It’s another record-high for the U.S. National Debt which today topped the $12-trillion mark. Divided evenly among the U.S. population, it amounts to $38,974.34 for every man, woman and child.

Technically, the debt hit the new high yesterday, but it was posted on the Treasury Department website just after 3:00 p.m. ET today. The exact calculation of the debt is a 16-digit tongue-twister and red-ink tsunami: $12,031,299,186,290.07

This latest milestone in the ever-rising journey of the National Debt comes less than eight months after it hit $11 trillion for the first time. The latest high-point is not unexpected, considering the federal deficit for the just-ended 2009 fiscal year hit an all-time high at $1.42-trillion – more than triple the previous year’s record high.

Much of the increase in the deficit and debt is attributed to government spending outpacing revenue – both exacerbated by the recession and the government response to it – including hundreds of billions in bailouts and stimulus spending and tax cuts along with decreased tax revenues due to rising unemployment.

In recent days, President Obama has spoken of the need to bring the rising deficit and debt under control.

“I intend to take serious steps to reduce America’s long-term deficit – because debt-driven growth cannot fuel America’s long-term prosperity,” he said in remarks prepared for delivery to the leader’s meeting last Sunday at the Asia Pacific Economic Cooperation summit.

The National Debt has increased about $1.6 trillion on Mr. Obama’s watch, though less than $4.9 trillion run up during the presidency of George W. Bush.

Of course, Obama has only been in office ten months, not eight years.

Since Barack Obama took the Oath of Office, the national debt has increased from $ 10,626,877,048,913.08 to $ 12,031,299,186,290.07. That’s an increase of $ 1,404,422,137,376.99 over 302 days, or $ 4,650,404,428.40 per day, $ 193,766,851.18 per hour, $ 3,229,447.52 per minute, and $ 53,824.13 per second.

Anyone want to bet how long it will take to get to $ 13 trillion ?

My guess is August 15, 2010.

The reality is that even before spending exploded to deal with the economic crisis, the government was set to grow by about 50 percent of GDP over the next generation just to pay for Social Security and Medicare benefits under current law. When the crunch comes and the need for a major increase in revenue becomes overwhelming, I expect that Republicans will refuse to participate in the process. If Democrats have to raise taxes with no bipartisan support, then they will have no choice but to cater to the demand of their party’s most liberal wing. This will mean higher rates on businesses and entrepreneurs, and soak-the-rich policies that would make Franklin D. Roosevelt blush.

Shorter: “Hey conservatives, you’ve completely and hopelessly lost the spending war. If you don’t play nice, you’re going to get even more screwed by the tax man than if you sit at the table.”

To which Samuel Adams might have responded: “If ye love wealth better than liberty, the tranquility of servitude than the animated contest of freedom — go home from us in peace. We ask not your counsels or arms. Crouch down and lick the hands which feed you. May your chains sit lightly upon you, and may posterity forget that you were our countrymen!”

In short, Bruce Bartlett has surrendered. He has taken the view “posit a giant welfare state — now what’s the best way to pay for it?” He suggests that if conservatives try to set the menu at — as Billy Beck would call it — the cannibal pot, that MAYBE they’ll just lose an arm and not the leg to go along with it.

All in all, Bartlett’s view is probably the calmest and most peaceful answer. But it gives us a nation that is so unlike America that I’m not sure I want a part of it. The peaceful way out is to accept that Democracy has given us a giant welfare state, that Democracy is never going to rescind it, and that therefore we might as well pay for it. He’s taking Mencken’s quote at face value:

Democracy is the theory that the common people know what they want, and deserve to get it good and hard.

Bartlett is arguing that if we’re all to be slaves, it’s best to suck up and hope for the job of overseer, holding the whip rather than tasting its lash.

But I’m not ready to surrender.

Bruce Bartlett says that if we don’t find a way to pay for the monstrosity growing out of Washington, the whole system will come crashing down. I say I’d prefer that to the “success” of the system as the social democrats want it to exist.

Bruce Bartlett says that the “starve the beast” tactic doesn’t work, as the beast keeps on growing. Well consider me a cancerous tumor hoping to infect the populace into becoming an ever-growing resistance that eats away at the beast’s insides until it dies of rot.

Bruce Bartlett wants conservatives to make sure they have a seat at the table to divvy up the “spoils”. Well, if he wants to be a good little Tory, that’s his choice. He’s taken sides, and despite his pleas, the fight will rage on.

Somewhere deep inside, despite a century of statism trying to weaken it with bread and circuses, the spirit of America still exists. Until that’s no longer the case, I’ll take the side of Freedom.

Here’s a thought Mr. Suthers: rather than trying to interpret the law yourself, why not allow the state legislature and/or Colorado voters clarify the law. In the meantime, while the law in your opinion is vague, err on the side of freedom by no longer prosecuting medical marijuana users or dispensary operators.

Greeley (Colorado) City Council member Carrol Martin also expressed concerns with the Obama Administration’s change in federal policy: “The federal government says they’re not going to control it [medical marijuana], so the only other option we have is to control it ourselves” and “If we have no regulations at all, then we can’t control it, and our police officers have their hands tied.”

Councilman, I would argue that this is a very good thing. You are no longer responsible for enforcing federal laws but state and local laws regarding medical marijuana. Your police officers “have their hands tied”? I think it’s quite the opposite councilman. Your police department can now concentrate on violent crime rather than spend valuable resources on going after non-violent, medicinal, marijuana users and their suppliers. If anything, the Greeley police has their hands freed!

In a time when we have an administration which wants to control banking, housing, the auto industry, the healthcare industry, and everything in-between we have one instance of the same administration relinquishing control and giving it back to the states. This is the perfect opportunity for states to act as independent laboratories of government. Some will pass stricter controls on medical marijuana (or outright ban it) while others may go the other direction and outright decriminalize or leagalize marijuana altogether.

Kirk Johnson writing for The New York Times:

Some legal scholars said the federal government, by deciding not to enforce its own laws (possession and the sale of marijuana remain federal crimes), has introduced an unpredictable variable into the drug regulation system.

“The next step would be a particular state deciding to legalize marijuana entirely,” said Peter J. Cohen, a doctor and a lawyer who teaches public health law at Georgetown University. If federal prosecutors kept their distance even then, Dr. Cohen said, legalized marijuana would become a de facto reality.

Senator Morrisette in Oregon said he thought that exact situation — a state moving toward legalization, perhaps California — could play out much sooner now than might have been imagined even a few weeks ago. And the continuing recession would only help, he said, with advocates for legalization able to promise relief to an overburdened prison system and injection of tax revenues to the state budget.

This seems like a very reasonable step to take for California from a purely economic standpoint. As I reported in my post Reforming America’s Prison System: The Time Has Come, last year California spent almost $10 million on corrections, more than half of the U.S. prison population accounts for drug offenses, 75% of state drug offenders are non-violent offenders, and that nearly half of all drug arrests in the U.S. were for marijuana offenses.

By my math, that would mean that if California* released all non-violent marijuana users and stopped prosecuting new cases involving non-violent marijuana use, the state could cut its prison population by 19% and save California taxpayers about $2 million** per year just on corrections (to say nothing of other costs associated with policing marijuana use).

If California or any other state tried such a bold approach, the American public would most likely learn that legalization does not lead to the sort of mayhem drug warriors have warned us of over the decades***. We would most certainly not see the sort of mayhem that has occurred via the drug war.

Not only does this perfect storm which the Obama Administration created have possible implications for the War on (Some) Drugs, but the very concept of Federalism itself. What might state governments learn about self governing once they have been encouraged to do so? Might the states resist the next attempted power grab from Washington?

There are many exciting possibilities. Those of us who advocate for smaller government should make the most of this opportunity.

*Assuming that California’s prison statistics are in line with the overall national statistics.

** I know $2 million doesn’t seem like a whole lot but in states which are in financial trouble as much as California, every little bit helps.

***Portugal is a real world case study of drug decriminalization; I don’t believe the results would be much different here.

The bottom line is this: The available empirical evidence does not support the idea that spending multipliers typically exceed one, and thus spending stimulus programs will likely raise GDP by less than the increase in government spending. Defense-spending multipliers exceeding one likely apply only at very high unemployment rates, and nondefense multipliers are probably smaller. However, there is empirical support for the proposition that tax rate reductions will increase real GDP.

Government taking your money and spending it is less likely to help GDP than government taking LESS of your money and letting you spend the difference yourself.

Not that this is a new idea, of course… But it’s good to see some academic support.

The above video clip from The Daily Show, while very humorous, illustrates a fundamental problem of government: shortsightedness.

In this example, the State of Arizona is offering to sell the state capitol for $735 million and rent it back from the new owners.

“What happens next year when you have to pay rent?” asks Daily Show correspondent Jason Jones.

Sen. Lopez responds that the state government is more concerned about this year…they will deal with the next year’s budget (and subsequent budget) shortfalls when the time comes.

If this doesn’t illustrate the shortsightedness of government (at all levels), I don’t know what does. Our government officials do not look far beyond the immediate future (i.e. the next election). They don’t worry about the insolvency of Social Security, Medicare, Medicaid, the long term financial difficulties of the bailouts etc, they will worry about those problems (which they created and will also blame on the free market, big business, or lack of regulation) when they can no longer pretend the problem doesn’t exist. If they are lucky, the other party will be in power by that time and the American public will turn its anger against that party by voting them out.

What the American public needs to understand is that whether the blue team or the red team controls the levers of power, this shortsighted mentality is standard operating procedure for both. They are not interested in solving long term problems but trying to appear as though they are.

Politicians will not be accountable for their deceitful actions until we, the people, hold them accountable.

…I won’t hold my breath.

Every time I write about the need to raise revenues to pay for federal spending, some nitwit always demands to know why we don’t just cut spending. That is not a viable option to deal with our fiscal problem.

The first point that people need to understand is that we live in a democracy. We don’t have a dictator who can just wave his hand and abolish government programs. We have a president who may propose spending cuts, but before they take effect he must get agreement from both the House of Representatives and Senate, both of which may be controlled by a different party. Congress’ efforts to cut spending on its own are futile without prior agreement from the president to support them, as Republicans found out the hard way in 1995.

Direct presidential control over spending is extremely limited. By law, he must spend every dollar appropriated by Congress. And presidents have no control at all over three-fifths of the budget devoted to interest on the debt and entitlement programs–those like Medicare for which spending is automatic. Even Congress can’t reduce spending for entitlements unless it changes the law governing eligibility and programmatic operations.

So 60% of the Federal budget cannot be touched in the budget process. The national debt must continue to be serviced and entitlements (ie. Social Security and Medicare) can only be touched by changing eligibility and the actual operations and only as stand alone legislation for the most part. So what about cutting the other 40%? Won’t work…

Looking at last year’s budget, only 38% was classified as discretionary; that is, under Congress’s control through the appropriations process. All the rest was mandatory: entitlements and interest on the debt. Within the discretionary category, 54% went to national defense. Just $37.5 billion, 3.3% of the discretionary budget, went for international affairs including foreign aid. Over the years I have encountered many conservatives who thought that abolishing foreign aid was just about the only thing needed to balance the budget. Obviously, that’s nonsense.

Domestic discretionary spending amounted to $485 billion last year. With a deficit last year of $459 billion, we would have had to abolish virtually every single domestic program to have achieved budget balance. That means every penny spent on housing, education, agriculture, highway construction and maintenance, border patrols, air traffic control, the FBI, and every other thing one can think of outside of national defense, Social Security and Medicare.

Obviously that will never happen because most of the above programs have a constituency that supports them.

Bartlett also points out that it would help the situation if some of the proponents of budget cuts knew what the hell they were talking about:

Many of those favoring budget cuts have ridiculous notions about how much of the budget can be cut without reducing services. A recent Gallup poll found that Americans generally believe that 50% of the budget is wasted. This suggests that they believe the federal budget could be cut in half without cutting anything important like Social Security benefits or national defense.

Just so people know the round numbers, total spending this year is about $3.6 trillion. At most, $200 billion of that represents stimulus spending, so even if there had been no stimulus bill and the economy had done as well as it has done, we would be looking at a $3.4 trillion budget.

Revenues are only about $2.1 trillion, so we would be looking at a substantial deficit even if the stimulus package was never enacted. Revenues would be even lower if Republicans had gotten their wish and the stimulus consisted entirely of tax cuts. How tax cuts would help people with no wages because they have no jobs or businesses with no profits to tax was never explained. But many right-wingers are convinced that tax cuts are the only appropriate governmental response no matter what the problem is.

It would also help matter if Republicans weren’t hypocrites:

This means that it is impossible to get control of spending without cutting entitlement programs. Many Republicans agree, but they never make any serious effort to do so. On the contrary, they defend entitlements when Democrats suggest cutting them. The Republican National Committee has run television ads opposing cuts in Medicare because Obama proposed using such cuts to fund health reform. Many demonstrators at right-wing tea parties were seen carrying signs demanding that the government keep its hands off Medicare.

Last year, we spent $456 billion on Medicare, and it is the fastest growing major government program. How likely is it that the people protesting Obama’s Medicare cuts will stand with Republicans if they propose cutting that program even more to balance the budget? They will switch sides in an instant. The elderly will fight anyone who tries to cut their benefits even as they hypocritically demand fiscal responsibility and rant about the national debt. The elderly are the reason why we have a national debt.

As for the great spending cutters Ronald Reagan and Margaret Thatcher, well not so much:

When I raised these facts with a prominent Republican recently, he countered that Reagan had cut spending. But he didn’t. Spending rose from 21.7% of the gross domestic product in 1980 to 23.5% in 1983 before declining to 21.2% in 1988. And that improvement came about largely because favorable demographics caused entitlement spending to temporarily decline from 11.9% of GDP in 1983 to 10.1% in 1988. (Last year it was 12.5% of GDP.)

When I noted these facts, my friend pointed to British Prime Minister Margaret Thatcher as someone who showed that spending could be slashed. But she raised spending from 42.4% of GDP when she took office in 1979 to 46% of GDP in 1985. Only in her last years in office was spending cut to 38% of GDP. But keep in mind that Thatcher was in office for 10 years, longer than a U.S. president may serve, and had compete control of Parliament the whole time–something Reagan could only dream about.

Since it is not politically possible to cut Federal spending there are only three choices, from the argument laid out in the article:

A) Raise taxes massively which would likely crush the American economy and continue to perpetuate the cycle of government growth consuming resources out of the private sector.

B) Default on the national debt causing a national and global economic collapse.

C) Continue the current cycle of bread and circuses of spending and spending more until options A and B come due.

However, I see Bartlett’s argument as too defeatist in nature.

Neither of the three options is pleasant and fortunately, we don’t have to choose between the three but that requires the American people and politicians making hard choices (which they don’t seem to know how to make).

Solving the long term financial crisis that will lead to national bankruptcy will take a grand bargain of sorts where every political faction will get some of what they want but will have to swallow some things they don’t.

The left will have to swallow budget cuts to social welfare programs but they will applaud the tax increases that will be needed overall.

The right will have to swallow defense cuts and higher taxes but they will applaud overall budget decreases.

Libertarians will have to swallow a government not quite as small as they want and higher taxes but will applaud a shrunken Federal government both in size and scope both at home and abroad.

Populists will not like any of this because populism whether it be right-wing populism, left-wing populism, or even libertarian populism is predicated on the concept of having one’s cake and eating it too. Populism is generally anti-intellectual and solving the serious long-term financial problems of this nation will take more than a slogan or a media celebrity. I don’t see a role for populists in solving this nation’s problems because they are generally the cause of them.

Over the coming weeks, I will lay out what I see as the ingredients of the great political grand bargain that will be needed to avert national bankruptcy.

