The Debt Ceiling and Political Cowards

Fox News recently reported that "The House of Representatives ... voted to raise the debt limit by $1.9 trillion. That vote raises the debt ceiling to $14.3 trillion, a new high for the amount of debt the U.S. has ever carried." It goes on to say that "As recently as 2001, the U.S. debt was only at $5.7 trillion. But exploded throughout the past decade after Sept. 11, 2001, amid record spending by the Bush and Obama administrations." Furthermore, it noted that "If Congress doesn't hike the debt ceiling, the U.S. would be unable make good on Social Security and Medicare payments.

"It certainly makes sense to be opposed to raising the debt ceiling. The vast majority of it was in areas that the government has no business being in. Yet, I'm disgusted to see where some of the "nay" votes came from. The Senate approved the debt limit increase in mid-January on a 60-40 party-line vote. Meanwhile, the House vote was much closer, 217-212. All Republicans and more than 30 Democrats voted against raising the debt ceiling. I have heard our Congress be described as a "parliament of whores." At the very least it is a club of spoiled brats that believes it should be allowed to have its cake and eat it too. The two "stimulus" packages that added over $1 trillion to the national debt in one year alone could not have passed without the help of some (if not many) of those who voted against raising the debt ceiling. Grow up members of Congress. Be responsible on the front end so you do not have to pretend to be a victim on the back end.

The Fox article also stated that "moderate and fiscally-conscious Democrats were suspect of voting to hike the debt" and since the whole House is facing hostile voters in 2010, they all collectively voted to cover themselves.

On the one hand, it would have been a wonderful thing to witness the Congress voting against the debt ceiling. Such an act would force everyone to roll up their sleeves and get to work on a sustainable -- and maybe even Constitutional -- budget. But it is ridiculous to witness these politicians vote as though they are drunk with power when bills come before them and cannot own the results of their voting when the time calls for it. If a member fueled the debt, they should confess up to it. I believe you should ask your member of Congress -- if he or she voted for TARP and similar packages, but against raising the ceiling -- to explain how such was going to be paid for? Those are the type of tough questions that demand honest answers today.

Kevin Price is a syndicated columnist whose articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media. Kevin Price is also host of the Price of Business (M-F at 11 AM on CNN 650). Hear the show live and online at PriceofBusiness.com. Visit the archive of past shows here.

Mr. Franken Gets Lost in Washington

I found it more than funny seeing Sen. Harry Reid guide newly elected Senator Al Franken to the podium to discuss his priorities as he takes his office. Franken, with that Saturday Night Live smile and "gee golly" expression, was memorable. One of his opponents will use this when, or if, Franken runs for reelection.

Franken has completely out done himself by becoming the US Senator from Minnesota. In spite of the fact that many are crying that he has stolen his way into this elite club, Franken is in and Washington will be watching closely.

I worked in DC for many years, first as an aide to US Senator Gordon Humphrey (R-NH) and later with several think tanks and political organizations. I also was a friend with members of the US House. Members in that "lower chamber" are noted for their rough and tumble antics, propensity towards individuality, and constant fight to be recognized. The US Senate is the exact opposite. That organization is very much like a prestigious club, designed for the "best and the brightest" from each state. Compared to the US Senate, the House of Representatives is like Animal House.

Animal House, the famous movie developed by many of the people behind Saturday Night Live, would likely be a great place for Franken, since that program made him famous. He could even pull gags on his colleagues and be voted most popular, at least on the Democrat side of the aisle. This is not the case with the US Senate. You could see the look of anxiety on Harry Reid's face as they walked up to the microphone. The Majority Leader appeared to be holding his breath. There is this simple belief that, with many states literally electing dozens to US House seats based on their population, there is something special about the US Senate. Al Franken challenges that conventional wisdom.

Besides having among the most extreme views in the Senate (he may proved to be to the left of socialist Bernie Sanders), he has some of the most unusual behavior. He speaks his mind when and how he wants, regardless of how inappropriate it may be. It will be fascinating to see what kind of committees he ends up being on. A few likely possibilities are Veterans Affairs, Small Business and Entrepreneurship, Indian Affairs, and the Joint Committee on the Library. They are going to try to put him in a place to minimize his air time and minimize the damage, he would likely place on his Democratic colleagues. On the other hand, it is the Democrats, so he could end up in the most important Committee assignments. We will have to see. Franken isn't leaving entertainment, he is just laying the groundwork for his next movie, "Mr. Franken Gets Lost in Washington."

Kevin Price is Host of the Price of Business, the longest running show on AM 650 (M-F at 11 am) in Houston, Texas and on AOL Radio. His articles often appear in Chicago Sun Times, Reuters, USA Today, and other national media. Steve Moore of the Wall Street Journal calls Price the “best business talk show host in the country.” Find out why and visit his blog at www.BizPlusBlog.com and his show site at www.PriceofBusiness.com. You can also find Price on Strategy Room at FoxNews.com.

If it Appears Your Member of Congress is "Out of Touch"...

It seems that our Members of Congress are "out of touch," when it comes to their constituents needs. While we are talking salary cuts and job losses, they are giving themselves pay raises. While the government is talking about making it impossible for us to afford private health insurance (in an effort to ration health care through socialized medicine) as they tax and regulate insurance policies out of existence, they have the finest health insurance in the world.

Members of the US House and Senate are each given an expense account that allows them to make purchases and leases that are designed to help them represent their constituents more effectively. The Wall Street Journal reports that "House members get a government expense allowance of $1.3 million to $1.9 million a year. Senators get $2.9 million to $4.5 million. The disparity is based on several factors, with lawmakers whose home states are far from Washington, for example, typically receiving more to cover their higher travel expenses." Yes, that is per person.

So where do these millions of dollars go? Here are a few examples cited by the Journal:

• Rep. Alcee Hastings (D-FL) spent $24,730 in taxpayer money last year to lease a 2008 luxury Lexus hybrid sedan.


• Rep. Michael Turner (R-OH) spent $1,435 on a digital camera.


• Democrat Eni Faleomavaega, the House delegate from American Samoa, purchased two 46-inch Sony TVs.


• Rep. Howard Berman (D-CA) spent $84,000 worth on personalized calendars, printed by the U.S. Capitol Historical Society, for his constituents. One could argue that this Congressman used taxpayer dollars towards his reelection efforts, since it is simply promotional material. He was not available to the Journal for comment.


• Rep. Rodney Alexander (D-LA) paid $20,000 for a 2009 lease on a Toyota Highlander, a hybrid SUV.


• Rahm Emanuel (D-IL and now President Obama's Chief of Staff) showed such expenditures included printing, recording a $33,000 printing expense in the fourth quarter of 2008.


• Rep. William Jefferson (D-LA) spent $2,793 on a Panasonic Toughbook laptop, which is marketed to the military, in September of 2008. Yes, this is the same Jefferson who was implicated in a scandal that included $90,000 found in a freezer in his office (bringing new meaning to "cold, hard, cash").

These accounts are often plagued with vague citations and are hard to monitor. Furthermore, there is an expiration date on these dollars. If they are not spent in a certain time frame, the dollars don't carry on the next year, but start with a new budget. Because of this, many found these expenditures all the more offensive in the last quarter of 2008. As many Americans were trying to buckle down and prepare for an economic storm, Members of Congress and their staff were enjoying taxpayer dollars.

The Wall Street Journal points out that "The review showed that the increased year-end spending went not only toward equipment but also to fund year-end 'bonuses' to aides. The average House aide earned 17% more in the fourth quarter of the year, when the bonuses were paid, than in previous quarters, according to an earlier Journal analysis. Payments ranged from a few hundred dollars to $14,000." It also went on to point out that "The records show that some lawmakers spent heavily in the final months of the year to draw down allowances before the end of December -- a time when U.S. households were paring their budgets and lawmakers were criticizing Detroit auto executives for taking private aircraft to Washington to plead their case for taxpayer funding."

There is talk about making these records available online and in more detail for both the House and the Senate so taxpayers can better keep track of the expenditures of their elected officials. That, and reconsidering how much they have available to spend, are reforms long over due.

Kevin Price is Host of the Price of Business, the longest running show on AM 650 (M-F at 11 am) in Houston, Texas and on AOL Radio. Eric Bolling of Fox News and Fox Business says that Price’s Blog “is very influential and moves the blogosphere.” Steve Moore of the Wall Street Journal calls Price the “best business talk show host in the country.” Find out why and visit his blog at www.BizPlusBlog.com and his show site at www.PriceofBusiness.com. You can also find Price on Strategy Room at FoxNews.com.

Christopher Dodd Has to Go

I am not at all sympathetic of the plight of the automobile industry. The Big Three of Detroit have largely brought their terrible situation upon themselves through decades of bad decision making. In spite of this reality, I was offended when Senate Banking Committee Chairman Christopher Dodd (D-CT) informed the CEOs of Ford, Chrysler, and GM that if they wanted money for their companies, they needed to go. This is the same Christopher Dodd who has been on the Senate Banking Committee for years and oversaw the financial debacle of Wall Street that led to an $800 billion bailout at taxpayers expense. This is the same Dodd who has fueled record government spending for years that has led to our debt of trillions of dollars.

As chairman of the Senate Banking Committee, Dodd proposed a housing bailout on the Senate floor in June 2008 that would assist troubled mortgage lenders such as Countrywide Financial. Condé Nast Portfolio reported that in 2003 Dodd had refinanced the mortgages on his homes in Washington, D.C. and Connecticut through Countrywide and had received favorable terms due to being placed in what was later called the "Friends of Angelo" (Countrywide's CEO) program. Dodd received mortgages from Countrywide at allegedly below-market rates on his Washington, D.C. and Connecticut homes. Dodd has not disclosed the below-market mortgages in any of six financial disclosure statements he filed with the Senate or Office of Government Ethics since obtaining the mortgages in 2003. The Senator's home state Hartford Courant reported Dodd had taken "a major credibility hit" from the scandal.

If direct payment has influence, the problem is even more widespread. Countrywide has also contributed a $21,000 total to Dodd’s campaigns since 1997. Dodd has also received $70,000 in campaign contributions from Bank of America, which is buying Countrywide, in the last year-and-a-half before the Countrywide Financial loan scandal surfaced. Senators Barack Obama and Hillary Clinton are the only other Senators who have received more money from Bank of America than Dodd. However, no politician has received more contributions from Fannie Mae and Freddie Mac than Dodd's combined $133,900.

Marcus Cicero, when discussing the Roman Empire, said "the arrogance of officialdom should be tempered and controlled..." Dodd's throwing stones in a glass house and maintaining a straight face in the process, is arrogance at its height. Senator Dodd needs to go and should be a part of a serious "house cleaning" that should be seen in both the US House and Senate. It is true that, in the end, many familiar faces like Dodd would disappear. That would be a face lift the US could afford.

Kevin Price is a syndicated columnist whose articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media. Kevin Price is Host of the Price of Business (M-F at 11 AM on CNN 650) and Publisher of the Houston Business Review. Hear the show live and online at PriceofBusiness.com. Visit the archive of past shows here.

McCain Advocates "Trickle Up" Economics

As John McCain's chances for reelection appear to be dwindling, his desperation becomes more obvious in his policy proposals. During the second debate with Barack Obama, McCain argued how he hopes to see the $700 billion bailout be implemented. After all, it will be the next President who implements the vast majority of this program with only a few months left in the Bush Administration.

McCain proposed something that is far more likely to come from the mouth of a Democrat -- a very liberal Democrat at that -- than a Republican stalwart. McCain proclaimed that he wants a significant amount of the money to go to bailout those in foreclosure directly. If you are about to lose your home and are months behind, the government should step in and rescue you. This is certainly better than helping the Wall Street fat cats, right?

The problems that come from such a policy are numerous. Such a plan will spread the moral hazard so rampant today to the general consumers. You will find them falling into the false sense of security that, no matter how bad the decision one makes you will get bailed out.

Worse still, what type of message does it send to the vast majority of Americans that figured out how to pay their mortgage even with the sub prime problem? I am sure the government, with all of its brilliance, will create a window for which people who prove they have had late payments will be able to participate as well. I have said all along that this $700 billion is a down payment. We are looking at $1.5 trillion by the time we are through.

What about those who already lost their homes? Tough luck. This bill is all about timing, not fairness. Those poor souls will simply have to lament their loses.

This bailout is fundamentally wrong and very dangerous to the long term prospects of this economy. It has done little to positively effect the markets and does far more at raising questions instead of answering them. It has essentially led to the socializing of our banking system and has damaged the respect for risk that is necessary in maintaining a free market economy. Members of the House and Senate who voted for this bill will find themselves haunted by it.

