or the FDA preventing the release of life saving medications. Think outside the box and show us how government regulations are harming you!

2. Post your video to YouTube. Send the link to Adam@netrightnation.com.

3. Two weeks from now, on May 11, we will post the top selection of videos that have been entered. We will also announce the judges for the contest that will narrow down the field to the best video entry in the coming week. Also, we will post your video submissions as they come in.

4. We will announce a winner on May 18 and they will receive the $2,500 cash prize that has not been stolen from the taxpayer!

And if you have never made a video check out the two below (just click the image) and read just how easy it is to make one: