Tuesday, September 30, 2008

Congress Should Fix the Fannie Mae and Freddie Mac Mess by David C. John

Source: http://www.heritage.org/Research/Economy/wm1993.cfm

July 15, 2008

Sunday's announcement by the Bush Administration and the Federal Reserve seems to have cooled the immediate crisis concerning Fannie Mae and Freddie Mac. However, their plan does nothing to resolve the fundamental cause of the problem, and without major structural reforms in the housing finance industry, it is probable that this whole situation will reoccur in a few years.

While both Fannie Mae and Freddie Mac are owned by private stockholders, they are really artificial government creations that are very different from real private sector companies. Both companies are remnants of the Great Society, when big government entities were thought to be the only way to achieve social goals. The fact that both were later privatized does not change their essential nature as government-sponsored dominators of a market rather than as participants in it. Both have a history of financial and management irregularities that have caused sudden changes in senior management and often sparked congressional action. Unfortunately, these problems have not resulted in any significant reforms to the overall structure of either entity.

Background to a Crisis

Experts have warned for decades that both entities lack sufficient capital, made up of both investors' money and retained earnings, to protect against losses. While most banks have $1 of capital for every $12 in assets, Fannie Mae and Freddie Mac only have $1 for every $20 in assets. Congress looked at higher standards in the 1990s, but many of the same congressional leaders who head their oversight committees today bowed to a sustained and high-powered lobbying campaign that took all the teeth out of the reform. Other reform efforts have been similarly stymied.

Fannie Mae and Freddie Mac play a dominant role in today's housing finance market by buying mortgages from lenders, packaging them into bond issues, and then reselling them to investors around the world. The two have a roughly 70 percent market share in this area, and also both guarantee mortgages and hold about $5 trillion worth of them in their investment portfolios. To operate, both entities need to borrow billions of dollars on a continuous basis. This most recent crisis was caused by concerns that an accounting rule change would sharply reduce their capital, which caused a sharp and continuing drop in their stock prices, which in turn frightened lenders and forced the government to act.

Government Stopgaps

Sunday's announcement that the government will lend Fannie Mae and Freddie Mac money through both the Federal Reserve and the Treasury—and, if necessary, buy stock in both—sent the necessary signal that neither will be allowed to fail. That was what the lenders needed to hear, and they promptly bought $3 billion worth of bonds from Freddie Mac on Monday. Fannie Mae plans to borrow a similar amount later in the week.

The joint action of the Administration and the Federal Reserve was important to the housing industry in general and to homebuyers in specific, since Fannie Mae and Freddie Mac provide most of the mortgage funds in today's market. If the crisis had continued, lack of cash could have dried up lending, hammering an already depressed housing sector by halting home sales in their tracks.

Even worse, the price of mortgage-backed securities would have almost certainly dropped even further, thus causing still more losses for the rest of the financial service industry. In addition, foreign governments own literally hundreds of billions of dollars worth of Fannie Mae and Freddie Mac bonds, and the shock and loss of confidence would have almost certainly led to a severe run on the dollar.

The Path to Real Reform

In the short run, Congress should:

  • Rapidly enact the proposed short-term reforms. While the Federal Reserve has the power to extend short-term financing to Fannie Mae and Freddie Mac, legislation will be required to both increase their credit line with the U.S. Treasury and to enable Treasury to purchase stock in both. In addition, lawmakers will need to exempt this temporary measure from the debt limit because otherwise, when the support of Fannie Mae and Freddie Mac ends, the debt limit would remain artificially high. These are strictly one-time moves forced by Fannie Mae and Freddie Mac's extraordinary position in the housing finance market. In both cases, Congress should act quickly in these areas to ensure that market anxiety does not resurface.
  • Strengthen OFHEO as their one regulator. The Office of Federal Housing Enterprise Oversight (OFHEO) does not have the powers that it needs to properly oversee Fannie Mae, Freddie Mac or the 12 federal home loan banks. Language strengthening the agency and giving it power to enforce decisions has passed both the House and the Senate and needs to be enacted into law. However, Congress should not agree to the recommendation that the Federal Reserve has a role in regulating any of these entities except to assess the systemic risk they pose to the economy. The long-term changes (below) will require one knowledgeable regulator that has the power to act to make sure that this situation never reoccurs.
  • Drop the Low Income Housing Fund. The housing bills passed by both the House and the Senate contain measures that assess the housing portfolios of both entities to contribute to a special fund for low income housing. Given the financial difficulties of both Fannie Mae and Freddie Mac, this provision should be eliminated.

These are important short-term moves, but in the longer run, the existing system of massive government sponsored entities that dominate housing finance should be replaced. Long-term measures should include:

  • Break up Fannie Mae and Freddie Mac. Congress needs to break up both Fannie Mae and Freddie Mac and allow them to be replaced with a much larger number of genuine private sector companies. The new, smaller companies would perform the same functions as the two current entities do, but with low and strict limits on the amount of assets the new companies can hold so that they will not have the ability to dominate the market. They could be bought, merged into other companies or even go out of business without the potential disruption that last week's crisis caused.
  • Eliminate government subsidies and preferences. After Fannie Mae and Freddie Mac have been replaced, Congress should eliminate any real or implied benefits including the line of credit with the Treasury, the ability of the government to own stock, and make it explicitly clear that there is no federal government backing for their securities.
  • Set strict standards for mortgage-backed securities. One major cause for today's financial losses and the loss of confidence in Fannie Mae and Freddie Mac has been inclusion of poor quality mortgages that are likely to default in mortgage-backed securities. Both regulators and industry need to take strict steps to ensure that quality controls can weed out low quality mortgages and properly grade these securities so that future investors can have confidence in what they are buying.

Let a Thousand Companies Bloom

Fannie Mae and Freddie Mac have caused enough turmoil due to poor management and inadequate capital. Just because the mortgage finance markets have been organized around the activities of these two entities in the past is no reason to retain that structure. Lawmakers need to take both quick actions on the short-term measures necessary to deal with today's problems and longer term reforms to ensure that this crisis cannot reoccur by breaking up Fannie Mae's and Freddie Mac's stronghold on the mortgage market. Otherwise, we will all be doing this yet again in a few years.

David C. John is Senior Research Fellow in Retirement Security and Financial Institutions in the Thomas A. Roe Institute for Economic Policy Studies at The Heritage Foundation.

Frank-Dodd Approach Won't Fix the Mortgage Mess by David C. John

Source: http://www.heritage.org/Research/Economy/wm1865.cfm

March 24, 2008

With the financial and housing markets in turmoil and the recent actions of the Federal Reserve being cited as a reason why Congress "must" act to help overstretched homeowners, attention has been focused on several plans to ease problems in the housing market. Unfortunately, there are no simple or quick solutions to a highly complex financial situation. The most cited proposals are discussed below; all have serious weaknesses that make them more likely to create additional problems down the road than to solve the current situation.

The Frank-Dodd FHA Refinance Plan

Representative Barney Frank (D-MA) and Senator Chris Dodd (D-CT), the Chairs of the House and Senate committees, respectively, with jurisdiction over housing, have proposed a plan using the FHA under which lenders that chose to take part would agree to reduce the loan amount and refinance the mortgage at a lower interest rate in return for a cash fee. Refinanced loans would be guaranteed by the FHA, and the lender would have no further credit exposure if the borrower subsequently defaulted. This means that if a refinanced loan later defaulted, the taxpayers would cover any losses. Dodd and Frank say that they would provide $20 billion to FHA, which they believe would be enough to refinance up to $300 billion worth of mortgages. They also would provide states and localities $10 billion for buying and refurbishing vacant foreclosed houses that could be occupied quickly.The proposal has the following shortcomings:

  • It is essentially a government buyout of problem mortgages disguised as a refinancing plan. It is an extremely bad precedent, as lenders will quickly request that this guarantee be made available to all loans to borrowers with poor credit histories or lower incomes. Until now, the mortgage market has operated under free-market principles with a moderate level of government regulation, but this program would be a step toward government micromanagement. As a significant number of the loans now facing problems were made by irresponsible mortgage brokers using inaccurate and even false data, it would also signal that there are no real consequences for poor lending practices.
  • If separate FHA reform bills are signed into law, many of these refinanced mortgages will be likely to default. Under the Frank-Dodd plan, taxpayers would have to pay for any mortgage that defaults. The risk of default is historically best measured by the size of a downpayment. The smaller it is, the more likely that the borrower will walk away from the loan. FHA reform bills already passed by Congress would reduce the minimum downpayment for FHA loans from today's 3 percent to 0 percent in the House bill or 1.5 percent in the Senate version. Different versions of the FHA reform bill have passed each chamber and are currently being reconciled.
  • The plan would reward two different groups of homeowners: those who took out a speculative loan they never had a chance of repaying in hopes of flipping the house in a rising market; and those who fell into trouble through no fault of their own. In doing so, it sends a message that it is acceptable to renege on an obligation because a government buyout will cut your losses.
  • Even if the money went to the FHA immediately, it is not possible to implement this plan quickly. Mortgages must be refinanced individually. It will take a great deal of time to refinance the 1-2 million loans that supporters say could benefit.
  • Closing costs for such refinancing can be expensive and are regulated by state laws. Distressed borrowers may not have the money available to pay them, and if the FHA covers the cost either directly or indirectly, the number of potential beneficiaries will be reduced. Moreover, doing so would also be unfair to the responsible borrowers who refinance their homes.
  • Borrowers with legitimate problems are already being assisted by the voluntary Hope Now program. Frank-Dodd attempts to do the same thing at a cost of billions of dollars and transfers all risk of default to the taxpayers. Frank-Dodd is also likely to undermine the FHA, which is adequately capitalized now but could face huge losses from the large number of inherently risky loans that it would be forced to guarantee.
  • Frank-Dodd will not stop foreclosures, even for many who qualify. During the time it would take to refinance mortgages, mortgages servicers will be legally bound to follow the terms of the existing contract in case the refinancing falls through, including steps toward foreclosure.

Senator Isakson's Proposed Real Estate Tax Credit

Senator Johnny Isakson (R-GA) has introduced legislation (S. 2566)that would provide buyers of either a newly constructed house or one that is in foreclosure or default with a one-time $15,000 refundable tax credit. The bill would apply to purchases made between February 28, 2008, and March 1, 2009. To qualify, newly constructed houses would have to have been built on or before September 30, 2007. Owner-occupied structures in default or foreclosure must have been in default prior to March 1, 2008, even though the actual sale would take place after that date[1] , although there is no such restriction on foreclosed structures owned by a mortgage company or its agent. The problems with this proposal are listed below:

  • As a general principle, an explicit federal subsidy for the purchase of certain homes is both bad tax policy and bad housing policy.
  • This subsidy rewards those who have been the most irresponsible. Homeowners of any income level who either irresponsibly borrowed all of their home equity or who took out a loan that they could not repay but hoped to profit from by reselling the property in a rising market will benefit. However, those who have made the effort to pay their mortgages on time will not be assisted at all regardless of their financial circumstances.
  • Homebuilders who ignored signs that the market was slowing and built houses in the hopes of finding a buyer would get assistance in selling houses that should not have been built in the first place.
  • Responsible homeowners who must move for a new job or for family reasons will suffer because the sale of their homes would not qualify for a tax credit, while their less responsible neighbors would qualify for one. The potential plight of responsible homeowners could be cited as a reason to expand this credit to all home sales, thus increasing the cost to all taxpayers.
  • Since the credit is only refunded after the end of the next taxable year, the money would not be available at the time of the purchase. In practice, this limits its effect to those buyers who have the money up front to make a purchase, i.e., upper-income homebuyers.
  • By applying the credit only to homeowners in default before March 1, 2008, the bill leaves out those homeowners whose mortgage interest rate will reset after that date. This may be intended to reduce incentives for default, but it is so poorly written that it essentially rewards those who were irresponsible early while excluding those who were victims of circumstance after that date.

Allowing Bankruptcy Judges to Change Mortgage Terms

Legislation before the House and Senate would allow bankruptcy judges to arbitrarily reduce mortgage payments by either reducing the interest rate to the current market level or by reducing the amount owed to the current value of the house. Since mortgages are secured by using the house as collateral that could be sold in the event of a default, bankruptcy courts until now have given borrowers the choice of either paying the mortgage contract as written or surrendering the home to the lender. The Bush Administration wisely announced that it "strongly opposes" the provision and threatened a veto. Policymakers should consider the bill's flaws:

  • This bill would add the government as a silent third party to all private contracts between a homebuyer and a lender. Until now, the government has rightly stayed out of these transactions. The bill would create an incentive for mortgage seekers to agree to any terms, confident that a bankruptcy court will bail them out at a later date.
  • Such a move builds in a greater chance that the mortgage contract will not be paid as agreed. In order to protect their shareholders, financial institutions must price that uncertainty and add it to the cost of a mortgage.
  • It will be much harder for low-income homebuyers or new homebuyers to find mortgages. Because of the even higher risk that courts may restructure loans to those groups, lenders will focus on upper-income borrowers or those with high downpayments and good credit histories.
  • If the bills are enacted, this premium is likely to be higher until the industry has enough experience to more accurately price the added uncertainty.
  • Even if they can get loans, low-income workers, first-time borrowers, and those with impaired credit histories will pay much higher interest rates since they have the highest probability of running into financial trouble.

Conclusion

The press for Congress to "do something" about the large number of mortgages that are either in default now or are at risk of defaulting once their interest rates rise to market levels is extremely intense. Unfortunately, none of the proposals reviewed in this paper will really do anything to solve the problem. What has worked to date is Hope Now, a voluntary, private-sector plan that allows homeowners who have the ability to pay a lower cost loan to refinance their mortgages. So far, Hope Now has assisted in refinancing 250,000 mortgages without major government intervention. Rather than pressing for massive new programs, legislators should allow one with proven results to do its work.

David C. John is Senior Research Fellow in Retirement Security and Financial Institutions in the Thomas A. Roe Institute for Economic Policy Studies at The Heritage Foundation.

