It Appears Obamacare was Designed to Fail so they could give us a Single-Payer System

Posted by PITHOCRATES - March 23rd, 2014

Week in Review

The Democrats have longed for national health care.  Because if the government controls health care they control one-sixth of the U.S. economy.  Which means one-sixth of the U.S. economy would flow through Washington.  That’s a lot of money.  And a lot of that can flow into politicians’ pockets.  Allowing them to spend more than they ever had before.  And the best thing about it is that once they get control of it they can scare the people into raising taxes.  “Unless the people tell their Congress members to raise tax rates we will have to make cuts in the national health care budget.  Which means some people won’t get the tests they need.  The treatment they need.  Or the surgery they need.”  Imagine the fear that’ll put into the American people.

So when President Clinton entered office his administration tried to give us national health care.  Hillarycare.  But the people said in no uncertain terms that they didn’t want national health care.  By voting Republicans in everywhere during the 1994 midterm election.  That was the end of Hillarycare.  And President Clinton moved to the center.  While the Democrats noted that if they were going to pass national health care into law they would have to be devious.  Which is what Obamacare apparently is.  A devious plan to get us to a single-payer system against our will (see Why Is the ObamaCare Mandate So Toothless? posted 3/19/2014 on Investors).

Health Care: Some think Democrats designed ObamaCare to fail so they could get to a single payer system. Seems a bit extreme. But it does help explain why they made the individual mandate so easy to avoid…

In fact, of the 30 million uninsured expected in 2016, 19 million will be exempt from the individual mandate, according to the Congressional Budget Office…

On top of this, ObamaCare includes various “hardship exemptions” — some of which appear to be so laughably easy to qualify for that it’ll be a shock if any uninsured pay the tax penalty…

The form even encourages people who “aren’t sure” to “ask for an exemption…”

What’s more, those who don’t qualify for an exemption could avoid the penalty simply by not paying it. Democrats specifically barred the IRS from charging civil and criminal penalties, imposing liens or seizing assets and bank accounts to collect unpaid ObamaCare penalties. It can take it only from a tax refund…

This leaves the question of why Democrats would make a key pillar of the ObamaCare structure so incredibly weak.

Were they worried about the political consequences of making the unpopular mandate too strict, not realizing it would undermine their reform? Or did they know that an ineffective mandate would ultimately wreck ObamaCare, hoping its demise would push the country toward a single payer system?

In other words, were Democrats dangerously incompetent or unbelievably cynical? Neither is a particularly good defense, but each underscores the need to scrap ObamaCare entirely and start over.

The health insurers were all for Obamacare.  At first.  Mandatory health insurance?  Cha-ching.  Easy money.  The government forcing people to buy their policies?  It’s like they died and went to insurance heaven.  But government is full of devious bastards.  The health insurers let their greed cloud that fact.  And now they may pay the ultimate price.  For with all of these mandate exceptions the young and healthy aren’t buying health insurance they won’t use.  Only sick people who will use that health insurance are buying it.  So the health insurers have far too much going out in claims and far too few premiums coming in.  Which won’t help a health insurer stay in business.  But, then again, that may have been the plan all along.


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Climate ‘Scientists’ have found Proof that Climate Change causes Humanitarian Disasters

Posted by PITHOCRATES - March 3rd, 2013

Week in Review

Now we have proof that global warming causes humanitarian disasters.  Well, not proof in a real scientific way.  But in the kind of way that you have to note with asterisk.  With the asterisk denoting that this science is not real science.  But climate science.  Where the science is more politics than science.  As evident by the vast majority (if not all) the climate ‘scientists’ are anti-capitalists and/or favor more restrictive business regulations.  This is the ‘science’ that has found proof that climate change has led to a humanitarian disaster (see Humanitarian disaster blamed on climate change by Michael Marshall posted 3/1/2013 on New Scientist).

For the first time, we have proof that climate change has led to a humanitarian disaster. The East African drought of 2011, which resulted in a famine that killed at least 50,000 people, was partly caused by human emissions of greenhouse gases.

For the first time the climate ‘scientists’ have proof that all the climate doom and gloom they’ve been preaching the last few decades is for real?  That until now it was at best a hunch?  They didn’t say that then.  In fact they spoke then with the same certainty that they now speak with.  So why should we believe this now?  How do we know that they won’t say in the future that they can finally, for the first time, actually prove something?  And it won’t be different from something they told us in the past?

Humanity’s activities had no effect on the short rains – they failed because of a strong La Niña in the Pacific. “That’s natural,” says Stott.

But climate change did affect the long rains, making them more likely to fail (Geophysical Research Letters, The model could only reproduce the scale of the drought if it included greenhouse gas emissions.

I have a model, too.  A formula.  It’s one that predicts the future economy.  Here it is.  EO=If(P=EC, good, bad).  Where P=President, EC=Economically Conservative and EO=Economic Outlook.  And it works as a standard ‘if’ function on a spreadsheet program.  If the president is economically conservative then the economic outlook is good.  If the president is NOT economically conservative then the economic outlook is bad.  And it is a proven formula.

The economy has been bad under President Obama who is not economically conservative.  But good under President George W. Bush, George Herbert Walker Bush, and Ronald Reagan.  Who were all economically conservative.  At least to a certain degree.  It was bad under Jimmy Carter, Gerald Ford and Richard Nixon.  Who weren’t economically conservative.  With Republican Richard Nixon even calling himself a Keynesian after he decoupled the dollar from gold.  It went from good to bad under JBJ.  Who wasn’t economically conservative.  It went from bad to good under JFK who was economically conservative.  We call the Fifties Happy Days because the economy was pretty good under Eisenhower.  Who was economically conservative (his foreign policy dwarfed any interest in meddling with the domestic economy).  Truman and FDR were New Dealers.  Who weren’t economically conservative in the least.  And neither was Herbert Hoover.  Whose non-conservative economic policies helped to kick off the recession that FDR transformed into the Great Depression.  Both Calvin Coolidge and Warren G. Harding were economically conservative.  And their policies gave us great economic prosperity.  And so on.

I’d have to modify the formula to account for President Clinton.  For though the economy did well while he was in office it is a little more complicated with him.  Who kind of fell ass-backwards into some good economic times.  First of all he was still riding the wave of Reaganomics.  He had a peace dividend from Ronald Reagan winning the Cold War.  Asia was suffering a financial crisis.  Japan was just beginning their Lost Decade.  And after only 2 years in office Clinton lost Congress.  Forcing him to scale back on his liberal agenda.  Also, it was under Clinton that we got the dot-com boom (and irrational exuberance) and the subsequent subprime mortgage crisis.  Making a lot of Clinton’s economic growth, then, artificial.  A bubble.  The dot-com bubble bursting just after Clinton left office.  The subprime mortgage housing bubble bursting in 2007.  So Clinton, who was not economically conservative, made a mess of things but was lucky enough to be out of office when the train wreck of his administration’s policies hit.  Especially those initiated by his Policy Statement on Discrimination in Lending that gave us the subprime mortgage crisis and the Great Recession.

So my model works.  History supports it.  Yet which model will be taken more seriously?  The one that is so complex with so many variables that no one can be sure what’s going on with it.  The one that took a lot of fine-tuning to get it to explain anything the way they wanted it to explain it.  Which is why it took until now to prove something for the first time.  Unlike mine.  Which has been proving things for decades.

The team calculate that climate change is responsible for between 24 per cent and 99 per cent of the risk of long rains failure.

Further proof that climate science is not real science.  Proving something is 24-99% responsible is not scientific.  I know.  I was marked down for something 4 places PAST the decimal point while in college.  When I protested that I was close enough the professor said that isn’t how science works.  Being close enough just doesn’t work.  You may eat food that is 99% salmonella-free.   But you sure aren’t going to eat food that is only 24% salmonella-free.

Although Stott’s findings add to the evidence that East Africa will face more droughts as the climate warms, for now, the region is slowly recovering from 2011. The short rains at the end of 2012 were good, and the latest forecasts suggest that the long rains will be roughly normal, or at least not far below that.

If the climate is warming because of man-made global warming how can the model show East Africa is cooling now?  Climate ‘scientists’ have been saying that if we don’t act NOW we’re doomed.  Because it could take decades to reverse the damage we’ve caused.  If so how is it that East Africa is reversing the damage in little over a year?  Despite the world NOT taking urgent measure to reverse global warming?  Or is what happening the normal ebb and flow of warming and cooling periods of climate that has little if anything to do with whatever man is putting into the atmosphere?

In the long run, studies that attribute blame in this way could be used by people attempting to sue for damages relating to climate change. A number of such cases are currently moving through US courts, spearheaded by the Alaskan village of Kivalina. The village is threatened by increased storm surges that may be linked to climate change, and its residents are suing major energy companies for the cost of evacuating.

Such cases still face significant challenges, says environmental lawyer Tracy Hester of the University of Houston in Texas. Anyone trying to bring one to court will have to link the damages they have suffered to a particular source of emissions.

How about that?  The ultimate use for such a model is for someone to sue some business.  Just as an anti-capitalist is wont to do.

I have another model.  This one points to who is responsible for global warming.  And who we should be suing.  Before global warming there was global cooling.  Climate ‘scientists’ were warning us about the coming ice age.  That changed sometime during the late 20th Century.  When the climate ‘scientists’ changed their minds and said the planet was warming.  Without really giving a good reason why they switched from cooling to warming.  But as they warned us they got the politicians to write new environmental laws.  To prevent warming.  And to save the planet.  Adding emission controls on our cars and power plants.  Launching their war on coal.  And what happened?  Temperatures continued to rise.  To the highest they had ever been.  As they continued to urge us to take even more drastic actions.  Before it was too late.

If the temperatures are still rising even after reducing harmful emissions what can one rationally conclude?  This temperature rise must be man-made.  The climate ‘scientists’ caused it.  (And should be the ones we’re suing.)  By forcing us to cut back on the cooling emissions of our coal-fired power plants.  For they put the same things into the atmosphere an erupting volcano does.  And erupting volcanoes cool the planet.  Which brings me to my other model.  It, too, is a simple equation.  CC=If(DIF=L, warming, not warming).  Where DIF=Dominant Influential Force, L=Liberal and CC=Climate Change.  If the dominating influential force is liberal they will restrict cooling emissions that are similar to what volcanoes produce, causing global warming.  If the dominating influential force is not liberal then cooling emissions may increase and not warm the planet.

Noting that people who are economically conservative are not liberal you can combine my two equations into one with some simple substitutions.  Which reduces down to an even simpler formula.  If you want a healthy economy and a healthy planet vote conservative.  Which the empirical data supports.  As President Obama’s policies are doing little to fix the economy or the environment.


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Social Security Receipts, Outlays and Surplus 1940-2012

Posted by PITHOCRATES - February 19th, 2013

History 101

Social Security is going Bankrupt because of an Aging Population, Inflation and Untrustworthy Politicians

Social Security introduced the era of Big Government.  When the Roosevelt administration passed it into law it faced fierce opposition.  For it wasn’t the job of the federal government to provide a pension.  If it was the Founding Fathers would have included it in the Constitution.  But they didn’t.  Thanks to the Great Depression, though, a serious crisis FDR didn’t let go to waste, FDR was able to change America.  By taking the federal government beyond the limits of the Constitution.

The fear was that it would grow into a massive program requiring more and more taxes to support it.  Which the FDR administration refuted in a 1936 pamphlet (see The 1936 Government Pamphlet on Social Security).

…beginning in 1949, twelve years from now, you and your employer will each pay 3 cents on each dollar you earn, up to $3,000 a year. That is the most you will ever pay.

Of course, that wasn’t true.  It was either a lie.  Or a disbelief that anyone would ever decouple the dollar from gold.  Or wishful thinking that we can trust politicians.  Whatever the reason the Social Security tax rate is a long way from that 3% today.  And the maximum earnings amount is a lot higher than $3,000.  But despite the tax rate and the maximum earnings amount soaring from these promised lows it’s still not enough.  For Social Security is struggling to avoid bankruptcy in the near future.  Because it has become a massive program requiring more and more taxes to support it.

Social Security is suffering from three major problems.  The first is an aging population (fewer people entering the work force to pay for the greater number of people leaving the workforce).  The second is inflation.  And the third is that politicians manage it.  Who just can’t control themselves around big piles of money.

The Social Security Surplus increased in the Nineties thanks to the Peace Dividend, Japan’s Lost Decade and the Dot-Com Boom

Social Security is off-budget.  Employers and employees pay into the program to provide for the program’s benefits.  These are dedicated taxes.  They are only to pay for Social Security benefits.  That is why it is off-budget.  They don’t mingle Social Security taxes with all the other taxes the government collects.  To pay for all the things in the federal budget.  Technically, those taxes are supposed to go into a retirement account that grows with interest.  And this big, growing pile of money is supposed to pay the benefits.  But in reality it doesn’t work this way.  The government collects taxes.  From these taxes they pay current benefits.  And anything left over, the Social Security surplus, goes into the Social Security Trust Fund.  We can see this graphically if we plot receipts, outlays and the surplus (see Table 2.1—RECEIPTS BY SOURCE: 1934–2017 and Table 3.1—OUTLAYS BY SUPERFUNCTION AND FUNCTION: 1940–2017 at FISCAL YEAR 2013 HISTORICAL TABLES).

