Obama's shot in the dark election offering

President Obama has to come up with something better than 1 to 2 percent of GDP growth in 2012 and better than 8.75% or higher expected unemployment in order to win re-election next year.  Expect his team to come up with something that will not be painful to taxpayers, not painful to the debt, but offers a lot of free money to a supposedly disadvantaged group that may represent a very significant, and very worried portion of the electorate, and to do so about a year from now.  This may be his best chance at re-election, but it won't be without risking significant harm to the nation.

Home Foreclosures Higher Than At A Recovery Level

September home foreclosures while down from August were still dramatically higher than the same month last year. And it's not like August was a low bar - July and August were the two highest foreclosure months ON RECORD.  The reality is that while unemployment is a lagging economic indicator, in the consumer arena, foreclosures lags unemployment - lose your job then lose your house. The same cannot be said to be true on the business side; foreclosures can happen prior to bankruptcy and can be part of the ultimate cause of death.

Why the high foreclosure rate? The Community Reinvestment Act. Blame Carter, Clinton, Dodd and a slew of other Democrats for imposing, expanding and propping up this boondoggle as part of an exercise in social engineering. Home ownership for all is as utopian as a no-money world. As a result of pushing this goal they created an unsustainable housing bubble, which inevitably burst. A recession that involves an inordinate number of underqualified home owners, many now out of work, and the threat of inflation ominously set to drive interest rates up thereby exacerbating the problem.

What does it mean for the economy?  Well it certainly doesn't help things.  And the government cannot do everything despite the White House belief that it can.  They cannot hold the flood gates forever;

Last week, the Obama administration hailed a milestone in its mortgage relief effort, reporting that 500,000 homeowners have received help since the program was launched in March. But new defaults are still exceeding the number of borrowers getting help.

Mortgage companies have slowed down the pace of foreclosures as they evaluate whether borrowers qualify for the administration's program. Analysts, however, forecast that many of those homeowners won't qualify, and foresee a new wave of foreclosed properties hitting the market next year. That's likely to further depress home prices.

 I'm still betting on a W-shaped recovery, with a long U shape in the right hand side dip of the W.  There's too many fundamental problems to assume that Wall Street will lead the way out of the recession. Hopefully I'm wrong, unfortunately I'm not optimistic.

Affordable Housing Debacle - Reminding You About Democrat Failures

First there was the red flag being raised before the election that the housing crisis was caused by government intervention, NOT de-regulation was the cause of the global financial crisis.

Remember this video?



Now comes the proof. The government did it. Carpe Diem has the story.

The real tragedy of the government’s affordable housing policy is the impact on average Americans, particularly those of modest means. Millions of these borrowers, who were supposed to have been helped by federal affordable housing policy, have now been forced into delinquency and foreclosure, destroying their asset base, their credit, and in some cases their families. For example, Latino homeowners, who once appeared to be among the most frequent beneficiaries of affordable housing policies, are now the victims of the policies that their political representatives in Washington once championed.

And yet Latinos predominantly vote Democrat. Democrats count on your inattention to keep power. They could not possibly be so wrong and get away with so much otherwise.

Alternatives to the Democrat stinkulus package

As conservatives, we deserve to be challenged on our distaste for the Democrat stinkulus package. What would we do instead? It's pretty easy to poke holes in a bad idea (I mean a REALLY BAD IDEA), and plenty of people have done so already. But what would Republicans do differently?

Is there anything that we could do, beyond looking at the bill, finding the pork-laden items and try to get them crossed off the list? Yes. That is not to suggest that those pork projects and things not related to economic stimulus should not be singled out, questioned and if required, ridiculed into removal. Those things should be done and in all likelihood will be done in the Senate today to some degree. But there is value in conservatives pointing out what we think would work better - much better - in solving the economic influenza the country is currently suffering.

There are plenty of conservative alternatives to the stinkulus package, including what top Republican Lawmakers have already proposed;

The Republican plan relies on cutting lowest individual tax rates from 15 percent to 10 percent and from 10 percent to five percent, tax deductions for small businesses, and a ban on tax increases to pay for new spending -- which they say should be paid for by cutting spending in other areas.

It would also make unemployment benefits tax free, and offer a home-buyers credit for those who make a minimum down payment of five percent, according to a statement from the Republican leadership.

"At the end of the day, government can't solve this problem. The American people have to solve it. And the way they can solve it is if we allow them to keep more of the money that they earn," said Boehner.

Republican leaders were expected to meet with Obama next week to discuss the plan, as the House prepares to vote Wednesday on the Democratic plan and any Republican amendments.

