Fiscal Follies

2010 YEAR END SERIES

Nouriel Roubini

Nouriel Roubini

Nouriel Roubini is Chairman of Roubini Global Economics, Professor of Economics at the Stern School of Business, New York University, and co-author of the book Crisis Economics.

2010-12-13
NEW YORK – The fiscal stimulus that most advanced economies and emerging markets implemented during the 2008-2009 global recession – together with monetary easing and the backstopping of the financial system – prevented the Great Recession from turning into another Great Depression in 2010. At a time when every component of private demand was collapsing, the boost from higher government spending and lower taxes stopped the global economy’s free-fall and created the basis for recovery.

Unfortunately, stimulus spending and the related bailout of the financial system, together with the recession’s effect on revenues, contributed to fiscal deficits on the order of 10% of GDP in most advanced economies. According to the International Monetary Fund and others, these economies’ ratio of public debt to GDP will surpass 110% by 2015, compared to 70% before the crisis. Aging populations in most advanced economies imply additional public debt in the long term, owing to non-fully-funded pension schemes and rising health-care costs.

Thus, in most advanced economies, deficits need to be reduced to avoid a fiscal train wreck down the line. But much research, including a recent study by the IMF, suggests that raising taxes and reducing government spending has a negative short-term effect on aggregate demand, thereby reinforcing deflationary and recessionary trends – and undermining fiscal consolidation.

In an ideal world, where policymakers could credibly commit to medium- to long-term fiscal adjustment, the optimal and desirable path would be to commit today to a schedule of spending reductions and tax increases, phased in gradually over the next decade as the economy recovers. That way, if the economy needed another targeted fiscal stimulus in the short run, financial markets would not respond by driving up borrowing costs.

Unfortunately, the fiscal policy currently adopted by various advanced economies deviates sharply from this path of credible medium-term consolidation combined with short-term additional stimulus.

In the US, we have the worst of all possible worlds. On one hand, stimulus had become a dirty word – even within the Obama administration – well before the Republicans’ mid-term election victory ruled out another round altogether. On the other hand, medium-term consolidation will be all but impossible in America’s current atmosphere of hyper-partisanship, with Republicans blocking any tax increase and Democrats resisting reforms of entitlement spending. Nor is there any pressure from bond markets to concentrate the minds of policymakers.

In the periphery of the eurozone, the problem is the opposite: bond vigilantes are demanding that Greece, Ireland, Portugal, Spain, and Italy front-load fiscal consolidation or watch their borrowing costs go through the roof, risking them their market access and triggering a public-debt crisis. Markets don’t care that front-loaded fiscal consolidation is exacerbating recession and thus making the goal of reducing debt and deficits as a share of GDP near-impossible to achieve.

To avoid a persistent and destructive recession, the fiscal and structural reforms imposed by the bond vigilantes should be accompanied by other euro-zone policies that restore growth and prevent vicious debt dynamics. The European Central Bank should ease monetary policy in order to weaken the value of the euro and bootstrap the periphery’s growth. And Germany should cut taxes temporarily – rather than raising taxes, as planned – in order to increase disposable income and stimulate German demand for the periphery’s goods and services.

Alas, neither of the two biggest players in the euro zone is pursuing policies consistent with restoring sustained growth in the euro zone’s periphery. The ECB’s monetary policy is too tight; and Germany is front-loading fiscal austerity. Thus, the periphery is destined to a destructive deflationary and recessionary adjustment that will exacerbate the risks of recession, insolvency, eventual defaults and, possibly, exit from the euro.

In the United Kingdom, the new government gave several reasons for front-loading fiscal consolidation. The bond vigilantes might have woken up if early austerity was not implemented; the deficit was very large and the public sector bloated; and it is always politically easier to implement tough measures early in an administration, when popular support is still high and the next election is far off.

Certainly, the UK was playing with fiscal fire and needed some commitment to earlier austerity. But phasing in austerity more gradually, and thus back-loading the adjustment, would have posed less risk to the economy’s anemic recovery while maintaining a credible commitment to fiscal consolidation. Instead, the government could well end up with no plan B in case plan A – massively front-loaded austerity – leads to a double-dip recession.

