Wall Street's Buddy



President Obama, summoning all his (severely limited) populist fervor, gave on December 6 a speech in Osowatomie, Kansas in which he noted

Remember that in those same years, thanks to some of the same folks who are now running Congress, we had weak regulation, we had little oversight, and what did it get us? Insurance companies that jacked up people’s premiums with impunity and denied care to patients who were sick, mortgage lenders that tricked families into buying homes they couldn’t afford, a financial sector where irresponsibility and lack of basic oversight nearly destroyed our entire economy.

The assumption, of course, was that the President disapproves of the roguish mortgage lenders and outrageous financial sector which "nearly destroyed our entire economy."

Only up to a point, it turns out. In April, The New York Times reported

several years after the financial crisis, which was caused in large part by reckless lending and excessive risk taking by major financial institutions, no senior executives have been charged or imprisoned, and a collective government effort has not emerged. This stands in stark contrast to the failure of many savings and loaninstitutions in the late 1980s. In the wake of that debacle, special government task forces referred 1,100 cases to prosecutors, resulting in more than 800 bank officials going to jail. Among the best-known: Charles H. Keating Jr., of Lincoln Savings and Loan in Arizona, and David Paul, of Centrust Bank in Florida.


Former prosecutors, lawyers, bankers and mortgage employees say that investigators and regulators ignored past lessons about how to crack financial fraud.


As the crisis was starting to deepen in the spring of 2008, the Federal Bureau of Investigation scaled back a plan to assign more field agents to investigate mortgage fraud. That summer, the Justice Department also rejected calls to create a task force devoted to mortgage-related investigations, leaving these complex cases understaffed and poorly funded, and only much later established a more general financial crimes task force.


Leading up to the financial crisis, many officials said in interviews, regulators failed in their crucial duty to compile the information that traditionally has helped build criminal cases. In effect, the same dynamic that helped enable the crisis — weak regulation — also made it harder to pursue fraud in its aftermath.


A more aggressive mind-set could have spurred far more prosecutions this time, officials involved in the S.&L. cleanup said.

Earlier this month, Jeff Connaughton, chief of staff to former Senator Ted Kaufman (D-DE), explained in The Huffington Post

The Obama Justice Department hasn't tried a single Wall Street executive in a criminal court. Against a handful, it decided to let the S.E.C. bring civil charges of fraud, which are easier to prove. So if defendants' wrists are merely being slapped by the S.E.C. instead of cuffed by the Justice Department, Obama has only his appointees to blame.


For three important reasons, the President needs to explain why the Justice Department has filed away its investigations of big banks and Wall Street firms without indicting anyone. First, American confidence in the system is deeply shaken. Second, it strains credulity for millions of Americans -- and has impelled thousands of them to occupy public places in protest -- that no banking or insurance executive deserves criminal prosecution for the actions that brought on the financial crisis. Third, by failing to prosecute a single high-profile Wall Street actor today, the Administration is failing to deter financial fraud tomorrow.

Secretary of the Treasury Tim Geithner surely deserves his share of the blame- which is huge. Early in the Administration, he ignored an order from the President to consider breaking up Citigroup and, armed with a rosy scenario, has been a constant advocate for emphasizing deficit reduction over economic stimulus, thus helping prolong the economic slump. More recently, he successfully encouraged Obama not to appoint Elizabeth Warren to head the Consumer Financial Protection Bureau, her brainchild, unsurprising given her stated skepticism over the Administration's tepid efforts to tamp down on home foreclosures.

It's hard to pin down blame for the abysmal response of Washington in the financial aftermath, with the FBI, the SEC, the Justice Department, the Treasury Department all failing in their law enforcement, oversight, or advisory functions. But we know the result, as illustrated in this graph from journalist David Cay Johnston showing criminal prosecution involving financial firms down markedly since fiscal 1999.

There is insufficient attention paid to President Obama's role in all this. The two leading GOP candidates prefer to blame Fannie Mae and Freddie Mac, the Community Reinvestment Act, and anything that might be lying around, so as to spare the private sector any responsibility for destroying American lives. Democrats don't want to expose the President months before the presidential election to attack for what Wall Street and, to a lesser extent the previous Administration, bear responsibility. And to the mainstream media, the whole issue is not sexy enough and may not be so easy to lay off in its "pox on both their houses" framework.

Now, though, Barack Obama is President. He should bear ultimate responsibility- and, increasingly, blame.







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Big Government Conservatives


In the few seconds he was allotted- before an uncomfortable Christiane Amanpour changed the subject- Barney Frank did a bang up job. But more could have been said.

This Week has begun a series in which two liberals and two conservatives square off debating the size of government. Last week, George Will was confronted by Barney Frank, who stated

It's a great embarrassment to the conservatives. They want to tell people who they can have sex with. Come on, all this is big government. Who can I have sex with? Who can I marry? What can I read? What can I smoke? You guys, on the whole- not all of you- but the conservatives are the ones who intrude on personal liberty there.










Actually, Barney Frank has been allowed to have sex with anyone he wants since the U.S. Supreme Court in Lawrence v. Texas in 2003 struck down the anti-sodomy law in Texas, which had the effect of invalidating all such laws in the handful of states which still had them.

Still, point well made, as reflected in the relief apparent felt by Will and Paul Ryan (R-Wis.) when Amanpour hastily moved on.

Nevertheless, if conservatives limited their criticism to 'big government' to what they believe is its deleterious impact in certain areas- e.g., regulation of the energy industry- they would be expressing a legitimate, albeit generally unjustified, concern.

But, no. At least since the days of President Reagan, who raised condemnation of the public sector to an art form as only an actor can do, the right has indiscriminately denounced big government. Most famously, painting with as broad a stroke as possible, Reagan upon taking office declared "in the present crisis, government is not the solution to our problem; government is the problem."

Less famously, President Reagan then proceeded to preside over an explosion in the size of the federal government. In real terms, federal spending increased an average of 2.5% per year while the national debt skyrocketed (in absolute terms) from $700 billion to $2.8 trillion. And as this graph from Angry Bear indicates, the number of civilian employees (per capita) therein has never been so great as it was in the administration of the great conservative icon.

Barney Frank, given the time, might have mentioned the great Reagan paradox- hailed as the conservative savior, the 40th President, were he to pursue those policies today, probably would be viewed as governing from the center, leaning to the left.

That is in the context of an attack on government which, on the matter of culture, goes beyond marijuana, pornography, and gay relationships to the issue of reproductive freedom.
While the right to obtain an abortion remains under attack from the right, family planning has been abridged throughout the nation. Generally, this has come from the GOP but the centrist Obama administration has joined in with its decision on Plan B. Though the President claimed that young girls should not be able to buy Plan "alongside gums or batteries" (hardly likely to occur), the decision by his HHS Secretary will mean that druggists will be required to keep (pretension alert!) Levonorgestrel behind the counter, unavailable to anyone except by specific request. Too much government is horrific, say conservatives and sometimes Barack Obama; but when it comes to determining where a pharmacist can place his/her products, the government will step in and put the hammer down.

The libertarian spirit of the right is alive and well- except when it can conveniently be shelved, only behind the counter.



And to all, a Happy Chanukah, Merry Christmas, or joyous December 25.



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A Victory, For Now


President Obama has won one, and not in the manner expected. Instead of Democrats caving, House Republicans, goaded by Karl Rove, the Wall Street Journal, Senate Republicans, and others, relented and approved the bill approved by the Senate extending the payroll tax cut, as well as extending unemployment benefits and mandating a presidential decision on the Keystone XL pipeline.

The measure extended the current, reduced, rate of the payroll tax only two months, so controversy will swirl in a couple of months when further action is needed. Meanwhile, the President has gotten what he wanted, but at a price.

When the Bush-era tax cut was extended in 2010, according to Josh Bivens of Salon, unemployment insurance was extended and a payroll tax cut was enacted, while the Make Work Pay tax credit, part of the Recovery Act, was ended. was replaced by a cut in the payroll tax. According to Josh Bivens of Salon, the decrease in the payroll tax in effect supplanted the Make Work Pay tax credit. Bivens explains

It seems obvious why Republicans didn’t like the MWP credit – it was actually well-targeted at low- and moderate-income households and it was a tax cut associated with the Obama administration. So, to grease the wheels of getting more fiscal support into an economy that needed it, the administration acquiesced to this swapping out of the MWP credit for a payroll tax cut. One is surely allowed to be ambivalent about whether this deal should’ve been struck, but it’s awfully hard to criticize the administration’s impulse behind it – they were actually trying to help ameliorate the very real problem of unemployment. And the MWP-for-payroll tax cut swap actually got more money out into the economy, so it wasn’t all bad.


