Monday, February 28, 2011

Saving Private Ryan and Bad Politicians Acting Badly

Steven Spielberg's fabulous movie, "Saving Private Ryan" appeared on TV last night. Watching it reminded me how brave and unselfish our armed forces were during World War II. The carnage and horrific experiences they went through, so vividly captured in the movie, were truly the stuff of heroes and legends. And they sacrificed, fought, and many died to protect our freedom that we try to still cherish and protect today.

In the context of their bravery, sacrifices, and noble deeds, it seems pretty sad how the country they fought for and the freedoms they protected are so poorly served today by members of  the political class. Their actions, in many cases, are nowhere close to being classified as courageous and noble, they are just bad politicians acting badly:

- A February 10, 2011 Associated Press (AP) report recounted how a  U.S. Congressman from upstate New York had resigned for sending a shirtless picture of himself to a woman he met through Craigslist. The Congressman, Christopher Lee, was serving his second term and is married with a young son.

Usually, I would not care one bit what two consenting adults do with their lives. However, this is a U.S. Congressman who should be focused on addressing and solving the major issues facing the country today, not meeting women on an Internet site. He was not elected to start an illicit affair with a stranger he met on the web that could have exposed him to the potential to be blackmailed for the affair, a possibility that would likely not result in behavior that benefited taxpayers and voters. He should be focused on the major issues of our times. Certainly not noble or courageous, just plain stupid and self serving.

- This situation with this upstate New York Congressman is not to be confused with a similar affair from last year with another U.S. Congressman. At that time, Congressman Eric Massa resigned from Congress in the middle of an investigation into whether he sexually harassed male staffers. Certainly not noble or courageous.

- Politico reported on February 24, 2011 that Nancy Pelosi was to be honored by the Democratic National Committee via a praising resolution. However, prior to the ceremony where the resolution would be presented, the Congresswoman sent her daughter to the Committee's Resolutons Committee and said they both of them wanted to amend the resolution to make the Congresswoman look better by attributing more successes to her.

In my view, this is the outer limit of pomposity. If someone wants to recognize your achievements and honor your work, especially your political allies, I would think you should their praise in a humble but proud way. You do not let your ego run so amok that you insist in writing your own praise resolution. I have never heard a World War II veteran worry so much, or worry at all, what he or she had accomplished in service to their country. They did what the did heroically but humbly. They rarely, if never, embellished their record. Ms. Pelosi's behavior is certainly not noble or courageous.

- An Associate Press article reported that Senate Majority Leader Harry Reid recently took on the issue of the legalized brothel industry in his home state of Nevada, "telling state lawmakers the time has come to have an adult conversation about Nevada's legal sex trade if the state hopes to succeed in the 21st century. His remarks to the state legislature was met with mostly silence.

Let's see: the United States is rapidly spending itself into bankruptcy, it is bogged down in two wars that drains our wealth and kills our soldiers every day, the Middle East is changing in ways that no one knows where it will end, our borders leak, and our schools still fail to educate. And now one of the top politicians and elected officials in the country is going after a legal industry that involves two adults freely indulging in a private interaction. Talk about lack of priorities. The Senator should be acting a little more courageously on getting our country's issues under control rather than lecturing adults how to behave. Certainly not noble or courageous, given the decisions the Senator should be making on behave of the country.

- An article in the February 18, 2011 issue of The Week magazine reported how the Montana state Senate was working on adopting a "cowboy code" as a guide to the state's residents. This code urges state citizens to live each day with courage, be tough but fair, and always ride for the brand. The fact that the state needs jobs, revenue, and other needs makes you wonder why the state politicians are not tackling the tough issues facing their citizens as opposed to coming up with slogans.

Much like Senator Reid's obsession with brothels, the state's wasting of time and resources working up slogans allows them to look busy but avoid making the tough decisions needed to help the state resolve its issues. Certainly not noble or courageous.

- Another article in the February 18, 2011 issue of The Week magazine reported that the latest approval ratings for the President showed an unbelievable dichotomy. 81% of Democrats approve of the job is is doing while only 13% of Republicans approve. This 68 point difference is the second largest gap ever with George W. Bush having attained a 76 point difference. But he needed a second term to get that bad.

How did President Obama get the nation so divided so quickly? Maybe standing back and remaining silent while those Americans that had reservations and had opposed the President's plans and policies were called un-American, knuckle dragging Neanderthals, racists, Ku Klux Klan members, enemies that needed to be punished and other derogatory names. 

It certainly takes a serious lack of courage to stand by while fellow citizens that the President is supposed to be serving are denigrated by his allies. Certainly not courageous or noble and the divisive numbers show how poorly the President serves half of the U.S. population. Certainly not noble or courageous, and certainly not a leadership example like our brave  armed forces.

These above examples are just recent events of bad politicians acting badly. It ignores the many other cases of adultery and the resultant lying (Clinton, MacGreevey, Spitzer, Ensign, etc.) and the numerous examples of politicians using their office for self serving purposes including the use of earmarks to fund their re-election campaigns via earmarks, granting themselves automatic pay raises every year regardless of how well the perform, and acting selfishly when bold and non-self serving actions are required.

The political class actions and performance are so often an affront to the freedoms that were so bravely protected over time by our armed forces, freedoms that are now at risk not from an outside force but from the actions of the very people that should be protecting them on the home front.

It is so sad that our political processes create a ruling class that display none of the positive and noble characteristics that our armed forces display today and which they displayed during World War II. Wouldn't it be great if Steven Spielberg could develop and film a movie that illustrated our courageous and humble our political class was. Unfortunately, if he did, it would be viewed as fiction, or worse, science fiction.

Our book, "Love My Country, Loathe My Government - Fifty First Steps To Restoring Our Freedom And Destroying The American Political Class" is now available at 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:

Sunday, February 27, 2011

Budget Cutting For Dummies...And Washington Politicians, Part 6 - Odds and Ends

The past five posts in this blog have covered a variety of government spending areas that could be cut but which minimize any pain and suffering to typical Americans. These cuts ranged from overseas Defense Department commitments to Defense Department waste to Social Security reforms to eliminating government functions and programs that are unnecessary, wasteful, or redundant. These types of cuts are necessary to avoid the impending financial collapse of the Federal government's finances as the national debt soars above $14 TRILLION and the political class shows no ability or desire to rein in spending.

Today's post cleans up some loose ends and lists out some other opportunities to reduce government spending that were not covered in the previous, focused discussions of spending cuts. The first set listed below are explicitly outlined in the book, "Love My Country, Loathe My Government:"

  • Step 9 - this step would terminate traditional government pension plans for all newly hired Federal government employees going forward. Very few Americans hired into the private sector of the economy are eligible for any type of traditional pension plan. They are forced to plan their retirement along the lines of tax free investment programs (e.g. IRAs and 401k plans) along with the hope that Social Security will still be available. It is not fair or financially viable to force these private sector employees to continue to finance something for Federal employees that they themselves are not capable of participating in.
  • Step 13 - this step would stop using Federal taxpayer funds to fund for any aspect of Presidential political conventions by the two major parties. If they want to have a four or five day bash to celebrate themselves and their Presidential nominee, then they can pay for it themselves. This ban would also include security costs (e.g. Secret Service), no taxpayer funds for any aspect of political conventions.
  • Step 26 - this step would do a ground up analysis of our failed "war on drugs," doing a comprehensive review of its effectiveness, its costs, and the ramifications of doing something different. The long term objectives of such an effort would include reducing the government costs of law enforcement, incarceration, and treatment while balancing the needs of crime reduction, personal freedom, and addiction reduction.
  • Step 36 - this step would require all members of the political class to take and pass a course on basic economics in the hope that their future behavior would include an understanding of the economic ramifications of their actions. Today, lack of this basic economic understating almost always results in wasteful and ineffective government programs.
  • Step 37 - would base annual pay raises for members of Congress on the quality of their performance. Lousy performance = lousy, if any, pay raise.
  • Step 41 - I recently came across a list of the ten richest politicians currently serving in Congress. These ten richest members all had a personal wealth valued at over $100 million each. Thus, their annual government salary of about $170,000 a year or so is an infinitesimal nit relative to their overall wealth. If we still believe that serving your country is the highest calling, then these obscenely wealthy politicians should have no trouble foregoing their salaries for the good of the country. In fact, Step 41 would prohibit any politicians with personal wealth exceeding $3 million from drawing a Federal salary while in office.
  • Step 42 - this step sets income and wealth levels for ex-Presidents that once exceeded, require these ex-Presidents to start paying for their own government services and Secret Service protection.
  • Step 46 - this step would require that all government functions, including Congress, be submitted to the same intense accounting and financial reporting scrutiny that the private sector is subject to under the Sarbanes-Oxley law, enabling an in-depth audit function to constantly ferret out waste and fraud in all government operations.
  • Step 49 - this step would cap the amount of an employee's compensation that a corporation could claim as a Federal tax deduction at $3 million. For example, this step would not prohibit a company form paying an executive $10 million a year in compensation. However, on their tax return, that company could only claim up to $3 million as a tax deductible expense. It is time that the American public no longer subsidize out sized compensation plans for executives and sports stars.
Other steps keep dropping out of the sky when it comes to cutting government spending:

