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Posts Tagged ‘bailouts’

Cash for Clunkers

Thursday, August 20th, 2009

Texas Straight Talk – A weekly column
Rep. Ron Paul (R) – TX 14

The Cash for Clunkers program has received a lot of attention this week on Capitol Hill and across the country. The program offers a voucher of up to $4500 in federal funds to anyone who trades in a working used car for a new one with better fuel economy. Congress was shocked at how quickly people responded to promises of free money and drained the program, while car dealers have been equally shocked at how slow and arduous the government’s website to claim the rebates has been.

It’s not a shock that people respond to incentives. The program has been deemed a resounding success, and Congress has authorized 2 billion more taxpayer dollars for it. But not everyone is happy about this. Low-income earners who would have been in the market for those perfectly serviceable, working cars will have fewer to choose from, and those cars will probably be more expensive than they normally would have been. Automotive repair shops actively lobbied against this program, as it will destroy many of the cars they would have repaired. They were out-lobbied. And of course, Americans as a whole are hurt, because this additional bailout of auto companies comes at our expense through inflation.

I have introduced a somewhat similar bill that would have provided a much better alternative to Cash for Clunkers because it does not rely on increased government bureaucracy or spending. My bill HR 1768 provides tax credits to people trading in used cars for new cars with better fuel economy. There is a big difference, in my mind, between letting people keep their own money versus giving them someone else’s. It is clear which one a free and fair society would choose. Not only that, but my bill would not have required working, serviceable cars to be destroyed for scrap metal.

Cash for Clunkers is a popular program right now, but in the larger scheme of things it does very little towards accomplishing its stated goals. Requiring cars to be destroyed and new ones made to replace them might help the auto industry in the short run, but any improved fuel economy will not make up for the environmental impact of junking one car and making a new one. So this is not a program that should really make environmentalists happy.

There is also much evidence that the boost in demand for autos, that has made dealers happy, is just borrowed demand from the past and the future. In other words, many have put off purchases they would have made anyway because they were waiting to see what the government would do. Others who would have waited a little longer to trade in a vehicle are accelerating their decisions so they can get in before the money runs out. So I would not be surprised to find that this artificial boom in auto sales is followed by an extended drop. This should serve as a very tangible example of how government meddling in the economy creates booms and busts. While everyone loves the booms, the busts are what creates the crises that government thrives on, and that is what we really need to watch out for!

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International Bailout Brings Us Closer to Economic Collapse

Monday, June 22nd, 2009

Last week Congress passed the war supplemental appropriations bill. In an affront to all those who thought they voted for a peace candidate, the current president will be sending another $106 billion we don’t have to continue the bloodshed in Afghanistan and Iraq, without a hint of a plan to bring our troops home.

Many of my colleagues who voted with me as I opposed every war supplemental request under the previous administration seem to have changed their tune. I maintain that a vote to fund the war is a vote in favor of the war. Congress exercises its constitutional prerogatives through the power of the purse, and as long as Congress continues to enable these dangerous interventions abroad, there is no end in sight, that is until we face total economic collapse.

From their spending habits, an economic collapse seems to be the goal of Congress and this administration. Washington spends with impunity domestically, bailing out and nationalizing everything they can get their hands on, and the foreign aid and IMF funding in this bill can rightly be called an international bailout!

As Americans struggle through the worst economic downturn since the Great Depression, this emergency supplemental appropriations bill sends $660 million to Gaza, $555 million to Israel, $310 million to Egypt, $300 million to Jordan, and $420 million to Mexico. Some $889 million will be sent to the United Nations for so-called “peacekeeping” missions. Almost one billion dollars will be sent overseas to address the global financial crisis outside our borders. Nearly $8 billion will be spent to address a “potential pandemic flu” which could result in mandatory vaccinations for no discernable reason other than to enrich the Pharmaceutical companies that make the vaccine.

Perhaps most outrageous is the $108 billion loan guarantee to the International Monetary Fund. These new loan guarantees will allow that destructive organization to continue spending taxpayer money to prop up corrupt leaders and promote harmful economic policies overseas.

Not only does sending American taxpayer money to the IMF hurt citizens here, evidence shows that it even hurts those it pretends to help. Along with IMF loans comes IMF required policy changes, called Structural Adjustment Programs, which amount to forced Keynesianism. This is the very fantasy-infused economic model that has brought our own country to its knees, and IMF loans act as the Trojan Horse to inflict it on others. Perhaps most troubling is the fact that leaders in recipient nations tend to become more concerned with the wishes of international elites than the wishes and needs of their own people. Argentina and Kenya are just two examples of countries that followed IMF mandates right off a cliff. The IMF frequently recommends currency devaluation to poorer nations, which has wiped out the already impoverished over and over. There is also a long list of brutal dictators the IMF happily supported and propped up with loans that left their oppressed populace in staggering amounts of debt with no economic progress to show for it.

We are buying nothing but evil and global oppression by sending your taxdollars to the IMF. Not to mention there is no Constitutional authority to do so. Our continued presence in Iraq and Afghanistan does not make us safer at home, but in fact undermines our national security. I vehemently opposed this Supplemental Appropriations Bill and was dismayed to see it pass so easily

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Expert urges U.S. gov’t to change policies of taxing, spending

Sunday, June 14th, 2009

www.chinaview.cn 2009-06-15
By Jing Zhao Cesarone

CHICAGO, June 14 (Xinhua) — Taking issue with the Obama Administration’s contention that the economy is showing signs of recovery, Peter Schiff, a well-known American economic commentator, firmly believes that this economy will never recover unless the government changes its policies of taxing, spending and expanding the government.

Schiff, currently serving as president and chief global strategist of the brokerage firm Euro Pacific Capital Inc, told Xinhua during an exclusive interview on Saturday that “the things the government is doing with the economy only put us into deeper debt and deeper trouble. All they will probably do is buy us time, interfere with the current situation and postpone the unpleasant consequences in exchange for more damage in the future.”

Regarding recent numbers showing slight growth in retail sales and a dip in first-time jobless claims, Schiff said, “they’re depending on that to reign in the massive deficits they’re creating. But they aren’t doing anything that will lead to recovery; they’re doing the opposite!”

As an expert on money, economic theory, and international investing, Schiff is best known for his prescient predictions of the economic crisis of 2008. He is one of the few investment advisors to have correctly called the current bear market before it began.

He said, “the Obama Administration will be like Jimmy Carter’s. They’re going to tell everyone to ‘sacrifice’ to support a government that is just too large and too powerful. Regarding interest rates, Schiff noted, “We may have reduced interest rates now, but with higher inflation, we will have to raise them in the future. Then, we will have recession, rising prices, and no available credit. This will smother any potential for recovery.”

Turning to the unemployment rate, Schiff pointed out, “the current headline unemployment rate of 9.5 percent does not truly capture the situation on the ground because it ignores those who are ‘marginally attached’ to the workforce; 16 percent is more realistic representation of the situation, and I estimate about a 20 percent unemployment rate by the end of this year.”

Commenting on the government’s stimulus plan and its effect on job creation, Schiff said: “The kind of jobs created by the government stimulus are not productive and viable for the economy, but the private sector is forced to subsidize them. Not only are they a drain on the real economy via taxation, they also divert human capital from private businesses.”

Then what should the government do to bring the economy back on track? Schiff advised: “If the government changes its policies, the economy will start to recover immediately. But the symptoms will get worse before they get better. It’s like ripping off a band-aid — they’re so worried about the pain that they’re pulling it off slowly. If they just ripped it off, it might hurt a lot for a second, but then it would be over and we could move on.”

Schiff criticized the Federal Reserve as the ultimate culprit in this crisis. He said, “in response to the dot-com bust, Alan Greenspan kept interest rates artificially low to stimulate the economy. The only thing he stimulated was an artificial boom in real estate and stocks. Now, we’re paying for that with a recession.”

“Instead of allowing this restructuring to happen, Ben Bernanke has dropped interest rates to near-zero and started intervening directly in the market. He’s ‘monetizing’ Treasury debt to make up for a drop in foreign demand. These policies will lead to a collapse in the dollar, which will be much worse than the current crisis,” he added.

Schiff is a supporter of the Austrian School of Economics and the Ludwig von Mises Institute, and was an economic adviser for Ron Paul’s campaign in the 2008 Republican Party primaries, through which Schiff also expressed support for sound money, limited government, and free market capitalism.

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Obama Is Running A “Gangster” Government

Saturday, June 13th, 2009

Hear, hear Congresswoman Michele Bachmann (R) MN-6

You Rock Mrs. Bachmann

“Call it for what it is” indeed

Obama and his gangsters. Taking over
everything, impoverishing Americans, demoralizing citizens into surrender for
handouts.

Watch the video

http://www.youtube.com/watch?v=aXyhKXUP7PM

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GM, Amtrak and an Increasingly Fascist America

Monday, June 8th, 2009

Texas Straight Talk – A Weekly Column
Rep. Ron Paul (R) – TX 14

Last week, General Motors finally declared bankruptcy. Many in government thought $20 billion in taxpayer dollars would save the company, but as predicted, it only postponed the inevitable. The government will dump another $30 billion into GM and take a 60 percent controlling interest for it. Public officials are now involving themselves in tactical business decisions such as where GM’s headquarters should move and what kind of cars it will build.

The promise that this is temporary and will eventually be profitable is supposed to ease the American people into accepting this arrangement, but it is of little comfort to those who remember similar promises when the American taxpayers bought Amtrak. After three years, government was supposed to be out of the passenger rail business. 40 years and billions of dollars later, the government is still operating Amtrak at a loss, despite the fact that they have created a monopoly by making it illegal to compete with Amtrak. Imagine what they can now do to what is left of the great American auto industry!

In a truly free market, GM would get your money one way and one way only – by selling you a car you want, at a price you are willing to pay. Instead, the government is giving public money to a private company in spite of the market signals it has been sending. Throwing money at GM does not stop it from being an engine of wealth destruction; on the contrary, it simply gives it more wealth to destroy.

Had it been allowed to fail naturally, the profitable pieces of GM would have been bought up and put to good use by now. The laid off employees would likely have found new jobs and all that capital would be in private hands, reinvested in companies that produce products demanded by consumers. Instead, we are all poorer now.

Political pressure, rather than the rule of law, is deciding how to divide up the remains of GM. The bondholders had billions in retirement savings invested in the company, and though they were entitled to nearly three times as much as the United Auto Workers, the bondholders were left with just a 10 percent stake compared to the union’s 17.5 percent stake. For their 60 percent stake, taxpayers have a future of constant bailouts to look forward to.

Comingling public control of private business is known as fascism. While today’s politicians may feel emboldened with all their new power, history will only repeat itself as all this collapses on itself. It is the height of hubris for bureaucrats and politicians to attempt to control the market and the freewill of the American people. In the end, the market always wins out. Maybe one day future generations will wise up and allow free markets to function and thrive without the albatross of government around its neck. For now, it looks like those in charge have not learned the lessons of the past, and have doomed us to repeat those mistakes once again.

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