Oil Slick, Joblessness May Stymie Dems’ Rebound
by Michael Barone

Republicans are encountering some speed bumps on what they hope is the road to victory in the November elections. Their candidates for Republican open Senate seats in Ohio and Missouri are running no better than even in recent polls. The independent candidacy of Gov. Charlie Crist is threatening Marco Rubio’s bid to hold the Republican Senate seat in Florida.

In Pennsylvania, Republican Pat Toomey is not a gimme to win Arlen Specter’s Senate seat, even though Democrat Joe Sestak’s charge that the White House offered him a job to get out of the race is causing him problems. In Kentucky, tea-party-backed Republican Rand Paul’s questioning of the Civil Rights Act of 1964 — an unforced error if there ever was one — makes a race of it in a state Barack Obama lost 57 percent to 41 percent.

As for Obama’s old Illinois Senate seat, the failure of Alexi Giannoulias’ family-owned, mob-lending bank looked like a fatal stroke. But now it turns out that Republican Mark Kirk misstated his military record. That could hurt him, though similar misstatements by Connecticut Democrat Richard Blumenthal have not much dented his lead over World Wrestling Entertainment owner Linda McMahon, whose negatives are high.

In Nevada, Senate Majority Leader Harry Reid has been trailing all year. But his ads attacking his Republican rivals have lowered their numbers, and the primary next Tuesday may be won by a state legislator who has taken some eccentric stands on issues.

So there are glimmers of hope for Democrats — that they won’t lose as many Senate seats as has seemed likely, that Republicans will fail to capture the 39 seats they need for a House majority. After all, they failed to win special elections in New York 20, New York 23 and Pennsylvania 12.

The Democrats’ tactics are predictable. Running against George W. Bush (who?) is not likely to get them very far, though Barack Obama can’t resist attacking him wherever her goes. But emphasizing local issues (as in Pennsylvania 12), banking on intraparty Republican splits (as in New York 23) and disqualifying Republicans as wackos or on personal grounds can salvage some seats that otherwise seem lost.

Still, the fact that Democrats are reduced to such tactics underlines their problem: The policies of the Obama administration and congressional Democratic leaders are deeply unpopular. And those policies have swept into politics hundreds of thousands of previously apolitical citizens symbolized by but not limited to the tea party movement.

When you get an infusion of new people into politics, you get a lot of unpredicted and improbable results. Some of the new people turn out to be crackpots or lack even the most basic political instincts. Challenging the Civil Rights Act or the 17th Amendment (popular election of senators) is not the way to capitalize on the swelling opposition to the Obama Democrats’ expansion of government.

But many of the new people who come forward turn out to be solid citizens, and some have political perfect pitch — like Sen. Scott Brown of Massachusetts, whom no national political reporter heard of eight months ago.

And the bad news keeps coming out. The gulf oil spill is evidently not going to be stopped for at least another two months; you’ll see lots of oily pelicans on newscasts between now and Election Day. The May jobs report showed that 411,000 of the 425,000 jobs gained were temporary Census workers.

The Democrats’ stimulus package kept many unionized public employees on the job. But, as liberal economists Paul Krugman and Robert Reich have pointed out, it has not done much to stimulate private sector job creation.

Maybe the contrary. We may be seeing something like the “capital strike” of the late 1930s, when investors and entrepreneurs held onto their money and refrained from creating jobs because of high tax rates and intrusive government.

Meanwhile, the Obama Democrats’ legislative agenda threatens recovery. The cap-and-trade bill would impose huge costs on the economy now for benefits promised decades hence. Legalizing illegal immigrants would hold down low earners’ wages. Higher taxes on high earners next year, when Democrats will let the Bush tax cuts expire, will tend to retard rather than stimulate growth.

So the road to November looks bumpy for both parties. But while the Republicans are encountering speed bumps, the Democrats are in danger of facing Jersey barriers and “road closed” signs. Fundamentals matter.

Obama’s Fantasy Jobs Plan
by Steve Chapman

This is that wonderful time of year when a roly-poly, white-bearded fellow descends from the North Pole to lavish us with presents. So when President Obama follows suit, maybe it’s just his way of getting into the spirit of the season.

He sounded uncannily like Santa Claus the other day in a speech taking credit for creating and saving 1.6 million jobs and vowing to do even more. The recent uptick in the economy and dip in unemployment, the president announced, came about because of the $787 billion economic stimulus package he signed last February.

But with unemployment still at 10 percent, Obama perceives a need for the government to generate additional jobs — which he plans to do with a new collection of tax cuts, public works expenditures, subsidies to homeowners for energy-saving investments, and a partridge in a pear tree. Though he stressed his commitment to fiscal responsibility, the president studiously avoided putting a price tag on this plan.

Like a certain jolly old elf, he doesn’t want us to worry about the cost. After all, fiscal stimulus is supposed to more than pay for itself by goosing consumption expenditures to unleash a new surge of jobs, economic activity and tax revenue. It’s a Christmas that will go on for months or even years.

If only it were true. In fact, there is no reason to believe the American Recovery and Reinvestment Act has done anything to revive the economy. Economist John Taylor of the Hoover Institution at Stanford University reports that the economic data show “no noticeable impact of the temporary tax rebates and one-time payments on consumption.” No impact, by the way, is pretty much what we got when President Bush tried a stimulus in 2008.

The administration’s allies crow that in the six months before the package was approved, the economy shrank, and in the six months after, the economy grew. But just because football season follows baseball season, that doesn’t prove baseball causes football. Just because the economy grew after the stimulus passed doesn’t mean the stimulus deserves the credit.

Considering the claims of stimulus supporters, John Cochrane, a macroeconomist at the University of Chicago Booth School of Business, says, “There is just as much evidence that Valentine’s Day saved the economy.” What the advocates disregard, he notes, is that every dollar spent on federal programs is a dollar that is not invested or spent elsewhere. An extravagant program can create jobs in one place only by endangering them in another.

