Sunday, October 23, 2011

Wall Street Vs. Government Responsibility for Economic Crisis

According to Investor's Business Daily, the percentage of responsibility for the subprime and nonprime mortgage crisis is pretty clear. Out of 27 million such mortgages, the government held 19.2 million: 12 million by Fannie & Freddie, 5 million by FHA, and 2.2 million with HUD and CRA loans. Wall Street held 7.8 million.

That would mean Wall Street bears 29% of the responsibility, while Washington bears 71%.

In a related piece, Gretchen Morgenson at the NYT notes a recent speech on needed financial reforms by Paul Volcker, former head of the Federal Reserve:

THE other area that cries out for change, Mr. Volcker said, is the nation’s mortgage market, now controlled by Fannie Mae and Freddie Mac, the taxpayer-owned mortgage giants.

“We simply should not countenance a residential mortgage market, the largest part of our capital market, dominated by so-called government-sponsored enterprises,” Mr. Volcker said in his speech. “The financial breakdown was in fact triggered by extremely lax, government-tolerated underwriting standards, an important ingredient in the housing bubble.”

Friday, October 14, 2011

The Politics of Raising Cain

Roger L. Simon sees Cain's campaign as a challenge to political professionals like Rove.

Cillizza & Blake: Why Herman Cain Can Win

Amy Gardner, Cain's Staff Trying to Keep Up

(Interestingly, she notes that Cain's trip to Tennessee may be because a lot of Country music people like him. This may answer the question some have been asking about why he's going there, like the next article.)

Cain's Curious Month Off

Was SimCity Cain's Inspiration for the 9-9-9 Plan? An amusing diversion ...

Discussions of Cain's 999 Plan

999 on Cain's Website and in an editorial in USA Today

The phases of Cain's plan, copied from his website:

Phase 1, 9-9-9:

  • Zero capital gains tax
  • Ends the Death Tax.
  • Eliminates double taxation of dividends
  • Business Flat Tax – 9%
    • Gross income less all investments, all purchases from other businesses and all dividends paid to shareholders.
    • Empowerment Zones will offer additional deductions for payroll employed in the zone.
  • Individual Flat Tax – 9%.
    • Gross income less charitable deductions.
    • Empowerment Zones will offer additional deductions for those living and/or working in the zone.
  • National Sales Tax – 9%.
    • This gets the Fair Tax off the sidelines and into the game.
Phase 2, the Fair Tax:

  • Amidst a backdrop of the economic boom created by the Phase 1 Enhanced Plan, I will begin the process of educating the American people on the benefits of continuing the next step to the Fair Tax.
  • The Fair Tax would ultimately replace individual and corporate income taxes.
  • It would make it possible to end the IRS as we know it.
  • The Fair Tax makes our exported goods and services the most competitively internationally than any other tax system.
Discussion of pros, cons, and what the heck does it all mean [this section will get filled out over the weekend, if you care to stop back]:

Nathan Lewis at Forbes, Flat Tax vs. Fair Tax vs. Herman Cain's 9-9-9 Plan

Edward Morissey at the Fiscal Times, 9-9-Nein! The Herman Cain Mutiny

Bruce Bartlett in the NYT, Inside the Cain Tax Plan

5 Reasons to Reject It

Thursday, October 13, 2011

Cain Picks Up Support

from Art Laffer

"Herman Cain’s 9-9-9 plan would be a vast improvement over the current tax system and a boon to the U.S. economy," Laffer told HUMAN EVENTS in a statement. "The goal of supply-side tax reform is always a broadening of the tax base and lowering of marginal tax rates."

Added Laffer: "Mr. Cain’s plan is simple, transparent, neutral with respect to capital and labor, and savings and consumption, and also greatly decreases the hidden costs of tax compliance. There is no doubt that economic growth would surge upon implementation of 9-9-9."

Laffer also said that "such a system provides the least avenues to avoid paying taxes, yet also maintains the strongest incentives for work effort, production, and investment."

Haley Barbour

“If this election is where it ought to be, and that is a referendum on how President Obama is doing, Republicans are going to win. If Herman Cain is our nominee against Barack Obama, I think he’ll sweep the south," Gov. Haley Barbour (R-Miss.) told Laura Ingraham today.

Paul Ryan

House Budget Committee chairman Paul Ryan says he “loves” presidential candidate Herman Cain’s signature “9-9-9″ tax plan.

Ryan told The Daily Caller in an exclusive interview that Cain’s plan is a good starting point for debate, and shows the GOP presidential campaign season has entered into a more advanced stage where ideas — not just personalities — have come to the forefront.

A spokesman for Ryan later clarified that Ryan wasn't endorsing Cain.

Today's Links of Interest

Herman Cain Takes the Lead

Cain, Perry, Romney All Beat Obama

Oxford U. History Prof. Tim Stanley says: If the Wall Street protesters really want to reform capitalism, they should join the Tea Party

Michael S. Malone: Waiting for Princip

Sunday, October 02, 2011

Illegal Students

Michael Flaherty at the WSJ has an article titled, The Latest Crime Wave: Sending Your Child to a Better School:

From California to Massachusetts, districts are hiring special investigators to follow children from school to their homes to determine their true residences and decide if they "belong" at high-achieving public schools. School districts in Florida, Pennsylvania and New Jersey all boasted recently about new address-verification programs designed to pull up their drawbridges and keep "illegal students" from entering their gates.

Other school districts use services like, which provides "the latest in covert video technology and digital photographic equipment to photograph, videotape, and document" children going from their house to school. School districts can enroll in the company's rewards program, which awards anonymous tipsters $250 checks for reporting out-of-district students.
Only in a world where irony is dead could people not marvel at concerned parents being prosecuted for stealing a free public education for their children.

In August, an internal PowerPoint presentation from the American Federation of Teachers surfaced online. The document described how the AFT undermined minority parent groups' efforts in Connecticut to pass the "parent trigger" legislation that offers parents real governing authority to transform failing schools. A key to the AFT's success in killing the effort, said the document, was keeping parent groups from "the table." AFT President Randi Weingarten quickly distanced her organization from the document, but it was small consolation to the parents once again left in the cold.
At the same time, many American schools are forced to accept the children of illegal aliens, and to even suggest that they shouldn't results in strident accusations of racism and heartlessness.

I am all for public schools educating the children of illegal immigrants. The children are not at fault, and not only would it be morally wrong to deny them an education, it would also be reckless from a utilitarian perspective. However, since those expenses have been incurred due to the deceptions and irresponsibility of the federal government, I also strongly believe that every school which educates these children should be paid to do so by the federal government. (I also believe this is the correct way to handle the local and state incarceration expenses for illegal aliens.)

For similar reasons, the AFT and other organizations that act to destroy educational choice and quality in the American public schools should be forced to pay for the consequences. That, however, would be impossible; you cannot reimburse someone for giving them an inferior education during their childhood. Consequently, these organizations should be abolished.

Today's Links of Interest

Transcript of the Fox News - Google GOP Debate

Simpson & Bowles: Our Advice to the Debt Committee: Go big, be bold, be smart

Fred Barnes at the Weekly Standard: Raising Cain (an interesting comparison of Cain and Obama's biographies)

Back in 2008, Cain defended TARP. This is a complex topic. I think bailing out the banks created a powerful, dangerous moral hazard, but at the same time, letting the banks fail would have had a significant negative impact on a lot of people who were innocent of wrongdoing. Sometimes there is no good option.

Michael Barone says that Cain is beginning to look like a contender.

Jennifer Rubin says Cain can shake up the GOP race.

Jane McGonigal: Gamer's Will Save the World (well, that's not really her headline, but I suspect it's true)