Making The Government and The Political Class Subservient To Freedom Again - Term Limits and More

Today's theme comes from a long time and very good friend of mine from my corporate employment days. I have always enjoyed and respected her smarts, drive, and passion so when she dropped an email on me today I knew it would be interesting. The email laid out some interesting changes she would like to see made to the broken  political and governmental processes we currently have in this country. Her concepts are entirely consistent with the principles of freedom and liberty laid out in our book, "Love My Country, Loathe My Government."

Before getting into the detail's of her concepts, consider what can be done when ordinary people get passionate and involved in making a better world. According to her email, the 26th amendment (granting the right to vote for 18 year-olds) took only three months eight days to be ratified. This was before email, personal computers, smart phones, Twitter, Facebook, and other modern ways to communicate. Furthermore, according to the email, of the twenty seven amendments to the Constitution, seven  took one year or less to become the law of the land...all because of public pressure.


So, let's call this movement the "Congressional Reform Act of 2011," an act that would include the following components:


1. Term Limits. This is totally consistent with Step 39 from "Love My Country, Loathe My Government" - "Restrict all United States Senators to One Six year term and all members of the House Of  Representatives to one four year term or two two year terms."

 2. No Tenure / No Pension. A Congressman collects a salary while in office and receives no pay when they are out of office. This concept is consistent with Step 9 - "Make a traditional government pension plan unavailable to all future Federal government employees including elected representatives," Step 41 - "Prohibit any Senator, Congressman, or President, whose net worth is over $3 million, from drawing a paycheck during the their term of office," and Step 42, which would require wealthy ex-Presidents to start paying for the Secret Service protection if their income and/or wealth exceeds certain thresholds.


3. Congress (past, present and future) participates in Social Security. See Step 9 above. All funds in the Congressional retirement fund move to the Social Security system immediately. All future funds flow into the Social Security system, and Congress participates with the American people.


4. Congress can purchase their own retirement plan, just as all Americans do. Also consistent with Step 9 from "Love My Country, Loathe My Government." Most Americans no longer have any chance of receiving a traditional pension. Politicians, whose pensions are paid by the very people who no longer can get a pension, should not be entitled to something most Americans can not receive.


5. Congress will no longer vote themselves a pay raise. Congressional pay will rise by the lower of CPI or 3%. This step is very consistent but slightly different from Step 37 - "Base pay raises for Congressional members on an annual customer satisfaction rating and repeal the current practice of automatically increasing Congressional pay without a vote." This approach requires that the political class actually be successful in their job before getting rewarded, much like the plight of most working Americans.

 6. Congress loses their current health care system and participates in the same health care system as the American people. No argument on this one


7. Congress must equally abide by all laws they impose on the American people. No argument here either.


8. All contracts with past and present Congressional members are void effective 1/1/11. In agreement but there might be some legal issues here, i.e. can you renege on past agreements? If you can, then great. If not, then at least start with future generations of politicians.

9. Allow only individual Americans to contribute to election campaigns. No corporate donations, no PAC donations, no union donations, no fancy sounding front group donations, just individual Americans exercising their freedom of expression by sending directly to a politician's campaign fund. Totally consistent with Steps 6 and 7 from "Love My Country, Loathe My Government."


The American people did not make this contract with Congressional members. They made all these contracts for themselves. Serving in Congress is an honor, not a career. The Founding Fathers envisioned citizen legislators, so ours should serve their term(s), then go home and back to work.

To see a graphical representation of what our political class has done to us, I refer you back to the November 18, 2010 post in this blog, The Freedom Pyramid. This is one of the most viewed posts of all time on this blog and it accurately and graphically illustrates how the political class has taken the concept of freedom and  liberty in this country, as envisioned by the Founding Fathers and made official and sacrosanct in the U.S. Constitution and Bill of Rights, and turned it upside down to the benefit of no one but themselves. The proposed Congressional Reform Act of 2011 and the fifty steps from "Love My Country, Loathe My Government" would help get us back to the original, intended Freedom Pyramid.

Before signing off, we would like your input on the first component above, term limits. It is any easy concept to grasp but when you start thinking about what this would actually look like, the permutations can make you crazy. Thus, we would like you to vote on one of the four options when it comes to term limits:

Option A - Senators get a maximum of twelve years via two six year terms and House members get a maximum of twelve years via six two year terms. Presidents get a maximum of eight years via two four year terms.

Option B - Senators get a maximum one six year term and House members get a maximum of six years via three two year terms. Presidents get a maximum of eight years via two four year terms.

Option C - Senators get a maximum of one five year term and House members get a maximum of three years via one three year term. The President gets a maximum of six years via one six year term.

Option D - term limits are not a good idea, no changes.

Although I do not want to affect results, I would like to point out the huge benefit of Option C. It is my belief that much of the perversions of the political process occurs when incumbents sell their souls for votes and campaign donations, subjugating the best interest of the country for the best interests of their political careers. If a politician has no chance at re-election, a lot of this problem goes away and they are free to make the right decisions for the country and are not burdened with the need to raise re-election funds. Just a thought.

To vote, please drop a short email with your choice of option A, B, C, or D as your preferred approach along with your home state and I will tabulate those results and publish them in a future post.

Send those emails to:  info@loathemygovernment.com  

The need to be subservient to the political class does not have to be. According to my friend, if each person reading this contacts a minimum of twenty people then it will only take three days for most people (in the U.S. ) to receive the message. I do not know if her math is right but her heart is right. Maybe it is time...



Our book, "Love My Country, Loathe My Government - Fifty First Steps To Restoring Our Freedom And Destroying The American Political Class" is now available at www.loathemygovernment.com. It is also available online at Amazon and Barnes and Noble. Please pass our message of freedom onward. Let your friends and family know about our websites and blogs, ask your library to carry the book, and respect freedom for both yourselves and others everyday.


Please visit the following sites for freedom:

http://www.cato.org/
http://www.robertringer.com
http://realpolichick.blogspot.com
http://www.flipcongress2010.com/
http://www.reason.com/
http://www.repealamendment

The Insanity That Is Our Expensive Election Campaigns

As the midterm election process finally and gratefully draws to a close, I thought it would be a good time to review the insanity that has entrenched itself in our electoral process when it comes to campaign spending. Consider a www.washingtonpost.com article by Ruth Marcus that appeared in the October 29, 2010 issue of The Week magazine:

• According to the article, Republicans will receive and spend more than $100 million from anonymous donors, an outrageous sum that has been loudly criticized by the Democrats.
• However, in 2004, Democrats set up campaign groups that fronted for labor unions and big dollar individual contributors, which contributed more than $150 million to the Democrats.
• Ms. Marcus reported that the "hapless" Federal Election Commission levied only a $1.3 million fine on this 2004 outrageous spending three years after the fact which, obviously, had no impact on election results. The $1.3 million fine is a pittance of a slap on the hand, less than 1% of the amount collected.
• According to the article's conclusion: "When it comes to campaign cash, Democrats and Republicans have essentially the same position: when we have more to spend because of some loophole in the law, that's just fine; when the other side has more money, democracy is being subverted."

According to a recent article in the St. Petersburg Times, House and Senate candidates running for office in these midterm elections have already shattered the previous campaign spending record and will likely spend over $2 billion in total on this election. According to the article, this is roughly equivalent to about $ 4 million spent per vacant Congressional seat. This number obviously does not include the money being spent at the local, county, and state government levels for their elections and does not include special interest group spending which the article estimates could be as high as $400 million.

And while the numbers are high, the consequences are not. A 2006 U.S. News and World Report article by Dan Gilgoff showed that once a politician gets into office, the access to campaign funds almost always guarantees that as an incumbent, that politician will almost always stay in office. The title for the article was "A Fake Democracy? Why No One Has Much Chance of Toppling Congress's Incumbents." According to the article, in the 2004 elections, 98% of the incumbents retained their seats. You cannot be living in a democracy with that kind of re-election rate.

And financial situation seems to be getting worse. If you believe Mr. Giloff's numbers, in 2004, it cost about $1.5 million to run a House Of Representives campaign. Just six years later, that cost is now about $4 million, two and a half times larger than in 2004. The article concluded in 2006 that the increasing costs were stifling competition for political seats, creating a state of  "partisan stasis."

How outrageous is all this insanity? Consider some simple math:

• The average Congressional office holder makes about $170,000 a year in salary. If you divide the campaign cost by the salary of the eventual winner you get a ratio of more than 23 to 1. In other words, for every salary dollar received, more than $23 will be spent to receive that $1. Makes no sense on the surface.
• If the average flu shot costs $10 per shot, then this $2 billion could have given two thirds of the country's population a free flu shot.
• If you had been alive since the birth of Christ and had spent $2,500 a day, every day from then until today, you still would have not spent $2 billion.
• According to a Parade Magazine article a few years ago, $2 billion could hire almost 5,000 teachers for a year, buy the health insurance for 50,000 American households and provide 83 million school lunches for needy children.

