The raw truth comes out

The Raw Story has recently been validating my posts from the early months of The Progressive Zone. Back in 2005, I posted about the fascist elements of the USA PATRIOT Act. Section 501 of the Act seems to be contrary to everything this country stands for. It prevents someone accused of terrorist activity from being informed of the evidence against him or her, no matter how flimsy it be. It's no surprise then that a federal appeals court has finally invalidated the section of the Act which permitted "national security letters" to create blanket gag orders.

Also in 2005, I tried to reconcile president Bush's claim that "we do not torture" with vice president Cheney's insistence that the CIA should be permitted to torture detainees. Why would it need this permit if we do not torture? Well, now we know why. The Raw Story also reported this month that Cheney admits authorizing detainee's torture. He had the gall to say on national television that he supports water-boarding, an act for which Japanese soldiers were tried and convicted of war crimes after World War II.

Although I'm pleased that the truth is coming to light and the judiciary is beginning to restore civil liberties, I still wonder why it's taken so long.

The role of the government in an economic recovery

I've mentioned that I take my cue from Peter Schiff when it comes to forecasting the economy. It turns out that he was not the only one who many years ago forecasted the economic problems we're experiencing now. Martin Weiss also saw the housing bust coming back in 2005.

So last week, Esquire magazine asked Weiss what he forecast for the housing market over the next few years. In his response, Weiss had some insights regarding the role the government should play in the economy. I agree with him that "the debt problem is far too big for the government to be able to address with its limited resources, so they should back off and let the marketplace resolve the two big problems our economy faces -- too much debt, and prices that are too high." As we all know, the government has instead chosen to do the opposite by trying to fix the economic decline through increasing the debt load on our nation. Weiss said:

I believe we should give up the war we can't win, which is the war against the economic decline. Instead we should fight the battle we must not lose, and that's the battle to protect the health and well-being of the citizens of the country. Right now, for example, hospitals are going broke and the states are running out of money to pay unemployment benefits -- we have already 19 states that are in the red with respect to their unemployment benefit funds, and it could grow to 30 or 40 states very quickly. That's where the government's role has always traditionally been since the New Deal, and that's where our resources need to go.

This viewpoint is not far off from president-elect Obama's position on the right way to recover the economy.

Remortgage America

Yes, I know I've been blogging about the folly of the bailouts lately. I haven't stopped being a free market economist. But I recently discovered a bailout proposal that actually makes a lot of sense. In a nutshell, the plan is that the US government offers every US citizen a 30-year mortgage at a 1½% fixed rate of interest. How this works and why it makes sense I'll leave up to the author to explain.

Given a choice between no federal intervention in private business or this plan, I'd choose no intervention. But our government is hell bent on spending trillions of taxpayer dollars on financial bailouts in spite of the fact that most Americans oppose it. So if secretary Paulson is going to empty our treasury on bailouts whether we like it or not, I think the Remortgage America plan is far superior to any of Paulson's hair-brained "economic recovery" schemes. Plus, the treasury would get paid back the outlay for the plan with interest.

Congress folds on yet another wasteful bailout

Congress is abdicating its authority to president Bush again. As always, they are laying down the law then looking the other way when Bush ignores their legislation. This time it's the Emergency Economic Stabilization Act, the bill that established the $700-billion Troubled Assets Relief Program (TARP). The terms are very specific that "the program will be available to qualifying U.S. controlled banks, savings associations, and certain bank and savings and loan holding companies engaged only in financial activities that elect to participate before 5:00 pm (EDT) on November 14, 2008." Note that there's no mention of automobile manufacturers in that qualifier and that it's now almost a month past the application deadline.

Congress has already betrayed its constituents' trust by authorizing the Emergency Economic Stabilization Act in the first place. Americans overwhelmingly -- almost to unanimity -- opposed a bailout of the financial services sector. Yet congress passed the bill anyway. If congress doesn't rescind the bill, then congress is obligated to ensure that the TARP funds are used as designated in the bill. There is no way that the Act could be construed as to permit TARP funds to be allocated to automobile manufacturers or that it is now before November 14, 2008.

Secretary Paulson insisted that the funds are needed to provide liquidity to financial services firms when he first requested them. He claimed that if the TARP were not immediately implemented, the economy would precipitously collapse. His logic was that the TARP funds would increase availability of credit. But now the Bush administration is talking about bailing out General Motors and Chrysler with TARP funds.

Detroit's Big Three are claiming that a big part of their problem is that potential car buyers are not receiving the credit they need to buy automobiles. If the Bush administration redirects TARP funds from financial institutions to automobile manufacturers, then according to Secretary Paulson's logic, there will be even less credit available for banks to loan to car buyers. That would not only exacerbate the Big Three's problem but it would also enable them to perpetuate their failed business models, thereby only delaying their inevitable position in the market (and risking the collapse of the economy, according to Secretary Paulson's original position).

The Department of the Treasury has already been an abysmal failure at managing the TARP, vacillating wildly from one ineffectual tactic to another. Now it will continue to do so in direct contradiction to what congress has authorized the Treasury to do. No one in congress has voiced any recognition that the Bush administration is yet again acting in contempt of congress.

Recovering the economy the right way

I heard President-Elect Obama address the nation yesterday. I was relieved to hear an economic recovery plan that wasn't just another bailout for a change. He spoke about a recovery that would put 2.5-million Americans back to work. He laid out a plan to invest in America's future rather than filling the coffers of failed corporations. I was so inspired by his plan that I wrote him the following letter:

Mr. President-Elect,

I support your economic recovery plan. This is the direction the Bush administration should've taken two months ago when Secretary Paulson first proposed his $700-billion bailout. If we're going to spend American tax dollars in a time of deficit, it should be investing in the future of this country. After all, it's the future generation that will have to pay for it.

So let's recover the economy by building our infrastructure, both physical and information systems. Let's rescue our power grid and supply it with renewable sources of energy. Let's renovate our medical system so that all Americans can get the health care they need. Let's advance our educational system to educate the next generation.

But let's stop with the bailouts. Enough already! We don't need to bailout the failing financial institutions. There are plenty of responsible, conservative, and sound financial institutions who will step up to serve the customers of the failed banks. We don't need to bailout Detroit's Big Three. Maybe one or two of them might go bankrupt but that would make the other one or two stronger as GM customers start driving Fords. And we don't need to bailout all of the home owners who bought homes they wouldn't be able to afford because they assumed the values would only go up. They'll get along just fine as renters, which is what they should've been all along, anyway, if they couldn't afford to buy a home. I'm sure the economic forces will straighten everything out there.

I will contact my congressmen and ask them to pass an economic recovery bill fashioned as you proposed in your address yesterday. I'll ask them to be sure to include the "use it or lose it" provision. I'll ask them to invest in America today by having that bill ready for you to sign as soon as you take office tomorrow. That will be the best use of tax dollars to quickly turn around this recession that might otherwise last for years and get millions of Americans back to work.

Regards,
The Progressive
American citizen