Items of Interest 10-19-2010

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THE WALL STREET JOIlRl'iAL.

REVIEW & OUTLOOK ! OCTOBER 19.2010

The Housing Bust Lobby

Obama is right to resist the foreclosure uxiils froni the political left.

More than three years into the housing bust, the foreclosure mitigation lobby apparently wants to keep the fun going. That will surely be the result if the political uproar over bank "robo-signers" becomes a moratorium on foreclosures.

,So far the Obama Administration, to our surprise and perhaps its own, has behaved with admirable sobriety despite the wailing from the political left. Housing Secretary Shaun Donovan indulged in some familiar bank-bashing in an oped on the weekend, but he also says a moratorium would be a mistake. Perhaps this is because he knows something ~out mortgage contracts, including that bank process errors don't add up to an injustice to homeowners who haven't b~n paying their mQrtgages for months or years. He also notes that stopping a foreclosure creates unintended victims-such as the potential new buyer.

The alleged scandal here is that "robo-signers" for mortgage servicing companies have been signing foreclosure authorizations based on assurances from colleagues, rather than reviewing the files themselves. Some banks and mortgage servicing companies were also sloppy in maintaining records on the ownership ofloans. This supposedl~ leads to horrible consequences for borrowers, though the evidence remains elusive.

The New York Times appeared to have produced a front-page victim on Friday-a woman fighting eviction from her $75,000 home at the hands of lender GMAC. The woman has not paid hel;' mortgage in two years while remaining in the house. Some may view this as a case of rough treatment, but we doubt New York Times subscribers can receive the paper for two years after they stop paying for it.

One left-wing financial blog has compiled news accounts that as many as seven people have unfairly suffered a foreclosure, despite making all payments. That's right, seven in a nation of more than 310 million. Our Journal colleagues also found a borrower who apparently paid her bills but was still charged additional fees by Senator Chris Dodd's favorite mQrtgageGompanv, Countrywide Financial. As we said last week, whether the number of legitimate victims is seven or eight or more, anyone who paid on time and still suffered at the hands of a bank sbould be made whole. But on the record so far this is not a case of widespread fraud or injustice.

On the issue of maintaining the documents to establish ownership of a mortgage debt, it's not surprising that t~e I2rocess is messy, given that Fannie Mae and Freddie Mac helped design it. But securitization errors are also process flaws, and they do not entitle everyone to a free house.

Joseph Mason, a Wharton fellow and finance professor at Louisiana State University. states it plainly: "There is no. question whether the contracts each party signed were valid. The Borrower owes the money they used to buy the ~operty. The Lender has a claim to that money. Mere delays in providing the right documentation of a perfected, collateral claim will not change the Situatjon."

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Sloppiness in some financial back offices does not come close to justi 'ng a national foreclosure moratorium. B some estimates suc a freeze could cost more than $2 billion per month, and given how involved the unwilling taxpayer has become in mortgage finance, this damage won't necessarily be limited to bank shareholders. This is a nightmare for ;nyone who wants a healing housing market and investors willing to lend to the next generation of homeowners. It

~ also raises false hopes among delinquent borrowers,

Backers of a moratorium claim they are upholding the rule oflaw, while we have allegedly abandoned it in opposing a freeze. This argument has it backwards. We say that disputes over private contracts should be decided on an individual basis under the law. The moratorium crowd wants to use the individual cases as a political lever to enact policies that effectively change the terms of existing contracts-e.g., more loan modifications, reductions in loan principal via bankruptcy court, or a moratorium.

@ f:s for the state Attorneys General who are promoting this foreclosure fracas, watch how few of them merely seek to • force banks to document ownership, and how many try to muscle banks into settlements with unrelated benefits for the AGs' favored constituencies.

The moratorium lobby also argues that keeping people in hollies they can't afford will somehow help the economy. This is of a piece with more than three years of failed policies intended to prevent housing markets from finding a bottom. These policies-begun under George W. Bush and continued under President Obama-have succeeded mainly in prolonging the agony and delaying a recovery.

In a slow-growth, high-unemployment economy still mending from a financial crisis, there are only so many trilliondollar markets the politicians can destroy without sending America back into recession. Mr. Obama has often seemed i?different to the economic consequences of political decisions, but on this issue he has correctly perceived the

j

horrendous cost of blowing up the mortgage market again.

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THE WALL STREET JOURNAL.

Vv>SJ.;:~(r

OPINION

OCTOBER 19,2010

How the Fed Is Holding Back Recovery

By promising to print more money, it's giving Congress an excuse to avoid critical tax and spending cuts.

By DAVID MALPASS

g_ongress will face a runaway train on taxes and spending when it reconvenes after the elections. The solution is to restrain both -especially to stop the $6 trillion tax increase scheduled to take place on Jan. I-in order to restore business confidence and help job growth.

Instead, Congress is more likely to do nothing and count on the central bank to flood the economy with more money. In his speech at the Boston Federal Reserve Bank on Friday, Fed Chairman Ben Bernanke practically promised to - oblige by resuming the large purchases of Treasury notes carried out to help stop the 2008 financial crisis. It's a sweeping manipulation of longer-term government interest rates and the dollar that the Fed should consider only in _!:he direst of national emergencies or with specific congressional authorization.

Mr. Bernanke argued that most oftoday's high unemployment is c clical and therefore susce tible to moneta

stimulus. "We see 1 e evidence that the reallocation of workers across industries and regions is particularly pronounced relative to other periods of recession," he said, "suggesting that the pace of structural change is not greater ~an normal." This ignores the tax, regulatory and federal spending crises hammering workers and small businesses.

Associated Press

Federal Reserve Chairman Ben Bernanke

In reality, workers are being reallocated, and by the millions.~o the mortgage shambles, they are not moving around as much as in past recessions. But the structural reallocation is clearly pushing older

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workers into long-term unemployment.

Meanwhile, there's also been a powerful rechanneling of credit away from small businesses. Corporate and governnlentjobs are faring better than smalll:ms1nes:;;jQPs, another major structural change that Fed purchases will exacerbate by channeling cheap credit to big entities.

Jobs are moving to Asia as Washington's weak-dollar policy causes trillions of dollars to move abroad to protect against the risk of U.S. inflation and dollar debasement. Investors put their money into foreign factories, mines and workers, creating a boom there. They avoid long-term job-creating investments here, instead buying short-term IOUs from our government.

Whether in Republican or Democratic administrations, the Washington policy consensus for a decade has been "print, and spend." When that doesn't work, the Washington m:esGrip.tiQI1 is to double the dose-more monetary easing and

i

dollar devaluation, and always more government spending. The Fed in particular has become accustomed to

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subsidizing federal borrowing by holding interest rates too low, which distorts capital flows and fosters asset bubbles.

By claiming that most of our unemployment is cyclical and not structural-and by not once mentioning the crashing dollar or small business profits-Mr. Bernanke has demonstrated that the central bank has blinders on. In his speech Mr. Bernanke cited the decline in the core PCE deflator (which uses the broad-based price index for personal c~sumption expenditures and excludes the volatile food and energy components) as evidence that inflation trends are wbdued. This is the same backward-looking indicator that former Fed Chairman Alan Greenspan used to defend his disastrous low-interest, weak-dollar monetary policy from 2003 through 2006.

The reality is that core PCE inflation is regularly revised upward as the government takes into proper account rising prices for popular new Items. Thus inflation gets underestimated and the Fed makes mistakes based on this mismeasure. For example, core PCE inflation was originally reported at 1.5% in most of 2004 with no real uptrend until Katrina hit in the second half of 2005. However, the corrected data now shows that core inflation was rising sharply in 2003 when the Fed hit the gas pedal and weakened the dollar. By April 2004, core inflation was already rising above the Fed's 2% ceiling and constantly exceeded it through 2008.

The Fed's public advocacy of bond purchases has already weakened the dollar. And the nearly $100 billion per year in profit the Fed is earning from its investments are at the expense of savers forced to compete with the Fed for bonds.

President Obama and Mr. Bernanke tried print-and-spend in trillion-dollar increments in 2009 and 2010, with no <.!iscernible improvement in unemployment (which is still almost 27 million counting underemployment) or small !msiness investment plans, nearly the weakest on record according to the September survey by the National Federation of Independent Business.

The administration's centralized small business loan plan, enacted in September, was the latest spending flop. As the government controls more industries and allocates more of the nation's capital, small businesses lower their hiring plans, as they did last month, on the expectation that the federal government will tax them more to pay for Washington's largess.

By electing a new Congress in November, voters may be able to slow federal s endin growth, but they probably can't stop the Fe s atest expansion plan. The Fed is likely to buy more long-term government-guaranteed bonds, using_ newly created money to add to the over $2 trillion in bonds it already owns.

