Redefinition, Spending and Money Holes

I saw this over at the American Thinker:

In the President’s dictionary of political terms, “bipartisan” means this: If I, the President, listen to your ideas, then you must accept mine. It’s unilateral bipartisanism. Barack Obama’s fundamental mindset of Orwellian doublethink continues to reveal itself as he, again, espouses two contradictory beliefs at the same time, seemingly accepting both.

Ouch. Unilateral bipartisanism. That's a good one (although I like 'unilateral bipartisanship' better). As a college professor, I have coined another, equally oxymoronic but equally valid saying about a small group of students in most intro courses: passionate disinterest. Can't describe it any better way than that. In any case, here's the video of Obama's diatribe:

Early in this speech, he sais (after talking about listening to everyone's ideas) "don't come to table with the same tired arguments and worn ideas that helped create this crisis.”

What ideas are those? Did tax cuts get us into this crisis? I thought the reason we have deficits is too much spending. But this crisis is not a direct result of defecits, it is a direct result of social engineering. As I wrote before (link here):

How did this happen? How did we get here? Let's start with Fannie Mae and Freddie Mac, two democrat inventions (FDR the former, LBJ the latter) known as GSEs (government sponsored enterprises). In a nutshell, a GSE is "capitalist profits, socialist losses; " that is, when profits are made, the executives make huge bonuses. When bad, the taxpayer is on the hook for the losses (and the executives still make huge bonuses!). When Fannie and Freddie went down, the entire housing market went down with it. These two inventions got absolutely ginormous in the last decade, mostly on subprime loans. But let's back up just a bit.

Before Freddie and Fannie became ridiculously large, there was the Community Reinvestment Act (CRA) of 1977 (Jimmy Carter). It was designed to make sure low-income residents of downtrodden neighborhoods received bank loans. Now the CRA by itself is not to blame for the current meltdown (although it was the beginning of government encouraging 'risky loans'). It had no teeth. It was a bunch of arm-twisting of financial institutions. And back in 1977 and so forth, there were no subprime loans advertised in papers (my parents bought a house then, and it was definitely not subprime). So how did the subprime loan business get so big?

Fast forward to 1995. Bill Clinton gave the CRA teeth (basically made affirmative action a banking requirement). The Glass-Stengal Act of the 1930s, designed to keep banks out of the speculation business following the bank failures during the Great Depression, was repealed. Banks no longer mitigated risky loans with savings deposits (so more risk, and less to back it up - read here). ACORN (yes, THAT ACORN) then launched campaign after campaign of intimidation coupled with protest to force banks to lower credit standards, which they subsequently did (a little). At the same time, Fannie and Freddie lowered credit standards (A LOT. They were pushed to do so by democrats in Congress at the urging of ACORN. Yes, THAT ACORN again). Fannie and Freddie began to buy subprime mortgages on the secondary mortgage market while holding just 3% (or less) capital to back up the loans. This encouraged banks to offer more subprime loans, which they did. These loans were subsequently bought up by Freddie and Fannie. More were offered (greed begets greed). You can see where this goes. By 2006, subprime loans made up a full 30% of total loans (they were 2% back in 2002). By 2007, Fannie and Freddie guaranteed half the U.S. mortgage market (12+ Trillion (!) dollars). During this time, Fannie and Freddie were also cooking their books. Once caught, the entire deck of cards came tumbling down (see a good roundup here). These dots are not hard to connect (Ace Ventura would lay out the exact same case and say this).

The worn ideas, it seems to me, are the ones that Obama is espousing now. More spending. The kind that extended the Great Depression for 8 years. The same kind of spending that extended Japan's recession to a full 10 years. And here we are again, this time trying to spend more money that had ever been spent before. Since the current dems glorify FDR and his spending, it's appropriate here to look back to 1939, when Roosevelt's own Treasury secretary, Henry Morgenthau, had realized that the New Deal economic policies had failed. Said Morgenthau,

"We have tried spending money. We are spending more than we have ever spent before and it does not work. . . . After eight years of this Administration we have just as much unemployment as when we started. . . . And an enormous debt to boot!"

You know what they say about those that don't learn from history...

Back to Obama's diatribe. At the 7:30 mark Obama also says "I found this deficit when I showed up... ...wrapped in a a big bow waiting for me..." Do your remember W blaming Clinton for the recession stemming from the dot-com bust in the late 90's? Me neither. The worst deficit in any year under W was nowhere near where we are about to go. 2009 is projected to have a deficit of $1.2 trillion. And that DOES NOT COUNT the non-stimulus stimulus bill before congress now. Should the $1.2 trillion dollar package pass (including interest), we could be looking at a $2.5 trillion dollar deficit for this year alone! It will put the 8 years of overspending under W (one of two things I disagreed with W on. The other was immigration) to shame in a short period of time.

Our current national deficit stands at $11 trillion. And that doesn't count the Medicare and Social Security tsunami that''s going to hit us in the next generation (all $53 trillion worth). This is what overspending has wrought. Ironically, individuals have figured this out and have started to save (ironic, because more savings = lower economy since consumer spending accounts for most of economic growth) rather than spend. It's too bad our elected officials in Washington haven't figured this out yet. They are literally going the wrong way! People are screaming "you're going the wrong way!" but the Washingtonians won't listen. Kinda like this:

Since we're on the topic of redefinition, I want to make a final comment about earmarks. Weren't there supposed to be no earmarks in this bill? Betsy Newmark has this:

Remember how Obama and Biden vowed that there would absolutely no earmarks in the so-called stimulus bill. Well, of course, any bill that has that much money at stake is going to include earmarks and ProPublica, part of the Sunlight Foundation, is listing the earmarks that they're finding in this bill. My favorite is the $198,000,000 for Filipino World War II veterans that Hawaii's Senator Inouye placed in the bill. That might be a perfectly fine thing to do, but it doesn't have a thing to do with stimulating our economy. Most of those veterans don't even live in the United States. Why put it in an emergency stimulus bill instead of debating them under normal budgetary procedures?

Ouch. This, however, gives me an idea. I will solve the homeless problem. Right here. Right now. I, from now on, redefine 'homeless' as anyone who doesn't even have a cardboard box to sleep in. If you have at least a cardboard box, you are no longer 'homeless.' Viola! There! Problem solved. Next!

UPDATE: On second thought, not only is our President doubletalk-challenged, he's also metephorically-challenged. I had to look it up, but I remember this a while back from The One himself:

The American people understand that we've got a big hole that we've got to dig ourselves out of...

Note to President Obama: when finding yourself in a hole, STOP DIGGING. CLIMB OUT! Digging will only deepen the hole, which seems to be exactly what we're about to do. Speaking of holes, there's this:

In The Know: Should The Government Stop Dumping Money Into A Giant Hole?

UPDATE#2: The New York Times - Japan’s Big-Works Stimulus Is Lesson. Sounds exactly like what we are about to embark on.

Economists tend to divide into two camps on the question of Japan’s infrastructure spending: those, many of them Americans like Mr. Geithner, who think it did not go far enough; and those, many of them Japanese, who think it was a colossal waste.

Ouch! That doesn't sound good. (HT:StonesCryOut)

UPDATE#3: Gateway Pundit has a good roundup about the "tired arguments" that Obama alludes to. It's good and I suggest you read the whole thing.