- A February 25, 2011 Associated press article reported that government controlled home mortgage giants, Fannie Mae and Freddie Mac, each posted multi-billion dollar losses for the last quarter of 2010, combining to lose $3.8 billion. For all of 2010, their combined losses were $41.5 billion.

The article points out that while these losses were smaller than in previous quarters, they are expected to start growing again as the number of home foreclosures a is expected to grow again throughout 2011. So far, the American taxpayer has paid over a quarter of a TRILLION dollars to keep both organizations afloat.

Thus, the Federal government has proven that it cannot manage any aspect of home mortgage financing without a major hit to the taxpayer. An exit strategy needs to be implemented that extradites the Federal government from ANY financial exposure in the housing market (recently released plans aim to reduce, but not eliminate, all taxpayer exposure) and allow the private sector to experience the risks and rewards of lending money for mortgages without government and the political class meddling  in the process.

- Politico ran an article on February 24, 2011 that described how some members of the political class are calling for the termination of the Home Affordable modification Program (HAMP), a Federal subsidy program that was supposed to help homeowners avoid losing their homes  to foreclosure along with other such programs. Why cancel the program? Maybe following had something to do with it:

  • Democratic Senator Spencer Bachus stated: "These programs may have been well intentioned, but they're not working and, in reality, are making things worse."
  • Only $840 million of the allotted $29 billion for the HAMP program has been spent for a utilization percentage of less than 3%.
  • The re-default rate for those in the program has been extremely high.
  • The HAMP inspector general found that some people in the program ended up in worse financial condition then before they entered the program, claiming that "The Treasury's claim that 'every single person' who participates in HAMP gets 'a significant benefit' is either hopelessly out of touch... or a cynical attempt to define failure as success."
So we waste just under a billion taxpayer dollars to worsen the plight of many strapped Americans under a program whose owners are either liars or naive when it comes to the results. This is obviously a program that never had a chance at success, given it meager participation rte of 3%, and never should have been launched int he first place.

Once launched, it should have had break points installed much sooner to identify problems and failure before over $800 million was spent. This program and others like them throughout the Federal government need to be kept on a much tighter leash or launched in a test mode first in order to not waste any more taxpayer money. Those responsible for their failures need to suffer the consequences of the failures just like workers in the private sector do when their failed program waste shareholder money and value.

- A subtle form of  waste, as outlined in Step 1 of "Love My Country, Loathe My Government," comes from the realm of higher education. Harvard University sits on tens of billions of dollars worth of endowment funds. Step 1 shows that even if the university invested these funds very conservatively, they could completely finance the costs of each Harvard student's tuition, room, and board each year and still grow the endowment.

It makes no sense that Federal taxpayer money should be used to help a student finance their education at Harvard and other endowment rich universities. Thus, going forward, no student loans and grants from the Federal government should be made to students attending universities such as Harvard and the savings from this reduction should help pay down the deficit.

Obviously, Harvard would howl at this perceived discrimination but by putting this ban in place, Harvard would have to face a hard economic decision: do they allow valued potential students to go to less wealthy institutions where they would receive taxpayer assistance or do they they drop their prices and/or hand out more money from their endowment to equalize the playing fields? In either case, the American taxpayer wins.

While this is just one small example of government frugality, this is the type of thinking that must start to pervade our spending mindset. It is a type of thinking that must be installed in all facets of government spending. We cannot afford everything that we would like. We need to reduce government spending in such a way that those that can afford to pay, continue or start to pay, while we try to protect out limited resources to help out those in need and to provide for an economical but effective national defense.

This does not mean a wholesale raping of the wealth and income of more affluent Americans. It means that politicians and the government stop their wasteful spending ways in a manner that protects the earning power and freedom of each American while providing necessary help for those in need. As we see in so many examples , e.g. failed government mortgage entities, failed economic programs such as TARP, economic stimulus, and HAMP, antiquated defense deployments, etc., the American political class is not capable of managing large and complicated enterprises. The nature of politics dooms their participation to failure from the start. Better to reduce the responsibilities of the government and the political class that drives that government to a reasonable and much reduced portfolio that maybe, just maybe, they can handle effectively.

Worst case, even if they cannot handle a reduced set of responsibilities that focus on protecting the needy, at least their wasteful ways will not bankrupt and destroy the country. Any dummy would welcome that trade off.

Our book, "Love My Country, Loathe My Government - Fifty First Steps To Restoring Our Freedom And Destroying The American Political Class" is now available at 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, February 25, 2011

Budget Cutting For Dummies... And Washington Politicians, Part 5 - Social Security

The last four days we have been looking at ways to reduce Federal government spending as quickly, as efficiently, and as painlessly as possible in order to avoid a complete financial and political meltdown of the United States government and the freedom that we derive from it. We have looked at government waste, obsolete programs, and redundancy as ways to reduce spending. Today we will take a stab at one of the biggest line items in the government budget, Social Security.

Before getting into the details of how to fix Social Security, lets review a few basic facts. First, several times in this blog we have proven that most Americans would have been better if money confiscated in their name and given to the Social Security Administration had instead been placed in a tax deferred retirement account, e.g. an IRA or 401k-type saving s option. Even if that money had been invested only in safe, low returning Treasury Bills, it would have been a better deal in retirement than trusting that Social Security would make good on their promises. However, that did not happen and we need to look at the reality of today.

As a result of that previous analysis, I do have detailed IRS results from 2008 income tax returns that give us the number of Americans who had adjusted gross income at various income bands, starting at $200,000 and up. We will use this official IRS data below. I also obtained Census data that showed how many U.S. households fall into different income bands from 2009. Finally, I have the latest Social Security Administration statistics from early 2011.

Thus, there is a small issue of timing since the three primary data sources are from recent, but different years. However, given that this is a rough estimate, the results should not vary much if we had the latest data from the same time period. I am sure it exists somewhere in the bowels of the Federal government but I could not find the information easily online. The methodology and logic are sound, the variations in the end results should be minimal.

In "Love My Country, Loathe My Government," three steps were proposed to fix the ailing Social Security financial mess:
  1. Step 10 exempt the first $50,000 of income from any Social Security tax, uncap the maximum amount of income that is taxed for Social Security, and tax all forms of income at 1%.
  2. Step 11 - prohibit any citizen with more than $3,000,000 in assets from collecting Social Security retirement checks.
  3. Step 12 - raise the retirement age to 70 over time.
Let's look at each of these changes in detail.

Step 10

A very basic problem with the current tax set up for Social Security is that wages are taxed up to about $102,000. Any wages earned that exceed this cap is exempt from further Social Security taxing. Thus, if someone earns about $102,000 a year and another American earns $1,020,000, ten times as much, the amount each pays for Social Security taxes is the same. If a third person earns $10,200,000, he or she pays exactly the same amount as the first person. Thus, the more wages a person earns, the lower the tax is as a percentage of total wages once the cap is exceeded.

The second problem with the current taxing arrangement is that Social Security taxes are levied only on wages. If someone had no wages but earned $10,000,000 in interest, dividends and capital gains, they would pay nothing into Social Security. Thus, the burden for carrying the whole system is placed on lower and middle income families and wage earners have a real tax rate that is much higher than for higher earners.

This proposed approach attempts to begin changing the above inequalities. It is the most detailed step but gets us very close to solving the entire funding problem. The analysis and logic go as follows:
  • The latest Social Security Administration (SSA) results indicate that there are 54,194,000 Americans currently receiving checks from the SSA every month with an average value of $1075.80. Thus, if you multiply these two numbers together along with the number twelve, twelve months in the year, you determine that the SSA pays out about $699,622,862,400 a year in benefits.
  • I found a source on the Net that tracks Federal government spending and they had a table that showed the budget for Social Security to be about $730 billion but this number also included administration costs in addition to payouts. Thus, there does look like there is some consistency between the two sources so let's use $730 billion as a Federal government line item for SSA.
  • Half of the SSA funding comes out of wage earners checks and the other half is a matching amount that the wage earner's employer must pay in. Step 10 assumes that the employer portion of the taxation scheme will not change. Thus, we need the American taxpayer to pick up half of the $730 billion or about $365 billion to cover SSA expenses.
  • From the IRS tax tables I already had, I can estimate how much higher earning Americans contributed to the SSA in 2008. However, these tax tables and the spreadsheet they are already in allow me to adjust and model what these taxpayers would pay under various scenarios.
  • I adjusted the spreadsheet to include the lower earning households that I got from the Census data.
  • After several iterations of various Step 10 scenarios, I found if I exempt the first $35,000 in every household's income from any Social Security tax and then tax everyone else's total income by 6.1%,  I can generate just over $365 billion, enough to cover the needed revenue of half of the SSA's budget line.
  • In this scenario, the amount of money paid by those U.S. households earning over $200,000 a year goes from about $26 billion to about $166 billion a year.
This approach, as laid out in Step 10, is a much fairer taxation method since every American is taxed at the same rate once you remove the cap. You no longer get the effect that someone making $10,000,000 pays the same dollar amount but a much lower percentage amount of someone making $100,000 a year.

This approach should also stimulate the economy by putting more disposable income into the hands of millions of more households.
The flexibility in this approach is that you could easily change factors over time. You could tweak the tax rate or the amount of money exempted from SSA taxes as needed. It is simple to understand.

However, there are two problems with this approach. 6.1% is a pretty hefty tax burden to place on a lot of U.S. households. It would probably result in some depression of economic growth since these households would have less disposable income. Second, while we have fixed the funding problem for the current time frame, this problem will get worse over time as more and more Baby Boomers retire. Thus, the $730 billion number will grow unless we do more.

Step 11

That beings us to the other two steps. Step 11 would not allow any American with more than $3 million in assets to collect a Social Security check. Consider an old joke to understand this step:

A young, good looking, and extremely rich gentleman walks into a bar, sits down and orders a drink. He notices a gorgeous young woman across the room and before you know it they are sitting together, enjoying each other's company as she learns that he is indeed, very rich. After a little while the following conversation occurs:

Man: Would you sleep with me for one might for a $1,000,000?
Woman: Quite possibly.
Man: Would sleep with me for one night for $10?
Woman (Outraged): What type of woman do you think I am????
Man: Oh, we know what type of woman you are, we are just negotiating price at this point.

Step 11 is all about price. Given the financial straits that the SSA finds itself in, should people like Bill Gates, Warren Buffet, Donald Trump, Derek Jeter, Oprah Winfrey, etc. receive Social Security checks in retirement? Wasn't Social Security designed as a safety net for elderly Americans in their retirement?  Wouldn't it be better to strengthen that retirement net by not allowing rich Americans to siphon money out of the system?

If you agree that these successful and quite affluent people should not get SSA benefits in retirement, then all we are negotiating about is the price, much like the man and woman above were talking about. At what level of assets should the cutoff be? Step 11 proposes that any American with over $3 million in assets not be eligible for SSA benefits. $3 million in assets conservatively invested would generate $150,000 income every year, placing that person in the upper 5% of all U.S. households. That should be enough for someone to live on, especially if it reduces the amount of financial strain on the SSA, allowing it to better serve less affluent retirees.

Step 12

Step 12 is based on the reality of the numbers, some on which were laid out in "Love My Country, Loathe My Government:"
  • In 1940, 54% of men and 61% of women in the United States could expect to reach their 65th birthday.
  • By 1990, 72% of men and 84% of women could expect to reach their 65th birthday.
  • In 1950, there were sixteen people paying into the Social Security Trust Fund for every retired person drawing benefits.
  • By 2030, there will be only two people paying into the Trust Fund for every retired person drawing benefits.
This is the reality of our world, it will not go away. More people will retire and fewer people will be able to support them. Thus, the third step needed to close the gap is to raise the retirement age over time from 65 to 70 with provisions for a less affluent Americans to draw payments before 70 under certain hardship conditions.

If you have $1,000,000 in assets and no hardship expenses, you should be able to live quite comfortably despite having to wait five more years to draw a Social Security check. This delay relieves the pressure on the real time collection of SSA taxes from the fewer workers that are supporting the whole system. This raising of the age would be phased in over a relatively short time but long enough to allow Americans to beef up their savings to overcome the five year increase in retirement age.

I could not find detailed enough data to show how much this step would save the system but it would be substantial. I will keep looking and present findings in the near future if I can get the detailed data I need to make an educated guess.

All three steps are needed. We need to balance and make fairer the inequities towards lower earning Americans via Step 10, we need to ask our more successful and richer Americans to make a sacrifice for their less fortunate citizens by foregoing their SSA benefits, and we need most everyone to suck it up for a few extra years before receiving their benefit in order to take pressure off of the system.

You cannot leave out a step. There are not enough rich Americans to only do Step 11. If you only do Step 10, that 6.1% today will grow so large that it will eventually stymie economic growth and place an unfair burden on current workers to support retired workers. If you only do Step 12, than most Americans will be dead before they are old enough to collect.

There, that wasn't so hard or painful. Everyone sacrifices a little to save the system. Just takes a little bit of math, a small amount problem solving skills, and a large dosage of leadership out of Washington and our political class.  Unfortunately this last point, leadership, is something we have not seen any trace of yet. The numbers and approach are pretty straightforward and laid out above, almost dummy-proof.  Will our political leadership step up? Doubtful.

Our book, "Love My Country, Loathe My Government - Fifty First Steps To Restoring Our Freedom And Destroying The American Political Class" is now available at 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, February 24, 2011

Budget Cutting For Dummies ...And Washington Politicians, Part 4 - Where's President Obama?

The last three days we have examined some innovative and critically researched ideas that would reduce the Federal government's outrageous deficit spending by hundreds of billions of dollars every year without significant economic or financial hardship and pain to ordinary Americans. These ideas ranged across the entire spectrum of government functions and included the elimination of wasteful, redundant, or obsolete government programs and departments. As we stated on Monday, the country is on a spending a debt trajectory that will eventually collapse both the economy and the country.

Today's post takes a slightly different tack on the whole national debt issue. But before explaining the back end of the title of today's post, "Where's President Obama?" consider the following quotes:

“Contrary to the prevailing wisdom in Washington these past few years, we cannot simply spend as we please and defer the consequences to the next budget, the next administration or the next generation.” President Barack Obama

"We were told by our President that we could fight two wars, increase our military budget by 74%, spend more on education, initiate a prescription drug plan, have tax cuts, all at the same time. We were told by Congress that they could make up for lost revenue by cutting government waste. The result is the most precarious budget situation we have seen in years. We now have an annual budget deficit of almost $300 billion, not counting more than $180 billion we borrow every year from the Social Security Trust Fund." President Barack Obama

"Obama must take the lead in cutting lethal U.S. debt." Syndicated columnist Morton Kondracke, February 15, 2011 article.

"How are we going to rein in government spending? We have heard very little from the President. Now maybe he will open up with his budget... But he really has to lead here, and so far he simply has not." Glen Hubbard, Dean, Columbia School Of Business, Business Week quote, February 14, 2011 issue.

"Obama Must Lead On Deficit Cuts." Financial Times headline, February 13, 2011

"Tomorrow never comes." David Brooks, New York Times, February 17, 2011 article quote when explaining how the Obama administration keeps delaying the task of cutting spending.

"One and Done: To Be a Great President, Obama Should Not Seek Re-election in 2012."  Douglas Schoen and Patrick Caddell, Washington Post article from November 14, 2011, explaining that if the President declared he would not seek re-election and focused only on taming the deficit, he would save the nation and go down as a great President.

Seems like the entire country is waiting for the President to step up and tackle the hard question of getting the national debt and government spending under control. A task of such a large and wide ranging reach needs strong leadership to get the hard work, debate, and actions accomplished in a manner that completes the task in the most efficient and caring way possible.

Unfortunately, that is not the approach the President has taken. He has criticized previous Bush administration deficits as being too large but which are a fraction of the deficits that have occurred during his Presidency. He has said that he will eventually get around to deficit reduction but first other issues had to be tackled. Once tackled, however, he still does not take up the lead. He appointed a bipartisan commission that took the better part of a year researching, analyzing, and proposing a comprehensive set of deficit reduction ideas, all of which were rejected without the slightest show of interest in what the commission had come up with. The 2011 deficit will skyrocket to well over  TRILLION dollars but both his state of the union message and latest budget proposal show no significant effort to reduce spending. He is nowhere to be found despite the calls from all sides to get out and lead.

Why is he is "leading from the rear" as one columnist, David Brooks once surmised? Great leaders in all walks of life, good and bad, lead from the front. FDR was always out front leading the country through the dark times of the Depression. Churchill was always out front leading the British people during the darkest times of the war. Martin Luther King, Jr. was leading the marches through the streets of the South during the civil rights era. Steve Jobs has led Apple back from the brink of extinction by being out front, on the cutting edge, taking chances. General Custer never brought up the rear in the 7th Calvary. When the historic chance of a lifetime, saving the United States from its government spending presents itself, as outlined in the Washington Post article above, the President is nowhere to be seen.

Why is that? I suppose you could surmise a few possibilities:
  1. Reason 1: The President does not understand the depth of the problem. I would find this reason difficult to believe. The man is a Harvard graduate. He proposed the Deficit Reduction Commission. I am sure his press people are keeping him abreast of articles like the ones listed above. It is not a secret what is going on. From the quotes above, he is saying all the right words. Is it possible that the President simply does not get it?
  2. Reason 2: The President does not want to understand the depth of the problem. This might be a little more believable. I would bet that he did not come into office to become a budget cutter and an accountant. I am sure he had lofty goals that included instituting massive social and government programs that would be a lasting monument to his government work. And now this pesky $14 TRILLION national debt issue is getting in the way of his high speed rail lines, electric cars, his cap and trade or equivalent programs, etc. In other words, he is in denial. And these pet projects are more important, in his mind, than saving the country from its own spending habits.
  3. Reason 3: The President views his re-election as the only priority and does not want to alienate a single voter by cutting government spending. As with almost every current American politician, getting elected is both the means and the ends, regardless of what damage it does to the American people, our economy, and our freedom. It used to be you got elected (the means) to do great government work for the good of the country (the ends.) Today in America, the winning of the election is all that matters. I think this is the driving force for leading from the rear, do not shake the boat, it might endanger my re-election. This is also very dangerous because if this is indeed the President's reason for not leading form the front, the chances of getting sane, logical, effective, and significant spending reductions are less likely. This would put the country at least two more years further down the deficit rathole, making recovery all the more difficult. And who knows, even Obama got re-elected, he could continue to believe that "tomorrow never comes."
  4. Reason 4: The last possible reason, and the scariest, is that he wants the economy to collapse, allowing him to sweep in and socialize and nationalize every facet of our lives once he has wiped out the existing institutions of government, a functioning free market economy, and freedom. Let's us hope that this is not his end game and the reason he appears apathetic to the whole economy crashing scenario.
If I was a betting person, I would bet that the trifecta/win-place-show order is: Reason 3 (to win) followed by Reason 2 (to place), Reason 1 (to show) and Reason 4 bringing up the rear. I believe that the President is just another contemporary politician who considers running for office the only endeavor worth doing and doing well (i.e. winning). Everything else is secondary, especially when it interferes with his own grand plans, as listed in Reason 2.

Unfortunately, with the exception of the long shot reason 4, while betting the trifecta might be amusing, regardless of the winning reason, the results are the same, he is not addressing the problem. And the reins of leadership may not be his much longer if you consider some of the information from the Morton Kondracke article:
  • Republican Senator Tom Coburn and Democratic Senator Kent Conrad, both current members of the Senate and former members of the President's Deficit Reduction Commission, are jointly working on plans to implement some of the proposals the commission came up with.
  • Republican Senator Bob Corker and Democratic Senator Claire McCaskill are working on a proposal and legislation that would force the Federal government to reduce its spending over ten years so that  spending as a percentage of the nation's GDP would drop from the historical high levels today of about 24.6% to the long term historical average of 20.6%.
  • Republican Senator Saxby Chambliss and Democratic Senator Mark Warner are also jointly working together to find a way to cut spending.
  • Republican Congressman Paul Ryan has the only comprehensive, detailed plan out in public that would reform spending in all facets of government spending over a long term span.
Additionally, organizations such as the Concord Coalition, which is headed up by a former Republican Senator and Democratic Senator,  are providing necessary ideas by forging their own sensible plans for curtailing the deficit.

When a leader leaves a void in the front, as Obama has done here, that void will be filled by others with more courage than that leader in the rear. (Note: the fact that Senator Conrad will not be running for re-election in 2012 might be a source of courage for him). I cannot imagine FDR, Churchill, King, Jobs, etc. deciding that they would lay back and see what happens in order to not endanger their personal goals. Would not happen.

That is why Mr. Schoen and Mr. Caddell of the Washington Post were implying in their article:

"This is a critical moment for the country. From the faltering economy to the burdensome deficit to our foreign policy struggles, America is suffering a widespread sense of crisis and anxiety about the future. Under these circumstances, Obama has the opportunity to seize the high ground and the imagination of the nation once again, and to galvanize the public for the hard decisions that must be made. The only way he can do so, though, is by putting national interests ahead of personal or political ones."

Leading from the rear is never a good thing, especially considering the view. General Custer can tell testify to that. In fact, any dummy can see that.

Our book, "Love My Country, Loathe My Government - Fifty First Steps To Restoring Our Freedom And Destroying The American Political Class" is now available at 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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Wednesday, February 23, 2011

Budget Cutting For Dummies...And Washington Politcians: Part 3 - Cato Institute

This post continues our themed week, "Budget Cutting For Dummies... And Washington Politicians" where, as a public service, we help our struggling political class in Washington learn how to cut out unnecessary government spending and save the country from financial destruction. On Monday, I offered my humble opinions and research and saved the American taxpayer between $100 billion and $140 billion a year with little, if any pain, for ordinary Americans.

Yesterday we summarized the outstanding work of Nicole Tichon and Andrew Moylan and their analysis, "Toward Common Ground: Bridging the Political Divide To Reduce Spending." Their work uncovered almost $600 billion in spending cuts that could be done by 2015, again with little or no impact on the ordinary American citizen. Their focus was on government efficiency and waste so that many of their recommendations save money through better processes and management.

Thus, as a rough average, their $600 billion savings within four years comes out to a,bout $150 billion a year on average. Combine their findings with Monday's findings and so far we have cut a quarter of  TRILLION dollars out of the Federal government's annual budget without hurting any animals, curtailing any safety nets, or making any American poorer, sicker, or less wealthy.

Today we will summarize the work coming out of the Cato Institute. Their "Downsizing Government" effort is identifying many, many ways to effectively and efficiently reign in government spending. They are going through the Federal budget and government, line by line and organization by organization, to ferret out waste, redundancy, and incompetence. They are still in the process of completing their analysis but what they have done so far is first rate. Consider what they have found so far:

* Department Of Education

The Department of Education is about thirty years old. During that time frame, the United States has probably spent more on education than any other country in the world. In fact, the Baltimore Sun reported in August, 2009 that the United States spends twice as much of its GDP on education than the next closest country.

What has that gotten us? According to an article in the December 26, 2010 issue of the St. Petersburg Times, the United States ranks 30th in the percentage of students that perform at advanced proficiency level in mathematics. We trail such countries as Iceland, Liechtenstein, and Slovenia. An international testing study found that in math, science and language skills, dozens of countries' students do better than U.S. kids.

Obviously, something is wrong with education in this country and after more than thirty years, the Federal government, through its Department of Education, has done nothing to help the United States be a leader in education standards and performance relative to the rest of the world. And for this pathetic performance the American taxpayer pays about $107 billion a year.

Cato's solution: terminate the whole department and leave the process of education to the states. Think about the math for a minute. At $107 billion a year, you could purchase 267 million IPads at Best Buy and give two IPads to probably school kid in the country. Obviously, you would not do this but what if you gave the states $107 billion. Imagine how much good they could do technology wise, facilities wise, reward wise, training wise, etc. for education in their respective states. 

And this is with only one year's worth of Department of Education funding. Given the horrendous performance of public education in this country and the wasting of over $100 billion a year at the Federal government level, we need to do something else. I would terminate the Department immediately but phase out the funding expense over three years. In the first year, the states and local school boards would share in $107 billion dollars. In the second year, they would get one third less, in the third year they would get two thirds less and in the fourth year they would receive nothing. At that point, the American taxpayer and the Federal government has $107 billion less to worry about.

The only condition I would put on the funding is that it cannot be used to increase salaries or benefits for teachers or administrators. It has to be used to improve the curriculum, the facilities, the technology or the training. This gives the states and local governments a three year funding plan to finally fix what ails our schools. It is obvious that the Department of Education will not be able to or they would have done it already.

Annual savings: $107 billion.

* Department Of Energy

In 1973, President Richard Nixon ordered the Federal government to make the United States energy independent by 1980. To help in that goal, the Federal government shortly after that declaration created the Department of Energy.

Thirty eight years later we are no closer to that goal than when Nixon was in the White House. the Department of Energy has grown and grown so that today it eats up almost $40 billion a year in budget. And we have nothing to show for their efforts. We still import and use much to much of carbon based fuels. We are at the mercy of foreign governments and forces that do not always have our best interests in mind. There has been no strategic or earth shattering energy breakthroughs by the Federal government via the Energy Department despite spending hundreds of billions of dollars to do so.

The Department spends almost $6 billion a year on "general research," research that has turned up nothing of consequence in its history. Thus, Cato recommend that this department also be terminated and that some of its responsibilities for environmental cleanup be given to the EPA and Department of Defense.

Annual Savings : $18.4 billion

* Defense Department

Cato makes a compelling case that the role of our armed forces has to be narrowed to only one objective: defending the United States. It should not be used as a diplomatic option, it should not be used to interfere in the internal workings of another country unless that country poses an imminent danger to our safety, it is not meant to garrison troops all over the world in places that are not an imminent threat to our safety, it is not meant to have high technology weaponry only for the sake of having high technology weaponry. If you narrow the focus to militarily address only our safety, you can cut the Defense Department budget significantly.

Obviously, the first and easiest place to cut is to get our forces out of Iraq and Afghanistan. Obama promised to get us out of Iraq during his election campaign but we still have thousands of troops there at a cost of tens of billions of dollars a year. In Afghanistan, I have no idea what the final answer is but it does not appear that the current strategy is working. If it is working, the Obama administration is keeping this success a well guarded. Cato estimates that if we get out of Iraq and Afghanistan, we would save $159 billion annually.

They have also come up with additional savings of $1.224 TRILLION over ten years or an annual average savings of $124 billion. They agree with the analysis done yesterday to kill some of the Defense Department's expensive and unneeded programs such as the Expeditionary Fighting Vehicle. This represents a about a 17% reduction in overall defense spending without undermining our national security.

Annual Savings (After getting out of Iraq and Afghanistan): $283 billion.

* Commerce Department - cut subsidies to private businesses and save the taxpayer $2.1 billion a year.

* Agricultural Department - cut subsidies to the farming industry and save the taxpayers $30 billion a year annually.

The above cuts to just these five Federal departments would save the budget and the country about $440 billion a year. If you consider the cuts and savings that Cato recommends in Health and Human Services, Housing and Urban Development, and other Agricultural Department areas, you come up with another $244 billion in reductions. However, these cuts are likely to be harder sells to the established Federal political class since they would involve privatizing government services or in most cases, transferring the funding and the responsibility to the state and local government levels. The Federal political class is much more likely to fight to keep some of these functions within their realms of power.

Keeping these cuts separate does not detract from the need to make the changes Cato recommends. However, I do not have the time or space to go through the details and logical reasoning that they go through at their web site, I recommend that readers do this for themselves and decide whether or not the extensive work done by Cato should be implemented in these areas, worth $244 billion in spending.

For today, let's keep it conservative and give Cato credit for identifying $440 billion in additional spending savings and cuts. Remember, there are some departments that we have not included above and other departments that Cato is still busy analyzing and have not yet published their findings.

If you take this $440 billion and combine it with the $250 billion we came up with the past two days, we are approaching $700 billion in annual cuts. If you assume there is some double counting in the three analyses, we can safely assume that we already have about $650 billion or so in savings.

Thus, these judicial and intelligent budget cuts are similar to Monday's and Tuesday's cuts since:
  • No animals were killed or harmed in the development of the budget cut list.
  • No Americans went hungrier, sicker, or poorer as a result of any of the identified cuts.
  • Corporate welfare was cut back, personal welfare or aid to the poor was unaffected.
  • Americans' freedom was unaffected but the freedom of politicians to use taxpayer money to fund their re-election campaigns via earmarks, defense contractor and lobbyist donations, and corporate welfare donations was negatively affected.
The sad part of the three analyses is that the $650 billion still would not close the annual, and now recurring, $1 TRILLION plus budget gap that the Obama administration has incurred over the past few years. To close that gap, there is no way to avoid curtailing the budget lines known as Social Security, Medicare, and Medicaid. We will take a shot at these lines on Friday.

Tomorrow, we will examine the poor performance of President Obama and the rest of the Washington political class. Their lack of leadership, courage, guts, and creativity are just as dangerous to the future of this country as is the devastating deficit they encourage and/or ignore. Any dummy can see that.

Our book, "Love My Country, Loathe My Government - Fifty First Steps To Restoring Our Freedom And Destroying The American Political Class" is now available at 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, February 22, 2011

Budget Cutting For Dummies...And Washington Politicians - Part 2: Government Efficiency

This is a second part of our themed week on how and why the political class needs to reign in its spending as soon as possible to avoid a financial disaster and suggest ways to accomplish the task. Yesterday's post identified anywhere from $100 billion to $140 billion worth annual savings that could be wrung out of government with relatively no pain except for corporate welfare recipients and incumbent politicans' re-election finances.

