Free Frank Warner

How Senate health-care bill invents $358 billion

James Pethokoukis on the Senate health-care bill, mislabeled the Patient Protection and Affordable Care Act:

The act would reduce Medicare spending on hospital stays by $245 billion from 2010-2019, while increasing tax revenue by $113 billion. So on paper, Medicare’s hospital insurance trust fund would be some $358 billion to the better, boosting its long-term solvency. But the government then takes that $358 billion and uses it to pay for increased, non-Medicare healthcare spending — leaving $358 billion worth of IOUs in the Medicare trust fund. If not for that $358 billion shift, the act would worsen the deficit by $226 billion over the next ten years.

It’s a clever trick that takes advantage of the CBO’s treatment of both the Medicare and Social Security trust funds as essentially off-balance sheet vehicles.

It is a disgrace that members of Congress keep feeding us fraudulent accounting. Now they’ve even figured out how to turn the once-respectable Congressional Budget Office into the Congressional Bulls--- Office.

Magic act. You steal $358 billion from Medicare, give it to the new health care program, and leave a piece of paper in Medicare saying the money will be paid back. Under the new Bulls--- accounting, that transaction puts $358 billion in new health care and, even though it’s only a promise, appears to leave another $358 billion in Medicare.

Presto! $358 billion out of thin air. It’s just this type of accounting that already has Medicare operating deep in the red, and has emptied the Social Security “Trust Fund” of $2 trillion that should be there.

Congress regularly takes advantage of the fact that the press is simply unable to handle math that takes more than two sentences to explain. Throw in the accounting jargon, and the bamboozlement is complete.

Frank Warner

Fannie Mae and Freddie Mac mislabeled high-risk loans as safe and secure

The Wall Street Journal reports how government sabotaged the economy by pushing Fannie Mae and Freddie Mac to buy or guarantee more than $1 trillion worth of bad home loans between 1993 and 2008.

Peter Wallison writes:

There is more to this ugly situation. New research by Edward Pinto, a former chief credit officer for Fannie Mae and a housing expert, has found that from the time Fannie and Freddie began buying risky loans as early as 1993, they routinely misrepresented the mortgages they were acquiring, reporting them as prime when they had characteristics that made them clearly subprime or Alt-A. ...

It is easy to see how this misrepresentation was a principal cause of the financial crisis.

Market observers, rating agencies and investors were unaware of the number of subprime and Alt-A mortgages infecting the financial system in late 2006 and early 2007. Of the 26 million subprime and Alt-A loans outstanding in 2008, 10 million were held or guaranteed by Fannie and Freddie, 5.2 million by other government agencies, and 1.4 million were on the books of the four largest U.S. banks.

In addition, about 7.7 million subprime and Alt-A housing loans were in mortgage pools supporting MBS issued by Wall Street banks--which had long before been driven out of the prime market by Fannie and Freddie’s government-backed, low-cost funding. The vast majority of these MBS were rated AAA, because the rating agencies’ models assumed that the losses that are incurred by subprime and Alt-A loans would be within the historical range for the number of high-risk loans known to be outstanding.

But because of Fannie and Freddie’s mislabeling, there were millions more high-risk loans outstanding. That meant default rates as well as the actual losses after foreclosure were going to be outside all prior experience.

Meltdown Barney. All of this was encouraged actively by Congressman Barney Frank. The losses are over $100 billion and could reach $1 trillion in a hurry.

The injustice is that Frank was re-elected easily last year as his time bomb destroyed the financial markets. Congressman Christopher Shays, who tried to stop the abuse, was defeated in his re-election bid.

Frank Warner

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See also: THE HUSHING: 5 years ago, Democrats told Fannie-Freddie watchdog to shut up about financial risks.

Democrats discover the daunting task of keeping us safe

For seven years, partisan Democrats accused President Bush of exaggerating the danger of terrorism as an excuse for such measures as cell-phone surveillance and the open-ended jailing of combatants.

In the last six days, the Democrats saw what Bush was up against, battling an unrelenting enemy and ducking domestic political potshots at the same time.

Since Sept. 11, 2001, the public has demanded that American civilians be 100 percent protected, and that the government do this with little inconvenience to the public. Bush accomplished his nearly impossible mission. Now Obama has to repeat or go down as a failure.

Test of competence. Suddenly, the president is noticing that it’s neither safe nor sensible to treat Islamist terrorism as a criminal matter to be dealt with by civilian courts. The courts can’t fight wars.

Farouk, the pants bomber on the Northwest flight to Detroit, made the Christmas wake-up call, even if the waking up took three days. With the Democrats’ competence now in question, we saw a Capitol Hill lockdown yesterday and the Times Square evacuation today.

There’s no doubt a wartime government will grab for every tool, even those that violate peacetime constitutional rights, in pursuit of the goal of zero civilian deaths. There’s no doubt, either, that the government occasionally will overreach.

LIfe and liberty. This is why each wartime program that challenges privacy, due process or any other constitutional right must be reviewed actively and regularly by all three branches of government, and by the free press.

There is a war on. Now it’s up to the Democrats in charge to make sure we win with our rights intact. As they’re beginning to learn, opposing a terrorist jihad wasn’t easy for Bush, and it won’t be easy for them.

Frank Warner

Farouk, the pants bomber, had 287 Facebook 'friends,' but was 'lonely'

Umar Farouk Abdulmutallab had 287 Facebook "friends." In January 2005, he wrote in an Internet forum that he was "lonely."

Funny, Kim Jong-Il also has 287 Facebook "friends."

Frank Warner

Iran's dictator may move to Russia

Iran's brutal theocratic dictatorship is killing Iranians who are demonstrating for their right to be free. It's criminal, and it's bad timing:

“Killing Muslims on Ashura is like crucifying Christians on Christmas.”

There already are reports top dictator Ayatollah Khamenei is so nervous he's booking tickets to Russia. Let's hope the Iranian army gets fed up and makes Khamenei's trip necessary.

Frank Warner

History of Climategate

Download the file, and discover for yourself 30 years of secrets in this science mystery. Then check the facts.

Frank Warner

Secret war in Yemen

Even General David Petraeus has been to Yemen this year. And if I had to pick a likely spot for Osama bin Laden’s current home, Yemen would be my second guess.

Al-Qaida’s Anwar Al-Alawki is there. Now the U.S. is looking for him (and may have killed him). Yemeni airstrikes against al-Qaida in the last two weeks were carried out based on U.S. intelligence.

This Islamist jihad ideology is turning out to be much like Communism in the Cold War. It’s deadly. It’s stupid. And it’s all over the place.

Frank Warner

TMZ says it has 1956 photo of John Kennedy with naked women

TMZ says the 1956 photo of JFK on a boat with naked women swimmers could have changed world history. Like how much?

I guess we'd have avoided the depression of the Kennedy assassination, but Lyndon Johnson probably would have become president four years earlier. Vietnam? No change there.

Who took this picture? Yeah, it looks real, but color me skeptical.

Frank Warner

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Update: It's a fake. The basic picture was taken by Playboy in 1967, and JFK's head was superimposed later.

Iran exploding: ‘Down with the dictator!’

Something big is going on in Iran. It’s a war, and the small-d democrats seem to have all the moral power on their side. The other side is trying desperately to justify itself as heaven-sent, even as it presses its criminal cause.

The theocratic government now is assassinating relatives of its most influential opponents, but it is quickly watching its last claims to legitimacy disappear. As the ayatollah and his thugs step up their brutality, the question is, will the people cower in fear or will their righteous anger bring even the army to the side of liberation?

Oddly enough, while many are calling on President Obama to shout out some words of encouragement to Iranian freedom-fighters, it might be just as well that he keeps his mouth shut.

Sit back. Unless we’re going to act, why talk now? The Obama You’re-On-Your-Own Doctrine makes some sense.

Frank Warner

President Obama’s passive contradictions upset ‘the Left’

David M. Green, a Hofstra political science professor:

Did this clown really say on national television that “I did not run for office to be helping out a bunch of you know, fat cat bankers on Wall Street”?!?!

Really, Barack? So, like, my question is: Then why the hell did you help out a bunch of fat cat bankers on Wall Street?!?! … Why did you allow them to open a Washington branch of Goldman Sachs in the West Wing? …

Are you going to tell us that “I did not run for office to be shovel-feeding the military-industrial complex”? But what they’re just so darned pushy?

“...I did not run for office to continue George Bush’s valiant effort at shredding the Bill of Rights. It’s just that those government-limiting rules are so darned pesky.”

“...I did not run for office to dump a ton of taxpayer money into the coffers of health insurance companies. It’s just that they asked so nicely.”

“...I did not run for office to block equality for gay Americans. I just never got around to doing anything about it.”

“...I did not run for office to turn Afghanistan into Vietnam. I just didn’t want to say no to all the nice generals asking for more troops.”

Sometime early in the Obama administration, reality collided with illusion, and so far, it appears the president has chosen to go with both.

This upsets people.

Frank Warner