Even by the administration’s logic, the success story doesn’t hold up. The contraction of the economy slowed sharply in the first month after the passage of the stimulus — before any appreciable amounts of federal cash had been spent. Which suggests that the economy, far from requiring huge injections of federal cash to avert a depression, was already bouncing back on its own, something economies did for eons before Keynesian prescriptions came along.

What has happened since then doesn’t make the case for buying a second round. Apparently the recession has already ended and unemployment has begun to fall — despite the fact that most of that $787 billion is doing about as much stimulating as the gold in Fort Knox. Only about one-third of the money has actually gone out the door.

If one-third of the stimulus spending was potent enough to rekindle growth, shouldn’t the other two-thirds be even more effective? Why do we need to throw more tens or hundreds of billions on the fire when it’s already starting to blaze? On the other hand, if the first stimulus fizzled, as the evidence suggests, it makes no sense to do a sequel.

Either way, there’s precious little to be said for opening the throttle of a federal spending machine that is already hurtling out of control. But there’s a lot to be said against it. Every big new appropriation represents money that has to be paid back with interest, on top of the $12 trillion we already owe.

Whatever else it may do, piling up more debt brings us closer to the day when the government will have to choose among such dire options as vastly increasing taxes, resorting to inflation and defaulting on its obligations. If that day comes, Santa Claus may be hard to find.

Obamanomics Isn’t Producing Jobs! Gosh, How Can This Be?
by Austin Hill

“As Obama holds jobs summit, frustrated left complains about slow growth.” This headline appeared at Foxnews.com last Thursday, and it was at least the fourth time in a week that I had noticed America’s left-wing expressing concern over the Obama economy.

The weeklong liberal’s lament seems to have started last Sunday with Arianna Huffington. While noting Obama’s televised address about Afghanistan, the liberal pundit stated that instead, the President should be addressing the nation about a “jobs bill.” And with this, the unhinged Huffington then cried out “Can someone in the White House Priorities Department please hit reboot?”

Well, a “jobs bill” has already been thrust upon us. It was loosely referred to as an “economic stimulus” bill, it had a staggering price tag of a reported $787 billion, it became law in February, it was lauded as a “major legislative victory” for President Obama.

And less than three weeks ago the Obama Administration was still crowing about the numbers of jobs that had either been “created or saved” by that very stimulus bill.

But things seem different now. To put it in contemporary liberal media terms, “the narrative about Obama” has begun to change. And it seems that even the most ardent of Obama fans – that is, the American left wing -is waking up and realizing that the Nobel Peace Prize-winning man who some regard as quasi-deity, may nonetheless not know what he’s doing with economic policy.

I’m not saying “I told you so” about Obamanomics. I could not have predicted months ago how good or bad the economy would be right now, and those who claim to predict such things often overlook an essential reality : economic activity is, by its nature, unpredictable, and risky.

But I have noted over the last couple of years Barack Obama’s approach to economic policy, which is, to say the least, “heavy-handed,” and I have also noted his apparent disdain for private sector enterprise. And I did state earlier this year that what was shaping-up to be the President’s economic platform was not something conducive to economic growth and job creation.

And now, to paraphrase the President’s former Pastor Jeremiah Wright, Barack Obama’s “chickens” appear to be coming home “to roost.”

If that sounds harsh, consider the economics of Barack Obama over the past couple of years. Among others, he campaigned on themes of: A) raising taxes on oil companies to get even with them for their so-called “windfall profits;” B) “reigning-in” executive salaries; C) raising the capital gains tax rate; D) “cracking-down” (whatever that means) on both the insurance, and pharmaceutical industries; E) raising income tax rates on high-income earners (the definition of “high-income earner” has been raised and lowered repeatedly in the past 24 months); and E) that elusive promise of making both healthcare, and a college education, “universal.”

Since becoming our President, Barack Obama has, in no particular order: A) alleged that Medical Doctors sometimes perform unnecessary procedures merely for the sake of enhancing their salaries; B) sought greater ability for his Administration to seize private banks; C) engaged in a public campaign of maligning the U.S. Chamber of Commerce ; D) forced the Chrysler corporation into a bankruptcy (if G.M. fell into bankruptcy, Chrysler got “pushed”) that defied both bankruptcy law and accounting rules, by requiring some of Chrysler’s creditors to accept payments of less than 30 cents on the dollar (by law those creditors were entitled to 100% payment of the debt); and E)ordered his “Executive Compensation Czar” to mandate anywhere from 50 to 90% salary cuts for executives of bailout-receiving companies.

Some Americans may look at this list (which is not, by any means, conclusive) and determine that the President’s approach to economics is, at worst, benign, and at best, helpful. But this is, again, to ignore yet another essential truth about economics: in order for economic growth to take place, participants in the economy must be willing to take risks, and to invest, with the prospect of earning a “return” on their investment if their enterprise is successful.

And the President has dis-incentivized this necessary risk-taking. Roughly 11 months into his Presidency, Obama has consistently threatened and impugned successful individuals and enterprises, and Americans who have dared to disagree with him. And despite what Obama’s Manufacturing Czar Ron Bloom (and communist dictator Mao Tse-Tung) say about how “justice comes from the barrel of a gun,” American economic growth most certainly does not. When government’s “guns” get drawn, investors, entrepreneurs and businesses run and hide – that is, they seek to minimize their risks by not investing, not hiring, not creating new things, and thus – they don’t produce “economic growth.”

After last week’s White House “jobs summit,” the President claimed that he is “open to every demonstrably good idea” that might create jobs, yet noted that “we also though have to face the fact that our resources are limited.”

Barack Obama may be surprised by what a tremendous “resource” the American people can be – if he could only get out of our way.

Fess Up, Ben
by Larry Kudlow

Fed head Ben Bernanke got hammered during his reconfirmation hearing in front of the Senate Banking Committee this week. Jim Bunning was Bernanke’s toughest critic, followed by Richard Shelby, Jim DeMint, and yes, Chris Dodd, the beleaguered committee chair who in all likelihood will be defeated in Connecticut next year.

In fact, Sen. DeMint has put the Bernanke confirmation floor vote on hold until the Senate votes on the Federal Reserve Sunshine Act of 2009, which would allow for a GAO audit of all Fed lending and Open Market Committee (FOMC) policies.

By the way, it now takes five years for the full content of the FOMC policy meetings to be released, and the GAO audit would reduce this to six months. That would still leave the central bank independent, but it would certainly give taxpayers a clearer picture of the central bank’s operations. And why shouldn’t Bernanke hold a press conference directly after the Fed policy meetings, just like Jean Claude Trichet does after the European Central Bank meetings?

A little sunshine certainly wouldn’t hurt Bernanke’s approval ratings. According to a new Rasmussen poll, only 21 percent of voters favor Bernanke’s reappointment as Fed chairman, while 41 percent think President Obama should name someone new to the post.

But back to the hearings. It was unfortunate that not one of the committee senators directly asked Ben Bernanke why the gold price recently surged to around $1,200, and what that might mean for future inflation and the U.S. economy.

The Wall Street Journal editorialized this week that while the Fed chair knows how to ease money, there’s no evidence during his tenure (or while he was Alan Greenspan’s copilot) that he knows how to make money sufficiently scarce in order to protect the dollar and prevent inflation. (Echoing the polls, the Journal editors concluded that “the country needs a new Fed chief.”)

Surely the steadily depreciating dollar and the surging gold price are bad omens for the future economy. In fact, inflation rates have been edging higher in recent months and will likely continue upward in the months ahead. Import prices channeled through the weak dollar have been rising. So while many of us hoped the Fed chair would address the gold question, he never did.

Bernanke did respond to questions on the declining dollar exchange rate, but as he always does, he insisted that it doesn’t matter as long as inflation is low. Huh? If you print more dollars than the rest of the world requires, surely this means too much money chasing too few goods. And as Art Laffer has pointed out, the exchange-rate mechanism is itself a transmitter of higher domestic prices.

Time and again Bernanke argued that the Fed was not to blame for the ultra-easy money that created the housing and commodity bubble which got us into this soup in the first place. He insisted that bankers were to blame for their “risky” lending policies, and he acknowledged that the Fed should have been tougher as a bank regulator.

But the point that escapes Bernanke is that negative real interest rates and excess money-creation trigger a chain of consequences throughout the financial system. Mistakes were made left and right that might never have been made had the dollar been sound and the inflationary bubble never appeared.

In effect, you get what you pay for. The Fed paid for easy money, and we all got the recessionary credit-crunching consequences of the Fed’s mistake.

By failing to heed the message of financial and commodity prices, future Fed decisions are likely to be just as flawed as past ones. It isn’t that Bernanke lacks the brains. It’s that he’s employing the wrong monetary model. Targeting the unemployment rate means always erring on the side of ease. On the other hand, targeting market-price signals would get us back to the financial and economic stability of most of the 1980s and 1990s.

The economy is improving, however slowly. The November jobs report showed an unexpected drop in the unemployment rate to 10 percent from 10.2 percent, with job losses narrowing to only 11,000 — the smallest decline in two years. At the same time, market-price indicators are telling the Fed to curb its balance sheet and let its target rate float upward. Regrettably, until the dollar and gold vigilantes punish the central bank even more, Bernanke will continue to stubbornly resist this message.

Heck, even Tiger Woods fessed up and came clean. Now it’s time for the Fed chief to do likewise.

Job-Killing Policies Could Doom Democrat Hopes
by Michael Barone

“The level of unemployment is unacceptably high. And will, by all forecasts, remain unacceptably high for a number of years.”

Who do you suppose said that? A Republican political operative? A Fox News political analyst? One of those several hundred thousand Tea Partiers who assembled in Washington on Sept. 12? No, it was Lawrence Summers, the director of Barack Obama’s National Economic Council and, by common consent, one of the world’s leading economists.

Summers made this gloomy forecast in the course of arguing that our economy is headed to “sustained recovery.” And while it sounds like self-protective political rhetoric, it is also in line with the thinking of Democratic economists who bemoaned a “jobless recovery” during the first Bush term.

They argued then that a variety of factors — big increases in the incomes of high earners, the crowding-out of wage increases by the fast-rising costs of health insurance — prevented the rapid job growth that followed previous recessions. There was something to these arguments.

But it’s also true that job creation accelerated in 2004 and kept going for another three years. Perhaps, although Democrats would not like to admit it, the Bush economic policies had something to do with that.

And perhaps the rather different policies of the Obama administration and the Democratic Congress may help Summers’ gloomy predictions come true.

Tax policy is one example. The Bush tax cuts are scheduled to expire next year, and the Democratic Congress will surely allow income tax rates on high earners to go up to 39.6 percent again, or even more if it enacts the administration’s proposed policy of limiting high earners’ charitable deductions.

These increases will produce revenue that the government needs to reduce the enormous budget deficit, though surely not as much revenue as static economic models indicate. But they will also depress economic growth to some non-trivial extent, and thereby depress job creation.

Then there’s trade protectionism. A week ago Friday, late at night, the Obama administration slapped import tariffs on Chinese tires. The Chinese retaliated by imposing tariffs on auto parts and chickens — take that, United Auto Workers and Tyson Foods! Upshot: American consumers will pay more for tires, and auto-parts and chicken-processing jobs will be at risk.

And more of that may be in store. “The smell of trade war is suddenly in the air,” writes The Wall Street Journal, and Global Trade Alert reports that 130 protectionist measures are ready to be implemented by countries around the world. Are we seeing a repeat of the job-destroying protectionism that followed the Smoot-Hawley tariff of 1930? It’s starting to look like it.

Then there are the additional burdens on the private-sector economy that would be piled on by the congressional Democrats’ health care bills and the cap-and-trade legislation passed by the House in June. In the job boom of the middle years of this decade, these policies looked like something we might be able to afford. They look less like that now.

Meanwhile, it’s plain that consumers are not going to spend money anytime soon at the rates they did when their house prices were bubbling up and that the $787 billion stimulus package passed last February was not — how to put this? — optimally designed for job creation.

The Obama administration, along with the Federal Reserve, deserves credit for stabilizing financial markets. But administration policies have put us on the path to increasing the national debt from 40 percent to about 80 percent of gross domestic product — a level we haven’t seen since the years just after World War II. Interest rates are low now, but when they rise it’s going to take an uncomfortably large chunk of federal revenues just to service this debt.

“After the health care debate ends, and whatever its outcome may be,” writes William Galston, deputy domestic adviser in the Clinton White House, “the administration and congressional Democrats would be well advised to turn their attention back to the economy and ask themselves whether there is anything more to be done to jumpstart job creation.”

Good advice, but why wait? The Office of Management and Budget now projects unemployment at 9.7 percent, the same as last month, in the fourth quarter of 2010, when the off-year elections take place. Maybe the administration and congressional Democrats should consider job-creating rather than job-destroying policies right now.

The Pay Czar’s Power Grab
by Michelle Malkin

Pay czar Kenneth Feinberg’s official government title is “Special Master for Compensation.” You’ll be happy to know that he’s really getting into the confiscatory spirit of his role. Asked by Reuters whether his powers include reaching back and revoking bonuses awarded to financial industry executives before his office was created earlier this year, Feinberg asserted broad and binding authorities — including the ability to “claw back” money already paid out.

Regulations governing his office explicitly limit his jurisdiction over contracts signed before Feb. 11, 2009. But the fine print is no obstacle to Obama’s czars. “The statute provides these guideposts, but the statute ultimately says I have discretion to decide what it is that these people should make and that my determination will be final,” Feinberg claims. “Anything is possible under the law.”

Yes, he said “anything.” It’s not just senior executive officers who fall under Feinberg’s purview. “These people” also includes “the next 100 most highly paid employees” of all bank bailout recipients, who must file compensation proposals with their pay overlord by Friday.

But why stop there? The Troubled Asset Relief Program has morphed from a toxic asset buy-up to a capital injection plan and back to a toxic asset buy-up. The money has been doled out to auto supply companies and life insurance companies. Congress wants to siphon off more of it to bail out bankrupt California and create a “national housing trust fund” to bail out low-income renters. Grabby-handed politicians have used TARP as a crowbar to pry open new areas for command-and-control meddling under the guise of saving the economy.

How much longer until the pay czar is determining all corporate pay he wishes to deem “inappropriate, unsound or excessive”? House Financial Services Committee Chairman Barney Frank has yapped all year long about extending pay curbs to all financial institutions and perhaps to all U.S. companies.

Let’s remember that the Beltway hysteria over bonuses served as a convenient distraction from the responsibility of subprime meltdown-enabling lawmakers like Frank and Obama’s crony economic team. Treasury Secretary Tim Geithner landed his previous job as head of the Federal Reserve Bank of New York thanks to heavy lobbying by his Wall Street mentors Robert Rubin and Larry Summers, both of whom sat on the New York Fed’s selection committee. Their cronyism had multi-billion-dollar consequences for taxpayers.

Rubin was also an executive at New York-based Citigroup, which Geithner regulated. Or was supposed to regulate. Instead, he helped foster Citi’s spending binge and engineered the teetering company’s $52 billion federal bailout. This makes the Obama administration’s recent protestations about one Citi employee’s $100 million compensation package look like the very kind of manufactured outrage of which it incessantly accuses its political opponents.

Geithner also had a hand in the $30 billion Bear Stearns bailout and the multilevel AIG bailouts ($85 billion and $38 billion under President Bush and another $30 billion in March 2009 under Obama). Massive sums of that taxpayer money went to major financial institutions that had employed Obama’s moneymen and their closest confidants. Goldman Sachs, for example, raked in nearly $13 billion in December 2009 from AIG in federal TARP funds — and reported record profits this quarter with a bonus pool of more than $11 billion.

The “solution” isn’t to empower a pay czar to curb bonus payouts ex post facto. The solution is to stop dumping billions into failing companies in the first place.

As for private businesses (what’s left of them, anyway), this is a teachable moment, to borrow one of the president’s favorite phrases. Government strings are like sexually transmitted diseases: They attach forever. If a basket-case company is willing to take bailout money, it will pay an interminable price. The long arm of regulators can and will reach back and open sealed deals and signed contracts on a whim. The Obama campaign chant is the czars’ chant, too: “Yes, we can!”

Welcome Back, Carter
by Ann Coulter

Well, I’m glad that’s over! Now that our silver-tongued president has gone to Cairo to soothe Muslims’ hurt feelings, they love us again! Muslims in Pakistan expressed their appreciation for President Barack Obama’s speech by bombing a fancy hotel in Peshawar this week.

Operating on the liberal premise that what Arabs really respect is weakness, Obama listed, incorrectly, Muslims’ historical contributions to mankind, such as algebra (actually that was the ancient Babylonians), the compass (that was the Chinese), pens (the Chinese again) and medical discoveries (huh?).

But why be picky? All these inventions came in mighty handy on Sept. 11, 2001! Thanks, Muslims!!

