I'm a Pundit Too

Saturday, December 27, 2008

Merry Christmas!

2000 years ago, in the insignificant town of Bethlehem, a baby was born in a stable that changed the course of history for mankind. Jesus Christ was born that day in humble surroundings and fulfilled the prophecies of the Messiah. He was prophesied to come to save the nation of Israel. Little did the shepherds and wise men, which gathered in the stable, realize that the baby boy would grow up and save the entire human race from their sins.

Christmas is a time of joy for all those who celebrate the holiday. For some it is a time to give gifts and receive gifts. For others it is a season to spend with their families and friends. For those who believe that Jesus Christ is the virgin-born Son of God, it is a time to celebrate the good news of Jesus, the good news of his birth, life, death and his resurrection. His death and resurrection is our saving grace from an eternity in hell.

Christmas has become something very different from what it originally celebrated, but it is a time of giving and joy nonetheless. I wish everyone a Merry Christmas. It does not matter whether or not you believe in Jesus Christ, or what side of the political spectrum you may fall, Christmas is a special time of the year. I pray that you and yours have a very blessed Christmas and New Year. We can get back to the politics next week.

Wednesday, December 17, 2008

The Fall Of Bernie Madoff Has Political Implications

If the roller coaster ride on Wall St. was not enough to give investors nightmares, the news of the Ponzi style scam of Bernard Madoff is sure to cause many a sleepless night. Madoff made a name for himself as an investment advisor to the ultra-rich, who promised and fulfilled double-digit returns in either a bear or a bull market. His con lasted for more than 4 decades before his historic $50 billion swindle came to an end.

The scam is a relatively simple idea of taking money from investors and instead of legally investing the funds; he would pay returns to other investors, after keeping a portion for himself. The Ponzi scheme is named for Charles Ponzi, an Italian immigrant, who took millions of dollars from thousands of investors in 1920. His lie was based on buying and selling of international postal reply coupons. Basically, he promised to buy these coupons in foreign countries and redeem them here in the U.S. for a huge profit. In a matter of months he went from being broke to a millionaire before he was shutdown for mail fraud.

Madoff’s customers included some of most influential people in the country, as well as billion dollar hedge funds, and Sterling Securities, the owner of New York Mets. The fallout from this scandal will be long and painful for many financial institutions, charitable organizations, and corporations, but the question remains of how could Madoff had such a long run without ever bringing the scrutiny he deserved. Records have shown that several times over the past 40 plus years, questions arose as to how Madoff could consistently produce double-digit returns for his clients, even in down markets. The SEC chief has admitted that his agency did not properly perform their duties for at least the past decade.

Congressional leaders have called for hearings and an investigation into how and why the SEC missed all of the signs of misconduct of Madoff. Interestingly enough, the congressmen who will be investigating the SEC and Madoff are some of the same politicians who benefited from Madoff’s political contributions. Open Secrets, the non-partisan group that tracks political contributions, has listed the political contributions and lobbying efforts of Madoff and his wife for the past 15 years. Madoff has given nearly $1 million to campaigns, committees, and lobbying efforts since 1992. Now we can expect the politicians on high to pass their hypocritical judgment down, so that we may sleep well knowing they are watching over us. I realize that the shock of a $50 billion scam has dominated the headlines, but why have we not heard from any of these politicians about receiving the ill-gotten gains from Madoff? I believe that the political implications of this scandal will get swept under the rug to prevent any embarrassment on Capitol Hill.

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Thursday, December 11, 2008

The Culture Of Corruption In Illinois Politics

President –elect Barack Obama’s magical victory tour through the transition process was sidetracked this week by the arrest of Illinois Governor Rod Blagojevich on charges of corruption. Blagojevich is accused of attempting to sell the now vacant Senate seat of the President-elect. He was caught on tape by FBI wiretaps discussing the potential for his personal and political profit off of the appointment of Obama’s replacement. The U.S. Attorney that is prosecuting this case is Patrick Fitzgerald, the same Patrick Fitzgerald of Scooter Libby fame.

Fitzgerald, you may recall, investigated the Valeria Plame leak and found that Richard Armitage was the original source of the leak. Fitzgerald learned it was Armitage during the first few weeks of the investigation and continued to investigate until Libby was charged 2 years later with a process crime. Now that Fitzgerald is on the case of corruption in the Governor’s mansion, how far will he take the investigation? The complaint documents against Blagojevich mention convicted “slum lord” Tony Rezko more than 100 times. Rezko is rumored to be talking to Fitzgerald in order to shorten his prison sentence. Rezko was very well connected within Chicago politics and the heat is now on anyone who may have had dealings with the convicted felon.

Obviously, President-elect Obama was asked what he knew about the scandal and his statements of shock, outrage, and innocence were to be expected. What was unexpected was his declaration that he had not spoken to the Governor concerning his replacement. On November 5, the day after Obama’s election victory, a Chicago news station reported that Obama’s first order of business was to meet with the Governor to discuss his replacement in the Senate. The news station is now claiming on their website that they have not verified that the meeting ever took place. Then on November 23 David Axelrod, Obama’s chief advisor, stated that he “knew” that Obama and the Governor had spoke to discuss the vacant Senate seat. After Blagojevich was arrested, Axelrod quickly claimed that he misspoke. The Huffington Post has a long article that has chronicled the news events related to the appointment of a replacement for Obama in the Senate. Several times over the past month, there have been reports of Obama advisors talking to Blagojevich about the Senate seat. I do not believe that Obama would be stupid enough to discuss any type of payment for an appointment to his Senate seat, but why did he so unequivocally state that neither he nor any of his staff had any idea of the scandal before the arrest?

This investigation will not be over quickly and it will include some very high profile names. Congressman Jesse Jackson Jr., who aggressively campaigned for the Senate appointment, has been named as candidate #5. Although, he has said that the prosecutors have told him that he is not the focus of the investigation, the pressure is on him because the Governor is on tape saying that he is certain that he could get at least $500,000 if he appointed candidate #5. Another interesting point is that the Congressman’s father, the Rev. Jesse Jackson, has retained legal counsel. Now I can’t help but wonder why would the elder Jackson hire legal counsel; especially when he is not mentioned anywhere in the complaint or the media coverage since the Governor’s arrest? There are only a few certainties in the eventual outcome of this investigation. The first being that Blagojevich will not be the Governor for much longer, it won’t matter if he is ever convicted of any of the crimes for which he is charged. The second certainty is that Fitzgerald has the most secure job in the world right now. There is no possible way that Fitzgerald could ever be fired. Incoming Presidents have in the past fired many of the U.S. Attorneys from the previous administration. Clinton fired all of them the first week, Bush fired a handful after the 2004 election, but there is no possible way that Obama can even consider firing Patrick Fitzgerald until well after the investigation is over.

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Thursday, December 4, 2008

Why Not A Tax Holiday, Instead Of Another Bailout?

The CEO’s of the big three automakers arrived in Washington to continue to beg for billions of taxpayer dollars to help bail them out of their financial woes. At the same time, House Speaker Nancy Pelosi has started talking about another $500 billion “stimulus” package. Cities and states are lining up on Capitol Hill with their hands out claiming that financial ruin is on the horizon without a federal government bailout. Secretary Paulson seems eager to hand out billions, if not trillions, more to any and all corporate takers. By some accounts, the bailout promises of Paulson and Bernanke total $7.7 trillion. It amazes me that very few appear to be asking the obvious question; who is going to pay all of this back?

At least one congressman is appalled by the bailout frenzy that has gripped Washington of late. Texas Representative Louie Gohmert has come up with a cheaper alternative. Gohmert has proposed two options. The first proposal is to make it so no one pays any income tax for 2008. Any income tax that has already been collected would be returned to the taxpayer and they would not pay any income tax for the rest of the year. Gohmert says in his press release, "My idea may sound unconventional, but it is trillions of dollars cheaper than our current course. My proposal actually relies on our nation's founding democratic principles that made us the greatest nation in the world before anyone ever heard of Mr. Henry Paulson!" Gohmert’s philosophy is simple. Why not give the money directly to the consumers who could use it to buy a new car, pay off credit cards, catch up on a mortgage, or make a down payment on a house? We are not talking about a stimulus check of $1000; this would be several thousand dollars for each taxpayer. The estimated tax revenues for 2008 are $1.2 trillion. Contrast that with the promised bailouts of $7.7 trillion, which plan would make more sense?

The Congressman’s second proposal is a bit more realistic. He proposes that we take the $350 billion already allocated for the financial bailout but not yet used, and give everyone a tax holiday for January and February 2009. This would not just be income tax, but also FICA. No one would pay federal income tax or FICA for January and February. Take a gander at your pay stub and calculate how much the government takes from your paycheck for federal income tax and FICA every pay period. How much more money would that inject into your personal budget? It would free up the consumers to pay down debt, make the home renovations they have been delaying, invest, or just take the family vacation that was postponed due to the economy. Surprisingly, the cost for this proposal is below the $350 billion left from the original $700 billion bailout. American Solutions, a conservative think tank, has calculated the numbers and reports that each month the federal government collects $101.6 billion in income taxes, and $65.6 billion in FICA. The 2 month total for Gohmert’s plan is $334.4 billion, a little more than $15 billion less than the Treasury Secretary’s $350 billion.

Representative Gohmert’s proposal of a tax holiday is currently building support in the House, but you can sign the petition to show support for the tax holiday here. Although I wholeheartedly support the tax holiday, I see a few reasons why this will never come to pass. First off, the congressional leadership is too eager to continue the private sector takeover to ever allow them to take control again. Secondly, there would be a tax revolt akin to the Boston Tea Party if the American public ever realized how much money the government took from them each pay period. It is one thing to see empty number on your pay stub, but to hold that money in your hand and then have the government take it away from you is quite another story. Whether or not the tax holiday ever comes to fruition, at least we have one congressman that is willing to think outside the box when it comes to the financial crisis.

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