Video of the Day

Mr. President: Mortgage Costs Aren't the Problem

In his weekly radio address, President Obama announced that he will soon have sweeping reforms in our financial system. Included in those reforms is a plan to cut mortgage costs.

Soon my Treasury secretary, Tim Geithner, will announce a new strategy for reviving our financial system that gets credit flowing to businesses and families," Obama, a Democrat, said in his weekly radio and Internet address.

"We'll help lower mortgage costs and extend loans to small businesses so they can create jobs."

The cost of refinancing a mortgage is about $2000 and the cost of buying a property is a bit more than that. Being in the business, I know that often there a plenty of nonsensical costs that only line the pockets of those that pay them. Both processing and underwriting fees are unnecessary since both the bank and the mortgage company already make money on the loan. Often, the title fees are ballooned during a purchase in order to pay a greedy attorney.

That said, mortgage costs are not the problem right now, and they are certainly not such a problem that they need government action to combat them. The government can do all sorts of things to reduce mortgage costs. For instance, they can cap appraisal fees, title fees, underwriting, and processing fees. They can cap or eliminate points. All of these government actions would be devastating.

A typical appraisal could cost between $250-300. If the government capped it at $200, all they would do is drive appraisers out of business. Capping title fees would have the same effect. Capping underwriting and processing fees would only mean that banks and brokers would charge more elsewhere.

Often times, a mortgage broker lowers a borrowers mortgage rate through something called a discount point. If the government capped or eliminated up front points, this practice would also be eliminated. As such, where it would be used legitimately to lower a rate, such an action would now be against the law.

Furthermore, limiting title fees would also make financing larger homes more difficult. Title insurance is calculated based on the size of the mortgage. If title fees were capped, larger mortgages would no longer be cost effective for the title company.

Most importantly, if a borrower is unable to pay for the fees associated with a mortgage, are they really qualified to get one? During the explosion of the real estate boom, it was a common practice for the seller to pay for the buyer's costs in the loan. As such, since it was also popular to get no money down loans, buyers could literally buy a property with no out of pocket expenses. Is it really wise to allow people to buy property with no out of pocket expenses? Of course, this is now moot. FHA currently allows a maximum mortgage of 97%. That means buyers must come up with at least three percent down payment. Limiting mortgage costs won't help anyone come up with this three percent. Anyone that can ought to have enough money for the mortgage costs as well. If they don't, they shouldn't be buying a property to begin with.

A plan for the government to limit mortgage costs is not only ineffective but dangerous. The government shouldn't be the arbitor of what is or isn't a legitimate and reasonable cost. The market should be. Any government action that limits costs will only drive those costs to other places and drive people out of business.

Another Historic Election

Yesterday, the Republican National Committee made Michael Steele its first African American chair.

Republicans yesterday elected former Maryland lieutenant governor Michael S. Steele to lead their party, selecting the GOP's first black national chairman. The outcome also signaled a clear break from the leadership of President George W. Bush, whose hand-picked party chief was among those Steele defeated for the post.

Don't expect the adoring media attention of this "historic election". Yet, Steele has much more pressing matters than basking in whatever history he has created. Bill O'Reilly summed up the problem with the RNC when he asked a commentator who was the RNC Chairman.

As such, job one for Michael Steele is to go out and get noticed. Of course, it is much more sophisticated than that. Steele is a very talented politician. He is charismatic and he is able to verbalize conservative principles with the best of them.

That must be his first priority. Steele, more than just about anyone, can and should become the face of the party. The party needs a leader. More than anything, it needs someone that can effectively debate conservative principles to counter the same from the other side.

Job two is organizing and getting some energy back into a deflated party. The Republicans have suffered two straight humiliating defeats. Steele must make it clear that there will be no number three. He must get out there and organize and fundraise. Then, he must use RNC resources effectively to support those candidates most in need, and with the best shot of winning.

Job three is to convince Americans that the party is getting back to its roots. The party has lost most of its credibility on fiscal discipline. Steele must convince Americans that given another chance they won't again be party to runaway spending, pork and corruption.

How does he do it? Those are answers I don't yet have. Good luck to him for his task is monumental.

The Republicans Must Draw the Line on Daschle

I believe the Republicans rolled over on the nomination of Tim Geittner but at least there that was a somewhat tough call. With regards to the news that just came out on the nominee for HHS, Tom Daschle.

ABC News has learned that the nomination of former Senator Majority Leader Tom Daschle, D-S.D., to be President Obama's secretary of health and human services has hit a traffic snarl on its way through the Senate Finance Committee.

The controversy deals with a car and driver lent to Daschle by a wealthy Democratic friend -- a chauffeur service the former senator used for years without declaring it on his taxes.

It remains an open question as to whether this is a "speed bump," as a Democratic Senate ally of Daschle put it, or something more damaging.

This is no speed bump. This is something that must disqualify Daschle from serving. He used a car service that he didn't claim on his taxes. That isn't an oversight, but a cover up. There is a much larger principel here. If Daschle is allowed to serve, we are basically excusing almost anything. We are saying that most any prior transgression is fine as long as the President is popular enough. Such a message would encourage corruption exponentially. It cannot be allowed. The Republicans must stand up to this nomination and make sure it doesn't pass.

Some Serious Perspective on President Obama's Planned Pentagon Budget Cuts

First let's look at this video from the primary campaign.


That should put some context into this report.

The Obama administration has asked the military's Joint Chiefs of Staff to cut the Pentagon's budget request for the fiscal year 2010 by more than 10 percent -- about $55 billion -- a senior U.S. defense official tells FOX News.

Last year's defense budget was $512 billion. Service chiefs and planners will be spending the weekend "burning the midnight oil" looking at ways to cut the budget -- looking especially at weapons programs, the defense official said.

Some overall budget figures are expected to be announced Monday.

Of course, the real context is that these defense budget cuts come at exactly the same time that he is proposing to spend nearly $1 trillion on "stimulus". The eduction budget will be infused with about $66 billion from the stimulus. HHS will get an extra $30 billion from this stimulus. The list goes on and on. Just about every government agency will get more money. Every part of the government except defense.

So, at the exact time that we are fighting two theaters in a much larger war, our President sees fit to try and cut ten percent from our defense budget. This comes at the exact same time he wants to increase government spending just about every where else. If ever there was an action that showed just how anti military someone is, this is it.

The Deadly Sins of Barry Bonds

Of course, it goes without saying that Barry Bonds, like everyone else, is Innocent until proven guilty. Yet, if the reports are true, then Barry Bonds fell prey several of the deadly sins. He exhibited the same character flaws that fall upon individuals everyday.

1) Envy

If the reports are correct, then Barry Bonds began using steroids because the attention that both Mark McGwire and Sammy Sosa received in 1998. In 1998, he hit a pedestrian 37 home runs. This was pedestrian compared to the 70 and 66 for Mark McGwire and Sammy Sosa. We can only assume that Bonds knew that both Sosa and McGwire got to their totals through cheating. All the attention showered on the two was something that Bonds yearned for. As such, began cheating nearly immediately following the 1998 season. By 2001, Bonds had broken the home run record himself when he hit 73 homers. By 1998, Bonds was already a hall of famer, and one of the greatest of all time, but that wasn't enough. He was envious of the two new superstars and that envy caused him to compromise the game that gave him everything.

2)Pride

His grand jury testimony was sealed. Furthermore, he would have received full immunity for any crime he would have admitted to under oath. Yet, Bonds couldn't bring himself to admit to cheating. Instead, he claimed that he took steroids unknowingly. Rather than coming clean at the most important moment, he had far too much pride to admit that he did anything wrong. It was this very pride that now puts him on the brink of jail.

3) Gluttony

By 1998, Bonds was on his way toward 500 career home runs for certain. He had a good chance to get to 600 home runs. He even had an outside chance to break 700 and become the all time home run king. This, he could have done without cheating. His career was already remarkable. He was a certain hall of famer, and he would have been on every one's short list for all time great outfielders. Yet, this wasn't enough. He wanted even more. He wanted something that even his great skill couldn't reach naturally. So, he cheated. His gluttonous desire for more greatness than he already had was his final deadly sin.

Sights from Melbourne, Florida

Video of the Day

Council Winners

First place with 1 2/3 points! - Mere Rhetoric - NJDC Tool Aaron Keyak Helpfully Illustrates How Liberal Activists Sneeringly Cocoon Themselves In Asinine Arguments And Dishonest Smears
Second place with 1 1/3 points - (T*) - The Provocateur - The Shadow Government of the Obama Administration
Second place with 1 1/3 points - (T*) - Cheat-Seeking Missiles - What, Indeed, Did We Win?
Third place with 1 point - (T*) - The Glittering Eye - Let’s Have a Constructive Discussion
Third place with 1 point - (T*) - Soccer Dad - Ob-eds
Fourth place with 2/3 points - (T*) - Joshuapundit - Obama’s ‘Change’ In The Middle East
Fourth place with 2/3 points - (T*) - Rhymes With Right - Tom Hanks’ Non-Apology For Anti-Mormon Bigotry
Fourth place with 2/3 points - (T*) - Bookworm Room - Offensive “charm”
Fourth place with 2/3 points - (T*) - The Colossus of Rhodey - Is this a surprise? The News Journal says “race still an issue”
Fifth place with 13 point - The Razor - I Won? No Mr. President, Howard Dean Won
Winning Non-Council Submissions
First place with 2 2/3 points! - Spiked Online - After Gaza: what’s behind 21st-century anti-Semitism?
Second place with 2 points - American Digest - Abortion in America: A Personal Journey
Third place with 1 1/3 points - Power Line - How Things Look to a Democrat
Fourth place with 1 points - (T*) - Rants And Raves - Israel and anti-Semitism, decision time
Fourth place with 1 points - (T*) - Elie’s Expositions - Aaron’s Birthday 2009: 22 And Not Counting
Fourth place with 1 points - (T*) - Jerusalem Post - History’s Tragic Farce
Fifth place with 2/3 point - Covert Rationing Blog - We Have Enough Primary Docs After All
Sixth place with 1/3 point - Debbie Schlussel - No Surprise: Iraqis Prefer U.S. Jailers to Iraqi Ones

Some Thoughts on President Obama's Al Aribiya Interview and Aimless Foreign Policy

There were times during the interview when I saw a bold and refreshing new foreign policy vision from President Obama, however, for the most part, I saw a vision that was terribly naive. This interview, along with several other foreign policy maneuvers, give me the feeling that President Obama has a very aimless foreign policy.

First, President Obama committed a cardinal sin. Our disagreements stop at the water's edge. As such, this particular line is very troubling.

All too often the United States starts by dictating…in the past on some of these issues…and we don’t always know all the factors that are involved.

In the movie, The Godfather, Michael Corleone tells his brother Fredo to never take sides against the family. A similar dynamic is in play here. Whatever President Obama may feel about prior President's foreign policies, he should never under any circumstances criticize those foreign policies when meeting with people outside the United States. It shows weakness and it puts us on the defensive. President Obama has backed himself into a corner now and he's made his own job that much harder.

Whenever he moves aggressively on any foreign policy matter, he leaves himself now open to being told that the "United States is trying to dictate". Imagine if he lobbies the Saudis to increase oil supply, the Saudis could easily tell President Obama that he is trying to dictate policy to them. Whenever the United States does anything that anyone around the world finds objectionable, he can be told that we are "dictating policy". It is exactly such seemingly innocuous statements that wind up haunting Presidents. By breaking the cardinal rule of leaving disagreements at the water's edge, he has now made a major foreign policy blunder.

On top of this, President Obama has sent George Mitchell to the Middle East to "listen". One of the biggest concerns I have with meeting with Iran is what is our agenda. I believe that the best foreign policy missions have specific and narrow goals. Instead, George Mitchell is sent to the Middle East to listen. So far, President Obama's goals in the Middle East is "to be more engaged". It's very hard to turn such broad goals into a specific policy. If all we do is listen, then here's what will happen. Everyone in the region will blame everyone else for all the problems. That's exactly what happened when President Bush sent Colin Powell on a similar mission. The Israelis blamed Yasser Arafat for the violence. Arafat then blamed the Israelis for the violence. Of course, ultimately, Powell's trip accomplished nothing.

This seems to be President Obama's problem with Iran. He wants to be magnanimous, conciliatory and to reach out. His goal is simply to get to a point where there is direct talks. He has no goal for those talks. As such, here is what the President said.

Iran has acted in ways that's not conducive to peace and prosperity in the region: their threats against Israel; their pursuit of a nuclear weapon which could potentially set off an arms race in the region that would make everybody less safe; their support of terrorist organizations in the past — none of these things have been helpful, " Obama said.

"It is important for us to be willing to talk to Iran, to express very clearly where our differences are, but (also) where there are potential avenues for progress.

"If countries like Iran are willing to unclench their fist, they will find an extended hand from us."

Here is how Iran responded.

First is a fundamental and effective change… The second … is a change of tactics. It is very clear that, if the meaning of change is the second one, this will soon be revealed,” he said.

“The US stood against the Iranian people in the past 60 years,” President Ahmadinejad said in reference to the military coup the US engineered against the nationalist government of Dr. Mohammad Mossadeq in 1953.

“Those who speak of change must apologize to the Iranian people and try to repair their past crimes,” he said

Mahmoud Ahmadinejad felt no need to be magnanimous. Instead, he took the U.S. to task. As such, President Obama looks like the weak player trying desperately to meet with an adversary that will only engage once the U.S. admits to prior wrongs. This only happened because President Obama's only goal is to get direct diplomacy started. Meanwhile, Iran used this as an opportunity to set its own demands for such talks. Once again, President Obama has boxed himself in.

The Stimulus Paradigm

A couple days ago, Bill O'Reilly gave a very matter of fact analysis of the stimulus bill. Essentially, O'Reilly liked the tax cuts. He liked the legitimate spending. He didn't like all the illegitimate spending. Without necessarily trying, O'Reilly gave a blue print for a stimulus bill that would get the support of most of the public. It is important to understand that the current stimulus has support that is fading rapidly. I referred to this as the drip factor. Everyday, there is a new story that illustrates yet another negative aspect of this bill. The culmination of all these stories is eroding support for the stimulus. With about two more weeks before this becomes law, the momentum clearly favors this bill being unpopular when it becomes law.

President Obama has several options. First, he can disregard public opinion. He can allow the Senate to pass a similar bill and allow the stimulus to become law in a way that is rather similar to its current form. In that case, he and the Democrats own it and they own the recession if it fails. He can pivot and try and craft a bill that will get bipartisan support and likely be welcomed by the public at large.

Such a bill has its own pitfalls. Essentially, President Obama needs to listen to O'Reilly. Keep the spending projects like infrastructure, internet, and alternative energy. Keep the tax cuts.
Get rid of everything else. In such a case though, he would need to thread a needle. If he merely cut spending and kept the tax cuts, he would craft a bill with overwhelming Republican support. The Blue Dog Democrats would also overwhelmingly support it. Yet, the rest of the Democratic caucus would overwhelmingly oppose it. It's not even clear if the Democrats in the Senate didn't try and filibuster it. He could set off an intraparty fight that would only lead to chaos within his own party.