Obama bravely told the Cairo audience that 9/11 was a very nasty thing for Muslims to do to us, but on the other hand, they are victims of colonization.

Except we didn’t colonize them. The French and the British did. So why are Arabs flying planes into our buildings and not the Arc de Triomphe? (And gosh, haven’t the Arabs done a lot with the Middle East since the French and the British left!)

In another sharks-to-kittens comparison, Obama said, “Now let me be clear, issues of women’s equality are by no means simply an issue for Islam.” No, he said, “the struggle for women’s equality continues in many aspects of American life.”

So on one hand, 12-year-old girls are stoned to death for the crime of being raped in Muslim countries. But on the other hand, we still don’t have enough female firefighters here in America.

Delusionally, Obama bragged about his multiculti worldview, saying, “I reject the view of some in the West that a woman who chooses to cover her hair is somehow less equal.” In Saudi Arabia, Iran, Afghanistan and other Muslim countries, women “choose” to cover their heads on pain of losing them.

Obama rolled out the crucial liberal talking point against America’s invasion of Iraq, saying Iraq was a “war of convenience,” while Afghanistan was a “war of necessity.” Liberals cling to this nonsense doggerel as a shield against their hypocrisy on Iraq. Either both wars were wars of necessity or both wars were wars of choice.

Neither Iraq nor Afghanistan — nor any country — attacked us on 9/11. Both Iraq and Afghanistan, as well as many other Muslim countries, were sheltering those associated with the terrorists who did attack us on 9/11 — and who hoped to attack us again.

The truth is, all wars are wars of choice, including the Revolutionary War, the Civil War, both World Wars, the Korean and Vietnam Wars, the Gulf War, and the wars in Iraq and Afghanistan. OK, maybe the war on teen obesity is a war of convenience, but that’s the only one I can think of.

The modern Democrat Party chooses — really chooses, not like Saudi women “choosing” to wear hijabs — to fight no wars. But the Democrats couldn’t say that immediately after 9/11, so they pretended to support the war in Afghanistan and then had to spend the next 7 1/2 years trying to come up with a distinction between Afghanistan and Iraq.

Maybe next they can tell us why fighting Hitler — who never invaded the U.S. and had no plans to do so — was a “necessity” in a way that fighting Saddam wasn’t. (Obama on Hitler: “Nazi ideology sought to subjugate, humiliate and exterminate. It perpetrated murder on a massive scale.” Whereas Saddam Hussein was just messing with the Kuwaitis, Kurds and Shiites.)

Meanwhile, Muslims throughout the Middle East are yearning for their own Saddam Husseins to be taken out by U.S. invaders so they can be liberated, too. (Then we’ll see how many women — outside of an American college campus — “choose” to wear hijabs.) The war-of-choice/war-of-necessity point must be as mystifying to a Muslim audience as a discussion of gay marriage.

Arabs aren’t afraid of us; they’re afraid of Iran. But our aspiring Jimmy Carter had no tough words for Iran. To the contrary, in Cairo, Obama endorsed Iran’s quest for nuclear “power,” while attacking — brace yourself — America for helping remove Iranian loon Mohammad Mossadegh.

The CIA’s taking out Mossadegh was probably the greatest thing that agency ever did. This was back in 1953, before it became a collection of lawyers and paper-pushers.

Mossadegh was as crazy as a March hare (which is really saying something when your competition is Moammar Gadhafi, Ayatollah Ruhollah Khomeini and Saddam Hussein). He gave interviews lying in bed in pink pajamas. He wept, he fainted, and he set his nation on a path of permanent impoverishment by “nationalizing” the oil wells, where they sat idle after the British companies that knew how to operate them pulled out.

But he was earthy and hated the British, so left-wing academics adored Mossadegh. The New York Times compared him to Thomas Jefferson.

True, Mossadegh had been “elected” by the Iranian parliament — but only in the chaos following the assassination of the sitting prime minister.

In short order, the shah dismissed this clown, but Mossadegh refused to step down, so the CIA forcibly removed him and allowed the shah’s choice to assume the office. This “coup,” as liberal academics term it, was approved by liberals’ favorite Republican president, Dwight Eisenhower, and supported by such ponderous liberal blowhards as John Foster Dulles.

For Obama to be apologizing for one of the CIA’s greatest accomplishments isn’t just crazy, it’s Ramsey Clark crazy.

Obama also said that it was unfair that “some countries have weapons that others do not” and proclaimed that “any nation — including Iran — should have the right to access peaceful nuclear power if it complies with its responsibilities under the Nuclear Non-Proliferation Treaty.”

Wait — how about us? If a fanatical holocaust denier with messianic delusions can have nuclear power, can’t the U.S. at least build one nuclear power plant every 30 years?

I’m sure Iran’s compliance will be policed as well as North Korea’s was. Clinton struck a much-heralded “peace deal” with North Korea in 1994, giving them $4 billion to construct nuclear facilities and 500,000 tons of fuel oil in return for a promise that they wouldn’t build nuclear weapons. The ink wasn’t dry before the North Koreans began feverishly building nukes.

But back to Iran, what precisely do Iranians need nuclear power for, again? They’re not exactly a manufacturing powerhouse. Iran is a primitive nation in the middle of a desert that happens to sit on top of a large percentage of the world’s oil and gas reserves. That’s not enough oil and gas to run household fans?

Obama’s “I’m OK, You’re OK” speech would be hilarious, if it weren’t so terrifying.

The Failure of Obamanomics
by Dick Morris and Eileen McGann

The data is in for April. Here’s what happened:

1. Household personal income (inflation adjusted) rose, but every penny — and then some — went into savings or paying down debts. Consumer spending, on which Barack Obama is betting to stimulate the economy, actually fell. None of the stimulus money was sent. None.

