About Those Middle Class Tax Cuts…

October 25, 2008 – 8:58 pm

The Wall Street Journal recently provided a history lesson about a Democrat President and his promises of tax cuts:

Mr. McCain could do worse than remind the middle class what happened to them the last time a charismatic Democratic candidate promised them a tax cut. While he’s at it, he might also remind them how much more expensive it will be to send Barack Obama to the White House at a time when his fellow Democrats will have a majority in both houses of Congress.

The Clinton years hold some good lessons on both these scores. Back when Mr. Clinton was campaigning for president in 1992, he made a pretty direct pitch: Raise taxes on people making more than $200,000, and use those revenues to fund tax relief for the “forgotten middle class.”

In an October presidential debate, then-Gov. Clinton laid out the marginal-rate increase he wanted and some of his plans for the revenue that would be brought in. He followed with a pledge:

“Now, I’ll tell you this,” he said. “I will not raise taxes on the middle class to pay for these programs. If the money does not come in there to pay for these programs, we will cut other government spending, or we will slow down the phase-in of the programs.”

Mr. Clinton, of course, won that election. And as the inauguration approached, he began backtracking from his promise. At a Jan. 14, 1993, press conference in New Hampshire, he claimed that it was the media that had played up a middle-class tax cut, not him. A month later, he announced his actual plan before a joint session of Congress.

On page one of the New York Times, the paper described the fate of the middle-class tax cut this way: “Families earning as little as $20,000 a year — members of the ‘forgotten middle class’ whose taxes he promised during his campaign to cut — will also be asked to send more dollars to Washington under the President’s plan.”

Oops. Can we trust Senator Obama more than we trusted Governor Clinton?


By Joe Martin | Posted in Politics | Tagged , , | Comments (0)

Obama Staffers Planned to Vote Illegally

October 25, 2008 – 8:53 pm

Seriously?

Thirteen campaign workers for Barack Obama yesterday yanked their voter registrations and ballots in Ohio after being warned by a prosecutor that temporary residents can’t vote in the battleground state.

A dozen staffers - including Obama Ohio spokeswoman Olivia Alair and James Cadogan, who recently joined Team Obama - signed a form letter asking the Franklin County elections board to pull their names from the rolls.

These jokers needed a prosecutor to prick their consciences before realizing that this might not be a good idea? What happened to the integrity of democracy? What happened to fair play? Guess none of that matters when an election is on the line.


By Joe Martin | Posted in Politics | Tagged , , | Comments (0)

Bad Theology and Bad Mortgages

October 25, 2008 – 8:34 pm

How important is good theology? Pretty important. Not only can bad theology give people a wrong picture of God, it can also cause them to do some pretty stupid things in the here and now. Take the “prosperity gospel” and the recent mortgage crash, for example. Time recently reported on the intersection between bad theology and bad economic decisions.

Has the so-called Prosperity gospel turned its followers into some of the most willing participants — and hence, victims — of the current financial crisis? That’s what a scholar of the fast-growing brand of Pentecostal Christianity believes. While researching a book on black televangelism, says Jonathan Walton, a religion professor at the University of California at Riverside, he realized that Prosperity’s central promise — that God will “make a way” for poor people to enjoy the better things in life — had developed an additional, dangerous expression during the subprime-lending boom. Walton says that this encouraged congregants who got dicey mortgages to believe “God caused the bank to ignore my credit score and blessed me with my first house.” The results, he says, “were disastrous, because they pretty much turned parishioners into prey for greedy brokers.”

… Although a type of Pentecostalism, Prosperity theology adds a distinctive layer of supernatural positive thinking. Adherents will reap rewards if they prove their faith to God by contributing heavily to their churches, remaining mentally and verbally upbeat and concentrating on divine promises of worldly bounty supposedly strewn throughout the Bible. Critics call it a thinly disguised pastor-enrichment scam. Other experts, like Walton, note that for all its faults, the theology can empower people who have been taught to see themselves as financially or even culturally useless to feel they are “worthy of having more and doing more and being more.” In some cases the philosophy has matured with its practitioners, encouraging good financial habits and entrepreneurship.

