Teachers unions and their supporters hoped to draw 1 million people to Washington D.C. last weekend for their “Save Our Schools” rally. They apparently fell about 992,000 people short.

The embarrassing attendance underlined one major truth – there is no mass movement to maintain the status quo in our nation’s public schools. The only people defending the current system are those who profit from it, like the leaders of the nation’s teachers unions.

The “Save Our Schools” message was honest in one respect – the union goal is to save public schools as they currently exist. Notice that there was no call to improve the quality of education for students, because that’s not what the unions are fighting for.

Their only concern is to maintain a system that has kept unions financially health for decades. The fact that American students are struggling in this system is not on their agenda.

The unions certainly did their best to draw a crowd, even going as far as inviting Matt Damon to be a keynote speaker.

The burning question in my mind was if Damon would draw more people to this rally than he did to his recently flopped film “Green Zone.” The answer was a definite no. And he got a little temperamental when pressed by a reporter from ReasonTV.

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After weeks of hard negotiation a compromise deal is has been drafted and will be voted on by both houses before the end of the day tomorrow. This deal does give a political victory for some of the players and more importantly can even lead to a victory for the country provided that GOP leadership of both houses consider this as a starting point, and make certain steps to keep the pressure coming. The bill will not forestall a ratings download, but honestly I don’t believe that anything could as even a bill that cut $4 trillion doesn’t cut the deficit but merely slows down its growth.

This month the General Accounting Office (GAO) released a report on the financial crisis and came to the same conclusion as Judicial Watch: The government has failed to provide a rationale for its unprecedented intrusion into the private sector through the massive bailout scheme initiated in 2008. And more transparency is needed to get to the truth.

When questioned about their rationale for the bailouts (by Judicial Watch, the GAO and others), government officials simply repeat their standard line: There were “unusual and exigent circumstances” that warranted extreme measures.

Those extreme measures included the Federal Reserve authorizing credit to “troubled” private financial institutions. (Not since the Great Depression had the Fed authorized a loan to a non-banking entity.) If such measures were not taken, we were told, the institutions would collapse, thereby spreading a “contagion” throughout the global financial system.

This thin explanation is simply not good enough said the GAO. You can read the full report here. In my view, here are two key takeaways (as reported by CNBC):

1. In explaining the basis for these exceptional credit extensions, Federal Reserve Board officials cited the continuing strains in financial markets and concerns about the possible failures of these dealers at the time. However, the Federal Reserve Board could not provide documentation explaining why these extensions were provided specifically to affiliates of these four primary dealers.
2. …without more complete documentation, how assistance to these broker-dealer subsidiaries satisfied the statutory requirements for using this authority remains unclear. Moreover, without more complete public disclosure of the basis for these actions, these decisions may not be subject to an appropriate level of transparency and accountability.

On this subject of transparency, Judicial Watch has launched a comprehensive investigation of the government’s rationale for the bailouts on behalf of our client and former Federal Reserve employee Vern McKinley. We have a number of lawsuits related to the bailouts of Bear Stearns, AIG, Lehman Brothers, and others working their way through the system. And, in fact, on July 18, we filed a “Petition for Rehearing En Banc,” with the U.S. Court of Appeals for the District of Columbia Circuit in our lawsuit over the Bear Stearns bailout (McKinley v. Board of Governors of the Federal Reserve System, Case No. 10-5353).

Like the GAO, with this FOIA lawsuit Judicial Watch simply wants to know the Board of Governors of the Federal Reserve System’s justification for authorizing the Federal Reserve Bank of New York to provide “temporary emergency financing” to Bear Stearns through JP Morgan. (JW did learn from Treasury documents we unearthed that Bear Stearns was considered “worthless” at the time the Federal Reserve Bank of New York handed JP Morgan $30 billion to take over the company.)

The government is stonewalling our request, saying that information related to this question is protected under the “deliberative process privilege” of FOIA law (Exemption 5). As you might imagine, documents supposedly relating to the “deliberative process” can be most the most illuminating about government decision-making and whether it is on the up-and-up.

Unfortunately, an appellate court panel bought the government’s argument.

On June 3, 2011, the panel ruled that if a government agency simply makes the claim that information can be withheld under Exemption 5 the courts must assume that releasing the information will harm the agency’s decision making process – even if no proof of harm is put before the court.

Judicial Watch is now requesting that the appellate court hear the matter en banc (or in full, rather than merely a three-judge panel). Here’s a squib from our brief.

By substantially lowering the government’s burden of demonstrating that material may be withheld under the deliberative process privilege, the panel created a sweeping exemption that is in direct conflict with decades of decisions holding that material may be withheld under the deliberative process privilege only if a government agency demonstrates that disclosure of the withheld material would harm the agency’s decision-making process. [Emphasis added.]

Really this boils down to a very simple issue. We believe the American taxpayers deserve to know how and why the government committed trillions of dollars of their money to prop up failing financial institutions. But the government says it’s none of our business. (Just like the Obama administration says their debt ceiling “crisis” plans are none of our business either.) Unfortunately, if allowed to stand, the panel’s ruling could severely undermine FOIA law.

The government’s position on these bailout documents is offensive and corrupt. And we’re glad the GAO has called attention to that with its report.

So, today is one of those full of history: In 1610,  Henry Hudson discovered Hudson Bay; in 1869 in Japanese Samurai class was abolished; in 1934 Hitler became Furher of Germany; in 1937 Marijuana was made illegal; in 1939 Albert Einstein urged FDR to begin the Manhattan Project; in 1943, JFK’s PT-109 was sunk by the Japanese; in 1945, the Potsdam Conference concluded, condemning large swaths of Europe to totalitarian rule; in 1964, the Gulf of Tonkin incident occurred, leading to an escalation of US forces in Vietnam; plus assorted bombs, hijackings, earthquakes and other disasters. Oh, also today, the U.S. Senate will push the nation’s debt to more than 100% of GDP with no real spending cuts in return. Crazy day…may be best to stay indoors.

From The Associated Press:

The deal reached by Congress to raise the debt ceiling and cut more than $2 trillion in public spending should have only a minor impact on the economy for the next two years.

Almost all the cuts would be made in 2014 or beyond. The approach heeds a warning by Federal Reserve Chairman Ben Bernanke and many private economists: Cutting too much too soon could harm the weak economic recovery.

Yet the deal won’t do much to help the economy, either, at least in the short term, economists said.

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With more than 90 votes from Democrats, the House has passed the recently announced deal to hike the debt ceiling. From The Associated Press:

With barely a day to act, the polarized US House of Representatives have approved a massive austerity plan to avert a debt default that would have wreaked havoc through the global economy.

After eight months of often angry negotiations, the Republican-led House voted 269-161 on a package backed by President Barack Obama to raise the limit on US borrowing and enact at least $2.1 trillion in spending cuts over the next decade.

The Democratic-led Senate was expected to approve the emergency measure in a noon (1600 GMT) vote Tuesday — scarcely 12 hours before a midnight deadline by which the world’s richest nation would run out of cash to pay its bills.

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Last Thursday, the American Federation of State, County & Municipal Employees suffered a crushing 116-32 defeat in a bid to unionize the City of Winter Park, Florida’s operational services employees.

According to MyFoxOrlando, AFSCME’s loss at the polls was a setback, as the union claims to have had a majority of employees’ support in April:

“Today Winter Park municipal service employees were unsuccessful in their efforts to organize themselves into a union. This, despite two-thirds of them having petitioned to form their union in April,” reads the [AFSCME] statement.

However, perhaps AFSCME’s undoing had something to do with the way it targeted Winter Park employees during its campaign. Apparently, sticking with its organizing playbook, AFSCME allegedly deployed its organizers to bother employees at their homes. (more…)

Nobody ever said all the criminal street thugs at ACORN were bright.

The left-wing astroturfers of ACORN’s new front group in California, Alliance of Californians for Community Empowerment (ACCE), were behind a garbage-dumping stunt at a branch of Wells Fargo bank in San Jose, Calif.

News reports consistently depict the players as angry homeowners who spontaneously erupted in a spasm of righteous indignation.

As if.

These “homeowners” were reportedly unhappy about the upkeep at a foreclosed property they thought Wells Fargo was responsible for so they decided to dump uncollected garbage at the bank. The problem is that while Wells Fargo is listed as a trustee for the property, it is actually owned by Bank of America, a longtime ACORN ally. (In recent years Bank of America Charitable Foundation Inc. has given $5 million to the mortgage bubble generators at ACORN Housing Corp.)

In a still from a TV news report on ACORN’s act of political theater (shown above) an angry protester can be seen holding a sign that reads: “MAKE THE BANKS PAY! ACCE.” (Full video is here.)

Whoops.

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Winston Churchill warned; “An appeaser is one who feeds a crocodile, hoping it will eat him last”. Churchill would understand the dynamics of the European and American sovereign debt crisis. Modern warfare is not about a blitzkrieg of panzers, dive-bombers, and storm-troopers swarming across borders to over-whelm patriotic defenders. Today’s world dominators sucker their prey into financially destroying themselves from within. Once the quarry is crippled; the invader walks in and takes control of the victim’s economy on the cheap.

Recently bureaucrats from Austria; Belgium; Cyprus; Estonia; Finland; France; Greece; Ireland; Italy; Luxembourg; Malta; Netherlands; Portugal; Slovakia; Slovenia; and Spain quietly surrendered their sovereignty to Germany. In contrast, Americans stand alone as the only nation on earth in full rebellion against their government’s dangerous addiction to deficit spending.

Hitler slyly wrote: “How fortunate for governments that the people they administer don’t think.” Most Europeans did not question the too-good to-be-true claims of the euro when it was first introduced in 2002 as the continent’s common currency. Overnight, serial debt-defaulters were granted unlimited power to raise huge volumes of cheap capital in the untested euro-bond markets. Fans boasted the new currency created the largest economic trading group in the world; with 332 million direct users and another 175 million people worldwide who pegged their currency exchange rate to the euro.

Thomas Jefferson cautioned: “I believe that banking institutions are more dangerous to our liberties than standing armies”; but Europeans don’t study American history. Germans designed the euro to be dominated by the Frankfurt-based European Central Bank (ECB); who control all money printing and operate the eurozone electronic payment systems. Member central banks are allowed to sit on Eurosystem Board, but only as junior members. With their supremacy of ECB rule-making, Germans implemented banking regulations eliminating reserve requirements for loans to euro members; while increasing collateral requirements against loans to the private sector. Goldman Sachs and other camp followers gave the local banks access to derivatives; which allowed for astronomic leverage of euro member loans.

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As we issue this week’s essay, the leadership of both parties and the White House have announced agreement to end the debt ceiling crisis.  The deal, which still requires congressional approval, will increase the nation’s debt ceiling by $2.4 trillion while, over the next ten years, cutting an equivalent amount in government spending. It is a complex and convoluted deal that will make few people happy, but it will end the default nightmare…at least for two years.  The process attested to Otto Von Bismarck’s famous lament over a hundred years ago, “Laws are like sausages, it is better not to see them being made.”

The spectacle, leading up to the agreement, of leaders from both houses of congress taking turns bloviating before the TV cameras about the stubbornness of the other side did not, in our opinion, inure to the credit of anyone or of either party.  It became an exercise of “pathetic” condemning “more pathetic.”

Incumbents, Republicans and Democrats (including the President), may, we believe, pay a stiff price when they face the voters next year.  The political jockeying over the debt ceiling crisis may well result in a plague on both houses as voters contemplate the stress to which Washington subjected them.  Most grating to most voters, we believe, is that the crisis didn’t have to be a crisis. Every party to the debate has staked out positions that are politically motivated, unhelpful and laden with risk to ordinary Americans throughout the land.

House Speaker Boehner initially staked out the high ground and than caved on the issue of revenue (even revenue that would be derived from eliminating special interest tax breaks that have long outlived their usefulness or otherwise distort the marketplace).  He had proposed, wisely we think, eliminating almost all tax deductions and then reducing marginal rates as a trade-off even though the revenue derived from that exchange might well exceed current tax revenue.  The elimination of these special interest tax breaks, which we had suggested in an earlier essay, was subsequently pulled off the table. We believe, and have often stated, that taxes, with few exceptions, should be used to raise necessary revenue rather than to influence, or distort, individual or corporate taxpayer behavior. His earlier insistence on a short-term resolution that would have had the country replaying this farce in a few months has been stricken from the deal.

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On today’s edition of Coffee and Markets, Brad Jackson is joined by Francis Cianfrocca to discuss the McConnell – Obama debt deal, how we got screwed, and the weak GDP report.

