A Nation In Distress

A Nation In Distress

Friday, August 12, 2011

Lessons From The British Riots

From Bill Muehlenberg and CultureWatch and zionica.com:

Lessons From the British Riots

Since I first wrote on this topic two days ago, a lot more light on what exactly has taken place has been shed, and a lot more informed commentary has been penned as well. All the new information and revelations simply confirm what I said in my original piece.

In particular, three major lessons can be adduced from all this, as I suggested two days ago. The first is the harmful effects of family breakdown. Many commentators have rightly noted how a half-century of family breakdown, the erosion of marriage, and an assault on two-parent families is now bearing ugly fruit, big time.

Many analysts and commentators have highlighted this issue. Melanie Phillips put it this way: “As I have been writing for more than twenty years, a society that embraces mass fatherlessness is a society that is going off the edge of a cliff. There are whole areas of Britain (white as well as black) where committed fathers are a wholly unknown phenomenon; where serial generations are being brought up only by mothers, through whose houses pass transitory males by whom these girls and women have yet more children, and whose own daughters inevitably repeat the pattern of lone and utterly dysfunctional parenting.

“The result is fatherless boys who are suffused by an existential rage and desperate psychic need, who take out the damage done to them by lashing out from infancy at the world around them. And all this is effectively condoned, rewarded and encouraged by the welfare state which conceives of need solely in terms of absence of money, and which accordingly subsidises lone parenthood and the destructive behaviour that welfare fatherlessness brings in its train.”

Theodore Dalrymple concurs: “British youth leads the Western world in almost all aspects of social pathology, from teenage pregnancy to drug taking, from drunkenness to violent criminality. There is no form of bad behaviour that our version of the welfare state has not sought out and subsidised.

“British children are much likelier to have a television in their bedroom than a father living at home. One-third of them never eat a meal at a table with another member of their household — family is not the word for the social arrangements of the people in the areas from which the rioters mainly come. They are therefore radically unsocialised and deeply egotistical, viewing relations with other human beings in the same way as Lenin: Who whom, who does what to whom. By the time they grow up, they are destined not only for unemployment but unemployability.

“For young women in much of Britain, dependence does not mean dependence on the government: that, for them, is independence. Dependence means any kind of reliance on the men who have impregnated them who, of course, regard their own subventions from the state as pocket money, to be supplemented by a little light trafficking.”

The second and related lesson is the debilitating impact of the modern welfare state. This simply tends to increase dependency, irresponsibility, and apathy. The very virtues needed to maintain a strong and tight-knit community tend to be unravelled in the welfare state.

In another important article Phillips also looks at this issue: “And this breaking of the family was further condoned, rewarded and encouraged by the Welfare State, which conceives of need solely in terms of absence of money, and which accordingly subsidises lone parenthood and the destructive behaviour that fatherlessness brings in its train.

“Welfare dependency further created the entitlement culture that the looters so egregiously display. It taught them that the world owed them a living. It taught them that their actions had no consequences. And it taught them that the world revolved around themselves. The result of this toxic combination of welfare and non-judgmentalism was an explosion of elective lone parenthood and dysfunctional behaviour transmitted down through the generations at the very bottom of the social heap — creating, in effect, a class apart.

“Once, children would have been rescued from their disadvantaged backgrounds by schools which gave them not just an education but structure and purpose to their lives. But the liberal intelligentsia destroyed that escape route, too. For its onslaught upon marriage — the bedrock institution of society — with a tax system that penalises married couples with a wife who doesn’t work, was replicated by an onslaught upon the understanding and very identity of that society. Instead of transmitting knowledge to children, teaching was deemed to be an attack upon a child’s autonomy and self-esteem.

“Thus it was that teachers adopted the ‘child-centred’ approach, which expected children not only to learn for themselves but also to decide for themselves about behaviour such as sexual morality or drug-taking. The outcome was that children were left illiterate and innumerate and unable to think. Abandoned to wander through the world without any guidance, they predictably ended up without any moral compass. All of this was compounded still further by the disaster of multiculturalism — the doctrine which held that no culture could be considered superior to any other because that was ‘racist’.”

Victor Davis Hanson speaks of “Paralytic Western Society”. He writes, “We seem able to admit that massive federal and state entitlements have created a sense of dependency, a loss of self-respect and initiative, and a breakdown of the family, yet we still seem to fear that trimming the subsidies would lead to some sort of cold-turkey hyper-reaction. We assume that society is to blame for disaffected youth and therefore are hesitant to use commensurate force to quell the violence or even to make it clear that perpetrators are responsible for their own conduct. Yet at some point — when the violence reaches middle-class communities or, in serial fashion, downtown or suburban stores — we likewise assume that sufficient force will be used. Sociological exegesis will go out the window. Reality has a way of dispelling such cognitive luxuries.”

And a third lesson is this: it is time to lay to rest the old leftist clich├ęs about such situations. We have seen again the folly of those on the left rehashing old Marxist analysis of such riots. The old leftist claims that these troubles are reflections of a war between rich and poor – the old class struggle, in other words – just don’t wash here. The left has been pushing this line at least since Lenin, but it really is beginning to wear a bit thin.

Indeed, I have had people pushing this line on my own site. I replied to one such person this way: “The typical leftist/Marxist line on this (it is all due to poverty and the class struggle) is simply not the case. The evidence is quite the opposite. We did not see poor starving rioters and looters stealing milk and bread to survive. We saw well-heeled young people stealing IPods, designer sunglasses, plasma TVs, and expensive footwear. Many of those arrested were university students, or children of wealthy CEOs and businessmen.”

