Less a "historic victory" than a Pyrrhic one

President Obama and his Democratic Congress have made history, only not the kind they have in mind. They have become the only president and Congress to enact a leviathan social program altering the life of every American -- against the wishes of those American people, over the threatened opposition of three-fourths of the state legislatures, with not a solitary vote from the minority opposition, and by arcane parliamentary maneuver.
　
When it comes to pass that a Republican unknown wins the special election for U.S. Senate in religiously-Democratic Massachusetts, to replace Ted Kennedy, no less, and after vowing daily to be the 41st vote to kill the Democrats' health-care bills, then it may well and truly be said that the American people do not want this "comprehensive health-care reform."
　
A month after the Massachusetts comeuppance, the CNN poll found just 25 percent of Americans supported the Democrats' health-care bills, to 73 percent who wanted Congress to either start from scratch or quit health-care altogether. And yet within a month of that, House Democrats voted to make the 2,700-page Senate bill the law of the land, and passed a "reconciliation" bill which actually builds on the Senate monstrosity and annexes the entirety of the student loan system to the federal government while they're at it.
　
Three days before the House vote, Obama's job approval rating went net negative in the Gallup poll for the first time, and Congress' approval hit 16 percent, just two points up from the lowest recorded in 36 years of Gallup polling on the question. The day before the vote, the Rasmussen poll of likely voters put Obama's job approval rating at 43 percent; it took five years for George W. Bush to fall so low.

By the time the House vote was called, 38 of the 50 state legislatures had indicated an intent to challenge the new law. And on the day of the vote, the only bipartisanship was in opposition to the new law: 34 House Democrats joined every Republican in voting "nay."

That looks less like a "historic victory" than a Pyrrhic one.
　
The undeniable good that is done by this "reform" could have been written up in a relative few pages and passed with wide margins and popular support the best part of a year ago, and the legitimate, hard-case uninsured could have been accommodated for a fraction of the $1.2 trillion that Obama and his Congress blew on their worse-than-useless stimulus and omnibus bills alone, without upsetting the system for the 80 percent who call themselves satisfied with their health-care as-is. This "comprehensive health-care reform" is something quite apart from help for folks who've fallen through the cracks and a curbing of the odd insurance industry abuse.
　
Obama's own chief actuary for Medicare and Medicaid Services had to report that the Senate bill would raise the price of health-care in America by $234 billion in ten years, that its savings "may be unrealistic," and that there was "a very serious risk" of its new insurance scheme becoming "unsustainable."
　
The Congressional Budget Office ruled the Senate bill would drive the cost of health-insurance premiums "10 percent to 13 percent higher in 2016 than...under current law," that it would lead employers to dump 5 million Americans net from their current coverage, and that even a decade after passage, it would leave 16 million Americans uninsured still, plus 8 million uninsured illegals.
　
The new law includes something called the "individual mandate" -- a legal requirement to buy federally-approved, comprehensive health-insurance, enforceable by the IRS -- which is probably unconstitutional and certainly unpopular, and which Obama attacked Hillary Clinton for proposing in the Democratic presidential primaries.
　
The new law establishes 159 new bureaucracies of all sorts, and hires 16,500 new IRS agents to police the new regime of taxes, regulations, and mandates.
　
The new law is supposed to be paid for by something like $500 billion in new taxes over ten years, plus another $500 billion in cuts to Medicare. And the accounting of the bills is as fraudulent as Enron's. Over $200 billion in spending was moved out of the bills, to be passed separately in what is called the "doctor fix," so as not to be counted in the official Congressional Budget Office scorings, and ten years of tax increases and spending cuts are counted against six years of benefits.
　
And nowhere in those thousands of pages is there any attempt at the obvious, common-sense reforms like opening the health-insurance companies to competition from out of state, enabling bare-bones insurance policies, or restraining the tort lawyers who make practicing medicine in America a legal hazard.

House Democrats passed the Senate bill only on the understanding that their "reconciliation" bill would then be passed in the Senate by 50-percent-plus-one budget reconciliation, to circumvent the Senate's 60-percent threshold, which is without precedent for legislation of this nature and scale, and which is the sort of thing Obama and his party denounced as affront to American democracy until they came to see it as a neat trick for getting their way.
　
It's not until 2014 and later that the new law goes fully into effect; there will be national elections this November and in November of 2012. By having it all their own way, against the national will and around the legislative rules, Obama and his Congress have only hastened the day when a very different government sits in Washington. The Left in America may never be entrusted with such unchecked power again for a generation.

--A slightly earlier version of this published in The Chronicle-Herald, Halifax, Nova Scotia

How kinder, gentler lending caused the Panic of '08

Today it's called "subprime lending," or, if you're of a more Marxist bent, "predatory lending." But back before the bubble burst, it was called "affordable housing." Today it's called "greed" and "corruption," but until the bottom fell out it was progress for "minorities and the poor."

Sloganeering has been a handy stand-in for understanding of this credit crisis. "Crony capitalism," "neocons," "politics of greed," and on and on. That may have been good enough for Soviet poster printers, but it does nothing to explain exactly what happened.

Between 2000 and 2006, the average home price in the United States rose by some 93 percent. It was the good times for that mania of these first years of the 21st Century: house-flipping. A fixer-upper might be bought for $100,000, renovated for $35,000, and re-sold for $200,000. But it was all too far, too fast. Inflation at that rate was insupportable, and the painful but necessary correction started in 2006.

In the boom years of '00 to '06, a fellow who found himself unable to manage his mortgage payments might simply put his house up for sale, and sell it within a few months for considerably more than he had paid for it. And the lender which had approved that bad mortgage was not much bothered by the borrower being a bad risk, so long as there was an out -- a quick turnaround in a market that could only go up.

But then, interest rates returned to more realistic levels. And the other side in the bargain -- the people who buy homes -- decided that home prices were getting to be higher than home values. Buying slowed, and the music stopped in the musical chairs game of moving from home to better home. New home construction slowed. Existing home prices deflated. Then the bad risk borrowers were back on the hook, and started defaulting. And finally the lenders and securitizers found themselves holding "bad paper."

It may fairly be said that conservatives had no problem at all with sellers and lenders playing the housing game and getting rich quick. And until 2007, the Bush Administration often touted the record numbers of home owners, and the new stake in America for millions which that homeownership represented. But there was nothing very conservative or capitalistic about lending to bad risks in the first place. That was a policy of progressives, leftists, and Democrats.

It all started with President Carter's Community Reinvestment Act of 1977, revised and enhanced in 1995 under President Clinton. The progressive set urged and mandated lax lending practices, particularly through Fannie Mae and Freddie Mac -- the two formerly quasi-governmental lending houses which accounted for the largest share of American mortgage holdings. The idea was to open homeownership to the sort of people who had traditionally been shut out of it, for the now clearly sensible reason that they were unlikely to meet their mortgage payments. Bad risks. Or, according to the CRA's supporters, "minorities and the poor."

The election-season fever-dream, that subprime lending was some Bush Administration/John McCain "neocon" ponzi scheme, is perverse. Fannie Mae and Freddie Mac are no friends of conservatives and Republicans. Their address books and campaign contributions skew in the other direction. And as it happens, the Bush Administration proposed that Fannie and Freddie be subject to "the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis," all of five years ago, in September of 2003.

This has been the way. The Administration tried to open domestic oil drilling in 2001 and 2005, when limited supply first started driving oil prices into troubling territory. The Administration made a Quixotic run at reforming Social Security in 2005, trying to move younger Americans off of Social Security dependence before the Baby Boomer retirement tab came due.

And cranky old John McCain was about the most vicious critic of Fannie Mae and Freddie Mac in American public life. In 2005, McCain co-sponsored the Federal Housing Enterprise Regulatory Reform Act, and assailed Fannie and Freddie as monstrosities, exposing the market and the taxpayer to untold risk.

But all these measures were blocked in Congress by a certain party which considers it a Golden Rule that any and every utterance and action by the president and his party must necessarily be wrong, stupid, and bad. The 2003 Bush Administration attempt to regulate Fannie Mae and Freddie Mac was received by the Fannie and Freddie Party as an assault on the poor, and on the good work of those two progressive friends of the little guy. Fannie and Freddie were "not facing any kind of financial crisis,'' and ''the more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.'' That, according to the now-Chairman of the House Financial Services Committee.

The true indictment against the Bush Administration is that they failed to fight and win those political battles, not that they didn't see the trainwrecks coming, or that they supported the status quo. They saw the problems clearly enough. But their proposed fixes were pronounced "dead on arrival," in the words of a Senate Majority Leader, and the Administration invariably dropped the issue and returned to fighting wars, or other more immediate concerns.

The Panic of '08 was not the product of some scam to take from the poor and give to the rich; it was the end result of government-directed "kinder, gentler" lending that spiralled into the stratosphere when it combined with low interest rates and the housing boom. But what's done is done. Now all that's left is to absorb the bad debt and restrict the bad risks -- as the U.S. government is doing -- and let America get back to business. And save the musty Socialist rhetoric for the museums.

Andrew W. Smith

Published in The Chronicle-Herald, Halifax, Nova Scotia

War by Committee, or Commander

“War by committee” is not just a figure of speech. The Continental Congress managed the Revolutionary War literally by committee, and by all accounts made a sufficient hash of it that when the Constitution was crafted in the Revolution’s wake, the new presidency was invested with the power of waging war.

But Congress was also constitutionally empowered in matters of national defense, to authorize and fund war. So, Congressional anti-warriors looking to withdraw from Iraq could move to either repeal their authorization of the war or de-fund the mission. Congressional attempts to determine troop levels or areas of operation, and even to specify which of their enemies the troops are allowed fighting, would seem to be pushing things constitutionally, and, in any event, would draw a presidential veto.

If Congress were to rescind its Iraq Resolution of 2002, the motion would assuredly be vetoed upon arrival at the White House. Congress could override a presidential veto with a vote of at least two-thirds in both the House and Senate, but the Congressional anti-war bloc is still far from that two-thirds threshold in either chamber.

And the de-funding option presents Congress with a Catch-22. Failing to undo its authorization of the war but halting payment for the on-going operations would place Congress in the position of leaving troops in the field but denying them the wherewithal to fight or even defend themselves. The number of Congressmen prepared to cast such a vote at present does not amount to 51 percent.

Plus which, for all the popular discontent over the war, support for simply de-funding it is in the single digits, according to an April 13 CBS News poll: 9 percent.

Congressional antagonism toward war efforts and war-time presidents is practically as old as the institutions themselves. As the president is commander-in-chief, and as the presidency and Congress are so often held by different parties, Congress can easily wind up as the anti-war branch of the U.S. government.

Only eight years ago, President Clinton launched the Kosovo War with NATO, but without Congress. Twice, a declaration of war resolution was rejected by Congress, as was even an authorization for the on-going air campaign. 26 Congressmen challenged the president’s war in court as unconstitutional for lacking Congressional authority. Nonetheless, Congress actually over-funded the war appropriation and authorized the use of U.S. troops for the post-war occupation.

The Vietnam War was a constitutional chess match between the legislative and executive branches. President Kennedy began the American intervention without Congressional authorization. The operation became full-scale war under President Johnson when he orchestrated Congressional approval for the escalation, which Congress revoked seven years later.

During the Nixon Presidency, Congress invoked its power of the purse to de-fund “combat operations” in the region, although by that stage the American military effort had effectively ended. Of more practical consequence was Congress’ de-funding of the native resistance in South Vietnam and Cambodia, which assured Communist victories and the exodus, abuse, and slaughter of literally millions who had opposed the Communists, or were deemed anti-Communist, in those countries.

The president exploited his power of shifting Congressional defense allocations, to fund operations in Cambodia and Laos which Congress had not provided for, and Congress exploited its power of ratifying treaties, to void agreements the President had negotiated with North Vietnam.

Two decades earlier, President Truman went to war in Korea citing a United Nations resolution and bypassing the Congress. In the 1950 midterm elections only months later, the president’s party lost 52 seats in the House and eight in the Senate. Divisions in the new Congress precluded a concerted legislative challenge to the war, though there was rancorous rhetoric enough. And when the great Gen. Douglass MacArthur gave his immortal Farewell Address after rebelling against Truman so flagrantly that the president was compelled to dismiss him, it was to a rapturous U.S. Congress.

President Wilson had campaigned in 1916 on keeping America out of the First World War, only to lead the nation into the war and institute a draft the following year, and a scant six days before the Great War ended in November 1918, the President’s party went from majority to minority in both the House and Senate, the latter having the Constitutional responsibility for ratifying treaties. So when the post-war Versailles Treaty -- which was very largely the doing of President Wilson and which included American membership in the League of Nations -- came before the hostile U.S. Senate, it was rejected. Twice.

And that is to say nothing of the constitutional confrontations over war before the 20th Century.

With the return to a Congress and presidency divided by party after last year’s midterms, Capitol Hill and the White House have assumed their accustomed adversarial roles, though there are some more novel twists this time around, like the House Speaker arrogating an executive diplomatic role in the Mideast. The balance can always tilt, and politics never stands still, but realistically, Congress today has little chance of reversing the Iraq policy in this latest showdown between the legislative and executive.

Andrew W. Smith / Andrew Smith, Tulsa, Oklahoma and Cape Sable Island, Nova Scotia
Published in The Chronicle-Herald, Halifax, Nova Scotia