by Harrison H. Schmitt
The fiscal house of the United States of America burns. Liberals and the President fiddle. Conservatives in the House and Senate therefore have an obligation to their voters and all Americans to not increase the Debt Limit of the Federal Government without significant progress toward fiscal sanity. Agreement to allow increased borrowing should only come if the Senate agrees to the House Budget Plan proposed by Congressman Paul Ryan.
Conservatives must remember that the last thing the economy and employment need is tax increases.
We are now treated to the spectacle of the Obama Administration increasing the pressure of its heavy hand on a struggling private housing marketplace while Fannie Mae, Freddie Mac, and the Federal Housing Administration continue to be allowed to undermine sound lending practices. Aside from the question of the constitutionality of any federal involvement in housing markets, it makes no logical sense to leave 90% of all new mortgage lending effectively in the hands of bureaucrats while subjecting private lenders and home buyers to ever increasing and more costly regulation.
The heavy hand of past Congresses and regulators forced lenders into providing unqualified borrowers with sub-prime mortgages that sound-banking practices never would allow. These unsustainable sub-prime mortgages, in turn, were either sold to the taxpayer through Fannie Mae or Freddie Mac or bundled into weird investment packages called “collateralized debt obligations” that a truly competitive investment market would have ignored. The collapse of the American housing market resulted, along with the continuing job recession and a return to a Carter-style “stagflation.” Conservatives in the Congress had better wake up and stop this continued attack on free enterprise and the net worth of homeowners.
The nearly three-year long effects of printing money to cover the horrendous levels of debt being incurred by the United States, and the accompanying devaluation of the U.S. dollar, has induced both obvious and hidden inflation for American consumers. This inflation contributes to the continued stagnation of the U.S. economy and job markets. The inflation most obvious to consumers shows double digit increases in fuel, food, and wholesale commodity prices in the face of the Labor Department’s announcement that the Consumer Price Index (CPI) is rising by less than 6%.
The CPI supposedly measures “core inflation”; but the absence of food and fuel and the inclusion of the depressed values of housing in its calculation further undermine its relevance to the real world of consumers. Hidden inflation lies in added regulatory costs to energy and food and in reduced quantities and sizes of tissues, crackers, soaps, etc. in packages costing the same or more than two years ago.
Conservatives in Congress must reign in the power of the Federal Reserve to continue its unconstitutional debasement of the dollar. Congress also must remove the Fed’s ill-considered, legislative mandate to interfere with normal economic forces related to employment.
President Obama’s attempt to fight a war by international consensus once again underlines the futility and cost of this form of international “cooperation.” If the continuing failure of the United Nations and other consensus-based organizations is not enough, this on-going fiasco in Libya, on the heels of policy confusion over Egypt and other Middle Eastern uprisings, should settle once and for all that the United States must be a leader rather than a follower if the forces of freedom are to prevail on this planet.