Monday, May 31, 2010

Remembering A Soldier

No political ranting and raving today. No pointing out how the politicians continue to screw up the country, constantly denying and depriving us of our freedoms and liberties to the benefit of their political careers.. Today is a day of remembrance, of the millions of Americans that have served the country in the past and in the present, many times sacrificing their lives for our freedom and liberty. Please spend a few minutes today thinking of them in any way possible and remembering that many of our fellow citizens and family members are on the front lines around the world today, facing serious danger, but unselfishly protecting us.

One soldier in particular is on my mind today. My father served in World War II with the 203rd Engineer Combat Battalion. It is my understanding that the 203rd came ashore at Omaha Beach in June, 1944, served across France, was involved in the Battle Of The Bulge in late 1944 and eventually made its way into Germany. It was destined for the Pacific Theater but had those plans cancelled when Japan surrendered. He was honorably discharged in late 1945.

I say that it was my understanding because my father rarely spoke of the war, I had to find out this information from secondary sources. He did not brag about his service, he did not boast of the battles he may or may not have seen, he did not regale us with tales of heroism. It is also my understanding that he is not alone in this approach. Stories abound of similar attitudes among World War II veterans. They did what had to be done, often at great cost, to protect the country and the ideals it stands for. They did not consider themselves heroes, they just did what had to be done. They then returned to become regular citizens and got on with their lives. No egos, no self-centeredness just a dedication to country and family.

I never thanked my father for his service in the fight for liberty and freedom, not sure growing up that I fully understood the sacrifices he and others made for us. I would like to do that today, seveneen years after he passed away. I would also like to hope that our politicians eventually realize what great costs have been expended to keep us free and that they re-dedicate themselves to maintaining freedom, for all Americans in so many different ways, and making that the core of their service in politics and government.



Our new book, "Love My Country, Loathe My Government - Fifty First Steps To Restoring Our Freedom And Destroying The American Political Class" is now available at www.loathemygovernment.com. It is also available online at Amazon and Barnes and Noble. Please pass our message of freedom onward. Let your friends and family know about our websites and blogs, ask your library to carry the book, and respect freedom for both yourselves and others everyday.

Saturday, May 29, 2010

"Vote Early And Often"

I believe that this saying, "Vote early and often" originated in the Chicago political realm but I will leave that to my Illinois friends to tell me if that is a correct assumption. Anyway, today's topic is voting and it provides two opportunities for you to actually vote to make a difference rather than voting to elect the same old tired politicians over and over.

Before we get to these opportunities, lets consider some background. First, the country's financials are hurdling towards a very serious situation. The government in Washington is spending much more than it is collecting in taxes, about 70% more than what is available (spending $3.5 TRILLION on collections of $2.1 TRILLION). They are financing this wasteful spending by selling bonds to other countries and individuals. The problem is that this selling of government securities is contributing to a rising debt load for both current Americans and future generations of Americans. All of the indicators are bad:
  • The total national debt is nearing the value of the country's entire GDP, a level that is generally acknowledged to put that country in financial peril.
  • The annual deficit of 70% is many times higher than what is recommended for a sound national fiscal policy (less than 10%), a level that is generally acknowledged to put the county in financial peril.
  • Even if the 10% unemployment rate miraculously went to zero overnight, increasing the collection of taxes by 10% of so would still leave the government hundreds of billions of dollars short on an annual basis.
  • In a previous post we showed that even if you confiscated the total wealth of the richest Americans, not their income, you still could not pay off the accumulating national debt.

Thus, you cannot tax or grow you way out of this problem, the hole is too deep. The only way to do it successfully is to begin reducing the size and expenditures of government. The problem is that the political class in America does not want that reduction to occur. If pork and earmarks were removed form the budget to save debt, they would not be able to boast on how effective they were to their voters. They would not be able to grant government earmark funding to private and public organizations that donate to their re-election campaigns. If they had less programs and budget to rule over, they might not have their egos stroked as much.

The second issue is that the political class has hijacked a lot of the freedom we should be enjoying when it comes to voting. They have wired the system through obscene gerrymandering so that incumbents almost always get re-elected. Outgoing Senator Bayh from Indiana is on record saying that no more than 15 out of 435 Congressional districts are truly competitive, the other 420 are wired for the incumbents and the incumbents' parties. Incumbents can use their position to steer sham government funding to businesses in return for extensive re-election campaign contributions. Those already in power can use and abuse their power to ensure they get their way politically.

The latest and one of the more gross examples of abuse appears to be the current situation where someone sent out former President Clinton to bribe Joe Sestak to get out of the Pennsylvania Senate primary and allow White House favorite and incumbent Arlen Specter to get the nomination. The theory is that Obama enticed Specter to switch parties in return for White House support in getting re-elected. What was offered in the bribe package is still under debate (could include appointments to President ail commissions, a Federal judge position, etc.) but Sestak and his lawyer have both come out and said the bribe was offered. An outsider and non-incumbent would have tremendous problems overcoming this kind of politicking which is not in the best interest of the voters, they should decide who represents them, not the political establishment.

So there's the dilemma: the current political class does not want to see any expense/budget cuts and the current political class is almost impossible to uproot because of their rigging of the election process, reducing our freedom in the process but we need to start cutting spending to get the country fiscally sound again. In the short term, there are two ways to start sending the message to Washington to start cutting. First, go to www.loathemygovernment.com and vote on the forty plus Federal spending items and whether or not you think they were good uses of your tax dollars. Some examples of spending you can vote on include:

  • $300,000 spent to study the feasibility of an enclosed motor speedway in Ohio.
  • $200,000 given to the Arkansas Commercial Driver Institute.
  • $134,000 spent on the Montana World Trade Center.
  • $250,000 to construct a county farmers' market in Kentucky.
  • $200,000 to conduct a county wide census of cats and dogs in a California county.
  • $125,000 to compile a "Simo-Tibetian Etymological Dictionary and Thesaurus.
  • $1,000,000 study in Utah on how to cross the street.

These and other documented Federal expenditures will allow you to vote on what you think were good uses of your tax dollars. I will publish the results next week.

The second way to send a message has just been made available by the Republican Party (note: this is not an endorsement of the Republican Party, they are just as adept at wasting money as the Democrats.). If you go to www.republicanwhiphouse.gov/YouCut you will be presented with five Federal programs that are currently funded. You are then allowed to vote once a week on which of the five you would like to see eliminated and the budget from that eliminated program saved. The Republicans then draw up actual legislation and present it for a vote in front of the full House of Representatives. I believe the programs put up for vote change on a regular basis so you can go back to the site weekly and vote again.

The first week resulted in hundreds of thousands of votes and the Republicans presented a plan to repeal the number one vote getter, an expansion of the Federal welfare program that was snuck through on the coattails of the health care reform bill (another reason to despise the bill). The proposed legislation was defeated along party lines but I understand some Democrats actually crossed those lines and voted with the Republicans to repeal the program.

Will either of these actions save us from financial ruin as a country? Probably not but at least it is a start. Now, you can bypass the rigged election rules and gerrymandered Congressional districts and at least voice your frustration with government waste at either of the two sites listed above. It is a form of democracy and that can never be bad. And who knows where it will lead. It does get us closer to one person one vote which I have to believe was the intent of our founding fathers. Sure beats bribes, earmarks, and political egos.

The obvious desire is that opportunities empower a critical mass of voters to step and take back the country. Dumping all incumbents, regardless of party, in November and starting to execute many of the steps (term limits, campaign donation restrictions, systematic reductions in government spending, etc.) in "Love My Country, Loathe My Government" are the only ways to save us from the political class.



Our new book, "Love My Country, Loathe My Government - Fifty First Steps To Restoring Our Freedom And Destroying The American Political Class" is now available at www.loathemygovernment.com. It is also available online at Amazon and Barnes and Noble. Please pass our message of freedom onward. Let your friends and family know about our websites and blogs, ask your library to carry the book, and respect freedom for both yourselves and others everyday.

