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.

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.

*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.

Heritage Foundation Breakdown of Alternative Energy Costs

Heritage Foundation breaks down alternative energy costs.  Heritage points out that,

The inconvenient truth is this: nearly half of America’s electricity is generated from coal. Natural gas and nuclear energy add about 20 percent each. Most of the rest is provided by renewable sources, primarily hydroelectric energy at 6 percent. Non-hydro renewables like wind, solar energy and biomass total only 3 percent. And this is after decades of existing generous renewable subsidies. If electricity created by wind and other renewables were cost competitive, consumers would use more of it without a federal law to force consumption. But renewable energy is not cost competitive, hence the need for government coercion to force the American people to buy it.

You can find the relevant research paper here.

-nick

The King Obama Chart: Democracy Denied

This is an excellent chart created by American’s For Prosperity. You can find the original at: www.obamachart.com.

Illegal Immigration and the Federal Government

Last evening, I watched the first twenty minutes or so of “The O’Reilly Factor” while in the gym. The host, Bill O’Reilly, opened by talking about the Arizona immigration law, and then talked to Karl Rove and Laura Ingraham about how the federal government has failed to do its job in securing our borders.

I wrote last week that the Arizona law needs to be modified so that civil rights abuses don’t happen, particularly with the “lawful contact” portion of the law. However, as O’Reilly pointed out, and Ingraham clarified, since the 1980s our presidents have failed to protect the borders, despite national security being one of the few areas the federal government is required to be involved in. Rove defended former President George W. Bush as having acted effectively to protect the border, something that is quite laughable.

Immigration, like a number of other issues in America, is extraordinarily complicated. Below are some of the key points I think need to be addressed, particularly in light of the Arizona law:

1. As O’Reilly said, liberals need to stop pitting Americans against Americans over the Arizona law. O’Reilly cited an Investor’s Business Daily poll showing 60% approval for the law and 30% opposition across the nation, and a Rasmussen poll shows 60% of Arizona residents support the law, and I keep hearing that up to 70% of the state supports it. President Obama, Al Sharpton and Daily Kos should probably go back and look at these polls before jumping to conclusions about where Americans stand, and making broad generalizations about who supporters of the law are, morally.

2. 30% of Arizona residents are Hispanic which, as one person wrote last week (I forget who and where- sorry), means that police officers are not going to be stopping every Hispanic on the street to ask for identification. Unlike the East Coast liberals in D.C., Boston and NYC, Hispanics are not a rare sight, and thus theoretical civil rights screeching from the East are not based upon firsthand knowledge of the state. Given the majority support for the law in the state, one has to assume a large portion of Latinos support the law (despite what La Raza found).

3. Ingraham noted that Republicans like the “wink-and-nod” from businesses looking for cheap labor, and Democrats like the probable votes they will get- even Bush only got about 40% of the Hispanic vote in 2004. This is a failure from both parties at the federal level.

4. On “This Week,” George Will cited the federal law regarding legal immigrants and carrying identification. Turns out they are required to, much as the Arizona law requires them. Looks like Arizona’s law merely clarifies the letter of the federal law (though, as noted above, I think there are legitimate concerns regarding the application of the law, and civil rights of citizens).

5. O’Reilly and Rove talked about a wall being effective in stopping illegal immigration, but that is just not true. Economics drives immigration to this country, whether it be to work (the majority of illegal immigrants); to get on our welfare system; or to smuggle drugs, weapons and other items into the country. We need to punish sanctuary cities and businesses; stop welfare policies that encourage illegal immigration; put more troops on the border; and stop wasting money on a wall. We also need a policy that encourages work for those legal immigrants who want it, through a streamlined (but also effective, security-wise) immigration process.

6. This law was mostly about waking up the federal government. I know jobs are the main concern of Congress, as they should be, but our- as O’Reilly put it- porous border needs to be controlled. Now. (Of course, if Congress’ was really concerned about the economy, and not just for political reasons, it would stop impeding businesses through regulations and taxes.) The Arizona law is not the way to go, but it’s darn close.

