The American Recovery and Reinvestment Act of 2009, the stimulus bill, was quickly passed by the Democratic controlled House and Senate without real debate in order to keep the unemployment rate from rising above 8%.  With unemployment at 9.1%, and over 17% when considering all those who stopped looking for work or are working part-time, that crisis was not averted.  All the stimulus bill did was to spend $800 billion of tax payer money to pay government workers salaries for one year and for a few temporary road construction projects.  The law did not provide any incentive for self-sustaining employment and our economy is now facing another recession.

The Patient Protection and Affordability Act of 2010, Obamacare, was crammed through the Democratic controlled House and Senate against overwhelming protests by the American people. All this ideologically designed legislation accomplished, with over 2,700 pages and the creation of 159 new bureaucracies, was to create uncertainty for employers and push up the cost of health care insurance.

The recently passed Dodd Frank Wall Street Reform and Consumer Protection Act of 2010, the last piece of hastily formed legislation passed by the Democratic controlled House and Senate before the November  2010 election shifted power in the House to the Republicans, is an empty bill passed for political purposes leaving its substance to regulations yet to be written.  Our nation’s banking system is now paralyzed by the uncertainty of what will be in those regulations.

From Cash for Clunkers to cash for Solyndra, everything this administration does is preceded by “pass it now, there is no time for debate.”  Economic conditions are difficult for most Americans and with 14 million citizens unemployed and an estimated 25 million Americans in total who are unemployed or under-employed, families are hurting and it would be easy to proclaim a crisis and cause panic.

The so-called jobs bill that Mr. Obama is promoting is nothing more than a re-cooked version of the stimulus bill.  The legislation will shift federal money to the states to pay the wages of state and municipal workers, primarily teachers, as did the stimulus bill.  Money will also be provided for infrastructure, but most of this work would require years of permitting and planning before there are any actual projects.  As worthy as it is to keep teachers working and to get construction professionals back to work, this money will only provide short-term relief without any self-sustaining employment created.  When the money is spent, we will be back where we started – with another crisis.

Mr. Obama also wants to pay for this wasteful spending with his typical call of class warfare, “tax the rich.”  He will most likely call again for a “balanced approach” and say that all need to “pay their fair share.”  Here are the facts about “fair share” according Internal Revenue Service data: the top 1% of earners pay 38% of all federal taxes; the top 5% of earners pay 58% of all federal taxes.  The American people are no longer fooled when President Obama and the Democrats refer to families earning $250,000 per year as “millionaires and billionaires.”  Internal Revenue Service data also reveals that of the 4.4 million American households that earn more than $200,000, 3.4 million make less than $500,000!  Mr. Obama knows that the tax revenue he seeks is from those families earning between $200,000 and $500,000 per year because that is where the money is.  Only 319,000 families report $1 million or more of income earned.

It is time for the American people to say “enough!”  Our nation was not built on panic.  It was built on deliberate and serious debate.  Our Founders did not simply react.  They acted on principle with the full understanding of what would follow.  We have to start thinking more deliberately.  An effective jobs bill will reduce regulation, clear uncertainty and address real tax reform.  Time and time again, lower tax rates with fewer tax preferences (deductions) have always resulted in strong and sustainable economic growth.   The best way to increase tax revenues is to increase the number of people employed and the best way to do that is to lower tax rates.

We do not need any more speeches evoking fear and panic.  We need leadership that is bold enough to call for broad strategic thinking, free of ideology and political gamesmanship.  It is time to reject Mr. Obama’s class warfare and platitudes.  The people know better, this is America!

Robert Allen Bonelli is the author of “Liberty Rising,” an accomplished business executive, public speaker and involved citizen.

The campaign pits freshman “Blue Dog” Democratic congressman Frank Kratovil in a rematch against Republican Dr. Andy Harris. Given the political tilt of the district, coupled with the Tea Party tsunami gathering force this year, one would think that this race should be a slam dunk for Harris.

A tall, affable family man, Harris is an anesthesiologist, Navy veteran, hardcore free-marketer, and constitutional conservative. By contrast, Kratovil, a former attorney, tries to portray himself as an “independent” who distances himself from Nancy Pelosi and the House Democratic majority. However, the Washington Post reports that “Frank Kratovil has voted with a majority of his Democratic colleagues 84.6% of the time during the current Congress.” Among his least popular votes since taking office: support for the “cash for clunkers” program, for the near-trillion-dollar “stimulus” spending orgy, and for the hugely expensive “cap-and-trade” energy bill. Plus, of course, his vote to elevate the widely reviled Pelosi to the Speaker’s position.

Yet, despite all that, a recent poll finds Harris holding only a statistically insignificant three-point lead over Kratovil. This, while other GOP candidates are faring much better even in usually “safe” Democratic districts.

What’s going on here?

One of the most infuriating spectacles this election season is supposedly “Republican,” “conservative,” and “pro-business” individuals and groups supporting entrenched liberal incumbents against free-market, limited-government challengers. For many special-interest “insiders,” even on the right, philosophical convictions are far less important than sharing a “seat at the table” with the politically powerful.

With a hat tip to Angelo Codevilla, let me label these fair-weather friends of freedom “the Ruling Class Right.”

Frank Kratovil is one of the undeserving beneficiaries of their favoritism, just as Andy Harris is one of their undeserving victims.

There is history here: We’re witinessing a virtual replay of the Kratovil-Harris race of 2008. Though the Republican-leaning district went handily for John McCain, Kratovil managed to squeak out a plurality of votes to win by less than one percent. Harris’s surprising defeat occurred only because he was betrayed by those who should have been his allies.

Harris had won the GOP nomination by challenging and defeating incumbent Republican congressman Wayne Gilchrest in the primary. Gilchrest — one of the most liberal Republicans in Congress — retaliated against the primary voters’ verdict by endorsing Kratovil over Harris.

Moreover, despite Harris’s long record as an anti-tax, pro-free-market state legislator, a Libertarian Party candidate entered the race, in one of that party’s futile vanity campaigns. But the Libertarian managed to siphon off 8,873 votes, many of which otherwise would have gone to Harris. As a result, Harris lost by only 2,852 votes.

In 2008, establishment Republicans and self-styled “advocates of liberty” turned their backs on a proven legislative champion of freedom. Now, this year — while a Tea Party tidal wave is sweeping even liberal Democratic districts — Andy Harris is being betrayed by “the Ruling Class Right.”

This entrenched elite first threw their endorsements and money behind liberals Arlen Specter, Charlie Crist, Mike Castle, and Lisa Murkowski, and against the insurgencies by free-marketers, constitutional conservatives, and Tea Partiers fed up with the Beltway’s corrupt old-boy network. Since then, supposedly “conservative” pundits within the Ruling Class Right have joined party apparatchiks to do everything possible to mock and undercut the campaigns of primary victors such as Christine O’Donnell, Sharron Angle, and Carl Paladino. Having first pronounced them “unelectable,” they now are working to make their assessment a self-fulfilling prophecy.

But the Ruling Class Right is not only centered within the GOP.

For example, the U.S. Chamber of Commerce proclaims on its website: “As the voice of business, the Chamber’s core purpose is to fight for free enterprise before Congress, the White House, regulatory agencies, the courts, the court of public opinion, and governments around the world.” Yet, in the face of the most far-reaching assault on our free-enterprise system since the New Deal by the current Democratic Congress, the Chamber has issued endorsements of at least ten Democrats.

And these endorsements include Frank Kratovil. Yes, the same Frank Kratovil who voted for Pelosi, for the “cash for clunkers” clunker, for the pork-packed “stimulus” flop, and for the “cap-and-tax” energy catastrophe. Nonetheless, he received the election endorsement of “the voice of business,” whose “core purpose is to fight for free enterprise before Congress.” And not only did the Chamber bestow its influential blessing upon Kratovil; it also granted him $168,841 to buy advertising to defeat consistent free-marketer Andy Harris. (“The new advertising,” reports the Baltimore Sun, “is part of a national buy of some $2 million by the Chamber on behalf of Blue Dog Democrats like Kratovil.”)

You might think the Chamber is rare in its unprincipled expediency. Guess again:

The National Federation of Independent Business (NFIB), which generally aligns with the GOP, has given its signature “Guardian of Small Business” award to 29 House Democrats in 2010, more than twice as many as it did in 2008. The recipients include some of the party’s most vulnerable incumbents, boosting their standing with a politically popular constituency. . . .

Democrats are touting the awards as evidence that counters Republican attacks that the vulnerable incumbents are lapdogs for Speaker Nancy Pelosi (D-Calif.) and the Obama administration. The party has similarly trumpeted endorsements for centrist and conservative members from groups like the National Rifle Association and the U.S. Chamber of Commerce that traditionally back Republicans.

One of those “Guardians of Small Business” is — you guessed it — Frank Kratovil. Like the Chamber, the NFIB spurned Andy Harris to back a Democrat incumbent who supported Pelosi’s agenda 85 percent of the time.

It gets still worse.

The National Rifle Association, viewed by millions as a stalwart defender of constitutional principles, has endorsed a whopping 58 Democrat incumbents. Once again: “In Maryland, the NRA has endorsed freshman Rep. Frank M. Kratovil Jr., who will be one of the most vulnerable Democrats in November.” This, even though the group also gave Andy Harris an “A” rating on gun-control issues. However, to keep its “seat at the table” with Washington’s power elites, you see, the NRA prefers to support incumbents over challengers, in cases where they have similar voting records.

But in doing this, they fail to appreciate that the Second Amendment is part of a larger project known as the Bill of Rights, and an even larger one known as the U.S. Constitution. Torn from the context of the broader protections that this venerable document affords us against unlimited government power, the Second Amendment becomes far more endangered. Selling out the rest of the Constitution by supporting its political enemies, is not the path to protecting gun rights: You can’t defend the individual’s right to bear arms if you demolish the entire legal edifice that protects individual rights generally.

But to “pragmatic” lobbyists, this talk of principles is all “abstract theory.” They live down in the “practical” weeds of day-to-day political machinations.

Just as the NRA wears blinders concerning the “single issue” of the Second Amendment, business lobbies suffer from appalling myopia on “single issues” centering around production and trade. Indeed, too many business groups have become completely detached from the free enterprise system. Instead, they are run by and for “crony capitalists”: corporatist schemers who line up at public troughs for taxpayer subsidies and political favors, and who back or buy any politician willing to grant them.

That’s why these congressional mid-terms are such pivotal elections for our nation. This may be the last opportunity we’ll have to roll back “the statist quo.” But to do that, we’ll have to roll over, not just progressive adversaries, but alleged “allies” from the Ruling Class Right. We’ll have to defeat their efforts to keep vulnerable Democrats in power, by supporting truly principled candidates like Dr. Andy Harris.

As we argued in an earlier column this month, the $2.0 trillion in cash (and growing) that has been accumulating throughout the year in corporate bank accounts is more than enough to jump start the economy out of the doldrums in which it has been languishing for the better part of three years.  All of this capital is locked in irons, as our sea-faring friends like to say, chiefly because a muscle-flexing, game-changing government is piling uncertainty on top of uncertainty with largely unwanted new taxes, new programs, new mandates (mostly unfunded), new regulations and new agencies to enforce them.  What’s a well-intentioned businessman to do?

Rather than stepping aside and giving the marketplace a chance to regain its footing after the financial debacle (also largely the result of government malfeasance) that defined the transition of government nearly two years ago, the Administration, Congress and the Fed have elbowed their way, at great cost, into the commerce of the country with dubious to negative results thus far and, for many, with absolutely devastating impact.

Interest rates have been maintained at ridiculously low rates quarter after quarter and, now, year after year.  The Fed has accomplished its goal and made this a heyday for borrowers. Companies and others who don’t even need the money are borrowing to avoid missing this debtors’ bonanza although in many sectors (notably real estate), banks won’t lend because of marketplace uncertainties.

Unfortunately, many of the borrowers are, for the time being, merely arbitraging the money they have borrowed (having placed it in higher-paying accounts) or using it to retire more expensive debt they have on their books.  And the companion consequence…the affect on the elderly on Main Street, and those retirees trying to stay in their own homes or living in retirement communities all over the country? The very people who have labored a lifetime to save enough for their so-called golden years are literally being financially strangled as they try to live on the earnings (interest) from the funds they spent decades of frugality accumulating.

For the first time in over a half-century, according to a recent report in the New York Times, the average returns on interest-bearing deposit accounts have sagged below 1.0 percent.  Imagine that.  An after-tax nest egg of $500,000 that may have taken a lifetime of hard work to accumulate and which would have produced $26,250 only three years ago, will, today, yield a paltry $7,500 in a 12-month certificate of deposit.  Those butterflies flapping their wings over at the Fed in Washington to make borrowing attractive, are forcing millions of Americans who have followed Ben Franklin’s golden rule of a penny saved is a penny earned to take their hard earned money and reallocate it to higher-yielding, riskier investments, something they never intended to do and spent a lifetime avoiding.