Monday, September 29, 2008

Ships



Artist Name: Barry Manilow
Songwriter(s): Ian Hunter

We walked to the sea, just my father and me
And the dogs played around on the sand
Winter cold cut the air, hanging still everywhere
Dressed in gray, did he say "Hold my hand"

I said, "Love's easier when it's far away"
We sat and watched a distant light

We're two ships that pass in the night
We both smile and we say "It's alright"
We're still here, it's just that we're out of sight
Like those ships that pass in the night

There's a boat on the line, where the sea meets the sky
There's another that rides far behind
And it seems you and I are like strangers
A wide ways apart as we drift on through time

He said, "It's harder now, we're far away"
We only read you when you write

We're two ships that pass in the night
And we smile when we say "It's alright"
We're still here, it's just that we're out of sight
Like those ships that pass in the night

We're just ships that pass in the night
And we smile when we say "It's alright"
We're still here, it's just that we're out of sight
Like those ships that pass in the night

HowStuffWorks: Can the government control a stock market crash? By Josh Clark

Source: http://money.howstuffworks.com/government-control-stock-market-crash.htm

In 1929, a stock market crash caused the Dow Jones index -- one of the main indices used to evaluate the health of the American economy -- to lose nearly 12 percent of its value in one day [source: New York Times]. From Black Tuesday, Oct. 29, 1929, to Nov. 13, 1929, $30 billion simply vanished from the United States economy due to falling stock prices [source: University of Wisconsin].

Banking Pictures


Crash of 1929
Hulton Archive/Getty Images
Panicked New Yorkers flood Wall Street during the stock market crash on Oct. 29, 1929. See more banking pictures.


Stock
prices are based on the perceived value of the company or investment they represent. Much of the American economy is based on the wealth bought and sold on Wall Street. So when stock prices fall across the board, the economy falters, too.


Some historians think that a crash in the Florida real estate market was one of the factors that led to the crash of 1929 and the Great Depression that followed [source: India Daily]. In 1987, another stock market crash caused the Dow to drop 508 points in one day -- a loss of 22.6 percent of value [source: New York Times]. This crash is thought to have been generated by a weak dollar and a sudden fleeing of foreign investors [source: Reuters]. In 2000, the stock market crashed again when the dot-com bubble burst and highly inflated Internet and tech companies lost their value all at once. The total amount of value that tech companies lost that year came to an estimated $800 billion [source: CNN].


In 2007 and 2008, the American economy found itself once again teetering on the edge of another economic slide. This time, the economy was brought to the brink by something called the subprime mortgage. The federal government has made several efforts to keep the markets from falling. But despite the government's efforts to prevent another stock market crash, in theory, a free market society isn't supposed to have any intervention in its economy. How bad would things have to get for the government to step in?


The Subprime Fallout


The stock market is all about perception. When the market is perceived as healthy -- meaning the dollar is strong, the trade deficit is narrow, and the value of companies is high -- investment begets investment. When things look bleak, however, a chain reaction of misfortune tends to occur. The failure of one section of the economy can lead to another and so on. In 2007, things began to look bleak on the American stock market. This was thanks in large part to the subprime mortgage fallout.


Subprime mortgages offered home loans to borrowers who posed a high credit risk. Often, these loans were given with attractive terms, like low initial interest rates and no down payment. In many cases, they were given for amounts people couldn't otherwise afford. Many of these subprime mortgages were issued as adjustable rate mortgages (ARMs). The interest rates on these loans reset, generally after two years, and at a higher rate. This increased monthly mortgage payments, often to amounts a homeowner couldn't afford. As a result, home foreclosures in the United States increased 75 percent from 2006 to 2007 [source: CNN Money].


foreclosed home
Joe Raedle/Getty Images
Foreclosures on homes, like this one in Miami, were expected to hit 1 million in 2008.

These foreclosures may not have had the sweeping effect on the American economy that they did had they not carried so many implications for other areas of the financial world. Under previous banking regulations, banks simply issued mortgages and kept them, accepting payments over 15 or 30 years until the loan was paid off. But in the mid-1990s, restrictions covering loans were eased as part of an effort to extend home ownership to more Americans. The result was that mortgages could be bought and sold easily. Many subprime mortgages were purchased by stock brokers, lumped together into portfolios, and sold as securities [source: Federal Reserve Bank].


Because financial institutions like investment banks and securities companies had purchased these mortgages, the risk from any fallout was spread across the financial spectrum.


Let's look at this dispersal like a metastasizing cancer. As interest rates on ARMs reset and increased, so, too, did monthly payments on home loans. Combined with additional factors, like auto industry workers who were part of a massive layoff and real estate speculators who had purchased homes with ARMs, some people simply walked away from their homes -- and the loans that went with them [source: Federal Reserve Bank].


But the huge mortgage lenders who actually paid out the money to borrowers to purchase these homes suddenly found that the revenue from their monthly payments was drying up -- quickly. The largest U.S. home loan lender, Countrywide, reported $1.5 billion in lost revenue during the second half of 2007 [source: AP]. In 2006, before the subprime fallout, Countrywide made more than $2.5 billion in profits [source: Fortune]. And since nonconsumer banks and institutions had become so heavily invested in the subprime market, almost all areas of finance became infected with worthless mortgages. Even worse, because investors around the world had purchased subprime mortgages as securities, the whole global economy suffered from the American subprime fallout.


Huge investment banks and major lenders began to go under. People braced for the worst: a stock market crash. Then, the U.S. government stepped in to try to save the sinking ship that was the American economy. But is there anything a government can do to control a stock market crash?


Government Action against a Stock Market Crash


Because the United States has a free market economy, theoretically, the highs and lows in the market should be affected only by supply and demand. According to the free market theory, any institution with enough clout to sway the movement of the market -- like the government -- should stay out of the way and let nature take its course. While the U.S. government doesn't directly intervene in the stock market (say, by inflating the prices of stocks when they fall too low), it does have power to peripherally affect financial markets. Since the economy is a set of interrelated parts, governmental action can effect a change.


stock traders
Mario Tama/Getty Images
In a free market society, the value of stocks traded (like those on the New York Stock Exchange) is subject only to supply
and demand.


The subprime mortgage fallout is an excellent example of what a government can do to try to avert a crash or recession. In 2008, the U.S. government pulled out many stops in an effort to keep the economy from plunging into a nosedive. The government announced it would infuse money into the economy in the form of tax rebate checks, totaling a minimum of $600 per taxpayer [source: IRS]. The hope was that the money would spur Americans to spend on goods and services in America to help revive the economy.


Governments can also help the economy -- and thus guard against stock market crashes -- by infusing cash into banking institutions. The U.S. government's main instrument for cash infusions is the Federal Reserve Bank (the Fed), the network of independent, government-related banks that standardizes, regulates and aids commercial banks in the United States. In 2008, the Fed announced that it had created a new lending arm: the Term Securities Lending Facility (TSLF). The TSLF would offer $200 billion in loans to non-deposit banks (not your neighborhood branch bank). What was so significant about the TSLF was that it accepted debts as securities [source: Bloomberg]. In other words, banks saddled with subprime mortgage-backed securities could use the very same investments that got them into trouble as collateral on 28-day loans from the Fed.


The point of this move is to increase liquidity in the market. A liquid market has lots of buyers and sellers trading assets -- without those assets being discounted, like in a fire sale. The Fed can also indirectly infuse cash by lowering the overnight rate -- the interest rates that banks charge each other for overnight loans. The Fed cut the overnight by three percent from September 2007 to March 2008 [source: Financial Post]. With lower rates and more cash available, the Fed hoped that banks would be more likely to infuse the cash back into investments once again.