I cited from an excellent piece which makes this quite clear. Andrew Gilligan begins his article this way: “They were, some said, the alienated poor, those without hope, lashing out in rage and despair. But as the accused London rioters started appearing in court they included university students, a wealthy businessman’s daughter and a boy of 11….

“Among the accused was Laura Johnson, 19, daughter of a successful company director. She lives in a detached converted farmhouse in Kent, with extensive grounds and a tennis court. She is an English and Italian undergraduate at Exeter. Before that, she attended St Olave’s Grammar, the fourth-best state school in the country, where she studied A-levels in French, English literature, geography and classical civilisation. On Wednesday, at Highbury, she was accused of looting the Currys superstore, in Charlton, of electrical goods worth £5000 ($7800).”

Ann Coulter speaks of how “The Sun Never Sets on the British Welfare System”. Her entire article is well worth reading, but consider this snippet: “Britain has a far more redistributive welfare system than France, which is why France’s crime problem is mostly a matter of Muslim immigrants, not French nationals. Meanwhile, England’s welfare state is fast returning the native population to its violent 18th-century highwaymen roots.

“Needless to say, Britain leads Europe in the proportion of single mothers and, as a consequence, also leads or co-leads the European Union in violent crime, alcohol and drug abuse, obesity and sexually transmitted diseases. But liberal elites here and in Britain will blame anything but the welfare state they adore. They drone on about the strict British class system or the lack of jobs or the nation’s history of racism.”

Jonah Goldberg speaks about “left-wing pundits both there and here who insist that the new Tory government’s budget cuts have led to widespread violence, even though most of the relevant cuts haven’t even gone into effect. Of course, they always manage to say ‘there’s no excuse’ for violence. But there’s always a ‘but’ that leads a long parade of excuses.

“Invariably, these rationalizations amount to a license to spend ever more on the social programs that have, at the least, helped to produce the sort of ‘youths’ who will burn homes and cars and beat people to death should the programs be even moderately curtailed. Indeed, according to liberal logic, the mere threat of reforming such programs is enough to cause wholesale violence. In other words, the cuts don’t justify the violence, but the threat of violence justifies avoiding cuts. It’s a clever rhetorical trick, but policy-wise it’s both appeasement of and appealing to thuggery, pure and simple.

“This helps to clarify how economic inequality has come to replace poverty as the most cited ‘root cause’ of social unrest. Poverty, while a more slippery concept than you might think, is still a definable thing. If you lack adequate housing, food and clothing, you’re very poor. Western democracies don’t have much of a problem, comparatively speaking, with that kind of poverty. But we do have income inequality. Inequality is a statistical artifact, an aesthetic offense. Its chief advantage as a bogeyman is that it will always exist and thus always justify programs to reduce it.”

Plenty of other lessons can be learned from all this, but if policy makers, the ruling class, and the opinion makers would just get their heads around these three, we could perhaps prevent such rioting from occurring in the future, at least to some extent.








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NCSL: States Introduced More Than 7,000 Immigration Bills In Last Five Years

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Joe Wilson Was Right About ObamaCare for Illegal Immigrants

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Life in an Age of Looting: "Some Will Rob You with a Sixgun and Some with a Fountain Pen" | Common Dreams

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SEC Investigating S&P Employees For Insider Trading Over Downgrade Of U.S. Debt

From MoneyNews.com and Newsmax:

FT: SEC Investigating S&P Employees for Insider Trading Over Downgrade of US Debt

Friday, 12 Aug 2011 07:16 AM

By Forrest Jones

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The Securities and Exchange Commission has asked Standard and Poor’s to hand over a list of people who knew the agency was going to downgrade U.S. ratings before it was announced to see if possible insider trading took place.

Sources familiar with the issue tell the Financial Times that the SEC’s enforcement division isn't after the S&P nor do they have evidence of specific trading activity that would suggest a leak.

An examination department, which oversees ratings agencies, asked for names.

Should a formal investigation evolve, a bigger issue could arise – Standard and Poor’s license.


Editor's Note: The ‘Unthinkable’ Could Happen — Wall Street Journal

50% unemployment, 100% annual inflation, a 90% stock market crash by 2012. Watch the Aftershock Survival Summit Now, See the Evidence. Click Here.


The Credit Rating Agency Reform Act of 2006 states that an agency could have its license revoked if it leaks information prior to disclosing a move on a rating public, MarketWatch reports.

The ratings agency must also have policies and procedures to prevent such a disclosure.

“If it is true that they told hedge funds and briefed banks and told a few people ahead of everyone else that would appear to be a clear violation 2006 Act,” says Consumer Federation of America director Barbara Roper, according to MarketWatch.

“Credit rating agencies have to have polices to prevent the dissemination of pending rating action on the Internet.”

Increasing the probe from an inquiry level to an enforcement one may be tough.

“Proving someone leaked information about the downgrade, or traded ahead of it, could be challenging. Many traders anticipated the downgrade and bets could occur across numerous securities or currencies without inside information,” the Times reports.

“In a traditional insider trading case, there is often a more predictable correlation between a company’s stock price and a particular development.”

(Getty Images photo)

Politicians are already all over the downgrade, the first of its kind ever.

The Senate Banking committee said it would look into S&P’s move to knock U.S. credit ratings to AA-plus from AAA, which pummeled stock markets.

