Tag Archives: Economy

ObamaCare and the Constitution – WSJ.com

The constitutional challenges to ObamaCare have come quickly, and the media are portraying them mostly as hopeless gestures—the political equivalent of Civil War re-enactors. Discussion over: You lost, deal with it.

The press corps never dismissed the legal challenges to the war on terror so easily, but then liberals have long treated property rights and any limits on federal power to regulate commerce as 18th-century anachronisms. In fact, the legal challenges to ObamaCare are serious and carry enormous implications for the future of American liberty.

The most important legal challenge turns on the “individual mandate”—the new requirement that almost every U.S. citizen must buy government-approved health insurance. Failure to comply will be punished by an annual tax penalty that by 2016 will rise to $750 or 2% of income, whichever is higher. President Obama opposed this kind of coercion as a candidate but has become a convert. He even argued in a September interview that “I absolutely reject that notion” that this tax is a tax, because it is supposedly for your own good.

Florida Attorney General Bill McCollum and 13 other state AGs—including Louisiana Democrat Buddy Caldwell—claim this is an unprecedented exercise of state power. Never before has Congress required people to buy a private product to qualify as a law-abiding citizen.

As the Congressional Budget Office noted in 1994, “Federal mandates typically apply to people as parties to economic transactions, rather than as members of society.” The only law in the same league is conscription, though in that case the Constitution gives Congress the explicit power to raise a standing army.

Democrats claim the mandate is justified under the Commerce Clause, because health care and health insurance are a form of interstate commerce. They also claim the mandate is constitutional because it is structured as a tax, which is legal under the 16th Amendment. And it is true that the Supreme Court has ruled as recently as 2005, in the homegrown marijuana case Gonzales v. Raich, that Congress can regulate essentially economic activities that “taken in the aggregate, substantially affect interstate commerce.”

But even in Raich the High Court did not say that the Commerce Clause can justify any federal regulation, and in other modern cases the Court has rebuked Congress for overreaching. In U.S. v. Lopez(1995), the High Court ruled that carrying a gun near a school zone was not economically significant enough to qualify as interstate commerce, while in Morrison (2000) it overturned a law about violence against women on the same grounds.

All human activity arguably has some economic footprint. So if Congress can force Americans to buy a product, the question is what remains of the government of limited and enumerated powers, as provided in Article I. The only remaining restraint on federal power would be the Bill of Rights, though the Founders considered those 10 amendments to be an affirmation of the rights inherent in the rest of the Constitution, not the only restraint on government. If the insurance mandate stands, then why can’t Congress insist that Americans buy GM cars, or that obese Americans eat their vegetables or pay a fat tax penalty?

The mandate did not pose the same constitutional problems when Mitt Romney succeeded in passing one in Massachusetts, because state governments have police powers and often wider plenary authority under their constitutions than does the federal government. Florida’s constitution also has a privacy clause that underscores the strong state interest in opposing Congress’s health-care intrusion.

As for the assertion that the mandate is really a tax, this is an attempt at legal finesse. The mandate is the legal requirement to buy a certain product, while the tax is the means of enforcement. This is not a true income or even excise tax. Congress cannot, merely by invoking a tax, blow up the Framers’ attempt to restrain government under Article I.


READ THE REST HERE:  ObamaCare and the Constitution – WSJ.com.

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Bernanke: Record-low rates still needed

WASHINGTON (AP) — Federal Reserve Chairman Ben Bernanke told Congress on Wednesday that record-low interest rates are still needed to ensure that the economic recovery will last and to help ease the sting of high unemployment.

In his twice-a-year report to the House Financial Services Committee, Bernanke struck a confident tone that the recovery should endure. But he also sought to tamp down expectations.

The moderate economic growth the Fed expects will lead to only a slow decline in the nation’s nearly double-digit unemployment rate, he said.

He offered no new clues about the timing of an interest rate increase. Most economists think it is months away. Bernanke said rates will need to stay at exceptionally low levels for an extended period “as the expansion matures.”

Investors seemed buoyed by Bernanke’s commitment to low rates. In afternoon trading, the Dow Jones industrial average rose 87 points. The stock pickup came despite a government report showing sales of new homes fell to a record low in January.

Bernanke is facing more pressure than usual from lawmakers in an election year. Their constituents are struggling economically, while bailed-out Wall Street banks are profitable again. Unemployment stands at 9.7 percent, home foreclosures are at record highs and individuals and businesses are having trouble getting loans.

“Getting people back to work — socially, most of all, but also for the overall economy” — is critical, said the committee’s chairman, Rep. Barney Frank, D-Mass.

To help make that happen, the Senate passed a bill Wednesday aimed at spurring job creation. The legislation would give tax breaks to businesses that hire the unemployed.

The Fed chairman reiterated a pledge that the Fed will keep its main interest rate at an all-time low near zero for an “extended period.” The target range for Fed’s main rate, the federal funds rate, has been between zero and 0.25 percent since December 2008.

At the same time, Bernanke sought to stress that when the economy is on firmer footing and the Fed needs to reverse course and tighten credit for millions of Americans, he will do so.

Deciding when to boost rates will be the next big challenge facing Bernanke. Boosting rates too soon could derail the recovery. But waiting too long could trigger inflation and feed a speculative asset bubble. That, too, could threaten the economy, along with Americans’ pocketbooks and nest eggs.

Bernanke would only say that “at some point,” the Fed will need to move to tighten credit. When it does, Bernanke sketched out the Fed’s strategy, first unveiled on Feb. 10, for doing so.

He said the Fed is likely to boost the rate it pays banks on money they leave at the Fed, which would mark a shift away from the funds rate, the Fed’s main tool since the 1980s. A bump-up in the interest rate on bank reserves, though, would ripple though the economy in much the same way an increase in the funds rates does. Consumer and businesses borrowers would have to pay more for loans.

With financial conditions improving, the Fed has been able to wind down most of its special lending programs for banks and others set up during the crisis.

One key economic revival program that has lowered mortgage rates and bolstered the housing market is slated to end on March 31. The Fed is on track to complete buying $1.25 trillion worth of mortgage securities from Fannie Mae and Freddie Mac at that time, and another $175 billion worth of debt from them.

Bernanke said the end of that program would have only a “modest effect” on pushing up mortgage rates. He continued to leave the door open to a possible extension of the program if the economy were to take a turn for the worse.

Asked whether the Fed’s low rates are risking a new speculative bubble, Bernanke said he didn’t see any “obvious bubble” forming in the U.S. economy.

The Fed’s decision last week to raise the rate banks pay for emergency loans was part of a broader strategy to bring lending closer to normal now that the crisis is over, he said. The bump-up in the “discount” rate should not be seen as a signal that tighter credit for consumers and businesses is imminent, Bernanke added.

To help improve relations with Congress, Bernanke said the Fed will seek to be more open about its operations. He said it would support legislation to identify companies that used the Fed’s special lending facilities — “after an appropriate delay.” A delay in identifying the companies would help discourage investors from viewing a company as having financial troubles, he said.

But Bernanke said the confidentiality of banks drawing emergency loans from the Fed’s “discount window” must be preserved. The Fed acts as lender of last resort for banks that can’t get money from private sources. Bernanke said identifying banks that draw emergency loans could cause a run on those institutions and undermine the program. Healthy banks are key to a sound economy.

Rep. Ron Paul, R-Texas, who’s led efforts in Congress to audit the Fed, accused it of a “cover up” involving details of bailed-out companies and users of its lending programs. Bernanke called those allegations “absolutely bizarre” and added: “I have absolutely no knowledge of anything remotely like what you just described.”

Pressed by Paul on whether the Fed has discussed a bailout of Greece, which is suffering a debt crisis, Bernanke said no.

Republicans on the panel, in particular, expressed concern about record-high federal budget deficits, which Bernanke agreed must be reduced over time.

The deficits are the “elephant in the room,” said Rep. Spencer Bachus of Alabama, the committee’s senior Republican.

Bernanke urged Congress to move ahead on revamping the nation’s financial structure to prevent a repeat of the events that thrust the economy into recession in December 2007. The Fed is working to improve regulatory oversight and is developing a program to better police large bank holding companies, he said.

The Fed’s lax regulation and failures to spot problems were blamed by lawmakers for contributing to the financial crisis. Some want to strip the Fed of its banking powers and place it under greater oversight. Bernanke opposes taking away the Fed’s banking supervision, saying it would hurt its ability to carry out interest rate policy.

via Bernanke: Record-low rates still needed – Yahoo! Finance.

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Deficit Will Push Economy Over The Cliff – Forbes.com

President Obama’s 2011 budget proposal was so outrageously egregious that he had to hold a special press conference on Monday just to spin the news.

The scope of the proposed budget for fiscal 2011 is $3.8 trillion. The difference between revenue and expenditures for the current fiscal year will leave us with a deficit of $1.6 trillion. Amazingly, that shortfall will equal 10.6% of gross domestic product–the highest since World War II. For 2011, Obama’s own Office of Management and Budget projects the deficit will fall by just $300 billion to $1.3 trillion, or 8.3% of GDP, the second highest since WWII.

Read the rest here: Deficit Will Push Economy Over The Cliff – Forbes.com.

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Boehner Report on “Stimulus”: “Broken Promises, Bloated Government, and Wasteful Spending” | John Boehner

It’s been one year since President Obama signed into law the trillion-dollar “stimulus” spending bill opposed by Congressman Boehner. What have we gotten for all of this spending? More debt and fewer jobs.The Hill links to a report released by Boehner today that debunks the Administration’s claims that the so-called “stimulus” has worked “and touts Republican alternatives as better-suited to stimulate job growth.” Bloomberg News reports:

“Republicans released their own report, with House Minority Leader John Boehner saying the stimulus law’s first anniversary ‘marks one year of broken promises, bloated government, and wasteful spending.’

“Since the measure was passed, ‘more than 3 million Americans have lost their jobs, unemployment is near 10 percent and the deficit is set to hit a record $1.6 trillion,’ Boehner said in a statement accompanying the Republican report, entitled ‘Where Are the Jobs?’”

The Dayton Daily News reports that “Ohio unemployment was at 9.5 percent in February 2009 and rose to 10.9 percent in December 2009, the last month for which federal figures are available. Also, the state lost 107,800 jobs from February- December, 2009, according to federal data.”

And NPR reports that all of the new government spending proposed by the Obama Administration means “the national deficit will crest at a record-breaking almost $1.6 trillion in the current fiscal year.” Boehner says taxpayers aren’t getting their money’s worth. According to CNN:

“’The American people took on record amounts of debt to fund Washington Democrats’ trillion-dollar ’stimulus’ and a year later the nation’s unemployment rate is near 10%,’ said Rep. John Boehner, R-Ohio, the House’s top Republican. ‘Taxpayers aren’t getting their money’s worth from the trillion-dollar ’stimulus’ and struggling families and small businesses are rightly asking, ‘Where are the jobs?’”

To learn more about the “no cost” plan for creating new jobs supported by Boehner, click here.

via Boehner Report on “Stimulus”: “Broken Promises, Bloated Government, and Wasteful Spending” | John Boehner.

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Soros More Than Doubled Gold ETF Stake in 4th Quarter

image by David Bugnon

Feb. 17 (Bloomberg) — Billionaire George Soros’s Soros Fund Management LLC more than doubled its holding in the biggest gold exchange-traded fund in the fourth quarter after bullion advanced 8.9 percent to a record.

The $25 billion New York-based firm became the fourth- largest holder in the SPDR Gold Trust, adding 3.728 million shares valued at $421 million, according to a filing with the U.S. Securities and Exchange Commission yesterday. Its investment was worth about $663 million, the fund’s largest single investment, as of Dec. 31.

Soros joined China Investment Corp. and central banks including those in China and India in acquiring gold. China Investment, the $300 billion sovereign wealth fund based in Beijing, took a 1.45 million-share stake in the SPDR Gold Trust worth $155.6 million, according to a SEC 13F filing posted on Feb. 5.

“The dollar is weak and people are just shifting their money into a safer haven,” Tetsuya Yoshii, vice president for derivative products at Mizuho Corporate Bank Ltd., said from Tokyo today. “Central banks are adding gold to their reserves and we’re going to see more people adding gold to their investment portfolio as they shift into safer stuff.”

Gold for immediate delivery traded little changed at $1,118.35 an ounce at 2:48 p.m. in Singapore. It rose for a ninth straight year in 2009, reaching a record $1,226.56 an ounce on Dec. 3, as the dollar dropped 4.2 percent against a basket of six major currencies.

‘Ultimate Bubble’

India bought 200 metric tons from the International Monetary Fund in October, while China’s holdings have expanded 76 percent to 1,054 tons since 2003, it said in April.

SEC filings are done quarterly, with a 45-day lag, so Soros could have sold some or all of the position since then. Soros, speaking last month at the World Economic Forum in Davos, called gold the “ultimate asset bubble” and said the price could tumble, according to a report in the U.K.’s Daily Telegraph newspaper.

Money managers who oversee more than $100 million in equities must file a Form 13F listing their U.S.-traded stocks, options and convertible bonds. The filings don’t show non-U.S. securities or how much cash the firms hold.

Michael Vachon, a spokesman for Soros, declined to comment on Soros’s investments.

Assets held by the SPDR Gold Trust have expanded 2.2 percent this year after surging 24 percent in 2009. They stood at 1,109.42 metric tons yesterday.

Institutional investor Paulson & Co. held the largest number of shares in the fund as of Dec. 31, with 8.65 percent, or 31.5 million shares.

Gold demand grew 2.6 percent in the fourth quarter from the previous three months as investment and jewelry consumption climbed amid record prices, the World Gold Council said in a report today. Global consumption increased to 819.7 metric tons as prices averaged 15 percent more than the third quarter, the London-based industry group said.

via Soros More Than Doubled Gold ETF Stake in 4th Quarter (Update1) – Bloomberg.com.

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