And yet, there was budget director Peter Orszag rushing to a lunch with Chinese bureaucrats on a Monday in late July. To his surprise, when Orszag arrived at the site of the annual U.S.-China Strategic and Economic Dialogue (S&ED), the Chinese didn’t dwell on the Wall Street meltdown or the global recession. The bureaucrats at his table mostly wanted to know about health care reform, which Orszag has helped shepherd. “They were intrigued by the most recent legislative developments,” Orszag says. “It was like, ‘You’re fresh from the field, what can you tell us?’?”

As it happens, health care is much on the minds of the Chinese these days. Over the last few years, as China has become the world’s largest purchaser of Treasury bonds, the government has grown increasingly sophisticated in its understanding of U.S. budget deficits. The issue has become all the more pressing in recent months, as the financial crisis and recession pushed the deficit to record levels. With nearly half of their $2 trillion in foreign currency reserves invested in U.S. bonds alone, the Chinese are understandably concerned about our creditworthiness. And this concern has brought them ineluctably to the issue of health care. “At some point, if you refuse to contain health care costs, you’ll go bankrupt,” says Andy Xie, a prominent Shanghai-based economist, formerly of Morgan Stanley. “It’s widely known among [Chinese] policymakers.” Xie himself wrote a much-read piece on the subject in 2007 for Caijing magazine–kind of the Chinese version of Fortune.

The Chinese, unfortunately for them, have worked their way into a suicide pact with America. They are simply too heavily invested here to see any serious problems with our economy, government, or monetary base. Had they not spent the last decade buying up enormous Treasury holdings, they could let us implode our economy and “fix” our debt/spending issues through debasing our currency, and then swoop in to buy assets on the cheap once we hit bottom. But that’s not on the agenda. If we take the low road, we’re towing them along for the ride.

Obama says he won’t accept a bill that adds to the deficit. I don’t believe him, since I’ve already seen him fail to live up to his promises on taxes and legislative transparency. Even worse, though, he’s got the folks who plan to finance that deficit worried. And the last group you want to scare are the ones you’re trying to get to lend you money.

Hat Tip: Ezra Klein

“I can make a firm pledge….no family making less than $250,000 will see any form of tax increase…..not any of your taxes”-Barack Obama, September 12, 2008

Once again, President Obama has lied to the country. After raising cigarette taxes earlier this year, Obama just ordered another tax increase. This time, he raised every American’s taxes without a vote of Congress and with the simple stroke of a pen. Obama increased taxes on Chinese-made tires.

In one of his first major decisions on trade policy, President Obama opted Friday to impose a tariff on tires from China, a move that fulfills his campaign promise to “crack down” on imports that unfairly undermine American workers but risks angering the nation’s second-largest trading partner.

The decision is intended to bolster the ailing U.S. tire industry, in which more than 5,000 jobs have been lost over the past five years as the volume of Chinese tires in the market has tripled.

It comes at a sensitive time, however. Leaders from the world’s largest economies are preparing to gather in Pittsburgh in less than two weeks to discuss more cooperation amid tensions over trade.

The tire tariff will amount to 35 percent the first year, 30 percent the second and 25 percent the third.

Which means American consumers will see an increase in prices of at least 35% for their tires in the name of saving 5,000 jobs. Chinese and US companies with factories overseas are not going to pay the tariffs, they’ll pass them on to consumers. There is also the latest example of the Obama administration diplomatic ineptness of angering trade partners before major trade talks with China among other countries. Also, there was not much public debate over this, since this decision was reached behind closed doors with the help of an obscure Federal trade panel with no citizen input.

Of course with the Obama administration, there’s always someone or some group to be paid back.

Although a federal trade panel had recommended higher levies — of 55, 45 and 35 percent, respectively — the decision is considered a victory for the United Steelworkers union, which filed the trade complaint.

The United Steelworkers union endorsed Obama’s presidential bid and the Steelworkers had a massive grassroots effort that claimed credit for helping win Pennsylvania, Ohio, and Virginia; among other states.

“Hope and Change” indeed.

Many auto industry analysts and dealers expect sales volumes to fall now that the program is over. They worry that many people who took advantage of the program were merely accelerating purchases they would have made later in the year.

If that’s true, the premature sales could hurt automakers, which increased production in the third quarter to replenish clunker-depleted inventories that had already grown low because of factory shutdowns over the summer.

Cash for Clunkers is essentially an inflationary policy. This is a policy well described by Adam Smith Milton Friedman, with the exact same consequence:

In a dynamic world demands are always shifting, some prices going up, some going down. The general signal of increasing demand will be confused with the specific signals reflecting changes in relative demands. That is why the initial side of faster monetary growth is an appearance of prosperity and greater employment. But sooner or later the signal will get through.

As it does, workers, manufacturers, retailers will discover that they have been fooled. They reacted to higher demand for the small number of things they sell in the mistaken belief that the higher demand was special to them and hence would not much affect the prices of the many things they buy.

The government has arbitrarily and falsely increased demand for a specific good (new cars). They’ve done so by throwing money at it (a locally inflationary policy) and the automakers are ramping up production in response to what they THINK is a more stable recovery. But they may soon find, as Adam Smith Friedman predicted, that they have been fooled.

The good news, Schwarzenegger glowed, is no new taxes.