But the payroll tax cut is pretty middling fiscal support in terms of jobs created per dollar it adds to the deficit. It is notably less efficient as a job creator than the MWP credit. It also provides a political hammer to opponents of Social Security who can claim that the cut has depleted the program’s Trust Fund ahead of schedule, requiring cuts in benefits. These opponents are wrong, of course: the legislation that cut the payroll tax also instructed Treasury to credit the Trust Fund for the lost revenue – but since when has being factually wrong defanged a political argument? And who’s to say that the next year of payroll tax cuts will maintain this commitment to hold the Trust Fund whole?


Further, the way the payroll tax cut is being marketed by too many of its Democratic proponents is maddening. Essentially, they sound like Republicans, and tout the simple virtue of the extension as being families having to pay less in taxes, period. How many of us have heard the statistic about a family earning $50,000 in wages will save $1,000 from the payroll tax cut? I’d guess pretty much everybody who has dipped into this debate for even a second.On the other hand, how many know the estimates of how many jobs will be created or preserved because of the increased economic activity it spurs? Very few of us who aren’t economists, I’d imagine. Conservative estimates put it between 400,000 to 700,000 jobs. But it’s the jobs that make this tax cut worth doing – unless progressives are willing to willing to accede to the Republican framing that all the economy and American families really need is “tax relief” – a phrase that actually appears in the Senate bill extending the payroll tax cut for two extra months.

This inability to connect economic policy to the larger problem of joblesssness is a real problem with the debate over the payroll tax cut. This disconnect explains why the unemployment insurance extension bundled with the payroll tax cut have attracted so much less attention. After all, if all that matters is the first tranche of money, the payroll tax cut will affect many more households than the UI extension. But all serious economists agree that the extension of unemployment insurance is a far more efficient fiscal support – providing about 50 to 100 percent more jobs per dollar added to the deficit.

While the Social Security Trust Fund is being reimbursed from the Treasury, that, too, comes with a cost. Once the GOP gains control (more than at present) of the federal government, the tax cut will be continued, upon orders from Grover Norquist, the Wall Street Journal editorial page, or just because of political expedience. And the fund will not be replenished from general revenues. In a harbinger of the argument the GOP will make, Representative David Schweikert argued earlier this month

what must not be lost in this discussion is that these dollars will come directly from debt paid back by U.S. taxpayers because they are owed to the Social Security trust fund.

This in turn increases the nation's debt because it eventually leads the Treasury to bail out the lost revenue in the Social Security trust fund.

In a Republican world, the loss in revenue will not be made up by a surtax on millionaires (which, even now, Democrats have not been able to enact), eliminating some corporate tax loopholes, or any measure which would inconvenience the 1% or the top 10%. And now, there are two firsts: as Bivens notes, Democrats argue for a tax cut extension primarily because it means less in taxes, rather than for the stimulative (Keynesian) impact; and conservatives can make a legitimate claim that the Social Security system increases the national debt.

Senate Majority Leader Reid is hinting that his party may be pushing the millionaires tax in the new year. That is at least good intent, but trouble looms.

HAPPY CHANUKAH MERRY CHRISTMAS

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Boost For Santorum


He is liked by Rush Limbaugh (whose heart belongs to Sarah Palin), who remarked yesterday: "I know that if Rick Santorum were elected president, I wouldn't have one doubt any day what he would be fighting for, not one. And it would be great if he could get there."

He is liked, apparently, by Mike Huckabee, who commented "I've been saying for several weeks now that Rick Santorum may be the surprise candidate coming out of Iowa ...he's going to greatly outperform (his poll numbers) and surprise some people because the caucuses are so much about intensity of support." He explained that the public nature of a caucus "puts pressure on people that's a whole lot different than" a primary and for Santorum "evangelical voters aren't going to have to defend that vote and nuance it some way." (And we know how uncomfortable Republicans are with nuance.)

And Bob Vander Plaats, leader of Iowa-based evangelical group, The Family Leader, likes Santorum. Or so it seems.

