Paul Tullis's Grim Tidings

Bitter musings on politics and policy

Archive for December 2009

Seismically false Republican statement of the day

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399px-Jeb_Hensarling,_official_Congressional_photo_portraitToday the House of Representative passed a consumer protection act that will, for the first time, regulate the derivatives market, which at $600,000,000,000 is larger than the sum of economic output in the United States since World War II.

McClatchy Newspapers’ Kevin Hall:

“The Wall Street Reform and Consumer Protection Act of 2009 would, among other things, create a mechanism for government to dissolve huge globally interconnected banks; provide first-ever regulation of…derivatives; rein in excessive speculative investment on Wall Street; require banks to set aside more capital in reserve; eliminate the much-maligned Office of Thrift Supervision; give shareholders a greater say on executive pay; and tighten supervision over credit-rating agencies who sold out investors.”

Considering we are just beginning to emerge from the greatest financial disaster in 70 years, a little attention to the matter might once, in an earlier era, have been thought to generate some bipartisan support. But not today. Not a single Republican saw fit to do anything about the horror that beset millions of households that lost their houses and substantial portions of their savings.

Here’s Jeb Hensarling (R-TX): “At a time when the economic policies of this Congress, of this administration, have produced the highest unemployment rate in a generation, they propose legislation that will make credit more expensive, less available, and crush jobs.”

I don’t know where to begin in repudiating this line of unvarnished horse manure.

The beginning is as good a place as any:

…the economic policies of this Congress, of this administration, have produced the highest unemployment rate in a generation…

Unemployment is a lagging indicator; this means it reflects the policies that prevailed in the preceding months [up to 2-to-3 years, it can be safely said]. Unemployment bottomed out in October, 2000. It began to rise after 9/11, hit another low in October, 2006, then peaked (God willing) in June, 2009.

So even if you attribute all the rise in unemployment after 9/11 to 9/11, the unemployment rate over the last few years must be said to be the result of the policies of the preceding Congress and the preceding administration. They were in charge for eight years; the current Congress and Obama, less than one. This should be obvious to anyone who has ever read a news account of an unemployment report, but it has either escaped Rep. Hensarling, or he is being deliberately dishonest.

Part deux:

…they propose legislation that will make credit more expensive, less available, and crush jobs.

Jim! Over here! Cheap credit is what got us into this mess in the first place. Does Hensarling represent Mars, or Texas? Let me revisit the chronology for him:

Financial professionals sought better returns. So they devised complicated instruments discernible only to themselves (and sometimes not even that, as anyone currently working in the Financial Products division of AIG can tell you), that would produce these returns if they were fed the right set of numbers (which were frequently ginned up, as anyone who did commercial real estate deals with Bear Stearns this decade can tell you).

Meanwhile, the head of the Securities and Exchange Commission used his influence with Congress to intervene when it was suggested that someone keeping an eye on how these instruments were made and sold might not be a bad idea.

At the same time, the Federal Reserve set low interest rates so as to engineer a “soft landing” from the Internet bubble of the late ’90s.

And in what can reasonably be characterized as tragic, the Bush administration valiantly sought to extend home-ownership to the poor and minorities, groups that had historically been unduly denied access to credit, because it believed more and broader individual ownership to be inherently valuable. Hence, federal lending standards were relaxed.

The combination resulted in a lot of mortgages for a lot of over-inflated houses to be sold to people who couldn’t afford them, and then packaged with other deals of varying quality into securities so opaque that even the people writing them didn’t know what was in them—all the while no one in government was looking.

Here’s the kicker: The chief ideological and practical proponent of this non-involvement has since repudiated the position.

But Jeb Hensarling stands firm.


The Group of 10's new health-care deal

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Last night I was having dinner with a Senate staffer when he got word on his BlackBerry that basically an entire year’s worth of work in the House and Senate had been scrapped, costing ten or more percentage points on the president’s approval rating and further polarization of the country that some had hoped would be reduced by the election of this president.

Walking to the subway later, the news had hit the NYT’s website (but not, oddly, its iPhone app).

So here it is, in a nutshell: Those age 55-64 can buy into Medicare. Everyone else can get the insurance plan federal employees get . If that plan doesn’t meet certain requirements–if it is not negotiated with private companies to the point that it hits certain benchmarks–a public plan kicks in.

Couldn’t they have arrived at this in February and saved everyone a lot of headaches?

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Written by ptullis

December 9, 2009 at 9:30 am

My so-cialized life

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I don’t know what is these people’s issue with “socialized” medicine.

Last weekend I drove on a socialized highway to a socialized recreational area and went hiking in the socialized woods.

Last week, I rode socialized transportation to the local socialized book-lending institution. Afterward, my younger daughter (who, had I a lower income, would have been eligible for socialized pre-natal care when in utero) and I walked on a socialized concrete pathway to a socialized children’s play area.

We used to live in a house we bought with a loan that was backed by the socialized federal money-lender. We moved, and now my older daughter attends the neighborhood socialized educational institution.

The elderly, the poor, the military, government employees and veterans all receive “socialized” health care and report higher satisfaction rates than those in the private system. Other countries with government-funded health insurance report similarly, and have better health outcomes. Health care is already rationed, except now it’s done by corporations in the interest of their own profit margins, rather than by government employees acting in the public interest.

So, like, duh!

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Why is the US Chamber of Commerce lying about health care reform?

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On Friday, I saw a stunning and perplexing ad against health care reform paid for by the US Chamber of Commerce. The ad was stunning for the breadth of the chasm between it and the truth, and perplexing because serious health care reform is in the interest of US businesses, which the Chamber purportedly represents.

More on that in a moment; first I’ll debunk the untruths in the ad.

Lie #1) The ad claims health care costs to families will go up. In fact they will go down. This is so obvious that anyone who’s read the first thing about the House and Senate bills should not be fooled by the Chamber’s efforts on this point. The Congressional Budget Office found that most people’s costs won’t change, and many will go down. Moreover, additional programs and provisions to pay for preventive care in the bills will make people less likely to acquire the preventable illnesses like diabetes (caused by poor diet), cancer (often caused by bad habits like smoking and excessive consumption of meat), and heart disease (poor diet and smoking again) that incur the greatest costs on the system.

Lie #2) The ad claims the current bills before Congress will add to the deficit. The Congressional Budget Office says both bills will reduce the deficit.

Then of course the ad puts “$1 trillion” in giant letters across the screen. Let’s put that in context: This is a cost over ten years, so it’s about $100 billion annually. The US federal budget is $3.1 trillion in 2009, making $100 billion a whopping 3.3% of the budget. The US economy is $14 trillion annually.

The Chamber’s membership is comprised of businesses. Businesses pay for most people’s health insurance. The cost of this insurance is going up four times faster than inflation and ten times faster than the economy is growing. It’s said that GM’s health care costs add thousands of dollars to the price of every car it sells.

So shouldn’t the Chamber of Commerce be in favor of unloading this expense from the backs of its members? The group’s opposition to reform makes no sense.

If you’d like to support the Obama Administration’s efforts to call out these liars, click here.

If you own an iPhone or are a customer of AT&T, tell them to quit supporting these lies (and the ones they tell about global warming) through their membership in the US Chamber of Commerce.

Here’s the number: (800) 355-9542

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