Obama's Misleading Medicine

By Robert J. Samuelson

Monday, July 27, 2009

The most misused word in the health care debate is "reform." Everyone wants "reform," but what constitutes "reform" is another matter. If you listen to President Obama, his "reform" will satisfy almost everyone. It will insure the uninsured, control runaway health spending, subdue future budget deficits, preserve choice for patients and improve quality of care. These claims are self-serving exaggerations and political fantasies. They have destroyed what should be a serious national discussion of health care.

The health-care conundrum involves a contradiction that the administration steadfastly obscures: In the short run -- meaning four to eight years -- government cannot both insure the uninsured and rein in health spending. Here's why. The notion that the uninsured get little or no care is a myth: They now receive about 50 to 70 percent as much health care as the insured. If they become insured, they would use more health care, possibly as much as today's insured. That would increase both government and private health spending, depending on how the insurance is provided.

Until health-care costs are better controlled, expanding insurance coverage will be expensive. The president talks endlessly about the need to limit spending and eliminate waste. These are worthy goals. But changing the way medical care is delivered and paid for would take years and involve disruptive and unpopular measures. Patient co-payments might increase; networks of doctors and hospitals might displace individual practices; the tax exclusion for employer-paid health insurance might be curbed. Obama downplays the obstacles. His "reform" isn't likely to compel needed changes, partly because it's not clear what will work.

Evaluations of proposals reflect this reality. The Congressional Budget Office judges that the legislation in the House would, through expanded Medicaid and subsidies for private insurance, reduce the uninsured from 46 million in 2007 to 17 million in 2019. But the cost would be $1 trillion over a decade; of that, $239 billion would add to the budget deficit. Worse, the costs would rise faster than the sources of financing, including a tax on the wealthy. In 2019, the projection's last year, the deficit would be $65 billion. Assuming that the deficit rises 4 percent a year, the cumulative shortfall in the second decade would total about $800 billion.

But Obama sees all blue sky. "Here's what reform will mean for you," he said at a recent rally. "It will mean lower costs and more choices and coverage you can count on. Health insurance reform will save you and your family money," he said. (Note: Except for subsidies, it's doubtful families will experience savings anytime soon.) And later: "We'll also change incentives so that our doctors and our nurses can finally start providing patients with the best care and not just the most expensive care. And if we do that, then reform . . . will lower our deficits in the long run."

Contrast Obama's reassuring rhetoric with this exchange at a congressional hearing between Sen. Kent Conrad (D-N.D.), chairman of the Senate Budget Committee, and Douglas Elmendorf, head of the CBO.

Conrad: "From what you have seen from the product of the committees that have reported, do you see a successful effort being mounted to bend the long-term cost curve?"

Elmendorf: "No, Mr. Chairman. In the legislation that has been reported, we do not see the sort of fundamental changes that would be necessary to reduce the trajectory of federal health spending by a significant amount. And on the contrary, the legislation significantly expands the federal responsibility for health care costs. . . . The (cost) curve is being raised."

Judged objectively, "reform" may do exactly the opposite of what Obama says. But because the president is so well-spoken, he has the ability to make misleading statements sound reasonable or sophisticated. Still, they're misleading.

The administration had to make choices; it could emphasize expanded insurance coverage ("access") or cost control, but not both. It chose coverage, embracing the long-standing liberal grail of "universal" insurance. Millions of Americans would receive more health care, though how much their health would improve is uncertain (the administration can't logically argue that much health care is wasteful and also that the uninsured will automatically benefit from more of it). Many with insurance would gain the peace of mind that they won't lose it.

But what helps many Americans as individuals may hurt society as a whole. That's the paradox. Unchecked health spending is depressing take-home pay, squeezing other government programs -- state and local programs as well as federal -- and driving up taxes and budget deficits. The president has said all of this; he simply isn't doing much about it. He offers the illusion of "reform" while perpetuating the status quo of four decades: expand benefits, talk about controlling costs. The press should put "reform" in quote marks, because this is one "reform" that might leave the country worse off.

What is Liberalism? It's Discrimination Against Asian-Americans

New UC admissions policy gives white students a better chance, angers Asian-American community

By Lisa M. Krieger

Mercury News
Posted: 03/27/2009 07:55:18 PM PDT

A new University of California admissions policy, adopted to increase campus diversity, could actually increase the number of white students on campuses while driving down the Asian population.

Now angry Asian-American community leaders and educators are attacking the policy as ill-conceived, poorly publicized and discriminatory.

"It's affirmative action for whites," said UC-Berkeley professor Ling-chi Wang. "I'm really outraged "... and profoundly disappointed with the institution."

At an Asian Pacific Americans in Higher Education conference Friday in San Francisco, Asian activists also noted the policy will result in negligible increases in African-American students and only a modest climb in the number of Latinos. But it's the drop in the already significant Asian count that has many in that community so upset.