The organization's seven-member board declined to make an endorsement in the GOP presidential race but Vander Plaats's personal endorsement of the former Pennsylvania senator, according to Huckabee, offers "a significant boost at exactly the right time for him."

The nod may prove just enough to catapault Santorum into fourth place in the Iowa caucus, which presumably would be sufficient for him to continue his campaign. But it appears to have come with a price- and that price, it seems, is financial. On Tuesday, the Des Moines Register


confirmed that Vander Plaats had asked for help in raising money to promote the endorsement.


Santorum spokesman Hogan Gidley said his campaign made no deal to drum up cash to pay to help promote the endorsement.


“I don’t know about the discussions other campaigns had, but we never agreed to raise a single penny,” Gidley said. “We’re focused on our own campaign, and that’s where our resources will be spent.”


Vander Plaats said he’d like to have the money to do television advertisements to promote his personal endorsement of Santorum, and he urges Santorum backers to contribute money for that purpose.

There are two problems with that denial. The campaign may have been asked for a contribution rather than being asked "to drum up cash" (and we'll be glad to accept a check, Master Card or Visa, thank you very much). And it may not have made a "deal" but instead have come up with a sort of arrangement (short of a deal) or an accommodation.

The candidate himself did little to clear up the uncertainty. Politico reports that Santorum told CNN


"What he talked about was he needed money to promote the endorsement and that that would be important to do that," Santorum said, referring to Vander Plaats.


Yet the candidate added: "There was never a direct ask for me to go out and raise money for it."


Asked by CNN what Vander Plaats had asked for, Santorum replied "He didn't say, 'Well I need X dollars from you' or anything like that. No," Santorum said."

No, not a specific sum of money. And "raise money for it" sounds a lot like "drum up cash." Perhaps the money could come from the campaign or another source, whether direct or indirect. Further, "a direct ask" would have been unlikely; these things tend to be understood, with or without the classic nod and a wink.

Even if there were an agreement, or favor returned in some manner, Santorum remains, I think, one of only two of the candidates (the other being the father of a U.S. Senator) who consistently believes what he says, though typically way wrong. Still, the moment should not pass by without an inquiry as to whether this particular dark horse can be bought.




HAPPY CHANUKAH MERRY CHRISTMAS


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Remarkable Neglect



A lot of good California's bias crime provisions did Larry King.

That would be the late Larry King, not the author or the guy with the suspenders. On February 12, 2008 Mr. King was a gay junior high school student in Oxnard, California when classmate Brian McInerney took a .22 caliber handgun from his backpack and twice shot King in the back of the head.

Mr. McInerney was charged with first degree murder and committing a hate crime but the jury failed to reach a verdict. When the prosecution moved to retry the defendant, the 17-year old pled guilty to second degree murder and manslaughter and pursuant to terms of the plea bargain, will be 39 years old when released from prison.

The Hueneme Elementary School District paid the victim's father $25,000 toward a $255,000 civil settlement.

But the father, Greg King, remains angry at the offender, the criminal jury for failing to convict and, most notably, the school district. The latter failed to intervene in the conditions which led to the murder and has refused to to make any changes in policies or procedures, claiming school officials followed state law.

Larry King was gay and, according to Catherine Saillant of the L.A. Times

Educators knew that his son had a history of acting provocatively for attention, yet they did nothing to stop King after he started going to E.O. Green Junior High School in women's high-heeled boots and makeup and began aggressively flirting with boys, the father said. The middle school student had been removed from his home for unspecified reasons and was in foster care.


Instead of protecting him from his "poor impulse control," King's father said, "they enabled and encouraged him to become more and more provocative," putting him in an unsafe position. During the trial, several teachers testified in the murder trial about their deep worries that King's feminine attire and taunting behavior could provoke problems — and that E.O. Green Junior High administrators ignored them.


It wasn't just that King, 15, had begun wearing makeup and women's spiked-heeled boots, witnesses testified. It was that he seemed to relish making the boys squirm at his newly feminized appearance and was taunting them with comments like "I know you want me."


"They wanted to beat Larry up for what he was doing to them and they came to me because I wanted to keep them out of trouble,'' E.O. Green teacher Jill Ekman testified. "I told them that I would work on getting assistance from the office and we would work this out."


But that didn't happen, Ekman and others testified.

Apparently, the discomfort experienced by (presumably straight male) students did not excessively alarm school officials with one teacher. As Saillant describes it, one teacher, Jill Ekman, testified that an Assistant Principal "sent an e-mail to the staff telling them to leave King alone unless his behavior was disrupting a class" and another, Joy Epstein,

advised her to teach tolerance if students were upset by King's behavior.


But that wasn't working, Ekman said. A group of male students in her classroom told her they wanted to beat King up because he would seek them out and follow them into the bathroom. Ekman considered that sexual harassment and went back to Epstein with her concerns, she testified.


Epstein told her there was nothing the school could do, Ekman said. When the teacher attempted to press her case, Epstein shut the door in her face, Ekman told the court. The next day Ekman filed a grievance with the school's principal, Joel Lovstedt, alleging that her concerns were being ignored.

Make no mistake about it. Brian McInerney, who was tried as an adult, should have been convicted of first degree murder and punished accordingly. He and he alone was responsible for killing an innocent boy in a premeditated, cold-blooded fashion, as demonstrated by his possession of a weapon in school.

But....

when boys in school taunt girls repeatedly, or even make passes at girls, they have a phrase for it: sexual harassment. It should not be ignored and it is not ignored. However, when a boy- and one who clearly was having trouble with his identity- harassed boys, the objects of the harassment were fair game. The school district turned a blind eye and, it would appear from Epstein's testimony, the State of California was just fine with that. If the straight students couldn't handle it, Epstein had a remedy: Ekman could teach them tolerance. The problem, it seems, was not a troubled student whose behavior- not sexual preference, but deviant and extraordinary behavior- was disruptive. No, it was the other students because they just couldn't handle it. Get with the program, the administrators urged.

They wanted to make sure not to offend. And not only is a boy dead but, as Greg King put it at the sentencing hearing, "rather than learning from it and striving to make a safer environment for our children, they hid behind lawyers."





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Be Sure Not To Offend

A lot of good California's bias crime provisions did Larry King.

That would be the late Larry King, not the author or the guy with the suspenders. On February 12, 2008 Mr. King was a gay junior high school student in Oxnard, California when classmate Brian McInerney took a .22 caliber handgun from his backpack and twice shot King in the back of the head.

Mr. McInerney was charged with first degree murder and committing a hate crime but the jury failed to reach a verdict. When the prosecution moved to retry the defendant, the 17-year old pled guilty to second degree murder and manslaughter and pursuant to terms of the plea bargain, will be 39 years old when released from prison. The Huenememe Elementary School District paid the victim's father $25,000 toward a $255,000 civil settlement.

But the father, Greg King, remains angry at the offender, the criminal jury for failing to convict and,most notably, the school district. The latter failed to intervene in the conditions which led to the murder and has refused to to make any changes in policies or procedures, claiming school officials followed state law.

Larry King was gay and, according to Kathleen Saillant of the L.A. Times


Educators knew that his son had a history of acting provocatively for attention, yet they did nothing to stop King after he started going to E.O. Green Junior High School in women's high-heeled boots and makeup and began aggressively flirting with boys, the father said. The middle school student had been removed from his home for unspecified reasons and was in foster care.

Instead of protecting him from his "poor impulse control," King's father said, "they enabled and encouraged him to become more and more provocative," putting him in an unsafe position. During the trial, several teachers

testified in the murder trial about their deep worries that King's feminine attire and taunting behavior could provoke problems — and that E.O. Green Junior High administrators ignored them.

It wasn't just that King, 15, had begun wearing makeup and women's spiked-heeled boots, witnesses testified. It was that he seemed to relish making the boys squirm at his newly feminized appearance and was taunting them with comments like "I know you want me."

"They wanted to beat Larry up for what he was doing to them and they came to me because I wanted to keep them out of trouble,'' E.O. Green teacher Jill Ekman testified. "I told them that I would work on getting assistance from the office and we would work this out."

But that didn't happen, Ekman and others testified.

Apparently, the discomfort experienced by (presumably straight male) students did not excessively alarm school officials with one teacher. As Saillant describes it, one teacher, Jill Ekman, testified that an Assistant Principal "sent an e-mail to the staff telling them to leave King alone unless his behavior was disrupting a class" and another, Joy Epstein,

advised her to teach tolerance if students were upset by King's behavior.

But that wasn't working, Ekman said. A group of male students in her classroom told her they wanted to beat King up because he would seek them out and follow them into the bathroom. Ekman considered that sexual harassment and went back to Epstein with her concerns, she testified.

Epstein told her there was nothing the school could do, Ekman said. When the teacher attempted to press her case, Epstein shut the door in her face, Ekman told the court. The next day Ekman filed a grievance with the school's principal, Joel Lovstedt, alleging that her concerns were being ignored.

Make no mistake about it. Brian McInerney, who was tried as an adult, should have been convicted of first degree murder and punished accordingly. He and he alone was responsible for killing an innocent boy in a premeditated, cold-blooded fashion, as demonstrated by the possession of a weapon in school by the perpetrator.

But....

when boys in school taunt girls, or even make passes at girls, they have a phrase for it: sexual harassment. It should not be ignored and it is not ignored. However, when a boy- and one who clearly was having trouble with his identity- harassed boys, it was fair game. The school district turned a blind eye to this outrage and, it would appear from Epstein's testimony, the State of California was just fine with that. If the straight students couldn't handle it, Epstein had a remedy: Ekman could teach them tolerance. The problem, it seems, was not a troubled student whose behavior- not sexual preference, but deviant and disruptive behavior- was disruptive. No, it was the other students because they just couldn't handle it. Get with the program, the administrators urged.

And now, a young man is dead because they wanted to make sure not to offend and because, as Greg King put it at the sentencing hearing, "rather than learning from it and striving to make a safer environment for our children, they hid behind lawyers."

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Comedy, American-Style


Pat Robertson, Bob Beckel: Quit while you're ahead.

Saturday Night Live's skit (video, below) featuring Jesus Christ, Tim Tebow, and the latter's Denver Broncos teammates understandably raised quite a few hackles.

If this had been a Muslim country and they had done that, and had Muhammad doing that stuff, you would have found bombs being thrown off!... We need more religious faith in our society. We’re losing our moral compass in our nation and this man has been placed in a unique position and I applaud him. God bless him.


Robertson was right (for the most part), initially. The freedom of expression allowed to be expressed about the U.S.A.'s dominant religion, Christianity, is not matched by a parallel tolerance in Muslim countries about Islam. Bombs may or may not have been set off- but as Theo Van Gogh tragically experienced, criticizing Islam in some quarters is vigorously discouraged.

But the 700 Club founder didn't stop there. After drawing attention to religious intolerance in Muslim countries (you know where this is heading, don't you?), Robertson added "we need more religous faith in our society."

Perhaps we do. But Robertson's example: "bombs being thrown off" if Muhammad had been caricatured in "a Muslim country" doesn't substantiate that view but, sadly, does the country.

Religious intolerance in some Muslim countries doesn't emanate from insufficient faith but from the religious fanaticism sometimes labeled "Islamofascism."

On GOP TV, Fox News consultant Bob Beckel remarked

First of all, it's despicable to display Jesus Christ, Our Lord and Savior, like that on Saturday Night Live and they should be ashamed of themselves. And the fact that this keeps drawing attention to Tebow and Christianity and faith and Jesus and they make it into some sort of commercial operation ... there’s nothing funny about that.

Obviously (except to Beckel, it appears), Jesus Christ is not Lord and Savior to all Americans (not even to many people affiliated with Protestantism, Roman Catholicism, or Orthodox Christianity), but he is to many. More significant and less defensible, owing to Beckel's lack of irony (a trait shared with Robertson), is his criticism of SNL for deciding to "make it into some sort of commercial operation."

That is offensive (although funny, depending upon your taste in comedy). Unfortunately, however, it was not left to Comcast-owned NBC or Lorne Michaels to "make it into some sort of commercial operation." Tebow beat them to it. As seen in the videos way below, Tim Tebow made himself into a commercial operation- even before his surprising success in Denver.

Tim Tebow was not reticent about using his fame as a Christian, pro-life athlete to gain a contract to pimp for underwear, and the minds behind Saturday Night Live were not reticent to use their fame to present a skit expressing ideas which, if not couched in comedy, would have offended even more people. It's not what's done in some Muslim countries. But they do it here, and it's a "shame" that neither Pat Robertson nor Bob Beckel understands.













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