The one thing we know about the financial “reform” now moving toward what looks like eventual congressional approval is that it will be oversold, says economist Robert Litan of the Kauffman Foundation. We will be told that it will forever prevent a repetition of the recent financial crisis; that it will root out corruption on Wall Street; that it will eliminate “bailouts”; that it will protect consumers against greedy lenders. In the present anti-Wall Street mood, no one wants to be accused of coddling America’s money merchants.

What can we really expect?

History counsels caution. Every financial reform, even if mostly successful, ultimately gives way to another because there are unintended consequences or unforeseen problems. Sheila Bair, the head of the Federal Deposit Insurance Corp., has noted that the reforms of the early 1990s, which curbed risk-taking within the banking system, perversely shifted lending to the largely unregulated “shadow banking system” — mortgage brokers, specialized lenders and “securitization.” The central aim of today’s reform is to avert another financial panic. A panic is not a bubble or just big losses. These are inevitable and, in part, desirable: Without losses, investors would become reckless. A panic is a stampede of selling and hoarding, driven by fear, that threatens the financial system and, through it, production and jobs. A panic occurred in September 2008 when Lehman Brothers failed. Distrusting most financial institutions, investors and money managers fled to safety (a.k.a. Treasury bills).

By its nature, a panic is unanticipated. Reform may resemble generals fighting the last war….

Read it all.

No pool coverage of today’s visit by President Obama to Billy Graham, just White House statements about the meeting first arranged when Obama called Graham in November to wish him a happy 91st birthday.

“The president had a private prayer and conversation with Rev. Graham,” said White House spokesman Bill Burton. “He is extraordinarily gratified that he took the time to meet with him.”

White House spiritual adviser Josh DuBois also attended the session in Graham’s mountaintop cabin in Montreat, N.C.

Read it all.

As Rep. Randy Forbes sees it, the decision by a Wisconsin federal judge that the law creating a National Day of Prayer is unconstitutional is little more than one person’s opinion.

Millions of Americans, Forbes said, think otherwise.

“That’s not what the Constitution says,” the Virginia Republican declared Wednesday (April 21), surrounded by other members of the Congressional Prayer Caucus. “That’s what one unelected judge says the Constitution says.”

On Thursday (April 22), the Justice Department said it would appeal the decision, capping a week of political uproar from conservatives after Judge Barbara Crabb of Madison, Wis., issued her April 15 ruling.

Read it all.

President Obama challenged some of the nation’s most influential bankers on Thursday to call off their “battalions of financial industry lobbyists” and embrace a new regulatory structure meant to avert another economic crisis.

Speaking in the bankers’ backyard, at the Cooper Union in Manhattan, Mr. Obama castigated the “failure of responsibility” by Wall Street that led to the financial crisis of 2008 and pressed his case for what he called “a common-sense, reasonable, non-ideological” system of tighter regulation to prevent any recurrence.

“That may make for a good sound bite, but it’s not factually accurate,” Mr. Obama said. “It is not true. In fact, the system as it stands is what led to a series of massive, costly taxpayer bailouts. And it’s only with reform that we can we avoid a similar outcome in the future. In other words, a vote for reform is a vote to put a stop to taxpayer-funded bailouts. That’s the truth. End of story.”

He said scrupulous business leaders had no reason to resist his regulation plan. “The only people who ought to fear the kind of oversight and transparency that we’re proposing are those whose conduct will fail this scrutiny,” he said.

Read it all.

“The bashing of Wall Street is something that should worry everybody,” [Michael] Bloomberg declared last week.

The Republican-turned-independent mayor’s positions have made him a lone wolf among left-leaning officials in the city. Local lawmakers and others rallied at City Hall on Tuesday in support of financial reform, some holding signs that read “Goldman Suchs.”

Bloomberg plans to attend Obama’s speech at The Cooper Union college Thursday but demurred when asked whether he was concerned about what the president would say.

Read it all.

President Barack Obama suggested Wednesday that a new value-added tax on Americans is still on the table, seeming to show more openness to the idea than his aides have expressed in recent days.

Before deciding what revenue options are best for dealing with the deficit and the economy, Obama said in an interview with CNBC, “I want to get a better picture of what our options are….”