Although Asians account for only 12 percent of the state's population, they now represent 37 percent of UC admissions — the single largest ethnic group. At UC-Berkeley, 46 percent of the freshman class is Asian. There are dormitories with Asian themes and spicy bowls of pho are served up in the Bear's Lair cafeteria.

Under the new policy, according to UC's own estimate, the proportion of Asian admissions would drop as much as 7 percent, while admissions of whites could rise by up to 10 percent.

"The UCs are a means of upward mobility," said Anthony Lin, a San Jose resident who is a graduate student at University of California-Los Angeles. "The University of California, because it is a research institution, is very prestigious."

More diversity

Since its adoption by the UC Regents in February, the policy has triggered Asian suspicions of the UC entry system not felt since the mid-1980s, when a change in admissions policy caused a decline in Asian undergraduate enrollment. In 1989, then-UC-Berkeley Chancellor Ira Michael Heyman apologized for the policy.

"I fear a general sense that there are too many Asians in the UC system," said Patrick Hayashi, former UC associate president.

In this newest overhaul of eligibility requirements, UC has eliminated SAT subject tests — which Asians tend to do well on.

Those critical of the proposed plan vow to get it reversed by appealing to those who hold UC's purse strings: state legislators. On Tuesday, two panels of the California Legislature will jointly hold a hearing to review the policy.

Meanwhile, supporters of the change, which results from a faculty study and is backed by president Mark G. Yudof, see it as a way to ease the widening achievement gap on their campuses. The impact of the new policy, according to UC's preliminary analysis, would be to simplify the application process and cast a wider net among promising low-income students.

It's a consequential shift for the UC system, reflecting its effort to make UC more accessible. The new policy applies to students entering college in fall 2012; they are now high school freshmen.

More than a decade after California passed Proposition 209, voting to eliminate racial preferences, university administrators have struggled to create a better balance on campus. The use of a strict meritocracy has been blamed on the rise of "the Asian campus." Some say it has come at the expense of historically underrepresented blacks and Hispanics — as well as whites.

"The president would not have supported the policy had he not felt it was fair and created opportunity," said Nina Robinson, UC's director of policy and external affairs for student affairs.

Many students — especially low-income and/or minority students — become ineligible to apply because they do not take the subject matter tests, she said.

Flawed report

But an analysis of the change predicts that the number of Asians admitted to UC could decrease because Asians tend to excel on the "subject tests," which are no longer part of the application.

The number of admitted whites could increase, because more weight will be given to the "reasoning SAT," which favors American natives.

African-Americans and Latinos could benefit slightly from the expanded class-ranking criteria because top students from troubled schools such as San Jose's Lick High School could be UC-eligible.

Critics say they are frustrated because UC has not made public the statistical analysis on which their decision was based.

But the report that created the data for that analysis, called the 2007 CPEC Eligibility Study, is deeply flawed, according to New York University education professor Robert Teranishi.

"It shows a wide margin of error for Asians. It is not a good predictive model, perhaps because the Asian population is very diverse. 'Asian' represents a lot of different demographic backgrounds," he said. "It should not be used to guide major policy decisions." Wang, who compared it to "peddling snake oil," complained that Asians had not been invited to participate in the process.

"The changes over the last two years took place inside the ivory tower and closed the door, without the public's knowledge," he said.

Added Hayashi: "A public university should be more responsive. Private schools can do anything they want. But public schools have a different set of objectives. "It will have a devastating impact on our community. It is a fatal mistake to think it will blow over."

The university has the power to set admissions criteria, said Steve Boilard of the California Legislative Analyst's Office. But the Legislature approves its $3 billion in funding every year.

"This is a dynamic where we need to work together to ensure its mission," he said.

What's Up With All the Tax Probkems with Obama's Staff?

No wonder the Democrats love taxes. They don’t pay ‘em. I think we could eliminate the federal budget deficit if the Democrats just paid the taxes they owe.

Nathan Moore: “The problem here, at least in my view, is not so much that Solis’ husband had some rather antique tax liens hanging around, but that the Obama administration’s vetting process has revealed itself to be decidedly incompetent. Or, more accurately, arrogant, which really is just a subform of incompetence. . . . The message is clear, no matter how earnestly the president employs Newspeak rhetoric in a vain attempt to muddle it - there are two sets of rules, one for us, and one for them. If they truly believed there was one set of rules, the administration would have taken it upon itself to weed out the tax-encumbered nominees from the process, but they didn’t - and that speaks volumes.”

I almost forgot to mention the problems of Democratic Congressman Charles Rangel!

Solis Nomination Vote Delayed After Tax Issue Arises

By Holly Rosenkrantz

Feb. 5 (Bloomberg) -- A Senate committee put off its vote on Representative Hilda Solis’s nomination as labor secretary, one day after her husband paid to settle tax liens.

