By Peter Morici
10:55 AM EST, February 20, 2012
Rick Santorum's assertion that President Barack Obama's agenda is not about the quality of life or jobs but "some phony ideal. Some phony theology" may not be an appropriate characterization of his religious views. However, it is an accurate description of what is wrong with the hard left in American politics — and the thinking that drives domestic policy in the Obama administration.
Too often liberal policies are based more on faith than reason — they are often premised on assertions having little foundation in facts or modern economics. Consequently, the president advocates or imposes solutions that make the nation's problems worse, and when confronted with disappointing results he often tells us what he believes without offering the data and logic that brought him to those conclusions.
Regarding the financial crisis, the president assigns blame to the lack of regulation. The facts are banks got into trouble making loans on real estate assigned inflated values to borrowers who could not repay. Loans were bundled into bonds and sold to investors. When not enough unwitting fools bought bonds, the big Wall Street banks put unsold securities into offshore special investment vehicles whose potential losses were not supposed to be a claim on bank capital. Other firms, like AIG, sold insurance against potential losses on bonds without sufficient assets to back up that protection.
When the loans and bonds failed, it turned out those special investment vehicles were indeed a drain on bank capital, and Citibank, AIG and others needed bailouts to avoid the complete collapse of bank credit available to the economy.
All this was a massive accounting fraud, something big public accounting firms were supposed to catch in audits of banks but didn't — a failure Sarbanes-Oxley regulations, passed in 2002, were supposed to avert.
The solution imposed by the Dodd-Frank bill is to ban propriety securities trading by banks and impose burdensome lending regulations on surviving community and regional banks, which were more victims of the bubble than malefactors in the crisis.
Proprietary trading had little to do with instigating the mess, and profits from trading actually helped big banks rebuild balance sheets more quickly. And now onerous regulations have hamstrung community and regional banks and are forcing them to seek buyouts by larger Wall Street banks, which caused the crisis and have little interest in lending to small and medium sized businesses that create jobs.
When faced with resulting problems, the president explains he is saving the country from unstable growth of decades past. Yet, economists of all stripes refer to the 20 years prior to the crisis as the "Great Moderation," owing to exceptional stability in economic activity and employment not before experienced in U.S. history.
President Obama persistently preaches that solar, wind and other alternative technologies will make America energy independent and sustain economic superpower status. Yet, any reasonable reading of the prospective economic viability of these technologies, and any assessment of the likely transition of the automobile industry to hybrids and electrics, indicate the nation will remain significantly dependent on petroleum for at least the next two decades.
Yet, with oil above $100 a barrel handicapping the U.S. economy, the president imposes regulations that all but shut down deep water drilling in the Gulf of Mexico and other offshore locations where the real potential for new American oil supplies lies. Instead, he plows money into projects like Solyndra that independent financial analysts predicted would likely fail.
Americans pay at least 50 percent more than Europeans for health care, often with less satisfactory outcomes, because the federal government pays for more than half of health care but does not impose price and access controls as effective as those in Europe.
Obamacare simply doesn't fix what's broke. Instead, it raises taxes to provide more subsidies and imposes more mandates on businesses. Any economist will tell you subsidies and mandates to purchase a product raise its price, and health care is no exception.
When critics opposed Obamacare, Jimmy Carter called them racists, and he was not alone in spewing such venom.
Among intellectuals, media personalities and senior policymakers that form the priesthood of the left, conservatives are not merely wrong but evil.
Beliefs over facts, assertions in place of reason, vilification of opponents: That looks a lot like religion — the worst kind.
Peter Morici, a professor at the University of Maryland's Smith School of Business, is former chief economist at the U.S. International Trade Commission. His email is firstname.lastname@example.org. Twitter: @pmorici1.
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