After the interview, White House deputy communications director Jen Psaki said nothing has changed and the White House is “not considering” a VAT.

Read it all.

And speaking of “responsibility.” A new poll by the nonpartisan Pew Research Center throws new light on the question of what’s-all-the-anger-about? In The Wall Street Journal, Pew Research Center president Andrew Kohut notes a national mood edgy and fractious, in the context of “a dismal economy, an unhappy public, and epic discount with Congress and elected officials.” Thirty percent of Americans, it seems, “view the federal government as a major threat to their personal freedoms.”

How come? What goes on here anyway, behind the oratorical battle smoke? A whole lot more goes on than one might surmise from tuning in to the Rush and Bill Show.

A cardinal principle of democracy is, don’t do things to demos — the people — against demos’ own ideas, notions and viewpoints. For instance, take over the health care system.

At the time of the final Senate and House votes on health care, polls indicated majority opposition to the bill, not the least reason being, apparently, that hardly anyone understood what the bill contained and proposed. Polls continue to show large majorities in favor of repeal.

No matter. The White House said we needed the bill.

Read it all (featured on the op-ed of the local paper today which is why I happened to see it).

Washington is gearing up for a big debate: What to do about the exploding national debt, the unsustainable annual budget deficits and what to do about the Bush tax cuts that expire at the end of the year.

Alarm bells are ringing over the size of the national debt, now equal to 84 percent of the country’s gross national product — the highest level since after World War II. The credit-rating agency Moody’s is hinting that the federal treasury’s Triple A bond rating is in jeopardy and Fed Chairman Ben Bernanke is warning that China, the United States’ largest foreign creditor, may start charging higher interest rates.

“The arithmetic is, unfortunately, quite clear,” Bernanke said. “To avoid large and unsustainable budget deficits, the nation will ultimately have to choose among higher taxes, modifications to entitlement programs such as Social Security and Medicare, less spending on everything else from education to defense, or some combination of the above.

“These choices are difficult, and it always seems easier to put them off — until the day they cannot be put off any more.”

Read or listen to it all.

Every year, Israelis approach the joy of their Independence Day right after immersing themselves in a 24-hour period of grief for fallen soldiers. Before the fireworks burst across the skies Monday night to celebrate the country’s 62nd birthday, the airwaves filled with anguished stories of servicemen and -women killed, the Kaddish prayer of mourning and speeches placing the deeply personal losses of a small country into the sweep of Jewish history.

So there is nothing new or unusual about Israelis’ marking their collective accomplishments with sorrow and concern. It happens all the time, especially among those on the political left who are angry that Israel’s occupation of the Palestinians shows no sign of ending.

But there is something about the mood this year that feels darker than usual. It has a bipartisan quality to it. Both left and right are troubled, and both largely about the same things, especially the Iranian nuclear program combined with growing tensions with the Obama administration.

Read the whole article.

President Barack Obama will proclaim May 6 as National Day of Prayer, the White House said Friday, despite a ruling by a Wisconsin federal judge the day before that it is unconstitutional.

“We have reviewed the court’s decision, and it does not prevent the president from issuing a proclamation,” spokesman Matthew Lehrich said.

The decision by U.S. District Judge Barbara B. Crabb of the Western District of Wisconsin found that the National Day of Prayer violates the First Amendment prohibition against laws respecting an establishment of religion.

Freedom From Religion Foundation of Madison, Wis., had sued the administration of George W. Bush and later that of Obama in an effort to block the presidents from making their annual proclamations inviting Americans to set aside a day for prayer or meditation.

Read it all.

The next day, at a breakfast with reporters in Washington, Douglas Elmendorf, the head of the Congressional Budget Office, confirmed that his economists have begun studying how to write a value-added tax, a form of national sales tax, because of growing congressional interest in drafting such a measure.

Elmendorf reminded the journalists of the grim news contained in his agency’s analysis of President Obama’s budget proposals. Agreeing with Bernanke that the current course is “unsustainable,” he said that unless something changes, the U.S. will emerge from the Obama years spending one-quarter more than it collects in revenue — 25 percent compared to 19 percent of the gross domestic product.

Closing the gap “can’t be solved through minor changes,” he said. Revenues projected under current laws would barely be sufficient to pay for Medicare, Medicaid, Social Security, defense and interest on the national debt. Everything else would depend on finding new revenues — or borrowing.

Read the whole piece.

President Obama yesterday released the names of ten individuals whom he intends to appoint to the recently created Presidential Commission for the Study of Bioethical Issues. The ten will join the previously named chair and vice chair””Princeton University President Amy Gutmann and Emory University President James Wagner””in exploring bioethical issues anticipated to emerge from advances in biomedicine and related areas of science and technology. In a statement released with the names of the new Commissioners, the President said; “I am grateful that these impressive individuals have decided to dedicate their talent and experience to this important Commission. I look forward to their recommendations in the coming months and years.”

The new Commission differs in several ways from bioethics commissions created by previous Administrations. First, according to the terms of Executive Order (pdf) that created the new Commission, it is limited to a maximum of 13 people (with a total of 12 now named, President Obama has the option of appointing one more at a later date). That’s a smaller number than previous commissions, in part to keep the group nimble and facilitate discussion and consensus building.

Read it all.

President Obama bared his soul before a cross section of Christian leaders at a White House Easter breakfast on Tuesday (April 6), where he spoke publicly of his faith in redemption through Jesus in his most personal terms since becoming president.

Addressing his “brothers and sisters in Christ” among the nearly 90 pastors, community activists, and bishops in attendance, Obama spoke of “our risen savior” and the inspiration he takes from Christ’s resurrection.

“We are awed by the grace he showed even to those who would have killed him,” Obama said, pausing occasionally to glance at written notes. “We are thankful for the sacrifice he gave for the sins of humanity. And we glory in the promise of redemption in the resurrection.”

Read it all.

The U.S. must start to prepare for challenges posed by an aging population with a credible plan to gradually reduce a soaring public debt, Federal Reserve Chairman Ben Bernanke said Wednesday.

Health spending is set to increase over the long term as the U.S. population grows older, posing challenges to the country’s already strained finances, the Fed chief warned.

Read it all.

In an open letter sent to President Obama on Tuesday (March 30), 29 human rights groups and faith leaders pressed the president to fill the vacant position of ambassador-at-large for international religious freedom.

“The absence of senior level leadership in your administration on this critical issue is of grave and urgent concern,” said the letter, which was signed by leaders representing Christian, Jewish, Muslim, Buddhist, Sikh, and Mormon groups.

The letter was also signed by a number of human rights groups, the former director of the State Department’s Office of International Religious Freedom, and a former ambassador for international religious freedom.

Read it all.

[The New York Times]… carried a very troubling article on the front page on Monday. It detailed how President Hamid Karzai of Afghanistan had invited Iran’s president, Mahmoud Ahmadinejad, to Kabul ”” in order to stick a thumb in the eye of the Obama administration ”” after the White House had rescinded an invitation to Mr. Karzai to come to Washington because the Afghan president had gutted an independent panel that had discovered widespread fraud in his re-election last year.

The article, written by two of our best reporters, Dexter Filkins and Mark Landler, noted that “according to Afghan associates, Mr. Karzai recently told lunch guests at the presidential palace that he believes the Americans are in Afghanistan because they want to dominate his country and the region, and that they pose an obstacle to striking a peace deal with the Taliban.”

The article added about Karzai: “ ”˜He has developed a complete theory of American power,’ said an Afghan who attended the lunch and who spoke on the condition of anonymity for fear of retribution. ”˜He believes that America is trying to dominate the region, and that he is the only one who can stand up to them.’ ”

That is what we’re getting for risking thousands of U.S. soldiers and having spent $200 billion already. This news is a flashing red light, warning that the Obama team is violating at least three cardinal rules of Middle East diplomacy.

Read it all.

The Obama administration is proposing to open vast expanses of water along the Atlantic coastline, the eastern Gulf of Mexico and the north coast of Alaska to oil and natural gas drilling, much of it for the first time, officials said Tuesday.

The proposal ”” a compromise that will please oil companies and domestic drilling advocates but anger some residents of affected states and many environmental organizations ”” would end a longstanding moratorium on oil exploration along the East Coast from the northern tip of Delaware to the central coast of Florida, covering 167 million acres of ocean.

