Obama's economic plan

Senator Barack Obama has developed a comprehensive economic plan for America. It's more detailed than the plans offered by the other major candidates, albeit not that different from senator Hillary Clinton's plan insofar as you can tell considering that hers is less specific. Senator John McCain's economic plan seems to be the perpetuation of president George W. Bush's failed economic policies -- cut taxes and reform Social Security.

Obama details six principles for modernizing the financial regulatory system:

1. Provide the Federal Reserve with basic supervisory authority over any financial institution to which it may make credit available as a lender of last resort.
2. Capital, liquidity and disclosure requirements should be developed and strengthened for all financial institutions.
3. End our balkanized framework of overlapping and competing regulatory agencies.
4. Regulate financial institutions for what they do, rather than who they are.
5. Crack down on trading activity that crosses the line to market manipulation.
6. Identify systemic risks to the financial system, no matter where they arise.

These are sound principles and Obama elaborated on them in his recent speech on Renewing the American Economy.

Obama also has a plan for Protecting Homeownership & Cracking Down On Mortgage Fraud (PDF). It too is detailed and has some good ideas that could be effective for dealing with the home mortgage crisis at hand. However, there are a couple of questionable components to this plan. He bases his plan to help homeowners facing foreclosure on the claim that:

One of the biggest problems associated with the crisis in the housing market is the decline in house values, which is putting people's mortgages underwater, meaning that their mortgage is worth more than their houses. Many people who find themselves in this situation simply walk away, worsening the foreclosure problem.

There is a basic weakness to this precept. The reason homeowners are facing foreclosure is predominantly because they bought homes they could not really afford using the creative financing instruments that were the hallmark of the real estate bubble. Then when their APR increases, they simply can't afford the new monthly installments, regardless of whether they have equity or not.

It doesn't make sense that homeowners would go into foreclosure simply because their mortgage is "underwater." They would still need a place to live even after foreclosure. They also understand the importance of maintaining a strong credit rating. If they could afford the payments, homeowners would keep their homes even were their valuations less than their outstanding principal. Unfortunately, some of the tactics Obama proposes would not be effective since they're based on the invalid assumption that people face foreclosures because they have negative equity.

Obama also proposes refinancing ARMs with fixed-rate mortgages as a solution to those facing foreclosure. But the reason people got ARMs in the first place is because they couldn't afford the monthly payments on a fixed-rate mortgage with the inflated property valuations that existed at the peak of the housing bubble. The only way to afford a mortgage was using negative amortization loans, and the like, which started out with monthly payments at artificially low rates. These homeowners assumed when the rates got high enough that they could no longer afford the payments, they'd simply flip their house for a big gain that they could use on a down payment for a new home. But with negative equity, how could a financially distressed homeowner be expected to make the payments on a fixed-rate mortgage even if they could refinance?

In spite of these criticisms, Obama's economic plan is fairly good on the whole. There are many good ideas in it. With the next presidential administration still almost a year away, Obama has time to shore up the weaknesses in it before occupying the Oval Office. Besides, most of the unaffordable mortgages could already be foreclosed on by that time.

The real milestone of Paterson's inauguration

All the buzz in the press lately has been about David Paterson becoming the first black governor of New York. That is somewhat significant since there have only been a handful of black governors in US history, although the first one was way back in 1872.

However, I don't think that is the most significant milestone of Paterson's ascension to the governor's office. The real milestone is that Paterson is the first blind governor in US history (actually, there was one other, but he only held the office for eleven days).

Paterson's accomplishment is inspirational to those of us with substantial disabilities. It raises awareness of the capabilities of persons with disabilities to be vocationally successful. If the press were to more widely acknowledge this milestone, it would likely cause more employers to think favorably about hiring persons with disabilities in the future.

Granted, racism is still widespread in America. However, the high unemployment rate of persons with disabilities indicate that they face more discrimination than African Americans do.

A hearing without a crime

President Bush is waging a war in Iraq that some say will cost our treasury $2-trillion when all is said and done. Meanwhile the economy is tanking here at home. Yet our congress can find nothing better to do than to stifle free enterprise.

The oversight and government committee from the House called a hearing on CEO compensation packages Friday. The chairman of the committee, Henry Waxman (D), clearly appeared convinced that he had a criminal lineup in front of him: Angelo Mozilo, founder and CEO of Countrywide Financial; Stan O'Neal, the former CEO of Merrill Lynch; and Chuck Prince, former CEO of Citigroup. Waxman's problem was that it is not unlawful for a CEO to be compensated with an income many times greater than that of their lowest paid employees.

Nonetheless, that did not stop him from asking questions like, "When companies fail to perform, should they give millions of dollars to their senior executives?" Stan O'Neal easily explained this away with assertions like "The reality is that I received no severance package. I received no bonus for 2007, no severance pay, no golden parachute. The amount discussed in the press consisted mainly of deferred compensation, stock and options that I earned during the years prior to 2007."

The committee also wanted to know why Angelo Mozilo sold many of his shares in Countrywide shortly before their values plummeted. Mozilo responded that, "The goal was to reduce my holdings because of my retirement ... almost all my net worth was in Countrywide." He was following the most basic rule of investing: diversify your portfolio. Mozilo made it clear that he was completely transparent about his divestiture so shareholders new that he was selling Countrywide stock -- they were free to use that information as a warning that they should be selling theirs at the same time if they wanted to.

As would be expected in this political environment, the hearing was partisan in that it was the Democrats trying to find something to pin on the CEOs. But there was no allegation of predatory lending practices by any of their firms. In fact, in all of the acts that the left side of the committee claimed the CEOs had perpetrated to try and shame them, not one was illegal.

At least the GOP members of the committee showed some sense. Representative Darryl Issa from California wrapped up the hearings nicely when he stated to chairman Waxman, "Mr. chairman, I look forward to finding if something is wrong here. So far you haven't found it."

Height of hypocrisy

The Mexican-American border dispute has reached a new height of hypocrisy. Arizona passed a law, that took effect on the New Year, which punishes employers who knowingly hire workers without valid legal documents to work in the US. In response, a delegation of nine state legislators from Sonora was in Tucson saying that Arizona's new employer sanctions law will have a devastating effect on the Mexican state.

For Mexican officials to point their fingers across the border without acknowledging their own responsibility in this economic situation is not only hypocritical but also arrogant. Their first duty is to create an economic infrastructure in Mexico which would give the Mexican people a decent standard of living. But Mexico, as my friend so aptly put it, is a kleptocratic oligarchy. That would mean the Mexican elite would have to stop hoarding all of Mexico's vast wealth for themselves and invest it instead in their people and their country's future. If they did that, the Mexican people would not want to come to the US in the first place.

America owes the same duty to her people that Mexico owes to hers. That includes maximizing the opportunity of employment for American people. Arizona's move could only serve to reduce the rate of unemployment in the state. The Arizona people should be proud of this legislation, regardless of Mexico's response.

Everyone thought there were WMDs

President George W. Bush has repeatedly maintained that everyone thought there were WMDs in Iraq before he invaded her. But even back in 2005, I wasn't the only one connecting the dots to discover there was widespread disagreement before the invasion regarding the existence of the supposed WMDs. The arms inspectors were already coming up empty-handed in their inspections for WMDs in Iraq around the 2003 New Year.

A recent study found that Bush made 232 false statements about Iraq and former leader Saddam Hussein's possessing weapons of mass destruction, and 28 false statements about Iraq's links to al Qaeda. Conducted by the Center for Public Integrity and its affiliated group, the Fund for Independence in Journalism, the study states unequivocally that, following 9/11, President Bush and seven top officials of his administration waged a carefully orchestrated campaign of misinformation about the threat posed by Saddam Hussein's Iraq.



The study was based on a searchable database compiled of primary sources, such as official government transcripts and speeches, and secondary sources -- mainly quotes from major media organizations. It found that president Bush and his top seven aides publicly made 935 false statements about the security risk posed by Iraq in the two years following September 11, 2001. The study concluded, "In short, the Bush administration led the nation to war on the basis of erroneous information that it methodically propagated and that culminated in military action against Iraq on March 19, 2003."

It was not important to Bush what the intelligence community thought or even what he thought, it was important to Bush that the American people believed Iraq had WMDs. To make them believe this without any evidence by conducting a campaign of deceit should be grounds for impeachment.

Federal budget deficit

President Bush is touting his plan to eliminate the budget deficit by 2012. Sure, he'll have to cut many programs to do so, but Bush wants to keep America focused on the end result in 2012.

Why does Bush stay focused on 2012? Perhaps because he'd prefer America doesn't know about what his budget will do in the next fiscal year. Under his plan, the budget deficit will increase almost 150% to $400-billion.

That's just shy of the record $413-billion deficit Bush racked up in 2004. Nonetheless, it seems that with such a substantial increase over last fiscal year, the budget deficit is heading in the wrong direction. With a record like this, how can anyone take the GOP presidential candidates seriously when they talk about the "tax and spend" Democrats?

Taking annual inventory of the war in Iraq

Another year has passed since I last took a tally of the war in Iraq. Back then, the talk was about launching a 'surge.' Since then, Bush launched the surge and is now talking about withdrawing it.

The surge met with moderate success, squelching the sectarian violence in spots in Iraq. Unfortunately, it has not been successful at achieving the one key objective of the surge: creating an environment where political reconciliation can occur in Iraq. Moreover, according to the latest Special Inspector General for Iraq Reconstruction Quarterly Report to the United States Congress (12 MB PDF download):

notwithstanding this important progress on the security front facilitated by the surge, the overall security situation in Iraq still hampers recovery and reconstruction efforts. Attacks on infrastructure continue to adversely affect the availability of essential services.

Subsequently, the withdrawal of the surge does not mean success, it means switching to Plan B ... except that the Bush administration does not have a Plan B.

2007 is shaping up to be the deadliest year for American troops in Iraq. We know that 3,874 of them have been killed in Iraq since the war started. However, that count does not include the numerous severely wounded troops who were evacuated from Iraq and subsequently died of the wounds they sustained in Iraq while under medical care in places outside of Iraq like the Ramstein Air Base in Germany.

It's not so clear how accurate the number of casualties reported by the military is. While it reports over 30,000 troops injured in Iraq, there are at least 20,000 American troops who sustained brain injuries in combat in Iraq and Afghanistan who are not counted among the wounded. It took Freedom of Information Act filings to force the military to release the information which uncovered this 'oversight.' Does it make a difference that there are actually over 50,000 American casualties of the wars in Iraq and Afghanistan rather than 'just' 30,000? While it doesn't to their commander in chief, who stubbornly sticks to his same losing strategy in Iraq, it does to the families and friends of those 20,000 unrecognized wounded veterans.

Meanwhile, the "coalition of the willing" is falling apart. Although their presence in Iraq was never substantial in the first place, nineteen countries have withdrawn from the Coalition. Even America's staunchest ally in the Coalition, England, reported in February that it would be withdrawing 2,100 of its 7,200 troops from Iraq. This will have little impact on America's commitment to the war since US troops have comprised around ninety percent of the Coalition all along.

Probably the most significant impact on the war in Iraq in the past year is what has not happened. President Bush has established no new policies to guide our action in Iraq. He has undertaken no new strategy for fighting the war (the surge was not a new strategy, it was just throwing more troops at the old one). And he hasn't come up with a new justification for the war this year -- Bush still claims it's the "front in the war on terror." This lack of addressing the failures of the war in Iraq means that America will continue to languish in the quagmire for at least another year.