Saturday, September 20, 2008

Yes, Republicans Can Like Obama Too

Yes, Republicans Can
Mother Jones
September/October 2008 Issue


At the grassroots, the "Republicans for Obama" movement has been growing for a while.

According to Steve Robin, a land-use attorney in Leesburg, VA, who describes himself as an independent, his conservative friends have been surprisingly open to Obama's candidacy, in large part due to the senator's "distinctive personality" and "the strength of his charisma." "Dyed-in-the-wool Republicans are saying Obama is not that awfully bad," he says.

In late June, Obama's campaign manager, David Plouffe, told reporters that he expects to put significant effort (read: money) into the fight for states like Virginia, noting that if Obama wins Iowa in addition to the states won by John Kerry in 2004 he could reach the White House by bagging just a couple more medium-size swing states. And, Plouffe added, in purple states like Virginia the campaign will be relying on Republican and independent Obama enthusiasts to proselytize to friends and relatives as part of a "persuasion army."

Read the Full Article

Obama's Economic Blueprint for Change

Joe Biden On The Economy

Notice the CBS News interviewer push Republican/McCain negative talking points against Senator Obama in the way she phrases her questions in the following interview. Biden pushes back hard!


Notice NBC Today host Meredith Vieira push Republican/McCain negative talking points against Senator Obama in the way she also phrases her questions in the following interview. Biden pushes back hard on Vieira's questions too!

Biden: McCain pedling 'Republican garbage'

Clinton Unveils Obama GOTV Effort

"Today I am asking all of you to stand up with me, to hit the road and spread the word that we must elect Barack Obama president and send a Democratic, filibuster-proof majority to Congress," Clinton told supporters in a conference call Friday.

"This is a call to action, a must-do. We all have a role. And there is not a moment to lose." Clinton said the outreach "continues the historic journey that you have made with me."
Photo of Clinton at a rally for Obama event in Ohio on Sept 16th.
Read more at HuffingtonPost.com

Many Democratic groups and organizations in Collin County are actively working Voter Registration and Get Out The Vote activities today. All of these campaign groups and political organizations need volunteers. Please answer Hillary's call to form a large army of Democratic volunteers to help Get Out The Vote! Call one of these groups today to volunteer:
Note: The boundaries of the 3rd Texas Congressional District and the 4th Texas Congressional District meet in Collin County. Your U.S. House of Representatives TX Congressional District Number can be found on your 2008 Orange Voter's Registration Card within the box titled "Congress."

Please vote early this year - you'll be glad you did. The first day of early voting is Monday October 20th.

McCain Describing His Own Behavior In Atack On Obama


A former Fannie Mae executive has written to The New York Times in an effort to escalate Democrats' pushback to a McCain campaign ad accusing Sen. Barack Obama (D-Ill.) of guilt by association with former officials of the mortgage giant. The McCain ad, called "Advice," says: "Fannie Mae collapsed. Taxpayers? Stuck with the bill. Barack Obama. Bad advice. Bad instincts. Not ready to lead."
The former executive's letter, not yet published, was provided to Politico.com:

To The Editor:

Yesterday, Senator John McCain released a television commercial attacking Barack Obama for allegedly receiving advice on the economy from former Fannie Mae CEO Franklin Raines. From the stump, he has recently tried tying Senator Obama to Fannie Mae, as if there is some guilt in the association with Fannie Mae's former executives.

It is an interesting card for Senator McCain to play, given that his campaign manager, Rick Davis, was paid by Fannie Mae and Freddie Mac several hundred thousand dollars early in this decade to head up an organization to lobby in their behalf called The Homeownership Alliance. ...

I worked in government relations for Fannie Mae for more than 20 years, leading the group for most of those years. When I see photographs of Sen. McCain's staff, it looks to me like the team of lobbyists who used to report to me. Senator McCain's attack on Senator Obama is a cheap shot, and hypocritical.

Sincerely,

William Maloni
Fannie Mae Senior Vice President for Government and Industry Relations (1983-2004)

McCain Advocates Deregulating Health Care Like He Deregulated Wall Street

John McCain published an article titled, Better Health Care at Lower Cost for Every American, in the Sept./Oct. issue of Contingencies, the magazine of the American Academy of Actuaries. In his article, McCain attempts to make his case for deregulating the health insurance industry by extolling the benefits of the last decade of deregulation in the banking sector. McCain advocates a fully unregulated market-based health care system just like the now collapsing deregulated market-based financial market system that he, Phil Gramm and other Conservative Republicans created. McCain writes:
Opening up the health insurance market to more vigorous nationwide competition, as we have done over the last decade in banking, would provide more choices of innovative products less burdened by the worst excesses of state-based regulation.
In the last two days McCain has flip-flopped and is now talking like a market regulator while attempting to blame Obama for the financial system collapse brought on by McCain's own two decade long push to deregulate financial markets.