Digging a little deeper, of course, reveals the truth:

REVENUES

* Accelerate income tax withholding — $1.7 billion
* Increase estimated tax payments for businesses and the self-employed — $610 million

Between now and the end of the year, $2.3 billion will be extracted from the economy in more aggressive tax collection. Where is that money going to come from? Everyone who works:

It also raises $4 billion by in part accelerating personal and corporate income tax withholdings and increasing income tax withholding schedules by 10 percent.

The state will take 10% more than it does today out of every paycheck issued in the State of California. That means that the Californian trying to stay afloat on a mortgage, pay medical bills, or send a kid to school will have less money to do it. The Californian out trying to support local businesses will have less money to do it. The Californian who lives paycheck-to-paycheck will have less money to survive.

Since this is a withholding change, the taxpayer should get the excess withheld back on next year’s tax return. That, though, won’t undo the foreclosure that happened because a Californian couldn’t pay his mortgage. It won’t make right the bankruptcy that occurred because a Californian couldn’t pay her medical bills. It won’t bring back the corner store that went under because people couldn’t afford to shop there.

The simple fact is that this budgetary shell game will cause each and every worker to pay more to the State of California in taxes. The state is so desperate to pass a budget that it is almost certain that this tax hike will pass. All I ask is that the clowns in Sacramento have enough respect for the taxpayers to level with us and admit that their budget contains $2.3 billion in tax hikes…

Fat chance.

Ezra Klein says there’s we shouldn’t act as if defense spending (considered discretionary in the budget) in unable to be cut:

My friend Chris Hayes likes to say that “non-defense discretionary spending” is the most pernicious phrase in Washington. It means, essentially, that there’s spending, which we can cut, and then there’s defense spending, which we cannot cut, and shouldn’t even talk about. Defense spending, however, accounts for about 20 percent of federal dollars. Add in the wars of the past few years and it’s accounted for even more than that. Saying you can’t touch defense spending is like going on a diet but letting the milk industry say that you can’t cut back on dairy.

…

There aren’t “defense dollars” and then “non-defense dollars.” There are only dollars, and we need to figure out how best to use them.

Hmm… Defense spending is 20% of the budget. And I might find myself in agreement with Klein that perhaps we can defend our nation for a hell of a lot less money than that.

But there’s another distinction here. “Discretionary”. Klein doesn’t ever address the fact that this is an antonym (in the case of a federal budget). There are two types of spending. “Discretionary” and “entitlement”. And entitlement spending is more than twice as large as “non-defense discretionary spending”.

Klein says “there aren’t ‘defense’ and ‘non-defense dollars’” — only dollars. Well, if 42% of our budget is entitlement spending — and that’s a number that’s going to rise significantly with Obamacare — why is it that we should assume that nothing there can or should be cut? You want to put defense spending on the chopping block, Ezra? I’m down with that. I’ll see your proposition and raise you entitlement spending. You ready to call, or are you just bluffing?

WASHINGTON (AP) — Former Treasury Secretary Henry Paulson testified on Thursday that he pressured Bank of America Corp. last year to go through with its plans to buy Merrill Lynch but didn’t tell the bank’s chief to hide potential losses from shareholders.

Paulson acknowledged that he warned the bank’s CEO, Kenneth Lewis, that Lewis could lose his job if he dropped the deal. Paulson also said he pledged government aid to the bank but declined to put that promise in writing because the details would have been vague and would have to be disclosed publicly by the Treasury Department.

…

In testimony to the committee, Paulson said he told Lewis last year that reneging on his promise to purchase Merrill Lynch would show a “colossal lack of judgment.”

Paulson said that “under such circumstances,” the Federal Reserve would be justified in removing management at the bank.

“By referring to the Federal Reserve’s supervisory powers, I intended to deliver a strong message reinforcing the view that had been consistently expressed by the Federal Reserve, as Bank of America’s regulator, and shared by the Treasury, that it would be unthinkable for Bank of America to take this destructive action for which there was no reasonable legal basis and which would show a lack of judgment,” Paulson said.

Paulson said he believed his remarks to Lewis were “appropriate.”

Federal Reserve Chairman Ben Bernanke has denied threatening to oust Lewis and said he never told anyone else to, either. But another Fed official suggested otherwise in an e-mail obtained by House investigators.

Jeffrey Lacker, president of the Richmond Federal Reserve Bank, said in a December 2008 e-mail that Bernanke had planned to make “even more clear” that if Bank of America backed out on the deal, “management is gone.”

Paulson said Bernanke never asked him to relay the message. But, he added, he believed he was expressing the Fed’s opinion that dropping the deal “would raise serious questions about the competence and judgment of Bank of America’s management and board.”

I’ve previously covered this type of activity by Paulson & Bernanke here and here.

First of all, Senator John Cornyn (R-TX) was booed when he spoke in Austin, Texas.  The key reason reason seems to be that he voted for the Fannie Mae/Freddie Mac bailout in order to protect “free market capitalism, with our civil liberties, [which are] are the foundation of American exceptionalism.”  In the hyperlinked explanation for his vote, he quoted Senator Tom Coburn (R-OK) and former House Speaker Newt Gingrich in order to help spread the blame.  “This bill does not represent a new and sudden departure from free market principles…” explained Cornyn, who was quoting Coburn.

Coburn has also infuriated fiscal conservatives because, in his role as chairman of the National Republican Senatorial Committee, he sided with “establishment candidate, Florida Gov. Charlie Crist, in a Senate primary against young conservative leader, former Florida House Speaker Marco Rubio” in the Florida Senate race.

Coburn probably wasn’t the only Republican Party leader booed in Texas.  I’ve seen some video of Texas Governor Rick Perry speaking in San Antonio, but I’ve not seen any video with jeers from the audience from anywhere in Texas (he wasn’t allowed to speak at the major Dallas event).  However, there are multiple reports that he was booed for “his advocacy of toll roads to relieve traffic congestion.” I tried to obtain additional information on Twitter and it seems my suspicions were correct: He received some sporadic booing, not specifically because of toll roads, but that the road in question is the “NAFTA Superhighway” or “Trans-Texas Corridor”.  Based upon observations during my campaign work in east Texas in 2006, there are probably quite a few Birchers who still vehemently oppose this effort.

The least biased view of the Austin event which I’ve read comes from Robbie Cooper:

I’d initially decided not to attend because the organizers had decided to build their rally around high profile elected politicians (like Sen. John Cornyn, Governor Rick Perry, U.S. Congressman Louie Gohmert, and State Rep. Wayne Christian).

The problem in Washington D.C. isn’t just Democrats. It’s been Republicans for at least the last 8 years, and in many cases these same GOPers are still complicit in helping the Democrats run our country into the dirt. Politicians on both sides of the aisles have been myopic in their quest to grant themselves more-and-more power and deprive us of more-and-more of our freedoms and our money.

The tea parties are our chance — the public, tax paying, hardworking, voting citizens — to make politicians listen to us. But instead, the Tea Party organizer (Heather Murray Liggett) thought that what our Tea Party needed was more politicians talking (and lying) to us.

She was wrong.

Cooper goes on to provide:

[Cornyn] missed the best speech of the day from the VP candidate from the Libertarian Party, Wayne Allyn Root. But it’s a speech that probably would have made Sen. John Cornyn pretty uncomfortable. Instead, Sen. Cornyn probably had to go find another RINO Senatorial candidate for his National Republican Senatorial Committee to endorse.

The other news coming out of Texas seems to be a tale of two headlines. The headline from the Dallas News (and Democratic Underground) reads “Tea party protest at Southfork Ranch falls short of estimated 50,000 attendees” while Michelle Malkin chose “37,000 at Dallas Tea Party — and next steps.”

My recollection is that the Dallas Tea Party organizers were hoping for 30,000 to 50,000.  The last time I checked, 37,000 is a credible number for any political event.

Of note also seems to be that President Bush spoke and was well-received at a Tea Party held in Oklahoma. Considering that Bush would have drawn loud jeers from the same folks who predominantly voted for him in Birmingham, I was surprised to read in the New York Times that he received numerous standing ovations.  Then I read the fine print:

Woodward Mayor Bill Fanning estimated about 6,500 people attended Bush’s speech. The former president surprised city leaders by accepting their invitation to speak at festivities celebrating the $25 million renovation of a local park.

Seats for the speech — held at a rodeo arena built in the 1930s as part of the Works Progress Administration — ranged from $25 up to $500 for the ”Oval Office Ticket” in the first rows with VIP parking and complimentary beverages. Event promoter Landon Laubhan declined to say how much Bush was getting paid to speak.

After the speech, Bush waded into the crowd for a few minutes, giving hugs, signing autographs and shaking hands. ”I didn’t think he’d do that,” Fanning said. ”I told him he’s welcome back any time.”

Woodward is friendly territory for Bush…

This sounds like a hand-picked crowd of big-government Republicans to me.  I doubt one will be able to find a better example of GOP usurpation of the spirit of Tea Parties than this.

I did attend two events in Alabama. The first was a small local event in Decatur, AL – one of three events held near my home. I had nothing to do with the organization or planning of this event and wouldn’t have attended had I realized it was going to be a GOP lovefest.  To be sure, it was so poorly promoted that I didn’t hear about this event until July 3rd, and that was only because of a random e-mail I found in my junk folder.

As I noted on Twitter, the event began with some local talk show host blaming socialism on Clinton and Obama, but conveniently forgetting years of Republican majorities and presidential terms in the middle.  I was later informed by a local blogger that the host is Will Anderson, who was reportedly “fired” by the dominant local talk show station, WVNN. I was about to walk out when Mo Brooks, one of the GOP congressional candidates, took the stage. I listened to him and he played to his audience well.  However, his many appeals to social conservatism wouldn’t have played as well in nearby Huntsville.

While I was snapping photographs, one local told me that we are doomed to Obama and socialism because we have forsaken “The Lord, our God.”  Another told me that President Bush was a shining light of free-market capitalism. I left early, in disgust.

The Birmingham event (liveblogged here), which I did help organize, was much better.  Once again, elected officials were not allowed to speak.  While the Libertarian Party and the Constitution Party (and several GOP candidates) had paid for booths, I didn’t see the state Republican Party out in force.  While we were setting up for the event, I had asked an event volunteer where the Republican Liberty Caucus and Alabama Republican Assembly booths were located and she gave me an earful as soon as she heard the word “Republican.” After I explained that both organizations had a long track record of opposing big-government Republican candidates, she politely assisted me.

The event was hosted by local talk show host Matt Murphy, who did a great job.  Other speakers included local conservative icon John Killian, local talk show host Lee Davis, and Kevin Jackson, author of The Big, Black Lie.

Before the April 15th Tea Parties, I had offered the following advice:

If you are an event organizer or speaker, keep in mind that pretty much everyone will agree with your fiscally conservative message.  The Second Amendment is probably pretty safe turf, but not necessary for the purpose of this coalition.  Conservatives or libertarians wandering off into territory such as abortion, gay rights, immigration, medical marijuana, and the Iraq War will be creating unnecessarily divisive issues.

On April 15th, the Birmingham speakers followed that advice and the only folks booed that day were Barack Obama and Nancy Pelosi.  The same was generally true on July 4th, with one exception.

During the candidate speeches leading to the main event, one candidate (I couldn’t hear him well due to the poor accoustics backstage) went off on a rant about our participation in the Iraq War.  He was immediately facing a roped-off section of veterans, and I couldn’t hear the end of his speech at all because of the boos he was receiving. To their credit, everyone else pretty much stayed on topic. Fortunately, there were plenty of Campaign for Liberty, Ron Paul, Libertarian Party and other folks there who were bright enough to focus on coalition building, as opposed to pressing issues destined to kill a team effort.

The best candidate speech was clearly the one given by Stan Cooke, who is also challenging incumbent Congressman Spencer Bachus.  Cooke was well prepared to go after Bachus for spending and ethical issues. He covered a return to constitutional government in detail and was equally critical of Democrats and Republicans.  Based on the level of applause, Cooke earned quite a few supporters on the 4th.

The presence of only two Alabama gubernatorial candidates was felt at the Birmingham event.  While Tim James wasn’t present, he did speak at the April 15 Birmingham event and provided a short video presentation on the Jumbotrons.  His were the first gubernatorial stickers I saw at the event and I saw more of his than all other candidate stickers put together.  I saw absolutely no Roy Moore signs, stickers, or any other sign of his existance, although I’m sure he had many supporters at the event.  There was no presence that I noted for any of the other announced Republican or Democratic candidates.

It is important to note that not-quite-yet-announced GOP gubernatorial Bill Johnson was there – not as a speaker but walking around with his wife and listening to people.

In his previously mentioned blog posting, Robbie Cooper noted:

Eliza Velma from Americans for Prosperity (the organizers) remarked on the event’s Facebook page in defense of inviting Cornyn, “He’s not only attending to speak, but will be in attendance to also hear what we have to say. It’s rare to find an elected official willing to do that.”

Ms. Velma obviously didn’t understand the mood of most Tea Party participants as well as folks in Alabama and Chicago did on April 15th. Here’s what happened in Alabama:

The highlight of the event in Birmingham was Beth Chapman, our Secretary of State.

Unbeknowst to most people, she showed up unannounced at the back of the stage and demanded to speak. Apparently she wasn’t there when I announced that no elected officials would be speaking and that at this rally politicians would listen to we the people.

As a matter of fact, she wasn’t there when the Rainy Day Patriots (25 in number) stood on 280 in the middle of a tornado warning with their protest signs. She wasn’t there during our organizational meetings. She wasn’t there during setup of the event. And she certainly wasn’t there during cleanup.

Needless to say, she wasn’t a very happy camper when she was told “NO”. I guess politicians are not used to being told no because she lingered for another 30 minutes quibling for a speaking spot.

It was a great day in Alabama when a group of citizens can grow their numbers from 25 to 7000 in a couple of weeks and tell our politicians “NO!”

Here’s what happened when event organizer Eric Odom told RNC Chairman Michael Steele that he was welcome to “listen” but not grab a microphone at the Chicago event:

As I mentioned on the phone the other day, I very much appreciate the fact that Chairman Steele is now finally starting to reach out to the true grassroots side of the free-market movement in America. Unfortunately, it appears that he has only just decided to reach out after realizing how big the movement has gotten and how much media is now involved.

That said, we’re still excited to know that Chairman Steele will be in Chicago and we hope, after knowing that he’ll be in the city, that he’ll stop by and mingle with the Americans who will be rallying on April 15th. This will also present a fantastic time for Chairman Steele to LISTEN to what we have to say and perhaps gather some thoughts on what the RNC needs to be doing moving forward.

With regards to stage time, we respectfully must inform Chairman Steel that RNC officials are welcome to participate in the rally itself, but we prefer to limit stage time to those who are not elected officials, both in Government as well as political parties. This is an opportunity for Americans to speak, and elected officials to listen, not the other way around.

I do hope that Chairman Steele will join us as a regular American in protest of Government spending and extreme taxation.

While Johnson is receiving criticism from local anti-tax advocates as well as national criticism in libertarian circles from folks ranging from Tom Knapp to Eric Dondero, he showed and wasn’t treated rudely (that I know of, at least). At a bare minimum, he deserves credit for showing  and listening to what folks have to say.  I don’t know (yet) what he said in return, but I did note several Libertarians and libertarian-Republicans sporting his sticker by the end of the day.  I’m sure that whatever Johnson ends up saying at the end of the day on fiscal issues will prove interesting.

From a political Tea Party perspective, the clear winner of the day was Tim James, followed by Bill Johnson.  Losers were the ones who didn’t show. The ultimate loser was Roy Moore, as he could have picked up a lot of support had his people been organized and energized.

The congressional winner of the day was clearly Stan Cooke.

Unlike in some other cities, short but reasonably fair coverage of the event was provided above the fold of the Sunday Birmingham News. The Alabama event was also under attack from a writer at DailyKos:

So this is a nationwide “nut fest.” What on earth is going on?

I’m not a psychiatrist, so I’m certainly not qualified to diagnose any form of mental illness. And I hate to throw that term around, partly because I probably have a number of friends and family members who might attend one of these events.

We’re not talking about the kind of mental illness that makes someone dysfunctional or overtly dangerous. But is the “tea party” movement grounded in reality? I don’t think it is. Should we be concerned about it? The answer, I think, is yes.

My guess is that quite a few people today will go to the Verizon Wireless Music Center, and other sites, simply to partake of the food, fireworks, music, and such. But if you read about these events, you see signs of possible psychological disturbances–hysteria, paranoia, delusion, and more. At the very least, it seems some people connected to these events are separated from reality.

For example, folks behind the Birmingham event claim they are not anti-Democrat or anti-Obama. But one of their speakers is a fellow named Kevin Jackson, who has penned a screed called The Big Black Lie: How I Learned the Truth about the Democrat Party.

The Birmingham organizers apparently have not checked the Web site of the AFA, the umbrella outfit for the tea parties…

To be quite clear on this, I attended quite a few of the organizational events for this event and never heard the American Family Association mentioned once. The Birmingham event was was totally organized by a brand new grassroots organization called the Rainy Day Patriots.

Calling most participants (there were a small handful of Truthers present) hysterical, paranoid and delusional is quite a stretch (my wife is a psychiatrist and she was there). But there was a lot of well-deserved anti-Obama sentiment displayed.

Finally, there has been a lot of talk about Tea Party attendance. My friend Dave Weigel observed:

The result of all of this: lower expected attendance, with some of the difference made up by a more celebratory atmosphere. On April 15, the largest Tea Party in Texas was the Fort Worth rally featuring Gov. Rick Perry, who drew days of controversy for apparently endorsing the idea of Texas seceding from the union. The July 4 Dallas Tea Party, by contrast, will combine political speeches from columnist Michelle Malkin, Bosnia war hero Scott O’Grady, and local conservative activists with entertainment from ersatz Monkees drummer and singer Mickey Dolenz, a bluegrass Beatles cover band, and a program that lets kids edit themselves into rock videos (”Be a star — no talent required!”).

TPM notes:

Thousands of right-wing activists across this country rang in the Independence Day holiday with yet another round of tea-party protests against President Obama, inadvertently highlighting an interesting divide in the Republican Party. On the one hand are the hard-line activists who attend these things, versus the more mainstream politicians who want to win elections and are looking for their votes — and are running into all manner of conflicts as a result, or finding themselves taking on some rather interesting policy stances along the way.

Less national media and less GOP interference probably did lead to lower turnout in a lot of places.  Birmingham dropped from well over 7,000 to around 3,000 – but Huntsville went from 2,300 to a reported 5,000.  Another factor to consider is that the events were scheduled on July 4th, a holiday where plenty of people had other plans.  To be sure, if I hadn’t been involved in the organization of this event, I would have been shooting fireworks and hanging out with my friend Robert Stacy McCain at Lake Weiss.

There’s another factor to consider, as well.  The first Birmingham Tea Party I attended wasn’t after Obama was elected, but in response to Governor Riley’s proposed tax increase in 2003. It was the only event of its type in Alabama (a dozen or so were held across the state yesterday) and the turnout was around 2,500. Obviously, there was no serious GOP presence, as it was in opposition to a major GOP tax increase. That event was the clear focal point which turned the momentum and those 2,500 activists lead the charge to kill the proposal by a two-to-one margin.

Unlike April 15th, there was no national media at our event, it was on a holiday and there were other Tea Party events in the state. That more people showed than in 2003 indicates that there is a hardcore activist base of fiscal conservatives in the state.  And if they have their way, Obama will be a sitting duck after the 2010 elections.

Disclaimer: The company for which I work has submitted various proposals to many Alabama candidates who could be described as “moderate, libertarian or conservative.”  We’ve not received any compensation from any entity mentioned in this article. The opinions and observations presented in this article are mine alone and not necessarily shared by my business partners, current clients or potential future clients.

It was sad, of course, when I reported late last year that BB&T had decided to take TARP money. I pointed out that if the rules have changed and the government’s picking winners and losers, it’s possible that they had a fiduciary duty to their shareholders to take the money. But I was still sad.

So I’m much happier to see that BB&T is leading the charge to pay back the TARP funds. There are many banks who I believe are simply trying to get out of TARP due to the additional regulation imposed by the government, but BB&T’s previous commitment to principle is enough to give them the benefit of the doubt that it was done in earnest.

Hat Tip: Reason Hit’N'Run

To fight this recession the Fed needs more than a snapback; it needs soaring household spending to offset moribund business investment. And to do that, as Paul McCulley of Pimco put it, Alan Greenspan needs to create a housing bubble.

Krugman said then that we needed to reinflate the bubble to save ourselves. We did, and we didn’t.

Now he says it’s time for Keynesian stimulus far bigger than what we’ve already done. He’s just as wrong as he was then.

Hat Tip: TJIC