Memorandum.

TO: All concerned taxpayers

Re: Exposing the HOAX of Senate Bill One

Reference: The truth about Senate Bill One (1), hereafter referred to as S1. This bill falsely represents itself to abolish the radical Council on Affordable Housing a.k.a COAH.

The following excerpts from S1 debunk the claim that this legislation “abolishes” COAH. S1 actually creates a super bureaucracy that concentrates even more power and money with the State Planning Commission, hereafter referred to as the “Commission.”
S1 empowers the Commissioner of the Department of Community Affairs with sweeping authority to “prioritize” LOW INCOME HOUSING projects and establish “rules” on the management of these projects, in essence establishing a “LOW INCOME HOUSING CZAR.”

I have cited specific passages from the bill and copied these passages directly to this memorandum, including short explanations. The passages speak for themselves. However, it is necessary to provide explanations for those legislators who will be voting on this bill, but appear to have some difficulty comprehending its actual meaning.

Please contact me if you require additional clarification.

The hoax that S1 “abolishes” COAH is exposed on the first page. The bill’s synopsis contains the following sentence in the first paragraph:

”1. (New section) The Council on Affordable Housing established by the Fair Housing Act is abolished, and all of its powers, functions and duties are continued in the State Planning Commission…”

Furthermore, the bill transfers every single prior act, rule and regulation ever promulgated by COAH to the State Planning Commission:

”Whenever, in any law rule, regulation, order, contract, document, judicial or administrative proceeding or otherwise; Reference is made to the Council on Affordable Housing the same shall mean and refer to the State Planning Commission.”

Money, your tax dollars, is the fuel the COAH fanatics need to advance their failed agenda. The following passage, also on page one, clearly defines that all funding is intact:

”All appropriations and other money available and to become available to the Council on Affordable Housing are hereby continued in the commission, and shall be available for the objects and purposes for which such moneys are appropriated…”

These three simple passages from the first page of S1 expose the truth -- COAH is simply being renamed. But that is not all. The newly constituted “State Planning Commission” becomes a hybrid super bureaucracy, even more dangerous than COAH as we know it.

I have stated S1 transforms the DCA Commissioner into a LOW INCOME HOUSING CZAR. This is proven in the following passages describing the Commissioner’s power. Start with the maintaining of the “Register” of LOW INCOME projects, this passage defines the term:

“Register" means The Register of Housing Projects directed by section 2 of this act to be established and maintained by the commissioner.”

The “Commissioner’s” power is expanded with the additional ability to “prioritize” these projects and force their implementation:

“The commissioner shall cause to be developed a system for assigning and designating priority ratings to each project included in the register. Priority ratings shall be based upon the following factors, giving to each factor such weight as the commissioner shall judge to be appropriate:”

The list of factors is long and complex and listed in detail in the bill. They include feasibility, distribution of units, desirability, size, etc. Ultimately, the commissioner has control over every aspect of the project. Under the term “desirability” the “Commissioner” could assume the authority to choose paint colors in the units. This is clearly a Low-Income Housing Czar.

Following Memorandums will address the expansion and further radicalization of the failed social engineering scheme known as COAH. COAH, by any other name, is still COAH.

Fear the Boom and Bust. How America’s economic power has declined.

This is the longest newsletter I have ever sent. That is because it is important Americans understand what is happening to our economy. Once the greatest in the world, the recent Index of Economic Freedom rating by the Heritage Foundation and the Wall Street Journal reveals our country has declined to a dismal 8th place amongst world nations.
For the first time ever, the United States was classified as "mostly free" (as opposed to simply "free"). The complete findings of the Index are posted online at
http://www.heritage.org/Index/

The driving force behind this decline has been the growth of government and debt, a natural consequence of an economy that has moved to central planning from free markets. This can be attributed to the acceptance of the economic philosophies of John Maynard Keynes. The video I am writing you about does a terrific job of bringing this issue to the public and educating folks in what is normally a highly scholarly discussion.

Please, take the time to learn and digest by watching this video. Some things cannot be expressed in sound bites.

The debate between John Maynard Keynes and F.A. Hayek, both living and teaching in Britain in the 1930s, was one of the great debates of the century. The leading proponent of government borrowing and debt to “grow” the economy, Keynes had the podium and the audience, to the point of influencing policy the world over even to the present day.

The quiet and studious Hayek never really did gain an audience, although he was awarded the Noble Prize for his seminal work “Road to Serfdom.” Like his colleague and mentor Ludwig Von Mises, Hayek wrote in scholarly journals and was heard only by those with skeptical minds; people who doubted the theoretical and policy conventions embraced by government bureaucrats and looked beneath the surface. Politicians, only interested in short term political gain, gravitated to Keynesian theory and today we are realizing the consequences of this short sightedness.

The debate was one of the most critical for the shape of economic principle in the world. The Hayekian point of view has been systematically marginalized and kept at bay by the political and economic establishment, as Hayek’s philosophy is the foundation of conservative economic thinking.

Keynes’ philosophy of expanding debt is the driving force behind the shift from conservative government spending policies, on which the nation grew its economy for more than 170 years, to the explosion of debt, deficits, printing press currency and a future be damned philosophy that is manifesting itself today in the economic crisis surrounding us. When questioned about the long term consequences of his borrow and spend philosophy, Keynes’ famous retort was “In the long run we are all dead.” Well, John Maynard Keynes is dead, but we are all living with the consequences of his economic principles. Government policy makers, academic intelligentsia and elected officials have all embraced this reckless philosophy.

Fear the Boom and Bust illustrates the debate and compares the philosophies in an extraordinarily dynamic manner. In this environment, Hayek’s statement that conservative economic principles are harder to explain is apparent, but when we do explain, we win. This video is a winner.

The video opens with Keynes and Hayek at the front desk of a hotel, in town for the "World Economic Summit." The clerk dotes on Keynes, treating him like a star. Keynes arrogantly announces that he needs no agenda because he is the agenda. Meanwhile, Hayek humbly notes his presence. The person behind the desk has never heard of him. This captures the ethos of the 1930s to the present: the world-famous Keynes vs. the unknown Austrian economists.

It's all true to life: a number of students report having sent this video to their economics professors, who report back that before seeing this, they had never heard of The Nobel Prize winning Hayek.

The character depiction is fantastic. Keynes is a rock star, promoting a high lifestyle, parties, and living it up — the future be damned. Hayek's personality here is more intellectual, sober, and even a bit puritanical, with a focus on reality and the long-term good.

Hayek goes to his room only to find a Keynes book in place of the Gideon Bible. The phone rings and it is Keynes, who announces that the festivities at the Fed begin shortly. Hayek is stunned because he thought they were going to seminars and meetings.

They meet in the lobby and head out, Hayek with his subway ticket in hand. Keynes orders a stretch limousine, while Hayek shakes his head in disgust.

The theme of the party animal vs. the sober economist continues throughout the story. The terms of the argument are laid out very clearly. Hayek says business
cycles are caused by "low interest rates" born of intervention, whereas Keynes wants to blame "animal spirits" loose in a market crying out for regulation.

Keynes then gets his turn at explaining depression. It is caused by sticky wages and can only be cured by boosting aggregate demand through government spending and the printing press. He favors public works, war, and broken windows, warns against the liquidity trap, favors deficits, brags that he has changed the economics profession, and concludes, "Say it loud; say it proud, we're all Keynesians now!" All the while, the viewer is witness to wild antics of drunken partying.

It is left to Hayek to restore reality to the discussion. He dismisses Keynes on the grounds that there is too much aggregation in his equations, which ignore human action and motivation. Hayek compares post-recession stimulus to drinking the "hair of the dog" to cure a hangover. He points out that there can be no prosperity without saving and investment, and he proceeds to school Keynes in the Austrian perspective.

He begins by changing the focus from the bust to the boom, which he regards as having planted the seeds of disaster. The boom starts with an expansion of credit. The new money is confused with real, lendable funds and is invested in new projects like housing construction.

But sufficient resources to complete these projects are lacking. They are malinvestments. The "grasping for resources reveals there's too few" and the boom turns to bust. As for the liquidity trap, that is only evidence of a broken banking system. SOUND FAMILIAR? This is the philosophy behind the Stimulus Packages, Wall Street bailouts and sub-prime mortgages and spiraling national debt. The lesson: "You must save to invest, don't use the printing press."

This entire explanation takes place against the backdrop of Keynes trying to sleep off a hangover and then hurrying to the bathroom to throw up — the aftereffects
of partying the night before.

It is important that conservative activists, Tea Party organizers and anyone concerned with the challenges we are facing today take time to educate themselves on this critical battle of economic principles. This philosophical distinction is the root of our problems today and students of Hayek, like me, have warned of the consequences of the failed reckless policies of Keynes and his disciples. I hope this video helps you become a better citizen and helps you better understand what is happening. Please pass this on to a friend.

On to Victory

Steve Lonegan
State Director
Americans for Prosperity

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