Friday, September 19, 2008

The Contrast: Barack Obama vs. John McCain

Republicans Spending Borrowed Money Worse Than Drunken Sailors

The United States became a net debtor under Reagan and these debts have grown rapidly under Bush 41 and Bush 43. Only under Clinton was the debt rolled back.

New government estimates released mid-September 2008 forecast that the federal government will be in a deeper a $546 billion deficit hole in 2009. (October 7, 2008 update - With the cost of the Wall Street Bailout added to the deficit, the new 2009 deficit projection approaches $950 billion)

In January 2001, the month President Bush took control of America from President Clinton, the Congressional Budget Office released budget estimates for each of the next ten years (2002-2011).

As Clinton left office the CBO predicted that the 2009 budget would show a $710 billion surplus. So the $546 billion deficit now predicted for 2009 is actually $1.3 trillion worse than CBO predicted nearly eight years ago. $1 trillion worth of the deficit deteriation is directly due to actions by the White House and Congress since 2001 -- specifically, the tax cuts and spending increases they enacted. The new $500 billion-plus deficit numbers represent about 3.5 percent of the economy, which is the deficit measure seen as most relevant by economists.

The two main reasons why the 2009 budget will be so much worse than CBO had predicted in 2001 are Republican tax cuts and increases in military and other security-related spending.

Tax cuts alone account for 42 percent of the budgetary deterioration for 2009 that stems from policymakers' actions since 2001. Increases in military and other security programs account for another 39 percent. Combined, these two factors account for 82 percent of the budget decline that is due to policy actions.

The tax cuts -- the largest of which by far was the giant 2001 Bush tax cut -- will cost $295 billion in 2009 alone. While nearly all taxpayers will receive some tax cut, the distribution of the tax cut benefits is highly skewed. In 2009, a typical household in the $40,000-to-$50,000 income range will receive a "Bush" tax cut of about $950; households with incomes over $1 million will receive tax cuts averaging $135,000.

The Bush administration has mis-managed the federal budget situation to an alarming degree. Although they inherited a budget surplus, they have continually spent more then they have taken in. As a result, the US is issuing debt like its going out of style. Total debt outstanding has increased from $5.8 trillion in 2001 to the current total of $9.5 trillion.

As a result of this problem, the currency markets have sent the (Trade Weighted Exchange Indexed) dollar lower for six years straight. If you were wondering why commodities in general and oil specifically have bee rallying for some time, you can thank the cheap dollar as a primary cause. The dollar has gone from peak to trough from nearly $130 to its current level of $72.75 -- or a drop of 44%. As the dollar has dropped in price, the dollar cost of commodities like crude oil and gasoline have have spiked in price for American consumers . One of the primary reason traders are bidding up commodities like oil and gasoline is as an inflation hedge.

The Republican controlled congress -- increased discretionary spending from 649 billion in 2001 to 1.041 trillion in 2007.

In short, the Republicans went on a spending spree while at the same time cutting taxes. That is a recipe for disaster.

But there is another, deeper problem at work here. The figure that is being reported is a dishonest figure because it counts the social security surplus. Remember in 2000 when Al Gore was talking about a "social security lock box"? What he was saying is we should take all of the surplus money paid into social security and not spend it now. However, that is exactly what we are doing and have been doing for a very long time. As a result, the "unified" budget deficit -- the figure reported in the press -- is, well a lie. The correct way to look at the budget deficit is to see how much debt we are issuing. And that figure is far worse than what is being reported.

Here are the yearly amounts of total debt outstanding.

09/30/2007 $9,007,653,372,262.48
09/30/2006 $8,506,973,899,215.23
09/30/2005 $7,932,709,661,723.50
09/30/2004 $7,379,052,696,330.32
09/30/2003 $6,783,231,062,743.62
09/30/2002 $6,228,235,965,597.16
09/30/2001 $5,807,463,412,200.06
09/30/2000 $5,674,178,209,886.86

The current total is $9,668,844,788,980.66. (October 7, 2008 update - With the cost of the Wall Street Bailout added to the deficit, the new total deficit projection exceeds $13 trillion - with all the zeros that's $13,500,000,000,000)

The point of all this is clear: the US' budget is structurally running a deficit to the tune of $500 billion dollars a year for the last five years. This is far worse than is being reported in the press.