Wanted: A Mainstream Media That’s Actually Mainstream

Yesterday, an interesting series of articles came out that say a lot about the national media and the Tea Party movement.

First, allow me to introduce a Washington Post article describing the anti-racism battle the Tea Party movement is fighting in the public arena. I found the article on the Huffington Post political page (since updated). According to the article,

The challenge is made tougher by one of the defining elements of the tea party movement: No one person controls it. There is no national communications strategy. And incidents of racist slogans and derisive depictions of President Obama continue to crop up, providing fuel for critics who say the president’s skin color is a powerful reason behind the movement’s existence.

In a new Washington Post-ABC News poll, most Americans see the movement as motivated by distrust of government, opposition to the policies of Obama and the Democratic Party, and broad concern about the economy. But nearly three in 10 see racial prejudice as underlying the tea party.

Supporters and opponents alike say the movement draws its strength from opposition to Obama’s policies, but they split deeply on the race question, according to the poll: About 61 percent of tea party opponents say racism has a lot to do with the movement, a view held by just 7 percent of tea party supporters.

A matter of perception

That indicates that the issue of race and the tea party is largely about differing perceptions, reflected in how people view the well-known illustration of Obama made up like the Joker from the Batman movie “The Dark Knight.” Some see the image, with its exaggerated lips, as an offensive reference to minstrelsy. Obama’s critics, however, say President George W. Bush was also portrayed as the Joker, as well as Dracula.

Now, there are multiple errors in this article, including the fact that neither of these Post sources regarding the poll cite the demographics in the poll- such as how many Democrats were polled, etc. Secondly, the article fails to note that the Joker picture was made by a liberal college student, not a conservative activist or conservative racist. Lastly, the racist slogans referred to could easily be the ones held by the liberal LaRouche supporters…but the Post simply sticks to the unprofessional and politically hackish general statement of “incidents,” without a single source or citation of the alleged incidents.

Next up on the “interesting article” stage is a Politico article describing the Post’s leftward tilt towards liberal bloggers. To be fair, the Post does have the tremendous writings of Charles Krauthammer and George Will, among other conservative columnists, but the article makes a great case that the Post is clearly heading towards a particular demographic- the young, Internet-savvy liberal. Given the initial article I quoted above, I think Politico was quite timely in its publication of the article.

Last, but not least, on stage we have The New York Times, which as of late has been acting strangely neutral/non-liberal in some of its articles. This latest betrayal of “mainstream” media values is a pretty interesting article about how a record number of black Republicans are running for Congress- a full 32. In the article, accusations of racism within the Tea Party are shot down by the candidates:

The black candidates interviewed overwhelmingly called the racist narrative a news media fiction. “I have been to these rallies, and there are hot dogs and banjos,” said Mr. West, the candidate in Florida, a retired lieutenant colonel in the Army. “There is no violence or racism there.”

As Ed Morrissey noted (emphasis mine),

There was more violence at May Day rallies this past weekend than there have been in over a year of Tea Party rallies.  Did the New York Times [sic] cover those and assign them to the entire liberal politisphere in the manner they do here with conservatives?  Did they link that violence to the immigration-reform movement in the same way they have with no violence at all at Tea Parties with its attendees?

The same media double standard is true with the supposed racism they keep reporting at Tea Parties.  These rallies back candidates like West, Princella Smith, Vernon Parker, Ryan Frazier, and others.  They support these candidates for the simple reason that these candidates best represent their views on governance, fiscal policy, and national security.  Will they all win?  Probably not, although this year looks better than most, but it shows that conservatives have no barriers to entry except on policy and philosophy — just like any other political movement.  The media spin on Tea Parties and conservatives has gotten very, very threadbare — and increasingly desperate.

Morrissey is absolutely correct. Poll after poll, as well as outright statements, show just how much liberal power players and media members are missing the mainstream-America nature of the Tea Party, and in doing so, are alienating themselves and their influence in providing real news. When you lose the Times, though…maybe it’s time to admit you have a problem.

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