Some Animals Are More Equal Than Others

Bob Herbert calls them "fat cats." The news media diligently exposes business executives benefiting from taxpayer handouts while maintaining a luxurious lifestyle. "Fat cats" use their political connections to lobby for their own advantage.

American International Group (AIG), once the largest insurance company in the US, was full of them. It collapsed September 2008 because it insured too many poorly-performing mortgage-backed securities. "Fat cat" Maurice R. Greenberg, AIG founder and still one of its largest share holders, lobbied members of Congress long before last year's TARP bailout, yet the news media didn't pay much attention.

On April 21, 2008, Charlie Rangel (D), House Ways and Means Committee chairman, met with AIG officials to solicit funds for a public service school to be built in his honor by CCNY. Rangel had already helped get a $5 million pledge from a Greenberg-controlled foundation. A few weeks after Rangel met with AIG officials, an AIG executive wrote and asked Rangel to support a provision of a tax bill that would save AIG millions of dollars a year. Again, the news media didn't pay much attention.

In the last two years AIG lobbyists pushed for changes in at least ten bills handled by the House Ways and Means Committee, including the $700 billion TARP bailout bill. House Ways and Means counsel, Janice Mays said, "There is simply no connection between Chairman Rangel’s advocacy on behalf of an educational institution in his district and legislation affecting AIG.”

The news media was alarmed, but not outraged on September 16, 2008 when then-secretary of the Treasury Paulson (R) and Fed chairman Bernanke put $85 billion of taxpayer money at risk, loaning it to AIG for two years with no guarantees the money would ever be repaid. Roger Altman, a former Clinton administration official expressed the fear:

“It’s the interconnectedness and the fear of the unknown. The prospect of the world’s largest insurer failing, together with the interconnectedness and the uncertainty about the collateral damage — that’s why it’s scaring people so much.”

House Speaker Nancy Pelosi (D) did criticize the amount, but not the principle of taxpayers guaranteeing loans to businesses in trouble. According to a NY Times article:

"House Speaker Nancy Pelosi quickly criticized the rescue, calling the $85 billion a 'staggering sum.' Ms. Pelosi said the bailout was 'just too enormous for the American people to guarantee.'"

Later Pelosi had no compunctions for supporting nearly 20 times as much in guarantees and handouts when she voted for both the $700 billion TARP and the recent $787 billion stimulus package pushed by President Obama.

The hundreds of billions of taxpayer dollars for TARP and the close connection between business executives and government didn't alarm the news media or the vast amount of citizens in America. Because some animals are better than others, the principle of taking from some to give to others is not even a consideration in the land of the free. What did outrage the news media and citizens were two boondoggles by AIG "fat cats:"

• September 22-29, 2008: At the St. Regis Monarch Beach resort, a luxury resort in Dana Point, California, AIG rewarded some of its employees with a vacation. The news media castigated AIG because it had just received $85 billion of taxpayer money.
• November 5-7, 2008: After an $85 billion bailout, AIG insurance company executives spent $343,000 of taxpayer money at the Pointe Hilton Squaw Peak resort, a luxury resort in Phoenix while AIG was waiting to get more taxpayer money. This video shows local news people questioning AIG executives at the airport. Like cockroaches in the kitchen, the executives scurried to their first class flights to avoid news cameras. Good Morning America did a fine job exposing the hypocrisy of the business executives in the embedded video at their news link. (An AIG press release later said the money for the stay came from other sources.)

On November 11, 2008, when the taxpayer-funded AIG rescue amount was increased to $150 billion, the news wasn't about the principle of taking far more money from taxpayers to bail out a failed enterprise. While the news media rightly skewers AIG executives taking advantage of taxpayer money, there is a different standard for politicians who gave away the money.

As one of the powerful and well-connected, green President Obama benefits from the double standard. In March 2008, then candidate for President, Obama released a list of his earmarks for federal spending as a newly elected US Senator, which included a $1 million earmark for the hospital where his wife, Michelle worked.

Michelle was promoted in March 2005 shortly after her husband took office, more than doubling her pay from $121,910 to $316,962. Michael Riordan, hospital president at the time, said the promotion and salary increase had nothing to do with Michelle Obama's husband becoming a U.S. senator:

"She was hired before Barack was Barack."

While answering the unasked question of why Michelle Obama was hired, Riordan didn't address the large increase of her pay after Barack became a US senator, after "Barack was Barack." Apparently some animals are more equal than others.

According to a February 18, 2009 Arizona Republic article, President Obama stayed in the Presidential suite at the InterContinental Montelucia Resort & Spa in Paradise Valley, Arizona for $3000 to $4000 per night. The hotel was fully booked with the Presidential entourage. Apparently President Obama doesn't feel the need to economize even though the Presidential suites at the Arizona Biltmore cost (only) $1600 per night. According to the article:

"Every American president since Herbert Hoover has stayed at the Arizona Biltmore Resort & Spa in Phoenix at least once while visiting the Valley.

"For his first visit here, Obama chose to stay at the new InterContinental Montelucia Resort & Spa in Paradise Valley. Open just three months, the Montelucia is a $325 million Andalusian-inspired stunner that's already facing foreclosure."

The weeks President Obama flies in Air Force One to--coincidentally--politically contested swing states will cost far more than the two boondoggles AIG took at taxpayer expense.

The US government has more than $10.6 trillion in debt. That's far more debt than AIG and its politically-connected "fat cats" will ever owe. Will Good Morning America's Diane Sawyer or anyone else in the news media ask President Obama why he's staying at luxury hotels on taxpayer money?

All animals are equal, but some animals are more equal than others. The commandment after the pigs take over in George Orwell's Animal Farm.

An American Dream

“We’re going to give people the opportunity to be part of the United States who are dying to be part of this country and they weren’t able to before now,” said Sergeant Campos, who was born in the Dominican Republic and became a United States citizen after he joined the Army.--From NY Times article.

The February 14, 2009 NY Times article, "US Military Will Offer Path to Citizenship," describes the push by the US government military to recruit temporary immigrants who've lived in the United States for a minimum of two years to fight in foreign wars in exchange for citizenship. The volunteer army cannot get enough citizens to volunteer as the willingness of citizens to fight the wars of their rulers has lessened.

This wasn't the case when the country was new. During the American revolution, a citizen militia fought the first battles of the new government using their own weapons. From their homes near the battlefield, they could see what was at stake as they fought for their liberty. As the war with Britain continued, regular soldiers dedicated to a cause they believed in, fought with Washington.

In later wars, with no apparent threat to citizens, such as the Mexican-American war of 1846-1848 and the War Between the States, the US military started to rely on foreigners and the disenfranchised to do the fighting. Of the estimated 2.2 million men who fought for the Union army, 150,000 Irish immigrants fought. They volunteered to gain acceptance in a society where citizens treated them as poorly as slaves. German-born immigrants contributed 216,000 Union troops, and from the bottom of the societal ladder, 179,000 blacks fought in the Union army.

By 1863 during the war that many believe the federal government fought to end slavery for blacks, the same federal government instituted slavery for all men: the first American draft. The immediate result: the New York draft riots killed hundreds. The Irish were the main participants, this time killing blacks and fighting Union soldiers in New York City. US conscription ended in 1973, and today the military can't get enough citizens to volunteer to fight in foreign wars.

Military service as a path to citizenship isn't a new phenomenon. Ancient Rome had a similar experience. Roman citizens fought the early wars of the Roman republic. Like the American militia of the late eighteenth century, Roman citizen-soldiers owned their weapons. As the military goals of ancient Rome intertwined with the internecine political ambitions of its leaders, there weren't enough citizens to fill the ranks. Roman leaders recruited foreign troops. During the late Republic period of Rome, Spanish and Gallic soldiers serving as auxiliaries often received citizenship upon discharge.

In need of soldiers, Rome lowered its recruitment standards, and military leaders paid their troops and hired mercenaries. As a consequence, Roman legions, more loyal to their military leaders than to Rome and Romans, provoked fear of a military despot in the Roman Republic. That fear proved prescient when Julius Caesar broke the taboo against crossing the Rubicon river with troops in 49 BC and five years later made himself tyrant for life. Octavian, ruling at the end of the Roman civil war, changed the use of the Praetorian guard from protecting military leaders in battle to protecting political leaders from dissent.

Rome needed a large army because the Roman empire solved its material resource problems by force. Today the US government follows a similar model and its military has similar problems getting recruits. Recruitment standards are lower: gang members are increasingly also members of the armed forces. The consequences of lower military recruitment standards might not be apparent to US citizens while the military destroys people and property beyond the Rubicon in faraway lands. It will be when they're stateside "helping people at home" or making sure we stay inside our "free speech zone" cages during political conventions.

