September 30, 2008

The Peter Principle Goes To Washington

I still don't know a great deal more about economics than I did last week, and guess what: neither do you.

That hasn't stopped our fellow Americans from assaulting the Congressional switchboards over our current economic crisis, assuring that the bailout bill in the House of Representatives failed yesterday.

It wasn't even especially close, falling 207 for and 226 against it. Down party lines, Democrats voted for it 141-94, and Republicans against it 66-132.

Yes, more Democrats opposed it (94) that Republicans voted for it (66).

Nancy Pelosi could have passed this bill simply whipping Democratic votes into line, but she didn't. The conventional wisdom is that Democrats up for re-election voted against the bill in order to placate angry constituents that didn't want to be stuck with a $700 billion bailout. Speaker Pelosi, no doubt, didn't want the blame if there was backlash over the bill, and pulled a "Sir Robin, " and allowed her fellow Democrats to "bravely run away."

This doesn't let Congressional Republicans off the hook.

Many were hearing the same sort of howling from their constituents (and conservative bloggers) to kill the bill, and so they did. Later blaming Pelosi for her heated partisan rhetoric as a convenient excuse for the lack of Republican support was just as bad as Pelosi's idiotic and nonsensical rant assigning blame for the meltdown on the Bush Administration when the problems began during the Clinton Administration and were enabled by Congress.

Glass houses, Madame Speaker.

And so the bill died.

We're now headed into a sizable recession, and the sad fact is that most of us don't yet grasp what it means. The same people who have been crying out to their Congressmen and Senators to "kill the bill" on ideological grounds will quickly change course once that ideology causes their company to shut down, their small businesses to fail, and their life's savings to evaporate.

And sadly, it seemed that as a nation, we're poised to elect a President who will only make matters worse.

If anything was under-reported about the first McCain-Obama debate, it was the fact Barack Obama couldn't come up with a single program or entitlement he would cut to rein in the cost of government to our faltering economy, and in fact, he was pitching massive new outlays. He was also insisting that he could cut taxes for 95% of Americans, while making up the difference by soaking the rich and corporations.

The nasty, dirty truth is that the pending recession has made Obama's entire stated Peter Principle platform unobtainable.

He cannot expect to run the existing government we have by cutting personal income taxes for 95% of Americans. That claim always an overt fiction to begin with, as nearly one-third of Americans already pay no taxes:

One of the biggest challenges facing both John McCain and Barack Obama in their commitment to provide tax relief to working-class Americans is the simple fact that millions of them already pay no personal income taxes.

According to the most recent IRS statistics for 2006, some 45.6 million tax filers—one-third of all filers—have no tax liability after taking their credits and deductions. For good or ill, this is a dramatic 57 percent increase since 2000 in the number of Americans who pay no personal income taxes.

If Obama truly cut income taxes for the 95% of individuals currently paying taxes—which is what he means to imply with his campaign speeches— the government of the United States would simply shut down. Period. There would not be enough money coming into the Treasury to make the federal payroll and write checks to those in various entitlement programs.

Social Security, Medicare, etc... simply gone.

Granted, they're bound to fail anyway within my lifetime because they are unsustainable in any form remotely similar to what they already are, and always were, but Obama's "robbing the rich to give to the poor" socialist platform just slammed into the ground.

Obama's entire platform was premised on a bull market, and cannot pass even a cursory non-economist's scrutiny now.