Under the plan, the coastline from New Jersey northward would remain closed to all oil and gas activity. So would the Pacific Coast, from Mexico to the Canadian border.

The environmentally sensitive Bristol Bay in southwestern Alaska would be protected and no drilling would be allowed under the plan, officials said. But large tracts in the Chukchi Sea and Beaufort Sea in the Arctic Ocean north of Alaska ”” nearly 130 million acres ”” would be eligible for exploration and drilling after extensive studies.

Read it all.

It’s been a banner week for Democrats: ObamaCare passed Congress in its final form on Thursday night, and the returns are already rolling in. Yesterday AT&T announced that it will be forced to make a $1 billion writedown due solely to the health bill, in what has become a wave of such corporate losses.

This wholesale destruction of wealth and capital came with more than ample warning. Turning over every couch cushion to make their new entitlement look affordable under Beltway accounting rules, Democrats decided to raise taxes on companies that do the public service of offering prescription drug benefits to their retirees instead of dumping them into Medicare. We and others warned this would lead to AT&T-like results, but like so many other ObamaCare objections Democrats waved them off as self-serving or “political.”

Perhaps that explains why the Administration is now so touchy. Commerce Secretary Gary Locke took to the White House blog to write that while ObamaCare is great for business, “In the last few days, though, we have seen a couple of companies imply that reform will raise costs for them.” In a Thursday interview on CNBC, Mr. Locke said “for them to come out, I think is premature and irresponsible….”

On top of AT&T’s $1 billion, the writedown wave so far includes Deere & Co., $150 million; Caterpillar, $100 million; AK Steel, $31 million; 3M, $90 million; and Valero Energy, up to $20 million. Verizon has also warned its employees about its new higher health-care costs, and there will be many more in the coming days and weeks….

Read it all.

Obama administration officials on Friday ramped up their attempts to help struggling homeowners, announcing major changes to the government’s much-criticized $75-billion program to modify mortgages to avoid foreclosures.

The most significant change is a set of complex new incentives for banks and investors to reduce the principal on so-called underwater mortgages — loans for homes now worth less than what is owed.

In addition, the administration announced that many unemployed homeowners could receive three to six months of reduced mortgage payments while they look for a job.

Together, the revisions are designed to spur the Home Affordable Modification Program to reach its target of helping 3 million to 4 million homeowners avoid foreclosure through 2012.

While the changes are significant to a year-old program that so far has helped just 170,000 homeowners receive permanently lowered mortgage payments, administration officials stressed they would only make a dent in the projected 10 million to 20 million foreclosures expected in the next three years.

Read it all.

The net results of the credit bubble are as follows:

1) An enormous number of families living in homes they cannot afford.

2) Bank balance sheets laden with current bad loans and lots of potential future defaulting loans.

3) Real Estate Sales, despite being propped up with historic low mortgage rates and tax purchase credits, are continuing to slide.

4) A weak overall economy with a very slow, soft recovery.

Whether a function of populist politics or bad economics, the proposals so far appear to address items one and three. But upon closer examination, they do nothing of the kind. In fact, they are actually gaming the system to help issue two ”” the bad loans the banks are carrying.

Even worse, they are making issue #4 ”” the economy ”” increasingly problematic.

We should allow the real estate market to experience a healthy price normalization process. Even though home prices have fallen dramatically, they have yet to reach their historical means relative to income or the cost of renting. This is to say nothing of the usual careening past the median towards under-valuation that typically follows a massive mis-allocation of capital.

Read it carefully and read it all.

When the common good takes a back seat to political and corporate interests, all, especially the vulnerable, are at risk. As the largest provider of non-governmental, non-profit health care in this country, the Catholic Church, and those who work as Catholic agencies and organizations, have a special obligation to vulnerable populations, such as the unborn, those with disabilities, and those at life’s end. These populations cannot be compromised in an effort to secure “the greater good.” This is utilitarianism, seeking the greatest good for the greatest number, and never equates to the common good.