The Fed got more hands-on in 2008 when it guaranteed $30 billion of debt when JP Morgan Chase bought out Bear Stearns [source: AP]. Investment banks are the institutions that really inject cash into markets. When these large firms stop investing (or go under), the entire financial system can grind to a halt [source: Farmer]. Investment banks make their money on dividends from their investments, and when they have more cash to invest, the market is stronger.


While the government's intentions to keep the market from crashing may be to protect its citizens' interests, not everyone agrees that action should be taken. Correcting the market can simply prolong the problem, some critics say. The best course of action could be taking no action at all [source: Bloomberg].



Lots More Information


Related HowStuffWorks Articles



More Great Links



Sources



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  • Christie, Les. "Foreclosures up 75% in 2007." CNN Money. January 29, 2008. http://money.cnn.com/2008/01/29/real_estate/foreclosure_filings_2007/
    index.htm?postversion=2008012905

  • Crutsinger, Martin. "Fed shows no fear in rescue attempts." Associated Press. March 19, 2008. http://seattletimes.nwsource.com/html/businesstechnology/2004291336
    _fed19.html

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    A15753C1A961948260&sec=&spon=&pagewanted=all

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    a6LLuTru5Sio&refer=home

  • Oberois, Peter. "In 1920s real estate collapse and stagflation preceded the stock market crash, deflation and depression - history repeating again?" India Daily. February 8, 2007. http://www.indiadaily.com/editorial/15499.asp

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Sarah Palin: Drill, drill, drill -- all the way By Andrew Leonard

Source: http://www.salon.com/tech/htww/2008/08/29/sarah_palin_and_anwr/index.html?source=rss

Friday, Aug. 29, 2008 10:15 PDT

Conservatives have a host of reasons for fawning over Alaska Gov. Sarah Palin, John McCain's surprise vice-presidential pick. She's solidly pro-life and a solid fiscal conservative. But possibly her most attractive attribute, at this particular moment in time, could be her position on energy. You would be hard put to find an elected politician in the United States who more resolutely supports a rapid ramp-up in exploiting domestic energy supplies -- offshore and on -- including in the Arctic National Wildlife Refuge.


One of her campaign promises in her 2006 run for governor was to "get ANWR open." Drill here, drill now? As CNBC talk show host Larry Kudlow noted in June, with Sarah Palin it's "drill, drill, drill -- all the way."


Here's what she told Kudlow in June:


I think those politicians who don't understand that we need more domestic supply of energy flowing into our hungry markets, you know, they're living in La-La Land. And we're in a world of hurt if their agenda continues to be to lock up these safe, secure domestic supplies of energy.


Remember too Larry, we're talking about a sliver of the coastal plain of Alaska being explored and drilled for oil. It's about a footprint of a 2000-acre plot of land. That's smaller than the footprint of LAX, for instance. So it's not so grandiose an acreage that it is out of the realm of possibility for others to start understanding why it is that we can do this safely.


The fact that an Alaskan Republican supports expanding drilling for oil is no shocker -- so do a majority of Alaskans. But if one of McCain's most effective thrusts in tightening the presidential campaign over the summer was his opportunistic switch to support offshore drilling, he's now added a flanker to his team who can push that line with gusto.


Again, from the Ludlow interview:


We sent [Energy] Secretary Bodman overseas the other day, and our president had to visit the Saudis a few weeks ago, to ask them to ramp up development. That's nonsense. Not when you know that we have the supplies here. You have the supplies in your sister state called Alaska, where we're ready, willing and we're able to pump these supplies of energy, flow them into hungry markets across the U.S. We want it to happen. It's Congress holding us back.


So is Palin Big Oil's girl? Her supporters will no doubt push back heartily on that accusation, noting that in 2004, she resigned after just 11 months as the head of the Alaska Oil and Gas Conservation Commission because of abuses she witnessed involving other Republican commissioners and their ties to energy companies and energy lobbyists. And as governor, she pushed through a major tax increase on oil companies, that would enable the state government, according to the Seattle Times, "to capture more of the windfall when prices are high."


Her official statement at the time:


"By receiving an equitable share for our resources, we are now in a position to demand more accountability and seize opportunities to save for future generations."


That tax increase made her some enemies in the Alaskan oil industry, but right now it makes her look perfect for McCain. Gas prices bothering you? Well, listen to my running mate, who is from Alaska and knows the oil biz inside and out. She says -- drill, drill, drill, all the way, and she's no Big Oil pawn.


How's the timing? Here's a manifesto Palin released in July:


Congressional approval of responsible petroleum development in the coastal plain of Arctic National Wildlife Refuge (ANWR) -- the most promising unexplored petroleum province in North America -- would be of incalculable benefit to my state and our nation.


If we don't move now to enact an energy policy that includes more oil and gas production from domestic sources, including ANWR and the federal [Outer Continental Shelf] OCS, we may look back someday and realize that we failed to perceive a critical crossroad in the history of this nation. I don't think it's overly dramatic to say that our country's future and the quality of life for every American depends on the decisions that are made or not made in the next few months.

Please Don't Be Scared



Source: http://www.mtv.com/lyrics/manilow_barry/please_don_t_be_scared/7176431/lyrics.jhtml

Songwriter: Mindy Sterling
Artist Name: Barry Manilow

There's a light behind your eyes
I see it shining
It only fades when you cry
There's a heart that beats so strong
I feel it dyin'
When the night time lasts too long
Now you and I have lived out centuries
And all I can say is what you've offered to me.

Please don't be scared
'Cause I've stood there too.
Between survival and the right thing to do.
'Cause only the strong admit their fears
And if you really need me
I'll always be here.

The parties and the lights
Fade to memories in the still of the night.
And you wonder in your mind
If theres nothing left to show for all the time
'Cause feeling pains a hard way to know you're still alive
But someday someone will make you glad you survived.

So Please don't be scared, 'cause I've stood there too
Between survival and the right thing to do.
'Cause only the strong admit their fears
And if you really need me
I'll always be here.

'Cause feeling pains a hard way to know you're still alive.
But someday someone will make you glad you survived.

Please don't be scared.
'Cause I've stood there too.
Between survival and the right thing to do.
'Cause only the strong admit their fears and if you really need me
Oh, I'll always be here.
No matter where you are...
If you really need me...
I'm never far

Media Coronation Of Obama Continues

Factchecking the Fact Checkers By Ed Whelan

Source: http://corner.nationalreview.com/post/?q=MGJhMTdjNDliZjBkMGY2ZGU4YjlmY2EzZDQ2NzcyMDY=

Saturday, September 27, 2008

In its print review (not available online, so far as I can tell) of last night’s debate, the Washington Post “Fact Checker” column continues its role as a propaganda arm of the Obama campaign:

 

1.  Reporter Michael Dobbs, who previously accused the McCain campaign of “clearly exaggerating wildly” when it accurately quoted the Post, says that McCain “raised an old Republican canard when he asserted that Obama’s [health-care] plan would eventually turn the system over to the federal government.”  Dobbs finds it conclusive that Obama “is not advocating a state-run health care system.”  But respected expert opinion—including, for example, this National Review essay by my Ethics and Public Policy Center colleague Jim Capretta—argues that the inevitable effect of Obama’s plan would be a “full government takeover”.  Dobbs need not embrace that conclusion, but it is absurd for him to dismiss it breezily as a “canard”.

 

2.  An item by reporter Glenn Kessler says that McCain “seriously misstated his vote concerning the Marines in Lebanon.”  You see, McCain says that he voted against sending the Marines to Lebanon, and Kessler says that they were already there and that McCain voted only against authorizing their continued deployment.  I’m not sure why anyone would consider this distinction significant.  McCain’s point was that he was correct in believing, in advance of the terrible Marine barracks bombing in Lebanon that killed 241 American servicemen, that the Marines shouldn’t be there.

 

3.  Obama falsely claimed in the debate that Admiral Mike Mullen had not called Obama’s withdrawal plan dangerous.  Unlike the items on McCain, the “Fact Check” account does not begin with, or even include, a simple declarative statement that Obama’s claim was false.  Instead, it leaves it to the careful reader to piece together the facts.

 

4.  The main “Fact Checker” column carries the headline “A Few Stretched Truths, but No Major Stumbles”.  Directly under that headline is a two-column banner quote from McCain:  “Well, Senator Obama twice said in debates … he would sit down [with] Ahmadinejad, Chavez, Castro, without precondition, without precondition.”  The casual reader would readily conclude from the juxtaposition that McCain’s statement is one of the “stretched truths” that the column title refers to.  In fact, the column does not take issue with McCain’s statement.

Obama Had Kenyan Citizenship Until 1982

'Fight the Smears' Website Admits Obama was Kenyan Citizen: Where's the MSM?

Source: http://newsbusters.org/blogs/p-j-gladnick/2008/09/29/fight-smears-website-admits-obama-was-kenyan-citizen-wheres-msm

By P.J. Gladnick
September 29, 2008 - 07:18 ET

Following the controversy over the authenticity of  Barack Obama's birth certificate can be a bit confusing with all its detailed analysis. Your humble correspondent will leave that up to the experts. However, in response to the charge that Barack Obama is not an American citizen, Obama's Fight the Smears website, quoting FactCheck.Org, has made a bombshell admission...Barack Obama was once a citizen of Kenya. You read that right, Obama had Kenyan citizenship until 1982. Here is the startling admission published in Fight the Smears (emphasis mine):



 “When Barack Obama Jr. was born on Aug. 4,1961, in Honolulu, Kenya was a British colony, still part of the United Kingdom’s dwindling empire. As a Kenyan native, Barack Obama Sr. was a British subject whose citizenship status was governed by The British Nationality Act of 1948. That same act governed the status of Obama Sr.‘s children.



Since Sen. Obama has neither renounced his U.S. citizenship nor sworn an oath of allegiance to Kenya, his Kenyan citizenship automatically expired on Aug. 4, 1982.”



So according to Fight the Smears itself, Obama's Kenyan citizenship expired on Aug. 4, 1982 meaning he held Kenyan citizenship until that point. This is astounding and so far no mainstream media outlet has reported on it. Will some reporter out there be so bold as to ask Obama if he was a Kenyan citizen until his 21st birthday as his own website concedes? 


Until reading of this Kenyan citizenship admission, I thought the lawsuit claimng that Obama was born in Kenya filed by Clinton supporter, Phil Berg, in Philadelphia was of minor import. However, by responding to it in the way it did, the Fight the Smears website has just opened up a big can of worms for Obama in its admission that he was a citizen of Kenya until 1982.


Meanwhile, instead of simply producing the original birth certificate in court and put the matter to rest, the Obama campaign seeks to evade that action by attempting to dismiss the lawsuit entirely. Here is the latest report on this lawsuit from the Phoenixville News:


PHILADELPHIA — Presidential candidate Sen. Barack Obama and the Democratic National Committee filed a joint motion in federal court Wednesday to dismiss a lawsuit challenging the Illinois senator to prove he's a citizen of the United States.


On Aug. 21, four days before the Democratic National Convention, Lafayette Hill attorney Philip Berg filed suit in Philadelphia seeking to remove the Democratic candidate from the November ballot claiming he was born in Kenya and not in America.


Berg asked the court for a temporary restraining order "prohibiting Obama from being formally confirmed as the Democratic Party nominee for president," according to court papers.


The Federal Election Commission was also named as a defendant in the legal action.


A day after the suit was filed, a federal judge denied the motion for a temporary restraining order.


When rumors emerged last summer questioning whether Obama was born Aug. 4, 1961, in Honolulu, Hawaii, his campaign posted a certificate of live birth on its Web site.


In a press statement circulated Wednesday by Berg's law office, the attorney insisted the Democratic candidate was born in Africa and thus ineligible to run for president.

"It is obvious that Obama was born in Kenya and does not meet the 'qualifications' to be president of the United States pursuant to our United States Constitution. Obama cannot produce a certified copy of his 'Vault' (version) Birth Certificate from Hawaii because it does not exist," the press release reads.


The suit seeks to compel the senator to produce the long version of his original birth certificate.


The motion to dismiss filed Wednesday called the suit's allegations "ridiculous and patently false," and argues the court lacks legal standing to challenge a presidential candidate's qualifications.


While Berg argued the case against Obama on constitutional grounds, Obama's attorney claims Berg must show a "specific and individualized injury" to prove standing in the case rather than a hypothetical one.


Earlier this year, a similar suit brought against Republican presidential candidate John McCain's and the Republican National Committee claimed that McCain wasn't "a natural born" citizen, having been born in the Panama Canal Zone while his father was serving in the military.


That suit was dismissed in July on grounds the plaintiff lacked standing in the case.



A minor lawsuit that seemed to be just a small irritant has now caused the Obama website to respond by admitting that he was once a Kenyan citizen. Where is the MSM on this? Which brave reporter will quote Obama's own website to him? Until now, there has been absolutely no mention in the mainstream media that we have a presidential candidate that once held citizenship with another country. 


Since Sen. Obama has neither renounced his U.S. citizenship nor sworn an oath of allegiance to Kenya, his Kenyan citizenship automatically expired on Aug. 4, 1982.”




—P.J. Gladnick is a freelance writer and creator of the DUmmie FUnnies blog.

Sunday, September 28, 2008

Alaska Magazine: Palin's Way



Source: http://www.alaskamagazine.com/index.php?option=com_content&task=view&id=876&Itemid=141

Written by Melissa DeVaughn
February 2008

She has attracted attention for everything from her appearance to being a maverick Republican, but Sarah Palin says she just wants to straighten out Alaska politics.

Alaska Gov. Sarah Palin stands in her kitchen wearing a black skirt and silver-sequined sweater, dressed for the gala she is about to attend. In front of her are a BlackBerry and a cell phone, devices that rarely leave her side. It’s her favorite room in the large but unpretentious home her husband, Todd, designed and built five years ago. In the kitchen, 6-year-old daughter Piper’s artwork dominates the décor in an otherwise modern, black-counter-topped room that opens into the rest of the living space.

“I wanted to be able to see everyone, to talk to them from here,” Palin says, glancing at her BlackBerry while leaning on the countertop. She quickly pushes a few buttons on the device. It is a rainy Saturday afternoon, but the work of the state’s first female governor never stops.

Palin straightens up and walks over to a tall table, taking in the expansive view of Lake Lucille through the wall of windows along the front of the living room. Todd’s floatplane is docked just a hundred yards away, at the edge of the neatly mowed lawn. Three grebes float by, and a duck loiters at the edge of the grass.

Across the room, the front door bursts open and Bristol, 17 and the second-oldest of the Palins’ four children, rushes in. She’s a younger version of her mother, with the same striking, dark eyes and hair that have earned Palin a reputation as “the hottest governor in the country.”

It’s a moniker that Palin shrugs off. Although poised and confident on camera, she is nonchalant when it comes to the comments on her appearance.

When a reporter and photographers from Vogue magazine came to Alaska in December to do a story on her, Palin was sure she disappointed them. “In the interview you could tell that the writer was trying to get me to focus on the gender and appearance issues, but I kept talking about energy and national security, and not relying on foreign sources of energy,” Palin said. “Finally, she stopped me and said, ‘I know that’s what you want to talk about, but this is a women’s fashion magazine.’ I don’t know about fashion. It’s bunny boots and fleece and The North Face. So I tried to talk about that, but it’s just not the way I’m wired.”

Palin’s father, Chuck Heath, said that’s simply the way his daughter is. “She’s not phony. She never has been,” said Heath, who moved his wife, Sally, and four children from Idaho to Skagway in 1964, when Sarah was just three months old.

Since his daughter took office last December, Heath has received several T-shirts proclaiming his daughter the best-looking political figure around. “One says, ‘My governor is hotter than your governor,’ and the other one says ‘Alaska: the coldest state with the hottest governor,’ ” Heath said, laughing.

And she has gained notoriety online as well. Wonkette.com, a political blog, seems obsessed with Palin, admiring not only her appearance (she’s a Tina Fey look-alike, the blog claims) but appreciating the simple fact that she is not, as it reports, “one of those creepy old men” in politics. Another blog, Palinforvp.blogspot.com, likes her so much it has started a grass-roots campaign to get her elected as the nation’s next vice president.

The Silver Lining
To be sure, Sarah Palin is a breath of fresh air in an Alaska political climate that is at one of its all-time lows and for years has been dominated by career politicians. In the past year, three former legislators were arrested on public corruption charges, and two of them have been convicted. A fourth was tried and convicted of similar offenses, and a fifth has been investigated, although not charged with any crime.

It isn’t much better on the national level. The country’s longest-serving Republican senator, 83-year-old Ted Stevens, is under investigation by the Federal Bureau of Investigation and the Internal Revenue Service, which are looking into who—Stevens or a oil-field services company known to have bribed to state lawmakers—paid for a renovation of the senator’s home in Girdwood.

Rep. Don Young, 74, is subject of a federal investigation into his campaign finance practices. Even Alaska’s first female senator, Republican Lisa Murkowski, a relative newcomer who was originally appointed by her father, Frank Murkowski, to fill his Senate seat when he became governor, isn’t immune. Last summer, she found herself under scrutiny after buying land from a supporter at a price that many considered a gift in disguise. She later sold the land back, claiming the loss of public trust was not worth it.

Such political missteps provided the platform upon which Palin, a former television newscaster, councilwoman and mayor of Wasilla, mounted her campaign in 2006. For too many years, she said, the state has been controlled by the oil industry, which has manipulated legislators like puppets on a string. Old ways had to change, she told voters, promising that if they elected her governor, cronyism—at the state level, at least—would end. It was time, she said, using a term that would be used repeatedly over the next few months, to reinsert “transparency and trust” in Alaska politics.

Palin’s appeal as a potential state or national politician began to broaden in January 2004 when she resigned as head of the Alaska Oil and Gas Conservation Commission after complaining to the governor and state attorney general about ethics violations by another commissioner, Randy Ruedrich, who was also state chairman for the Republican party. Later that year, Ruedrich paid a $12,000 fine for breaking state ethics laws. In 2005, she joined a Democrat to launch an ethics complaint against then state attorney general Gregg Renkes. The governor reprimanded Renkes, who soon resigned.

Her record and her promises struck a chord with voters. In the Republican primary, Palin crushed Frank Murkowski, the embattled incumbent who had enraged the public by largely ignoring its sentiments on issues ranging from the elimination of a longevity bonus for Alaska seniors to the purchase of a private jet for government use. Palin collected nearly 51 percent of the votes to Murkowski’s 19 percent.

She went on to handily win the general election with more than 48 percent of Alaskans’ votes compared with her opponent, former Democratic Gov. Tony Knowles, who collected 40 percent. Winning the election not only made her the first female governor in Alaska but, at age 42, the youngest. “I think those actions that I took in the past … established that I would be an Alaskan first before my chosen party, the Republican Party,” Palin said. From an ethics standpoint, the move gained her favor among the masses, and citizens praise her openness.

Alaska’s political bigwigs, though, seem wary of her. “The hindrance, some would say, is that because I have done things like calling for Ben Stevens to step down as our national Republican committeeman, I don’t have those communications with the party’s hierarchy. “I don’t think of it that way, though. I consider it a freeing and independent position I’m in to do what I believe is the right thing for Alaska They’re not telling me who to appoint, or how to make a decision.”

Thinking For Herself
It is the last day of the 25th Legislative session, and Palin sits in her office watching lawmakers at work via a television mounted in a mahogany-colored cabinet. She watches with the intensity of a fan watching a football game, knowing the clock is ticking. Many of the issues she has been working on—municipal revenue sharing, reinstating the longevity bonus for seniors and education funding—languish in committees. She is particularly concerned about a measure that would limit the deductions oil companies can claim when making necessary safety repairs.

“Just put it on the floor for a vote,” she says to herself, clearly frustrated at the number of bills being held up so late in the session.

“This is a good bill,” she continues, speaking to no one in particular but to everyone in the room. “If they can make these (tax) claims, we’d be on the hook for 52 percent of their costs. It’s ridiculous.”

To hear such talk come from a Republican, a party known for its guardians of big business and proponents of paving the way for more oil production, comes as a surprise to many. Palin has been called a maverick Republican for her unconventional views, but she steadfastly maintains that she has the best interests of Alaska—and big business—in mind.

Despite her occasional differences with the party’s mainstream ideas, she fits the mold as a lifelong member of the National Rifle Association who is pro-life and opposed to gay marriage. But she seems to appeal to Democrats as well as Republicans.

“She has not been partisan,” said Rep. Les Gara, a Democrat from Anchorage. “Anybody that comes to Juneau and says, ‘I’m not going to do my party’s bidding’ deserves credit. We had some very dark years under Frank Murkowski, and it has been nice to see something different.”

In her office, Palin continues to pace near the television screen, watching the legislators while she conducts her usual, day-to-day business. An aide brings a letter for her to sign, which she does after reading it closely and clarifying one point. Representatives from the National Education Association present her with a framed promotional poster that shows the governor sitting in a chair, reading a story with Piper on her lap. Later, she has an impromptu meeting with the British consul from San Francisco, here on a cruise vacation with his wife.

“Are you having a great time?” she asks the couple as she sits on a sofa and sips coffee. Her staff appears antsy for her to move on to other matters, but Palin gives the couple her full attention. Although the meeting is meant to be casual, there is an agenda. Every meeting has one, and Palin knows it. The NEA folks reiterated their need for education funding. The consul, after several minutes of chitchat, reminds Palin that something must be done about global warming. Palin listens intently and responds with patience that, according to many in the Capitol, is refreshing.

“She’s got this even keel to her, and it’s pretty amazing,” said her deputy press secretary, Sharon Leighow, who shadows Palin most days. But Palin’s style has critics, even among those who like her.

While Gara said he and Palin have met halfway on many issues—such as taxing oil companies—there are other challenges ahead.

“While I like her, I don’t think we have the same vision about how to uplift those born without privilege,” Gara said. “Alaska is still one of only 10 states that doesn’t have universal pre-kindergarten education. All the studies show it works, and we should be educating those kids better. That’s been a frustration for me. We just have different visions. In that sense, this is still a very Republican state.”

Palin said she appreciates the need for pre-kindergarten education, but it is kindergarten through 12th grade that she is most intent on helping. “Constitutionally, we are mandated to provide public education and, traditionally, we are talking K-12,” she said.

In December, Palin’s staff unveiled an education plan that would put an end to the year-to-year seesaw of budgeting that school districts are faced with as they wait to see how much money they will get from the state. Under her plan, educators would know years in advance how much money to expect from the state, and it would be more than ever before—$5,500 per student, Palin said.

“It was always a very nonsensical budget process, but with forward funding, it will no longer be about fiscal funding,” she said. “We have to shift that debate from ‘how much are we going to fund’ to ‘what innovative ways will lead to a better education system?’”

Going Her Own Way
About lunchtime, Todd Palin enters his wife’s office wearing a dress shirt and tie. He throws his jacket over a chair and sits down by a large coffee table littered with Girl Scout cookies and a floppy, stuffed-animal polar bear.

Having such a high-powered wife does not seem to faze Todd, who refers to himself jokingly as the “First Dude.” While Sarah does the work of governor, Todd remains the quintessential Alaska man. He stays busy with his week-on, week-off job with British Petroleum on the North Slope. He’s also one of the state’s best snowmachiners, and has won the grueling 2,000-mile Tesoro Iron Dog race four times.

In the summer, Todd fishes a commercial site in Bristol Bay and spends time flying his airplane, a hobby he has enjoyed for 20 years. Having his wife become governor changed the Palin household, he said, but not in a monumental way.

“Her schedule dictates my schedule, but with her being mayor for so many years, we were already used to it,” he said. “The kids are very adaptable. There are thousands of Alaska families that adapt, whether you’re a contract guy who’s gone for the summer season, a sloper or in the military, we have a lot of families who don’t have the 9-to-5 schedule.”

On this day, Todd Palin is preparing to change into work clothes and help oversee construction of a community playground in Juneau. As First Dude, he is a champion of vocational education for Alaska students. “I’m a product of on-the-job training that was offered to me in 1989. And growing up in the high schools that I attended, we had great shops, mechanic shops and carpenter shops. In recent years, that has not been a high priority but that is coming back. So I’ve told the commissioner of labor, ‘Wherever you can use me in that role, I am there for you.’ ”

Gov. Palin said that goal is much more in line with her husband’s skills as a laborer than those of first ladies, who have traditionally been tasked with choosing linens and flower arrangements for social events.

“I think I have the first working spouse working outside the home with a normal job,” Palin said. “That, in its first year, has taken getting used to for people.”

The playground project has brought together hundreds of community members, and Todd’s presence—thought not as coveted as that of his wife—will bring welcome attention to the effort. It also gives Todd a chance to tout his cause.

“My slope job has provided for my family,” he said. “When an opportunity is given to an individual, it is what that person does with it that matters. As I travel the state, that’s a big concern, getting kids motivated. I am meeting kids that can’t read a tape measure or just don’t want to work, so it’s the same message wherever we go. Step out. Once you step out and are given an opportunity, you can change a life.”

Back in her office, Gov. Palin seems to no longer be able to stand it. She wants to know what is holding up the bill that she has been watching. Since taking office, she has been told repeatedly that doing business in state government is not as straightforward as it might seem, and today she is getting a lesson in that frustrating reality.

“There are a lot of political practices in Juneau that would turn your stomach, and it’s something I still fight,” Gara said. “A lot of practices caught her by surprise—the fact that one committee chair could hold sway over so many legislators. It was interesting to see someone come in and see it for themselves.”

“Nothing has really surprised me since I got here,” Palin countered. “As a member of the public I already was observing the obsessive partisanship that was getting in the way of doing what is right for Alaska (such as) a Republican’s refusal to listen to a Democrat’s proposal just because they were a Democrat, and vice versa. That sort of behavior was something that I knew we had to make a commitment to change, and I think it has pleasantly befuddled lawmakers and some don’t know how to take it.”

Just such a moment occurs as Palin walks out the door and heads for the office of Rep. Mike Chenault, a Republican from the Kenai Peninsula who is holding onto the tax measure. With looks of disbelief on their faces, a bevy of colleagues follows her as she approaches Chenault’s office and speaks to a legislative staff member. Chenault is meeting behind closed doors and doesn’t emerge.

Eventually, Palin tires of waiting, then turns around and walks back to her office on the third floor. In the final hours before the session closes, the bill will fail, a development Palin reluctantly accepts but promises to revisit (and does, successfully adding the tax requirement to a bill that passes in a special legislative session she calls later in the year.)

Staff members whisper among themselves, surprised at Chenault’s lack of courtesy and equally stunned that Palin marched to his office unannounced.

“I think it was an unconventional thing to see the governor just come down and chat about an issue,” Palin said. “For me it wasn’t devastating or surprising that he didn’t come out to talk to me. I’m just Sarah Palin walking down the hall from the third floor to ask a question. But it is a new ballgame for these legislators (who) were used to doing things a certain way. I don’t begrudge them in their hesitancy. It will just take some time.”

Apparently, the public has not taken so long to convince.

In two polls conducted last May, Palin’s approval rating ranged from 89 percent to 93 percent, making her perhaps the most popular governor in the country. The ratings came from both Republicans and Democrats who said they liked the fact that Palin has followed through on the promises she made during her campaign.

One of the larger issues was the construction of a natural-gas pipeline from the North Slope, which many say would bring renewed vigor to the state’s economy. Soon after taking office, Palin introduced the Alaska Gasline Inducement Act, which in Alaska has taken on its own identity. The act, which passed last spring, calls for competition among those with interests in building a natural gas pipeline to tap Alaska’s reserves. The state would be the driving force behind the competition, and there would be inducements to create it. As of December, five companies had made bids for the gas-line construction, defying critics of the plan who said it would scare away big business.

There are other criticisms, too. Some say she is playing a popularity game, and that she simply says what the masses want to hear. Others worry about the record-high $6.6 billion operating budget Palin passed in June and the near-record $1.6 billion capital budget she approved, despite making more than $235 million in cuts. After the cuts, some lawmakers said they hadn’t received clear guidance on what could be put into the budget. Others seemed confused by her seemingly random cuts.

“The importance of having a grasp of facts, figures and policies continues to be the same as when (Palin) was on the campaign trail: No it doesn’t really matter, just smile and talk about trust and transparency,” wrote former state representative Andrew Halcro, who failed in his 2006 bid for governor against Palin and now writes a blog related to state politics. “The fact is, both the operating and the capital budgets came in at a combined $350 million higher than what she promised.”