Sen. John McCain promises that, as president, he would "cut taxes," mostly for corporations and wealthy individuals. But McCain's economic plan could create deficits as deep as 5.7% of GDP by the end of a two term presidency -- the highest federal budget deficit in 25 years -- and would accumulate the biggest debt since the second World War, according to a new analysis by the Center for American Progress Action Fund. McCain's current fiscal plan would recklessly exacerbate the fiscal irresponsibility of the Bush Administration further by gutting revenues far below the average level of the past 25 years.

For the past 25 years, deficits have never been more severe than 5% of GDP, with surpluses as high as 2.4% of GDP in the year 2000. Under McCain, yearly deficits would increase sharply, beginning with $505 billion in FY2009 (3.4% of GDP) and skyrocket to $1.2 trillion (5.7% of GDP) by FY2017. In 2018 these deficits would reach 6% of GDP, tied with the largest deficits since WWII. McCain's "tax cut" plan would further weaken the the (Trade Weighted Exchange Indexed) dollar value causing the cost that Americans pay for gasoline to further to climb to $5, $6, $7 or more per gallon at the pump.

Obama's economic plan would at least reduce the budget deficit growth and possibly even begin to again reduce the budget deficit. This in turn could begin to strengthen the (Trade Weighted Exchange Indexed) dollar value which would in turn begin to reduce the $4 per gallon price of gasoline back to something under $3 per gallon.

Which is more important to you - McCain's lower taxes for corporations and the wealthy creating a weaker dollar, which leads to higher gasoline prices at the pump? OR, Obama's lower taxes for everyone who earns under $250,000 per year and higher taxes on the wealthy, which will create a stronger dollar and lower gasoline prices at the pump for everyone? It's up to you, the voter, to decide!

Republican Deregulation To Cost Taxpayers $1.5 Trillion in Wall Street Bailouts

CNBC says the bailouts have cost taxpayers over $900 billion, so far:
The U.S. Federal Reserve stepped in to rescue insurance giant American International Group from bankruptcy with an $85 billion loan on Tuesday, the latest in a series of bailouts and loans for the financial and housing sectors. The action brings the total tab for government rescues and special loan facilities this year to more than $900 billion.
  • $200 billion for Fannie Mae and Freddie Mac...
  • $300 billion for the Federal Housing Administration to refinance failing mortgage[s]...
  • $4 billion in grants to local communities to help them buy and repair homes...
  • $85 billion loan for AIG...
  • At least $87 billion in repayments to JPMorgan Chase for providing financing to underpin trades with units of bankrupt investment bank Lehman Brothers...
  • $29 billion in financing for JPMorgan Chase's government-brokered buyout of Bear Stearns...
  • At least $200 billion of currently outstanding loans to banks issued through the Fed's Term Auction Facility...


The Newest Wall Street Bailout Plan announced yesterday to cost taxpayers an Additional Half Trillion Dollars:

Treasury Secretary Hank Paulson briefed Congressional leaders on plans to address the "illiquid assets" on U.S. financial institutions' balance sheets, possibly including the creation of a government facility to take on financial firms' bad debts.

The proposal to create a massive facility to buy mortgage-backed securities could cost as much as a half-trillion-dollars and would involve the purchase of both private-label and government-guaranteed mortgages, according to an administration official.

The plan would have two parts. The largest part would be the purchase of private-label (those underwritten by Wall Street) mortgages by some as-yet unnamed vehicle. Financing would occur through the sale of treasuries, the official said. That part of the plan would require congressional approval. The idea is to hold the securities to maturity. The average mortgage has a life of about 7 years.

A second part of the plan would involve the purchase by Treasury of additional government-backed (Fannie Mae and Freddie Mac) under a plan it announced several weeks ago to rescue the two government-sponsored entities. Back then, it said it would purchase $5 billion initially. The idea is to ramp up those purchases more quickly. It does not require approval by Congress. ...

CNBC first reported the creation of a Treasury plan, similar to the Resolution Trust Corp., that would take mortgage backed securities off the market. ...

A federal government plan could also involve FDIC-type protection for money market funds, according to a report in the Wall Street Journal.

It is the Republican Party's Hoover-like philosophy of no government regulation and the 1999 Financial Services Modernization banking system deregulation legislation written by McCain adviser Phil Gramm and pushed by McCain himself that helped pave the way for the 2008 financial system collapse. That deregulatory legislation allowed the very financial companies that have collapsed during 2008, to become mega-giant companies laden with self-destructing loans and investments.

