Tag: Barack Obama

Love the Cards, Hate the Card Issuers

God hates the sin but loves the sinner, we are told.  Americans have a similar attitude towards credit cards.  They love the cards but hate the card issuers.

Naturally, President Barack Obama has picked up on this sentiment and wants the credit card companies to be “fair.”  Reports the Washington Post:

The Obama administration yesterday called for an end to unfair credit card industry practices such as retroactive interest rate increases for any reason, late-fee traps that penalize borrowers with weekend or middle-of-the-day deadlines and teaser rates that last less than six months.

In a written statement released by the Treasury Department, the administration outlined practices it would like Congress to reform as it considers two bills that would crack down on the industry. One proposal would force card companies to apply payments above the minimum amount to the highest interest rate debt. To crack down on over-limit fees, the administration would also like Congress to require card companies to get customers’ permission to set up accounts so transactions over the limit can still be processed.

There are lots of reasons to criticize the practices of  credit card companies, but many of the rules are simply mechanisms to charge riskier borrowers more.  If you pay off your bill every month, you don’t pay the extra fees and interest.  If you are more disorganized, short on cash, or both, you pay more. 

Higher charges make it possible to provide more credit to more people.  Of course, politicians believe in the latter but not the former.  Banks should provide credit cards, make loans, and issue mortgages to everyone, irrespective of credit standing, at rates akin to those charged Bill Gates.  Anything more is viewed as a variant of “predatory” lending deserving condemnation.

Maybe it would be best for some people not to buy so much on credit, but that isn’t – at least so far – the government’s decision.  However, it would be more honest if government branded people with the Scarlet C and banned them from borrowing than prohibiting companies from charging higher rates and fees to reflect higher credit risks.

The credit card debate is stranger than most in Washington.  Listening to critics you’d think that the card companies were dragooning people off the streets, forcing them at gunpoint to sign up for cards, and demanding that they spend money else their children will be kidnapped and sold into slavery.  Precisely who was forced to accept and use these terrible cards with their terrible terms?  No one.

Instead of posturing as defenders of the body politic, crusading politicians should, as my friend Don Boudreaux of George Mason University suggested,  give up their day jobs and start credit card companies.   These entrepreneurs then could offer consumers better cards with less onerous terms, making everyone better off.

Any takers?

The War in Afghanistan Is about to Turn Nastier

afghanistanWhile Iraq’s security situation has been improving–though the possibility of revived sectarian violence remains all too real–the conflict in Afghanistan has been worsening.  The challenge for allied (which means mostly American) forces is obvious, which is why the Obama Administration is sending more troops.

But the administration risks wrecking the entire enterprise by turning American forces into drug warriors.

Reports the New York Times:

American commanders are planning to cut off the Taliban’s main source of money, the country’s multimillion-dollar opium crop, by pouring thousands of troops into the three provinces that bankroll much of the group’s operations.

The plan to send 20,000 Marines and soldiers into Helmand, Kandahar and Zabul Provinces this summer promises weeks and perhaps months of heavy fighting, since American officers expect the Taliban to vigorously defend what makes up the economic engine for the insurgency. The additional troops, the centerpiece of President Obama’s effort to reverse the course of the seven-year war, will roughly double the number already in southern Afghanistan. The troops already fighting there are universally seen as overwhelmed. In many cases, the Americans will be pushing into areas where few or no troops have been before.

Through extortion and taxation, the Taliban are believed to reap as much as $300 million a year from Afghanistan’s opium trade, which now makes up 90 percent of the world’s total. That is enough, the Americans say, to sustain all of the Taliban’s military operations in southern Afghanistan for an entire year.

“Opium is their financial engine,” said Brig. Gen. John Nicholson, the deputy commander of NATO forces in southern Afghanistan. “That is why we think he will fight for these areas.”

The Americans say that their main goal this summer will be to provide security for the Afghan population, and thereby isolate the insurgents.

But because the opium is tilled in heavily populated areas, and because the Taliban are spread among the people, the Americans say they will have to break the group’s hold on poppy cultivation to be successful.

No one here thinks that is going to be easy.

Indeed.

The basic problem is that opium–and cannabis, of which Afghanistan is also the world’s largest producer–funds not only the Taliban, but also warlords who back the Karzai government and, most important, the Afghan people.  The common estimate is that drugs provide one-third of Afghanistan’s economic output and benefit a comparable proportion of the population.  Making war on opium inevitably means making war on the Afghan people.

As both Ted Galen Carpenter and I have been arguing, most recently in speeches to various World Affairs Councils, diverting military attention to the drug war risks the entire enterprise in Afghanistan.  Already some drug-running warlords have been refusing to give intelligence to allied commanders and are killing government anti-drug officials.  Broader popular sentiments also turn against the allies when they deprive farmers of their most remunerative livelihood.

Washington has no obvious long-term answer to the opium trade–only legalization/decriminalization would take the money out of illicit drug production, but American politicians refuse to admit the obvious.  In any case, the Obama administration should focus on the war against the Taliban and al-Qaeda.  Ultimately, we should emphasize a solution which safeguards America’s fundamental security objectives in Afghanistan, namely, which precludes any terrorist training camps and sanctuary for those who attack Americans.  Once we achieve these goals and bring American military personnel home, we can debate doing more about Afghanistan’s opium fields.

The Politics of Budget-Cutting

helicopterIn Washington, the symbolic almost always trumps the substantive.  Thus, legislators complain, for good reason, about pork and earmarks, which ran about $35 billion at their maximum, and ignore entitlements, which entail some $100 trillion in unfunded liabilities.

So it is with President Obama.  He continues the endless bailouts, which cumulatively now run around $13 trillion.  He proposed a $3.6 trillion budget and will leave us with a $1.4 trillion deficit next year–and nearly $5 trillion in additional debt on top of the massive deficits already projected over the coming decade.  But he asked his Cabinet officers to chop $100 million in administrative expenses.

And he says he doesn’t need a new helicopter.  Fiscal responsibility in action.

Alas, the helicopter, while costing billions, isn’t an easy budget target.

Reports the New York Times:

At a Washington conference on fiscal responsibility in February, President Obama tried to set the tone by saying he did not need the new costly presidential helicopters that had been ordered by the Bush administration.

“The helicopter I have now seems perfectly adequate to me,” he said to laughter. On a more serious note, he added, “I think it is an example of the procurement process gone amok. And we’re going to have to fix it.”

But the president is learning that in the world of defense contracting, frugality can be expensive. Some lawmakers and military experts warn that his effort to avoid wasting billions of dollars could end up doing just that.

The administration’s plan to halt the $13 billion helicopter program, announced this month, will leave the government with little to show for the $3.2 billion it has spent since the Bush administration set out to create a futuristic craft that could fend off terrorist attacks and resist the electromagnetic effects of a nuclear blast.

Critics say the Pentagon would also spend at least $200 million in termination fees and perhaps hundreds of millions to extend the life of today’s aging fleet. As a result, several influential lawmakers and defense analysts are now calling for a compromise that would salvage a simpler version of the helicopter that is already being tested.

They say it could be a more palatable alternative in tough economic times than seeking new bids for a more advanced craft, which has proved difficult to develop.

No wonder Washington is known as a place where everything about government is permanent.  Once you start spending money on a program, it becomes extremely hard to stop.  Part of that is the political dynamic of interest groups, the problem so well dissected by the Public Choice economists.  And part of it is legal and procedural.  Contracts are let, cancellation fees are due.  It’s bad to waste money on a gold-plated helicopter.  It seems even worse to waste money developing a gold-plated helicopter, and then getting nothing at all by canceling it.

There is, however, an amazingly simple solution, of which Congress and the president apparently are not aware.

Don’t spend the money in the first place.  Eschew new programs.  Say no to special interests.  Let taxpayers keep more of their own money.

This approach would seem to make sense at any time.  But especially today, with the federal government facing a deficit approaching $2 trillion in 2009.

Didn’t Nancy Reagan lecture us to “just say no”?  We should invite her back for a return tour of Washington, only she should talk about federal spending this time.

The Problem with the EU in Afghanistan

President Barack Obama, like President George W. Bush before him, has gone hat-in-hand to the Europeans to request (beg?) for more troops for Afghanistan.  Alas, the European governments gave him the back of their collective hand:  they may like President Obama more than his predecessor, but that doesn’t mean they, or their peoples, want to do any more in Afghanistan.

But then, it’s not clear that getting more European troops would help much.  Reports the (Australia) Herald Sun:

When asked by the Britons to attack Afghan rebels, the commander of a [Czech] special operations unit (SOG) said “we’re not going to, it’s dangerous,” then ordered his men to get in trucks and return to the base.

On another occasion, an SOG commander decided that the task the Britons had set ran counter to the unit’s mission.

Yet another time, a commander said he could not help as his soldiers were on vacation.

“I find it hard to recover from the news I get about this unit. It harms the reputation of the army,” Czech Defence Minister Vlasta Parkanova told the daily.

Some help.

Obviously, some European troops, including Czechs, fight hard and well.  But most of the countries deploy their forces to ensure that they don’t have to fight.  NATO provides precious few benefits for America in Europe or elsewhere.  After 60 years, the U.S. should leave NATO to the Europeans.

The Joys of Stock Ownership

I happen to own shares in Bank of America, so I’ve just received a proxy statement for the upcoming annual meeting. The Board of Directors recommends that I authorize them to vote my shares FOR an uncontested slate of candidates for the board. Usually I go along with such proxy requests.

But this time I thought: Why should these people get something like $250,000 a year to take orders from President Obama and Secretary Geithner? It’s become pretty clear that the Obama administration intends to use the bailout money to control private companies. He intends to tell companies what cars to make, how much to lend, how much to charge for credit cards, what to pay their executives, what kinds of bonuses are acceptable, and other crucial management decisions.

So I decided to write in “Barack Obama” for all 18 positions on the Board of Directors. However, neither the paper ballot nor the online ballot allowed for write-ins. I guess the official slate will win. But make no mistake. Obama’s the boss.

Juan Williams Blasts Obama, Duncan on Vouchers

juan-williamsYesterday on Fox News’ Special Report, Juan Williams had this to say about Obama’s silence and Duncan’s hostility to the DC voucher program, recently put on the chopping block by Democrats in Congress:

This is an outrage to me. … This is so important that you give young people a chance to have an education in America and especially in a failing public school system like you have in the District of Columbia. This voucher system is a direct threat to the unions. And so I think everybody on Capitol Hill, that’s getting money from the NEA or AFT, they should be called on the table. They should ask them, ‘where do you send your kids to school? And are you willing to say these kids getting the vouchers…and doing better than the rest of the kids, that these kids aren’t deserving of an opportunity to succeed in America?’ You just want to scream. Why Duncan and Obama aren’t in the forefront of education reform is an outrage and an insult to the very base that voted for them.

But we don’t have to ask President Obama where he sends his kids to school, do we? We already know he sends them to the prestigious private Sidwell Friends school also attended by several of the poor DC voucher students. But those voucher students will only remain classmates of Sasha and Malia for another year or so. After that, they’re out… because Barack Obama lacks the courage, the wisdom, or both to get his own party behind this program – a program that his own education department has shown is a success. Better results at a quarter the cost, and the reaction of our unified Democratic government ranges from outright opposition to malign neglect.

Future generations will look back on these politicians and bureaucrats as the Oral Faubuses of the 21st century. Like Faubus, they will ultimately fail.

Like Faubus, their names will live in infamy.

The Bloom Could Not Survive

“Among several outstanding nominations made by President-elect Obama, I believe Arne Duncan is the best.”

That’s what Senator Lamar Alexander (R-TN) said of now-U.S. Secretary of Education Arne Duncan at his confirmation hearing. Alexander thought that Duncan was a man who truly embraced reform and could work with anybody, and who, like his boss, seemed to really want to get beyond politics.

That was before reality set in.

With the Department of Education’s media-dodging, Friday-afternoon release of a study showing that Washington’s voucher program is outperforming DC public schools at a fraction of the cost, and Duncan’s galling failure to report these results as Congress debated the voucher program’s fate last month, it has become clear that Duncan is far from above playing politics. Of course, he isn’t necessarily calling the shots. He works for President Obama, whom you might recall announced that his children would attend posh, private, Sidwell Friends on a Friday afternoon.

