Sunday, December 05, 2010

Behind that unemployment rise to 9.8%

An all-out attack on employers from the Obamabots

There is some very scary stuff happening inside of Obama’s Department of Labor that should cause you to shudder. As John Fund at the WSJ points, out the Department of Labor is up to no good, as usual.

Labor’s Office of the Solicitor released a plan that has been adopted as the standard operating procedure which highlights just how much DOL and the Obama administration dislike business. DOL is looking at doing the following things to intimidate businesses, as Fund reports:

Patricia Smith, who heads the solicitor’s office, told me in an interview yesterday that the plan is a “living document” that will “never be finalized.” Whatever its status, it includes the following:

• “Identify a public affairs liaison in each Regional Office” to “send stronger, clearer messages to the regulated community about DOL’s emphasis on litigation.”

One tactic to be employed by the department’s Occupational Safety and Health Administration (OSHA) division will be to “deter [employers] through shaming.” Ms. Smith told me she didn’t know what that means. But whatever it might involve, it doesn’t sound appropriate for an agency charged with carrying out the law in an even-handed fashion.

• “Engage in enterprise-wide enforcement.” Ms. Smith said that means targeting multiple work sites of the same company. A department source says it also is likely to involve enforcement agents from the Wage and Hour Division and from OSHA showing up at the same time. The plan also calls for “Imposing shorter deadlines for implementing remedial measures in conciliation agreements and consent decrees.”

• “Engage in greater use of injunctive relief,” which means using court injunctions rather than fines to enforce compliance. The department plan also wants to “identify and pursue test cases” that could stretch the meaning of the law.

DOL is drawing a line in the sand on where they stand with business. DOL is the regulator, and whatever they say goes and if you refuse to go along, you will wish you did.

But it gets worse. While DOL tightens the screws on business and the folks responsible for providing jobs to Americans, they are turning their gaze away from Big Labor, the money sucking, job killing group of thieves:

But while the Department of Labor prepares for a hyper-aggressive enforcement strategy against business, it has rolled back Bush-era reforms mandating greater union transparency. Just this week the department rescinded its Form T-1, which required unions to report on strike funds and other accounts under union control.

The Labor Department is also planning to transfer responsibility for whistleblower investigations from OSHA (which currently has 80 investigators on this beat) to the Office of Labor-Management Standards (OLMS), which oversees union financial integrity. But the Obama administration has severely cut funding and staff for OLMS. There are 187 OLMS investigators, down from 223 last year. With additional responsibilities, the office’s ability to investigate embezzlements and union corruption will be further hindered.

This work is important. Since 2001, OLMS investigations have resulted in 972 indictments for various financial misdeeds, with 905 of them resulting in convictions. As a result, $88 million in restitution was made to rank-and-file union members.

There you have it folks. If you aren’t part of the chosen class, which would be swearing allegiance to a labor union where you can have your paycheck shanghaied each week, then you are at the mercy of the Labor Department.



How Obama & Co. are Creating Another Housing Bubble

Leftists never learn. They don't want to learn

It is hard to believe, but it looks like the government will soon use the taxpayers' checkbook again to create a vast market for mortgages with low or no down payments and for overstretched borrowers with blemished credit. As in the period leading to the 2008 financial crisis, these loans will again contribute to a housing bubble, which will feed on government funding and grow to enormous size. When it collapses, housing prices will drop and a financial crisis will ensue. And, once again, the taxpayers will have to bear the costs.

In doing this, Congress is repeating the same policy mistake it made in 1992. Back then, it mandated that Fannie Mae and Freddie Mac compete with the Federal Housing Administration (FHA) for high-risk loans. Unhappily for both their shareholders and the taxpayers, Fannie and Freddie won that battle.

Now the Dodd-Frank Act, which imposed far-reaching new regulation on the financial system after the meltdown, allows the administration to substitute the FHA for Fannie and Freddie as the principal and essentially unlimited buyer of low-quality home mortgages. There is little doubt what will happen then.

As in the period leading up to the 2008 financial crisis, these loans will again contribute to a housing bubble, which will feed on government funding and grow to enormous size.

Since the federal takeover of Fannie and Freddie in 2008, the government-sponsored enterprises’ (GSEs’) regulator has limited their purchases to higher-quality mortgages. Affordable housing requirements Congress adopted in 1992 and the Department of Housing and Urban Development (HUD) administered until 2008 have been relaxed. These had required Fannie and Freddie to buy the low-quality mortgages that ultimately drove them into insolvency and will cause enormous losses for the taxpayers.

The latest regulatory change does not reduce the total losses that taxpayers will suffer from HUD's policies; those losses, estimated at about $400 billion, are baked in the cake. But the higher lending standards now required of Fannie and Freddie should reduce future losses.

Not so for the FHA. While everyone has been watching Fannie and Freddie, the administration has quietly shifted most federal high-risk mortgage initiatives to FHA, the government's original subprime lender. Along with two other federal agencies, FHA now accounts for about 60 percent of all U.S. home purchase mortgage originations. This amounts to more than $1 trillion and is rising rapidly. The administration justifies this policy by saying it is necessary to support the mortgage market, yet borrowers are once again receiving high-risk loans.

The goal of Congress and regulators should be to foster the residential mortgage market’s return to the standards that used to prevail in 1990, before the affordable housing requirements were imposed on Fannie and Freddie. At that time, mortgages required 10 to 20 percent down payments, and were only made to borrowers with good credit and relatively low debt-to-income ratios. When loans of this kind were the standard in the residential mortgage market, we did not have financial crises brought on by the collapse of a housing bubble.

The Dodd-Frank Act, however, exempts FHA and other government agencies from appropriate standards on mortgage quality. This will give low-quality mortgages a direct route into the market once again; it will be like putting Fannie and Freddie back in the same business, but with an explicit government guarantee.

For example, thanks to expanded government lending, 60 percent of home purchase loans now have down payments of less than 5 percent, compared to 40 percent at the height of the bubble, and the FHA projects that it will increase its insured loans total to $1.34 trillion by 2013. Indeed, the FHA just announced its intention to push almost half of its home purchase volume into subprime territory by 2014-2017, essentially a guarantee to put taxpayers at risk again.

What is the answer? The Dodd-Frank Act needs significant amendment, so that it applies quality standards to FHA and other government agencies. This should not seriously impair credit availability for low-income borrowers with good credit. For many years, until it had to compete with Fannie and Freddie for affordable loans, FHA had reasonably good standards for the mortgages it would insure. As late as 1990, only 4 percent of the loans it insured had down payments of 3 percent or less, though by 2008 this number was 44 percent.

Establishing reasonable lending standards for the FHA, while still allowing it to make loans to low-income borrowers, would assure that the agency does not become the unworthy successor to Fannie and Freddie.

Dodd-Frank was badly designed in numerous ways. Many observers have noted that it did not address the government housing policies that caused the financial crisis. A first order of business for the new Congress should be to correct this error by requiring that the FHA and other government mortgage lenders abide by reasonable mortgage lending standards.



Cure or Care?

Which do you think is less expensive, not to mention preferable: a cure for cancer, Alzheimer's disease and diabetes, or caring for people with these diseases? Wouldn't it be better medical and public policy to direct more resources toward finding a cure for diseases that cost a lot to treat than to rely on a government insurance program, such as Obamacare, which seeks mainly to help pay the bills for people after they become ill?

Isn't the answer obvious? Apparently not to many politicians trapped in an old paradigm that focuses too much on hospitals, doctors and medicines and too little on medical research and preventive care so that people will not need hospitals, doctors or medicines.

The pursuit of cures as a priority is a subject that has been taken up by my colleague James Pinkerton in his forthcoming book entitled "Serious Medicine Strategy" and on his blog at

It's not that we are failing to fund research to cure diseases that end lives too early. Rather, it is a failure of political leadership to make research a priority in their speeches and policies. Think back more than 50 years ago to when the political and medical communities united and led the public toward a cure for polio and the elimination of the need for "iron lungs." This Herculean effort was the medical equivalent of going to the moon.

Why can't we create a united front to find cures for diabetes, Alzheimer's, cancer and other ailments? Pinkerton believes it's because of "the baneful influence of the Food and Drug Administration and the trial lawyers. If the government would protect the ability of entrepreneurs and scientists to create products without getting sued into oblivion, capital would come pouring into the pharma sector, not only from American investors, but from investors around the world." That's because, he notes, people in Europe and Asia now suffer from the same diseases as Americans.

Republicans, especially, should pick up on this strategy of cures before care. Instead, most Republicans are singularly focused on repealing the president's health care "reform" law. It should be repealed, or at least experience an extreme makeover, but repealing that law doesn't cure anyone of anything. And here's the double benefit that Obamacare claims for itself, which can never materialize. Finding cures for diseases helps people live healthier lives, and it's cost efficient. Look at the money saved from no longer having to treat victims of polio, smallpox and tuberculosis. Imagine the savings when a cure is eventually found for cancer. Plus, the retirement age could be easily raised as older people work longer and live more vigorous, productive (and tax-generating) lives.

What's not to like about any of this? Republican presidential candidates in 2012 -- and a Republican president should the GOP win that election -- could change the direction and content of the entire health care debate, if they fashioned a strategy for going to the "medical moon" by a certain and attainable date. We are close to a cure for some diseases, but far from a cure for others. Let's begin with those closest to a cure.

Ask yourself: would you rather be healthy and fit and live a long life, or be taken care of in your illness by a government health system that sees you as a burden and is constantly trying to reduce care and lower costs? Ask the English, who are currently experiencing the downside to poor care.

The problem is that once a nation has made a wrong turn, it is difficult if not impossible to reverse course. America still has time to make the right choice and move in the direction of cures. Now all we need is the political leadership to point the way.



Pres. Emptyhead actually believes that the government puts people back to work

When it's actually the biggest obstacle to job creation

This Monday, during his remarks regarding the federal workforce pay freezes, President Barack Obama said, "And I'm going to be interested in hearing ideas from my Republican colleagues, as well as Democrats, about how we continue to grow the economy and how we put people back to work."

He actually believes that the government puts people back to work. Government can transfer wealth from one group to another -- but people and businesses put people back to work. More often than not, the government gets in the way of putting people back to work.

For example, my part-time assistant on Tuesday called a government agency to apply for a government number. She was put on hold for an hour. When she finally reached someone and asked a question, she was transferred to another department, which again put her on hold. She finally had to hang up to go attend to her preschool children.

I'm not sure how more government is going to create more jobs, but I know how government can make it too hard and too costly for people to run businesses.

Obama continued Monday, "Today I'm proposing a two-year pay freeze for all civilian federal workers." He's about two years too late. Most of my friends have had their pay frozen, cut or eliminated during the past two years. Glad Obama thinks it's time for the government to join the rest of us.

If Obama administration officials understood the fundamentals of our country's structure, they would understand that taxes are not the government's revenue -- but the people's expense. President Calvin Coolidge understood this when he said, " I want taxes to be less, so that the people may have more."



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The Big Lie of the late 20th century was that Nazism was Rightist. It was in fact typical of the Leftism of its day. It was only to the Right of Stalin's Communism. The very word "Nazi" is a German abbreviation for "National Socialist" (Nationalsozialist) and the full name of Hitler's political party (translated) was "The National Socialist German Workers' Party" (In German: Nationalsozialistische Deutsche Arbeiterpartei)


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