2. Meanwhile, to pay for this stimulus spending that didn’t stimulate, Obama had to borrow so much money that long-term interest rates have almost doubled since he took office, forcing postponement or abandonment of business expansion and hiring across the board.

What a record!

Here are the details. In April, personal household, inflation-adjusted income rose by $122 billion. Of that increase, one-third — or $44 billion — came from the government’s stimulus program. But while personal income was rising, household savings (which includes paying down credit-card balances, mortgages, student loans, car loans, etc.) rose by $132 billion — $10 billion more than the rise in income. So personal consumption dropped 0.1 percent.

The stimulus package was a total and complete failure. As predicted, as happened with Bush’s 2008 tax cut, as happened with the Japanese stimulus packages of the ’90s, fearful consumers sat on their money and wouldn’t spend it. Keynesian economics didn’t work. Again.

But the debt sure piled up. The deficit quadrupled and is sending interest rates soaring, as the government elbows aside businesses and consumers at the loan window, all in a desperate effort to borrow enough money to spend enough money to stimulate the economy, which isn’t happening.

Keynesian economics doesn’t work. The theory for rational expectations has taken its place. Consumers are not idiots. They know that when their paycheck is fatter — either because of tax cuts or government spending — that it is not the beginning of Nirvana, but just a short-term, one-shot respite from hard times. They know the difference between standing in front of an electric fan and a windy day.

Barack Obama has fatally undermined our currency, our solvency, our financial stability and — ultimately — our economy, all to spend money that has had no economic effect!

Is Obama a failure? Not by his lights. His goal was never to stimulate the economy. His goal was to expand government spending, and he used the recession as an excuse to do so. And, by this standard, he is a raging success. With the stimulus spending, the government proportion of gross domestic product will rise from about 35 percent to about 40 percent, and with health care “reform” it will go soaring into the mid-40s, bringing us to parity with Germany en route to France!

But the results are in: None of Obama’s spending is doing anything to help the economy.

Of course, the process of household savings, designed to pay down debt, is very healthy.

Economists call it de-leveraging. By the start of the recession, the debt American households owe had risen from 70 percent of their annual income in 1995 to 140 percent (excluding mortgages). Now it’s on its way back down again. And, eventually, that will lead to a real recovery — if Obama doesn’t wreck the currency and bring on mega-inflation before then (but he probably will).

Obama: The Charming Menace to Peace and Prosperity
by Larry Elder

Numb. At some point, that’s about how one feels, isn’t it?

Didn’t rogue nuclear power North Korea, in violation of yet another United Nations resolution, test-fire a long-range missile? Didn’t this occur while President Barack Obama delivered a speech on nuclear disarmament? Isn’t North Korea the same country that helped Syria build a nuclear reactor, showing North Korea’s clear intention to sell and export its nuclear technology? And in response, didn’t the President call for the United Nations Security Council — the one that provides Russia and China with a veto — to … take action?!

Did the traditional media, in full praise over Obama’s “successful” European tour, note that he failed to secure anything of substance? After all, getting more buy-in from the Europeans for the war in Afghanistan was the President’s most important objective. And our allies agreed to send 5,000 more personnel to Afghanistan. But wait. The promised deployment consists of police and trainers to be sent on a temporary basis and kept out of harm’s way. The United States, Canada and Great Britain, therefore, continue the heavy lifting. And since 9/11, most NATO countries spend less on defense as percentages of their GDPs than before.

Didn’t the president fire the CEO of General Motors? With polls showing opposition to bailing out the automakers, the President dumped CEO Rick Wagoner, the 30-plus-year General Motors lifer. Wagoner’s long GM career means that he walked the halls while GM continually made decisions that lost money and market share. His replacement checks in with 25 years’ experience at General Motors. So the President, praised by the media for his “get-tough” approach with the automakers, swapped a GM lifer with a GM lifer.

And where are the connect-the-dots conspiracy nuts when you need them? During the Bush administration, critics spoke of the “unholy alliance” between Bush and “Big Oil.” They attacked Vice President Dick Cheney for an alleged unholy alliance with Halliburton, the company Cheney once ran. Neither the oil companies nor Halliburton received taxpayer “bailout” money — unlike the banks.

What of the Wall Street bailout recipients’ connections to Treasury Secretary Tim Geithner? Until recently, former Clinton Treasury Secretary Robert Rubin — a mentor of Geithner’s — served for a decade as senior adviser and member of the board of directors at Citigroup. During that time, the company got deeply involved with those fancy derivatives now known as “toxic” assets. Rubin’s former firm has received — so far — $50 billion from taxpayers.

This brings us to Obama’s top economic adviser, Lawrence Summers. Summers, in 2008, earned $5.2 million in compensation from hedge fund D.E. Shaw and more than $2.7 million in speaking fees — a lot of that from financial institutions now receiving bailout money. Obama blames the financial meltdown on greed and the lack of regulations. But Summers, while secretary of Treasury under Clinton, publicly defended unregulated, free market derivatives.

Didn’t presidential adviser David Axelrod, following former Vice President Dick Cheney’s criticism of Obama’s changes to fighting the war on terror, call Cheney “unstatesmanlike”? Cheney, appearing on a news show, calmly explained why he feels that Obama’s approach makes the country less safe. Cheney — along with the majority of Americans — objects to the closing of Guantanamo Bay. He opposes restricting interrogation techniques to the U.S. Army Field Manual and the closing of secret interrogation sites. Unstatesmanlike?

Does Axelrod, to compare Veeps with Veeps, recall former Vice President Al Gore’s angry, almost-unhinged attacks on President Bush? “He played on our fears!” screamed Gore during a speech — as opposed to during an interview, when he might (as did Cheney) have rationally explained his differences and objections. Unstatesmanlike?

Didn’t the President, with a straight face, promise to reduce the deficit by half in five years? The Congressional Budget Office forecasts government spending over the next 10 years will quadruple the annual deficit of Bush’s presidency. The CBO expects the nation’s debt to double in five years and triple in 10.

