At the end of last week, President Barack Obama nominated Jack Lew, who currently serves as White House Chief of State, to replace Timothy Geithner as the next Treasury Secretary. While he may eventually win confirmation, the White House and Lew may have a fight on their hands in the Senate:
Republicans say Jack Lew will have to answer for what they view as the president’s bare-knuckle tactics when Lew undergoes the Senate confirmation process for Treasury secretary.
Republicans are frustrated that Obama has not put forth what they would consider a credible plan to reform entitlement programs. And they were angered when after the election he traveled to Pennsylvania and Virginia for campaign-style events to pressure Republicans to extend the middle-class tax cuts.
Senate GOP aides say Lew will be called to account for the White House’s tactics when he comes before the Senate Finance Committee.
“He’s coming to the Senate from the chief of staff’s role in the White House and this White House just points the finger at everyone else. It refuses to take the blame for the bad things that are happening. This is a White House that is overly political and not really interested in alternate points of view,” said a senior Senate GOP aide.
“He’s going to be facing a lot of questions related to his involvement in the White House. He’s the top dog over there. He’s responsible for the direction,” the aide said. “It’s a shame the president would send along such a divisive figure.”
For the last few weeks, protesters have camped out in New York City to express their grievances with Wall Street. The complaints are somewhat familiar and to some extent, I can understand where they’re coming from. They are upset with what they see as government colluding with corporations for taxpayer-funded bailouts during very tough economics times.
The frustration with corporatism is understandable, libertarians and free market conservatives have expressed the same sentiment for years only to take a back seat to the idea that what’s “good for business” is good policy. But as we’ve come to learn, so-called “pro-business” policies aren’t always a good deal for taxpayers. And by that I mean that we truly want a level playing field, but not through excessive taxation or regulation. Rather, keeping government out of the business of picking winners and losers.
But some members of the nascent “Occupy Wall Street” have expressed demands (note that these demands are unofficial), which for all of their supposed distrust of government, these guys have a very utopian idea of what government should be — likely enough to make Karl Marx and Che Guevara proud. Nevermind that they would be economic suicide.
Among the suggested demands for the movement are (with my comments next to them):
“If a nation expects to be ignorant and free, in a state of civilization, it expects what never was and never will be.” - Thomas Jefferson, 1816, Letter to Thomas Yancey
Our nation, for several years now, has been in extended crisis mode. By the end of the Bush administration, we’d reached a point of complacency. We had wars raging on two fronts, but rather than being something the entire nation was focused on and engaged in, it was little more than partisan fodder to be used against Bush and the Republicans in the newspapers and on the nightly news (as evidenced by the fact that the constant front-page stories of soldier death counts miraculously disappeared once Obama took office).
Then came the financial collapse, which effectively ended John McCain’s chances at the presidency and ushered in Barack Obama, a political neophyte who campaigned not on specific policy positions and political philosophies, but on his claim to being “not Bush”, ushering in an era of “hope and change”. Unfortunately, while Obama has certainly achieved “change”, in doing so he has all but destroyed hope in America, at least until he leaves office.
These past two weeks we’ve seen the stock market rising and falling more often than a Kennedy after a night of partying. The dollar continues to be weakened, America’s credit rating is downgraded for the first time in history, unemployment remains high, and the prospects for improvement seem bleak in the short term. We are largely dependent on our enemies for our energy consumption, mainly because we refuse to access the vast reserves of energy we have on our own soil and in the oceans surrounding us. The waves of bad news crashing over us seem endless right now.
Understanding the underlying meaning of a politician’s words is an art. It is a skill that must be cultivated, because all too often the words they speak are nothing more than deceptive marketing. You have the high-energy sales pitch…and thirty seconds of fine print read at high speed. Most of the time, the loud claims are completely negated by the fine print.
Nowhere is this deceptive nuance more prevalent than when politicians talk about money. To those of us in the real world, we go out and work hard to earn money to provide for the needs of ourselves and our families. We have gross earnings, and then we have “take-home pay”, which is the gross earnings minus the litany of state and federal taxes, insurance premiums, etc. If we take a pay cut, it means that our gross earnings are reduced from the previous level. This is how normal people speak.
The political world has its own Orwellian lexicon, where nothing means what it sounds like it means. Before we can even address the lexicon though, we have to address the larger underlying problem; namely, the philosophical differences between government and the average citizen. Since I believe the words of the Declaration and the Constitution, which says that I am a son of my Creator, endowed with unalienable rights, and that government derives its powers from the consent of the governed, I naturally believe that the fruits of my labor belong to me and me alone. As a citizen, I have agreed to take a portion of my earnings and contribute it to the funding of the cost of government, which is there, in theory, to protect my rights.
