1/24/12

Last night’s Republican presidential debate once again reminded me of the similarity between politics and Wall Street. It has to do with the lack of transparency. It is difficult to tell whether we are being sold a good or bad product.

It is called packaging. The wrapping may seem attractive, but the product often turns out to be foul.

Newt Gingrich says he was paid $1. 6 million by Freddy Mac for teaching them history. He noted that the GSE’s (government sponsored enterprises) at one time were good for the housing market. That was before Jim Johnson became involved. But, Johnson convinced Bill Clinton to change the model about 15 years before Gingrich was hired as an adviser. By then, the GSE’s had been corrupted. Now we are supposed to believe Gingrich advised them to revert to the old model. The suspicion is Gingrich was brought on board to help fend off stricter regulation.

Gingrich said he helped balance the federal budget several times when he was Speaker during the 1990’s. He might have told us Ronald Reagan had something to do with this. When the Cold War ended it allowed deep cuts in the defense budget. Gingrich did not tell us how he voted on the Clinton tax increase in 1993 (he voted against it).

Gingrch said he resigned as Speaker and left the House in 1998, because Republicans lost seats in the election that year. Ron Paul interjected that when he joined the House the place was a mess and Gingrich had lost the support of his Republican colleagues.

Mitt Romney has problems of his own. He says a mandate to buy health insurance in Massachusetts is fine for that state, but it is not good for America. It is called federalism (states rights). But Romney was eager to attack Rick Perry, in an earlier debate, for allowing children of illegal aliens to go to college after graduating from high school and pay the same tuition as other Texans. That choice by the people of Texas apparently does not fit Romney’s concept of federalism.

Barack Obama is less exposed, because he does not have to engage in debates. However, his supporters says it is not fair for Gingrich to call Obama the food stamp president, even though the number of Americans receiving food stamps has increased more than 50 % during his three years in the White House.

On the other hand, Obama should take credit for the increase in America’s oil and gas production in recent years. Tom Sever and John Podesta write in the Wall Street Journal (We Don’t Need More Foreign Oil) that under Obama’s leadership we appear to be at the beginning of a domestic oil and gas boom. Therefore, we do not need to import Canadian oil. Romney, however, noted that the only reason we have an oil boom in North Dakota is that Obama has not been able to stop it because it is on private land. Obama does not like fossil fuels in any form. He is for wind and solar.

The gridlock in Washington cannot be blamed on the Constitution. People do not trust government because politicians lie too much. They also do not trust Wall Street.