This is Obama's Reagan moment when he called the bluff of striking air traffic controllers and replaced them. 

Just as Charles Ponzi's name became synonymous with the Ponzi scheme. "Madoff" is a perfect container for all his regulatory enablers, and legal gamblers who bankrupted the country in a symbiotic relationship between Public and Private entities. Through the 1990's and well into this century we have seen an explosion in these types of relationships. These networked partnerships allow for all sorts of unscrupulous activities, from wall street investment firms, to community block-grants, enterprise zones, TIF districts, regulating safety, and the environment.

Case Study: Environment 

Pre-1990 regulatory regimes found themselves ineffectual in bringing about improved environmental practices by industry. The system was oppositional, and industry was quite happy and successful at gaming it. Thus instead of chasing uncompliant industries, who were gaming the system, in the 1990's, the USEPA changed approaches and began to partner with these industry's interests. This lead to two decades of meager incremental improvements, creating unsustainable communities (East Chicago), and placing humankind at odds with maintaining a life-sustaining environment on earth. The same industries who gamed the environmental regulatory regime from the outside (pre-1990) are now gaming the regime from within. 

I am not against these partnerships - I think it is necessary to base these type of relationships on common interests. They just are not incentivising the the desired result, and we are not getting the desired result. Incrementalism has not worked. It just puts off the difficult work ahead.

The media is creating the myth of Madoff as a lone criminal in the private sector. At $50 billion, this was a criminal enterprise, extending well into the halls of government. We are now discovering hundreds of Madoff's in the investment banking sector. What we are not doing is naming the hundreds Madoff's in Government. These criminals can be found at the local level. 

There is not just one hole in our boat, there are thousands of holes. 

Here is one: George Pabey: Mayor of East Chicago. 

• In a community of ~30,000 George amassed and spent > $1 million in the last election (mostly as undisclosed street money).
• Gave BP $165 million tax abatement - Residents 0 (at %8.5 East Chicago has the hightest property tax rate in the state)
• Funneled government contracts to cronies
• Used School City funds to payoff political IOUs
• Used City workforce to do construction work on Lakefront home in another community.

Thank you for the opportunity to testify before you this morning. As you know, I testify as a Republican--I have served in senior political positions in Ronald Reagan's White House and George H.W. Bush's Treasury Department, and as executive director of the Joint Economic Committee, a cosponsor of this hearing. However, I do not represent the Republican Party or any organization with which I may be associated. I am here speaking only for myself.

I testify as someone who is very disenchanted with his party's fiscal policy since 2001. Unlike the other witnesses, I am less concerned about the deficit per se or about the size of the tax cuts enacted over the last five years. Rather, what really bothers me is the increase in spending and expansion of government that my party has been responsible for.

I used to believe that the Republican Party was the party of small government. That's why I became a Republican. I don't believe that the federal government has the right to one penny more than absolutely necessary to fulfill its essential functions as spelled out in the Constitution. I think government is over-intrusive and could do what it has to do far more efficiently and at lower cost, which means with lower taxes.

Therefore, it bothers me a great deal when Republicans initiate new entitlement programs, massively expand pork-barrel spending, and show the most callous disregard for fiscal integrity. Not too many years ago, Ronald Reagan vetoed a politically popular highway bill because it contained 157 pork-barrel projects. The latest bill contained at least 5,000. Yet President Bush signed this $295 billion bill into law, despite having promised repeatedly to veto a bill larger than $256 billion.

For the life of me, I cannot understand why President Bush seems so incapable of using his veto pen. His father knew how to veto bills. He vetoed 29 of them in his four years in office. But in his first four-plus years, this President Bush has vetoed nothing. He is the first president since John Quincy Adams to serve a full term without vetoing anything. Curiously, Adams is also the only other son of a former president to become president--and his father, John Adams, didn't veto anything, either.