On the other hand, he could remove the pork but then increase spending on those projects the public deems worthy. In such a case, he would get mostly overwhelming support from the Democratic caucus. The Blue Dogs would be split, and he would get about 20% of the Republicans. He would craft a bill that would be popular. Yet, he would also again be in a position of owning said bill if it failed.

There's mor though. If he did do a pivot, he would lose serious credibility since he has lobbied so hard for its passage in its current form. If that wasn't bad If that wasn't complicated enough, a bi partisan group of Senators is looking to get together to augment the stimulus themselves.

An influential Senate Democrat said Friday that it's unclear whether President Obama's $819 economic stimulus bill will win enough support to pass in the Senate.

"I don't even know how many Democrats will vote for it, as it stands today," Sen. Ben Nelson, D-Neb., told FOX News.

Nelson, a moderate Democrat, is famous for gathering lawmakers from both sides of the aisle in a so-called "Gang of 14" to avert a shutdown of the Senate over judicial nominations. He is seeking a similar bipartisan effort to improve the stimulus bill.

Lawmakers are unhappy that the bill, passed by the House on Wednesday, contains billions of dollars for programs that arguably won't spark much job growth.

"What I'm hoping to do is bring together a bipartisan group of Republicans and Democrats and offer changes that will attract others and improve the bill," he told FOX News. "People want this to succeed.

It's possible this group would craft a bill with enough support to pass. In such a case, President Obama would take a very serious political loss. He could certainly veto th bill but that would subvert his own argument that things are dire. Either way, this legislation would no longer be his. This group is going to be made up of moderate Democrats and Republicans. If they crafted their own legislation, and that legislation was markedly different from President Obama's. That would seriously undercut his own argument that he is bi partisan and moderate.

So, we have a paradigm for the stimulus. The road to good policy is easy. All you really need to do is listen to Bill O'Reilly. The road, politically, to get good policy is very unclear. If we do get to good policy, it is even more unclear who will be the political winners and losers.

President Obama and Executive Power

For about the last seven years, Democrats had bemoaned former President Bush's use of executive power.

From shielding energy policy deliberations to setting up military tribunals without court involvement, Bush, with Cheney's encouragement, has taken what scholars call a more expansive view of his role than any commander in chief in decades. With few exceptions, Congress and the courts have largely stayed out of the way, deferential to the argument that a president needs free rein, especially in wartime.

In fact, President Obama has been quick to criticize executive power, at least as it was used by President Bush.

"I think it’s going to take some time, and our legal teams are working in consultation with our national security apparatus as we speak to help design exactly what we need to do," Obama said on ABC’s ‘This Week’. "But I don’t want to be ambiguous about this. We are going to close Guantanamo, and we are going to make sure that the procedures we set up are ones that abide by our Constitution."

Of course, when it comes to his own administration, President Obama has certainly taken his own expansive use of executive power. Here is how President Obama views the cabinet system created by the Framers of the Constitution.

But Obama appears willing to take that chance. Aides say he believes the Cabinet structure is outdated because it doesn’t recognize that problems like global warming sprawl across several agencies, often requiring a sort of uber-Cabinet member – a czar – to confront them.

As such, instead of using the "outdated" structure of Cabinet appointees, President Obama has instead appointed all sorts of Czars, advisors, and envoys. The latest is the appointment of a WMD Czar. It is rather convenient that President Obama finds the Cabinet structure outdated. That's because czars, advisors, and envoys need not get Senate approval. They have no bureaucratic structure. Most of all, they are only answerable to the President himself. In fact, all these czars, envoys, and advisors have been created by President Obama out of whole cloth. They will do whatever he wants them to do.

Now, it's true that Cabinet Secretaries are also ultimately answerable to the President. Unlike Czars, Envoys and advisors, they have a bureaucratic structure that they use to implement policy. Envoys, Czars, and advisors have no such problem. They are also not answerable to the sort of Congressional oversight that a traditional Secretary would. They can do whatever they want. Furthermore, their only job is whatever the President asks of them.

By creating a structure for the White House that consolidates power outside of the Cabinet structure, President Obama also consolidates power in the hands of a few that are answerable only to him. By doing so, he also expands his own executive power. It seems that the expansion of Executive power is only a bad thing when you are out of power.

Video of the Day

Arguably the greatest scene of all time, and certainly, it's the greatest opening scene of all time.

The Stimulus, GITMO, and the Drip Factor

In news, the so called drip factor is when there is a neverending stream of relatively bad news or press about a particular subject. Each specific piece is in and of itself not necessarily a back breaker but after enough negative press the cumulative effect becomes back breaking. The best example of the drip factor was Iraq. After a while the public turned on the war because of the cumulative effect of the never ending violence. It wasn't one specific car bomb, but rather the cumulative effect of the car bombs.

President Obama may be facing the drip factor with both of his main priorities right now. For both the stimulus and GITMO, we are beginning to see the cumulative effect of the drip factor and we are likely to see support for both begin to drop off in the next few weeks. Each has a unique dynamic but both drip factors threaten the very fabric of his Presidency. With the stimulus, we are seeing a rush of drips however the stimulus ought to be law in the next three weeks. As such, the rush of drips will be balanced against the relative speed with which this will become law. Yet, three weeks is an awfully long time and what is occurring is a serious undressing of this bill and an exposure of many of its warts.

The analysis of this bill is everywhere. CNN has a balanced assessment. The New York Times also has a balanced assessment. Meanwhile, the Wall Street Journal excoriates the stimulus. The Conservative publication the National Review largely echoes the Wall Street Journal. Meanwhile, Amanda Carpenter of Townhall has uncovered some very troubling things in this bill regarding universal health care.

$600 million is allocated on page 50 of the bill to double funding to pay doctors and nurses employed by the National Health Services Corps. The bill states: "A key component of attaining universal health care reform will be ensuring the supply of primary health care providers family medicine, internal medicine, pediatricians, dentists, and nurses."And, as written today, the bill gives billions to Health and Human Services Secretary Tom Daschle's to conduct "comparative medical research" and issue a final report. Under the bill univeral health care advocate Daschle would receive $400 million to compare various medial treatments. The language, on page 135 of the bill, says it would fund "conduct, support, or synthesize research that compares the clinical outcomes,effectiveness, and appropriateness of items, services, and procedures that are used to prevent, diagnose, or treat diseases, disorders, and other health conditions; and encourage the development and use of clinical registries, clinical data networks, and other forms of electronic health data that can be used to generate or obtain outcomes data."

This is frankly indefensible. There's no way anyone can argue that giving the Department of Health and Human Services billions simply for research on universal health care will stimulate the economy. That's a blatant attempt to pad liberal causes under the guise of stimulus.

Beyond this, we have recently found out that everyone from the National Endowment for Arts, the National Mall in D.C., and even ACORN will be getting a piece of the stimulus. Meanwhile, the Congressional Budget Office raises doubts about how quickly the stimulus can be spent. CNN reports that with interest the cost of the stimulus will be $1.2 trillion. We've also found out that the stimulus will spend $66 billion on education alone. To put this in perspective, President Bush's entire 2001 education budget was $36 billion.

The worst thing from the perspective of the Obama campaign is that their answer to all of these criticisms at once seems to be that time is urgent and we need to act now. You can't respond to a whole host of different sorts of problems with the exact answer.

Looking beyond expected House approval of his $825 billion economic stimulus plan, President Barack Obama said Wednesday the nation is at a "perilous moment" requiring swift and decisive action.

"We don't have a moment to spare," Obama said in the East Room of the White House, just hours before a crucial House roll call vote. The measure intended to steady the ricocheting economy was expected to pass, but likely with little of the bipartisan support that Obama wanted. The issue then goes to the Senate where the new president hopes to draw more GOP backing.

