It's all about cronies: That's why Democrats pour money into programs that fail

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President Barack Obama's new chief of staff is a multimillionaire, as were his first two chiefs of staff.

Like the recently departed William Daley and Rahm Emanuel, Jacob Lew "made his millions while passing through the revolving doors that lie between the Democratic Party and Wall Street," said Daily Caller reporter Neil Munro.

The fund Mr. Lew managed for Citigroup lost billions. The bank was bailed out by the Troubled Asset Relief Program.

Mr. Daley is a banker by trade. Mr. Emanuel, who was paid $16.4 million for two and a half year's work, had no prior experience in business or finance when he was hired by Wasserstein Perella.

New York Times reporter Gretchen Morgensen described in "Reckless Endangerment" how the Federal National Mortgage Association (Fannie Mae) "and the government housing policies it supported, pursued and exploited brought the financial system to a halt in 2008."

Fannie and the Federal Home Loan Mortgage Corp. (Freddie Mac) bought bad loans from firms such as Countrywide Financial -- where "fraud was systemic" -- then resold the toxic mortgages to Wall Street.

Mr. Daley served on Fannie Mae's board. Mr. Emanuel was on Freddie Mac's board. Journalists rarely report these facts, because they clash with the narrative.

For Democrats, politics is all about narratives, of which the most important is: Republicans are the party of the rich.

According to exit polls, 52 percent of Americans earning $200,000 a year or more voted for Barack Obama. Fourteen of the 15 wealthiest counties --22 of the top 30 -- usually vote Democratic. The seven richest senators are Democrats.

Republicans who criticize domestic spending programs are selfish, greedy, mean-spirited and racist, the narrative continues.

This slander is despicable, but shrewd. It shifts focus away from whether government programs deliver what Democrats promised.

They don't. Since Lyndon Johnson declared the War on Poverty in 1964, about $16 trillion has been spent on means-tested welfare programs. That's more than double the $6.4 trillion (in inflation adjusted dollars) America spent on all its shooting wars combined.

We won most of the real wars, but poverty is winning this one. In 1970, 12.6 percent of Americans were living below the poverty line. Now, 14.3 percent are.

Democrats' programs cost much more than they predict. Congress projected in 1987 that the subsidy for hospitals it had added that year to Medicaid would cost less than $1 billion in 1992. The actual cost that year was $17 billion.

They also deliver less than promised. Medicaid patients are more likely than the uninsured to die in hospitals, researchers at the University of Virginia found.

Efforts to explain to Democrats how better results could be achieved for less money fall on deaf ears. Democrats don't care how much their programs cost or how little they achieve, because the stated goals aren't the real goals.

There is an economic divide between Democrats and Republicans, but it isn't based on wealth. It pits those who live off the government against those who pay for it.

The poor come first in Democratic rhetoric, but not at their feeding trough. At the head of the line are crony capitalists who receive subsidies and bailouts. Next are faculty and staff at colleges and nonprofits that depend on government funding. Then come the unions.

Democrats design programs to benefit providers of services. There are 69 different federal welfare programs. From this the poor get mostly confusion. But duplication multiplies jobs for bureaucrats and consultants. If the War on Poverty were ever won, most of these jobs would go away. This may explain why Democrats are content to have it go on and on, with little progress made.

To Democrats, teacher unions matter more than children trapped in failing schools. The federal student loan program has saddled thousands of young people with debts they can't repay, but has been a bonanza for colleges and universities.

Times are tough for most Americans. But Wall Street is making record profits. Members of Congress are getting richer. Crony capitalists reap billions in taxpayer subsidies.

If you want to know what's really going on, follow the money.


Jack Kelly is a columnist for the Post-Gazette and The Blade of Toledo, Ohio ( jkelly@post-gazette.com , 412 263-1476).


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