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No one likes high bank fees, especially in an era of bailouts, Wall Street occupations, and Washington deciding which banks survive. So a $5 monthly debit card fee creates an ideal situation for a manipulative politician, and Sen. Dick Durbin is ready to reap the populist hay.
Bank of America initiated the $5 debit card fee and you'd have thought they'd reinstated debtor's prison. No sooner was the fee announced than Durbin pounced.
Bank of America customer, vote with your feet. Get the heck out of that bank. Find yourself a bank or credit union that won't gouge you for $5 a month and still will give you a debit card that you can use every single day. What Bank of America has done is an outrage.
Did Durbin forget that Bank of America never charged a monthly debit card fee until he legislated "fairness" into the banking industry? No, he didn't forget. He's just a hypocrite. Then, to cover his trail, this dim bulb encouraged a bank run that would, if fulfilled, result in Bank of America's insolvency.
Yesterday the federal government bailed out "too big to fail" Bank of America with 45-billion taxpayer dollars. Today Dick Durbin has declared B of A expendable. I don't know which is more insulting: the inconsistency, or Durbin's belief that Bank of America customers need his prompt to seek a new bank if they find the debit card fee egregious.
How can Durbin feign such self-righteous indignation over the debit card fee anyway? He created it. Durbin's amendment to the Dodd-Frank banking reform legislation placed an artificial cease-and-desist order on the debit card fees banks once charged. Bank of America predictably sought new revenue streams to replace those Durbin's amendment disallows. It's the natural action for an institution whose revenue is disrupted.
When a business is squeezed in one area it will redirect its quest for profits, a phenomenon clearly illustrated in my Water Balloon Theory. If you fill a long balloon with water and compress one area, the water will be forced to a new location. No matter how hard you squeeze, you can't contain the water in one place. It will always move to a spot of lesser resistance. The only way to stop the process is to compress the balloon until it bursts.
Sen. Durbin tried to disprove my Water Balloon Theory, but he failed. His attempt to constrain the bank's fee structure simply forced those fees to a new location. At Bank of America the bulge appeared in the form of a $5 monthly charge for debit card use.
The Water Balloon Theory remains intact. Exerting political pressure on businesses will push their hunt for profits in a new direction. Continually increasing said pressure will cause businesses to fail, just like a balloon. We should apply this theory whenever we're tempted to demand congressional action on a perceived unfairness. Otherwise we, like Durbin, will end up all wet.
The debt ceiling debate is a political charade. Democrats are simply doing what they’ve previously done. The threat about a government shutdown is an empty political bluff. No reasonable person can claim the government hasn’t acquired too much debt. So, extending the debt limit means the government’s credit card doesn’t run dry.
This opinion of the debt ceiling debate sounds like a synopsis of the Rush Limbaugh Program. But it’s not. Actually, California Rep. Pete Stark provided this analysis of the debt ceiling debate. And just so there are no misconceptions, let’s affirm that Rep. Stark has no political commonality with Limbaugh.
If governing left is described as walking westward, Pete Stark has one foot in the Pacific Ocean. A brief review of his record provides all the testimony required to convict Pete Stark as one of Congress’ most fervent liberals. He is a man in love with his position; a man superior to his great unwashed constituency. In short, he is the kind of politician we would expect to manipulate the debt limit extension for personal gain.
This is Pete Stark, who once quipped to an ObamaCare opponent, “I wouldn’t dignify you by peeing on your leg. It wouldn’t be worth the waste of urine.” This is Pete Stark, who believes the federal government faces few, if any, constitutional restraints. Rep. Stark is a Washington insider, thoroughly versed in political grandstanding and gamesmanship. For him to call the debt limit debate a “political charade” is like Bill Clinton declining a bimbo’s phone number.
Pete Stark’s candor confirms what the astute observer has long believed about the debt ceiling. Political chicanery is driving this crisis. The Beltway establishment, at work in both political parties, is using the debt ceiling to sow doubt and fear in the American public. Politicians are defending their turf, forecasting calamitous ruin unless their way is followed. The elderly will die, the nation will default and ruin our bond rating, and total chaos will ensue. It’s all spin, a dastardly charade.
Debt ceiling or not, revenue will remain available for the federal government’s essential obligations. Federal revenue averages $180 billion to $210 billion per month. Debt interest and Social Security payments consume about $100 billion per month. Moody’s threat to lower the United State’s AAA rating is tied more to Washington’s failure to reduce deficit spending than failing to increase debt. So, if the debt ceiling isn’t raised and the projected calamities ensue, we should blame government demagogues (mostly liberals) whose political security depends on creating public fear and paralysis.
Only Pete Stark knows if he intentionally exposed Washington’s manipulation of the debt limit debate. Purposeful or not, he was right on target. What we’re witnessing is a charade, pure political theatre. Americans are being led down a primrose path by blind guides whose only concern is spinning the situation for favorable media play and campaign talking points. That is the debt ceiling debate’s stark reality.
If there were an elephant in your swimming pool would you need to call attention to it? An elephant is difficult to miss and impossible to intentionally ignore. So the problem isn’t in realizing the elephant’s presence, but in removing it from the pool. Federal debt presents a similar predicament, dominating an economy like an elephant does a swimming pool. The question is what can be done about the debt elephant?