In short, an optimal path of fiscal austerity would, in most countries, imply a back-loaded but credible commitment to medium-term consolidation, together with short-term additional stimulus when necessary and allowed by market conditions, thereby avoiding the prospect of a deflationary and recessionary spiral. Unfortunately, the main advanced economies are following a divergent path – which, in some cases, will lead them in the opposite direction in 2011. As a result, the risks of debt deflation and eventual disorderly sovereign and private-sector defaults are rising.

Nouriel Roubini is Chairman of Roubini Global Economics (www.roubini.com), Professor of Economics at New York University’s Stern School of Business, and co-author of Crisis Economics.

Copyright: Project Syndicate, 2010.
www.project-syndicate.org

Issa Announces Hearings, Will Probe Fannie, Freddie, FDA, WikiLeaks

Ryan J. Reilly | January 3, 2011, 12:52PM

After making the rounds on the Sunday talk shows yesterday, incoming House Oversight Committee Chair Darrell Issa today laid out his agenda for the next session of Congress and oversight of the Obama administration.

Issa spokesman Kurt Bardella told TPM that the hearing list so far would focus on these six topics: the impact of regulation on job creation; Fannie Mae's and Freddie Mac's roles in the foreclosure crisis; the Financial Crisis Inquiry Commission and the failure to identify the origins of the financial crisis; how to combat corruption in Afghanistan; Wikileaks; and issues of food and drug safety at the FDA. Issa also announced the lineup this morning on his Twitter account. Bardella also emphasized that there was a difference between holding a hearing on a topic and launching an investigation.

Bardella's outline said that Issa's hearing on WikiLeaks would include constitutional scholars and White House National Security Adviser Tom Donilon. The hearing would examine the "constitutionally appropriate and technologically possible ways the Federal government can stop the dissemination of sensitive information on the Internet by organizations like Wikileaks?" Issa wants to determine if the administration has a strategy for combating and preventing the problem.

Bardella said the FDA was an "example of broken bureaucracy" and that a hearing would include FDA officials and others with first-hand knowledge of FDA failures.

For the Afghanistan corruption hearings, Issa would bring in "relevant Administration officials, non-government organizations concerned about the extent of corruption in Afghanistan."

He'll also have Financial Crisis Commissioners including Phil Angelides and Bill Thomas in to discuss the Financial Crisis Inquiry Commission, which Issa said will "release results that are biased, controversial, and highly partisan." Angelides and Thomas issued their own report last month, largely blaming Fannie Mae and Freddie Mac without examining the other issues in the commission's mandate to any great degree.

The Fannie and Freddie hearing will examine the underpinnings of the financial crisis, and the hearing on the impact of regulation on job creation will examine "indications that the Administration intends to try and bypass Congress by pursuing its agenda on issues such as energy and health care through the regulatory process."

Issa' counterpart, incoming Oversight Ranking Member Rep. Elijah Cummings (D-Md.) told Politico said he would "draw a line at which any witch hunts or hearings that are conducted purely for partisan gains."

Here's Issa's interview on CNN:

Rule of Law in the Age of ObamaCareLess

03 JAN 2011

"These are the times that try men's souls. The summer soldier and the sunshine patriot will, in this crisis, shrink from the service of his country; but he that stands it now, deserves the love and thanks of man and woman."  --Thomas Paine OP/ED WRITTEN BY SCOTT STRZELCZYK    MONDAY, 03 JANUARY 2011 00:04

 

Recently, U.S. District Court Judge Henry Hudson ruled that the individual mandate under the Patient Protection and Affordable Care Act is unconstitutional. 

While a significant ruling in context of expansive federal powers under the commerce clause, of paramount importance is the underlying fundamental principle of the Rule of Law.

The Rule of Law is often overlooked and misunderstood when constitutional issues arise.  A general misconception is a law is constitutional if Congress passes a bill and the president signs the bill into law, or the Supreme Court of the United States upholds a laws constitutionality.  Not only is this wrong, but it is inherently dangerous to our constitutional republic, limited government and federalism, and the protection of man's natural rights and liberty.

