Vote blue if you care about deficits, the economy or wages

Dear pastor: STFU

I'm getting really tired of this genre of story.  Prominent politician takes a stand on a controversial issue; media finds his pastor and sees if the two disagree; reporter casts issue as a "church-state" conflict.

Friends, fifty years ago, we actually needed a presidential candidate to say this:

"I am not the Catholic candidate for President. I am the Democratic Party's candidate for President who also happens to be a Catholic. I do not speak for my Church on public matters — and the Church does not speak for me." 

That statement still stands (at least for most Democrats).  Have we really made so little progress?

And by the way, if you like poking your nose in politics, Reverend, run for office.  Otherwise, get back to your shepherding.

Recession and Stimulus 101

Sometimes I just like to let the experts have a say on how the Obama administration should handle this economic crisis.

Step 1: Give money to states to prevent severe cutbacks in state spending.  Otherwise, any federal stimulus package is being offset by "50 Herbert Hoovers."

Step 2: Focus on government spending, rather than tax cuts or private spending.  Individuals are particularly likely in a recession to either save or pay down credit, which has no stimulus effect.  But every dollar of government spending is a dollar of economic stimulus.

Detroit: needs a restructure, not a bailout

President-elect Obama has proposed a bailout for Detroit auto firms, but this proposal reeks of political favor rather than rational economic policy.  From Tom Friedman's column on the proposed bailout:

Bob Lutz, G.M.’s vice chairman...has been quoted as saying that hybrids like the Toyota Prius “make no economic sense.” And, in February, D Magazine of Dallas quoted him as saying that global warming “is a total crock of [expletive].”

Is there any question as to why an industry led by these idiots is sinking in a down economy with gas prices having been higher?  Oh, there's the health care thing, but Friedman has a thought on that:

please, spare me the alligator tears about G.M.’s health care costs. Sure, they are outrageous. “But then why did G.M. refuse to lift a finger to support a national health care program when Hillary Clinton was pushing for it?” asks Dan Becker, a top environmental lobbyist.

It's not just the car companies themselves, their Congressional representatives have done them an ill turn, as well.

The blame for this travesty not only belongs to the auto executives, but must be shared equally with the entire Michigan delegation in the House and Senate, virtually all of whom, year after year, voted however the Detroit automakers and unions instructed them to vote. That shielded General Motors, Ford and Chrysler from environmental concerns, mileage concerns and the full impact of global competition that could have forced Detroit to adapt long ago.

 In other words, we should finally show them the tough love, or we'll be doing this all over again. 

“In return for any direct government aid,” he wrote, “the board and the management [of G.M.] should go. Shareholders should lose their paltry remaining equity. And a government-appointed receiver — someone hard-nosed and nonpolitical — should have broad power to revamp G.M. with a viable business plan and return it to a private operation as soon as possible. That will mean tearing up existing contracts with unions, dealers and suppliers, closing some operations and selling others and downsizing the company ... Giving G.M. a blank check — which the company and the United Auto Workers union badly want, and which Washington will be tempted to grant — would be an enormous mistake.”

Given this advice, I think the companies (and unions) are likely to go for bankruptcy instead.  That's lousy, too, because either way there are a lot of good, union jobs going down the toilet.  But I'm not convinced there's any way to save the car companies from themselves, in a fashion that would prevent this kind of bailout again.

Why this bailout is not the right one

Taxpayers are about to ante up $700 billion to save the financial giants.  But what do we get in return?

Paul Krugman analyzes the bailout and his comments can be summarized as this:

• It's not clear that the bailout can actually accomplish its goal.
• Even if it does, it may do so by over-paying for bad mortgages and leaving taxpayers with nothing in return.
• We'd be a lot better off with a plan that involves injecting capital into failing firms in exchange for stock, rather than buying up their worthless assets.   In this plan, if the financial giants recover (the whole point), taxpayers get something in return.

Here's the full story:

What is this bailout supposed to do? Will it actually serve the purpose? What should we be doing instead? Let’s talk.

First, a capsule analysis of the crisis.

1. It all starts with the bursting of the housing bubble. This has led to sharply increased rates of default and foreclosure, which has led to large losses on mortgage-backed securities.

2. The losses in MBS, in turn, have left the financial system undercapitalized — doubly so, because levels of leverage that were previously considered acceptable are no longer OK.

3. The financial system, in its efforts to deleverage, is contracting credit, placing everyone who depends on credit under strain.

4. There’s also, to some extent, a vicious circle of deleveraging: as financial firms try to contract their balance sheets, they drive down the prices of assets, further reducing capital and forcing more deleveraging.

So where in this process does the Temporary Asset Relief Plan offer any, well, relief? The answer is that it possibly offers some respite in stage 4: the Treasury steps in to buy assets that the financial system is trying to sell, thereby hopefully mitigating the downward spiral of asset prices.

But the more I think about this, the more skeptical I get about the extent to which it’s a solution. Problems:

(a) Although the problem starts with mortgage-backed securities, the range of assets whose prices are being driven down by deleveraging is much broader than MBS. So this only cuts off, at most, part of the vicious circle.