But according to The Heritage Foundation, Obama’s claim of “$2 trillion in savings over the next decade” is “simply not true. His budget increases spending by $1 trillion over the next decade, which he attempts to offset by reclassifying as ’savings’ $1.4 trillion in tax increases and $1.5 trillion in reduced spending in Iraq.” First he describes tax increases as “savings.” Then he falsely projects spending on the war in Iraq to remain high. By manipulating “future spending,” Obama can then “reduce it” and pronounce it “savings.”

Obama seeks to replace entrepreneurs with bureaucrats. He emboldens our enemies, who interpret his words of outreach and humility as signs of weakness. His actions — while well-intended — represent a menace to the continued security and prosperity of this nation. He smiles. He reproaches America. And much of the “world community” applauds.

But many of us just become … numb.

The High Cost Of Subsidizing Bad Decisions
By THOMAS SOWELL

Now that the federal government has decided to bail out homeowners in trouble, with mortgage loans up to $729,000, that raises some questions that ought to be asked but are seldom being asked.

Since the average American never took out a mortgage loan as big as seven hundred grand — for the very good reason that he could not afford it — why should he be forced as a taxpayer to subsidize someone else who apparently couldn’t afford it either but who got in over his head anyway?

Why should taxpayers who live in apartments, perhaps because they did not feel that they could afford to buy a house, be forced to subsidize other people who could not afford to buy a house but who went ahead and bought one anyway?

We hear a lot of talk in some quarters about how any one of us could be in the same financial trouble that many homeowners are in if we lost our job or had some other misfortune. The pat phrase is that we are all just a few paydays away from being in the same predicament.

Another way of saying the same thing is that some people live high enough on the hog that any of the common misfortunes of life can ruin them.

Who hasn’t been out of work at some time or other, or had an illness or accident that created unexpected expenses? The old and trite notion of “saving for a rainy day” is old and trite precisely because this has been a common experience for a very long time.

What is new is the current notion of indulging people who refused to save for a rainy day or to live within their means. In politics, it is called “compassion” — which comes in both the standard liberal version and “compassionate conservatism.”

The one person toward whom there is no compassion is the taxpayer.

The current political stampede to stop mortgage foreclosures proceeds as if foreclosures are just something that strikes people like a bolt of lightning from the blue — and as if the people facing foreclosures are the only people that matter.

What if the foreclosures are not stopped?

Will millions of homes just sit empty? Or will new people move into those homes, now selling for lower prices — prices perhaps more within the means of the new occupants?

The same politicians who have been talking about a need for “affordable housing” for years are now suddenly alarmed that home prices are falling. How can housing become more affordable unless prices fall?

The political meaning of “affordable housing” is housing that is made more affordable by politicians intervening to create government subsidies, rent control or other gimmicks for which politicians can take credit.

Affordable housing produced by market forces provides no benefit to politicians and has no attraction for them.

Study after study, not only here but in other countries, shows that the most affordable housing is where there has been the least government interference with the market — contrary to rhetoric.

When new occupants of foreclosed housing find it more affordable, will the previous occupants all become homeless? Or are they more likely to move into homes or apartments that they can afford?

They will of course be sadder — but perhaps wiser as well.

The old and trite phrase “sadder but wiser” is old and trite for the same reason that “saving for a rainy day” is old and trite. It reflects an all-too-common human experience.

Even in an era of much-ballyhooed “change,” the government cannot eliminate sadness. What it can do is transfer that sadness from those who made risky and unwise decisions to the taxpayers who had nothing to do with their decisions.

Worse, the subsidizing of bad decisions destroys one of the most effective sources of better decisions — namely, paying the consequences of bad decisions.

In the wake of the housing debacle in California, more people are buying less-expensive homes, making bigger down payments and staying away from “creative” and risky financing. It is amazing how fast people learn when they are not insulated from the consequences of their decisions.

httpv://www.youtube.com/watch?v=bEZB4taSEoA

Economic Crapshoot Ahead
by Tony Blankley

Finding wisdom on the question of economic stimulus may be Washington’s most important task in generations — short of major war decisions. President Barack Obama currently is proposing to spend about $850 billion over two years that he asserts is intended to stimulate the economy and thereby add 3-4 million jobs that otherwise would not exist.

It is generally expected that Obama is lowballing it and that after Congress is finished, the level will be closer to $1.2 trillion. Without such efforts, it is asserted, we would face something on the dimensions of the Great Depression (during which America endured up to 24 percent unemployment and up to 13 percent contraction of gross domestic product in a single year). With the stimulus and other legislative and executive actions, people close to Obama hope that unemployment would top out at less than 10 percent and GDP contraction at about 5 percent.

Rarely has so much hung on contested economic theories and ambiguous historical references. The first question is whether fiscal stimulus can ameliorate an economic contraction. Interestingly, Obama’s chief economist, Christina Romer, according to The New York Times, “concluded in research she helped write in 1994 that interest-rate policy is the most powerful force in economic recoveries and that fiscal stimulus generally acts too slowly to be of much help in pulling the economy out of recessions.”

Although she now supports Obama’s stimulus, many economists fear that by the time a stimulus comes online, the economy already will be recovering and all the stimulus will do is induce inflation. With trillion-dollar deficits and huge expansions of the money supply by the Federal Reserve, the prospect of double-digit or worse inflation in a year or two is a real danger to consider.

On the other hand, even many important conservative, free market economists — including some of former President Ronald Reagan’s top economists — believe we do need a very big fiscal stimulus a la what we had in the 1930s and ’40s. And here is where it gets even more confounding. Maybe a trillion-dollar deficit is too small. Most economic historians believe that the Great Depression did not end until World War II because only then was the deficit spending big enough to fully replace the lack of private-sector economic activity. FDR was afraid of big deficits and didn’t spend enough to end the Depression sooner.

If that theory is right, consider that during WWII, the deficit as a percentage of GDP was: 1943 — 30 percent; 1944 — 23 percent; 1945 — 22 percent. A trillion-dollar deficit in 2009 would be only 8.3 percent of the GDP, although it would be bigger than the previous biggest deficit since WWII — 6 percent in 1983.

So, if the Depression-WWII theory is to be followed, then next year’s deficit should not be a paltry $1 trillion, but rather about $2.5 trillion (in order to be about the same percent of the GDP as the WWII deficits were). At a mere trillion, we may be spending enough to badly inflate the currency without spending enough to lift the economy.

Of course, economic historians point out that 2009 is vastly different economically from 1943. Back then, we had almost a command wartime economy. There were few consumer products available; our economy was much more self-contained than our globalized economy and financial system is today; we had rationing of food, gasoline and other products; the government was spending the money directly to build and run war material factories; and 16 million people were in the military — mostly abroad.

So how literally do we want to copy the methods of the past to cure today’s problem?

If we agree to spend trillions of deficit dollars in the next two years, can our political system spend it for the purpose of stimulus, or will it waste hundreds of billions of dollars on pet projects that do not maximize the stimulating potential of government deficit dollars? It is hard not to giggle at that question. There is already abundant evidence of members of Congress pushing for projects that will yield little stimulus but may yield local votes for them in two years. And from what I have heard off the record, team Obama also is checking around to see what politically popular projects they might back around the country.

Any experienced political observer must conclude that if we go ahead and spend the trillions of deficit dollars, inevitably a significant percentage of those dollars will get us very few jobs or economic activity per buck. If the spending will bring a prompt recovery, it may be worth the corrupt waste of much money. But will it work, even then?

We are about to roll the dice on the biggest crapshoot in the economic history of humanity. Will seven come 11? Or will it be snake eyes for our economic future?

How Big Government Is Obama?
by Lawrence Kudlow

Obama spoke Thursday at George Mason University about his American Recovery and Reinvestment Plan — a.k.a. the stimulus package. There’s an interesting section that would warm the heart of John Maynard Keynes. It goes like this:

“It is true that we cannot depend on government alone to create jobs or long-term growth, but at this particular moment, only government can provide the short-term boost necessary to lift us from a recession this deep and severe.”

Well, 28 years ago Ronald Reagan said government was the problem, not the solution. Dealing with a bad recession like this one, the Gipper lowered taxes and domestic spending. Obama on the other hand has offered an $800 billion package, with plenty of infrastructure spending that alleges to create three million jobs.

Nobody really believes infrastructure spending will end the recession or create permanent new jobs. However, it’s interesting just how much the Obama plan has changed since the election. The size has been roughly constant. But the mix of tax cuts and spending increases is now totally different.

Instead of $100 billion worth of tax credits, there are now $300 billion worth of tax cuts. This includes a big new piece for business, more cash-expensing for small-business investment, and a restoration of the five-year tax-loss carry-back, which will especially help banks and homebuilders. It might even result in tax refunds for businesses, and might also allow banks to rid themselves of toxic assets, since the losses will now be spread over many years.

So what we have now is an $800 billion stimulus package with $300 billion of so-called tax cuts which could infer less spending than before — maybe only $500 billion worth.

Obama’s economic advisers are bragging to me about their new tax-cut package. They say they’re very pro-growth. And you know what? I acknowledge it. People like Larry Summers, Austan Goolsbee, Christy Romer, and Tim Geithner are no left-wing big-government whackos. They may not be hard-core supply-siders. But in terms of the economics profession, I would call them center-right.

And they absolutely understand the importance of private business and investment in the job-creating economic-growth process. And I think they’re views are the main reason for the reshaping of the Obama package between the campaign trail and the eve of inauguration.

The problem is that they’re not reducing marginal tax rates on large and small businesses or individuals. Their tax credits will be two-year’s worth, not permanent. There will be no incentive effects to maximize growth. And many of the tax cuts are refundable credits, which really are a form of government spending.

So it’s not a supply-side package. However, I’ve really never met a tax cut I didn’t like. And any tax cut is better than a spending increase since private companies and individuals will at least get the money instead of government.

This is the interesting part of the Obama plan. Somewhere in there the tax cuts will have a small positive economic effect. I would have designed it differently, but then again Team Obama won the election. I guess I could say it could have been worse.

Of course, Team Obama will have to contend with the sticker shock of a $1.2 trillion deficit for 2009, just printed by the Congressional Budget Office. And that’s before the Obama stimulus plan. But I don’t think Republicans really have a leg to stand on with the deficit argument — or for that matter the spending argument.

Yes, Obama is raising the ante, and the new numbers are just about over the edge. But a lot of that new deficit is TARP money that should be scored as investment — not real spending. And in view of all the economic pessimism out there, I doubt if the public is very worried about deficits.

What’s most regrettable is that congressional Republicans have yet to make the alternative case. They haven’t pressed for marginal tax-rate cuts as an option to Obama’s credits. So far, the GOP is me-too. They’ve offered an echo instead of a choice.

Meanwhile, polls now say the public favors Obama’s plan by 55 to 65 percent. His personal approval rating is even higher. And he’s being politically astute by reaching out to Republicans. He has virtually removed partisan rhetoric. Simply put, Obama is in the driver’s seat right now.

Sure, the Democratic Congress may mangle Obama’s plan. They might even repeal the Bush tax cuts this year. So there is considerable uncertainty about the details of the final package. But I must say, a crafty Obama is doing his best top employ his version of the Reagan tax-cut plan. Obama talks big government. But so far his program actually reduces the government-spending share and increases the private tax-cut share.

Very interesting.