Where are all the jobs?

By Jennifer Rubin

The July 2011 unemployment numbers are out. The Wall Street Journal notes: “Nonfarm payrolls rose by 117,000 last month as private-sector employers added 154,000 jobs, the Labor Department said Friday. Payroll data for the previous two months were revised up by a total 56,000 to show increases of 46,000 jobs in June and 53,000 in May. The unemployment rate, which is obtained from a separate household survey, dropped to 9.1% last month from 9.2% in June. That still leaves almost 14 million Americans who would like to work without a job.” Moreover, “The jobs report Friday showed 44.4% of unemployed Americans, or 6.2 million people, were out of work for more than six months in July.”

To put this in context, Matt McDonald, a former Bush administration aide and now a communications and governmental affairs consultant, has crunched the numbers and found that in order to get down to 8 percent unemployment by Election Day, we would have to add 272,000 jobs per month. To get down to 8.5 percent, we would need 220,000 jobs per month. There is no indication whatsoever that we are generating jobs anywhere near those amounts.

Each of the presidential contenders is out with a statement blasting the president’s record on jobs. Rep. Michele Bachmann (R-Minn.) had a long statement, including this: “This week the President announced that he would again pivot to focus his attention on jobs. We can only hope he will pivot away from his failed economic policies that have killed growth and put millions of Americans out of work.” Mitt Romney had this: “Today’s unemployment report represents the 30th straight month that the jobless rate has been above 8 percent. The administration promised with their $800 billion stimulus that they would keep unemployment below that number. When you see what this president has done to the economy in just three years, you know why America doesn’t want to find out what he can do in eight.” Jon Huntsman struck a similar theme: “The President has had 2.5 years to turn around the American economy and it is clear he has failed. In less than one day, Americans have witnessed a considerable drop in the stock market and yet another jobs report showing an unemployment rate above 9%. . . . America needs a President who knows how to create an economic environment that allows entrepreneurs to thrive and create jobs. This country will never realize its true economic potential until we enact tax cuts, implement regulatory reform and move toward energy independence.”

Aside from the obvious political peril in which President Obama finds himself, he has a serious policy problem. His itty-bitty job ideas (e.g., patent reform) are laughable. And he keeps telling us that he wants the supercommittee to raise taxes. That seems ludicrous as the economy sputters.

Won’t the weak economic and high unemployment force Obama to quash tax-hike rhetoric? Brad Daypsring, spokesman for House Majority Leader Eric Cantor (R-Va.) isn’t very optimistic on that front. He e-mailed: “It hasn’t stopped him from trying thus far, despite two dozen claims of ‘pivoting to jobs.’ The only period in which the President appeared to stop pushing for tax hikes was between election day 2010 and the New Year.” He explains: “People understand the disingenuousness of the President’s class warfare rhetoric, and understand that when he says ‘millionaires and billionaires,’ he is actually talking about small business owners, entrepreneurs, families, and people making over $200-250,000 per year. The President can’t ‘pivot to jobs’ and then tie the hands and penalize the very people that he expects to create them.”

As to whether Obama will shed his tax-hike fetish, Don Stewart, communications director for Senate Minority Leader Mitch McConnell (R-Ky.) says, “We agree with what the President has said about how a recession is the wrong time to raise taxes, and with what he said in December: lower taxes mean more opportunities for job creation. So if you care about job creation, this is the wrong time to be raising taxes.”

But, for now, the White House has, to put it mildly, a messaging problem. After two and a half years of claims by the White House that Obama “saved or created” millions (!) of jobs, press secretary Jay Carney, now insists, “The White House doesn’t create jobs . . . the government, together — White House, Congress — creates policies that allow for greater job creation.” Well, the White House isn’t doing that either.

Yes, the jobs numbers could have been even worse, but they are bad enough. And Obama has a huge political and policy challenge, namely how to make the economy much better very fast while disclaiming responsibility for the dismal jobs picture.

Why I Voted Against the Debt Deal

By Tom Coburn, Published: August 2

The good news out of the debt debate is that Washington is now debating how much we can cut instead of how much we can spend. The American people deserve all the credit for forcing that change. Unfortunately, it’s still all talk in Washington. This deal is a victory for politicians but a defeat for families.

In spite of what politicians on both sides are saying, this agreement does not cut any spending over 10 years. In fact, it increases discretionary spending by $830 billion.

I voted against this agreement because it does nothing to address the real drivers of our debt. It eliminates no program, consolidates no duplicative programs, cuts no tax earmarks and reforms no entitlement program. The specter of default or a credit downgrade will still hang over our economy after this deal becomes law.

Politicians on both sides are misleading the country by calling a slowdown in the growth rate of new spending a “cut.” Spending will increase at a time when real cuts are necessary to make us live within our means, repair our economy and preserve our credit rating.

It is true that next year there will be a genuine cut of $7 billion when discretionary spending drops from $1.05 trillion to $1.043 trillion. But with our government borrowing $4.5 billion a day, that $7 billion is enough to fund the government for about 36 hours. And after our day and a half of restraint, spending will increase $830 billion over 10 years.

Supporters say the real savings will come when the joint committee the deal empowers makes recommendations to reduce the deficit by at least $1.2 trillion (as we increase the debt limit by the same amount). But the enforcement mechanism designed to force these hard decisions — across-the-board cuts to defense and nondefense programs — will never work. Congress will easily evade these caps. In the Senate, all it will take is 60 votes — the threshold for passing anything. Some have complained about defense cuts, but everyone in Washington knows those cuts can be avoided through supplemental or “emergency” spending bills.

I proudly served on the president’s debt commission and spent months negotiating with senators of both parties in the Gang of Six. But I took a break from the Gang of Six because we were not offering enough savings, especially in entitlements, to heal our economy. And the truth is that the joint committee is likely to be a step backward from the Gang of Six and the Bowles-Simpson commission.

I am the first to admit that, with this plan, the commission process in Washington has become a farce. The plan’s joint committee has been called a “super” committee because it is anything but.

For our country’s sake, I hope I am wrong. Nothing prevents the congressional committee from recommending deficit reduction far in excess of $1.2 trillion. For that to happen, however, both sides will have to sacrifice their sacred cows and embrace real entitlement reform and tax reform.

Experience has taught me that to achieve real savings, there is no substitute for being specific. In Washington, however, wide is the road that leads to pledges, commissions and caps, and narrow is the road that leads to cuts. That’s why I have targeted specific excesses such as the “Bridge to Nowhere” and the ethanol tax earmark. It’s why I recently released a 620-page report, “Back in Black,” that makes hundreds of recommendations and calls for $9 trillion in deficit reduction. Congress could spend a year eliminating no-brainer examples of waste and duplication, such as our government’s policy of directing unemployment benefits to millionaires.

I understand that Congress is not ready to accept $9 trillion in deficit reduction even though changes of that magnitude are necessary to heal our economy. Congressional leaders are probably correct that this is the best deal they could have gotten. The only recourse the people have, then, is to elect lawmakers who will produce better results.

I was among the first members of Congress to call for using the debt-limit debate as leverage to force spending cuts. I’m glad I did. Even though the cuts didn’t materialize, the debate informed the American people of the scope and magnitude of the problem.

The real debt crisis is not a debate that has been imposed on Washington by Tea Party activists. It is a crisis Washington has imposed on the American people through laziness, incompetence, dishonesty and political expediency. Politicians can talk all they want about how they did something to address the problem. But when the flaws of this plan become apparent, another change election will be coming.

The writer is a Republican senator from Oklahoma.

Spending = The tax burden

By Jennifer Rubin

In the Wall Street Journal yesterday, economist Michael Boskin reminded us: “As Milton Friedman taught decades ago, the true burden on taxpayers today is government spending; government borrowing requires future interest payments out of future taxes.” Or as my brother-in-law likes to say, “The amount you spend is the effective tax burden.”

This explains the frustration among the Democrats: They set the course by piling up the spending, and now Republicans are refusing to do their part, that is, collect the tax necessitated by all that spending.

Jim Pethokoukis has it right when he observes:

Big Taxes to fund Big Government. Decade after decade. See, it’s an almost universal belief among left-of-center journalists, economists, policymakers and politicians that Americans must pay higher taxes in coming years to cover the medical expenses of its aging population — not to mention all sorts of brand new social spending and green “investment.” Dramatically higher taxes. On everybody. And if we have a debt crisis, maybe those tax increases come sooner rather than later.

And conversely, the connection between high taxes and big government is precisely why conservatives are so adamant about not raising taxes. Every dollar obtained by a tax hike is a dollar not cut from federal expenditures.

So it is not simply that conservatives fear an increased tax burden will hobble the economy. It is not simply that the prospect of a double-dip recession increases their determination to protect employers from additional tax burdens. The root of their concern here is that the huge uptick in discretionary spending and a new entitlement (ObamaCare) will become permanent fixtures unless they stand firm on tax hikes.

This is a perfectly legitimate battle between the two parties. The Democrats want bigger government and are willing to tax Americans, regardless of economic conditions, to keep it as big as possible. The Republicans want smaller government and are unwilling to provide the taxes to fuel an expansion of federal power. Unfortunately for the Democrats, poll after poll shows the public would rather have smaller government with fewer services and fewer taxes than bigger government with more services and more taxes. And that is precisely the issue on which the Republican presidential nominee and Republican House and Senate candidates will run on in 2012. It is the foundation of the Tea Party movement. And, at least for now, it is a winner with critical independent voters.

Does Bachmann’s gender matter?

By Jennifer Rubin

The hardest stories to cover in politics are the dogs that don’t bark, that is figuring out why something isn’t happening. When it comes to Rep. Michele Bachmann (R-Minn.) the dog that isn’t barking, at least not yet, is her gender. Hillary Clinton’s campaign was “historic,” and the press thrilled to story after story about the potential for a woman president. Supreme Court Justices Sonia Sotomayor and Elena Kagan were likewise hailed as models of feminist achievement. But there is scant mention of the fact that a Republican woman, emphasis on woman, is zooming to the top of the polls in Iowa and may be the first GOP woman ever to win a caucus or primary.

That doesn’t mean her gender doesn’t matter. To the contrary, the sneers that greeted her announcement that she was running, and the propensity to lump her in with Sarah Palin (two conservative women must be two peas in a pod, right?), suggest that, at least in the mainstream media, gender politics and bias are very much alive. When GOP consultant Mike Murphy took to Twitter during the first debate to slam Bachmann’s appearance, we knew that the double standard for evaluating candidates is alive and well. Vin Weber, a Tim Pawlenty supporter, had to apologize after referring to Bachmann as “sexy,” a remark Bachmann cheerfully let roll off her back. But Bachmann as a role model or as a breakthrough in the GOP, which liberal pundits insist remains “anti-woman,” is not a story that’s drawn coverage, even in the conservative media.

Doug Sachtleben, a spokesman for the campaign told me, “Congresswoman Bachmann doesn’t make it about gender or herself. This election is about the need for a constitutional conservative in the White House. The best candidate happens to be a woman.”

Some observers agree that it has to do with Bachmann’s decision not to run as a gender-identity candidate. Gail Heriot, a professor at the University of San Diego law school and a member of the U.S. Commission on Civil Rights, thinks the rules are different for Republican women. “Bachmann hasn’t yet won a primary, so I am not surprised that nobody is celebrating her as any kind of a “first,” Heriot said. “More fundamentally, however, she is a Republican. In general, Republicans don’t seem to back particular candidates on account of their race or sex. Identity politics is not really a conservative thing. Her campaign, therefore, is under no pressure to use her sex as a selling point. Nor is it under any pressure to make a case for why her sex shouldn’t matter.”

Others think the lack of interest in Bachmann’s gender is itself evidence of bias, and not simply that Clinton’s campaign made gender a non-issue in politics, argues, Diana Furtchgott-Roth, a senior fellow at Hudson Institute. “Look at MSM portrayals of Kagan and Sotomayor as women who have broken barriers. And that was after Hillary. Feminizing Bachmann would be making her likeable.”

And still others think that she’s only recently been taken seriously by the media (perhaps due to sexism). A Republican woman communications guru tells me that “the MSM doesn’t take her that seriously yet. When it does, we’ll probably notice it more.”

Of course, the lack of interest in her gender may be a combination of all of these factors. But what is clear is that Bachmann’s gender is no barrier within the Republican electorate. (In a recent Quinnipiac poll, Bachmann had the support of 14 percent of Republicans (15 percent of men and 12 percent of women.)

Right Turn will have more on Bachmann and gender as the campaign plays out, but for now, for whatever reason, liberal feminist groups sure aren’t celebrating her candidacy, and Republican Tea Partyers are welcoming her with open arms. Just saying.

Even If He Hadn’t Said So, We’d Know the President Is Bluffing

Jagadeesh Gokhale
Senior Fellow, Cato Institute

The president’s Wednesday night warning to House Majority Leader Cantor to not “call his bluff” suggests that… well, he’s bluffing. But the president has already been playing some transparently thin cards in this game of poker, including his melodramatic — but highly questionable — hint that Social Security checks would be interrupted on August 2.

The go-to strategy in a literal train wreck is to jump off a nanosecond just before the collision. The debt-limit debate is more complicated, however, because no one really knows what the effect would be if the deadlock on budget negotiations continues through August 2nd.

Debt-rating agencies may soon downgrade U.S. debt. But does the debt of a country on a fiscal path to borrow and spend 45 percent more than its revenues — at a time when its debt already equals its annual output — really warrant a AAA rating? Won’t House Republicans really be doing investors a service by revealing a more honest debt rating?

One might argue that the real objective is to shift to a more responsible fiscal path, and that there are better ways of doing so than getting stuck on the debt limit problem. But the very fact that we are on a path of massive fiscal indiscipline — namely, an unsustainably steep projected increase in government spending — implies that fiscal rectitude will not happen without a trip to the brink of the precipice. The debt limit offers a policy lever to shift the nation’s spending trajectory, and it is only fitting and proper that it should be used it to force the issue.

Regarding a potential “bluff” by the president and high officials of the Treasury and the Federal Reserve: It’s only natural that they would sound the most dire of alarms. There is no guarantee that the government would default on its existing contractual debt and that financial markets would tank even if such a temporary technical default were to occur. But the risk of such events is not zero and no high government officials would wish to risk it on their watch.

A hint about whether and how much President Obama might be “bluffing” is his unwarranted warning that Social Security payments could not be guaranteed if the debt limit is not increased. There is every reason to believe that those payments could and would be made in full in August — and for many more months — no matter whether the budget deadlock is resolved by August 2nd.

The debt limit encompasses both debt held by the public, and that held in intra-governmental accounts such as Treasury IOU’s in the Social Security Trust Funds. Even if the debt limit is reached, Social Security payments covered by incoming payroll taxes would not be delayed. As some observers correctly point out, payroll taxes are insufficient to cover present-law Social Security benefits. But that’s true only on an annual basis. Because the payroll tax rate is applied to earnings, those tax withholdings generate more revenues during earlier months of the year than during later ones — when higher earners’ taxable earnings limit is reached and payroll tax collections decline. That means the still quite small annual payroll tax shortfall will not emerge until November or December of this year. Therefore, no Social Security beneficiaries should miss their payments in August.

Even if payroll taxes were to fall short of scheduled benefits on August 3rd, there is a way to ensure that Social Security checks are mailed on time. The Social Security Trust Funds would simply exchange their Treasury IOUs for cash from Treasury, financed out of non-Social Security taxes. This is exactly how they are to be used in the event of a payroll tax shortfall anyway. But this redemption of Trust Fund IOUs would reduce federal debt below the current debt limit. Treasury could then simply issue more public debt to recover the cash — in effect exchanging debt to the Social Security Trust Funds for debt held by investors.

This information about how to negotiate through the laws governing the debt limit and the Social Security Trust Funds should be common knowledge among experts at Treasury, the Social Security actuaries, and the White House staff. The fact that President Obama feels compelled to demagogue the issue speaks volumes about how much he might really be bluffing.

Big government is not way to stronger economy

By CARLY FIORINA | 7/12/11 4:44 PM EDT

The engines of a thriving economy can be stalled by politics and bad government policy. Incentives for innovation can be ignored — until innovators and job creators move elsewhere.

Today, when any job can go anywhere, they may not come back. At a time of relentless, hyper-paced global competition, competitive advantage can be lost — and never regained.

Consider California. Once a haven for innovators, job creators and dreamers of every kind, its population is now shrinking and its unemployment rate is at historic highs. Despite some of the country’s highest tax rates, California also has one of the highest budget deficits. Businesses of all kinds are strangled in a thicket of regulation and the people who should be served by government aren’t.

California demonstrates that even one of the world’s largest economies can reach a tipping point — where the disincentives for economic growth and job creation overwhelm even extraordinary human talent and natural resources.

Yet President Barack Obama and his allies seem determined to impose California’s economic experience on the nation. Look at what’s happened so far: Our nation has started down the slippery slope of lost opportunity. Democrats’ failed stimulus package, 9.2 percent unemployment, $14 trillion in debt, not to mention the economic damage that could be done by Obamacare and the hundreds of regulations yet to be written under the Financial Regulatory Reform Act.

This has been on my mind since Sen. John Cornyn (R-Texas), chairman of the National Republican Senatorial Committee, asked me to help Republicans regain the majority in the Senate in 2012.

Republicans understand that the American dream starts with a job. Maintaining our economic power in the world requires that we create jobs here at home. While America has been the world’s most prolific and productive innovator, we are not on a trajectory to sustain our innovation and leadership.

But job creators could count on a majority Republican Senate to uphold three core principles fundamental to U.S. economic vitality.

First, it would decentralize power whenever possible. Whether in business or government, decentralizing power holds decision-makers more accountable to their customers and constituents. Decentralized decision-making is faster, more innovative and more flexible — all vital in a complex, constantly changing world

Second, it would value individuals ahead of institutions. Republicans place their faith in an individual’s ability to choose his or her own path and distrust that a faceless bureaucracy is better at making decisions. Modern technology helps the individual to be smarter and more effective than a bureaucracy.

Third, Republican senators know that job creators make better decisions for our economy than government agencies. Job creators in any size business are held to account: by customers’ demands for a good product at a good price; by investors’ demands for a good return, and by the challenge of competitors to do it better or cheaper.

Republicans understand that government must set appropriate boundaries for risk in a capitalist economy. But the bottom line is that when businesses profit, they grow and hire.

Democrats disagree with these principles. They put their faith in bigger government. And the government bureaucracy has grown. So government is less manageable and less transparent.

Ours was intended to be a citizen government. That is why it is important for those who understand what it takes to create jobs and sustain businesses get involved in the political process. Job creators play a special role — for they are the true purveyors of the American dream.

Carly Fiorina is the new vice chairwoman of the National Republican Senatorial Committee. She is the former chief executive officer of Hewlett-Packard.

No Defense Cuts or Tax Increases in Debt Deal

By Marc A. Thiessen, Published: June 27

President Obama will meet with congressional leaders today in an attempt to revive the debt-limit talks that broke down last week over the Democrats’ insistence that any deal must include tax increases. The president knows full well that Republicans are not backing down on taxes — but he is using the issue to extract other concessions, such as getting the GOP to back his plan for massive and irresponsible reductions in defense spending. Will Republicans walk right into his trap?

Critics say Republicans are being unreasonable in rejecting any tax hikes. In an editorial last week,The Post called GOP leaders “childish and irresponsible” and pointed out that Democrats have agreed to accept $2 trillion in spending cuts while Republicans are refusing to accept any tax increases in exchange. “Where is the Republican flexibility?” the paper asked.

Let’s be clear: Compromise here isn’t spending cuts for a tax increase; compromise is spending cuts for a debt-limit increase. Republicans elected in the Tea Party wave of 2010 campaigned on a promise to reduce the national debt. They are now being asked to turn around a half a year later and vote to raise the national debt. The vast majority of Republican voters don’t want them to raise the debt limit at all. The only way these Republican legislators can vote for a debt-ceiling increase without getting thrown out of office is to show their constituents that they secured unprecedented cuts in current spending — and ironclad constraints on future spending — in exchange. Tax increases? They are not even part of the equation.

Yet Republicans are letting the Democrats use the tax issue to extract concessions. GOP leaders need to realize that they are the ones with the leverage in these negotiations. What are Democrats going to say if GOP leaders simply refuse to go along with their demand for tax hikes or give them defense cuts in exchange? “Sorry, Mr. Speaker, no deal — let the country default”? Of course not. President Obama does not have the luxury of letting the debt-limit talks fail and then blaming the GOP for a government default. If the dire predictions of his treasury secretary are to be believed, the consequences of a default would be so calamitous that Obama cannot allow it to happen. He must sign whatever debt-limit increase Republicans give him.

This means Republicans hold all the cards. So why on earth are they even thinking about giving Obama deep cuts in national defense in exchange for dropping his demand for tax increases that he knows he will never get? In November, Defense Secretary Robert Gates warned that even a 10 percent cut from the Pentagon budget, roughly $55 billion, would be “catastrophic” to the U.S. military. Obama has already cut more than $400 billion in defense programs since taking office, and he has proposed an additional $400 billion in defense cuts over the next 10 years.

As Gary Schmitt of the American Enterprise Institute has pointed out, if these cuts are enacted, the Obama administration will have chopped more than $800 billion from the Pentagon’s previously planned spending. In other words, our men and women in uniform will effectively be paying for Obama’s failed stimulus with cutbacks in needed equipment, training and force structure. Is that really what the GOP wants to do? Pay for the stimulus on the backs of our military? If Republicans really aspire to be constitutional conservatives, their first responsibility is to provide for the common defense. Congressional Republicans should not be a party to Obama’s plan to hollow out our military — they should fight it.

Far from giving Obama deep cuts in national defense, Republicans should the ones making the demands in these negotiations — including more domestic spending cuts and a balanced-budget amendment that will force the government to live within its means. If Democrats balk and the Aug. 2 deadline set by the Treasury Department arrives without an agreement, so be it. The sky will not fall. Republicans can simply pass a small, temporary debt-ceiling increase — and attach some of the $2 trillion in spending cuts the Democrats reportedly accepted in the negotiations led by Vice President Biden.

If the Democrats still won’t sign on to an acceptable agreement when that temporary debt-limit increase runs out, Republican leaders can pass another small increase with still more of these spending cuts attached. And if Democrats still don’t agree when that temporary debt-limit increase runs out, Republicans can pass temporary increases with spending cuts attached again . . . and again . . . and again.

Democrats will cry foul, but in the end, the Democrat-controlled Senate will pass, and President Obama will sign, every temporary increase the House approves — because the alternative is unthinkable. The message from Speaker John Boehner should be: The GOP will not allow the government to default — but Republicans will not raise the debt limit without deep cuts in federal spending. And Republicans will not raise taxes or hollow out our military — period.

Republicans have something the president not only wants but something he desperately needs. They need to stop negotiating with themselves and looking for ways to capitulate to the Democratic demands, and start using their unprecedented leverage to extract concessions from the other side.

Obama’s terrorist ‘catch and release’ policy
By Marc A. Thiessen

This morning The Post reports that a Somali terrorist named Ahmed Abdulkadir Warsame was held and interrogated on a Navy ship for more than two months before being flown to New York to stand trial. The Post reports this morning that he “is the first foreign terrorism suspect captured by the administration outside the United States and moved to this country for trial.” This news comes a week after Vice Adm. William McRaven told the Senate Armed Services Committee that the Obama administration has no clear plan for handling captured terrorist leaders if they are caught alive outside the war zones of Afghanistan and Iraq. McRaven testified that that “in many cases” suspects captured in secret are taken to a U.S. Navy ship until they can be tried in a U.S. court or transferred to the custody of an allied country, but if neither option is feasible, he said, the terrorist is let go. “If we can’t do either one of those, then we will release that individual,” McRaven told the committee.

Which leaves the obvious question: If Warsame is the first suspect to be transferred to the United States for trial, what happened to the others?

The United States’ top special operations commander told Congress that because the United States has no place to hold captured terrorists we have simply been letting them go. In his testimony, Adm. McRaven used the phrase “in many cases,” which seems to indicate that not only has this happened, but it has happened in numerous instances. Well, exactly how many al-Qaeda terrorists have been taken into U.S. custody on Navy ships and released by the Obama administration? Who are these terrorists? Where were they captured? Who decided to release them? Where were they released? And what has become of them since?

Until now, it was believed that the administration was not capturing senior terrorists alive outside the war zones of Afghanistan and Iraq, but simply killing them. Last year, The Post reported that there had been no known high-value detentions by the United States since Obama took office. Now, it appears, we have indeed been capturing such terrorists — and setting them free. If so, this is an outrage. With Adm. McRaven’s testimony, and today’s news, the administration owes the American people — and the United States Congress — some answers, and fast.

Burning down the house

By George F. Will, Published: July 1

“The louder he talked of his honor, the faster we counted our spoons.”

— Emerson

The louder they talked about the disadvantaged, the more money they made. And the more the financial system tottered.

Who were they? Most explanations of the financial calamity have been indecipherable to people not fluent in the language of “credit default swaps” and “collateralized debt obligations.” The calamity has lacked human faces. No more.

Put on asbestos mittens and pick up “Reckless Endangerment,” the scalding new book by Gretchen Morgenson, a New York Times columnist, and Joshua Rosner, a housing finance expert. They will introduce you to James A. Johnson, an emblem of the administrative state that liberals admire.

The book’s subtitle could be: “Cry ‘Compassion’ and Let Slip the Dogs of Cupidity.” Or: “How James Johnson and Others (Mostly Democrats) Made the Great Recession.” The book is another cautionary tale about government’s terrifying self-confidence. It is, the authors say, “a story of what happens when Washington decides, in its infinite wisdom, that every living, breathing citizen should own a home.”

The 1977 Community Reinvestment Act pressured banks to relax lending standards to dispense mortgages more broadly across communities. In 1992, the Federal Reserve Bank of Boston purported to identify racial discrimination in the application of traditional lending standards to those, Morgenson and Rosner write, “whose incomes, assets, or abilities to pay fell far below the traditional homeowner spectrum.”

In 1994, Bill Clinton proposed increasing homeownership through a “partnership” between government and the private sector, principally orchestrated by Fannie Mae, a “government-sponsored enterprise” (GSE). It became a perfect specimen of what such “partnerships” (e.g., General Motors) usually involve: Profits are private, losses are socialized.

There was a torrent of compassion-speak: “Special care should be taken to ensure that standards are appropriate to the economic culture of urban, lower-
income, and nontraditional consumers.” “Lack of credit history should not be seen as a negative factor.” Government having decided to dictate behavior that markets discouraged, the traditional relationship between borrowers and lenders was revised. Lenders promoted reckless borrowing, knowing they could off­load risk to purchasers of bundled loans, and especially to Fannie Mae. In 1994, subprime lending was $40 billion. In 1995, almost one in five mortgages was subprime. Four years later such lending totaled $160 billion.

As housing prices soared, many giddy owners stopped thinking of homes as retirement wealth and started using them as sources of equity loans — up to $800 billion a year. This fueled incontinent consumption.

Under Johnson, an important Democratic operative, Fannie Mae became, Morgenson and Rosner say, “the largest and most powerful financial institution in the world.” Its power derived from the unstated certainty that the government would be ultimately liable for Fannie’s obligations. This assumption and other perquisites were subsidies to Fannie Mae and Freddie Mac worth an estimated $7 billion a year. They retained about a third of this.

Morgenson and Rosner report that in 1998, when Fannie Mae’s lending hit $1 trillion, its top officials began manipulating the company’s results to generate bonuses for themselves. That year Johnson’s $1.9 million bonus brought his compensation to $21 million. In nine years, Johnson received $100 million.

Fannie Mae’s political machine dispensed campaign contributions, gave jobs to friends and relatives of legislators, hired armies of lobbyists (even paying lobbyists not to lobby against it), paid academics who wrote papers validating the homeownership mania, and spread “charitable” contributions to housing advocates across the congressional map.

By 2003, the government was involved in financing almost half — $3.4 trillion — of the home-loan market. Not coincidentally, by the summer of 2005, almost 40 percent of new subprime loans were for amounts larger than the value of the properties.

Morgenson and Rosner find few heroes, but two are Marvin Phaup and June O’Neill. These “digit-heads” and “pencil brains” (a Fannie Mae spokesman’s idea of argument) with the Congressional Budget Office resisted Fannie Mae pressure to kill a report critical of the institution.

“Reckless Endangerment” is a study of contemporary Washington, where showing “compassion” with other people’s money pays off in the currency of political power, and currency. Although Johnson left Fannie Mae years before his handiwork helped produce the 2008 bonfire of wealth, he may be more responsible for the debacle and its still-mounting devastations — of families, endowments, etc. — than any other individual. If so, he may be more culpable for the peacetime destruction of more wealth than any individual in history.

Morgenson and Rosner report. You decide.

The wrong reason for depleting the strategic oil reserve

By Editorial, Published: June 23

ENERGY SECRETARY Steven Chu announced Thursday that the federal government will release 30 million barrels of oil from the Strategic Petroleum Reserve , a complex of salt caves that contain 727 million barrels in case of national emergency.

What’s the emergency, you ask? The White House says that military operations in Libya have disrupted supply. But Libya’s oil has been shut in for months now, and oil prices are down from their highs this year. So on Thursday Obama administration spokesman Jay Carney argued that oil demand is likely to rise over the summer. In other words: It’s vacation season, and the White House is worried about high prices through the summer driving months.

Therein, perhaps, is a political emergency, at least in the White House view: President Obama’s reelection prospects will be harmed if national discontent over high gasoline prices continues. The oil release could be seen as a way for the president to take credit for gas prices that are falling anyway, or as an indirect, pre-election stimulus.

Whatever the rationale, it is a bad idea.

The government should not tap the reserve absent a genuine crisis. America consumes much more oil than it produces, and by using the petroleum reserve, it can’t expect to do anything but nudge oil prices, and only for a short time. There’s no question that high gasoline prices cause hardship for many Americans. But the answer cannot be for the government to try to encourage consumption.

Neither tapping the petroleum reserve nor increasing Saudi Arabia’s production will change the basic equation on oil: It is a scarce resource that the developing world will demand more and more of. Americans have enjoyed cheap gas for decades — underpriced when you consider the many social costs, such as air pollution, climate change and the enrichment of hostile foreign regimes, that the country’s dependence exacts. Ideally, as we’ve said many times, the government would tax gasoline more and rebate some of the revenue in a progressive way. And leaders concerned about the political effects of high oil prices would explain the painful realities of America’s structural dependence on crude, not abet Americans in believing that the government can keep prices smooth and low.