Obviously you can go crazy with the numbers. The bottom line, though, is that $2 billion total, $4 million per Congressional seat, is a lot of money to spend for a job that only pays $170,000. It is this 23 to 1 payback that illustrates how much power and freedom has migrated away from the ordinary citizens in this country to those sitting in Congress. No sane person would personally pay $23 to possibly win back $1, if successful. Only in an American election can this type of irrational behavior be considered rational.

And the holier than though attitude of the Democrats in this election does not hold water. We all know that if any politician can get their hands on money to ensure their re-election, then principles go out the door. The Democrats are not mad because the Republicans are spending so much money. They are mad because they do not have that amount of money to spend this time around like they did in 2004. Their hypocrisy is incredible. No one says that any politician HAS to take the money presented to them for their election campaign. However, has there ever been an politician that not take money shown to them?

It is obvious from this insanity that our political class at all levels of government cannot control their urges to take any money at any time to ensure their comfortable positions in Congress and elsewhere. That is why the following suggestions from "Love My Country, Loathe My Government" are needed to take the money decisions out of their hands and structurally change the election process in this country:

• Step 6 - allow only individual Americans to contribute to election campaigns, not corporations, unions, PACs, etc. The U.S. Constitution guarantees freedom of speech for individuals, not organizations.
• Step 7 - allow only those affected by an election to contribute to their respective election campaigns. For example, only those living in a specific Kansas Congressional district should be allowed to contribute to those running for Congress from that election district, i.e. no outside money allowed.
• Step 8 - strengthen the Federal Elections Commission by staffing it with seasoned prosecutors, not political appointees, so that cronyism is not a factor in prosecuting election law violations.
• Step 18 - hold all of the Democratic and Republican primaries on the same day in order to shorten the election cycle that should also result in less money being spent on the primary election cycle.
• Step 39 - impose single term limits on all politicians which would remove a huge amount of corruption and money exchanging going on since a lame duck politician, which a single term politician would be, would not be given campaign funding for their re-election since it does not exist anymore.

These steps, when implemented, would greatly reduce the amount of money that goes into our election process and would reduce the distortion that the huge amounts of money cause. Waiting for our political class to voluntarily behave is not going to happen, they are part of the insanity. Only the structured electoral changes listed above in these steps will restore sanity and fairness to our election process.

And, a side benefit of these steps might be that some of this wasteful $2 billion would find its way back into society and be used for some more useful purposes, such as growing the economy, adding teachers to our schools, increasing the health benefits of our citizens, etc.



 Our new book, "Love My Country, Loathe My Government - Fifty First Steps To Restoring Our Freedom And Destroying The American Political Class" is now available at www.loathemygovernment.com. It is also available online at Amazon and Barnes and Noble. Please pass our message of freedom onward. Let your friends and family know about our websites and blogs, ask your library to carry the book, and respect freedom for both yourselves and others everyday.


Please visit the following sites for freedom:


http://www.cato.org/

http://www.robertringer.com/

http://www.realpolichick.blogspot.com/

http://www.flipcongress2010.com/

http://www.reason.com/

Screwed Up Government Priorities, Case #1 - Earmark Spending Vs. Cancer Research Spending

Today will start a series of at least two posts where I make a definitive statements of what I think are really screwed up Federal government priorities. These are not Democrat vs. Republican nuances in policy, these are just plain, stupid wasteful government and political class screw ups.

Let's start today with data from a Washington Post from article February 18, 2010. The article reports on an analysis by the organization, Taxpayers For Common Sense. They issued their annual report showing that in 2010 the Federal government will spend about $15.6 billion on over 10,000 Federal budget earmarks. Recall that earmarks are special funding buckets that sitting politicians can use to direct Federal taxpayer money to their home state or Congressional district for use on projects and initiatives in their state/district or are special buckets of money directed to all types of organizations (companies, non-profits, etc.) that usually, in turn, donate some of the organization's money to the politician's re-election campaign.

