Tuesday, November 30, 2010

Leveraging The Bush Tax Cut Debate: Killing Multiple Birds With One Stone

As the lame duck session of Congress convenes, I am sure we will here a lot about whether or not and how the Bush tax cuts should be handled since they expire at the end of this year. If nothing is done, every U.S. tax payer will pay more in income taxes next year. If all of them are renewed, then everyone will not see any increases in taxes.

The main sticking point between the two factions within the American political class is whether or not to renew the tax cuts for those American families earning more than $250,000 a year or individual Americans making more than $200,000 a year. Obama and the Democrats want those hard working, higher earning Americans to pay more while the newly invigorated Republicans want all of the tax cuts renewed. Thus, I am sure that unless things change, we will have more childish debate, as we always do with our politicians, as they pit one group of Americans against another for their own political gain, the good of the country be damned.

However, it does no have to be that way. The following paragraphs explain a way for all parties to get what they want, the deficit and national debt gets addressed, and pertinent national needs are addressed. But before we explain what could accomplish all of this, let's review where we currently are:

- The Obama administration's economic stimulus program was supposed to address infrastructure needs, using stimulus funds to not only create work but also fix the country's crumbling infrastructure. However, an in-depth Associated Press investigation in late 2009 revealed that fully half of the stimulus construction money set aside to fix crumbling bridges was actually spent on fixing bridges that were in perfectly good condition.

How could this type of screw up occur? Because the political class wanted to direct taxpayer money to bridge projects in their home districts and states, regardless of whether or not it was needed. Thus, the political class ended up fixing things that did not need to be fixed and wasting the opportunity to create true infrastructure repair only where it was needed.

- Other parts of the economic stimulus budget was spent on out of control and useless projects. These wasteful projects ranged from using taxpayer money to research and photograph exotic ants in east Africa to spending hundreds of thousands of stimulus dollars to replace windows in a Mt. St. Helen's government visitors center that is currently shut down and will probably never be opened up again. Thus, the political  class spent and wasted money on projects that had not chance of being successful in fixing a national problem, spent funds on projects that affected very few U.S. households,  and created no long lasting jobs, all objectives of the stimulus program.

- If the Bush tax cuts are not renewed for the higher earning Americans, the budget deficit will be expanded by about $70 billion a year for the next ten years. While everyone wants to reduce the deficit, Obama and Democrats seem fixated on this group of Americans and their relationship to the budget deficit even though the Democrats have increased the budget deficit about $1.4 TRILLION a year for the past four years. Thus, this $70 billion would have reduced the Democrat's annual wild spending by only about 5%. And this assumes that the $70 billion was actually saved and used to reduce the deficit and national debt. In all likelihood, if this additional $70 billion is sent to Washington, it will be wasted by the political class.

- Our national debt is currently over $13 TRILLION and growing steadily. One of the biggest drivers of the national debt is the ever growing budget required by Social Security to meet their obligations.

- I came across  an interesting article by Joseph DiStefano in the Philadelphia Inquirer this past Sunday. According to the article, a lot of super-rich and regular rich Americans think that they should be taxed at a higher rate. More than 400 hundred of these richer than average Americans signed a petition that called on Obama and Congress to let the Bush tax cuts expire for the higher earning Americans. Consider a quote form Warren Buffet in the article:

"People at the high end - people like myself - should be paying a lot more in taxes."

Many of those quoted in the article wanted to see their additional taxes go for investment in education, health, job creation, transportation, infrastructure, and renewable energy. Many of them lambasted past tax cuts for ruining the economy.

While I find it interesting that these rich Americans is that none of them claimed to have paid higher than required income taxes through the years. If they really felt so bad about not paying enough taxes and felt that their lower than historical tax rates were destroying the country, their words would have had a lot more meaning if they had proudly stepped forward over the past few decades and written checks for additional tax dollars, payable to the U.S. Treasury.

Okay, the above paragraphs set the stage. Now, let's solve the problem:

1) First step is to maintain the Bush tax cuts for those American families earning less than $500,000 a year and let them expire for families earning more than $500,000. This keeps the tax structure unchanged for over 99% of the population and raises taxes for less than 1% of Americans.

2) By raising the Obama target from the $250,000 to $500,000, my calculations show that only about $56 billion additional dollars will annually flow to the government and political class, not the currently estimated $70 billion a year. This difference would be made up by upping the taxes imposed on those patriotic-minded Americans like those that signed the petition described above. The IRS would go back over the past ten years of tax returns for these super-rich Americans who think they underpaid their past taxes and re-calculate their taxes as if they were taxed at the higher rates, pre-Bush tax cuts. Since they want to be so patriotic, let them put their money where their mouth is.

The IRS would allow these super rich Americans to make up their additional taxes over a ten year period. For example, if Warren Buffet should have paid an additional $100 million if the Bush tax cuts had never been implemented, he would now have ten years to repay that deficit. That way those who think they have been under taxed over the years can make the amends for their shortfall. It would certainly make their signing of the petition more impactful.

3) At the same time, we would adjust the Social Security rules according to Step 11 in "Love My Country, Loathe My Government."  Step11 calls for the Social Security eligibility rules to be changed so that any American with over $3 million in assets and wealth, not income, would not be able to draw any checks from Social Security until their net worth was under $3 million.

$3 million in assets should be able to conservatively generate about $150,000 a year in income, placing that person's income in the top 5-6% of all U.S. earners, i.e. they do not need the extra Social Security money to live comfortably. This sacrifice on the part of those types of Americans that signed the above petition would allow them to further contribute to the good of the country. By not paying out to those Americans that seem to have too much money and wealth, we can protect the program for those Americans that truly need the Social Security coverage for basic living needs and reduce the national debt at the same time. Two birds with one shot.

4) The biggest component of the program would be that two virtual lock boxes would be created to protect additional tax dollars from the political class. Half of the additional dollars from allowing the Bush tax cuts to expire for those earning over $500,000 a year would be put in a lock box that would only be used to pay down the national debt. The political class would never be able to get its hands on the additional funds, it would go straight from the Treasury to the pay down of the national debt.

The other half of the additional dollars would be put into a lock box that would be used to address the issues that Warren Buffet and others who signed the petition discussed in the article. Infrastructure projects would be determined on their merit and not on how well a politician would earmark money for unneeded projects in their home state or district like they did with the bridge stimulus money. The last thing we want to see is all of this additional money be spent as foolishly as the stimulus money was spent.

An independent commission would be set up to screen projects based on needs. No politicians would sit on the commission. One model might be the Public/Private Consortium that is buying up distressed mortgage securities in order to clean up the financial mess in the housing industry. I would have no problem allowing those 400 signers of the petition to run the commission since it is their money we would be spending. Whatever process is used, it has to keep the political class out of the decision making process and be totally transparent relative to how projects are selected for funding, how the funding is spent, and how the results turn out.

Executing this plan would make everyone happy:
  • The Republicans would be happy since they protected more Americans from tax hikes (those making over $500,000 would pay more vs. those making more than $250,000) but still got the tax breaks extended for most Americans.
  • The Republicans would also be happy because they could claim they helped solve Social Security's shortfall and reduced the national debt by reigning in Social Security costs by ending payments to those Americans with more than $3 million in assets and wealth.
  • Obama would be happy since his irrational disdain for higher earning Americans would be mostly satisfied with the Bush tax cuts expiring for the richest Americans.
  • Obama would also be able to claim that he is a deficit cutter with the rich sacrificing for Social Security solvency.
  • People like Warren Buffet would be especially happy since they would not only be paying more taxes going forward, like they want to, but they also would be able to make up for their low taxes paid over the past ten years with the IRS billing them for their shortfall.
  • The economy would be happy since we would have some certainty in tax policy, reducing the uncertainty in the minds of consumers and small business owners.
  • We would all be happy since we would know that the additional taxes would be put to good use via the lock boxes, i.e. the actual reduction in the national debt and the spending of money on only needy infrastructure and other worthwhile projects. 
Thus, we would solve some important problems with a little compromising on everyone's part, i.e. killing multiple birds with one shot. The only people that would be unhappy would be those politicians that could not spend the additional taxes on their pet projects and unneeded expenditures. But that would be a good thing. We do not need more ant research and photographs and replacement windows that no one will ever look through.

Our recent 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.
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Friday, November 26, 2010

Resetting U.S. Foreign Policy - From Weakness and Begging To Strength And Leverage

There has been a lot of thought and conjecture on how the Obama administration was going to "reset" itself, given the rebuke and significant defeat the administration and the Democrats suffered in the early November elections. Most of the "reset" speculation has been centered around Obama's approach to domestic policy, especially as it applies to the economic situation.

However, I would suggest that the President also strongly consider resetting U.S. foreign policy since right now, it is a disaster. Consider:

- An article in the November 26, 2010 issue of The Week magazine talked about the rising problems and conflicts we are having with the government of Afghanistan President Karzai. Recently, Karzai unexpectedly called for the NATO troops, fighting to protect his government, in Afghanistan to stop combat initiatives in southern Afghanistan that have led to the capturing or deaths of hundreds of Taliban fighters. Since the Taliban stronghold is in southern Afghanistan and our troops look like they are having some degree of success in fighting the enemy, the Taliban, why would we do this? And more importantly, why would Karzai want us to do that?

Thus, we are fighting hard, spending money and soldiers lives to fight the enemy and now we are told by the very people we are supposedly fighting for to stop fighting. Worse yet, recent NATO and U.S. negotiations have established 2014 as the target date to turn over the fighting responsibilities to the Afghan forces, meaning another four years of wasted resources for a government that is by far one of the most corrupt in the world and which is led by someone who may just be stringing us along for their own  protection and power.

The current U.S. foreign policy strategy of starting to bring U.S. troops home in July, 2011 is now out the window, leaving us with a muddling through to a nebulous disengagement date with a corrupt partner somewhere down the road, beyond the 2012 elections. As a result, more money wasted, more lives lost as the Afghan foreign policy continually drifts.

- On a related matter, consider an article in the Briefing section of November 26, 2010 issue of The Week magazine. This article did an in-depth analysis of the Pakistani government's ISI organization, the Directorate of Inter-Services. ISI is basically comparable to our CIA with a little bit of our Defense Department's Defense Intelligence Agency thrown it. The difference with our CIA, however, is that while the ISI is theoretically under civilian government control. the ISI pretty much does whatever it wants to do. It is has resisted all attempts to reign in its power, it is suspected of assassinating Pakistani Prime Minister Benazir Bhutto, and it is believed to have been behind the 2008 terror raids in Mumbai, India that killed almost 200 people.

What is their relationship to the conflict in Afghanistan? According to the article, the ISI realizes that they will be around long after U.S. and NATO forces leave Afghanistan. Supporting the Taliban stationed in Pakistan gives the ISI leverage over the future status and government of Afghanistan. The article cites a London School of Economic report that found the ISI funds and trains Taliban fighters and even sends some of its agents to Taliban leadership meetings. The ISI also allows Taliban and al Qaida leaders to move freely about the country, with some sources claiming that Bin Laden and other terror leaders live comfortably in ISI safe houses.

As this wing of the Pakistani government supports the very people our soldiers are trying to defeat, the U.S. government continues to send billions of dollars of military aid to the the same government, including an announced two billion dollar deal last week. Thus, our current foreign policy in the area puts us between a rock and a hard place, i.e. we are being played for suckers everywhere. The Pakistan government knows we need them to logistically supply our troops in Afghanistan and plays on our fear that Bin Laden and the sort might re-emerge to take back power in Afghanistan. At the same time, the same government's agencies are supporting the Taliban in case they ever regain power rather than being true to our needs and agreements of destroying them and the terrorists among them.

Combine this situation with the previous points above, where Karzai is also playing both sides, wanting us to be successful enough to keep him in power but not so successful that we win the conflict and go home by hamstringing our fighting forces. Dealing with two timing friends with little leverage at all makes for a very weak foreign policy strategy.

There appears to be only two foreign policy strategies. Either you go all out and win the war, which probably involves bypassing both the Afghan and Pakistani governments altogether, and militarily go after the Taliban and terrorists wherever they are. This would include both the southern part of Afghanistan and the northwest haven corner of Pakistan. The problem with this strategy is that we would be violating sovereign space of a country (Pakistan) and we would have to find a way to supply our troops without Pakistan's help. Additionally, we would suffer an increase in battle field deaths and wounded as we finally took the fight to the enemy.

The second alternative is to just get out now, minimizing our loses. We need to recognize that there are forces in both countries that want us on their terms and for their reward, not for our goals and aims. If that situation is not going to change, then we will continue to be in this no-man's ground with little leverage to succeed. Time to reset this entire operation and do it before 2012, regardless of whose political career is endangered. U.S. solidiers' lives should always override political careers.

- Staying in the Middle East, another article from The Week magazine, this one also from the November 26, 2010 issue, discussed the latest peace initiatives between Israel and the Palestinians. In order to keep the endangered peace process moving along, the United States recently agreed to supply $3 billion in military aid to Israel and would commit to oppose any international recognition of a unilaterally declared Palestinian state if only the Israeli  government agreed to stop constructing new homes in the West Bank for 90 days. The logic is that if the construction was not frozen, the Palestinians would walk out of the talks. The hope, and it is not much more than a hope, is that the 90 day window would allow the talks to move so far forward that by the 91st day the peace talks would have their own momentum.

Serious problems with this U.S. foreign policy strategy. First of all, these two parties have been at each others' throats for 62 years, I find it highly doubtful that a 90 day window is going to make any difference. Second, according to the article, the Israeli government has not yet approved the plan and the Palestinians are balking because the freeze does not include the building of new Israeli homes in Jerusalem. Thus, the two parties might not even agree on the terms of the 90 day freeze, never mind settling the conflicts of 62 years.

The additional problem with this approach is that we are again negotiating from a position of weakness, much like we are in Afghanistan and Pakistan. We beg the Israelis to do a momentary stop to construction in exchange for $3 billion worth of military hardware. After 62 years, a 90 day delay for $3 billion worth of goodies is a great deal for them. Again, we are being played for suckers.

There is only one viable approach to this situation from a U.S. foreign policy perspective: don't do anything until both the Israeli and Palestinian people, not their governments, truly want peace. That is currently not the  environment. Rather than have the United States bounce back and forth between both parties, literally begging them to make nice to each other, we need to get out of the way and go home, taking our $3 billion worth of military hardware enticement with us. The U.S. begging has not worked and it weakens our position as a neutral broker if and when the conditions for peace ever did spring up. Let them call us when they are ready, we should not be constantly ringing their doorbells to see if they want to come out and play peace.

- Staying with the November 26, 2010 issue of The Week magazine, a short blurb discussed the fact that it was unlikely that Khalid Sheikh Mohammed, the planner of the 9-11 attacks, would  be put on trial prior to the next U.S. Presidential election. This would likely result in the prisoner facility at Guantanamo Bay being kept open for at least several more years, despite the Obama campaign pledge to close it, a move supported as one of the fifty steps in "Love My Country, Loathe My Government."  A major part of the Obama foreign strategy was to close Gitmo since it was thought to serve as a recruiting tool for terrorists. Keeping it open becomes another foreign policy defeat for this administration.

- In the past week, North Korean forces artillery shelled an island off of the coast of South Korea, resulting in several South Korean civilian and military deaths. The world reacted with horror, condemning the attack, and again asking China for help in keeping its friend, North Korea, under control. Again, the United States goes begging for help from a nation that does not really have the U.S. interests as a top priority. Why? Consider some root causes for China's continuing support of North Korea:
  • If the North Korean government ever collapses, millions of North Koreans would likely flee to China, looking for humanitarian aid, especially given the starvation situation currently going on in North Korea. China's best interest is to avoid dealing with starving of Koreans, regardless how badly the North Korean government acts.
  • If North Korean does collapse, and you assume that the South Korean government moved in to take over, much like the West/East Germany model twenty years ago, the Chinese probably fear having an United States ally, South Korea, and possibly American troops, sitting on its southern border. Thus., China would prefer to have the current geographic buffer of North Korea to its south, regardless of how badly the North Korean government acts.
  • Finally, the Chinese government has been flexing its military muscle lately, especially with regard to Japan. The Chinese and Japanese have a hot dispute going on over some island territories, so hot that only recently did the Chinese government resume shipments of rare earth elements to Japan. Since North Korea has, in the past, test fired rockets that went through and over Japanese airspace, the North Koreans can continue to be a surrogate pain to Japanese on behalf of the military flexing of China.
Again, as elsewhere, U.S. foreign policy comes from a position of weakness, begging others to act like we want them to behave. Rarely does our foreign policy understand the underlying priorities of those we are dealing with, allowing those parties to take advantage of our good will and intentions.

Karzai wants us to be somewhat, but no totally successful, stringing us along to keep himself in power. The Pakistani government wants us to be somewhat successful in Afghanistan, but not so much that we stop sending them aid or we cut off their ties to their potential future Taliban allies in Afghanistan. The Israelis are happy to take our military aid for a token break in West Bank construction but probably have no real intention of using the 90 day window as a true opportunity for peace. We say we want to close the prison at Guantanamo but we have no plan to do so. The Chinese could care less how we want North Korea to behave, given their country's interests.

What should our foreign policy look like? Better to answer that question by changing our government's basic structure and policies first, including the following steps from "Love My Country, Loathe My Government:
  • Underneath a lot of our foreign policy deficiencies is the fact that our political class tries to time foreign policy decisions to elections. The trial of  Mohammed and the closing of Guantanamo are delayed until beyond the next Presidential election. The deadlines in Afghanistan are set to avoid coming due around the next Presidential election, whether it was Obama's initial 2011 troop pull down or the new 2014 hand over of fighting to the Afghan government. If politicians were limited to one term in office, as proposed in Step 39, then valid, timely, and successful foreign policy might not be at the mercy of when our elections are scheduled.
  • Second, as outlined in "Love My Country, Loathe My Government," we need to bring home almost all of our foreign deployed troops as soon as possible, including the 28,000 or so U.S. troops stationed in South Korea. In a hot war between the millions of native soldiers in both Koreas, 28,000 U.S. troops are not going to make any difference in the outcome of the fighting. Get them out now and remove a potential impediment to China helping reign in North Korea.
  • Closing the prison at Guantanamo was also a step from the book, why does it take so long to comply with such a simple foreign policy strategy when our political class controls every aspect of this situation?
  • Finally, stop being played for a sucker. We need to put some smarter and less gullible people in political office that can understand the both the obvious and the subtle underlying priorities and situations in a foreign policy strategy and execute and leverage a strategy that comes from a position of strength and not from a begging and pleading position of weakness.
Sounds like a lot of resetting to be done in a very short amount of time. The Presidential 2012 election is right around the corner.

Our recent 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.

Please visit the following sites for freedom:


Wednesday, November 24, 2010

Out Of Control Government, Out Of Touch Politicians And Other Madness

I recently received my monthly edition of Reason magazine. Reason is a great source of articles from writers and journalists dedicated to preserving and expanding freedom in America. Their articles are detailed but easy to understand and serve no political party, just the pursuit of freedom. Each issue has its share of instances where our government, at all levels, is out of control and the politicians that run it are out of touch with reality, often making for some humorous but tragic wastes of taxpayer money and resources.

Below I have picked out some of these examples for you to laugh at and cry about:
  • Katherine Mangu-Ward wrote about the bagel situation in the state of New York. Apparently, in New York state if you go to a bagel shop and buy a bagel, it will cost you $.08 more if the bagel shop slices the bagel in half for you. The $.08, of course, goes to the state government in a form of a tax for your convenience of having a sliced bagel. More confusing, if you eat an unsliced bagel at home it is untaxed but if you eat that same unsliced bagel while still in the bagel shop you are subject to tax. Thus, to avoid bagel taxation in New York state you should never ask the bagel shop to slice it for you or dare to eat a whole bagel while still in the shop.
  • The same article goes on to point out that in several states, if you purchase a Hershey chocolate bar you have to pay tax on the purchase. However, if you purchase a Kit Kat bar, another type of candy which is covered in chocolate you do not have to pay tax because the Kit Kat bar has flour in it. Both of these situations are examples of out of control government. These stupid rules take up valuable time and energy from business owners who have to understand and implement these requirements, time and energy that could be better spent serving their customers, expanding their businesses and maybe actually hiring more workers, reducing the high unemployment rate in this country. And who is responsible for these out of control government regulations? It is the out of touch politicians who concoct these stupid rules and laws with no sensitivity or experience on how the waste ripples through the economic system, hurting everyone in the process. Madness.
  • The Milwaukee school system had to lay off hundreds of its teachers due to a budget shortfall. At about the same time, the teachers union had taken the school board to court. The reason for the suit? To force the school system's health insurance plan to cover Viagra and other ED drugs for teachers. The school board estimates that the benefit would cost about $786,000 a year. How many more teachers would have to be laid off, and how many kids would suffer as a result, if the school board actually loses this case? More madness.
  • We have done this type of economic stimulus math before but a short article by Peter Suderman updates the numbers and confirms our previous math exercise. According to the Department of Energy's reports, it spent $1.9 billion of the stimulus money it received to create 10,018 jobs, resulting in a cost per job created of $194,213 per job. Since the wages of most of these jobs were probably far less than $194,213, we see yet another example of what a dismal and insane failure Obama's economic stimulus plan was. However, this is probably a best case scenario. Mr. Suderman goes on to explain that "jobs created" is probably a misnomer. As the economic stimulus money was spent and jobs were not "created," the administration solved the problem by just changing the definition of jobs created. That category was expanded to include new full time jobs created, new temporary jobs created, jobs saved, and the most ludicrous of all, "lives touched." Thus, many of the 10,018 jobs created in the Energy Department could have included people who worked on an Energy project for two hours. That situation was given the same weight as if an unemployed American was given a 40 hour a week job. Seems the politicians were spending more time on concocting job definitions than actually creating jobs. Even our usually out of control government recognized the insanity with the Federal General Accounting Office  calling the Energy Department's job estimates unclear, problematic, confusing, and potentially misleading. No kidding. When government calls the bluff on itself you know it is madness you are dealing with.
  • The United States government has maintained a ridiculous trade embargo with the island nation of Cuba for about 50 years in an attempt to force Fidel Castro from power. However, 50 years later, Castro is still in power, many of the Presidents who continued the embargo are themselves dead, the United States deprives itself of a good sized economic market right off its shores, and the Cuban people have lived in poverty for 50 years, especially since the fall of the Iron Curtain when the support from Russia dropped dramatically. Typical U.S. government program: never ending, never accomplishing its goals, and the people of both countries worse off for the experience. Stopping the embargo is one of the 50 steps to freedom outlined in "Love My Country, Loathe My Government." Why is this an important step? First, the United States should never condemn a group of people to a live of poverty because of who is ruling them. Second, as pointed out in this edition of Reason magazine by Ms. Mangu-Ward, opening the Cuban market to American goods and services could lead to American farmers annually exporting over $360 million a year of American food crops to the island, in the process feeding a hungry nation. It is madness that this has not happened.
  • Talk about true madness, consider another article by Peter Suderman. This one concerns the health care reform package that Obama forced through the back door of reconciliation in the spring and the fact that a new Congressional Research Services (CRS) report stated that it is impossible to count or estimate the number of new government entities, boards, commissions, and organizations that will be created as a result of the legislation. Talk about out of control. Even the government cannot now estimate how big it will become as a result of politicians being out of touch with the root causes of rising health care costs. Specifically, the CRS reported that "the precise number of new entities that will ultimately be created pursuant to PPACA (i.e. Obama care) is currently unknowable." The report went on to say that it is unclear how the General Accounting Office will be able to audit the new creations, it is impossible to determine how much power many of the new entities will have, and it is currently impossible to know how much influence the new organizations will have. Again, this is Congress talking about itself. We have created an out of control government  monster with this legislation that is self reproducing, eating up taxpayer resources without solving any problems. The worst part of this monster is that many in the government bureaucracy and the political class will be part of the problem but no one will be accountable for the tragic results.
  • If the latest CSR report shows an out of control government, then Health and Human Services Secretary Kathleen Sebelius is the perfect example of an out of touch politician. If experts in the Congressional Research Service cannot explain what is going on in the health care reform legislation after an extensive study, what chance does a single bureaucrat like Sebelius have of explaining everything going on as a result of the legislation?  If Nancy Pelosi, who helped ram the bill's approval through, has publicly stated that we will not know everything in the bill until it was passed, a truly ignorant statement for a politician to say for a piece of legislation he or she is advocating for, how will anyone else know? Apparently, however, Ms. Sebelius has got it all figured out since she was recently quoted as stating: "We have a lot of re-education to do" as it pertains to the legislation. If she has an education plan ready to go, maybe she should start over at the CSR since they have not figured it out yet, despite their best efforts. Madness.
  • One last example of out of touch politicians, people who never understand the ramifications of their actions. The health care reform legislation is one example, an attempt to fix a problem spawns out of control government control and bureaucracy, among other catastrophes. A Reason magazine report by Brian Doherty discussed  the cost of the wars in Iraq and Afghanistan. According to Mr. Doherty, the out of pocket costs for these two conflicts has so far reached about $800 billion. Thus, each American family, on average, has paid about $7,000 each to support both war efforts, $7,000 that could have been spent within the economy, contributing to economic growth and employment growth. However, the $800 billion is just the current operating cost. According to the article, two economic and financial experts from Harvard and Columbia universities have estimated the true cost over time to the American public of both wars closer to three TRILLION dollars. Their analysis shows that the country was still paying for the effects of the first world up until about 1965 and for the second world war up until about 1980 as veterans and disabled soldiers needed to be cared for and interest payments on borrowed money spent to execute the wars was paid off. Just another example of out of touch politicians rushing off to do something without understanding the root cause and the true cost to the Treasury and the country's taxpayers.
Silly and sad at the same time. Just these few examples illustrate how, in a wide set of fields, we have allowed our political class, which has no grounding in reality, to create madness and an out of control government that results in lost freedom, wasted money, and non-solved problems. Besides stopping the Cuban embargo, "Love My Country, Loathe My Government" also proposes steps such as term limits that remove out of touch politicians before they can do real damage and a step that would implement procedure to punish existing politicians for the out of control and non-effective government programs they create.

However, it is up to us to stop this madness by electing leaders, not politicians, regardless of what party they are from, that can understand all of the implications of complex problems and their proposed solutions, that can look at stupidity (e.g. Kit Kat is not taxable, a Hershey bar is taxable, a sliced bagel is treated one way, and unsliced another way) and say enough with the madness, and who have the fortitude an courage to focus on real issues affecting real American families. Until then, Reason magazine will continue to have endless material to talk about, material that unfortunately reduces our freedom every day.

Our recent 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.

Please visit the following sites for freedom:


Tuesday, November 23, 2010

Wasting And Wanting: Our Politicians and Our Needy

In this time of Thanksgiving, I was quite annoyed by an Associated Press article this week. According to the article, the IRS has determined that it is losing out on about $380 million a year in income taxes when separated or divorced parents both claim their children as deductions on their tax forms, basically double counting the deductions they are entitled to and underpaying the IRS.

What was really annoying was the IRS spokesperson who said that while the tax agency had identified and quantified the non-payment of income taxes, they would do nothing to go after the abuse since it was not worth their time and resources. This kind of attitude raises any number of questions:

  • When is a taxpayer abuse big enough for the IRS to get interested? $380 million sounds like a lot of money to me to go wanting, especially if you have done enough work to identify the abuse and quantify the abuse. Obviously, the IRS has already done some work on the issue.
  • If the IRS acknowledges that it is missing out on $380 million on this just one, specific type of abuse, what other types of abuses are they not following up on? Fix a lot of $380 million abuses and before you know it you are saving some real money for the taxpayers.
  • If the IRS does not have the time, resources, and desire to close down this abuse, why would they not hire a collection agency or company to do it for them in a risk free manner? Why would they not go to a collection specialist (or several) and offer a deal: we will give you 10% (or 15-20%) for every delinquent dollar you collect for this specific type of abuse. If the collection agency collects no money, they get no reward, Risk free, no money up front from the IRS to the collection specialists. I am sure there are plenty of capable collection agencies in the country that would salivate about the opportunity to collect on a multi-million bounty, especially since the IRS has done a lot of the identification work up front. Makes no sense to not follow in this manner - while the IRS would not get all $380 million, it would get something with very little risk vs. getting nothing.

However, let's put this abuse in Thanksgiving day terms, which is what really annoys me. The major supermarket chain in my area is Publix. For Thanksgiving, they are offering a deal where for $39.95 they will prepare a complete Thanksgiving Day dinner for your family. The dinner includes enough food to feed 8-10 people and includes several courses. If we assume that one purchase of $39.95 would serve two needy families this holiday season, then $380 million would theoretically serve 19 million needy American families if you could somehow transfer that tax shortfall from Americans who should have paid their correct taxes to Americans that might need a little help this holiday season.

Obviously, this is only a theoretical example, especially since 1) the government and political class would never be able to execute this massive type of program and 2) because the IRS/government is not even going to go after the $380 million abuse. This all gets back to our favorite new term: immobile government. Our Federal government has gotten so big and so inflexible that it rarely does the things it should do and has gotten its priorities so screwed up that one of its basic functions, helping citizens, usually gets lost in the bureaucracy of politics. In this type of country, the government should not be ignoring $380 million that is due to it while the needy go hungry.

Obviously, immobile government is created by the people that operate it, namely our political class. If government is immobile and ineffective, it has to be because our politicians have become the same. Think about it. Our politicians spend so much time on trivial matters that the big issues of taxpayer abuse and hungry Americans never get any kind of proper attention. They get up in arms about a mosque in New York City, or about a new caffeinated alcoholic drink, or about a college football playoff system or about the sound volume of television commercials or any of dozens of other non-issues. Meanwhile, taxes go uncollected and people go unfed.

Two steps from "Love My Country, Loathe My Government" would address these broader governance issues. Step 1 would reduce the size of government 50% over a five year period by doing a ground up review of all government functions, eliminating them that are as trivial as worrying about the sound volume of televisions. If politicians have far fewer things on their plate, maybe they can focus on the important ones and finally get something done.

Step 39 would impose term limits on all Federally elected political seats. Most of the current politicians have been in office for more than just a few terms. Their reign has resulted in immobile government and they should have their immobile bodies removed from their positions by any law or Constitutional amendment that limits their time in government. We need some mobility in office, mobility that would walk over to the IRS offices and demand that a way be found to get that $380 million that is due the American public. Once the IRS gets the $380 million, this new mobile government would go after the next tax abuse and then the next one and so on. Not getting the unpaid tax money and having American families wanting on Thanksgiving day is not acceptable.

Our recent 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
Please visit the following sites for freedom:


Monday, November 22, 2010

More Bad News On Obama Care - Strikes One, Two and Three

Trust me when I tell you that I do not go out looking for bad news on Obama Care, the health care reform legislation that the Democrats forced through the back door of reconciliation for passage in the spring. It is just that the bad news and pending failures of the legislation just keep on coming.

We have already covered the fact that many major corporations including AT&T, Verizon, John Deere, and Caterpillar have made very public overtures that they may drop their health care insurance plans for their employees and retirees since it is less expensive for their companies to pay a government fine for not having a health insurance plan than it would be for continuing to have employee and retiree health insurance. The Associated Press reported several months ago that the much touted ten year savings of $135 billion for the Federal government was really closer to a ten year savings of less than $25 billion since the Congressional Budget Office's estimate of $135 billion did not include all of the programs and their associated costs that went into the final legislation. The CATO Institute's detailed analysis of every component of the legislation led them to estimate that rather than reduce the Federal deficit by $135 billion it will increase it by over $2 TRILLION.

