Friday, October 30, 2009

Top Obama fundraisers get posts
WASHINGTON — More than 40% of President Obama's top-level fundraisers have secured posts in his administration, from key executive branch jobs to diplomatic postings in countries such as France, Spain and the Bahamas, a USA TODAY analysis finds.

Twenty of the 47 fundraisers that Obama's campaign identified as collecting more than $500,000 have been named to government positions, the analysis found.

Overall, about 600 individuals and couples raised money from their friends, family members and business associates to help fund Obama's presidential campaign. USA TODAY's analysis found that 54 have been named to government positions, ranging from Cabinet and White House posts to advisory roles, such as serving on the economic recovery board charged with helping guide the country out of recession.

Nearly a year after he was elected on a pledge to change business-as-usual in Washington, Obama also has taken a cue from his predecessors and appointed fundraisers to coveted ambassadorships, drawing protests from groups representing career diplomats. A separate analysis by the American Foreign Service Association, the diplomats' union, found that more than half of the ambassadors named by Obama so far are political appointees, said Susan Johnson, president of the association. An appointment is considered political if it does not go to a career diplomat in the State Department.

That's a rate higher than any president in more than four decades, the group's data show, although that could change as the White House fills more openings. Traditionally about 30% of top diplomatic jobs go to political appointees, and roughly 70% to veteran State Department employees. Ambassadors earn $153,200 to $162,900 annually....

Politicians Butt In at Bailed-Out GM
...Along with Montana's two Democratic senators, the Republican congressman is battling to get GM to reinstate a contract with a Montana palladium mine nullified in bankruptcy court. "The simple fact is, when GM took federal dollars, they lost some of their autonomy," Mr. Rehberg says.

Federal support for companies such as GM, Chrysler Group LLC and Bank of America Corp. has come with baggage: Companies in hock to Washington now have the equivalent of 535 new board members -- 100 U.S. senators and 435 House members.

Since the financial crisis broke, Congress has been acting like the board of USA Inc., invoking the infusion of taxpayer money to get banks to modify loans to constituents and to give more help to those in danger of foreclosure. Members have berated CEOs for their business practices and pushed for caps on executive pay. They have also pushed GM and Chrysler to reverse core decisions designed to cut costs, such as closing facilities and shuttering dealerships.

Democratic Sen. Amy Klobuchar of Minnesota persuaded GM to rescind a closure order for a large dealership in Bloomington, Minn. In Tucson, Arizona Democratic Rep. Gabrielle Giffords did the same for Don Mackey, owner of a longstanding Cadillac dealership with 80 employees. Rep. Giffords argues it made sense, even for GM, to keep the Mackey dealership, which sold 750 cars last year. "All I did was to help get GM to focus on his case," she says....

...In May, even before the government's ownership became official, lawmakers erupted when GM disclosed it planned to produce a new subcompact car at its factories in China. Under congressional pressure, GM dropped those plans and promised instead to retool an existing U.S. facility in Michigan, Wisconsin or Tennessee for the new model.

Lawmakers from those states demanded and received high-level meetings in Washington to quiz GM on the criteria for site selection and to tout their states. GM in the end picked a site in Michigan....

Cash for Clunkers Results Finally In: Taxpayers Paid $24,000 per Vehicle Sold, Reports, the premier resource for online automotive information, has determined that Cash for Clunkers cost taxpayers $24,000 per vehicle sold.

Nearly 690,000 vehicles were sold during the Cash for Clunkers program, officially known as CARS, but analysts calculated that only 125,000 of the sales were incremental. The rest of the sales would have happened anyway, regardless of the existence of the program. ...

Physicist Howard Hayden's one-letter disproof of global warming claims
...It has been often said that the "science is settled" on the issue of CO2 and climate. Let me put this claim to rest with a simple one-letter proof that it is false.

The letter is s, the one that changes model into models. If the science were settled, there would be precisely one model, and it would be in agreement with measurements.

Alternatively, one may ask which one of the twenty-some models settled the science so that all the rest could be discarded along with the research funds that have kept those models alive.

We can take this further. Not a single climate model predicted the current cooling phase. If the science were settled, the model (singular) would have predicted it.

Let me next address the horror story that we are approaching (or have passed) a "tipping point." Anybody who has worked with amplifiers knows about tipping points. The output "goes to the rail." Not only that, but it stays there. That's the official worry coming from the likes of James Hansen (of NASA­GISS) and Al Gore.

But therein lies the proof that we are nowhere near a tipping point. The earth, it seems, has seen times when the CO2 concentration was up to 8,000 ppm, and that did not lead to a tipping point. If it did, we would not be here talking about it. In fact, seen on the long scale, the CO2 concentration in the present cycle of glacials (ca. 200 ppm) and interglacials (ca. 300-400 ppm) is lower than it has been for the last 300 million years....

... CO2 concentration has risen and fallen in the past with no help from mankind. The present rise began in the 1700s, long before humans could have made a meaningful contribution. Alarmists have failed to ask, let alone answer, what the CO2 level would be today if we had never burned any fuels. They simply assume that it would be the "pre-industrial" value....

...The first principle of causality is that the cause has to come before the effect. The historical record shows that climate changes precede CO2 changes. How, then, can one conclude that CO2 is responsible for the current warming?...

...Consider the change in vocabulary that has occurred. The term global warming has given way to the term climate change, because the former is not supported by the data. The latter term, climate change, admits of all kinds of illogical attributions. If it warms up, that's climate change. If it cools down, ditto. Any change whatsoever can be said by alarmists to be proof of climate change. ...

Thursday, October 29, 2009

Is Dissent ‘Legitimate’? Not According to Campaign Finance Laws
Fox News’ ratings have been off the charts lately, and it has the White House to thank for that. After the administration decreed that Fox is not a “legitimate news organization” and that people shouldn’t watch it, more people than ever are tuning in to see Glenn Beck and Bill O’Reilly fight back.

But we shouldn’t be so entertained by this spectacle that we lose sight of why, at bottom, it is a disturbing one. It’s not just because, as many commentators have already observed, the president appears to be taking a page out of Nixon’s playbook. Fundamentally, it’s because the administration’s media war against Fox is but a minor display of the tremendous power the government has to stifle speech it views as illegitimate.

Much of this power is the result of long-standing “campaign finance” laws. These laws impose all sorts of restrictions on political speech, and it’s no coincidence that the most draconian of these restrictions are targeted at those who can speak the most effectively against a politician’s reelection. The most effective speakers tend to be those who can spend the most money. Corporations, many of which have lots of money, receive particularly harsh treatment under the law. Congress and state legislatures have as a practical matter banned corporations from speaking effectively about candidates by prohibiting them from spending any money for that purpose during election season.

Fox News is part of a corporation, as are most of the other major news outlets in the United States. Congress and state legislators have chosen to exempt them from the ban they have placed on other corporations’ political speech. However, under current Supreme Court precedent there’s no legal reason that lawmakers cannot take that exemption away. As a result, government officials are constantly tempted to manipulate the exemption and silence those who disagree with them.

With the Obama administration now arguing that Fox News is a partisan political group masked as a news outlet, expect politicians to call for the government to revoke the network’s media exemption and use the campaign finance laws to mute its speech. Other networks will be on notice that they could suffer the same fate if they are too critical of the administration....

Your tax dollars used against you
...This Friday, taxpayer funded researchers will brief politicians in Congress on how to improve their approval ratings by avoiding face-to-face townhall meetings with voters.

After receiving tongue lashings from outraged taxpayers across the country at townhall meetings this summer, career politicians no doubt will eagerly listen to this briefing to learn how to avoid direct contact with voters and simultaneously increase their approval ratings. Taxpayers already upset by out of control, wasteful Washington spending would, however, probably be even more upset if they were told that this research was all paid for with tax dollars by the National Science Foundation....

The Unhealthy 'Public Option'
...President Obama says it would help consumers by giving private insurers some real competition. But the typical state has 27 companies competing in the small-group health insurance market. If there were insufficient competition, the health insurance sector wouldn't rank 86th among American industries in profitability.

Health care plans average profits of just 3.3 percent. In wireless communications, a vigorously contested market, profits are 11 percent. Does Obama think we need a government cell-phone company to compete with Verizon and AT&T?

The proponents also believe that, like Medicare, a new government plan could be run far more efficiently than private firms. Don't make me laugh. Medicare, keep in mind, is going broke. And its alleged efficiencies are illusory or nontransferable.

Health economists Regina Herzlinger of Harvard and Robert Book of the Heritage Foundation note that on a per-person basis, Medicare has higher administrative costs than private firms. They look smaller only because the average Medicare patient uses more services than the average private insurance patient. "Expressing them as a percentage makes Medicare's administrative costs appear lower because they are spread over a larger base of health care costs," write Book and Herzlinger. ...

..."Under the current Medicare system, a majority of doctors and hospitals that care for Medicare patients are paid substantially less than it costs to treat them," they said in an open letter to Congress. "Many providers are therefore already approaching a point where they can not afford to see Medicare patients." Last year, the government's Medicare Payment Advisory Commission reported that 29 percent of recipients who were looking for a primary care physician had trouble finding one. ...

Parents banned from watching their children in playgrounds... in case they are paedophiles
Parents are being banned from playing with their children in council recreation areas because they have not been vetted by police.

Mothers and fathers are being forced to watch their children from outside perimeter fences because of fears they could be paedophiles.

