Why working class voted Republican in 2010

Michael Barone (February 28, 2011) had an interesting observation worth pondering.

He points out that Republicans did pretty well among whites who did not graduate from college -- the exit poll's best proxy for the white working class -- even in the otherwise dismal year of 2008. John McCain carried non-college whites by a 58 percent to 41 percent margin, more than his 51 percent to 47 percent margin among college whites. Thomas Frank's book "What's the Matter With Kansas?" argued that modest-income whites were bamboozled by the moneyed elite to vote on cultural issues rather than in their direct economic interest. However, Barone counters that is no more plausible than the notion that rich liberals from Park Avenue to Beverly Hills have been bamboozled to vote the opposite way on similar issues rather than for those who would extend the Bush tax cuts. 


The conclusion Barone offers is simple. People are entitled to base their vote on the things they think important. They do not always vote just to maximize their short-term income. For many political analysts, politics is supposed to be about who gets how much when, and people with modest incomes should be eager to take as much from the rich as they can get. Conservative writer David Frum has made the same point and has said that Republicans must come up with policies that will raise ordinary people's incomes if they hope to win.


His basic point is that people are capable of voting in terms of what they think of as the national interest, rather than what may benefit them in the short term. 

As Barone sees it, the recoil in 2010 against the Obama Democrats' vast expansion of the size and scope of government seems to have a cultural or a moral dimension as well. It was a vote, as Washington Examiner writer Timothy P. Carney wrote last week, expressing "anger at those unfairly getting rich -- at the taxpayer's expense." Those include well-connected Wall Street firms like Goldman Sachs that got bailed out and giant corporations like General Electric that shape legislation so they can profit. They include the public employee unions who have bribed politicians to grant them pensions and benefits unavailable to most Americans.

At some level, many citizens think that a government intertwined with the private sector inevitably picks winners and losers. It allows well-positioned insiders to game the system for private gain. It bails out the improvident and sticks those who made prudent decisions with the bill. Modest-income Americans think this is wrong. They want it fixed more than they want a few more bucks in their paychecks.

Home Mortgage Crisis 2011

Bruce Bialosky, in his February 21, 2011 article, discusses the ways in which the home mortgage crisis has changed recently. However, he also discusses some of its history. It goes back to 1999, during the Clinton Administration. Andrew Cuomo, the Secretary of Housing and Urban Development (HUD), wanted to expand homeownership among the lower-middle class and to inject about $1 trillion into the housing market. Of course, the only way to get the loans into the hands of these individuals was to lower the lending standards.

Bankers and Wall Street types rarely overlook an opportunity to make some extra Franklins. The Feds said they wanted these loans and they were going to underwrite them, so why not make them happy and rake in some fees? Why wouldn’t they write loans to the new standards when Fannie Mae and Freddie Mac were going to assume all the risk? Not a chance they would pass on that. Gradually, the market for these lightly documented loans expanded, and eventually everyone was getting into this easy money game.

Builders kept on building because people kept on buying. More permits were issued and more towers were built along the South Florida coast. The units were selling, so they kept on building until the merry-go-round stopped. The market was predicated on prices continuing to rise, but then people started to realize the obvious: even the heartiest trees don’t grow to the sky. It was a pyramid scheme where the last player got stuck.

Ultimately the market reversed, and housing prices have dropped for the last four years. We have been waiting for the Feds to come up with a plan – a smart plan to end this downward spiral. They came up with politically oriented ideas, like putting foreclosures on hold, a plan that forestalled the inevitable. Some people stayed in their homes an extra six months, and the taxpayer picked up the tab for the bank.

So here is the Feds’ master plan: Let’s make it almost impossible to get a home loan. So, we are now going to stifle the buying market while it is being flooded with more product. The idea was to not only strengthen lending standards, but make them tougher than anyone can remember! Not only are higher down payments required, but borrowers now have to complete an endless cycle of ridiculous paperwork just to apply for a loan. Remember that the Feds – through Fannie Mae and Freddie Mac – are buying 90% of the loans, so they set the rules.

One helpful book on this topic is Thomas Sowell, The Housing Boom and Bust.

Wisconsin Demonstrations Feb 2011

All of us have friends who are "public employees." What is happening in Wisconsin is of concern to us all. The purpose of this brief note is to try to focus on "facts," rather than offer opinion.

State government workers in the Badger State pay small amounts for generous taxpayer-subsidized health benefits. Faced with a $3.6 billion budget hole and a state constitutional ban on running a deficit, new GOP Gov. Scott Walker wants public unions to pay a little more. He has proposed raising the public employee share of health insurance premiums from less than 5 percent to 12.4 percent. He is also pushing for state workers to cover half of their pension contributions. To spare taxpayers the soaring costs of union-negotiated work rules, he would limit Labor's collective bargaining power to cover only wages unless approved at the ballot box.

As the free-market MacIver Institute in Wisconsin points out, the benefits concessions Walker is asking public union workers to make would still maintain their health insurance contribution rates at the second-lowest among Midwest states for family coverage. Moreover, a new analysis by benefits think tank HCTrends shows that the new rate "would also be less than the employee contributions required at 85 percent of large Milwaukee_area employers."

Michelle Malkin thinks of this as a modest proposal for shared sacrifice that has triggered wrath. Many of the protesters are from other states. I have seen posters that paint the governor as another Hitler. Some of the posters have the governors face in the "cross-hairs." From the perspective of the governor, everyone else is experiencing cuts, and the state employees need to share in that. 

Comments on Obama Budget for 2012

I have collected a few comments I find worthy of consideration as the citizens of this country ponder the budget for 2012, the debt, and the deficit. 

In Obama's first two years in office, he (and his Congress, of course) increased federal spending by nearly 30 percent over fiscal year 2008 and added $3.5 trillion in new debt.