Friday, May 28, 2010

Federal Government Services - Overpaying For Underperformance

Lets quickly review some points listed in yesterday's post:
  • many of the Federal employees responsible for the overseeing and regulation of offshore oil drilling were busy accepting and taking free fishing and hunting trips from the very companies they were supposed to be overseeing, were actively inspecting those companies' operations at the same time they were negotiating their employment contracts with those same companies, and some were actively involved in downloading pornography onto their government issued computers. Result: by far the biggest ecological disaster ever as a result of a faulty oil platform malfunction.
  • many of the Federal employees responsible for overseeing and controlling the goings on in the financial market at the Securities and Exchange Commission (SEC), including some earning over $200,000 a year in salary, have been identified as prolific Internet searchers of pornography and downloading that pornography onto their government issued computers and other media once they had filled their hard drives to capacity with smut. Result: the biggest financial collapse and economic disaster since the Great Depression which was totally unforeseen by the SEC, whose job is to foresee this kind of financial market trouble.
  • although they opened more than one investigation into faulty Toyota products, the Federal safety agencies that were responsible for such safety never went deeply into the problem until it got out of hand years later. Result: latest reports indicate that 89 Americans have died in Toyota vehicles that no government agency found unsafe until recently although there were safety issue red flags many, many years ago.
  • although responsible for safeguarding Americans from faulty products, Federal safety agencies failed to flag imported children's products containing dangerous levels of lead until the market was awash with such products. Result: those lead based products were eventually pulled form the market but the same safety agencies failed to detect the fact that foreign manufacturers had replaced the lead with equally bad cadmium, again endangering those that might ingest the latest heavy metal from the products.
Not a pretty picture, certainly one of under performance relative to expectations of the American taxpayer. And to add insult to injury, consider the following facts from a short article in the June issue of Reason magazine, written by Katherine Mangu-Ward, that reviewed a March report in USA Today:
  • Accountants, nurses, chemists, surveyers, cooks, clerks and janitors that work for the Federal government get paid substantially more than those that do the same jobs in the private sector.
  • On average, the Federal worker earns $7,600 a year more than the private sector worker doing the same function. This comes out to about $145 per week.
  • As examples of some of the more outrageous discrepancies: Federal broadcast technicians earn about $90,000 while private sector broadcast technicians earn about $49,000, Federal graphic designers earn about $71,000 while private sector designers earn about $47,000, and Federal dry cleaning workers earn about $33,000 while private sector workers earn about $20,000.
  • According to the article, the average Federal worker in 2008 also got almost $41,000 worth of benefits compared to the $10,000 or so value of benefits that the private sector worker received.

I do not want to disparage all Federal workers. I am sure that most of them, at least those not searching the web for pornography, are trying to put in an honest day's work. However, you can see the discrepancy outlined in the title of this post. We, the American taxpayer, which includes all Federal employees, pay a very large sum of money to the government and the political class that operates the government and get very little back in return. Ecological disasters, financial disasters, safety disasters, etc. seem to be the normal mode of operation of the political class. We are taxed more and more for less and less in terms of value for our dollar.

That is why dumping all incumbents in the November elections becomes critical. The current set of politicians in Washington are not going to improve this high cost, low performance equation anytime soon. Otherwise, they would have addressed the issue already. After we dump the incumbents in November, the next step has to be the implementation of Step 39 in "Love My Country, Loathe My Government" a priority and implement term limits so that those elected to office can spend their ENTIRE term looking to add value to our lives rather than spending the majority of their time making sure they get re-elected and not addressing the fundamental issue of high costs and low performance.


Our new book, "Love My Country, Loathe My Government - Fifty First Steps To Restoring Our Freedom And Destroying The American Political Class" is now available at www.loathemygovernment.com. It is also available online at Amazon and Barnes and Noble. Please pass our message of freedom onward. Let your friends and family know about our websites and blogs, ask your library to carry the book, and respect freedom for both yourselves and others everyday.

Thursday, May 27, 2010

Two Examples Of Government Spending/Taxes/Control - What Happens When They Go Up Or Down?

Two contrasting examples of government spending, control, and taxes have presented themselves in the past week or so. They both address the question: when government spending, control. and the resulting taxes go up or down, what happens? First, consider the example that was presented in the most recent edition of Business Week magazine. This article described what happened when France dropped its value added tax on restaurant dining in the wake of soaring restaurants bankruptcies. Details of the tax reduction include the following:
  • Last July, the French government dropped the value added tax to 5.5% from 19.6%.
  • Since then, the industry has added 5.300 jobs even as the national unemployment rate rose.
  • Salaries by those employed in the industry went up 5% on average despite a very weak economy.
  • The industry also invested in job training for its workers, as promised to the French government in exchange for the tax relief.
  • While average prices went down only 1.2%, less than the 3% hoped hoped for, the question that needs to be asked is what would have been the prices without the tax decrease since more restaurants would have gone out of business, reducing competition and probably increasing prices. The good news is that prices did go down and if more restaurants stay in business, the free market and competition will help keep prices down.
Wow, drop taxes and government control and the market seems to take care of itself, at least with restaurant dining in France. Prices go down, jobs are created, salaries go up, and competition should intensify with fewer restaurants going out of business.
Now consider the opposite phenomenon, this one where government funding (i.e. taxes go up) and the government takes over and increases its control and management of part of a market. This story comes from the July, 2010 issue of Reason magazine and was described in an article written by Michael C. Moynihan. In December, 1998, Britain Mavis Skeet was scheduled for cancer surgery but the National Health Service postponed the surgery this time and four subsequent times. The last postponement was actually a cancellation in January, 2000 when the National Health Service declared her cancer was now inoperable.
As a result of this major screw up, the British government, led by Prime Minister Tony Blair, decided that spending for national health care was too low and "requested a new infusion of cash to shore up the faltering system by adding doctors, nurses, and beds." According to the reporting of the Daily Mail newspaper in March, ten years later, after increased government spending, and theoretically the increased taxes to pay for the spending, it turns out that the volume and quality of health care in Britain did not change for the better. However, the infusion of more government control and taxpayer money did result in the number of bureaucrats in the organization growing six times faster than the number of nurses and the number of management employees doubling.
So lets review. Less taxes, less government control results in positive outcomes. More taxes, more government control results in negative outcomes. Seems pretty simple, except to someone in the political class who continually needs to prove their self worth by taking more of the Tony Blair approach and less of the French tax reduction approach. When will we learn that like the British example above, government and the politicians who run it rarely improve our lives, our pocketbooks, or our safety:
  • while BP and others in he industry have to shoulder the majority of the blame for the current Gulf oil slick debacle, it was government regulatory employees who were lax, lazy, or completely derelict in their duty to make sure those drilling platforms were safe.
  • while the economic crisis and financial collapse were occurring, at least dozens of SEC employees were busy patrolling the Internet for pornography and downloading the smut they located to their government computers or to discs.
  • while Americans were dying due to faulty Toyota products, the government safety watchdogs started and prematurely stopped a series of safety investigations, not able or not wanting to find anything amiss with Toyota products even though we now are told 89 Americans died as a result of their lax investigations.
  • several years ago, the government watchdogs for children's toys were lax in their vigilance in allowing imported toys into the country that had been manufactured with lead based components, endangering the health of American children who may have ingested the lead when the put the products in their mouths. Eventually, the government watchdogs finally woke up and got the lead based products off of the market. However, their lax of vigilance continued when the foreign manufacturers just replaced lead with cadmium, an equally dangerous heavy metal in the latest wave of imported products.
We are so screwed if we continue down this path. We pay higher and higher taxes for less and less service when the reality of the French tax cut shows that reducing taxes and government control can be a very good thing. We have to get over this myth that just because the government says it is doing something we cannot assume that they are doing it right or, in fact, doing it at all. We need a complete government overall as outlined in Step 1 of "Love My Country, Loathe My Government" in order to find ways to make government leaner and cheaper while increasing its effectiveness and accountability. No one in Washington seems to think this is worth doing or they would have done it already.
Second, and we keep coming back to this step, Step 34 needs to be implemented which would remove existing members from Congressional committees who screw up in their oversight. Thus, in the above examples, those committee politicians overseeing the inspectors who did not do their job on the oil platform inspections, overseeing the pornography searchers in the SEC, and overseeing the auto safety and toy safety failures wold be booted off of their committees for dereliction of duty. Less government, less taxes, more effectiveness, more accountability.


