The Sound You Hear Is Obama Picking Your Pocket

Price control on wages then price controls on prices. Nixon tried it and ruined the economy. (See 1 below.)

The next sound you will hear is the government picking your pocket even further. After all, someone - you - has to pay for Obama's government health care coverage proposals.

At first it will begin with taxes on a host of things you consume and then the taxes will consume you. Welcome aboard the runaway inflation and tax train!


Soon government will tell you what salary you can earn, what air you can breathe and its cost. What doctor you can go to and when, eventually what books you can read. Obama's government has unilaterally abrogated bond indenture provisions, own most of America's car companies, control some of the largest banks and insurance companies. All of this is taking place under the rubric of change. You must read or re-read Orwell's "1984" and "Animal Farm" because you have begun living Orwell's predictions. (See 2 below.)

Red Alert from Stratfor re Iran election!

No one in the press or media and certainly not in the Obama administration will connect or attribute the Iranian vote with GW's rhetoric about those in the region hungering for freedom who, given the opportunity, are trying to throw off the yoke of their fascist totalitarian government. Yet, Iranians, because of technology (the internet, cell phones and TV) cannot be prevented from seeing what is going on next door in Iraq and aroud the world.

Iranians feel the economic deprivation imposed by their radical leadership, They feel the impact of their nation's isolation. In an objective world it cannot be denied the effect of GW's efforts and policies, poorly executed as many often were, cannot be disconnected from the Iranian vote.(See 3 and 3a below.)


Have a great weekend.

Dick


1) The New Wage Controls: One more sign that the levelers are now in charge

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The U.S. "market" economy took another hard-to-believe turn this week with the Obama Treasury appointing a "compensation czar" to dictate wage controls on private companies that take taxpayer money and offer guidelines for every other U.S. publicly traded company. Can wage and price controls for everyone be far behind?

The Treasury says that's not what it has in mind, but then much of what government has done in the past eight months would have been scoffed at even a year ago. Richard Nixon disavowed wage and price controls right up until the time he imposed them in 1971. The Obama Administration is hardly restrained as a matter of principle against such brute government force, and if prices start rising after our current Great Reflation, well, you read the warning here first.

Associated Press Obama 'compensation czar' Kenneth Feinberg.
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What's amazing is how little stir the new maximum wage edicts have created. Part of this is because Washington has the business class intimidated, and part is because much of the public thinks bankers deserve the retribution. "The financial crisis had many significant causes," said Treasury Secretary Timothy Geithner on Wednesday, "but executive compensation practices were a contributing factor. Incentives for short-term gains overwhelmed the checks and balances meant to mitigate against the risk of excessive leverage."

Mr. Geithner has a point, but his analysis also neatly avoids Washington's own role in encouraging "the risk of excessive leverage." Wall Street's compensation model of big bonuses for big risks has been in place for decades. How do you think Robert Rubin and Jon Corzine made fortunes at Goldman Sachs in the 1980s and 1990s?

What changed this decade is that Washington's housing policies and flood of easy money created a subsidy for credit, and especially for mortgage products, that encouraged bankers to take on even more debt and greater risks. The bankers were doing, in short, what Alan Greenspan and Barney Frank subsidized them to do. Blaming the bankers for making bigger money in the bargain is a political diversion.

Corporate boards and compensation committees could certainly have done a better job at any number of companies. But some of Mr. Geithner's statement of principles on pay are little more than the bromides that every compensation consultant has loaded in his PC for a corporate business pitch. Everyone agrees that "compensation plans should properly measure and reward performance." The question is how to do it. Government bureaucrats aren't likely to do this any better than directors who at least have some insight into the business at hand.

Mr. Geithner also wants compensation to "be structured to account for the time horizon of risks." Another terrific idea. But with some financial instruments having lifespans measured in decades, there are limits to that principle's real-world application. Yes, some firms paid big bonuses to traders whose bets later blew up, but we doubt they need a "pay czar" to tell them that this wasn't a great idea.

Treasury is also proposing more "transparency and accountability in the process of setting compensation," which is the mother of all bromides. The SEC under Chris Cox recently rewrote the public disclosure rules on compensation on precisely these grounds. The Obama Administration wants to go further and is proposing nonbinding requirements to give shareholders a "say on pay" for publicly traded companies. This is supposed to align shareholder interests with those of the executives.

But can shareholders really offer informed opinions on whether, given the nature of a company's business, prospects and competition, a particular executive deserves incentive pay with three-, five- or seven-year vesting periods; or whether the mix of restricted stock, options and other compensation is the "right" one? Say on pay is a hobby horse of the political left because it offers a platform to demagogue executive pay without doing anything about it.

Some in the White House may figure these measures will be enough to sate the political taste for revenge. But once you concede the principle that government should influence pay, it's hard to stop Congress from actually setting it. Mr. Frank has already declared that the Treasury guidelines don't go far enough, and one thing we know this Administration doesn't do is stand tall against Congress. Recall the AIG bonus mob.

The new pay limits betray once again that Washington's dominant impulse today is leveling and redistribution: Put caps on success, raise taxes on what you can't cap, and then give the money to someone else. None of this will encourage the entrepreneurial spirits we need for a buoyant economic recovery.


2)Democrats and the Health Tax Taboo: The president attacked McCain for proposing a benefits tax.
By KIMBERLEY A. STRASSEL

To understand why Sen. Max Baucus has taken so long to release his health-care reform, tune in to Oregon radio. That's where Mr. Baucus's fellow Democrat, Sen. Ron Wyden, has been flayed by unions for his own reform proposals.

"The last thing we need is to pay more," moans a radio ad aired by three labor outfits, including the National Education Association. It excoriates Mr. Wyden for daring to fund his plan with what has become liberal taboo: taxes on existing health-care benefits.

Mr. Baucus, the Finance Committee chairman who is helping lead the Obama health effort, is still deciding what to include in the bill. But his far bigger headache remains how to pay for this blowout. He and other Democrats have been inching toward the taboo benefits-tax, putting them on a collision course with liberal special interests like unions. Mr. Baucus's newest solution? A union payoff.

David Gothard .
The cost estimates for the Democrats' health-care reform have by now hit $1.5 trillion over a decade. Goodness knows the architects of this beast -- which they hope will include a new "public option" health entitlement -- have been creative in dreaming up ways to pay for it. In recent months, the administration and Congress have floated ideas to limit tax deductions, penalize soda-pop drinking, tax alcohol, tax salty foods, further raise the price of cigarettes, tax specific companies, charge for carbon, cut Medicare payments, or even implement a national sales tax.

In each case, Democrats have confronted the bitter reality that the proposed tax is too puny (Dr. Pepper tariffs), too doomed (cap-and-trade revenue), or too politically ugly (a sales tax). Contrast this with the tantalizing reality that requiring Americans to pay taxes on some part of the company health-care benefits they now receive for free could easily raise a half-trillion dollars over a decade. In a choice between a dozen niggling tax fights that could yield uncertain revenue, or a bigger fight over benefits taxes that could yield oodles, Mr. Baucus will take the oodles.

But for two small problems. The first is that about 99% of the Democratic Party is on record trashing the idea of taxing health benefits. Trasher-in-chief is none other than President Barack Obama, who mercilessly berated Sen. John McCain for proposing such a change during the 2008 campaign. "Apparently, Senator McCain doesn't think it's enough that your health premiums have doubled. He thinks you should have to pay taxes on them, too," ran one Obama ad. Republicans are, as you read, turning these words into crisp attack ads.

The Democrats' other problem is that the usual populist line won't fly. The party would like to be able to protect itself by saying that only those who now receive the most generous benefits will face taxes. Then again, the Americans who now have the Cadillacs (or, in these post-bailout-days, the Swedish sports car Koenigsegg CCXs) of health-care coverage are union workers. Union workers "would be stuck footing more of the bill than others," says Paul Fronstin, a senior research associate with the Employee Benefit Research Institute.

This was the big gripe back when President George W. Bush first proposed rewriting the tax code to equalize the tax treatment of employer-provided and individually purchased health care (albeit as a means of creating a market-oriented system, rather than funding a federal entitlement). In Michigan, home of the once-mighty auto workers, Sen. Debbie Stabenow growled in 2007: "There are 160,000 people [in Michigan] with excellent health insurance plans . . . who for the first time would end up paying taxes on them."

The attack against Mr. Wyden was an early shot across the Baucus-Obama bow, and it resonated. Mr. Baucus officially floated his plans for a tax this week, only with a surprising twist: His levy will not apply to union plans, at least for the duration of existing contracts. In other words, Mr. Baucus intends to tax the health-care benefits only of those who didn't spend a fortune electing Democrats to office. Sen. Ted Kennedy, who is circulating his own health-care reform, has also included provisions that will exempt unions from certain provisions.

The union carve-out is designed to allay the fears of many Democrats who remain outright hostile to a tax on health-care benefits, whether out of principle, political fear or union solidarity. Much will depend on the union reaction, which might remain ugly. Manufacturing unions in particular view their health-care benefits as sacrosanct, and even a delayed tax is still a tax.

The administration, for its part, is bobbing and weaving. Peter Orszag, Mr. Obama's budget director, said in a recent hearing that a benefits tax "most firmly should remain on the table," a comment immediately followed by White House assurances that, honestly, it hated the idea. Mr. Baucus also recently reported that the president remained open to the idea, a comment again instantly refuted from above. The president may well be attracted to the dollars of a benefit tax, but he's waiting to see if he can blame Congress for dragging him into it.

What is clear is that it is only now -- as details finally start


3) Red Alert: Iran's Election Results


The Iranian election is currently in turmoil. Both Iranian President Mahmoud Ahmadinejad and challenger Mir Hossein Mousavi are claiming to be ahead in the vote. Preliminary results from the presidential vote show Ahmadinejad leading; Iranian Election Commission chief Kamran Danesho held a press conference at 11:45 p.m. local time and announced that with some 20 percent of the votes counted, the president was leading with 3,462,548 votes (69.04 percent), while his main challenger, Mousavi, had 1, 425,678 (28.42 percent). Sources tell STRATFOR that these preliminary numbers pertain to the votes from the smaller towns and villages, where the president has considerable influence, as he has distributed a lot of cash to the poor.

However, Iran’s state-run Press TV is saying that only 10 million of 24 million votes, or around 42 percent of the vote, have been counted. At the same time, they are also claiming that 69 percent of the vote has been counted. Obviously the numbers are not adding up, and the agencies themselves appear to be in chaos.

Prior to the announcement of the results, Mousavi held a press conference in which he said he was the winner of the election. The opposition camp is greatly concerned about fraud, and STRATFOR has been told that Mousavi has vowed to resist any fraud, even if it entails taking to the streets. This means there is considerable risk of unrest should Ahmadinejad emerge as the winner. But so far there is no evidence that the government is mobilizing security forces to deal with any such eventuality.

The situation is being monitored carefully, as it is potentially explosive.

3a) Ahmadinejad wins second presidential term up to 2013


Tehran rules: Ahmadinejad is the winner. Mousavi claims election irregularities
With most of the votes counted, the election committee chairman in Tehran awarded president Mahound Ahmadinejad a 66 percent victory over his main reformist challenger Mir Hossein Mousavi's 33 percent with the remainder divided among the two last contestants in Iran's highly-charged presidential election. .

Earlier, Mousavi claimed to have toppled the president with 65 percent of the record-breaking turnout and alleged widespread irregularities. His disappointed supporters clashed with police in Tehran when the apparent results unfolded.

Turnout is estimated to top 80 percent of Iran's 46 million eligible voters. If the official results are confirmed, no run-off will be necessary.

Iranian sources report that the Islamic Republic's authorities appear to have swung into action to ensure the hard-line president's re-election and try and stop Moussavi, whose promise of change attracted many of the under-30s who make up three-quarters of the electorate.

The apparent freedom of debate permitted in the election campaign was held up in the West as denoting a certain easing in the regime's autocratic rule and a pointer to Mousavi's election which was heavily staked by the US administration, Western and Israeli media. DEBKAfile's Iranian sources report that in Tehran, the winner is preparing to raise the ante for consenting to dialogue with the parties who backed his rival.

While improving its image abroad, the authorities were accused by Mousavi's supporters of quietly preparing mechanisms to rig the results to make sure Ahmadinejad won the election in the first round.


Interior minister Sadeqh Mahsooli was accused of planting "mirror ballot boxes" at voting stations, pre-stuffed with mostly Ahmadinejad ballots ready to switch with the real ballots in precincts where opposition support was preponderant.

By not requiring voters to present photo IDs and running off more than a million fake IDs in Qatar for use by the hundreds of thousands of loyal "bassij" (voluntary militiamen), the Tehran establishment made it possible for a huge number of voters to cast ballots in more than one polling station and substantially pad Ahmadinejad's support.

The Iranian government also set up a vast number of mobile ballots where voters were not required to provide their addresses. In former elections, bogus votes were uncovered by comparing the numbers cast with the number of registered voters in a given precinct. This kind of supervision is ruled out by mobile stations.

Crucial policies are not determined by the president but by the clerical establishment headed by the supreme ruler and the president of Iran