So it is good to be back in Milwaukee. Of course, this isn’t my first time at Laborfest. I stood right here with you two years ago, when I was still a candidate for this office. During that campaign, we talked about how, for years, the values of hard work and responsibility that built this country had been given short shrift, and how that was slowly hollowing out our middle class. About how some on Wall Street took reckless risks and cut corners to turn huge profits, while working Americans were fighting harder and harder just to stay afloat. And about how the decks were too often stacked in favor of the special interests and against working Americans.
I would like to concentrate on two things Obama mentions. The first is the unnecessary risks on Wall Street to turn huge profits. The risks he is referring to are mostly related to the housing / loan industry in one way or another. So what did members of Obama’s economic team think of these risks?
“the risk to the government from a potential default on GSE debt is effectively zero…the expected cost to the government of providing an explicit government guarantee on $1 trillion in GSE debt is just $2 million.” – Peter Orszag
This statement actually reveals a lot. One, it shows us that these companies were indeed taking on a tremendous amount of debt and that the government knew about it. Second, it shows that the government was guaranteeing this debt so they were eliminating the reckless risk from the companies’ point of view. They knew the government would bail them out. Another member of Obama’s team, Timothy Geithner, was the New York Fed Chief at the time and he either shared Orszag’s point of view or ignored the risks these institutions were taking because he took no action either. But why? The first reason is the liberal political philosophy of easy home ownership. This ideal that home ownership is a right perpetuated itself into both political parties and is the basis for everything that happened. The second is special interests. These two things became so intertwined that it is almost hard to describe, but I have done my best in the past so I will not bore you with that again. For those that want to read what I wrote here is a post that describes the problem from beginning to end. It shows how Obama advisers were intimately involved with both this political philosophy and the special interests that were driving them. Here is another post that describes how Obama’s relationship with ACORN was involved. And last but not least, here is a post that describes an internal report illustrating the government’s role in the crisis. The bottom line is that, yes, companies took on too much risk, but they were almost forced to because of government intervention. Add to this the government’s guarantee that they would bail them out and Obama’s argument does not hold much water. Mainly it is just another tired attempt at class warfare.
The second point should come as no surprise. It is special interests. It is pretty funny to see Obama bad mouth special interests while talking to a special interest group. Perhaps it is funnier that the unions themselves do not grasp the concept that they are a special interest group because lets be honest, that is all they are these days. They are certainly not a group that helps the middle class. With all of the laws protecting workers these days, they really serve no purpose. (Unless you want to count government dependency and disruption of sound economic polices…but who wants that as a purpose) It was a different time when unions supported pro business policies from Washington, but those times are long gone. The reason is pretty obvious. As the Foundry pointed out, for the first time in history union membership is higher within the government than in the private sector. That is why you have unions organizing protests this year to actually raise your taxes. It is also why they are throwing millions at electing pro-union, big government politicians such as Obama. And because he is getting millions, Obama feels obliged to return the favor. And it is certainly no secret that he is returning it…you just have to be paying attention. And it is not just sweetheart deals in Obamacare. Liberals have been feeding their union friends for a long time. I do find it interesting that all of this began during what is called the “progressive era”. Some others might want to call it the beginning of the end. Ok, I guess once again I did not get too far into the speech, but I thought it was important to point out that Obama has not thrown out special interests…he has just added a giant one. That is where his rhetoric begins to stray from reality.
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