Obama tempered the sense of urgency in his voice with his observation that he and corporate leaders "left our meeting confident that we can still turn our economy around."

You can't continue to respond to all sorts of different criticisms with the same answer. This may in fact be a perilous moment but that doesn't explain why the stimulus spends billions to allow HHS to research universal health care.

Worst of all from the perspective of President Obama is that this stimulus is almost six hundred pages. It has now become the political story. The analysis is only beginning. In the next two and a half weeks we are likely to see all sorts of new things discovered. The drip factor is only getting started and it will intensify as this gets near passage. The most likely effect will be a serious erosion of support for the bill as it passes. As such, by the time President Obama signs it into law, he will be signing a fairly unpopular bill. More extreme is the possibility that a groundswell of opposition will occur and the public will demand that the bill get slowed down and debated more fully.

Regarding GITMO, we have a different dynamic filled with the same sort of pitfalls. Since President Obama announced that he would close GITMO we have learned of two new terrorists that left GITMO only to wind up on the battlefield against our troops. We've also learned that several families of 9/11 victims are outraged by President Obama's decision to close the prison and demand that trials move forward immediately. The problem for President Obama here is time. If in a week we heard about two new terrorists that wound up on the battlefield from GITMO, how many will we hear about in a year? No one knows the magic number. What if twenty more terrorists are discovered that left GITMO and wound up on a battlefield? How will the public feel about giving them criminal trials then? How much criticism from families of 9/11 victims will there need to be before the public turns against the decision? Keep in mind, closing GITMO isn't necessarily all that popular now. It polls about 50/50. After a year of drip, drip, drip, those numbers are bound to fall. By the time President Obama actually puts together a plan it is very likely a minority will support the decision at all. It appeas on this one President Obama has an even tougher problem regarding the drip factor.

Council Submissions

Council Submissions
The Glittering Eye - Let’s Have a Constructive Discussion
Cheat-Seeking Missiles - What, Indeed, Did We Win?
Joshuapundit - Obama’s ‘Change’ In The Middle East
Rhymes With Right - Tom Hanks’ Non-Apology For Anti-Mormon Bigotry
Bookworm Room - Offensive “charm”
Soccer Dad - Ob-eds
The Provocateur - The Shadow Government of the Obama Administration
The Razor - I Won? No Mr. President, Howard Dean Won
Right Truth - First Post-Inauguration Interview Goes To Al-Arabiya and Keeping America and Israel Safe
The Colossus of Rhodey - Is this a surprise? The News Journal says “race still an issue”
Mere Rhetoric - NJDC Tool Aaron Keyak Helpfully Illustrates How Liberal Activists Sneeringly Cocoon Themselves In Asinine Arguments And Dishonest Smears
Non-Council Submissions
Submitted By: The Glittering Eye - American Digest - Abortion in America: A Personal Journey
Submitted By: Cheat-Seeking Missiles - Jules Crittenden - Gaia re Gaia
Submitted By: Joshuapundit - Rants And Raves - Israel and anti-Semitism, decision time
Submitted By: Rhymes With Right - Debbie Schlussel - No Surprise: Iraqis Prefer U.S. Jailers to Iraqi Ones
Submitted By: Bookworm Room - Power Line - How Things Look to a Democrat
Submitted By: Soccer Dad - Elie’s Expositions - Aaron’s Birthday 2009: 22 And Not Counting
Submitted By: The Provocateur - Jerusalem Post - History’s Tragic Farce
Submitted By: The Razor - Covert Rationing Blog - We Have Enough Primary Docs After All
Submitted By: Right Truth - Prison Planet - Blackjack Part 2: Telegraph Continues To Run Vulgar Propaganda
Submitted By: The Colossus of Rhodey - Spiked Online - After Gaza: what’s behind 21st-century anti-Semitism?
Submitted By: Mere Rhetoric - Daniel Pipes - George Mitchell’s Return to Middle East Diplomacy

Video of the Day

The Fragile Presidency of Barack Obama

People ask me when the glow of Barack Obama will wear off. I tell them that it is as soon the soaring rhetoric isn't enough. As soon, as he really has to start governing, then the country and the world won't be in the trance they're in. What those currently in a trance don't realize is that a hornet's nest hovers around President Obama. The hornet's nest of world events, policy ideas, as well as all sorts of political dynamics that are ready to explode if handled incorrectly.

First, President Obama will totally own the stimulus and with it the economy. Furthermore, he will already falling short of one of his themes, bi partisanship. In fact, President Obama has been partisan more than once. He immediately signed a Presidential order closing GITMO. He reversed an order and thus allowed for organizations to get money overseas even if that money goes to funding abortion activities.

President Obama is betting that out of control government spending is the way out of a recession. There's a bet I would rather never make. Even if theoretically his idea could work it will have to be implemented correctly. Between the stimulus, the second part of TARP I, and the coming TARP II, President Obama is about to borrow and spend $2.5 trillion. Here's an individual who's never managed more than a Senate office and he is about to lead the government in the execution of this massive spending. Of course, who will be chiefly responsible for all this spending? Tim Geitner. This guy can't figure out his taxes and he's about to manage $2.5 trillion. Does that sound like a recipe for success or disaster?

Then, there's his chief foreign policy initiative. He's going to close down GITMO. He's closing down a prison full of the worst and most dangerous prisoners in the world. Yet, he has absolutely no plan to speak of for what to do with them when it's closed. Does this sound like a recipe for success or failure?

He's sent George Mitchell to the Middle East and it appears that his mission there is to listen.
Any doubts about just how serious the Obama administration would treat global warming were obliterated when Secretary of State Hillary Clinton named Todd Stern Climate Envoy for the State Department.


In the June 2007 issue of the American Interest, Washington lawyer Todd Stern and think tank executive William Antholis wrote a memo to the next president. Addressed from the "United States Department of Brainstorms" to "The 44th President of the United States," the action memorandum laid out the case for "creating the E-8" -- a novel international group uniting leading developed nations and developing ones for an annual gathering focused on combating global warming.


On foreign policy, he has no goal yet. Yet, he has sent an envoy to the Middle East. He has broad ideas like getting both sides back to the negotiating table. Yet, he doesn't have any idea for how to negotiate with Hamas in the way. He hasn't said much of anything specific about any foreign policy issue. Now, George Mitchell is in the Middle East to "listen". Does this sound like a recipe for success or failure?

Let's not forget that Vladimir Putin is licking his chops to test the mettle of this guy. With oil prices so low, it's only a matter of time before VVP needs to raise oil prices by stoking some crisis with one of its neighbors. Does anyone really believe that Obama would stand up to Putin in any confrontation?

Lastly, he's created a new policy for interrogations that is modeled after the Army Field Manual. Does anyone really believe that we will get all the intelligence necessary to stop further attacks if our interrogators can't go beyond the Army Field Manual?

There is a hornet's nest forming and soon it will engulf around him. The glow will wear off. Reality will hit and it all appears to be a recipe for disaster.

President Obama's Multi Pronged Strategy for the Near Total Socialization of America

What we are witnesssing, right before our eyes, is the nightmare that all free market, small government conservatives have feared from President Obama. In the last week, we have had several different reports about only mildly related issues and each one of them points in the same direction. President Obama is determined to turn the United States of America into a Socialist Democracy on the order of France and Sweden.

The most obvious bit of news is the stimulus package. There are several things that are clear from this package. First, this will entail a massive expansion of government. Second, whatever jobs will be created will be created by the government. Third, the deficits will wind up being so high that it will be nearly impossible to cut taxes in the future and thus give stimulus to the private market. As such, the end result of this stimulus will be the government playing a far more important role in our economy than it ever has before.