But that's not necessarily an exhaustive view of what conservatism offers as alternatives. Tax reduction and tax credits are differing ways of managing the same problem for example. And while Republicans are lampooned as helping greedy corporations for trying to use that method, and Democrats are lauded for their ability to use a "scalpel instead of a hatchet" (of course in ways that suit their socio-political aims, those options should not be off the table either. If the Republicans were to proceed with specific, targeted tax credits, they would need to do so carefully with forethought and abetted by a strong PR campaign that the specifics are not evil-corporation-and-anti-justice manipulations.

Here's a far from comprehensive list of ideas that deserve consideration, thought and development (not 647 pages in 14 or so days, like our liberal counterparts have done);

*Repeal the destabilizing parts of the Community Reinvestment Act. It won't stimulate the economy but it will prevent a re-occurrence of the biggest fundamental cause of the housing bubble

*Zero rate capital gains taxes for 2 years for investment - in American investments only. It will promote investment in the nation. Investment is another key way to help the ailing GDP. While it is true that consumer spending accounts for about 2/3 of the GDP, it also accounts for the bulk of the reason for consumer debt being at such high levels and why the loosening of credit will not necessarily re-establish a spending frenzy. It's an inherently unstable way to grow an economy - there needs to be more balance between consumer spending and corporate research, development and investment. This is also a longer term approach but should be considered as part of a holistic fix rather than the stop-gap approach being thrust upon Americans.

*Reduce income taxes at the higher end of the income scale where the taxes are actually being paid. It's been pointed out numerous times, backed by IRS data, that the top 5% of income earners pay 60% of federal income tax, the top 25% of income earners pay 86%, and the top 50% pay 97% of income taxes. The table below is from the National Taxpayers Union.Clearly, providing tax breaks in the form of rebate checks to the bottom percentages of the grid is not tax relief, but re-distribution of wealth. The merits of that idea are for another debate. What is critical here, is that by reducing the tax burden on those with more considerable income, achieving spending or investment is far more likely than by spreading out to those who will spend it on debt repayment, or food. Nobody wants to see people going hungry, but wouldn't it be better for investors to hire people or avoid layoffs so that people can buy themselves the food they need rather than be dependant on food stamps or a rebate check?

*Provide tax credits for companies for additional Research and Development. This is the same idea as using a scalpel monotoned above. However in this case it could be an effective investment generating tool.

*Provide substantial tax credits for companies who repatriate labor or create new jobs. In a sense it's anti-free trade, but companies who outsource labor offshore are looking to enjoy the benefits of the American market without a commensurate investment into the people of that country. While the rules exist such that it is not required to do so, it doesn't mean the government can't incent companies to help with domestic production.

*Remove or reduce federally imposed restrictions on nuclear power, offshore drilling, onshore drilling, and clean coal development. This will help reduce the dependence on foreign, often politically hostile oil. It will create exploration and development jobs, AND it will generate revenue for states that were looking for federal handouts as part of the stinkulus package. This would reduce the burden of that $888 billion boondoggle substantially.

*Allow banks and automotive companies and any other businesses who have acted recklessly to fail. Cover only FDIC protected deposits, like the rules say. Bad banks/car makers will be replaced by more efficient options. Where there is a void the free market will fill it. Allow companies who would benefit from restructuring to do so under Chapter 11 protection. Thee would be a lot of short term pain, but the reality is that OVER-REGULATION (e.g. CAFE standards, Community Re-investment Act), government intervention, is what has turned the American economy on it's head, not stupid or greedy companies, or stupid or greedy CEOs (although in some cases it's apparently true).

Ronald Reagan's warning about the government being the problem is no less true today than in his time. The government needs to back away from the economy and let the entrepreneurs and those in the know do their thing. Just watch the miracle unfold and reap in the tax dollars it generates.

*Reduce government spending enough to balance the budget. The crisis exists from over-extension of credits, more deficits are not the answer - fiscal sanity is the answer. This is not a fight fire with fire situation. Why such a no-brainer fails consistently to get the attention it deserves is beyond me. Let's just borrow from our grandchildren and the people of America won't care - the impact is too esoteric to understand. If that's true, it's a shame. Government should set an example, clean up it's wastefulness and spend money only where it needs to do so - roads, police, the military, things like that.

The above items are far from a comprehensive list, but they are ideas that certainly make more sense than funding contraception. How does that possibly tie in to economic stimulus? Maybe some other type of stimulus, but it's something the government clearly has no business being involved in.

There are a multitude of conservative ideas, that given the chance I'm sure conservatives would be willing to debate about the specific merits and/or shortcomings. Then again, Obama won. Pelosi won, and Reid won. There's no such thing as a free lunch, but the Democrats would have you believe there is. Another way of looking at it is that you get what you pay for, and if you paid nothing, don't expect a lot of quality in what you receive America.