Are you a Chamberlin or a Churchill, Mr. Cameron?

The annals of English history shall record you in one light or the other.  You have snatched back a rudderless country out of the hands of directionless leftists – and for this, we across the Atlantic are thankful.  But don’t light your cigar just yet, sir.  You have failed your first test of fortitude. 

Prime Minister Cameron took a step toward a Chamberlainian philosophy this last week.  In a chilling statement, the PM denounced the Jewish state and embraced an anti-Semitic agenda propagated by the terrorist organization and ruling Palestinian power, Hamas.  Not only did Cameron condemn Israel’s completely legal blockade of an extremist funded flotilla, but he also had the audacity to liken Gaza to a prison camp.  In all due respect Mr. Cameron, the Jewish people are all too aware of what a prison camp is, particularly the few surviving with numbers tattooed on their arms.  Would they not concur that a real prison camp has no access to 4 star restaurants, resorts and air-conditioned multi-level shopping centres?

Where has our ally gone?  Since when does such blistering condemnation come from the historically supportive (or at least compliant) United Kingdom? 

A well-placed Westminster informer had this to say about the Gaza remark:

“Whatever Cameron may be from day to day, he is always and foremost a pragmatist. He does not make mistakes. So we must assume that his “prison camp” comments were deliberate, and, given that, we must therefore assume that the effects of the comments would have been predicted. Israel furious, Israel’s critics temporarily appeased. A speech like that would have gone through the Foreign Office, Downing Street, the National Security Council, and countless policy advisors. In other words, Cameron knew that what he was saying was going to hit the headlines. So there must be a bigger agenda at play here. Turkey’s entry to the EU? Winning support in the left-wing press? Appeasing his Liberal coalition partners? The only certainty is that Cameron was certain of what he was saying.”

 Just last week the German military was coordinating exercises for the Jewish state.  This is a world upside down.  Leave it to the enlightened Germans to realize the indispensable stabilizing force of tolerance and civility Israel has established within the region.  Does anyone think for a moment that a Hamas-controlled state would allow such NATO military coordination within its borders? Particularly when the target of the exercises is the Taliban, Hamas’ ideological brethren?

Timing is everything. Unfortunately, it is not on Israel’s side.  Treating the Jewish people with condescension is particularly in-vouge.  President Obama’s disdainful, arrogant tone set a trend in March when he all but threw PM Netanyahu’ out of the White House.  Let us not forget the Presidents bow to a Saudi King nine months earlier.  The Obama Administration has conducted a policy of cooling toward Israel and warming toward the Arab world that is unprecedented.  Mr. Cameron has no doubt taken pretences from his inexorably-linked political counterpart and blindly added to the atmosphere of Jewish derision. 

The ultimate flaw for centrists such as Cameron and leftists like Helen Thomas is their apostatizing is done from a political runway.  For them, it is always in fashion to side with the faux plight of the Palestinians and never within the context of reality.  Indeed, this dogma of Palestinian land entitlement is as logical as relinquishing Texas, California and Arizona back to Mexico.  The argument beholds a historical ignorance and factual bias that would make a North Korean journalist proud. 

In a freak act of journalistic integrity, Ashraf Abu al-Houl, writer for Egypt’s largest news paper Al-Ahram, described his recent visit to Gaza:  

“A sense of absolute prosperity prevails, as manifested by the grand resorts along and near Gaza’s coast. Further, the site of the merchandise and luxuries filling the Gaza shops amazed me.  The resorts and markets have come to symbolize prosperity, and to prove that the siege is formal or political, not economic.”

 

Such honesty makes few waves in a media cycle bent on portraying Israeli cruelty and Palestinian injustice.  Wherein the reality remains: Hamas is enriching itself by fuelling the conflict.  They follow an old prescription of keeping the people poor while their aristocracy grows richer by taxing and exploiting the masses. The Jewish people are then used as a red herring. We have all seen this before.    

Sadly, this would not be the first time this century we’ve witnessed a weak-minded PM capitulating to the concept that a violent, anti-Semitic enemy had the right to lay siege upon a land because they were historically entitled to it.  Thank Providence that the Jewish Nation wields one of the world’s finest militaries aided by a supportive American military not in an isolationist slumber. 

Our weak-minded allies should cease playing euro zone appeasement politics with our common enemy.  Cameron should follow in a strong English tradition of calling evil for what it is and meeting it with force of verb and action.  Failure to do so will surely condemn him to the company of the naive idea of “Peace in our time” instead of the more rational “Never give in, never give in, never; never; never; never – in nothing, great or small, large or petty – never give in except to convictions of honor and good sense.”

Comparing Bush Spending to Clinton Spending

Yesterday, Jed Lewison of Daily Kos put up a post comparing Clinton’s eight years of spending to Bush’s eight years of spending. The post- which cited the very reputable Tax Policy Center for its budget claims- showed just how badly Bush spent compared to Clinton. According to Lewison, Clinton saved over $100 billion in his final budget, Fiscal Year 2001.

I found the post interesting- not the least because Lewison cited the TPC, a partnership of the Urban Institute and the Brookings Institution- but also because TPC’s (and, thus, Lewison’s) claims are in direct contrast to what the Treasury itself shows in the 2000-2001 Fiscal Year, which is an increase in the federal debt of over $100 billion. I decided to contact Lewison about his claims. Below are the questions I sent, and his responses:

1. According to the Treasury, the debt increased from 9/30/2000 to 9/30/2001. What are the differences between the numbers you used and the numbers from the Treasury?

2. How much of the Bush debt you cited can be attributed to the growth in entitlements started pre-Clinton and pre-Bush years (i.e. not including the Medicare Drug Bill, etc. that added to the debt) and that obviously grew during both presidencies?

Lewison’s response:

1) The increase in total debt is basically an increase in the Social Security Trust Fund (i.e., intragovernmental debt, money that the government owes itself, which accounts for a bit over a third of all debt). I’m not an expert on all the accounting rules, but if you look at the non-intragovernmental debt, it decreased. But how Social Security is accounted for is a separate issue from the overall fiscal well being of the Federal government under Bush and Clinton.

2) Outside of new programs like the Medicare drug plan, the rate of growth in entitlements should be a wash; since they are proscribed by law, both administrations would have experienced growth in them. The underlying demographics would have had to have been huge to explain the difference in overall spending growth rates.

Regarding #1, Clinton almost balanced the annual budget, but never took care of the long-term entitlement issues America was (and still is) expected to face. So while he (and his Republican Congresses) should get credit for almost balancing the budget, they should also get blame for not touching the Third Rail of politics that is Social Security. I think Lewison is mostly right on this one, though I disagree with his last sentence. (Note: the 2000-2001 recession cut into the revenues in FY2001, which Clinton could not have accounted for in his FY2001 budget, since the recession started one month after the start of FY2001.)

Lewison is a bit more inaccurate in his second point. The rate of entitlements can’t be a wash, as they continue to annually increase as a percentage of the national budget. This in no way excuses Bush and the Republicans for their spending spree(s), nor the Democrats who were in charge for two fiscal years during the Bush presidency, but it does clarify things a bit, I think.

Lewison’s post does point out that a Democratic president spent much better than a Republican president, and rightly so. He did, however, miss that that Bush was opposed by most Republicans on TARP (which Democrats mostly supported, as well as much of the Republican leadership), and while he acknowledged the drop in revenues from the recession at one point in the post, he neglected to do the final math. Using Lewison’s numbers:

  • The FY2009 deficit was $1.4 trillion;
  • the stimulus accounted for $200 billion of that deficit;
  • and the recession accounted for $400 billion losses in revenue for FY2009.

So, while the deficit was an atrocious $800 billion, what Bush was directly responsible for in FY2009 deficit was not nearly as bad as Lewison would like to think. It certainly was not as bad as the FY2010 or proposed FY2011 budgets under President Obama (who, admittedly, has to deal with a terrible recession and seven decades of entitlements and many years of war he is not responsible for).

Overall, as I have been saying for some time, both parties need to grow up. The Debt-Paying Generation is here, as a previous post pointed out, and unless we get a batch of politicians willing to reform how much we spend on Medicare, Medicaid, Social Security and defense, the situation is only going to get worse. (And no, the new health care law won’t help prevent that financial worsening.)

Full disclosure: I informed Lewison I would likely be using his comments in a post. I am not pulling a bait-and-switch by asking him for his thoughts without disclosing I would use them.

Profiles in Courage in Georgia

Originally published at The Daily Caller.

I was recently speaking with one of my teachers from high school, reflecting on her summer reading assignment, JFK’s Profiles in Courage.  If you have never read the book, it can be summarized quite simply in that it follows the actions of statesmen throughout the history of our country which took serious resolve and unwavering confidence.  That’s not to say that these individuals who were profiled did not face fear in their hearts, fear for their jobs, and possibly fear for their lives.  Fear is an emotion and it is understandable to have felt such emotion being placed in the situations that these men were embroiled.

Emotions however are not actions, and actions are not words.  Words are funny things.  They form sentences and go on to form speeches.  Speeches stir emotions and cause people to talk about issues.  Sometimes this causes people to become involved and take action, which is good.  However the difference between words and actions is that a word may or may not cause an action, while an action will always be the process of doing.  And the men of Kennedy’s most renowned work were doers.

In February of this year, my Congressman, John Linder, announced his retirement from public office.  I’ve always liked Mr. Linder even though I was turned down for a position at his state office when I was 20 and looking for work while in college.  It has always given me a sense of pride for some reason that my congressman introduced the Fair Tax legislation, even though I obviously had nothing to do with it.  So now Linder will take his leave, and Georgia’s 7th District looks for new leadership.  The heart of the 7th is Gwinnett County, a suburb of Atlanta, home of the Tripple-A Gwinnett Braves and 800,000 of your closest friends (except during rush hour).  The district also contains other metro counties including Forsyth, Barrow, Newton, and Walton.

The district will be won by a Republican.  That’s not a prediction, it is a statement.

So the question many are asking in the 7th at this moment is, “Who can be as good as Linder?”  That’s the wrong question.  Let’s ask who can be better than Linder.  And that’s not a knock on Linder.  That’s simply American to raise the bar and our expectations of our leaders.  And to Linder’s credit, he set the bar rather high.

In the past months we’ve seen a lot of candidates in the 7th.  Some have come late and some have gone early.  Some even left the race to return to houses of waffles only to wind back up in state politics.  There are many candidates for the seventh.  Most of them have words.  Some of them have even had years of career political words.

There is one candidate, however, who is a candidate of action and most certainly can raise the bar.

Some of you will recognize the name Jody Hice from The Jody Hice Show, a nationally syndicated talk show featured on over 400 stations across the country.  Others of you will recognize the name from his courageous battle with the American Civil Liberties Union.  Several years ago, the ACLU journeyed to Georgia to force the Ten Commandments out of the Barrow County courthouse. Jody formed an organization which raised money to fund the county’s defense, standing toe to toe against one of the most anti-American institutions of the last hundred years.

Ultimately, this fight against the ACLU later led to legislation that was passed in Georgia allowing the display of the Ten Commandments in front of government buildings as long as it was displayed in historical context along with the Declaration of Independence, the U.S. Constitution, and the Bill of Rights.

In the Fall of 2008, Dr. Hice stood with 33 other pastors across the country to challenge an IRS code that strips pastors of their right to freedom of speech by way of threatening the removal of the tax-exemption status of the churches they pastor.  Get this: He mailed a copy of his speech to the IRS daring them to come after him.  They didn’t.  Probably a good decision on their part.

Earlier this year in January, Hice decided to step down from the pulpit.  He felt strongly that his current call was in defense of his nation and he had determined that he would make a bigger push with his radio show.  Now before dollars start clouding your vision, understand that Hice is not paid to run his radio program.  He stepped down from a paying gig in order to do a non-paying gig full time having no idea how he would support his family all for the sake of restoring the Republic.  Take a second with that in this economy.  Don’t brush over that fact.

In March of this year Hice was approached and recruited to run for Congress and was made aware he could retain his radio show while representing the people of Georgia.  So Hice accepted being tapped to run.

In case you didn’t catch that, I’ll write it again. The Jody Hice Show will be retained in some fashion even if Dr. Hice is elected to Congress.

Hice will be the only member in Congress who can walk out the door of the assembly chamber and walk into a radio station and sit there and tell you exactly what is going on in your government.  We aren’t talking about members of Congress getting 30 seconds here and there on your favorite news network.  We are talking about a radio show of several hours for a Representative to sit down and hash out with the public what is actually happening in the chamber.

That’s political Direct Media at its finest.

In the coming weeks, individuals will begin to pull levers here in Georgia during early voting leading up to the 20th of July.  The vote will be of vital importance for the second most populated district in Georgia.

I have personally endorsed Dr. Jody Hice.  And in full transparency so has ConservativeCongress.com, a conservative candidate evaluation platform of which I am a co-founder.  But that group has also endorsed other candidates in the district who met organizational criteria as well.  I was not paid to write this, I don’t work for Hice, and I have not donated to any primary campaign.  Rules of which all members of ConservativeCongress.com agreed to abide by at the projects onset.

The simple truth is that I am of the conviction that actions speak louder than words.  And the profiles in courage of Dr. Jody Hice putting his feet to the fire speaks for itself as the representative leadership that we need in Washington, D.C.

Resurgent Republicans in the Northeast

Over the last several years, the common mantra among the left (as well as some on the right), has been that New England and the Northeast are doomsday regions for Republicans. There are no Republican Representatives in New England, for example, and only three Republican Senators in the entire NorthEast.

Unfortunately for liberals, this mantra has been proven premature. While the Republican resurgence- begun by Senator Brown (R-MA) and New Jersey governor Chris Christie- isn’t necessarily conservative (Christie is a moderate on social issues, and Brown recently voiced support for the financial regulation bill working its way through Congress), it certainly is Republican. One allegedly blue state in particular, New Hampshire- which has kicked out two Republican Representatives; a Republican Senator; and a Republican governor in the last six years- has now competitive races in its four Senate, Representative, and gubernatorial races this year. Another “blue” state, Connecticut, may elect a Republican to replace the corrupt Democratic Senator Chris Dodd.

As a conservative, I find this pretty optimistic. While few of the candidates are as conservative as I would like, they are at least less liberal than those Democrats currently holding offices or running for open seats, and in some cases they are very conservative. Admittedly, this is happening in a strong anti-Democratic year, but it’s still happening, and that’s the important thing.

One race in particular that I think is being overlooked in the national scheme of political races is the 4th District race in Connecticut. Held by Republicans for decades, it was the last Republican Representative seat in New England until 2008- and Chris Shays only lost by slightly over 2,000 votes that year. The current Representative, Jim Himes, has voted with the Democratic Party line on the big votes- including, but not limited to, cap-and-trade, health care and financial regulations- and is being opposed by several Republicans.

One of the Republicans, Rob Merkle, is a very conservative candidate who has term limits; limited government; tax reform; effective job growth; and pro-life platforms. He opposes the stimulus and TARP, and wants Too Big To Fail to end through the free market- the best anti-TBTF policy in existence. Best of all, though, unlike his major primary opponent, Dan Debicella, Merkle has never run for political office before. He is a businessman who actually knows what works, unlike both Debicella (who, for example, wants a cap on increases in federal spending, instead of reversing the deficits, which is what Merkle wants) and Himes (who worked for crony capitalist Goldman Sachs for years).

Now, in the interest of full disclosure, I work for Rob Merkle as the campaign blogger and online media specialist. (Check out the blog here.) I was brought onto the campaign a) on the recommendation of a mutual acquaintance whose conservative credentials are unchallengeable, and b) after a lot of talking with Merkle about his view of government; its limits; and how best to apply changes to bring the government within those limits. According to Merkle, the biggest issue facing America is the national debt, and he wants to lead the charge against the unwillingness of Members of Congress to risk re-election in order to implement appropriate changes.

All in all, the Northeast is not yet strong Democratic territory. It may not be conservative central, but given the gifts of bad bills; arrogance; and the inability to create jobs the Obama administration and the Democratic Congress have given the Republican Party, perhaps conservatives like Rob Merkle can bring a strong Republican resurgence to the Northeast.

Did Obama Just Admit He Was Born In Kenya? No, No He Didn’t

Look, I’m not “birther” by any means.  I really haven’t paid a ton of attention to the issue.  But if this video is legit, Obama admits out of his own mouth that he was born in Kenya. ie. Not a natural born citizen.  Watch the first 40 seconds or so.  After that, well it’s up to you what you think.  But I’m mainly concerned with what is coming out of the President’s mouth in a WH.gov video.

If the video is legit, we as a country have a problem.  Being a natural born citizen as a requirement for the presidency is sort of a big deal. And if we skirt that, then the whole Constitution might as well be skirted and we should just start naming kings.

I don’t know where this is going to go, and it would be silly to predict a result. But you watch it and tell us in the comments if you think the video looks legit.

-nick

Update: I think RJ is right on this. So I pulled the video.  Watched it a couple more times and RJ’s point is pretty obvious.  Sorry for the brain meltdown.

Interview With Rep. Michele Bachmann

(You can grab the audio of the interview here via “Right-click… Save as…”.  Or hover your mouse over the speaker icon to listen to the interview as streaming audio. -nick)

Representative Michele Bachmann (R-MN) was kind enough to give thelobbyist.net a few minutes of her time last week to talk about the national debt and how if Congress trusts the American people, the so-called Debt-Paying Generation (those young Americans whose futures will be crushed by the tsunami of debt the nation faces) will be able to live the American Dream and not be forced to live a life of less quality than their parents.

Representative Bachmann is the Republican representative of the 6th District of Minnesota. She has represented her constituents since 2007, and has been a conservative leader in everything from government transparency to health care reform to reversing course on the size and scope of the federal government.

Dustin Siggins: So you and I met, briefly, Representative, when you were on the Laura Ingraham Show back in March…

Michele Bachmann: Mm-hm, isn’t she great?

DS: Oh she’s awesome; she’s a riot.

MB: She is such a talent.

DS: I really liked when she was on Bill O’Reilly a couple of weeks ago, and they were talking about blaming Napolitano- I don’t know if you saw it?

MB: I didn’t.

DS: They were debating and Bill O’Reilly decided that he wasn’t going to blame Napolitano for the BP response for the oil spill. And he was trying to play the middle road, and so Ingraham just went crazy on him and then picked up his cup of water from behind where he was sitting and went, “He is drinking the Kool-Aid!”

MB: Oh! (laughter) She is so creative. Well you know the great thing is, he has a tremendous audience, and a lot of interests, and he tries very hard, I think…I think he is really trying to be fair and balanced and trying to get both sides or both perspectives. And obviously he has been very successful for a long period of time. But people really do love Laura and I think that her stock is only going to continue to soar.

DS: Oh I have to agree with you. There’s no way, and especially with what’s going on here in DC, there’s no way any conservative’s stock is going to tumble in the next two to four years.

MB: Yeah.

DS: Um, so I was talking to Dave, whom I met a couple of weeks ago, and I am currently at the Heritage Foundation working on the Debt Paying Generation project…

MB: Oh good so you’re working with Bill Beach!

DS: Exactly.  According to Mr. Beach you are a ‘huge fan.’

MB: I am a huge fan! This is the issue, I told Bill, that I really want to hit on because I think that young people’s ears are starting to perk up on their future, what their future is going to be like. And I think that it’s a tremendous shock for a lot of young people to find out that their standard of living could be demonstrably lowered beyond what their parents had. And even though people may hear that in the abstract, especially for younger people, it’s hard to believe that it could be true or that it could be translated into a diminishing reality going forward, and I think it’s important for us to make that case and I think it will be easier, then, for us to talk about positive solutions to be able to dig our way out so that we can have a way forward. Because, there is, it isn’t something where we have to give up and realize that we have to consign ourselves, especially the young debt-paying generation, to a future of less. We can have a better future, but what it means is people in my generation are going to have to make alterations as well.  We can’t let the government try to be the answer to every problem.

DS: Your generation, 31,32?

MB: That’s right. (laughter) No actually I love getting older, to be honest with you. I’m 54 years old and I told my husband that I love getting older so it doesn’t bother me at all.

DS: Interesting. Well I’m 24 and look 20, or 19 and 18; so I wouldn’t mind looking a little older, but-

MB: Ahh, well I’m sure, well your…It’ll come sooner than what you think.

DS: Well hopefully- I think the grey hair would help make me look distinguished.

MB: Yes, undoubtedly. Get a pair of glasses- that will help.

DS: I’ve had glasses since I was one and a half and it hasn’t helped (laughter) Well anyway, a little side-tracked. Regarding the debt paying of this generation, I mean obviously the democrats aren’t going to pass a budget in the house. Rep. Hoyer just stated that yesterday, correct?”

MB: That’s right.

DS: Why are they not passing a budget? Are they scared that American will look and say “oh wow, they made it worse than the Republicans did?”

MB: Well, it’s a dereliction of duty and it’s also an admission that they can’t govern. They had made the comment about Republicans passing budgets and I think now what is good for the goose is good for the gander. I think they’re going to have to live by their own statements. If they make an admission that they can’t pass a budget when they own the white house, when they own the senate, and when they own the house, they are making an admission that they cant govern. And frankly, they are digging a hole for themselves…that they hole that they dug for themselves is embarrassing. The debt and the taxing…the taxes that result from this out of control debt will be one that will mean fewer jobs will be created in the private sector. You have to have a growth economy to create jobs and we saw that there were some 40,000 jobs that were created last month, that is not going to get us anywhere. Especially for the debt paying generation, there is certainly more than 41,000 people who graduated from college last year. Those recent college graduates and those individuals that have left high school and chose not to go onto college, they are looking for employment; and unfortunately, under President Obama’s policies and Speaker Pelosi’s policies…their policies are not inducing entrepreneurs to grow and create jobs. Without private job creation, there can be no healthy public sector either. And so, they are making some very foolish decisions that have long term consequences and they bode ill for the debt paying generation.”

DS: The Center for American Progress did a study- well I guess they called it an analysis, I wouldn’t call it an analysis myself- but they cited several polls showing that the most popular thing for America is to cut the budget of Foreign Aid which is two percent of the budget that President Obama proposed and yet older Americans seem to like Social Security and seem to like Medicare, how do we convince people in my age bracket that we have to get rid of these programs, or at least reform them severely, as President Bush tried to do in 2005. How do we convince people this is best- that they’re going to have to suffer a little bit for the long-term benefit of the country?