When I complain about this to the White House, they tell me that it is very hard to veto bills when your party controls both Congress and the White House. But this explanation is simply implausible. Franklin D. Roosevelt had huge Democratic majorities, yet vetoed a record 372 bills. John F. Kennedy, Lyndon Johnson and Jimmy Carter also had large majorities of Democrats, yet Kennedy vetoed 12 bills during his short presidency, Johnson vetoed 16, and Carter vetoed 13.

I won't bore this committee with numbers. You know them as well as I do. Suffice it to say that our fiscal situation is dire and growing worse by the day. My principal concern, however, is not with today's deficits--even if they are swollen by Katrina and Rita-related emergency spending. What worries me is the retirement of the baby boom, the first of which turns 62 in 2008. I'm not saying that we are close to driving off a fiscal cliff, but clearly the implications of this event have not impacted on policymakers in any way whatsoever.

I have struggled with a way to illustrate the consequences of an aging population and its effect on the budget. This is the best I have been able to do. Social Security's unfunded liability comes to 1.2 percent of GDP in perpetuity (1.4 percent without the trust fund)--about what is raised by the corporate income tax--according to that program's actuaries. The comparable number for Medicare is 7.1 percent of GDP--about what is raised by the individual income tax. And remember that these figures are for the unfunded portion of these programs, so they are over and above payroll taxes.
The chilling conclusion, therefore, is that virtually 100 percent of all federal taxes, on a present value basis, do nothing but pay for Social Security and Medicare. Unless there are plans to abolish the rest of the federal government, large tax increases are inevitable.

Let me be clear that I am no advocate of higher taxes. I'm the one who drafted the Kemp-Roth bill back in the 1970's and I have spent most of my career looking for ways to cut tax levels and tax rates. But that was predicated on an assumption those supporting tax cuts also wanted to downsize government. I never saw tax cuts as a substitute for spending cuts, but more as sugar to make the medicine go down. My ultimate goal was to reduce both taxes and spending.

Unfortunately, few in my party seem to share this philosophy any longer. For many, tax cuts have become a substitute for spending cuts. It truly amazes me how often I hear people on my side talk about cutting taxes as if this is the only thing necessary to downsize government. They seem genuinely oblivious to the fact that the burden of government is largely determined by the level of spending, not taxes. Nor do they understand that in the long-run, all spending must be paid for one way or another. Increasing spending today, therefore, absolutely guarantees that taxes will have to be raised in the future.

I am often criticized by friends on my side of the aisle for implicitly endorsing tax increases. I do no such thing. I am simply adding two and two and getting four while my friends seem to think there is some way of only getting three.
They also criticize me for implicitly abandoning the fight to cut spending and downside government. Again, I plead innocent. It is not I who has abandoned the fight, but my party. I don't need to remind anyone here that the biggest spending increases in recent years passed Congresses with Republican majorities largely without Democratic votes. Nor do I need to remind anyone here that during the Clinton years we not only went from budget deficits to budget surpluses, but did so to a large extent by cutting spending--something my conservative friends seldom acknowledge.

Here's the basic accounting. Defense spending fell by 1.4 percent of GDP between 1993 and 2000, and domestic discretionary spending fell from 3.8 percent to 3.3 percent. Even spending on entitlements fell for temporary demographic reasons, from 10.2 percent of GDP to 9.8 percent. Finally, interest on the debt fell, largely because of falling interest rates, from three percent of GDP to 2.3 percent. The result was an overall decline in spending of three percent of GDP, from 21.4 percent to 18.4 percent, the lowest level since 1966, before the Great Society geared up.

On the revenue side, individual income taxes rose by 2.5 percent of GDP, mainly as the result of rising incomes that pushed people up into higher tax brackets and higher capital gains taxes from the booming stock market. Corporate income taxes and payroll taxes added another 0.8 percent, for a total revenue increase of 3.3 percent of GDP. Thus lower spending and higher revenues constituted a fiscal turnaround of 6.3 percent of GDP, which explains how a deficit of 3.9 percent of GDP in 1993 became a budget surplus of 2.4 percent by 2000.