What are these buckets of money spent on? Anderson Cooper of CNN recently reported that the following efforts received earmark funding:

• $200,000 for the Arkansas Commercial Driver Training Institute
• $150,000 for educational programs at the Washington DC National Building Museum
• $134,000 for the Montana Trade Center
• $100,000 for the Myrtle Beach International Trade And Conference Center
• $500,000 For exhibits at the National Mississippi River Museum and Aquarium In Iowa
• $200,000 for the Washington (state) Opera
• $150,000 for exhibits at the Teddy Roosevelt Inaugural Site

The website for Citizens Against Government Waste contains the following wasteful spending examples:

• $1,000,000 to renovate the Portsmouth, New Hampshire Music Hall
• $400,000 to renovate the Ritz Theater in New York
• $350,000 to renovate the Uptown Theater in Philadelphia
• $250,000 to construct the Monroe County Farmers' Market in Kentucky
• $100,000 to construct the Santa Ana River Trail in California
• $250,000 to renovate the Murphy Theater in Ohio

According to John McCain, the latest defense budget includes the following earmark buckets:

• $500,000 for the Brown Snake Program (yes, this was in the Defense budget)
• $1.800,000 to renovate the Fort Hamilton Community Club in New York
• $5,000,000 for the Presido heritage in San Francisco
• $1,600,000 for the Center For Space Entrepreneurship
• $18,900,000 for a center :dedicated to educating the general public, students, teachers, new Senators and Senate staff about the role and importance of the Senate."

We could go on and on (about 10,000 more times) but you get the picture. Just these eighteen examples alone cost the American taxpayer almost $32 million, money that should have been spent but the state or local governments or the private sector. National taxpayers should not help finance a farmers' makret in Kentucky or a river trail in California. These are bribes, nothing more, to get voters to pony up money and votes to re-elect incumbents.

But what is really screwed up is the following information that was published in the June 20, 2010 issue of Parade magazine, "Government Research Funding For The Top 10 Cancer Killers in 2009." The following numbers come from the National Cancer Institute (NCI), the biggest Federal government research funder (Note: the article does point out that some other government agencies fund cancer research but the NCI is the largest):

• Lung and Bronchus - $246.9 million funded by the NCI
• Colon and Rectum - $264.2 million
• Breast - $599.5 million
• Pancreas - $89.7 million
• Prostate - $293.9 million
• Leukemia -- $220.6 million
• Non-Hodgkin's Lymphoma - $130.9 million
• Liver - $70.3 million
• Ovary - $110,1 million
• Esophagus - $28.8 million
• Total = $2.037 billion

According to the article, 150,000 people are diagnosed with colorectal cancer every year and 50,000 people die from it. According to the American Cancer Society website, about 180,000 Americans are diagnosed with breast cancer every year and about 40,000 die from it. According to the National Cancer institute, about 220,000 new cases of lung cancer are diagnosed every year and about 157,000 Americans die from it.

Thus, if you take all of the above information, you get the following government and political class screw ups:

• How come, as a country, we allow the political class to spend about 59 times more taxpayer money on earmarks and their re-election efforts than we do on colon cancer research ($15.6 BILLION spent on earmarks and $264.2 MILLION on colon cancer research?
• How come, as a country, we allow the political class to spend about 26 times more taxpayer money on earmarks and their re-election efforts than we do on breast cancer research?
• How come, as a country, we allow the political class to spend about 63 times more taxpayer money on earmarks and their re-election efforts than we do on lung cancer research?
• How come, as a country, we allow the political class to spend $15.6 BILLION on earmarks to support their re-election efforts while almost 250,000 Americans die every year from just these three cancers?
• How come, as a country, we allow the political class to spend $32 million on just the eighteen earmarks listed above when $32 million would represent an almost 50% increase in liver cancer research?
• How come, as a country, we allow the political class to spend over seven times the amount of money in earmarks than we spend on the ten cancers listed above?
• Does the political class really think that building a river trail or a farmer's market with Federal tax dollars is a better use of money than helping solve the cancer riddle?
• While just about every family in America will be affected by cancer at some point in time, how many people will shop at the Monroe County Farmer's Market or will walk the Santa Ana River Trail?

This is what a call a prime example of screwed up government priorities. It gets back to the elitist discussion we have had in the past two posts where the politicians in this country put their interests first and whatever is left over is given back to the citizens. The political class sees their right to issue earmarks in the billions of dollars more important than to help many more Americans fight the battle against cancer. Spending billions for their own self good vs. spending millions for the betterment of the citizens is a major screw up in my opinion.

Three steps in "Love My Country, Loathe My Government" would address this situation. First, Step 39 would impose term limits on all Congressional seats so that the perceived need to issue earmarks in exchange for re-election donations would go away since there would be no re-election opportunities, one term and out. Step 4 would occur after the first three steps were executed, i.e. the drastic reduction in Federal government expenditures, and would direct some of those savings from reducing the size of government towards focused efforts to substantially reduce the dire cancer statistics facing the country. And finally, Step 44 would not allow any Federal funding on any project or program unless it was beneficial to a significant number of residents in at least five states. This step would eliminate the river trails and farmers market earmarks immediately.

Despite hollow calls for reducing earmarks over the years, the political class has shown they are addicted to them and the campaign donations that follow. If we eliminated all of the earmarks and gave half of the wasted money money back to the taxpayers, we could still increase cancer research funding by more than three fold if we saved the other half for research. That is the intent of Step 4 and should be intent of a benevolent government, not a screwed up government.

Our new book, "Love My Country, Loathe My Government - Fifty First Steps To Restoring Our Freedom And Destroying The American Political Class" is now available at www.loathemygovernment.com. It is also available online at Amazon and Barnes and Noble. Please pass our message of freedom onward. Let your friends and family know about our websites and blogs, ask your library to carry the book, and respect freedom for both yourselves and others everyday.

Also visit the following sites for freedom:
http://www.cato.org/
http://www.reason.com/
http://www.robertringer.com/
http://www.realpolichick.blogspot.com/

More BP and Government Screw Ups In The Gulf

Here we are over 50 days into the Gulf oil spill disaster and the incompetency of BP and Federal government continue to pile up. The most glaring problem, obviously, is the fact that neither BP or the government have figured out how to totally cap the well and stop the flow of crude into the waters of the Gulf. While disastrous, what is done is done. What is just as disastrous, is what is not being done to contain the damage.

Consider two articles from the the Tampa Tribune today, Sunday, June 13, 2010. The first was written by Richard Mullins and was titled "Helping Hands Tied On Oil Spill." Some of the highlights (or lowlights):

• According to Mr. Mullins, there does not appear to be any single organization, private sector, charitable, or government, coordinating donations and volunteers wanting to help out.
• As an example, the article cites Peter Demarie of Delaware who wants to contribute both money and his personal time to help out. He has spent days calling different entities and cannot find anyone who will accept his offers of help. He has called BP many times, the Coast Guard, local Gulf mayors, Greenpeace and others but no one can find any opportunity for him to help out.
• According to an expert, Jeff Capanigro, a crisis communications specialist in Tampa, the whole volunteer situation is a mess. And this mess is still in place more than 50 days after the well blew up. It is not like it just happened yesterday and the recovery effort has not yet begun, it should have begun over seven weeks ago.
• BP will only use trained personnel for the cleanup but training takes only four hours. The bigger problem is the lack of direction for people on how to volunteer for cleanup duty, partly because a lot of the cleanup work has been outsourced to contractors. Further complicating that situation is that in some states, by law, the subcontractors are required to only hire the unemployed or a local resident directly affected by the spill.

Consider another article, this one by Conn Carroll of the Heritage Foundation. He writes:

• Five weeks ago, officials from a Florida Gulf county, Escambia, asked for permission to use a sand skimmer which is a device pulled behind a tractor that collects tar and oil from the top three feet of sand. The officials have not heard back yet because they sent the request to the Unified Command Center in Alabama, the request was then reviewed by BP and then reviewed by the Federal government and then reviewed by the Army Corps Of Engineers and then reviewed by the Coast Guard.
• This sad tale of not being kept in the loop by many of the state, county, and local governments along the Gulf has apparently been repeated many times over the past weeks, according to Mr. Carroll.
• Thirteen countries have offered to help with the oil spill, many of whom are experienced in dealing with this type of disaster. The Obama administration has turned them all down.
• According to one Dutch newspaper, the European companies experienced in this type of disaster could clean up the Gulf in just four months while the Obama administration has estimated it will take the Federal government nine months by doing it themselves (and we all know how bad government estimates can be.)
• Even if the Obama administration wanted to use foreign resources to help in the cleanup, an old law on the books would prohibit such help unless the waiver portion of the law was put into effect, like it was done for the Katrina cleanup. So far, Obama and the Democrats controlling Congress have not moved to put the waiver in place. Thus, even if the administration should reverse itself and accept foreign help, more time would be lost waiting for the waiver to go into effect.