Watford Council was branded a 'disgrace' yesterday after excluding parents from two fenced-off adventure playgrounds unless they first undergo criminal record checks.

Children as young as five will instead be supervised by council 'play rangers' who have been cleared by the Criminal Records Bureau. ...

...It comes amid an escalating row over the Government's new anti-paedophile database, which will contain the names of more than 11million adults cleared to work with children and vulnerable adults. ...

Wednesday, October 28, 2009

States of Personal Privilege
How good is Sen. Max Baucus's health reform bill? So good that Democrats have made sure some of the most costly provisions don't apply to their own states.

The Senate Finance Committee is gearing up for a final vote next week, and Chairman Baucus now appears to have the Democratic votes to pass his bill. Getting this far has of course meant cutting deals, and those deals, it turns out, are illuminating. The senators are all for imposing "reform" on the nation, so long as it doesn't disadvantage their constituents. ...

...Senate Majority Leader Harry Reid, who is worried about losing his seat next year, worked out a deal by which the federal government will pay all of his home state's additional Medicaid expenses for the next five years. Under the majority leader's very special formula, only three other states—Oregon, Rhode Island and Michigan—qualify for this perk, on the grounds, as Mr. Reid put it recently on the Senate floor, that they "are suffering more than most."...

...That is, unless you live in a state such as New York. That state, along with some others, has many high-value plans—in part because it boasts a lot of union members with "Cadillac" plans, in part because the state has imposed so many insurance regulations that even skimpy plans are expensive. Sen. Chuck Schumer didn't want a lot of angry overtaxed New Yorkers on his hands, so he and other similarly situated Democrats carved out a deal by which the threshold for this tax will be higher in their states. If you live in Kentucky, you get taxed at $21,000. If you live in Massachusetts you don't get taxed until $25,000. This carve-out is at least more sweeping, applying to 17 (largely blue) states, though that's cold comfort if you live in Louisville.

Mr. Baucus will also pay for his bill by socking it to pharmaceutical companies, on the principle that drug companies are filthy rich and should have to contribute to health care. The view is a bit different in New Jersey. The state's Web site boasts it is the "global epicenter" of the drug industry, where "15 of the world's 20 largest pharmaceutical companies have major facilities." And Sen. Bob Menendez, of the Garden State, seems concerned that his home-state employers are going to struggle to both pay their federal liabilities and to continue to grow and innovate. Thus Mr. Menendez's quiet deal for a $1 billion tax credit for companies investing in drug R&D.

The Baucus bill, we are assured by many Dems, will successfully "bend down" the health-care cost curve. Michigan Sen. Debbie Stabenow isn't counting on it when it comes to her constituents. She and Massachusetts Sen. John Kerry included $5 billion in the bill for a reinsurance program designed to defray the medical costs of union members. ...

Freaked Out Over SuperFreakonomics
...Also smart are University of Chicago economist Steven Levitt and writer Stephen Dubner, whose delightful "SuperFreakonomics"—the sequel to their runaway 2005 bestseller "Freakonomics"—gives Myhrvold and Co. pride of place in their lengthy chapter on global warming. Not surprisingly, global warming fanatics are experiencing a Pinatubo-like eruption of their own.

Mr. Gore, for instance, tells Messrs. Levitt and Dubner that the stratospheric sulfur solution is "nuts." Former Clinton administration official Joe Romm, who edits the Climate Progress blog, accuses the authors of "[pushing] global cooling myths" and "sheer illogic." The Union of Concerned Scientists faults the book for its "faulty statistics." Never to be outdone, New York Times columnist Paul Krugman scores "SuperFreakonomics" for "grossly [misrepresenting] other peoples' research, in both climate science and economics."...

...But when it comes to the religion of global warming—the First Commandment of which is Thou Shalt Not Call It A Religion—Messrs. Levitt and Dubner are grievous sinners. They point out that belching, flatulent cows are adding more greenhouse gases to the atmosphere than all SUVs combined. They note that sea levels will probably not rise much more than 18 inches by 2100, "less than the twice-daily tidal variation in most coastal locations." They observe that "not only is carbon plainly not poisonous, but changes in carbon-dioxide levels don't necessarily mirror human activity." They quote Mr. Myhrvold as saying that Mr. Gore's doomsday scenarios "don't have any basis in physical reality in any reasonable time frame."

More subversively, they suggest that climatologists, like everyone else, respond to incentives in a way that shapes their conclusions. "The economic reality of research funding, rather than a disinterested and uncoordinated scientific consensus, leads the [climate] models to approximately match one another." In other words, the herd-of-independent-minds phenomenon happens to scientists too and isn't the sole province of painters, politicians and news anchors.

But perhaps their biggest sin, which is also the central point of the chapter, is pointing out that seemingly insurmountable problems often have cheap and simple solutions. Hence world hunger was largely conquered not by a massive effort at population control, but by the development of new and sturdier strains of wheat and rice. Hence infection and mortality rates in hospitals declined dramatically as doctors began to appreciate the need to wash their hands.

Hence, too, it may well be that global warming is best tackled with a variety of cheap fixes, if not by pumping SO2 into the stratosphere then perhaps by seeding more clouds over the ocean. Alternatively, as "SuperFreakonomics" suggests, we might be better off doing nothing until the state of technology can catch up to the scope of the problem.

All these suggestions are, of course, horrifying to global warmists, who'd much prefer to spend in excess of a trillion dollars annually for the sake of reconceiving civilization as we know it, including not just what we drive or eat but how many children we have. And little wonder: As Newsweek's Stefan Theil points out, "climate change is the greatest new public-spending project in decades." Who, being a professional climatologist or EPA regulator, wouldn't want a piece of that action?...

Government Is Encouraging Lax Lending Standards
...First came the Federal Housing Authority inspector general's report [pdf] on the FHA's lender approval process, which found that FHA was missing or ignoring relevant information, failing to document loans, not preventing convicted financial criminals from participating in its lending program, and in most other ways failing to "ensure that lenders met all applicable requirements." The IG's spot check revealed, for example, that just one out of 22 approved applications contained all the documentation needed to meet the FHA's own standard for guaranteeing a loan.

The FHA's much more serious offense against lending standards -- its dangerously low 3.5 percent down payment minimum for guaranteed loans -- became the focus of attention this month when the authority admitted it was shown to be close to bankruptcy, and Rep. Scott Garrett (R-New Jersey) introduced legislation to boost that minimum to 5 percent. ...

...While all economic indicators, from rising unemployment through rising mortgage defaults, describe a market in collapse, real estate prices continue to increase. The Case-Schiller August index, announced today, was up 1.2 percent. The National Association of Realtors (NAR) is celebrating a 9.4 percent jump in existing home sales. This Goldman Sachs report issued last week concludes government largesse is adding a full 5 percent to current real estate prices.

How are people buying all this expensive real estate? With nearly the same ratio of debt to down payment as they had in 2005. According to NAR, the median down payment is 4 percent -- slightly above what it was earlier in the decade -- but a third of all U.S. houses are still being bought with no money down.

That's a bad bet for us, because we will be on the hook for the defaults. As this San Francisco Federal Reserve report notes, nearly all mortgage securitization is now being done by the nationalized government sponsored enterprises, and virtually none by the private sector. So lenders are not just gambling on bad credit risks, but gambling with your money. Not surprisingly, it's the administration that gets the benefit, as real estate prices, in marked contrast to unemployment, are doing better than the most-adverse projections of the bank stress test conducted earlier this year. (Calculated Risk compares the trendlines.) ...

Goldman Sachs Reaps $6B After $1M Obama Contribution
He campaigned on a promise to restore trust in the U.S. government by making it more transparent, but after a confidential report showing how taxpayer money to American International Group (AIG) landed in the back pocket of Goldman Sachs was leaked to the Wall Street Journal, many have questioned Barack Obama’s commitment to transparency.

With lawmakers now clamoring for names and the Federal Reserve balking at such disclosures, Capitol Hill is embedded in controversy surrounding the vitality of the AIG bailout. It started at $83 billion and has since swelled to $173 billion....

...But it was the $6 billion that landed in the back pockets of Goldman Sachs, a bank with close ties to Mr. Obama, which raised a number of ethical questions of how and why taxpayer dollars were covertly funneled to one of the president’s largest campaign backers.

According to, those at Goldman Sachs were second only to the University of California in terms of being an Obama top donor. While the organization itself did not donate the money, such donations were made either through employees, owners, the immediate families of such members and/or through the organization’s PAC.

During the 2008 campaign, those at Goldman Sachs donated $955,473 to the Obama campaign. Morgan Stanley, though further down the list, still made the top 20 with a bundled donation of $485,823.

Mr. Obama has also dipped in the Goldman Sachs pool in making his presidential appointments. U.S. Treasury Secretary Timothy Geithner’s loyalty to Goldman Sachs has been an issue of contention and, upon assuming his post at the Treasury Department, he named Mark Patterson, a former Goldman Sachs lobbyist, as a top aide.

And as early as last December, reports Mr. Geithner favored Goldman Sachs surfaced when the New York Times Editorial Board questioned the motivation of then New York Federal Reserve President Timothy Geithner’s decision to let Lehman Brothers fail. Then, two days later, he advocated for the bailout of AIG and its counterparties.

Add to the mix Mr. Geithner arranged a September meeting to discuss the AIG bailout, and Goldman Sachs CEO Lloyd Blankfein was the only Wall Street leader at the meeting. At the time, Goldman Sachs was AIG’s largest trading partner, which raises more questions.