Erskine Bowles, the Democrat whom Obama appointed as co-chairman of his fiscal commission, said the budget goes "nowhere near where they will have to go to resolve our fiscal nightmare."

The Washington Post and The Atlanta Journal-Constitution, both historically liberal newspapers, say he "punted" on the budget and "kicks the hard choices further down the road" (Post) and the projected deficit "would be larger, in inflation-adjusted dollars, than any deficit between 1940 and 2008" (Journal-Constitution). The proposed spending cuts in the budget are, according to Investors Business Daily, "beyond absurd. The expected deficit this year alone ... is greater than all 'deficit cuts' Obama has in 10 years."


"I don't need to tell you what I think of the budget: It's disastrous," wrote Atlantic economics blogger (and Obama voter) Megan McArdle. "I'm starting to think it's time to panic."

The New Republic's Jonathan ("I hate George W. Bush") Chait headlined his comment, "Why Obama's budget is OK." He thinks it might be a successful political ploy.

In his Tuesday press conference, Obama was reduced to calling for "patience" and saying he wanted to have an "adult conversation" with Republicans on entitlement spending.

Rep. Jim Jordan (R-OH), chairman of a Republican Study Committee made up of economic and socially conservative members, told me over breakfast Tuesday, "the $1.1 trillion savings claim made by the president over 10 years is nothing. This year's deficit is $1.5 trillion."

Obama's budget increases 2012 deficit by a third. This budget produces a $1.1 trillion deficit for 2012. This deficit is 33 percent higher than his 2011 budget projection, which targeted the 2012 deficit at $828 billion. This higher 2012 deficit is equivalent to $3,217 per person in the United States (based on the U.S. Census Bureau's population clock).

“The program (Social Security) is expected to grow from 4.8 percent of GDP today to nearly 6.1 percent in 2030,” a recent CRFB report calculated.

Meanwhile the retirement of the baby boomers means that Medicare enrollment will grow from 47 million to 80 million over the next two decades – creating yet another cost crunch. Currently representing 3.6 percent of GDP, Medicare will consume 5.1 percent of GDP in 2030 according to a recent report published by the Kaiser Family Foundation.

Beyond these twin behemoths is the explosive growth of Medicaid – the state health care system – which saw its ranks swell by more than 6 million during the first two years of the recession. According to a recent survey of state health care directors, Medicaid spending grew by 8.8 percent in 2010 – well above the projected rate of 6.3 percent and the highest rate of growth in eight years.

The Congressional Budget Office estimated earlier this month that interest payments on the national debt alone will consume $5.5 – $6.8 trillion over the coming decade.

Ronald Reagan - 100th Birthday

Friends:
I have long had admiration for President Reagan. Today, he would be 100 years old. I have listened to two speeches today, and I invite you to listen as well. They illustrate the consistency of the Reagan message over the years. For those who, like me, continue to honor his message, they illustrate why. For those who dislike Reagan, they also illustrate why.

One speech is the "Goldwater" speech, his "A Time for Choosing" speech. I invite you to listen. It lasts for 29 minutes.
http://www.youtube.com/watch?v=qXBswFfh6AY

The second speech, toward the end of his presidency, was in Germany, in front of the Berlin Wall. He famously said to Mr. Gorbachev, "Tear down this wall."
http://www.youtube.com/watch?v=5MDFX-dNtsM

He was also known for his humor. Here is a book you might enjoy:
The Wit & Wisdom of Ronald Reagan

I honor his memory today.

Pondering Judge Roger Vinson’s opinion in Florida v. Health and Human Services

Judge C. Roger Vinson was nominated by President Reagan in 1983 to the US District Court in Florida. Vinson began his opinion in Florida v H.H.S by establishing the intent of the Commerce Clause of the Constitution. He explained that the clause was added to make certain that the states did not engage in trade wars with one another, and to promote the free movement of goods between and among the states. But over time, our courts began to interpret the commerce clause more liberally. In fact, the attorneys for the federal government advanced some novel legal reasoning for the individual mandate. They argued that failing to buy insurance was itself an act of interstate commerce. I find it rather amazing that a reasonable person can advance the argument that not buying somehting is commercial activity, but there it is.


On page 42 of the opinion, Vinson took that argument apart, and in words we could all understand: 


“If it (Congress) has the power to compel an otherwise passive individual into a commercial transaction with a third party merely by asserting — as was done in the Act — that compelling the actual transaction is itself commercial and economic in nature, and substantially affects interstate commerce, it is not hyperbolizing to suggest that Congress could do almost anything it wanted.”

He then went on to say this in the same paragraph:

“It is difficult to imagine that a nation which began, at least in part, as the result of opposition to a British mandate giving the East India Company a monopoly and imposing a nominal tax on all tea sold in America would have set out to create a government with the power to force people to buy tea in the first place. If Congress can penalize a passive individual for failing to engage in commerce, the enumeration of powers in the Constitution would have been in vain for it would be difficult to perceive any limitation on federal power, and we would have a Constitution in name only. Surely this is not what the Founding Fathers could have intended.”

He then offers what legal scholars call the “parade of horribles.” Vinson wondered what Congress might have in store for us if this expanded view of the Commerce Clause became the Law of the Land. He argued, with his tongue firmly in cheek:

 “Because virtually no one can be divorced from the transportation market, Congress could require that everyone above a certain income threshold buy a General Motors automobile — now partially government-owned — because those who do not buy GM cars (or those who buy foreign cars) are adversely impacting commerce and a taxpayer-subsidized business.”

Presidents come and go rather quickly, some more quickly than others. Judges matter. They are around a long time. The Presidents who appoint them matter. It would indeed be amazing if the courts determined, finally, that the constitution sets limits to what the federal government can do to the American people.