Social Security Receipts Outlays Surplus 1940-2012

For the first 30 years or so of this program it hardly made a dent in our lives.  Small amounts were going in.  Small amounts were going out.  And small amounts were going into the trust fund.  Then a lot of people started retiring.  Just as birth control and abortion changed the family size.  And President Nixon decoupled the dollar from gold.  Allowing them to print money like never before.  Which, of course, depreciated the dollar.  This is why receipts and outlays started trending up after 1971 (when Nixon decoupled the dollar from gold).  To get a better look let’s zoom in and look at the years from 1970-2012.

Social Security Receipts Outlays Surplus 1970-2012

The Seventies were a horrible time economically.  As the government went all in with Keynesian economics.  Which resulted with high inflation and high unemployment.  And stagnant economic growth.  Stagflation.  And Social Security was in trouble.  Receipts were greater than outlays.  But not by very much.  Receipts and outlays may have been trending up but the surplus was pretty flat.  Until President Reagan and the Democrat Congress fixed Social Security to avoid bankruptcy.  After 1983 receipts trended up greater than outlays.  Which caused the surplus to trend up.  Thus saving Social Security.  For awhile.  Now let’s zoom in further to the years 1990-2012 to see what happened in the last two decades.

Social Security Receipts Outlays Surplus 1990-2012

President Reagan won the Cold War by spending more on defense than the Soviets could ever match.  At least not without starving her people to death.  And the Strategic Defense Initiative (aka Star Wars) was the straw that broke the camel’s back.  In 1991 the Soviet Union was no more.  Creating a huge peace dividend for President Clinton.  Which coincided with the dot-com boom.  And Japan’s Lost Decade (Japan’s economic woes were America’s prosperity).  Making the Nineties a very good time economically.  And that healthy economic activity translated into a nice uptrend in the Social Security surplus.  However, low interest rates and irrational exuberance fed the dot-com boom.  It was not real economic growth.  It was a bubble.  And when it burst it gave George W. Bush one painful recession at the start of his presidency.  Which was compounded by the tragedy of 9/11.  Causing a fall in economic activity.  Which caused Social Security receipts to fall.  While outlays continued to grow.  Causing a decline in the Social Security surplus.  Once again cuts in tax rates restored economic activity.  And the Social Security surplus.  Which continued until another bubble burst.  This one was a housing bubble.  Caused by President Clinton with his Policy Statement on Discrimination in Lending.  Where his justice department pressured lenders to qualify the unqualified.  And when the housing bubble burst into the Subprime Mortgage Crisis giving us the Great Recession receipts fell while outlays increased.  Sending the surplus into a freefall.

Social Security is Doomed to Fail because you just can’t Trust Politicians around Great Big Piles of Money

There is both a Social Security tax rate.  And a maximum amount of income to tax.  Both of which they have had to increase to keep up with inflation.  To make up for that aging population.  And to offset the corrupting influence of politicians around big piles of money.  And contrary to that 1936 pamphlet those tax rates started rising early.  And often (see Historical Social Security Tax Rates).

Social Security Surplus and Tax Rate

The Social Security tax rate rose as high as 12.4%.  Which is a 313% increase from the maximum amount guaranteed in that 1936 pamphlet.  And this great upward trend began in the Fifties.  Continuing through the Sixties.  In fact most of the increases came before Nixon decoupled the dollar from gold.  Showing what a horrible job the government actuaries did in crunching the numbers for this program.  As it turned into exactly what the opponents said it would.  A massive program requiring more and more taxes to support it.  And President Obama reducing the tax rate from 12.4% to 10.4% didn’t help the surplus any.  Or the solvency of Social Security.

Social Security Surplus and Maximum Earnings

While the tax rate began rising in the Fifties the maximum taxable earnings amount didn’t.  This amount was pretty flat and able to produce a surplus until 1971.  When President Nixon unleashed the inflation monster by decoupling the dollar from gold.  And the only way to produce a surplus after that was by continuously increasing the maximum earnings amount.  Further proving what a horrible job the government actuaries did in crunching the numbers for this program.  But why are they projecting Social Security will go bankrupt after raising both the tax rate and the maximum taxable earnings amount?  For despite all of the ups and downs there has been a surplus throughout the life of the program.  Some seventy years of a surplus and the miracle of compound interest should have built up quite a nest egg in the Social Security Trust Fund.  But it hasn’t.  Why?  Well, we can see what it could have been.  If we take each year’s surplus (starting in 1940) and add it to an account earning interest compounded annually at an interest rate of 3% through 1971 and 6% after 1971 (to account for inflation) it would look something like this.

Social Security Surplus Earning Compound Interest

Note that these amounts are in millions of dollars.  So at the end of 2012 the ending balance in the trust fund would be $16.5 trillion.  Which is large enough to wipe out the entire federal debt.  From 1980 through 2008 the surplus grew on average 8% each year.  If we assume this growth through 2050 that would take the trust fund to $184.5 trillion.  In 2075 it would be $960.9 trillion.  In 2076 it would be $1.03 quadrillion.  Or $1,027.3 trillion.  With this phenomenal growth based on a realistic 6% interest rate why is Social Security going bankrupt?

Because there isn’t a big pile of money in the Social Security Trust Fund earning compound interest.  The money goes in.  And the government takes it out.  Leaving behind treasury securities.  IOUs.  They raid the Social Security trust fund to pay for other on-budget government expenditures.  With the off-budget surplus.  Hiding the true size of the federal deficit.  And putting Social Security on the path to bankruptcy.  Because you can’t loan money to yourself.  You can only take money meant for one thing and spend it on another.  Leaving that first thing unpaid.  This is Social Security.  And why it was doomed to fail from the beginning.  Because you just can’t trust politicians around great big piles of money.


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President Nixon helped President Clinton despite what Hillary Clinton Did

Posted by PITHOCRATES - February 16th, 2013

Week in Review

Hillary Clinton was the Secretary of State when terrorists killed four Americans in Benghazi.  Ambassador Stevens had requested additional security as the safety of Westerners in Benghazi was tenuous.  The British had already left after an attempt on their ambassador’s life.  But Secretary Clinton denied Ambassador Stevens’ request.  For it didn’t look good politically.

All during the 2012 campaign the Democrats repeated over and over how Osama bin Laden was dead.  And General Motors was alive.  Not only that al Qaeda was on the ropes.  Because President Obama defeated them.  Making them an empty shell of what they were when President Bush was president.  This is why we needed to reelect President Obama.  Because only he could defeat al Qaeda.  And did.  After winning the War on Terror it just wouldn’t look good to be beefing up security to defend against a resurgent al Qaeda.  Because that would go against the narrative that President Obama defeated al Qaeda.  So Ambassador Stevens and the Americans in Benghazi were left to fend for themselves so they wouldn’t reflect adversely on the president’s reelection campaign.  And then came 9/11/2012.

Four Americans died so as not to be a political inconvenience to President Obama.  And Secretary Clinton let that happen.  For their safety was her responsibility.  And it was no secret that Benghazi was not a safe place.  Which is why the British left.  When Secretary Clinton finally appeared before Congress to explain how four Americans died under her watch she got indignant and simply yelled “what difference does it make” to their questions.  Refusing to answer them.  Angry and annoyed that these Republicans even dared to ask her these questions.  Why wasn’t security beefed up?  Why didn’t we send help when they were under attack?  Why did she lie about it being a spontaneous reaction to a YouTube video?  Who edited the talking points given to Ambassador Rice?  She did not like these questions.  And she made her resentment clear.  Funny when the shoe is on the other foot (see Documents show Bill Clinton’s close dealings with Richard Nixon on Russia, foreign affairs by Michael R. Blood, The Associated Press, posted 2/13/2013 on The Vancouver Sun).

Richard Nixon, in the final months of his life, quietly advised President Bill Clinton on navigating the post-Cold War world, even offering to serve as a conduit for messages to Russian President Boris Yeltsin and other government officials, newly declassified documents show.

Memos and other records show Nixon’s behind-the-scenes relations with the Clinton White House. The documents are part of an exhibit opening Friday at the Nixon Presidential Library, marking the centennial of his birth.

Clinton has talked often of his gratitude to Nixon for his advice on foreign affairs, particularly Russia. In a video that will be part of the exhibit, Clinton recalls receiving a letter from the 37th president shortly before his death on April 22, 1994, at a time when Clinton was assessing U.S. relations “in a world growing ever more interdependent and yet ungovernable.”

What really makes this remarkable and relevant to Hillary Clinton is this.

Clinton in his younger days was no fan of Nixon — as a college student in the 1960s, he opposed escalation of the Vietnam War. And his wife, former Secretary of State Hillary Rodham Clinton, was a young lawyer advising a House committee when she helped draw up impeachment papers against Nixon.

Hillary Clinton helped draw up the impeachment papers against President Nixon which led to his resignation.  For Watergate.  Which amounted to a burglary.  And some wire-tapping.  There was no loss of life.  President Nixon’s crime, the cover-up, didn’t kill four Americans.  Yet Hillary Clinton helped to destroy President Nixon.  Even though he was a good president when it came to foreign policy.  At least, according to Hillary Clinton’s husband.  President Clinton.  But when she’s on the hot seat she responds with righteous indignation.  Even though her actions, or her lack of action, caused the death of four Americans.

So what can we learn from this?  President Nixon was a good president that put his country first.  Even helping the man whose wife destroyed his career.  President Clinton was not as good a president as President Nixon was.  And Hilary Clinton ruined a good president who didn’t do anything as bad as she did.  Allowing four Americans to die on her watch.  Because she put politics first.  Instead of her country.  Just as she did when she helped to destroy President Nixon.


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The Democrats issue new Lending Regulations to address the Financial Crisis they Created

Posted by PITHOCRATES - January 13th, 2013

Week in Review

The subprime mortgage crisis is still a political football.  The Democrats are using the crisis to further regulate the financial markets.  Giving us the convoluted Dodd-Frank Wall Street Reform and Consumer Protection Act.  Financial reform.  For apparently there was no financial oversight of the financial markets up until now.  Despite Barney Frank being the Chairman of the House Financial Services Committee (2007-2011).  And Chris Dodd being the Chairman of the Senate Committee on Banking, Housing, and Urban Affairs (2007-2011).  Both of who were responsible for the oversight of Fannie Mae and Freddie Mac.  The GSEs at the center of the subprime mortgage crisis (see Mortgage lender rules released by Daniel Wagner, Associated Press, posted 1/10/2013 on The Washington Times).

In the wake of the national housing collapse that helped bring on the Great Recession, federal regulators for the first time are laying out rules aimed at ensuring that borrowers can afford to pay their mortgages.

The long-anticipated rules being unveiled Thursday by the Consumer Financial Protection Bureau impose a range of obligations and restrictions on lenders, including bans on the risky “interest-only” and “no documentation” loans that helped inflate the housing bubble…

CFPB Director Richard Cordray, in remarks prepared for an event Thursday, called the rules “the true essence of responsible lending…”

Mr. Cordray noted that in the years leading up to the 2008 financial crisis, consumers could easily obtain mortgages that they could not afford to repay.

So, prior to the Great Recession and the 2008 financial crisis we did not have responsible lending.  Which resulted in consumers obtaining mortgages they could not afford to repay.  Why?  Why were people getting mortgages they had no chance of repaying?  Who was responsible for that?  Well, as it turns out it was President Clinton.  Whose administration overhauled the Community Reinvestment Act (see New Study Finds CRA ‘Clearly’ Did Lead To Risky Lending by Paul Sperry posted 12/20/2012 on

Democrats and the media insist the Community Reinvestment Act, the anti-redlining law beefed up by President Clinton, had nothing to do with the subprime mortgage crisis and recession.

But a new study by the respected National Bureau of Economic Research finds, “Yes, it did. We find that adherence to that act led to riskier lending by banks.”

Added NBER: “There is a clear pattern of increased defaults for loans made by these banks in quarters around the (CRA) exam. Moreover, the effects are larger for loans made within CRA tracts,” or predominantly low-income and minority areas.

To satisfy CRA examiners, “flexible” lending by large banks rose an average 5% and those loans defaulted about 15% more often, the 43-page study found…

The strongest link between CRA lending and defaults took place in the runup to the crisis — 2004 to 2006 — when banks rapidly sold CRA mortgages for securitization by Fannie Mae and Freddie Mac and Wall Street.

CRA regulations are at the core of Fannie’s and Freddie’s so-called affordable housing mission. In the early 1990s, a Democrat Congress gave HUD the authority to set and enforce (through fines) CRA-grade loan quotas at Fannie and Freddie.

