Archive for the 'Congress' category

The Perfect Storm Of Stupid

Let’s be clear about one thing. The economic disaster we find ourselves in is not entirely the making of Wall Street. For the Democrats in the audience, it is not entirely the fault of Republicans. For the Republicans in the audience, this is not entirely the fault of Democrats. This is, to put it plainly, the net result of the perfect storm of stupidity.

If you have ever read The Perfect Storm, there is a great explanation of the three weather phenomenon that came together to create the system that is the focus of the book. The movie glosses over the explanation, so read the book instead.

What we are witnessing this week is the same interaction of three deadly factors. Any one of the three would be destructive. In total, however, they have just cost you and I a trillion dollars. And don’t for a moment think the total will end there. Mark my words, this bailout has only begun to cost us.

The Three Factors

Under a Republican congress and Democratic President, Washington expanded a Carter era relic called the Community Reinvestment Act.

The Community Reinvestment Act is intended to encourage depository institutions to help meet the credit needs of the communities in which they operate, including low- and moderate-income neighborhoods, consistent with safe and sound banking operations.

In other words, banks will make loans for houses to people who are ill-equipped to pay them back. The “encouragement” came in the form of penalties for not doing so.

Add to that another bill passed by a GOP controlled Congress with a Democratic President. That bill, the Gramm-Leach-Bliley Act sought to:

Enhance competition in the financial services industry by providing a prudential framework for the affiliation of banks, securities firms, insurance companies, and other financial service providers, and for other purposes.

In other words, prior to the law, Insurance companies could sell insurance, banks could do loans, securities firms sold stock, and never the three should meet. After the law, it was a free for all. Banks created securities out of the shitty loans they issued under the CRA, Insurance companies under wrote those while creating their own shitty securities, etc, etc.

Now into the mix you have to throw the American people. They look at the news and see home values going through the roof. The react the same way they did during the Beanie Baby craze. They rush out to get a piece of that action. They can buy a $5 stuffed animal and sell it for $300 on eBay, so they buy the hell out of Beanie Babies.

Unfortunately, economic laws will only support that for so long. The company will make more (thereby reducing demand for the things), people will lose interest, or some other force will enter the market and suddenly your left with crates full of stuffed animals rotting in closets. Beanie Babies were an artificial market.

In the same way, people saw home ownership as a great way to make money. Home flipping became the rage, people took out second mortgages to buy second homes, and suddenly everyone had to buy a house.

The Perfect Storm

The trouble is when you have people who can’t afford to buy houses meeting up with people who have to sell houses to keep from running afoul of laws designed to promote home ownership among the poor, you wind up with a) a guy who will lie about his income or b) a guy who will lie about the value of the house or the terms of the loan.

So suddenly a lot of people are invested in houses they can barely afford anyway, and the real terms of those notes go into effect. People can’t pay, so the value of that note becomes worthless.

Since you have built shitty securities on the value of that house, the value of those securities go into the toilet. When that happens, the debt that the mortgage company is carrying becomes unsustainable and the house of cards comes tumbling down.

This is exactly what we’re witnessing. We’re seeing exactly what happens when an artificial market comes tumbling down. There never was a market for housing for people who can’t afford it. The government created one, took their eyes of the guys who were managing it, and is now asking us to throw another deck on the house of cards so people who can’t afford to borrow can keep doing so.

DC is Fundamentally Broken

I have said that Washington DC is so fundamentally broken it is going to drag the rest of the country down with it. I am more convinced of that than ever today.

With this bailout, we’re solving nothing. We’re simply allowing people who shouldn’t have credit to keep on borrowing. We’re enabling addictive behavior. The Congressmen who voted for the bailout should be tried as traitors.

Despite all of that, I was forced to watch to politicians on TV last night both of whom blamed “the greed and corruption of Wall Street” for the mess while giving a pass to the incompetence and stupidity of Washington. Make no mistake. This dismal situation was the result of horrible policy that started with, and was supposed to be overseen by, Congress. They passed the laws that allowed this to happen and ARE TAKING ABSOLUTELY NO RESPONSIBILITY for the mess they created.

What’s worse, is both candidates for President, and both candidates for Vice President, appear to have learned absolutely nothing from watching this happen and are pursuing the same ridculous policies that have crippled our nation.

I believe you can absolutely count on two things.

First, when the next Administration is about 6 months or a year into its term, they will have to deal with an economic disaster of Biblical proportions. This is a band-aid fix for a missing leg. It’s stupid and will do nothing but punt the problem into an off-year when the sheep aren’t watching.

Second, if you think we dodged a bullet with this bill today, you haven’t seen anything yet.