MB: Well, I think the best way we can do that is to make the case to people that these programs are going to collapse of their own accord- no one will benefit from that. We don’t want to see senior citizens put in a situation where they’re dependent on either Medicare or Social Security, and one day when they go to their mailbox, they open it up, and there’s no check there because these programs have collapsed because we’re actually bankrupt. That’s why we need to do the responsible thing and make these programs work for the people they were intended to benefit. And we can do that- we could do that sitting down with a magnifying glass and a pencil, and we could make adjustments so that we can actually save these programs for the people who really, truly need them and who truly depend on them, and then for the Debt-Paying Generation we want to make sure going forward that we have alternatives for them so that they can have a secure retirement and deal with health care in a more rational level.

Government takeover of health care has been the Obama way and the Obama solution, and it isn’t that I think President Obama is an evil, negative person- I think he just simply, simply has it wrong. I think he’s simply wrong about the government takeover of health care, and a person can’t point to one jurisdiction or area where the government takeover of health care has actually improved healthcare for people, or made it more inexpensive, because adding the price of bureaucracy to a product doesn’t make a product cheaper, it makes it more expensive and more difficult to obtain- and I think Americans intuitively know that will be our future going forward.

This is why I think, when it comes to health care, which is a new entitlement program, that’s why I think we have a real, and realistic, chance, of actually repealing the bill, and I was the first Member of Congress to issue a full-scale repeal of the bill, and ObamaCare, and it is very popular, as a measure, and we’re looking at about 2/3 of the American people hoping Congress will have a repeal. If you have 2/3 of the American people, wanting to repeal the president’s signature achievement over the last 18 months-perhaps the signature achievement of whatever length of time is his presidency- I think that we will be able to make the case on a number of areas of government overreach.

DS: Well, I guess my last question- and you talked about what the Democrats have done badly, and I agree with you- but I came of age during the Bush years, and Republicans obviously didn’t do so well between 2001 and 2006 with the Medicare Part D, and they jumped the cost of government, the size of government, up. How do you convince the American people that Republicans are trustworthy? Not you individually, of course [DS: Rep. Bachmann was first elected in 2006, and served her first term starting in 2007], but how, I mean, the Republican Party as a whole. This year, yes, it’s anti-incumbent, but I don’t think, personally, that it’s so much pro-Republican.

MB: Oh, I think you’re accurate about that. I think people are reacting negatively to what they have observed from the Pelosi/Reid/Obama agenda. People intuitively understand that they can’t live with excessive spending that creates unsustainable levels of debt- if they can’t live like that in their own personal lives or in their businesses, they certainly know that government doesn’t have a magic formula that defies economic reality. So people are rejecting the Obama agenda. People want to know, “Republicans, if we give you the gavel, can we trust you? Will you be responsible? Do you have a plan to get us out of this hole?” And that’s up to Republicans, now, to make that message. I think one of the best things we could do, is let the American people know- number one- if you put us in office, we will vote to full-scale repeal ObamaCare. Root and branch, we will pull it out, and we will repeal that measure. I think that’s something that is a very saleable proposition. I also think it’s saleable to tell the American people that we will pass a budget- a balanced budget- and I think that’s what people want us to do, is to pass a balanced budget, and then to show the American people, first of all, that the tremendous straits that we’re in, financially, going forward, once people know the difficulties and the reality of the problem that we’re in right now, I think they’ll be more amenable to the solutions that we can propose to put our financial house on a- in the right order.

DS: I hope so, because I’d like to see this country be as good for me as it was for my parents, so-

MB: Exactly. I will tell you, anywhere I go to speak, I ask that question. “Do you believe you live better than your parents?” Almost everyone in the audience puts their hand up. I ask them, “do you think your children will live better than you financially?” Virtually no one puts their hands up. I doubt in the last 234 years, if you ask that question of any generation, that they would think that their children would not be better off than they are; I just don’t think that you would have gotten that response. That’s really what is frightening today, because we’ve always been a country that’s been about forward- looking people, and growth. And this is one of the first times when Americans look into the future, and they see diminished way of life, and they see decline.

The beauty of America, is that we get to choose.  We get to choose decline, or we get to choose if we want growth. I think that if you put the question to a referendum to the American people, they will choose growth. And if that means pinching back on a social safety-net, I think that we’ll have buy-in from people, because, ultimately people do want better for their children and for the next generation.  Even if people are childless, they want the next generation to be able to do well. In fact, I think it’s simply the matter of having to make the case, you know just like you’ll see on Glenn Beck with his chalkboard, he makes a compelling case if he’s describing an issue. And I think that’s something that Republicans will have to do, so to speak, have our own kind of a chalkboard where we make the case to the American people of two futures for America: one where we go down the road of the Pelosi-Reid Agenda that they have taken us down, which the American people are thoroughly rejecting, but take it beyond the year 2010…play it out to 2020, and play it out to what America will look like when we are in the same economic bind that Greece is in today. Economists like Larry Lindsey tell us that we are looking within a ten-year window of having that type of economic decline. That truly is not a road that people would choose to go down, and that’s what gives me great hope and great excitement because even people who are senior citizens, they don’t want to bequeath a future grounded in decline. I know that sounds like an oxymoron; but senior citizens don’t want to see that for their own children and grand-children. And that’s what gives me hope going forward- because we really are a nation of very bright people, who make good choices. We could trust the American peoples’ choice, we just need to give them the truth and put all facts on the table, and then I have every hope and every reason to believe that people will make choices for their own gain and their own benefit because no one wants to succeed… I mean, no one wants to fail, everyone wants to succeed.

DS: Well, Representative Bachmann, I think I’ve run out of time. I really appreciate what you’ve said and hopefully we’ll see you doing a lot of that, especially if Republicans take back the House.

MB: Well, and we’ll do this again soon, I’d love to do this again!

DS: Alright, thank you very much.  Take care!

MB: Alright, bye bye.

[Note: I would like to thank RJ; Will; and Nick for helping transcribe the interview. This would not have gotten posted without their help. DS]

Leave Afghanistan

I know RJ will vehemently disagree with me, but here is an op-ed I wrote about leaving Afghanistan that Daily Caller was kind enough to publish:

On Monday, a former professor and I were chatting, and the war in Afghanistan came up. I have been supporting a 100% pull-out from that country- as well as Iraq- for some time now, and think that with the General McChrystal issue hitting the fan (for the record, I support the president’s acceptance of the general’s resignation), it’s as good a time as any to post about why we need to leave the country.

First, we should leave for humanitarian/ethical reasons. We are sending servicemembers to that country to die for an Afghan leader who is corrupt, and whose brother is a criminal. What is our goal over there? The Afghanistan people are, at best, a tribal people with no real central government and no willingness to even have a central government. Being there to have access to Pakistan is just not a good enough reason anymore. Secondly, to (admittedly, hesitantly) quote a front page poster at Daily Kos, the worse Afghanistan gets, the less likely we are to leave. Since when does a proper cost-benefit analysis include sending good money after bad, and since when does honoring those who have valiantly served, been injured and/or died in Afghanistan include sending more young people to die without cause?

Secondly, we should leave because the American people don’t support this war. Oh, they say they do. But as New York Times columnist Bob Herbert described in December of last year, our support is minimal. Some money or other means of assistance is sent by those affected directly or indirectly by the war (friends and family with military members overseas, etc.) and some truly patriotic Americans, but most of the nation is satisfied with rhetoric pulled from blogs, talking heads and Associated Press articles. (Oh, yeah, and they have yellow ribbons on their bumpers.) As Herbert put it,

The reason it is so easy for the U.S. to declare wars, and to continue fighting year after year after year, is because so few Americans feel the actual pain of those wars. We’ve been fighting in Iraq and Afghanistan longer than we fought in World Wars I and II combined. If voters had to choose right now between instituting a draft or exiting Afghanistan and Iraq, the troops would be out of those two countries in a heartbeat.