Now, consider some recent bad news:

- According to a recent article in the New York Times by Reed Abelson, as the Obama administration rolls out components of the health care reform legislation they are finding that they have to already start issuing waivers to prevent some insurance companies and employers from terminating their current health insurance plans in order to stay in conformance with the legislation. The article also points out the administration has already promised to issue more waivers going forward.

The administration has already issued 111 waivers covering about 1.2 million American workers, workers that would not have been able to continue to get health insurance from their employers, because of Obama Care guidelines, without the waivers. Apparently, those in Washington who put the law together never took the time to do some elementary homework and understand the impact it would have on these million plus American workers before the legislation is even ten months old.

- Talk about unintended consequences. Another New York Times article, on November 21, 2010, discussed how the new health care reform legislation would lead to a "merger mania" in the health care industry. This mania would occur as hospitals, medical clinics and doctor practices merge together to save costs and cash in on the incentives in the legislation. The article described the merger activity as a "growing frenzy."

As a result, many in the medical industry have hired and sent lobbyists to Washington to persuade the Obama administration to relax or dump existing laws and regulations that attempt to prevent health care monopolies. Some health care experts fear that this merger mania will reduce competition within the industry and by creating a more monopolistic environment, actually drive up costs for providing health care. It would create incentives, under Obama Care guidelines, to short change the health care given to patients in order to collect cost savings bonuses under the legislation. According to an expert on the health care industry quoted in the article, Thomas L. Greaney from St. Louis University: "The risk that dominant providers and dominant insurers may exercise their market power, individually and jointly, has never been greater." Great, a law that was intended to reduce costs will probably increase costs.

Great piece of legislating, folks. A law that was supposed to foster competition, provide health care coverage for more Americans, and reduce the nation's health care costs, is actually likely to suppress competition, throw more Americans into the pool of the uninsured, and will lead to skyrocketing health care costs. Strike one, strike two, strike three, you're out.

The only way out of this fix is to start over. The batter known as Obama Care has already struck out and we are still in the first inning of passage. The process established in the Social Issues section of "Love My Country, Loathe My Government" provides a process and approach to identify the root causes of our rising health care costs, formulate solutions that directly attack those underlying root causes, and does it all without lobbyists and politicians. Obama Care never understood or attacked the root causes, it just moved money around within the current system, loaded on way too many new rules and regulations, and stirred in some additional taxes on top of everything. As a result, we get the mega problems we are seeing already with the legislation. Throw out the existing law and bring in some new players that know how to play the game of solving a problem.

 Our recent 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.

Please visit the following sites for freedom:


Friday, November 19, 2010

Are The Failed Japanese Economic Policies and Obamanomics One And The Same?

Robert Samuelson had an interesting article in the latest issue of Newsweek magazine, "Why Japan Fell And What It teaches Us." Mr. Samuelson reviews how Japan got into its current and long running economic slump, highlights of which include the following:
  • Japan's economic problems started after several economic bubbles arose in the late 1980s including a tripling of their stock market's value from 1985 to 1989 and the tripling of its real estate values by 1991.
  • However, by the end of 1992, the stock market had lost 57% of its peak value and land prices fell so low that they are still at early 1980s level.
  • Banks weakened as the bubbles burst and they did not have enough collateral, with some banks going bankrupt.
  • Economic growth stalled and grew only about 1% a year for the entire decade of the 1990s. This was a fraction of the annual 4% average growth in the 1980s in Japan.
  • Despite implementing massive government stimulus spending programs, the economy is still stalled two decades later.
  • They increased government spending while cutting taxes, resulting in massive budget deficits. Government debt as a percent of Japan's GDP went from 63% in 1991 to 101% by 1997 to 200% today. 
  • The Bank Of Japan, their equivalent of the Federal Reserve Bank in the U.S., cut interest rates all the way down to zero percent by 1999 with no discernible impact on the economy.
  • Japan has an aging and shrinking population which tends to dampen domestic economic demand and growth.
All of these policies and facts have led to twenty years of anemic economic growth in what used to be a power house economic engine.

Do the symptoms of the Japanese experience sound familiar? They are almost identical to the economic policies of the Obama administration and Democratic Congress, policies that have been successful in only creating a skyrocketing national debt. Our political class and other arms of the Federal government never saw the devastating impact of the impending real estate bubble burst before it happened, just like in Japan. Our national bank continues to support very low interest rates with not positive results, just like in Japan. Our political class spends hundreds of billions of dollars on stimulus programs that do not work, just like in Japan. Our annual GDP growth has been steadily below the long term GDP growth rate, just like in Japan. Our national debt as a percentage of GDP is getting dangerously close to 100%, just like in Japan. We have an aging population, just like in Japan.

Sounds like we are going down the same road as the Japanese went through and that is not good. Everything that the Obama administration has done from an economic policy has mimicked the failed Japanese model with the same results: low growth, high unemployment, growing national debt, no apparent way out.

However, there may be some ways out if we look at our own history and some of the contrarian economic actions being taken by governments around the world:
  • After Word War II, the United States faced an economic quandary. Much of the civilian workforce worked in the war factories making goods to support the war effort. Their current jobs were no longer needed once the war was over. Millions of military people were about to be discharged into civilian life, all of whom would be looking for a job. What did the Truman administration do? Did they significantly increase government spending to provide government jobs for everyone? Did they raise the national debt to frightening levels? Did they drop interest rates to near zero? No, between 1945 and 1948, the budget of the United States government was shrunk by over 60%. Unemployment, despite this high influx of new workers, never got about 4.5%. Economic growth, even without massive government stimulus and deficit spending, was robust every year. In other words, they did the exact opposite what Japan did and Obama, and the got outstanding economic results.
  • In Europe, France has taken the bold step of increasing its retirement age by two years to alleviate the financial pressure on their national retirement system caused by its aging population, i.e. they are cutting government spending. England is making substantial cuts in its military budget and is cutting nearly half a million government employees from its payroll, i.e. they are cutting government spending. Other western European countries are also cutting government spending, contrary to what the Obama administration budget busting spending is doing.
  • Other countries outside of western Europe are also shrinking its itself by selling off government assets. According to an article in the November 1, 2010 issue of Businessweek, the Russian government is selling some of its government ownership in over 900 government companies, India plans to sell some government stakes in at least eight companies in the next five months, Poland is selling shares in its energy, insurance, copper, telecom, and power companies, and Malaysia is selling government interests in its postal system, its national chemical company, and other companies. In other words, while the Obama administration is becoming more and more entangled with U.S. businesses, e.g. General Motors, Chrysler, banks, the rest of the world is trying to shrink its government footprint in its domestic industries and shrink its national debt.
While the rest of the world is trying to get its government spending under control, the Obama adminstration has ruled over astronomical growth government spending, just like in Japan. In fact, everything that this administration is doing on the economic front is just like what did not succeed in Japan. Albert Einstein once said that the definition of stupidity is doing the same thing over and over and expecting the same results. Japan has been doing the same thing over and over with a failed twenty year track record. Could the Obama administration be fulfilling Einstein's insight?

Mr. Samuelson concludes his article with the remedy for our ailing economy and a way to not follow Japan down the failed rabbit hole of economic policy. He is one of many Americans, most of whom do not currently hold an elected office,  who recognize that lasting economic prosperity and employment opportunities lie not with governments and politicians since governments and politicians do not create jobs. Only the private sector creates true, lasting jobs and wealth. Unless we reduce the thicket of business regulations, create a viable and low cost tax policy, reduce government spending and, most importantly, remove uncertainty from the equation, Mr. Samuelson predicts, probably correctly, that we will follow the path of a faltering Japan.

Removing uncertainty is the key. The Obama administration has introduced never before seen levels of uncertainty in the economy. Uncertainty as it results from a 2,500 page health care reform bill, uncertainty as it applies to the delay in finalizing tax rates for small business, historically the engine of this nation's economic growth, uncertainty from what would happen if cap and trade ever occurred, uncertainty from a financial sector regulation bill that left all of the details to unknown Federal government bureaucrats, etc. No wonder no American businesses are hiring, they have no idea what the future holds due to Obama's uncertainty factor but understand that the future is starting to look like Japan's past, and that is plain stupid.

Our recent 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.
Please visit the following sites for freedom:


Thursday, November 18, 2010

The American Freedom Pyramid: Where It Should Be Vs. Where It Is Today

An important part of the book, "Love My Country, Loathe My Government," is the understanding of what I call the Freedom Pyramid. The Freedom Pyramid tries to imagine what our founders had in mind when the put the U.S. Constitution, the Bill of Rights and a government based on individual freedom together. The ideal American Freedom Pyramid fits together as follows:
  1. The base and foundation of the pyramid is the Constitution and the Bill Of Rights.
  2. Sitting on top of this base level is the government structure that the founders defined to implement the liberty principles and concepts of the Bill of Rights and the Constitution in a limited government manner.
  3. This government structure serves all of the country's citizens equally in guaranteeing each person's rights and freedoms as defined by the base level documents.
  4. And finally, the pinnacle of the Freedom Pyramid is our own individual rights, freedom, and liberties.
These concepts are graphically illustrated below:

There are a few important characteristics of this pyramid. The power in the pyramid flows up from the Bill of Rights and U.S. Constitution to our individual freedoms which is the pinnacle of our country. Government exists to serve the citizens and the country and is just the mechanics for implementing the tenets in the Bill of Rights and Constitution. Finally, the political class appears nowhere in the Freedom Pyramid structure.

This structure has served the country and its citizens quite well over the past two centuries. Americans were usually the freest people in world, which allowed the country to grow into the most prosperous ever. The Freedom Pyramid concept placed individual freedom above all else, including the government and the political class, whose sole purpose should be implementing the concepts and principles of the Constitution and the Bill Of Rights.

However, over time, we have allowed the American political class to pervert this original Freedom Pyramid concept:
  1. Today, individual citizens and their freedom and liberties are no longer at the pinnacle of the pyramid, having been replaced by a self serving political class.
  2. This political class uses government functions and institutions to enlarge, entrench, and enrich itself. Examples at this level abound and include earmark abuse, favorable campaign finance laws, Congressional voting district gerrymandering, excessive  Congressional benefits and perks, confiscating large amounts of citizens wealth and income via taxes, and a general low priority for the needs and desires of the country's citizens.
  3. The political class uses their increased power to divide the country into various and competing tribes and voting blocks of citizens, "energizing their bases" as needed and demonizing those not in their bases or tribes.
  4. This increased power of the political class and their abuses of power results in diminished individual rights and freedoms.
These concepts are illustrated in the current day, perverted  Freedom Pyramid below, where the only Americans with the freedom and power tend to be our politicians:

As you can see in this pyramid, the Bill of Rights and Constitution are no longer vital to this pyramid's structure since the often act as an obstruction to the needs and desires of the political class rather than their original intent, the foundation of the country. Also, the power is driven down from the political class and is imposed on American citizens and their freedom.

We need to recognize how far we have deviated from the concept of the first Freedom Pyramid. The reality of America today is that we no longer live in a free country. We do not get true freedom in our election processes since the political class has rigged the voting process to favor existing officeholders and existing political parties. We do not get true freedom while under our excessive tax burden. When an individual is forced to pay more than 30% of their annual income to all levels of government, that individual's freedom to send his or her kids to a better school or to start a business or to save for retirement or to go on a vacation is severely limited: you cannot have political freedom without financial freedom. We do not get true freedom when politicians call individual citizens racists, Neanderthals, un-American, smelly, and other derogatory names just because they dare to disagree with a politician's programs.

If we ever want to get back to the right Freedom Pyramid, where individual citizens are in charge and the political class and the government the run are subservient, we need to implement most, if not all, of the steps laid out in "Love My Country, Loathe My Government." Some of the most important steps include:
  • Step 1 - reduce the size and budget of the Federal government by 10% a year for five years.
  • Step 6 - allow only individual American citizens to contribute to election campaigns, forbidding unions, corporations, PACs and other organizations from flooding the election process with money. The Bill of Rights guarantees freedom of speech to individual Americans, not organizations.
  • Step 7 - allow only citizens that are affected by an election to contribute to election campaigns within that election. For example, political parties would not be allowed to accept campaign contributions from someone in Kansas and send/funnel that money to be used in an election campaign in New Jersey.
  • Step 14 - stop gerrymandering Congressional voting districts to almost guarantee the re-election of incumbents.
  • Step 17 - eliminate the Democratic Party's "Super Delegate" process which has the potential of voiding the votes of all voters who voted in Democratic Party Presidential primaries.
  • Step 34 - hold politicians sitting on Congressional committees accountable for their respective government areas of oversight and remove them from their committee positions if that committee falls short of serving the country, e.g. all members of Congressional Intelligence committees should have been removed from those committee posts on September 12, 2001 for their inability to foresee the 9-11 terror attacks.
  • Step 39 - institute term limits for all Federal political seats.
Many of the other 50 steps are also important but implementing these listed above would go a long way to getting us back to the true and rightful Freedom Pyramid concept for this country.

Our recent 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.

Please visit the following sites for freedom:


Wednesday, November 17, 2010

The Latest Silliness and Insanity From Our Political Class

If you follow our political class and their inane actions and antics long enough and close enough, you are continually amazed about what they do and how much time, resources, and taxpayer money they waste without ever really accomplishing anything worthwhile. Their actions range from just outright waste to wasting time on issues and topics that have very little to do with the average American's daily life.  Consider some of the latest examples:

- Outgoing Governor Charlie Crist of Florida just got whooped in his bid to become the next U.S. Senator from Florida. This has caused him to be out of the office a lot lately while the Florida economy continued to be a basket case with high unemployment, high foreclosure rates on homes, and no immediate prospects for an economic upturn. Florida schools, while improved, are still not where they should be. Thus, now that he is back to being a full time Governor with limited time in office, one would have hoped he could have finished out his terms vigorously on some of these major issues.

No chance. According to an Associated Press article on November 17, 2010, Governor Crist has decided he wants to work on getting a state pardon for Jim Morrison of the Doors, who was convicted of exposing himself at a concert in Miami 41 years ago. Mr. Morrison died in Paris 39 years ago. According to the article the Governor will need the support of at least two Cabinet members and even then it might be a problem to pardon a dead guy from almost 40 years ago because the state has no procedures and law in place to do so. Talk about a waste of time and effort, does anyone, anywhere really think this is a pressing issue except for Mr. Crist?

- According ot a short blurb in the November 12, 2010 issue of The Week magazine, California Governor Arnold Schwarenegger has recently banned the use of state government-issued welfare debit cards at psychics, medical marijuana shops, bingo parlors, tattoo parlors, and cruise lines, all of which have shown up as locations where welfare recipients are spending the state taxpayer dollars. I think it is a great idea that the Governor is shutting down this gross misuse of taxpayer dollars but why was this behavior not forbidden from the first day the debit cards were issued? A rational human being would have initially restricted the use of the cards to food stores, medical establishments, clothes stores, etc.

- This example falls into that wonderful category of : "Why didn't they do the math upfront?" Federal Reserve Chairman Ben Bernanke spoke to Senators today to explain his plan for printing about $600 billion of U.S. money to buy back Treasury notes from the public domain in an attempt to lower interest rates, resulting in more economic growth and more employment.

He told the Senators that his plan would result in 700,000 new jobs created over the next two years. Let's do the math: the Chairman is going to flood $600 billion into the market and create 700,000 jobs which comes out to about $857,000 to create a single job. Hardly sounds like an efficient way to create jobs. Last I saw was that there were about 14 million unemployed Americans so at this rate the Chairman would have to float about $12 TRILLION to get everyone a job, which is a ridiculous idea and number.

But this type of silly thinking is not much different than the Obama administration job claims. It claimed to have created over 3 million jobs by implementing its $800 billion stimulus program. However, more simple division shows that the $800 billion total program cost resulted a per job created cost of over $250,000. Don't these people in Washington ever to the math?