The list of incompetence goes on and on. Both BP and the Federal government still have no plan in place on how to deal with the destruction form the spill. Turning down help, from both Americans and foreign experts, makes no sense. This is further proof that the American political class is really not good at anything except getting themselves re-elected. The scary part is that this is a very tangible, a very identifiable problem and the government cannot even handle this one finite problem. You can imagine how poorly they handle the more nebulous, open ended issues like health care, public education failures, drug addiction, etc., problems that are much more wide spread and less clearly defined.

As I read the papers and other news sources, I still see no evidence that politicians sitting on Congressional committees responsible for all aspects of this disaster have visited the Gulf, except for those whose home districts and states are affected. Much like the military hospital embarrassment several years ago when returning wounded soldiers were forced to stay in very substandard military medical facilities, it does not appear that those Congressional representatives supposedly guiding both the Gulf activities or the hospital situation are really engaged in finding solutions, having never visited the Gulf since the spill disaster began or stepped inside an armed forces hospital before that crisis arose. Otherwise, maybe a Congressional committee by now would have stepped up and started coordinating recovery plans.

These Congressional members would be removed from their committee posts if Step 34 from "Love My Country, Loathe My Government" was in effect. Somebody in Congress needs to be held accountable, whether it is for the lack of contingency planning for the disaster, the lax oversight of the Federal employees in the Interior Department responsible for drilling safety, or the lack of emergency coordination after the spill.

One last note, also from Mr. Carroll's article. According to his research, as provided by the Center For Responsive Politics, President Obama "was the largest recipient of campaign contributions from BP and its employees over the past 20 years." Can you imagine if the preceding statement had "George Bush" as the subject of the sentence and not "President Obama." The Democrats and liberal mainstream press would have gone ballistic. However, Bush has not been the largest single recipient of BP-related campaign funds, Obama has. Proving my theory in "Love My Country, Loathe My Government" that there really is no difference between Democrats and Republicans, the labels they choose may be different but they all belong to the exclusive club known as the American political class. And we all suffer because of it.


Our new book, "Love My Country, Loathe My Government - Fifty First Steps To Restoring Our Freedom And Destroying The American Political Class" is now available at www.loathemygovernment.com. It is also available online at Amazon and Barnes and Noble. Please pass our message of freedom onward. Let your friends and family know about our websites and blogs, ask your library to carry the book, and respect freedom for both yourselves and others everyday.

Also visit the following sites for freedom:

www.cato.org
www.reason.com
www.robertringer.com
www.realpolichick.blogspot.com

More Reasons To Expect The Financial Reform Legislation To Fail

A few days ago we went into detail about how the new financial markets reform legislation that the Senate recently passed (their version must now by merged with the House of Representatives version) is likely to be ineffective for the simple reason that it did nothing to reform or keep in check two of the biggest causes of the economic meltdown: irrational and risky behavior by Fannie Mae and Freddie Mac. We calculated that these two Federal agencies were costing the American taxpayer about $7 billion a month to keep them solvent and that the proposed legislation did not nothing to get them in line from a lending, accounting, and solvency perspective.

If Fannie and Freddie were not enough to doom the effectiveness of the reform legislation, consider an Associated Press (AP) article by Daniel Wagner that appeared on May 24, 2010, titled, "New Financial Rules Might Not Prevent Next Crisis." Mr. Wagner takes a detailed look at the many components that the proposed law covers and provides some in-depth analysis of why the bill may fail in each area:

• Derivatives - many believe that these types of financial products not only helped to pump up the housing market but also magnified the chaos of the bursting housing bubble. Apparently, business lobbying groups got the new rules on visibility for derivative trading diluted so that only the big banks are affected. The old, dangerous ways of doing business for most companies will continue with no new visibility rules.
• Weak banking oversight - prior to the crash, many government oversight organizations failed to foresee the coming financial meltdown and the risky behavior that was causing the crisis and allowed some industry companies to avoid oversight altogether. While this legislation supposedly tightens regulation oversight, there are two problems. Banking lobbyists got serious concessions and a diluting of oversight regulation and many government agencies involved in oversight also lobbied the government (figure that one out, government agencies lobbying government politicians) to protect their turf, resulting in virtually no changes to the government's regulatory hierarchy, a hierarchy that failed miserably in foreseeing the latest recession clouds and storm.
• Too Big To Fail - according to Mr. Wagner, the bill does very little to prevent big banks from getting bigger, implying that taxpayers may still have to pay up for risky and ill timed behavior of the biggest banks in the future.
• Consumer Protection - a lot of the foreclosure and housing problems were caused when consumers took on mortgages and financing plans that they were not qualified for. This part of the bill is supposed to oversee banking products and financing plans and ban those products and offers that are thought to be too risky. However, the oversight in this bill would only extend to lending organizations with over $10 billion in assets. Smaller banks and more importantly, nonbanks, would not be be covered. Since many of the bad mortgages in the past were written by smaller mortgage brokers who sold the mortgages immediately after closing, regardless of how poor a credit risk the deal was, a root cause of the housing collapse, shady mortgage dealers, will not be addressed by this bill.
• Credit Rating Agencies - credit rating agencies such as Moody's and Standard and Poor's failed miserably to detect bad mortgage securities and wrongly gave many of them high credit worthiness ratings. Obviously, most of these high rated securities,s backed by poorly performing mortgages, were disasters so this part of the bill tries to end the practice of banks choosing the credit agencies that rate their investment offerings. An independent board would assign rating agencies. However, the banks still would have to pay the credit rating agencies that are chosen to rate their investments so the incentive to overrate is still present.

Many would say this is a nice try but that is about all it is, a nice try. Many of the problems have not been addressed or they have been addressed in a haphazard or diluted way. The further concern is the House and Senate bills still have to be merged, probably resulting in more compromises and a further weakening of the legislation's intentions. At some point you have to ask: when does so much dilution and compromising result in a toothless bill? The political class will no doubt congratulate itself when the final law is passed but banks will still be too big to fail, underhanded small mortgage brokers and smaller banks will still be pushing bad financing products (which eventually get dumped on the taxpayer via Fannie Mae and Freddie Mac), the regulation hierarchy that failed so miserably a few years ago will still be in place, unseen derivative trading may still stalk the underbelly of the economy, and rating agencies will still be rating, and being paid by banks, to rate a banks investment offerings with the incentive to give a higher rating, while somewhat muted, still present.

Why are we stuck with such ineffective legislation? Possibly two reasons. First, as we have mentioned many times, the political class as an entity is not very smart when it comes to solving large, complex problems. In fact, I cannot even remember the last time they solved a major problem or resolved a major issue. Second, they may not have had a chance in this area since, according to the article, the following organizations lined up for input to the writing of the bill: U.S. Chamber of Commerce, Business Roundtable, Independent Community Bankers, the American Bankers Association, Federal regulatory agencies such as the FDIC, Goldman Sachs and other large banks, the payday lending industry, and the National Automobile Dealers Association.

Mr. Wagner reports that the financial services industry has donated about $2.3 billion to political candidates for Federal public office in the past twenty years. It has also spent $3.8 billion in pure lobbying expense since 1998, more than any other sector. Thus, is it any wonder that possibly the political class is looking out for their own interests and the interests of their re-election funders than the American taxpayer?

This is just another example where Step 39, term limits, as outlined in "Love My Country, Loathe My Government" would be needed. Most people, especially politicians, cannot be expected to act rationally and in the best interests of average Americans and the country as a whole when the banking or other industry is throwing billions of dollars in campaign funding at them. The only real solution is to make sure that re-election is not an option. Then, and only then, can we begin to take money out of the equation and maybe put the country's welfare back into the equation. While we are at it, lets also impose Step 6 which only allow individual citizens to contribute to any campaign and thus, take corporate, union, and PAC money totally out of the election process.

In conclusion, please remember our advice from yesterday's post as this so-called reform legislation moves forward - focus on what the unintended consequences are of the final law, not the intended aims of the law. The intended goals are highly unlikely to be attained, based on the discussion above, while the unintended consequences of such a large piece of legislation could be extensive.

Our new book, "Love My Country, Loathe My Government - Fifty First Steps To Restoring Our Freedom And Destroying The American Political Class" is now available at www.loathemygovernment.com. It is also available online at Amazon and Barnes and Noble. Please pass our message of freedom onward. Let your friends and family know about our websites and blogs, ask your library to carry the book, and respect freedom for both yourselves and others everyday.