We’re brought to you as always by BigGovernment and Stephen Clouse and Associates. If you’d like to email us, you can do so at coffee[at]newledger.com. We hope you enjoy the show.

Related Links:

Erick Erickson: Not Playing the Fool
Obama, Congressional Leaders Reach Debt Deal
Monday Look Ahead: Debt Deal Rally Could Be Short-Lived
PIMCO CEO Mohamed El-Erian: Budget Deal Will Only Bring Short-Term Relief
The Q2 US GDP report – just terrible
Economists React: ‘Recovery? What Recovery?’

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No one in recent memory has faced the left’s vitriol like Sarah Palin (not even George W. Bush). The over-the-top, asinine attacks she’s received have been so ubiquitous they need not even be relisted here. Just suffice it to say there is a genuine hatred of Palin throughout the MSM, the leadership of the Democrat Party, and the Republican Party establishment.

And don’t be fooled folks: they don’t hate her because of her convictions – although they despise her convictions – rather, they hate her because they can’t control her.

Fortunately, the hatred the left holds for Palin is more than overcome by the love conservatives and right-leaning Independents have for her. They see in her a refreshing image that dares cast certain issues in the prism of right and wrong, just and unjust, American and un-American, etc.

Perhaps as a group, the Tea Party has come closest to receiving the kind of vindictive normally reserved for Palin alone. There’s no doubt they’re hated as she is hated, and equally no doubt that the hatred is a result of the fact that the MSM, the leadership of the Democrat Party, and the Republican Party establishment can’t control them.

For example, during the push to get Tea Partiers to “compromise” (which is political speak for check your convictions at the door) and support Boehner 3.0, an angry John McCain took to the Senate floor and referred to Tea Party conservatives in the House as “hobbits,” Senator Lisa Murkowski , whom Alaskans foolishly elected over Joe Miller last year, referred to them as “absolutists,” and John Kerry, the haughty one, described them as a group “of extremists, who don’t understand the implications even of what they’re doing.”

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Liberals are already licking their wounds from the debt ceiling debate, wondering how it is that Republicans managed to get Democrats to abandon tax increases and shift the terms to spending cuts and entitlement reforms.

Though there are many conservatives who are critical of the bill that House Speaker John Boehner passed, and worried about splits within the Tea Party, the fact is that the left feels it lost the deal as well as the debate.

EPA/Stefan Zaklin

The left did lose–or, more precisely, it lost more than conservatives did–partly because it has failed to confront economic and financial reality.

In April, when Standard & Poor’s first warned of a possible downgrade in the U.S. credit rating, the White House reacted with denial. President Barack Obama’s chief economic adviser, Austan Goolsbee, said that S&P’s warning was a “political judgment” that didn’t deserve “too much weight.” (more…)

Cross-Posted: TobyToons.com (Conservative Political Cartoons)

While driving home Friday, I had the miserable experience of listening to a financial journalist being interviewed about the anemic growth numbers that were just released.

I wasn’t unhappy because the interview was biased to the left. From what I could tell, both the host and the guest were straight shooters. Indeed, they spent some time speculating that the economy’s weak performance was bad news for Obama.

What irked me was the implicit Keynesian thinking in the interview. Both of them kept talking about how the economy would have been weaker in the absence of government spending, and they fretted that “austerity” in Washington could further slow the economy in the future.

This was especially frustrating for me since I’ve spent years trying to get people to understand that money doesn’t disappear if it’s not spent by government. I repeatedly explain that less government means more money left in the private sector, where it is more likely to create jobs and generate wealth.

In recent years, though, I’ve begun to realize that many people are accidentally sympathetic to the Keynesian government-spending-is-stimulus approach. They mistakenly think the theory makes sense because they look at GDP, which measures how national income is spent. They’d be much less prone to shoddy analysis if they instead focused on how national income is earned.

This should be at least somewhat intuitive, because we all understand that economic growth occurs when there is an increase in things that make up national income, such as wages, small business income, and corporate profits.

But as I listened to the interview, I began to wonder whether more people would understand if I used the example of a household.

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He seems to have done it. President Obama has brought together Congressional Leadership and struck a deal to hike the debt ceiling. While the Federal Government had been expected to spend somewhere around $50-70 trillion over the next decade, it will now have to get by on $48-68 trillion.