- With the Federal government spending out of control and the national debt skyrocketing, one would have hoped that sanity would prevail and that the Feds would be looking for non-painful ways to cut spending. That does not appear to be the case, at least according to a Heritage Foundation report from October 4, 2010, a report that cited the New York Times as its source. According to their information, the Federal government's National Science Foundation will award $700,000 of taxpayer money to a New York theater troupe to produce and stage a show entitled "The Great Immensity" which will look into "the emotional and psychological aspects of the current environmental crisis," i.e. global warming. Number of insanity aspects to this action:
  • First, the Foundation was founded in 1950 "to promote the progress of science, to advance the national health, prosperity and welfare, and to secure the national defense." Personally, I find it difficult to connect their charter to a local play about global warming. As did the New York Times which called the grant a rare gift, recognizing that the Foundation usually funds research that involves math, science and engineering, not emotional and psychological aspects of anything.
  • Second, while many think global warming is a man made problem, many others do not hold that belief. The article cites experts that would dispute the notion of global warming. Would not this money have been better spent in hard science areas to actually get more proof, one way or another, on what the root cause of the problem is and what possible solutions are out there?
  • Rather than fund local plays that will be seen by very few people and have an impact on even fewer, would not this money have been better spent to reduce taxes, pay down the national debt, hire a few more good teachers, treat a few more drug addict Americans? The Federal government should not be in the theater subsidy business.
- Staying in the area of global warming, consider an article on the rash of new electric car models that will be hitting markets around the world soon. In a review of these new models and their impact on the environment, an article in the October 9, 2010 issue of The Economist magazine worried that although the electric cars would reduce harmful emissions, those reductions might be offset by the additional fossil fuels that would have to be burned to create the electricity that runs the new electric cars.

Skeptics quoted in the article doubted that the electric cars would have much of an impact at all and would waste taxpayer money in the subsidies the political classes in all countries are throwing at, and possibly wasting, on electric care purchases. The article quotes Richard Pike's work as chief executive of the Royal Society of Chemistry. He estimated that replacing all of Britain's cars with subsidized electric cars, and using Great Britain's current electric generation fuel mix, would cost 150 billion British pounds and would reduce carbon emissions by only 2%. With that subsidy money, according to Mr. Pike, Britain could replace its entire power generation capacity with solar cells and cut carbon emissions by one third.

Is Mr. Pike correct in his analysis? I have no idea but given his position in the science world, would not it be a good idea to take a comprehensive look at the value of electric cars in general and the value of their subsidies? A 2% reduction in carbon emissions vs.  a 30% reduction certainly merits a little better subsidy legislating beforehand, i.e. do the math first.

- A Wall Street article by Jonah Lehrer was summarized in the November 12, issue of The Week magazine and was entitled: "Proof That Pundits Are Clueless." The main thrust of the article was that the future is impossible to predict. It cites a long term University of California study that actually monitored the predictions of pundits and experts in a variety of fields. Of the 82,000 predictions from the experts that the study documented and tracked, the accuracy rate was below 50%. In other words, a simple coin flipping decision process probably would have done a better job than what the experts predicted. The study found that the results were consistently bad across the political spectrum and the most famous experts were usually the worst predictors. Thus, given this study's results, one needs to be very skeptical when a Federal Reserve chairman tells you that his actions will create 700,000 jobs or a President tells you that unemployment will never go above 8% if his economic stimulus package is passed, or an economist tells you they know the future when very few of them, along with our politicians, never saw the coming of the "Great Recession" until it smacked them in the face.

- And finally, some very sad and serious insanity. According to an article in the Chronicle Of Higher Education that was summarized in the November 12, 2010 issue of  The Week magazine, in the United States more than 5,000 janitors and more than 8,000 waiters and waitresses have earned Ph.Ds or the equivalent before settling into their current job. In total, 17 million working Americans have received college degrees but are employed in jobs that do not require a bachelor's degree. What a waste. We have allowed the political class to steer us into an economic situation where millions of people are not using their full capabilities, capabilities that could find cures for diseases, make factories more efficient, teach our kids better, invent better products and services, etc.

Funny, sad, wasteful, ridiculous, you pick your own adjective to describe this behavior. I could quote from "Love My Country, Loathe My Government" on how implementing term limits, holding Congressional committee members accountable or reducing the size of government would help eliminate some of these inane acts of our politicians. These steps would probably all help.

However, we need to do a better job as an electorate in selecting capable candidates who are smart, problem solving oriented, and courageous enough to take unpopular stands, even if it might harm their political career. We should not accept people in office that actually want a political career, we need people in office who want a leadership career.

Our recent 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.

Please visit the following sites for freedom:


Tuesday, November 16, 2010

The Fallacy and Fantasy Of The Potential For High Speed Rail Success In This Country

High speed rail service has been on mind my lately since there are two big rail projects in the news lately, one from my home state of New Jersey and one from my current state of Florida. They both came to mind when I came across a Washington Post article by Robert Samuelson, "The Myths Of High-Speed Rail Service," that was summarized in the November 12, 2010 issue of The Week magazine. Mr. Samuelson quickly reviews the Obama administration's high speed rail plans that will cost $10.5 billion for the preliminary work and eventually could cost $200 billion to build high speed train lines in 13 major U.S. corridors.

What does Mr. Samuelson think the payoff for this taxpayer investment of $200 billion? He thinks the return will be next to zero because:
  • America will not be able to replicate the success of high speed rail in Europe because the bulk of America does not live close to metro centers like the populations of Europe, rendering high speed rail line virtually useless for the travel needs of most Americans.
  • Also, most Americans work relatively close to their homes, making high speed rail lines a non-event for most of the 120 million Americans that commute by driving to work each day within or near their local communities.
  • According to Mr. Samuelson's estimates, a national U.S. high speed rail line will serve only a very small subset of people, possibly in the tens of thousands of people. This small set of people would only include those that make occasional trips between urban centers.
  • If you assume worse case and that the estimate of tens of thousands comes out to 100,000 riders, then dividing the cost of $200 billion by 100,000 riders you end up with a cost per high speed rail rider of $2,000,000 per rider, hardly an efficient use of taxpayer money.
Thus, in Mr. Samuelson's informed opinion, high speed rail service between major metro centers will be expensive, will not affect most Americans, and will not make any significant improvements in the environment since high speed rail will remove very few cars from our streets and highways.

The scary thing about the $200 billion estimate is that our political class has never put forth a transportation project estimate that was even close to the final reality. Most people know about the Big Dig  project in Boston that was supposed to cost less than $3 billion but went over the budgeted amount by many times over, was completed late, the finished product leaks water badly, and a construction flaw actually killed a driver there several years ago from falling roof panels.