Lt. General Benjamin Freakley, who heads US Army recruitment said:

“The Army will gain in its strength in human capital, and the immigrants will gain their citizenship and get on a ramp to the American dream.”

Did Freakley speak more truthfully than he realized?

In war, human life truly is capital to be spent by generals, lending irony to Staff sergeant Campos' comment about "people dying to be part of this country."

Tragically, the hope to participate in the American dream for some still requires belief in the American fantasy that preemptively invading other nations and killing civilians somehow serves freedom.

The Dunning-Kruger Effect

The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups. Henry Hazlitt [1]

Watch this 19 second YouTube of Nancy Pelosi (D) declaring that 500 million Americans lose their jobs for every month that the stimulus package is delayed, and you'll be on your way to understanding the Dunning-Kruger effect (pdf). Pelosi, off by three orders of magnitude in her figures (three zeroes off), virtually indemnified Obama and Biden for the remainder of their term in office.

Opinions are like a part of human anatomy, everyone has one. The trick while managing our own lives is to recognize the limits of our knowledge of a subject--to know enough to know that we don't know enough. At that point either learning can begin, or we can at least acknowledge that we don't know enough about something.

The Dunning-Kruger effect, a study of metacognition, names that mixture of ignorance and arrogance in those who don't know enough to be aware of their own ignorance and who are arrogant enough to believe that they have the answers. Normally a danger only to themselves, those who don't acknowledge what they don't know can be very dangerous as politicians with coercive power over the lives of others. Examples are plentiful.

In a January 22, 2009 San Francisco Chronicle article, Nancy Pelosi, again demonstrating that mixture of hubris and ignorance, described how Congress and President Obama will fix the weak economy and an ailing health care system:

"We can't fix it all overnight, but we have to begin."

The article also gives a clue as to how Pelosi may have may have become so number-challenged:

"Pelosi said one of her favorite moments from Inauguration Day was when Marine One lifted off the Capitol grounds, signifying former President George W. Bush's exit from Washington. 'It felt like a 10-pound anvil was lifted off my head,' she said."

In another example of the Dunning-Kruger effect, to which politicians succumb, Mayor Bloomberg (R) declared a "war on salt." Apparently his years in public office have taught him a lot about nutrition.

Newly appointed Energy secretary Steven Chu (D), a Nobel prize-winning physicist, but not a climate scientist, may have also just joined the club when the physicist and energy researcher, "a vocal advocate" for alternative energy sources, gained the coercive power of government "to limit greenhouse gas emissions." An intelligent and skilled research scientist, hopefully as Energy secretary, Chu's career path doesn't illustrate the Peter Principle, where capable individuals rise in the hierarchy until they reach the level of their incompetence and remain in a position of authority where they are a detriment to the organization.

In a free market, a private organization suffering from too many inept bureaucrats goes out of business. In America, that business hires lobbyists and gets TARP money.

President Obama, the new emperor, has declared that people are not spending enough money: we need a stimulus package. The collection of people who are the American economy has slowed its spending. Many individuals are cutting spending and saving their money, something which ultimately builds real wealth. Others just don't have money to spend.

Congress, that august body of predominantly (pdf) lawyers, career politicians, and lobbyists, debates for a few weeks on whether to spend $800 or $900 Billion. How long does it take you to decide to spend much smaller sums?

It's different for Congress you say? Congress and President Obama do operate under different constraints. Unlike you and I, who get to decide what to do with our money only, they spend other people's money. Nor do they debate the justice of spending money that belongs to others who have already decided not to spend it. Instead, Congress debates how much new spending to add to the budget, how much spending to keep while cutting taxes and redistributing income, and how many angels dance on the head of a pin.

Who has the better view of reality? The many individuals cutting their spending, or Congress and the President, who are deciding how much of the money to take from those non-spending people and their descendents and spend it as the Congress sees fit? Who has demonstrated knowledge of their fiscal limits? Those who've cut their expenses, or Congress spending money it doesn't have and that doesn't belong to it?

Just as the economy is not a car battery to be jump-started by omniscient politicians, neither is it a machine of any kind to be controlled by "wise" central planners or "well-meaning" fools. "The economy" is an abstraction for the collection of actions of all of the individuals in a place. There are as many wishes and capabilities as there are people. Who has the omniscience to know what's best for you and everyone else other than God? Lawyers-turned politicians who don't even know what they don't know?

Surely not the emperor.

[1] Economics in One Lesson, Henry Hazlitt, Arlington House Publishers, New Rochelle, N.Y. 1979, p.17. Hazlitt gives numerous examples of fallacious economic reasoning that result when all of the consequences of economic policies are not understood. He uses Bastiat's Broken Window Fallacy as his first example.

Perquisites of Power

The myth of American history is that we are a government of the people and no one is above the law. That lie should have been put to rest as far back as 1787, when the new power elite in America put down Shay's rebellion, and reinforced in 1794, after the Whiskey rebellion. Soldiers and debtors after the American Revolution learned that they'd traded one set of masters in England for another in Philadelphia, the capital of the new federal government.

Politicians hold themselves to a different set of rules. It's common knowledge. For example, if you're in an accident where alcohol might be involved, do you get to wait until the next day to speak to the sheriff, as former Vice President Cheney (R) did? In all fairness, Cheney was just following Ted Kennedy's example in 1969, when Mary Jo Kopechne was killed at Chappaquiddick; Kennedy (D) waited until the next day to report the accident.

How many of the politicians in this YouTube video, who admitted to using illegal drugs, have pursued legislation to legalize the same drugs they've used? Will President Obama ("Yes we cannabis"), who smoked and inhaled, and snorted, stop federal prosecution of drug users? Will he stop federal prosecution of medical marijuana dispensaries in states where they are legal? Will he push for decriminalization legislation?

Do you believe he'll be a change from former Presidents Clinton (D) and G.W. Bush (R), who both smoked or snorted illegal drugs? Obama's predecessors both thought they deserved treatment different than the average citizen, since neither pushed for any decriminalization of the same drugs they admitted to sampling.

Presidents promise their administrations will be ethical with laughable results. When they run for office, politicians try to convince you that they're no different than you, the average citizen. On the campaign trail, they promise they won't tolerate a double standard for those in power:

• Not long after Richard Nixon (R) was impeached and resigned, Jimmy Carter (D) restated, as he signed into law the Ethics in Government Act of 1978, that he had "promised the American people that I would do everything in my power to guarantee integrity in the executive branch of government." (pdf) Where was Carter's integrity when he didn't hold Bert Lance, his banker friend, to the same standard when there was a conflict of interest between Lance's financial holdings and his new job as director of the Office of Management and Budget?
• To contrast his future administration with the Reagan (R) administration in which "138 Reagan administration officials had been convicted, had been indicted, or had been the subject of official investigations for official misconduct and/or criminal violations," Bill Clinton (D) promised that his would be "the most ethical administration in the history of the country." The man who smoked but didn't inhale, was later impeached, but not convicted.
• George W. Bush (R) promised "to restore honor and integrity" to the White House. Conflicts of interest with cabinet members emerged as soon as he took office. In 2005, he had to order his aides to attend ethics training after the Valerie Plame leaks. And just where are those WMD?

Just like his predecessors, Barack Obama (D) has promised a "new era of responsibility." Responsibility? Or irresponsibility? According to a February 2, 2009 NY Times article:

"Every four or eight years a new president arrives in town, declares his determination to cleanse a dirty process and invariably winds up trying to reconcile the clear ideals of electioneering with the muddy business of governing. Mr. Obama on his first day in office imposed perhaps the toughest ethics rules of any president in modern times, and since then he and his advisers have been trying to explain why they do not cover this case or that case."

In the same article, Melanie Sloan, executive director of Citizens for Responsibility and Ethics in Washington is quoted:

“This is a big problem for Obama, especially because it was such a major, major promise. He harped on it, time after time, and he created a sense of expectation around the country. This is exactly why people are skeptical of politicians, because change we can believe in is not the same thing as business as usual.”

Here are examples of the "high standards" of Obama's "new era" cabinet position selections:

• December 2008: As part of an agreement with President-elect Obama (D) to support the nomination of senator Hillary Clinton (D) for secretary of state, former President Bill Clinton’s foundation revealed the identity of its donors. Upstate New York developer, Robert J. Congel, donated $100,000 to Bill Clinton’s foundation in November 2004, at about the same time that senator Clinton helped secure millions of dollars in federal assistance for Congel's mall project. (Bill Clinton and secretary of state-to-be Hilary Clinton denied any connection between the two events.)
• January 3, 2009: Obama's secretary of commerce nominee, New Mexico governor Bill Richardson (D), announced he withdrew from his nomination for secretary because of an FBI investigation into his connection to a California company that won municipal bond business in New Mexico after contributing money to various Richardson causes. (The governor said he was innocent of any wrong-doing.)
• January 23, 2009: The Senate delayed the confirmation vote for William J. Lynn III, an ex-Raytheon lobbyist, and former Pentagon official during the Clinton administration. (Lynn will have difficulty meeting paragraph 3 of President Obama's executive order on ethics which prohibits registered lobbyists from taking a government job within two years of working as a lobbyist.)
• January 26, 2009: Timothy Geithner (D), who failed to pay $40,000 in income taxes, was approved by the Senate as secretary of the Treasury and immediately began overseeing the giveaway of taxpayer money.

According to Chris Dodd (D), the chairman of the Senate Banking Committee, the double standard is in force, some "pigs" are more equal than others:

"To suggest that Tim Geithner is unqualified because of this tax issue is to fail to understand his contribution to this country."

• January 27, 2009: Mark Patterson, who represented Goldman Sachs as a lobbyist, is appointed chief of staff to Treasury secretary Timothy F. Geithner. According to a USA Today article, Geithner announced Patterson's appointment on "the same day he announced rules aimed at reducing the role of lobbyists in agency decisions." (No, George Orwell, I'm not making this up.)
• February 3, 2009: Nancy Killefer pulled her name from the running as Chief Performance Officer of the Obama administration because of failure to pay under $1000 in unemployment taxes for household help at her D.C. home.
• February 3, 2009: HHS nominee Tom Daschle (D), a strong supporter of the Obama campaign, withdrew his nomination. Senate hearings revealed that Daschle had made $5 million and lived lavishly because of his connections in Washington, D.C. in the four years after he was a senator. Two days earlier, after Senate hearings had also revealed Daschle's failure to pay $128,000 in federal taxes, President Obama said that he was “absolutely” standing behind the former senator.

Robert Gibbs, Obama's White House press secretary said,

“The President believes that senator Daschle is the right person for the very important job of ensuring that we cut costs, reform our health care system, and finally give the American people in health care the outcomes that they deserve.”

Was the President sending a message that different rules applied to Tom Daschle and his other appointees?

Yes. In a February 4, 2009 NY Times article quoting an interview with NBC News, the President said:

“I’ve got to own up to my mistake, which is that ultimately it’s important for this administration to send a message that there aren’t two sets of rules. You know, one for prominent people and one for ordinary folks who have to pay their taxes.”

Daschle said he had “no excuse” and wanted to “deeply apologize” for his failure to pay $128,000 in federal taxes, and has paid the back taxes.

(While admitting his mistake, President Obama didn't say whether he'd ask Treasury secretary Timothy Geithner, who had owed $40,000 in taxes, to also step down.)

• February 4, 2009: The Senate delayed approving California congresswoman Solis as President Obama's Labor secretary. Solis co-sponsored the Employee Free Choice Act, also co-sponsored by then-senator Obama. The bill eliminates secret ballots for unionizing at a business, allowing unions to strong arm employees into supporting unionization at a non-union business. During her confirmation hearings, Solis didn't reveal her role as treasurer of a lobbying group for labor unions in support of the EFCA.
• February 4, 2009: Details were released that Leon Panetta, President Obama's nominee for CIA director, received $700,000 in speaking fees last year. Merrill Lynch & Co. paid Panetta $56,000 for two speeches and Wachovia paid him $28,000 for one. Both are failed banks involved in the TARP program to redistribute taxpayer money to failed bankers. Panetta also received a $28,000 "honorarium" from the Carlyle Group, a private-equity firm that owns companies doing business with national-security agencies of the U.S. government and specializes in cronyism for former politicians. (A Carlyle spokesman said Panetta was paid to speak at an investor conference and that the matter was unrelated to Carlyle Group subsidiary Booz Allen. Of course not.)

Does anyone still believe there isn't a double standard for politicians? Here are nine examples of Obama's kind of change within less than one month of taking the oath of office. Obama is clearly showing that he is not different. There is no change.

Obama continues the double standard established in 1787. He advocates government spending, but his elite supporters aren't keen on contributing their own money to the tax coffers; his policies are ok with them as long as he's spending other people's money. Listen to this link of Tom Daschle speaking in 1998 about tax cheats. He made the statements when he was in government voting to spend other people's money.

If you're connected to the right politician and don't pay your taxes, you might get a cabinet-level position in the Obama administration. If you're connected to the wrong mob and don't pay your taxes, you'll get seven years prison time as Al Capone did.

Business as usual.