That’s not the fiscal restraint she promised, Halcro pointed out.

“Criticism, when you’re in elected office, of course, it’s expected,” Palin said. “I will take the criticism that is constructive, that is helpful. If it needs to be listened to, I don’t mind.”

But criticism like Halcro’s is not constructive, she said.

“The irony with Andrew is, I am the same person with the same positions I had when he so wanted to work with me in the administration,” she said. When Halcro was not hired for a job, she said, his tone changed.

“There is certainly bitterness now,” she said. “But I hope for his sake that he can find something to be happy about.”

A Family Foundation
Todd and Sarah Palin are driving to Chuck and Sally Heath’s house for a short visit before they head into Anchorage for the gala. Seeing her parents, who live less than 10 minutes away in a beautifully kept home, was once an everyday occurrence. These days, it is an uncommon treat, squeezed in between public appearances, meetings and travel.

Inside the Heath home, there are walls covered with photos showing the Heath children —Chuck, Jr., Heather, Sarah and Molly—at various ages doing childhood things. From a young age, they hunted, fished, hiked and camped.

“They had to go do these things because they had to go with me,” Chuck Heath says. “Enjoying the outdoors and making the most of it is what you do in Alaska. Alaska is a participant-type sport place, not a spectator-type place.”

In one photo, Sarah is pointing a rifle at a distant caribou. She took it from 300 yards out, her father says proudly.

“She’s a good shot,” Heath says. “We were up on the Denali Highway for her first one, and she shot one up out of Cantwell with Todd. Don’t pin me down on how many she’s shot, but there’s been a few.”

Contrasting the hunting shot is one of a well-coiffed Palin, smiling as Miss Wasilla 1984. Her hair is bigger, her cheeks plump with youth, but it’s still the same person. Palin pretends not to see that one—she has endured so much grief over her brief stint as a beauty queen that it has become a tiresome topic—and instead points to one of her brother shirtless and flexing his muscles.

Around the room is more evidence of a lively childhood. Stuffed birds, mounted animal heads and bear hides cover the walls. On every shelf and tabletop is some sort of Alaska artifact—mammoth teeth, tusks from a steppe bison, fossils and rocks of various sizes.

Near the back doorway are two giant, dried-out snakeskins hanging the length of the doorway. The Heaths had boa constrictors during Sarah’s childhood, a fact the girls in the family were never too thrilled with, Chuck points out.

“Remember that turtle, too, that we had?” Palin says. “It disappeared and we never found it again. I wonder what happened to it?”

Then there was the albino skunk, yet another of Heath’s specimens used for science lessons during his years as a teacher. Perhaps when you grow up in a household knowing anything is possible—one day it’s a skunk, the next a 9-foot snake—you grow up knowing no limits. It’s a trait Palin has carried with her to Alaska politics.

Down to Earth
The Heath-Palin connection has created a large and wide-reaching family tree. Todd’s family is spread from Bristol Bay to Homer, and Sarah’s siblings all still live close to home in Southcentral Alaska. Todd and Sarah have four children of their own: The oldest, Track, 18, graduated from Wasilla High last May and then enlisted in the U.S. Army. Next is Bristol, who is staying in the Valley to finish high school. Willow, 13, and Piper attended school in Juneau during Palin’s first year in office, which made the transition easier for the whole family. But despite her fame and new job requirements, Palin is still a mom first.

“She can be on the phone with Dick Cheney and have (Republican Senate President) Lyda Green right outside her door, and her kids call and she goes, ‘Oops, hold on,’” said Leighow, the deputy press secretary. “Her kids trump everyone, and I think that’s pretty neat.”

Watching her everyday life, it’s easy to forget Palin is the governor, a quality that unnerves her security detail. She likes to go running alone. She often walks down the road to meet Piper’s school bus. And although she could have a driver with her at all times, she often prefers driving herself.

“I know I don’t need a chauffeur, that’s for sure,” she said. “Their time can be better spent elsewhere. I watch people slogging through a slushy parking lot to get to a building and I know I should be doing the same thing. Also, I do like getting to just chill for a 10-minute drive into (Wasilla), or my commute into Anchorage. It’s nice and quiet, and private.

“Besides the home life with the kids—and offices in Juneau and Anchorage are so busy—that’s the only time that I’m alone.”

Leighow said in all their years of government detail the security personnel, mostly retired state troopers, have never had a governor who drove himself.

“It drives them crazy, keeping up,” she said.

At a July governor’s picnic, held on a greenbelt in Anchorage, Palin stood behind a grill, flipping burgers and talking to the people lined up with plates in hand. The hordes wanted to talk, shake her hand, tout their latest cause or make a plea on some issue.

Leighow stood nearby, watching as the crowd grew closer and closer, enveloping Palin. She kept a keen eye on the governor, watching for potential signs of trouble. Palin seemed oblivious to it; Leighow was nervous.

“You just have to be really careful,” Leighow said.

Perhaps it’s Palin’s everyday normalcy that the public appreciates. She presents herself more as a PTA mom than a political force, someone just as likely to trade tips on scrap-booking as discuss public policy. But one thing is clear: The public is ready for this sort of leadership.

In the end, Palin is a practical, real-life person applying the rules of everyday life to government. When she laid off the chef at the governor’s mansion, it was not because of poor performance; she simply didn’t need one.

“She told me, ‘I get home from the capital at 9, 10 o’clock. I can warm up something myself,’ ” Heath said. “The lady was a good cook, but the kids would rather have a hot dog than a gourmet crab cake.”

Bristol, upon returning from a shopping trip in Anchorage, received Palin’s nod of approval for the $15 dress she bought for the night’s gala they were about to attend. No need for a $300 gown, Palin said.

But when Bristol revealed she spent $30 on leg waxing—“That was supposed to be gas money,” Todd Palin said disapprovingly—the governor wasn’t too happy, either.

“That’s a waste of money,” she said. “You have razors.”

When they married in 1988, Sarah and Todd were coming off a mediocre fishing season in Bristol Bay. She didn’t want to burden her parents with the costs of a lavish wedding, something the young couple felt was unnecessary.

So they took the practical approach. One day in August, they simply drove to the Palmer courthouse and bought a marriage license. But they still needed two witnesses to stand for them at the ceremony.

“So they went to the senior center there in Palmer and got two old people as witnesses,” Heath said. “They didn’t know them at all. I’d love to have seen that. When Sarah came home, she said, ‘By the way, we got married today.’”

It’s that kind of attitude that seems to have gotten Palin where she is today. She has been a practical person since before her future even hinted at a career in politics, and she’s bringing practicality to Juneau. As Palin sees it, for too long the state has been waxing when it could have been shaving. She acknowledges that there is still much work to be done to reduce state spending, improve business growth and create an open and honest state government.

But, she maintains, it can happen.

“We’ve said all along we are going to be open and honest,” she said. “We’re certainly going to have to continue to let our actions speak louder than words. Some lawmakers just need to feel more comfortable and confident that our part is to work with them, not against them. Instead of pessimistically believing things can’t get better, we need to help them see they can, and will, get better.”

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-Melissa DeVaughn is a free-lance writer from Chugiak. She wrote A Constitution for the Ages, part two of our Alaska Statehood series, in June 2008.