White House Press Secretary Robert Gibbs said Solis’s nomination wasn’t in trouble even though the Senate Committee on Health, Education, Labor and Pensions today delayed the vote. Her husband paid about $6,400 yesterday to settle the liens.

Solis is the fourth of President Barack Obama’s nominees to top posts whose family’s taxes have become an issue in the Senate’s confirmation process. Three have said they had failed to pay all their taxes, and two withdrew from consideration.

Gibbs said Solis wasn’t involved in the liens and shouldn’t be blamed. “We’re not going to penalize her for her husband’s mistakes,” Gibbs told reporters at the White House. “Her tax returns are in order.”

Former Senator Tom Daschle, a South Dakota Democrat, withdrew Feb. 3 as nominee for health secretary after questions arose about errors on his federal taxes. Hours earlier, Nancy Killefer withdrew from consideration as deputy director of the White House Office of Management and Budget. She also cited a personal “tax issue.”

Timothy Geithner was confirmed as Treasury secretary on Jan. 2, overcoming concerns that he underpaid federal taxes in previous years.

Auto Repair Business

Solis’s accountant was unaware of the tax liens until about two days ago, White House spokesman Tommy Vietor said. The liens had been outstanding for as long as 16 years against an auto repair business belonging to Solis’s husband, Sam Sayyad. The liens were first reported today by USA Today.

“He believes he paid the taxes,” Vietor said. “He believes they are only county fees and assessments, and he is planning to appeal.”

The couple filed their taxes jointly. The liens were on a business for which Sayyad was the sole proprietor.

Solis, a California Democrat, has already had her nomination delayed while Republicans examine her support for union legislative goals such as the Employee Free Choice Act, which would make it easier to unionize. Labor leaders today said it was important that the Senate confirm her nomination.

“As the daughter of two immigrant workers and proud union members, Hilda Solis is the embodiment of the American dream,” said Andrew Stern, president of the Service Employees International Union.

Senator Michael Enzi of Wyoming, the top Republican on the committee considering her nomination, will examine the new issue, said Craig Orfield, Enzi’s spokesman. Enzi hasn’t yet decided how he will vote.

“Obviously, there are new tax issues to review now,” Orfield said. “It’s going to take a few days” because “we’re trying to get answers and verify a lot of new information.”

To contact the reporter on this story: Holly Rosenkrantz in Washington at hrosenkrantz@bloomberg.net
Last Updated: February 5, 2009 18:19 EST

Daschle Withdraws Nomination Following Tax Questions

By Kristin Jensen and Edwin Chen

Feb. 3 (Bloomberg) -- Former Senator Tom Daschle withdrew as nominee for secretary of health and human services after questions arose about errors on his federal taxes.

Hours earlier, another of President Barack Obama’s nominees, Nancy Killefer, withdrew from consideration as deputy director of the White House Office of Management and Budget. She also cited a personal “tax issue.”

The twin withdrawals in rapid succession dealt Obama his worst setback as president, threatening to delay his efforts to enact comprehensive health care overhaul and inject greater accountability into his administration.

Fixing the nation’s health system “will require a leader who can operate with the full faith of Congress and the American people and without distraction,” Daschle, 61, said in a statement today. “Right now, I am not that leader.”

Obama said in a statement that he accepted Daschle’s decision with “sadness and regret.” In a series of previously scheduled interviews with television networks later in the day, Obama took responsibility for the demise of the nomination.

“Did I screw up in this situation? Absolutely,” Obama told NBC. “I’m willing to take my lumps.”

He said the episode, while “an embarrassment,” should not detract from his agenda.

Amended Returns

Daschle’s nomination faced delays after he amended three years of returns on Jan. 2 for unreported income, including personal use of a car and driver provided by Leo Hindery Jr., founder of the private-equity firm InterMedia Advisors. Daschle, who sat on the firm’s board, paid $140,000 in back taxes and interest.

Killefer was to oversee White House efforts to make government more accountable for its spending.

In her letter to Obama, Killefer, 55, said she came “to realize in the current environment that my personal tax issue of D.C. unemployment tax could be used to create exactly the kind of distraction and delay those duties must avoid.”

Daschle’s withdrawal stunned his former colleagues in the Senate, many of whom had defended him.

“It’s regrettable,” said Senate Finance Committee Chairman Max Baucus, a Montana Democrat. “I thought he was going to get confirmed.” Daschle also was to have held a senior post within the White House.

Daschle “did the honorable thing to spare his family, the president and his colleagues in the Senate from a tough political battle,” Illinois Senator Dick Durbin, the Senate’s No. 2 Democrat, said.

Health Care Role

The withdrawal “really sets us back a step” in the drive to overhaul the health-care system because “there are very few people who could have stepped into the role he was going to play,” Durbin said.

Daschle’s tax errors are part of “an unfortunate trend here” that shows “some serious problems with the vetting process” in the Obama administration, Republican Senator John Cornyn of Texas said in an interview yesterday.

