The AMT and the Lessons of Taxation and Class Warfare

In 1969, in order to make sure that about 100 fat cats paid their fair share Congress created the Alternative Minimum Tax...

In August 1969 as he was preparing the next year's budget Barr warned that the country faced a taxpayers' revolt. He explained, according to the Washington Post, that in 1967 there were a total of 155 individuals with incomes over $200,000 who did not pay any federal income taxes; twenty of them were millionaires. These individuals successfully used all tax loopholes available to legally evade paying taxes. The revelation attracted wide media attention and led to public shock. As he presented the next annual budget, published in the final weeks of his administration, President Johnson indicated that the problem needed to be addressed...

Unfortunately what started as a tax against fat cats has now begun to affect a large majority of Americans.

For more than three decades, the individual income tax has consisted of two parallel tax systems: the regular tax and an alternative tax that was originally intended to impose taxes on high-income individuals who have no liability under the regular income tax. The stated purpose of the alternative minimum tax (AMT) is to keep taxpayers with high incomes from paying little or no income tax by taking advantage of various preferences in the tax code. The AMT does so by
requiring people to recalculate their taxes under alternative rules that include certain forms of income exempt from regular tax and that do not allow specific exemptions, deductions, and other preferences. For most of its existence, the AMT has affected few taxpayers, less than 1 percent in any year before 2000, but its impact is expected to grow rapidly in coming years and affect about one-fifth of all taxpayers in 2010. In her 2003 report to the Congress, the Internal Revenue Service's National Taxpayer Advocate, Nina Olson, labeled the AMT "the most serious problem faced by taxpayers."(1)

The evolution of the AMT from going after 155 fat cats to one that will hit ten million people if it isn't dealt with is a great example how taxes often morph into something totally from its initial purpose and should be a lesson to all politicians about the dangers of using taxes as a means of fighting class warfare.

Unfortunately, many politicians continue to use taxes as a means of fighting class warfare in hopes of finding themselves on the same side of the table with the majority of Americans against the wealthy. For instance, here is how Hillary Clinton feels about the estate or death tax.

“I am more focused on preventing the repeal of the estate tax and returning to what I think are fairer, more effective tax rates for the wealthiest. There may be an argument to be made, which I would be open to but I think you need to look at the entire tax picture. There isn’t any credible argument that the taxes under the Bush administration have gone down disproportionately on high-income investors and earners.”

So what is the so called death tax and why should everyone be concerned when a politician uses it as a means of class warfare?

The estate tax is technically a tax on the transfer of property to others, generally to children of a decedent. It was envisioned to prevent families from passing on huge fortunes and developing a type of royalty in America.

Once again, we have a tax created to make sure that we punish the fat cats. This time they are actually taxed in death. Unfortunately, while the tax death does punish the fat cats it also punishes another class: the savers. Here is a chart of the bottom line levels of an estate's value before it is taxed. For instance, in 2002, any estate worth one million dollars and more would have been taxed. Keep in mind that an estate is everything you own including your home. It is also any retirement that you may have saved up. Let's suppose you saved $100 per month for 40 years and earned an average of 12% on that money. That savings would grow to just over one million dollars after forty years. Someone saving 100 dollars a month is no fat cat and yet they would likely be affected by the estate tax.


Let's look at another tax used by many politicians as a tool in class warfare: the capital gains tax.

A capital gains tax (abbreviated: CGT) is a tax charged on capital gains, the profit realized on the sale of an asset that was purchased at a lower price. The most common capital gains are realized from the sale of stocks, bonds, precious metals and property. Not all countries implement a capital gains tax and most have different rates of taxation for individuals and corporations.

Here is what Barack Obama would like to do to the capital gains tax.

As part of his "Tax Fairness for the Middle Class" plan, Barack Obama is in favor of nearly doubling the capital-gains tax rate from 15 percent to 28 percent. Leaving the fairness issue aside for a moment—as well as the impact of higher taxes on economic growth—the Obama plan could also be called a "Ways in Which Government Can Collect More Taxes to Pay for New Spending" plan, since Democratic candidates are all scrambling to figure out ways to plausibly pay for
new healthcare, education, and infrastructure spending if elected.

Keep in mind that the capital gains tax taxes an gain in any long term investment including stocks and real estate. So, what percentage of American households currently own stocks?

Dramatically more Americans own financial assets now than in the recent past. As recently as 1980, only 4.6 million U.S. households owned mutual funds; by 2003 the number was 53.3 million.

More than half of American families currently own stocks, bonds or real estate. Nearly half of all U.S. households own stocks or stock mutual funds.

So, when Barack Obama promises to raise the capital gains tax to make the tax system more fair he is actually promising to raise taxes on more than half of American households and growing.

Another way in which politicians use taxes as class warfare is through the nebulous word: loophole. Whether its John Edwards, Barack Obama, or
Hillary Clinton, the word loophole is used as another tool in fighting class warfare.

Every day, millions of working Americans go to their jobs, play by therules and hope to make a decent living for themselves and their families. These workers strengthen our middle class and keep oureconomy going. In turn, the vast majority of American employers holdup their end of the bargain by treating their employees fairly.

But sadly, many working men and women are not being treated fairly because some businesses are using a little-known tax loophole to avoidpaying their fair share. It's workers and American taxpayers who paythe price.

...

New York Sen. Hillary Clinton, the front-running Democratic presidential candidate, on Friday urged closing a tax loophole that she said unfairly benefits a few top Wall Street financiers.

Clinton called the loophole a "glaring inequity" and joined other lawmakers in a push to raise the tax rate on "carried interest" gains made by senior partners in the booming private equity and hedge fund businesses.

...

Sen. John Edwards, D-N.C., told crowds Thursday in Des Moines, Iowa, that he would pay for new programs to benefit the middle class by closing loopholes and tax breaks now benefiting the wealthiest Americans.

Remember, the Alternative Minimum Tax itself was created to supposedly close a tax loophole that was also supposed to affect only the wealthiest Americans.

A tax increase speaks for itself. The problem is that many a politician have used tax increases as some sort of tool to appeal to emotions. We have a country of nearly half a billion people and at any given time there are millions who are less successful than they would like to be. Those millions can almost always be quantified by someone and put into percentages. The unsuccessful almost always have a resentment toward those at the top. Politicians see opportunities in appealing to such emotions. By increasing taxes that they see as primarily applying to the successful, they seek to score points with the masses who are largely less successful. Unfortunately, the reality of tax policy is almost never in line with the perception that is created by politicians.

Whether it is the AMT, the capital gains tax, the estate tax, or the nebulous tax loopholes, these, like most taxes, almost always end working the same: by affecting the majority of people.

My Hubris Moment Vis a Vis Susan Estrich

I know that I am threatening to step over the lines of political analytical hubris as I disect this piece by Susan Estrich, however I will explain later what gives ME the right to challenge such an accomplished political operative. Before that, here is some disclosure. I am NOT a Huckabee supporter, and he wouldn't even be in my top three choices for the Republican nod. (I am a Rudy supporter)

Huckabee is now a bona fide contender because the knives are out all over the place for him. For instance, Rick Moran wrote this scathing analysis.

But Mike Huckabee is not a conservative – at least not any kind of conservative that I would recognize as such. His tenure as Arkansas governor was marked by a corn pone populism – part Huey Long and part Jimmy Carter along with a massive increase in the tax burden on the individual taxpayer in his state as well as a sharp rise in spending. Huckabee channeled the ghost of Huey Long in his funding of state road improvements – largely through a hefty gas tax increase and a controversial bond issue. He also put a $5.25 premium on nursing home patients and raised the sales tax in the state. The Club for Growth detailed his “conservative” tax policy and ideas:

...

The Club for Growth isn’t the only fiscally conservative group that has looked in askance at Huckabee’s record. The Cato Institute was also unimpressed by Huckabee’s tenure as governor. They gave him an “F” in fiscal policy for 2006. Hucksterites will point to his $80 million tax cut package he pushed through the legislature that eliminated capital gains taxes on home sales and indexed taxes to the inflation rate. But that’s just a drop in the bucket. While Huckabee claims to have cut taxes 90 times totaling $378 million, the state’s Department of Finance and Administration says he also raised taxes 21 times that brought in a whopping $883 million. Under his “conservative” governance, the “average Arkansan’s tax burden” went “from $1,969 in the fiscal year that ended June 30, 1997, to $2,902 in the fiscal year that ended June 30, 2005, including local taxes.”

Red State is having a virtual orgy of scathing analyses of Mike Huckabee. Michelle Malkin has weighed in negatively on her forte, illegal immigration. It is obvious that the right is now picking apart every nook and cranny of his record. I have never been one to look this deeply at anyone's record. I know that in reading some of the most extreme analyses of Rudy's record that a lot can be twisted. I HAVE FOUND that detractors and supporters alike have totally misanalyed the phenomenon that is now the candidacy that is Mike Huckabee.

It really comes down to two words: charm and charisma. Those are universally appealing qualities and Huckabee has them in spades. He far exceeds those qualities compared to any of his Republican opponents, and matches even Barack Obama in those two qualities. He has a solid resume to boot which is something Obama doesn't have. Charm and charisma is the simple and succinct explanation for his tremendous appearances in every debate, and he exhibits those two qualities in every interview and appearance.

This brings me back to Susan Estrich. Now, the reason that I have decided to put Estrich in my cross hairs and not everyone of my colleagues is that she doesn't simply misanalyze Huckabee but the entire state of our party. Second, she is a Democrat and with all due respect to her, she knows less than me, a Republican, about the dynamics of our party. Now, here is a sampling of her analysis.

Huckabee is an interesting guy. He is a straight shooter, a former Baptist minister, a born-- not born-again--conservative.

But as a Democrat, am I worried about Hillary or Barack taking on this former Arkansas governor?

Not a little. Certainly not a lot.

Not only is he out of step with the rest of America, as opposed to the right tail of the right tail of the Republican party, which is to say the religious conservatives who dominate the caucus and primary process, on social issues, but his proposals in such areas as federal taxation and especially Social Security are enough to make any Democrat’s mouth water.Not that anyone loves taxes, but eliminating the IRS and progressive tax system and replacing it with one that puts a flat tax on all consumption, which is the most regressive way to pay our bills, doesn’t have political winner written all over it. It’s one of those ideas that people with no chance of winning run and lose on. Think Steve Forbes. It’s not one you want to defend in the World Series.

But that’s nothing compared to his proposal to get rid of the payroll tax for Social Security, and his support for private retirement accounts. Did anyone say Florida?

There is plenty to blast here. First, the minute you don't take someone seriously as an opponent is the moment your opponent defeats you, just ask USC about their loss to Stanford, the Soviets about their loss to the U.S. in 1980, Georgetown about their loss to Villanova, and the St. Louis Rams about their loss to the Patriots in 1999.

Second, while she claims that most of his proposals aren't mainstream, she backs none of it up with data. She claims ridiculously that the flat tax is a loser by attaching it to Forbes. The Flat Tax is not necessarily a loser, Steve Forbes is. The flat tax is new and revolutionary and most people don't know it or understand it. What such a proposal needs is a great ambassador to sell it. What a great salesperson needs is: charm and charisma. See where I am going here. Huckabee has all the attributes that Forbes was missing to be able to sell a revolutionary idea to the public like the flat tax. Besides what exactly will the Democrats counter with, tax increases?

She claims that while no one likes the IRS or taxes the flat tax is regressive. It is but it also gets rid of income taxes entirely. It bulks up sales taxes which are entirely voluntary (in other words you choose to buy stuff). In any case, I don't want to debate the fair tax here. What I do know is that the fair tax can be framed just fine if it has the right person framing it. Clearly, she dislikes the Fair Tax and dismisses it out of hand without much analysis. I believe that by doing so Estrich...well let me let Vizzini of The Princess Bride explain...

fell victim to one of the classic blunders! The most famous is never get involved in a land war in Asia, but only slightly less well-known is this:

...believing that something you don't like will also be disliked by the public at large.

She, not surprisingly, condescends to his faith and spirituality as if he is out of the mainstream. Eighty percent of this country is Christian. They may not be a Baptist Minister like Huckabee, however, again, when he speaks about his faith people WILL be impressed because: Charm and Charisma.

She claims that she wouldn't be worried about a race between Huckabee and Hillary. I would. Huckabee is charming, charismatic and likeable and Hillary is not. He compares just as favorably against Obama, given that he is experienced and Obama is not. Everyone compares favorably to Edwards so that is beneath me.

The worst part of the analysis is the claim that Huckabee's rise is indication that our party is in trouble. Nothing could be further from the truth. His rise shows that our party is strong and vibrant. It shows that we have a plethora of good, qualified candidates that can at anytime capture anyone's attention. The Democrats have a scandal ridden, cold unlikeable, candidate who's only accomplishment is being married to a popular President competing against a lightweight with less than four years of national experience. In third position is a total fraud who claims to be for the little guy while living in a home that measures five digits in square footage. None of the other candidates are worth even one look.

The Democrats are arrogant and cocky because they think that Iraq has dragged the Reps down to where they can't recover. I think that will all change soon enough, and their cockiness is quite obvious in Estrich's piece. There is a reason why superbia, or pride and arrogance, is one of the seven deadly sins, and the Democrats should heed the warning not to revel in it.

Finally, I am still a bit of an internet dunce. Thus, I can't seem to figure out how to put the video into this post. Thus, for an example of Huckabee's charm and charisma check out the video in the post directly above this...

Dems and Iraq: Rock Meet Hard Place

Here is the latest "good" news out of Iraq as reported by the New York Times yesterday.

As Iraqi refugees begin to stream back to Baghdad, American military officials say the Iraqi government has yet to develop a plan to absorb the influx and prevent it from setting off a new round of sectarian violence.

The Iraqi government lacks a mechanism to settle property disputes if former residents return to Baghdad only to find their homes occupied, the officials said. Nor has the Iraqi government come forward with a detailed plan to provide aid, shelter and other essential services to the thousands of Iraqis who might return. American commanders caution that if the return is not carefully managed, there is a risk of undermining the recent security gains.

“All these guys coming back are probably going to find somebody else living in their house,” said Col. William Rapp, a senior aide to Gen. David H. Petraeus, the top American commander in Iraq, speaking at a two-day military briefing on measuring military trends for a small group of American reporters in Baghdad...

But Mike, that isn't good news... Sure it is. This is, after all, the New York Times. If all they can find in the way of bad news is the government's troubles in dealing with refugees. Well, that frankly is good news. Our goals in Iraq were to remove Saddam, install a representative government, and turn Iraq from an enemy into an ally in the GWOT. None of that has anything to do with their refugee situation. That is, with all due respect, entirely the internal problem of the Iraqi government. If the government fails in such tasks as dealing with refugees, well then, the Iraqis will quickly grow as cynical toward their elected officials as we do here. So what. That has nothing to do with any of our goals in the country. The good news is that the New York Times can't actually find any real bad news.

On the same day, we also had vocal war opponent Jack Murtha say this.

Murtha said he saw signs of progress and continuing chaos during his one day in Iraq. A hospital he visited had been hit by a mortar attack the day before, but more parts of the country are peaceful than before, and Iraqi troops in the Al Anbar province are rooting out the remnants of al-Qaida in their area, he said…

Murtha said that “surge” of troops is working, but it only underscores how poor planning from the Bush administration has hamstrung the war effort. Other examples include the slow response to protecting troops from roadside bombs and a shortage...

Despite the expected caveats, Murtha couldn't deny reality. The surge is working. Violence is down. Iraqis: Sunni, Shia, Kurd, and all others are turning against the insurgency and are working with our side. Even the Daily Kos is starting to admit reality.

As U.S. casualties have continued to drop, many people on the anti-Bush side of the aisle have begun to quietly panic in recent days over this question: "Could George W. Bush and Frederick Kagan have possibly been right about the surge?"

Simply put, the answer is no. The surge is not working and George W. Bush and Frederick Kagan were not right. Despite what right-wing blogs are saying, and despite what conservative observers are noting, the plunge in violence is actually the result of an Iraqi political decision made by and implemented by Iraqis—and the drop has little to do with the "surge"—an infusion of 30,000 troops (which wouldn’t fill a Major League stadium) into Baghdad, a city of six million people...

It may in fact be desperately important for the Kossacks to prove to the world that the improved situation has nothing to do with the surge, however in reality, the arguement is silly, because it is not relevant. First, Bush's legacy will be set by history. Second, in the next election Bush won't be on the ticket.

Several anti war Democrats will be though. An entire Congress that tried to stop the surge before it got started will be. Let's take them one at a time...

Hillary Clinton

I think that the reports that you provide to us really require the willing suspension of disbelief...“In any of the metrics that have been referenced in your many hours of testimony, any fair reading of the advantages and disadvantages accruing post-surge, in my view end up on the downside.’’

Barack Obama

I will not support funding for a failed policy. It is long past time for the Republicans to stop filibustering a responsible removal of our troops from Iraq, and for the President to stop threatening to veto anything that is not a blank check for his failed strategy.

"Our troops must not bear the burden for the failure of Iraq's leaders to reconcile, nor should they be kept in Iraq to counter Iran.

Harry Reid

I believe ... that this war is lost, and this surge is not accomplishing anything, as is shown by the extreme violence in Iraq this week...

Nancy Pelosi

No statistic can capture the pain and loss endured by the families of the fallen in Iraq, particularly the children of parents who will not be returning home. Those who have lost loved ones, and those still serving in Iraq and around the world, are in our thoughts and prayers every day as we work to bring an end to the President’s disastrous war.

"While nothing compares to the loss of life in Iraq, the financial costs of the President’s policy are enormous and growing, with $10 billion being spent each and every month of the war. The total cost for the Bush Administration’s Iraq war could rise as high as $2 trillion, according to the Congressional Budget Office

"With every passing day, the President’s Iraq policy leaves the United States more isolated at a time when we must reclaim our moral leadership and rally the world to fight against terrorism. The choice is between a Democratic plan for responsible redeployment of our troops and the President’s plan to spend another trillion dollars for a 10-year war in Iraq."

So, every Democratic leader is now on record as believing that what is happening would NOT happen. They called a policy failed before they even had time to assess it. They are now stuck between the perverbial rock and perverbial hard place. They must now convince the country that what is real isn't actually real.

That's why they are all fixated on the benchmarks which haven't been met. The Dems are reaching for anything out of Iraq that looks like bad news. It is a very difficult arguement to make though. It is hard to convince the public the surge isn't working because the central government hasn't reached agreement on some pre determined goals. Second, this is becoming more and more General Petreaus' war. Thus, in order to prove failure when there is success, they will ultimately have to show the country more credibility on this matter than General Petreaus (who they incidentally voted unanimously to install less than a year ago).

I pointed out that the Republicans are not in a great position either because they are handcuffed to a war that will likely never be popular, however their perverbial "pickle" is much easier to navigate. Here is how they are currently navigating it.

The 2008 Republican presidential candidates have a simple position on the war in Iraq: They want victory, and they want to talk about something else.

With the notable exception of Rep. Ron Paul (R-Tex.), they echo President Bush, and say the United States must remain in Iraq for an unspecified period until the country is stable, and that leaving before then would be a victory for al-Qaeda.

But they usually only say that when asked. The two leading candidates in Iowa, former Arkansas governor Mike Huckabee and former Massachusetts governor MittRomney, occasionally give entire speeches without even using the word "Iraq."

Unlike the Democratic candidates, who have competed over who can offer the most precise plan for withdrawing troops as president, the GOP candidates have offered limited visions about how they see Iraq's future, choosing instead to focus on howthey would enlarge the U.S. military to fight the broader war on terrorism.

The Reps want to minimize Iraq as an issue as much as possible. That maybe the appropriate strategy now, however as the war continues to get better, and especially after Petreaus' next report in March, this issue may even turn into a benefit for the Reps. All those quotes will be damning if our casualties fall into the teens or even single digits by the next election after all. For the Reps, the trick is easy. Divorce yourself from the failed strategy that Bush employed (relatively easy since it was Bush's strategy after all, and Bush isn't the first President to start with a failed war strategy, see Lincoln, FDR, Wilson, Washington, etc.) Continue to back the current strategy and contrast that with the defeatist strategy that the Democrats are now married to.

The Ponzi Scheme Known as Social Security

This is Charles Ponzi and he is the inspiration for Social Security.



A hat tip needs to go to Michelle Malkin for pointing out this story. It seems that Barack Obama has made enemies with the nutroots recently. His crime is pointing out that social security has some problems. Social Security is the third rail for the base of the Democratic Party and much like someone's ugly wife, criticizing it brings an emotional response. He got hit by most of the usual suspects

All of which makes it just incredible that Barack Obama would make obeisance to fashionable but misguided Social Security crisis-mongering a centerpiece of his campaign. It’s a bad omen; it suggests that he is still, despite all that has happened, desperately seeking approval from Beltway insiders.

...

Barack Obama, please realize that you are assisting the right’s efforts to get rid of Social Security. Their strategy is to make the public think that the program is in trouble and then sweep in with their “solution.” …IS your heart in the right place? Social Security is not in trouble. Stop saying it is.

Now, the right blogosphere is having fun with this little political civil war however they should also remember their own threats against most of the candidates for the Rep nomination because they dared not toe the company line on things like abortion, campaign finance reform, immigration, etc. We all have our third rails and Democrats have among them Social Security.





I don't much care about this little battle. I frankly believe that Obama is better off taking them on. He has nothing to lose at this point anyway and the nutroots turn off as many people as they turn on. I am glad he said what he said and frankly showed political courage that I wish more politicians would show.





That said, I am much more interested in the problems facing Social Security and their solutions. I pay about seven percent of each check to social security and I don't believe that I will get anything when I retire.





A Ponzi scheme works as such. I came to you and promise that if you give me $100 today I will give you say $200 in the future. The way I get your $200 is from other suckers that are made the same promise. This works until I find no more suckers.





Now, the way Social Security works is that today's workers pay for today's retirees under the promise that once they retire, that day's workers will pay for them. That is no different than any other Ponzi Scheme only two things: 1) the government doesn't even hide that it is a Ponzi Scheme and 2) since the government is doing it instead of being illegal it is Social Security.





Frankly, the politicians can raise the age limit or the limit on income or any other limit, and it won't change the fundamentals behind it. If one group is used to fund the investment of another group, that PYRAMID scheme will fail once you have an imbalance in the investors. Say for instance, one month my ponzi scheme had a huge number of new investors and the next month I slowed down. I wouldn't be able to fund the new investors from the first month. That is what is happening now. It wasn't a month but years of baby boomers being born, and now there aren't enough workers to fund their retirement.





Anyone that knows anything about Ponzi Schemes knows that at some point there will be suckers holding the bag. It maybe the baby boomers if we don't figure it out, or it might be my generation or maybe even the generation after us. It matters not. The system is flawed. Social Security is among the worst ideas our government has created. It is a state sponsored legal Ponzi Scheme. That is what we should focus on. Everything else is trivial.

Barack Obama Responds vis a vis the Dream Act

A few days ago, I received an email from Senator Durbin regarding my inquiry about the DREAM Act. I thought it was an instructive email because it gives everyone a glimpse into the perspective of those that do not take illegal immigration seriously. Obama just responded as well and his email is quite similar.

Dear Michael:

Thank you for contacting me to share your views on the Development, Relief, and Education for Alien Minors (DREAM) Act (S. 2205). I appreciate hearing from you on this important issue.

As an Illinois State Senator and a United States Senator, I have worked hard to improve our nation's immigration laws. For example, I strongly supported legislation before the Illinois State Senate that would have helped honest and hard-working immigrant students attend college by providing them with government loans to pay for tuition. In the U.S. Senate, I am an original cosponsor of the DREAM Act when it was first introduced in the 110th Congress as S. 774. This legislation would allow certain immigrant students to attend college and obtain legal permanent residency.

In order for an undocumented student to qualify and apply for conditional legal status under the DREAM Act, he or she would have to: have arrived in the United States at age 15 or younger; have been continuously present in the U.S. for at least five years; have good moral character; graduated from high school or obtained a GED in the U.S.; not have a history of criminal or terrorist activity; and be age 29 or younger when the DREAM Act is signed into law. The undocumented student would then be required to either serve in the military or attend college for at least two years within a six year time frame. If the undocumented student is able to meet all of these requirements within six years, he or she could then apply for legal permanent residency; if the student fails to meet all of these requirements, he or she would revert to illegal status and become deportable. This legislation offers hope and opportunity to young people who have chosen the right path and who want to become contributing citizens of the United States.

Unfortunately, in October, the DREAM Act failed to receive the necessary 60 votes in order to cut off debate on the measure. Failing to pass the DREAM Act only compounds the immigration crisis by continuing to drive thousands of young people every year into hiding.I will be sure to keep your views in mind if the DREAM Act makes it before the Senate floor for another vote.Again, thank you for writing, and I look forward to hearing from you in the future.

Sincerely,
Barack Obama

The first thing that should be obvious is the terminology for illegal immigrant. Obama will call an illegal anything before he will call them illegal. At one point, he simply refers to them as immigrants and at another point he refers to them as undocumented. Those are all euphimisms used by the writer to try and minimize the situation. Referring to illegals as illegal is a stigma that would rather not face. It is, unfortunately for the Senator, the truth however. Anyone that can't even bring themselves to call an illegal illegal is already suspect.

Now, when this bill was first introduced, I warned opponents that proponents would immediately try and appeal to our sympathies. At least Obama doesn't find an illegal and try and tell their sad tale. Instead, he tries to create empathy through generalization. He points out that the DREAM Act only affects those that came here illegally with their parents. He points out that it allows them to go to school and join the military, and he even tries to appeal to our reasonable side by pointing out all of the hoops they have to go through as well as the "severe" punishment for non compliance. The simple fact of the matter is that he is for a bill that gives legal status to those that came here illegally. That encourages more illegal immigration.

I notice that while Senator Obama was listing through the accomplishments he thought he had in regards to illegal immigration, there weren't any that involved enforcement or anything that would actually discourage illegal immigration. By doing a lot of work on illegal immigration, the Senator means doing everything he can to cater to law breakers. I have sympathy for those that came here illegally with their parents as well. That is why I would be more than happy if before they were deported, they also met with someone that would show them how to fast track their re entry. I would be all for a bill that absolves them of their crime when we look at their application upon re entry. I understand that it wasn't their fault that they entered the country illegally however they still did. Rewarding them with legal status only encourages more illegal immigration.

I would frankly be more than happy to revisit the DREAM Act when I am confident that the border is sealed and we have cut off employment access to illegals. At that point, the DREAM Act is the right thing to do and the compassionate thing to do. At this point, it puts compassion above reason and it is ultimately bad policy. Obama cannot get around that.

Clinton and Obama Show Their True Colors on Illegal Immigration

Last week, the Senate debated a bill that would have ended sanctuary cities. Sanctuary cities are those cities that instruct their police force not to find out the legal status of suspects and criminals. In other words, if the cops arrest someone, and they are illegal, that person is not reported to immigration authorities, and after the case is resolved the criminal illegal alien is free to roam our streets. The link provides several instances of tragedy as a result of criminal illegal aliens. Now, that vote failed 52-42. Two of the Senators that didn't vote at all were Hillary Clinton and Barack Obama.

Today, there was a vote on the Dream Act. This is a bill that would legalize the children of illegal aliens, who of course are illegal themselves. Of course, this bill allows for many legislators to play to people's compassionate side. No doubt many Senators see the children of illegal aliens as helpless victims who did nothing wrong themselves. This is all true, however problems don't get solved by merely finding a victim that is easy to empathize with. They get solved by reasoned and logical solutions. You cannot reward illegal behavior with a free pass and expect to lessen that behavior. That is what this bill did. While the two Senators couldn't be bothered to show up for the previous Amendment to end sanctuary cities, they did vote on this one and they both voted to pass it. Fortunately, it didn't have the votes.

There are two other votes that are important in understanding where Hillary Clinton and Barack Obama really stand vis a vis illegal immigration. These votes came during the contentious immigration debate this past summer. The first one would have permanently barred criminals, gang members, and terrorists from entering our country. That means members of MS 13 and others would no longer be allowed into the country. It seems unbelievable that anyone would vote against this however both Hillary Clinton and Barack Obama did.

The second one would have simply committed our legislature to enforcing the laws already on the books. It is hard to imagine that anyone that who's job it is to make laws would vote against enforcing already existing laws, however both Hillary Clinton and Barack Obama voted against this amendment.

Here are some things that Hillary Clinton said vis a vis illegal immigrants.

Speaking at a rally of Irish immigrants, Clinton criticized a bill the House passed in December that would impose harsher penalties for undocumented workers.

"Don't turn your backs on what made this country great," she said, calling the measure "a rebuke to what America stands for."

It's clear that Clinton equates those that came here illegally with the millions of immigrants that followed the laws to get here. We have a phrase for that type of a view, open borders.

Obama is even more radical in his statements. Here is what he said to La Raza, the separatist, open borders group.

And I will never walk away from the 12 million undocumented immigrants who live, work, and contribute to our country every single day.

There are few better examples of how broken, bitter, and divisive our politics has become than the immigration debate that played out in Washington a few weeks ago.

So many of us - Democrats and Republicans - were willing to compromise in order to pass comprehensive reform that would secure our borders while giving the undocumented a chance to earn their citizenship.

We knew that the American people believe that we are a nation of laws - that we have a right and duty to protect our borders. And we should also crack down on employers who hire undocumented workers so that we can protect jobs and wages.

But the American people also know that we are a nation of immigrants - a nation that has always been willing to give weary travelers from around the world the chance to come here and reach for the dream that so many of us have reached for. That's the America that answered my father's letters and his prayers and brought him here from Kenya so long ago. That's the America we believe in.

These two Senators, and Presidential candidates, have no intention of addressing illegal immigration. In fact, by word and deed, they fall in line with their puppet master, George Soros, on this issue. It is clear that vision that these two Senators have for America's border is one where the border is wide open.

The Classic Bad News/Good News Story from Iraq

Those that know me know that I like very few things more than I like to argue. Since I majored in Finance in college and currently work in the mortgage industry, I invariably find my way toward arguements about the economy with many of liberal friends and colleagues. At this point, it is, in my mind, beyond discussion that the tax cuts served as a stimulant for the economic recovery and boon that followed. I find the tortured logic of any counter arguement to be amusing. For instance, many of my liberal friends point out the fact that the manufacturing sector has struggled since the recovery. This is of course a bogus arguement since it isn't the President's job to prop up one sector. He is there to provide stimulus to the economy as a whole and what happens from there is beyond anyone's control. Economies like everything else evolve. For instance, we don't have any blacksmith's any longer. Were there similar types screaming at the top of their lungs at the end of the eighteen hundreds that the President wasn't doing enough to protect their industry. There may have been and they would have been no less wrong.

Well, it turns out that the Iraqi economy is going through its own revolution, and as a result, one of their industries is unfortunately struggling. Of course, everyone in the industry is struggling along with it. That is the bad news. The good news is what industry it is that is struggling

At what's believed to be the world's largest cemetery, where Shiite Muslims aspire to be buried and millions already have been, business isn't good.

A drop in violence around Iraq has cut burials in the huge Wadi al Salam cemetery here by at least one-third in the past six months, and that's cut the pay of thousands of workers who make their living digging graves, washing corpses or selling burial shrouds.Few people have a better sense of the death rate in Iraq.

"I always think of the increasing and decreasing of the dead," said Sameer Shaaban, 23, one of more than 100 workers who specialize in ceremonially washing the corpses. "People want more and more money, and I am one of them, but most of the workers in this field don't talk frankly, because they wish for more coffins, to earn more and more."

No doubt there are a few anti war types that will blame the surge strategy for destroying the ditch digging industry. I am of course reminded of the classic Caddy Shack line now,
well the world needs ditch diggers too

True, however, in Iraq, it needs significantly less of them. It is this sort of scientific evidence that should convince everyone that things have turned. I know that most of our MSM is ignoring it and many politicians continue to parrot the same tired line about finding a new strategy however we have found a new strategy and its working, and if you want evidence of how well its working, just look at the struggling ditch digging industry in Iraq.

Incidentally, you can count Barack Obama among those politicians that hasn't seen the light yet. I emailed him for comment about the Betray Us ad controversy and here is his response.

Thank you for contacting me to voice your opposition to the MoveOn.org advertisement referring to Gen. David Petraeus as "General Betray Us." I appreciate hearing from you and share your distaste for such attacks on our military leaders.

General Petraeus is a distinguished, highly capable military leader doing the best that he can in an extraordinarily difficult situation. And though there are different views of the war in Congress, there is no disagreement about the tremendous sacrifice being made by the men and women who are serving in Iraq and Afghanistan. They have performed valiantly under exceedingly challenging circumstances. They have done everything that has been asked of them.

For this reason alone, our troops deserve better than partisan squabbling over a newspaper ad. I am focused on addressing the serious challenge we face in Iraq. Today, nearly four thousand brave young Americans are dead, and tens of thousands more have been wounded as our troops have become targets of the exploding sectarian violence in Iraq. Our military has been strained to the limits, and the cost to American taxpayers has already reached hundreds of billions of dollars.

As I have said repeatedly, the Administration's decision to invade Iraq and its disastrous handling of the war have left us without good options for dealing with Iraq. With full recognition of this reality, we must be as careful getting out of Iraq as we were reckless in the decision to invade Iraq. In the coming months, I will continue to push for a new course in Iraq that immediately begins a safe and orderly withdrawal of our combat troops, that changes our military mission to focus on training and counter-terrorism, that puts real pressure on the Iraqis to resolve their grievances, and that focuses our military efforts on the real threats facing our country. I hope you will stay in touch in the days ahead.Thank you again for writing. Sincerely,

Barack Obama

United States Senator

Well, Senator, as I have shown in these pages, we don't need a new strategy. The current counter insurgency strategy has lead to the classic war strategy of divide and conquer. Violence is down, and we only need to look at the ditch digging industry for evidence.

Senator Obama Graciously Responds to me vis a vsi Rush Limbaugh

I recently wrote Senator Obama an email urging him not to be a part of the mob in the cooked up controversy of Rush Limbaugh and the phoney soldiers. Here is his response...

Dear Michael:

Thank you for writing to me regarding Rush Limbaugh's recent comment about “phony soldiers.” I believe that remark was in poor taste and is a disservice to our servicemen and women fighting in Iraq and Afghanistan. I registered that belief in my correspondence with the CEO of Clear Channel. I understand that Mr. Limbaugh has claimed he was only referring to one soldier, Jesse MacBeth, who pleaded guilty to one count of making false statements to the U.S. Department of Veterans Affairs for pretending to be an injured Iraq war veteran. However, after reviewing the full written transcript it is clear that he was referring generally to soldiers critical of the war in Iraq.

Our troops have done everything that has been asked of them, and they have performed valiantly under exceedingly challenging circumstances. For this reason alone, our troops deserve better than partisan squabbling over an outrageous comment. I am focused on addressing the serious challenge we face in Iraq. Today, nearly four thousand brave young Americans are dead, and tens of thousands more have been wounded as our troops have become targets of the exploding sectarian violence in Iraq. Our military has been strained to the limits, and the cost to American taxpayers has already reached hundreds of billions of dollars.

In the coming months, I will continue to push for a new course in Iraq that
immediately begins a safe and orderly withdrawal of our combat troops, that changes our military mission to focus on training and counter-terrorism, that puts real pressure on the Iraqis to resolve their grievances, and that focuses our military efforts on the real threats facing our country.

Further, the American servicemen and women I have met inside and outside Iraq are courageous people. I admire and have confidence in them. I know they want to keep America secure and bring democracy to Iraq, and that they care deeply about their honor and America's honor. They deserve our utmost respect and gratitude for fighting for our country, and we should not undermine their ability to do their jobs in Iraq or ignore their needs when they return home to the United States.The American people may have disagreements over the conduct of the war in Iraq. I would hope, however, that there would be total agreement that our troops need and deserve our full support.

Thank you for writing, please stay in touch in the days ahead.
Sincerely,Barack ObamaUnited States Senator

Now, I have a few problems with some of the things that the Senator said and I will use this forum to address them. First, I have no problem with the anti war diatrobe that he went on which frankly was only generally related to what I asked about. He is a politician and that is politics. I disagree with his position and I will use future pages here to demonstrate the fallacy of his arguement however that is for another time.

First, the Senator said it is clear from the transcript that Rush was talking about all soldiers against the war. Well, it isn't clear to me and the Senator doesn't explain how it is clear to him, and thus I don't think that it is clear to him either. Second, and this is important, he refused to condemn the Betray Us ad. He refused to vote for a resolution condemning Moveon.org even though he voted for a previous resolution condemning all personal attacks, a resolution that tried to equivocate this attack on the General in war time to what the swift boat vets did to Kerry for instance. He referred to the matter as a political stunt. Well, he had no problems using his standing as a Senator and Presidential candidate to pressure the CEO of a public company in a similar matter, and thus, it seems the Senator picks and chooses his political stunts.

Furthermore, the Senator is no stranger to his own controversy vis a vis belittling the troops. Here is what he said

We’ve got to get the job done there and that requires us to have enough troops so that we’re not just air-raiding villages and killing civilians, which is causing enormous problems there.

Now, there were plenty of people that took those comments as condemnation of the troops. I think someone should be given the benefit of the doubt. I give the Senator the benefit of the doubt and to be fair he should have done the same thing with Rush Limbaugh. He didn't. He did vis a vis a far left group, and so I can only conclude it is political. What say Senator?

One More View of Barack Obama's Latest Proposal

My good friend Josh Levy of Win The War gives yet another perspective of Obama's latest speech at Depaul University here in Chicago. (for full disclosure I am a contributing editor at Win-The-War)

In Sen. Obama's latest speech on the war, he summarized his position on the Iraq War as follows:

But it's also time to learn the lessons of Iraq. We're not going to defeat the threats of the 21st century on a conventional battlefield. We cannot win a fight for hearts and minds when we outsource critical missions to unaccountable contractors. We're not going to win a battle of ideas with bullets alone.

Let's put aside the fact that al-Qaeda itself wants very much to to fight and defeat us on the battlefield, and considers Iraq the most important battlefield.

Let's put aside also that the solution to outsourcing critical missions is to increase the military so that it can accomplish those missions.

Let's put aside, finally, that by providing greater protection (i.e., manpower and bullets) to the Iraqis under the new strategy of Gen. Petraeus, we are in fact winning the battle of ideas. Sunnis and Shia both are giving us immense help and cooperating more with each other at the local and regional levels.

All that aside, Sen. Obama wants to leave Iraq and never discusses the probable consequences of our departure. He does not consider whether leaving will bolster the power of al-Qaeda or reduce it, whether it will increase unity in Iraq or lead to greater civil conflict, whether Iran and Syria will try to dominate the country or cease providing men, money and arms, whether America's reputation in the minds of its enemies will be burnished or blemished.
In other words, Sen. Obama wants to abandon the war effort merely on his principle that it was wrongly begun.

Sen. Obama believed that the war would hurt more than help American interests and security. He isn't asking himself the same questions about the consequences of retreat.
Any candidate who proposes, in effect, abandoning our allies to slaughter, yielding territory unconditionally to determined and fierce foes, and casting disgrace upon America's image abroad, is unfit for the presidency.






Now, after reading this, I just have one question for Josh, Why don't you tell us how you really feel?

Nuclear Disarmement: We Go First

I spotted this story earlier today and if I wasn't, you know, working, I would have gone ahead and seen this speech live at Depaul University.

That said, I would like to introduce guest commentator Todd Anthony, of Twin Cities Conservative, with his thoughts which I have cross posted here...


This article is typical of the unreal, utopian message to which the Left espouses.
How are we supposed to take the Left seriously, when they’re not dealing with a full deck? They live in a world where ultra-violent Islamofascists are subject to negotiation and appeasement, where Judeo-Christianity is the TRUE enemy in our country.

In this report, Democratic presidential candidate Barack Obama proposed eliminating all nuclear weapons, including the American nuclear stockpile. Here’s the primary issue that I’m sure most of you can identify: he assumes that rogue nations currently developing a clandestine nuclear program (see: North Korea and Iran) can be counted on to willfully disarm (i.e in good faith).

Is anyone surprised that the Democrats assume we can negotiate with despotic regimes? This is the same group of people that believed negotiations with Hitler would prove to be more fruitful. This is the same group that believes our exit from Iraq will magically halt all terrorist attacks against American citizens and interests within our borders and abroad.
Note the following points:

“In his speech, Senator Obama asserted that the US should not threaten terrorist training camps with nuclear weapons.”

Naturally, this comment is indicative of the anti-American rhetoric uttered from the Left. Along the same lines as the defeatist language expressed by the Democrats regarding Iraq, the message that terrorists hear is this: 1.) attack us with WMD, our response will be weak and timid; 2.) wait us out by (insert deadline); 3.) it’s our fault that you’re angry and violent.

“Senator Obama called for a combination of diplomacy and pressure to prevent Iran from acquiring nuclear weapons and to eliminate North Korea's nuclear weapons programs.”
Two words: wishful thinking. Obama and his Leftist ilk are under the delusion that Mahmoud Ahmadinejad and Kim Jung Il are trustworthy partners. How many times, for example, did the North Koreans renege on nuclear proliferation deals since the 1994 deal brokered by President Clinton and Secretary of State Albright?

Basically, Obama’s message is more of the same: America is bad. We’re the sole cause of anger in the Muslim world. Furthermore, we’re emasculating ourselves; this is akin to the gun dilemma in our country. The Democrats wish to strip all gun owners of their weapons, thinking this is the magic cure for gun violence. Yet, who will have guns? The criminals…
The same logic applies here; if a terrorist outfit wishes to use a nuclear device against an American interest, Israel, or God Forbid, within our borders, what’s to stop that group?
Nothing…

Here’s the complete article:
Obama seeks world nuclear ban
Jeff ZelenyOctober 3, 2007

PRESIDENTIAL hopeful Barack Obama overnight proposed eliminating all nuclear weapons, saying the US should greatly reduce its stockpiles to lower the threat of nuclear terrorism.
In a speech in Chicago that was due to have been delivered early today, Senator Obama was to add his voice to a plan endorsed this year by a bipartisan group of former government officials from the Cold War era, who say the US must begin building a world consensus to reverse a reliance on nuclear weapons.

Senator Obama, according to details provided by his campaign, was to call for vigorous diplomatic efforts aimed at a world ban on the development, production and deployment of intermediate-range missiles.

"In 2009, we will have a window of opportunity to renew our global leadership and bring our nation together," according to an excerpt of his remarks.

"If we don't seize that moment, we may not get another."

The Bush Administration has tripled the rate of dismantling nuclear weapons in the past year, putting it on track to halve US stockpiles by 2012.

The number of weapons being dismantled, like the overall stockpile, was secret, but the total number of American nuclear weapons would be at its lowest since Dwight Eisenhower was president from 1953 to 1961.

Under a 2002 treaty, the US and Russia agreed to limit operational nuclear weapons to between 1700 and 2200 by 2012.

Senator Obama is seeking to draw attention to his foreign policy views with the approach of the fifth anniversary of the congressional vote authorising military action in Iraq.

Senator Obama, a member of the Foreign Relations Committee, often tells voters the Iraq war has consumed foreign policy to the detriment of its ability to tackle other threats to the US.
In his speech, Senator Obama asserted that the US should not threaten terrorist training camps with nuclear weapons.

If elected, he said, he would lead a world effort to secure nuclear weapons and material at vulnerable sites in four years.

He pledged to end production of fissile material for weapons, agreed not to build new weapons and remove any remaining nuclear weapons from hair-trigger alert.

Senator Obama called for a combination of diplomacy and pressure to prevent Iran from acquiring nuclear weapons and to eliminate North Korea's nuclear weapons programs.
Senator Obama is endorsing a call for "urgent new actions" to prevent a new nuclear era, which was laid out in January in a commentary in The Wall Street Journal by several former government officials.

The authors of the article were George Shultz, secretary of state in the Reagan administration; Henry Kissinger, secretary of state in the Nixon and Ford administrations; William Perry, secretary of defence in the Clinton administration; and Sam Nunn, a former chairman of the Senate Armed Services Committee.

Barack Obama's Withdrawal Plan

It just occurred to me. While most anti war politicians have called for a pullout of one sort or another, none have turned that pull out into a specific plan. Whether this is by accident or design, it has the effect of countering reality with utopia. Many times the opposition has countered the reality of Iraq with some sort of utopia. For instance, Hillary Clinton did it when she called for the ouster of Prime Minister Maliki without endorsing another candidate or explaining how this would be done.

Today, Barack Obama will reveal his pullout plan and no longer will we need to compare reality with some sort of utopia.

His plan is an unmitigated disaster good for nothing more than a thought experiment. That is exactly how it was described by Fredrick Kagan.

I don't know if Obama himself ever leveled this charge, but one of the criticisms of Bush's Iraq policy was framed as the whack a mole arguement. Whack A Mole is a game with five holes in which five moles pop up one at a time and the object is to pop each mole back in its place as it pops out of its hole. The metaphor is that as we cleared one trouble spot the enemy would just clear out and move to another spot or after we pulled back to our bases the enemy would return.

In fact, our new strategy of clear, hold and build assures that this error is corrected. Yet, despite the obvious flaw in our previous system Obama's pull out plan ensures that once again we will play Whack A Mole only in reverse.

Obama wants to pull out brigades and battalions in phases starting with the quietest areas. The flaw is obvious. These areas are quiet specifically because U.S. troops are there in conjunction with Iraqis. Let's take Ramadi for instance. This used to be one of the most violent cities in the world, and now it is so quiet that soldiers actually complain of boredom. Obama hasn't specified which quiet area goes first but let's say it is Ramadi.

What does any reasonable person think the enemy would do as soon as U.S. soldiers are pulled out of Ramadi. They would return and return it to its previous violence. What of our allies in Ramadi: the local government, the Sheiks, tribes, and ordinary citizens. Do they follow our soldiers out of Ramadi. If so, how? If they don't what will happen to them?
They will get slaughtered of course. They won't just get slaughtered but their slaughter will most likely be posted on the internet, Al Jazeera, and anywhere else that will have their propaganda.

Once Ramadi turns into a bloodbath, then what. Will we move our soldiers from another quiet area to Ramadi? That of course will inevitably turn the next area into the next bloodbath.
This is the absurdly fatal flaw of Obama's pull out plan. It fails to realize why certain areas are quiet. Furthermore, it is totally duplicitous. If he believes that all quiet areas will continue to be quiet whether U.S. soldiers are there or not, then the only logical thing to do is to continue to apply man power to any spot that isn't quiet. After all there are only a finite number of troubled areas left. Once all of those are pacified, he could logically call for a phased pull out.
There are several other problems with his plan,

He wants forces to remain in Iraq to protect our embassies, military installations, and strike at Al Qaeda. First, the best way to do all of this is to stay on the offensive. Pulling out is a defensive strategy. Second, as I have already pointed out, AQ would simply fill the vacuum of any area that our troops would be pulled back from. If we pulled out of Ramadi, AQ would move into Ramadi. What does Obama propose that we then move a residual force back into Ramadi? From where? Wherever it came from, AQ would simply fill the vacuum there.

Then, Obama would put pressure on other Middle Eastern nations to provide security and diplomacy in Iraq. Does he seriously think that anyone is going to listen to anything we say with regards to Iraq as we pull out troops and spiral the country into chaos and genocide. Obama seems to think that other countries aren't doing enough while our troops are there en masse, but will become good partners while we are in the process of washing our hands of the nation.
As to genocide, Obama says he will reserve the right to step in if a genocide ensues. What a foolish statement. He will first create a genocide in a city like Ramadi and then reserve the right to pull forces back in to stop the same genocide that he created. How exactly would that work? Who in their right mind would trust our soldiers after they witness their brethren get slaughtered because they were precipitously withdrawn?

The problem is that Obama fails to realize that you don't end wars with phased withdrawals. They are won or lost. He is dressing up his loss into some high minded concepts that he himself doesn't really understand. The enemy is not going to sit on the sidelines while we withdraw in an orderly fashion. They will take full advantage of it, and our troops along with our allies will be caught in the chaos that follows. There is nothing orderly or responsible about this plan. This is a recipe for a humiliating defeat, a genocide, and ultimately a regional war that we will not be able to contain.

Barack Obama Rides His Mortgag Horse to the Rescue

In these same pages, I have pointed out that the narrative of the mortgage crisis pins all of the blame on people like myself, mortgage brokers. The reason for this is simple. We are a sociopathic, scummy, greedy, and thus we are an easy target. I have pointed out what really happened...

The reason that we have a sub prime crisis is because a bunch of dead beats
bought homes they couldn't afford from banks that should have never lent them
money. The role of the mortgage broker in securing these loans shouldn't be
understated and frankly I will never miss any opportunity to take a pot shot at
my industry, however blaming this crisis on us frankly gives us too much credit.
We have always been a collective group of sociopaths.
That didn't start two years ago. That was always so. Thus, there was a new
dynamic in play in the last few years.

The truth of the situation is that banks loosened their restrictions so much that irresponsible people were able to get loans. To somehow claim that mortgage brokers pushed people to buy homes they couldn't afford, is well, something only a pandering politician would ever come up with. Yet, this is exactly what Barack Obama (following closely on the Heels of Hillary Clinton) is now saying.

This all started as a good idea – helping people buy homes who previously
could not afford to. But over time, lenders began pushing low-income buyers into
homes they could not possibly afford, abusing the system by lowering their
lending standards, making loans that required no money down and offering low,
teaser interest rates that explode after the initial grace period. Some
borrowers were also lying to get mortgages or engaging in irresponsible
speculation.
Nearly everyone – from lenders to investors to borrowers –
fooled themselves into thinking that what they were doing was low risk when it
in fact involved a lot of risk.

Read Obama's statement carefully. In it, he does recognize that the borrower's played at least as big a role in the mess as the evil, evil mortgage broker. Yet, his remedy is only to punish the broker and to use the proceeds of the punishment to help the same borrowers that he himself recognizes were active players involved in fraud.

What is his solution...

That is why I have proposed a Home Score system that would create a simplified, standardised metric for home mortgages – rather like the annual percentage rate (APR), the effective interest rate a borrower ends up paying on a loan – allowing prospective home buyers easily to compare various mortgage products so they can find out whether they can afford to make the payments.

I have also introduced a bill in the US Senate called the Stop Fraud Act that would treat those who commit mortgage fraud as the criminals they are.

There are only two problems to his two solutions. The first is that the APR system is simplified. The Annual Percentage Rate takes your interest and combines it with the fees you pay and thus if someone offers you a low rate with a lot of fees that will be reflected in the Annual Percentage Rate. Now, if Obama's system is simpler then I would like to know how, but simply saying it does nothing.

Second, we already have laws on the books against mortgage fraud. Obama seems to think that mortgage brokers, like myself, can commit fraud at will with impugnity. The fact is we can, but the reason is not the lack of laws, but the lack of enforcement. The problem is that it is the banks that need to report fraud. Banks are not going to go through the trouble, usually, of reporting fraud when it has been recognized. Their remedy is normally to simply deny the loan and either put the broker on notice or terminate the relationship entirely. It is simply not cost effective for banks to get into criminal matters everytime they think there is fraud.

The ones that will report fraud are the borrowers. The problem there is that usually it isn't fraud. Usually the borrower acted as though they knew the terms of the loan, signed the paperwork, and when something went haywire then they cried fraud. Several of my friends are facing fraud charges from angry borrowers who claim they weren't told that their mortgage payment would adjust. Never mind the fact that they signed documents that did in fact say this, they are still crying fraud.

Obama knocks off everyone from his short list of demons in his proposal, and no short list of demons would be complete without an attack on lobbyists...

There is a reason why this has happened. Over the past several years, while
predatory lenders were driving low-income families into financial ruin, 10 of
the country’s largest mortgage lenders were spending more than $185m lobbying
Washington to let them get away with it. So if we really want to make sure this
never happens again, we need to end the lobbyist-driven politics that made it
possible.

There are several things that bother me about this. First, no one can force anyone to do anything. Obama, like Clinton before, him makes it seem as though evil, evil mortgage brokers forced unaffordable mortgages onto helpless borrowers. Is this really so? Is someone really so helpless that they couldn't simply refuse to take on the loan they were offered? Furthermore, it wasn't lobbyists that created the market for these loans, but rather Wall Street. That's right from 2004-2006 Wall Street had an insatiable appetite for more and more aggressive mortgage backed bonds, and they continued to want more and more aggressive mortgage backed bonds as long as the price of homes were going up. Once the price topped out, Wall Street realized these securities were bad and the money for them dried up, and we are in the mess we are in. This had little to do with lobbyists, but rather as Alan Greenspan once said, "irrational exuberance".

Anyone who has read my work knows my favorite quote, "the nine most dangerous words in the English language are 'I'm from the government and I'm here to help'". Barack Obama, and his convoluted mortgage bailout, is a perfect example of its wisdom.