It passed a law requiring the government-backed agencies to “assist insured depository institutions to meet their obligations under the (CRA).” The goal was to help banks meet lending quotas by buying their CRA loans.

But they had to loosen underwriting standards to do it. And that’s what they did…

From 2001-2007, Fannie and Freddie bought roughly half of all CRA home loans, most carrying subprime features…

Housing analysts say the CRA is the central thread running through the subprime scandal — from banks and subprime lenders to Fannie and Freddie to even Wall Street firms that took most of the heat for the crisis…

While the 1977 law was passed 30 years before the crisis, it underwent a major overhaul just 10 years earlier. Starting in 1995, banks were measured on their use of innovative and flexible” lending standards, which included reduced down payments and credit requirements.

Banks that didn’t meet Clinton’s tough new numerical lending targets were denied merger plans, among other penalties. CRA shakedown groups like Acorn held hostage the merger plans of banks like Citibank and Washington Mutual until they pledged more loans to credit-poor minorities (see chart).

A Democrat Congress gave HUD the authority to set and enforce (through fines) CRA-grade loan quotas at Fannie and Freddie?  And Democrats say that Community Reinvestment Act had nothing to do with the 2008 financial crisis?  Funny.  Based on the historical record the Democrat Congress that forced lenders to loosen underwriting standards to meet those quotas are solely responsible for setting into motion the events that led to the 2008 financial crisis.  Not Wall Street.  Not the banks.  It was the Democrat Congress that empowered HUD to destroy good lending practices.  And they bear the responsibility for the 2008 financial crisis.  And the Great Recession.


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FT147: “The politician that plays with the meaning of words most is the politician that is lying the most.” —Old Pithy

Posted by PITHOCRATES - December 7th, 2012

Fundamental Truth

When you start Playing with the Meaning of Words it’s usually because you’re Trying to Lie

When President Clinton committed perjury when denying having sexual relations with Monica Lewinsky he tried to play with the meaning of words.  Saying it depended on what the meaning of ‘is’ is.  Clinton was a lawyer.  Like most politicians.  Who like to parse their words.  To twist their meanings.  So they can say one thing.  While they mean the complete opposite.  Clinton said he did not have sex with Lewinsky even though he had.  But the words he used could be parsed to both say he did and did not have sex with that woman.  Monica Lewinsky.  Lewinsky’s blue dress with Clinton’s semen on it, though, proved he was lying despite his nimble linguistic gymnastics.  And the House of Representatives impeached Clinton.  But the Senate didn’t have the votes to remove him from office for his perjury.  Nor did he resign as Richard Nixon did after he was caught in his perjury.

In George Orwell’s Nineteen Eighty-Four the oppressive socialist state did the same thing.  Play with the meaning of words.  To make lying easier.  The Ministry of Love was like the Gestapo in Nazi Germany or the Stasi in East Germany.  Institutions that tortured and instilled fear into the people.  Which was for the people’s own good.  For the state loved the people.  At least that’s what the state said while they were torturing and abusing the people.  The Ministry of Plenty was responsible for the empty store shelves and the constant hunger gnawing in the people’s bellies.  The Ministry of Peace waged perpetual war.  And the Ministry of Truth was the state’s propaganda arm in charge of state censorship.  Advancing the state’s lies.  Like Joseph Goebbels did in Nazi Germany.

Words mean things.  And when you start playing with the meaning of words it’s usually because you’re trying to lie.  Trying to advance an unpopular agenda by disguising that agenda in a cloak of disarming words.  You can trust anything coming from the Ministry of Truth as the word ‘truth’ is in its name.  And you have nothing to fear from the secret police as the branch of government they work under is all about love.  And when the state tells you over and over again that it is a moneyed upper-class that is the cause of everything that is wrong in your life you start believing it.  Whether that moneyed upper-class are rich capitalists and bankers.  Or Jews in 1930s Germany.

The Ronald Reagan and George W. Bush Tax Rate Cuts brought in Record Tax Revenues into the Treasury

Liberal democrats like to tax and spend.  They believe in big government.  They like it big like it is in Europe.  Where they have socialism-light.  Social democracy, they call it.  A big, expansive welfare state funded by high tax rates.  When taxes can’t pay for all their spending they borrow money.  When they can’t borrow any more they start printing money.  As a result of this excessive state spending most of Europe is mired in a sovereign debt crisis.  Many nations are so broke that they have no choice but to cut back their spending.  Which is sending people into the streets rioting.

This is where the U.S. is heading.  Most people who understand economic fundamentals know this.  And vote against going further down this European road.  But there are a lot of people who don’t understand economic fundamentals.  They listen to their Ministry of Truth.  The Democrats, the public schools, college professors, mainstream media and the entertainment establishment.  Who all lean left.  And who all say the only problem we have is a moneyed upper-class who aren’t paying their fair share.  Though the top 10% of income earners pay about 70% of all federal income taxes.  Something the state doesn’t mention when they say they aren’t paying their fair share.  So the people don’t know that they pay 70% of all federal income taxes.  And they are more willing to believe their Ministry of Truth.

The public schools, college professors, mainstream media and the entertainment establishment do their part, too.  By revising history.  They note the deficits of Ronald Reagan in the Eighties.  And blame those deficits on the Reagan tax rate cuts.  But what they don’t tell the people is that after those cuts in tax rates the amount of tax revenue (money coming to Washington from taxpayers) nearly doubled.  President Obama and his Ministry of Truth blame all of our economic woes on George W. Bush’s tax rate cuts.  But what they don’t tell the people is that the treasury collected a record high in tax revenue under George W. Bush.  Proving that cuts in the tax rates did not cause any fiscal harm.  It was the greater increases in spending that caused all of the harm.

Democrats want to Raise Taxes on Everyone because they are Tax and Spend Liberal Democrats

Under baseline budgeting increases in spending amounts are automatic.  Every year they go up.  And they never go down.  So when the politicians decry proposed draconian spending cuts there are no real cuts in spending per se.  What they are proposing to cut is the rate at which to increase spending.  Say, instead of an automatic 7% spending increase they will only increase spending 5%.  Spending will increase 5%.  But those in government call it a 2% spending cut.  Which is why despite all of the spending cuts ever enacted (and there hasn’t been a lot of them) the federal debt has never gotten any smaller.

So an increase in spending can be a spending cut.  But the Orwellian doublespeak doesn’t stop there.  Those on the Left call tax cuts increases in government spending.  (Interestingly, the only kind of spending the government can never afford.)  Here’s why.  Excessive spending causes deficits.  And if they cut tax rates they believe less money will flow into the treasury.  Thus increasing the size of the deficit.  Ergo, spending and tax cuts are the same because both increase the deficit.  Of course that’s a fallacy.  As proven by Reagan and Bush.  Who actually increased tax revenues by cutting tax rates.  How?  Lower tax rates encourages more economic activity.  More people are working and paying taxes.  Resulting in a higher tax revenue overall.

Currently President Obama and his Ministry of Truth are saying that the Republicans are fighting against a middle class tax cut to give the richest 2% a tax cut.  Which isn’t exactly true.  There are no tax cuts on the table.  The George W. Bush tax cuts are expiring.  If they expire everyone’s taxes will go up.  The president wants to extend these tax cuts.  But only for the middle class.  Unfortunately, there are many small business owners whose business earnings flow to their personal tax returns.  Which puts them into the richest 2%.  But most of that money never comes out of their business.  They may be taxed as rich people.  But they live middle class lives.  Because they reinvest their earnings into their business.  To buy new equipment.  To expand their business.  And to hire new people.  This is why Republicans don’t want to raise taxes on these small business owners.  For it’s these small business owners who provide the majority of jobs in the economy.  And increasing their taxes will only hurt the economic recovery.

The Republicans offered to increase tax revenues by revising the tax code to eliminate certain deductions.  Providing the amount of revenue the president was asking for.  But the president refused.  For he wants those increases in the tax rates.  To complete the revision of history by ‘righting the wrongs’ of the Reagan and the Bush administrations.  To further the lie about the Reagan and Bush tax cuts.  But there’s another reason.  The amount of revenue he’s asking for now (whether it’s from eliminating deductions or increasing tax rates) won’t make a dent in the deficit.  Or the debt.  The only way they will be able to do that is by increasing taxes on the middle class.  Which will be a lot easier to do after they raised taxes on the rich.  Which is what they want to do.  Raise taxes on everyone.  Because they are tax and spend liberal Democrats.  But as most people don’t vote for people that want to raise their taxes, they lie.  And play with the meaning of words.  As liars do.  And the politician that plays with the meaning of words most is the politician that is lying the most.


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