Supreme Court Rules, Freedom Suffers

I very rarely find myself in agreement with a member of the political class including most Presidential positions since they rarely consider the impacts on freedom and liberty when they act or pontificate. However, I do find myself in total agreement with President Obama relative to the recent Supreme Court ruling on campaign financing law. According to a January 23, 2010 Associated Press article, the Supreme Court, in a 5-4 ruling, disallowed parts of a 63-year old law that said companies and unions could be blocked from using their own money to produce and execute campaign advertisements that urge the election or defeat of particular candidates by name. Up until now, under current law, these companies and unions had to use money allocated from employees, not the coffers of the company or union.

It is both President Obama's opinion and mine that this will open up new avenues of campaign financing sources that could overwhelm the voice of the ordinary citizen in favor of lobbyists, special interest groups, large corporations and large unions. In past posts to this blog we reported on how 60% of the House Armed Services Committees were able to trade Defense Department earmarks for reciprocal campaign contributions under the current, more restrictive campaign finance laws; imagine how much easier this has become with this Supreme Court ruling. According to the President, "This ruling opens the floodgates for an unlimited amount of special interest money into our democracy. It gives the special interest lobbyists new leverage to spend millions on advertising to persuade elected officials to vote their way - or to punish those who don't." According to the AP article, he went on to say that "lawmakers who stand up to banks, oil companies, health insurers, and other powerful interests cold find themselves under attack at election time."

This ruling is in direct opposition to Step 7 in "Love My Country, Loathe My Government": "Only allow individual citizens to contribute to political campaigns. This eliminates the contributions of PACS, unions, corporations, and lobbyists. The Bill Of Rights guarantees freedom of speech for individual citizens, not groups of citizens." The purpose of this step and the attendant restrictions outlined in the book was to get the power back to individual Americans, not groups of Americans that have undue sway over political activities. If you believe the concerns of the President and others who have commented on this ruling, this is the exact opposite of what will happen.

This type of ruling will also be counter to Step 8 in "Love My Country, Loathe My Government" which would restrict campaign contributions to a specific House of Representative or Senate race to only those citizens that are to be served by that race, e.g. if a person was running for Senator from New Jersey, Step 8 would prohibit him from receiving financial aid for his campaign from anyone that was no ties to or in New Jersey. As another example, let's assume that a Senator who chairs an important Senate committee, that oversees a major segment of the economy, is up for re-election in Montana. He can now get a totally new and lucrative source of campaign funds from unions and corporations, as a result of this ruling, that have no connection whatsoever to the citizens of Montana. Thus, while he may not be the best choice to represent the citizens of Montana, he is likely to overwhelm a better choice since he is the best choice to represent the economic segment he oversees, a segment that now can contribute much more to the candidate.

This ruling is also likely to make it easier for incumbents to stay in power, in direct opposition to Step 39 which would impose term limits on Congressional seats. History shows us that incumbents, under the current system, are much more likely to receive campaign contributions from non-individual citizen entities than non-incumbents. This ruling will just make this gap in funding much more pronounced, further preventing new ideas and people to serve the country. Given the dire straits the long term politicians have gotten us into today, as reported in previous posts to this blog, imagine how much worse it will be as these incumbents get more and more of the campaign funding dollars thrown at them.

Thus, Obama is probably right when he says it will be harder to enact financial, tax, health care, and energy changes, since these changes will be going up against a much larger set of campaign financing dollars from companies and unions. However, while I agree with him, if he had acted more boldly and Presidential in his first year, he may have been able to make some changes before this ruling. By being more concerned about the pomp of being President (talking about his NCAA basketball picks, jetting off to Europe to promote Chicago's Olympic bid, filming a TV commercial for the George Lopez show, flitting around the world giving speeches, etc.) than the dirty work of being President, he missed his window being able to get some of his "Change" agenda approved before this ruling. By essentially wasting his first year, seeing his popularity nosedive, and wasting his party's dominance in Congress, he now has a much harder battle to get anything of significance done. Congressional incumbents are not likely to tighten up finance campaign laws since this Supreme Court ruling probably makes them more likely to stay in office in the future.

Thus, the basis of Obama's support, the ordinary Americans who may have hoped for fundamental change by voting for him, are likely to be very disappointed. And freedom and liberty in this country will continue to erode at the hands of the political class and their new best friends, the five members of the Supreme Court who voted to throw out the restrictions.


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