I don't give President Clinton full credit for this performance. I think most of the credit goes to gridlock. Mr. Clinton wouldn't support the Republican Congress's spending and it wouldn't support his. So for a blessed six years, government effectively was on automatic pilot. Sadly, unified government has led to an utter lack of restraint by my party that is simply inexcusable. It is extremely dismaying for me to hear House Majority Leader Tom Delay say that there is no fat in the budget and that Republicans have cut it to the bone. This is, quite frankly, ludicrous. My real fear, however, is that he may actually believe it.

I remain convinced that given the total lack of fiscal responsibility demonstrated by the Republican Party that very large tax increases are inevitable. I believe that the fiscal hole is now so large that it is unrealistic to think that we can just tinker with the tax system, as we did so often in the 1980's, and raise enough revenue to pay for spending commitments that have been made. And under the circumstances, I have no faith whatsoever that spending will be significantly restrained--at least not by my side. They would first have to admit error and beg for forgiveness from people like me, something I don't expect to be forthcoming any time soon.

Therefore, like it or not, we must travel the same route taken by the Europeans, who long before us made peace with the welfare state and tried to figure out how to pay for it with the least negative impact on economic growth and incentives. They all imposed a broad-based consumption tax called the value-added tax as an add-on tax to all the others. I think it is only a matter of time before we are forced to do the same thing and the longer we wait the more painful it will be when it is finally done. Unfortunately, we are more than likely going to have to be forced into it by a financial crisis of some sort. It would be better to avoid that cost and deal with our fiscal situation rationally. But I see no leadership on either side that would allow that to happen.

I don't know when, where or how a financial crisis will develop. I only know that trends that can't continue don't. Since it is unlikely that the vast fiscal imbalance will be resolved with a whimper, it becomes a certainty that it will end with a bang. Among the areas ripe for triggering a crisis are a popping of the housing bubble, a crash of the dollar, a mistake by some big hedge fund, excessive tightening by the Fed and others too numerous to mention. It will take extraordinary luck and skill to avoid every boulder in the stream and I have little confidence that this administration has the personnel to even give us a fighting chance. There are too many Michael Browns at senior levels of the government today and too few Bob Rubins or Alan Greenspans.

Contrary to popular belief, I don't think the American people are a bunch of children who only want hand-outs from the government and will only reward the party that promises them something for nothing. Experience and academic research confirm that they are more likely to support the candidate who treats the public purse with prudence and trust and not as a piggy bank to be routinely broken on a whim. In short, I think there is a political market for the party and the candidate who speaks honestly about the nature of the fiscal crisis that is looming. The payoff may not be immediate and the public trust has to be earned by more than just rhetoric. But if, as I believe, some event will eventually change the political landscape, voters will remember who spoke the truth and who mouthed the platitudes.

It's dirty work, but someone has to do it. Since my party won't do it, yours is going to have to. If it's done right, your party will gain at the expense of mine and you will deserve the benefits and my party will deserve the electorate's disdain. 

Cause:  49C01 0810 PL 49131

Parties:  Schoettle, Pugh and Marion County Republican Party v. Marion County Board of Elections

 

Intervenor: Cabbert Hahn, Attorney for Marion County Democratic Party

 

The Republican Party has filed suit in Marion County Circuit Court for a Temporary Restraining Order,  Preliminary Injunction and other injunctive relieve, to have all the Indiana early votes made into provisional ballots - I have not seen their filing, but I believe they would like this to apply statewide.  The original judge had to recuse himself because he had voted early.

Demographics such as income, education, and race are predictive of Voter-Turnout.