The Cash-for-Clunkers program, which according to President Obama, “was successful beyond anybody’s imagination,” produced some pretty interesting unintended consequences too.  We won’t dwell on the cost per car to the taxpayers of rebates, paid for cars that would have been purchased anyway without the program.  Industry analysts pretty uniformly agree that about 70% of the cars for which rebates were paid ($3,500 to $4,000) would have been purchased anyway.  The program also required that all of the cars traded in (the so-called clunkers) be destroyed (couldn’t have these cars competing with new car sales after all).   The result, a serious shortage today of used cars available to those citizens who can only afford to buy used cars.  Thus, the average cost of a used car is, today, about 10% to 15% higher than would otherwise be the case.  Many of the higher-end used cars have increased about 35% as a result of the Cash-for-Clunkers program.  It gets worse. Japanese and South Korean companies made eight of the top ten selling vehicles in the Cash-for-Clunkers program. The Toyota Corolla (of subsequent recall fame one year later) wound up as the most popular car in the trade-in program.  So much for the advertised benefits for U.S. car manufacturers.

Then there is the unintended consequence of H.R. 3590, the so-called “Patient Protection and Affordable Care Act” (we think there should be an extra ring in Dante’s hell for wordsmiths who think up these absurdly misleading legislative labels…well, then again, fraud does constitute one entire circle).  This was the product of 219 Democrats in the House of Representatives and 58 Democratic monarchs in the Senate flapping their collective butterfly wings.  We all recall that Obamacare was supposed to sharply reduce costs, improve service and “not add one dime to the deficit.” In fact, the president vowed, with a straight face, to veto any healthcare bill that did add one dime to the deficit. Well, as it turns out these butterflies flapping their wings did, in fact, create some consequences down stream, although we don’t really believe they were unintended.

First, we now learn that insurance companies will soon be raising their rates up to 10%, much of which is attributable to the requirements imposed upon them by the new health care mandates, and we don’t believe for a nanosecond that a 10% raise will begin to cover the costs insurance companies will soon be facing.  Worse, the federal Centers for Medicare and Medicaid Services now calculate that healthcare spending in the United States will increase an average of 6.3 % a year over the next decade, an annual 0.2% increase from the increase they calculated barely six months ago.  Compounded, this equates to a near doubling of costs in the next ten years.

The new 2700-page law is loaded with something for almost everyone. For example, Obamacare, in effect, changes the definition of a child, for family insurance coverage purposes to age 26, and in so doing adds another $10.2 billion to annual healthcare costs. Because, the vast majority of Americans do not directly pay for their health care costs, these expenses continue to rise considerably more than they would if each individual or family were making direct payments for the health care services they demand.  As a consequence, the Feds now estimate that by 2019 one out of every five dollars spent in the United States will go to the provision of health care and it’s probably a safe bet that expenses will probably continue to grow thereafter. This is, unequivocally, unsustainable. In order to avoid drastic reductions in Medicare and Medicaid service, it is a near certainty that fees to healthcare providers will have to be drastically cut.  No one likes to talk about it, but it is a given that thousands of doctors will exit Medicare and Medicaid practice.  That is a reality, which those 219 House and 58 Senate butterflies hope the voters won’t notice this year because Obamacare is not yet in full throttle.

Instead of removing obstacles to economic growth the President and his congressional allies have decided that they can better plan for economic progress than can a properly regulated free marketplace.  That seems to be a widely held view within the capital beltway, but, not surprisingly, almost nowhere else.  Virtually all polls show that incumbents are in for a severe shellacking in the forthcoming mid-term elections, consumer confidence has plummeted to its lowest level since pollsters began measuring this factor and, lo and behold the United States has slipped to fourth place in the latest World Economic Forum competitiveness survey, behind Switzerland, Sweden and Singapore. The United States was in first place when President Obama assumed office.  Chief among the concerns expressed about the United States are our escalating deficits, a weakened financial system, access to credit and government regulation.

The 2010 fiscal year is sputtering to a close with our government having spent $1.3 trillion more than it collected from taxes and all other sources of revenue.  The past two years constitute the greatest shortfall or deficit in the past sixty-five years.  Today, our deficit is bumping up against 10% of the nation’s Gross Domestic Product or the value of all goods and services produced in the United States.  That is  a level many economists consider the point at which nations begin to fail.  Our problems do not stem from a government that is not doing enough.  Quite the opposite; confidence in America is sinking because people throughout the length and breadth of the land either understand, or feel in their gut, that the effect of decisions being made in Washington are having or will have adverse affects where they live and work.  They are experiencing political chaos (or the butterfly effect) up close and personal and they clearly do not like what is happening.