Kevin Price articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media.

Kevin Price is Host of the Price of Business (M-F at 11 AM on CNN 650) and Publisher of the Houston Business Review. Hear the show live and online at HoustonBusinessShow.com. Visit the archive of past shows here.

Questioning the Constitutionality of the Senate Bailout Bill

I hate to bore the Congress with details, but there is a little passage in the US Constitution that could very well haunt the Legislative Branch if the House of Representatives passes the Senate bailout bill. Article I, Section 7 of the United States Constitution states that "All bills for raising revenue shall originate in the House of Representatives; but the Senate may propose or concur with amendments as on other Bills. " Simply put, the bailout package had to come from the House and the one that Congress is now considering is therefore, unconstitutional.

Modern practitioners of political science are dismissive of requirements such as this. They argue that, "this is a formality" or "a mere question of protocol," but has nothing to do with the substance of the Constitution. Reality? It has everything to do with the substance.

When the Founding Fathers developed our Constitution, they wanted the Legislative Branch to be broken into two Houses for reasons in addition to making sure large states and small states had fair representation. They also wanted to make sure that the government would be extremely deliberative about making changes in law. The US House of Representatives are up for reelection every two years and typically represent smaller populations than the Senate. They are closer to the people than the US Senate which faces reelection in six year cycles (and only approximately one-third at a time). This means the Senate can afford to take risks that the US House cannot usually take.

Proof is in the pudding. The US House took on this bailout bill earlier this week and voted against it. That bill was dead and a new bill needed to be created. According to the US Constitution, that begins in the US House. Instead the Congress is being driven by expediency instead of rule of law and they started from scratch (adding $100 billion more in the process) in the Senate where it passed in a body where many of the members have four years before they face reelection. That bill is now in the House and those members are now being told by the upper body to "jump in, the water is great."

Senators should have voted against the bill because of its unconstitutionality. US House members should now do the same, regardless of the merits of the bill itself (which are few, considering the costs). Unfortunately, discussions about constitutionality are relegated to law schools and not where laws are created. However, this cloud could follow these members to their reelection efforts or maybe all the way to the US Supreme Court.

Kevin Price articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media.

Kevin Price is Host of the Price of Business (M-F at 11 AM on CNN 650) and Publisher of the Houston Business Review. Hear the show live and online at HoustonBusinessShow.com. Visit the archive of past shows here.

Sizing Up the Vote Against the Wall Street Bailout

I was trying to have a business lunch while watching the US House of Representatives vote regarding the Wall Street bailout on TV. It wasn't easy. On the one hand, I wanted it to pass. I grew up with two parents who were raised during the Great Depression and the life they lived has had an impression on how I look at things. Generally speaking, I have denounced the philosophy of fear and scarcity that I grew up with, but when they spoke about the problems with banks and the fears of the Stock Market, I had to take notice. On the other hand, passage of this bill would be the abandonment of moral hazard on Wall Street and further promote a financial system growing out of control.

I was a little surprised that the bill didn't make it. I actually expected it to do more than squeak by, let alone crash and burn. It demonstrated how deep the angst of the American voters is and how great the fear is among members of Congress towards those voters. We have an election that is less than six weeks and the more vulnerable a member of Congress, the less likely he or she was going to vote for it. Clearly, many members rightly feel like they are in the cross hair of angry voters.

Most Republicans were making more than a "protest vote." Some felt that $700 billion being voted on in such a short time frame didn't make sense. What could be hidden in a bill that virtually no one had enough time to thoroughly understand it? Most feared there could be plenty and it gave Secretary of the Treasury Henry Paulson carte blanche authority for bailing out other financial institutions (including some outside of this country). Most Republicans wanted a proposal that didn't have taxpayers bearing the lion's share of the proposal. They wanted a system more like the Federal Deposit Insurance Corporation, where the banks have to pay a premium to protect their accounts. They offered a list of other reforms that would have dramatically reduce the final costs of the multibillion dollar bailout by hundreds of billions of dollars.

The Republican proposals didn't even receive serious consideration because they didn't offer quick or simple solutions, would require more pain on Wall Street (and also Main Street) in order to achieve long term reform, and simply didn't have the "panacea effect" that investors are looking for. The bottom line is that Wall Street and Washington wants average Americans to do the hard work that our politicians and financial institutions should be responsible for.

In the end, I'm glad that the House Republicans put the breaks on this proposal. Certainly, we need some type of bill to get us out of this situation, but it should be done with deliberation and not at the expense of future generations.

Kevin Price articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media.

Kevin Price is Host of the Price of Business (M-F at 11 AM on CNN 650) and Publisher of the Houston Business Review. Hear the show live and online at HoustonBusinessShow.com. Visit the archive of past shows here.

The 50 Richest Members of Congress Might Surprise You

Recently, while taking my boys to Scouts, I indulged in one of my favorite guilty pleasures -- listening to Michael Savage. I admit, I can't handle him in massive doses, but his depth of knowledge is amazing and his candor is off the chart. I often get the next blog idea from listening to his show. Tonight he spent some time discussing the 50 richest members of Congress (source: Roll Call). He focused on how these politicians (whom he referred to as "mobsters") were rich and planning on staying that way through the policies they perpetuate to bail out financial institutions. I will make a few different observations.

• The top ten may come as a surprise to many. Seven of the top ten were Democrats and not Republicans. This included number one, former Democratic nominee for President John Kerry (D-Mass). So much for the "party of the poor" mantra that the Democrats love to rally around. No wonder the American voters had a difficult time buying Kerry's case that he was "for the poor" and worth close to a quarter of a billion dollars ($230.98 million).



• Twenty-one of fifty are in the Senate, although the house out numbers them four to one. The Senate is a millionaires boys club if there ever was one, with one-fifth of them worth at least 7 digits. The list ends at 50, there are probably several more between $999K and $5 million (the bottom of the list) that are among these numbers.



• Some of the richest might surprise you. I would think most Americans had not heard of Jane Harman, Darrell Issa, Robin Hayes, Vern Buchanan, and Gordon Smith. Each are worth $28 million or more.



• Others are household names. John Kerry (mentioned before, the former Democratic nominee), Rockefeller (yes, from that family, a great grandson of the financial giant), and Edward Kennedy (who also enjoys family money).

The bottom line is that both Houses of Congress are homes of enormous affluence and neither party can accurately argue that they are some how "for" the poor because of their personal lives. The Democrats have been postured as the party "for the poor" by both their own communications and by the media for decades. The only true measure is in the policies they promote. And then it isn't money going to the poor or tax breaks for particular groups, it is measured by the impact policies have on poverty.

Ironically the best example of fighting poverty happened when both parties worked together. A Republican Congress and a Democrat President essentially wiped out "poverty as we knew it" by signing bills that put strict limits on how long one could be depended on government, which provided incentive for people to move towards higher incomes and work. As a result of that policy the percentage of poor has declined over the last decade after years of growing in number.

Kevin Price articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media.

Kevin Price is Host of the Price of Business (M-F at 11 AM on CNN 650) and Publisher of the Houston Business Review. Hear the show live and online at HoustonBusinessShow.com. Visit the archive of past shows here.

When it Comes to Iraq, Can the Democrats Afford Victory?

On the news this morning there is discussion of a bill in the US House of Representatives designed to put a deadline for US troop withdrawal from Iraq. I agree with many of those in the military that setting a deadline is the equivalent of providing important strategy information to our enemies. The logic is simple: if the enemy knows when we are going to leave they will know when to increase attacks (weeks up to withdrawal in order to make sure the US leaves). Congress forcing the President's hand in this way is paramount to treason, in my opinion.

Meanwhile, since the troop surge, violence has dropped significantly, areas are becoming more controllable, and people are cooperating with the US forces (including the turning in of terrorists). Everyone from the ground forces to the brass are reporting momentum in the right direction.

With each story indicating good news, the Democrats are getting more concerned. In fact, imagine what would happen to the Democrats, politically, if we actually won the war. They have invested in their rhetoric, policies, and positions in defeat. To win now would be devastating for Democrats, what a sad position for them to be in.

I'm not arguing that the Democrats lack patriotism, but rather that they have forced themselves into such a terrible position that can make them appear that way. We need to recognize the position they are in when they state their positions we develop our views accordingly. For me, I join the 57% of the population that doesn't want to leave without victory and I believe in our troops ability to meet that objective.