More recently, the New Jersey governor shut down a planned project that would have built a much needed new rail tunnel from New Jersey into Manhattan. While everyone agrees the additional tunnel is needed, the cost of the project went from $5 billion in 2005 to a recently updated figure of $9 billion just five years later with the governor's office estimating that the real number might actually be between $11 and $14 billion. For a state that is suffering from huge revenue shortfalls, the governor probably made the right short term decision to stop the construction of the new tunnel because the state cannot afford it.
But the granddaddy of all failed transportation projects belongs to California and its attempt to build a high speed rail line along its length. According to an article by Tim Cavanaugh in Reason magazine last August, the following situations have cropped in California's High Speed Rail Authority:
  • A state auditor found that the authority had paid $4 million worth of invoices that it had not receipts for.
  • When the auditor checked 22 contractor invoices, she found the Authority had paid 20 of them worth $6.9 million without checking if the work on those invoices had actually been done.
  • The Authority paid $46,000 for furniture for the Project Manager's office.
  • The auditor concluded that the Authority had weak estimates of ridership, weak estimates of what government entities would be funding the entire project, and how the authority would manage the risks involved in a project of this complex undertaking.
  • The auditor found that the regional contractor working on the simplest part of the entire plan, the Los Angeles to Anaheim leg, had completed 81% of the planned hours to work on the project but had spent 230% of the budgeted dollars.
  • The state legislative analyst's office in California in early 2010 discovered that the Authority had no timeline plan for the completion of the entire project and had possibly illegally used bond funds to subsidize its operating budget.
  • Mr.Cavanaugh points out that since 1996, this project has cost taxpayers more than a quarter billion dollars but not one rail of track has yet to be laid. This time frame is longer than the time it took to build the Transcontinental Railroad in the 1800s.
  • The project is estimated to cost $43 billion of which only $11.25 billion has been allocated. Given the dire straits of California's finances, it is doubtful additional funding can be found under favorable terms, given the dive in the state's creditworthiness.
Enough with California, you can begin to see my doubts with the current members of our political class being able to pull off any kind of major transportation public works project efficiently and effectively. But the bad news on public transportation has recently hit closer to home here in Florida. In an October 29, 2010 article in the St. Petersburg Times by Bill Varian, he laid out a major problem that Tampa Bay area officials were having relative to their proposal to build a light rail, more commuter friendly rail system in Tampa's Hillsborough County. A rail system like this, tailored to the local needs of local residents, probably has a far better chance of success, from a financial, environmental, and usability perspective than a high speed rail line that most ordinary Americans would never use.

The problem Mr. Varian points out is that the construction cost for the proposed light rail line, which was originally estimated at $70 million per mile by the county's Metropolitan Planning organization, was reestimated recently by the Hillsborough Area Regional Transit organization to be between $85 to $120 million per mile of construction. Thus, you have two government entities giving two wildly different cost estimates of the same project. As a result of the escalating cost estimate, and possibly other factors, on election day Hillsborough County voters turned down a plan to increase the sales tax to fund the light rail project.

The second local rail project close to my home is the planned high speed rail line from Tampa to Orlando. The proposed high speed rail line would run from Tampa to a stop in Lakeland, Florida and then continue on to Disney World outside of Orlando to another stop outside of Orlando and finally finishing up at the Orlando airport. This project is part of the Obama administration's plans to build out that $200 billion network of high speed trains. This leg of the plan is considered relatively easy to build out since the land it will travel over is quite level, there are no mountains, forests, or residential communities to cut through, and most of the high speed line will run on a straight line along Interstate 4, which is the main road between Tampa and Orlando.

However, I am not a transportation expert and I foresee some serious problems with this use of taxpayer money:

  • First, since the area around Tampa has very little mass transit capability, especially since the voters nixed the idea of a local light rail system, potential users of a high speed rail line will find it difficult to actually get to the rail line station without using a car.
  • The current plan does not foresee the rail line ever connecting to the Tampa Airport so that anyone flying into Tampa and wanting to get to , or making the reverse trip to get to the Tampa Airport, would have to make some additional ground transportation arrangements to get from the Tampa Airport to the rail line station.
  • We are frequent Disney visitors from our Tampa Bay area home in Pinellas county and on most trips to and from home to Disney, the elapsed car travel time is about an hour and forty five minutes (105 minutes). We have done it in an hour and a half or over two hours  but an hour and forty five minutes is a very consistent time. Several sources I have come across put the travel time from the Tampa high speed rail station to the Disney station at  about 82 minutes, a difference of 23 minutes from my experience driving.
  • However, that is rail travel time. If I was to use the line to get to Disney, I would have to first get to the station from my home which would be about 30 minutes, wiping out the 23 minute advantage. On the other end, the estimated travel time only gets me to the Disney station, there would be additional time to get from the station to my Disney destination.
  • Thus, one of the selling points for this high speed rail line, getting to Disney quickly from the Tampa Bay area, does not hold water for me as a selling point, I drive there quicker almost every time. It does not make much sense from a cost perspective either. The door to door distance, round trip, is about 180 miles. We drive over to Disney using our Honda Civic that gets about 37 miles a gallon. Thus, the cost of gas for the round trip is about  five gallons or currently less than $15 dollars. I sincerely doubt that a trip from Tampa to Disney on the high speed rail line will cost less than $15 for two adults. Thus, from a time and cost perspective, this idea makes no sense for a large number of its target market.
If you do not believe me, consider a March 22, 2010 article by Michael Cooper of the New York Times which discussed the downsides and risks of this high speed rail line leg:

  • According to his estimates, the high sped rail line would trim only about 30 minutes off of the travel time along its entire length, consistent with my 23 minute time reduction over part of the line.
  • In Mr. Cooper's mind, since neither Tampa or Orlando have great local public transportation, high speed rail travelers "may discover that they have taken a fast train to a slow bus." The article cites a real life example of some Tampa tourists who took a bus from Tampa to St. Petersburg to visit the Dali museum. The bus ride took two and a half hours, one way, even though the distance between their hotel to the museum was only 20 miles.
  • Even a local Florida Congressman, John Mica, publicly doubted whether the allocated money for the Tampa-Orlando high speed rail line might be better spent in a higher volume traffic corridor like the Northeast. Think about that for a minute: a politician actually questioning whether money from the Federal government to his area should be sent somewhere else! Shows how bad an idea this line might actually be from a taxpayer perspective.
  • State transportation officials do not know where they will get the additional funds needed to actually complete this leg of the high speed rail line network, never mind where they will find the money to extend it from Orlando to Miami.
  • Since Tampa and Orlando are so close to each other, the rail line is highly unlikely to draw airline passengers since currently there are no airline connections between the two airports and an environmental impact study issued back in 2005 said the line would have little impact on auto traffic.
  • America 2050, a planning group, analyzed the country's rail needs and established a prioritized list of "Where High Speed Rail Works Best." The Tampa-Orlando route did not even make their top 100 and the Miami-Orlando route came in only at 100.
  • Orlando is planning a local light rail commuter system but current plans to not have the local route connecting to the high speed rail line.
Enough already. What does all of this mean?

  1. Our current set of politicians do a horrible job of correctly prioritizing the country's transportation needs.
  2. Our current set of politicians do a horrible job of correctly estimating the cost of transportation projects.
  3. Our current set of politicians do a horrible of planning, budgeting and executing a plan that comes in on time and on budget.
  4. Our current set of politicians do a horrible job of understanding the reality of the situation, putting in rail lines that cannot compete on a time schedule and cost basis or how local conditions on the ground do not make a transportation project viable.
  5. Our current set of politicians do a horrible job of holding people responsible and accountable for the planning and budgets of transportation projects. As always with our politicians, everyone is in charge but no one is responsible.

As a result of this incompetence, we again end up in the situation that David Brooks of the New York Times calls "immobile government." Immobile government is what we are currently living through right now in this country: bad priorities, bad money management and no accountability in our political processes results in nothing being accomplished by our political class. As a result of this incompetence, voters no longer trust government to do anything right and end up defeating potentially worthwhile projects, like the Hillsborough Country local light rail line, because the political class has shown no ability not to waste resources on such projects.

It is a nasty place to be. That is why we need to execute a few steps from "Love My Country, Loathe My Government" to break out of this immobile government mode:

  • Step 34 would hold Congressional members of Senate and House of Representatives transportation committees and subcommittees accountable for the success of transportation projects, removing those members from their committee posts for failures like the Big Dig and other wasteful, failed projects.
  • Step 37 would institute an annual voter satisfaction study for Congress that would directly affect Congressional raises, providing a way for voters to express their frustration with wasteful spending on failed transportation projects.
  • Step 39 would install term limits on Federal government elected posts in order to ensure that long term membership in Congress does not result in long term, friendly relationships with transportation contractors, relationships that never work to the advantage of the taxpayers.
  • Not explicitly listed in the book, but the political class and the government departments it oversees has to start demanding retribution from transportation contractors that fail to meet their committed time and budget commitments. It would no longer be acceptable for budgets to be busted and the disaster dumped at the feet of the American taxpayer.

Bottom line is somehow we need to inject accountability into the entire process. Until we do, public transportation projects in this country, the good, the bad and the ugly ones, will all remain a costly legacy of our immobile government.

Our recent 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.
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