By Hal Gershowitz and Stephen Porter

In Friday’s dreary news conference, Obama acknowledged that economic progress is “painfully slow,” and that voters may blame him for the economy. Yet he nonetheless continued to finger Bush “for policies that cut taxes, especially for millionaires and billionaires, cut regulations for corporations and for special interests, and left everyone else pretty much fending for themselves.”

“Millionaires and billionaires” has become Obama’s favorite phrase as he calls for tax hikes on the wealthy and renews his attacks on Bush. In Cleveland last week, Obama actually blamed the Bush tax cuts for the financial meltdown and severe recession. Now that’s a reach. A big reach.

While Mr. Bush made plenty of economic mistakes, his 2003 reductions of marginal tax rates led to more than 8 million new jobs in the next four and a half years. Under Bush, the unemployment rate dropped to 4.6 percent.

And almost all economists agree that the 2007-08 financial meltdown was a housing-bubble and credit event. It had nothing at all to do with cutting taxes.

Regarding John Boehner, Obama slammed the GOP leader eight times in Cleveland. He claimed “no new policies from Mr. Boehner,” saying the Republican leader’s philosophy “led to this mess in the first place: cut more taxes for millionaires and cut more rules for corporations.”

Well, none of this is going to work come November 2.

Take a good look at the latest Wall Street Journal/NBC poll. It is very revealing on these points.

Voters were asked, if Republicans win control of Congress, will they return to the economic policies of George W. Bush, or will they have different ideas to deal with the economy? The response: 58 percent said different ideas, 35 percent said the policies of George W. Bush. Voters were then asked, if Democrats maintain control of Congress, will they continue with the economic policies of Barack Obama, or will they have different ideas on the economy? The response: 62 percent said the policies of Obama, 32 percent said different ideas.

The poll also found that 56 percent of voters disapprove of Obama’s handling of the economy while 39 percent approve; that 71 percent disapprove of the job Congress is doing; and that 62 percent think it better that different parties control Congress and the White House. Overall, on the generic congressional vote, likely voters favor Republicans over Democrats 49 to 40 percent.

Clearly, Obama is barking up the wrong tree with his assaults on Bush and Boehner.

It’s the Obama agenda, especially on the economy, that has voters agitated. It’s a couple trillion dollars worth of big-government spending stimulus. It’s add-ons like cash for clunkers, cash for caulkers, and homebuyer tax credits. It’s the never-ending mortgage-default assistance. It’s two years of unemployment benefits. It’s more government-union bailouts for the states. It’s GM, Fannie, and Freddie. And of course, it’s Obamacare, which remains hugely unpopular.

Folks simply don’t think they got much for their money. And now they want to get their money back. They even want strict constitutional limits on the size, scope, spending, and taxing of the federal government, which has just made the biggest power grab they’ve ever seen.

The point is, your average Joe the Plumber in all those flyover states has probably barely even heard of John Boehner. This Boehner attack reminds me of the GOP’s futile attempt to demonize Nancy Pelosi in the autumn of 2006. Back then, nobody had much heard of Pelosi. But people voted the Republicans out because of overspending, bridges to nowhere, corruption, and the Iraq War.

Today, while the GOP is developing a platform that is expected out at the end of the month, voters seem to know that a nearly united Republican party opposes Bailout Nation, big spending and borrowing, Obamacare, and a new national energy tax. Republicans are far from perfect. But they have slowly developed a good message: Freeze spending, keep tax rates down, hold back the redistributionist government tide, help entrepreneurs, reward success, and create jobs and economic growth through the traditional American route of private-sector business, not government planning.

In the next seven weeks, if Republicans can stay on this message, they will win big.

The case for government deficit spending was that idle unemployed labor and capital would be put to work to increase the output of goods and services. Hence, a dollar of government spending would produce more than a dollar of new output because of the “multiplier effect.” Robert Barro of Harvard has studied wartime and defense spending, and found a multiplier of only 0.8. But those were better times, when businesses, banks, and consumers were not primarily concerned to use new income to pay down debt or save to protect against income loss. Even in better times there wasn’t much bang for the buck.

So what has been the government’s response in the current crisis? Besides spending stimulus, it was tax incentives for new home buyers and cash for clunkers if you bought a new car. All three are programs for borrowing output, homes and cars from future production and sales. Using subsidies to pump up home sales beyond what people could afford was the problem that led to the crisis. Now the problem is touted as the solution.

We are in times not seen since the Depression, when at its depth in 1934 my parents lost their Kansas farm to the bank. Such memories and the intensity of the current crisis led me and my colleague, Steven Gjerstad, to examine the last 14 recessions including the Depression. We have been surprised and dismayed to learn that in 11 of these 14 recessions the percentage decline in new house expenditure preceded and exceeded percentage declines in every other major component of GDP. Hence the sources of the current debacle are hardly new! Moreover, past recoveries in the housing market have been closely associated with recovery from recession. The latest data continue to tell us that the turnaround in housing, consumer durables, and business investment are all anemic.

Our past housing and government spending mistakes leave us with no good choices. But please no more government spending! The deficit must now be faced. Avoid any new taxes; they are unlikely to reduce the deficit without discouraging recovery.

Our best shot at increasing employment and output is to reduce business taxes and the cost of creating new start-up companies. Don’t subsidize them; just reduce their taxes even as they become larger; also reduce any unnecessary impediments to their formation. This is strongly indicated by the business dynamics program of the Bureau of Census and the Kauffman Foundation which has tracked new startup firms in the period 1980-2005. The entry of new firms net of departing firms in this period account for a remarkable two-thirds more employment growth (3 percent per year) than the average of all firms in the US (1.8 percent per year). The invigorating turmoil created by new technologies, with accompanying growth in output, productivity, and employment lead to new business formation as old firms inevitably fail. Reducing barriers to that growth encourage a recovery path which does not mortgage future output.

Read the whole article here.

I’ve been to Missouri quite a few times since becoming “Joe the Plumber”: Rolling hills, farmland, beautiful rivers, vibrant cities, honest people. So I’m not in the least surprised that the rural town of Caulfield has produced a true statesman. A statesman that all freedom-loving Americans have searched for since the Reagan years.

I AM surprised and disgusted that these same “conservatives” who have been shouting fiscal conservatism from the mountain tops are now throwing a true statesman under the bus instead of rallying to his side.

Chuck Purgason is a State Senator for a portion of southern Missouri. He’s worked his way up from the House to the Senate ever since his “Tea Party” moment in 1996. He has proven the hard way that you actually can be a man of integrity in a government full of wolves. When liberal U.S. Senator Kit Bond (R) decided to retire, he anointed RINO Congressman Roy Blunt (R) to be his heir apparent. After Roy Blunt’s votes for the TARP Bailout, Cash for Clunkers, No Child Left Behind, taking the most lobbyist money, etc. (I really could go on and on and on . . . ) Chuck said there was no way he was going to let Blunt represent Missouri in the US Senate.

State Senator Chuck Purgason threw his hat into the race for US Senate against mega power broker Roy Blunt.

Now this is where the story begins to get interesting. Just a week or so ago, Democratic Governor Jay Nixon ($170,000+ donations from unions) called for a special session to pass a $150M “tax cut” to Ford Motor Company. Every Republican started lining up like good little bees because tax cuts are good – right? Besides, Missouri has a lot of unions – they wouldn’t win their re-elections if they didn’t vote for this bill.

Everyone lined up except for one – Chuck Purgason. He just said no. He said if you want to save jobs, give ALL the manufacturing companies a tax break – not just your pet business. Stimulate the economy the RIGHT way by moving out of the way of the people who make it grow. The Republican leadership would have none of this kind of talk. But, the leadership had one tiny problem. . . . Chuck was Chairman of the committee that held the bill and come hell or high water, Chuck wasn’t going to let it out.

Senate Pro Tem Charlie Shields made it very clear to Senator Purgason that if he didn’t pass this bill out of committee, Shields would remove Purgason from the Chair and put himself in Chuck’s place. (Shields said that he would give Chuck the chair back after this vote. Chuck said, “No, thanks. Not interested in being your puppet.”)

Now, pay close attention folks: State Senator Chuck Purgason said, “No.”

Chuck has powerful positions in the MO Senate; he is running for US Senate against a man who will out spend him a zillion to one; he has everything to lose and nothing to gain. Yet, he said, “No.”

Last week, he spent 24 hours filibustering the bill while talking about failed economic policy; playing favorites to line your pockets; and doing the right thing.

