Federal Reserve Chairman Ben Bernanke was confirmed to a second term by Obama. Along with Obama's retention of another Bush appointee, Defense Secretary Robert Gates, Bernanke is perhaps the most important appointment, rather paradoxical for habitual Bush-basher Barack Obama. As I write this, I haven't seen the roll call of final votes, but 23 of the 40 Republicans voted for cloture to proceed to a floor vote. I reluctantly supported confirmation in an earlier post; I do have concerns about the Fed's reactive mode and ineffectual role in dealing with 2 major asset bubbles over the past 15 years or so, I don't like the fact that Bernanke has largely sidestepped the government bubble: progressive drunken-sailor spending, a baked-in federal deficit of a half trillion to $1.5T over the next few years (assuming the Democrats don't get their way on major federal footprint expansions, e.g., health care), and entitlement fund solvency issues. I don't like the fact that policymakers and the Fed did not address the economic dependency on other contributions to liquidity (e.g., private-sector funding and foreign investment inflows) I don't care for the fact that Bernanke did not address the dependence of the housing sector on nontraditional mortgages, with little collateral, vulnerable to resets on mortgage interest rates approaching the historical mean, never mind mortgage-backed securities which were not diversified for geographical risk (i.e., houses outside of hot areas like Florida, Nevada, California, etc., had much lower price appreciation) and the fact that implicitly government-backed Fannie Mae and Freddie Mac were snapping up relevant mortgages. (At the same time, I also remember that Greenspan, not Bernanke, was Fed chair during the housing bubble buildup; the point is--why was it necessary for Bernanke to go into firefighter mode over a year and a half after he assumed the chairman position--after the market was already starting to correct?)
I am giving Bernanke credit for performance during the tsunami and some unconventional, innovative tactics, like buying up troubled mortgage-backed securities. But more importantly, the last thing I wanted Obama to do is appoint a Keynesian economist (e.g., like (shudder) Paul Krugman) to replace Bernanke.
The State of the Union Address: An Initial Quick Review
This was not a good speech. In fact, it was my perception that the reaction from those attending was somewhat somber.
-- Supreme Court Decision
Probably the thing that people will take away most from the speech, although it probably won't be reported as such by the liberal mass media, is when Obama, arrogantly speaking right in front of the Supreme Court in attendance, politically attacked last week's Citizens United v FEC decision (which allows independent expression of policy positions or political endorsements for all organizations, but maintains restrictions against direct funding to campaigns). The flagrant dishonorable attempt to politically intimidate the Supreme Court is unconscionable and unworthy of a legitimate American President. Obama's polemical interpretation of the decision, echoed by other progressives as well, can be easily refuted (see, for instance NRO Anthony Dick's column).
In particular, Obama made a demagogic, tacitly xenophobic attack on the decision, stoking fears of foreign corporations trying to manipulate our elections. What Obama did not tell the American people is that Obama is latching onto a point of view in Justice Stevens' dissent, which has no legal standing, and the majority opinion specifically addressed this issue, saying it was beyond the scope of their decision. (The Supreme Court ruled on 2 U.S.C. Section 441a; it did not set aside 2 U.S.C. Section 441e, which prohibits foreign nationals, explicitly including corporations, not only from direct contributions to local, state or federal campaigns, but "expenditure, independent expenditure, or disbursement for an electioneering communication.")
[Obama and his fellow liberals/progressives maintain an untenable double standard when it comes to First Amendment rights. Why should a corporate-owned newspaper be able to endorse a candidate but not, say, an energy corporation? Why is it acceptable for a nonprofit to express their point of view but not a publicly-traded company? Since when can you disparately strip away liberties of the economically successful? What's particularly appalling is when Obama cuts back room deals with unions, Big Pharma, insurance companies, and publicizes support from certain medical groups and AARP, but argues inconsistently that groups not part of corrupt deal making with the progressive White House and Congress are less equal when it comes to expressing their point of view; it's government censorship, and the principles don't vary based on the net worth of a person or economic value of the organization.]
No doubt Justice Sam Alito, who seemed to be mouthing that the President's populist attacks on the Supreme Court decision weren't true, will be accused of having a Joe Wilson moment. (As I wrote this, I did a Google search on Joe Wilson and Alito and found already a handful of progressive blogs, tweets and at least one MSNBC commentator saying exactly that.) The progressives are also attempting to argue that conservatives are being hypocritical, e.g., suggesting past GOP platform disagreements with Roe v Wade, liberalizing elective abortions. [But there is no comparable in-your-face message from Republican Presidents in State of the Union addresses.] That is a disingenuous argument in many respects; for example, Republicans have advocated constitutional amendments to set aside Roe v Wade or attempted to restrict the use of tax dollars to fund abortions, but Obama and progressives are taking a position against freedom of speech, a core right. The real intent was for Obama and his progressive cronies to intimidate opposition to a progressive statist agenda.
-- Obama Staying the Course on His Progressive Agenda
I didn't quote this in an earlier post, but a centrist Democrat Congressman (Marion Berry) recently announcing his decision to retire mentioned the following regarding Obama and the this year's elections:
I’ve been [expressing concern over the impact of the unpopular progressive agenda on centrist Democrats' chances this fall] with this White House, and they just don’t seem to give it any credibility at all. They just kept telling us how good it was going to be. The president himself, when that was brought up in one group, said, ‘Well, the big difference here and in ’94 was you’ve got me.’ We’re going to see how much difference that makes now.”In other words, Obama thinks he's a better politician than Clinton. I don't know if Clinton had a reaction to this, but at this point, I think Obama is in a state of denial, if not delusional. There have been some polls recently done showing Obama losing to an unnamed 2012 opponent and others showing him narrowly losing to a hypothetical race against Huckabee or narrowly leading Romney. He has actively and unsuccessful supported Democratic candidates in 3 prominent statewide races over the last 3 months for offices held by Democrats for several years. Now, there is no doubt that maintaining honeymoon approval ratings is unrealistic, and anyone in a leadership role during a protracted recession is going to lose some popularity, but there is no doubt the country is signaling displeasure with a divisive, ineffectual agenda in which economic issues, the primary factor behind Obama's election, have been largely ignored since the so-called stimulus bill (not to mention some issues related to the War on Terror, i.e., the KSM trial and the underwear bomber).
For partisan Republicans worrying that Obama had learned Clinton's lesson from 1994 and would sharply shift to a centrist agenda to mitigate this fall's effects of the super-majorities in Congress, Obama didn't do that. He seems to cling to the progressive delusion that it's not due to intrinsic disagreements with legislation itself, but problems of a communication nature, i.e., he's getting (or not getting) his point across: the average voter needs to be "educated" on the issues. In fact, he reaffirmed the climate change and health care reform legislation. And he's making an implausible connection between health care and employment. There is no doubt that health insurance costs are high, but the progressive attempts to address this issue are wildly misguided.
Fundamentally we need to reform the concept of health care insurance--we need insurance to cover catastrophic costs, not to be debating whether we should pick up the costs of someone's Viagra or otherwise routine, manageable expenses; Obama fails to acknowledge the issue of state-specific mandates and the fact that premiums are much higher in high-mandate states. We also need for health care patients to have more of a vested interest in more efficient spending of dollars, we need to address issues constraining primary-care physicians, including the busy time of handling paperwork and high medical malpractice insurance, and we need to address how to fairly distribute catastrophic costs and high-risk patients. Whereas his focus on preventive medicine is laudable, he doesn't address the salient fact that many expensive preventive measures are dubiously cost-effective, and an implicit requirement to take on unnecessary costs aggravates health care inflation. We don't need the hubris of progressive legislators and Presidents arguing that government bureaucrats, without the private-sector intrinsic incentives for cost-savings and innovation, can better manage the health care sector.
-- Obama Continues Rerunning His Campaign Stump Speeches and Bush-Bashing
Obama also engaged in some bad math and accused Bush of leaving him with a fiscal year 2009 budget a trillion in the red. That's not true and misleading in a number of respects. First, the TARP funds in theory should be paid back (and already has been for most banks). The $787B stimulus plan, totally on Obama's watch, turns out, according to the most recent CBO estimate, to require another $75B in spending (i.e., unemployment benefits higher than projected). Also, the Democratic-controlled Congress passed the TARP legislature. When you look at, say, a $1.5T deficit for fiscal year 2009, with Bush in the White House for just under a third of the fiscal year, (and in fact the Dems refused to pass the budget until after Obama was President). When Bush left office, unemployment was still under 8%, so I would expect that relief spending picked up while Obama was President. For progressives, "math is hard". How Obama passed off the blame for the majority of a $1.5T deficit in fiscal year 2009 to a President who occupied the office for less than a third of the fiscal year and never signed the stimulus bill or the budget bill on his watch. Obama's ludicrous claim for credit for keeping the economy from collapsing is yet another pathetic attempt to disingenuously rewrite history; the major issue during the economic tsunami was keeping the life blood in the economy through the banks from freezing up. That crisis was addressed primarily under Bush's tenure, not Obama's.
A lot of things had already been anticipated, such as the misleading discretionary spending freeze (cf. yesterday's post). Obama wants to use the repaid TARP funds--which are supposed to pay down the deficit--to fund small business lending via politically-favored community banks; I'm opposed to this; the money should be repaid to the Treasury, and any loans to community banks should be approved on their own merits. I'm also nauseated by Obama's nuanced policies of a similar nature (e.g., investment tax credits only for smaller companies). The only thing I did hear of a positive nature in his discussion of taxes (mostly he spent his tax cut discussion explaining why 40-plus percent wage earners whom do not pay taxes deserve a check from the federal government, but no tax break for the economically successful whom already pay the lion's share of taxes) is the idea of letting companies in general accelerate depreciation. Obama's picking winners and losers for preferential tax rates or other benefits (set-asides, etc.) is, as I've discussed in other posts, a violation of the rule of law.
I was also suitably annoyed by his attempts to rationalize a federal takeover of the student loan market. (Right now if a lender loses money in exchange for servicing loans at a particular rate, including delinquencies, the federal government has to make up the difference.) Currently the private sector services about 64% of relevant loans. Obama is simply transferring the loan principals from the private sector to the federal public debt. Gee, do you think Obama has applied the lessons learned from Fannie Mae and Freddie Mac (which accounted for nearly a half of the mortgage market, transferring risk to the backs of the American taxpayer) to Sallie Mae? The government being a "fair competitor"? Yeah, right. And then Obama starts talking about capping loan repayments to a percentage of post-collegiate income and then forgiving loan balances if students take a government job (versus the private sector)? This goes beyond reckless spending and promises we can't afford with already massive deficits; this is a stunningly appalling bad idea teeming with moral hazards. I can't believe Obama is really stupid enough to believe this nonsense; the Congress would have to be nuts to go along with it; it's essentially a back door approach to nationalizing higher education. What I think it really is is some cynical ploy to force Republicans to vote against it and then try to use it as a political weapon to use against parents and college students worried about financing, arguing to voters in 2012 that the Republicans are against college students and parents with high school kids worrying about financing their kids' college education. [I'm almost surprised he didn't propose a federal public option, building a federal university system to provide some much-needed price competition to existing colleges and universities!]
Obama talked about building up our exports--strange thing: maybe I need to look at the speech again, but I didn't hear a word from him calling for the ratification of the South Korea and Colombian trade agreements or any new free trade agreements. The only thing I heard from him regarding trade pacts was reaffirming the usual set of progressive union-based demands. Once again, he's proposing an unrealistic goal for exports; let me get this straight: a President--who is not a committed free trader, proposes new business taxes or penalties (e.g., banks, health care and climate change) and regulations (e.g., financial industry, etc.), enacts massive new deficit-financed spending competing with the private sector for investment dollars, refuses to lower higher-bracket tax rates to more globally-competitive rates, has attempted to increase the public sector footprint (e.g., auto industry micromanagement and nationalizing student loans), reflexively backs high labor cost/inflexible union demands, and wants to increase tax rates at the end of the year on the economically successful--thinks he can rebuild our manufacturing base by mere fiat? Give me a break!
Obama once again attacked the GOP opposition, mocking them for not showing "leadership" (there's a pot calling the kettle black...) and merely paying lip service for being receptive for new ideas for health reform. His key point there was "lowering premiums" while expanding the coverage base beyond the existing 84% or so. I don't think anyone can promise to lower health care costs under trends where policyholders have little incentive to lower health care costs, an aging population where health costs correlate with age, a fragile pipeline of medical professionals to accommodate even larger patient loads, and dumping even more patients, preventive services on the system. There are compelling arguments to conservative/Republican suggestions already out there: for instance, address the pipeline issue by tackling medical malpractice tort reform and lowering the busy work (i.e., leaving more time to accommodate patients) related to government procedures and paperwork (not to mention addressing below-market reimbursements). Yeah, right: the reason that health care "reform" is failing is not the 40 or 41 GOP senators voting against Obama's death wish for the health care industry, but the fact that the American people know there's no such thing as a free lunch and recognizing corrupt deal making (e.g., the Louisiana purchase, the Cornhusker kickback, and the union deferments and exclusions) for just what it is.
-- Revoke 'Don't Ask-Don't Tell"
I've made clear in prior posts I have no problem with gay people in the military; I know homosexuality is a natural phenomenon that occurs across species, and I think there should be a fair opportunity for individuals to participate in the service of our country. I knew a couple of lesbians serving the Navy while I was stationed in Orlando. What is the purpose (beyond the obvious reason for paying off a political chit) for modifying a policy that simply says, "Be discreet about your sexual behavior and preferences"? Is there some compelling military need for recruiting openly gay individuals in the middle of a recession? I would suggest that the military enforce sanctions on an as-needed basis, say, inappropriate activities or disruptive events (e.g., wearing a military uniform in unauthorized circumstances or otherwise implying a government endorsement of political or social causes, unwanted sexual attention or harassment, etc.)
-- Energy Policy
I was pleased to hear Obama is being more open to offshore oil & gas development, but the proof is in the pudding, i.e., rules and regulations (say, for instance, if the most promising site is 75 miles offshore, is Obama only going to allow drilling much further out?) What about lifting environmentalist obstructionism in oil shale territory (e.g., Colorado or the Bakken formation)? What about nuclear power?
-- Obama's "We Can't Afford to Wait" Argument
In typical progressive speak, Obama refers to the solution to the recession as government intervention and the private-sector approach the same old policies of the last 8 years. [Let's see: Bush imposed steel tariffs, exploded domestic spending and the federal deficit, expanded entitlements (e.g., Medicare drug prescription coverage), and presided over one of the largest federal interventions in American history during the economic tsunami--it seems to me that Obama isn't "change"--it's MORE of the same...]
Tell me, Obama, was AIG unregulated? What about Fannie Mae and Freddie Mac? No SEC? No insurance regulators? No Federal Reserve? No bank regulators? No accountants? No credit raters? No Congressional oversight? If the federal government, after the intelligence and other failures in 2001 led to 9/11 and various streamlined agencies still failed to uncover the underwear bomber years later, why do we expect progressive pseudo-economics to work? Is it that European progressive policies have resulted in booming growth and low unemployment on the Continent?
What Republicans are referring to is to providing some stability so the private sector isn't having to deal with an uncertain economic environment, including inconsistent handling of circumstances (some companies bailed out, others not). Personally, for instance, I think Goldman Sachs should have not received full price for the value of their AIG swaps; they should have suffered the consequences for selecting a vendor which did not have enough reserves to cover their losses. On the other hand, automaker debt holders were paid by the Obama Administration something like 29 cents on the dollar while lower-standing union cronies were rewarded with equity.
Obama's conviction that he and his fellow progressives must do something--anything sounds desperate, with an abiding faith stronger in government bureaucracy than in economic liberty.
I'm ABSOLUTELY convinced that Obama and his progressive Congressional cronies have prolonged the recession and unnecessarily, inefficiently and counter-productively run up the nation's credit card. The best thing Obama and the Congress could have said was, in the interests of the country, ceased all attempts at micromanaging the economy, simply pass relief spending measures, and let the market find a bottom. It's seems they haven't learned a thing from FDR's inept handling of the economy during the Depression. What snapped us out of the Depression wasn't FDR's domestic policies but WWII.
-- Obama's "Recovery" / "Jobs" Bill: Putting Lipstick on a Pig...
I was watching new Fox News commentator Sarah Palin, hoping that she would take the opportunity to say of Stimulus III that it's not the politically-spun, euphemistic "Jobs" bill: "You can put lipstick on a pig..." (particularly a Big Government bubble pig...) We don't need multi-billion dollar Big Government boondoggles like the super-train connecting Orlando and Tampa. (It's not like there's a flood of people visiting Orlando, undecided on whether to go to Tampa but would, the main factor being how quickly they could get there...) If you like the way Amtrak consistently loses money, you'll LOVE the super-train.
The American people already know how expensive and ineffective the Democrats were at passing Stimulus II. Simple question, America: how much do you expect the Democrats to effectively spend your grandchildren's money this time around? Isn't it time we stop throwing good money after bad?
Bonus Videos: Teleprompters for Obama Visit to Sixth-Grade Class?
In teaching classes, I always came with structured, typewritten lecture notes or overheads, but I didn't spend my time reading from them, like Barack Obama or Sarah Palin reading from a script, however well-delivered. There were a couple of reasons. First, the notes provided a logical structure for student learning. Second, I found the practice of writing my notes imposed a certain preparatory discipline. The notes served mostly as a checklist; I would elaborate on and rephrase key points, work in some extemporaneous examples and occasional humor, constantly check the students for nonverbal cues, solicit and answer questions, etc.
(My teaching ratings didn't really reflect the effort I put into my classes, but I usually had a heterogeneous group of students, whom came to the classroom with differing backgrounds, abilities, and motivations. The predominant attitude in most universities is that students appreciate and favorably rate more demanding professors; my personal opinion is that it depends on context (including a professor's tenure and reputation). For instance, I don't think teenagers really appreciate parents right after being grounded. I'll never forget while at Illinois State as a visiting professor one of my late students joining me as I went into class after allowing time for the ratings; as we entered the room, one of the other students told the tardy student that he had missed a chance to get his pound of flesh.)
As a former professor, I often analyze Barack Obama as I would a fellow professor. (In fact, he used to be an adjunct lecturer at the University of Chicago.) Obama, in fact, does have outstanding oratorical skills (although I myself have had my own moments of being in the zone, when I knew I had the attention of everyone in the room, e.g., at conferences or business meetings). What particularly strikes me about Obama is when he gets into these long-winded, meandering or overly abstract, professorial discussions, oblivious to the fact he has lost connection with his target audience. (Of course, I realize some might make the same point about my own blog posts.) He sorely needs a good editor, to strip out sound bites, predictable rhetoric, and trite observations and avoid heavily nuanced, complex, or legalistic, arcane discussions; he also needs to watch his tone which can come across as condescending (e.g., guns and Bibles) and to be more respectful and less judgmental with the political opposition and his predecessors. He also needs to limit the times he's referring to himself; one speech included 132 such references. It's good when a speaker like Obama has confidence; it's another thing when a communicator is unaware of his own limitations.
Here is a clipping from Obama's visit to a northern Virginia classroom, followed by a humorous clip from Jon Stewart on the incident:
| The Daily Show With Jon Stewart | Mon - Thurs 11p / 10c | |||
| Obama Speaks to a Sixth-Grade Classroom | ||||
| ||||
Of course, this shouldn't be surprising; given by the November family dinner teleprompter mishap first reported by the Onion:
(Note: the Onion is a news satire organization)
Unfortunately, the Onion did not brief us on any teleprompter tips from Rick Warren or Joel Osteen for the President's leading Sasha and Malia in bedside prayers.
Political Cartoon
Gary Varvel notes how Obama, instead of accepting responsibility for the office he holds and coming up with positive, proactive solutions to deal with the economy, lacks confidence and is defensive, taking every opportunity to scapegoat his predecessor for his own lackluster performance, convoluted decisions and unfocused, divisive leadership.
Musical Interlude: My Favorite John Lennon Tunes
One of the things I remember about the Beatles era is that a pastime of fans was declaring their favorite, e.g., Paul was the "cute one". For those of us who went through school as the unpopular bright kids, there was one natural role model: the articulate, intelligent, introspective, nonconforming idealist, John Lennon. There is something appealing about one of the most talented musicians ever whom took a timeout for his family in the 1970's and then came back with an Grammy-winning album with 3 Top 10 singles, including my favorite Lennon solo track below. John Lennon was murdered just weeks after release of Double Fantasy. There were tribute songs (including Harrison's "All Those Years Ago" and McCartney's "Here Today"), but I particularly liked Elton John's, included below.
Beatles, "In My Life"
In My Life
There are places I remember
All my life, though some have changed
Some forever not for better
Some have gone and some remain
All these places had their moments
With lovers and friends
I still can recall
Some are dead and some are living
In my life I've loved them all
But of all these friends and lovers
there is no one compares with you
And these memories lose their meaning
When I think of love as something new
Though I know I'll never lose affection
For people and things that went before
I know I'll often stop and think about them
In my life I love you more
Though I know I'll never lose affection
For people and things that went before
I know I'll often stop and think about them
In my life I love you more
In my life I love you more
John Lennon, "Woman"
John Lennon Tribute: Elton John, "Empty Garden"