It is undeniable that the enacted Patient Protection and Affordable Care Act includes public funding of programs that provide abortion on demand. No accounting practices, or requiring enrollees or employees to write separate checks for abortion coverage, changes that fact. The plan would mandate that in each regional Exchange only one of the qualifying plans not include abortion. Furthermore, there is no restriction on coverage of assisted suicide costs. President Obama’s executive order cannot override federal law. In fact, his Order merely requires adherence to the Act. Specifically, it states: “This Executive Order is not intended to, and does not, create any right or benefit, substantive or procedural , enforceable at law or in equity against the United States.” While he attempts to assure us that the seven billion new dollars for Community Health Centers will be applied consistent with the Hyde Amendment, the placement of that language within the Act does not make it subject to the cost-sharing provisions for abortion coverage. Most significantly, Beal v. Doe, 432 U.S. 438 (1977) dictates that, without statutory provisions for the Hyde amendment within each enacted law, “essential services” are to include abortion.

Both individuals and employers will be penalized for the absence of health care coverage. There is no evidence of conscience protections for individuals or employers, who may find themselves having to write separate checks for undesired abortion procedures that happen to be in the plan of choice. There is limited evidence of conscience protections for providers, and the legislation does not provide for protection against coercion of health care providers and employers related to contraceptives or abortifacients. Here we see, most significantly, that a house divided eventually will pay the price for taking compromising positions. Yet, unfortunately, in public opposition to the US Conference of Catholic Bishops’ call for rejection of this legislation as it was written, the Catholic Health Association and fifty-five women religious urged its passage.

Read it all.

Poor Bart Stupak. The man tried to be a hero for the unborn, and then, when all the power of the moment was in his frail human hands, he dropped the baby. He genuflected when he should have dug in his heels and gave it up for a meaningless executive order.

Now, in the wake of his decision to vote for a health-care bill that expands public funding for abortion, he is vilified and will forever be remembered as the guy who Stupaked health-care reform and the pro-life movement….

Stupak, too, knew that the executive order was merely political cover for him and his pro-life colleagues. He knew it because several members of the U.S. Conference of Catholic Bishops explained it to him, according to sources. The only way to prevent public funding for abortion was for his amendment to be added to the Senate bill.

Clearly, House Speaker Nancy Pelosi and the president didn’t want that. What they did want was the abortion funding that the Senate bill allowed.

Thus, the health-care bill passed because of a mutually understood deception — a pretense masquerading as virtue. No wonder Stupak locked his doors and turned off his phones on Sunday, according to several pro-life lobbyists who camped outside his office.

Read it all.

Third, the combination of pressure and disinformation used to break the prolife witness on this bill among Democratic members of Congress ”“ despite the strong resistance to this legislation that continues among American voters ”“ should put an end to any talk by Washington leaders about serving the common good or seeking common ground. Words need actions to give them flesh. At many points over the past seven months, congressional leaders could have resolved the serious moral issues inherent in this legislation. They did not. No shower of reassuring words now can wash away that fact.

Fourth, self-described “Catholic” groups have done a serious disservice to justice, to the Church, and to the ethical needs of the American people by undercutting the leadership and witness of their own bishops. For groups like Catholics United, this is unsurprising. In their effect, if not in formal intent, such groups exist to advance the interests of a particular political spectrum. Nor is it newsworthy from an organization like Network, which ”“ whatever the nature of its good work — has rarely shown much enthusiasm for a definition of “social justice” that includes the rights of the unborn child.

Read it carefully and read it all.

The White House says it isn’t worried that 13 state attorneys general, including South Carolina’s, are suing to overturn the massive health care overhaul, and many legal experts agree the effort is futile.

But the lawsuit, filed in federal court seven minutes after President Barack Obama signed the 10-year, $938 billion health care bill, underscores the divisiveness of the issue and the political rancor that has surrounded it.

Read it all from the front page of the local paper.

Diocese of Connecticut Bishop Suffragan James E. Curry, speaking to ENS from the House of Bishops meeting in Camp Allen, Texas, called the legislation “a wonderful step that continues our national walk toward accessibility.” The Episcopal Church’s longstanding commitment to health care reform is deeply rooted in the Baptismal Covenant, he said.

“For 2,000 years followers of Jesus have been at the forefront of efforts to provide for the health and well being of all people. We do this because the law of love compels us to care for everyone,” Diocese of Maryland Bishop Eugene T. Sutton said in an e-mail to ENS. “While people of good will disagree about some controversial provisions in the new health care legislation, in the main, Christians everywhere should rejoice that our society has taken a major step toward ensuring that all citizens have adequate and equitable access to health care without fear that sickness will result in their financial ruin. For that alone we say, ‘Praise God!'”

Curry and Sutton were among the seven Episcopal bishops who travelled to Washington, D.C. in September 2009 to advocate on Capitol Hill for health care reform.

Members and bishops of the Episcopal Church, the church’s Washington-D.C.-based Office of Government Relations, its Episcopal Public Policy Network and the ecumenical faith community continued to advocate for the health bill and press representatives to pass the bill up to March 21, when the bill passed the House by a vote of 219-212.

Read it all.

Nobody knows how this bill will work out. It is an undertaking exponentially more complex than the Iraq war, for example. But to me, it feels like the end of something, not the beginning of something. It feels like the noble completion of the great liberal project to build a comprehensive welfare system.

The task ahead is to save this country from stagnation and fiscal ruin. We know what it will take. We will have to raise a consumption tax. We will have to preserve benefits for the poor and cut them for the middle and upper classes. We will have to invest more in innovation and human capital.

The Democratic Party, as it revealed of itself over the past year, does not seem to be up to that coming challenge (neither is the Republican Party). This country is in the position of a free-spending family careening toward bankruptcy that at the last moment announced that it was giving a gigantic new gift to charity. You admire the act of generosity, but you wish they had sold a few of the Mercedes to pay for it.

Read it all.

5. Four million people will lose their employer-based plans.

The new health care law will impose a list of benefits each health care plan will have to offer if they are to remain in business. The Congressional Budget Office also estimates that about 4 million people would lose their employer-based plan and be forced to buy plans on the new government exchanges.

6. Medicare will cut services along with costs.

The bill makes $528 billion in cuts to Medicare, including a $136 billion reduction for Medicare Advantage. The Medicare Advantage cuts will force 4.8 million seniors off the popular plan by 2019. An additional $23 billion in cuts to Medicare will come from a panel charged with slashing Medicare spending.

7. The bill will not pay for itself.

The CBO found that the bill would reduce the deficit by $138 billion over 10 years, but the savings was achieved by leaving out a $208 billion provision lawmakers will have to enact later to ensure doctors are adequately paid for treating Medicare patients. When the “doc fix” is included in the bill, it runs $59 billion in the red over the next decade. And former CBO Director Douglas Holtz-Eakin said that “if you strip out all the gimmicks and budgetary games” the 10-year deficit would exceed $560 billion.

Read it all.

Even when the “fixes” that have to be approved by the Senate are made, the health-care bill will still be something of a mess. But it’s a glorious mess, because it enshrines the principle that all Americans have the right to health care — an extraordinary achievement that will make this a better nation.

It may take years to get the details right. The newly minted reforms are going to need to be reformed or at least fine-tuned, and those will not be easy battles. But the social movements that allowed Obama to become president and Pelosi to become speaker proved that the arc of history bends toward fairness and inclusion.

Needed change must not be thwarted, even if some people find it hard to accept. Obama got it right in his remarks following the vote: “We did not fear our future. We shaped it.”

Read it all.

Seventy-five years ago, on August 8, 1935, the United States Congress passed the first sweeping legislation creating a welfare safety net for the American people, the Social Security Act 1935. Its champion was President Franklin D. Roosevelt….

Support in Congress was both overwhelming and bi-partisan.

Thirty years later, in July 1965, Congress passed the second major piece of the national safety net, the Medicaid and Medicare act.

It, too, passed by an overwhelming majority with bi-partisan support. That bill was championed by another Democratic President, Lyndon B. Johnson….

Now comes the third major piece in the safety net when tomorrow (local time), President Barack Obama signs the Health Care and Education Affordability Reconciliation Act of 2010, introducing almost universal health care.

The bill passed yesterday in the House by a slender and contentious majority, 219 vote to 212.

Not a single Republican voted ‘yes’.

Read it all.

This is a very good discussion of some of the real substance of the legislation.