Danny Davis Watch

Though he’s not excited about it, Congressman Davis has announced that he’s generally supportive of Obama’s plan to open up some coastal waters to oil drilling.

Even from an ecological standpoint, given that America will continue to consume oil for the foreseeable future (especially with Obama’s consumption-oriented stimulus plan in full bore), it makes more sense to drill within America’s stronger eco-guidelines than to import oil pumped under the lax rules of third world nations.

No, it won’t end our dependence on foreign oil, but if companies are willing to drill for it, this off-shore oil is certain to benefit the country, and Davis is right to support access to it.

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If you want to understand just how twisted Congressman Davis’ economic views are, his recent appearance on Fox News’ Your World with Neil Cavuto is a great introduction.

In the interview, which discusses the “Jobs Bill,” Davis makes the following outlandish arguments:

1. Not passing the bill would mean the government is “hoarding” money from the economy

Davis has said this before, and it’s patently ridiculous. Our government is currently running both the highest debt and highest deficit in our country’s history. For decades, we have been operating at the extreme polar opposite of “hoarding” — spending all of our all savings as well as some of the savings of other, poorer countries. By contrast, countries that could truly be considered as hoarding money (such as China, India, Brazil and Singapore) have economies that are continuing to grow.

2. Not giving jobs to the unemployed will cost the country more in care for these people

This might be true if Davis was talking about eliminating barriers to productive employment, but he’s not. The kind of stimulus programs Davis has largely supported have been the kind that rely on money “trickling down” to those in need, usually through corporate sectors like the automotive, real estate — and recently — coal freight car manufacturing industries. It would actually be cheaper — and more humane — to simply give the money directly to the needy (through either tax cuts or stimulus checks), rather than making them toil at an artificial job for a small cut of the cash.

News, Prosperity Issues Fiscal Policy

Congressman Davis appeared recently on the “Public Affairs” program and spoke with host Jeff Berkowitz on a range of issues. The interview was a fairly interesting one, even getting a tad heated at moments. You can view the 30-minute video below:

Danny Davis – Public Affairs

The topics covered were as follows:

0:50 The Illinois Democratic Primary and Davis’ challengers

1:57 Rod Blagovich’s rejected Senate seat offer to Davis

3:10 The Cook County Board presidential race and why Davis dropped out to run for reelection

4:55 Davis’ position on the House Ways and Means Committee

5:10 Funding for local community health centers

7:38 Todd Stroger and the Cook County sales tax hike

9:55 Davis’ endorsement for the Cook County Board race

11:15 The health care debate

14:00 The effects of the stimulus spending and jobs in the 7^th district

19:45 Education in the 7^th district, charter schools, and school vouchers

24:55 The repeal of the Glass-Steagall Act

26:00 Obama’s Afghan troop surge

27:00 The Wall Street Bailout

27:43 Davis’ controversial trip to Sri Lanka

Overall, Berkowitz did a good job of interviewing Davis and holding his feet to the fire, even when Davis tried to dodge on questions about his positions on the Cook County sales tax hike and charter schools in Chicago.

However, Berkowitz also seemed insistent on pinning some of the blame for the failure of Chicago public schools on Davis, to which the congressman rightly replied “Talk to the people who run the schools!” Indeed, public schools are largely run at the local, not federal, level.

Berkowitz also repeated tried to frame Davis’ congressional actions in a “how has this benefited the 7th?” mindset, to which Davis again appropriately countered by saying that his voters cared about the country as a whole. (I certainly do).

However, it certainly wasn’t all wisdom flowing from Davis’ lips. When the discussion came around to Obama’s proposed Afghan troop surge, Davis offered lukewarm criticism of the troop increase, but then consoled himself with the following:

“The one thing I did agree with – that I really liked – was the fact that President Obama says, ‘We’re going to go in here, we’re going to have a surge, and we’re going to start pulling out at a time certain.’ I hope that that does in fact work, but I’m not enthralled with the fact that we’re sending 30,000 additional troops.”

Unfortunately, as Glenn Greenwald has pointed out, statements by Secretary of State Hillary Clinton and Defense Secretary Robert Gates have directly contradicted Obama’s promise of a fixed withdrawal date.

Things then went further down hill with Davis justifying his trust in the Commander in Chief by saying, “It’s possible that President Obama may have known something that I didn’t know.”

Of course, Congress’ role is not to trust that the president “knows best” but to act as a check and balance. Furthermore, can anyone imagine Davis applying the same logic while Bush was still in office?

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While Danny Davis may want to encourage Americans to go further into debt by replacing their working used vehicles with new ones, the folks over at the the Onion know what car is truly right for the country.

Ford Unveils New Car for Cash-Strapped Buyers: The 1933 Taurus

And I write this as someone who has never owned a vehicle newer than fifteen years old and who currently owns no vehicle at all (meaning I never qualified for Davis’ “cash for clunkers” boondoggle).

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Public Enemy Number One, to hear Danny Davis tell it

On occasion, Congressman Davis has been a good champion for some causes, but economics has never been his forte, and he proved that all too well this Tuesday on Fox News when he insisted that the government has been “smothering” the economy by not spending enough.

“If you hold your fist too tightly, and nothing goes out, nothing comes in. And ultimately, you smother whatever is in there to death,” Davis said.

But is that really the case?

The federal government is currently running the highest deficit in history, $1.36 trillion, and counting the shortfall in Social Security, it has been running deficits for most of the past several decades. Personal savings in the U.S. have been falling since the 1980s, and the debt accumulated by corporations like GM and AIG is now legendary.

Despite all this very un-tight-fisted spending, America is now facing an enormous economic crisis.

By contrast, China, which has had the highest personal savings rate in the world since 2000 and whose government holds the world’s largest foreign reserves, has shown double-digit economic growth for decades, despite the “tight-fisted” attitudes of its citizens and government.

Why is this?

It’s because the Chinese have been spending their money in a better way than us. They’ve been saving it.

In the modern world, all savings is actually spending. When money is saved in a bank or in a stock or bond market, it gets invested in the economy to produce things like machinery, bridges, and college educations. This creates jobs, expands the economy, and makes society wealthier.

In the U.S., however, money goes increasingly not towards investment but toward consumption. When Americans aren’t being deterred from saving by government-slashed interest rates, politicians like Congressman Davis tax them and “invest” their money in failing car companies, worthless housing stock, and ongoing wars. But real investments always produce something more, not something less. The spending that the Danny Davis’s of the world are perpetuating is just more wasteful consumption masquerading as investment.

Consumption destroys wealth, and when wealth is destroyed, there is less left for everyone, including the government, to spend.

So, if Congressman Davis really wants to point the finger at someone for being too tight-fisted on spending, all he really ought to do is find the nearest mirror.

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Despite his continued cries that more money be spent on health care, Congressman Danny Davis announced yesterday that he will attempt to make less of that money available by supporting an extension of the first-time home buyer tax credit. The current credit has given up to $8,000 to qualified first-time buyers to purchase homes. “Qualified” buyers has included those who earn up to $150,000 a year individually or $300,000 a year jointly. Those who are too poor or whose credit is too weak to purchase a home get zero assistance under the program.

The problems with the credit are legion, but here’s a short summary of some of the major one’s that apparently didn’t faze Davis during his decision making.

Low- or no-down payment mortgages were one of the major contributing factors to the housing crisis, yet the tax credit allows this same practice to continue. Since the credit can be used toward down payments, it can be combined with products like the 3.5% down FHA loan to effectively purchase homes with zero money down, just like at the height of the risky lending frenzy. This means that the credit may just be fueling another real estate crash down the road – not mending the current crisis.

The credit does little if anything to solve the cause of the housing crisis. Home prices are falling because there is too much housing and too few people. By convincing people to stop renting and buy homes instead, the credit simply replaces an empty house for sale with an empty house for rent. As vacant rental units rise, rents will drop, as they already are, motivating fewer people to buy homes and therefore undermining the effect of the credit.

The program spends a lot of money to accomplish very little. According to the real estate lobbying group the National Association of Realtors (which supports the tax credit) the vast majority of those who take advantage of the credit would have purchased a home anyway. Taking these numbers into account, the estimated cost to create one extra home sale with the credit is $43,000. If the credit is extended, the price tag will rise to $258,000 per home.

The program helps many of those who need no help. As stated above, the tax credit can be claimed by individuals who earn up to $150,000 a year – hardly the kind of people who are suffering economic hardships. A cut of the money will also go to real estate agents and mortgage brokers, two of the very groups that helped create the crisis in the first place. The IRS is also currently examining 100,000 cases of possible fraud concerning the program, including $4 million in credits claimed by children under 18-years-old, another source of significant waste.

The credit encourages more people to go into debt. By definition, most first-time home buyers are renters who have no mortgage. By encouraging them to stop renting and take on home loans, the program is incentivizing debt. This could also have disastrous effects for the economy down the road if new buyers are unable to keep up with their loan payments.

The program may be bad for the environment. As Harvard economist Edward Glaeser recently wrote about the credit, “Federal tax policies toward housing have long encouraged Americans to emit more carbon. President Obama could do the country, and the planet, a service by either refusing to sign the extension of the $8,000 credit or by insisting that it be accompanied by offsetting reductions in the home mortgage interest deduction.”  The The New York Times has also written on how housing subsidies contribute to carbon emissions.

All told, the first-time home buyer credit, like the “cash for clunkers” program Davis supported, does very little and helps those who need very little helping in the first place. What’s particularly bizarre is that Davis supports tax credits for programs like this, yet despite his stated concern about health care, he hasn’t bothered to cosponsor the Child Health Care Affordability Act, which would provide tax credits for children’s health care. Surely that would be a better use of limited resources than new houses and new vehicles.

If you’d like to help Congressman Davis see the light on this issue, contact his office and politely ask to have Davis reverse his position on this program. If Davis does correct his stance, we’ll be the first to give him credit here.

Update: Davis, disappointingly but predictably, has voted “yea” on the tax credit extension as part of H.R. 3548. By the estimate on his own website, the extension will cost $10.8 billion over ten years, an amount of money that could have given private health insurance to 430,000 people for the same period of time. Unbelievable.

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Congressman Davis appeared on The Rachel Maddow Show recently, lending his voice to the criticism of conservatives who celebrated Chicago’s failed bid for the 2016 Summer Olympics.

Maddow and Davis arguably had the saner argument against those who have tried to label Obama as a “failure” for his inability to sway the Olympic Committee into awarding Chicago the games. (That Obama managed to successfully negotiate landmark concessions from Iran on their nuclear program in the same week didn’t seem to register with some).

Disappointingly, however, though Maddow briefly noted that “not everyone in Chicago” supported the bid, Davis never mentioned the many undeniably “progressive” arguments that were made against bringing the games to Chicago. To hear him tell it, only those on the Right were happy to see the games skip Chicago, when in reality, that was hardly the case.

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Having voted this year to encourage used car owners to take out private loans to buy new cars (the “cash for clunkers” program) and to encourage renters to take out private loans for new homes (the first-time home buyer tax credit), Davis issued a release on Tuesday reporting that he is “concerned” about a growing trend — students taking out private loans for college.

According to Davis, “The study by the Project on Student Debt raises concerns for education policymakers because it shows a dramatic increase in students’ use of private student loans that often lack important consumer protections, even when federal loans that include such protections are available.  For example, private student loans typically have variable interest rates, lack options to make payments manageable (e.g., deferment, income-based repayment), and are almost impossible to discharge via bankruptcy.”

What the release doesn’t mention is that the difficulty in discharging private student loans through bankruptcy is an intentional government policy designed to encourage lenders to lend more money to students. Without such strict standards, there would be fewer private student loans available to the students who wanted them.

However, Davis goes on to say, “Congress should restore bankruptcy protections afforded to private student loan borrowers similar to those protections afforded to other unsecured debtors…”

If this is his intention, it would certainly mean greater protection for student loan recipients, but at the cost of reducing student ability to take on debt. We’ll have to wait and see if Davis truly follows through with this proposal. After all, if there’s one thing the Congressman seems to love, whether it’s for new SUVs or old wars, it’s more debt.

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With the national debt rocketing past $11.6 trillion, Congressman Davis and other members of the Congressional Black Caucus recently released a letter to President Obama and Speaker Pelosi mocking the “spurius claim” by some Democrats that our nation cannot afford Obama’s proposed health care plan.

“Spurious?”

Does Congressman Davis know something we don’t?

U.S. Government Stages Fake Coup to Wipe Out National Debt

Freedom Issues, News, Prosperity Issues Fiscal Policy, Health Care

In another demonstration of how low health care, fiscal responsibility, and personal freedom are on Congressman Davis’ priority list, he voted yesterday to approve an additional $2 billion to help people who already own cars buy new ones. That amount of money could have bought health insurance for 800,000 people (the population of San Francisco) for one year at the average Illinois individual market rate. Instead, if this measure passes the Senate as well, that money will be gone forever.

The $2 billion will go to the “Cash for Clunkers” program, which rewards buyers with a discount of up to $4,500 for trading in old vehicles for new ones with higher MPG ratings. The program had exhausted its initial $1 billion in funding, which Davis voted for as part of this bill, just days after commencing.

While supporters of the program have claimed it benefits the environment, that claim is only weakly supported by the program’s actual terms. For example, under the plan, a driver who trades in a 16 MPG Hummer for a brand new SUV that gets a marginally better 18 MPG can apparently receive a rebate of up to $3,500. Furthermore, these discounts give personal vehicles an unfair advantage over already disadvantaged mass transit systems such as Chicago’s CTA.

Another cause that doesn’t benefit from this program is that of America’s working poor. Those who don’t own a vehicle, own one that already gets high mileage, or can’t afford to buy a new vehicle even with a rebate, get little or no help under the Cash for Clunkers program.

Sound ridiculous? It’s all in a day’s work, apparently, for Illinois’ 7th District “progressive” Democrat congressman.

Update: A recent report by Edmunds.com has concluded that because so many “cash for clunkers” sales would have happened anyway, the total price to taxpayers for each new car sale created by the program was $24,000.

The Mises Institute has also pointed out that the program’s destruction of used cars contributed to an increase in the cost of living in October.

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