Our new book, "Love My Country, Loathe My Government - Fifty First Steps To Restoring Our Freedom And Destroying The American Political Class" is now available at www.loathemygovernment.com. It is also available online at Amazon and Barnes and Noble. Please pass our message of freedom onward. Let your friends and family know about our websites and blogs, ask your library to carry the book, and respect freedom for both yourselves and others everyday.

Wednesday, May 26, 2010

New Jersey Political Class Insanity and Stupid Math

Complete disclosure: I grew up in New Jersey and moved back to New Jersey after college to spend 22 years in a corporate job and another seven years starting and running a successful business. I left New Jersey for good in 2005 and moved to Florida. The primary motivation for moving out of state was the ever escalating taxes and ever dwindling value for the tax dollars paid. In 2005, we were paying over $12,000 a year in property taxes for a typical suburban house and that tax bill had been rising steadily, obscenely for years with no end in sight. We received virtually no services in return except for schools and roads, paying for our own garbage removal, being served by volunteer fire and rescue (who did a wonderful job), minimal parks, no library, and relying on state police stationed pretty far away to service our needs. Thus, when I talk about New Jersey taxes and politics, I do have some personal experience.

But if you do not believe me, consider some facts that were in an online US News and World Report article last month, an article written by Brandon Greiffe:
  • New Jersey has the second highest sales tax rate in the country.
  • New Jersey has the sixth highest corporate tax rate in the country.
  • New Jersey has the highest property taxes in the country.
  • New Jersey is near the top of all states in the amount of debt the state government is responsible for.
  • New Jersey is number one when looking at how many college graduates leave the state after getting their diploma.
  • New Jersey is 50th in the country relative to how much support they get back from Washington compared to how much Federal taxes New Jersey residents pay.

And now it appears, as quoted in the US News article and a Business Week online article, that in fiscal year 2011, New Jersey's budget of $29.3 billion will be about $10.7 billion short, based on current economic projections. In other words, next year New Jersey's expense stream will be about 50% higher than its revenue stream unless major budget action is taken. Since the state constitution requires a balanced budget every year, with unemployment higher than the national average and various state taxes already very high, this will be an extremely difficult thing to do.

So what is the hot topic among New Jersey politicians? Is it how to make the fundamental and painful decisions needed to completely reorient the state and its citizens to the new reality of less revenue? No. The big hubbub is whether or not to raise the income tax rate on those state residents earning over a million dollars a year. If this is done, the net gain to the state treasury would be about $637 million, according to the Business Week article. This comes out to less than 6% of the deficit and still leaves another $10 billion gap to close. This is what I call stupid math, everyone is up in arms about the tax on millionaires when in reality, it is a trivial part of the bigger problem. Its stupid to focus on this single issue vs. the much larger problem.

Rather than attack the bigger problem, the $10 billion, the state political class members are trying to find ways to leverage this so-called "millionaire's tax" in the November elections. Never mind that the state is about to go over a financial cliff, the only thing that the politicians can think about is how to leverage a relatively minor issue for their own good. The $10 billion deficit is not going away, it is only being ignored for the greater good of politicians' careers. Given that New Jersey has about 3.5 million households, the potential hit on average for each household AFTER taking into effect the millionaire's tax is still almost $2,900 per household. This $2,900 would be on top of the some of the very highest tax burdens in the country (see above list). If there is no tax increase on millionaires, the amount each household would have to pay is only $181 or 6% higher, i,e. it makes virtually no difference if the tax is passed or not relative to the deficit.

That is the reality of the situation and rather than attack that reality, the New Jersey politicians would rather divide the state into tribes, millionaires vs. non-millionaires, and exploit that division for their own good. They are somehow hoping that they would never have to present that household bill for $2,900 to their constituents, knowing that a reality like may actually end their political careers. Thus, not only did they mismanage the state into its dire economic straits, they still want to play their petty politics and protect themselves rather than fix the underlying, structural budget problems.

It is no different on the national level. Our total national debt level is getting very dangerous, to levels that are unsustainable, according to the Congressional Budget Office. Our deficit spending will not be overcome by a rebound in the economy or employment. The Obama administration is spending almost 70% more in expenses than it is collecting in revenue. No combination of rising employment and economic growth will add up to 70%. Already, just like New Jersey politicians, you hear Federal politicians talking about not wanting to do anything substantial, whether it is cutting the budget, passing immigration reform, getting out of Iraq, etc., since it might endanger their chances at re-election in November.

Much like New Jersey, the country as a whole will now drift in the sea of red ink and indecision in order to maintain politicians' careers. In the meantime, reality will get worse and worse as will the eventual pain of dealing with that worsening reality. Just ask the Greeks.

Oh, one last thing. To my friends and relatives and millionaires in New Jersey. Maybe you should follow the lead of your young college graduates, they seem to know that leaving the state is best for their lives. Especially if you are a millionaire, maybe moving to Florida, where we landed, where there is NO STATE INCOME TAX is a good decision. Do you really think that this argument of taxing the rich will end with this fiscal budget? I would expect it, the millionaire's tax, to go ever higher year over year, given the track record of New Jersey politicians. Best to get out now and save tens of thousands of dollars every year here in Florida (or any other state that has no state income tax). If enough New Jersey millionaires leave the state, that would certainly make the "millionaire's tax" a moot point in future budget discussions.


Our new book, "Love My Country, Loathe My Government - Fifty First Steps To Restoring Our Freedom And Destroying The American Political Class" is now available at www.loathemygovernment.com. It is also available online at Amazon and Barnes and Noble. Please pass our message of freedom onward. Let your friends and family know about our websites and blogs, ask your library to carry the book, and respect freedom for both yourselves and others everyday.

Tuesday, May 25, 2010

Oil In The Gulf and Another Dysfunctional Federal Government Agency

Several weeks ago we reviewed reports and an investigation by Securities and Exchange Commission (SEC) auditors that found numerous cases of SEC management personnel, some at high levels of management (earning over $200,000 a year), using their government issued computers on work time to cruise the Internet looking for pornography. Not only were they searching for pornographic material, they were downloading voluminous amounts of smut to their computers and discs. These activities, according to the auditors occurred before, during and after the financial markets and the economy crashed, dire situations that SEC personnel might have helped avoid if they had been doing their job properly.

Not to be outdone, we now apparently have another dysfunctional Federal agency being identified, this one associated with the massive Gulf Of Mexico oil spill. Matthew Daly of the Associated Press published an article today which highlighted a new government report, from the Inspector General of the Interior Department, alleging that Federal oil drilling employees have been accepting gifts and jobs from the industry that they are supposed to be regulating. The following are direct quotes from Mr. Daly's article:
  • An inspector for the Minerals Management Service (MMS) admitted to using crystal methamphetamine and said he might have been under the influence of the drug the next day at work.
  • The report cites a variety of violations of Federal regulations and ethics rules at the agency's (Minerals Management Service) Louisiana office.
  • Minerals agency employees move between industry and government. While no specifics were included in the report, "we discovered that the individuals involved in the fraternizing and gift exchange - both government and industry - have often known one another since childhood." Their relationships took precedence over their jobs.
  • The report follows a 2008 report: that decried a "culture of ethical failure" and conflicts of interest at the minerals agency.
  • Several employees cited in the report have resigned, were fired, or were referred for prosecution.
  • The report said that employees from the Lake Charles, La. MMS office had repeatedly accepted gifts including hunting and fishing trips from the Island Operating Company, an oil and gas company working on oil platforms regulated by the Interior department.
  • Taking such gifts "appears to be a generally accepted practice."
  • Two employees at the Lake Charles office admitted to using illegal drugs, and many inspectors had emails that contained inappropriate humor and pornography on their government computers (My observation: there's that pesky Federal employee pornography connection again).
  • One MMS inspector conducted four inspections of Island Operating Company platforms while negotiating and later accepting employment with the company.

My goodness, how bad does it get? We are looking at a massive bill for the cleanup of the current spill and massive ecological damage and the Federal employees that should have been protecting us are on industry sponsored vacations, using drugs, working the pornography angle just like the SEC, and obviously putting themselves in a conflict of interest position when they are working and inspecting for the government while they were negotiating for a job from the very people they should be riding herd on. Disgusting. The interesting notation in the report is that some employees had actually been referred for prosecution. You know it is bad when the government cannot ignore your sins and actually wants you to be prosecuted. And this behavior is just from 2000 through 2008, the current Interior Secretary has called for an update to the investigation to bring it up to current time.

These transgressions did not just happen this month. They apparently have been going on for a long time (remember, the report form the inspector general covered the 2000 - 2008 timeframe) and those in upper echelons of the Interior department and on the Congressional committees responsible for the oversight of these functions did not nothing to stop the transgressions and sloppy, and possibly illegal activities. Again this is a prime example where Step 34 of "Love My Country, Loathe My Government" would come into play. It would remove the politicians from the responsible committees for dereliction of duty and replace them with other, hopefully better qualified members, of the political class. There must be accountability for these atrocious Federal shortcomings and removal from their committee posts would be a good start. At the same time, somebody high up in the Interior Department needs to be fired for allowing this kind of behavior to go on for so long, behavior that probably contributed to the lax regulatory environment which resulted in the current oil spill.

Step 1 from "Love My Country, Loathe My Government" also comes to mind since while it calls for year over year reductions in the size of the Federal government, it also calls for a ground up, zero-based review of every government function, entity, and budget. This type of ground up approach might prove useful in identifying poorly performing organizations, rampant pornography habits, and obvious conflicts of interest.

On a somewhat related note, a new report today from the National Highway Transportation Safety Board (NHTSB) now estimates that up to 89 Americans may have been killed from faulty Toyota vehicles. This was another case where government regulation was a failure. We covered this situation several months ago when it was reported that NHTSB auto safety personnel had opened numerous, formal inquires into Toyota vehicles in the past decade or so but all of the investigations had been terminated quickly, with no safety or recall action issued. It was not until it became obvious that there was a problem, i.e. people were dying, that some action was taken. Thus, here are three examples, SEC, MMS, and NHTSB, of Federal entities not doing their jobs. The only difference is that they were responsible for different facets of our lives and so far, it does not appear pornography was a factor in the NHTSB (at least so far).





Our new book, "Love My Country, Loathe My Government - Fifty First Steps To Restoring Our Freedom And Destroying The American Political Class" is now available at www.loathemygovernment.com. It is also available online at Amazon and Barnes and Noble. Please pass our message of freedom onward. Let your friends and family know about our websites and blogs, ask your library to carry the book, and respect freedom for both yourselves and others everyday.

Monday, May 24, 2010

More Reasons To Expect The Financial Reform Legislation To Fail

A few days ago we went into detail about how the new financial markets reform legislation that the Senate recently passed (their version must now by merged with the House of Representatives version) is likely to be ineffective for the simple reason that it did nothing to reform or keep in check two of the biggest causes of the economic meltdown: irrational and risky behavior by Fannie Mae and Freddie Mac. We calculated that these two Federal agencies were costing the American taxpayer about $7 billion a month to keep them solvent and that the proposed legislation did not nothing to get them in line from a lending, accounting, and solvency perspective.

If Fannie and Freddie were not enough to doom the effectiveness of the reform legislation, consider an Associated Press (AP) article by Daniel Wagner that appeared on May 24, 2010, titled, "New Financial Rules Might Not Prevent Next Crisis." Mr. Wagner takes a detailed look at the many components that the proposed law covers and provides some in-depth analysis of why the bill may fail in each area:
  • Derivatives - many believe that these types of financial products not only helped to pump up the housing market but also magnified the chaos of the bursting housing bubble. Apparently, business lobbying groups got the new rules on visibility for derivative trading diluted so that only the big banks are affected. The old, dangerous ways of doing business for most companies will continue with no new visibility rules.
  • Weak banking oversight - prior to the crash, many government oversight organizations failed to foresee the coming financial meltdown and the risky behavior that was causing the crisis and allowed some industry companies to avoid oversight altogether. While this legislation supposedly tightens regulation oversight, there are two problems. Banking lobbyists got serious concessions and a diluting of oversight regulation and many government agencies involved in oversight also lobbied the government (figure that one out, government agencies lobbying government politicians) to protect their turf, resulting in virtually no changes to the government's regulatory hierarchy, a hierarchy that failed miserably in foreseeing the latest recession clouds and storm.
  • Too Big To Fail - according to Mr. Wagner, the bill does very little to prevent big banks from getting bigger, implying that taxpayers may still have to pay up for risky and ill timed behavior of the biggest banks in the future.
  • Consumer Protection - a lot of the foreclosure and housing problems were caused when consumers took on mortgages and financing plans that they were not qualified for. This part of the bill is supposed to oversee banking products and financing plans and ban those products and offers that are thought to be too risky. However, the oversight in this bill would only extend to lending organizations with over $10 billion in assets. Smaller banks and more importantly, nonbanks, would not be be covered. Since many of the bad mortgages in the past were written by smaller mortgage brokers who sold the mortgages immediately after closing, regardless of how poor a credit risk the deal was, a root cause of the housing collapse, shady mortgage dealers, will not be addressed by this bill.
  • Credit Rating Agencies - credit rating agencies such as Moody's and Standard and Poor's failed miserably to detect bad mortgage securities and wrongly gave many of them high credit worthiness ratings. Obviously, most of these high rated securities,s backed by poorly performing mortgages, were disasters so this part of the bill tries to end the practice of banks choosing the credit agencies that rate their investment offerings. An independent board would assign rating agencies. However, the banks still would have to pay the credit rating agencies that are chosen to rate their investments so the incentive to overrate is still present.

Many would say this is a nice try but that is about all it is, a nice try. Many of the problems have not been addressed or they have been addressed in a haphazard or diluted way. The further concern is the House and Senate bills still have to be merged, probably resulting in more compromises and a further weakening of the legislation's intentions. At some point you have to ask: when does so much dilution and compromising result in a toothless bill? The political class will no doubt congratulate itself when the final law is passed but banks will still be too big to fail, underhanded small mortgage brokers and smaller banks will still be pushing bad financing products (which eventually get dumped on the taxpayer via Fannie Mae and Freddie Mac), the regulation hierarchy that failed so miserably a few years ago will still be in place, unseen derivative trading may still stalk the underbelly of the economy, and rating agencies will still be rating, and being paid by banks, to rate a banks investment offerings with the incentive to give a higher rating, while somewhat muted, still present.

Why are we stuck with such ineffective legislation? Possibly two reasons. First, as we have mentioned many times, the political class as an entity is not very smart when it comes to solving large, complex problems. In fact, I cannot even remember the last time they solved a major problem or resolved a major issue. Second, they may not have had a chance in this area since, according to the article, the following organizations lined up for input to the writing of the bill: U.S. Chamber of Commerce, Business Roundtable, Independent Community Bankers, the American Bankers Association, Federal regulatory agencies such as the FDIC, Goldman Sachs and other large banks, the payday lending industry, and the National Automobile Dealers Association.

Mr. Wagner reports that the financial services industry has donated about $2.3 billion to political candidates for Federal public office in the past twenty years. It has also spent $3.8 billion in pure lobbying expense since 1998, more than any other sector. Thus, is it any wonder that possibly the political class is looking out for their own interests and the interests of their re-election funders than the American taxpayer?

This is just another example where Step 39, term limits, as outlined in "Love My Country, Loathe My Government" would be needed. Most people, especially politicians, cannot be expected to act rationally and in the best interests of average Americans and the country as a whole when the banking or other industry is throwing billions of dollars in campaign funding at them. The only real solution is to make sure that re-election is not an option. Then, and only then, can we begin to take money out of the equation and maybe put the country's welfare back into the equation. While we are at it, lets also impose Step 6 which only allow individual citizens to contribute to any campaign and thus, take corporate, union, and PAC money totally out of the election process.

In conclusion, please remember our advice from yesterday's post as this so-called reform legislation moves forward - focus on what the unintended consequences are of the final law, not the intended aims of the law. The intended goals are highly unlikely to be attained, based on the discussion above, while the unintended consequences of such a large piece of legislation could be extensive.