Thirdly, we should leave Afghanistan because, despite the very good reasons for entering in 2001, Bush and Congress ignored Afghanistan for half a decade while focusing on Iraq. Whether or not we should have focused on Iraq is a different debate for a different time…but they failed to conduct the war in Afghanistan with efficiency, and President Obama is not improving things. Instead, as George Will pointed out this week, we have created a military for babysitting. Even with President Obama sending 30,000 troops over to the nation, we have a timetable. Since when has letting the foe know when it’s safe to come out become American policy? Obama’s mistakes are somewhat different than Bush’s…but they have the same consequences for our young people dying over there. Again, the cost-benefit analysis is not in favor of staying in Afghanistan.

Fourth, we just don’t have a clue as to what we’re doing, as pointed out by The Washington Examiner. Period. Is Karzai a good guy for us? It depends on the day. Are we trying to kill terrorists, or win the minds of the people? Um…the answer is unclear- ask again later. Is our enemy in Pakistan, Somalia, Yemen or Afghanistan? I don’t think anyone really knows, despite what they may say. It could be all four. Are we going to invade Pakistan, Somalia and Yemen next, as a result?

After our conversation, my professor sent me an e-mail with the following title: “Until: 1) We decide to WIN wars again & 2) The Harvard kids also serve …this says it all.” He was referring to a recent Herbert column, in which Herbert talked about the courage to leave Afghanistan. The fact is that if we want to win wars, we should have a beginning, a middle and an end planned out. We should bring in enough troops. We should know the culture. We should not be convinced by elitists to enter a conflict- elitists whose their total involvement in war consists of debating on TV or making a profit off of the deaths of our countrymen. Pay the taxes to support the war, or do a USO tour, or encourage your child to join the military. Something. (On that note, great credit goes to people like Senator McCain and Vice-President Biden, whose children have served in post-9/11 conflicts, and especially to Senator McCain, who supports the war despite the risk to his family.)

I wasn’t alive in 1972, but my professor, my father and an increasing number of right-of-center individuals are saying the same thing- they’ve seen Afghanistan before. Of course- and it is now clichéd- it was called Vietnam, then. Since Bush took office, our debt has risen nearly 125%, with over 10% of that cost directly attributable to entering Iraq and Afghanistan. We’ve lost thousands of young men and women. As much as it pains me to say it, the honorable thing to do is tactically retreat, starting tomorrow, and conduct a full pull-out from Afghanistan and Iraq, and honor our fallen by swearing to never, ever forget our first duty to the troops is to use them to protect our nation, not appease the egos and wallets that have benefited over the last nine years from our involvement in the Middle East.

My friend Tom Qualtere, who works for The Heritage Foundation, wrote an op-ed for Daily Caller back in March, and in it he said that Millennial/Generation Y Americans “are the 9/11 generation.” I agree with him, if only because the specter of 9/11 has dominated this nation’s, and our young people’s, thinking and culture since the towers fell. According to Tom, however, our duty is as follows:

But for those of us who’ve chosen a vocation on the home front, our support for them and their mission must be unambiguous and unwavering. It is time for conservatism’s 9/11 generation to fully embrace and defend the role that history has bestowed upon us and wear our hawk feathers more proudly than ever.

Tom and I disagree on many policy issues, and Afghanistan is one of them. He will undoubtedly respond to this opinion by saying we are letting the terrorists win by leaving Afghanistan. This would be the case if we just left Afghanistan (and Iraq) and forgot about the Middle East. However, when we leave, we must do so with the following assertions to the rest of the world (and our own citizenry):

  1. We are going to get the government out of the way and drill for oil within our national borders, build wind farms and build nuclear power plants. No longer will we send tens of billions every year to nations that support terrorism and hate us. While I do believe we went into Afghanistan and Iraq for good and ethical reasons, the fact is that part of that reasoning was for the benefits of oil for America. Well, take away the need for overseas oil, and we can start minding our own business for a change. Moreover, many terrorist organizations will have less money with which to fund attacks against us. This will take years, of course- but better late than never, and the sooner we start the better off we will be.
  2. The international community has for too long relied on our military. We have over 700 bases worldwide, and given our budget issues, this is unsustainable. If other nations- the same ones who criticize and condemn us if we don’t get involved (see Rwanda), but also if we do (see Iraq), with world affairs- want to utilize our blood and treasure, they can sign treaties and trade deals that give America a slice of the economic pie we have not asked for during our six-plus decades of world protection. Protection of other nations should be handled on a case-by-case basis, not with the assumption we will help every nation without such agreements. Supporting Kuwait in 1991, for example, was done because a) it was in our national interest, and b) because we had the ability to strike and win without a prolonged, expensive endeavor. Essentially, the cost-benefit analysis was positive.
  3. Protect our borders with some of the troops we bring home, among other good immigration policies (allowing border guards to shoot; encouraging legal immigration through incentives, etc.). Terrorists will have a hard time hurting us without being able to get in. Good, effective border policy will also give us the time to better our energy policies, as mentioned above.
  4. The jihadists will probably claim victory; after all, they drove out the “Great Satan,” much as they did with the Russians in the 1980s. This is a major concern, as 9/11 was the culmination of a nearly a decade’s worth of minor attacks that went unanswered by President Clinton. However, that’s where minding our own business and providing them with less money come into play, as well as the treaties I mentioned above. By minding our own business, we will blunt some of the jihadist propaganda. Secondly, without money they will have less success in attacking us in our own nation. Thirdly, should our intelligence see a threat, they can work with intelligence agencies in other nations and sign treaties and work together to deal with threats both before and as they arise. Lastly, should all else fail, we will have our own border control forces.

A clarification: I do not support an isolationist foreign policy platform, nor do I believe we have caused all of the world’s problems. The Middle East would have been a pit of peoples fighting among themselves even if America had never even sent a single dollar or troop there. However, other than supporting Israel and other allies with which we have treaties, or responding as we did after 9/11 to a direct threat on our nation, we should not be in that part of the world. The difficulty, of course- and this is why we have experts in government and the private sector- is striking the correct balance between leaving with our tail between our legs, thereby encouraging boldness by our enemies, and leaving with our heads held high without showing weakness. I think it is possible to do the latter by leaving now, though I admit the idea is balanced on a blade’s edge, and would require much delicate work.

It is difficult to say something is not worth vast amounts of effort- in this case, money and blood- put into it. It’s especially difficult when we have not won a major military conflict (except in 1991) since World War II. However, pride is only useful if those with the pride (i.e. politicians, think tank observers, etc.) are in the conflicts or are otherwise directly affected. Otherwise, the consequences of the pride are simply foisted onto those patriotic Americans who die or are maimed as a direct result of the pride. The delicate balance necessary to leave Afghanistan without handing a public relations boon to our terrorist enemies is an important step in owning up to the mistakes pride have bought us in the War on Terror.

*Originally published at DailyCaller.com.

The Facts About Social Security (Update- Transcript Added)

I was recently able to interview James Agresti, the founder of JustFacts.com, about the dark future facing Social Security.

The audio can be heard here. The transcript is forthcoming, and will be up ASAP.

Update: The transcript has been added below.

On May 26, 2010, Rep. Anthony Weiner (D-N.Y.) wrote an op-ed in Politico defending Social Security’s solvency, and refuting many concerns cited by critics. Intrigued, I contacted the Congressman’s press secretary by phone the following day to interview the Congressman about his assertions, and to contrast them with what I have heard and read from critics of Social Security. His press secretary and I exchanged several phone calls, and I sent two follow-up e-mails regarding an interview. After receiving no response, I moved forward.

I decided to interview James Agresti, the founder of the non-profit think tank Just Facts, about the very dark future Social Security faces. I intended to write a full article, as opposed to a simple transcript, but without the Congressman’s perspective and given the critical information James provided, I decided to stick with a simple transcript. The audio of the interview can be heard here.