Like Daschle and Killefer, Treasury Secretary Timothy Geithner also faced questions about back taxes he had to pay. He was confirmed Jan. 26.

Today’s events are all the more reason for Obama to push his economic stimulus bill through Congress quickly and chalk up a big win as quickly as possible, said analyst Paul Begala, a onetime top adviser to President Bill Clinton.

“It all depends on passing a successful economic plan,” he said. “The country believes in this new president and wants him to succeed.”

Economy Is Key

“This is somewhere between a huge embarrassment and, at least temporarily, debilitating,” said Washington-based political analyst Stuart Rothenberg. “But if a year from now the economy is coming back and the U.S. looks strong, and our international reputation is up, nobody is going to worry about this other stuff.”

Three of Obama’s nominees now have withdrawn before going through the confirmation process. Obama’s first pick to lead the department, New Mexico Governor Bill Richardson, withdrew last month amid a federal investigation into the state’s government.

In seeking replacements for Daschle and Killefer, the Obama White House now must adhere to “zero-tolerance for vetting problems,” and Obama must pick “ivory snow” nominees with spotless records, said Charlie Cook, publisher of the Cook Political Report.

Obama Pledge

That job is no mean feat in part because of Obama’s own campaign pledge to limit the role of lobbyists in his administration, as well as to instill a new era of personal responsibility and government accountability.

“Obama set incredibly high standards” that may continue to “expose him to suggestions of hypocrisy,” Cook said.

Still awaiting confirmation are William Lynn, Obama’s nominee to be deputy defense secretary, and William Corr, the president’s pick as the next deputy secretary of health and human services.

Lynn, 55, is senior vice president in Raytheon’s Washington office and oversees government lobbying for what is the nation’s fourth-largest defense contractor. He was a registered lobbyist until March 2008.

Critics said Corr, executive director of the nonprofit advocacy group Campaign for Tobacco-Free Kids, acted as a lobbyist. A campaign spokesman, Joel Spivak, said Corr “was not ever a fulltime lobbyist.”

“Obama came in with such high expectations and lofty rhetoric,” said Rothenberg. “Now he’s encountering the difficulties of governing.”

Vetting Process

The Daschle and Killefer incidents suggested less-than- rigorous background checks on potential jobholders.

“The question is whether this somehow uncovers some weaknesses in the early days of the administration that will show up later,” Rothenberg said.

At the White House, press secretary Robert Gibbs said Obama retains confidence in the vetting process.

“The president has confidence in the processing,” Gibbs said. “The bar we’ve set is higher” than any past administration, he said, adding that it would take more than two weeks for the president to make good on his pledge to bring change to Washington.

“Thankfully, we’ve got four years to try,” Gibbs said.

The biggest casualty, several analysts said, may be Obama’s aspirations to overhaul the U.S. health care system.

“Having such a high powered, well-wired guy as Daschle as the quarterback on health care was going to be huge,” Cook said.

“I’m sure they’ll get somebody that’s quite competent. But they’re not going to be able to step in the same way that Tom Daschle did,” he said. “So of course it’s a setback.”

To contact the reporters on this story: Kristin Jensen in Washington at kjensen@bloomberg.net; Edwin Chen in Washington at Echen32@bloomberg.net

Tax issues prompt Obama nominee to withdraw

Another one bites the dust.

February 3, 2009

WASHINGTON (CNN) -- Nancy Killefer withdrew her nomination Tuesday to become the Obama administration's chief performance officer, citing unspecified problems with District of Columbia unemployment tax.

The post is a new one, set up to help the incoming administration "scrub" waste from the federal budget. But in a letter to President Barack Obama, Killefer said her tax issue "could be used to create exactly the kind of distraction and delay those duties must avoid."

"Because of this I must reluctantly ask you to withdraw my name from consideration," she wrote.

Killefer was nominated to be deputy director of management at the Office of Management and Budget, and her duties as chief performance officer were added on. The OMB portion required her to be confirmed by the Senate.

Killefer is the third Obama nominee to face tax troubles, after questions about Treasury Secretary Timothy Geithner and former Senate Majority Leader Tom Daschle, Obama's pick for health and human services secretary, who also withdrew Tuesday.

A senior administration official told CNN that Killefer's tax issues dealt with household help, and that Obama aides had expected her to be raked over the coals after the Geithner and Daschle nominations. The official said that Killefer had been upfront about the matter and that Obama's staff had reviewed the questions raised and decided they were comfortable with her before the announcement of her nomination.

Geithner, whose office oversees the Internal Revenue Service, was confirmed after admitting that he had failed to pay in timely fashion more than $34,000 in self-employment taxes while he worked at the International Monetary Fund from 2001 to 2004. The issue was caught during a 2006 audit, and Geithner told the Senate that the debt was incurred unintentionally.

Daschle, who had been awaiting confirmation, previously had acknowledged that he failed to pay taxes on a car and driver provided by a friend and on $80,000 in consulting fees after he left the Senate. He called the matter a mistake and said he paid his taxes in full, but he announced Tuesday that he "will not be a distraction" to the administration. Obama said he accepted Daschle's withdrawal "with sadness and regret."

Killefer, a senior director at the management consulting firm McKinsey & Company, was nominated last month as Obama pledged to cut unnecessary spending and bring "a new sense of responsibility to Washington." Officials said her position would restore fiscal order and reform government.

"We can no longer afford to sustain the old ways when we know there are new and more efficient ways of getting the job done," Obama said in announcing her nomination.

The Congressional Budget Office announced last month that the deficit for the current budget year will be $1.2 trillion. Obama said at the time the government would have to "make tough choices" in the budget "to address both the deficit of dollars and the deficit of trust."

Killefer served as assistant secretary for management and chief financial officer of the Treasury Department during the Clinton administration.

CNN's Ed Henry contributed to this report.

Geithner's failure to pay taxes just an 'honest mistake'?

The Chicago Sun-Times
January 17, 2009

BY ROGER SIMON
Would it be OK if I stopped paying my taxes until Barack Obama names me to be his secretary of the Treasury?

That is a deal I would like to get. That is the deal financial wizard Timothy Geithner got.

He didn't pay all of his federal taxes for years. Then, after Obama decided to name him Treasury secretary, the president-elect's vetting team discovered Geithner's little oversight.

Not paying your taxes is considered serious for some people. But not for Geithner, a Wall Street "wonder boy" -- he is 47 -- who is president of the Federal Reserve Bank of New York and was instrumental in putting together the recent Wall Street bailout package.

You would think a guy like this would know about paying taxes, but no. Mistakes were made.

Geithner failed to pay the proper self-employment taxes for 2001, 2002, 2003 and 2004, even though he was sent documents telling him he had to do so.

But in 2006, Geithner got a document he couldn't ignore. The Internal Revenue Service sent Geithner a notice saying he had not paid his taxes for 2003 and 2004, and Geithner paid up.

But he did not pay up for 2001 and 2002, even though he must have known that he skipped taxes for those years, too.

He didn't pay those taxes until Obama decided he wanted Geithner to head the Treasury and sent vetters to look into Geithner's past.

The vetters discovered Geithner's little tax error in November and told Geithner. Then Geithner paid up, with interest. The vetters also told Obama, of course.

According to an article by Politico's Craig Gordon and Amie Parnes, Obama "decided to push ahead with the nomination anyway because he 'still wanted him.'"

At the end of the day, a source said, "Barack decided that he was the best person for a really important job."

OK, I get it.

The economy is teetering on the brink, and we need to cut corners a little. We can't be all that scrupulous and nitpicky when the future of the nation is at stake.

So in November, Team Obama announced that Geithner had this little problem and was paying his back taxes with interest and that it was all an honest mistake and no big deal, right?

Wrong. They decided to keep it a secret. But the Wall Street Journal discovered it and blew the whistle Tuesday.

The Senate Finance Committee has been looking into Geithner -- it has to vote on his appointment -- and discovered something else.

According to Gordon and Parnes: "In addition, Geithner included payments to overnight camps in calculating his dependent child care credit in 2001, 2004 and 2005.

His accountant informed him in 2006 that the camps were not allowable expenses. The committee notes that Geithner did not file amended returns to fix the mistake."

Can I get this deal? Can I ignore my accountant? He is always telling me that my trips to Vegas are not allowable under "necessary mental health expenses," and fool that I am, I keep listening to him.

The Geithner foul-up is different from the Bill Richardson foul-up. The Obama vetters were unable to get Richardson to give them all of the background information they needed, but Obama went ahead and appointed Richardson to the Cabinet anyway. Then that blew up, and Richardson withdrew his name.

With Geithner, the vetters found the bad stuff -- yay! -- but everybody thought they could sweep it under the rug. Boo.

Now Republicans are forcing a delay on the Geithner hearing until after Obama is inaugurated.

Team Obama says Geithner made "honest mistakes."

OK. I'll buy that. But as secretary of the Treasury, Geithner would be in charge of the Internal Revenue Service. And we will see how easy he is on other people when they say they made "honest mistakes."

Liberals Are Cheap Bastards

The "great" Nick Kristof of the New York TImes states the obvious in an surprisingly refreshing op-ed:

December 21, 2008
Op-Ed Columnist
Bleeding Heart Tightwads
By NICHOLAS D. KRISTOF

This holiday season is a time to examine who’s been naughty and who’s been nice, but I’m unhappy with my findings. The problem is this: We liberals are personally stingy.

Liberals show tremendous compassion in pushing for generous government spending to help the neediest people at home and abroad. Yet when it comes to individual contributions to charitable causes, liberals are cheapskates.

Arthur Brooks, the author of a book on donors to charity, “Who Really Cares,” cites data that households headed by conservatives give 30 percent more to charity than households headed by liberals. A study by Google found an even greater disproportion: average annual contributions reported by conservatives were almost double those of liberals.

Other research has reached similar conclusions. The “generosity index” from the Catalogue for Philanthropy typically finds that red states are the most likely to give to nonprofits, while Northeastern states are least likely to do so.

The upshot is that Democrats, who speak passionately about the hungry and homeless, personally fork over less money to charity than Republicans — the ones who try to cut health insurance for children.

“When I started doing research on charity,” Mr. Brooks wrote, “I expected to find that political liberals — who, I believed, genuinely cared more about others than conservatives did — would turn out to be the most privately charitable people. So when my early findings led me to the opposite conclusion, I assumed I had made some sort of technical error. I re-ran analyses. I got new data. Nothing worked. In the end, I had no option but to change my views.”

Something similar is true internationally. European countries seem to show more compassion than America in providing safety nets for the poor, and they give far more humanitarian foreign aid per capita than the United States does. But as individuals, Europeans are far less charitable than Americans.

Americans give sums to charity equivalent to 1.67 percent of G.N.P., according to a terrific new book, “Philanthrocapitalism,” by Matthew Bishop and Michael Green. The British are second, with 0.73 percent, while the stingiest people on the list are the French, at 0.14 percent.
(Looking away from politics, there’s evidence that one of the most generous groups in America is gays. Researchers believe that is because they are less likely to have rapacious heirs pushing to keep wealth in the family.)

When liberals see the data on giving, they tend to protest that conservatives look good only because they shower dollars on churches — that a fair amount of that money isn’t helping the poor, but simply constructing lavish spires.

It’s true that religion is the essential reason conservatives give more, and religious liberals are as generous as religious conservatives. Among the stingiest of the stingy are secular conservatives.
According to Google’s figures, if donations to all religious organizations are excluded, liberals give slightly more to charity than conservatives do. But Mr. Brooks says that if measuring by the percentage of income given, conservatives are more generous than liberals even to secular causes.

In any case, if conservative donations often end up building extravagant churches, liberal donations frequently sustain art museums, symphonies, schools and universities that cater to the well-off. (It’s great to support the arts and education, but they’re not the same as charity for the needy. And some research suggests that donations to education actually increase inequality because they go mostly to elite institutions attended by the wealthy.)

Conservatives also appear to be more generous than liberals in nonfinancial ways. People in red states are considerably more likely to volunteer for good causes, and conservatives give blood more often. If liberals and moderates gave blood as often as conservatives, Mr. Brooks said, the American blood supply would increase by 45 percent.

So, you’ve guessed it! This column is a transparent attempt this holiday season to shame liberals into being more charitable. Since I often scold Republicans for being callous in their policies toward the needy, it seems only fair to reproach Democrats for being cheap in their private donations. What I want for Christmas is a healthy competition between left and right to see who actually does more for the neediest.

Of course, given the economic pinch these days, charity isn’t on the top of anyone’s agenda. Yet the financial ability to contribute to charity, and the willingness to do so, are strikingly unrelated. Amazingly, the working poor, who have the least resources, somehow manage to be more generous as a percentage of income than the middle class.

So, even in tough times, there are ways to help. Come on liberals, redeem yourselves, and put your wallets where your hearts are

Getting Out of the Credit Mess

The last thing we need is policy that encourages or incurs more debt

The Wall Street Journal
December 9, 2008

By HARVEY GOLUB

The federal government has announced a series of actions in the past few weeks ostensibly designed to make consumer credit more available and invigorate the economy. Obviously, the country is in recession and the recession is likely to get deeper. But will these actions reduce the depth and duration of the recession? Or, in the long run, will they make matters even worse?

Last month the Federal Reserve and the Treasury announced that the government would buy $500 billion in mortgages guaranteed by Fannie Mae and Freddie Mac. They also announced they would lend $200 billion against securities backed by car loans, student loans, credit-card debt, and small business loans. The purpose of both moves is to create lending capacity across key elements of the consumer sector.

Most recently, the government announced that it would subsidize new home mortgages by one percentage point, effectively lowering monthly payments on a 30-year loan by about 10%. The stated reason was to help the housing market, which is crucial to an economic recovery.
With each announcement, the Fed and Treasury were careful to point out they might take additional action in support of these sectors and others as well. And it is a virtual certainty the government will cobble together some program to reduce foreclosures to keep people in their homes. I'm sure that, as other industries or sectors come under pressure, there will be new programs to help. The automobile industry will not be the last to come to Washington.

To begin to understand today's problem, we have to have a sense of how we got there. Between 1994 and second quarter 2008, the U.S, housing stock more than doubled in value from $7.6 trillion to $19.4 trillion. Almost three quarters of that increase was due to a speculative bubble, the root cause of which was government policies designed to increase home ownership, largely among people who would be considered nonprime borrowers -- i.e., people without sufficient documented income or employment history and little or no savings or credit history.