But Walton suggests that a decade’s worth of ever easier credit acted like a drug in Prosperity’s bloodstream. “The economic boom ’90s and financial overextensions of the new millennium contributed to the success of the Prosperity message,” he wrote recently on his personal blog as well as on the website Religion Dispatches. And not positively. “Narratives of how ‘God blessed me with my first house despite my credit’ were common. Sermons declaring ‘It’s your season to overflow’ supplanted messages of economic sobriety,” and “little attention was paid to … the dangers of using one’s home equity as an ATM to subsidize cars, clothes and vacations.”

It’s sad. Americans have been richly blessed by God. America is the richest country in the world and our poor are wealthy than most of the “rich” in Africa. Our poor are fantastically well off compared to the poor in Asia, South America, or Central America. The Bible also has much to say about contentment. Rather than teaching their congregations to be both thankful for what they have and content with what they have, these pastors have been encouraging people’s natural greed, covetousness, and discontent. As a result, many of these people have been directly hurt by the mortgage crash.

Not that these pastors need to be worried about my opinion. Ultimately, they will answer to God for how they’ve led His people. That’s enough for me.


By Joe Martin | Posted in Biblical, Economics | Tagged | Comments (1)

FDR: Responsible for the Great Depression

October 25, 2008 – 8:18 pm

Recently, UCLA confirmed my belief that Franklin Delano Roosevelt was one of America’s worst Presidents. He not only did more than any other politician to create interst group politics, he not only centralized and increased government power to an unprecedented degree, but he prolonged the Great Depression by at least 7 years. That was the conclusion recently reached by UCLA researchers.

After scrutinizing Roosevelt’s record for four years, Harold L. Cole and Lee E. Ohanian conclude in a new study that New Deal policies signed into law 71 years ago thwarted economic recovery for seven long years.

“Why the Great Depression lasted so long has always been a great mystery, and because we never really knew the reason, we have always worried whether we would have another 10- to 15-year economic slump,” said Ohanian, vice chair of UCLA’s Department of Economics. “We found that a relapse isn’t likely unless lawmakers gum up a recovery with ill-conceived stimulus policies.”

In an article in the August issue of the Journal of Political Economy, Ohanian and Cole blame specific anti-competition and pro-labor measures that Roosevelt promoted and signed into law June 16, 1933.

… In the three years following the implementation of Roosevelt’s policies, wages in 11 key industries averaged 25 percent higher than they otherwise would have done, the economists calculate. But unemployment was also 25 percent higher than it should have been, given gains in productivity.

Meanwhile, prices across 19 industries averaged 23 percent above where they should have been, given the state of the economy. With goods and services that much harder for consumers to afford, demand stalled and the gross national product floundered at 27 percent below where it otherwise might have been.

“High wages and high prices in an economic slump run contrary to everything we know about market forces in economic downturns,” Ohanian said. “As we’ve seen in the past several years, salaries and prices fall when unemployment is high. By artificially inflating both, the New Deal policies short-circuited the market’s self-correcting forces.”

The policies were contained in the National Industrial Recovery Act (NIRA), which exempted industries from antitrust prosecution if they agreed to enter into collective bargaining agreements that significantly raised wages. Because protection from antitrust prosecution all but ensured higher prices for goods and services, a wide range of industries took the bait, Cole and Ohanian found. By 1934 more than 500 industries, which accounted for nearly 80 percent of private, non-agricultural employment, had entered into the collective bargaining agreements called for under NIRA.

Cole and Ohanian calculate that NIRA and its aftermath account for 60 percent of the weak recovery. Without the policies, they contend that the Depression would have ended in 1936 instead of the year when they believe the slump actually ended: 1943.

NIRA’s role in prolonging the Depression has not been more closely scrutinized because the Supreme Court declared the act unconstitutional within two years of its passage.

“Historians have assumed that the policies didn’t have an impact because they were too short-lived, but the proof is in the pudding,” Ohanian said. “We show that they really did artificially inflate wages and prices.”

Even after being deemed unconstitutional, Roosevelt’s anti-competition policies persisted — albeit under a different guise, the scholars found. Ohanian and Cole painstakingly documented the extent to which the Roosevelt administration looked the other way as industries once protected by NIRA continued to engage in price-fixing practices for four more years.