It’s not only on choice that Obama and Duncan are playing the game. They are great at reform-y talk about such things as accountability and high standards, but talk is all they’ve delivered. Oh, that and tens-of-billions of dollars to bail out public schools from which parents should never be allowed to take their kids and money, and which aren’t good enough for the president’s children.

So is the public starting to see that the administration might not be delivering the great change it has promised? It’s hard to tell, but some journalists and education wonks are catching on.

Today, the Denver Post’s David Harsanyi rips into pretty unbelievable protestations by Duncan that he didn’t know about the DC voucher study’s results – or, presumably, that they were even available – at the time Congress was slashing the program’s throat. He also attacks an assertion by Duncan that the Wall Street Journal was being “fundamentally dishonest” in reporting that Duncan’s people refused to answer questions on when they knew about the study’s results.

Now to the wonks. Over on the Fordham Institute’s Flypaper blog, Mike Petrilli takes Duncan to task for his huge-money, huge-talk, little-substance approach to coupling accountability and reform to stimulus riches. But Petrilli  doesn’t just offer his own thoughts; he links to similar assessments by a couple of prominent Obama supporters as well.

So is the bloom coming off the Duncan rose, and at least on education, the Obama rose as well? Maybe, though growing critiques do not a fall-from-grace make.

If the honeymoon is over, it is critical that people understand that the Obama administration failing to match rhetoric to reality is hardly unique, except insofar as Obama’s rhetoric has been uniquely persuasive. No, the administration is just traveling the same political rails that all recent administrations have gone down when they’ve claimed – and sometimes even tried – to challenge the status quo.

The Bush administration softened enforcement of No Child Left Behind pretty quickly as the public-schooling monopoly dodged and evaded any meaningful change. NCLB’s predecessor, the Improving America’s Schools Act, was at best weakly enforced by President Clinton. Even Ronald Reagan gave up on major reform when it became clear that far too few members of Congress would take on the then-nascent U.S. Department of Education.

Why can’t politicians deliver the changes to the system that they promise? Because any within-the-system reforms that could be meaningful, such as high standards and tough accountability, ultimately go against the interests of the 800-pound gorillas in education – the teachers unions, administrators associations, bureaucrats, and others whose comfortable jobs are all but guaranteed by the education monopoly. So reformers might win little skirmishes now and then, but no groups have either the will, ability to organize, or resources necessary to defeat in protracted political warfare the people whose very livelihoods come from government schools.

It is not just the awesome political power of special interests, however, that keeps the monopoly in place. As Terry Moe has found, many Americans have a deep, emotional attachment to public schooling, one likely rooted in a conviction that public schooling is essential to American unity and success. It is an inaccurate conviction – public schooling is all-too-often divisive where homogeneity does not already exist, and Americans successfully educated themselves long before “public schooling” became widespread or mandatory – but the conviction nonetheless is there. Indeed, most people acknowledge that public schooling is broken, but feel they still must love it.

So how can we overcome the government-schooling monopoly, which cannot be reformed from within? We must go around it. We must let individuals control their education dollars by giving everyone school choice. We must make education work the same way as the computer, package-delivery, grocery, clothing, toy, and countless other industries, with autonomous providers competing for the business of empowered consumers. Only then will educators have to earn their money by offering something people want, not by controlling politicians.

But what of the public schooling ideology that compels even unhappy parents to support the reform-destroying status quo? How can that be overcome in order to get widespread choice?

Here’s where long, hard work comes in. We must remind the public over, and over, and over again of reality: that forced government schooling has not been a great unifier of diverse people, and has often been a great divider; that Americans for centuries educated themselves without compelled public schooling; that a government monopoly is inherently doomed to failure; and perhaps most importantly, that forcing all people to support a single system of government education, in which either a majority or powerful minority decides for everyone what the schools will teach, is fundamentally incompatible with individual liberty and freedom.

Barack Obama and Arne Duncan are guilty of too successfully portraying themselves as something different, as people above political reality who can and will implement enlightened policies no matter what. For this they deserve to be taken to task. But they are not, ultimately, to blame for yet more empty promises; political reality almost requires such deception. No, government education itself – and too many people’s blind fealty to it – is the root of our education evil.