(Full disclosure: I met James at a Leadership Institute seminar last April, and we have kept in touch since. I am a regular caller on his Tuesday evening radio show, Just Facts Radio.)

Dustin Siggins: Anthony Weiner, the Rep. from New York, wrote a piece supporting Social Security as a vital part of retirement for Americans. He said the program was in very little to no trouble, and was perfectly solvent. This was a couple of weeks ago, in a Friday’s [Correction: The op-ed was written on a Wednesday] Politico. I called the Congressman’s office twice, I traded e-mails with his Press Secretary- they did not get back to me. So, I’m writing the article, because I’m past my deadline.

Now, your website, JustFacts.com, you’ve done a lot of work on Social Security; on the National Debt; and how Social Security affects the National Debt. Is that correct?

James Agresti: That is correct.

DS: I just have a few questions, I guess based upon the assertions the Congressman made in his Politico column. The first is that he said Social Security will be solvent for many, many years. My question to you is, are seniors receiving at least an equal payback? They’re putting 6.2 percent, I believe, of their income, plus the 6.2 percent from their employer, into their retirement- essentially, through Social Security. Are they receiving an equal number, an equal amount, back?

JA: Well, that depends on what seniors you are talking about. Under the current system, some will get absolutely nothing back, while others will get back far more than they put in. The way the system is currently structured- let’s take an example of someone who dies right when they are ready to receive benefits, let’s just say 65 years old. They have no surviving heirs, no surviving children—I shouldn’t say heirs, I should say they have no surviving minor children. They may be adults, and may be self-sufficient, they’re not dependent on him- that person will have worked their entire life, paid into the system—and it is 6.2 percent, but that money from the employer ultimately comes from the employee’s paychecks. The Obama administration has been clear about that in other contexts, such as the health care bill, where they say, “Hey, if your employer’s spending less on insurance, on health insurance, on health benefits, that’s more money in your paycheck; that’s more money they can give to you.” So that money, even though they say the employer is paying it, you’re paying it, the employee’s paying it. The market rate for a person, when they calculate how much it’s going to cost to have an employee, they bill that into it. I know that from running a small non-profit organization. It’s built into the paycheck.

Now for seniors as a whole, which is often the way people look at this, they look at it as a generation, not as an individual- which, by the way, under the personal ownership that have been put forward, that would not be the case. If you put that money in it would be your property, and you could will it to whoever you wanted, whether that be a child or a charity, whoever that may be, your friend. But if you look at seniors as a whole, I’ve looked at such performing rate of return calculations, in other words, when you look at a generation- what the generation put in, and what they’ll get out- it’s a very difficult calculation because of the numerous tax increases for Social Security over the years, plus the cost-of-living adjustments, the earned-income tax credit, the nature of the tax-to-benefit ratio, make this a very complicated calculation, and thus I haven’t done it. But another important variable in all of this is what constitutes a reasonable rate of return? If these current retirees had taken their money that was put into Social Security and places this into moderately conservative investments over their working years, I would estimate they would get a lot more money back. However, if they simply put the money into bank accounts or CDs, the opposite may be true.

The point I usually make when explaining the Social Security system to retirees is the fact that the government has already spent all of the money they have paid into the system. They say, “Well, I’m due this money back, I paid it into the system.” Yeah, you paid it in, but it’s gone! Okay, either they spent it- either they paid it into the system and it was spent by the Social Security system, or the Social Security Administration [SSA] took that money, loaned it to the federal government, who then spent it. But the money’s gone, so all the money the current retirees are receiving is coming directly from the pockets of younger workers, and often these younger workers have far less money than a retiree they’re forced to support, and furthermore these workers, these current workers- guys like you, young guys like you- cannot possibly receive your full Social Security benefits unless workers younger than you are forced to pay even more in taxes. Far greater than these people put in, and far greater than you’ve put in.

DS: So, essentially, what you’re saying is it’s a vicious cycle of increasing poverty and increasingly lost revenue for each continuous worker.

JA: Not necessarily poverty, and not necessarily ongoing. The projections of the Social Security system show it eventually stabilizing, but we’ll get into that a little bit down the road. The thing people have to realize is Weiner says the program is solvent- first of all, it’s only solvent because of the massive tax increases of the past. At the outset of this program, the federal government published an informational pamphlet that said the following in regard to taxes- I’m quoting here- “And finally, beginning in 1949, 12 years from now, you and your employer will each pay three cents on each dollar you earn, up to three thousand dollars a year. That is the most you will ever pay.” Okay? This is a direct quote- this is a pamphlet put out by the federal government, and after adjusting for inflation, the maximum tax collection, the most you will ever pay, right now, is more than seven times this amount. So they have just basically- well, I don’t want to say “lie,” because that implies that they knew this would happen, but it seems pretty obvious to me, looking back with hindsight, which I guess isn’t a fair comparison, that there was no way this was going to hold out the way they projected it would, or promised it would.

DS: Okay. Well, related to that, the 2008 SSA report to Congress stated that-

JA: Dustin, I’m sorry for interrupting, I just want to make one more point on this. My fault- I told you to move on, and I wasn’t ready. We did some calculations here at Just Facts, and what we found is that if extra money had not been added to the Social Security program by increasing the tax rate above the levels specified in the original Social Security Act, the system would have been unable to pay full benefits since about 1980- or, the word that is used is “insolvent,” I’m not sure that is a proper word, but it wouldn’t have been able to pay the promised benefits. So I just wanted to add that in.

DS: The 2008 SSA report to Congress matches the Congressman’s claim in his column, which is that they will be able to pay 78, or 73, percent of promised benefits in 2080. [Correction: The actual quote from Rep. Weiner’s column was “Without any change, Social Security could cover three-quarters of benefits until 2083 — when people born today will be 73.”] That is what he claimed, and that is what the report said in 2008. But that, obviously, was before the crash, before the major disaster that happened in the economy in the last two years. Have you seen an updated report on whether those numbers are going to be changed?

JA: An updated report was due out earlier in 2010. The Obama administration delayed it until June 30. That is when the 2010 report will come out, which will contain information on Fiscal Year 2009, which runs from October 2008 until September 2009. That report is not out yet.

DS: All right. I was just curious. I guess I’ll just have to follow back up with you in about a month. The last question—could you just clarify your statement from earlier, about the program eventually being solvent? How would that happen, given that we are going to have 10,000 people a day retire for the next 20 years, and they are going to increasingly live longer, and use more money?

JA: Give me a moment here- I want to pull up the exact numbers.

DS: Sure, sure.

JA: If you look at the ratio of people paying taxes to the people receiving benefits, it has gone from 41.9 workers in 1945 paying into the system to one person receiving benefits. By 1970, that had dropped to 3.7 to one; in 2000, 3.4 to one; in 2007 3.3 to one; around 2030 it’s going to drop to 2.2 to one; and 2070 2.1 to one. According to projections.

Now, let me add that there are reasons to be suspicious of these projections. First of all, their track record from the past is not that great. Secondly, even- and I’m talking long-term track record—their short-term predictions have aroused my suspicions. Let me give you an example: in 2001, the Social Security Administration projected the trust fund balance would reach $2.54 trillion by the end of 2007. It actually reached $2.24 trillion- 13 percent lower than projected. Yet, if you compare the projections from the 2001 report and the 2008 report, they’re more optimistic in the 2008 report than in the 2001 report. So the financial condition of the Social Security program is worse than they projected, from sitting back from eight years before, but yet they are saying it’s going to be better in the future. All right? So in 2001 they were saying, by the time – let me see here- the expected annual deficit in 2075, we’d have to increase Social Security taxes by about 49 percent to cover that deficit. In 2008, they said we’ll only have to increase taxes by 32 percent.