The intellectual start of this mess was in a flawed Boston Federal Reserve study published in 1992 that purported to show that minorities were treated less well than whites. That study led to increased political pressure on banks to modify their standards with increased emphasis through the Community Reinvestment Act, and aided by U.S. Department of Housing and Urban Development regulations in the Clinton administration that required parity of outcomes in the lending process.

The effect of all of this meddling was compounded by the lax or incompetent supervision of Fannie Mae and Freddie Mac. All in all, the government got into the business of encouraging and then forcing lending institutions to make mortgage loans to people who could not pay them back. What we ended up with is a failure of government, which we have erroneously termed a failure of capitalism.

The standards applied to these subprime loans began to be applied to what heretofore had been prime borrowers who also increasingly became overextended. But, as housing prices increased, owners cashed out their equity and bought cars, appliances and other items, including using the freed-up equity to pay for everyday living purchases. Over the past decade alone, U.S. households have taken on some $8 trillion in debt, bringing the nation's current consumer debt load to $14 trillion.

This cynical and unsustainable cycle was abetted by mortgage originators who had little interest in making sure loans were good quality, investment banks that securitized and packaged these loans, rating agencies who forgot fundamental laws of gravity, and purchasers who bought securities they could not possibly understand. This was fueled by borrowers who committed fraud and bought houses, or speculated in them, when there was no realistic chance they could afford them.

All of this led to a huge overleveraging in the consumer market. The increase in debt burden fueled much of the nation's economic growth over recent decades, aided somewhat by increases in productivity and underpinned by easy money from the Federal Reserve. Since consumers represent about 70% of the nation's GNP, and since leverage cannot increase forever, we were bound to see the bubble burst and eventually enter a substantial recession.

So, are the current credit easing actions likely to be helpful or not? In my judgment, measures to create liquidity are likely to be helpful. Financial institutions that lend money to credit-worthy people for reasonable purposes have experienced a substantial reduction in available funding from which they can make loans. Hence the programs to support the securitization markets are sensible because money used for this purpose will be lent and used for purchases. Programs that deliver a short-term reduction in mortgage rates will, at the margin, help absorb some of the available housing stock, reducing the time it will take for housing to reach market-clearing levels.

However, measures intended to reduce foreclosures, per se, are likely to be ineffective at best and morally flawed at worst. When analysts say that people are being foreclosed because house values have declined they are missing the point. A large number of foreclosures are taking place because people can no longer refinance and take value out. They could not afford the houses to begin with and greed or stupidity -- not a falling real-estate market -- have caused their problems. On the other hand, measures to subsidize homeowners facing foreclosures because they have lost their jobs can be helpful.

In the longer term, our nation must delever -- either by reducing the amounts of borrowing or by increasing consumer earning power through economic growth. Relying on growth alone implies a growth rate higher than we have ever experienced in our nation's history. Nonetheless, our public policy must encourage economic growth by lowering tax rates for corporations and individuals while at the same time avoiding what would be growth killers, including "card check" legislation and trade restrictions. Public policy should support higher savings rates, and avoid encouraging increased consumer spending funded by further debt, which may be helpful in the short term but catastrophic in the longer term.

It is not only consumers that must delever. Governments must as well. State and local governments across the nation have incurred direct and indirect debt or obligations in the tens of trillions of dollars -- obligations that cannot be met under any set of reasonable circumstances without an explosion in growth and tax revenues. In fact, we continue to incur debt for politically palatable ideas, like rebate checks, which have very little stimulative power but increase the depth of the hole we're in.

To solve this problem for ourselves and future generations, we must get back to our historic reliance on personal responsibility and market forces, and get government out of economic management. It doesn't do a good job, as the current economic mess amply proves.

Mr. Golub is a former chairman and CEO of American Express.

The night we waved goodbye to America... our last best hope on Earth

The Daily Mail
November 8, 2008
By Peter Hitchens

Anyone would think we had just elected a hip, skinny and youthful replacement for God, with a plan to modernise Heaven and Hell – or that at the very least John Lennon had come back from the dead.

The swooning frenzy over the choice of Barack Obama as President of the United States must be one of the most absurd waves of self-deception and swirling fantasy ever to sweep through an advanced civilisation. At least Mandela-worship – its nearest equivalent – is focused on a man who actually did something.

I really don’t see how the Obama devotees can ever in future mock the Moonies, the Scientologists or people who claim to have been abducted in flying saucers. This is a cult like the one which grew up around Princess Diana, bereft of reason and hostile to facts.

It already has all the signs of such a thing. The newspapers which recorded Obama’s victory have become valuable relics. You may buy Obama picture books and Obama calendars and if there isn’t yet a children’s picture version of his story, there soon will be.
Proper books, recording his sordid associates, his cowardly voting record, his astonishingly militant commitment to unrestricted abortion and his blundering trip to Africa, are little-read and hard to find.

If you can believe that this undistinguished and conventionally Left-wing machine politician is a sort of secular saviour, then you can believe anything. He plainly doesn’t believe it himself. His cliche-stuffed, PC clunker of an acceptance speech suffered badly from nerves. It was what you would expect from someone who knew he’d promised too much and that from now on the easy bit was over.

He needn’t worry too much. From now on, the rough boys and girls of America’s Democratic Party apparatus, many recycled from Bill Clinton’s stained and crumpled entourage, will crowd round him, to collect the rich spoils of his victory and also tell him what to do, which is what he is used to.

Just look at his sermon by the shores of Lake Michigan. He really did talk about a ‘new dawn’, and a ‘timeless creed’ (which was ‘yes, we can’). He proclaimed that ‘change has come’. He revealed that, despite having edited the Harvard Law Review, he doesn’t know what ‘enormity’ means. He reached depths of oratorical drivel never even plumbed by our own Mr Blair, burbling about putting our hands on the arc of history (or was it the ark of history?) and bending it once more toward the hope of a better day (Don’t try this at home).

I am not making this up. No wonder that awful old hack Jesse Jackson sobbed as he watched. How he must wish he, too, could get away with this sort of stuff.

And it was interesting how the President-elect failed to lift his admiring audience by repeated – but rather hesitant – invocations of the brainless slogan he was forced by his minders to adopt against his will – ‘Yes, we can’. They were supposed to thunder ‘Yes, we can!’ back at him, but they just wouldn’t join in. No wonder. Yes we can what exactly? Go home and keep a close eye on the tax rate, is my advice. He’d have been better off bursting into ‘I’d like to teach the world to sing in perfect harmony’ which contains roughly the same message and might have attracted some valuable commercial sponsorship.

Perhaps, being a Chicago crowd, they knew some of the things that 52.5 per cent of America prefers not to know. They know Obama is the obedient servant of one of the most squalid and unshakeable political machines in America. They know that one of his alarmingly close associates, a state-subsidised slum landlord called Tony Rezko, has been convicted on fraud and corruption charges.

They also know the US is just as segregated as it was before Martin Luther King – in schools, streets, neighbourhoods, holidays, even in its TV-watching habits and its choice of fast-food joint. The difference is that it is now done by unspoken agreement rather than by law.
If Mr Obama’s election had threatened any of that, his feel-good white supporters would have scuttled off and voted for John McCain, or practically anyone. But it doesn’t. Mr Obama, thanks mainly to the now-departed grandmother he alternately praised as a saint and denounced as a racial bigot, has the huge advantages of an expensive private education. He did not have to grow up in the badlands of useless schools, shattered families and gangs which are the lot of so many young black men of his generation.

If the nonsensical claims made for this election were true, then every positive discrimination programme aimed at helping black people into jobs they otherwise wouldn’t get should be abandoned forthwith. Nothing of the kind will happen. On the contrary, there will probably be more of them.

And if those who voted for Obama were all proving their anti-racist nobility, that presumably means that those many millions who didn’t vote for him were proving themselves to be hopeless bigots. This is obviously untrue.

I was in Washington DC the night of the election. America’s beautiful capital has a sad secret. It is perhaps the most racially divided city in the world, with 15th Street – which runs due north from the White House – the unofficial frontier between black and white. But, like so much of America, it also now has a new division, and one which is in many ways much more important. I had attended an election-night party in a smart and liberal white area, but was staying the night less than a mile away on the edge of a suburb where Spanish is spoken as much as English, plus a smattering of tongues from such places as Ethiopia, Somalia and Afghanistan.

As I walked, I crossed another of Washington’s secret frontiers. There had been a few white people blowing car horns and shouting, as the result became clear. But among the Mexicans, Salvadorans and the other Third World nationalities, there was something like ecstasy.

They grasped the real significance of this moment. They knew it meant that America had finally switched sides in a global cultural war. Forget the Cold War, or even the Iraq War. The United States, having for the most part a deeply conservative people, had until now just about stood out against many of the mistakes which have ruined so much of the rest of the world.

Suspicious of welfare addiction, feeble justice and high taxes, totally committed to preserving its own national sovereignty, unabashedly Christian in a world part secular and part Muslim, suspicious of the Great Global Warming panic, it was unique.

These strengths had been fading for some time, mainly due to poorly controlled mass immigration and to the march of political correctness. They had also been weakened by the failure of America’s conservative party – the Republicans – to fight on the cultural and moral fronts.

They preferred to posture on the world stage. Scared of confronting Left-wing teachers and sexual revolutionaries at home, they could order soldiers to be brave on their behalf in far-off deserts. And now the US, like Britain before it, has begun the long slow descent into the Third World. How sad. Where now is our last best hope on Earth?