Not only did McCain, and the Republican Party as a whole, push these destructive anti-regulation policies, Bush administration officials failed to step in to aggressively address the financial crisis’s first warning signs in 2007. Stephanie Pomboy, the founder of the economic consulting firm MacroMavens that has been forecasting the housing and credit crises, told Barron’s,

"We can’t resist pointing out had [President Bush's third U.S. Treasury Secretary, Henry "Hank"] Paulson and his bailout crew used their powers for ‘good’ from the get-go, they could have saved a lot of time, energy and, most importantly, money. Had they simply established a fund to buy up the surplus housing inventory, presently valued at just over $1 trillion, they could have stitched up this wound for less than they’ve spent layering Band-Aid after Band-Aid on top of it."

Alas, Paulson and the entire Bush Administration is stuck in the Republican "no government regulation" philosophical rut just like McCain, all of McCain's advisers and conservative legislators like Republican incumbent for the U.S. 3rd Texas Congressional District, Sam Johnson, age 78, Republican incumbent for the U.S. 4th Texas Congressional District, Ralph Hall, age 85, and Republican incumbent Senator John Cornyn.

Even as Paulson told congressional leaders Thursday night, "that we’re literally maybe days away from a complete meltdown of our financial system, with all the implications here at home and globally,” McCain said at a campaign stop, that the Federal Reserve needs to stop bailing out failed financial institutions and get back to "its core business of responsibly managing our money supply and inflation."

Wednesday, September 17, 2008

McCain’s Conservative "Hooverism"


Last Monday Sept 15th, one Wall Street bank, Lehman Brothers, filed for bankruptcy protection and another, Merrill Lynch, sought salvation by selling itself to Bank of America for $50 billion. Earlier this year, the government helped enable the sale of faltering investment bank Bear Stearns to J.P. Morgan Chase, and more recently took over mortgage giants Fannie Mae and Freddie Mac.

Today, Wednesday Sept 17th, the Federal Reserve (rather the American taxpayer) bailed out the mega-giant American International Group Inc. insurance company with a two-year, $85 billion loan. The Federal Deposit Insurance Corporation (FDIC) has a list of problem banks that numbers over 90. Since the California IndyMac Bank, which was declared insolvent in July, was not on the FDIC list a week before it collapsed, the number of "problem" banks might be greater than the FDIC currently understands.


Sen. John McCain (R-AZ) continues to insist that the “fundamentals of our economy are strong.” As Eric Rauchway notes in the American Prospect, McCain’s response to this economic crisis is reminiscent of President Herbert Hoover’s “the fundamentals are strong” response to the Great Depression. On October 25, 1929, a day after what is now known as Black Thursday, President Hoover declared, "The fundamental business of the country, that is the production and distribution of commodities, is on a sound and prosperous basis."

Financial system failures such as we are experiencing more and more frequently as 2008 progresses were supposed to have been prevented, or at least mitigated, by regulatory systems that the nation began to put in place after the banking system collapsed at the start of the Great Depression.

By 1932 after a decade of Republican laissez-faire government and unregulated "anything goes" excesses in the banking and securities and commodities trading systems, many banks at the time were badly wounded by their personal and financial ties to Wall Street. President Roosevelt and a wave of Democratic Senators and Congressmen won election in 1932 on the promise of a "New Deal" to clean up the economic mess left by the laissez-faire Republicans. The 1933 Glass-Steagall Act, and later the 1956 Bank Holding Company Act, mandated the separation of banks, insurance companies and securities firms.

Those and many other federal laws stabilized the banking, insurance and securities markets.

The Conservative "No Government Regulation Philosophy," that was the root cause of the 1929 Black Thursday crash, did not die out on Black Thursday 1929. Conservatives like President George W. Bush's grandfather Prescott Bush never forgave President Franklin Roosevelt for pushing the 1933 Glass-Steagall Act and other financial reform acts through Congress during the 1930's New Deal Era. Conservatives like Republican incumbent for the U.S. 3rd Texas Congressional District, Sam Johnson, age 78, Republican incumbent for the U.S. 4th Texas Congressional District, Ralph Hall, age 85, Republican incumbent Senator John Cornyn and Republican presidential candidate Senator John McCain, age 72, have never stopped their push to return the American financial system to the unregulated "anything goes" era of the 1920's.

Through this election year we have heard Senator McCain repeat time and time again,"I’m always for less regulation. But I am aware of the view [of Democrats] that there is a need for government oversight. … But I am a fundamentally a deregulator. I’d like to see a lot of the government regulations eliminated." And so, most of the government regulation that fostered a secure and robust American financial system from 1933 to the 1980's has been dismantled by conservatives, including some conservative "blue dog" Democrats.

Ronald Reagan finally led the conservative "no government regulation" movement to power in 1980 proclaiming faith in free markets and mistrust of government. That conservative philosophy of "no government regulation" has dominated America for the past 28 years. Over these last 28 years conservatives have systematically dismantled the "New Deal" and returned the American financial system to its unregulated "anything goes" status of the 1920's.