Like the SEC, the Senate panel is gathering information on the move and hasn’t opened a formal investigation over any wrongdoing, Reuters reports.

Senate Banking Committee Chairman Tim Johnson has said the downgrade was an "irresponsible move" that could have a far-reaching impact, Reuters adds.

The downgrade may also "have spillover effects that tax the American people by increasing interest rates on home loans, credit cards, and car loans, and by increasing the cost of finance for some state and local governments."

S&P also has come under attack from House of Representatives Majority Leader Eric Cantor, a conservative Republican who has been outspoken in his opposition to tax increases.

In a memo to his fellow Republicans that was made public by his office, Cantor noted that S&P's analysis of the U.S. fiscal situation "is overly focused on resolving the debt crisis in a manner that would greatly worsen the jobs crisis."

He was referring to S&P's contention that "the majority of Republicans in Congress continue to resist any measure that would raise revenues" to help ease the country's fiscal problems.

During the debt limit negotiations, Cantor and fellow Republicans successfully opposed raising taxes on Americans despite Democrats' insistence for more revenue.

The House Financial Services oversight subcommittee, which held a hearing on the credit agencies last month, has no plans for another hearing, a congressional aide said this week.

Meanwhile, Columbia University law professor John Coffee said the fate of future reform efforts for the ratings agencies was uncertain.

Credit rating agencies were widely criticized for fueling the 2007-2009 financial crisis by assigning top ratings to securities that were backed by subprime mortgages, which then plummeted in value as the housing market collapsed.

The new Dodd-Frank regulatory reform law does not include a tough reform amendment offered by Democratic Senator Al Franken of Minnesota, but it did require a two-year study of the credit ratings industry, perceptions that it suffers from an inherent conflict of interest, and what to do about it.

Of particular concern is the fact that companies issuing financial instruments pay the ratings agencies to do the analysis that results in their ratings, Coffee said.

Governments don't solicit or pay credit agencies for ratings.

Meanwhile, a managing director at Standard & Poor's said that he has absolutely no second thoughts about the credit ratings agency's decision to cut the U.S. debt rating.

S&P's David Beers told BC's "Good Morning America" earlier this week that the agency's decision was based on several factors, including damage done to the U.S. reputation over the controversy surrounding the debt ceiling and concerns that underlying public finances are on an unsustainable path.

Asked if he had any second thoughts about the downgrade, Beers said "absolutely not."

While much has been made about the Treasury Department's claim that S&P acted on an analysis that had a $2 trillion error, Beers rebuffed the notion during an appearance on CNN.

"This idea that we made a $2 trillion error is simply a smoke screen for the unhappiness about our decision," he said.

Beers did seem to try to alleviate concern about the downgrade, saying it was "a very small diminution, if you like, in the credit standing of the United States."

"This is not a catastrophic decline in the U.S.'s creditworthiness," he added.

© Moneynews. All rights reserved.

Read more: FT: SEC Investigating S&P Employees for Insider Trading Over Downgrade of US Debt

Important: Can you afford to Retire? Shocking Poll Results

Obama Voters Bring EU-Style Riots to Wisconsin

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Appeals Court Rules ObamaCare Mandate Un-Constitutional

From LifeNews.com:

Appeals Court Rules Obamacare Mandate Unconstitutional

by Steven Ertelt
Atlanta, GA
8/12/11 1:43 PM






A federal appeals court today issued a ruling agreeing with a federal judge’s decision ruling the individual mandate at the heart of Obamacare is unconstitutional.

In January, a federal judge in Florida issued a ruling in what is the largest lawsuit filed against the Obamacare health care law. U.S. District Judge Roger Vinson said the individual mandate is unconstitutional and, therefore, the entire law is as well.

The individual mandate is a portion of the law independent and conservative voters most strongly oppose because it requires Americans to purchase health insurance, that could fund abortions with taxpayer funds or premiums, whether they want to or not. The case the state of Florida and more than two dozen others made to Judge Vinson is that the individual mandate is unconstitutional and the Constitution does not allow Congress to regular financial inactivity.

The Obama administration appealed the decision to the U.S. Appeals Court based in Atlanta, Georgia. Judge Vinson did not stop the implementation of the law pending the appeal which could take two years to reach the Supreme Court and result in a decision.

Today, a three judge panel of the federal appeals court ruled Obamacare’s individual mandate is unconstitutional, calling it “an unprecedented exercise of congressional power.”

The court said, “the individual mandate contained in the Act exceeds Congress’s enumerated commerce power. This conclusion is limited in scope. The power that Congress has wielded via the Commerce Clause for the life of this country remains undiminished. Congress may regulate commercial actors. It may forbid certain commercial activity. It may enact hundreds of new laws and federally-funded programs, as it has elected to do in this massive 975- page Act. But what Congress cannot do under the Commerce Clause is mandate that individuals enter into contracts with private insurance companies for the purchase of an expensive product from the time they are born until the time they die.”

“It cannot be denied that the individual mandate is an unprecedented exercise of congressional power. As the CBO observed, Congress “has never required people to buy any good or service as a condition of lawful residence in the United States.” CBO MANDATE MEMO, supra p.115, at 1. Never before has Congress sought to regulate commerce by compelling non-market participants to enter into commerce so that Congress may regulate them. The statutory language of the mandate is not tied to health care consumption—past, present, or in the future. Rather, the mandate is to buy insurance now and forever. The individual mandate does not wait for market entry,” it continued.

The panel was comprised of two Democratic-appointed judges and one Republican — making it hard for the Obama administration to dismiss the opinion as coming from conservative justices opposed to Obamacare.

The decision virtually guarantees the Supreme Court will take up the Obamacare case — as the Obama administration will very likely appeal the decision in what has become the largest and most focused-upon lawsuit against Obamacare.

The American Center for Law and Justice, a pro-life legal group, praised the ruling.

“The appeals court got it right and the decision represents a critical step forward in undoing ObamaCare,” said Jay Sekulow, Chief Counsel of the ACLJ, which is involved in litigation challenging ObamaCare. “The individual mandate, which forces Americans to purchase health insurance, exceeds the authority of the Commerce Clause. We’re delighted that the appeals court recognized that fact. While the appeals court did not declare the entire law unconstitutional, by striking the individual mandate, the entire law is clearly in jeopardy. We remain hopeful that the Supreme Court will ultimately declare the entire health care law unconstitutional.”

Previously, Judge Vinson ruled: “Because the individual mandate is unconstitutional and not severable, the entire Act must be declared void. This has been a difficult decision to reach, and I am aware that it will have indeterminable implications. At a time when there is virtually unanimous agreement that health care reform is needed in this country, it is hard to invalidate and strike down a statute titled ‘The Patient Protection and Affordable Care Act.’”

“Regardless of how laudable its attempts may have been to accomplish these goals in passing the act, Congress must operate within the bounds established by the Constitution,” the judge wrote. “This case is not about whether the Act is wise or unwise legislation. It is about the Constitutional role of the federal government.”

“Congress exceeded the bounds of its authority in passing the Act with individual mandate,” he added.

Every leading pro-life organization opposed Obamacare over the abortion funding and rationing concerns.

Four Reasons Why S&P Got It Right

From The CATO Institute:

Economic Growth

Four Reasons S&P Got it Right

by Richard A. Epstein

Hoover Institution

August 09, 2011

The major headlines on Saturday, August 6, 2011, contained no surprises in announcing that Standard & Poor’s had downgraded the United States credit rating from AAA to AA+. That decision, of course, had this rich irony: the same credit agency that was lambasted for giving rosy ratings to toxic mortgage-backed securities is now being skewered by liberals for selling the United States short. The markets, however, did not react with the same skepticism toward the S&P as the committed liberals did. For the economy to rebound it is imperative that the US address high marginal tax rates, fealty to unions, the Obama distractions idea of International free trade, and entitlement programs like Medicare and Medicaid.

The U.S. Credit Rating Downgraded: Now They've Done It

From The Heritage Foundation:

U.S. Credit Rating Downgraded: Now They’ve Done It

By J.D. Foster, Ph.D.

August 6, 2011

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Late on Friday, August 5, Standard & Poor’s (S&P) downgraded the United States credit rating from AAA, and really best in class, to AA+. In one fell swoop, S&P sent two separate and powerful messages. First, as The Heritage Foundation and many others warned, the spending reductions in the deal negotiated by President Obama to raise the debt ceiling were entirely and woefully inadequate. Second, the global economy, the national economy, and state finances have all in their own ways been delivered a mighty and frightening body blow.

A Lost Standard of Excellence

For decades past memory, United States government debt was deemed the gold standard of credit quality. Textbooks referred to U.S. Treasuries as the “riskless asset” against which all others were compared. Those days have passed, at least for now, because the U.S. government has rapidly piled debt upon debt and, on its current trajectory, evidences no inclination to stop. Under the circumstances, without a fundamental policy course correction, a repeatedly threatened credit rating downgrade became inevitable, with only the timing at issue.

President Obama and his allies in and out of Congress do not deserve all the blame for the downgrade. Unaffordable entitlement programs were built up Congress after Congress, President after President, and their imposing fiscal dangers for the future were ignored thereafter. To his credit, President George W. Bush tried to reform the lesser problem of Social Security, spending virtually all the political capital acquired in his strong re-election in doing so, yet even many of his allies in Congress wanted no part of it. And so the basic facts regarding the tens of trillions in unfunded obligations in Social Security, Medicare, and Medicaid remain and are not in dispute.

While not solely to blame, President Obama and his allies are most certainly preeminently to blame. Facing a rapidly growing budget deficit in 2009, President Obama pushed through a massive fiscal stimulus program followed by a succession of lesser efforts. As the anemic state of the economy attests quite clearly, those programs failed miserably—except in raising federal spending and national debt.

Then the President pushed through his disastrous and highly unpopular health care reform. On paper, these reforms give the appearance of improving the fiscal picture modestly. But as the Medicare trustees’ report has reminded us every year after Obamacare’s passage, this happy picture is an illusion. Aside from the damage it has done and will do to health care costs and services, from a fiscal perspective Obamacare ultimately is just yet another unaffordable entitlement piled on top of those already on the books.

A Lost Opportunity

In the recent debt ceiling fight, the President’s initial view was that Congress should pass a “clean” debt ceiling, allow yet more borrowing, and attend to whatever deficit reduction might be possible later. The reaction by S&P demonstrates undeniably how wrong the President was. And the nation knew it. Rarely have the American people been more engaged in and more concerned about a matter of federal fiscal policy. Yet after ignoring his own high-profile if fatally flawed fiscal commission, and after offering a budget in January that was utterly silent on these critical issues, the President told the Congress: Don’t worry, be happy.

