I.O.U.S.A., One Nation, Under Stress, In Debt.

Last night I attended a special screening of a documentary film called I.O.U.S.A. The documentary was produced and directed by the award-winning team of Christine O'Malley and Patrick Creadon. Their most famous documentary is Wordplay which was a hit at the 2006 Sundance Film Festival. It was about the editor of the New York Times crossword puzzle and was the second-highest gossing documentary of 2006 and won several awards.

The screening of I.O.U.S.A. was presented locally by Nashville Public Television and Nashville Public Library as part of the Independent Television Community Cinema. Prior to the screening was a wine and snack reception and following the showing was a group discussion led by a panel of prominent Nashvillians.

Prior to the event, I enjoyed pleasant chic-chat with interesting people along with the wine and cheese and after the showing, enjoyed the lively discussion.

This documentary examines the rapidly growing national debt and its consequences for the United States and its citizens. People interviewed in the film include Warren Buffett, Alan Greenspan, Paul O'Neill, Robert Rubin, and Paul Volcker. I already knew some of what the film presented but did not know just how gloomy of a situation we face. With charts and grafts and historical context, this film put the financial problem of the US’s debt in perspective.

The debt of United States is 8.7 Trillion dollars or about 64% of our 13.5 trillion dollar GDP. The level of debt to GDP however is not the real problem, disturbing though it may be. The real problem is the unfunded obligations for social security and Medicare, which amount to $53 trillion and getting greater all the time. Under the Bush Administration the problem was made much worse due to the passage of the Medicare drug benefit. With budget deficits and recent financial bailouts we are digging a deeper hole daily.

In addition to this enormous debt obligation of the United States, we have a huge trade deficit. Much of America’s debt, unlike in the past when American debt was held by Americans, is held by foreign nations. Also, individual American households are collectively debtors. For most of our history, American households saved money; now, Americans are deeply in debt with more and more people living beyond their means.

This film paints a disturbing picture. At the conclusion of the film you are urged to call your congressman and tell them to “do something.” If I have a criticism of the film, it is that it does not tell you what to tell your congressman to do. I think the film is very good at defining the problems but is short on providing solutions. There are no easy answers. Many politicians call for cutting waste and ending earmarks or ending the war in Iraq. If we did all of this, it would only make a very small dent in the problem. It would only slightly slow the rate at which we are digging a deeper hole; it would not stop the slide into deeper and deeper debt. Cutting current spending will not get us out of this hole.

I am not sure anyone knows what the solution may be. Raising taxes to balance the budget may be counterproductive and actually result in a slowing economy and increase the debt and American would not toleration a repudiation of the benefits promised retiring Americans. With the first of the baby boomers ready to retire starting next year, we face a severe crisis. If we inflate the money supply to meet our obligations, that will also have dire consequences.

If this film event comes to your city, I urge you to go see it. The bad news goes down easier with cheese and wine and in the company of interesting people. Below is a link to a 30-minute version of the film: I.O.U.S.A.

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Bailout like a bad rerun from 1970s

by Ben Cunningham, The Tennessean, November 12, 2008

Fool me twice, shame on me. In 1979, U.S. taxpayers saved Chrysler management from many years of stunningly bad judgment. (link)

Comment

This is a very good article by Ben Cunningham that was published in the Tennessean last Wednesday. Ben is a citizen activist who was the leader a couple years ago of the movement that stopped Tennessee from adopting a state income tax. I belong to an informal organization along with Ben called Right of Center Bloggers. From time to time the group meets to hear from guest speakers and to share ideas. Ben's blog is Taxing Tennessee.

In this insightful article, Ben argues that we should not prop up mediocrity by bailing out the auto industry. Obviously, I agree.

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Socialism? It is already here.

In his column today, “Socialism? It is already here”, George Will makes the point that spreading the wealth is nothing new. That is what any government action does that takes money from some people and gives it to others.

George Will argues, “The supreme law of the land is the principle of concentrated benefits and dispersed costs.” He gives the example of the protectionism provided the sugar industry. “Sugar import quotas cost the American people approximately $2 billion a year,” writes Will, “ but that sum is siphoned from 300 million consumers in small, hidden increments that are not noticed. The few thousand sugar producers on whom billions are thereby conferred do notice and are grateful to the government that bilks the many for the enrichment of the few.”

It struck me as phony that the Obama’s remark about spreading the wealth was treated as if it was a major revelation revealing Obama’s socialist, if not Marxist, ideology. In my post of November 7, “If Obama is a Socialist…So was Ronald Reagan” I made a point similar to what Will makes in his article today. Spreading the wealth is not new.

Will is critical of the conservative’s attempt to pin the socialist label on Omaba. “Hyperbole is not harmless; careless language bewitches the speaker's intelligence.” And he says, “if conservatives call all such spreading by government ‘socialism’, that becomes a classification that no longer classifies: It includes almost everything, including the refundable tax credit on which McCain's health-care plan depended.”

I think Will is right.

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Bush to Declare Martial Law

Generally reading more conservative Blogs and chat groups than liberal blogs and groups, I have tended to think we on the right had a lot of nuts among us. However, in the last couple days I have been exploring the left side of the blogosphere and talk about nuts; the left may have more of the Tinfoil Hat Crowd than we do.

You would think the left would be joyous that they have won the recent election, and most lefties are; however, there is this contingency that really can’t enjoy their victory because they believe that there will be a right wing coup between now and inauguration day. They are really worried about it. They are downright gloomy. Many of them thought it would happen before the election, but now that Bush-Cheney allowed the election to occur, they think it will happen between now and inauguration day.

Type into Goggle “Bush to declare martial law” and you get 257,000 hits! There are whole websites devoted to the topic. Troops are coming home from Iraq. Good news? Nope! They are being brought home to take part in the coup.

Many think that Bush will start a war with Iran and use the unrest that would follow as an excuse to declare marshal law and prevent Obama from taking office. Others think that the excuse will be tied to the financial crisis.

Remember Naomi Wolf? She was the “third wave” feminist who a few years back gained notoriety for promoting the view that a woman’s desire to lose weight and look attractive was evidence of oppression. She is best known perhaps as the consultant to Al Gore who was paid a salary of thousands of dollars a month to tell Al how to appeal to women voters and which tie to wear. Well, Wolf is a big proponent of this view that a coup is imminent. Another person who has been warning of a coming coup is Ralph Nader. Lou Dobbs is also helping spread this fear as are web sites such as Daily Kos and the popular chat group Secular Humanist. I am not going to post a bunch of links or Youtube videos but if you doubt me, do the goggle search for yourself.

The Internet is a wonderful thing, but it does allow the nuts to get together. Those who read nothing but postings from other nuts can feel that they are the only one who possess the truth and know what is really going on. They can feel empowered, being part of what they perceive as a large movement. It can make them think that their nuttiness is normal.

Aware of all the crazies who believed that 9-11 was an inside job, I guess nothing should surprise me. It is disturbing, however, to think that so many people really expect a military coup in America. They don't just think it is possible, they expect it. There is one thing that is reassuring about this: I was concerned about the right-wingers who are stockpiling weapons in anticipation of Obama taking office, fearful that an Obama Presidency would spell the end of a free America and a revolution may be necessary. I was beginning to think the Republican party attracted a lot of nuts and maybe we were the party of stupid people. It is comforting to know that there are just as many, and maybe more, nuts on the other side.

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Republicans win in Tennessee

While Republicans took a beating all across the nation and we lost the Presidency and both houses of Congress, in Tennessee, Republicans won big taking control of both houses of the State Legislature. The Republican win was unexpected. It appears that McCain’s big win in Tennessee helped Republicans running for State House and Senate seats. Primarily in rural areas of the state, Republicans defeated Democrats and picked up seats.

I am delighted my party won. The Republican win probably weakens the Governor’s push to expand education down to the pre-pre-pre-Kindergarten level and means more emphasis on K-12 education. It probably means we are safe from a state income tax for a while. It may mean those Democrats who got jobs and contracts due to party affiliation may loose their jobs and contracts and they will be given to deserving Republicans. It means we will get more buildings, bridges, and roads named after Republicans rather than Democrats. This win will help Republican lawyers. Those who seek favor from the government will fire the lobbyist with Democratic connections and hire lobbyist with Republican connections. We will probably get some meaningless symbolic legislation passed that addresses abortion and gun ownership.

I am concerned, however about one issue that is important to me. With the election of these conservative, religious, rural legislators, does this mean I can forget about being able to buy wine in the grocery store?

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Rod Williams discusses avoiding mortgage foreclosure

On Thursday November 13, I appeared live on the Tennessean's web cast "Lunch Money." I was interviewed by Tennessean Business Editor Randy McClain and discussed the mortgage crisis and how homeowners can work with their mortgage company to get a work out. I outlined the various work out options. It is a 30 minute web cast. Click here to view the program: Link

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Why Bear Stearns but not GM

I reluctantly supported the bailouts in the financial sector but oppose the proposed bailout of the auto industry. I say I “reluctantly” supported the bank bailout because I would have really liked to let those large financial institutions that created the foreclosure crisis pay the price for their greed and bad decision-making and go belly-up. Unfortunately, a financial melt down would not be contained to the financial sector. If credit dries up, the economy grinds to a halt. I think the bank bailouts were necessary but that doesn't mean I liked it.

I know the argument of those who support the proposed auto industry bail out is that if we can bail out the fat cats of Wall Street we ought to bail out the industries that keep American laborers working. If Wall Street deserves a bailout so does Detroit, they will argue. Bailing out the auto industry is keeping Americans working and the economy humming. We need to support the autoworkers and save American jobs.

The counter argument is that the Government is not a rich uncle whom we can keep going back to for more and more money every time we get in trouble. The government cannot bail out everyone. There are limits. If we bail out the auto industry, the airlines, appliance manufacturers, tractor makers, farmers, miners, commercial fishermen, and boat builders will be next in line for us to save their jobs. It has to come to stop somewhere. Stop it now.

I am persuaded by the second argument, but still feel that there is a more fundamental reason why the bail outs in the financial sector may have been proper and the bailouts in the auto industry are wrong. I think it comes down to this: Banking is a more legitimate government concern than manufacturing.

Monetary policy is a basic government function except in the minds of the most extreme market purist. Among the powers given Congress by the Constitution are the powers: “To borrow money on the credit of the United States; To regulate commerce with foreign nations, and among the several states, and with the Indian tribes; To coin money, regulate the value thereof, and of foreign coin, and fix the standard of weights and measures; To provide for the punishment of counterfeiting the securities and current coin of the United States.”

That is long way from saying it is a function of government to prop up AIG or Bear Sterns, but nevertheless it seems that “money” is a government responsibility. To ensure liquidity and prevent a collapse of the banking system appears to me to be a legitimate government function and is fundamentally different than producing goods and services.

In addition to a concern about the legitimate roll of government, it seems that funding the auto industry puts government into the business of picking winners and losers in the economy and makes the government a competitor with everyone who is not getting a government subsidy. GM is not only competing with Toyota for the consumer dollar but they are competing for that dollar against everything else in the market. To prop up GM appears counterproductive to bringing about efficiencies, innovations, and creating wealth. If, when the auto began to replace the horse and buggy, the government had moved in to protect the buggy whip makers, I suspect the government would still be subsidizing the production of buggy whips. If the Big Three cannot produce vehicles American want, why should the government prop them up?

I think ensuring a proper functioning system of money and banking is an appropriate government function; owning the means of production and making decisions about what is produced is not.

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Honor all our Veterans

" Is there something wrong with being a Muslim in this country? The answer’s no, that’s not America. Is there something wrong with some seven-year-old Muslim-American kid believing that he or she could be president?" ~ Colin Powell, Meet the Press, Oct. 19, 2008.

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Would you like to help Veronica get her hot water heater fixed?

Greeting Friends and Family,

A couple years ago several of you contributed money to help me help other people who are in need. I have exhausted all money in this fund and have been keeping it going with my own contributions. If you contributed when I first set up this fund, I am writing to see if you would like to contribute again. If this is the first time I have asked you or if you are reading this on my blog and you feel led to help, I would appreciate it.

Right now I am trying to raise money to help Veronica H___. Every single penny of the money you contribute goes to the person who needs it. There is no administrative cost. About three years ago, I was instrumental in helping put Veronica in a home of her own. Veronica and her two lovely young daughters were living in a public housing project here in Nashville. The apartment she lived in backed up to a row of apartments where just a few weeks before she moved out a young girl was killed when a stay bullet penetrated the wall of the apartment. The young girl who was killed was not a resident of public housing but had went home from school with a class mate and was visiting. A drug deal gone bad resulted in a shoot out and the visiting young girl was killed by a stray bullet.

This was the environment that Veronica H and her daughters lived in. Veronica’s only income is SSDI. Veronica surfers from bi-polar disorder and can not work. Veronica was able to get her home through a grant provided by the Federal Home Loan Bank of Cincinnati. We have had this grant program for three years and have put nine families in homes through this program. The FHLB of Cincinnati provides the money to Pinnacle Bank. My employer, The Woodbine Community Organization, is the non-profit partner with Pinnacle Bank in administering this grant.

This grant program is one of those niche grant programs and is only for people with mental illness. Under this grant, the homeowner is awarded $36,000 toward the purchase of a home. The client must qualify for a first mortgage. They must meet standard underwriting guidelines for housing affordability, debt affordability and credit. The financing must be a 30 year fixed-rate loan and the interest rate must not exceed current FHA rates. Clients enroll in a Homebuyers Club and must attend class for once a month for a year prior to being eligible for the grant.

In the Homebuyers Club the client learns improved money management skills and must repair their credit and save money to contribute at least 1% of the homes value as a down payment. During the time Veronica was a member of the Homebuyers Club, I taught the class.
Veronica would catch a bus to get to the Homebuyers Club and bring her daughters with her. The trip involved a bus transfer. By the time the class was over, the connecting bus was no longer running so I began taking her home. It was only about three miles out of my way, so I did not mind doing it. Over time I got to know Veronica and her daughters.

For those of you have never been to a housing project, it can be another world. One time, I took her home and as I pulled into her street it was like pulling into a war zone. People were running for cover and a police helicopter was circling overhead. There had been another shoot-out. Veronica was kind of nonchalant about it and said there was always something going on.

Veronica was able to qualify for a $40,000 first mortgage, the house payment equaling 32% of her monthly income. She was able to buy a three-bedroom, one-bath brick home in a modest but quite neighborhood. The home was only two blocks form a bus line and she was tingled to death. Her daughters are doing well in school and they attend a local church. Veronica has not been late on a house payment one single time since she moved in. There have been times when her phone was disconnected, but she always pays her house payment.

This grant has made all the difference in the world in Veronica’s life and the life of her children. The problem is that after she pays her house payment and utility bills, and normal living expenses, there is nothing left over for emergencies.

Veronica called me last Wednesday and told me that her hot water heater was leaking and her bathroom sink was stopped up and her washing machine had broken. She has been washing clothes by hand, and I told her she may just have to do that for a while but that I would see that we got the sink unstopped and see if I could raise the money to help her repair the water heather.

I had my friend Mark Thompson, a professional handy man, go take a look at it and see what it would cost to fix the water heater. The water heater must be replaced and will cost $550. If no one else contributes, I will pay for the water heater and Mark will provide the labor for free. However, Veronica is only one of the people that I help in this way.

I have established a fund to help people like Veronica. The fund I have created has been used on other occasions to keep families from losing their home. Those who know me know that I am frugal. I am only going to give money to those who really need it. I am not going to give money to those who are trifling. I am not going to simply subsidize one’s poor choices. I am not going to give money to a lost cause. If giving money to someone simply delays a foreclosure by a month there is no point, but if a small amount of money can keep a family form losing their home and being homeless, I try to do it. The decision of who to help is mine. If you choose to contribute, you can be assured the money will not be wasted or spent frivolously. If you would like to be part of helping Veronica get her water heater repaired and help others like Veronica who are in dire circumstance, I would welcome your contribution.

If you would like to contribute please make your check payable to “The Woodbine Community Organization”. Be sure and write on the check, “Rod Williams Fund”. Mail it to WCO, 222 Oriel Ave, Nashville, TN, 37210. On the outside of the envelope write “Attention Rod Williams.”

WCO is a 501(C) 3 organization. Any contribution you make will be tax deductible. Thank you and God bless you.
Sincerely,
Rod

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The 1% Difference

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It could have been worse

The day after the election the media talked about Obama’s landslide. Some spoke about Omaba’s “mandate.” Many are talking about this election as being a repudiation of the past and a political realignment.

In 1936, FDR beat Alf Landon and won 61% of the popular vote and 98% of the electoral vote. That was a landslide. LBJ beat Barry Goldwater, winning 61% of the popular vote and 90% of the electoral vote. That was a landslide! In the election of 1972, Richard Nixon beat George McGovern winning 61% of the popular vote and 97% of the electoral vote. In 1984 Ronald Reagan beat Walter Mondale winning 59% of the popular vote and 98% of the electoral vote. That was a landslide! Barack Obama won 52% of the popular vote and 67% of the electoral vote. That is not a landslide.

Obama won by a comfortable majority. He did not win a broad mandate from the public. Democrats increased their lead in both houses of Congress but did not win the super majority necessary to ram through a radical legislative agenda. It could have been a lot worse. Republicans must use it judiciously and rarely, but the ability to filibuster can moderate the Senate Democratic majority.

In the House, the Republicans lost seats, but the fiscally conservative Blue Dog Democrats increased their number. Together the Republicans and Blue Dogs can block a lot of the most irresponsible Democratic spending proposals.

I do not see that there was a major ideological shift this election. I think President Bush has been such a poor President that many people simply were voting against the Republican Party as a means of showing their displeasure with Bush. The American public did not suddenly wake up and renounce all they had previously believe and vote for a far left agenda. Certainly, Obama advocated, “spreading the wealth”, but he also promised tax cuts for 95% of the public. Middle class tax cuts is hardly a left-wing agenda item. Despite Obama’s liberal voting record and radical associations, he did not present himself as a revolutionary figure. He presented himself as a steady, moderate, pragmatic, centrist. That is what the public was voting for.

Obama talked about “change” but offered no radical proposals and never defined change. Even his health care proposal is not that radical. He does not call for a single-payer system or nationalization of health care. His health care proposal is to build upon the same system we have now. He would expand health care coverage but would continue the current system of employer provided insurance. While I think he is going to take us further down the wrong road, the public was not voting for a radical departure from what we have now.

His position on the war was not that radical. He promised to be out or Iraq in sixteen months. Unless there is reversal of current trends, most American combat roles would have been completed in sixteen months anyway. The Obama position on the war is a much less radical position than what some of his Democratic primary opponents were offering. Obama did not run on a peace platform. He promised a more aggressive war in Afghanistan, has said he would violate Pakistan’s national sovereignty by pursuing Al Qaeda across the border, and has said he would not permit Iran to obtain nuclear weapons.

While part of his agenda is certainly radical, such as re-imposing the anti-free speech “fairness doctrine”, ended the secret ballot in union votes, and passing several gay agenda provisions, these issues received little prominence during the election. Most people probably did not even care about these issues and were not even aware of Obama’s position.

Given the low popularity of the sitting Republican president, an unpopular war, and the economic meltdown, it is a wonder that Obama did not win by a massive landslide. Prior to the economic collapse in Mid September, McCain was actually leading in the polls. I found that amazing. Obama ran a brilliant campaign and out-raised and out-spent McCain by almost two to one. The surprise in this election is not that Obama won, but that he did not win by the biggest majority in history.

If Obama actually governs as a centrist, I suspect that he will have a successful term in office and his popularity will remain relatively high. However, I suspect that even if he governs as a centrist, his popularity will never again be as high as the day he takes office. I also would not be surprised if Republicans do not retake one or both houses of Congress in two year or at least substantially cut into the Democratic lead.

One of the reasons Obama won by the margin that he did is because of all the newly registered Black voters and young voters. They were swept up in the enthusiasm of being part of a movement and electing the country’s first Black president. They turned out to vote for Obama in large numbers, and a Democratic Congress was elected on the strength of Obama’s coattails. Two years from now it will be difficult to get these new voters back to the polls to reelect the Democratic Congress. It will simply not be as gratifying to vote for your boring congressman as it was to make history and vote for the charismatic Barack Obama.

The other reason, I suspect that the Democratic lead will not hold is that many people voted the way they did because they blamed current office holders for the country’s economic woes and just wanted “change.” I do not think we will have a miraculous economic recovery. The country’s economic problems will not be solved in two years. The President is not Commander in Chief of the economy and the economy does not turn on a dime. I suspect things will get worse before they start getting better and in two years we will probably be in an economic recovery period. However, the public will not be satisfied by the modest improvements and will again blame current office holders. The “throw the bums out” sentiment will again be in play in 2010.

This election was certainly a defeat for Republicans and while there is little to be happy about, I think things could have been much worse. Republicans have a challenge ahead to rebuild the party but I do not think this election spells the end of the Republican Party and I do not think this election represents any kind of radical political sea change.

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