White House hostility so bad business is moving back to GOP

We are a long way from Dwight Eisenhower's cabinet. "Eight millionaires and a plumber," as one journalist dubbed Ike's team.

The Obama administration has the least corporate executive experience of any White House in decades.

The premiere posts of Treasury and Commerce express the issue. Both are traditionally bridges to business. This is the only first-term administration in about a century, when the Commerce post was created, to have neither a Commerce nor Treasury secretary with significant business experience.

"Obviously, the Obama administration doesn't stack up with previous Republican administrations but they don't even stack up with previous Democratic administrations," said Stephen Hess, a Brookings institution presidential scholar and veteran of four administrations.

"Democratic administrations always have a much shallower corporate personnel," Hess continued. "But if you deconstructed previous Democratic administrations you would have found considerable tokenism, particularly to cool things with Wall Street. You would want a Treasury secretary who had the friendships and the connections to settle people down. You don't want a jumpy Wall Street, even in ordinary times."

Obama has advisors from the private sector. The National Journal calculated that 28 percent of Obama's top officials have experience as business executives. It was 38 percent during George W. Bush's first term.

But locating that experience sheds more light on the story. National Journal had to reach to Chief of Staff Rahm Emanuel's brief sojourn from government into investment banking and second tier cabinet posts (e.g., Housing and Urban Development Secretary Shaun Donovan, once managing director at Prudential Mortgage Capital for affordable-housing investments, or Interior Secretary Ken Salazar, who worked as a partner in his family-run ranch).

It's worth noting that, in these hard times, there would have also been issues with a big business cabinet. Many Americans already believe the Bush and Obama administrations put Wall Street ahead of the public interest (see bailout).

But Obama's circle has the worst of both worlds. He is seen as too close to big business. And big business sees him as too close to the populists.

The anger has built for more than a year, even among Obama supporters. The Obama White House is "without question the most hostile administration to business and to the role of business that we've had in decades," said media mogul Mort Zuckerman this summer on MSNBC, an erstwhile Obama backer.

CNBC's Jim Cramer, another former Obama man, said last March that, "this is the most, greatest wealth destruction I've seen by a president." Cramer has not let up since.

Big business has not been this antagonistic toward Washington since Franklin Roosevelt. FDR's populism earned him the label of "traitor to his class."

The feud has already cost Democrats. Wall Street is donating a majority of its contributions to Republicans for the first time in years.

Abolish Fannie Mae and Freddie Mac; we can't afford them

The Obama administration held yet another style over substance “conference” yesterday, this time to give the appearance of doing something about housing giants Fannie Mae and Freddie Mac. The two behemoth government sponsored enterprises (GSEs) are at the epicenter of America’s financial meltdown.

The two GSEs have further placed taxpayers on the hook for nearly $5 trillion in mortgage guarantees and debt obligations.

And Fannie and Freddie continue to bleed money at an alarming rate.

In early August they requested over $3 billion in additional bailout funds. To date, America’s taxpayers have shelled out a whopping $148.2 billion bailing out the two failed government mortgage enterprises. The Congressional Budget Office (CBO) estimates the bailout could reach as high as $389 billion.

“With the national debt at nearly $14 trillion and unemployment still near 10 percent, the administration has yet to stop the bailouts of Fannie Mae and Freddie Mac,” said House Republican Conference Chairman Mike Pence (R-Ind.). “They would do well to remember that underwriting every bad loan in America is not the answer.”

My take:

It's hand-wringing time again concerning the future of Fannie Mae and Freddie Mac, which, unfortunately for American taxpayers, may actually have a future.

But it's election season, so posturing is in order. A couple of days ago, Barney Frank even suggested that maybe, perhaps, eventually, Fannie and Freddie should be "abolished," a suggestion that has been made here without conditions.

Fannie and Freddie served as consigliere in the subprime housing bubble and bust. Without Fannie and Freddie, neither of those disasters could have happened.

Since the bubble and bust did happen, the rational course would be to abolish Fannie and Freddie, since that would prevent a repeat of the subprime mess.

Trouble is, this is election season, and Fannie and Freddie have served as generous supporters of Democrat congressional campaigns. They also have served as hiring halls for out-of-work Democrats, no small consideration given the likelyhood that the Democrat unemployment rate will rise after the November election.

So why don't Republicans make the extinction of Fannie and Freddie an election issue?

Call Barney Frank's bluff.

Shrink government.

Congress critters got $2 million from beneficiaries of earmarks

House and Senate lawmakers have received nearly $2 million in campaign contributions this election cycle from organizations for which they had sponsored earmarks, according to a new report by two nonpartisan watchdogs.

Over half of the members of the House and Senate accepted money for the November elections from recipients of their earmarks, according to the report, released Thursday by the Center for Responsive Politics and Taxpayers for Common Sense. Thirteen senators and nine House members received more than $20,000 from companies and organizations that were beneficiaries of their earmarks.

"In too many cases campaign contributors are able to donate thousands of dollars and get millions of dollars back in earmarks," said Steve Ellis, vice president of the taxpayers' group. "This isn't altruism that is driving their behavior."

In total, lawmakers spent $15.9 billion on earmarks in the current fiscal year, only a fraction of which went to campaign contributors, according to the group. That figure is less than the $19.9 billion spent in fiscal 2009.

Earmarks, which direct spending to specific recipients, have become a political issue as the federal deficit has ballooned. Critics charge that the spending is directed to lawmakers' pet projects, bypassing competitive bidding and other fairness safeguards. Democratic leaders said this year that they will allow earmarks only for nonprofit organizations. Republican leaders said they would seek to ban all earmarks.

The report also found $269 million in lobbying last year by earmark recipients, though that figure includes amounts spent on other issues as well. "Even with all of the scrutiny that we've seen in the last couple of years, earmarks are still a big business," Ellis said.

Big Dem donor stole $292 million from banks

A once-wealthy businessman and prominent donor to Democratic candidates pleaded guilty on Thursday to stealing hundreds of millions of dollars to buy property in Westchester County, donate to charity and give money to political campaigns.

“I am deeply ashamed of my conduct,” the man, Hassan Nemazee, 60, told Judge Sidney H. Stein in Federal District Court in Manhattan. “I accept full responsibility for my actions.”

In September, federal prosecutors charged Mr. Nemazee, who had raised money for Bill and Hillary Rodham Clinton, John Kerry and Barack Obama, with running a Ponzi scheme from 1998 to 2009 that obtained $292 million in fraudulent loans from Bank of America, Citibank and HSBC.

At the time of his arrest on Aug. 25, Mr. Nemazee, the Iranian-American son of a shipping magnate, was chairman and chief executive of Nemazee Capital, a holding company with investments in private and public companies. In pleading guilty to three counts of bank fraud and a count of wire fraud, Mr. Nemazee, of Manhattan, told the judge that his misdeeds began when he was facing “severe financial difficulties.”

Trial lawyers profit from jackpot justice; protect their domain with campaign contributions

From Wall Street Journal

"Tort reform is a policy no-brainer. Experts on left and right agree that defensive medicine—ordering tests and procedures solely to protect against Joe Lawyer—adds enormously to health costs. The estimated dollar benefits of reform range from a conservative $65 billion a year to perhaps $200 billion. In context, Mr. Obama's plan would cost about $100 billion annually. That the president won't embrace even modest change that would do so much, so quickly, to lower costs, has left Americans suspicious of his real ambitions.

It's also a political no-brainer. Americans are on board. Polls routinely show that between 70% and 80% of Americans believe the country suffers from excess litigation. The entire health community is on board. Republicans and swing-state Democrats are on board. State and local governments, which have struggled to clean up their own civil-justice systems, are on board. In a debate defined by flash points, this is a rare area of agreement.

The only folks not on board are a handful of powerful trial lawyers, and a handful of politicians who receive a generous cut of those lawyers' contingency fees. The legal industry was the top contributor to the Democratic Party in the 2008 cycle, stumping up $47 million. The bill is now due, and Democrats are dutifully making a health-care down payment."

(snip)

"Over in the House the discussion isn't about tort reform, but about tort opportunities. During the House Ways & Means markup of a health bill, Texas Democrat Lloyd Doggett ($1.5 million from lawyers) introduced language to allow freelance lawyers to sue any outfit (say, McDonald's) that might contribute to Medicare costs. Only after Blue Dogs freaked out did the idea get dropped, though the trial bar has standing orders that Democrats make another run at it in any House-Senate conference. "

Why tort reform is not on the health care table

From San Francisco Examiner

"...trial lawyers have effectively bought themselves veto power.

In the ranking by OpenSecrets.org of campaign contributions by the top 100 special interests during the past 20 years, the American Association for Justice — formerly the Association of Trial Lawyers of America — ranks sixth. The AAJ is trial lawyers’ Washington lobbying group, and 90 percent of its $30.7 million in contributions since 1989 went to Democrats. At the other end of this pay-to-play process in the Capitol, AAJ has spent nearly $14 million lobbying Congress just since Democrats won control of both chambers, including $2.3 million so far this year.

The Democratic focus of the plaintiffs’ bar is even more obvious from campaign contributions of National Journal’s top 15 class-action trial attorney firms.

As the Examiner’s David Freddoso and Kevin Mooney reported last week, those firms have in 2009 contributed more than $636,000, 99 percent of which went to Democrats. And employees of those firms have given more than $236,000 to the Democratic Senatorial Campaign Committee this year. Senate Majority Leader Harry Reid faces an uphill re-election battle, but the top trial lawyers’ firms are right there for him, with contributions totaling some $54,000 to date."

Dems could bend health care cost curve down by infuriating trial lawyers who fund their campaigns

"The second component, which can explain the difference in baseline healthcare costs for the United States compared to other developed countries, is the medical-legal environment that healthcare is practiced in. The United States has the least tort-adverse healthcare system in the world. Studies estimate that $200 - $500 billion of the annual US health care budget is attributable to defensive medicine.

So the question is, can we cut costs and expand access to care for more Americans while maintaining what is good about our current healthcare market and respecting the values of individual liberty, freedom, and personal responsibility that this country was founded upon? The answer is yes but we have to decrease government imposed restrictions on consumer choice in the healthcare market and enact nationwide tort reform."