(b) Anyway, the vicious circle aspect is only part of the larger problem, and arguably not the most important part. Even without panic asset selling, the financial system would be seriously undercapitalized, causing a credit crunch — and this plan does nothing to address that.

Or I should say, the plan does nothing to address the lack of capital unless the Treasury overpays for assets. And if that’s the real plan, Congress has every right to balk.

So what should be done? Well, let’s think about how, until Paulson hit the panic button, the private sector was supposed to work this out: financial firms were supposed to recapitalize, bringing in outside investors to bulk up their capital base. That is, the private sector was supposed to cut off the problem at stage 2.

It now appears that isn’t happening, and public intervention is needed. But in that case, shouldn’t the public intervention also be at stage 2 — that is, shouldn’t it take the form of public injections of capital, in return for a stake in the upside?

Let’s not be railroaded into accepting an enormously expensive plan that doesn’t seem to address the real problem.

Government privatization undone - by Bush

Formerly government-owned, then government-back private mortgage companies Fannie Mae and Freddie Mac have returned to the federal fold.

For a more detailed story, check out this coverage from non-profit news source, MinnPost.

Real American Hero

The breakup of unified Republican control of government has restored the checks and balances to our democracy and few examples have illustrated it as well as this letter from a citizen who was served a National Security Letter and refused to take it sitting down.

These letters have been sent to citizens by the FBI - over 140,000 of them since 2003 - to demand certain sensitive information. The letters, authorized by the "Patriot" Act, require no judicial oversight and are accompanied by a gag order preventing the recipient from telling anyone that they've even received the letter. In other words, it's something you'd expect to hear about in a spy movie about Communist Russia, not in the United States.

This citizen refused to give up his rights. He sought legal counsel from the American Civil Liberties Union (ACLU) and was successful in getting the FBI to back off from its information request. However, the FBI refused to remove the gag order and this man is still prevented from telling his family and friends about the letter he received, its contents, or why he's been meeting with so many lawyers.

So, even after successfully defending his right to habeus corpus, the man continues the fight for civil liberties. In his anonymous letter to the Washington Post - anonymous to protect him from breaking the gag order - he argues that, among other things, the gag order violates his right to petition his representatives for changes to the Patriot Act, because he is barred from discussing his receipt of said letter.

This man, unlike the Republican-sponsored legislation, is no pretender to the term "patriot" and no stranger to the cause of liberty.

What we really need is a government subsidy for TVs

As I was contemplating the 1.2 trillion spent on Iraq, the pending shortfalls in Medicare and Social Security, and the challenges of global warming, a thought entered my head. "What America really needs is a better TV viewing experience - and someone should make a law..."

Well, they did. Thanks to extensive lobbying from high-definition TV manufacturers and other digital device peddlers, the National Telecommunications and Information Administration in the Department of Commerce is setting aside $1,000,000,000 - a billion dollars - to help people comply with the mandatory switch to digital TV broadcasting on February 19, 2009.

What's good about it?
There is one important reason that government has stepped in: when TV goes digital-only in 2009, all of the analog broadcast spectrum currently used for TV becomes government property again. This spectrum can be used for emergency services or "advanced wireless services" such as wireless broadband internet. For the latter use, the government can auction off the spectrum and collect revenue for the use of the airwaves, which were initially given out for free.

The other side: So much for free markets
Remember when you had a great cassette tape collection and they came out with CDs? Well, the CDs seemed so much better that you bought a lot of your music again to update your collection. Pretty soon all we had were CD players. Same happened with VHS tapes. When is the last time you rented a tape at Blockbuster? And remember how the government stepped in to make sure that people bought these technological improvements?

Right, they didn't. Because what kind of TV you have is a market decision. Enough people thought CDs were better than tapes and DVDs were better than VHS.

The other side 2: Digital is not always better
I'm becoming a Neanderthal about new technology, but many people didn't realize that better picture and sound aren't given for free (try fast forwarding that FBI warning on a DVD player). With digital TV, advertisers might not let us skip ads anymore and programmers might not let us record. Not to mention there's the ugly question of where Americans are going to dispose of 33-65 million analog TV sets that rely on over-the-air signals, each of which contains 4-6 pounds of lead.

What would you buy with a billion dollars?

Open the books, Uncle Sam

One of the main ideas behind American government is that the people rule. And flowing from this principle is the concept that people should be informed so that they make good choices. Laws like the Freedom of Information Act - turning 40 this year - were designed to ensure that the public has access to documentation of the government's business. So what's with the dramatically increasing level of government secrecy?

This kind of restriction is what's happening to American government, as increased secrecy removes a lot of public decisions from the scrutiny of citizens. And since citizens are supposed to hold the power in a country with democratic self-rule, secrecy is the enemy of effective and responsive government. If you don't buy it from me, check out Jimmy Carter's recent commentary or view the secrecy video at openthegovernment.org.

Hair net saves transit system several thousand

Conventional wisdom suggests that government tends to react to problems with specialty solutions, all too often re-inventing the wheel. Well, not in Boston. An innovative technician for the T (the metro area transit system) discovered that a 5-cent hairnet and some duct tape worked better than any previous solution for keeping snow and ice out of T-engine intakes. In fact, the use of the hair net has now become standard policy.