Author Archives: Jeff Shetler

Obamacare: Enter the Finger Pointing

obamacare_logo_1It may not be a surprise that Republicans, and some Democrats, are now calling for the resignation or termination of Health and Human Services (HHS) Secretary Kathleen Sebelius, given the absolute calamity that is the HealthCare.gov launch. But is the call for her head really fair? Probably not.

It is probably fair to say that no unelected bureaucrat, regardless of party or experience, could possibly keep HHS running smoothly. Forget that half a billion dollars were thrown at building a website – quite possibly the most expensive website launch in the history of the internet – over three years, the idea of a federal bureaucracy delivering a consumer ready product over any amount of time and expense is laughable.

Over the years much has been made of the headaches and hassles involved at the DMV. The DMV is such an easy target it has become a joke frequented by mediocre comedians. And yet, after decades and untold expense, the DMV lines are just as long or longer, and the service is just as bad.

Put frankly, Sebelius was given a task no government bureaucrat could have accomplished. In fact, many don’t realize HHS has the greatest cut of the budgetary pie, consisting of $941 billion, or roughly 25% of the total federal budget. Could anyone, anywhere, oversee the proper spending and allocation of such a huge amount of money? Could anyone possibly claim they not only could ensure the money was spent wisely, but that the services provided would be of the top quality?

If launching a website is too monumental a task for the all-powerful federal government, what will we get from the “Independent Payment Advisory Board” (IPAB)? This was the “death panel” Sarah Palin made so famous. IPAB submits “recommendations” to Congress which automatically take effect unless a supermajority can override them. Which is to say, 15 unelected directors will decide what services should be cut, suspended or done away with. Those decisions, by the way, are exempted from administrative or judicial review.

HealthCare.gov isn’t a disaster because Secretary Sebelius is incompetent, though she very well may be, but because this is the inevitable results of big government. The members of Congress now demanding Sebelius’ head have found a handy scapegoat, but a disingenuous one. If the GOP has any sense left at all, they will hold up HealthCare.gov as a perfect example, a living example, of exactly why big government can never work. Fingers should be pointed for this debacle, but they should be pointed at the very people who brought us Obamacare: the Democrats in Congress and President Obama.

Quantitive Pain

Janet Yellen - The Face of Pain

Janet Yellen – The Face of Pain

Ben Bernanke out, Janet Yellen in. But, don’t worry, the same failed fiscal policy will continue chugging along.

For those playing catchup, since 2008 the Fed has been using a practice called “Quantitative Easing” or QE. Since the interest rates have already been at or near 0%, it’s the Fed’s way of inflating the money supply. The theory goes that by buying financial assets, businesses will have access to easy credit and easy cash, then they’ll open factories, hire employees, and that will get the economy going again.

As it happens, there are two big problems with this plan: the capital is straight out of Wonderland, and everyone knows it.

When the Federal Reserve prints cash to buy assets, business hasn’t improved, there’s no extra demand needing to fill, and there’s no reliable projection to indicate it’s going to get better anytime soon. No decent businessperson is going to expand operations today, knowing they won’t have the magic money tomorrow. In other words, no one is going to take on additional liabilities without confidence they’ll have the revenue to cover them tomorrow.

Much to the contrary, it’s a very dangerous fiscal policy to follow, and one we’re all to familiar with.

When we throw good money after bad, we create an artificially large market: or, a bubble.The problem with bubbles is that they cannot be sustained forever. Already the Fed owns over $2 trillion worth of bonds and other financial assets under QE, but the Fed cannot continue to buy tens of billions of dollars worth of assets every month. The money runs out, and the bubble bursts.

Instead of the markets returning to their natural levels, investors will attempt to avoid losses and pull their cash out as well. The market contracts below its natural growth and the economy contracts. In other words, we go into recession.

This isn’t some big secret. Investors have been paying close attention to the Fed in the hopes of pulling out their cash before the QE fountain runs dry. Companies know it as well, and have been reluctant to grow, knowing the contraction which will eventually follow.

Instead of growing the economy, the Fed’s policy creates a bubble in financial markets which is not reflected in economic growth. Instead of investors being able to judge profits and growth based on customer demand, they play a game of beat-the-Fed, and businesses grow slower than they otherwise would.

Contrary to growing the economy, Quantitative Easing only slows recovery.

If you doubt it, just ask yourself why the Stock Market has hit record highs in 2013, yet unemployment remains at 7.3% and labor participation remains at a 35 year low.

Follow Jeff on Twitter

All the Way to Baghdad and All I Got Was this Satellite

Iran_Iraq

President Barack Obama loves to complain about all the things he was saddled with as he rose to become the most powerful man in the world: the economy, the Constitution, Joe Biden… but he’s rarely taken to the stage to talk about the war in Iraq. You could hardly blame him: he was steadfastly against the Bush surge, which ended up stamping down the daily suicide bombings, and provided a sustainable level of security.

True to his campaign pledge, on October 21, 2011, Obama announced the end of the war and pulled US forces out of the desert nation. With the exception of Vietnam, it may have been the worst US pullout of all time.

Whatever one might think of the US invasion, after 8 years of war, thousands of casualties and tens of thousands of wounded, one would have to hope all of it meant something. That it was all worth something. In the end, that’s a hard argument to make.

The nation we invaded was ruled by a sadistic, paranoid psychopath: Saddam Hussein, and terrorized by his even more psychotic sons. No one is sorry to see the likes of them gone. For years the Bush administration pushed to establish a functioning Arab democracy in Iraq, and to some degree he was moderately successful in that aim by the time he left office. With the 2007 troop surge, the daily suicide bombings were all but eliminated, allowing the Iraqi people and their government to function.

After Obama took office, the press quickly got very quiet about troop deaths and violence in Iraq. In fact, when Obama announced the end of the war in 2011, most Americans responded with, “What? Oh, yeah, I remember that war…” And the nation we left behind we left behind fell quickly into chaos.

It wasn’t hard to predict: the US pullout came with absolutely no plan for long-term security of the country, and no strategic agreement with the government of Iraq. When the troops took off, they left a power vacuum in their wake, and as vacuums are want to do, it pulled in all comers.

It was also not overly difficult to predict who would emerge victorious in the new bloody battle for power either. After all, the 2010 re-election of Shi’ite Prime Minister Nouri al-Maliki was not due to American security or support, but due to the backing of the Shi’ite regime in Tehran. Iranian supplied and supportive militias roam the streets of Iraq while the Sunni dissidents rely on suicide bombings.

This year Iraqis killed in terrorist attacks are at levels unseen since their height in the US occupation. Recently, over 1,000 Iraqis are killed in terrorist strikes every month.

American influence in Iraq is nonexistent. Iraqis know as well as any American that the US is certainly not putting boots on the ground in Iraq again anytime soon. And whatever aid we send over can’t be cut out without an admission that the Obama administration utterly failed to responsibly end the war.  So Maliki, being the good puppet of Iran that he is, expresses his support for Bashar al-Assad in Syria, and has allowed Iranian weapons and supplies to flow through Iraq on their way to Syria. US Secretary of State, John Kerry, even flew all the way to Baghdad to pressure Maliki to put an end to it. Maliki seemed as impressed with Kerry as… well… just about everyone else, plainly telling the top US diplomate to take a hike.

Last month, 52 Iranian exiles were murdered, execution style, by Iraqi Security Forces. The exiles were members of the Iranian Mujahedin Khalq (MeK) group, which has long fought the theocratic rule of Tehran. After renouncing violence in 2001, the UN was in the process of providing safe passage for the exiles to Algeria.

Qasem Soleimani, the commander of Iran’s Qods Force, a division of the Iranian Islamic Revolutionary Guard, had other plans. After visiting Baghdad on August 27, the exiles were executed September 1. The mass murder was highly lauded in the halls of Tehran.

Perhaps most disturbing of all, Hassain al-Shahristani, Iraq’s Deputy Prime Minister for Energy, has announced Iraq is ready to help Iran develop her nuclear program.

 

Eight years.

4,500 KIA.

35,000 wounded.

1 Iranian satellite nation.

Follow Jeff on Twitter

With Love From Iran: Egg on Your Face

Hassan Rouhani

The Iranian election of Hassan Rouhani is the ushering in of a new era of peace and transformation for the Islamic Republic, at least to hear the world press tell it, and the Obama administration is right on board. Unfortunately, it turns out that the politics of empty rhetoric is the same in the Middle East as it is in the West, and while Rouhani may appear softer and gentler, there’s nothing new coming out of Iran.

You could hardly blame Obama for jumping on the Rouhani bandwagon, what with the Iranian’s campaign slogan of “change and prudence.” It’s almost as if Rouhani attended a liberal buzzword training course in Foggy Bottom, not to mention looking oddly similar to Santa.

Rouhani_Santa

The State Department, for its part, is all too eager to believe their policies of engagement with the world’s most tyrannical actually works, especially after the catastrophe in Syria.

Those who keep their eyes on such things may remember the State Department’s new policy in 2010, after the blackout of “engagement” under Bush, to send an ambassador to Damascus. This was despite Syria’s refusal to cooperate with the IAEA. State Department spokesman P.J. Crowley said, “we’re putting an ambassador in Damascus so we can have the kind of direct conversation and engagement that we think is necessary in the region in the 21st century.” But that didn’t really work out so well.

But if the Obama knows anything, it’s that when you find yourself in a hole, keep digging. Now’s the time for the same sort of “engagement” with Tehran’s new president. Of course, the idea that anything has changed in Iran ignores the fact that there’s been no change in Iran’s Supreme Leader, Ali Khamenei, or in the Guardian Council which pre-approves presidential candidates before they go before the voters. But, in diplomacy, ignorance is bliss, and there may be no one more ignorant than Rouhani.

Take his UN speech, in which he referred to Iran as an anchor of peace in the ocean of instability that is the Middle East. Never mind Iran arming and training Hezbollah, and arming and training Hamas, and arming Iraqi insurgents to kill Americans, and arming Afghani insurgents to kill Americans, and the execution of political dissidents… Never mind these things, Rouhani assures us that Iran’s nuclear program won’t develop weapons, which would “contradict [their] religious convictions.” Exactly why this form of indiscriminate killing would contradict Iranian religious convictions, no one’s quite sure, but it sure does sound good on the world stage!

The West would be well served to greet the new boss the same as the old boss. Empty rhetoric aside, Iran has demonstrated none of the long-held conditions for engagement, but has promised their centrifuges will continue to spin. Iran gets that much closer to her nuclear weapon, and the West only ends up with radioactive egg on her face.

 

Follow Jeff on Twitter