Today's focus is on making government more efficient, either by doing things better and smarter or just plain eliminating wasteful spending that benefits relatively few Americans. The basis for the following budget cuts is a comprehensive analysis jointly done by Nicole Tichon, Federal Tax And Budget Reform Advocate in the U.S. Public Interest Research Group and Andrew Moylan, Director of Government Affairs, in the National Taxpayers Union. Although I will not review all of their excellent work below, understand that it appears to be relevant, analytically sound, well researched, based on solid, underlying financial and government statistics and best of all, nonpartisan. Their recommendations cross many government functions.

Their work concentrated on four specific areas of government spending that could be reduced significantly or eliminated:

  1. Ending Wasteful Subsidies - Budget savings by 2015 = $62 billion
  2. Improving Contracting and Asset Acquisition - Budget savings by 2015 = $353 billion
  3. Improving Program Execution and Government Operations - Budget savings by 2015 = $77 billion
  4. Addressing Outdated Or Ineffective Military Programs - Budget savings by 2015 = $107 billion
Thus, over the next four years, their recommendations could save taxpayers about $600 billion or about $150 billion a year on average. Combine these results with the savings we estimated yesterday from other areas that are not included above and in just two days, we have identified about $250 billion a year in wasteful government spending, or about about $2.5 TRILLION over ten years. Compare these savings with the meager ten year savings of President Obama's budget of $1 TRILLION. And we are not even done yet.

Below are some examples from each of the four categories above that Ms. Tichon and Mr. Moylan identified for savings:

* Ending Wasteful Subsidies

- Terminate the Federal government's Overseas Private Investment Corporation (OPIC) which uses taxpayer money to subsidize the foreign operations of many large multinational corporations via financing and insurance support. This is a blatant form of corporate welfare, let these large corporations support themselves overseas and save the taxpayers $154 million by 2015.

- Eliminate the Market Access Program which uses taxpayer dollars to fund advertising and promotions for private companies that sell agricultural products overseas. Given how well the U.S. farming industry is doing, let these companies fund their own advertising and promotions overseas. Drop this corporate welfare program and save $1 billion by 2015.

- Eliminate insurance subsidies for repeatedly flooded homes through the National Flood Insurance Program. One percent of these policies represent up to 30% of all insurance claims since they are repeatedly damaged by flooding. Eliminate the subsidies for these loser properties and save $891 million by 2015.

- Eliminate the program that subsidizes deepwater natural gas and petroleum research. With oil prices rapidly galloping to over $100 a barrel, eliminate this corporate welfare program and let the oil companies themselves decide whether or not they want to fund the research, saving the taxpayer $258 million by 2015.

- Reduce funding for public timber sales since the Forest Service has spent more on Federal timber sales in recent years than it has collected from the companies that harvest the timber. Save $279 million by 2015.

* Improving Contracting And Asset Acquisition

- If the government implemented the reforms of the bipartisan Defense Acquisition Panel which was passed last year by Congress in an attempt to address Department Of Defense acquisition processes, taxpayer savings by 2015 would be $135 billion.

- A recent audit by the Defense Contract Audit Agency found 32 existing Homeland Security contracts, collectively worth $34.3 billion, that have been plagued by waste, abuse, and/or mismanagement. Eliminate these poorly performing contracts and bank the $34.3 billion.

- The Government Accountability Office (GAO) investigated armed forces purchasing and inventory processes and results and found that our armed forces continually purchase  products that are never used, never required, or are obsolete. Fix these purchasing problems, as identified by the GAO, and save $184.5 billion by 2015.

* Improve Program Execution and Government Operations

- Sell off 25% of the 55,500 buildings that the Federal government owns that are vacant or are underutilized, according to the Office of Management and Budget, netting the taxpayer $24 billion by 2015.

- According to the Congressional Budget Office (CBO), if Medicare better aligned its payments to cover actual costs for its graduate medical education program, the taxpayer would save over $20 billion by 2015.

- According to the GAO, the Federal government wastes large amounts of money through the Housing and Urban Development's programs due to a variety of overpayment errors. If corrected, the government would save more than $4.5 billion by 2015.

- The Troubled Asset Relief Program still has an unspent amount of $15 billion on its books. Given that the banks are much healthier and the economy is much healthier, return that money to the taxpayers and save $15 billion immediately.

- The GAO has investigated and concluded that the National Drug Intelligence Center's functions are  duplicative and its scandals numerous. Terminate the program and save $223 million by 2015.

* End Wasteful or Outdated Military Programs and Systems

- Cancel the production of the overly expensive and under performing V-22 Osprey aircraft and save over $6 billion by 2015.

- According to the Sustainable Defense Task Force, the "F-35 Lightning may represent all that is wrong with our acquisition process." It is overly expensive, has serious cost overrun problems, and "would provide a capability that is not warranted, considering emerging threats." Drop the program and save $22.5 billion by 2015.

- Terminate spending for high risk satellites and replace them with low-cost alternatives since the Defense Department has already determined that ground based radars "not only provide a viable alternative to a space based system but also provide this capability at significantly lower risk and costs." Drop the expensive system, go with the less costly and less risky alternative and bank the $5 billion in savings by 2015.

- Align or right size the nation's nuclear arsenal and save $56.75 billion by 2015.

- Eliminate the outdated, unreliable, and unneeded Expeditionary Fighting Vehicle which even the Secretary of Defense does not need or want. Savings would exceed $16 billion by 2015.

Thus, these judicial and intelligent budget cuts are similar to yesterday's cuts since:
  • No animals were killed or harmed in the development of the budget cut list.
  • No Americans went hungrier, sicker, or poorer as a result of any of the identified cuts.
  • Corporate welfare was cut back, personal welfare or aid to the poor was unaffected.
  • Americans' freedom was unaffected but the freedom of politicians to use taxpayer money to fund their re-election campaigns via earmarks, defense contractor and lobbyist donations, and corporate welfare donations was negatively affected.
This is an outstanding piece of analytical work from these two Americans, each of them representing two different views of the world. The U.S. Public Interest Research Group usually comes at the world from a left leaning, Democratic party perspective while the National Taxpayers Union usually comes at the world from a right leaning, Republican party perspective.

However, on this issue they come to the same conclusion: "Our nation faces unprecedented fiscal challenges, as the commitments we've made now and into the future far outpace our fiscal capacity.... It will be critical to reach out across party lines and across ideological persuasions to achieve common-sense reforms that bring us closer to balance."

Now look at their statement relative to the petty actions and petty politics that the Washington political class have engaged in relative to this grave problem. Pretty pathetic performance from our politicians' perspective. It does not appear that they appreciate the "unprecedented fiscal challenges" the nation faces with their meager and petty attempts at budget reform. 

A typical, non-political American found over $100 billion in annual budget cuts yesterday and these two smart people, Ms. Tichon and Mr. Moylan, from two widely different perspectives, have found about $600 billion in budget cuts within just a very small sample of government operations. It is not that difficult... any dummy can do it. Well, most any dummy.

Our book, "Love My Country, Loathe My Government - Fifty First Steps To Restoring Our Freedom And Destroying The American Political Class" is now available at 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:

Monday, February 21, 2011

Budget Cutting For Dummies...And Washington Politicians - Part 1: A Typical American's View

This post kicks off a themed week called "Budget Cutting For Dummies...And Washington Politicians." The tentative schedule looks like the following:

  • Monday, Part 1 - An ordinary American cuts the budget of unnecessary spending.
  • Tuesday, Part 2 - A right leaning and a left leaning pair of think tanks develop a joint way to get government spending under control.
  • Wednesday, Part 3 - The Cato Institute goes through the Federal budget line by line to cut unnecessary spending.
  • Thursday, Part 4 - President Obama On The Budget - Lack Of Leadership and Lack of Courage
  • Friday, Part 5 - Fixing Social Security (this is a tentative topic, it assumes I can gather the necessary data and crunch the numbers by then.)
Before we start budget cutting, let's review the facts of how deeply the political class has buried us under a sea of debt:

  • The Federal government currently owes about $14 TRILLION worth of debt to various parties around the world, including China which is fast approaching the $1 TRILLION mark in U.S. government debt held.
  • This $14 TRILLION is a per household burden of about $120,000 per household.
  • Under Obama's current budget plans, that $14 TRILLION will grow by about $7 TRILLION over the next ten years, assuming that economic conditions improve and continue to be healthy, i.e. the best case scenario.
  • This additional budget debt will increase the average American household's debt burden by about $60,000.
  • If nothing is done soon, within a few years the American taxpayer will be spending more on debt interest than on most other discretionary government programs such as education, transportation, etc.
  • Almost every state government in the country is fighting the same battle where the political class has allowed government expenses to far outstrip government revenue.
This is the reality today, I dare anyone to paint a much rosier picture than above. Into this fray march the Republicans and Democrats from the national political class, looking totally inept at finding a way to financial solvency. The Republicans are bragging about their aim of reducing annual Federal government spending by $100 billion. Certainly better than not cutting $100 billion but let's be honest, $100 billion is only about 2.6% of the total Federal budget in 2011. It is only about 9% of the Federal deficit. Thus, rather than over spend revenues by $1.1 TRILLION, they would over spend revenues by $1.0 TRILLION. Pathetic. Yes, a start. But a pathetic start.

The Democrats are far worse. When Bush was running up debt burdens in the hundreds of billions of dollars, the Democrats hollered about fiscal irresponsibility. When they took over Congress, their House leader Nancy Pelosi declared she would operate a pay-as-you-go House Of representatives, i.e. no new spending would occur unless spending cuts were done elsewhere in the budget. Since she and the other Democrats took over Congress, joined two years later by a Democrat in the White House, Federal government spending deficits and debt have skyrocketed, hitting never before seen, or dreamed of, levels. Trillions of additional debt in a few short years.

Now the Democrats are hollering that some of their favored political government programs are under pressure to have their funding cut. If they had been more fiscally prudent when the had control, this never would have happened. They have no one to blame but themselves. However, this does not prevent their typical hypocrisy from shining through. They had their chance and control and will now have to pay the price. Their proposed budget cuts are so feeble that they make the pathetic Republican cuts look draconian in comparison.

But wait. Maybe I am too hard on these poor folks. Maybe they do not know how to cut the budget. Think about it. They have never had to cut it in the past. They are a lot like the dictatorial regimes and monarchies in the Middle East. They always had enough wealth to spend, even if it placed undue burdens on their fellow citizens. They always got their way and the best of everything: automatic pay raises, lobbyist favors, the best health care, high wages, almost job security for life (at least until last November), etc. Seems like the Washington politicians are just like Mubarak or Qaddafi, or the monarchies in Bahrain and Jordon. Always taking what they wanted for themselves, never having to sacrifice, always living the good life at the expense of others. Maybe they are just too ignorant or inexperienced to manage a budget.

That is where this series of posts comes in. Today we will start with my simpleton view on life and how to get started on cutting the budget. The next few days we will then turn to the experts in the think tanks, both right leaning and left leaning, for further insights on how to get to a smaller but more manageable and more effective government.

If I was running the show, this is where I would start:

- Why do we still have over 50,000 U.S. troops in Germany? The Iron Curtain was destroyed over twenty years ago, maybe we should finally start getting some of that so-called "peace dividend" by bringing these troops home and reducing our military footprint abroad. The same argument could be made for the 30,000 or so troops we have in Japan and the same amount or so in South Korea. If it costs the Obama administration a million dollars a year to put a U.S. soldier into a war zone, then if we assume it costs half of that to maintain a U.S. soldier in a non-war zone, reducing the size of our military by the 110,000 needlessly deployed soldiers in these three countries, we could eventually save over $50 billion a year. Even if the cost of a non-war zone deployment is a quarter of a war zone deployment, the savings would still be about $25 billion a year.

- Even though the President campaigned to get us out of Iraq as soon as possible, we still have 50,000 troops there. Bring them home and eventually save at least $12.5 billion as year.

- Budget earmarks are really nothing more than a thinly disguised way for incumbent politicians to get re-election campaign donations using taxpayer money. It is really quite a simple process:
  • Assume Congressman A puts a million dollars budget appropriation/earmark into a budget bill for Company X to do some government work that may or may not be needed. Company X then turns around and arranges to send Congressman A's campaign fund a check for some amount of money. Everybody wins but the taxpayer who foots the bill for the earmark, rarely sees the benefit, and helps ensure the continuation of the incumbent's career. Conservative estimates put the annual earmark cost at around $16 billion. Eliminate earmarks, bank the savings.

- An Associated Press report from February 17, 2011 discussed how the government had busted a Medicare scam ring and arrested 111 people. Great work since it is thought that these 111 had stolen $225 million from the American taxpayer through fraud. Details include the following:

  • One Detroit doctor who charged for partial toenail removals bilked Medicare out of $700,000 which turned out to be little more than toe nail clippings.
  • The same doctor billed Medicare for removing three toenails from the same toe of the same patient.
  • A Brooklyn doctor billed Medicare $6.5 million for hemorrhoid removals, most of which were bogus. One patient was identified as having hemorrhoid removal done ten times, which the article claims is not possible (I would hope not.)
  • Three physical therapy clinics in Brooklyn were also busted which involved an organized group of Russian immigrants who bilked Medicare out of $57 million for giving elderly patients nothing more than back rubs.

Good news, but also bad news. The $225 million is less than .4% (best case) of the annual fraud inflicted on Medicare. Rather than hire IRS agents to go after newly criminalized American citizens under Obama Care who freely decide not to purchase health insurance, why not hire a few more resources to after the remaining 99.6% of the Medicare fraud that has not yet been shut down? Conservatively if you can wipe out 10% of the Medicare fraud a year, government estimates would say you would be saving $6 billion to $9 billion a year in savings.

- The lead story in the February 21, 2011 issue of Business Week talked about global food crisis that is beginning to pick up steam around the world. Bad weather and bad government policies could result in global food shortages and food price inflation, especially in poorer nations. That is the bad news.

The good news is that, according to the article, this means good news for American farmers and the American farm industry. Record food prices and riots around the world "have led to the biggest-ever U.S. farm exports, sending Midwest cropland to record values and boosting profits for rural banks and equipment makers...Income for U.S. farmers is expected to jump 20% this year."

It has never been better to be in the U.S. farm industry. Thus, this would be a great time to start cutting back most farm subsidies, the majority of which do not go to family farmers but to large farm corporations. It believe that the Federal government subsidies are in the annual range of over $300 billion a year. If you took just 10% of that immediately, the taxpayer savings would be about $30 billion. If you took that 10% away only from the prospering agricultural corporations (corporate welfare), the family farmer would be largely unaffected.

- Staying on the farm, consider a February 21, 2011 Associated Press article on broccoli. The article reviewed how the Federal government was spending $3.2 million in research grants to help eastern U.S. farmers grow broccoli in a climate that is usually not favorable for broccoli growth. The majority of broccoli is grown on the west coast and then shipped around the country. A South Carolina farmer is quoted in the article: "We're not attempting to put California out of business. We just want a piece of the action."

Think about how stupid this expenditure of taxpayer money is. I would be really ticked off if I was a California broccoli grower. In theory, a part of his Federal taxes are going to subsidize his competitors or would be competitors. If growing broccoli on the east coast is such a good deal, then let east coast farmers subsidize the research work to make it a reality. Let the free market decide who wins and who loses the broccoli wars, the Federal government should not be taking sides and subsidizing one group of Americans with taxes taken from another group of Americans.

Now, we are only talking about a few million dollars. But I would imagine this type of cross purpose spending goes on thousands of times a year. If you could eliminate just a 100 cases of this type of stupidity, you would save about $300 million a year.

- One last example. I checked out official government sources to find out how many civilians work for the Federal government. Table 494 from the 2011 Statistical Abstract of The United States, an official Federal government publication, shows that civilian employment was about 2.7 million civilians employed by the Federal government in 2007 and about 2.8 million employed in 2009, the last year data was available. 