Well, I have a few words for the State Senator Chuck Purgason, the candidate Chuck Purgason; the business owner Chuck Purgason; the husband Chuck Purgason; the father Chuck Purgason and the American Chuck Purgason . . . .

Thank you. You are a genuine man of integrity, honesty, moral courage, and political excellence.

I am going to do everything possible to get this statesman we’ve all been hoping for elected. This kind of unadulterated boldness doesn’t come along too often.

And after August 3rd, it will be too late.

In a June 14th editorial entitled “Politicizing the Fed,” the Wall Street Journal sheds light on one of the dubious regulations of the upcoming financial reform bill.  The Journal states:

The biggest underreported threat comes from Subtitle I, Section 1801 of the House financial reform bill titled “Inclusion of Minorities and Women; Diversity in Agency Workforce.” Sponsored by California Democrat Maxine Waters, the provision requires each federal financial agency, the Fed Board of Governors and the 12 regional Fed banks to “establish an Office of Minority and Women Inclusion.”

So what else is new, you say? Don’t the feds already dictate racial and gender hiring? Yes, they do, through the Equal Employment Opportunity Commission and assorted other federal laws. As a matter of racial and gender diversity, the Waters provision is at best redundant.

But Ms. Waters and the House are hunting bigger game—to wit, the political allocation of credit.

[...]

The House provision makes that very clear by making each diversity officer a Presidential appointee who must be confirmed by the Senate.The post, says the bill, will be “comparable to that of other senior level staff.”  The post, says the bill, will be “comparable to that of other senior level staff.”

The law says this diversity czar will “ensure equal employment opportunity and the racial, ethnic and gender diversity” of the work force and senior management of these institutions. More ominously, this creature of Congress and the White House will also be charged with “increas[ing] the participation of minority-owned and women-owned businesses in the programs and contracts” of each agency and conducting “an assessment” of stated inclusion goals.

Mull over that one for a minute. Having recently lived through a financial mania and panic caused in part by political pressure for “affordable housing,” Congress will now order regulators to allocate credit by race and gender.

In an article I wrote on February 28th entitled “Fiscal Death by Welfare,” I argued: “I believe that as the downturn goes on the government will blame the banks for the lack of economic growth and force them to allocate credit to chosen political entrepreneurs and other bad credit risks…”  I truly wish I had been wrong in my assessment.

Note that this is not to say that minorities or women are bad credit risks, but that based upon prior social engineering experiments in which government has intervened to force lending, we have seen that the worst credit risks are the ones who most benefited at the outset, to the detriment of themselves and all taxpayers at the day of reckoning.

Too, any government forcing of credit necessarily reflects a bad credit risk, because in lieu of government intervention, market actors would already properly allocate credit to anyone, regardless of their race, gender or ethnicity, at an interest rate reflective of their risk profile.  If lenders were to discriminate on the basis of non-economic reasons, than other competitors would see this void and fill it.  This principle is reflected for example in the old days when in response to the so-called WASP investment banks, Jews built their own ones to fill the vacuum of talent being ignored by white-shoe firms.  Private self-interest works in the face of discrimination.  Public self-interest creates discrimination.

Why is forced allocation of credit to certain sectors of society harmful?  Forced allocation of credit means mispricing of credit which leads to market distortions that manifest into bubbles and crashes.

Interest rates are supposed to reflect the risk profile of the borrower.  Lenders assess the ability of a borrower to pay back a loan and determine a proper compensatory rate based upon the opportunity cost and risk involved with leaving the cash with such a borrower over a period of time.  The government by forcing the allocation of credit will not only distort the market mechanism which best coordinates lending and borrowing activity in all sectors of the economy, largely to the detriment of the most creditworthy debtors, but also artificially cheapen the cost of credit for the least creditworthy of debtors by increasing the supply of available credit to them.

In effect, the government will seek to deny the truth reflected in higher interest rates for more risky borrowers by dropping their rates by fiat.  Since better credit risks will have to pay higher interest rates due to such diversion of capital, this will have a doubly negative effect on the worse credit risks who would benefit from the likely more successful economic activity of the more creditworthy borrowers.

The notion that interest rates must be kept low — that we should lie by suppressing the price of credit because it reflects truths we do not want to acknowledge is not limited to the central planning writers of the financial reform bill.