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The Trouble With Earmarks

The attention to earmarks that has been paid in this campaign highlights the hypocritical nature of the American electorate. We decry “the other guy’s” earmarks. When our guy is bringing back the fat, we praise him. When the other guy is doing it, we vilify him. It’s one of the odd ironies of our political system.

The fact is, we judge our elected officials by what they do for their state. The jobs they bring home, the scientific research centers located in our towns, the military bases, the bridges, etc. When someone is good at attracting that investment in their home state, we call them effective. If they fail at bringing federal dollars back home, we call them ineffective.

We hire politician’s to do a job where the goal is to get stuff for their state. We give them the power – through the nation’s checkbook – to get that stuff. Then, we demand that they not do their job. It’s ridiculous.

If earmarks are evil, and we want to get rid of them, then we need to fundamentally change the role of the elected official. We cannot support a system where their election depends on their ability to deliver for the people, and then blame them for delivering.

Banning earmarks outright would take more political will than Congress has ever had. It’s like challenging them to put down their machine gun and walk willingly into a knife fight. They know they have the advantage over their would-be rivals. As long as they bring back the pork, they don’t have to find a real job.

Why would they want to give up such a powerful tool?

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Victory In My Campaign Against The USDA Graduate School

Aug 21 2008 Published by under Congress, Craziness, Government, Legislation, Self-Promotion, Taxes, Waste

Since political hacks are inclined to take credit for the sun coming up every day, I will be the first to declare victory in my ongoing campaign against the USDA Graduate School. An alert reader (holy crap! I have readers?) points me to this little passage in HR 6124 which became law in June.

`(B) TERMINATION OF AUTHORITY- The authority under paragraph (1) shall terminate on the earlier of–

`(i) the completion of the transition of the Graduate School to an entity that is non-governmental and not a nonappropriated fund instrumentality of the United States, as determined by the Secretary; or

`(A) IN GENERAL- The Secretary of Agriculture is authorized to use funds available to the Department of Agriculture and such resources of the Department as the Secretary considers appropriate (including the assignment of such employees of the Department as the Secretary considers appropriate) to assist the General Administrative Board of the Graduate School in the conversion of the Graduate School to an entity that is non-governmental and not a nonappropriated fund instrumentality of the United States, including such privatization activities not otherwise inconsistent with law or regulation.

`(1) CEASE OPERATIONS- Not later than October 1, 2009, the Secretary of Agriculture shall cease to maintain or operate a nonappropriated fund instrumentality of the United States to develop, administer, or provide educational training and professional development activities, including educational activities for Federal agencies, Federal employees, non-profit organizations, other entities, and members of the general public.

`(2) TRANSITION-

`(ii) September 30, 2009.’.

That’s right! The ridiculous waste of taxpayer time that is the USDA Graduate School must become a private entity or close its doors by October of next year.

Having flaunted its tax status to engage in direct competition with schools that don’t get such breaks, while still claiming to be “non-governmental” the USDA boxed itself into a corner. Apparently someone in government realized the ridiculous contradiction in calling it an NAFI while allowing it to use its government connection to skirt laws. So language was inserted to pull the plug on this $60 million boondoggle.

All I can say is it’s about time. Thank you to whatever House staffer followed my gripes about this and finally had the stones to kill it. Now the next question is, what bloated piece of bureaucratic crap do I set my sights on next?

P.S. I don’t actually believe I had anything to do with getting this killed, but I’ll be the first to pop the cork on a champagne bottle next October 1.

Update: My dear friend Anne was the first person to point out the absurd government abuse that is the USDA Graduate School. Any part I played in in getting it closed (which was none, but ignore that) starts with her.

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The GOP, Online Politics, and Internet Regulation

(cross-posted at Red State and The Next Right)

The Politico today has a column penned by David All, a young GOP internet consultant, and Saul Anuzis, Chairman of the Michigan GOP. The column looks at the premise that the GOP is behind its Democratic counterparts online, and suggests one possible reason why – we don’t support the idea of big government intervention in regulating the Internet.

As Republicans, we must not only adopt the new techniques and structure of Internet democracy, but also understand the importance of preserving the open nature of the Net as a policy issue.The tools that are available at low cost to Republicans are only there because of an Internet ecosystem that has managed to remain open, despite the efforts of phone and cable companies.

Republicans need to adopt a lighter approach that will preserve the values of decentralization and freedom — essential conservative values — on the Internet. If we fail to engage in this effort, the Internet service providers, who control the last mile of the tubes into a customer’s house or small business, will choke off the affordable tools available to conservative activists.They have already started exercising their market power to block applications that enable Internet users to distribute information across the Net.

They will make the Internet look a lot more like cable TV, where citizens lack access to every legal channel available and where, consequently, conservative activists get shut out. Taking away these free tools will come at the major expense of the activists and small-businesspeople who are the core of our party’s strength.

Given the attacks on cable and telephone companies in this diatribe, it would be easy enough to discount any response from me as shilling on behalf of cable. Look at my bio, however, and you’ll see that I may be the one person uniquely qualified to address every inaccuracy and outrageous claim in his post. Prior to coming to work in the cable industry, I was the eCampaign Director for Bush-Cheney ’04, and the Republican National Committee. I’ve been involved in Republican politics – and online politics – since I launched one of the first state party websites (EVER) at the New Mexico GOP in 1995. At that time, there were only about 5 state parties online.

Since I have been active in GOP politics, and specifically online politics, since Andreesson released the browser in 1994, I have a bit to say about the reasons the GOP is behind (which virtually nobody argues). As an employee of the cable industry, I have a bit to say about what , if anything, that has to do with net neutrality.

The Cyclical Nature of Politics

To begin with, I, and many others, believe the GOP is behind online for the simple reason that it has never had to be ahead. When the GOP was previously in the minority it turned to talk radio to communicate and organize. In the early 1990s, talk radio was the most interactive medium and the party out of power generally gravitates to the best available method of message disbursement and organization.

In 2000, when the Democrats were out of power, they did the same and gravitated toward the Internet. The Republican Party still dominates talk radio, though the Democrats have been making inroads. Unfortunately, you can‚Äôt give money through your radio, so the media focused on the Internet and long ago stopped writing the “Why aren’t Democrats on talk radio?” stories.

Just as there is nothing preventing Democrats from building an audience on talk radio, there is nothing preventing Republicans from achieving online. Now that we are in the minority in Congress and, if Obama wins, may be completely out of power, Republicans will look to rebuild using the tools that offer the most capability to interact and spread a message. They will eventually catch up to and surpass what the Democrats are doing. That’s the cyclical nature of politics.

But What Does Net Neutrality Have to Do With This?

The short answer is absolutely nothing. But David is part of a group called Internet For Everyone whose founders have suggested nationalization of the Internet. The list of his coalition partners reads like a who’s who of the left. ACLU, ACORN, Care2, NOW and SEIU are just a few of the far left groups signed on to the project. David and his two web properties – SlateCard and Techrepublican – appear to be the only GOP organizations onboard with the project.

To his specific claim, it is simply absurd to make the suggestion that Republicans are behind because there is no national broadband solution. David might as well argue that the GOP is behind because the government hasn’t bought everyone a car. The two are just as closely related.

David, like most people arguing for Net Neutrality likes to throw out numbers that seem to support his point.

America’s rural voters are largely Republican. Yet they face major challenges in gaining access to a broadband Internet connection. The latest U.S. Census data show that only 39 percent of rural households subscribe to broadband — and nearly 10 million rural households are in areas not served by any broadband provider.

These figures come from an Internet for Everyone document, which cites a 2007 Current Population Survey (CPS) of the U.S. Census Bureau. There is a document available on the NTIA website that provides statistics from the CPS. According to the CPS, 39% of rural households did respond that they have broadband service, but 19% also said they have dial-up, and another 10% responded that they access the Internet outside of their home. Thus 68% of rural households access the Internet according to the CPS survey. The figures for urban households, the only other category, were 54% broadband, 9% dial-up, and 9% outside of the home, for a total of 72%. The spread between rural and urban households is only 4%, hardly qualifying as a great divide, or leaving the poor rural folks behind.

Neither the NTIA site nor the CPS study address the 10 million households claim. The 10 million figure may be arrived at by referring to the number of housing units not passed by cable broadband service, according to estimates provided by SNL Kagan – a media research firm. Kagan found that 10 million households, not rural households, don’t have access to cable broadband – not broadband at all, which is what David claims . Simply put, not all of these people live in rural areas. For instance, some areas in Montgomery County, Maryland – a suburb of Washington DC, are unserved by cable, but that is hardly a “rural” area. Moreover, some of those are served by telephone company broadband service – as in Montgomery County. There are suburban or exurban communities that cable doesn’t serve, for one reason or another.

David also fails to note that the cable broadband he denigrates was a) built with $130 billion in private capital, not government subsidies, and b) was built without the burden of government regulation that hampered development of DSL. It was the lack of regulation and the investment of private funds that created the platform we rely on for high bandwidth applications. The cable system that serves 92% of Americans with broadband was built under a system identical to the current regulatory regime, not under the ‘good old days’ of common carrier and forced access.

It’s worth noting, by comparison, that the telephone companies sat on DSL technology for more than a decade while under the exact regulatory regime the IFE folks are now promoting. There was simply no incentive to invest in a network technology they could not monetize and see returns on the initial outlay. Now that they have been freed of such regulations, the telephone companies are aggressively building a $100+ billion Fiber to the Home networkto compete with cable.