Income (Quintile): Percentage of turnout

- Lowest 43%

- 52%

- 59%

- 67%

- Highest 77%

Education: Percentage of turnout

- No High School 38%

- Some High School 43%

- High School Graduate 57%

- Some College 66%

- College Grad 79%

- Post-Graduate 84%

Community (1996): Percentage of turnout

- White 56%

- Black 50%

- Latino 27%

In addition geography locates demographics. Due to the segregation of our society, each demographic type has a location with longitudinal and Latitudinal coordinates. On the one hand this creates certain efficiencies for businesses when locating services for a particular segment of our society, but it also makes it easy for those with more nefarious intent to pray on a particular population. Thus when there is voter-suppression of a demographic type, it has a negative impact on a place - such as Gary Indiana. 

Gary indiana and its neighboring communities (East Chicago and Hammond) are interesting in that they fall in the Lowest income quintile with the lowest education attainment and are minority communities. This makes it easy for the Republican party to challenge and attempt to suppress their voting rights. 

To overcome these forces entities like Acorn have been working to enfranchise their vote, by registering voters and fighting off suppression tactics. 

With the DOW falling below 8,000 I recommend that Obama and the Democrats slow down and use a quieter tone. It is not that the Democrats don't understand the seriousness of the crisis - they do. It's about how we respectfully enter a room of deep sorrow and quietly address peoples fears and supply HOPE. 

Too Predictable. The Collapse of Market Extremes
Thesis: Collapse of Communism (Francis Fukuyama's "End of History") 
Antithesis: Collapse of Free-Market Capitalism
Synthesis: Managed Care

As America Falls,                         below 10,000 on the DOW 
George Bush:  Free Market Capitalists = Banking Collapse = Socialized Debt = Martial Law (?) - Martial Law for the masses who are bailing-out the banks and paying off the National debt, and golden parachutes for corporate executives. 
CPAN: Rep. Brad Sherman Martial Law 
U.S. Army News: Exercise readies first units for NORTHCOM assignment

In the mist of America's Financial Crisis, two Wars, an Energy Crisis, and the threat of Global Warming, Russia is now offering Chavez nuclear help 
"Venezuelan President Hugo Chavez was to meet Russian counterpart Dmitry Medvedev on Friday after Russia risked Washington's wrath by offering the fierce US foe help developing nuclear energy."
McCain's erratic behavior is now itself a threat to America's health and welfare. He is distracting Us from the important issues at hand and the need for sober governing.

John McCain has said many times now "We have seen self-interest, greed, irresponsibility and corruption undermine the hard work of the American people."
I say we are seeing the results of a MAVERICK wandering off course with our economy. 
There are GOOD reason for rules and referees. 
- McBush

Is there more to Romney's statements than hurt feelings for not being chosen as McCain's running mate? 
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Is this, along with Carl Rove's recent statements, a sign that the Neo-Cons don't trust McCain? Are they pulling their support? 

In the aftermath of George Bush fiscal conservatives, championing the American Entrepreneurial Spirit, must reassert their best natures and demand that leadership once again take empirical evidence into account  when making economic, and foreign policy decisions. Lets can argue the downturn in the economy, the failure of our strongest economic institutions - banks (Bear Sterns, Lehman Brothers, Merrill Lynch) and lending institutions (Freddy Mac and Fanny May), and insurance companies (AIG), or about the war in Iraq and the surge, or the use of torture, or what did not happen in post katrina, etc. We can all pretty much agree that the last eight years have been fraught with leadership failures and decisions based on something other than good data, evidence or sound economic strategies. 

What America needs now more than ever is the sobriety of sound decision making to put our economic house back in order and end the practice of stoking "cultural wars" for political gain. Stoking the culture wars, may win campaigns, but they also makes it nearly impossible to govern effectively. We need to get back to choosing our leaders based on their ability to make difficult but effective decisions based on sound data and evidence, and not their gut. The catch-phrase of the day is "sustainability." Its seems an appropriate term for what America needs. We can be thankful that American leaders of the 20th century had the foresight to build such a resilient and sustaining economy, but we must acknowledge the lessons of the Bush administration - that these economic gains can be squandered and washed away quickly by poor leadership. 

Fiscal Conservatives are faced with a difficult decision this November. Do they continue to vote down party lines as they have these past 40 years or do they break with their party and vote for the candidate they know will reassert their best natures?  Or do they vote for more of the same - McCain.
I leave the rest to Andrew Sullivan. to reflect on McCain's choice of Sarah Palin as a running mate. 
____________

For the past two weeks serious commentators and columnists have been asked to take the candidacy of Sarah Palin for the vice-presidency of the United States seriously.

Formerly sane people have written of the McCain campaign’s selection of this running mate as if it represents a new face for Republicanism, an emblem of can-do western spirit, a brilliant ploy to win over Clinton voters, a new feminism, a reformist revolution, and a genius appeal to the religious right.

I’m afraid I cannot join in. In fact I cannot say anything about this candidacy that takes it in any way seriously. It is a farce. It is absurd. It is an insult to all intelligent people. It is a sign of a candidate who has lost his mind. There is no way to take the nomination of Palin to be vice-president of the world’s sole superpower - except to treat it as a massive, unforgivable, inexplicable decision by someone who has either gone insane or is managerially unfit to be president of the United States. When, at some point, the hysteria dies down, even her supporters will realise that, by this decision, McCain has rendered himself unfit to run a branch of Starbucks, let alone the White House.

with a another metaphor. And then another. And another. 
- Articulate policy differences. 
- Question whether McCain is fit to lead. 
- Suggest that Palin is probably a better leader than McCain.
Don't invite discussion. Just Move on.
- Question McCain's temperament again. 

Move on. There is no need to pause. 
- Invite comparison between McCain and Bush.
- Question whether American's can risk continuing the having a leader who forgoes facts and empirical evidence in setting foreign and domestic policy. 
Move on.
- Ask American's if they are doing better than they were 4 or 8 years ago. 
- Ask American's if they want to continue the practice of ideological hirings in our Federal prosecutors office.
Move on.
- Show how McCain has lost his facilities on an array of issues. 
- Remind American's of the Republican Party's actions in the Terry Shivo case. And remind them again how they invaded personal tragedy to set political through legislating her and her families personal loss.
Suggest that McCain is....
And Move On Already......

Hillary is an extraordinary person of policy and has done very well in this election. She has always been deserving of respect. As such I continued to argued for a unity ticket. Until recently, I really felt this would be the best way to move the party forward towards winning in November. 

But now, after more than 2 months of unwarranted drama, and demonstrating her lack of ability to except political reality. And the fact that she never properly communicated or led her constituency in the face of what was clear and obvious, but continued with a brazen and unprofessional endgame. 

Her behavior this week has been absolutely unacceptable, and beyond the pal of a good leader. Her unwillingness to accept the loss and concede the race in a timely fashion has grave consequences.

I realize Hillary has seriously damaged her political reputation, as well as the Clinton legacy.  But more importantly, I am afraid, despite the historic significance of her run for the White House, she did a disservice to my daughter's changes of becoming the President of the United States. Ironically, her drama plays right into misogynistic tendencies. 

If there is anything I am truly angry towards Hillary about, it is not the effect she had on Obama's candidacy - Obama won, it is the effect her behavior may have on my daughter's future. My six-year-old daughter has been a huge Hillary fan from the beginning of the Primary. She wanted a "Girl" President. If Hillary would have won, I would have been happy for our country and my daughter. But she didn't win and she didn't loss gracefully, and that I am afraid hurts my daughter.

Right now, I want to cuss Hillary out. She need to find a way to repair this. 

Scott McClellan's mea culpa begs the comparison to the Iraqi Propaganda officer during the U.S. invasion of Baghdad. At that moment, they both earnestly stood for their respective regimes, and in the presence of record they looked into the world's eye and proclaimed mutual annihilating narratives in the face of evidence and truth. During those first few delicate moments the first cycle bonded their successes. The next cycle eliminated them both.