In the course of negotiations on the debt ceiling, congressional Republicans tried tirelessly to get the President and Senate Democrats to get serious about cutting spending. All Obama and Senate Majority Leader Harry Reid (D–NV) could do was carp about symbolic tax hikes on the rich, oil companies, and their latest silly affection—corporate jets. To be clear, despite the perilous state of the nation’s finances, the President’s sole objective was ideological and symbolic: Even if Republicans had caved on tax hikes, which they wisely refused to do, the revenue gains would have been inconsequential compared to the spending cuts that are necessary. The President played politics while the nation’s credit rating was set to burn, and now it has.

Whether the congressional Republican leadership should have forced deeper spending cuts before agreeing to raise the debt ceiling is now a settled question. S&P settled it. Whether they could have forced deeper spending cuts in the face of a politics-playing President and Senate dominated by spenders will never be known. But the nation will soon see the consequences.

Failure Has Consequences

Taken in isolation, a credit rating downgrade will eventually mean higher interest rates on U.S. government debt. This may be hard to imagine given the recent drop in Treasury bond rates in response to events overseas. But higher future rates are certain, and that means that even more federal tax dollars must be dedicated to paying the interest on past government excesses. Higher interest rates and interest cost means greater deficit pressures, which can mean more debt, which can lead to higher interest rates. This is why it is termed a debt spiral.

How will the credit rating downgrade of U.S. government debt affect the states and municipal governments’ interest costs? Nobody knows for sure, but it cannot be good. As a practical matter, U.S. government debt is the foundation of the U.S. financial system, as a point of reference if for no other reason. Interest rates paid by state and local government can only go up as a result of the downgrade, unwelcome news indeed to states wrestling with their own massive deficits due in part to the failure of the economy and state revenues to recover.

In today’s global economy, however, the U.S. credit rating downgrade may prove catastrophic. Prior to the credit rating downgrade, Europe was already teetering on the brink. Last week European stock exchanges plunged 10 percent, their worst weekly losses since November 2008. The long-building government debt crisis in Europe, which had been so unsuccessfully papered over just a few weeks ago by its leaders, is reaching the boiling point, threatening to wash over not just the worst offenders like Greece and Portugal but also some of the pillars of the European Union like Spain and Italy.

This is a European government debt problem on top of a European currency problem on top of a European economic growth problem. But the 2007–2009 financial crisis taught an important lesson about the intense interconnectedness of global financial markets—and that a great many of these connections are little known and poorly understood.

What happens in Europe will not stay in Europe. What weaknesses in global finance and financial supervision will this crisis reveal? No one knows, but what a terrible time for the dominant financial actor in the global financial system, the United States government, to suffer an entirely preventable credit rating downgrade. The dangers to the global economy, and specifically to the U.S. economy, have increased markedly as the U.S. credit rating has been marked down.

Perhaps the Last Opportunity That Must Not Be Lost

President Obama and Congress have the time and opportunity to change the course of fiscal policy. The United States can recover its AAA credit rating and begin to heal the damage, but it must not delay. The debt ceiling deal included the provision for the creation of a joint select committee of Congress to cut at least $1.2 trillion over the next 10 years. Clearly, that figure is much too low. The committee was to report by November 23. Clearly, that is too late. In the eyes of many, the committee was designed to fail. That must not happen.

President Obama must now do things he has been loath to do heretofore. First, he must lead. No more grand speeches, no more politicking, no more finger-pointing while criticizing those who oppose him. Above all, leading now means corralling his forces to reach across the aisle to Republicans and work together.

Second, he should give up the ideological fight for higher taxes on anyone. For one thing, even suggesting higher taxes when unemployment is so high and economic growth is so low suggests a man more committed to politics than jobs. As The Heritage Foundation suggested at the start of his term,[1] President Obama should suspend his desire for higher taxes at least until the economy has moved far toward full employment. The wisdom (or lack thereof) of higher taxes can be debated when Americans are back to work.

Finally, the President should forego his inclination to use entitlement reforms for political purposes. Scaring seniors about Social Security checks and related “Mediscare” tactics, which are basic elements of the Democratic Party playbook, must stop. The problem is too much entitlement spending now and even more so in the near future. Republicans know it. Democrats know it. Conservatives know it. Liberals know it. The nation now knows it.

A number of sound incremental reforms can garner strong bipartisan support and can substantially improve these programs’ sustainability and the nation’s finances. The President must lead his party to join hands with Republicans in the joint select committee to embrace these reforms and be ready to enact them, saving far more than $1.2 trillion and far sooner than November 23.

It Can Be Done

The objective for the nation, the President, and the joint select committee is clear: drive down spending—including and especially on entitlement programs—toward a balanced budget while protecting America and without raising taxes. Properly done, this would lead to economic growth, more jobs, less government, and a restoration of the nation’s credit rating. It can be done. The Heritage Foundation has described in detail how to do it in “Saving the American Dream: The Heritage Plan to Fix the Debt, Cut Spending, and Restore Prosperity.”[2]

J. D. Foster, Ph.D., is Norman B. Ture Senior Fellow in the Economics of Fiscal Policy in the Thomas A. Roe Institute for Economic Policy Studies at The Heritage Foundation.

Show references in this report


[1]J. D. Foster and William W. Beach, “Economic Recovery: How Best to End the Recession,” Heritage Foundation WebMemo No. 2191, January 7, 2009, at http://www.heritage.org/Research/Reports/2009/01/Economic-Recovery-How-Best-to-End-the-Recession.

[2]“Saving the American Dream: The Heritage Plan to Fix the Debt, Cut Spending, and Restore Prosperity,” The Heritage Foundation, at http://www.savingthedream.org.

Terminating The Small Business Administration

From The CATO Institute:

Budget & Taxation

Terminating the Small Business Administration

by Veronique de Rugy, Tad DeHaven

Cato Institute

August 11, 2011

The primary purpose of the Small Business Administration (SBA) is to encourage lending to small businesses through government loan guarantees. The SBA retains political support because it is a tool for policymakers to signal their support of small businesses. At the same time, SBA supporters have cultivated a myth that being against the agency is equivalent to being against small businesses. In reality, the great majority of American small businesses have thrived without government subsidies. Even though there are no substantial economic benefits of the SBA, the agency has remained politically entrenched. It gains particularly powerful support from the banking industry. However, with today’s huge federal deficits, policymakers should begin eliminating unneeded business subsidies in the budget, including SBA spending.

The Cost Of Government Day 2011

From The CATO Institute:

Budget & Taxation

Cost of Government Day 2011

by Jacob Feldman

Americans for Tax Reform

August 12, 2011

Every year, the Americans for Tax Reform Foundation and the Center for Fiscal Accountability calculate Cost of Government Day. This is the day on which the average American has earned enough gross income to pay off his or her share of the spending and regulatory burdens imposed by government at the federal, state, and local levels. In 2011, Cost of Government Day falls on August 12. Working people must toil 224 days out of the year just to meet all costs imposed by government, a full 27 days longer than 2008. In other words, in 2011 the cost of government consumes 61.42 percent of national income.

Appeals Court Rules Fannie/Freddie Documents Can Be Kept Secret By Obama Regime

From Judicial Watch:

Appeals Court Rules Fannie/Freddie Docs Can be Kept Secret by Obama Administration

So far the U.S. government has bailed out Fannie Mae and Freddie Mac to the tune of at least $130 billion, and perhaps as much as $1 trillion. And yet, the Obama adminsitration continues to stonewall the release of documents that could shed light on why Fannie and Freddie failed, thereby sending the economy into a tailspin from which we have yet to recover. (Those records are housed at the Federal Housing Finance Agency (FHFA) now that Fannie and Freddie are owned and operated by the federal government.)

Judicial Watch is especially interested in documents related to the political contributions of Fannie and Freddie. And we’ve gone to court to get our hands on them. Unfortunately, our efforts sustained another setback when an appellate court sided with the government and ruled that Fannie and Freddie’s records are not subject to Freedom of Information Act (FOIA) law and may continue to be kept secret:

The Federal Housing Finance Agency (FHFA) has been the conservator of Fannie Mae and Freddie Mac since 2008. Judicial Watch filed a request under the Freedom of Information Act (FOIA) asking the FHFA to disclose records of Fannie and Freddie that show how much money they gave to political campaigns. But it is uncontested that no one at the FHFA has ever read or relied upon any such documents. The district court held that the documents are not agency records subject to FOIA, and we agree.

So, in other words, because no one at the FHFA, the agency in charge of Fannie Mae and Freddie Mac, has “read or relied upon” the documents, they are not considered agency records under FOIA, and cannot be released. (Here’s an idea. Maybe someone at FHFA should read the documents so someone in the government might have a clue as to why these two institutions failed so miserably.)

We obviously, strenuously disagree with that Alice-in-Wonderland logic, as explained in our appellate brief: “In every meaningful way, the FHFA is lawfully in control of these records. There is nothing contingent, hypothetical, indefinite, or limiting about this plain statutory language vesting the FHFA with both legal custody and lawful control over the records.” Our lawyers are considering what the next step should be in this important legal battle.

But even though the record is incomplete with regard to Fannie and Freddie, we do know of one major factor in their demise: the corrupt relationship between the two mortgage giants and their congressional conspirators, who looked the other way while Fannie and Freddie continued their reckless lending policies. That’s why we’re after these records.

Members of Congress received more than $4.8 million in political contributions from Fannie Mae and Freddie Mac over a ten-year period.

According to OpenSecrets.org from 1998 through 2008, the top ten recipients of Fannie Mae and Freddie Mac's political largesse are as follows: Senator Dodd (D-CT), then-Senator Obama (D-IL), Senator Kerry (D-MA), Senator Bennett (R-UT), Rep. Bachus (R-AL), Rep. Blunt (R-MO), Rep. Kanjorski (D-PA), Senator Bond (R-MO), Senator Shelby (R-AL), Senator Reed (D-RI). Senator Dodd, the top recipient of Fannie Mae and Freddie Mac campaign contributions, is Chairman of the Senate Banking Committee responsible for regulating the mortgage industry. Notably, President Obama was a top recipient of campaign monies despite being in the Senate for only three years.

Still, this is just the tip of the iceberg. The documents currently being withheld by FHFA likely contain a treasure trove of information related to the inner workings of these two government-controlled agencies. That’s why Judicial Watch is fighting so aggressively to get hold of them.

But just because the Obama administration thinks the details of the collapse of Fannie and Freddie are none of your business, that doesn’t mean they’re going to stop taking your money.

According to The Washington Post:

Freddie Mac, the mortgage finance house, said Monday that it will ask for an additional $1.5 billion of taxpayer money to make up for losses stemming from weak housing markets.

The request falls on the heels of an announcement last week by Freddie Mac’s sister organization, Fannie Mae, that it will need $5.1 billion to make up its shortfall. The two coincide with Standard & Poor’s downgrade of the U.S. government’s credit rating from AAA status to AA+, which has the potential to affect the institutions’ lending and collecting abilities.