The number of antitrust cases brought by the Department of Justice fell from an average of 12.5 cases per year during the 1920s to an average of 6.5 cases per year from 1935 to 1938, the scholars found. Collusion had become so widespread that one Department of Interior official complained of receiving identical bids from a protected industry (steel) on 257 different occasions between mid-1935 and mid-1936. The bids were not only identical but also 50 percent higher than foreign steel prices. Without competition, wholesale prices remained inflated, averaging 14 percent higher than they would have been without the troublesome practices, the UCLA economists calculate.


By Joe Martin | Posted in Economics | Tagged | Comments (0)

Blame the Fed?

October 24, 2008 – 8:36 pm

I always like a story that points out how supposedly wise government employees manage to destroy the very thing they’re trying to protect. Today, the Wall Street Journal fingered the Federal Reserve for much of the turmoil of the last year.

But the larger story is that the global economy is fast popping its latest monetary bubble, the one over the last 14 months in commodity prices and non-dollar currencies.

The original bubble was in housing prices and mortgage-related assets, which the Federal Reserve helped to create with its negative real interest rates from 2002 into 2005. This was Alan Greenspan’s tragic mistake, not that the former Fed chief will acknowledge it.

As for the second bubble, this one began in August 2007 with the onset of the credit panic. This is Ben Bernanke’s creation. The Fed chose to confront the credit crunch as if it were mainly a problem of too little liquidity, not fear of insolvency. To that end it flooded the economy with money, while taking short-term interest rates down to 2% from 5.25% in seven months. The panic only got worse, and this September’s stampede finally led the Treasury and Fed to address the solvency problem by supplying public capital and numerous guarantees to the financial system.

The Fed’s liquidity burst nonetheless sent markets for a 14-month loop, as the nearby charts indicate. The Fed created a commodity bubble of record proportions, with oil doing a round trip in a single year from $70 up to $147 and back down to $69 yesterday. The dollar also plunged along the way against most global currencies, notably the euro, as the bottom chart illustrates.

The dollar price of oil and the dollar-euro exchange rate are probably the two most important prices in the world. They represent a huge share of global commerce, sending signals that shape trade and capital flows. When those two prices move up and down so sharply in so short a time — based more on fear and expectations than on economic realities — they distort price signals and can lead to a misallocation of resources. Commodity prices have now fallen back to Earth, as the reality of global recession hits home and the Fed can’t ease much further. Meanwhile, the euro has fallen from the stratosphere as Europe heads into recession and the dollar becomes a safer haven in a world of fear.


By Joe Martin | Posted in Economics, Government | Tagged , | Comments (0)

McCain’s Socialist Tendencies

October 24, 2008 – 3:42 pm

I said earlier today that I don’t really trust McCain on economic issues. Slate quotes McCain’s hero, Teddy Roosevelt, on taxes.

We grudge no man a fortune in civil life if it is honorably obtained and well used. It is not even enough that it should have been gained without doing damage to the community. We should permit it to be gained only so long as the gaining represents benefit to the community. … The really big fortune, the swollen fortune, by the mere fact of its size, acquires qualities which differentiate it in kind as well as in degree from what is possessed by men of relatively small means. Therefore, I believe in a graduated income tax on big fortunes, and … a graduated inheritance tax on big fortunes, properly safeguarded against evasion, and increasing rapidly in amount with the size of the estate.

That’s the same type of thing that McCain has been known to spout, when he forgets that he’s running as a Republican. And it’s another reminder of why I won’t be voting Republican for President this year.


By Joe Martin | Posted in Politics | Tagged , | Comments (0)

Fred Thompson Gets Out the Vote

October 24, 2008 – 11:09 am

Fred Thompson gave a great speech this morning, exhorting Republicans to get out the vote. It’s just unfortunate that his candidate is John McCain. While John McCain might be better than Barack Obama on economic issues, I’m not really convinced that he would be. McCain is a deficit hawk who would be comfortable raising taxes in order to pay for the recent bailouts and his proposed increases in defense spending. McCain is an economic populist who hates profits and “greedy” businessmen. McCain is an economic populist who believes the government needs to buy mortgages to bailout homeowners.

No thanks.