The Rule of Law is defined as follows: "Individuals, persons and government shall submit to, obey and be regulated by law, and not arbitrary action by an individual or group of individuals" [i].  In other words, nobody is above the law, nor can anybody act outside the constraints established under the Rule of Law.  The Rule of Law is incorporated in the Constitution of the United States.

The Rule of Law embodies certain indispensable characteristics which are necessary and proper in a government of laws (as opposed to a government of men).  Those indispensable characteristics are the supremacy of law and justice.  The absence of either supremacy of law or justice represents a fatal flaw in our form of government.

Supremacy of Law

Supremacy of Law requires both citizens and government to be subject to known and standing laws.  By subjugating government to a set of known and standing laws, the Rule of Law constrains government bureaucrats and political rulers' arbitrary power over the citizenry.  Today, political expediency and ideology result in a myriad of laws subjugating citizens to political will, which ultimately violates the Rule of Law.

People conflate the supremacy clause, found in Article VI of the Constitution, with Supremacy of Law.  Many people believe the supremacy clause states that the federal government is supreme in all matters of law.  Nothing could be farther from the truth.  Such wishful thinking is the rational basis used to usurp power otherwise not granted to the federal government in the Constitution.  The key provision of the supremacy clause is "which shall be made in Pursuance thereof."

Limitations on arbitrary power were incorporated into the Constitution under Article I, Section VIII.  This section enumerated the powers ceded by the several states to the federal government.  The Constitution established a federal government with limited powers.  The several states created the Constitution, ratified the Constitution, and are the ultimate authority required to amend the Constitution.

After years of despotic rule under the British Crown and fighting a war of independence, it is inconceivable that the framers would create and establish a system of government under the Constitution which granted unlimited power and authority to the federal government.  For the federal government to be supreme in all matters of law raises the following questions:

1. Why did the framers labor to define and enumerate the powers ceded to Congress under Article I, Section VIII of the Constitution?
2. By default, all acts of Congress would be supreme, therefore rendering most of the Constitution meaningless.  There would be absolutely no limits on congressional power and authority.  Why would the colonies fight a war of independence to establish a new system of government capable of subjugating the people to laws under a new tyrant?

Supremacy of Law doesn't support any conclusion as to whether the federal government is supreme over state governments or vice-versa.  The proper interpretation is that those powers reserved to the states and those powers delegated to the federal government must be adhered to because it is stated in the Constitution, and the Rule of Law embodies supremacy of law.

Likewise, the supremacy clause is applicable only to those powers ceded to the federal government.  If Congress passes an act within the limited powers ceded to it, then the law is binding and supreme over any state law or state constitution.  This is what "shall be made in Pursuance thereof" means.  Otherwise, the law is not binding and, therefore, not supreme law.

Justice

Justice is another indispensable characteristic of the Rule of Law.  In the state of nature, man possesses certain rights as a matter of being -- the right to associate, to contract, to self-defense, etc.  These are referred to as natural rights.  In the Declaration of Independence, natural rights are stated as certain unalienable rights to life, liberty, and the pursuit of happiness conferred upon man by his Creator.  These natural rights cannot be conferred by man unto man.  That is, government does not confer natural rights, nor can government deny or abridge natural rights.  The Constitution protects man's natural rights and liberty from government.

In a state of nature, a formal justice system doesn't exist.  One man steals property from another man, and the aggrieved man seeks retribution for his loss of property.  The aggrieved man enacts his own form of justice to compensate for his loss.  That retribution may be excessive or unjustly applied in the mind of a disinterested third party.  For instance, a man steals food from another man.  The aggrieved man seeks retribution and kills the man that stole from him.  Most would conclude that the aggrieved man's action was excessively unjust.

One of the primary reasons man enters into civil society is the resolution of conflicts between individuals.  To ensure that government treats citizens fairly when resolving conflicts, certain protections are necessary to preclude government's arbitrarily taking action against its citizens.

Personal liberty must be protected.  That is, man must be safe and secure in knowing he cannot be arrested without cause, and his private belongings and things cannot be seized or searched without probable cause.  Man must violate the law for the government to justify encroaching upon his personal liberty.