Since David’s whole argument hinges on getting rural, Republican voters connected, it’s important to note that he got his central supporting facts wrong with regard to the current status of rural broadband. David made the same arguments in a Washington Times video interview posted yesterday (in which he conveniently rounds the number of Americans without a broadband connection down to 50%, despite many current estimates which place the figure at between 42% and 45% and likely to drop to 40% when numbers are compiled for the second quarter of 2008).

Since he has a habit of misstating facts and figures, one must ask if he is uninformed or intentionally misquoting numbers to justify his thesis. My belief is the former, but I still have some suspicion it may be the latter.

Further Pandering

Part of the reason I believe David may simply be desperate to make his case and willing to clutch at straws is the way he characterized the AP “research” into the Comcast/BitTorrent issue.

For example, Comcast was caught red-handed by The Associated Press blocking the distribution of the King James Bible. Martin launched an investigation and convened public hearings that put Comcast in the hot seat.

That is an absolutely false characterization of what happened. The Comcast/BitTorrent flap was a matter of Comcast trying to guarantee the best possible experience for the vast majority of its users, and trying to restrict the impact that heavy users of P2P applications have on broadband networks.

David implies that a) Comcast was aware the content the AP used in its test was the King James Bible and b) specifically targeted that traffic. Why would he make such outrageous claims to make his case? Because David is trying to convince Republicans to support his cause, and Republicans identify strongly with issues of faith. By claiming “the big bad cable company tried to stop you from seeing the bible” he’s pandering in the worst possible way.

As a Republican

As a Republican, I would be skeptical of Internet regulation on the best day, and downright hostile on any other. I do not believe the imposition of a new regulatroy regime is the cure to the perceived ills of either the state of broadband or the state of my party. As someone who has been thinking of ways for Republicans to use the Internet for almost fifteen years, I disagree completely with David’s ridiculous claim that the only way to save the party is to create a new bureaucracy to regulate the Internet.

While I respect David’s opinion and right to speak out on whatever topic he chooses, I firmly believe he could not be further off track on this issue. I also hope he will take the time to address my deconstruction of his argument and answer my challenge to the factual basis of his column. He may perhaps become informed about the subject matter rather than irresponsibly disseminating mistruths.

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Culberson, Capuano, and the Struggle for Relevance

Jul 11 2008 Published by under Bloggers, Congress, Craziness, Government, The Internet, Web 2.0

Shelbinator has a ridiculous little post up defending Rep. Capuano’s braindead attempt to regualte YouTube for political speech.  Patrick Ruffini at The Next Right has a good post up calling out the frightening number of Dems trying to make this about partisanship.

The fact is the whole thing is stupid.  Capuano’s argument for why he is doing this, Nancy Pelosi’s defense of him in her letter to Boehner, and Shelbinator’s defense all come down to the same lame argument.

In order to keep up with the “decorum” of the House, they ought to find a way to do so that doesn’t get too tangled up in commerce or political campaigning due to free market forces (i.e., if you watch a Representative’s “official” YouTube video, it might be unbecoming if the three “related” videos that pop up in the YouTube player after it’s over were a racist anti-Obama ad, a pitch for Viagra, or candid footage of Britney Spears’ crotch). Not unreasonable suggestions, I think.

I left a comment on Shelby’s site, but I think it bears repeating here.

If these rules are so critical to protect us from unrefined content that might accompany “official” communications, why hasn’t the Franking Commission required newspapers to print any columns submitted by Members on facing pages with no advertising, comic strips, or campaign news?

If this is such a reasonable request, why hasn’t the Franking Commission required TV news programs to not bookend Member appearances with commercials?  Why don’t they have rules for what other stories can appear in the crawl on the chyron?

The fact is Capuano is ignorant of the equivalence between offline and online communications.  He clearly doesn’t use, know, or understand the area over which he is attempting to exert jurisdiction.

Honestly, the idea of franking dates back to the 1600s.  The entire concept of the Commission is a joke in the era of the Internet.  With newspapers losing subscribers, TV losing viewers, and every other aspect of society being radically changed, Capuano’s action is nothing but a desperate attempt to remain relevant in a position that is growing obsolete by the second.

When Micah Sifry and I were in London in April, we had many discussions with the academics there that felt they could just watch the Internet change everything else on the planet, but somehow they would be excused from the Internet Age.

Congress is now making the same mistake.  They’re attempting to ignore the flames around them and keep playing their fiddles as the US burns.  They’ll continue looking for ways to apply 17th century standards of decorum to 21st century communications technology.  It’s frightening that our institiutions are so far behind the world around them.  But that’s what you get with bureaucracies…

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