E!!

You’ve probably heard the social drinker’s jovial party line, “I don’t drink any more.  (dramatic pause)  Don’t drink any less, either…”

Yuk-yuk.

Today’s Morning Bell says this joke pretty much sums up Obama’s proposal for pay-as-you-go (PAYGO) legislation which comes equipped with an exception for entitemlement spending.  Their quoted quip: 

Commenting on President Obama’s exemption for entitlement spending in his PAYGO legislation, Committee for a Responsible Federal Budget President Maya MacGuineas said: “This is like quitting drinking, but making an exception for beer and hard liquor.”

Here’s a clip from the piece:

In theory, PAYGO sounds like common sense: Congress can only spend a dollar if it saves a dollar elsewhere. In reality, PAYGO is nothing more than a political gimmick that only enables higher spending and exploding deficits. Heritage fellow Brian Riedl explains:

1) PAYGO has never been enforced

• During the 1991-2002 round of statutory PAYGO, Congress and the President still added more than $700 billion to the budget deficit and simply cancelled every single sequestration that would have enforced PAYGO.
• Since the 2007 creation of the PAYGO rule, Congress has waived it numerous times in order to add $600 billion to the deficit. In fact, the entire “stimulus” bill violated PAYGO; Congress simply ignored the rule.

2) PAYGO’s design is flawed

• PAYGO exempts all discretionary spending, and would also allow all current entitlement programs like Social Security, Medicare, and Medicaid to continue growing on autopilot. It affects only new entitlements or tax cuts that may be created in the future.
• Even if PAYGO were fully enforced, entitlement spending would still grow 6 percent annually, and discretionary spending could grow without limit.

Already this year Obama expanded Medicaid liabilities by $200 billion over 10 years, and he is now pushing a public health insurance option that would cost $452 billion per year, or more than $6 trillion over a 10-year period. How does Obama plan to pay for all this new spending under his new PAYGO legislation? He doesn’t.

Obama is banking on trillions in exemptions to PAYGO over the next decade, including the one for his health care reform plan which will have to run big deficits if they get it passed.  PAYGO is a farce, sham, mockery, etc.  As is politics in this country.

Pass the vodka, please.

Victor Davis Hanson is always worth the read.  Today’s column is on the basic lessons we can learn from the financial mess.

An excerpt:

The new national gospel became charge now/pay later and speculate, rather than put something away in case of a downturn. To provide more goodies that we hadn’t earned, politicians ignored soaring annual budget deficits and staggering national debt and kept spending.

The lessons:

First, cash really is king. For all the talk of a trillion here or billions there, when the crunch came, many of these investment houses and their once-strutting managers found themselves with a minus net worth. They were desperate to find liquidity — any money anywhere they could find it. Pedestrian passbook savings accounts proved wiser investments than all the clever hedge funds, derivatives, and sub-prime schemes put together.

And:

Second, wisdom and blue-chip college educations are not quite the same thing. The fools in Washington and New York who blew up Wall Street had degrees from our finest professional schools.

And:

Third, we as a nation need to relearn the old notion of shame — as in “shame on you!” Firms like Lehman Brothers and Bear Stearns were once responsible Wall Street institutions, built up over decades by sober men. But their far-lesser successors in just a few months have bankrupted these venerable brokerage houses — with seemingly no shame at what they have done to the image of Wall Street.

Americans used to pay their debts. Somewhere in all the blame-gaming about the crooks and liars in New York and Washington, we never hear that real people borrowed real money that they should not have. And they then defaulted on what they owed to others. Walking away from debts may have been understandable, but it was also a violation of trust — and wrong.

K-Lo just posted this, from Jim DeMint’s office:

We’ve just been alerted that despite House Democrats relenting on extending bans on offshore drilling and oil shale in the continuing resolution (CR) appropriations bill, Democrat Senate Leader Harry Reid has decided to sneak an extension of the oil shale ban through as Congress fights over the financial bailout. Oil shale in America’s West is estimated to hold be between 800 billion and 2 trillion barrels of oil — that is more than three times the proven oil reserves in Saudi Arabia alone.

Here is the text of Reid’s proposed new ban on oil shale, that he is trying to add as an amendment to the CR or move seperately as a “stimulus” package, or we should say an anti-stimulus package if this is included.

Sec 1602 continues ban on oil shale. The language follows:

SEC. 1602. Notwithstanding any other provision of law, including section 152 of division A of H.R. 2638 (110th Congress), the Consolidated Security, Disaster Assistance, and Continuing Appropriations Act, 2009, the terms and conditions contained in section 433 of division F of Public Law 110–161 shall remain in effect for the 19 fiscal year ending September 30, 2009.

It would be an insult to all Americans if Senate Democrats worked to bailout Wall Street while damaging our future prosperity by banning development of vast energy reserves in oil shale.

I had the honor of meeting and assisting Pat Toomey last week at the Conservative Leadership Conference here in Las Vegas.  This morning, Club for Growth says/releases the following (excerpted):

Eighteen months into the credit crunch, many largely capitalized financial services firms are experiencing serious difficulties but the overall economy continues to grow.  GDP growth over the past 12 months was 2.25 percent and 3.5 percent when excluding the drag imposed by the housing sector.  Even within the financial sector, many banks are doing well.  Regional bank indices had risen significantly since the lows of last July—prior to the bailout announcement—and thousands of community banks are thriving.  It is extraordinary that a massive government intervention in the economy is considered inevitable when the economy is not even in a recession.

Indeed it is.  On what is the panic of Wall Street types based?  Could it be fear that lack of liquidity and credit in the market will affect their own bank accounts?

At the same time, socializing economic risks come at a great cost to the American economy by misallocating capital, inviting political manipulation, and putting taxpayers on the hook for possibly a trillion dollars.  Such a large takeover by the government will surely be accompanied by adverse, unintended consequences.  Already, other companies and industries are lining up at government’s door asking for their own bailout.  And if the government incurs $700 billion in debt to finance the purchase of bad bank assets, the danger that it will eventually monetize that debt and trigger dramatic inflation is very worrisome.

“Unintended consequences.”  This concept is one of the great underlying tenets of conservative thought.  The idea is that when one makes broad, sweeping changes there are always unplanned effects, and they are often worse than the problem with which you began.

Our Do Nothing Congress should, in this case, do nothing (other than what Newt said yesterday).  We ought to free things up where we can, allow the market to self-correct, and let those who must (and should) take their proverbial Lumps. 

Access to unlimited cash and credit is not a “human right,” and we should stop behaving as if it is.

Here’s Andy McCarthy today:

The mainstream press mindlessly repeats the mantra that Fan and Fred perform a “vital” role in making the dream of home ownership a reality for the lower middle class — increasing market liquidity and thus keeping mortgage rates low. In fact, these quasi-government entities have what is at best a marginally depressive effect on mortgage rates. To create such an artificial effect — however imperceptible — is not a good idea at all; but even if you think it is arguably beneficial, the benefit is palpably not worth $5 trillion in liabilities. And if the mortgage crisis has taught us anything, it is that: without any government intervention, lenders and borrowers will innovate mortgage arrangements; borrowers shouldn’t be encouraged to buy homes they can’t afford; and private/public entities are apt to pour gasoline on a fire.