The second announcement is the announcement that the Obama administration will allow individual states like California to set their own emission standards. Now, it's important to understand that the big three are soon going to need more money. They will of course come to the federal government for more money. President Obama will likely oblige however there will no doubt be strings attached. President Obama will demand that as a stipulation of getting this money the big three go on a serious campaign to build energy efficient automobiles. In fact, they will have no choice regardless. With stringent emissions standards in states like California, the big three will have to or they won't be complying with the law. Now, of course, everyone is in favor of energy efficiency. However, some are more than happy letting the government dictate it, while others would like to see the free market dictate energy efficiency. The Obama administration will be more than happy having the government tell the automakers just how energy efficient their cars have to be.

The last bit of news is the news that the Obama administration is likely to ask for a second round of bailout money for the banks. (that's on top of getting the second $350 billion released). Now, CNBC reports that full nationalization is the least likely option following the second TARP. Of course, ultimately it won't matter much. President Obama has already been on record as being displeased with the lack of oversight of how previous TARP money has been spent. As such, you are sure to see President Obama demand that it be spent exactly as he likes. After all, the TARP money is the government's money. One way or another, once the second TARP is rolled out, we will effectively have banks be nationalized.

So, in one fell swoop, President Obama will expand the size and scope of government exponentially. At the same time, he will effectively nationalize two major industries. The sum total will be an America that is much like the Socialist Democracy of France.

The Stakes for the Stimulus Couldn't Be Higher

The stimulus bill that will likely become law within a few weeks have stakes that reverberate throughout the culture, the economy, and the long term prospects of both parties. As it currently stands, the stimulus is likely to draw little Republican support. Right now, the President is meeting with Congressional Republicans in order to try and find compromise in crafting the legislation.

Republicans are stuck between their principles, a popular President, and a weakening economy. They would be wise not to vote for anything that is at all economically liberal. Their base is already disheartened viewing the Republicans as largely selling out their principles. If the Republicans now vote for a largely liberal bill, that might be the final straw for their base. Democrats, on the other hand, are going all in economically on a plane that has absolutely no comparison. Never has such a large stimulus been tried to successfully recharge an economy. This plan is quite a gamble.

For the President, bi partisan support for this stimulus carries with it all sorts of political capital. First, he campaigned as post partisan. If his first signature legislation is in fact bi partisan, then he can credibly pronounce that a new era has emerged. If his first piece of legislation is mostly party line, those words will start to ring more hollow. Yet, the stakes are much higher than that for the President. If this stimulus passes mostly with Democratic support, he owns the stimulus and the economy.

In such a case, the direction of both parties rests almost entirely in what happens to the economy following the stimulus. Because the Democrats will own the stimulus, the fate of the economy will determine the fate of each party. If we are sitting here come the election 2010 and the economy is no better off than it is now, the Republicans can credibly argue that the Democrat's idea of government spending to stimulate the economy is a failure. They will have their alternative and they can then argue that more tax cuts and limited government would have been the right stimulus.

If this stimulus is seen as working, it will usher in a sustained period of more government and Democratic rule. Unless something terrible happens in the GWOT, President Obama will likely win in 2012 with similar majorities to what we saw Ronald Reagan win in 1984. Following the stimulus, we will see the implementation of some form of universal health care. President Obama will have all the political capital he will need to mount an aggressive attack on global warming. He will easily follow up on his promise for a "new regulatory framework".

By opposing a successful stimulus, the Republicans will be seen as supporting outdated ideas that will have little use in the 21st century. Conservatism will take a back seat and it will be unclear if or when it will return.

On the other hand, the Republicans could easily make big government liberalism obselete if the stimulus doesn't work. They will point to massive deficits. The word pork will be used over and over. They will bemoan the massive expansion of government. The Republicans will in fact make the argument that President Obama's ideas are not new. They are the same failed tax and spend policies that liberals have been known for for years. If the stimulus is seen as failing, the Republicans could use its failure to usher in a new era of Conservatism. It will means significant legislative gains in 2010. They could use it as a mandate to return the country to fiscally conservative economic policies. Meanwhile, President Obama will have been weakened. Bill Clinton was able to successfully navigate similarly difficult political waters in 1994, however President Obama will find little reception for most of the platform he currently wants to implement.

Ultimately, which way we go will be determined by how the stimulus will be viewed. If it is viewed as successful, it will spell the end of Conservatism for the time being. If it is viewed as a failure, it will be viewed as a referendum on big government liberalism. Either way, the direction of the country and the party will ride on the success or failure of this stimulus.

Global Warming, the Climate Envoy, and the Erosion of Sovereignty

Any doubts about just how serious the Obama administration would treat global warming were obliterated when Secretary of State Hillary Clinton named Todd Stern Climate Envoy for the State Department.

In the June 2007 issue of the American Interest, Washington lawyer Todd Stern and think tank executive William Antholis wrote a memo to the next president. Addressed from the "United States Department of Brainstorms" to "The 44th President of the United States," the action memorandum laid out the case for "creating the E-8" -- a novel international group uniting leading developed nations and developing ones for an annual gathering focused on combating global warming.

Now, as Al Kamen noted this morning, Stern will be in a position to write memos to the president for real. This morning, Secretary of State Hillary Rodham Clinton announced that Stern will be the special envoy for climate change.

"With the appointment today of a special envoy, we are sending an unequivocal message that the United States will be energetic, focused, strategic and serious about addressing global climate change and the corollary issue of clean energy," Clinton said at the announcement.

In the Obama administration, climate change won't merely be an environmental issue, an energy issue, but it will also be a foreign policy issue. Of course, if you take climate change as seriously as the Obama administration it makes perfect sense to make this a foreign policy issue. After all, it makes no sense for the United States to get serious about climate change if the rest of the world doesn't follow. As such, the answers to climate change must be done on a global level.

Of course, there is a very serious and pernicious side effect to making climate change a foreign policy issue. While the liberal elites were busy condemning Bush for not joining the Kyoto Treaty, they also dismissed his concerns over such a treaty. The main concern for me is that Kyoto is a great first step toward ceding our own sovereignty.

Making climate change a foreign policy issue also means that one day it will be the world that decides just how much greenhouse gases a company in Cleveland can emit. At some point bureaucrats in Belgium will tell our domestic companies how to run their companies. After all, making global warming a foreign policy issue means creating a world consensus on how much global warming is allowed. At some point, it also means that the rest of the world will tell our companies just how much in greenhouse gases they can emit. If you believe that we will soon melt away and die from global warming, then such sacrifices are a small price to pay. If you are at all skeptical about global warming such ceding of sovereignty is unacceptable.

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Our National Security: Theory Vs. Reality

From my perspective, President Obama is embarking on a very dangerous journey. What he wants to do is take away the very real benefits of former President Bush's tough anti terror measures in order to gain theoretical benefits like our moral standing in the world. The GWOT will not be fought in some theoretical world in which hypotheticals apply. It will be fought in reality. The terrorists want to blow us up. They want to kill as many Americans as possible as soon as possible. It is the job of our government, and those sworn to protect us, to stop them before the accomplish their tasks.

This means that when we capture a terrorist we want to find out as much as possible from them. In theory, everyone deserves civil rights. In practices, terrorists are our enemy in war and we need to find out as much from captured terrorists as soon as possible. The same rule applies to most of Bush's policies. In theory, we want to get a judge to give permission before listening to someone's phone call. In practice, we can't wait for a judge before spying on the enemy.

What liberal thought, that which President Obama occupies, would have us do is treat our enemy in war like a criminal. That is where their theories will meet the realities of war. It is exactly this theoretical world that John Kerry occupies.