During the campaign, Mr. Obama had strong connections with Goldman Sachs, as he was invited to a private Goldman Sachs dinner in May 2007 when his candidacy was in its infancy....

New York Fed’s Secret Choice to Pay for Swaps Hits Taxpayers
Oct. 27 (Bloomberg) -- In the months leading up to the September 2008 collapse of giant insurer American International Group Inc., Elias Habayeb and his colleagues worked nights and weekends negotiating with banks that had bought $62 billion of credit-default swaps from AIG, according to a person who has worked with Habayeb.

Habayeb, 37, was chief financial officer for the AIG division that oversaw AIG Financial Products, the unit that had sold the swaps to the banks. One of his goals was to persuade the banks to accept discounts of as much as 40 cents on the dollar, according to people familiar with the matter. ...

...After less than a week of private negotiations with the banks, the New York Fed instructed AIG to pay them par, or 100 cents on the dollar. The content of its deliberations has never been made public.

The New York Fed’s decision to pay the banks in full cost AIG -- and thus American taxpayers -- at least $13 billion. That’s 40 percent of the $32.5 billion AIG paid to retire the swaps. Under the agreement, the government and its taxpayers became owners of the dubious CDOs, whose face value was $62 billion and for which AIG paid the market price of $29.6 billion. The CDOs were shunted into a Fed-run entity called Maiden Lane III.

Habayeb, who left AIG in May, did not return phone calls and an e-mail.

Goldman Sachs

The deal contributed to the more than $14 billion that over 18 months was handed to Goldman Sachs, whose former chairman, Stephen Friedman, was chairman of the board of directors of the New York Fed when the decision was made. Friedman, 71, resigned in May, days after it was disclosed by the Wall Street Journal that he had bought more than 50,000 shares of Goldman Sachs stock following the takeover of AIG. He declined to comment for this article. ...

...Janet Tavakoli, founder of Chicago-based Tavakoli Structured Finance Inc., a financial consulting firm, says the government squandered billions in the AIG deal.

“There’s no way they should have paid at par,” she says. “AIG was basically bankrupt.” ...

Have Fox News and Roger Ailes Goofed?
...I have come to believe that the nearly daily back and forth between the White House and Fox News is good for both sides. I have further come to believe it’s good for the political class in general. For one thing, the fight is deeply self-referential and true inside baseball (who is doing what to whom on the basis of what strategy and what future benefit); for another it sets up the ultimate liberal-conservative face-off. In one corner the new young president (with all his promises of bipartisanship) and in the other Fox Chief Roger Ailes, that dark figure who has been bending media to the conservative cause since the Nixon administration....

...I wonder now if that game is subtly changing. The White House wants us to believe they are standing up to Fox’s bullying—and they are. But what they are also doing is playing the Fox game: The White House’s pretend sanctimony is like Fox’s pretend sanctimony; it’s all for the show of it, everybody’s a big ham, everybody’s playing everybody else....

The real climate change catastrophe
...Then, in the mid-Seventies, temperatures started to rise again, and by the mid-Eighties, a still fairly small number of scientists – including some of those who had been predicting a new ice age – began to warn that we were now facing the opposite problem: a world dangerously heating up, thanks to our pumping out CO₂ and all those greenhouse gases inseparable from modern civilisation.

In 1988, a handful of the scientists who passionately believed in this theory won authorisation from the UN to set up the body known as the Intergovernmental Panel on Climate Change (IPCC). This was the year when the scare over global warming really exploded into the headlines, thanks above all to the carefully staged testimony given to a US Senate Committee by Dr James Hansen, head of NASA’s Goddard Institute for Space Studies (GISS), also already an advocate for the theory that CO₂ was causing potentially catastrophic warming.

The disaster-movie scenario that rising levels of CO₂ could lead to droughts, hurricanes, heatwaves and, above all, that melting of the polar ice caps, which would flood half the world’s major cities, struck a rich chord. The media loved it. The environmentalists loved it. More and more politicians, led by Al Gore in the United States, jumped on the bandwagon. But easily their most influential allies were the scientists running the new IPCC, led by a Swedish meteorologist Bert Bolin and Dr John Houghton, head of the UK Met Office.

The IPCC, through its series of weighty reports, was now to become the central player in the whole story. But rarely has the true nature of any international body been more widely misrepresented. It is commonly believed that the IPCC consists of “1,500 of the world’s top climate scientists”, charged with weighing all the scientific evidence for and against “human-induced climate change” in order to arrive at a “consensus”.

In fact, the IPCC was never intended to be anything of the kind. The vast majority of its contributors have never been climate scientists. Many are not scientists at all. And from the start, the purpose of the IPCC was not to test the theory, but to provide the most plausible case for promoting it. This was why the computer models it relied on as its chief source of evidence were all programmed to show that, as CO2levels continued to rise, so temperatures must inevitably follow.

One of the more startling features of the IPCC is just how few scientists have been centrally involved in guiding its findings. They have mainly been British and American, led for a long time by Dr Houghton (knighted in 1991) as chairman of its scientific working group, who in 1990 founded the Met Office’s Hadley Centre for research into climate change. The centre has continued to play a central role in selecting the IPCC’s contributors to this day, and along with the Climate Research Unit run by Professor Philip Jones at the University of East Anglia, controls HadCrut, one of the four official sources of global temperature data (another of the four, GIStemp, is run by the equally committed Dr Hansen and his British-born right-hand man, Dr Gavin Schmidt). ...

...But however persuasive the case seemed to be, there were just beginning to be rather serious doubts about the methods being used to promote it. More and more questions were being asked about the IPCC’s unbalanced approach to evidence – most notably in its promotion of the so-called “hockey stick” graph, produced in time for its 2001 report by a hitherto obscure US scientist Dr Michael Mann, purporting to show how global temperatures had suddenly been shooting up to levels quite unprecedented in history.

One of the hockey stick’s biggest fans was Al Gore, who in 2006 made it the centrepiece of his Oscar-winning film, An Inconvenient Truth. But it then turned out that almost every single scientific claim in Gore’s film was either wildly exaggerated or wrong. The statistical methods used to create the hockey-stick graph were so devastatingly exposed by two Canadian statisticians, Steve McIntyre and Ross McKitrick (as was confirmed in 2006 by two expert panels commissioned by the US Congress) that the graph has become one of the most comprehensively discredited artefacts in the history of science.

The supporters of the hockey stick, highly influential in the IPCC, hit back. Proudly calling themselves “the Hockey Team”, their membership again reflects how small has been the number of closely linked scientists centrally driving the warming scare. They include Philip Jones, in charge of the HadCrut official temperature graph, and Gavin Schmidt, Hansen’s right-hand man at GISS –which itself came under fire for “adjusting” its temperature data to exaggerate the warming trend.

Then, in 2007, the story suddenly entered its third stage. In a way that had been wholly unpredicted by those IPCC computer models, global temperatures started to drop. Although CO2 levels continued to rise, after 25 years when temperatures had risen, the world’s climate was visibly starting to cool again. ...

...The ice caps haven’t been melting as the alarmists and the models predicted they should. The Antarctic, containing nearly 90 per cent of all the ice in the world, has actually been cooling over the past 30 years, not warming. The polar bears are not drowning – there are four times more of them now than there were 40 years ago. In recent decades, the number of hurricanes and droughts have gone markedly down, not up.

As the world has already been through two of its coldest winters for decades, with all the signs that we may now be entering a third, the scientific case for CO₂ threatening the world with warming has been crumbling away on an astonishing scale. ...

...In words quoted on the cover of my new book, Prof Lindzen wrote: “Future generations will wonder in bemused amazement that the early 21st century’s developed world went into hysterical panic over a globally averaged temperature increase of a few tenths of a degree and, on the basis of gross exaggerations of highly exaggerated computer predictions combined into implausible chains of inference, proceeded to contemplate a rollback of the industrial age.” ...

Labour wanted mass immigration to make UK more multicultural, says former adviser
The huge increases in migrants over the last decade were partly due to a politically motivated attempt by ministers to radically change the country and "rub the Right's nose in diversity", according to Andrew Neather, a former adviser to Tony Blair, Jack Straw and David Blunkett.

He said Labour's relaxation of controls was a deliberate plan to "open up the UK to mass migration" but that ministers were nervous and reluctant to discuss such a move publicly for fear it would alienate its "core working class vote".

As a result, the public argument for immigration concentrated instead on the economic benefits and need for more migrants. ...

...He wrote: "Earlier drafts I saw also included a driving political purpose: that mass immigration was the way that the Government was going to make the UK truly multicultural.

"I remember coming away from some discussions with the clear sense that the policy was intended – even if this wasn't its main purpose – to rub the Right's nose in diversity and render their arguments out of date."

The "deliberate policy", from late 2000 until "at least February last year", when the new points based system was introduced, was to open up the UK to mass migration, he said. ...

Frank: "We Are Trying On Every Front To Increase The Role Of Government"

Tax refugees staging escape from New York
New Yorkers are fleeing the state and city in alarming numbers -- and costing a fortune in lost tax dollars, a new study shows.

More than 1.5 million state residents left for other parts of the United States from 2000 to 2008, according to the report from the Empire Center for New York State Policy. It was the biggest out-of-state migration in the country.

The vast majority of the migrants, 1.1 million, were former residents of New York City -- meaning one out of seven city taxpayers moved out.