Even after taxpayers had to rescue deregulated savings and loans, or S&Ls, with a $200 billion bailout in the late 1980s, the push to loosen regulation paused only briefly.

In 1999, President Clinton signed the Financial Services Modernization Act passed by a Conservative controlled Congress, which tore down Glass-Steagall's reforms by removing the walls separating banks, securities firms and insurers. McCain joined with other Republicans to push through landmark legislation sponsored by then U.S. Senator from Texas, Phil Gramm, who is now an economic adviser to McCain's campaign. The Financial Services Modernization Act (also identified as the Gramm-Leach-Bliley Act) aimed to make the country’s financial institutions competitive by removing the Depression-era walls between banking, investment and insurance companies.


It is the Financial Services Modernization legislation written by McCain adviser Phil Gramm and pushed by McCain himself that helped pave the way for the very financial companies and banks that have failed during 2008 to become behemoths laden with bad loans and investments.

Then, in 2000, the Republican controlled Senate Banking Committee, controlled by Congress and Phil Gramm who is McCain's current financial advisor, pushed through a deregulatory exemption on electronic commodities trading without a Senate hearing or debate.

After President Bush took office his administration and the Republican controlled Congress turned their back on any responsibility to oversee the financial system.

With interest rates pushed to the floor after the events of September 11, 2001, the market grew for loans to borrowers with weak credit and private-sector mortgage bonds boomed. About 38 percent of those bonds were backed by sub-prime loans. These sub-prime loans loans, made possible by Republican deregulation, are at the root of today's financial crisis.

A generation ago, banks, credit unions and S&Ls issued home mortgages that they retained on their books as an asset. The lenders had a stake in receiving full repayment of the loans from credit-worthy borrowers.

But after deregulation, mortgages began to be sold to firms that cobbled the loans together to create mortgage-backed securities, or mortgage bonds. Loans to the least credit-worthy borrowers carried the highest risk but gave the highest returns, so banks and other institutional investors bought loads of them. Except no one was policing or even gave a second thought to the creditworthiness of the borrowers. Exactly the conditions behind the the 1929 Black Thursday crash.

Republican deregulation has cause other turmoil for American investors and consumers.

The so-called "Enron Loophole" deregulation legislation allowed Enron to speculatively exploit and manipulate electricity commodity trading in California energy markets in the summer of 2001, spawning artificial electricity shortages, steep climbs in electricity prices and rolling brownouts across California.

The "Enron Loophole" legislation was created and attached to U.S. Senate legislation in December 2000 by McCain campaign co-chair Senator Phil Gramm at the behest of Enron executives. In fact, internal Enron documents, which were released in 2002, revealed that the Houston-based company wrote the legislation for Gramm.

In 2006, the “Enron Loophole” allowed Amaranth Advisers hedge fund to shift its trades from the regulated New York Mercantile Exchange (NYMEX) to the unregulated Intercontinental Exchange (ICE) in Atlanta.

That let Amaranth corner the natural gas market, betting that futures prices would rise. The hedge fund lost about $6 billion and imploded as natural gas prices fell to a two-year low in September 2006.

The Federal Energy Regulatory Commission and the Commodity Futures Trading Commission charged that Amaranth manipulated prices paid in the physical natural gas markets. FERC has proposed $291 million in penalties and the forfeiture of “unjust profits.”


In 2008, the “Enron Loophole” has allowed a speculative free-for-all that helped drive oil prices over $135 per barrel last summer. As much as 99 percent of the market for U.S. premium crude oil is dominated by big financial firms, hedge, pension and index funds seeking short-term profits from oil's rise. Some analysts believe that as much as $70 of that $135 a barrel price was speculative froth.
In May 2008 the Commodity Futures Trading Commission, which normally keeps investigations confidential, said in a statement that it was "taking the extraordinary step of publicly disclosing an investigation into market manipulation because of the unprecedented [commodity] market conditions."

In addition to commodity trading manipulation, regulators are concerned that companies may be reporting inventory levels that benefit their own trading positions but that may not be accurate, people familiar with the regulators' thinking say. Commodity-market regulators are investigating whether energy-market players are injecting false data into the marketplace to influence perceptions about crude-oil supply and demand.

Republicans, including Texas Senator John Cornyn, have threatened to filibuster U.S. Senate business to block the efforts of Democratic Senators to close the "Enron Loophole." Obama Vows To Close "Enron Loophole."



Senate Democrats Discuss Eight Years Of Failed Bush-McCain Economic Policies