FreedomTalks

FreedomWorks writer Joseph Onarati has a great piece up on our website about the history of the financial panic of 2008. CLICK HERE to read it.

To understand today’s financial crisis, you must understand the long history of government interference and subsidies for housing and housing debt.

Since the New Deal, the federal government has passed law after law attempting to shape U.S. housing markets. The U.S. today compels banks to lend to risky borrowers, skews the cost of housing debt and benefit of housing-related capital gains through the tax code, and operates several enormous government lending programs and taxpayer-backed corporations.

The net result is a wild, multi-trillion dollar overinvestment in America’s housing stock, the encouragement of dangerously overleveraged consumers and banks, and a massive new tab for taxpayers. The market is currently trying desperately to correct government-created housing bubble, but the federal government’s response is to actually expand the government intervention that created the problem.

Since I wrote about the Metro asking for a bailout and noted that there were at least some flagging industries that still hadn’t asked for a bailout, to no surprise to anyone, that has changed.  Newspapers have indeed started asking for their handout because without newspapers, according to people who have never heard of the internet, citizens would have no idea what was going on.  Michelle Malkin has been watching the ridiculousness unfold over on her blog.

Even as Big Government wades further and further into the private sector, increasing numbers of public entities want their piece of bailout pie as well, as if they didn’t already get our tax dollars every other day of the week.  First it was the states, then cities, and now, public schools.  The Miami Herald reports  “Miami-Dade schools chief Alberto Carvolho: Schools deserve bailout, too” (h/t Beyond Bailouts).

With the state facing a potential $1.4 billion tax shortfall, Miami-Dade Schools chief Alberto Carvalho called on the federal government to consider a bailout for the nation’s public schools.

”The question in my mind is this: At a time when we’re continuing the bailout of key industries, at what point do we have a bailout of public education?” asked Carvalho.

Ironically, public schools share some problems with their fellow bailout-wannabes in the Big 3, namely, problematic union contracts and poor quality.

Teachers unions require ever higher taxation to pay high salaries based solely on seniority, while at the same time they spend dues not on improving education as promised, but on their political agenda. And myriad other practices, like tenure that makes firing poor teachers almost impossible, mirror the UAW’s infamous job banks.

While the Big 3 refuse Chapter 11, arguing that consumers won’t buy cars from bankrupt manufacturers, parents shouldn’t still be forced to send their children to what are basically bankrupt public schools.  Encouraging school choice is a great solution to the financial woes of public schools where funding follows the children and with it comes accountability.

Here are two great stories of where school choice improved not just student’s futures, but also the public school districts themselves:

• Milwaukee

• San Antonio

Just as Chapter 11 bankruptcy would actually be a good deal for the Big 3 - giving them the time to reorganize and the space to get out from under some crippling contracts - the best solution for public schools is less government and more choice.

I’m heading home for Thanksgiving, but in the meantime, here are some essential reads:

• “Bailout on Wheels”: George Will

In the 1994 elections, Republicans ended 40 years of Democratic control of the House of Representatives. So in 1995, a vice president of Fannie Mae wrote a letter to Ed Crane, president of the Cato Institute, saying that Fannie Mae intended to give that libertarian, free-market think tank a $100,000 grant

• “FDR’s Policies Prolonged Depression by 7 Years”: UCLA Newsroom (H/T Carpe Diem), and especially precient in light of this and this.

“Why the Great Depression lasted so long has always been a great mystery, and because we never really knew the reason, we have always worried whether we would have another 10-to 15-year economic slump,” said Ohanian, vice chair of UCLA’s Department of Economics.  “We found that a relapse isn’t likely unless lawmakers gum up a recovery with ill-conceived stimulus policies.”

In an article in the August 2004 issue of the Journal of Political Economy, Ohanian and Cole blame specific anti-competition and pro-labor measures that Roosevelt promoted and signed into law June 16, 1933.

• “No Detroit Bailout”: FreedomWorks President Matt Kibbe

Recession is like nature’s wildfire: It cleans out the deadwood from the economy. The Big Three will survive only as auto companies, not employee benefit organizations propped up with taxpayer money.

After a successful reorganization—not a bailout—the Big Three (or two, by that point) will be able to escape the past and emerge as competitive companies. Chapter 11 might be the last shot for the Big Three to credibly claim it is a new day in Detroit and to win back the faith of the consumer.

President-elect Barack Obama is proposing a staggering $500 to $750 billion federal government spending spree when he takes office to “fix the economy.” He is promising to add or save 2.5 million jobs by 2011 with this FDR-style monstrosity. My only thoughts at this point are, “Well, it didn’t take long for him to overreach.”

Obama is not even the president yet, and he is already setting himself up for failure by setting the bar on jobs and economic recovery extremely high. He is also about to make the same mistake that other politicians, like FDR and LBJ have made. Namely, the belief that federal spending increases will create real economic growth. If anything, this spending will simply grow the size and scope of government, put people to work in inefficient sectors of the economy and add to our already booming deficits.

If the Blue Dog Democrats in Congress want to maintain any credibility whatsoever, they will have to stand up to the president and work to prevent the looming trillion dollar deficit next year. But if they get their way and “pay” for the spending with new tax increases, that will sink the economy. It’s a lose/lose situation however you slice it for liberals. Their antiquated and failed ideas for dealing with the economy are about to be exposed once again. It’s just sad that so many people bought into the hype, without thinking about the consequences of liberalism’s ascendancy in Washington.

I’m finally relaxing after a full day of organizing volunteers and doing some GOTV in the Georgia Senate runoff election between Saxby Chambliss and Jim Martin. I was greatly impressed with the dedication and hard work of the conservative activists I met with this weekend. Although they fear what the liberals in Congress and the White House will do next year, they understand the importance of getting more involved now to rebuild the conservative movement from the ground up.

Early this morning I met with some volunteers in the Buckhead neighborhood of Atlanta, where we kicked off a brand new chapter. I have high hopes for this group. They have already shown great promise, heading straight from the meeting to do GOTV in their neighborhood. FreedomWorks volunteers will put out more than 85,000 pieces of campaign literature leading up to election day on December 2nd! Our voice will be heard among the cacaphony of liberal groups that have made their way to the state these last few weeks. The labor unions, Obama activists and MoveOn.org have been doing their own GOTV, which makes it so much more important for advocates of freedom to do our part.

The right can learn a thing or two from Obama’s community organizing concepts. Leftist organizer Saul Alinsky’s books should be required reading for all conservative activists. We still have a long way to go before we can effectively compete on the ground with the unions, ACORN and other left-wing groups. We have the numbers, but we don’t have the organizational methods down yet. But if all goes according to plan, we will soon. More to come on that in future posts.

Yesterday, House Republicans rejected a motion by Minority Leader John Boehner and new Minority Whip Eric Cantor to enact a short-term earmark moratorium only through February 16.  Unwilling to give up their pork just for three short months, Republicans can hardly try to pin the Big Spenders label on Dems, like they did earlier this year.

Former Minority Whip Roy Blunt’s words last winter sound more than a little hollow now:

“It is regrettable - though, sadly, not surpring - that Democrats have once again rejected the American taxpayers’ calls for reform.  Republicans know what our constituents have been saying is true: Washington is broken, and we can take a giant step to regain the trust of the American people if both parties come together to fix the earmark process.

“With our vote today, Republicans demonstrated our desire for change and our commitment to get it done.  Democrats, unfortunately, demonstrated their contentment with the failed status quo.”

If Republicans want to set themselves apart and show a “desire for change” they could start by taking the earmark problem seriously.

Rep. Jeff Flake of Arizona understands the urgent need for oversight and reform of the earmark process and is once again standing up for a position on the powerful House Appropriations Committee.  So, once again, FreedomWorks is calling on the House Steering Committe to Make it Flake and put this reformer where he can do the most good.

Proponents of funneling another twenty-five to fifty billion of taxpayer dollars to the failing U.S. auto industry justify their support by carping about potential job losses that would follow Chapter 11 filings.  Thankfully, people like Dartmouth associate dean and professor Matthew Slaughter understand that a short-sighted bailout would be far more harmful to our economy long-term, likely resulting in even greater future job losses.  In today’s Wall Street Journal, Mr. Slaughter points out that continued bailouts will result in decreased foreign direct investment (FDI) in the United States:

The first global cost of a bailout could be less foreign direct investment (FDI) coming into the United States

Across all industries in 2006, insourcing companies registered $2.8 trillion in U.S. sales while employing 5.3 million Americans and paying them $364 billion in compensation. But as the world has grown smaller, today the U.S. faces increasingly stiff competition to attract and retain insourcing companies. Indeed, the U.S. share of global FDI inflows has already fallen. From 2003-2005 the U.S. received 16% of global FDI. That’s down from 31.5% it received in 1988-1990.

Will fewer companies look to insource into America if the federal government is willing to bail out their domestic competitors?

The answer is an obvious yes. Ironically, proponents of a bailout say saving Detroit is necessary to protect the U.S. manufacturing base. But too many such bailouts could erode the number of manufacturers willing to invest here.

He also gives us some insight into the auto industry:

On Sunday, President-elect Barack Obama asked, “What does a sustainable U.S. auto industry look like?”

Well, it looks a lot like the automotive industry run by “foreign” car companies that insource jobs into the U.S. In 2006 these foreign auto makers (multinational auto or auto-parts companies that are headquartered outside of the U.S.) employed 402,800 Americans. The average annual compensation for these employees was $63,538.

At the head of the line of sustainable auto companies stands Toyota. In its 2008 fiscal year, it earned a remarkable $17.1 billion world-wide and assembled 1.66 million motor vehicles in North America. Toyota has production facilities in seven states and R&D facilities in three others. Honda, another sustainable auto company, operates in five states and earned $6 billion in net income in 2008. In contrast, General Motors lost $38.7 billion last year.

Will Congress listen to Mr. Slaughter or will they listen to Ron Gettelfinger?  We’ll get the answer to that $50 billion question soon enough.

Senate Minority Leader Mitch McConnell has an important decision to make. He can either continue the Republican Party’s policy of offering slightly less government than the Democrats. Or, he can decide to bring in a conservative reformer into a key position on the powerful Senate Finance Committee.

Conservative star Jim DeMint of South Carolina has announced that he is seeking a spot on the Finance Committee, and all grassroots conservatives should get behind his effort. Check out FreedomWorks’ statement in support of DeMint. DeMint has been the best defender of liberty in the Senate, and has taken on tough issues, sometimes without the help of anyone else. Now is the time to thank him for his efforts, and focus our energy on moving him up to a spot where he can be even more effective.

Please take a few minutes to call Sen. McConnell’s office and ask to speak to his chief of staff. Let him know that you support a true conservative, Senator Jim DeMint, for the Senate Finance Committee. Call 800-590-6127 and do your part to send a message to the Senate Minority Leader that it’s time for reform.

FreedomWorks activists will be leading a major phone and email campaign to deliver this message. If you’d like to help us out, send me an email at bsteinhauser @ freedomworks.org

Just watching this video from the AFL in Georgia makes me ill. As if they haven’t done enough damage to our economy, the labor unions have their sights set on the Georgia Senate race.

FreedomWorks volunteers are currently making thousands of phone calls and going door to door all over the state. I’ll be in Fulton County this weekend to do some GOTV with our volunteers in the Atlanta area. Rasmussen polls show that Saxby Chambliss is leading Jim Martin in the race. It should be very close, and very interesting.

FreedomWorks volunteers are doing their part to educate voters about where the candidates stand on taxes and the economy. We will see on December 2nd what Georgians decide.

One of our volunteers (and fellow blogger) found a great way to use the grassroots tools of General Motors against them. Check out his post about how you can call a 1-800 number, type in your zip code, and then connect to your elected officials in Washington.

GM has set up a number to have your voice heard. Granted they want you to call and profess support but you can also call this number to say “NO!” to bailing out inefficent companies that have had ample time to fix it themselves (35 years since this problem happened once before).

Simply call 1-866-927-2233, enter your zip code and you will be able to connect with your representatives (Senate and House). When you are connected say:

“I DO NOT support any bailout of General Motors (or Ford or Chrysler) and feel that, in the long run, the country will be better positioned if the current companies are left to make the hard-choices that will make them competitive in the future.”