But this speech is great motivational material for anyone thinking of voting for Bob Barr. An excerpt:

All of this is important, because how we respond to our economic challenge is more important than the crisis itself. For the last 25 years the United States, and indeed the world, has enjoyed unprecedented prosperity. You wouldn’t know it from listening to Obama, but worldwide over 1 billion people have been able to lift themselves out of poverty. This is due to America’s influence, from our defense of freedom in World War II to the Cold War, to the ascendency of our free-market capitalism, the adoption of open trade policies, and globalization. Yet some say our current financial difficulties are evidence that we should turn our back on our founding, free market principles … that it’s time for big changes.

But in a world that is increasingly inter-connected by jobs, trade and global finance, how our economy is viewed by the rest of the world is extremely important to America’s economic well being. The worst thing in the world we could do is appear to be unfriendly to investment and trade with an economy constrained and made uncompetitive by layers upon layers of new regulations, and bogged down in the divisiveness of class warfare. Yet if you are to take them at their word this is precisely the direction that an Obama administration and a Democratic Congress would take us, turning a short term recession into a long term economic decline for the United States.

And while our regulatory regime needs to be examined and improved, we should be clear: capitalism is not the cause of our nation’s economic challenges. The subprime mortgage crisis was not rooted in lack of regulation, but in bad policies made by Democrats in Congress that forced banks to give mortgages to people who could not afford the houses they were buying. These are the same politicians who protected the excesses and fraudulent conduct of Fannie Mae and Freddie Mac. They are the same ones who now want to control the spending of hundreds of billions of dollars to solve the problem they helped create, and who tried to slip $200 billion into the first bailout bill for their political cronies in ACORN, the organization that is now systemically perpetrating voter registration fraud around the country. This record, Obama and the Democrats say, entitles them to total control of all of the levers of power in Washington.

Under an Obama-Reed-Pelosi scenario nothing will restrain them from making the secret ballot in union elections be a thing of the past. The so called “fairness doctrine” will likely be passed, restricting free speech on talk radio, possibly even the Internet.


By Joe Martin | Posted in Politics | Tagged , , , | Comments (0)

The Casualness of Thomas Jefferson

October 23, 2008 – 4:28 pm

For years I’ve repeated the following story about Thomas Jefferson. Now I’ve finally seen the source. I see that I had a few of the details wrong, but had the basic gist right.

“In a few moments after our arrival, a tall, high-boned man came into the room. He was dressed, or rather undressed, in an old brown coat, red waistcoat, old corduroy small-clothes [breeches] much soiled, woollen hose, and slippers without heels. I thought him a servant, when General Varnum surprised me by announcing that it was the President.” –Thomas Jefferson receiving guests at the White House, from the Life of William Plumer.


By Joe Martin | Posted in Politics | Comments (0)

Obama Hoped to Change Kenya

October 23, 2008 – 3:39 pm

One of the things that has continued to disturb me about Senator Obama is the gap between his rhetoric and his actions. He continually talks about changing politics for the better. But every time he has the ability to actually change things, he votes for keeping the status-quo. Earlier, I wrote about his endorsements of Chicago machine politicians. Yesterday I read that he’s endorsed thuggish Kenyan politicians.

National Review’s Andy McCarthy summarized a Washington Post story about Senator Obama’s connections to unsavory Kenyan politicians.

Odinga evidently has a very close relationship with Obama. He is native of Kenya’s Luo tribe, the same one to which Obama’s father belonged. In fact, in early 2008, Odinga told the BBC he is Obama’s cousin (i.e., that Obama’s father was Odinga’s “maternal uncle”).

Like other Obama connections — Ayers, Dohrn, Wright, and Mike Klonsky (about whom I have an article today) — Odinga is a socialist. He was educated by Soviets in East Germany, he named his oldest son after Fidel Castro, and his father was the leader of Kenya’s Socialist opposition.

The former Kenyan government of Daniel Arap Moi was pro-American. (ACM — I can attest to this personally, having worked with Kenyan authorities extensively during the investigation of the 1998 bombing of the U.S. embassy in Nairobi, which was carried out by the jihadist cells al Qaeda established in Kenya in the early Nineties.) Odinga served eight years in jail because he was implicated in a violent coup attempt against Moi’s government in 1982.