The damage is substantial. Near-zero interest rates are hammering savers, while transferring hundreds of billions of dollars annually to bond issuers-mostly governments, banks and bigger corporations. The weaker dollar is pushing risk capital away from this country and toward Asia and emerging markets.

~erica's structural growth problems are clearly focused in small business and stem from high taxes, regulatozy threats and the central control of credit. But the Fed's stimulus policy supports government over the private sector and

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~big business over small-meanwhile, giving Congress an excuse to impose crippling increases in taxes and spending.

Mr. Malpass, deputy assistant Treasury secretary in the Reagan administration, is president of Encima Global LLC.



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Peter Kafka John Murrell

Apple Has $51 Billion and a Shopping List. Is Facebook On it? ..

Jobs on Android: The Isn't Closed Vs. but

HI.18 - 2:58 pm

10.'18" 2:13

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REVIEW & OUTLOOK

OCTOBER 19, 2010

What's the Matter With America?

President Obama's false consciousness theory of economic worries

In his 2004 bestseller "What's the Matter with Kansas?," our former columnist Thomas Frank argued that sodal conservatism is a form of "working class" false consciousness and that bltle .. collar voters ignored their own economic interests by declining to. support Democrats. Now President Obama is picking up the theme, albeit with a twist.

"And so part of the reason that our politics seems so tough right now, and facts and science and argument does not seem to be winning the day all the time, is because we're hard-wired not to always think clearly when we're scared," Mr. Obama told an audience of well-heeled liberal donors at a Boston-area fundraiser over the weekend. The country's anti-Democratic mood, he said, was the result of "having gone through this trauma."

Mr. Obama meant the 2008 financial panic and recession, not two years ofliberal governance. But it's telling that the President is blaming the lousy economy that he wa~ elected to fix for his party's electoral predicament. Democrats blamed John Kerry's 2004 defeat on the culture war, and now they're pre-emptively blaming November on the false consciousness of economic worries. They might as well be asking, "What's the matter with America?"

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KeithHennessey.com » Checks for the politically powerful» Print

- KeithHennessey.com - http://keithhennessey.com -

Checks for the politically powerful

Posted By kbh On October 19, 2010 @ 5:00 am In budget,economy.featured,seniors,taxes I No Comments

~nior citizens, disabled people, and veterans have four things in common;

1. Y::!_e feel empathy for the_rn,;

2. they are politically powerful constituencies~

3. their government benefits are indexed to inflation through an annual cost-of-living adjustment

(cOLA).L..and '

4. the President wants Congress to write them a $250 check.

On Friday the White House released a Statement by the Press Secretary whicf::l said in l3aFt:

.J':1any seniors are struggling in the face of the economic downturn, haying seen their savings, fall. ... The President will renew his call for a $250 Economic Recovery Payment to our seniQrs this year, as well as to veterans and people with disabilities.

I'd like to ask about other Americans, may of whom are struggling but who are not as well organized or as politically powerful as these groups.

The political justification for this policy is clear. The policy rationale is not. (photo credit: Steven Martin [1])

Related Posts

(best matches are listed first)

1. The President's new economic proposal [2]

2. Enacting President Bush's stimulus proposal [3]

3. Will the stimulus come too late? [4]

4. Demographics is a bigger problem than health care costs [5]

5. The wrong health reform will hurt the economy [6]

6. Six month economic policy status update [7]

7. RNC Chair makes the wrong argument on Medicare [8]

8. The Medicare battle begins anew [9]

Article printed from KeithHennessey .com: http://keithhennessey.com

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THE WALL STREET JOllID~AL.

POLITICS

OCTOBER 19,2010

Right Turn Seen in Granite State

Polls Show Republicans With Upper Hand as Voters Tire of Democratic Dominance in New England 8y GARY FIELDS

MANCHESTER, N.H.-Two years after Democrats turned this state as blue as it's been in nearly a centur)?:. polls suggest Republicans are Roised to reverse the balance of power.

GOP candidates are in a position to win all three of New Hampshire's congressional races Nov. 2-two House seats and one Senate. If they do, Sen. Jeanne Shaheen, who won election in 2008, would be the Granite State's lone Democrat in Washington.

Democratic supporters last week at a Cheshire County Democratic Committee rally in Keene, NH Republicans are running strong in the state's congressional races this year.

The expected turnaround in New Hampshire is emblematic of the dynamic across New England, a region that has been a bastion of strength for Democrats, much as the South has been one for Republicans.

After the 2008 election that brought President Barack Obama to the White House and gave Democrats control of every House seat in New England, Republicans now have a good chance of ickin u a seat in

"The country as a whole is trying to find its center balance" so

e

In New Hampshire's U.S. Senate race, Democratic Rep. Paul Hodes is trailing Republican Kelly Ayotte, a former state attorney general, in most polls. A recent WMUR/University of New Hampshire Survey Center poll shows Ms. Ayotte with a I5-point lead. According to an average tabulated by political website Real Clear Politics, Ms. Ayotte is up by nine.

"I think this year we're seeing significant volatility on how Reople are feeling generally," said Mr. Hodes. He said polls

r in New Hampshire were "notoriously unreliable" and that voters often decide late. ,<0 trt W \ $ h !

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leff Grappone, Ms. Ayotte's spokesman, said the state's motto, "Live Free or Die," says it all. "New Hampshire is a.., small-government, low-tax state and the runaway spending and expandin overnment in Washin on" are 0 osed y state residents, he said.

Races in 2010

With voters impatient about the struggling economy, the mood here in New Hampshire is worrisome for Democrats, given the state's large number of independents, a group that often tips the balance in races. About 42% of the state's 920,685 registered voters are undeclared/ with the parties splitting the rest.

In the First District, Democratic Rep. Carol Shea-Porter hasn't topped 45% in the polls in her re-election bid. In the most recent WMUR/UNH poll, released Friday, she lagged behind her Republican rival, former Manchester Mayor Frank Guinta, by 12 points.

At Castro's Back Room, a tobacco store next door to Ms. Shea- Porter's Manchester campaign, manager Morgen Seimer, 39 years old, said ~ny of his customers were fed up after the Bush years and "ready for _

More interactive graphics and photos a change. It hasn't worked out." Mr. Seimer, an undeclared voter who

supported Ron Paul in the 2008 presidential race, said he wasn't happy with either party but was likely to su ort Mr.

See which House, Senate and governors' races are considered closest.

One of his customers, W. Michael Dunn, 70 years old, an attorney, said he would like Democrats to have more time, but concedes it's a tough case to make. "We all had all our hopes, too high in my opinion" that the Obama adininistratlOn would fiX the economy, he said.

In the Second District, Democrat Ann McLane Kuster has recently closed the gap in polls and leads in the latest one. She is facing Republican Charlie Bass, who is seeking to regain his old House seat.

Ms. Kuster, is portraying Mr. Bass as a Washington insider who helped lay the foundation for the current economic problems. Speaking at a debate last week sponsored by seniors' lobby AARP and the Greater Concord Chamber of Commerce, Ms. Kuster, the daughter of a former Republican state senator, tagged Mr. Bass for supporting bills that "reward American companies for shipping jobs to China" and deregulated Wall Street.

Mr. Bass focused on the nation's ballooning deficit and high unemployment numbers. "My opponent and the president of the United States and Nancy Pelosi think we need more stimulus spending after more stimulus spending," he said.

§tanding outside one debate, Gerald Coogan, 63, a New London businessman, said he was backing Mr. Bass. In 2006,_ "I wasn't against Charlie, I was pissed at Bush," Mr. Coogan said. "Now I'm doing everything I can to get Charlie back in Congress."

Write to Gary Fields at gary .fields@wsj.com

Mr. Coogan, reflecting a view voiced by many voters here, said one-party control in Washington was a driving issue.



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WEEKLY MARKET UPDATE

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THE Will STREET JOllRl~AL.

MAIN STREET i OCTOBER 19, 20 10

Washington State' s Union Tax

Bill Gates Sr. supports a state income tax on wealthy Washingtonians, but public unions are the real muscle behind the initiative.

By WILLIAM MCGURN

In Washington state, the fight over a proposed new income tax has been cast as a battle of the billionaires. In this

, narrative, the struggle is between wealthy people who believe in paying their fair share of taxes-and other wealthy people who do not.

Now, it's true that one of the world's richest men, Microsoft founder Bill Gates, supports the ballot initiative proposing this new tax (1-1098), and that his father has donated to the cause. It's also true that Microsoft's other co-founder, Paul Allen, Microsoft CEO Steve Ballmer, and Amazon.com founder and CEO Jeff Bezos have contributed to the other side. ,Yet while it all makes for good copy, the battle of the billionaires is a misnomer.

the

far from a civil war among the rich, the push for 1-1098 is being led and financed by unions. In a day when organized labor claims more members in government than in the private sector, it's not surprising to learn that public-employee unions are front and center. Their leadership raises a question asked by beleaguered taxpayers across America: Do state budgets exist to serve their citizens or their government employees?

If you read the talking points, the unions are involved in this initiative _!>ecause they see It as the only way to maintain vital health-care and education services. Under 1-1098, that would mean a new 5% tax on individuals earning more than $200,000 a year and couples earning more than $400,000. An additional 4% would kick in for individuals earning more than $500,000 and couples making more than $1 million.

Bill Gates Sr. is pushing a state income tax on Washingtonians, but public unions are the real muscle behind the initiative.

Here's a better way of putting it. By taxing others, these unions want to insulate the governor and the legislature from having to make difficult choices about what the government should fund and what it might cut back.

As this column goes to press, the latest filings suggest that the funding for the two main groups on either side of the 1098 initiative appears to be roughly equal. If you look past the $500,000 contributed by Bill Gates Sr., the contributions recorded by Washington's Public Disclosure Commission suggest the real story here: Of the roughly $6.2 million raised by the lead group urging a "yes" on 1098, $4.1 million comes from unions.

The largest chunk of this money comes from two unions and their local affiliates: the Service Employees International ynion and the National Education Association (the teachers union). In addition to representing, say, health-care and

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maintenance workers, the SEIU describes itself as "the second largest union of public service employees."

Why should contributions from these unions be thought different from a contribution from, say, Microsoft's Mr. Ballmer? It's not just that the public-sector unions have a vested interest in more state spending. They also enjoy a unique ability to elect their bosses-the politicians who set their s<l,li'lrie§ and benefits, and vote on the state programs that create more government workers.

In a recent article for the Seattle Times, one local businessman pointed out that 60% of the state budget is untouchable. because it relates to salaries and benefits for public employees that are governed by union contracts. At a time when

the government is facing shortfalls totalling $4.5 billion, he says that the government unions "have more control over

_our state budget than we the people have."

Union activity on other tax-and-spend issues on the Washington state ballot this year is likewise illuminating. In addition to pushing for a new income tax, the public-sector unions are also supportin a referendum callin for a $505 million energy retro t or SGOQls to be raised through new bonds.

At the same time, they are urging "no" to a measure repealing taxes on certain food and beverages; "no" to an initiative that would require a two-thirds legislative majority for any tax increase; "no" to another initiative to allow privatesector insurers to compete on worker's compensation; and "no" on two separate initiatives to end the state monop02y on liquor sales.

Jason Mercier of the Washington Policy Center, a local, free-market think tank, puts it this way: "On Election Pay, • voters will send one of two signals. Either we want to continue the status quo of a government that is going to grow and lead to additional tax increases-or we want it to reset, focus on its core functions, and stop competing with the private

-- ~

sector."

So look past the billionaires. At issue on this Washington ballot is how government is to respond when it is spending more money than it takes in. The answer may help tell the rest of us whether our future is to be government of the public employee, by the public employee and for the public employee.

Write to MainStreet@wsj.com



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Print - Killing Marcus Welby

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AMERICAN ENTERPRISE INSTITUTE for PuBuc POLICY REsEARCH

Killing Marcus Welby By Scott Gottlieb

New York Post

Monday, October 18, 2010

ARTICLES & COMMENTARY

The only way health plans can improve their profits is by cheapening the product that they provide, in other words, holding down the cost of the

The ACO concept was coined in 2006 by the same Dartmouth health health coverage that they offer.

researc ers w 0 amo I er e Icare s en mg oesn't

correlate with better medical outcomes. Their data was controverSIa. orne experts refuted the findings. Even so, it became the intellectual foundation for ObamaCare's visiOn of "bending the cost curve"--that you can Improve medIcal outcomes !?y cuttmg

Medicare spending. The ACOs have become Washington's most fashionable vehicle for pursuing that prophecy. -

Inma

no

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So the next time you see your doctor. it may be far from home, in an office park built by your nearest hospital. Thanks to ObamaCare, Marcus Welby is taking down his shingle. He's becoming an employee of General Hospital,

Scott Gottlieb, M.D., is a residentfellow at AEI.

Photo Credit: iStockphoto/Bluberries

You can find this article online at http://www.aei.org/article/102669

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mE W4Ll STREET JOURt'UL.

POLITICS

OCTOBER 19_ 2010

GOP House Leaders Seek to Avoid Mistakes of '94

By NAFTALI BENDAVID

PORTLAND, Ore.-~ublicans on the campaign trail are bashing the president and his agenda and some are vowing to shut down Washington if they don't get their way. Behind the scenes, key party members are talking a different gaIDQ.

A number of House Republicans, including some who are likely to be in the leadership, are pushing a post-election strategy aimed at securing concrete legislation, with the goal of showing they can translate general principles into specific action.

Among the ideas is to bring a series of bills to the floor, as often as ~nce a week, designed to cut spending in some way. Longer term, GOP leaders say they recognize they may have to compromise with

Democrats in tackling broader problems. fo /6"J <tJ wt .I()Y1f bt'r~e

pa. f j- a f- ti:c. (I ro to f ~ If they recapture the House, Republicans say they are wary of

following the example of the class of 1994, which shut down the government in a standoff with President Bill Clinton. Top

Republicans contend that passing legislation, or at least making a good faith effort to do so, will earn them more.

credibility with voters than refusing to waver from purist principles. /I rJ 111 0 Y'( f2- ltv/? '.s

Mr. McCarthy, a top GOP House recruiter, left, with Oregon candidate Scott Bruun.

Races in 2010


More interactive graphics and photos

"It's pretty clear the Al,llQIiGC3,H people expect us to use the existing, gridlock to GI~i!tf compromise and advance their agenda," said Rep. Darrell Issa CR., Calif.). "They want us to come together [with the

~ >

administration] after we agree to disagree."

GOP leaders stressed that this depends on the willingness of ~resident Barack Obama to compromise as well. And some say if the :e9st-election atmosphere is especially toxic, such compromises may, be difficult.

The approach stands in contrast to the Senate, where Republican

~ 5

nominees including Kentucky's Rand Paul and Nevada's Sharron

....,

Angle more clearly represent the anti-establishment instincts of the tea-party movement. This would be a role reversal of sorts-the Senate was designed by the founding fathers to be the more sober

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institution.

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Under the leadership of Rep. Kc:;vin McCarthy, a rising star, the GOP has recruited a slate of House candidates with all.. '"array of political experience, suggesting they know how to work within the strictures of government. In many cases, these aspirants boast of their record of working with Democrats.

Some Experienced GOP Hopefuls

Scott Bruun Oregon 5th di,trict

Jaime Herrera Washington

Steve Chabot Ohio1 stdisttict

as spending and ethics.

Elected <0 Oregon state \~Jisldture in 2004, 20{)6 and 200S

Sen,ed on the $,afY', House Revenue and ~Iealth(are (ommittee~

2005 2007, senior leqisf,)tive aide to Rep_ Cathy - MCiViorris-Rodgel'"

2001 /'ppoint(:d to 'iva~hington sta(c leg,is,!atIJre to fill a vacancy

2008 Elected in her own right to the: legisl"hl'C

Served ',n Congrcss 1994·2008 Was manaqer during the impeachment of Bill Clinton

5elvf:d 4 ye.':lr; each un Cindnr'lati City Council dnd Hamilton County Cornrr:l"Sion

The GOP roster doesn't fit the image of an invading revolutionary force. Of the Republicans' 89 "Young Guns," as the party's top House candidates are called, 55..., have political experience. Five are former congressmen seeking their old seats back, such as former Rep. Stev~ Chabot, who served 14 years in the House. The rest are mostly state legislators, a typical path to Congress. Of

the 34 newcomers, many are relatively mainstream candidates or aren't expected to win.

On a trip last week to encourage candidates in the Northwest, Mr. McCarthy visited a number of relatively traditional GOP candidates. Among them were Jaime Herrera, a Washington state legislator and former congressional aide. Mr. McCarthy appeared with Oregon State Rep. Scott Bruun, a legislator known for working with Democrats. And he held a breakfast fund-raiser in Portland for Rob Cornilles, a political novice and underdog in a Democratic district.

House Republican leaders including Mr. McCarthy have reached out to the tea-party movement, attended rallies, crafted a "Pledge to America" that reflects the movement's anti-establishment sensibilities and emphasized their sympathy with activists' anger at Washington. The incoming Republican caucus intends to move swiftly on key conservative priorities including spending, taxes and deficits.

But the party is also aware it may have a brief shot at convincing voters it has changed since the last time it held power, under President George W. Bush. Most Republicans now say the party strayed in matters such

Th Y G @"Ifwe Republicans get a second chance and screw it UR, we'll be put in

e oung uns '

the wilderness for a generation," Mr. Bruun said. See who the Republican party considers its top -

candidates:

Martha Roby - AL 2 Mo Brooks - AL 5 Rick Crawford - AR 1 Tim Griffin - AR 2 Paul Gosar - AZ 1

David Schweikert - AZ 5 Jesse Kelly - AZ 8 David Harmer - CA 11

Rep. Bob Inglis of South Carolina, who lost his Republican primary to a challenge from the right, compared the GOP candidates to surfers

using a tea-party wave to reach the shore. Once they arrive, he said, many will act like the lawmakers they replaced.

"Not every candidate that wins this November with tea-party support

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Van Tran - CA 47

Scott Tipton - CO 3

Cory Gardner - CO 4 Ryan Frazier - CO 7

Dan Debicella - CT 4 Sam Caliguri - CT 5 Steve Southerland - FL 2 Daniel Webster - FL 8 Dennis Ross - FL 12 Allen West - FL 22 Sandy Adams - FL 24 David Rivera - FL 25 Mike Keown - GA 2 Austin Scott - GA 8

Ben Lange - IA 1

Mariannette Miller-Meeks - IA 2 Bob Dold -IL 10

Adam Kinzinger - IL 11

Randy Hultgren - IL 14

Bobby Schilling - IL 17

Jackie Walorski - IN 2

Larry Bucschon - IN 8

Todd Young - IN 9

Kevin Yoder - KS 3

Andy Barr - KY 6

Jeff Perry - MA 10

Andy Harris - MD 1

Dan Benishek - MI 1

Tim Walberg - MI 7

Randy Demmer - MN 1

Ed Martin - MO 3

Vicky Hartzler - MO 4

Alan Nunnelee - MS 1

Steven Palazzo - MS 4

Iiario Pantano - NC 7

Harold Johnson - NC 8

Jeff Miller - NC 11

Rick Berg - ND AL

Frank Guinta - NH 1

Charlie Bass - NH 2

Jon Runyan - NJ 3

Jon Barela - NM 1

Steve Pearce - NM 2

Joe Heck - NV 3

Randy Altschuler - NY 1 Nan Hayworth - NY 19 Chris Gibson - NY 20

Matt Doheny - NY 23 Richard Hanna - NY 24 Ann Marie Buerkle - NY 25 Tom Reed - NY 29

Steve Chabot - OH 1

Bill Johnson - OH 6

Tom Ganley - OH 13 Steve Stivers - OH 15

will be a tea -party partisan," Mr. Inglis said.

_Mr. McCarthy, 45 years old, will playa key role in navigating this new jandscape. The California lawmaker led the charge to recruit. .. ~andidates and is racing around the country offering last-minute pep

talks and fund-raising, packing protein shakes and bars in his suitcase to keep down his weight. Rep. Peter Sessions of Texas officially. coordinates the GOP House campaigns, but his style is to let others_

~take the lead, giving Mr. McCarthy an opening.

In talking to voters, Mr. McCarthy makes much of a youthful stint as owner of a deli called Kevin O's Chis middle name is Owen). But much of his career has been in politics. In college, he was a leader of the California Young Republicans. He was an aide to former Rep. Bill Thomas CR., Calif.), chairman of the House Ways and Means Committee. He was elected to the California State Assembly and became mmonty leader before winning his House seat in 2Q0.6.~

Should the Republicans recapture the House, Mr. McCarth is seen as ~ strong candl ate to be the third-ranking House Republican after J_?hn Boehner of Ohio and Eric Cantor of Virginia.

.@ touting the Republican candidates, he talks frequently ab_gut ~phen Fincher, a cotton farmer and gospel singer from Frog Jump, Tenn., who has never run for office before. But equally important is ruck Berg, who served in the North Dakota legislature for more than :'5 years and may knock off longtime Rep. Earl Pomeroy.

Mr. M.cCarthy takes the view that a House Republican majority would indeed be a potent force of change. As he sped in a Chevrolet Silverado to campaign events, he contended this season's GOP candidates are relatively unorthodox, noting that fewer candidates ~me from state legislatures than in previous elections. "Also, thes; are not 20-year established people," he said. "T_!:ey've been serving a couple terms. And some of them are serving part-time."

Mr. McCarthy conceded state representatives often make suitable candidates. "They will have some name ID and some credibility," he said.

Jim RenaCCI - OR 16 Bob Gibbs - OH 18 Rob Cornilles - OR 1 Scott Bruun - OR 5 Mike Kelly - PA 3

Keith Rothfus - PA 4 Pat Meehan - PA 7 Mike Fitzpatrick - PA 8 Lou Barletta - PA 11 Tim Burns - PA 12

Mick Mulvaney - SC 5 Kristi Noem - SD AL Scott Desjarlais - TN 4 Stephen Fincher - TN 8

That kind of resume is making some Republican backers anxious~ dinner for Mr. Bruun at Portland's University Club, a small ~f d2_nors sought assurances the new crop would be different frQ);:P recent Republican majorities, especially on matters of spending ~

"The freshman class is going to be bolder than anyone there," Mr. McCarthy promised to about 15 financial-services executives who had Raid $500 for their steak dinner. "They're going to be like a stampede of horses."

Upon arriving in Portland, Mr. McCarthy was interrupted by a call

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Bill Flores - TX 17

from Republican candidate Tom Reed in New York. "Is your opponel1,t showing up?" Mr. McCarthy inquired. "I think I can send you $3.,000

more."

Francisco Canseco - TX 23 Scott Rigell - VA 2

Robert Hurt - VA 5

Morgan Griffith - VA 9

Keith Fimian - VA 11

John Koster - WA 2

Jaime Herrera - WA 3

Dan Kapanke - WI 3

Sean Duffy - WI 7

Reid Ribble - WI 8

David McKinley - WV 1

Spike Maynard - WV 3 Mr. McCarthy's Northwest swing was an exercise in orthodox 12arty

politics. At a country-club fund-raising lunch for Ms. Herrera in Vancouver, Wash., a campaign flyer at the door ;Uphasized the candidate's government experience. "Senior legislative aide ... Worked with legislators of both parties to solve problems."

Next, an email arrived from Rep. Jason Chaffetz, who represents a

------~---- '

conservative district in Utah. "Oh, no. I need to raise some money,"

Mr. Chaffetz wrote sarcastically. "There's a new poll. I'm only 51

points up."

Mr. McCarthy's next stop was Paradigm Foodworks Inc. in Lake Oswego, Ore., to appear with Mr. Bruun, who is challenging Democratic Rep. Kurt Schrader. In a press conference touting Mr. Bruun's endorsement by the U.S. Chamber of Commerce and other groups, Mr. McCarthy depicted Mr. Bruun as an accomplished legislator.

Last was breakfast for Mr. Comilles, the first-time candidate who is seeking to oust Rep. David Wu (D., Ore.). In a district where Barack Obama won 61% of the vote, Mr. Comilles plays down his party affiliation and any association with the tea party.

Said Mr. Comilles in an interview: "When we focus on the problems facing Oregonians, we discover, 'Party, shmarty.'"

-Janet Hook, Brody Mullins and Neil King Jr. contributed to this article.

Write to Naftali Bendavid at naftali.bendavid@wsj.com



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THE WALL STREET JOlJRNAL.

US. NEWS I OCTOP,ER 18,2010

GOP Hopefuls Narrow Focus

By JONATHAN WEISMAN

WASHINGTON-The Senate is likely next year to see the largest group of strong conservatives enter the chamber since

-

1995, with Republican candidates calling for an end to the minimum wage, a phase-out of federal involvement in

education and for challenging federal regulations they say have no foundation in the U.S. Constitution. •

t!:fi) But Senate candidates and the tea-party activists pressing them say they view their initial mandate narrowly: Cut 'lY federal spending significantly, even in defense programs, and block the health-care law.:...

Some of the candidates say the mandate is strong enough that they should push ahead even if that means a clash with President Barack Obama that shuts down the government.

)' "I certainly can foresee circumstances where that is necessary and important," said Mike Lee, who will almost certainly be the next jUnIor senator from Utah. "The mandate from the voters is

._ uneqUIvocal: Do everything in your power to get this situation under control. Sometimes it is necessary to belly Ull to the bar and do wh~t needs to get done."

Mike Lee, a Republican candidate for the U.S. Senate from Utah and his and his wife Sharon, celebrate victory in the Republican primary in June.

This year's election will bring at least six new Republicans to the

.

Senate, but likely more than that-possibly more than a dozen.

Conservative actiVIsts say this year's crop will be fundamental~y different from those who arrived in 1994, when eight Republicans joined the Senate amid an election nationalized in part by the GOis

- --

"Contract with America. "

The 1994 GOP gain was engineered by a small group of House conservatives already in the Republican leadership. "very much an inside job," said Matt Kibbe, a tea-party organizer at the conservative group FreedomWorks.

__,

The Republican electoral wave that year was so sudden, it swept in Congress candidates with different motives.

;fi;;) ]his time, the grass-roots tea-party movement has helped unite Republican candidates around fiscal conservatism and, I W Ql2.Position to the health-care law. Anti-government activism is driving the Republican leadership from the outside.

Those activists are likely to hold elected Republicans to their promises.

Races in 2010

"There's more unity of purpose," Mr. Kibbe sajd "And what's different this time is, I don't think the tea paN goes away Nov. 3."

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Senate Republican candidates have converged around a set of, £_onservative positions.

Eighteen have expressed some support for either a single, flat-rate income tax or a national sales tax that would replace an income tax.

Sixteen have expressed a willingness to allow some Social Security taxes to be diverted to private investment accounts. Eleven have expressed interest in turning Medicare into a voucher program that young people can elect to join upon retirement.

Ten have broached eliminating or scaling back the Department of Education.

Four have talked of eliminating or lowering the federal minimum wage.

John Raese, the Republican nominee for Senate in West Virginia, suggested that the minimum wage, which he termed "price controls," contributed to high unemployment among young workers. "The highest amount of unemployment we have is youth, isn't it? Entry-level jobs, where we have, probably, what-minimum wage," Mr. Raese told the Charleston Daily Mail editorial board last week.

In an interview, Mr. Lee said the federal role in primary and secondary education should be limited to Indian reservations"

- .

military bases and the District of Columbia. The federal government~

he said, oversteps its constitutional bounds when it regulates

~ #

activities that happen within a single state. As examples, he cited

mine safety regulations, minimum wage and work-site rules, which he said should be the purview of state

,

More

WSJ Campaign 2010 News and Analysis

Washington Wire: Real-time Washington News and Insight

governments.

In Kentucky, GOP nominee Rand Paul has hit similar themes, questioning federal mine safety rules in Kentucky coal country and law enforcement actions against drugs in a region beset by methamphetamines.

Joe Miller, the Republican tea-party Senate candidate in Alaska, has said federal unemployment insurance didn't comport with his view of the Constitution.

-d7 But Ron Johnson, the Republican who is leading in the polls over Sen. Russ Feingold (D., Wis.), said such ideas are A . secondary to the broader mandates of rolling back spending and Mr. Obama's health-care law.

{ "From my standpoint, it', a pretty 'imple mce," he ,.id. Congreg, needs to "tablish a hard 'Eending cap. Mr. Joh",on said, and then press for a constitutional amendment that limits spending to 20% of the economy. It is currently around. 24%.

Democrats say the Republicans this year are setting themselves up for overreach on their agenda that will turn off many voters.

"If Republicans in Congress have their way, we would return to the broken policies that led to the [financial] crisis,"

said Jen Psaki, a White House spokeswoman tr, fe.

Leslie Principata, a 41-year-old third-grade teacher from Florence, Ky., voted for Mr. Paul, who is strongly identified with the tea party, in the Repllblican primary and still supports him. But some of his positions, such as his suggestion that a $2,000 Medicare deductible could help bring down costs, are making her rethink her support.

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"I liked that he's not a regular Republican or a regular Democrat, that's he's in the middle and maybe can finally get something done," she said, citing "following the Constitution" and balancing the federal budget as important goals. "But I'm beginning to hear some things that have made me wonder whether I knew enough about him."

Some voters, shocked by the government's $1.3 trillion budget deficit and their belief that a surge of spending has not turned the economy around, are ready for candidates with uncompromising views.

"In general, we've got to have a change in the whole direction," said Bruce McRea, a 53-year-old investment adviser in Kentucky who calls himself a moderate Republican. "I don't think there's any question that [Mr. Paul's] not a. moderate. But maybe it's time."

Among the eight Republicans elected in 1994 were two centrists-Sens. Olympia Snowe of Maine and Michael DeWine of Ohio-but also such firm conservatives as James Inhofe of Oklahoma, Rick Santorum of Pennsylvania and Jon Kyl, now the Senate minority whip.

_While this year's GOP Senate candidates are outlining a focused agenda that targets spending and the health law, there is potential for tension among themselves or with others in the party over issues such as the defense budget. Several_, GOP Senate candidates have said military spending should be on the table when budget cuts are weighed, while Marco Rubio of Florida has called for exempting defense programs from a proposed freeze on discretionary spending.

Also unclear is how far Republicans will go to achieve their goals. While Mr. Lee and other GOP candidates have said a government shutdown should be among their tactics, party leaders have downplayed that possibility.

"I don't think the country needs or wants a shutdown," said Rep. Eric Cantor CR., Va.), the House minority whip, in an interview this month with the Wall Street Journal editorial staff.

Outside activists are pressing for specifics on spending cuts, and they are looking for confrontation. Spending cuts need to be dramatic and across the board, including defense, Mr. Kibbe said.

"There's no federal government agency that would not benefit from 20% less spending," he said.

Dick Armey, the House majority leader after the Republican landslide of 1994 and now a tea party promoter at Freedom Works, says lawmakers next year should revisit efforts that failed in that earlier conservative wave, such as _private investment accounts for Social Security, eliminating the Department of Commerce and turning all federal education aid into block grants to the states, with no role for the federal Department of Educati.?n.

Democrats will argue that Republicans are dismantling the social safety net, he said, but "if you can't man up in the, face of this superficial malarkey, then you're not man enough to do thejob."

-Douglas Belkin and Douglas A. Blackmon contributed to this article.

Write to Jonathan Weisman atjonathan.weisman@wsj.com


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FrontPage Magazine» Obama's Politics of Fear » Print

- FrontPage Magazine - http://frontpagemag.com -

Obama's Politics of Fear

Posted By Rich Trzupek On October 19, 2010 @ 12:20 am In FrontPage I 5 Comments

Those three sentences represent a classic example of the Democratic thought process, although most Democrats would not express such sentiments less than three weeks before an election. Democrats embrace fear. It's the emotion that drives them as much as any other. They spent eight years demonizing practically every move George W. Bush made by whipping up fear. Domestic wiretaps, Gitmo, and the War on Terror itself were all examples of fascism on the rise in America, or so the Left claimed. When foreign leaders criticized our actions, that was proof enough that America was fast becoming a rogue state. In 2008, Barack Obama campaigned for "change." Left unsaid, but well understood, was Obama's belief that if we didn't change our ways, America was doomed. If that's not appealing to fear, what is?

For all of his ever engaged in this kind of gamesmanship. He didn't have a problem

with going after his 0 onents or the 0 osition part but he kn weer an ~ InSU . . .. .

J nstead, he worked to cajole voters, to convince them that he was worki.ng in. th~lr best Int~rest without !:Jemeaning them by declaring that they were too stupid to understand hiS obJectives. !~e d~fference between Bush and Obama is the difference between someone who has ~ad to earn a llvinq In the r~al w~rld and someone whose career has been almost entirely built upon the public dole. Barack Obama can t begID to imagine that he's not much smarter than the rest of Am~rica because his entire lif~ ~as been. based on the proposition that he is. How in the world can we not realize that about Obama? ThiS IS the mlndset that

informed the president's all-to-candid remar~s.

While some of this administration's opponents might actually be afraid, the more prevalent and relevant adjectives would be "concerned" and "worried." Those adj~cti~es, in turn, give w~y to a much more important emotion when it comes to this election: determination. Voters are turning away from Obama because they are justifiably concerned that the president has committed ~he go~e:nme~t t? do far. more. than it can realistically deliver. Voters are understandably worried that thiS admlnls~rat~on IS saddlln . t. children and their children's children with unconscionable unsustainable debt. In t IS clrcumstan~e IS It an _surprise that the ele torate might vote for a change Of. course? .Barac~ ?bam.a would be well-advised to ~top .fixating on the fact that America is troubled by the actions of hiS administration, and. to s~art co.ntemplatlnQ Why that is so. It may be difficult for the president to believe. but the average American Just might be a lot

smarter than he thjnk?

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10/19/2010

FrontPage Magazine» Leftists, Progressives and Socialists» Print

- FrontPage Magazine - http://frontpagemag.com -

Leftists, Progressives and Socialists

Posted By Walter Williams On October 19, 2010 @ 12:00 am In FrontPage I 3 Comments

One of the greatest sources of confusion and deception is the difference between leftists ro ressives

socialists, communists and fascists. ou t a ou IS as cau ht a lim se of the Oct. 2 "One Nation"

marc on Washington. The participants proudly marched with banners, signs and Rlacards reading "Socialists," "Ohio U Democratic Socialists" "International Socialists Or anization ""Socialist Part 'USA"

"_!?ui ocialist Alternative" and other signs expressing support for socialism and communism. They haq

stands where they sold booklets under the titles of "Marxism and the State," "Communist Manifesto," "Four

'Marxist ClassIcs," "The Road to Socialism" and similar titles. '

Nazism is a form of socialism. In fact, Nazi stands for National Socialist German Workers' Party. Nazis

murdered 20 million of their own peo Ie and in nations they captured. The uns eaka Ie acts f Hitler's

Socialist Workers' a y a e in comparison to the horrors committed in the Union of Soviet Socialist

B-epublics SR). Between 1917 and 1987, Vladimir Lenin, Joseph Stalin and their successors murdered, or

were otherWise responsible for the deaths of, 62 million of their own people. Between 1949 and 1987, Mao Tse-tung and his successors were responsible for the deaths of 76 million Chinese. The most authoritative' tally of history's most murderous regimes is in a book by University of Hawaii's Professor Rudolph J . ..., ""' BJdmmel! "Deathby_ Government." A wealth of information is provided at his website: (http://bit.ly/WgWaf).

generations of Germans, Russians and Chinese, like man of toda 's Americans who would have cringed at the tFiou~t 0 gen§Oililli:;::Y" 0 UI t t e Trojan horse for a Hitler, a Stalin or Mao to take over. But as Voltaire said, "Those who can make you believe absurdities can make you commit atrocities."

I believe most Amedgms find the ideals and principles of SOCialism, communism and QrQgressivism r~ugflaJlL:.but by our sanctioning greater government centralization and its control over our lives, we become~their duces or, as Lenin said, "useful idiots." '

~----------------------------------

, I

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w

The Cult of Multiculturalism - National Review Online

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NATIONAL REVIEW ONLINE

www.nationalreview.com

PRINT

THOMAS SOWELL

ARCHIVE I LOG IN

OCTOBER 19, 2010 12:00 A.M.

The Cult of Multiculturalism

This modern obsession has created problems so obvious that only the intelligentsia could fail to see them.

SOmebOdY eventually had to say it - and German chancellor Angela Merkel deserves credit for being the one who had the courage to say it out loud. Multiculturalism has "utterly failed."

~culturalism is not just a recognition that different groups have different cultures. We all knew that, long before multiculturalism became a cult that has spawned mindless rhapsodies about "diversity," without a speck of evidence to substantiate its supposed benefi~.

In Germany, as in other countries in Europe, welcoming millions of foreign workers who insist on remainin~ foreign has created problems so obvious that only the intelligentsia could fail to see them. It takes a high IQ to

- .

evade the obvious.

"We kidded ourselves for a while," Chancellor Merkel said, but now it was clear that the attempt to build a society where people of very different languages and cultures could "live side by side" and "enjoy each other': has "failed, utterly failed."

This is not a lesson for Germany alone. In countries around the world, and over the centuries, peoples with

- '

jarring differences in language, culture, and values have been a major problem and, too often, sources of major disasters for the societies in which they coexist.

Even the tragedies and atrocities associated with racial differences in racist countries have been exceeded by the tragedies and atrocities among people with clashing cultures who are physically indistinguishable from one another, as in the Balkans or Rwanda.

Among the ways that people with different cultures have managed to minimize frictions have been (1) mutual

_ i

cultural accommodation~ even while not amalgamating completely, and (2) living separately in their own

,

enclaves. Both of th~se approaches are anathema to the multicultural cultists.

- .. . . -

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The Cult of Multiculturalism - National Review Online

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_Expecting any group to adapt their lifestyles to the cultural values of the larger society around them is "cultural imperialism" acco.!.ilingJ:o the multicultural cult. And living in separate neighborhoods is considered to be.so _

..... -..::.._-----

terrible that there are government-financed programs to take people from high-crime slums and put them in

subsidized housing in middle-class neighborhoods.

Multiculturalists condemn people's objections to transplanting hoodlums, criminals, and dysfunctional families

,

into the midst of people who may have sacrificed for years to be able to.escape from living among hoodlum.s, criminals, and dysfunctional families.

The actual direct experience of the people who complain about the consequences of these social experiments is , often dismissed as mere biased "perceptions" or "stereotypes," if not outright "racism." But some of the strongest complaints have come from middle-class blacks who have fled ghetto life, only to have the government transplant ghetto life back into their midst.

-

The absorption of millions of immigrants from Europe into American society may be cited as an example of the

success of multiculturalism. But, in fact, they were absorbed in ways that were the direct opposite of what the multicultural cult is recommending today.

Before these immigrants were culturally assimilated to the norms of American society, they were by no means scattered at random among the population at large. On New York's Lower East Side, Hungarian Jews lived

'- clustered together in different neighborhoods from ROJ:~anian Jews or Polish Jews - and German Jews lived "' away from the Lower East Side.

When someone suggested relieving the overcrowding in Lower East Side schools by transferrin some of the chil ren-t{)_~ school in an Irish neighborhood that had space, both the Irish and the Jews objected.

N one of this was peculiar to America. When immigrants from southern Italy to Australia moved into neighborhoods where people from northern Italy lived, the northern Italians moved out. Such scenarios could

---- ....... . . ,

be found in countries around the world.

It was in later generations, after the children and grandchildren of the immigrants to America were speaking English and living lives more like the lives of other Americans, that they spread out to live and work where

. .

other Americans lived and worked. This wasn't multiculturalism. It was common sense.

- Thomas SOl-vel! is a seniorfellow at the Hoover Institution. (¢! 201 () Creators Syndicate, Inc.

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10/19/2010

Op-Ed Columnist - That Sinking Feeling - NYTimes.com

Page 1 of3

l P ... ,,'jM

D/\,IUU N ARONOfSKY

This copy is for your personal. noncommercial use only. You can order presentation-ready copies for distribution to your colleagues, clients or customers here or use the "Reprints" tool that appears next to any article. Visit www.nytreprints.com for samples and additional information. Order a reprint of this article now.

October 18, 2010

That Sinking Feeling

By BOB HERBERT

B,arack Obama seems to think he's done a pretty ter_rific job as president, but maybe he hasn't trumpeted his accomplishments effectively enoug~.

He told The Times's Peter Baker) in an interview for the Sunday magazine, "Given how much stuff was

~oming at us, we probably spent much more time trying to get the policy right than trying to get th~ politics right. There is probably a perverse pride in my administration - and 1 take responsibility for this;

--- .

this was blowing from the top - that we were going to do the right thing, even if short-term it was

unpopular."

This assessment by the president is debatable, but it won't be among the things that are front and center in the minds of voters as the November elections approach. The problem for Mr. Obama and the Democrats is the widespread sense among anxiety-riddled Americans that the country is still in very bad

~ ~

shape and headed in the wrong direction.

~ Gallup poll last week found that 62 percent feel that economic conditions are deteriorating.

_The president and his party may have racked up one legislative victory after another - on the bank

...

;t _!Jailouts, the stimulus package, the health care bill, and so forth - but ordinary Americans do not feel as if __

their lives or their prospects are improving. And they don't think it's a public relations problem.

_ Nearly 15 million are jobless and many who are workiI_lg are worried that they (or a close relative) will soon become unemployed. The once solid foundation of home ownership has grown increasingly wobbly,

- .

with the number of foreclosures this year expected to surpass a million. And the country is still at war.

The voter unrest that is manifesting itself in myriad (and often peculiar) ways reflects a real fear that not just family finances but the country itself is in a state of decline. "I don't know where we're headed," said a 1f businessman named Chuck Carruthers, who chatted with me in a coffee shop in Atlanta last week. "But I'll

- - ..,

tell you the truth, 1 don't think it's anyplace good."

Neither the Democrats nor the Republicans have come to grips with this fear, although the Republicans

.,

have done yeoman's work exploiting it.

-

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Op-Ed Columnist - That Sinking Feeling - NYTirnes.com

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President Obama and the Democrats blew an important opportunity at the beginning of the president's term. That was the time, with the economy in virtual free fall, to rally the American people behind a grand

...._ -

yes, the bailouts and the stimulus package (however flawed) were essential._

plan to rebuild the nation and its economy for the long term. Yes, the emergency had to be dealt with. And,

-

But even in the midst of the crisis, the public needed to be presented with a clear idea - a vision, to use the term once derided by President George H.W. Bush - of where the Obama administration wanted to take the country.

Job creation was the most important issue. With his sky-high approval ratings and the economy hemorrhaging hundreds of thousands of jobs a month, a bold and creative employment initiative, tied to long-term investments in infrastructure and green energy, was the issue that President Obama could -

and should - have used to trump Republican obstructionism. -k '" /

flt..-" t!v( I" /' I'_ •

-:

But Mr. Obama wanted his health care bill, and had a misplaced faith in the willingness of the G.O.P. to

work with him on that and any number of other issues. He would also escalate the monumentally ~bilitating war in Af_ghanistan. Employment never seemed to be the top priority.

J.Vhat ordinary voters see is an economy that is not working for them and an increasingly dismal outloof f2!. their children. From that perspective, the enormous budget deficits don't seem to be providing much of a tangible return.

Democrats are making the seemingly logical argument that the policies pushed by their Republican opponents will only make matters worse. They are constantly urging voters to remember that it was conservative Republican laissez-faire policies that landed us in this horrid mess in the first place.

The problem for President Obama and his party is that logic does not always rule the electoral roost .... y oters want the same thing they wanted in 2008: change.

However the elections turn out, the Obama administration needs to begin focusing much more intently on, the economic plight of ordinary Americans. Nearly 44 million are living in poverty. A third of all Hispani~ children and more than a third of black children are poor.

Job security and benefits like paid vacations, health insurance and a secure retirement are going the way of the typewriter. More than 11 million new jobs would have to be created just to get us back to where we, ~ere when the Great Recession began. No one sees that happening anytime soon.

~ ~mocrats are in trouble because they have not been nearly aggressive enough in confronting this, ~ _profound economic crisis facing so many millions of ordinary Americans.

http://www.nytirnes.coml20 1 0/1 0/19/opinionlI9herbert.htrnl? _r=2&partner=rssnyt&ernc=rss&pagewant... 10/19/2010

RealClearPolitics - Articles - Print Article

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REAL CLEAR. PO]~IrrICS

Return to the Article

October 19, 2010

Obama Shouldn't Dismiss Voter Concern

By Michael Gerson

WASHINGTON -- After a series of ineffective public messages -- leaving the political landscape dotted with dry rhetorical wells -- President Obama has hit upon a closing argument.

Let's unpack these remarks.

Obama clearly believes that his brand of politics represents "facts and science and argument." His opponents, in . disturbing contrast, are using the more fearful, primitive portion of their brains. Obama views himself as the neocortical leader -- the defender, not just of the stimulus acka e and health care reform, but of co nitive reasonin . His critics Iely on their lizard brains -- t e location of reptilian ritual and aggression. Some. presumably Democrats, rise abQYe their evolutionary hard-wiring in times of social stress; others, sadly, do not.

Though there is plenty of com etition these are some of the most arro ant words ever uttered b an American presi ent.

The neocortical presidency destroys the possibility of political dialogue. What could Obama possibly learn from voters. who are embittered, confused and dominated by subconscious evolutionary fears? They have nothing to teach, nothing

to offer to the superior mind. Instead of engaging in debate, Obama resorts to reductionism, explaining his opponents -

.

away.

It is ironic that the great defender of "science" should be in the thrall of pseudoscience. Human beings under stress are not hard-wired for stupidity, which would be a distinct evolutionary disadvantage. The calculation of risk and a preference for proven practices are the conservative contributions to the survival of the species. Whatever neuroscience may explain about political behavior, it does not mean that the fears of massive debt and intrusive government are irrational.

here have been several recent attempts to explain Obama's worldview as the result of his ost-colonial father or his ~rly SOCI 1st mentors -- Gnostic attempts to produce the hidden key that unlocks the man. The reality is simpler. In April 2008, Obama described small-town voters to wealth donors in San Francisco: "It's not s rising then they get bitter, they clin to uns or reli ion or anti ath to eo Ie who aren't ike them." Now, to wealthy donors m Massachusetts, opponents are "hard-wired not to always think clearly." Interpretmg Obama oes not require psychoanalysis or the reading of mystic Chicago runes. He is an intellectual snob. _

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What must Democrats trying to compete in Pennsylvania or Ohio think when they hear Obama make arguments such as these? Do they realize the tremendous mistake they have made, tying their political fortunes to a leader who makes Michael Dukakis, Al Gore and John Kerry look like prairie populists in comparison?

This is not just a political problem; it is a governing challenge. There is fear out there in America -- not because of the .lizard brajn Qut because Qfobi~ctive ecoumn@conditions. And a reachop.ary populIsm can 6e disturbing when it target~ minorities, immigrants and intellectuals. But intellectual disdain among elites feeds this destructive 120pulism rather" than directing or defusing it. Obama is helping to cause what he criticizes.

~ is among the nobler callings of a leader to understand public fears and then place them in the context of nationp.l commitments. Yes the American dream is fra ile but it won't be recovered b abandonin American ideals. Yes the orders must be controlled and terrorism is a mortal threat -- but we can't give in to stereotyping and hatred.

_ i

Qne response to social stress doesn't hell? at ap: telling people their fears result from primitive irrationality. Obama m~ think that mally of his fellow citizens can't reason. But they can still vote._

michaelgerson(at)washpost.com

Copyright 2010, Washington Post Writers Group

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Obama adds $3 trillion to national debt in less than 2 years

posted at 9:30 am on October 19, 2010 by Ed Morrissey Share68

printer-friendly

Hey, don't worry about it. Phil Hare says that danger from a raQidly-increasing national debt is just a myth. Look how ~ell Greece is doing!

From: William Dierker (billdierker@hotmail.com) Sent: Tue 10/19/10 10:53 AM

To: William Dierker (billdierker@hotmail.com)

New numbers posted today on the Treasury Department website show the National Debt has increased b

more than $3 trillion since resl ent ama too 0 ice.

The National Debt stood at $10.626 trillion the day Mr. Obama was inaugurated. The Bureau of Public Debt reported today that the National Debt had hit an all time high of $13.665 trillion.

Barack Qbama likes to blame George Bush foL..A~S:

Mr. Obama frequently: lays blame for soaring federal deficits on his predecessor:"

'J3y the time I got int<? office we already had a $1.3 trillion deficit and we had expl52d~d the national debt," he said last month during one of his backyard chats with Americans.

But, as CBS points out. Obama has already added 60% of the debt in two years that Bush added in eight, and Obama is on track_ to add a trillion dollars more in his first term than Bush did in tWQ:

The Debt increased $4.9 trillion during President Bush's two terms. The Administration has projected tbe ~tional Debt will soar in Mr. Obama's fourth year in office to nearly $16 5-trillioo in 2012. That's mQre than, 100 percent of the value of the natio.!.Ls economy and $5.9-trillion above what it was his first day on the job.

As we have pointed out repeatedly, the proper measure 'fJould be which party controls Congress. Presidents propose and sign budgets, but Congress actually creates them, Using that as a guide let's take a walk through a couple of scenarios to see which party owns more of the national debt First, let's break down the last 10 years of the Bush/Obama era by control of Congress, starting on January 1, 2001, The starting point for the national debt was $5.662 trillion. On

January 6, 2007, when Democrats took over, Republicans in total contr ed $3.011 trillion in debt in si

than four years ago, Democrats have added 4.992 trillion to the national debt Perhaps it would be more fair to look at the entirety of Republican control of the House, which lasted 12 years and bridged the Clinton and Bush administrations, In that entire span, Republican budgets added $3.873 trillion to the national debt. That is not only far below what Democrats have added In just one-third of the time, it's also far below the

Obama admmistration's own projections of how much they Will add to the national debt in just one term, j

We can also do the same calculations by fiscal year, from October 1 to September 30 each year, matching the budgets. Using that guide, we find the following scenarios: •

• Republicans in control for 12 years' Added $4.034 trillion (avg $336.17 billion per year)

)

• ~epublicans in control during Bush era: Added $3.201 trillion (avg $533.5 billion per year}

• Democrats in control of Congress during Bush/Obama era: Added $4.603 trillion (avg 1.48 trillion per year)

Clearly, while Republicans have been somewhat irres onsible in running up debt, Democrats have mana ed to be almost three times worse t an Republicans. Just as clearly, they have no intention to cut spending to correct this, but instead

_ IS own budget projections s~ow.

resident who wants to s end even more as

The Foundry: Conservative Policy News. » Addressing the Debt Now Means Addressing It on Our Own ... Page 1 of 1

- The Foundry: Conservative Policy News. - http://blog.heritage.org -

Addressing the Debt Now Means Addressing It on Our Own Terms Posted By Kathryn Nix On October 15, 2010 @ 2:00 pm In Entitlements I 3 Comments

17

tweets

_The 2010 fiscal year just ended, but America's fiscal crisis has just begun. In 2010. the Congressional Budget Office's (CBO) preliminary estimates [1] show that the federal government i spent $3.45 trillion, amassing a deficit of $1.3 trillion. Spending on entitlement programs. whic;}l

include Medicare, Medicaid, and Social Security, comprised 41 percent of the budget.

And this is just the beginning. By 2050, entitlement programs will consume the entire federal budget. To keep up with this level of spending, the CBO predicts [2] that tax rates would have to grow to 19 percent .. from 10 percent for low earners, to 47 percent from 25 percent for middle earners. andJrom 35 percent to a whopping 66 percent for high earners. This level of taxation would cripple the economy.

retweet

Although Ryan and Stern represent opposite ends of the political spectrum, they both agreed that the U.S. needs a plan to get the nation's fiscal house back in order. Ryan has proposed a plan that be calls the , , "Roadmap for America's Future" that addresses entitlement spendin~.

Ryan explained that if we act now, we can address the debt on our own terms. but if nothing is done, America will lose its say in the matter-these programs simply won't be there for younger generations. Both

and Stern are members of the National CommiSSion on Fiscal Res onsibility and Reform that is ....

scheduled to make its report by December .

Article printed from The Foundry: Conservative Policy News.: http://blog.heritage.org

URL to article: http://blog.heritage.org/ 20 10/10/151 addressing-the-debt-now-means-addressing-it -on-ou r-own-terms 1

URLs in this post:

[1] Congressional Budget Office's (CBO) preliminary estimates: http://online.wsj.com/article/SB10001424052748703358504575544351734226956.html? mod=googlenews_wsj

[2] the CBO predicts: http://www.heritage.org/budgetchartbook/entitlements-double-tax-rates [3] the Concord Coalition hosted:

http:// www.concordcoalition.org/act/ eventl 20 10 1 09 221 cong ressman-pau I-rya n-and-formerpresident-seiu-andy-stern-join-concord-coalitio

Copyright © 2008 The Heritage Foundation. All rights reserved.

http://blog.heritage.org/201 Oil 0/15/addressing-the-debt-now-means-addressing-it-on-our-own-terms/printl 10/18/2010

Print - Obama's Foreclosure Inaction Risks Katrina Redux

Page 1 of2

AMERICAN ENTERPRISE INSTITUTE .for PUBIJC POLICY REsEARCH

ARTICLES & COMMENTARY

Obama's Foreclosure Inaction Risks Katrina Redux By Kevin A. Hassett

Bloomberg.com

Sunday, October 17, 2010

J'he foreclosure crisis that seems on the brink of spinning out of control may be the decisive nudge that pushes the U.S. into a double-di recession. Banks that have oni 'ust be un to recover rom the worst nancial crisis since the Great Depression are about to nd themselves m straitjackets.

,As was the case during the aftermath to Hurricane Katrina, Washington seems not up to the .Jask. Instead offacing the ~roblem head-on, President Barack Obama has mostly deferred to state attorneys general. his IS a terrible time for Obama to finall discover the virtue of federa restramt.

While lines are forming to take a pound of flesh from the banks, their real-estate activities are all but frozen. It will be difficult for lenders to make decisions about future loans WIth their capital positions so fundamentally in question.

Next Spitzer

Which means that Washington needs to step in and do what it ean to preempt the coming legal moras~.

was the ease with Katrina--a different kind of disaster nder a different resident--there's a lot of confusion about what role

the state and loea overnm in this mess. To date Obama has been content to let the states lead. This will allow

t e same type of extortion game to play out that sucked billions from the tobacco companies. 7

Obama's position is particularly puzzling in light of the fact that there's a sparkling new federal entity that could take charge of the

runaway trai:r~. -

Attention Please

he facts

http://www.aei.org/print?pub=article&pubId= 1 02674&authors=<a href=scholar/26> Kevin A. Hassett</a> 10/18/2010

Print - Obama's Foreclosure Inaction Risks Katrina Redux

Page 2 of2

Temptation to Skim

This doesn't necessarily mean that the foreclosures were in error. But doubts about foreclosure processing mean that virtually every foreclosure that has occurred can now be challen ed as invalid. This is true for recent foreclosur rtedl have

It a so may apply to foreclosures that occurred in the past. Can banks really be sure that they were

,

If Washington continues to give the foreclosure crisis the Katrina treatment, the credit contraction that follows will likely be that

m!Qge. -

Kevin A. Hassett is a senior fellow and the director of economic policy studies at AEI.

Photo Credit: BigstockJ Andy Dean Photography

You can find this article online at http://www.aei.org/article/102674

http://www.aei.org/print?pub=article&pubId= 1 02674&authors=<a href=scholar/26>Kevin A. Hassett</a> 1011812010

Trust on Issues

Voters Trust Republicans More on Eight of 10 Key Issues


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With two weeks to go until Election Day, voters trust Republicans ~n ~ocrats on eight out of 10 important issues regularly ~ by Rasmussen Reports including the economy and health care.

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In late August Likely Voters ~onwlde trusted the GOP ~ all 10 issues. This is a sharp contrast from this time two years ago when Democrats were trusted more than Republicans on all of these issues.

Voters now trust Democrats over Republicans in onl two areas - government ethics % margin and education where Democrats have a

The economy continues to be the most important issue 0 [on,

and 49 0 pace t elr trust in Republicans to handle this issue. Thirty-nine percent (39%) trust Democrats more. These findings show little change from early June 2009.

On the issue of health care, which voters place second on the list of important issues, ~Id a modest 47% to 40% advantage. Democrats were trusted more on this issue until the debate over a proposed national health care bill began to heat up in early September of last year.

Most voters continue to favor repeal of the national health care law, but the number of voters who expect the law to Increase tlie defiCIt Ims lallen to the lowest pOjnt, since its passage by Congress in March.

(Want a free dailv e-mail update? If it's in the news, it's in our polis). Rasmussen Reports updates are also available on Twitter or Facebook.

Two surveys of 1,000 Likely U.S. Voters each were conducted October 12-13 and October 14-15, 2010 by Rasmussen Reports. The margin of sampling error is +/- 3 percentage points with a 95% level of confidence. Field work for all Rasmussen Reports surveys is conducted by Pulse Opinion Research, LLC. See methodology.

Government ethics and corruption rate number three in terms of overall importance, but voters have been narrowly divided for the past several months over which party to trust more on this issue. Democrats have held small leads since February.

As for education, both parties have held very modest leads on the issue at different times for months now.

Forty-eight percent (48%) of voters nationwide place their trust in the hands of Republicans when it comes to the issue of taxes. Thirty-nine percent (39%) would rather the Democrats handle this issue. The GOP has held a solid lead over Democrats on thiS issue since eariy July 2009. •

But most voters believe that Democrats in Con ress want to raise taxes and s£:_nding, whi e epu Icans in Congress want to cut taxes and spending.

~en it comes to immigration, 45% trust Republicans" while 33% trust the Democrats more. The gap between the two parties has widened since the beginning of January as the debate over the immigration law in Arizona intensified. At the beginning of the year, voters were essentially evenly divided on which party to trust.

~rs feel more strongly than ever that the federal government is encouraging illegal immlgrabon and that states like Arizona have the answer to the problem, 'but the Obama administration is challenging the Arizona law in federal court.

Republicans continue to be trusted more on national security issues and the war on terror, with 49% of voters trusting the GOP versus 39% who trust the Democrats more. When it comes the war in Afghanistan, Republicans hold a six-point advantage, 42% to 36%.

{It()Vj ~ T Mort fh pt_rp

aerica/trust on issues

Similarly, voters trust Republicans more than Democrats to handle the war in Iraq,

43% to 37%. ~

Republicans now hold a nine-pOint lead on the Generic CongreSSional Ballot.

7

10119/2010

II Most Americans Say U .8. Is Too Politically Correct

Tuesday, October 19, 2010

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It may not be politically correct to say it, but most Americans think the country's gotten too PC and see that Q.S a problem.

A new Rasmussen Reports national telephone survey finds that 57% of Adults believe America today has become too politically correct. while just 23% say the country is n~ politically correct enough. Eleven percent (11%) say the balance is about right.

Some people think that government officials too often override the facts and common sense in the name of political correctness, and 74% regard political correctness as a problem in America today. Thirteen percent (13%) disagree and say it's not a problem, and 13% more are not sure

Sixty-three percent (63%) of voters said last November that political correctness

,

prevented the U.S. military from responding to warning signs that could have .erevented Major Nidal Malik Hasan from massacring 13 people and wounding many. others at Fort Hood, Texas.

An Obama Endorsement - A Breath of Life or a Kiss of Death?


On a list of six prominent Democratic and Republican politiCians, voters rank President Obama as the one who carries the most weight - positively and negatively - when it comes to an endorsement.

According to a new Rasmussen Reports national telephone survey, 29% of Likely Voters sayan en.dorsement from the president is the one most likely to make them vote for a candidate.

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But even more (45%) say Obama is the politician who makes them least likely to vote for a candidate he endorses. (To see survey question wording, click here.)

As for the others on the list, 16% rate an endorsement by former President George 't;L; Bush as the most likely to make them support a candidate, followed by former President Bill Clinton (15%), ex-Alaska Governor Sarah Palin (14%), New Jersey ~epublican Governor Chris Christie (5%) and Vice President Joe Biden (1 %).

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