Barack Obama's Stance on the EconomyReality
Heath Care:
As President, Barack Obama will guarantee health coverage for every American and will lower the cost of health care for the average American family by up to $2,500.
Pure Fantasy.
In a severe recession, the government cannot implement expansive new social programs, especially those costing tens of billions of dollars. To do so would either bankrupt the government, or create an additional tax burden that would plunge a fragile economy into a full depression. And I don't even want to think of the effect this will have on the research and development of new drugs. If there is no profit in finding a cure for cancer, pharma companies can probably survive on the existing market for sedatives and painkillers.
Tax Policy:
Barack Obama will ease the burden on hardworking Americans, offering middle-class tax cuts three times the size of McCain's.
Pure Fantasy.
Tax Foundation estimates show that if all of the Obama tax provisions were enacted in 2009, the number of these "nonpayers" would rise by about 16 million, to 63 million overall. If all of the McCain tax proposals were enacted in 2009, the number of nonpayers would rise by about 15 million, to a total of 62 million overall. In addition, as noted previously, Obama simply lied when he claimed he would cut taxes for 95%, as a third are already not paying. There is very little difference in what the candidates will directly do for the middle class. The big difference is that Obama will tax employers out of new hires. He can't seem to grasp that a poor person never employed anyone but gravediggers.
Energy Policy:
Barack Obama will ease American's burden at the pump, giving American families $1,000 in rebates. Barack will also create five million new jobs by investing in clean energy technologies.
Pure Fantasy.
Obama talks about future technologies that are nowhere near being commercially viable during the next President's term as if they are already here, and utterly ignores the all important short-term and transitional energy economies. We all, want a non-polluting, sustainable domestic energy resources. Obama utterly ignores how we get there from here. Once again, he's offering rhetoric, and voting "present."
Trade Policy:
Barack Obama will end tax breaks for companies that send American jobs overseas, and reward companies who create good jobs here at home.
Pure Fantasy.
This is the same Barack Obama that has consistently painted American corporations as the enemy, and who has pledged to increase their corporate taxes. Companies, if they want to survive, will have to leave American branches with a skeleton workforce until the oppressive Obama regime ends. He'll cost us jobs, and see his socialist policies grind our economy to a standstill, as those policies have in every singe country then been implemented in. I don't want to be France Lite. Do you?
Federal Deficit:
Barack Obama will cut both taxes and spending, implementing a responsible budget that lowers the federal deficit by reducing wasteful spending.
Pure Fantasy.
Obama was aked by McCain what he would cut during the debate, and couldn't answer the very simple, reasonable question. Why? Because he seeks to grow the size and cost of government, with socialized healthcare, and plans for other massive new government boondoggles.

Here's a brief visual demonstration of a Barack Obama economy.

As always happens under socialism in a bad economy, the people get burned.

Update: A New RNC Ad makes the case.

Posted by Confederate Yankee at September 30, 2008 10:35 AM

The ironic twist to the video of the plane burning is that it was part of a test to use a modified jet fuel that wasn't supposed to flash up when a jet crashes.

Posted by: Neo at September 30, 2008 11:09 AM

"The same people who have been crying out to their Congressmen and Senators to "kill the bill" on ideological grounds will quickly change course once that ideology causes their company to shut down, their small businesses to fail, and their life's savings to evaporate."

I fail to understand how a high level finance crisis (which has already failed to meet initial "48 hours to catastrophe" doomsday predictions) will drive me to bankruptcy and make my savings evaporate. My FDIC insured savings.

Posted by: Dawnfire82 at September 30, 2008 11:26 AM

Aaargh! Pelosi is the worst thing to happen to the House in its entire history. I don’t know why people — both Democrats and Republicans — aren’t getting mad and staying mad about this latest example of piss-poor “leadership.”

Join with us at Grand Rants, and get mad!

Posted by: Stoutcat at September 30, 2008 11:46 AM

If the loss of value of financial services companies was caused by the SEC's recently more vigorous enforcement of the mark-to-market rule, and if the SEC announced it was backing off yesterday, shouldn't we give it a couple of days to see if liquidity returns on its own?

Note that the bailout bill is being loaded up with the usual earmarks - doesn't look as if Congress is really worried about the economy.

Note that the financial services companies apparently can afford to sit on billions in bad loans, not even trying to move bad paper at discounted prices, waiting for a bailout. Why? They must think they'll make more peddling bad paper to the feds than on the market. Why should we enable profit-taking at taxpayer expense?

As Glenn Reynolds says on Instapundit: I'll believe it's a crisis when the people who say it's a crisis start acting like it's a crisis.

Posted by: Joe Doakes at October 1, 2008 02:57 PM