Essential holiday reading for anyone who’s had it up to here with thieving politicians and bureaucrats.
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For starters, the bill didn’t pass out of committee near the end of the 2008 session. It passed out of the Judiciary Committee in July 2008, more than enough time to get it to the floor for a vote. While it is true that Pelosi supported and got passed the Credit Cardholders’ Bill of Rights in 2009, Schweizer shrewdly notes that it focused on the interest rates that banks charge on the credit cards they issue. That doesn’t impact VISA at all since VISA makes its money by licensing its name and through interchange fees.
Nor was it a small stock purchase. Schweizer notes that the investment in VISA was at least 10 percent of Pelosi’s stock portfolio. In the end, the IPO shares Pelosi purchased soared 203 percent, making her a hefty profit.
Zornick also tries to create a diversion by saying that this doesn’t fit with Pelosi’s “legislative record.” What matters is if it fits with her financial record during her congressional career. Indeed it does. She has participated in at least 10 profitable IPOs since she has been in the House. And Zornick completely overlooks Pelosi’s efforts at securing earmarks for public transit and construction projects that boost the value of her husband’s real estate holdings. In one instance, Pelosi secured over $700 million from the federal government to build a section of light rail in San Francisco. Two stops on the line are three blocks from buildings the Pelosis own, thereby more than doubling their value.
Pelosi is hardly the only member of Congress to use earmarks to boost the value of her real estate holdings. Schweizer chronicles many others including Carolyn Maloney, Bennie Thompson, and former Speaker Dennis Hastert.
Schweizer also has chapters examining the crony capitalists who benefit from this arrangement, and none is better than the one dealing with the sanctimonious Warren Buffett. Schweizer notes that Buffett is a master of public relations often portraying himself as “above the rough and tumble of politics” and “above the folly and excess of finance.” Yet that image provides cover for the fact that he “is very much a political entrepreneur, whose best investments are often in powerful political relationships, and who in recent years has used taxpayer money as an important vehicle to greater wealth and profits.”
During the financial crisis of 2008, Buffett campaigned for the $700 billion TARP bailout. Buffet met with Speaker Nancy Pelosi and House Democrats to urge them to pass TARP. After the first vote on TARP failed, Buffett went on TV to say that he had “confidence in Congress to do the right things.”
Buffett has been so effective with his image that journalists seldom ask him what financial interests he has in his policy positions. If they did they might have discovered that in September 2008 Buffett invested $5 billion in Goldman Sachs. His company, Berkshire Hathaway, “received preferred stock with a 10% dividend yield and an attractive option to buy another $5 billion at $115 a share.” He also bought $3 billion in GE stock, and had large investments in Wells Fargo and U.S. Bancorp, all of who were struggling in the crisis. Getting TARP passed proved a windfall for Buffett and Berkshire Hathaway.
And it didn’t hurt that key political players just happened to buy Berkshire Hathaway stock in the fall of 2008, such as Senators Dick Durbin, Orrin Hatch and Claire McCaskill.
In the end, none of this was illegal. Schweizer dubs it “honest graft,” unethical business practices that don’t violate the law. But more pernicious than the fact that it is unethical is that it doesn’t create any new wealth. The political class isn’t producing anything; it is living well off of other people’s money — and in the case of some politicians and crony capitalists, they are living very, very well. This system is self-perpetuating: more and more people will join the political class as they realize it is the means to wealth. However, it can’t go on forever. The bigger the political class grows, the more resources that are sucked out of the productive sector of the economy. A society can survive only so long as its productive sector is productive.
Both Schweizer and Murray offer a number of reforms, but only Murray gets at the main solution, reducing the size of government. As the size of government shrinks, there will be less plunder for the political class. To paraphrase Ronald Reagan, it’s a simple solution, but not an easy one. As we saw in Madison, Wisconsin earlier this year, the political class will fight tooth-and-nail to keep the gravy train going.
A man of faith in a godless age is hitting Americans where it hurts.
Mr. and Mrs. American Spectator Reader, let P.J. O’Rourke talk sense to your kids.
In Britain, defending your property can get you life.
The debacle of this president’s administration is both a cause and a symptom of the decline of American values. Unless Congress impeaches him, that decline will go on unchecked. An eminent jurist surveys the damage and assesses the chances for the recovery of our culture.
It won’t take long for conservatives to scratch this presidential wannabe off their 2008 scorecard.
The American Christmas, like the songs that celebrate it, makes room for everybody under the rainbow. Is that why so many people seem to be hostile to it?
Was the President done in by the economy, or by the politics of the economy?