When you dig deep into those reports, you see that the actuarial calculations- in other words, based upon the demographics; how many people are going to be working; how many people are going to be living; life expectancy- there are a whole bunch of variables that build into that- they change those numbers and say, “Well, we’re going to have more immigration, so there will be more people paying into the system.” But what these calculations don’t show is what will it then cost to pay those people when they retire? Does that make sense?

DS: Right, because they are assuming the immigrants won’t be receiving Social Security, not paying into it. They’re not double-counting.

JA: Well, they’re not assuming they won’t be receiving it- what they’re doing is they’re backloading the calculations and- let me get the quote here from the U.S. Treasury Department- the simple time horizon calculations (in other words, the 75-year unfunded liability, whatever it may be)- I’m quoting here, “Understates financial needs by capturing relatively more of the revenues from current and future workers and not capturing all of the benefits that are scheduled to be paid to them.” So, there are numerous ways of calculating what kind of shape the Social Security system is in. Weiner is doing his calculations, but there are other ways, more accurate ways, of doing this. I, personally, think the best way to look at it is the way private corporations are forced by law to look at their pension obligations, which is called the “Closed Group Unfunded Liability,” and when you look at these numbers, they are far more than the numbers that are commonly cited in the media, and by people like Congressman Weiner.

You’re looking at approximately $16 trillion projected shortfall. If you who’s in the system right now, what they’re going to take out in benefits, and what they’re going to pay in taxes, the Social Security system is about $16 trillion in the hole.

DS: Is that from the Treasury Report earlier this year?

JA: That is from the 2009 Treasury Report, yes.

DA: And that Treasury Report was very devastating.

JA: It’s an Obama administration document, okay, so we’re using his numbers.

DS: James, I really appreciate your time. If I have any more questions, may I follow up by e-mail?

JA: Of course.

*Originally published at The Daily Caller.

Helen Thomas Tells Jews To “Go Home”

Helen Thomas wants the Jews to “go home”.  They are apparently occupying Palestine even though there are 5.7 million Jews of a total of 7.5 million people living in Israel.  Not to mention the fact that the Israeli state existed for over TWO THOUSAND YEARS prior to the Siege of Masada.  But what is more baffling is where “home” is for the 159,000 babies born in Israel this year?  Why in the world would Helen think that Europe would be home for those newborns or anyone born in Israel in the last 62 years?  This would be no different than someone walking up to a black person in the United States and telling them they are occupying America and should return to Africa.  It would be profoundly racist on multiple levels.  Not to mention the fact that you are assuming where they come from.  Just like different races of people have come from all over the world to be American citizens, Jews have come from all over the world to be Israelis.  But Helen wants all you Jews to go back “where you belong,” and apparently that is Poland and Germany.  How does this woman have a job?  She’s obviously a callous bigot who is insanely politically biased.  I saw her in Morton’s in DC once. Had this happened before that occasion I would have gladly told her this to her face.

thelobbyist Interviews Congressman Ed Royce

thelobbyists’ Dustin Siggins had the pleasure to interview Congressman Ed Royce this past week.  You can find the transcript of the interview below and the audio file (Click to stream or Right-Click, Save as.. to download the .mp3) here: Siggins-Royce Interview.

Representative Ed Royce (R-CA) is a nine-term Congressman who serves on the House Foreign Affairs and Financial Services Committees. For more than a decade Royce has called for a stronger federal regulator to limit Fannie Mae and Freddie Mac’s excessive risk taking at the expense of taxpayers. In 2003, he offered the first legislation that sought to bring Fannie Mae, Freddie Mac and the Federal Home Loan Bank System under a strong federal regulator.

Siggins: So I don’t know if you remember but I asked one or two questions when you spoke at the Heritage Bloggers Briefing?

Royce: I do. I do remember.

Siggins: I asked you about mark-to-market Accounting.

Royce: Yes.

Siggins: So that’s really the basis of some of the questions I wanted to ask you about. Obviously the financial reform is one of the biggest deals going through Congress right now.  And it’s going to have very many, long term consequences if the current bill passes…mostly negative.

You had talked a lot about Freddie and Fannie.  And I know the Gregg bill was shot down in the Senate.  And I read an opinion online that said it was a bill that people on the right and the left agreed would have very negative effects because it wound Freddie and Fannie down too quickly.

So I didn’t know if you might be able to explain what your House Republican view is on winding down Freddie and Fannie in an appropriate way so that it wouldn’t hurt the housing market but would allow better lending standards so that we don’t have a repeat of ’08.

Royce: Well it wasn’t just the lending standards that were the problem.  That was part of the problem.  But just to recap very quickly, the other aspect to the problem was that Fannie and Freddie were pushed off of their primary line of business which was very safe 30-year fixed mortgages into a virtually unknown portion of the market at the time.  And that was subprime and ULTA loans.  It’s important to remember that it was Congress that passed that legislation in 1992. That was the Government Sponsored Enterprise Act which the Democrats passed.  And it was that legislation that put in place the current regulatory structure over the GOC’s, and basically had them going into the business of arbitraging and overleveraging and 100 to 1, and placed on them mandates that eventually led to 50% of their portfolio being subprime and ULTA loans. Those portfolios exceeded $1.6 trillion.

As a consequence Fannie and Freddie took this decisive step into the junk loan market to meet their affordable housing mandates instituted in the early 1990s on them by Congress.  Once the government backed Fannie and Freddie got into the junk loan market it was believed throughout the financial system that there was little risk associated with these types of mortgages. And that false assumption was exactly what Fannie and Freddie and their allies in Congress were hoping for. They were eager to signal to the rest of the financial sector that the junk mortgage loans were actually safe investments.  What we are dealing with now is the aftermath of the meltdown where a trillion dollars in value was lost as a consequence.

So certainly there were other mistakes made along the way.  But the distortions of the mortgage market caused by Fannie and Freddie along with the excessively low interest rates pursued by central banks; the FED and the European central banks, were at the heart of the inflated housing bubble; and the financial collapse that followed.  What we are now trying to do is to slowly, slowly un-wind this catastrophe.  Deleveraging is always very painful and it’s going to take awhile for this to work its way out in the marketplace.  So it is not possible right now to convince investors to go back into the mortgage market.  One of the additional reasons investors are on the sidelines, is because you also have legislation advocated by Chairman Barney Frank to reduce the principle amounts on loans. There is legislation on what is called a mortgage cram down which would allow those that borrow money to simply come back and have part of the principle that they borrowed removed.

And so the very actions Congress is taking right now, or at least actions of the House, this passed in the Senate, have created this apprehension on the part of investors.  And so as a corollary to that, the market is going to be very slow to respond because investors don’t know what additional surprises Congress may have in store for them.  And certainly removing the protection of the sanctity of contract is one thing that is being pursued with gusto.  We find ourselves in a very tough predicament without investment capital coming back in the housing.

Siggins: How would you wind them down though?  Obviously, you have talked about the difficulty in doing so and their involvement in the 2008 crash. Republicans who comment verbally, their rhetoric, and what you said at the Heritage Bloggers Briefing, was that we have to get rid of them.  And I happen to agree with you.