One idea for addressing Washington’s spendthrift habits is a balanced budget amendment to the U.S. Constitution. Theoretically, under constitutional mandate the federal government would be forced to balance annual expenditures with receipts. However, requiring the federal government to balance the budget and forcing it to control spending are quite different.
A balanced budget amendment without spending controls is a disaster in the making. Once ratified, politicians who favor tax hikes could argue the Constitution mandates tax increases to meet projected spending levels. To be useful, a balanced budget amendment must respect the Constitution’s spirit of limited government.
Cap, Cut and Balance addressed the fear of constitutionally imposed tax increases. Modeled after H.J.RES.1, it limited federal spending to 18-percent of GDP, required a supermajority to raise taxes, and introduced a balanced budget amendment to the states. With egregious taxation and federal spending limited, a balanced budget amendment could finally fulfill the promise its proponents have long claimed.
Of course, optimism plays well in an ideal world. Reality is far from ideal. Cap, Cut and Balance passed the House with relative ease. But it had no chance to pass the Democrat-controlled Senate and would never have escaped Obama’s veto pen. Democrats will support nothing more than token spending reductions. Thus any compromise on a balanced budget amendment would lack spending controls, making it a constitutional mandate for tax increases. Such a scenario would suit Democrats just fine.
But problems existed even in the House version of Cap, Cut and Balance. It would’ve increased the debt ceiling by 18-percent, to $16.7 trillion. To put that number in perspective, consider each dollar as one second in time and do the math. A $16.7 trillion debt equals 529,553 years. Chew on that number, if you can do so without choking. Furthermore, a balanced budget amendment would have, at best, only symbolic effect until ratified by 38 states (U.S. Constitution, Article V). Before the proposed amendment could become part of the Constitution the debt ceiling could be raised several more times.
Was Cap, Cut and Balance mere political theatrics, a distraction orchestrated to divert the public’s attention from the federal elephant in the swimming pool? Or did it represent action toward curing Washington’s debt addiction? Actually, it was both. While easily the lesser of all current evils, Cap, Cut and Balance remained flawed nonetheless.
Barack Obama promised change for America. He went to the White House with an agenda that had been partially concealed in the flowery slogans “hope and change” and “Yes we can.” But to the observant, the promise was more government, less liberty and an ideology that makes Jimmy Carter seem like Ronald Reagan.
Now everyone can peer through Obama’s crystal ball and see his vision for America’s economic future. It isn’t hopeful; it’s change for the worse. He wants America to emulate California.
He has praised California’s history of “energy efficient” mandates. California is producing jobs, according to Obama. And their economy is on pace with the rest of the country while consuming less energy.
Why is it that every time Obama speaks about producing or “saving” jobs the unemployment rate rises? And California’s economy is keeping up the rest of the country? Congratulations, I guess.
“Wait a minute,” you say. “What’s wrong with California? It’s warm, sunny. It has big trees, mountains and Hollywood.” All true. But California’s economy is nowhere near as attractive. Reasons abound why we should want no part of Obama’s “California Dreaming.”
First, Obama’s portraits of California are either misleading or downright false. The state’s budget is $26 billion in the red and their credit rating is the worst in the country. There’ve been no dreaded tax reductions, yet California has seen a steep drop in revenue. That’s because less people are working and more people are leaving.
California’s unemployment rate is 11.5-percent, fifth highest in the country and 2.5 times that of Nebraska and North Dakota. One-fifth of their manufacturing jobs had disappeared before the current recession began and their “dot com” boom was a bubble.
The state has suffered from the housing bust, too. Open space and anti-sprawl initiatives previously drove housing prices sky-high. Prices have now plummeted, eliminating more than $1 trillion dollars in private wealth. And yet homes remain unaffordable for most people. The great economic model that Obama would have America imitate is driving people out of the state.
California has become the land of population flight. People are leaving for other states faster than they’re coming in. And it’s not an anomaly; it’s a trend.
What’s driving people out of the Golden State? It's a combination of things. Traffic congestion doesn’t help. An eroding school system and unchecked illegal alien infiltration are problems, too. But among the best reasons to leave California is their exorbitant tax rates. State income taxes are among the highest in the nation and property taxes on a three-bedroom house can run $4300. But the state’s broke. Go figure.
You might also recall California’s blackout and brownout problems, which were blamed on the state’s deregulation of utilities. However, wholesale energy prices were deregulated while retail prices and power production were capped and controlled. Power companies were forced to buy electricity from other states, on the open market, and sell at a loss on a controlled market. Some deregulation.
This government manufactured situation prompted then-Governor Gray Davis to say, “Never again can we allow out-of-state profiteers to hold Californians hostage.” Better to be held hostage by the state, I suppose. Davis even threatened to commandeer the utilities and run them himself. Now, doesn’t that remind you of the Obama administration’s acquisitions in the automotive and financial sectors?
This is Barack Obama’s vision of economic prosperity? Contentment is high levels of government manipulation, rising unemployment, financial insolvency and an exodus of productive people. Housing prices should drop precipitously while remaining over-inflated, taxes should rise and every state should welcome an unbridled influx of illegal aliens. Oh, and we’ll enjoy these benefits with the occasional electrical brownout. This is preferable to liberty and self-determination.
That’s California as it exists today, Obama’s shining example for what America should be. Mr. President, put away your crystal ball.