Our new book, "Love My Country, Loathe My Government - Fifty First Steps To Restoring Our Freedom And Destroying The American Political Class" is now available at www.loathemygovernment.com. It is also available online at Amazon and Barnes and Noble. Please pass our message of freedom onward. Let your friends and family know about our websites and blogs, ask your library to carry the book, and respect freedom for both yourselves and others everyday.

Sunday, May 23, 2010

Political Class Actions and The Many Unintended Consequences

One thing that most Americans never think is what happens after the political class takes action or passes a law? I think most of us just assume that once the law is passed, everything will be okay and work as planned. Unfortunately, that is almost never the case. For one, most of the laws pass never solve, or even address, the issue that they are purported to be addressing. Anti-drug laws do not work, Bush's public education initiative, No Child Left Behind, does not work (and the Obama version will not work either), the Federal government funded and started building a fence along our southern border to keep illegal Mexicans out of the country but the fence has been breached over 3,000 times, allowing who knows how many illegals to get into the country, we are told that we need an economic stimulus package that will be used to fix our crumbling infrastructure but the Associated Press reported that about half of the stimulus money for bridges was spent on bridges that were in excellent condition, etc. The list goes on and on.

Consider some more recent occurrences of unintended consequences:
  • The main reason that BP has not gotten its runaway well under control is that the accident occurred about a mile under the Gulf Of Mexico. Why are they so far out in the Gulf and drilling in such deep water? Because Congress decided to force drilling further and further from the coastline, falsely assuming that our beaches would not get fouled by an oil disaster if the oil rigs were further away. The unintended consequence of their logic is that once the disaster did occur in deep water, it could not be readily fixed compared to if the drilling had been closer to shore. Yes, there may have been some localized ecological damage but it would have been contained and easily and more cheaply cleaned up. Now, this unintended consequence will spread disaster all along the Gulf and into the Atlantic Ocean, unintended consequences from a political class that did not think through the problem.
  • In the past year or so, there have been horror stories of airline passengers spending hours and hours in airplanes waiting to take off resulting malfunctioning toilets, shortages of food and water, high degrees of stress, and other behaviors that one would expect being cooped up in a plane for long hours but not going anywhere. To remedy the situation, the political class passed a law that puts a cap on how long passengers can sit in a waiting plane before the airline starts being fined. Their logic was that if the airlines were facing stiff fines for delaying flights on the ground for more than a few hours, they would act more efficiently and promptly to get the passengers airborne. However, the unintended consequence of this law was that airlines can avoid fines if they cancel the flight before the time limit is reached. Consider this unintended consequence example: if a plane is scheduled to actually leave the ground fifteen minutes after the time limit elapses, rather than going through with the flight, the airline will cancel it to avoid the heavy fines and inconvenience all of the passengers even though they were very close to taking off. Thus, an airline will probably never get fined under this law but untold number of passengers will be inconvenienced by canceled flights, an unintended consequence.
  • Back when the economy first started to implode, the political class told us that we had to bail out the banks because they "were too big to fail." If they failed, then the entire financial system might collapse. Two years after the political class sold us this bill of goods, it appears that the four biggest banks, Wells Fargo, Bank Of America, Citi, and JP Morgan, are now bigger than ever with a bigger percentage of deposits and assets than before the economic meltdown. Thus, in an attempt to save banks "that were too big to fail", the unintended consequence was that the political class made a handful of the surviving banks bigger than ever. This must mean that we are no closer to getting out from under the "too big to fail" dilemma despite wasting billions and billions of taxpayer dollars on bailouts.
  • In almost every past recession, it was small businesses that led the country out of the economic downturns with their hiring of new workers. However, in this recession, unemployment has stayed very high and small businesses are not hiring people, they are just getting more productivity out of their current workers. What happened? According to many sources, small businesses are having a very difficult time getting loans to expand. No loans, no new hiring. Thus, the unintended consequence is that the political class has been so tied up with the big banks, all of their actions in the banking industry over the past two years has resulted in an environment where banks do not want to loan money except to the biggest companies.
  • Last year, it was discovered that many children's products coming from China factories had high levels of lead in them. The serious concern was that kids might put the toys and other products in their mouths, ingest some of the lead, and suffer serious health issues. The political class and government agencies got involved after the fact and made sure that those products were removed from the shelves and not longer imported. The unintended consequence of their late actions were highlighted in a May 20, 2010 Associated Press report that found high levels of the toxic metal cadmium in some imported children's products. Thus, through incompetence, the removal of lead from products was not enough to protect our kids since the overseas factories just replaced one toxic metal with another. So, just when you thought it was safe to have your child suck on a toy because of what the government did to remove the lead, you run smack into the unintended consequence of a different dangerous metal to be ingested.
  • The recent health care reform legislation that was passed was opposed by every Republican in both the House and the Senate and had to be carried by all Democrat votes. The Democrats have traditionally been strong advocates of abortion rights for women. However, according to an Associated Press May 17, 20120 article, the way the final legislation was written had the unintended consequence of making it easier for a state government to restrict abortion coverage by private insurance plans serving the 30 million uninsured Americans in the so-called insurance exchanges that will take place in 2014. In other words, if you buy your health insurance through these new exchanges, the state where you live can make it much more difficult to get funding for an abortion. Arizona and Tennessee have already passed laws to this effect and dozens of other states are considering doing the same. Not quite the result the Democrats wanted in the area of abortion rights, certainly an unintended consequence.
There are probably a number of reasons why political class and government programs do not go as planned and result in unintended consequences. First, some of these issues are very complex (the banking/financial industry, the 2,400 page health care reform bill) and the politicians are not smart enough to understand how things work. As a result, their intentions result in unintended consequences that they were not intelligent enough to foresee.

Second, there is no accountability for correctly implementing many of these programs. Why was taxpayer money wasted fixing bridges that did not need to be fixed, especially when we were told by the politicians that one benefit of spending obscene amounts of borrowed money is that our crumbling infrastructure would be improved? The fence on the border costs billions of dollars to build, why is no one being held accountable for its poor performance and numerous breaches?

Third, as we have said many times in this blog, politicians do not solve problems, they only get re-elected. They are either not smart enough to find root causes and solutions for problems, they are too lazy to find the the root causes and solutions, or they do not want to find the root causes and solutions since it may harm their election chances. In any case, we suffer the unintended consequences of bad legislation, legislation that is not properly executed, or politicians that are not held accountable for laws and policies that go astray.

Thus, in the future, whenever Congress passes a law, do not think what good the law will do. Focus on all the ways things that could go wrong, you are far more likely to be right tracking the latter possibility than the former. At the same time check out Step 39 and Step 34 in "Love My Country, Loathe My Government" to see what could be done to help minimize unintended consequences. If we do not do it, our political class will certianly not do it.




Our new book, "Love My Country, Loathe My Government - Fifty First Steps To Restoring Our Freedom And Destroying The American Political Class" is now available at www.loathemygovernment.com. It is also available online at Amazon and Barnes and Noble. Please pass our message of freedom onward. Let your friends and family know about our websites and blogs, ask your library to carry the book, and respect freedom for both yourselves and others everyday.

Friday, May 21, 2010

Financial Market Reform Legislation - Another Failed Political Class Action

As a result of the recent economic crisis and financial market meltdown, Congress and the Obama administration have been trying to craft a law that reforms the financial markets so that we do not have another meltdown in the future. Without even reading the proposed legislation, I can promise you that it will be a failure. However, before I prove it, lets review some numbers:
  • Taxpayer cost to bailout Fannie Mae and Freddie Mac SO FAR: about $145 billion and counting. The Obama administration has publicly stated that it will continue to back both organizations until at least 2012 regardless of their losses. (source: Business Week, May 17, 2010 issue and other sources)
  • This bailout of Fannie and Freddie has cost the taxpayers about $7 billion a month, about $318 million a day, and about $40 million an hour since the bailout began.
  • Fannie Mae stock price in 2007 = about $70, Freddie Mac stock price in 2007 = about $65.
  • Fannie Mae stock price today = $.96, Freddie Mac stock price today = $1.21. Thus, both entities have destroyed over 98% of their shareholders' value in just two years. This is the market talking and putting a value on their operations, a valuation of near zero.
  • According to Business Week, both organizations now hold $340 billion in "non-performing" (i.e., worthless) assets.
  • Despite their incompetency, both organizations now basically control the entire $5 TRILLION mortgage market in this country, making it almost impossible to get a mortgage without their help.
  • The Congressional Budget Office estimates that keeping both organizations alive will cost taxpayers $389 billion between 2009 and 2019, far exceeding any other bailout, including AIG, from the bailout era. This comes out to a per household average cost of $3,400 per household, $3,400 each household does not have to spend on expanding the economy and generating jobs.
  • A lot of their problems were started in the early 2000s, according to the Business Week issue, when they started to purchase billions and billions of dollars of subprime mortgages and packaged them as securities. As we all know, the primary reasons for the economic collapse was the dangerously risky subprime securities that were sold in the market, of which these two government agencies were the biggest offenders.
  • Their numerous accounting scandals through the years are too numerous to list here but most were monumental and potentially criminal.

Let's review: two government agencies are leaking great amounts of money hourly that the Obama administration says the U.S. taxpayer will gladly pay or "back stop" for at least another two years. These agencies have never had decent accounting procedures but now control the entire American mortgage market. These agencies destroying untold billions of dollars in shareholder value in a very short amount of time. These agencies were at the center and are primary causes of the economic collapse we are still living through.

Given this atrocious performance, you would think that the financial reform legislation before Congress is heavily involved in getting this runaway disaster under control. It is obvious that Fannie Mae and Freddie Mac were root causes of the financial meltdown. But, no surprise here, there apparently is not part of the legislation that will address this root cause problem. All of the focus on financial reform is elsewhere, namely the banking industry, most of whose players have already paid back their bailout money or who never received bailout money to begin with. The largest recipient, Fannie and Freddie, who have no chance of repaying the taxpayers, are not included in the reform bill.

Anyone who reads this blog knows that if you do not identify and quantify the root causes of a problem you have no chance to solve that problem. Just like with health care reform, the political class has not taken on the root causes and thus, I can confidently say that this legislation will be a failure.

Don't believe me, consider some quotes from the Business Week article:

  • John McCain, U.S. Senator: "..like declaring war on terror and ignoring Al-Qaeda."
  • Craig Pirrong, professor of risk management at the University of Houston: "Fannie and Freddie are the poster children of the moral hazards of government guarantees - even implicit ones."
  • Phillip Swagel, Treasury economist under the first President Bush: "They are now being used as a conduit for the executive branch to spend money for policy purposes without having to get a vote and without transparency."

What a mess. The obvious question that comes to mind is why isn't the political class addressing this root cause? I have a number of theories:

1) Fannie and Freddie have been big contributors to politicians' campaign re-election efforts. Downsizing them or eliminating them would dry up a set of funds that they use to stay in office. This is especially true of the Democrats who are the biggest recipients of the donations from these two government agencies (ponder on the absurdity of that statement - government funded organizations who take taxpayer money and donate it politicians!) Of course, if Step 6 in "Love My Country, Loathe My Government" (allow only individual citizens to contribute to election campaigns), Step 39 (term limits), and Step 36 (require all politicians to take and pass a course in economics before serving) were in place, a lot of this issue would go away.

2) The political class does not not know how to fix the problem of Fannie Mae and Freddie Mac. Given that they rarely fix any other problem in this country, this theory has a high probability of being true. That is why term limits and dumping all incumbents in November is important, we need new blood and new leaders that are smart enough to fix these types of problems.

3) The scariest theory is that since these two entities control the mortgage market, without them the recovery may take longer than expected if they are not backing up housing loans. the problem with this theory is that it just prolongs the root cause and we continue to waste billions of taxpayer dollars every month keeping these two terminal patients alive.

4) The last theory is based on comments by two Democratic Senators who are pushing this bill, John Warner and Chris Dodd. Both have said that Fannie and Freddie's problems will be addressed next year. More absurdity. They are the biggest problem, why not address them first? They are costing the American taxpayer the most money, billions of dollars, why not fix them first? Could it be that the political class does not want to shut off the campaign donation spigot until after the November election even though at $7 billion or so a month, it will potentially cost the American taxpayer over $80 billion to wait another year?

Again, I repeat, what a mess. I do not know what theory or combination of theories above are the cause of the inaction but I do know this: without addressing the root cause of the problem, Fannie and Freddie, we will not solve the problems inherent in the country's financial markets.



Our new book, "Love My Country, Loathe My Government - Fifty First Steps To Restoring Our Freedom And Destroying The American Political Class" is now available at www.loathemygovernment.com. It is also available online at Amazon and Barnes and Noble. Please pass our message of freedom onward. Let your friends and family know about our websites and blogs, ask your library to carry the book, and respect freedom for both yourselves and others everyday.

Thursday, May 20, 2010

America's Public Schools - Still Receiving Failing Grades

Consider the following facts from Christine Armario of the Associated Press in her May 11, 2010 article, "Nation Has High College Remedial Education Rate":
  • Using Broward College in South Florida as an example, Ms. Armario reports that two thirds of entering students there require at least one remedial class in math, English or reading.
  • Nationwide, abut 33% of freshman students had taken at least one remedial course, according to the Department of Education, and at two year colleges that percentage is over 40%.
  • In a 2007 AST National Curriculum Survey of College Professors, 65% of the respondents said that their states poorly prepare students for college level coursework.
  • A 2008 study by the nonprofit Strong American Schools found that nearly four out of five remedial students in college had a high school GPA of 3.0 or higher.
From another Department Of Education source, I found an estimate that said the United States spends about $529 billion a year on public education at the elementary and secondary levels or over $9,000 per student. And what do we get for this annual half a TRILLION expenditure, according to Ms. Armario? Not much. We are essentially paying for the same service twice when students in colleges have to take course work and be educated on topics that they theoretocally should have learned in high school. Not only did they not learn the material but they were rewarded for not learning since many of them got out of high school with a GPA over 3.0.

Many times we have referred to a commission that Ronald Reagan presided over that presented its finding on public education in 1982 in the landmark study, "A Nation At Risk." Twenty eight years and many TRILLIONS of dollars later we are no closer to solving the problem of failing public schools in this country than we were when we were determined to be at risk as a nation in 1982. Imagine how much of a risk we are at now.

Bush tried with the No Child Left Behind Legislation but I think most people would conclude that this multi-billion effort was also a failure. The Obama adminstration's education effort announced a few months ago was not much different and is also probably doomed to failure. This article did mention that "the Obama adminstration is pushing states to adopt tougher standards, and governors and education leaders across the country are working together to propose a uniform set of common standards."

Nowhere, either in this article or elsewhere, have I seen proof that tougher standards and a uniform set of standards are the root causes of the failing public schools. Much like the health care reform legislation, the political class is running off proposing solutions to problems that they do not understand. If you do not understand the root cause of the problem, the chance that your solutions will be successful are very, very small. Who is to say that faulty teacher training is not the problem vs. tougher standards. Who is to stay that parental involvement is not the problem vs. a set of common standards? Who is to say that tenure abuse is not the problem vs. tougher standards and a uniform set of standards?

Those politicians in charge are mostly lawyers, they should not be the ones identifying and solving root causes to problems. That is why Step 27 in "Love My Country, Loathe My Government" is so important. It would establish a panel of smart Americans to analyzae the problem, identify the root causes, and propose solutions based on their findings and expertise. We cannot rely on politicians and lawyers to solve the problem. They were provided a solution in 1982 and still could not even execute the plan after all of the work had been done.

Twenty eight years from now we do not want to be sitting around and talking about how bad public schools are in the country. However, if we allow the political class to manage this problem like we have in the past, that is exactly what will happen.


Our new book, "Love My Country, Loathe My Government - Fifty First Steps To Restoring Our Freedom And Destroying The American Political Class" is now available at www.loathemygovernment.com. It is also available online at Amazon and Barnes and Noble. Please pass our message of freedom onward. Let your friends and family know about our websites and blogs, ask your library to carry the book, and respect freedom for both yourselves and others everyday.

Wednesday, May 19, 2010

Obama's Health Care Reform Disaster - Bruno Update # 4

As we promised several months ago, we will periodically go back to the disaster know as Obama Care to review the status and ramifications of this horrid piece of legislation. In past updates and other related posts, we have shown that this bill reformed nothing as it relates to high and rising health care costs in this country. All it did was increase taxes, extend coverage in the same cost environment to uninsured Americans, and mandated a forced purchase of a service, health care insurance, by all Americans. It never identified the root causes of the problem underlying rising costs and thus, was never able to provide solutions to wipe out those root causes.

In addition, several recent announcements by the Congressional Budget Office and other sources have confirmed that the bill will not reduce the deficit as Obama, Reid, and Pelosi claimed but will actually become a budget buster within the next twenty years as the baby boomers retire. We questioned whether the supporters of the bill were too dumb to figure out the actual costs before the vote or were being devious and suppressing the actual costs until after the vote, in essence lying to America. In either case, costs will go up, deficits will go up, taxes will go up, and the root causes of the problem will remain.

Based on research of knowledgable health care sources, none of whom worked for the political class, we identified some major root causes, that if properly attacked, would significantly reduce the disease levels in this country in the biggest categories, resulting in lower health issues of the nation as a whole, and in the process, reduce health care costs. These root causes include:
  • Americans eat too much.
  • American smoke too much.
  • Americans are overweight.
  • Americans do not get enough exercise.
  • As the baby boomers age, increasing levels of dementia related diseases will increase.
  • Breast and several other types of cancers are big components of health care costs.
If you can attack these root causes, high health care costs will take care of themselves since you would have reduced the demand for health care services. When you reduce demand for any product or service and supply remains the same, prices/costs have to come down. The added benefit of this approach is that the country does not become a police state where everyone has to carry health care papers on their person.

Consider the following math, based on an article in the June, 2010 issue of Money magazine, "Should health insurers penalize people for their unhealthy behavior?":
  • 21% of U.S. adults smoke and there are about 230 million adults in the country today.
  • the additional lifetime medical costs for a smoker vs. a non-smoker are higher by $17,500.
  • if you assume a lifetime of smoking is fifty years, then combining the above numbers shows that the nation's annual medical bills are about $17 billion a year higher because of smokers.
  • This comes out to about $170 billion over ten years, the time frame Obama likes to use to fudge his numbers.
  • If you reduce smoking by 50%, you could save about $85 billion a year in health care costs.
  • Furthermore, another smoking-related number from the article stated that the average bill for a hospital lung cancer stay is $45,500.
  • About 163,500 people die from lung cancer every year.
  • Conservatively, lets say every one of them had to stay in the hospital during the last year of their life. We will not count those that were in the hospital for lung cancer but did not die.
  • If you combine the 163,500 with the $45,500 estimate, you will estimate that the nation spends about $7.5 billion a year on lung cancer hospital visits each year or about $75 billion over ten years. Cut the amount of lung cancer occurrences in half and you could save tens of billions of dollars every year.
The same article also spoke about obesity in America:
  • 34% of U.S. adults are obese or about 78 million people.
  • The extra annual medical costs for obese people vs. those of normal weight is $1,429.
  • Thus, America incurs an extra $111.7 billion a year in medical costs due to obesity of a whopping $1.1 TRILLION over ten years. Cut the obesity problem in half and the country could save a half a TRILLION over ten years in unnecessary medical costs.
  • These savings do not include any savings from being just overweight, but not obese, which is about another third of the adult population.
  • Furthermore, according to the article, the average bill for a hospital stay for a heart attack victim is $54,400.
  • According to the American heart association website, about 1.3 million Americans suffer a heart attack every year.
  • Thus, the costs of heart attack hospital stays is $71 billion a year or $707 billion over ten years. Many of those heart attacks are caused by people's weight problems, get their weight under control and you could save billions of dollars.
Thus, in just a few short minutes, the above math identified more than two TRILLION dollars in potential health care costs savings that are available to be reaped if we can get the amount of smoking down and the levels of obesity down in this country. Those are root causes without a "papers please" environment. This is called problem solving.

To answer the question posed in the article, those that smoke and who are overweight should be penalized for their behavior. It is called personal responsibility, they are the costs causers, they should be the cost payers. Unfortunately, the political class knows nothing about personal responsibility, they just want to get re-elected regardless of the costs.

These savings just cover smoking and overweight people. Consider the following statistics from the American Cancer Society as reported recently in the Tampa Tribune:
  • On out of every two men will get cancer in their lifetime.
  • One out of every three women will get cancer.
  • About 77% of all cancers are diagnosed in people 55 years or older.
  • Over 190,000 Americans will get breast cancer this year.
Even if these percentages stay the same, the number of older people in the U.S. population will continue to grow and thus, the absolute number of people getting cancer will grow in the years to come unless the cure rate is significantly improved. The same holds true for dementia-related diseases, the older one gets the likelihood of getting dementia rises. These are the types of issues that need to be addressed to get health care costs under control. these are the types of issues Obama and the rest of the political class did not address in any effective way in Obama care.

Thus, as always, two steps in "Love My Country, Loathe My Government" are cited as having the potential to solve this national problem. Step 28 would convene a panel of smart Americans to do a zero based, ground up analysis of the root causes. This panel, which would be void of lobbyists and politicians, would propose legislation and steps to address the root causes as opposed to the charade we have seen in Washington over the past year in this area.

Step 4 would direct more funding to researching and solving the riddles of cancer and dementia-related diseases in order to avoid the large costs facing the country as the baby boomers mature and enter the prime years for coming down with these diseases. Solve the root causes and the economics of health care will take care of themselves.









Our new book, "Love My Country, Loathe My Government - Fifty First Steps To Restoring Our Freedom And Destroying The American Political Class" is now available at www.loathemygovernment.com. It is also available online at Amazon and Barnes and Noble. Please pass our message of freedom onward. Let your friends and family know about our websites and blogs, ask your library to carry the book, and respect freedom for both yourselves and others everyday.

Tuesday, May 18, 2010

Almost A Good Idea To Fix The Congressional Gerrymandering Problem

Definition: Gerrymander - to divide a state, county or city into voting districts in order to almost guarantee the reelection of one party.

Step 14 in "Love My Country, Loathe My Government" is a critical step to regaining our freedom in that it sets down the reasons and the remedies needed to stop ensuring that House Of Representative politicians will almost always get reelected. By rigging the borders of the Congressional districts, politicians can configure Congressional districts that are predominately Republican or predominately Democrat, ensuring that that party will almost always get elected in that district.

The tragic outcome of this manipulation is that if you are a voter in a Congressional district that has been configured for the other major party, your vote will usually be meaningless since you have been lumped together with members supportive of the other party. For example, if you are a Democrat that happens to live in a Republican configured district, your Democrat leaning voting tendency will almost always be wiped out by all of the Republican voters you have been lumped together with. The converse holds true for a Republican in a Democratic district. When your vote is rendered useless by gerrymandering, your freedom has taken a significant hit.

Besides loss of individual freedom, the art of compromise and give and take in governing is lost. If you are a politician from a predominant Republican district, you are probably going to be a little more to the right than average in order to not alienate the large number of Republicans in your district. Any sign of weakness or giving in to the Democrats may signal that another Republican might better represent your district. Thus, "compromising" in order to find a solution is now viewed as "giving in" to the other side so compromise be damned. That may be one of the reasons why nothing is ever accomplished by the political class, the art of compromise has been gerrymandered out of existence.

Although I could not find the article online, I distinctly remember an article from a number of years ago that appeared in the Newark Star Ledger. The article laid out how the two wings of the New Jersey political class had gotten together and remapped the Congressional districts in order to guarantee that six of the thirteen districts would almost always be represented by a Republican and seven of the thirteen would almost always be represented by a Democrat. If you look at the map of New Jersey on page 55 of "Love My Country, Loathe My Government," you will see the contortions they went through to accomplish their goals and disenfranchise a large number of New jersey voters (i.e. Democrats in Republican districts and Republicans in Democratic districts).
  • District 5, a Republican district, starts in the upper northeast corner of the state, continues all the way across the top of the state where it makes a left hand turn and comes down the western edge of the state, almost half down the entire length of the state.
  • District 12, a Democratic district, crosses five New Jersey counties (almost 25% of all counties) and runs from the Delaware river on the western border all the way across the middle of the state to the Atlantic Ocean. During its journey across the state the district borders meandering up and down, left and right, all in order to get enough Democrats concentrated in that one district.
  • Other districts, especially in the more populated northern part of the state, are just as illogical and contorted. The only logic being to guarantee that the incumbent party always wins.

I am not the only person who holds these views. In an article in the May 16, 2010 issue of Parade Magazine, "Making Elections Less 'Safe'", there was ALMOST a good idea for eliminating this encroachment on our voting freedom and rights. A Democratic Congressman, John Tanner, and a Republican Congressman, Michael Castle, have proposed the Redistricting Transparency Act. This legislation would require each state top establish a website through which citizens could track and comment on proposed redistricting before plans and maps are finalized. Sounds like a great idea but it will not work because:

  1. Congressional district mapping has always been a state level responsibility so it is likely that some incumbent politician or group of incumbent politicians somewhere would take this Federal bill to court and argue state rights and that would tie up the issue for years in Federal court. The sad part is that they would probably win even though this is a noble attempt to get some visibility into the process.
  2. The other reason it would fail is that there is no requirement that the existing set of office holding politicians do anything different than they have been doing for decades. Given their arrogance, it is highly doubtful that these people are going to listen to or obey any input that comes through the website, they are going to do what they want in order to preserve their political career and fiefdoms in office.

What is needed is the enactment of laws, not websites, that accomplish the following and which were laid out in "Love My Country, Loathe My Government":

  • Voting districts should not include more than two counties unless two counties do not have enough population. This is to address the likes of District 12 in New Jersey that we discussed above.
  • The widest geographic diameter of a district should be no more than three times the length of the smallest geographic dimensions. This would address situations like District 5 above where districts are stretched and twisted in order to get the right mix.
  • Finally, no member of the political class, past or present, should be involved in drawing up the districts. Several suggestions on who should do this are listed in the book, but any former or current member of the political class has to be left out of the mapping function.

All votes in America should carry the same weight, something that does not happen today with the loaded Congressional districts we have allowed to happen.

I close this posts with two quotes, the first of which neatly summarizes the problem we have in America today relative to gerrymandering and the loss of voting rights and freedom: "The idea is to encourage more fairly drawn, competitive districts so that voters choose their politicians, rather than politicians choosing their voters." - Gerald Heber, Campaign Legal Center as quoted in the Parade Magazine article.

On a less optimistic note, consider this quote form Matt Bai in the New York Times Magazine as it appeared in the March 19, 2010 issue of The Week Magazine: "Most of the 535 Senators and members of Congress are forced to choose, constantly, between their constituents and their own self-preservation. Is it really so outside the bounds of human nature to expect Congressman to serve the interests of voters, even when their own re-elections are in jeopardy? The political system is imperiled mostly because too many politicians just can't seem to imagine any worse fate than losing an election. A lot of lawmakers still cling to their seats at any cost to conscience or to constituency, as if it were the only job they could ever see themselves holding." That is why the Redistricting Transparency Act is ALMOST a good idea. As Mr. Bai elegantly points out, sitting politicians will do anything to hang onto their jobs and gerrymandering is the primary way to satisfy that need. They are not going to easily give up that tool in their re-election kit, it will have to be taken from them forcibly.


Our new book, "Love My Country, Loathe My Government - Fifty First Steps To Restoring Our Freedom And Destroying The American Political Class" is now available at www.loathemygovernment.com. It is also available online at Amazon and Barnes and Noble. Please pass our message of freedom onward. Let your friends and family know about our websites and blogs, ask your library to carry the book, and respect freedom for both yourselves and others everyday.

Monday, May 17, 2010

Government Salaries - High Pay, Low Performance

Consider some of the known government screw ups that have recently made the headlines:

- While the financial markets and U.S. economy were imploding, dozens of employees, including top officials, at the government watchdog organization, the Securities and Exchange Commission (SEC), were apparently preoccupied during business hours using their government issued computers to surf the Internet in order to download and view pornography.
- According to the Intelligence report of Parade Magazine on May 16, 2010, the General Accounting Office (GAO) submitted twenty bogus product designs to the Department of Energy (DOE) in order to see if the DOE would certify them as energy efficient. Certification as energy efficient gets a product the coveted Energy Star designation, allowing the company receiving the designation to market their products as energy efficient. One of the designs was billed as a room air cleaner and the design consisted of a feather duster taped to a space heater. Fifteen of the fake designs, including this one, received an Energy Star label.
- According to an article in The Week magazine from the May 21, 2010 issue, Mexico's biggest drug cartel had access to top secret United States drug enforcement information. When a top drug cartel member was apprehended, police found the U.S. Drug Enforcement Administration papers. Apparently the drug cartels have infiltrated U.S. drug interdiction efforts via corruption by Mexican officials.
- And last, but certainly not, least, we are starting to find out how not only BP but several government agencies are to blame for the massive oil slick coming out of the runaway BP well. According to an article by Justin Pritchard of the Associated Press (AP):
  • The Federal Minerals Management Service conducted at least sixteen fewer inspections of the runaway BP drilling rig than it should have.
  • Other AP investigations have shown that the rig "was allowed to operate without certain safety documents required by the Minerals Management Service for the exact disaster scenario that occurred."
  • The cutoff valve that failed has failed numerous times on other rigs since the time that regulators loosened their standards for the valve.
  • The Mineral Management Services organization has suspiciously changed the inspection visit numbers related to the BP rig several times over the past month.
  • Last year the Mineral Management Services organization cited the runaway BP rig "as an industry model for safety."
- In previous posts we have already covered, in extensive detail, the incompetence's of the Treasury Department, the Federal Reserve Board, the FDIC, Housing and Urban Development, Fannie Mae, Freddie Mac, Senate committees on housing and banking, House of Representatives committees on housing and banking, Federal Housing Authority, and other government agencies for their pitiful performance before and after the banking and housing crash.

Now, consider this low level of performance relative to some numbers that were published in the Tampa Tribune on May 16, 2010:
  • The number of Federal employees taking home more than $100,000 in annual salary rose from 14% of the employee base to 19% in just 18 months.
  • In 80% of professions where there is both a private industry and Federal government equivalent, the Federal government employee makes more money.
  • The average value of benefits for a Federal employee is almost $41,000 while it is only $9,882 for a private industry worker.

Thus, not only are we getting far below satisfactory performance from our government agencies, we are paying them top, top dollars for this horrid performance. Government programs do not deliver what they are supposed to do, government agencies do not even follow their own processes and procedures, classified information leaks out easily, and the biggest economic crisis in eighty years goes undetected until it hits everyone in the face but we still pay top dollar for this incompetence.

As always, nobody in the political class is taking any responsibility for the bad performance. Obama and members of Congress are blaming the government workers involved in the oil slick in the Gulf, much like they do with other government shortcomings, it is never their fault.

"Love My Country, Loathe My Government" woulds address both of these issues. Step 1 would require a ground up, zero based approach to completely reviewing and fixing how government operations function, firing those that do not know how to serve their masters, the American taxpayer. Step 34 would hold those Congressional committee members responsible for such poor government performance and would remove them from their committee posts for severe sub par performances. For example, anyone sitting on the committees that oversaw the Minerals Management Service could possibly be removed for overseeing an agency that utterly failed in the case of the BP disaster.

It is only when people start losing their jobs will there be accountability driven down to all government employees. They are making enough money, accountability should finally become part of their job description.



Our new book, "Love My Country, Loathe My Government - Fifty First Steps To Restoring Our Freedom And Destroying The American Political Class" is now available at www.loathemygovernment.com. It is also available online at Amazon and Barnes and Noble. Please pass our message of freedom onward. Let your friends and family know about our websites and blogs, ask your library to carry the book, and respect freedom for both yourselves and others everyday.