Enough is enough!

OK...For whatever reason, I have not posted in a while. I apologize for the length of this post and the tangents I take. But, you haven't hear from me in a while and I think that we all agree on the importance of the topic.

In the same "bipartisan" light that Speaker of the House "San Fran Nan" used today, I am calling for a deal that will work for both parties while also setting the record straight. This is NOT just the Bush administration's fault! I'm not a huge fan of Bush. I think his spending policies have contributed to where we are today. I'm suprised that his spending causes him to be hated by Democrats...the same Democrats who want to spend at will throwing money at programs like free health care, welfare without the threat of workfare, throwing more money at a flawed public education system.

Before you get all hot and bothered and begin to throw "Cheez Its" at me through your screen, hear me out. I agree that we need to improve on the programs mentioned above. But, instead of creating a huge bureaucracy with billions of our dollars (that will already be used when a deal is passed), let's go after the pharmaceutical companies. We need to get rid of the loophole that allows those companies to essentially pass-through their advertising for a drug as R&D. Those costs drive up the cost of producing the drug, which drives up the cost that is paid by private health insurance and/or Medicare/Medicaid. We also need to attack the legal system and have legitimate tort reform. The cost of malpractice insurance is passed through to you and I and is paid for through the health insurance companies and our health care premiums.

Workfare must be attached to welfare. Welfare is needed for those who temporarily cannot provide for one's family. I understand that issues may arise. Just as welfare is the nipple of Mother Government, there comes a time when the mother should not continue to breast-feed the dependent. Welfare dependents MUST document attempts to improve their situation. No one on welfare is above working at a menial job! Now, if someone can document a permanent disability then I am totally for the government providing a working wage.

Personally, I am for education vouchers for taxpayers. Not everyone has the means to pay for a private education while also paying taxes and ultimately paying for someone else's education. Fortunately, my parents found it important enough and were able to struggle through the cost of catholic and private schools. Depsite my belief, we can't just throw more money at public schools without accountability. We need to have national standardized testing at certain grades to ensure that students have basic skills as they progress through the system. I don't listen to people who say that teachers will then teach to the test. Fine! If the test asks a student when was the Civil War, the student should be able to give the correct answer, not 1960s. If the question asks which document begins with "We the people of the United Sates, in order to form a more perfect union...", I want the student to know that it is the Constitution and not the Gettysburg Address! What is wrong with this! In general, we need to increase the pay for teachers. However, I need something in return. Every teacher MUST have a Masters, be required to be attend continuing education courses (not for additional pay as they will already have an increase), go through a more difficult re-certification to ensure they still are competent to teach, and serve at the will of the school system. Teachers are not Supreme Court Justices and are not appointed for life. If a teacher is incompetent, he/she should be fired. Union power must be reduced. The union can still negotiate contracts, I'm fine with that. But, they cannot act as a barrier to getting rid of bad teachers. In return, school loans will be deferred for 10 years. Teachers begin to pay after 10 years. If a teacher completes 15 years of service, the loans will be retroactively forgiven. Teachers will receive a tax credit for the amount already paid and will not be required to finish paying their loan. I feel that these measures would attract people who truly want to make a difference and actually teach our kids.

Anyway, back to the discussion at hand...The video below is from a 2004 hearing after Fannie Mae and Freddie Mac were initially investigated for their accounting methods. It is a little lengthy (8 minutes), but you must see with your own eyes. You'll see the partisian debate. What you won't see are comments from Republicans fighting against regulation. You won't see Democrats calling for regulation and blaming Republicans for the mortage crisis. What you will see is Democrats calling the hearing a "witch hunt" on the head of Franklin Raines, then the CEO of Fannie Mae. The same Franklin Raines that received $91M in compensation from Fannie Mae while leading the company into the "chaos" Pelosi says Bush is responsible for (see quote below). The same Raines who is an economic adviser to Barack Obama. The same Raines whose golden parachute pays him $1M per year FOR LIFE!

"When President Bush took office, he inherited President Clinton's surpluses — four years in a row, budget surpluses, on a trajectory of $5.6 trillion in surplus. And with his reckless economic policies within two years, he had turned that around ... and now eight years later the foundation of that fiscal irresponsibility, combined with an anything-goes economic policy, has taken us to where we are today. They claim to be free-market advocates when it's really an anything-goes mentality, no regulation, no supervision, no discipline...Democrats believe in a free market ... but in this case, in its unbridled form as encouraged, supported by the Republicans — some in the Republican Party, not all — it has created not jobs, not capital, it has created chaos."



Republicans have an alternative to the taxpayer funded bailout. The Republican Study Committee released an alternative to the Treasury Department's bailout proposal. Conservatives are concerned that the Treasury's proposal will alter the free-market system, gives too much authority to the Treasury, and does not penalize debtholders and shareholders.

Here is the committee's free-market alternative:
REFORMING A TAX CODE THAT DISCOURAGES CAPITAL FORMATION: Two-Year Suspension of the Capital Gains: Immediately suspend the capital gains rate of 15% for individuals and 35% for corporations. By encouraging corporations to sell unwanted assets, this provision would unleash funds and materials with which to create jobs and grow the economy. After the two-year suspension, capital gains rates would return to present levels but assets would be indexed permanently for any inflationary gains.
REFORMING A FAILURE IN GOVERNMENT INSTITUTIONS: Schedule the GSEs for Privatization: Transition Fannie and Freddie over a reasonable time period to truly private companies without special government privileges and open them up to real market competition. This reform would 1) establish commonsense limits for their capital requirements and portfolio holdings relative their size, 2) focus their mission on affordable housing only, not profit making, 3) require them to pay an appropriate risk-based amount for the government guarantee they enjoy, 4) subject them to state and local taxes and accurate SEC filings like every other private for-profit corporation, and 5) ultimately provide for the phase out their GSE charters once their conservatorship has ended. In a matter of mere weeks, Fannie and Freddie have gone from too big to fail to too dangerous to repeat. This hybrid illusion must not be allowed to continue.Stabilize the Dollar: Repeal the Humphrey-Hawkins Full Employment Act which diverts the Federal Reserve’s attention from long-term price stability to short-term economic growth. In an effort to fuel the economy, this additional mandate has encouraged the Fed to keep rates artificially low, fueling economic boom and busts, and now a strong up-tick in inflation and the decline of the dollar (as investors free dollars for hard assets). This reform would require the Fed to establish a numerical definition for price stability and maintain a policy that promotes it over the long-term.
REFORMING A FAILURE IN GOVERNMENT REGULATION: Suspend “Mark to Market” Accounting: Suspend the mark-to-market regulatory rules for long-term assets. These rules require financial firms to mark assets at current market levels, even where the no market exists and any immediate transactions would result in fire-sale prices. Instead of allowing firms to mark these assets to their true economic value, these rules contribute to a downward spiral as firms have to evaluate their assets not on the basis of their long-term investment but rather on a short-term mania.

On a side note, I hate that Fox News, MSNBC, CNN, etc. have the "Breaking News" headline on the bottom of their screens! Every time they come back from a commercial, you hear the music and see "Breaking News" flash onto the screen. It is 9:30pm when I'm writing this. It is not "breaking news" anymore. It wasn't breaking news at 4pm! What would be breaking news is an announcement that a new bill has been agreed to and will be sent for a vote!

We need to get this done! I'm confident that something will be passed. When we're done, we'll all sing "Cumbaya!" around a fire at Matt & Maggie's!