Topic: Government and Politics

Obama’s Unerring Instinct for Aides with Authoritarian Instincts

President Obama has appointed New York City health commissioner Thomas Frieden to head the Centers for Disease Control. Public health is an important issue, but as Jacob Sullum points out at Reason, Frieden has a weak grasp of what’s “public” in the world of health:

Frieden, an infectious disease specialist who is known mainly as an enthusiastic advocate of New York’s strict smoking ban, heavy cigarette taxes, trans fat ban, and mandatory calorie counts on restaurant menu boards, embodies the CDC’s shift from illnesses caused by microbes to illnesses caused by lifestyle choices. “Dr. Frieden is an expert in preparedness and response to health emergencies,” Obama said today, ”and has been at the forefront of the fight against heart disease, cancer and obesity, infectious diseases such as tuberculosis and AIDS, and in the establishment of electronic health records.” Some of these things are not like the others. When it comes to justifying the use of force, there is a crucial difference between health risks imposed by others (such as bioterrorists or TB carriers) and health risks that people voluntarily assume (by smoking or overeating, for example). In the former case, even those who believe that government should be limited to protecting individual rights can see a strong argument for intervention; in the latter case, intervention can be justified only on paternalistic or collectivist grounds. Frieden either does not recognize or does not care about this distinction.

Frieden told the Financial Times in 2006 that “when anyone dies at an early age from a preventable cause in New York City, it’s my fault.” That’s a breathtaking vision of the scope and power of government. If you eat butter or salt, or smoke, or climb mountains, or ride a motorcycle, or bungee-jump, or run with the bulls in Pamplona, Dr. Frieden feels that he and the government are personally responsible. This isn’t paternalism; your parents usually let you make your own decisions along about the age of 18. And it isn’t fair to nannies to call it “nanny state” regulation: after all, nannies are paid to take care of children until they can care for themselves; they don’t barge into your home or your bar or your restaurant uninvited, issuing orders to adults. Maybe the right term is food fascism, for the attempt to use force to tell adults what they can and can’t eat, smoke, or purchase.

More on the distinction between public health problems and health problems that are merely widespread here.

And more about Obama’s appointment of “a bunch of statist ideologues who have been waiting years or decades for an election and a crisis that would allow them to fasten on American society their own plan for how energy, transportation, health care, education, and the economy should work” here.

How Does It Feel to Be at the Table Now?

On Monday, the Obama administration held a well-publicized love-fest with lobbyists for the health care industry.  It turns out that rather than a “game-changer,” the event was a fraud.  And the industry got burned.

At the time, President Obama called it a “a watershed event in the long and elusive quest for health care reform”:

Over the next 10 years — from 2010 to 2019 — [these industry lobbyists] are pledging to cut the rate of growth of national health care spending by 1.5 percentage points each year — an amount that’s equal to over $2 trillion.

By an amazing coincidence, $2 trillion is just enough to pay for Obama’s proposed government takeover of the health care sector.

Yet The New York Times reports that isn’t the magnitude of spending reductions the lobbyists thought they were supporting:

Hospitals and insurance companies said Thursday that President Obama had substantially overstated their promise earlier this week to reduce the growth of health spending… [C]onfusion swirled in Washington as the companies’ trade associations raced to tamp down angst among members around the country.

Health care leaders who attended the meeting…say they agreed to slow health spending in a more gradual way and did not pledge specific year-by-year cuts…

My initial reaction to Monday’s fairly transparent media stunt was: “I smell a rat.  Lobbyists never advocate less revenue for their members.  Ever.” The lobbyists are proving me right, albeit slowly.  (Take your time, guys.  I don’t mind.)

The Obama administration seems a little less clear on that rule.  Again, The New York Times:

Nancy-Ann DeParle, director of the White House Office of Health Reform, said “the president misspoke” on Monday and again on Wednesday when he described the industry’s commitment in similar terms. After providing that account, Ms. DeParle called back about an hour later on Thursday and said: “I don’t think the president misspoke. His remarks correctly and accurately described the industry’s commitment.”

How did the industry find itself in this position? Politico reports:

The group of six organizations with a major stake in health care…had been working in secret for several weeks on a savings plan.

But they learned late last week that the White House wanted to go public with the coalition. One health care insider said: “It came together more quickly than it should have.” A health-care lobbyist said the participants weren’t prepared to go live with the news over the weekend, when the news of a deal, including the $2 trillion savings claim, was announced by White House officials to reporters.

Gosh, it’s almost like the White House strong-armed the lobbyists in order to create a false sense of agreement and momentum.  Pay no attention to that discord behind the curtain!

At the time, I also hypothesized that this “agreement” was a clever ploy by all parties to pressure a recalcitrant Congressional Budget Office to assume that the Democrat’s reforms would produce budgetary savings.  “Otherwise, health care reform is in jeopardy,” says Senate Finance Committee chairman Max Baucus (D-MT).  Turns out there was no agreement, and the industry was just being used.

American Hospital Association president Richard Umbdenstock was more right than he knew when he told that group’s 230 members:

There has been a tremendous amount of confusion and frankly a lot of political spin.

Merriam-Webster lists “to engage in spin control (as in politics)” as its seventh definition of the word “spin.”  Its second definition is “to form a thread by extruding a viscous rapidly hardening fluid — used especially of a spider or insect.” Which reminds me…

CORRECTION: My initial reaction to Monday’s media stunt – “I smell a rat” – was transcribed incorrectly.  It should have read, “I smell arachnid.”

(HT: Joe Guarino for the pointers.)

Of Course, It Is the Banks’ Fault!

Congress is off on another crusade, to save Americans from credit cards.  People get into debt, run up big fees, generally feel abused, and complain to their elected officials.  Never mind the obvious convenience, which is why credit cards have become an indispensable part of American commerce.  Legislators plan on micro-managing the credit terms which may be offered across America.

Reports the New York Times:

“We like credit cards — they are valuable vehicles for many people,” said Senator Christopher J. Dodd, Democrat of Connecticut, the chairman of the Senate banking committee and author of the measure now being considered by the Senate. “It’s when these vehicles are being abused by the card issuers at the expense of the consumers that we must step in and change the rules.”

“Abused by the card issuers.”  Of course.  The very same card issuers who kidnapped people, forced consumers to apply for cards at gunpoint, and convinced merchants to refuse to accept checks or cash in order to force everyone to pull out “plastic.”  The poor helpless consumers who had nothing to do with the fact that they wandered amidst America’s cathedrals of consumption buying wiz-bang electronic goods, furniture, CDs, clothes, and more.  The stuff just magically showed up in their homes, with a charge being entered against them against their will.  It’s all the card issuers’ fault!

But then, Sen. Dodd’s assumption that consumers are not responsible for their actions fits his legislative style: no one is ever responsible for anything.  Least of all the residents of Capitol Hill.

Drop the Soda, or Else!

Government is busy trying to protect us from ourselves.  It tosses nearly a million people in jail every year for marijuana offenses.  City councils, state legislators, and Congress all add ever more restrictions on cigarette smoking.  Legislators demand action to stop steroid use by athletes.  And the Senate Finance Committee is considering a “fat tax” on sugared drinks.

This isn’t the first time legislators have considered trying to squeeze a little money out of us while micro-managing our lives.  Editorializes the Boston Herald:

Earlier this year Gov. Deval Patrick proposed a 5 percent tax (more if the sales tax is raised) on sweetened drinks and candy bars under the pretext of battling obesity (while thinning out our wallets). Happily we haven’t heard much about it lately. But yesterday on Capitol Hill the Senate Finance Committee heard testimony about helping to fund President Barack Obama’s massive health care expansion in part with a similar tax.

The Congressional Budget Office estimates that a 3-cent tax per 12-ounce sweetened drink - including sports drinks and iced teas - would bring in $24 billion over four years.

“Soda is one of the most harmful products in the food supply,” said Michael Jacobson, head of the Center for Science in the Public Interest, which gives you some idea of the mindset here. Jacobson would also like to raise taxes on alcoholic beverages.

If the American people don’t start saying no, there won’t be much liberty left to preserve.

“Gangster Government” at Work

With the Obama administration preferring to rely on politics rather than the law to “fix” the auto industry, bondholders have discovered that the new politics of this administration is quite a bit more brutal than the old politics practiced by the Bush administration.

Henry Payne and Richard Burr write of “gangster government” using not just demagogic public attacks on greedy bondholders but apparent threats of regulatory sanction to get its way in bankruptcy court.  They explain:

The holdout debtholders sought the refuge of the courts, where decades of bankruptcy law promised that secured lenders would receive just compensation for their investment. But then Obama called in his fixers.

In his April 30 news conference, Obama singled out Chrysler’s self-described “non TARP lenders” as “speculators” who sought to imperil Chrysler’s future for their own benefit. “I do not stand with them,” Obama thundered. “I stand with Chrysler’s employees and their families and communities… . (not) those who held out when everybody else is making sacrifices.” Michigan Democratic allies like Sen. Debbie Stabenow and Rep. John Dingell piled on, calling the lenders “vultures.”

Then, on Detroit radio host Frank Beckmann’s show May 1, a lawyer for the lenders, Tom Lauria, chillingly revealed how “one of my clients was directly threatened by the White House and in essence compelled to withdraw its opposition to the deal under threat that the full force of the White House press corps would destroy its reputation if it continued to fight.”

Lauria later confirmed the threats came from Rattner and that the target was Perella Weinberg, which had suddenly withdrawn its opposition after the president’s April 30 press conference.

The White House denied the threats, but Business Insider subsequently reported that “sources familiar with the matter say that other firms felt they were threatened as well. None of the sources would agree to speak except on the condition of anonymity, citing fear of political repercussions.”

“The sources, who represent creditors to Chrysler,” continued the Insider story, “say they were taken aback by the hardball tactics that the Obama administration employed to cajole them into acquiescing to plans to restructure Chrysler. One person described the administration as the most shocking ‘end justifies the means’ group they have ever encountered… . Both were voters for Obama in the last election.”

The idea of the White House–with the IRS and SEC at its disposal–threatening investment firms should have sent off alarm bells in America’s newsrooms. Inexcusably, the media establishment largely ignored the hardball tactics. This is the same media that has doggedly reported on President Bush’s U.S. attorney firings and the post-9/11 interrogations of terrorist suspects.

I have no opinion on who should get what as part of Chrysler’s bankruptcy – other than that the taxpayers shouldn’t be paying for America’s version of lemon socialism so common around the world.  But crude political interference by the political authorities in Washington in a bankruptcy case erode the rule of law and administration of justice.  If Obama and company believe that the end justifies the end when it comes to handing the auto companies over to favored interests, who among us is safe from similar action by this or another administration in the future?

Handicapping the Justicial Horserace

The increase in chatter in Washington about Justice Souter’s replacement is a clear signal  that pundits have gotten about as much mileage as they can over speculation and want to have an actual nominee to dissect.

Even though the administration has been evaluating candidates since the inauguration (and before), there’s no real reason for President Obama to announce a replacement before the Court’s term ends in late June.

The only limiting factor is that the president needs to have a new justice in place by the time the Court resumes hearing cases in October. So, clearly, this politically savvy president will be weighing his legislative priorities against the relative amount of political capital he’ll have to spend to confirm possible nominees. Similarly, Republicans seem to be keeping their powder dry, hopefully in preparation for a serious public debate of competing judicial philosophies and theories of constitutional interpretation.

As far as handicapping goes, the smart money is now on Solicitor General Elena Kagan—because she was recently confirmed by a comfortable margin, has significant support in the conservative legal establishment, and is young (49)—but don’t count out either Judge Diane Wood or Judge Sonia Sotomayor. Or dark horse candidates like Senator Claire McCaskill. It’s really any woman’s ballgame at this point, and will be until Barack Obama—who famously holds his cards close to his vest—announces his pick, on his time.

For a geometric discussion (X-axis = desirable criteria; Y-axis = confirmability) of the above political calculus, see here.

Shocking News: Fannie Mae Is Losing More Money

Yes, I know.  It’s hard to believe.  Fannie Mae continues to lose money and, even more surprisingly, isn’t likely to ever pay taxpayers back for all of the billions that it already has squandered.  Rather, it says it will need more bail-out funds – probably another $110 billion this year alone.

Reports the Washington Post:

Fannie Mae reported yesterday that it lost $23.2 billion in the first three months of the year as mortgage defaults increasingly spread from risky loans to the far-larger portfolio of loans to borrowers who have been considered safe.

The massive loss prompts a $19 billion investment from the government to keep the firm solvent, on top of a $15 billion investment of taxpayer money earlier this year.

The sobering earnings report was a reminder of the far-reaching implications of the government’s takeover in September of Fannie Mae and the smaller Freddie Mac. Losses have proved unrelenting; the firms’ appetite for tens of billions of dollars in taxpayer aid hasn’t subsided; and taxpayer money invested in the companies, analysts said, is probably lost forever because the prospects for repayment are slim.

But the government remains committed to keeping the companies afloat, because it is relying on them to help reverse the continuing slide in the housing market and keep mortgage rates low.

Even as the government bailout of banks appears to be leveling off, the federal rescue of Fannie and Freddie is rapidly growing more expensive. Fannie Mae said that the losses will continue through at least much of the year and that it “therefore will be required to obtain additional funding from the Treasury.” Analysts are estimating that the company could need at least $110 billion.

Freddie Mac, which has been in worse financial shape than Fannie Mae and has obtained $45 billion in taxpayer funding, will report earnings in coming days.

The response of policymakers in the administration and Congress to this fiscal debacle?  Silence.  No surprise there, since many of them helped create the very programs that continue to bleed taxpayers dry.

Alas, this isn’t the first time that the federal government has promoted a housing boom and bust.  Instead, writes Steven Malanga in Investor’s Business Daily:

This cycle goes back nearly 100 years. In 1922, Commerce Secretary Herbert Hoover launched the “Own Your Own Home” campaign, hailed as unique in the nation’s history.

Responding to a small dip in homeownership rates, Hoover urged “the great lending institutions, the construction industry, the great real estate men … to counteract the growing menace” of tenancy.

He pressed builders to turn to residential construction. He called for new rules that would let nationally chartered banks devote a greater share of their lending to residential properties.

Congress responded in 1927, and the freed-up banks dived into the market, despite signs that it was overheating.

The great national effort seemed to pay off. From mid-1927 to mid-1929, national banks’ mortgage lending increased 45%. The country was becoming “a nation of homeowners,” the Times exulted.

But as homeownership grew, so did the rate of foreclosures, from just 2% of commercial bank mortgages in 1922 to 11% in 1927.

This happened just as the stock market bubble of the late ’20s was inflating dangerously. Soon after the October 1929 Wall Street crash, the housing market began to collapse. Defaults exploded; by 1933, some 1,000 homes were foreclosing every day.

The “Own Your Own Home” campaign had trapped many Americans in mortgages beyond their reach.

Financial institutions were exposed as well. Their mortgage loans outstanding more than doubled from the early 1920s to 1930 — $9.2 billion to $22.6 billion — one reason that about 750 financial institutions failed in 1930 alone.

The only serious option is to close down all of the money-wasting federal programs  and laws designed to subsidize home ownership.  A stake through the hearts of Fannie Mae, Freddie Mac, Federal Housing Administration, and Community Reinvestment Act, to start.  Otherwise the cycle is bound to be repeated, again to great cost for the ever-suffering  taxpayers.