What if we reduced the number of Federal employees back to 2007 levels, a cut of about 100,000 jobs. We know from news reports that employees from at least three different Federal organizations, the Securities and Exchange Commission, The Interior Department, and the Pentagon have been busted over the past year for porn surfing on the Net during work hours. This is just one type of waste that could be eliminated, reducing the need for so many employees.

Now I know Pelosi and some Democrats would holler that this is adding to the nation's unemployment numbers. However, a cut of 100,000 public employees would amount to just about 2% of the annual rate of people losing their jobs in the private sector, hardly a hefty sacrifice by the government relative to the private sector. Given the advanced age of the Federal work force, you could probably attain this cut through attrition anyway.

Thus, if you conservatively estimate that each Federal employee, on average, is worth $100,000 a year in taxpayer costs when you consider wages, benefits, and an allocation of overhead, a cut of 100,000 positions would yield an annual savings of about $10 billion with little degradation in service.

So let's review:
  • In about a half hour, a typical American such as myself, who has never been a politician and who has never worked for the government, identified anywhere from about $100 billion to $140 billion in unnecessary government spending.
  • No animals were killed or harmed  in the development of the budget cut list.
  • No Americans went hungrier, sicker, or poorer as a result of any of the identified cuts.
  • Corporate welfare was cut back, personal welfare or aid to the poor was unaffected.
  • Americans' freedom was unaffected but the freedom of politicians to use taxpayer money to fund their re-election campaigns via earmarks was negatively affected.
See, that was not hard. And imagine what the experts can do, who study the Federal budget in detail, tomorrow and on Wednesday. If you know how to frame a problem, analyze the root causes of that problem, not be selfish in developing answers to the problem, and have a little bit or creativity, any dummy can constructively cut the budget. Well, at least most dummies.

Our book, "Love My Country, Loathe My Government - Fifty First Steps To Restoring Our Freedom And Destroying The American Political Class" is now available at 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, February 18, 2011

Wisconsin, Simple Math, Simpleton Politicians

As most of you probably know by now, there have been some rather large demonstrations going on in Madison, Wisconsin by public employee union members who are upset that the new Republican governor and legislature are about to pass a bill that would eliminate collective bargaining for certain public employee unions and require union members to contribute to their pension and medical benefit costs. The reason for this legislative action is that the state is faced with a looming budget deficit of $3.6 billion and the Republican lawmakers believe that this is only way to effectively close that deficit.

Now, I was struck by the idiocy of a lawmaker who was supporting the protesters on the news by saying that that wealthy in Wisconsin should be taxed more and that the unions should not be required to do any givebacks to save the financial solvency of the state. That got me to doing a little math to see if the math was simple in this case or the politician was simple:
  • To support a previous post in this blog I went and found out how many Americans earn how much money as reported to the IRS. Thus, these are official Federal government numbers, they are not Fox News numbers, Tea Party numbers, Republican numbers. These are 2008 final, official IRS numbers, the last year which this data was available to this detail
  • I also checked out the results of the 2010 Census which showed that Wisconsin was home to 1.82% of the nation's population.
  • For 2008 IRS filings, 321,294 households nationwide earned over as million dollars. If you assume that the number of millionaires are spread throughout the country in the same proportion as the population, then we would expect Wisconsin to have about 5,847 millionaire earners in the state, 1.82% of 321,294.
  • If this lawmaker wanted the "rich' to pick up the state budget shortfall, then each of those 5,847 state residents would have to pay a whopping $615,700 to eliminate the shortfall ($3.6 billion divided by 5,847 people).
  • I would venture a guess that there are even fewer millionaire earners in Wisconsin than the 5,847 estimate above, making the budget reduction burden for Wisconsin millionaire earners even greater. Other, richer  states (New York, California, Texas, New Jersey) probably have more millionaire earners relative to their population than Wisconsin.
  • If you ever did such an insane move you can be sure that shortly afterward there would be no millionaires living in Wisconsin.
  • Since we know that the average American household spends almost 30% of its annual income on income taxes, sales taxes, Social Security taxes, Medicare taxes, property taxes, gasoline taxes, excise taxes, etc., and Wisconsin is already one of the most heavily taxed states, many of these Wisconsin millionaires would not be able to pay their $615,700 share since after taking more than 30% of their earnings via other taxes and paying for food and other basic necessities, they would not have enough left over to cover their $615,700.
Simple math, simpleton politicians. The government debt burden has gotten so high in this country that even if you confiscate all of the earnings from the richer Wisconsin families, you still might not be able to cover the budget shortfall. Does not the political class understand this simple math fact of reality? You can no longer tax the rich to pay off the bad financial management of the simpleton politicians.

Last year we did a similar analysis for the national debt. Fortune magazine annually publishes its list of the richest Americans along with an estimate of their worth. If you added up the richest 400 Americans from their last analysis, you found that their total net worth was about $2.7 TRILLION. Thus, if you confiscated all that these richest Americans owned, (bonds, cash, boats, houses, cars, furs, property), you would not come close to paying down just the deficit that Obama, Reid, and Pelosi rang up over the past four years. You cannot tax the rich enough, even if you take all that they own, to cover the shortfall. Simple math, simpleton politicians.

Want more examples? Last year, my home state of New Jersey was looking at a state government expense stream of about $30 billion and a revenue stream of about $20 billion, leaving a budget shortfall of about $10 billion. What were half of the New Jersey political class worried about? Was it the $10 billion? No, it was the fact that the governor refused to raise the income tax on the highest earners in the state by 2%.

By the outcries from the state employee unions and the state Democrats, you would have thought that this single action was responsible for the $10 billion shortfall. However, if you did the math, you would have found that raising the income tax 2% for that small percentage of earners would have raised far less than $1 billion, still leaving the state more than NINE billion dollars short. Rather than attack the underlying root causes of the problem, the politicians were intent on arguing and politicking over a nit that would not have made any significant difference in the overall crisis. Simple math, simpleton politicians.

That is what is so disconcerting about the Federal government's skyrocketing national debt. It seems most of the political class do not understand simple, logical math and the simple reality that goes along with it. And even the small percentage of politicians that might get the simple math, they are too busy continually running for office to make a stand for sanity. Let's review the looming financial crisis at the Federal level once again for the simpletons in D.C., I will try to speak s...l...o...w...l...y:
  1. We are about to hit a national debt level of $14 TRILLION.
  2. With about 115 million households in the country, that comes out to a debt burden of about $122,000 per household.
  3. In the best of all economic worlds, if Obama has his way, his budgets will add another $7 TRILLION to the national debt in the next ten years, making the household burden in excess of $182,000. This debt will eventually have to be paid off by us and FUTURE generations of Americans, our kids and our grandkids.
  4. Very soon, within the next few years, American taxpayers will pay more on interest on the Federal debt than they do on all other discretionary areas of the Federal budget combined, meaning less money for transportation, education, etc.
  5. By paying so much to cover the national debt, Americans will be less free to spend their earnings on things they want such as charities, better schooling for their kids, their own businesses, and their own lives, resulting in a sustained and deep loss of freedom.
  6. Speaking of freedom, the Chinese now own almost $1 TRILLION worth of our debt, restricting our freedom in the international arena, i.e. do not tick off one of your largest bond holders regardless of what compromises you have to make on human rights.
  7. Smart Americans from across the political spectrum recognize and understand the problem and most have come up with ways to eliminate the problem, with the one exception being the American political class. These partisan and bipartisan Americans include, but are not limited to, the Cato Institute, Obama's own debt reduction comimission, the Concord Coalition, the National Taxpayers Union and the U.S. Public Interest Research Group.

Simple math, simpleton politicians. Simply a travesty. 

Our book, "Love My Country, Loathe My Government - Fifty First Steps To Restoring Our Freedom And Destroying The American Political Class" is now available at 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: