Tocqueville as Prophet

“The American Republic will endure until the day Congress discovers that it can bribe the public with the public’s money.”

Alexis De Tocqueville, Democracy in America (1835)

Last week the economic central planners at the Federal Open Market Committee (FOMC) of the Federal Reserve Bank issued a statement tempering their previously optimistic forecast for recovery from the “Great Recession”.  In its statement, the Ben Bernanke led FOMC indicated that the weakening recovery has made it necessary for the Fed to keep interest rates at “exceptionally low levels…for an extended period”.  Additionally, the FOMC stated it will change course.  Instead of shrinking its historic $2 trillion balance sheet, the Fed will reinvest money from maturing mortgage bonds to buy up more assets (notably government treasury bonds).  All of this will be done in an effort to further stimulate the markets to recovery.

No one doubts that something needs to be done to reverse the downward spiral that our economy is once again taking.  After all, consumer confidence is down, factory orders are down, the real unemployment rate which takes into account discouraged and underemployed workers is still north of 16 percent, Food stamp usage has skyrocketed to a record high of 40.2 million recipients, and  Bank repossessions and foreclosures are still a massive problem.  No, nobody doubts that something needs to be done, but that something should not be more of the same that got us into this mess in the first place and is keeping us in it in the second.

Now, I would not question the intelligence of anybody on the FOMC.  Bernanke and his comrades are smart folks.  They all have fancy degrees and have spent years on Wall Street and/or in the government cutting their teeth becoming seasoned economists and financiers.  They certainly are not “wet behind the ears” as is said in the business.  So then if it is not mental ability maybe it is motives that drive the FOMC members to pursue what appear to the reasonable layman as an insane policy.  Let’s analyze the situation further by looking at historical examples.

Faced with double digit inflation and an unemployment rate of 11-12 percent in the early 1980’s, then Fed chairman Paul Volcker did exactly the opposite of what our current Fed commander has done.  He raised money market rates to 19 percent.  It was painful at first, but in the long run the policy broke the decade long grip that stagflation had on our economy and ushered in a decade of solid economic growth.

Then we can point to Japan’s horrible experience with “quantitative easing” in the 1990’s as another example for objecting to the FOMC’s lamebrain policy.  Japan’s financial meltdown in the early 1990’s like ours this time was caused by government induced easy money and real estate speculation.  Once the bubble popped the Japanese powers that be pursued a policy of massive fiscal stimuli, propping up of insolvent banks, and discriminatory credit allowances. Sound familiar?  All in all, in the decade of the 1990s Japan passed 10 fiscal stimulus packages worth more than 100 trillion yen.  Instead of curing its economic ills the spendthrift policy led to what is now known as the “Lost Decade” in Japan.  In fact, many economists claim Japan has still not recovered.

Of course, Bernanke will make up excuses why the same policy he is pursuing for the U.S. didn’t work for Japan but will work for us.  Actually, all he really has to do is reference noted Keynesian economist Paul Krugman who says both Japan in the 1990s and the U.S. today simply did/have not spent enough to stimulate their respective economies.  Unfortunately for Bernanke at least two of his underlings don’t buy the argument.  In March of 2009 Timothy Kehoe, Edward Prescott of the Minneapolis Fed and a team of 24 economists from around the world published a report indicating that it is the “overreaction” by government which “prolongs” and “deepens” economic downturns.  In fact, if you look at the three crisis in the last 100 years where government has overreacted the most (the Great Depression, Japan’s Lost Decade, and our current crisis) they are also the longest lasting.  This is a fact that seems to solidify Kehoe and Prescott’s conclusion.

Lastly, the U.S. government has tried quantitative easing and Keynesian economics to solve our most recent troubles for close to 3 years now.  When the “Great Recession” began in December 2008 the national debt was a little over $9 trillion.  As I write this article, our debt is more than $13.3 trillion.  And this doesn’t count the trillions of dollars in easy credit doled out by the Fed to induce banks to loan again.  The longevity and size of the effort can only make one wonder about the motives of the FOMC to pursue more of the same.  Could it be that we are missing some information only available to the Fed?  Or could it be that Tocqueville was correct when he prophesized that Congress would discover that it can bribe the public with the public’s money.  We are talking about the Federal Reserve but who chartered the Fed and refuses to audit its books – Congress.  What’s unknown, given our current circumstances, is how much longer our republic can endure?           

Article first published as Tocqueville as Prophet on Blogcritics

Calderon is a Welfare Pimping Hypocrite; Congress is out of Touch

Mexican president Felipe Calderon used his state visit to the United States this week to lambaste Arizona’s new self-defense, anti-illegal immigration legislation and the 2^nd Amendment to our Constitution.  Speaking before a joint session of Congress, no less, the Mexican leader criticized the new Arizona law because it “criminalized migration and could encourage discrimination” against Mexican “citizens”.  He also blamed U.S. gun laws for the increase in violence in his country.  For his remarks Calderon was given a standing ovation by more than half the members of Congress.  By allowing Calderon to use such a privileged forum as a joint session of Congress to lambaste our laws and to applaud him so loudly, Congress has once again shown how demagogic it is and how far out of touch from the American people it has become.

In the first place, the Arizona law is a good one.  It allows law enforcement to stop suspected illegal aliens only if they are suspected of breaking some other law.  This happens every day in America.  Police stop a motorist for speeding or because a headlight is out, they check the tag number and the next thing you know a different crime has been detected.  The state of Arizona is also providing further safeguards against violations of civil rights by ordering the state’s law enforcement licensing agency to mandate a training course on how to implement the law without violating civil rights.  Lastly, according to Jack Cafferty of CNN, parts of the Arizona law are word for word the same as the federal immigration statutes on the books.  Thus, in his criticism of the law, Calderon was way off base and members of Congress who rose to their feet to applaud his remarks were also showing their ignorance.  But, what can we expect from a legislative body that doesn’t read its own bills let alone those of other bodies?

Secondly, Calderon is nothing more than a welfare-pimping hypocrite.  He supports all types of migration to the U.S by his people because more than $17 billion is sent back to Mexico each year.  This amount that migrant workers, some of them illegal aliens, send back to their families in Mexico is more than the total amount of direct foreign investment in the country.  Calderon appreciates having this side welfare program sponsored by American business to prop up his economy.  Of course, Mexico also enjoys welfare courtesy of our state and federal government.   Billions are spent each year in the U.S. that doesn’t have to be spent in Mexico to educate, medicate, and incarcerate illegal aliens.  It is no wonder Calderon went all out in criticizing the Arizona law since its enforcement may cost his regime a bundle in the long run.

But, that is not all.  Calderon is also a hypocrite.  Amnesty International has reported that illegal immigrants on their way through Mexico to the U.S. from Central America regularly face beatings, rape, and even murder at the hands of the Mexican people.  What’s worse is that evidence has been uncovered linking government officials at various levels to these crimes.  Perhaps Calderon should tend to the problems in his own country before criticizing ours.

And boy does he have problems in Mexico.  Thing is, he made them himself.  Since his intensified war on drugs was instituted in December of 2006 close to 23,000 people have been killed in Mexico in drug related crimes.  The victims include judges, police, politicians, and a U.S. Embassy family.  The really bad part is that Calderon’s war is spilling over our southern border with Mexico and is already responsible for numerous kidnappings and the murder of at least one American.  Thus, there can be no question that Arizona is justified on the grounds of self-defense to enforce the new anti-illegal immigration law.  Recent polls indicate that more than a majority of Americans agree.  Again, Felipe Calderon should clean up the mess that he caused in his own country before he comes to America and criticizes ours.

Getting back to America, Article 4 Section 4 of the U.S. Constitution guarantees each state that the federal government … “shall protect each of them against invasion.”  Arizona and other states of the southwest are under attack from illegal aliens from Mexico and other parts of Latin America.  This is yet another provision of the Constitution that Washington has ignored for too long.  Members of Congress can use demagoguery to defame Arizona’s law all they want.  Rep. Yvette Clarke (D-N.Y.) can claim the statute is “akin to apartheid” and Rep. Jared Polis can proclaim the law was like Nazi Germany.  The bottom line is that Americans are in danger in Arizona and Washington doesn’t seem to care.  Arizona acted justly in its own self-defense.  Outrageous remarks and especially inviting the welfare pimping hypocritical president of Mexico to lecture Americans on the errors of our ways is just another indication of how far from reality this Congress has become.       

Article first published as Hold DN: Calderon Is a Welfare-Pimping Hypocrite and Congress Out of Touch  on Blogcritics.

Why the Constitution Matters in Military Affairs

Week after week it’s easy for me to blog with compelling arguments that most things Congress does is unconstitutional.  But, up until about two years ago with the advent of Ron Paul’s Freedom Revolution and last year’s birth of the Tea Partiers, most Americans would have said, so what if something is unconstitutional?  That document is outdated and irrelevant.  These are modern times with issues unimaginable to the Founders.  Nonsense, the eternal truths contained in the U.S. Constitution are as relevant today as they were in the 1700s.

Take making war for instance.  Article 1 Section 8 gives Congress, not the president, the power to declare war.  In that same section, Congress has the power to finance the endeavor.  Since the end of World War II, the clause pertaining to declaring war in the Constitution, like many others, has been almost totally ignored by both the Congress and president.  Additionally, Congress has rarely if ever invoked its power to restrain presidential power by controlling the purse strings of the military during times of war.  The consequences have been horrendous. 

In the 1960s and 1970s it led to an 11 year war in Southeast Asia.  Instead of a declaration of war the military action was justified on the basis of the Gulf of Tonkin Resolution passed in 1964.  The resolution gave President Johnson the authorization to do whatever was necessary in order to assist “any member or protocol state of the Southeast Asia Collective Defense Treaty.”   This vague and open ended wording led to much criticism of the president and his Secretary of Defense over how they conducted the war.  Specifically, President Nixon’s expanding of it to include the bombing of Cambodia made an already unpopular war almost an event that tore the country in two.  It also led to over 50,000 American and countless Southeast Asian lives being lost.  The conflict ended in defeat for the U.S. and spending for the war caused high inflation which hurt American households, facilitated our manufacturing base to move overseas, and eventually brought on problems like the Savings and Loan crisis.

In current times we find ourselves mired in two conflicts in Afghanistan and Iraq.  To be sure, Congress did not declare war in either circumstance.  For Afghanistan, it passed a resolution authorizing the president to use all “necessary and appropriate force” against those whom he determined “planned, authorized, committed or aided” the September 11th attacks, or who harbored said persons or groups.  For Iraq, the resolution authorized the president to use the Armed Forces of the United States “as he determines to be necessary and appropriate” in order to “defend the national security of the United States against the continuing threat posed by Iraq; and enforce all relevant United Nations Security Council Resolutions regarding Iraq.”

It seems like Washington never learns from its mistakes.  Again, loosely worded resolutions instead of firm declarations with a narrow objective allowed President Bush to abuse his powers by spying on Americans, holding prisoners at Guantanamo Bay indefinitely, and expand the bombing to include other countries other than Afghanistan and Iraq, namely Pakistan.  In addition to over 1 million Iraqi and Afghani deaths from the main theaters of war, 1 in 3 people killed in the expanded bombings of Pakistan have been civilians. 

Because Washington has not followed the eternal truth that war should be entered into and conducted carefully, our government is primarily responsible for the destabilization of the Middle East.   It doesn’t take a rocket scientist to understand that because of the threats of invasion that came from the previous administration and with American military might all around it Iran is attempting to acquire nuclear weapons.  Even though Saddam was a vile and ruthless tyrant his Iraq acted as a counterweight to Iran.  Today, Iraq is in chaos and if U.S. forces do ever leave it will be ripe for a takeover by Islamic extremists.

A Republican Congress unfortunately did not deny George W. Bush the ability to launch an unjust war on Iraq based on lies, misinformation and his desire to avenge Saddam Hussein for allegedly sending a hit squad to assassinate his father.  One man made the decision to start the war in which Americans would die and hundreds of billions of dollars would be spent.  This was not the intent of the Founders who were wise enough to give the powers of declaring wars and financing them to the Congress.  The Founders gave them to Congress because it is a deliberative body that represents the many viewpoints of Americans.  These viewpoints, like in the enactment of laws, place a check and balance on the solitary power of the president.  Congress has abdicated this constitutional power and consequently has propped up an imperial presidency – something the Founders, other than Hamilton and Adams, would have vehemently rebelled against.

In 2006 the Democrats took back control of Congress with a pledge to end the wars in Afghanistan and Iraq.  For a time there was hope that they would restore the constitutional balance of power in war making. They simply could have done this by cutting funding for the wars.  But instead, Congress continues to finance the wars and in fact has gone along with President Obama’s wishes to continue funding bombings in Pakistan and to escalate the war in Afghanistan – so much for the hope that Congress would exert control over the powers granted to it and rein in the powers usurped by the president.

Wars are costly both in terms of human life and monetary expense.  Unless an attack on U.S. soil is imminent, Congress must retain its constitutional power to declare war and use its authority over funding it to limit the president’s actions.  By not following these constitutional mandates we have become a militaristic society almost constantly at war in adventures far beyond what the Founders envisioned.  This has caused a drain on our families, our finances, and our country’s reputation in the world.  Fortunately, many Americans are finally waking up to this reality.