In a season of transformational changes, these are among the most meaningful, because they send a powerful message that America's struggle against terrorism will once against honor some of the most cherished ideals of our republic: respect for the rule of law, individual rights, and America's moral leadership.

The president understands all too well that the threat our nation faces from terrorism is all too real. And we should all agree that sometimes, in the name of national security, it is necessary to make difficult ethical decisions to protect the American people.

However, I and many others believe that the use of torture and indefinite detention have not only tarnished our honor but also diminished our security.

In this global counterinsurgency effort against al Qaeda and its allies, too often our means have undercut our efforts by wasting one of our best weapons: the legitimacy that comes from our moral authority.

This is a very nice theoretical argument however it is useless in the real world. Where, I would ask, should we reach with our new found moral authority? Does Senator Kerry believe that Al Qaeda is less apt to attack us because we closed GITMO? If that's the case, why did they attack us at all on 9/11 given that none of these things were done yet? Will this new moral authority reach the Middle East where their methods make anything we do mild? Will it reach weak kneed Europeans? Does Senator Kerry really think that the Europeans haven't been aggressively helping us in the GWOT because GITMO is open?

Does Senator Kerry doubt that Khalid Sheikh Muhammad was broken when he was water boarded? Does he doubt that after breaking him we received invaluable information? Does he doubt that the information we received lead to the United States stopping attacks we wouldn't have stopped without having this information? This is the difference between reality and theory.

The President and Senator Kerry would have us believe that whatever information we don't get because we stop before we break terrorists will be more than made up with our new found "moral authority". The President and Senator Kerry would have us lose very real and tangible intelligence that we would get from doing what we need to do to break a terrorist for the very intangible idea of "moral authority". What's most disturbing about this argument is the idea that we struggle with moral authority against an enemy that flies planes into buildings, straps bombs on their persons, and looks to kill civilians because we have GITMO open and we waterboard when we have to.

This is a war, a very real war, and an asymetrical war. We have to be willing to do what is necessary to win the war. Treating terrorists like criminals means we fight the war with both hands tied behind our backs. Whatever we gain in "moral authority" we more than lose in very real lack of intelligence. In war, as in most things, I will give up something intangible, if it means gaining something tangible. Intelligence is real, and it is tangible, whereas "moral authority" is very intangible. I will gladly give up the latter for more of the former.

President Obama Vs. Rush Limbaugh

As many know by now, there is a little bit of a spat going on between the President and the talk show giant. It all started when the President said this about Rush Limbaugh

You can't just listen to Rush Limbaugh and get things done,

Limbaugh responded to the President when he spoke to Byron York of the National Review.

To make the argument about me instead of his plan makes sense from his perspective. Obama's plan would buy votes for the Democrat Party, in the same way FDR's New Deal established majority power for 50 years of Democrat rule, and it would also simultaneously seriously damage any hope of future tax cuts. It would allow a majority of American voters to guarantee no taxes for themselves going forward. It would burden the private sector and put the public sector in permanent and firm control of the economy. Put simply, I believe his stimulus is aimed at re-establishing "eternal" power for the Democrat Party rather than stimulating the economy because anyone with a brain knows this is NOT how you stimulate the economy. If I can be made to serve as a distraction, then there is that much less time debating the merits of this TRILLION dollar debacle.

Now, what's interesting about Rush's analysis of the stimulus is how eerily similar it is to Dick Morris' analysis.

The most pernicious of his proposals will be the massive Make Work Pay refundable tax credit. Dressed up as a tax cut, it will be a national welfare program, guaranteeing a majority of American households an annual check to “refund” taxes they never paid. And it will eliminate the need for about 20% of American households to pay income taxes, lifting the proportion that need not do so to a majority of the voting population. Unlike the Bush stimulus checks, this new program will be a permanent entitlement, a part of our budget that can only go up and never down. Politically, it will transform a majority of Americans from taxpayers, anxious to hold down government spending, into tax eaters, eager to reap new benefits.

Both Morris and Limbaugh believe that Obama is using the so called tax cuts as a means of creating a Democratic majority. Both point out that these so called tax cuts, really tax credits, are in fact no more than a pernicious way of making sure that more than 50% of the population pays no federal income tax. By doing so, more than half the nation becomes dependent on the very larger government that President Obama is proposing. This would create the very electoral majority that both Limbaugh and Morris allude to.

Here is what Limbaugh sees as the strategy for going after him.

One more thing, Byron. Your publication and website have documented Obama's ties to the teachings of Saul Alinksy while he was community organizing in Chicago. Here is Rule 13 of Alinksy's Rules for Radicals:

"Pick the target, freeze it, personalize it, and polarize it."

Now, it's important to also examine how ambitiously President Obama views the Presidency.

Eking out a bare Democratic majority isn't good enough," he writes in The Audacity of Hope. "What's needed is a broad majority of Americans--Democrats, Republicans, and independents of good will...." After the New Hampshire primary, he told his supporters "you can be the new majority who can lead this nation out of a long political darkness." A month later, after winning the Wisconsin primary, he explained what he called "my central premise," that "the only way we will bring about real change in America is if we can bring new people into the process, if we can attract young people, if we can attract independents, if we can stop fighting with Republicans and try to bring some over to our side. I want to form a working majority for change." That's easier said than done, of course, and likely would require several elections. Speaking to the AFL-CIO in 2003, he laid out the long march that would be necessary:

I happen to be a proponent of a single-payer universal health care program.... [a] single-payer health care plan, a universal health care plan. And that's what I'd like to see. But as all of you know, we may not get there immediately. Because first we have to take back the White House, we have to take back the Senate, and we have to take back the House.

So, it would be foolish to believe that President Obama has goals that merely amount to governance. President Obama also believes in grander ideas like creating a sustained new Democratic majority much like the New Deal created a sustained Democratic legislative majority for about half a century.

If all of this is in fact the case, then Rush would be dead on. President Obama would like nothing more than to create a bi partisan stimulus bill. That would insulate him if in fact the bill fails. It would also signal to the country that government spending is a bi partisan goal. By putting the debate centered on the issue of bi partisanship, he also moves it away from the specifics of the bill.

In fact, he has tried since the beginning to bum rush this bill and turn it into law. This will insulate the bill from any serious examination by the public. Yet, his so called tax cuts speak for themselves. They are in fact not tax cuts. No marginal tax rate is cut. Rather, everyone gets a check back from the government and that check is the same whether you make $25,000 or $125,000. (it only goes up for married couples) As such, this tax rebate will in fact mean that an extra 20% of the population will wind up paying no federal income taxes. It will in fact mean that more than half the population will be the beneficiary of the entitlement government culture that is the hallmark of the Obama administration. It will mean that more than half the population will be natural Democratic voters.

If this is what President Obama meant to misdirect the public from, then he way overstepped. The last thing he should have done is got into a food fight with someone with as big a megaphone as Rush Limbaugh. Rush will now be preaching what he has asserted from his microphone three hours daily five days a week. Sure, Rush preaches to the converted, but Rush is also a media figure. By starting this, he has also created a media story. The media can't simply ignore Rush's thesis in covering this story. So, at some point, what Rush is hypothesizing will at least become a part of the media story.

This stimulus package continues to be less and less popular with each passing day. That's because no matter how skilled and charismatic you are, you can't dress up a pork filled spending spree to be anything but that. By throwing a shot at Rush Limbaugh, what President Obama has done is added a layer to this story that only political junkies would be interested in, and allowed that the mainstream might be exposed to this. If, in fact, the MSM is soon debating whether or not this stimulus bill is in fact a means by which President Obama is attempting to create a sustained electoral majority, then the bill is dead. With it will go his extraordinary approval ratings.

Is Al Qaeda Rattled by President Obama?

That appears to be the thesis purported Joby Warrick of the Washington Post.