Lastly, due process under the law is paramount to the protection of personal liberty, natural rights, and private property.  Laws regarding procedural and evidentiary rules, jury trials, and the presumption of innocence are necessary safeguards under the Rule of Law.

A quick glance at the constitutional amendments illustrates the importance of justice under the Rule of Law, particularly on the limitation of arbitrary and discretionary government powers.  Amendments IV through VIII all deal with some aspect of justice.  The fourteenth amendment is frequently referenced in regards to justice and due process under the law.  Amendments I, II, IX, and X are restrictions on government infringing upon man's rights and liberty.

Coercive Government

Whenever government violates the Rule of Law, government becomes coercive.  Regardless of the government's rationale, citizens' popular opinion, or intended outcomes, any government action which violates the Rule of Law is coercive, unconstitutional, and unjust.  The Rule of Law and coercive government are of utmost concern to the survival of our constitutional republic.

In many cases, elected officials or government bureaucrats use humanitarian reasons to justify their actions.  We are doing this for the children.  We are doing this to protect you from some harm.  We are compassionate and must help those who are disadvantaged.  All are attempts to justify the use of arbitrary power to achieve political or ideological outcomes that often abridge individual rights, property rights, or liberty.

How does government usurp powers and act arbitrarily in violation of the Rule of Law?

First and foremost, the federal government usurps powers that were intended to be reserved by the states.  Consider a traditional power like local police.  If Congress were to pass a bill taking control of all local police powers, the president to sign the bill into law, and the Supreme Court to rule that the law is constitutional, then state powers would be usurped by the federal government [ii].

The Supreme Court has presumed powers not otherwise granted to it by the Constitution and established itself as the final and ultimate word on all constitutional matters.  The framers did not intend to vest the Supreme Court with this ultimate authority.  It is akin to putting the fox in charge of the hen house.  Furthermore, constitutional interpretation exacerbates the problem of authority, as it affords judges the opportunity to institute distributive and social justice rather than commutative and legal justice.  The framers did not intend to vest nine people in black robes with the power to change the meaning of the Constitution [iii].  Only a properly ratified constitutional amendment can change the Constitution.

Congress established numerous federal agencies and programs administered by the executive branch.  Legislation often grants agencies broad general powers to implement and regulate programs.  Unelected government bureaucrats establish rules and regulations which are considered equivalent to statutory law.  These rules and regulations may run afoul of the Constitution, be used to redistribute private property, take control of private industries, or further an administration's political ideology.  Dozens of czars were appointed without the consent of the people.  The Declaration of Independence states, "He has erected a multitude of New Offices, and sent hither swarms of Officers to harass our people and eat out their substance."  Regulations are another method used by government to arbitrarily exercise power over the citizenry.

Those who swear an oath to uphold the Constitution are stating that they will uphold the Rule of Law.  In the next breath, the same people say the Constitution is a living and breathing document, the Constitution is stale and doesn't reflect modern realities, or the federal government has the power to do whatever it wants under the Constitution.

Expansive views and interpretations of the commerce clause, general welfare clause, necessary and proper clause, etc. are referenced by elected officials as their constitutional authority to enact legislation, institute rules and regulations, and usurp powers otherwise reserved to the states.

These are arguments of tyrants and ideologues.  A person either reveres the Rule of Law or rejects the Rule of Law.  There is no middle ground.  There is no cafeteria plan where certain aspects of the Rule of Law can be followed or ignored as one pleases.

Those who revere the Rule of Law understand it is meant to constrain government against arbitrary use of power.  Those who reject the Rule of Law use government power arbitrarily to constrain the people.

The founding fathers and framers revered the Rule of Law.  The Tea Party and the 2010 elections are about the Rule of Law.  The next two election cycles are critical to the country's future and the Rule of Law.  Nothing less than our constitutional republic is at stake.

[i] Several definitions exist for the rule of law.  The definition I chose for this article is here.

[ii] Federalism was established under the Constitution.  All powers originated as states' powers, and certain limited powers were ceded to the federal government by the states.  James Madison addresses the question of state and federal powers in Federalist 45.  The second and third paragraphs from the end of the paper encapsulate the framers' thinking regarding state and federal powers.

[iii] The current Supreme Court has nine judges.  This has varied over time from as few as six to as many as ten.  The Supreme Court has remained at nine judges since 1869.

---

Scott Strzelczyk writes from his home in Carroll County, Maryland, with a big-picture perspective in local, state and national politics. Article first appeared in American Thinker and is reprinted here with permission.

Tea Party Republicans Vow to Attack Deficit Spending 'Once and for All' in Next Session

Published January 02, 2011

| FoxNews.com

 Shown here are Sen.-elect Mike Lee, left, and Sen.-elect Pat Toomey.

Republicans elected to Congress with the help of Tea Party support pledged Sunday to devote

themselves to balancing the budget over all else when they start their new jobs on Wednesday. 

In the lead-up to the next session, Tea Party freshmen and activists have expressed 

disappointment at the legislation passed by Congress in the waning days of the post-election 

lame-duck session. The bipartisan package to extend the Bush-era tax cuts was seen by some 

conservatives as a flawed deal that failed to bury the estate tax and make permanent the 

income tax rates of the past decade. At the same time, critics assailed the package for 

containing billions in new deficit spending. 

Tea Party candidates said Sunday they hope to change the culture of spending in Washington 

as they prepare to get sworn in this week. They said Social Security, Medicare, Medicaid, 

earmarks and other items will all be on the table for serious reform. They warned their more 

experienced colleagues to hold back on the deficit spending once they come into office. 

"It's time to once and for all ... stop perpetually spending money we don't have and sending the 

bill to unborn generations of Americans," Sen.-elect Mike Lee of Utah told "Fox News Sunday." 

Lee said the $858 billion package passed by Congress at the end of 2010 demonstrated the 

need for a balanced-budget amendment, which he said he will propose. 

"It certainly is disturbing that we have to add an additional trillion dollars to our debt in order to 

preserve tax cuts without which our economy couldn't survive right now," he said. "Congress has 

long abused the authority to incur debt in the name of the United States. And we need to restrict 

that." 

Allen West, an incoming GOP congressman from Florida, said the problems facing Washington 

are big, but not "insurmountable." 

Speaking on "Fox News Sunday," he said more needs to be done to set the stage for private-

sector job growth and scale back government intervention. West suggested the latest vote to 

extend long-term unemployment benefits for another 13 months was just "creating more victims 

and making people dependent on the government." 

He said the federal government needs spending caps and needs to address the long-term 

imbalance in the nation's entitlement programs -- a common refrain in Washington. 

It remains to be seen whether Tea Partiers can muster the kind of bipartisan majority needed to 

address that imbalance. But Sen.-elect Pat Toomey of Pennsylvania echoed the point on 

entitlement reform in an appearance on NBC's "Meet the Press." 

"Nobody is talking about making it go away. We're talking about changing the structure," he 

said in reference to Social Security. 

Toomey was one of the Tea Party movement's early stars, effectively forcing incumbent 

Sen. Arlen Specter out of the Republican Party during the GOP primary race. After Toomey 

cruised to victory in the primary and Rep. Joe Sestak beat Specter on the Democratic side, 

Toomey defeated Sestak by a narrow margin in November. 

Toomey and Lee will join several other Tea Party-backed senators, including Kentucky's Rand 

Paul and Florida's Marco Rubio, when they take the oath this week. That's along with dozens of 

new GOP House members. 

Republican leaders can probably count on most incoming Tea Partiers to back early priorities 

like voting to repeal the health care law -- though that effort will almost certainly be stymied by a 

presidential veto in the off-chance that it clears both chambers. But on some other tricky 

subjects, they could be a bit of a wild card. 

Rep. Michele Bachmann, R-Minn., who is not a freshman but still commanded Tea Party 

enthusiasm over the past two years, said Sunday that she does not support raising the debt 

ceiling. 

She said on CBS' "Face the Nation" that she's gathering signatures on a petition to urge 

Congress to vote against raising the $14.3 trillion cap. 

The White House warned Sunday that failing to raise the ceiling could drag the country into 

default and trigger an economic crisis worse than that of 2008. Acknowledging the dilemma, 

other Tea Party-backed lawmakers, like West, said they could vote for a debt ceiling increase 

provided certain conditions are met. 

West said he would not write a "blank check," and that if Congress wants to raise the cap, they 

need to talk about "budgetary controls" and spending caps.

Hasta la Vista:

 Arnie quits as California governor

Jan 2 03:31 PM US/Eastern

 Arnold Schwarzenegger, pictured in 2010, steps down as California "Governator" Monday, defending his record to the last -- and keeping fans and others guessing about his next move.

Arnold Schwarzenegger steps down as California "Governator" Monday, defending his record to the last -- and keeping fans and others guessing about his next move.After seven years at the helm of the Golden State, the former champion body builder turned "Terminator" movie megastar and businessman is leaving his adopted home mired in huge financial woes.
But in a newspaper interview to mark his handover of power to Democrat Jerry Brown -- two months after November 2 polls -- Arnie stood by all his decisions.
"The important thing with my job that I've had for the last seven years is, you have to have passion... You can't be afraid," he told the Los Angeles Times newspaper.
"You have to recognize very quickly that political risk-taking is not political suicide."
While he impressed many with his transformation into a liberal Republican and green champion who won reelection in 2006, his poll ratings slid in recent years, in line with California's dire economic fortunes.
A budget crisis in 2010 pushed California, which would have been the world's eighth largest economy if it were a country, to the brink of bankruptcy, sending its credit-rating plunging and forcing it to pay bills with IOUs.
But while commentators will pick over Schwarzenegger's political legacy here, many are watching closely to see what the 63-year-old will do next -- notably whether he will return to the movies.
"Will I still have the patience to sit on the set and to do a movie for three months or for six months, all of those things? I don't know," he tweeted in October.
In another interview with the LA Times last month, he acknowledged he has many other options, from writing his autobiography to the speech-making circuit, to business projects or even a behind-the-camera role in Hollywood.
"It's very clear there are a bunch of different options because of the different careers that I've had.
"From the health industry, to the environmental side, to the political stuff, to writing books, to giving speeches -- all of those kinds of things. There's a huge variety of different doors that can open."
It is all a long way from his humble beginnings in a small town near Graz in eastern Austria.
In 1968, after winning a string of bodybuilding contests, the penniless 21-year-old came to the United States to pursue his passion.
He earned a business and economics degree from the University of Wisconsin,became a millionaire while winning the Mr. Universe title four more times, and then shrugged off barbs about his thick accent as he turned to acting.
Joining Hollywood's royalty, his ominous "Terminator" catchphrases "I'll be back," and "Hasta la vista, baby" have now entered the English language -- and he still uses them frequently as a politician.
His star power would certainly help him pursue a political career -- there has even been talk about him joining the Obama administration in some environmental role.
He certainly doesn't need the money after making a fortune in Hollywood -- he was on a reported 30 million dollars a movie, and refused his salary asCalifornia governor -- not to mention his extensive business interests.
Schwarzenegger remained tightlipped about his options this weekend, but insisted that, whatever he does, it won't be for financial reasons.
"I'm financially protected for the rest of my life. But that makes it actually more fun to do things. Because I always believed, never do things just for the money; always do things because you're passionate about it."

Copyright AFP 2008, AFP stories and photos shall not be published, broadcast, rewritten for broadcast or publication or redistributed directly or indirectly in any medium

Look who wants 500% bump in funding for government media

OBAMA WATCH CENTRAL

State adviser, Marxist also want more FCC control of airwaves

---

Posted: January 01, 2011
10:50 pm Eastern

By Aaron Klein
© 2011 WorldNetDaily

Ben Scott

"Net neutrality" rules must be implemented for content control while thegovernmentshould quintuple federal funding for public and community broadcasting, Ben Scott, the State Department's recently appointed policy adviser for innovation, argues.

Scott's writings, last year in a radical magazine, were in an article co-authored by Robert W. McChesney, an avowed Marxist activist who has called for the dismantlement "brick-by-brick" of the U.S. capitalist system, with America being rebuilt as a socialist society.

McChesney is the founder of the George Soros-funded Free Press, which petitions for moregovernmentcontrol of the Internet and news media.

Scott and McChesney also recommended the U.S. impose ownership limits on local radio, TV, andcablechannels while pushing for more control of the media by the FCC.

The two were writing in the January/February 2009 edition of Tikkun Magazine, run by avowed MarxistMichael Lerner.Lerner has been accused of using the magazine to justify Palestinian terror and has written articles in which he suggested the 9/11 attacks were a response to U.S. policies.

"Whatever issue tops your list of priorities, real progress will be impossible unless we first change our media system," wrote Scott and McChesney. "Currently, access to communications and control over media content are vested in the hands of corporate titans."

The two recommended the following policy implementations:

• Restore the original mission of the Federal Communications Commission as a guardian of the public interest. The FCC must become a 21st-century agency focused on the digital media marketplace of ideas and commerce, with a commitment to public engagement, transparency, and accountability.
  
• Support ownership limits and public oversight to foster more diverse, competitive, and local ownership of radio, TV, andcablechannels.
  
• At a minimum,quintuplethe federal funding for public and community broadcasting, to at least $3 billion annually – earmarking money for children's and public affairs programming. Funding should come from fees paid by commercial licensees to the public airwaves.
  
• Ban all advertising on broadcast andcableTV programs where over 33 percent of the viewership is under the age of 12. This is similar to the rules in many European nations.
  
• Establish "Network Neutrality" rules that guarantee free speech and a free market on the Internet by prohibiting discrimination, manipulation, and interference by network owners like Comcast or AT&T.
  
• Restore competition to the market in high-speed Internet access to break the hold of thecable-telephoneduopoly on the nation's "broadband" infrastructure.
  
• Transition all public subsidies fortelephonenetworks to fund infrastructure to bring the benefits of broadband to all Americans.
  
• Authorize the license of more noncommercial, low-power FM radio stations in communities nationwide.
  
• Open antitrust investigations into vertically integrated media companies that control production and distribution through anti-competitivepractices.

"Net neutrality" refers togovernmentdemands for a principle for users' access to networks participating in the Internet. The principle states that if a given user pays for a certain level of Internet access, and another user pays for the same level of access, then the two users should be able to connect to each other at the subscribed level of access.

Just last week, FCC commissioners voted 3-2 to approve controversial "net neutrality" rules, with the content of those rules, about 100 pages, still being rolled out.

Just in May,Scott was named a policy adviser for innovation at the State Department.He previously served as director of McChesney's Free Press.

Scott authored a book, "The Future of Media," which was edited by McChesney, who doubles as a professor at the University of Illinois and is former editor of the Marxist journal Monthly Review.

In February 2009 McChesney wrote in a column, "In the end, there is no real answer but to remove brick-by-brick the capitalist system itself, rebuilding the entire society on socialist principles."

The board of Free Press has included a slew of radicals, such as Obama's former "green jobs" czar Van Jones, who resigned after it was exposed he founded a communist organization.

In May,WND reportedFree Press published a study advocating the development of a "world class"government-run media system in the U.S.

Now the group is pushing a new organization, StopBigMedia.com, that advocates the downfall of "big media" and the creation of new media to "promote local ownership, amplify minority voices, support quality journalism, and bring local artists, voices and viewpoints to the airwaves."

Free Press has ties to other members of the Obamaadministration.

Obama's "Internet czar," Susan P. Crawford, spoke at a Free Press's May 14, 2009, "Changing Media" summit in Washington, D.C.

Crawford's pet project, OneWebNow, lists as "participating organizations" Free Press and the controversial Association of Community Organizations for Reform Now, or ACORN.

Crawford and Kevin Werbach, who co-directed the Obama transition team's Federal Communications Commission Review team, are advisory board members at Public Knowledge, a George Soros-funded public interest group.

A Public Knowledge advisory board member is Timothy Wu, who is also chairman of the board for Free Press.

Like Public Knowledge, Free Press also has received funds from Soros' Open Society Institute.

With additional research by Brenda J. Elliott .