Odinga sought the presidency in Kenya’s December 2007 election. In 2006, Obama came to Kenya and campaigned for him, simultaneously voicing sharp criticism of the pro-American government. His comments will sound familiar to Americans. As Hyman writes, Obama declared, “The [Kenyan] people have to suffer over corruption perpetrated by government officials[.]… Kenyans are now yearning for change.” Obama’s visit, the culmination of consultations with Odinga that had gone on for years, vaulted Odinga’s candidacy.

(ACM — the outraged Kenyan government issued a rebuttal, greatly disturbed that Obama had represented that he was coming to Kenya to nurture Kenya/U.S. relations but, in fact, had used the trip as a platform to lecture to Kenya about social justice. Obama’s interference in a foreign election, transparently designed to topple a government cooperative with the United States, comes close, to say the least, to violating the Logan Act, 18 U.S.C. 953.)

Are any of Obama’s supporters the least bit concerned about this display of hypocrisy? Are any of them even aware of it?


By Joe Martin | Posted in Politics | Tagged , | Comments (1)

Vote As Though You Were Not Voting

October 23, 2008 – 2:58 pm

Lately I’ve been thinking about how Christians should respond to political outcomes. I’m a Libertarian. I believe that government governs best which governs least. Liberty loses no matter who wins — Senator Obama wins or Senator McCain. Both support a stronger, more assertive government that strips away liberty. How should I respond to that loss?

Well, ultimately God still rules over the world. Things are imperfect — and will be getting less perfect — but God never told me that I’d live in a perfect world. In fact, he promised the opposite. I should devote myself more fully to God, no matter who wins. This election is just one huge reminder to trust God, not man. For all men are fallible, weak, and imperfect. Only God is the perfect ruler of this world. One day, he’ll rule openly. And that’s the day I’m waiting for.

Until then, I’ll follow Pastor Piper’s advice and vote as though I was not voting.

Voting is like marrying and crying and laughing and buying. We should do it, but only as if we were not doing it. That’s because “the present form of this world is passing away” and, in God’s eyes, “the time has grown very short.” Here’s the way Paul puts it:

The appointed time has grown very short. From now on, let those who have wives live as though they had none, and those who mourn as though they were not mourning, and those who rejoice as though they were not rejoicing, and those who buy as though they had no goods, and those who deal with the world as though they had no dealings with it. For the present form of this world is passing away. (1 Corinthians 7:29-31)

Let’s take these one at a time and compare them to voting.

1. “Let those who have wives live as though they had none.”

… So it is with voting. We should do it. But only as if we were not doing it. Its outcomes do not give us the greatest joy when they go our way, and they do not demoralize us when they don’t. Political life is for making much of Christ whether the world falls apart or holds together.

2. “Let those who mourn [do so] as though they were not mourning.”

… So it is with voting. There are losses. We mourn. But not as those who have no hope. We vote and we lose, or we vote and we win. In either case, we win or lose as if we were not winning or losing. Our expectations and frustrations are modest. The best this world can offer is short and small. The worst it can offer has been predicted in the book of Revelation. And no vote will hold it back. In the short run, Christians lose (Revelation 13:7). In the long run, we win (21:4).

3. “Let those who rejoice [do so] as though they were not rejoicing.”

… So it is with voting. There are joys. The very act of voting is a joyful statement that we are not under a tyrant. And there may be happy victories. But the best government we get is a foreshadowing. Peace and justice are approximated now. They will be perfect when Christ comes. So our joy is modest. Our triumphs are short-lived–and shot through with imperfection. So we vote as though not voting.

4. “Let those who buy [do so] as though they had no goods.”

… So it is with voting. We do not withdraw. We are involved–but as if not involved. Politics does not have ultimate weight for us. It is one more stage for acting out the truth that Christ, and not politics, is supreme.

5. “Let those who deal with the world [do so] as though they had no dealings with it.”

… So it is with voting. We deal with the system. We deal with the news. We deal with the candidates. We deal with the issues. But we deal with it all as if not dealing with it. It does not have our fullest attention. It is not the great thing in our lives. Christ is. And Christ will be ruling over his people with perfect supremacy no matter who is elected and no matter what government stands or falls. So we vote as though not voting.


By Joe Martin | Posted in Biblical, Politics | Tagged , , | Comments (0)