That was just a warm-up. In the weeks since, the terrorist group has unleashed a stream of verbal tirades against Barack Obama, each more venomous than the last. Obama has been called a "hypocrite," a "killer" of innocents, an "enemy of Muslims." He was even blamed for the Israeli military assault on Gaza, which began and ended before he took office.

"He kills your brothers and sisters in Gaza mercilessly and without affection," an al-Qaeda spokesman declared in a grainy Internet video this month.

The torrent of hateful words is part of what terrorism experts now believe is a deliberate, even desperate, propaganda campaign against a president who appears to have gotten under al-Qaeda's skin. The departure of George W. Bush deprived al-Qaeda of a polarizing American leader who reliably drove recruits and donations to the terrorist group

...

But for now, the change in Washington appears to have rattled al-Qaeda's leaders, some of whom are scrambling to convince the faithful that Obama and Bush are essentially the same.

...

Al-Qaeda's rhetorical swipes at Obama date to the weeks before the election, when commentators on Web sites associated with the group debated which of the two major presidential candidates would be better for the jihadist movement. While opinions differed, a consensus view supported Republican Sen. John McCain (Ariz.) as the man most likely to continue Bush administration policies and, it was hoped, drive the United States more deeply into a prolonged guerrilla war.

Soon after the vote, the attacks turned personal -- and insulting. In his Nov. 16 video message, Zawahiri denounced Obama as "the direct opposite of honorable black Americans" such as Malcolm X. He then used the term "house Negro," implying that Obama is merely a servant carrying out the orders of powerful whites.

Now Warrick may not be aware of the view of American Presidents by Al Qaeda, however here is how they view all American Presidents. To Al Qaeda, all American Presidents are the same. It matters not whether they want to withdraw from Iraq, stop enhanced interrogations, or any other liberal fantasy that some think will make the world love us.

In fact, that Al Qaeda is viciously verbally attacking the new President ought to hint to some of the liberals just how much goodwill all of their policies will gain with Al Qaeda itself. The insults should NOT however be a hint that Al Qaeda is scared or on the run. They are verbally abusing the new President with the same vigor that they did the old President. That's because they hate America and all it stands for. They will attack every symbol, verbally or otherwise, of the country.

In order for these verbal assaults to stop all the U.S. needs to do is meet the demands of Al Qaeda. This includes removing all troops from the Middle East. Immediately, become an Islamic nation that follows the Wahhabi sect. Finally, relinquish all support for Israel. Now, if the President does all of this then Al Qadea will stop hurling insults. Until then though, we should not interpret their insults as a sign of weakness.

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Obama's New Mortgage Regulations: From Wholesale to Retail

The Obama administration has announced plans for sweeping new regulations that will affect much of the financial sector. The rules are vague so far and they will affect hedge funds, credit default swaps, credit rating agencies as well as mortgage brokers. Since nothing specific has yet been proposed, I won't comment on any specific regulation. Furthermore, I will stay in my sphere of knowledge and only comment on what the Obama administration plans on doing regarding mortgage BROKER regulation.

Aides said they would propose new federal standards for mortgage brokers
who issued many unsuitable loans and are largely regulated by state officials.
They are considering proposals to have the S.E.C. become more involved in
supervising the underwriting standards of securities that are backed by
mortgages.

The key word, the one I made in all caps, is BROKER. There are two types of niches in mortgages, wholesale and retail. Wholesale mortgages are done by banks and mortgage companies but a mortgage broker is used to bring them the borrower. The mortgage broker has the ability to choose from a universe of bank, and so the logic is that with a good mortgage broker borrowers always get the best deal.

In retail, the borrower goes through the bank directly. While this means the borrower can only choose one bank, this eliminates the need for the broker, the middleman, and thus saves on fees.

For many years, it was the broker that usually dominated the industry. Banks liked the convenience of having borrowers brought to them and thus often gave better rates wholesale than retail.

Now, in the nearly seven years in the business I have seen incremental inconveniences done to mortgage brokers. Initally, there was no barrier. I started and as soon as I had a loan, I was making money. Then, the state began charging a yearly licensing fee. Then, the state made licensing more difficult. It included testing and a background check along with a yearly fee. I also saw the state of Illinois, my home state, very disorganized in the process. Often, brokers could work for weeks and months well past when they needed to have licensing done. That's because the state had little apparatus to quickly find out if someone was operating without a proper license.

Now, the Obama administration wants to add their own licensing procedures on top of the state's procedure. The first observation is that if the state of Illinois had trouble tracking down brokers you can imagine how well the federal government will do with several million mortgage brokers nationwide. Ultimately, what all of this will eventually do is drive most business from wholesale to retail. The more difficult wholesale brokering will be, the more banks will simply focus on retail banking.

Again, the key word is BROKER. If you work for a bank, you are a mortgage BANKER. You will notice that President Obama is not talking about tightening restrictions against mortgage BANKERS. As such, what all of this new regulation will really do is give more of a competitive advantage to retail. Now, already, in the last few months, Bank of America, Chase, and WAMU, have all closed wholesale operations and they only do loans retail. If the federal restrictions will be tight enough, it will mean that wholesale won't be worth it for most banks. Many other banks will follow in the footsteps of Bank of America, Chase and WAMU.

So, what will happen? All of these mortgage brokers that President Obama wants to oversee will simply move to retail where there is no oversight. A large enough bank can have its own portfolio of loans that will rival that of a broker that can choose from a menu of banks. As such, there is often little difference between the two. If the advantage is to work in retail, that's where all of these brokers will work. As such, while the Obama administration will be touting how they provided more oversight to mortgage brokers, in reality, what they will have done is drive mortgage broker to where there is no oversight, in mortgage banking. Not only would such a move not accomplish anything as far as oversight, but it will limit competition. If retail has no wholesale competition, it's much easier to charge higher rates. A borrower would actually have to become the broker in order to shop. They would literally have to call to every bank themselves to get a rate. That's in fact why they hire a broker. Without a broker, you are liable to see all the retail shops increase their rates slightly because the competition will now be limited.

The Shadow Government of the Obama Administration II

Yesterday, I pointed out that the explosion of "Czars", advisers, and envoys has the potential of creating a shadow government in the Obama administration. That's because "Czars", advisers, and envoys have no standard or defined roles. They are the creation of the President himself. As such, they operate outside of the apparatus of the government. Whereas someone in the State Department is answerable to the Secretary of State who is then answerable to the President? Who exactly is the terrorism Czar answerable to? Sure, they are answerable to the President but a terrorism Czar has no defined role. It's been created by the imagination of the President.

Today, like clockwork, Politico has a story that encapsulates what I was talking about yesterday.

For all the talk of his “Team of Rivals” pick in Secretary of State Hillary Clinton, Obama last week handed the two hottest hotspots in American foreign policy to presidential envoys – one to former Senate Majority Leader George Mitchell, and the other to a man who knows his way around Foggy Bottom better than Clinton does, Richard Holbrooke."Czar" Carol Browner will head up Obama's fight on global warming, where once his energy and environmental chiefs might have stepped in. Tom Daschle scored a ground floor office in the West Wing not by running Health and Human Services – but because of his role as Obama's health-reform czar.

...

But Obama appears willing to take that chance. Aides say he believes the Cabinet structure is outdated because it doesn’t recognize that problems like global warming sprawl across several agencies, often requiring a sort of uber-Cabinet member – a czar – to confront them.

In other words, Obama doesn't believe the "outdated" structure of cabinets is fit to deal with today's problems. Such talk should scare everyone. After 9/11, President Bush created the Department of Homeland Security. A lot of folks criticized him for expanding our bureaucracy, but when he saw a problem, he created a government bureaucracy. Whatever problems that creates, it also means there is a government structure to deal with it. President Obama thinks that global warming is a problem, but he doesn't think that government structure is fit to deal with it. Instead, he will let Carole Browner go off as a free agent and do as she pleases in dealing with it.

Browner has no official staff. She doesn't even have any official duties. In fact, she has no official power. Worst of all, she wasn't even confirmed. She can pretty much do as she pleases and she only has the ear of one person to convince of any new ideas.

Just think about the potential for abuse. If the Department of Energy were in charge of climate change, that would mean an entire apparatus was in place. Any corruption would be seen by a whole bureaucracy. Any one person could become the whistle blower. Now, Browner herself will be solely in charge of executing climate change. The only oversight Browner will have is from President Obama. In fact, even the legislature won't have oversight over Browner. Likely, the Legislature won't even know what Browner is doing. She will be a free agent. She will run a shadow government right out of the White House out of the control of anyone but the President himself.

Of course, as the Politico story points out, this will happen in intelligence, health care, automakers, and in the hot spots of the Middle East and Afghanistan/Pakistan. All of these areas will be run by positions created out of whole cloth by the President himself. These folks will only be answerable to the President himself. You will have shadow departments run by free agents that only report to one person. There will be no apparatus in place to control them at all.

We have the beginning of an unelected, unconfirmed, shadow government answerable only to the President. Conveniently enough, they were all created by the President. Such combinations are all a recipe for disaster.

$2.5 Trillion and Counting..The Government Picks Winners and Losers

There is now word that sometime in the next few months the President will ask for another round of TARP (Troubled Asset Relief Program)

Just last week, the Senate cleared the way for the release of $350 billion in bailout funds. A senior Obama administration official refused to speculate Monday on a future request, saying the first priority is to use the new money to “get ahead of the game and lay out a statement of principles from which to go forward.”

But persons close to the situation in Congress told Politico that the deteriorating economic situation leaves little breathing room. Bank losses are up and auto sales down. A top Hill staffer predicted Obama could be forced to seek more money even before the President’s Day recess in mid-February.

So, if you are counting, the first TARP program cost about $750 billion. The stimulus will be between $800 billion and just over $1 trillion. The next TARP program will likely be at least as large as the first. That is $2.5 trillion in new government spending to try and revive the economy.

Beyond the sheer size of the spending, the main concern should be just how targeted it is. In other words, either you are a major recipient of the new TARP, or it's likely you are going to be the one to pay for it. Talk about a redistribution of wealth...this is a massive government program that picks winners and losers.

Some of the biggest winners include banks, struggling homeowners, alternative energy providers, struggling states, auto makers, folks on food stamps, students, providers of infrastructure, providers of internet broadband. The losers are anyone not a winner.

Just imagine you have some money and you want to start buying up foreclosed properties. Here is a business that ought be thriving. Yet, the government will do all it can to make sure you don't make one red cent. Imagine you are a financial services company that largely stayed out of the mortgage mess. Your balance sheet is good enough to weather the economic storm. You are likely to be left out in the cold as far as any TARP money. Yet, all your competitors that weren't as wise will be flushed with government cash. In fact, there is even renewed talk of buying up so called "toxic assets" again. Put yourself in the position of a company like Berkshire Hathaway. You have taken some losses because everyone has. Yet, you didn't overextend yourself into mortgages. You are now looking up at the landscape and you see opportunity. Most of your competitors are about to go belly up. Talk about an opportunity. Not so fast, the government will eliminate that opportunity and hand you nothing.

What if you are Circuit City? The economy has hit you hard. You have to be liquidated. Yet, your business is not deemed worthy of saving so while the automakers will continue to get lifelines until they figure it out, you will have to be chopped up for parts. If you are Microsoft, you will have to lay people off because you are in good enough financial shape not to require a bailout. WalMart's profits are down, but not nearly enough to earn government money. So, if you are a retailer, software developer, or electronics outlet, you are not deemed worthy of government money. You are deemed one of the losers and will wind up paying for the stimulus.

Yet, struggling cities, car makers, homeowners, and banks will get free government money. Who is the most left out in the cold? Let's say you are not only a successful but financially wise individual that makes in excess of $250,000. Now, you get nothing. None of the tax cuts are for you. You get no bailout. In fact, others get a bailout. You get nothing.

It's frankly more than that. The government is determined to see certain things thrive. Automobiles, alternative energy, broadband, and infrastructure are just a few. Government interference of this sort combined with market forces only work in one way. What you will see is a rush to these markets. The government will succeed. What you will see is an explosion of activity in all markets the government deems worthy. Of course, it won't happen because they are worthy. It will happen because government money is there.

For instance, the easiest way to help struggling homeowners is by propping up loan modifications. So, with more government influence in this process, you will see all sorts of folks rushing to become loan modifiers. There is word that rules for mortgage brokers will get tighter. It's not hard to do the math on that. If being a mortgage broker will be more difficult and being a loan modifier easier, guess where more and more mortgage brokers will go.

What this stimulus plan will really do is transform our economy. It won't transform it based on any market forces. Rather it will be transformed based on the perception of President Barack Obama and the Democrats because they are picking winners and losers.

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My Advice to Republicans: Think Fourth Dimensionally

In this case, when I say the fourth dimension I mean the dimension of time. In other words, while President Obama may enjoy overwhelming popularity now, that doesn't mean that come next election he will. Certainly, the policies that he is backing won't necessarily be popular come next election.

In fact, there is an interesting dynamic forming. The massive spending stimulus bill that Obama is only supported by about half the nation. Closing GITMO, his main foreign policy proposal so far, has similar polling. In other words, while President Obama is currently very popular, his two signature issues get lukewarm receptions at best. As such, President Obama's popularity is fragile and can easily fade.

This brings me to two fairly trivial things that President Obama recently said that could be used in the future against a much less popular President Obama. Speaking to Congressional Republicans, he said this.

You can't just listen to Rush Limbaugh and get things done

After hearing some concerns about the stimulus plan from Republican Whip Eric Cantor, Obama said this.

I won. So I think on that one, I trump you

This sort of arrogance can be charming when a President is popular, but it can be used against the same President if he isn't all that popular. The President appears to want bi partisanship as soon as that means agreeing with him.

As such, my advice to the Republicans is this. Continue to meet with President Obama. Continue to present your ideas. Continue to voice your concerns. Do it in a respectful manner. Do not attempt to filibuster this stimulus. Reserve the filibuster for ideas like card check and the fairness doctrine, both of which the public generally agrees with the Republicans on. Under no circumstances though should the Republicans get on board any massive spending bill. There is no way that any more than a few marginal Republican ideas find their way into any final bill. That's fine because soon it will be President Obama and the Democrats that will own this stimulus. If and when this stimulus fails, they will also own the recession or even depression.

Then the Republicans need to go on the attack. Then, the Republicans need to point out just how much Obama's talk of bi partisanship is just TALK. They will have their own alternative. That alternative focuses on tax cuts and spending discipline. In other words, it is nearly 180 degrees different than Obama's stimulus plan. As soon as he owns the economy, their alternative, largely hypothetical, will look that much better. Once Obama and the Democrats own the recession, then it will be time to attack. At that point, the civility can end. Point out just how large the deficit is. Point out just how much pork there is in this bill. Furthermore, point out that this is exactly what you, the Republicans, were concerned about, and when you raised those concerns the President said that he won.

As such, the Republicans are in fact in good position to take advantage in 2010. They don't need to be confrontational with a popular President, however they must not give in to something they don't agree with just because the President is popular. Let him enjoy a legislative victory and then be ready to turn that legislative victory into an electoral defeat. They can do it if they think fourth dimensionally.