"The Empire State is being drained of an invaluable resource -- people," the report said. ...

... While New York City and the state were the losers, the Sunshine and Garden States were winners. more than 250,000 New Yorkers who lived in and around the city fled to Florida. Another 172,000 city taxpayers ended up in New Jersey.

Why all the moving vans?

The center, part of the conservative Manhattan Institute, blames the state's high cost of living and high taxes. ...

Monday, October 26, 2009

Public plan mirage
In the health-care debate, the "public plan" is all things to all people. For supporters, it would discipline greedy private insurers and make health-care coverage affordable. For detractors, it's a way station on the path to a single-payer insurance system of government-run health care. In reality, the public plan, also known as the public option, is mostly an exercise in political avoidance: It pretends to control costs and improve access to quality care when it doesn't. ...

...As for administrative expenses, any advantage for the public plan is exaggerated, say critics. Part of the gap between private insurers and Medicare is statistical illusion: Because Medicare recipients have higher average health expenses ($10,003 in 2007) than the under-65 population ($3,946), its administrative costs are a smaller share of total spending. The public plan, with younger members, wouldn't enjoy this advantage.

Likewise, Medicare has low marketing costs because it's a monopoly. But a non-monopoly public plan would have to sell itself and would incur higher marketing costs. Private insurers' profits (included in administrative costs) also explain some of Medicare's cost advantage. But profits represent only 3 percent of the insurance industry's revenue. Moreover, accounting comparisons are misleading when they don't include the cost of Medicare's government-supplied investment capital. A public plan would also need investment capital. And suppose the public plan suffers losses. Congress would assuredly bail it out.

The promise of the public plan is a mirage. Its political brilliance is to use free-market rhetoric (more "choice" and "competition") to expand government power. But why would a plan tied to Medicare control health spending, when Medicare hasn't? From 1970 to 2007, Medicare spending per beneficiary rose 9.2 percent annually compared to the 10.4 percent of private insurers -- and the small difference partly reflects cost shifting. Congress periodically improves Medicare benefits, and there's a limit to how much squeezing reimbursement rates can check costs. Doctors and hospitals already complain that low payments limit services or discourage physicians from taking Medicare patients. ...

...Many would say: Whoopee! Get rid of the sinister insurers. Bring on a single-payer system. But if that's the agenda, why not debate it directly?...

We Can Do It
...A deal must include an equitable global governance structure. All countries must have a voice in how resources are deployed and managed. That is how trust will be built.

Can we seal a comprehensive, equitable and ambitious deal in Copenhagen that will reduce greenhouse gas emissions and limit global temperature rise to a scientifically safe level? Can we catalyze clean energy growth? Can we help to protect the most vulnerable nations from the effects of climate change? Can we expect the United States to play a leading role?

The best answer to all these questions was given last week by Senators Kerry and Graham: “Yes, we can.”

Ban Ki-moon is secretary general of the United Nations.

The Countrywide Files
...Kudos to Illinois Congressman Mike Quigley, who became the first committee Democrat to publicly back a subpoena when he told us, "Both parties must decide that they can't protect their members, no matter how powerful they are." Last week, New Hampshire Democrat Paul Hodes also made the principled decision to buck his party and join Mr. Quigley in calling for the subpoena of Bank of America, which bought Countrywide last year and has said it is ready to provide the documents if asked. These defections from his own party forced the reluctant hand of Mr. Towns, who was under pressure from other Democrats to keep all this under wraps.

Praise also goes to Mr. Issa, who has been pursuing the investigation since last year and kept the pressure on the majority party to face a vote, despite a near total lack of interest from the press corps. That subpoena will now cover all documents related to VIP borrowers since 1996, including emails and any telephone recordings that still exist, for all federal and state officials. The subpoena also covers employees at Fannie Mae and Freddie Mac, who may have received special treatment as an inducement to put taxpayers on the hook for Countrywide's toxic mortgages.

As the largest subprime lender and valued partner of Fannie Mae and Freddie Mac, Countrywide was at the core of the mortgage meltdown. The political class wants to blame the mania and panic on the bankers, but the bankers couldn't have made the subprime lending mess without plenty of political help from Congress. To ensure that this disaster is never repeated, it is critical that Congress uncovers the facts about the extraordinary efforts by Countrywide and Fannie and Freddie to influence federal housing policy.

Sunday, October 25, 2009

Business Fights Back
...When several major companies—including Exelon, Apple and Nike—ostentatiously quit the Chamber several weeks ago, provoking a flurry of unflattering headlines, it seemed no coincidence. Mr. Obama's allies in the unions, the trial bar and green lobbies have targeted the Chamber, some of its members, and Mr. Donohue personally.

For a man who prides himself on working both sides of the aisle, the Chamber these days is not a fun place for Mr. Donohue. Then again, he has an Irish temper and doesn't shrink from a brawl. At least for now, he's showing no signs of muting the Chamber's message.

"I did an interview a couple of week ago, and somebody said, 'Well, the White House says that you've become Dr. No and you are going to lose your seat at the table.' And I said, 'The White House doesn't give out the seats at the table. The seats at the table go to the people who have a rational policy, who have strong people to advance that policy, that have a strong grass-roots system, that have the assets to support their program, and that are willing to play in the political process," Mr. Donohue remarks, sitting in his office, which looks across Lafayette Park to the White House.

"The bottom line is you can't do this job if you are squeaky about all that stuff. My job is to represent the American business community in an honorable way, to present their interests in a way that I really think is good for them and good for this country. And," he adds with a pointed look, "I plan to keep doing it."

One irony of the Obama administration's demonization campaign is that Mr. Donohue is hardly a right-wing ideologue. There was a day, in the 1970s and 1980s, when the Chamber fought for limited government. But starting in the 1990s, the group became more interested in using Washington to forward a narrower corporate self-interest. ...

...What really seems to bother the White House is less Chamber ideology than its effectiveness. "They are going to have to go after somebody, right? Of course they are going after the individual ones, the bankers, and the insurers—and that's after they made deals with them. But who would you go after? Companies can't do this themselves . . . When it gets tougher, we get in."

Going after the Chamber is nonetheless a risk. The lobby works with a lot of Congressional Democrats from swing districts. Those pols face tough races next year, and Chamber support can help them raise money and protect against GOP attacks. The White House campaign gives GOP candidates an opening to point out how much Democrats dislike business.

The Obama team has already had one bruising experience with the Chamber's power over card check, Big Labor's priority of getting rid of secret ballots in union elections. The Chamber launched a full-scale campaign against the union-backed bill with the Orwellian name, the "Employee Free Choice Act."

Mr. Donohue is blunt, singling out the SEIU, the Teamsters and other unions: "What they are trying to do is change the rules." Why? "They want a hell of a lot more members, so they can have a hell of a lot more political influence, so they can change the way this country runs." ...

FACT CHECK: Health insurer profits not so fat
WASHINGTON (AP) -- Quick quiz: What do these enterprises have in common? Farm and construction machinery, Tupperware, the railroads, Hershey sweets, Yum food brands and Yahoo? Answer: They're all more profitable than the health insurance industry.

In the health care debate, Democrats and their allies have gone after insurance companies as rapacious profiteers making "immoral" and "obscene" returns while "the bodies pile up."

Ledgers tell a different reality. Health insurance profit margins typically run about 6 percent, give or take a point or two. That's anemic compared with other forms of insurance and a broad array of industries, even some beleaguered ones....

...Health insurers posted a 2.2 percent profit margin last year, placing them 35th on the Fortune 500 list of top industries. As is typical, other health sectors did much better - drugs and medical products and services were both in the top 10.

The railroads brought in a 12.6 percent profit margin. Leading the list: network and other communications equipment, at 20.4 percent....

More Bad Mortgages on the Way, Thanks to Congressional Committee
Expect to see more bad mortgages as a result of a House committee’s vote Thursday to create the so-called “Consumer Financial Protection Agency.” That agency, contrary to its deceptive name, will harm savers and consumers by forcing banks to make loans to people with bad credit, leaving banks with less money to pay interest. “The agency would be in charge of enforcing the Community Reinvestment Act, a law that prods banks to make loans in low-income communities.”...

You Mislead!
It is a good thing that other congressmen did not follow Rep. Joe Wilson’s lead. If they yelled out every time President Obama said something untrue about health care, they would quickly find themselves growing hoarse.

By our count, the president made more than 20 inaccurate claims in his speech to Congress. We have excluded several comments that are deeply misleading but not outright false. (For example: Obama pledged not to tap the Medicare trust fund to pay for reform. But there is no money in that “trust fund,” anyway, so the pledge is meaningless.) Even so, we may have missed one or more false statements by the president. Our failure to include one of his comments in the following list should not be taken to constitute an endorsement of its accuracy, let alone wisdom....

From the people who brought us the swine flu vaccine shortage - Government-run health care!
President Obama's late-night declaration of a nationwide public health emergency last night shouldn't be allowed to obscure the most important lesson of the developing swine flu crisis - The same government that only weeks ago promised abundant supplies of swine flu vaccine by mid-October will be running your health care system under Obamacare.

On Sept. 13, Kathleen Sebelius, Secretary of Health and Human Services, told ABC's This Week program that the government was on schedule to deliver an "ample supply" of swine flu vaccine by mid-October:

"We're on track to have an ample supply rolling by the middle of October. But we may have some early vaccine as early as the first full week in October. We'll get the vaccine out the door as fast as it rolls off the production line."

But here we are five weeks later and news reports are coming in from across the nation of long waiting lines of people wanting the shot, but being turned away because of grossly inadequate supplies. The typical explanation from public health offiials is that the swine flu vaccine requires more time to be cultivated than seasonal flu vaccine.

That's no doubt true, but did federal public health officials just discover that fact? These are the same government officials who will be in charge of your health care under the government-run health care system being sought by Obama and Democratic leaders in Congress....

Priceless. Protest Breaks Out at Massive Wisconsin Flu Shot Line
The Milwaukee Journal Sentinel posted this photo essay showing the HUGE lines of people being forced to wait outside in the rain for flu shots.

Photo six is posted below- Mike O’Keefe brought a plywood sign, “Welcome to Government health care.”...

Generous pay for new Freddie Mac CFO
The pay package given to Freddie Mac's new chief financial officer should have sent a message from Washington to corporate America about how executive compensation standards must change. Instead, it did just the opposite.

The government-controlled mortgage finance company is giving CFO Ross Kari compensation worth as much as $5.5 million. That includes an almost $2 million cash signing bonus and a generous salary that could top $2.3 million.

The Federal Housing Finance Agency, which oversees Freddie Mac, approved the pay package. A spokeswoman pointed to a statement that justified the agency's approval of the pay, which was done in part because the amount was comparable to what others in the financial services industry make.

That way of thinking is exactly what helped feed the surge in executive pay over the last decade. Everyone wants to make at least as much, or more, than their peers.

Freddie Mac is not just another company. It's alive today, and nearly 80 percent owned by the government, only because almost $51 billion in taxpayer funds were pumped into it over the last year. More bailout money also may be needed in the quarters ahead as losses from its troubled mortgages mount.

Outside pay experts are outraged. "We are in a period when this shouldn't be acceptable," said Paul Hodgson, a senior research associate at The Corporate Library, an independent corporate governance research firm. "Even if pay is competitive to the market, that doesn't make it OK today."...

Making someone else pay
...This is exactly the spirit of Obamacare. The animating drive is to transfer: mainly money, from those who pay to those who need. The strongest appeal of Democrats' plans is that you needn't worry about coverage because someone, presumably a villain, will pay for it.

Who, exactly?

Ask first who won't pay. Doctors? Maybe not. One reason the Senate's latest plan didn't worsen the deficit by the $1 trillion that congressional accountants earlier reckoned was that its writers hid huge sums in Medicare payments off the books. They did this to buy the support of the American Medical Association. Doctors are right not to want to be shafted. Trust that they'll lobby to make sure of it.

Insurance companies won't. Their pleas will be heard, bailouts granted. The industry, in fact, seemed to be going along with Obamacare in hopes of finding a utility-like role in a government-dominated system.

You, however, may have an ATM-like role. The plan assembled by Sen. Max Baucus (D-Mont.) dictates premiums on a sliding scale - 12% of income, about $8,700 a year, for the median Waukesha County family, for instance. We'll all be paying extra to cover people who earn less. Those figures assume, by the way, massive, improbable cuts in costs.

Who else pays? The healthy: Patsies who obey the law and buy insurance before they're sick. Their premiums will cover those who don't bother until they've incurred huge bills.

Mainly, the young will pay. They tend to use less care. Obamacare depends on this: Young workers' premiums are needed to fill the pool as aging workers drain it. That's how insurance works, they say. They mistake insurance, which pools similar risks, with the pooling of known dissimilar costs, which is called a raw deal.

The arrangement is like another "compact between generations," Medicare, in which young workers pay with the expectation of collecting later. But Medicare, which works fine for now, will be insolvent by 2017, say its trustees. The young will pay for that now and later.

The real winners in Obamacare aren't the elderly. They're already covered, though Baucus' plan cuts Medicare massively. It is, rather, the pre-retirement demographic, not old enough for Medicare, insured but worried, and costly to cover.

Such people usually are in their peak earning years. They've had time to save up, pay off the mortgage. They are typically far better off than the young who will subsidize them. Yet Congress would transfer huge sums from low-wealth twentysomethings to higher-wealth boomers.

And the young will pay still more. Congress' plans portend huge deficits, even before the evaporation of reformers' fantasies about cutting costs. This will be funded by unprecedented debt. The costs will be paid later, by citizens now so young as to not yet be born....

Saturday, October 24, 2009

Democrats Vote To Give ACORN Regulatory Authority Over Financial Institutions
...WASHINGTON - During consideration of H.R. 3126, legislation to establish a Consumer Financial Protection Agency (CFPA), Democrats on the House Financial Services Committee voted to pass an amendment offered by Rep. Maxine Waters (D-CA) that will make ACORN eligible to play a role in setting regulations for financial institutions.

The Waters amendment adds to the CFPA Oversight Board 5 representatives from the fields of "consumer protection, fair lending and civil rights, representatives of depository institutions that primarily serve underserved communities, or representatives of communities that have been significantly impacted by higher-priced mortgages" to join Federal banking regulators in advising the Director on the consistency of proposed regulations, and strategies and policies that the Director should undertake to enforce its rules.

By making representatives of ACORN and other consumer activist organizations eligible to serve on the Oversight Board, the amendment creates a potentially enormous government sanctioned conflict of interest. ACORN-type organizations will have an advisory role on regulating the very financial institutions from which they receive millions of dollars annually in direct corporate contributions and benefit from other financial partnerships and arrangements. These are the same organizations that pressured banks to make subprime mortgage loans and thus bear a major responsibility for the collapse of the housing market.

In light of recent evidence linking ACORN to possible criminal activity, Democrats took an unprecedented step today to give ACORN a potential role alongside bank regulators in overseeing financial institutions. This is contrary to recent actions taken by the Senate and House to block federal funds to ACORN. ...

Are we Dunn yet?
...Then, those enterprising little ferrets at Fox News dug up some old video of Dunn from a January conference in the Dominican Republic, where she talked about Obama campaign media strategy.

Now we're steamed!

"One of the reasons we did so many of the David Plouffe videos was not just for our supporters, but also because it was a way for us to get our message out without having to actually talk to reporters," she said (emphasis added). "We just put that out there and made them write what Plouffe had said as opposed to Plouffe doing an interview with a reporter. So it was very much we controlled it as opposed to the press controlled it."

Right. Because when you are running on "transparency" and more to the point, "accountability," it's just a pesky time-waster having to actually talk to reporters, about policy and positions and whatnot. Better to just issue a video press release and refuse their quarrelsome little entreaties! They should be grateful for that much!...

Justice concludes black voters need Democratic Party
KINSTON, N.C. | Voters in this small city decided overwhelmingly last year to do away with the party affiliation of candidates in local elections, but the Obama administration recently overruled the electorate and decided that equal rights for black voters cannot be achieved without the Democratic Party.

The Justice Department's ruling, which affects races for City Council and mayor, went so far as to say partisan elections are needed so that black voters can elect their "candidates of choice" - identified by the department as those who are Democrats and almost exclusively black.

The department ruled that white voters in Kinston will vote for blacks only if they are Democrats and that therefore the city cannot get rid of party affiliations for local elections because that would violate black voters' right to elect the candidates they want. ...

Let's Counterfeit Our Way to Wealth
There are many reports that the Obama economics team is using a multiplier of 1.5 to estimate the effects of government spending. The theory of the multiplier is that $100 of government spending is supposed to "stimulate" the production of $150 in increased wealth.

Obama also believes that the multiplier for tax cuts is only about 1, so much more wealth is created when the government spends money collected from taxpayers than when the taxpayers spend that money. The idea is that the taxpayers might save some of that money, so it won't flow around and create wealth.

Obama believes that the government can spend so that its dollars go to people who won't save any of it. They will help the rest of us by spending it all. They will be doing their patriotic duty while they watch big-screen TV's and eat at expensive restaurants.

Obama's team is making this stuff up as they go along. It can't possibly be true. But, being in a good mood, let's assume that it is true. Then the following is also true.

We should immediately license counterfeiters.

Read more ...

Anyone who can produce good looking paper money should be licensed to print up as much as possible, after agreeing to give it to people who are likely to respend it immediately. That would be anyone working for minimum wage, the obviously unemployed, or even friends who would take the oath to spend, spend, spend.

This meets all of the conditions that the government likes for its own programs...

3,000 NHS staff get private care
THE National Health Service has spent £1.5m paying for hundreds of its staff to have private health treatment so they can leapfrog their own waiting lists.

More than 3,000 staff, including doctors and nurses, have gone private at the taxpayers’ expense in the past three years because the queues at the clinics and hospitals where they work are too long.

Figures released under the Freedom of Information act show that NHS administrative staff, paramedics and ambulance drivers have also been given free private healthcare. This has covered physiotherapy, osteopathy, psychiatric care and counselling — all widely available on the NHS.

“It simply isn’t fair to have one service for staff and another for everyone else,” said Norman Lamb, the Liberal Democrat health spokesman, who obtained the figures....

Health Costs and History
Washington has just run a $1.4 trillion budget deficit for fiscal 2009, even as we are told a new health-care entitlement will reduce red ink by $81 billion over 10 years. To believe that fantastic claim, you have to ignore everything we know about Washington and the history of government health-care programs. For the record, we decided to take a look at how previous federal forecasts matched what later happened. It isn't pretty.

Let's start with the claim that a more pervasive federal role will restrain costs and thus make health care more affordable. We know that over the past four decades precisely the opposite has occurred. Prior to the creation of Medicare and Medicaid in 1965, health-care inflation ran slightly faster than overall inflation. In the years since, medical inflation has climbed 2.3 times faster than cost increases elsewhere in the economy. Much of this reflects advances in technology and expensive treatments, but the contrast does contradict the claim of government as a benign cost saver.

Next let's examine the record of Congressional forecasters in predicting costs. Start with Medicaid, the joint state-federal program for the poor. The House Ways and Means Committee estimated that its first-year costs would be $238 million. Instead it hit more than $1 billion, and costs have kept climbing.

Thanks in part to expansions promoted by California's Henry Waxman, a principal author of the current House bill, Medicaid now costs 37 times more than it did when it was launched—after adjusting for inflation. Its current cost is $251 billion, up 24.7% or $50 billion in fiscal 2009 alone, and that's before the health-care bill covers millions of new beneficiaries.

Medicare has a similar record. In 1965, Congressional budgeters said that it would cost $12 billion in 1990. Its actual cost that year was $90 billion. Whoops. The hospitalization program alone was supposed to cost $9 billion but wound up costing $67 billion. These aren't small forecasting errors. The rate of increase in Medicare spending has outpaced overall inflation in nearly every year (up 9.8% in 2009), so a program that began at $4 billion now costs $428 billion. ...

Treasury Inc.: The Shadow National Debt
...When Peter Orszag ran the Con­gres­sional Bud­get Office, he fought the Bush admin­is­tra­tion over con­sol­i­dat­ing Fan­nie and Freddie’s debt into the national bud­get. His posi­tion was that two prin­ci­ples of gov­ern­ment account­ing require consolidation. Principle one, we con­trol these com­pa­nies; prin­ci­ple two, we guar­an­tee their debt. For more, take a look at, after I tes­ti­fied on this issue here, this press release from the Con­gres­sional House Over­sight Com­mit­tee about how I dis­cov­ered the prob­lem described in this post.

Orszag has been notice­ably silent since join­ing the Obama Administration. Omitting appro­pri­ate lia­bil­i­ties from our government’s books is decep­tive, allows us to bor­row more than we should and feeds our habit for deficit spending.

The admin­is­tra­tion dis­putes its con­trol of TARP com­pa­nies. Yet the gov­ern­ment tells GM what kind of cars to build and GM and Cit­i­group which direc­tors to elect. It tells Fan­nie and Fred­die which mort­gages to subsidize. Secretary Gei­th­ner affirms that we stand behind the banks, which means we stand behind their debt as well. Budget con­sol­i­da­tion prin­ci­ple one, check. Prin­ci­ple two, check.

This doesn’t mean we should con­sol­i­date debt of all com­pa­nies tak­ing TARP money, and gov­ern­ment account­ing prin­ci­ples aren’t fully pre­pared for this unique situation. Since the gov­ern­ment is act­ing like a pri­vate investor by pur­chas­ing com­mon stock, pri­vate finan­cial account­ing prin­ci­ples also pro­vide use­ful guidance.

The first use­ful rule in finan­cial account­ing is that con­sol­i­da­tion of debt is appro­pri­ate where a par­ent com­pany con­trols another com­pany by own­ing a major­ity of its stock. This cov­ers GM at 60% Trea­sury own­er­ship, AIG at 85%, and Fan­nie Mae and Fred­die Mac at 100%. The sec­ond rule is that even if a share­holder has less than 50% own­er­ship, if the equity and non-equity posi­tion of the par­ent com­bined make it the ben­e­fi­ciary of most of the company’s future prof­its, con­sol­i­da­tion will also be appro­pri­ate. This should clearly cover Cit­i­group, with 34% gov­ern­ment own­er­ship (pur­chased with $40 bil­lion of TARP money) and an addi­tional $301 bil­lion in out­stand­ing guar­an­tees from Treasury.

Look only at the out­stand­ing debt of these five TARP com­pa­nies (out of over 600 of them). Cit­i­group has $1.8 tril­lion in debt; AIG, $807 bil­lion; Fan­nie and Fred­die, $5.2 tril­lion; and GM, $10 bil­lion. This means the Admin­is­tra­tion is hid­ing $7.8 tril­lion of the national debt. (As a com­par­i­son, Bernie Mad­off hid $50 bil­lion in other people’s money and is reviled as the crook of the cen­tury. The cur­rent admin­is­tra­tion, by the way, is hid­ing $7.8 tril­lion of the nation’s debt.)...

The Politics Don't Add Up
President Obama has said he will not sign a health care reform bill unless it's paid for. If it doesn't lower costs, he will suggest spending cuts to make sure the deficit doesn't grow. That's a promise he says he will keep. But what about future presidents and members of Congress?

The question is not exactly a hypothetical: Today's rush to send money to seniors gives us a pretty good idea of the answer. For the first time since 1975, the Social Security Administration has announced, seniors will not receive an annual cost-of-living adjustment in their Social Security benefits. The move makes good policy sense—the formula used by the SSA shows the cost of living has not increased in the past year. But it's also politically unpopular. That's why members of Congress and the president are trying to give seniors more money....

...The former policy director for the McCain campaign, now with the Manhattan Institute, wasn't quibbling with the CBO's math. He just didn't think future politicians would keep the promises the bill was holding them to. According to one proposal, for example, if health care savings don't materialize in the coming years, automatic cuts in health care funding will kick in. Holtz-Eakin, not unreasonably, sees this as unlikely. Budget experts also worry that Congress will not reduce payments to providers as scheduled or follow through with planned Medicare cuts.

"There's been discussion of taking behavioral economics into account when assessing health care reform," says Marc Goldwein, policy director of the Committee for a Responsible Federal Budget. "We also have to take into account behavioral politics. Political history teaches us that it's unlikely that there will be nominal cuts."

If Congress faces pressure from voters or from powerful lobbies like doctors, it could buckle and pass legislation that gets around the law (as it has repeatedly in saving doctors from cuts in payments). It's not so far-fetched: It's happening right now with Social Security. Cost of living increases are meant to help seniors maintain purchasing power, not increase it. Deflation and other factors actually mean that seniors should get a negative COLA, but law prohibits the COLA from being less than zero. ...

'War on Terror' II
We know the rules by now, the strange conventions and stilted Kabuki scripts that govern our cartoon facsimile of a national security debate. The Obama administration makes vague, reassuring noises about constraining executive power and protecting civil liberties, but then merrily adopts whatever appalling policy George W. Bush put in place. Conservatives hit the panic button on the right-wing noise machine anyway, keeping the delicate ecosystem in balance by creating the false impression that something has changed. We've watched the formula play out with Guantánamo Bay, torture prosecutions and the invocation of "state secrets." We appear to be on the verge of doing the same with national security surveillance.

Last week, the Senate Judiciary Committee seemed to abandon hope of bringing any real change to the Patriot Act. A lopsided and depressingly bipartisan majority approved legislation that would reauthorize a series of expanded surveillance powers set to expire at the end of the year. Several senators had proposed that reauthorization be wedded to safeguards designed to protect the privacy of innocent Americans from indiscriminate data dragnets--but behind-the-scenes maneuvering by the Obama administration ensured that even the most modest of these were stripped from the final bill now being sent to the full Senate. ...

...The supposed rationale for rejecting these changes--many of which the very same Judiciary Committee had unanimously favored just four years earlier--was that any new limitations on broad search powers might interfere with an "ongoing investigation." During hearings, one Justice Department official had alluded to an "important, sensitive collection program" involving 215 orders, and Attorney General Eric Holder publicly implied--though he did not state outright--that the new powers had played a crucial role in the capture of alleged bomb plotter Najibullah Zazi.

But there is ample reason for doubt. According to a report on National Public Radio, intelligence officers became aware of Zazi thanks to a tip from Pakistani intelligence indicating that he had trained with Al Qaeda. Such a tip should have provided grounds for a full-blown FISA wiretap warrant, and would have far surpassed the mere "reasonable basis" to suspect a terror link that even the most aggressive reform proposals required for NSLs or 215 orders. Democratic Senator Dick Durbin complained that "the real reason for resisting this obvious, common-sense modification of Section 215 is unfortunately cloaked in secrecy," and worried that posterity would look unkindly on his colleagues once that cloak was lifted. Feingold, too, disputed that his reforms would hamper investigations, and hinted that classified briefings had revealed uses of Section 215 that he considered abuses of the power. ...

Tax Collapse
I've talked a lot about the way that making our tax system more progressive has made tax revenues more volatile--they're higher when the economy is booming, and lower when the economy is in depression. ...

...Income taxes, especially corporate income taxes, are sharply off. But revenue from the payroll tax, which is our most regressive, basically hasn't dropped at all. ...

Rush Limbaugh and the Race Hustle
...those “angels of history” on the Left—labor unions, Woodrow Wilson, FDR, and LBJ—committed some of the worst racist actions in our history. The Left ignores (or “contextualizes”) Wilson’s segregation of the federal government, LBJ’s declaration that an anti-lynching bill was worse than lynching itself, or FDR’s defense of quotas to keep Jews from overwhelming Harvard (where he sat on the Board of Trustees). FDR also wrote that interracial “mingling” (marriage) produced “horrific results.” As president, FDR blocked Jewish refugees from Nazi Germany and interned Japanese Americans during World War II. Not surprising.

It is time for so-called liberals to give up the race hustle and learn their history. In so doing, they may discover some heroes of the classic liberal sort—neither Left nor Right—but committed to racial freedom and equality.

Fewer Americans See Solid Evidence of Global Warming
...There has been a sharp decline over the past year in the percentage of Americans who say there is solid evidence that global temperatures are rising. And fewer also see global warming as a very serious problem – 35% say that today, down from 44% in April 2008....

...The decline in the belief in solid evidence of global warming has come across the political spectrum, but has been particularly pronounced among independents. Just 53% of independents now see solid evidence of global warming, compared with 75% who did so in April 2008. Republicans, who already were highly skeptical of the evidence of global warming, have become even more so: just 35% of Republicans now see solid evidence of rising global temperatures, down from 49% in 2008 and 62% in 2007. Fewer Democrats also express this view – 75% today compared with 83% last year....

Tarp inspector threatens subpoena
...“Unfortunately, several decisions by Treasury – including Treasury’s refusal to require Tarp recipients to report on their use of Tarp funds, its less-than-accurate statements concerning Tarp’s first investments in nine large financial institutions, and its initial defence of those inaccurate statements – have served only to damage the government’s credibility and thus the long-term effectiveness of Tarp,” says the special inspector general’s quarterly report to Congress due to be published later on Wednesday.

Mr Barofsky has his critics in Congress and the administration, who claim that the reports are sometimes light on substance.

His threat to use legal powers to seize documents relates to the public-private investment partnership, the scheme whereby Treasury and Federal Reserve debt and equity is used alongside an investment by private companies to encourage the sale of toxic assets from banks’ balance sheets....

Fight Over Medicare Cuts Plays Into Larger Debate
WASHINGTON -- Senators battled Tuesday over legislation to forestall a cut in Medicare payments to doctors, trying to seize the advantage in the larger health debate.

Medicare's reimbursement schedule calls for a 21% drop in payments to doctors beginning in January. Top Democrats are proposing to upend that arrangement and instead freeze doctor payments at this year's level for the next decade. They seek to do so in a bill -- separate from the overhaul legislation -- that they said would shore up the government health program for the elderly.

Republicans and some Democrats questioned the price of the Medicare measure -- $247 billion over 10 years -- and said proponents haven't offered any new revenue sources or spending cuts to offset the cost.

The Senate's No. 2 Republican, Jon Kyl of Arizona, complained that the change in doctor payments was being taken out of the broader bill -- which President Barack Obama has promised won't raise the federal budget deficit -- and moved as a freestanding measure. "I see it as a transparent attempt to take the deficit off the table," he said.

Supporters of the bill say the sharp payment cuts, unless reversed, would encourage doctors to stop seeing Medicare patients....

Monday, October 19, 2009

Bank of America Corporation Q3 2008 Earnings Call Transcript
...We continue to see deterioration in our community reinvestment act portfolio which totals some 7% of the residential book. Additionally, California and Florida which combined comprise 42% of the legacy Bank of America balances drove 62% of the net losses through August.

The annualized loss rate from the CRA book was 1.26% and represented 29% of the residential mortgage net losses. ...

The War is Lost
...Over those months, I came to a simple realization. After seven years of reporting in the region, I did not fully understand how extreme many of the Taliban had become. Before the kidnapping, I viewed the organization as a form of "Al Qaeda lite," a religiously motivated movement primarily focused on controlling Afghanistan.

Living side by side with the Haqqanis' followers, I learned that the goal of the hard-line Taliban was far more ambitious. Contact with foreign militants in the tribal areas appeared to have deeply affected many young Taliban fighters. They wanted to create a fundamentalist Islamic emirate with Al Qaeda that spanned the Muslim world.

I had written about the ties between Pakistan's intelligence services and the Taliban while covering the region for The New York Times. I knew Pakistan turned a blind eye to many of their activities. But I was astonished by what I encountered firsthand: a Taliban mini-state that flourished openly and with impunity.

The Taliban government that had supposedly been eliminated by the 2001 invasion of Afghanistan was alive and thriving.

All along the main roads in North and South Waziristan, Pakistani government outposts had been abandoned, replaced by Taliban checkpoints where young militants detained anyone lacking a Kalashnikov rifle and the right Taliban password. We heard explosions echo across North Waziristan as my guards and other Taliban fighters learned how to make roadside bombs that killed American and NATO troops.

And I found the tribal areas -- widely perceived as impoverished and isolated -- to have superior roads, electricity and infrastructure compared with what exists in much of Afghanistan. ...

Sunday, October 18, 2009

Why Liberals Kill
...What too few Americans realize—especially the president’s anti-war supporters, who accuse him of betraying liberal or "progressive" values—is that if he accedes to General Stanley McChrystal's request for more troops in Afghanistan and intensifies the drone attacks in Pakistan, he will follow squarely in the footsteps of the great liberal statesmen he has cited as his role models. Though opponents of the wars in Iraq and Afghanistan cheered loudly when Obama spoke reverentially in his campaign speeches of Theodore Roosevelt, Woodrow Wilson, Franklin Roosevelt, Harry Truman, and John F. Kennedy, those heroes of the president promoted and oversaw U.S. involvement in wars that killed, by great magnitudes, more Americans and foreign civilians than all the modern Republican military operations combined.

What should be even more troubling to those who call themselves progressives but oppose the current wars: Obama's motivations for pursuing them are rooted in the central tenet of progressivism, enunciated by his idols, that the American national government is responsible for the reform and uplift of those "we" deem to be living below "our" standards, and that "they" must be protected from their oppressors. Obama's role models followed the logic of that moral calling to the ends of the earth.

And though liberals are routinely chastised for their "secular relativism," as Bill O'Reilly puts it, liberal statesmen who waged the largest wars were driven by the Christian doctrine of "good works," often enunciated in Obama's speeches as the duty to be "our brother's keeper." Whereas the traditional conservative notion of Christian communal obligation is limited to one’s family or nation, Obama’s political ancestors extended it to the world.

Both Theodore Roosevelt and Woodrow Wilson declared that God had given American leaders—"Christ's Army," according to Wilson—the divine duty to "improve" the backward peoples of America and the world. Roosevelt and Wilson used that rationale to establish modern progressivism and American imperialism, both of which were part of what Roosevelt called "the long struggle for the uplift of humanity." They argued that greater government intervention, through social welfare and regulatory programs at home and military incursions abroad, would remake American slums and all the countries of the world into the Puritan ideal of a "city on a hill."

To fulfill this mission, Roosevelt championed many social-welfare measures, including pure-food and worker-safety regulations, but he also pushed the United States to attack Spain and occupy Cuba and the Philippines—the so-called Spanish-American War, which historians characterize as America's "first imperial war.” The assault and subsequent occupations resulted in the deaths of more than 10,000 Cubans, several hundred thousand Filipino civilians, and 4,541 American soldiers.

Wilson believed that to "Christianize the world" required the radical expansion of government power. Along with fellow progressives in Congress, Wilson established three classic progressive institutions: the Federal Trade Commission, the Federal Reserve Board, and the federal income tax. But Wilson's self-appointed obligation to rescue and “redeem” all the world's people compelled him, beginning in 1916, to push the country toward intervention in Europe with what many historians call a "missionary zeal." The United States, he said, "must assume the messianic mantle" and had "the right and duty to intervene whenever and wherever" its leaders thought necessary. Some 116,000 U.S. servicemen were killed and more than 200,000 wounded in World War I, which ended in a virtual stalemate....

Wall Street Fat Cats Aren't at Fault This Time
...The self-proclaimed angels in Washington will tell you they’ve been working tirelessly to expand the American dream of homeownership by making mortgages available to people unable to plunk down 20 percent on a house. Franklin Raines, the Clinton-appointed former head of Fannie Mae from 1998 to 2004, made it his top priority to make mortgages easier to get for people with poor credit, few assets and little money for a down payment.

The fine print to this noble intent was an ill-conceived loosening of standards. For instance, the Clinton administration reinterpreted the Jimmy Carter-era Community Reinvestment Act to politicize lending practices. Under the CRA, the government forced banks to prove they weren’t “redlining” — i.e., discriminating against minorities — by approving loans to minorities and various left-wing “community group” shakedown artists whether they were bad risks or not. (A young Barack Obama got his start with exactly these sorts of groups.) Sen. Phil Gramm called it a vast extortion scheme against America’s banks. Still, the banks were perfectly happy to pass the risky loans to Raines’ Fannie Mae, which was happy to buy them up

That’s because Raines was transforming Fannie Mae from a boring but stable financial institution dedicated to making homes more affordable into a risky venture that abused its special status as a “Government Sponsored Enterprise” (GSE) for Raines’ personal profit. Fannie bought the bad loans and bundled them together with good ones. Wall Street was glad to buy up these mortgage securities because Fannie Mae was deemed a government-insured behemoth “too big to fail.” And others followed Fannie’s lead....

How HUD Mortgage Policy Fed The Crisis
In 2004, as regulators warned that subprime lenders were saddling borrowers with mortgages they could not afford, the U.S. Department of Housing and Urban Development helped fuel more of that risky lending.

Eager to put more low-income and minority families into their own homes, the agency required that two government-chartered mortgage finance firms purchase far more "affordable" loans made to these borrowers. HUD stuck with an outdated policy that allowed Freddie Mac and Fannie Mae to count billions of dollars they invested in subprime loans as a public good that would foster affordable housing.

Housing experts and some congressional leaders now view those decisions as mistakes that contributed to an escalation of subprime lending that is roiling the U.S. economy.

The agency neglected to examine whether borrowers could make the payments on the loans that Freddie and Fannie classified as affordable. From 2004 to 2006, the two purchased $434 billion in securities backed by subprime loans, creating a market for more such lending. Subprime loans are targeted toward borrowers with poor credit, and they generally carry higher interest rates than conventional loans.

Today, 3 million to 4 million families are expected to lose their homes to foreclosure because they cannot afford their high-interest subprime loans. Lower-income and minority home buyers -- those who were supposed to benefit from HUD's actions -- are falling into default at a rate at least three times that of other borrowers. ...

At Freddie Mac, Chief Discarded Warning Signs
...Indeed, executives of both companies maintain that one of the reasons the firms hold so many bad loans is that Congress has leaned on them for years to buy mortgages from low-income borrowers to encourage affordable housing. In 2004, Freddie Mac warned regulators that affordable housing goals could force the company to buy riskier loans....

...However, the companies were constantly under pressure to buy riskier mortgages. Once, a high-ranking Democrat telephoned executives and screamed at them to purchase more loans from low-income borrowers, according to a Congressional source. Shareholders attacked the executives for missing profitable opportunities by being too cautious.

Mr. Syron and Mr. Mudd eventually yielded to those pressures, effectively wagering that if things got too bad, the government would bail them out.

“The thinking was that if something really bad happened to the housing market, then the government would need Freddie and Fannie more than ever, and would have to rescue them,” Mr. Andrukonis said. “Everybody understood that at some level the company was putting taxpayers at risk.” ...

Regulating Fannie Mae and Freddie Mac (May 2005)
...Congressman Richard Baker (R-La.) has been concerned about the risks created by Fannie and Freddie since 2000, when he first introduced legislation to augment the powers of their regulator. However, the alignment of the political stars was so unfavorable at the time that Baker--then the chairman of the House subcommittee that had jurisdiction over the GSEs--could not find sufficient support for his bill to bring it to formal consideration and possible amendment by the subcommittee (what is known as "mark-up"). Successive bills in 2002 and 2003 met similar fates, although the threat of legislation brought Fannie and Freddie to agree to modest changes in their financial procedures and voluntary registration of their equity securities under the Securities Exchange Act of 1934.

Then, in June 2003, came what in retrospect appears to have been the turning point. As part of the fallout from Enron and WorldCom, Freddie Mac decided to engage new auditors, replacing Arthur Andersen. The new auditors found discrepancies in the company's financial reports, and an independent counsel was engaged to do an investigation. The investigation showed that Freddie had manipulated its earnings in order to reduce reported volatility, and--perhaps more important--one of Freddie's senior managers seemed to have taken steps to obstruct the investigation. As a result, Freddie dismissed its three top officers, an action that apparently came as a complete surprise to the Office of Federal Housing Enterprise Oversight (OFHEO), the company's regulator. OFHEO was embarrassed by its failure to discover on its own the facts that led to the dismissal of Freddie's top officers--or even that there was an internal investigation that might lead to their dismissal--and its ability effectively to regulate the GSEs was publicly called into question.

This event seems to have precipitated major changes in the views and behavior of the three principal government groups that had the power to affect the future of Fannie and Freddie. The administration became engaged, seemingly for the first time, in considering the risks associated with both companies; OFHEO metamorphosed from a butterfly into a wasp; and members of Congress started to take Chairman Baker's legislation more seriously. The result was a compete change in the atmosphere surrounding the GSEs. Suddenly, administration figures--representatives of Treasury, the Department of Housing and Urban Development, the Council of Economic Advisers, and the Office of Management and Budget, among others--began making public statements criticizing the GSEs, questioning their role in the housing market and the risks they were creating for taxpayers and the economy. Federal Reserve chairman Alan Greenspan, citing these same risks, weighed in with letters to lawmakers and testimony supporting stricter regulation and even privatization. OFHEO vowed tougher regulation, and sought and received funds from Congress to do a forensic audit of Fannie, arguing that if Freddie had manipulated its financial results Fannie may also have done so. As a result of these steps and disclosures, the GSEs' share prices, which had been stable over several years, began a significant decline. Investors were either losing confidence in the companies, or were unwilling to absorb the constant headline risk to which the companies were subject....

...In the fall of 2004, OFHEO reported that Fannie Mae had also manipulated its accounting, and to a degree far more significant than what Freddie had done. At a dramatic hearing in Richard Baker's subcommittee, Fannie's chair, Franklin Raines, stood by the company's accounting, claiming that Fannie was being victimized by an overzealous regulator and its accounting position would eventually be vindicated by the Securities and Exchange Commission (SEC), which had been asked to review the disputed accounting. The tenor of things in Congress was still so supportive of the GSEs that Armando Falcon, the director of OFHEO, received a far more hostile reception than Raines got in Baker's subcommittee. Nevertheless, most accounting specialists viewed Raines's position as unsupportable, and many questioned his judgment both in making a frontal assault on his regulator and in making statements under oath that might later put him in jeopardy. Weeks later, the SEC's chief accountant dismissed Raines's contentions, famously holding up a piece of paper and telling Raines to his face that Fannie's position on the relevant accounting was not even "on the page" of allowable interpretations. Shortly thereafter, Fannie announced that Raines had resigned as chairman and CEO. Both the Justice Department and the SEC have begun investigations of Fannie's accounting, and the company has dismissed its former auditors and retained an independent counsel to conduct an investigation of its own accounting....

Mortgage Madness, Again
Watching Washington policymakers in action, I sometimes think they make mistakes because of unrealistic goals, flawed thinking, blind obedience to party, or dubious information. And sometimes I think they make mistakes because they are—how to put this?—clinically insane.

There is no other way to explain what is going on at the Federal Housing Administration, which provides federal guarantees for home mortgages. Given the collapse in real estate prices, the weak economy, and the epidemic of foreclosures, banks are acting with more caution than before. They now commonly require home buyers to make down payments of 20 percent to qualify for a loan. But the FHA often requires only 3.5 percent.

That's the equivalent of playing pool with a guy named Snake, and it's had two predictable effects. The first is that the agency is insuring about four times as many home loans as it did just three years ago. The other is that the number of FHA-approved borrowers who are not repaying their loans is climbing. Since last year, the default rate has jumped by 76 percent.

Another likely consequence looms: you and I eating the losses. A former executive of mortgage giant Fannie Mae told a congressional subcommittee that the FHA "appears destined for a taxpayer bailout in the next 24 to 36 months." Commissioner David Stevens had to assure the subcommittee that it would not need help—well, unless there is a "catastrophic home price decline."

Obama administration promotes junky, risky mortgages at taxpayer expense, ignoring history’s lessons
George Mason University Professor Ilya Somin explains how the Obama administration is expanding the awful policies that caused the mortgage crisis, like having taxpayers effectively underwrite risky-mortgage loans by bailing out GSEs at a cost of hundreds of billions of dollars. Now, the administration is stepping up Federal Housing Administration subsidies for risky, junky mortgage loans that are likely to default in large numbers.

(The Obama administration doesn’t seem to have learned history’s lessons overseas, either. White House Communications Director Anita Dunn cites as her favorite political philosopher the Chinese communist tyrant Mao Zedong. That may explain why it has sometimes pursued left-wing policies overseas.)

President Obama is also pushing for financial regulations that reinforce the worst features of the status quo. They would increase pressure on lenders to make the risky, low-income loans that helped spawn the financial crisis. At the same time, they would worsen the credit crunch by shutting down banking operations known as “industrial loan corporations,” that are convenient for consumers. Earlier, Obama backed a new law that is wiping out many credit-card rewards programs and rebates, and leading to the return of annual fees on some credit cards.

Even though Obama’s proposals would lead to even more junky loans in the future, both he and Senate banking chairman Chris Dodd (D-CT) claim that his proposals would fight the “status quo.” But they are part of the status quo. Dodd is famously corrupt, having received sweetheart loans from the reckless, bankrupt subprime lender Countrywide, and having received a massive gift from a crook, Edward Downe, in the form of a luxurious “cottage” in Ireland he received in a “cut rate real estate deal” for hundreds of thousands of dollars less than fair market value. Obama was the third biggest recipient in Congress of campaign contributions from the government-sponsored mortgage giants Fannie Mae and Freddie Mac, which went broke, costing taxpayers perhaps $200 billion. (Fannie Mae was a corrupt bully that engaged in massive accounting fraud and used intimidation to fight reform.)...

Friday, October 16, 2009

Mickey's Assignment Desk: Explain Away the Health Care Shell Game, Please!
Mickey's Assignment Desk: Senate Dems quietly move a bill to countermand a 21% cut in Medicare fees for doctors, which will add $247 billion to the deficit over ten years. Of course, the Baucus health care reform bill achieves its famed deficit neutrality through cuts in Medicare fees, mainly to non-physicians--saving (by my reading of the CBO analysis) at least $184 billion from Medicare over the same period. Plus there is a special panel set up to recommend further cuts.

Jonathan Cohn and Ezra Klein might productively explain a) Why this isn't a shell game, with Dems granting Medicare increases in one bill and then taking ostentatious credit for partly-offsetting cuts in a separate bill; b) Why Congress' unwillingness to put up with the scheduled Medicare doctors' cuts this year doesn't indicate that it won't put up with scheduled cuts in future years--that, as Megan McArdle among others argues, the projected Medicare cuts in Baucus' bill simply won't happen. ......