Daily Archives: 26 March 2013

The Aftermath Begins

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Spiegel Online International is describing it, albeit with some misconceptions.

Not even savings accounts are safe, as was recently seen in Cyprus. Such deposits are actually guaranteed to up to €100,000, but the euro rescuers cared little about this as they desperately searched for funds.  Cypriot small savers may have escaped this time around, but the realization remains, even beyond Cyprus, that a state teetering on the edge of bankruptcy will resort to all available means to raise money—and a guarantee is only worth something as long as the entity that stands behind it remains solvent.

Nothing is safe from being seized by the state, no savings account, but also no house or apartment.  …  Governments have even banned the possession of gold during currency crises, forcing citizens to exchange the precious metal for the national currency.

That’s the nub of the aftermath.  No one’s private property is safe from an overweening government.

Those paragraphs, though, carries SOI‘s first misconception: the original demand to expropriate private savings came from the Euro Group, not Cyprus.  Cyprus’ Parliament rejected it at the start.  However, Cyprus’ government, including its Parliament, is complicit in the present theft—it could have rejected that attempt, too.

Then there’s this:

Greece and Cyprus have millionaires and billionaires of whom many profited from the artificial boom fueled by low interest rates after the introduction of the euro—a boom that subsequently went bust.  Why shouldn’t they help finance efforts to deal with the aftermath?  Is it fairer to place the burden on the euro bailout fund, and thus distribute it among the taxpayers of other countries?

Why shouldn’t they?  The question is a demonstration of the lack of understanding.  Why should folks who played by the rules placed before them, and with no other responsibility for the companies, have to pay for the failures of the companies, at least as part of the first resort?  Why should not the companies’ investors and creditors be the only ones to suffer the consequences of the failure of their investments and loans—or at least be wiped out entirely  before depositors—those not responsible at all—suffer any loss?

Is it fairer to place the burden on the euro bailout fund?  To ask this is to demonstrate, again, a lack of understanding.  The euro bailout fund should not exist at all.  The taxpayers of other countries should not even be under consideration of paying for the failure of one country.

Finally, this:

A levy on assets would immediately reduce the debts of crisis-stricken countries, whereas bailout packages pool risks and shift them to the future.

Those risks can become dangerously explosive.  The more countries that have to be bailed out, the fewer countries remain that have to bear the burden—as long as they are able to.  This could even prove to be too much for Germany at some point.

The second answers the first, but only partially.  A levy on assets does not cure the reason the crisis-level debts exist in the first place, but it does destroy property rights.  Neither does any bailout address the underlying causes.  Levy or bailout, they merely perpetuate the situation—as we’re seeing in the euro zone and in the US.

National Defense in Obama’s Second Term

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Senator Jon Kyl (R, AZ (Ret)) outlined in a Wall Street Journal op-ed what we can see and expect from President Barack Obama during his second term.  It isn’t pretty.  On missile defense, Obama is doing this [emphasis added]:

  • The president is on course to systematically reduce America’s capabilities in both areas despite specific commitments he made while securing bipartisan support for the 2010 New Strategic Arms Limitation Treaty with Russia.
  • [Adding 14 ground-based interceptors in Alaska only] gets us back to the numerical level planned during the Bush administration—and without the technological improvements in ground-based interceptors, or GBIs, that the Bush administration supported.
  • US national missile defense will continue to rely on obsolete 1980s “kill vehicle” technology involving kinetic energy and small warheads.  At 44 GBIs, the system should be effective against the current threat from North Korea, but not against an attack from countries like Russia and China with more robust and mature capabilities.
  • US has canceled the final phase of the Europe-based missile-defense system, which was to have included NATO allies such as Poland as the hosts of sensors and other elements of the system. This will please Russia.
  • [T]he Aegis system the Navy uses to track enemy missiles and guide American ones will be less capable of protecting Europe—from Iran, for instance—and offer even less protection for the U.S. The assurance of deploying the final phase of missile defense in Europe was the Obama administration’s pretext for capping the improvement of America’s GBI system.

On strategic deterrent, Obama is doing this to our triad of ICBMs, SLBMs, and bomber fleet [emphasis added]:

  • Russia is preparing to field a new generation of intercontinental ballistic missiles (one type of which can carry as many as 15 warheads); Obama is still studying whether to develop its own modernized ICBMs.
  • Replacement of the Ohio-class nuclear-ballistic-missile submarine—the foundation of the sea-based leg of the triad—has been delayed for two years, leaving the force with only 10 boats.
  • No decision has been made on whether the next generation strategic-bomber force will even be capable of delivering nuclear weapons.
  • Energy Department and National Security Agency five-year budgets for modernization have been cut by some $4.4 billion.  That’s the same amount Obama had agreed to add to secure Senate support for the New Start treaty in 2010.
  • The building of a modern Chemical and Metallurgy Research Replacement facility for handling plutonium—critical to modernization and added to the Treaty Resolution of Ratification and in the president’s message to the Senate upon entry of the treaty into force—has been delayed at least five years—tantamount to killing it.

As Kyl puts it,

President Obama’s antipathy to both missile defense and our nuclear deterrent risks leaving the U.S. and its allies vulnerable not just to attack, but also to nuclear blackmail and proliferation.

This is a national disaster waiting to reverse the defeat of the Soviet Union.

Why Are We Not Surprised?

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The Democrat-controlled Senate Thursday night voted down the House-passed budget that reached zero deficit by 2023.  Then they voted up their own budget, which doesn’t even pretend to try to reach balance, instead adding $7 trillion more to our existing debt over those 10 years.

Via Power Line we learn that Senator Jeff Sessions (R, AL) offered an amendment to the Senate Budget Committee’s bill as it was being debated on the Senate floor.  Sessions’ amendment, as all of these ought to be, was short, and to the point:

Mr. Sessions moves to commit S Con Res 8 back to the Committee on the Budget with instructions to report back no later than March 22, 2013 with such changes as may be necessary to achieve unified budget balance by fiscal year 2023.

From Senator Mike Lee’s (R, UT) office, we get a compilation of the statements of 23 Democratic Senators with the gist of their comments explicitly supported a balanced budget amendment.  One has retired since his statement, and two were defeated in the 2012 reelection process.  The remaining 20 are below:

SENATOR SHERROD BROWN (D-OH): “Before I ask for your vote, I owe it to you to tell you where I stand. I’m for… a balanced budget amendment.” (Rep. Brown, “Where I Stand,” YouTube, 11/1/06)

SENATOR DEBBIE STABENOW (D-MI): “I crossed the line to help balance the budget, as one of the Democrats that broke with my party.” (Michigan Senate Debate, 10/22/00)

SENATOR MARK BEGICH (D-AK): “It’s time to stop playing political brinksmanship with the budget and do what every Alaskan is doing – balance the budget.” (SENATOR Begich, “Begich Statement On 2011 Budget Vote,” Press Release, 4/15/11)

SENATOR BILL NELSON (D-FL): “Over the years, I have supported a balanced budget amendment…” (SENATOR Bill Nelson, Congressional Record, S.1920, 3/29/11)

SENATOR JOE MANCHIN (D-WV): “[T]he balanced budget amendment’s very, very important to me and to every governor, to every state, to every household, especially in West Virginia. And if they can do it, they think we can do it also.” (U.S. Senate, Budget Committee, Hearing, 1/27/11)

SENATOR BEN NELSON (D-NE): “I voted yes and support a balanced budget amendment that allows for flexibility in times of war and for natural disasters.” (SENATOR Nelson, Press Statement, 3/4/11)

SENATOR MARK UDALL (D-CO): “I’ve long gone by the saying, if you find yourself in a hole, stop digging. By restoring healthy and responsible spending through a reasonable Balanced Budget Amendment, we can begin filling in that hole.” (SENATOR Udall, “Udall Co-Sponsors Balanced Budget Amendment,” Press Release, 2/1/11)

SENATOR MICHAEL BENNET (D-CO): “U.S. SENATOR Michael Bennet broke his hesitation on endorsing the balanced-budget amendment last week… pledging support for the idea.” (“Bennet Balancing His Approach To Budget,” Denver Post, 3/6/11)

SENATOR CLAIRE McCASKILL (D-MO): “I think they should. …It would be great if that discipline were in place. Clearly it’s a goal we’ve got to work toward…” “…responding to a question of why the federal government can’t have a balanced budget amendment…” SENATOR CLAIRE McCASKILL (D-MO): “I think they should. …It would be great if that discipline were in place. Clearly it’s a goal we’ve got to work toward…” (“McCaskill For ‘Responsible’ Balanced Budget Amendment,” PoliticMo, 6/29/11)

SENATOR KIRSTEN GILLIBRAND (D-NY): “New York families must continuously balance their checkbooks. Forty-nine states, including New York, require a balanced budget. An amendment to the Constitution will finally hold the federal government to the same, common sense standard.” (Rep. Gillibrand, “Nation Deserved A Balanced Budget,” The Time Union, 6/4/07)

SENATOR TOM CARPER (D-DE): “As a Member of the House, when I served with Senator Santorum over there, we were great proponents of something called a balanced budget amendment to the Constitution…” (SENATOR Carper, Congressional Record, S.8063-4, 7/14/04)

SENATOR HARRY REID (D-NV): “…I believe we should have a constitutional amendment to balance the budget. I am willing to go for that.” (SENATOR Reid, Congressional Record, S.1333, 2/12/97)

SENATOR MARY LANDRIEU (D-LA): “I took a position to support a Balanced Budget Amendment…” (SENATOR Landrieu, Press Conference, 2/25/1997)

SENATOR DIANNE FEINSTEIN (D-CA): “The spending trends are what really motivates me, and I hope others, to accept a constitutional balanced budget amendment.” (SENATOR Feinstein, Congressional Record, S.1594, 2/26/97)

SENATOR TOM HARKIN (D-IA): “Mr. President, I have long supported a balanced budget amendment. I expect to do so again…” (SENATOR Harkin, Congressional Record, S.2460, 2/10/95)

SENATOR TIM JOHNSON (D-SD): “It is time to get our priorities straight. I’ve been a strong supporter of a balanced budget amendment…” (Rep. Johnson, Congressional Record, H.11213, 10/26/95)

SENATOR MAX BAUCUS (D-MT): “I have always supported a balanced budget. Montanans want a balanced budget. We must listen to the people and give them a balanced budget.” (SENATOR Baucus, Congressional Record, S.2469, 2/10/95)

SENATOR DICK DURBIN (D-IL): “…we need to move toward a Balanced Budget Amendment.” (Rep. Durbin, Congressional Record, H.1310, 1/11/95)

SENATOR JON TESTER (D-MT): “It’s absolutely critical.” “My folks did not teach me to not have a fiscal balanced budget. It’s absolutely critical… Because I am of the belief that you take care of your own self and you don’t pass your debts on to your kids… Let’s be fiscally responsible. Let’s have a fiscally balanced budget.” (Montana Senate Debate, 6/25/06)

“Jon Tester will lead efforts to balance the federal budget…” (“Real Change, Real Vision For Montana Plan,” Jon Tester Website, Accessed 7/14/11)

Tester Spokesman: “Of course Jon supports a balanced budget…” (“Rehberg Chides Tester Over Budget-Balancing Vote,” Billings Gazette, 3/3/11)

SENATOR BOB CASEY (D-PA): “I Believe In A Balanced Budget. Government Should Live Within Its Means, Like Any Small Business.” MR. RUSSERT: “Let me find out how you would implement something that you’re promising the voters of Pennsylvania. Here’s a Casey campaign ad about our budget.” (Videotape, Bob Casey campaign ad): MR. CASEY: “I believe in a balanced budget. Government should live within its means, like any small business.” MR. RUSSERT: “How would you get a balanced budget?” MR. CASEY: “It’s not easy, Tim, but here are the steps we should take. First of all, when it comes to the budget, what’s missing principally is a lack of fiscal responsibility, you know that. We’ve gone from about two, 236 of, of surplus down to 296 in deficit. We need some fiscal discipline.” (Pennsylvania Senate Debate, “Meet The Press,” 9/3/06)

They’re for a balanced budget amendment, but they won’t hold out for a budget that balances…sometime?  Liars all, save Manchin, who was the only one of the crowd above to vote for the Sessions amendment.  If only half of these were worthy of their word, this bill would have been sent back for work.  And we keep reelecting these…fools.

Shame on us.