Your Kids May Fund Payroll Tax Cut Extension

Published: Fri, 01/13/12

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In This Issue:

Grand Idea By Richard C. Young
Your Kids May Fund Payroll Tax Cut Extension By E.J. Smith
Romney Wins New Hampshire, Paul Second, Huntsman Third The Editors
Terminal High Altitude Area Defense (THAAD) The Editors
Romney Unstoppable? David Boaz Gives You the Answer The Editors
Increasing Real Estate Costs By E.J. Smith
And He Went The Editors

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Have You Been Affected by Market Volatility?

Here is one problem facing investors: during August and September, the Dow Jones Industrial Average rose or fell by more than 1% on 29 days. By third quarter’s end, the Dow was down 12%, the largest quarterly percentage decline since the first quarter of 2009. This degree of volatility, which of course is great fodder for the media, can lead to knee-jerk decisions that send investment strategies off course. Read more here!

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Grand Idea

Now here’s a grand idea! Talk about cooking one's goose!

You’ve got to love how lawmakers wheel and deal during the holidays while the rest of us are trying to enjoy them. Lost in the 11^th-hour payroll tax cut extension is how it will be funded. It will be paid by Fannie Mae and Freddie Mac which, last time I checked, are in conservatorship and were bailed out with $153 billion in taxpayer money. Now, instead of unwinding the two behemoths, which was the chatter this time last year, we’re all back in the mortgage business.

As ordered by Congress who is trying to find $36 billion, beginning April 1, Fannie Mae and Freddie Mac will begin a 10-year-long premium-charge increase of 10 basis points on lenders to guarantee principal and interest on home loans. These fees, known as guarantee fees or “g fees,” will no doubt be passed along to borrowers in the form of higher interest rates.

With the stroke of a pen, lawmakers have increased real estate financing costs for the middle class. It is a blatant backdoor tax on the middle class, the main customer for the conventional loans purchased by Fannie Mae and Freddie Mac. President Obama is not only breaking a promise not to increase taxes on the middle class, but is issuing a penalty on savers and those trying to be responsible with their money by investing in a home. This is rotten to the core.

Ten years of “g fees” charged by Fannie Mae and Freddie Mac will be used to fund the government’s payroll tax cut for two months. Now that a precedent is set, what’s to stop the government from coming back again with hat in hand a year or two from now? And now, if an effort is made to wind down Fannie Mae and Freddie Mac, there will be a general revenues shortfall to deal with. It’s unconscionable that Republicans in the House and Senate went along with this boondoggle.

With interest rates for a 30-year mortgage at around 4%, a 10-basis-point increase is a significant extra cost. If lenders pass the cost along as a higher rate of 4.10%, that’s a 2.5% increase. My point: How much government do you want in your house? It’s really a matter of principle.

This is especially hurtful to states that are losing population and jobs faster than the rest of the country. And it’s a direct hit on the saving class and those being responsible with their money, no matter where they live.

Mitt Romney won the New Hampshire GOP primary Tuesday with 40% of the vote. Congressman Ron Paul came in second with 23% of the vote, and Jon Huntsman followed up third with 17%. When coupled with the results from Iowa, it is clear Romney and Paul are the top tier in the GOP race, each picking up delegates in both states. Watch their speeches from Tuesday night below.

Results of the New Hampshire GOP primary (via CNN):

New Hampshire
Romney	95,669	40%	5	95%
Paul	55,455	23%	3	reporting
Huntsman	40,903	17%	2
Gingrich	22,921	10%	0
Santorum	22,708	9%	0
Perry	1,709	1%	0

Terminal High Altitude Area Defense (THAAD) is a key element of the Ballistic Missile Defense System (BMDS). THAAD will provide rapidly deployable ground-based missile defense components that deepen, extend and complement the BMDS to any Combatant Commander to defeat ballistic missiles of all types and ranges while in all phases of flight.

THAAD’s combination of high-altitude, long-range capability and hit-to-kill lethality enables it to effectively negate the effects of weapons of mass destruction at intercept ranges well beyond the defended area. These attributes, along with THAAD’s unique endo (in the atmosphere) and exo (out of the atmosphere) atmospheric capability, enlarge the battle space to allow multiple intercept opportunities in both the late-midcourse and terminal phases of ballistic missile trajectories. THAAD can accept cues from Aegis, satellites and other external sensors to further extend the battle space and defended area coverage. THAAD will operate in concert with the lower-tier Patriot/PAC-3 system to provide increased levels of effectiveness.

THAAD is a rapid response weapon system that can be deployed quickly to protect critical assets worldwide. The THAAD element consists of five major components: missiles; launchers; radars; fire control; and THAAD-specific support equipment. All components have been successfully integrated, tested and demonstrated during the first program phase that concluded in 2000.

The THAAD Development Program flight testing began in November 2005 with a successful launch. Flight testing continues at White Sands Missile Range (WSMR) through 2006. Operations are then scheduled to transition to the Pacific Missile Range Facility (PMRF) in Kauai, Hawaii to conduct flight testing through early 2009. The THAAD government-industry team continues to focus on mission success and delivering, testing and integrating hardware and software components that ensure the highest level of quality, reliability, producibility and affordability.

Industry team members:
Lockheed Martin
Raytheon
BAE Systems
Pratt & Whitney Rocketdyne
Aerojet
Honeywell

Recent News: Lockheed Martin Receives $1.96 Billion THAAD Production Contract For The United Arab Emirates December 30, 2011

• THAAD Weapon System Achieves Intercept of Two Targets at Pacific Missile Range Facility – October 5th, 2011
• Lockheed Martin Awarded $789.8 Million THAAD Production Contract March 30th, 2011

Cato Institute’s David Boaz gives you the answer.

From Politico’s Arena:

Question: Is Mitt Romney unstoppable?

David Boaz Executive VP, Cato Institute :

Romney is at 85 percent on Intrade, and he’s a good buy at that price. His success rather mystifies me. He has only four years in public office, and his only accomplishment there – the health care mandate - is highly unpopular with Republicans, for good reason. This really is the best evidence yet for the hypothesis that Republicans nominate the guy who ran second the last time.

And speaking of second, I think the only candidate who’s done well enough to persist after South Carolina is Ron Paul, and he’s also the candidate with no good reason to drop out. So I’d expect a long Romney-Paul debate. And let’s take note of a particular accomplishment by Paul. One rule in presidential politics is that Americans don’t elect House members to the presidency.

Last night Ron Paul did better in the New Hampshire primary than any other House member in history – better than Morris Udall, or Jack Kemp, or indeed former speaker Gingrich. He’s also the oldest candidate who ever drew noticeable votes in New Hampshire. Ron Paul is a 76-year-old House member, and yet his libertarian message has given him a strong performance in both Iowa and New Hampshire. It gives me a lot of hope that 23 percent is not an upper limit for a libertarian candidate, but rather that a libertarian-leaning governor or senator, in his fifties, without the baggage that burdens Paul, could do far better.

>> read more

Increasing Real Estate Costs

>> read more

And He Went

Congressmen Ron Paul has never shied away from his responsibilities to his country. His opponents paint him as soft on national defense. He’s not. Paul wants a strong national defense, but not a national offense. He summed up his position well in his speech after the New Hampshire primary:

So often they say that if we tell people we think we should spend less in the military, they say, “Oh, that means you want to cut defense.” No, if you cut the military-industrial complex, you cut war profiteering, but you don’t take one penny out of national defense! Besides, we’re flat-out broke. Fortunately, we did not have to fight the Soviets. The Soviets brought themselves down for economic reasons. Do you know they were so foolish and thought themselves so bold that they could pursue their world empire, that they invaded Afghanistan?

In an exchange with Newt Gingrich during the ABC News debate on January 7, Paul criticized the former Speaker for his hypocrisy in avoiding military service during the Vietnam War while supporting sending troops to far-off lands today.

MCELVEEN: Talk about the understanding of the military. And let’s go to you, Speaker Gingrich. Recently, Dr. Paul referred to you as a chicken hawk because you didn’t serve. Given what you just heard Governor Perry say about understanding the military and Dr. Paul’s comments, how do you respond?

GINGRICH: Well, Dr. Paul makes a lot of comments. It’s part of his style.

My father served 27 years in the Army in World War II, Korea, and Vietnam. I grew up in a military family, moving around the world. Since 1979, I have spent 32 years working, starting with the Army’s Training and Doctrine Command. I was the longest-serving teacher in the senior military for 23 years. I served on the Defense Policy Board. But let me say something about veterans, because as an Army brat whose family was deeply engaged, I feel for veterans. We had a great meeting today in Wolfeboro with veterans. And I made a commitment in New Hampshire that we would reopen the hospital in Manchester, we would develop a new clinic in the north country using telecommunications, and we would provide a system where veterans could go to their local doctor or their local hospital.

The idea that a veteran in the north country in midwinter has to go all the way to Boston is absolutely, totally, fundamentally wrong. And I would say, as an Army brat who watched his mother, his sisters, and his father for 27 years, I have a pretty good sense of what military families and veterans’ families need.

SAWYER: Congressman Paul, would you say that again? Would you—would you use that phrase again?

PAUL: Yeah. I—I think people who don’t serve when they could and they get three or four or even five deferments aren’t—they—they have no right to send our kids off to war, and—and not be even against the wars that we have. I’m trying to stop the wars, but at least, you know, I went when they called me up.

But, you know, the—the veterans’ problem is a big one. We have hundreds of thousands coming back from these wars that were undeclared, they were unnecessary, they haven’t been won, they’re unwinnable, and we have hundreds of thousands looking for care. And we have an epidemic of suicide coming back. And so many have—I mean, if you add up all the contractors and all the wars going on, Afghanistan and in Iraq, we’ve lost 8,500 Americans, and severe injuries, over 40,000. And these are undeclared war.

So, Rick keeps say[ing] we—you don’t want this libertarian stuff, but what I’m talking about, I don’t bring up the word. You do. But I talk about the Constitution. Constitution has rules. And I don’t like it when we send our kids off to fight these wars, and when those individuals didn’t go themselves, and then come up and when they’re asked, they say, oh, I don’t think I could—one person could have made a difference.

I have a pet peeve that annoys me … a great deal, because when I see these young men coming back, my heart weeps for them.

STEPHANOPOULOS: Speaker Gingrich?

GINGRICH: Well, Dr. Paul has a long history of saying things that are inaccurate and false. The fact is, I never asked for deferment. I was married with a child. It was never a question. My father was, in fact, serving in Vietnam in the Mekong Delta at the time he’s referring to.

I think I have a pretty good idea of what it’s like as a family to worry about your father getting killed. And I personally resent the kind of comments and aspersions he routinely makes without accurate information and then just slurs people with.

PAUL: I need one quick follow-up. When I was drafted, I was married and had two kids, and I went.