Royce: Long term we have to basically privatize them.  Long term we have to create a situation where they evolve into businesses that don’t operate with the mandates that Congress put on them to put them into arbitrage.  To put them into a situation where they go into arbitrage and over leverage in order to compensate for the risk that they take on because of mandates from Congress.  In other words we need to allow them to be run like a business rather than to be run on the basis of whims of Congressmen who decide that 3% or zero down payment loans would be nice rather than 20%, and mandating that half of their portfolio be in sub-prime and all-day loans. It would be an advantageous step for affordable housing. We cannot have them run as an experiment in government intervention into the economy- where we introduce that sort of moral hazard and systemic risk. Instead, they should be converted into businesses that operate on market principles. The problem is that when Freddie and Fannie were finally taken over by the government, they had more than ten million subprime and other weak loans- either on their books or in the form of mortgage-backed securities that they had guaranteed. So it is going to take a while to handle this situation, and I think the first step is for people to really comprehend how much difficulty we are in right now, as well as the reasons for it- because almost 2/3 of all the bad mortgages in our financial system, many of which are now defaulting at unprecedented rates, were bought by government agencies or required, basically, by government regulation. So this is the crux of the problem.

Siggins: So how long- in a one, two-word answer- how long would this take if we did it efficiently?

Royce: It’s gonna take the return of the private market.

Siggins: Oh. So that could be decades.

Royce: Well, not necessarily. If we take the right steps, a market will return, but at this point it’s gonna require a return of investors into the market. And it’s gonna take careening, or moving away, from the government policies that create the moral hazard to begin with.

Siggins: I think I’ll have about two minutes more to your time. Two final questions. The first one is: you had mentioned, I believe, at the Bloggers Briefing, that the Federal Reserve was really at the crux of the problem.

Royce: Right.

Siggins: Artificially-low interest rates and other issues with it. I happen to agree with you, as well. But, what do you think of the Senate, the very weak audit of the Fed. Do you think Rep. Paul- Rep. Paul wrote an opinion piece on The Daily Caller the other day saying it was basically a worthless audit, because a one-time deal and then forever nothing else happens. What do you think of the audit and, just very briefly, how do you think we should be looking at the Fed?

Royce: Well, in the first place, there is little question that excessively-low interest rates resulted in an excess of credit throughout the economy, and I think- the theory behind allowing the Federal Reserve to manipulate interest rates is that, if used correctly, the central bank can ease ups and downs that are natural in an economy. But unfortunately, because it is politically unpopular to slow what appears to be a strong economy, the Federal Reserve tends to err toward interest rates that are lower than appropriate, and this was one rationale behind the Federal Reserve and other nations’ central banks setting real interest rates at a negative level from 2002 through 2006, so when adjusted for inflation those interest rates are negative. And the effect of these negative interest rates were [sic] devastating; and if we go through this cycle again, it will have similar consequences. Instead of mitigating the ups and downs of the economy, the Fed’s actions often lead to the opposite effect. So what Ron Paul would like to get to, and what I would like to see as well, is an understanding on the part of the Fed governors that, for example, Ben Bernanke’s agitation in 2002 for negative real interest rates- we’d like to see an understanding on their part that that intensified the boom-and-bust cycle, and encouraged excessive risk-taking throughout the economy, and an understanding of what that means in terms of the effect of that balloon on the financial sector and on housing. And we don’t see an admission out of the Fed as to the nature- that would indicate they understand what economists understand. And we don’t see an admission on the part of the Federal Reserve as to this problem. This is why we want to see an auditing of the Fed and a real understanding as to the consequences of these perennial policies that compound the boom-bust…help create a boom-bust cycle in real estate and the marketplace. So this is, and again, there were other mistakes made along the way. I think we need to point that out. There were speculators in the mortgage market, and large banks on Wall Street-

Siggins: Well, plus mark-to-market accounting.

Royce: And mark-to-market accounting. But these were symptoms of a much deeper illness. The distortion of the mortgage market caused by Fannie and Freddie, and the excessively low interest rates pursued by central banks- as I said- were at the heart of the inflated housing bubble, and the financial collapse that followed, and it’s the inability of participants in the Fed for the culpability of the Fed with the low interest rates or in Congress- in terms of the abilities of Members of Congress to admit their mistakes in terms of the 1992 GSE ACT that caused Ron Paul and me great concern.

A great concern over the ability of people in government to learn from mistakes that were so recently made.

Siggins: OK, I guess I have one last question, which is: I’m sure you’re involved with the program coming out of the Whip’s office?  YouCut- where Americans tell Republicans what programs they want to cut out of the federal budget. Steve Benen is a writer for PoliticalAnimal.com, calculates $1.1 Billion a year in cuts (I think it’s closer to three billion, personally) but I don’t know the exact number. But, of the five cuts, they include a half a million here, $600 million there, $2.5 billion- none of it is really getting at the systemic problem of Social Security, Medicare, Medicaid, perhaps high defense spending (depending on who you talk to). I was wondering, briefly, about what your thoughts were about the YouCut program, and second of all, if you think it will lead to real systemic reform in Congress?

Royce: Well, first, remember that in addition to the unfunded liabilities and Social Security and Medicare, and that will come about as a result of the passage of the Health Care entitlement, you also are facing a situation where we have deficits that will, this year, will total over $1.5 trillion. So in terms of focusing on the ongoing growth of these appropriations, we see these double-digit increases in appropriations bills- that’s where you see the increases in the deficits over recent years. When the Democrats took over Congress the budget deficit was $162 billion, and at the time I and other fiscal hawks were decrying the $162 billion deficit. Today it’s ten times that. And so, the spending bills  coming out of Congress are increasing government agency funding by double-digits and I think that one of the advantages of the YouCut program is getting the American public to better understand that aspect of the problem, which is half of the problem. The current deficits are half of the problem. The other half of the problem, as you correctly point out, is the unsustainability of Medicare and Social Security, long term; because the debt held by the public is going to double over five years, and it’s growing to triple over 10 years, at this rate of growth and the consequences of that are not unlike what we see in Greece today. So at some point we are going to have to come together with a Base Commission type of procedure, or a more recent example would be the Base Closure Commission process. We are going to have to- I would argue- everything would have to be on the table. You would have to get both Democrats and Republicans involved in the process, with an eye toward sustainability, or an eye toward the requirement that we reform these entitlement programs. I would also argue that if Republicans do retake the majority in the House or the Senate, I expect the first order of business to be the repeal of the Health Care entitlement legislation that passed, so at least that portion of the problem would be removed in the future but that still leaves….and at some point we are going to have to have a President elected that would sign it.

Siggins: I was going to say the Senate has too many Democrats to over-turn a Presidential Veto…

Royce: Right, right, so at some point after we pass it initially, and then we are going to have to wait until we have a Republican or a New Democrat (and I don’t see a lot of those around recently), or a New Democrat as president who is going to take a different tact, and move back to the issue of fiscal responsibility and balanced budgets. But, the first half of that is getting the budgets balanced- that is essential. The second half of it is doing something about the long-term legacy costs, or the long-term entitlement costs; we have to do that sooner than later, because as you see in Greece today if you put it off, if you continue to put it off, and continue to build entitlements, it’s…

Siggins: Devastating.

Royce: Yeah, it’s devastating and eventual government expands to a point where, how many people are working a 32 hour work week in Greece and are expecting to retire at age 52? So you set up this expectation for early retirement, for basically part-time work, and you create an entitlement mentality on top of the entitlement itself. So when you go and try to go in, and address the entitlement, the entitlement mentality floods out into the streets of the capital, as you see in Athens, with “No Compromise” as the rallying cry. I think that this tells us why it is so important to address this immediately rather than putting it off.  We are not going to get Speaker Pelosi’s attention on this because she is busy building entitlements. But come the aftermath of November’s election, I think it has to be addressed immediately.

Representative Ed Royce (R-CA) is a nine-term Congressman who serves on the House Foreign Affairs and Financial Services Committees. For more than a decade Royce has called for a stronger federal regulator to limit Fannie Mae and Freddie Mac’s excessive risk taking at the expense of taxpayers. In 2003, he offered the first legislation that sought to bring Fannie Mae, Freddie Mac and the Federal Home Loan Bank System under a strong federal regulator.

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