There has been much ado over bailouts and socialism, Wall Street and Main Street, greedy bankers and noble capitalists, and a myriad of other related catchphrases and ideological positions when it comes to a discussion of the state of our financial system over the last year and a half. The debate rages on as today former Fed Chairman Paul Volcker testified before the Senate Banking Committee and with Barack Obama’s recent call for a new tax on banks. Volcker has suggested a ban on proprietary trading for certain banks. This is a modified reinstatement of Glass-Steagall which served to separate standard commercial banking from hedge fund like behavior.
Lately, the conservative mainstream has taken to siding against such reforms. Typical free market rhetoric has led the way. It’s been suggested that a ban on prop trading would over-regulate the banks and inhibit growth. We also hear the usual arguments against corporate taxes which state that it such policies only hurt the end consumer. I’d like to offer an alternative point of view on this subject that I think libertarians (and Libertarians) should consider supporting. I’ll present my logic one point at a time.
1. Our System Encourages “Too Big To Fail”
For years liberals, conservatives, independents, DC, Main Street and Wall Street seemingly defied all normality and not only embraced, but nearly worshiped the same individual, Alan Greenspan. After rising in 1987 to the position of Chairman of the Federal Reserve, the most powerful financial position in the world, he presided over the most sustained period of economic growth in the history of America. He rode the wave of private sector technological achievements that created abnormally high productivity growth. To many it was his greatness that brought about the increase in income, increase in homeownership, increase in credit, increase in all things material — while still maintaining price stability.
Ever since the “billionaire bailout” of Wall Street passed nearly two weeks ago, the market has signaled its displeasure in the goverment’s decision to shore up the failing system. The bailout passed on a Friday and the following week the Dow had its worse week in history. This created an environment where the Administration took hits for their “failed plan”- a plan that had not even been put into practice. But since markets look forward, expectations of the effects of the plan helped bring about the miserable week on Wall Street.
In the fall of the 2008, the Bush Administration and Congress ironed out the details of what would come to be known as TARP in secret negotiations, hoping that rent-seekers on Wall Street would react positively. Fast-forward to 2013 — Washington has done it again.
Matt Kibbe, President and CEO of FreedomWorks explains that Congress has again stuck it to hard-working Americans with the passage of the “fiscal cliff” deal that not only raises their taxes, but includes special interest tax breaks and corporate welfare:
On New Year’s Day, Republicans and Democrats joined together to bilk taxpayers with their phony “fiscal cliff” deal. They voted to raise taxes on 77% of Americans, yet larded the bill with pork, corporate welfare, and special-interest giveaways. They voted to increase spending by $330 billion, while throwing around buzzwords like “compromise” and “deficit reduction.” And they once again postponed the promised sequester spending cuts negotiated in 2011.
It was a team effort. Senator Mitch McConnell and Joe Biden drafted an outrageous bill behind closed doors; Harry Reid gave Senators all of 6 minutes to read and vote on the bill around 1:30am on New Year’s Eve when nobody was watching; Speaker Boehner scheduled a rushed, up-or-down vote in the House the following day without allowing for sufficient time to read or amend the bill.
This type of collusion against the average American is no surprise. Republicans have been negotiating with themselves ever since the Boehner-led House Republicans passed the consensus “Cut Cap Balance Act” in July 2011 and then began walking away from it. Democrats have been winning since that day, and the goal of fiscal responsibility has been losing.
Since the 2008 financial crisis, many analysts and policy wonks have been trying to come up with their best guesses as to what led to what we now call the “Great Recession.” Most lay blame on Wall Street, the beneficiary of taxpayer-funded bailouts, and never think of discussing the affects of policies pursued by the government in the years leading up to the recession.
Wall Street is, of course, an easy target, especially at a time when populism and class warfare are so common. But in his new book, The Financial Crisis and the Free Market Cure: How Destructive Banking Reform is Killing the Economy (McGraw-Hill, 320 pages), John Allison, retired Chairman and CEO of BB&T, explains that government policies, cronyism, and politics led to the worst economic troubles in decades and presents a compelling case for the free market.
Allison, who at the beginning of this month became CEO and President of the Cato Institute, has long been an advocate of free market economic policies. Allison explains that his principles helped guide BB&T to weather the economic storm before the financial crisis.
In his book, Allison outlines what he sees as the six factors that led the recession and this very tumultuous economic “recovery” in which we currently find ourselves: