Four years ago, I reported on the colossal failure of IndyMac Bank. One day later, I published a post in which I highlighted the Federal Deposit Insurance Corporation‘s list of 33 banks in the United States that had failed since 2000. Today, I thought I should provide a Hope-and-Change Update on the status of U.S. banks. Here it is in a nutshell:
The list of U.S. banks that have failed since 2000 has grown from only 33 in July 2008 to nearly 500 today, and the vast majority failed AFTER President Barack Obama took office.
Now, I want to ask Obama supporters a question: “How’s that ‘hope and change’ thingy working out?”
Click here or on the image below to see ‘em all. [Warning: The list is LOOOOOONNNNNNNNGGGGGGG!]
Wall Street meltdowns? Banking industry bailouts? Hedge fund hanky-panky? Multi-million-dollar Wall Street bonuses? Collapse of the dollar? National debt default? Economic collapse? Who can possibly make sense of it all? How did it happen, and who’s to blame? Did George W. Bush create the mess and leave it for Obama to clean up, or were Democrats to blame all along and Obama was just too incompetent to know what to do about it? What is the truth of all this?
Now that the Securities & Exchange Commission is finally pursuing wrongdoing at Fannie Mae and Freddie Mac, it’s time the American people knew the root causes of our current economic difficulties. We all need to have a basic understanding of the mess… one that will allow us to explain it to our Democrat friends in terms that even they can understand.
First, it must be said that the Community Reinvestment Act, a Carter Administration initiative, was not a totally bad idea. It encouraged lenders to make loans to qualified borrowers who had previously been denied solely on the basis of the color of their skin. The CRA was intended to reduce or eliminate a practice known as “redlining,” in which Realtors and lenders discriminated against potential buyers in low-income and depressed neighborhoods, approving home loans for lower-income whites but not for middle or upper-income blacks.
Throughout the Reagan and Bush (41) years, between 1981 and 1993, the CRA was enforced in a straightforward manner. Lenders were encouraged to abandon the “redlining” practice and to meet the credit needs of all members of the community, consistent with sound lending practices.
However, when Democrats regained control of the White House in 1993, in the person of Bill Clinton, Democrats began to act like Democrats. They decided that the CRA, if strategically enforced with a political end in mind, provided a unique opportunity to purchase the votes of those at the lower end of the economic ladder.
Under the Clinton Administration, regulators paid particularly close attention to the lending practices of banks and savings & loan associations. In other words, were lenders meeting the credit needs of all borrowers in their local communities, regardless of borrowers’ ability to repay their loans? Accordingly, they began to use the results of those examinations to determine whether or not to approve mergers and acquisitions, and whether or not to approve applications for new branch banks. Lenders soon found that the CRA was more stick than carrot.
As a result, lenders abandoned traditional lending criteria and made mortgage loans to almost anyone who applied, regardless of their income level or credit worthiness. Under normal circumstances, no prudent lender would ever lend money to those with little or no ability to repay, but these were not normal circumstances. Two of the Democratic Party’s favorite patronage cesspools, Fannie Mae and Freddie Mac, were standing ready to buy up any and all mortgages. And why should Fannie and Freddie worry about the quality of the mortgages they bought? They had no reason to worry because, as quasi-public institutions, they had the cash assets of the American taxpayer, the U.S. Treasury, at their disposal.
Here’s how it worked. When a home buyer took out a home loan from a bank or a savings & loan association, the mortgage was then sold to what was known as a Government-Sponsored Enterprise (i.e. Fannie Mae or Freddie Mac). Fannie and Freddie then bundled the loan with other sub-prime mortgages and sold the bundle to private investors, promising not only attractive returns, but a high degree of security as well. By year end 2010, Fannie and Freddie had acquired more than half of the $11 trillion mortgage loan market in the United States.
However, the sale of mortgages to private investors was not a totally arms-length proposition because, even though Fannie and Freddie had sold the bundled mortgages, they continued to have a financial interest in them. They guaranteed the securities for the investors, promising to continue making payments on the mortgages even if the homeowner stopped paying. In 2008, when the overheated real estate market collapsed and a great many homeowners stopped paying all at once, the cash reserves of Fannie and Freddie were soon depleted, forcing them to default on their guarantees and precipitating a major economic crisis.
One might ask, how could something like this happen directly under the noses of our political leaders without anyone taking notice? The fact is, shortly after taking office in 2001, the Bush administration did notice and took steps to reform Fannie Mae and Freddie Mac. What they apparently failed to understand was that Fannie and Freddie existed in a world of their own, a world in which Democrats who were either owed big favors, or who were being paid to keep their mouths shut for one reason or another were well taken care of.
Among these was Franklin Raines, former Clinton White House budget director, who served as chairman and chief executive officer of Fannie Mae. Raines took “early retirement” from Fannie Mae on December 21, 2004 after the Office of Federal Housing Enterprise Oversight accused him of participating in widespread accounting irregularities, including the shifting of losses so that senior Fannie Mae executives could earn large bonuses. Some $90 million was paid to Raines based on overstated earnings… earnings initially reported at $9 billion but later found to be in the neighborhood of $6.3 billion.
Tim Howard, chief financial officer under Raines, is a former senior economic advisor to Barack Obama. When Howard was terminated at Fannie Mae, he walked away with a “golden parachute” reported to be worth approximately $20 million.
Jim Johnson, a former Lehman Brothers executive who headed Obama’s vice presidential search committee, is also a former Fannie Mae CEO who was forced to resign. Johnson’s 1998 Fannie Mae compensation was reported at between $6-7 million. In truth, it was $21 million.
And last, but not least, we have Jamie Gorelick, a former deputy attorney general in the Clinton Administration and the woman who erected the infamous “Gorelick Wall” which prevented the CIA and the FBI from sharing intelligence that could have prevented the 9/11 attacks on the World Trade Center and the Pentagon. After leaving the Justice Department, she resurfaced as vice chairman of Fannie Mae from 1997 to 2003. And although she had no training or experience in finance, whatsoever, she earned over $26 million during the six years she worked at Fannie Mae.
While serving as vice chairman of Fannie Mae, Gorelick participated in the development of an accounting scheme which allowed Fannie’s Mae’s top executives – whose bonuses were tied to earnings-per-share – to meet the target for maximum bonus payouts. For example, in 1998 the target earnings for maximum bonus payout at Fannie Mae was $3.23 per share. Fannie Mae reported earnings of exactly $3.2309. (Don’t you just hate it when that happens?)
So how was this arranged? Because of lower interest rates in 1998, Fannie Mae found itself facing an extraordinary expense estimated at $400 million. Johnson, Franklin and Gorelick decided to recognize only $200 million of the $400 million expense, deferring the remainder to the next fiscal year. This fortuitous “coincidence” resulted in maximum bonus payouts: $1.932 million to then-CEO Johnson, $1.19 million to CEO-designate Raines and $779,625 to accounting whiz Gorelick.
Democrats do have an uncanny way of taking care of their own.
In the two years and 11 months that Barack Obama has been in office, Democrats have waged an uninterrupted and unabashed attack on George W. Bush, insisting that he did nothing to forestall the Fannie and Freddie disasters that we now face. However, the facts are these: The Bush Administration warned Congress of impending insolvency at Fannie Mae and Freddie Mac in April 2001, May 2002, November 2003, February 2004, August 2007, December 2007, March 2008, April 2008, May 2008 and June 2008. In addition, Bush Administration officials testified before Congress, calling for reform of Fannie and Freddie, in September 2003, June 2004, April 2005 and February 2008.
In each instance, their warnings were either ignored or were subjected to strong push-back from leading Democrats, who charged Republicans with opposing home ownership by the poor and minorities. In each instance, the principal push-back came from Sen. Chris Dodd (D-CT), chairman of the Securities and Investment Subcommittee of the Senate Banking Committee, the recipient of major “sweetheart” loans from now-defunct Countrywide Financial Corporation; and Rep. Barney Frank (D-MA), ranking member of the Housing and Community Opportunity Subcommittee of the House Financial Services Committee. Not surprisingly, one of Frank’s homosexual partners, Herb Moses, was a high-ranking official of Fannie Mae at a time when he and Frank played house together on Capitol Hill.
In short, the financial crisis that our country now faces is exclusively the product of Democratic political excess. It is further proof that, when government interferes in the private economy in order to guarantee what liberals and Democrats see as “fairness” and “equal outcomes,” the unintended consequences are always predictable, but never pretty. What would be pretty would be to see Dodd, Frank, Raines, Johnson, Gorelick, and other Obama cronies being led away in handcuffs. The current charges being investigated by the Securities & Exchange Commission are a good beginning.
Democrats complain endlessly that “millionaires and billionaires, big oil companies and corporate jet owners” are not paying their fair share. It’s all political flim-flam, which is what Democrats do best, and it’s all beginning to wear a bit thin. If nothing else, their propaganda writers need to take a few days off so they can come back with some fresh inspiration.
Maybe while the speechwriters are off getting re-inspired and Democrats find themselves at a loss for words, the rest of us can get serious about doing what has to be done to get our economy back on track. For example, in what passes these days for real courage in Republican circles, former Minnesota Gov. Tim Pawlenty went way out on a limb, suggesting that the time has come when wealthy retirees can expect not to receive an annual cost-of-living increase in their Social Security checks so that low-income retirees can have meaningful increases.
He doesn’t seem to realize that what we need to be talking about, if we’re going to reverse the trend and actually reduce our national debt, is not a modest contribution toward debt reduction, but real sacrifice. What that means is that low income retirees… those with annual incomes of, say $50,000, could look forward to a 5 percent reduction in benefits, with monthly stipends becoming smaller and smaller so that, by the time we reach annual incomes of $150,000, and more, Social Security payments would completely zero out. We must begin to means-test Social Security.
The old argument that “they paid into the system their entire working life and they deserve to get full benefits” just doesn’t wash anymore. We’re too far down the road to economic Armageddon to play that silly game any longer. To continue sending monthly checks to T. Boone Pickens, Warren Buffet, and George Soros because “they have it coming to them” is sheer madness. And to suggest that we can put even a tiny dent in the problem by increasing taxes on “millionaires and billionaires, big oil companies, and corporate jet owners” is even more insane, and no one but a liberal Democrat hoping to fan the flames of class envy would even suggest it.
Another “entitlement” that absolutely must be addressed is the burgeoning growth of the Supplemental Security Income boondoggle. Searching for SSI references on Yahoo or Google we find the first four or five references to be advertisements from lawyers who specialize in lying to the Social Security Administration in order to obtain monthly disability benefits for able-bodied recipients who are many years away from retirement age. Sen. Tom Coburn (R-Okla.) has said that SSI payments to able-bodied recipients amounts to about 40 percent of their total outlays.
One such advertisement explains that “Supplemental Security Income (SSI) is a Federal assistance program designed to provide income those who have limited assets with which to support themselves.” The ad explains that the SSI program is managed by the Social Security Administration, but financed by the general fund. Because the program is not financed by Social Security taxes, there are no work requirements necessary to qualify for SSI… In order to qualify, an individual must be 65 or older, legally blind, or meet the definition of permanent disability provided by the SSA. Because SSI is a need-based benefits program, the financial eligibility of potential claimants is based on two categories of assets: income and resources, where “income” refers to the amount of money a person receives from wages, other benefits programs, food assistance programs, pensions, etc., and “resources” refers to the value of assets such as cash savings, equity, or real estate.
The advertisement declares that, “In order to qualify for SSI, a family’s combined income and resources must total less than $3000.”
All of this may be true, so far as the official rules are concerned, but that’s not how it works in actual practice. All over the United States, able-bodied men and women in their thirties, forties, and fifties, with family incomes in excess of $50,000 a year and assets in excess of $100,000, and their dependent children, are receiving billions of dollars each month from the Social Security Administration because of alleged disabilities.
What sort of disabilities? The disabilities which prevent many from being self-supporting range from alcoholism to drug addiction, and from gambling addiction to bi-polar syndrome. And because the Social Security Administration requires a claimant to be turned down for benefits at least twice before they can be represented by counsel, an entire field of legal practice has sprung up comprised of lawyers who specialize in lying to the Social Security Administration, convincing administrative law judges that their clients are unable to support themselves. Published reports show that some administrative law judges approve from 80 percent to 100 percent of contested applications where claimants are represented by counsel.
It’s just a game that is played by lawyers, for the benefit of lawyers, that we all pay for. As a necessary first step the Congress should tighten the rules defining disability and require all those receiving benefits to re-qualify before juries comprised of ordinary hard-working citizens.
Another “entitlement” that demands attention is the federal minimum wage.
Since gaining control of Congress in 2006, Democrats have pushed through three increases in the minimum wage, a combined 40 percent increase from $5.15 to $7.25 per hour. Studies show that, for every 10 percent increase in the minimum wage, the total number of jobs available decreases by up to 2 percent. The impact on entry-level jobs is even greater. For each 10 percent increase in the minimum wage, the number of entry-level jobs for teenagers and unskilled workers is reduced by from 4 to 5 percent. Those most victimized by these unconscionable increases are black teenagers.
Beginning in 1938, Democrats and the leadership of organized labor have maintained an unholy alliance in support of the minimum wage, but for different reasons. Democrats have adopted the minimum wage as a matter of party orthodoxy because it is a cheap way of buying the votes of the poor, the unskilled, and those just entering the workforce. Organized labor has fought for an ever-increasing minimum wage because of the upward pressure the minimum wage puts on hourly wages for union workers. At the very least, the Congress should establish a two-tier minimum wage… a $5.15 per hour minimum wage for teens and unskilled entry-level workers and a $7.25 per hour wage for those with experience and marketable skills who find themselves temporarily unemployed. If President Barack Obama really means it when he says he wants to put people back to work, minimum wage reform is the perfect place to start.
But the single most important reform the Congress should undertake is a complete overhaul of our federal tax system. The key to that reform should be a transition from an income-based tax system to a consumption-based system.
The consumption-based tax system is far preferable to the so-called “flat tax” because liberal and Democratic demagogues would never accept a system in which an individual with a $1 million annual income would pay an annual tax of only $200,000, while a taxpayer with annual income of $20,000 would pay tax at the same 20 percent rate, or $4,000. Liberals and Democrats would never be happy until the taxpayer with the $1 million annual income would pay annual taxes of $900,000, while the $20,000 earner… who smokes, drinks beer and wine, and wears $150 Nike sneakers… pays absolutely nothing in federal or state taxes.
If liberals and Democrats want a so-called “progressive” tax system, the best way to achieve it is with the Fair Tax, under which individuals, rich and poor, would receive a regionally calculated monthly stipend equivalent to the imputed taxes per individual on the basic necessities of life… food, clothing, shelter, healthcare, and transportation. Since the wealthy spend a great deal more on non-essentials than the less fortunate, they would end up paying the bulk of the federal tax receipts. However, the important point to be made is that the Fair Tax would result in everyone paying something toward essential government services; everyone would have some “skin in the game.”
Liberals and Democrats have long survived and prospered relying on their belief that the American people are incurably stupid. And while we may concede that they’re probably right about most of their constituencies, more and more members of the broad middle class are “catching on” every day. They have come to realize that:
a) the amount of money that government spends over and above revenues must be borrowed and added to our national debt;
b) the only way to increase tax revenues and reduce the deficit is by having more people working and paying taxes;
c) to increase taxes on the investor class… millionaires and billionaires, the big oil companies, and corporate jet owners… at a time when job creation must be our primary goal, is counter-productive; and
d) the smaller we can make government, the smaller will be the deficit added to our national debt.
If it is true that the purpose of the terrorist is to strike terror in the heart of the intended victim, then yes, we conservative and our Tea Party allies are “terrorists” and “hostage takers,” and proud of it. By holding Barack Obama’s feet to the fire in recent budget cap negotiations we have struck terror in the hearts of high-tax, big-spending Democrats. But even longtime Democrats are getting wise to all the demagoguery. They are coming to the realization that, while their party has flim-flammed them for more than three generations, Obama is the biggest flim-flam artist of all time. What they will do to Obama and to congressional Democrats next November will not be pretty, but for those of us who believe in justice it will be fun to watch.
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It’s a rare occasion when I link to an ABC News item, but I simply couldn’t resist sharing the video below that accompanied an article showing the impact of the poor leadership of President Barack Obama and Congress: Yesterday, some 5,000 people showed up at a job fair in Atlanta sponsored by the Congressional Black Caucus.
Two-hundred and eighty-thousand people are looking for work in the Atlanta area, where the unemployment rate is at 10.5 percent, according to the report.
Wow! Hope and change? Vote wisely in 2012.
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After catching a glance at a Washington Timesarticle about President Barack Obama taking his so-called “debt team” out for 1,700-calorie burgers today at Good Stuff Eatery on Capitol Hill, I couldn’t help but be reminded of a cartoon by David Donar at Political Graffiti that appeared on this site more than two years ago in a bailout-related post, “Wimpy Economics” at Work in Nation’s Capitol. Seems appropriate, don’t you think?
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If the Environmental Protection Agency succeeds in advancing new ozone standards, places like Yellowstone National Park — where naturally occurring ozone levels can exceed the standard — won’t be able to meet the new requirements. And that’s not the half of it when it comes to EPA’s regulatory overreach!
Two recently-released studies show that the EPA’s proposed new ozone standard — which calls for tightening the allowable levels of ozone to as few as 60 parts per billion from its current 75 ppg – is full of flaws.
A study by NERA Economic Consulting shows the EPA’s health benefit assumptions associated with the proposed new requirements are greatly exaggerated:
EPA’s assumed causal relationship between ozone and mortality has not been supported by EPA’s science advisors;
The health benefits EPA attributes to the tighter ozone standard should are due to a slight reduction in particulate matter (dust), which already is regulated separately by EPA; and
The EPA’s own data show that the benefits of the proposed ozone standard will not outweigh the costs.
Another study by Manufacturers Alliance/MAPI estimates that strengthening the ozone standard to 60 ppb could cost the U.S. economy more than $1 trillion per year between 2020 and 2030, and destroy 7.3 million jobs.
If you think the EPA is going too far, CONTACT YOUR ELECTED OFFICIALS IN WASHINGTON, D.C., and demand they reign in the environmental activists at the EPA on this and other matters. Millions of jobs are at stake!
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The post-industrial era in the United States has been dominated by two vastly different economic philosophies – the Keynesian model and the Supply Side model. Keynesian theory, generally associated with economic policies of Democratic presidents… and to a lesser degree Republican presidents… from Franklin D. Roosevelt through Barack Obama, is a macroeconomic theory based on the ideas of 20th century British economist John Maynard Keynes, first published in 1936.
Keynesian economists contend that private sector decisions sometimes lead to “inefficient” economic outcomes, necessitating some form of government intervention… including fiscal policy measures by the executive and legislative branches and monetary policy actions by the Federal Reserve. Keynesian economists advocate a mixed economy – mostly private sector, but with major involvement of government and the public sector. The stimulus spending programs of the Bush #43 and Obama Administrations were uniquely Keynesian in nature.
The Supply Side model, most often associated with the economic policies of Ronald Reagan, brought an era of economic expansion that began in the late 1980s and lasted throughout the 1990s. It provided the Bush #41 and Clinton Administrations with 12 years of low taxes, low price inflation, full employment, ever-increasing tax receipts and revenue surpluses.
Also known as “trickle down” economics, Supply Side theory insists that high marginal tax rates and overly-aggressive government regulation discourage private investment that fuels economic activity and that more capital in the hands of the private sector, as opposed to government bureaucrats, will produce jobs and wealth that trickle down to the rest of the population. The truth of it is self-evident.
Although liberals and Democrats attempt to credit the Clinton administration with the economic boom of the 1990s, any objective analysis will show that it was the “lag effect” of the Reagan tax cuts and the regulatory reforms of the 1980s that were responsible for the decade’s economic boom. It was not until the tax increases of the Bush #41 Administration, the politicization of the Community Reinvestment Act during the Clinton years, the artificially-created real estate “bubble” of the 1990s, and the devastating economic impact of the 9/11 attacks that the positive impact of supply side economics was temporarily stifled.
Now comes “Obamanomics,” a make-it-up-as-you-go economic philosophy heretofore unknown to mankind – an economic model that might also be called “straightjacket” economics because the underlying policies are intended to restrain, not unleash, the economic vitality of the nation.
For example, the United States is a country that runs on oil. And while liberals and Democrats spend an inordinate amount of time extolling the virtues of “alternate” and “renewable” sources of energy… wind, solar, geothermal, biofuels, etc… when asked for a timetable when those magical sources of energy will be available, and economically viable, they simply ignore the question or change the subject.
Instead of junketing around the country on Air Force One, teleprompter in hand, an entourage of hundreds trailing along behind, touting so-called “clean energy” projects, Obama could solve most of our energy problems with a single stroke of the pen. He could open the outer continental shelf, the wilderness areas, and the Arctic National Wildlife Reserve to oil and gas exploration; he could reverse the negative impact of Bill Clinton’s decision to lock up additional low-sulfur coal reserves; and he could eliminate the roadblocks to development of nuclear power plants. But he doesn’t do that. Instead, he promotes policies that increase our dependence on foreign oil while selling the liberal pipedream of “clean,” “green” and “alternative” energy sources.
As matters now stand, approximately 85 percent of U.S. energy supplies come in the form of coal, oil, and natural gas and it is unlikely that we will see that percentage change appreciably during our lifetime. The United States imports approximately 60 percent of its 20 million barrel per day crude oil requirements (4.4 billion barrels per year) from regions of the world… the Middle East, Africa, and South and Central America… that have become increasingly hostile to U.S. interests. And while those countries control some 913 billion barrels of proven reserves… enough to supply U.S. needs for more than 200 years… the cost of that oil grows and grows as China, India and Japan challenge the U.S. for economic supremacy.
Any reasonable person would conclude that it is long past time for the United States to produce as much of its own energy requirements as possible, but that’s not part of the “Straightjacket” economic plan. Instead, at a time when jobs are scarce and American families are struggling to buy enough fuel to power their cars and heat their homes, Obama continues his search for more and more creative ways to prevent low-cost energy from reaching the U.S. market.
Interior Secretary Ken Salazar over Gulf.
In the aftermath of the BP oil spill in the Gulf of Mexico, Obama and his White House czars falsified a report by a team of his own offshore drilling experts, making it appear as if the panel had recommended a six-month moratorium on all new drilling in the Gulf. And when a federal district judge set aside the moratorium, Obama and his outlaw Interior Secretary, Ken Salazar, simply ignored the court order.
Between the time of the first offshore well, drilled in 16 feet of Louisiana waters in 1947, and the completion of a well in 10,011 feet of water, in 2004, 200 miles offshore, some 42,000 wells have been drilled in the Gulf with little or no environmental impact. Today, some 72 percent of Gulf oil is produced from wells drilled in 1,000 ft. or more of water.
In a Dover, N.H., speech during his 2008 campaign, Obama said, “I can make a firm pledge. Under my plan, no family making less than $250,000 a year will see any form of tax increase. Not your income tax, not your payroll tax, not your capital gains taxes, not any of your taxes.” However, as a result of his Gulf drilling moratorium, the Louisiana Midcontinent Oil & Gas Association estimates that the idling of 33 offshore drilling platforms will result in the loss of 46,200 jobs and some $330 million per month in lost income.
But that represents only the direct impact of Obama’s economic policies. Just imagine for a minute the indirect impact on American workers and their families. If, as has been suggested, the price of gasoline goes to $5 per gallon as a result of Obama’s energy-killing policies and his challenge to Middle Eastern populations to fight for more democratic government, the economic impact on American workers will be profound. A worker who earns $50,000 a year and who drives 50 miles to and from work, will see his/her monthly gasoline bill increase from $250 to $500 (from $3,000 to $6,000 per year)… an Obama-imposed “tax” of $3,000 per year.
Assuming that electric power costs would keep pace with fuel costs, that same worker will find his/her electric power costs increasing from $2,100 per year to $4,200, an Obama energy “tax” increase of $2,100. Together, they represent a 10.2 percent energy “tax” increase on that worker’s gross income. Recently we learned that the Obama administration has voided the clean water permit of a West Virginia coal producer, reversing a 2007 decision by the Bush administration. The New York Timesreports that the EPA has revoked a permit for Arch Coal’s mountaintop-removal coal mining project, one of the nation’s largest. It was the first time the EPA has rescinded an existing clean water permit for a new development mine.
Inasmuch as Obama has called on corporate chief executives to unleash hundreds of billions of dollars in cash reserves to stimulate economic expansion and job creation, the EPA action is seen by business groups as “adding to a difficult economic climate because of excessive regulation.” The U.S. Chamber of Commerce issued a statement saying that the EPA’s decision sent a “very unsettling message to American business” and threatened the fragile economic recovery. The Chamber said, “EPA’s unprecedented action to retroactively deny a permit changes the rules not just in the middle of the game, but at the end of it. This is exactly the kind of practice that will keep capital on the sidelines.”
Perhaps the most telling example of the end result of Obama’s “Straightjacket” economics can be found in the City of Detroit where people and businesses have fled the city and the school district faces a $327 million shortfall. The Wall Street Journalreports that the district has already closed 59 public schools, proposes to close 70 of the remaining 142 schools, and expects to increase high school class sizes to 62 students. A Journal spokesperson has said, “The budget gap is partly due to the property tax revenue collapse as the Motor City crumbles, as well as financial mismanagement and a surge in pay and benefits for public employees… It’s hard to think of a sadder commentary on a government so fiscally desperate and so captured by its workers that it may be forced to abandon property to thieves. But are they the scavengers or (is it) the union?”
The economic decisions and policies of the Obama administration are unlike any ever imposed on a functioning society. They are not intended to enhance the lives, the liberties, and the happiness of the people. They are intended to destroy liberty and property. What better way to accomplish that than to saddle the people with unworkable economic policies… policies that will feel like an economic straightjacket to workers and employers alike.
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