In Ben Bernanke, the chief financial central planner’s most recent performance in front of the House Budget Committee, he echoed this argument, noting that we must keep interest rates low — that we must stop the price of interest from reflecting reality or we will risk facing the consequences of reality.  This of course is how he arrives at the supposed panacea of an interest rate of 0-.25%.

We have government at every level that is bankrupt, hundreds of under-capitalized banks with toxic assets on their books and an economy that is being hyper-regulated to death and facing increasing onerous taxes direct and indirect, and yet the benchmark cost of borrowing money, to which all other interest rates are connected is 0%.  Utter insanity.  Almost as insane as giving a body like the Fed the ability to fix such a price, as if a single human being or board of human beings could pick the price of anything, be it credit or bananas.  Obama, Bernanke & Co. would rather wage a war on truth and centrally plan than go home and let prices reflect reality.

Another aspect to the denial of truth in the economy deals with the abandonment of “mark-to-market” pricing.  If banks were to have to price assets on their books based upon what they could reasonably expect to obtain in the market for those assets, many of them would be in serious trouble.  Yet instead, because we have suspended mark-to-market pricing, and forced taxpayers to pump capital into our banks, their balance sheets appear to be healthy.  Hence the new normal in our economy of “extend and pretend,” where we throw lifelines at banks and failing enterprises by providing them with cheap capital, and pray that their now hidden underlying problems will go away, knowing that they will not only not go away but grow larger until some unknown dark point in the future when the cancer kills the host.

When it comes to unemployment too, we see an administration not only denying truth but flat out lying, laughably arguing that we are creating jobs.  Leave aside the fact that the more honest measure of unemployment, U6 shows unemployment at much closer to Depression levels.  The bottom line is that a government job, the only kind we are creating, is not an economically beneficial job, the caveat being the jobs of those who defend us and keep us safe who are necessary to maintain the peace that allows our economy to function.  Even there, I doubt anyone would argue that in a world without foreign enemies, maintaining a military would be anything more than a diversion of funds.

In any event, the private sector creates jobs in response to the demand of consumers.  Sovereign individuals dictate what sectors should grow and what sectors should contract based upon their needs.  Government does not meet any such demand.  It can only take resources away from the private sector and allocate land, labor and capital based upon political, not economic factors that in a capitalist economy, individuals would make to drive economic activity.  The government in depriving individuals and enterprises of such economic resources will only stifle recovery, immorally attempting to play the role of the omnipotent master of consumers and producers.  The government will destroy jobs by “creating jobs.”

Note too that the underlying argument that people are not consuming enough, and that thus we need such boondoggles as cash-for-clunkers and HAMP further denies truth.  How is a government to know what is the proper amount of consumption?  Why is the government to stop individuals from choosing to consume less?  Why is government to take resources from people and consume more if individuals choose to consume less?

We overconsumed (as reflected in the unjustified rise and subsequent crash in asset prices) precisely because we were misled by gobs of artificially cheap credit, so now we need to force people to consume even more and make credit even cheaper?  NO!  Now we need to contract — consume less and save and invest more.  Saving and investment means foregoing consumption today to consume more tomorrow.  But if interest rates are artificially suppressed, disincentivizing saving, all we will do is perpetuate existing stagnancy.

Most recently, with regard to BP, President Obama is trying to use the disaster to argue that drilling for oil is bad, and that thus we need to use public money to push all sorts of green initiatives like windmills and solar energy.  Forget that BP was forced to drill so deep underwater because of all of the environmental regulations we have in place that prevent us from tapping much more easily usable sources of oil.  Forget that the baby-killers at BP are losing billions of dollars, again as a result of this policy, while you demonize them as if they intentionally caused this disaster.  Forget that alternative sources of energy are nowhere near being perfected, nor are they yet economical, which is why the private sector is not pushing all of its resources toward such development.

When you are the central-planner-in-chief you know better than your serfs.  You can deny all truth and continue to push your intentionally destructive policies, claiming that existing notions of individual liberty, property rights and true equality before the law are antiquated and immoral.

But in reality, President Obama’s economic policy of denying truth merely divides and favors certain classes of people over others and compounds and prolongs our problems.  Obama seeks to supplant with the decisions of divine bureaucrats the decisions of millions of individuals partaking in mutually beneficial actions to the good of the whole world.

This administration completely perverts truth, justice and morality in their grab for greater control over you and I.  Most importantly, this administration forgets the fundamental truth that man is flawed and thus cannot be G-d.  What could be more dangerous and immoral than a policy which stems from such a hubristic and fallacious principle?