(The Associated Press is also reporting that in an act of abject desperation the Obama administration plans to be the world’s largest landlord: “The Obama administration may turn thousands of government-owned foreclosures into rental properties to help boost falling home prices. The Federal Housing Finance Agency said Wednesday it is seeking input from investors on how to rent homes owned by government-controlled mortgage companies Fannie Mae and Freddie Mac and the Federal Housing Administration.”)

The story of Fannie Mae and Freddie Mac is the story of the entire bailout scheme. The government continues to “invest” trillions of taxpayer dollars to prop up failing private institutions with no end in sight. And the Obama administration continues to stonewall and obfuscate even as it asserts government control of 90% of the housing market.

I don’t know about you but it seems that we’re in the same sorry spot three years after the bailouts/government takeovers that “rescued” our economy. Our credit has been downgraded, the stock market is on a rollercoaster, our government continues its gangster ways in attempting to run the private sector, the government-controlled housing market continues to be a mess, and our banks stand on a precipice. Unless our nation reckons with the government corruption behind the ongoing financial crisis, I suspect our economy (and our republic) will continue to flounder.

Racism In The DOJ

From Judicial Watch:

From the Desk of Judicial Watch President Tom Fitton:

New Court Ruling in Black Panther Scandal

Judicial Watch earned a victory in court on August 4 in its pursuit of documents related to the Obama administration’s Black Panther scandal. (This gets a bit technical, so hang with me.)

In short, a federal court rejected a claim of the “attorney work-product doctrine” by the Department of Justice (DOJ) for documents prepared after the government dismissed its case against the New Black Panther Party for Self Defense on May 15, 2009. (The work-product doctrine shields materials prepared in anticipation of litigation from release. The Obama administration was using it to try to protect documents sought by JW through the Freedom of Information Act (FOIA) and a related lawsuit.)

Several members of the New Black Panther Party were accused of engaging in voter intimidation during the 2008 presidential campaign.

In his August 4, 2011, decision, U.S. District Judge Reggie B. Walton rejected the Obama DOJ’s arguments that documents prepared after the government dismissed its case (against the Black Panthers on May 15, 2009) could be withheld under the “attorney work-product privilege” exemption. Judge Walton explained:

Although an injunction remains in place in the New Black Panther Party case…the filing of the motion for voluntary dismissal largely marked the end of the litigation. As such, the documents prepared subsequent to that event were not prepared in contemplation of litigation and are thus outside the scope of the work-product privilege.

Because the case had essentially ended on May 15, 2009, Judge Walton found that “it is difficult to see how” the 24 documents created after May 15, 2009, “were prepared or obtained because of the prospect of litigation, which is the testing question the Court must answer in evaluating the DOJ’s work-product claim.”

Although Judge Walton found that the DOJ improperly withheld the 24 documents under the attorney work product doctrine, he concluded that the documents were properly withheld under the deliberative process privilege. (This is the exemption that intends to protect the internal processes of the executive branch. The idea is that by guaranteeing confidentiality, the government is in a better position to receive candid advice and recommendations. In our experience, the government often uses this privilege broadly and inappropriately to stonewall the release of information to the public.)

Judge Walton also found that the DOJ failed to satisfy its burden of showing that the 24 documents may be withheld in their entirety. Under the deliberative process privilege, the DOJ may only withhold information that is “predecisional and deliberative.” Judge Walton explained:

As it stands now, the description of the DOJ’s segregation efforts is too general for the Court, and the plaintiff, to evaluate whether any factual material in these documents is ‘inextricably intertwined’ with the deliberative material and would thus permit the DOJ to withhold the documents in their entirety.

Judge Walton provided the DOJ a second chance to satisfy its burden by submitting “a renewed motion for summary judgment accompanied by a declaration or other documentation that solely addresses the segregability issue.”

(The DOJ’s renewed motion for summary judgment is due September 30, 2011. Judge Walton hopes to rule by February 3, 2012.)

Importantly, Judge Walton also stated that if the Obama DOJ fails to “provide adequate detail regarding why these documents cannot be segregated, the DOJ will be required to disclose the non-exempt portions to [Judicial Watch].”

So additional documents could be forthcoming, which would help Judicial Watch to complete the public record on this race-tinged scandal.

Let’s review what we know so far…

According to a DOJ document previously produced to Judicial Watch, top political appointees at the DOJ were involved in the decision to dismiss its voting rights case against the New Black Panther Party, including Associate Attorney General Thomas Perrelli, the third highest ranking official at the Obama DOJ.

Attorney General Eric Holder also received “an update on a planned course of action in the NBPP” from Acting Assistant Attorney General Loretta King dated May 12, 2009, just three days before the case was dismissed, according to a Vaughn index uncovered by Judicial Watch. (A Vaughn index describes documents being withheld from disclosure under FOIA and the basis for the withholdings.)

The documents JW uncovered through this Vaughn index include descriptions of internal DOJ email correspondence that directly contradict sworn testimony by Thomas Perez, Assistant Attorney General for the Civil Rights Division, who testified before the U.S. Commission on Civil Rights that no political leadership was involved in the decision.

So now you see why it is so important to force the release of as much information as possible about this scandal, and to find out why the Obama administration is going to such extraordinary lengths to shield this information from the public.

We already know the Obama administration’s claim that political appointees were not involved in this decision is patently false. And now DOJ officials continue to fight tooth-and-nail to stonewall the release of additional information. What else do they have to hide? This new court ruling means that we may pry loose some additional information on this voter intimidation scandal and perhaps get to the truth in the matter.

Of course, one of the major discoveries emerging from this scandal is the Obama DOJ’s racist and preferential application of civil rights laws. And if you’d like to know more about this problem, then please read on.

Obama Justice: Will Not Investigate Radical Hispanic Group That Attacked Civil Rights Activist

If you needed any more evidence of the level of corruption that exists inside the Obama Department of Justice (DOJ) when it comes to enforcing civil rights statutes, here it is.

As I mentioned in this space several months ago, on March 15, 2011, civil rights activist Ted Hayes testified, by invitation before the Judiciary Committee of the Maryland House of Delegates, against providing taxpayer dollars for in-state tuition benefits for illegal aliens. Shortly after his testimony, Mr. Hayes was subjected to vicious retribution by a radical Hispanic group known as “The Timmytop,” which posted a hate video on a YouTube channel that included racist smears and death threats.

The video begins with the message “[expletive] you ‘Mayate,’” which is reportedly a racist and derogatory term used to smear African-Americans and “dark skinned” people. The video then streams a series of racist images including: The silhouette of a man hanging from a noose; photos of Mr. Hayes adjacent to photos of monkeys and bananas; and doctored photos of Mr. Hayes pictured with a gun next to his head. The video, which runs two minutes and nine seconds, concludes with the message “Your [sic] FREE Now Mayate go back to Africa.”

The video has since been removed from its original placement on YouTube, but it is available on Judicial Watch’s website here. (If you choose to watch it, please be warned that it is extremely offensive and unfit for young eyes.)

You might think that this type of vile behavior would earn the interest of the DOJ’s Civil Rights Division. (That’s what we thought, too.) After all, this is the division at the DOJ that is responsible for investigating and prosecuting violations of civil rights, including, and perhaps especially, those that could have a chilling effect on the First Amendment. In this case, you have the intimidation of a witness through death threats and humiliation.

Judicial Watch filed a complaint with the DOJ regarding the matter on April 28, 2011, calling for a full investigation. And recently we received a response directly from the office of Assistant Attorney General Thomas Perez (of Black Panther scandal fame). It was short and sweet:

The Federal Bureau of Investigation conducted an investigation into the matter referenced in your letter. We and the United States Attorney’s Office for the Central District of California reviewed the results of that investigation and concluded that this incident does not constitute a prosecutable violation of the federal criminal civil rights statutes. Accordingly we cannot authorize a criminal prosecution of this matter.

That’s it. No further explanation. No review of the evidence “reviewed” by the DOJ. Not even a concession that the treatment of Mr. Hayes was reprehensible and wrong. Just a flat out rejection and a lame reference to the DOJ’s general commitment to “combating violations of federal law that are motivated by racial or ethnic bias.”

So here we have another in a long line of examples of corruption at the Obama DOJ concerning the enforcement of civil rights laws. Apparently the enforcement of civil rights at the DOJ no longer has anything to do with violations of the law. It’s all about racial preferences and partisan politics.

Put another way, had Ted Hayes been a left-wing activist testifying on behalf of illegal alien tuition and attacked by white “conservatives,” Perez would have sprung into action. Trust me on that.

How do I know? Just look at the record!

First, consider the Black Panther scandal discussed in the first Weekly Update story. The DOJ dismissed it’s own voter intimidation lawsuit filed against members of Black Panthers, who hurled racial epithets and threatened white voters at a polling station in 2008. The Obama adminstration said no political appointees were involved in this decision. In fact, Perez himself testified to this effect. This testimony was false. JW uncovered evidence that indeed political appointees at the highest levels inside the Obama DOJ were involved. And why is this important?

According to The Washington Post, “[DOJ attorney J. Christian] Adams and a Justice Department colleague have said the [Black Panther] case was dismissed because the department is reluctant to pursue cases against minorities accused of violating the voting rights of whites.”

Describing the environment over at the Obama DOJ, Christopher Coates, a DOJ attorney, testified before the U.S. Commission on Civil Rights that there exists at the DOJ “…a deep-seated opposition to the equal enforcement of the Voting Rights Act against racial minorities and for the protection of whites who have been discriminated against.”

So, we know that the DOJ is involved in the race-based selective enforcement of civil rights laws. (Our friends (and client) over at Pajamas Media have also exposed the radical leftists being planted in the career ranks at DOJ, which further explains why a conservative seeking protection can get no justice at Justice.)

Now, Mr. Hayes is black. But he’s not in left-wing lock-step with the Obama administration on the issue of illegal alien tuition. And his attackers just happen to be part of a key voter block for the Obama 2012 re-election campign. So Mr. Hayes evidently is not entitled to any protection under law.

Remember, too, the immigration issue addressed by Mr. Hayes in the testimony that led to threats on his life. The Obama DOJ has taken a “La Raza” approach to the issue, allowing illegal alien sanctuary cities to thrive, while attacking states that want to crack down on illegal aliens. The Obama administration has also begun dismissing deportation cases against a wide range of illegal aliens, including those convicted of violent crimes.

Mr. Hayes is on the opposite side of the fence of Obama on these issues. And it is his politics that seem to define how the DOJ responded to his case. Which is just shameless and unlawful. This is yet another scandal in the Obama/Holder DOJ that ought to result in a new attorney general.