Posts tagged with: bailouts

Some proponents of limited government understandably yearn to see Mitt Romney’s recently announced running mate, Paul Ryan, as something like the pure intellectual descendent of Friedrich Hayek and Milton Friedman. Some on the left, meanwhile, will be tempted to portray him as a heartless monster who only wants to enrich the 1 percent. Paul Ryan the politician is more complex than either portrait. Far from throwing granny under the bus, his efforts at budget reform are an essential step in saving Social Security and Medicare, along with improving the long-term fiscal health of the nation. On the other hand, and although his American Conservative Union score is a solid 91.69, he did vote for TARP, the bank bailout, and the auto bailout–government intrusions he has said he now partially regrets.

The personal side of Paul Ryan also doesn’t fit neatly into many preconceived categories. His extended family is financially successful, but he lost his father when he was 16, attended a public university, and worked a variety of summer and side jobs during and after college to make ends meet. As a teenager he helped take care of his grandmother who had Alzheimer’s.

He’s a socially conservative Catholic, and a fan of grunge rock, Beethoven, Led Zeppelin, and Hank Williams, Jr. He’s an outdoorsman who bow hunts, does his own skinning and butchering, and kills catfish with his bare hands. And he’s married with three children, with a wife, Janna, who is a stay-at-home mom with degrees from Wellesley and George Washington University.

For more, here is a piece in which Ryan discusses his votes for TARP and the bailouts; here is a breakout of the American Conservative Union’s 91.69 conservative score for Ryan; and here is a short biography.

UPDATE: The Janesville Gazette has just published an Extra that pulls together their local pieces on Ryan and Janesville along with some national stories and policy resources–a nice one stop resource.

It is very easy to forget what is happening in other parts of the world especially when we are in the midst of our own financial crisis in the United States. Considering the economic challenges we are faced with, this may be a mistake as we can learn from other’s problems. Europe is experiencing economic woes that continue to worsen. In the American Spectator, Samuel Gregg explains:

As Europe’s financial crisis worsens, it’s increasingly apparent that the economic woes of countries like Portugal, Spain, and Greece have resulted from more than just bad policy. With each passing day, evidence mounts that one dynamic driving the crisis is that of untruth: a disturbing European pattern of fabrication about levels of public spending and debt.

The latest proof for this thesis is the discovery by newly-elected Spanish regional and local governments of concealed debts run up by their predecessors. This contradicts claims by Spain’s Socialist Finance Minister, Elena Salgado, that Spain’s regions had no “hidden deficits” on their accounts. Spain’s business community, however, has long complained about local governments pressuring private companies to do business with them “off the books.”

One reason for such behavior is that Spain’s government knows that the greater Spain’s real overall-public debt, the higher will be the interest-rates demanded by financial markets and the more stringent will be the conditions attached to any “financial assistance package” (i.e., bailout) that Spain might, like Portugal and Greece, eventually need.

As Gregg says, the financial problems in Europe are not just current but have been festering since the beginning of the Eurozone when strict standards were to be implemented:

In the 1990s, European governments agreed the single currency’s success would depend upon countries entering the eurozone on a solid financial basis and then remaining on a firm footing. To that end, both the 1992 Maastricht Treaty and the 1997 Stability and Growth Pact (SGP) established strict criteria concerning public spending for countries admitted to the single currency.

One such standard concerned the ratio of an applicant country’ gross government debt to GDP. It was not to exceed 60 percent at the end of the preceding fiscal year. Maastricht’s convergence criteria also specified that the ratio of the annual government deficit to GDP should not exceed 3 percent of the same fiscal period.

Such standards were supposed to prevent a “free rider” program from occurring so countries with an irresponsible fiscal reputation, such as Greece, didn’t use their membership to over-indulge and rely on the rest of the members to bail them out. However, this policy wasn’t strictly adhered too. Gregg states that “…many euro applicants were allowed to get away with ‘creative accounting’ to meet the conditions of Maastricht.”

Europe continued to financially falter and wasn’t showing signs of recovery. This could be seen from many actions such as the encouragement of “fudging” numbers through new rules that “added many exceptions for types of spending that would not be included when determining debt and deficit figures.”

Is there a solution to Europe’s financial crisis? Gregg responds with a resounding yes:

Few “core values” would have a more bracing effect upon Europe’s current economic problems than their governments embracing honesty, transparency, and accountability. No doubt many a European political-career would be terminated as a result. The alternative, however, is for Europe’s governments to continue the charade about the real state of their finances.

Morally and financially, that’s not an option at all.

Click here to read the full article in the American Spectator.

Acton On The AirThree tasty morsels of Acton commentary goodness for you today:

  • Last week Jordan Ballor joined Paul Edwards to discuss the recently concluded Third Lausanne Congress on World Evangelization and the broader ecumenical movement. They talked about the relationship between “mainline” and “evangelical” ecumenical groups and the role of these groups in articulating the public and social witness of Christians all over the world. Also be sure to check out his new book, Ecumenical Babel: Confusing Economic Ideology and the Church’s Social Witness.

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  • Acton President Rev. Robert A. Sirico spent an hour on Religion, Politics and the Culture with host Dennis O’Donovan and several callers yesterday discussing Tea Party politics and Catholics.  (Hey – did you know that Father Sirico is now on Twitter?  You didn’t?  Get with the program – follow him here.)

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  • Kishore Jayalaban, Director of Acton’s Rome office, appeared today on Vatican Radio to discuss the decision made at this week’s European Union summit to create a “permanent mechanism” to deal with the financial crisis.  Translation: the EU has created a permanent bailout fund.  Needless to say, Kishore is not impressed, and explains why in a nearly ten-minute interview.

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It’s over a year now since the 2008 financial crisis spread havoc throughout the global economy. Dozens of books and articles have appeared to explain what went wrong. They identify culprits ranging from Wall Street financiers overleveraging assets, to ACORN lobbying policy-makers to lower mortgage standards, to politicians closely connected to government-sponsored enterprises such as Freddie Mac and Fannie Mae failing to exercise oversight of those agencies.

As time passes, armies of doctoral students will explore every nook and cranny of the 2008 meltdown. But if most governments’ policy responses to the crisis are any guide, it’s apparent that many lessons from the financial crisis are being ignored or escaping most policy-makers’ attention. Here are five of them.

Perhaps the most prominent unlearned lesson is the danger of moral hazard. The message conveyed to business by many governments’ reactions to the financial crisis is this: if you are big enough (or enjoy extensive connections with influential politicians) and behave irresponsibly, you may reasonably expect that governments will shield you from the consequences of your actions. What other message could businesses such as AIG, Citigroup, Royal Bank of Scotland, Lloyds, and Bank of America have possibly received from all the bailouts and virtual nationalizations?

A second unlearned lesson is that once you allow governments to increase their involvement in the economy to address a crisis, it is extremely difficult to wind that involvement back. Indeed, the exact opposite usually occurs.

Who today remembers the stimulus and bailout packages so heatedly debated in late-2008? They pale next to the fiscal excesses of governments in America and Britain throughout 2009. Recessions and subsequent government interventions create an atmosphere in which the hitherto implausible – such as trillion-dollar, 1900 pages-long healthcare legislation in an era of record deficits – becomes thinkable. Likewise the Bush Administration’s bailout of Chrysler and GM morphed into the Obama Administration’s virtual appropriation of the same two companies. (more…)

Blog author: jballor
Thursday, April 9, 2009
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AS NYT columnist Frank Rich observed earlier this week, it’s hard to find much sympathy for Rick Wagoner. “Sure, Rick Wagoner deserved his fate,” writes Rich. “He did too little too late to save an iconic American institution from devolving into a government charity case.”

The delusions of the CEOs who lined up on Capitol Hill last year to lobby for bailouts extended beyond the arrogance of flying to congressional meetings in private jets. Duly chastened, the CEOs next made the pilgrimage in a caravan of hybrids, but still didn’t realize that some of them might be lobbying to lose their jobs.

If they had realized that in getting a government bailout they would be getting far more than they expected, they might have thought longer and harder about taking public money. I’m sure that Ford CEO Alan Mulally is happy that his company is the only one of the Big 3 that isn’t currently beholden to the whims of the federal government.

Companies who take government money are going to learn what charities who have gone on the government dole learned long ago: he who writes the checks ultimately calls the shots. In biblical parlance, “the borrower is servant to the lender.”

The fate of Rick Wagoner should be a cautionary tale to all those companies who are considering government bailouts, just as the fate of so many faith-based nonprofits serve as warnings to those who want government subsidies.

President Obama took time out over the weekend to respond to this week’s PBR question: “Let me assure you in the days ahead my administration intends to do to every industry in this country exactly what we are doing to the automakers.”

rl_18_3 The new issue of Religion & Liberty featuring an interview with South Carolina Governor Mark Sanford is available online, now in its entirety. From the very beginning, Governor Sanford has been a vocal critic of all bailout and stimulus legislation pouring out of Washington, regardless of who is occupying the White House.

For an update on the stimulus debate, and the governor’s role in the new stimulus law, The Wall Street Journal published Governor Sanford’s March 20 column titled, “Why South Carolina Doesn’t Want ‘Stimulus.'” Our interview is also unique in that Governor Sanford also talks about faith in the public square and the virtues related to spending restraint.

We have some excellent cultural analysis in this issue, which includes “Busting a Pop Culture Illusion” by S.T. Karnick. Karnick is the editor of the American Culture website. He calls the Disney “life without limits mindset, one of the main progenitors of modern, statist liberalism.” Bruce Edward Walker of the Mackinac Center for Public Policy offers a piece that uplifts the moral order over ideology. Walker declares:

For Eliot, the moral imagination derived from his Anglo-Catholicism; for Kirk, his Roman Catholicism. Devoid of moral imagination, all systems–political, social, economic, familial and spiritual–are bound to fail. True conservatives, both men believed, place moral considerations ahead of ideology. In fact, both held that true conservatism is the negation of ideology.

Two books are reviewed in this issue, Kevin Schmiesing reviews Philip Lawler’s The Faithful Departed: The Collapse of Boston’s Catholic Culture and I review Spiritual Enterprise: Doing Virtual Business by Theodore Roosevelt Malloch. Schmiesing’s review first appeared on the Powerblog in November.

In this issue we also pay tribute to one of the giants who was pivotal in the destruction of Marxist-Leninism. Alexander Solzhenistyn (1918 – 2008) is the “In The Liberal Tradition” figure for this issue. I was about 14 or 15 when my dad gave me a copy of Aleksandr Solzhenitsyn’s The Gulag Archipelago, and in reading his book it was plain for me that the fundamental flaws of the Soviet System were moral in nature. Nobody has written and articulated that case better and more effectively than Solzhenitsyn did. His works offered the first critique of the Soviet system I had come across from a non-Westerner. It’s not the first time we have written about Solzhenitsyn of course, Religion & Liberty’s Executive Editor John Couretas published “Solzhenitsyn and Russia’s Golgotha” in the Spring issue of 2007.

sanford-blog In the next issue of Religion & Liberty, we are featuring an interview with South Carolina Gov. Mark Sanford. Sanford has made national headlines for his principled opposition to all bailout and stimulus legislation coming out of Washington.

He was elected South Carolina’s governor in 2002 and re-elected in 2006, becoming only the third two-term governor in modern state history. In 2008, Sanford was also named Chairman of the Republican Governors Association.

Before becoming governor, Sanford served six years in the U.S. Congress after his election in 1994. For his consistent efforts to lower taxes and limit government growth he was ranked #1 in the entire Congress by Citizens Against Government Waste. He was rated similarly by the National Taxpayers’ Union, and Taxpayers for Common Sense inducted him into the Taxpayers Hall of Fame.

We would like to offer our PowerBlog readers an exclusive preview of the interview (the full interview will be available soon in the pages of Religion & Liberty):

You’ve taken a very principled approach in working for smaller government, lower taxes, individual liberty and fostering a culture of personal responsibility. Those principles are taking a battering in Washington today. Can anything turn the tide?

George Washington and his fairly battered band of patriots were facing far greater odds. The situation looked much more bleak. And yet they were resolved to creating the perfect union that they believed in. And they ultimately prevailed against incredibly long odds. So I think the answer rests in that silent and sleeping majority. Really making their voice heard. Not just for an election or election cycle but on a prolonged basis. And that’s what it will take to turn the tide. Really, that is the only thing that can turn the tide. However, if the status quo remains, we’re going to have profound problems coming our way that I think signal frankly the undoing of our Republic.

A lot of state governors are lining up for federal bailout money. Won’t this simply postpone the day of reckoning that some states need to face because of their own policies?

The answer is yes. That which is unsustainable is going to end. And so for instance California government grew by 95-percent over the last ten years. Federal government grew by about 73 percent. So you have state government that has grown at an even faster rate than the federal government. You have a state government that has gone out and issued long-term debt to cover the actual operations of government over the last couple years. It’s not sustainable. The idea is that you can just throw some federal money in to that unsustainable mix. But all you do is delay big structural reforms that are absolutely essential to California, for instance, being on firm financial footing. And this notion of mandating over a bad situation ultimately generally makes the situation worse. So, yeah, I do think it postpones the day of reckoning. And frankly makes the day of reckoning worse.

The line of business people asking for government bailout help seems to get longer by the day, how can you say no when jobs may be on the line?

The role of government is to promote, in my view, individual freedom. In other words, we have a governmental apparatus that is legitimate in nature in as much as it is to maximize one’s individual freedom. There are other folks who believe in the idea of a nanny state, and believe government is there to take care of your different needs, cradle-to-grave, chief among them being employment. Rather, government is there to create a foundation by which private sector can grow and create employment opportunities. Its job is not to create employment itself as I see it. And so I would say, yes, they’re lining up. There’s an article in today’s paper about car rental companies now lining up for a piece of the bailout funding. There was another article I saw where credit unions were getting money they’ve never gotten before. So, yes, there’s going to be an endless list. And it is again going to get to the point of the absurd before this thing is over and done. And the fact that the list is growing longer shows the fallacy it is to think that government can change economic laws.