Federal Reserve - Was Woodrow Wilson Right?

Woodrow Wilson has been credited with the following insightful quote: "The government, which was designed for the people, has got into the hands of the bosses and their employees. An invisible empire has been set up above the forms of democracy."

This quote came to mind when reading a recent extensive investigative report from Bloomberg, "Wall Street Aristocracy Got $1.2 TRILLION In Secret Loans." The report looked into the secret relationships that the Federal Reserve Board has been having with the major banks of the world over the past few years. According to the article of the investigation, the Fed did not easily and voluntarily give up the information and the descriptions of their behavior.

I am, by far, not an expert on the workings of the Federal Reserve System, banking systems, high finance, and monetary system. However, I am a somewhat educated person who thinks that some of the findings of the Bloomberg analysis are distressing, scary, and a danger to democracy in America:

• In 2006, the 10 largest U.S.banks and brokerage firms had their best year ever, earning $104 billion in profits.
• Within two years, the Federal Reserve  had lent these same banks $669 billion, in addition to the $160 billion these banks had received from the Treasury Department.
• Thus, in 2008, the U.S. government had endangered  $829 billion worth of the nation's wealth to save these ten large financial services firms, or about $7,200 per U.S. household.
• The extent of this Federal Reserve activity had been kept secret until now.
• In total, the Fed gave out $1.2 TRILLION worth of public money to keep banks afloat and out of bankruptcy.
• Turns out that the Fed took taxpayer money and also gave it to many foreign financial services  firms including Royal Bank Of Scotland ($84.5 billion), Zurich-based UBS ($77.2 billion), and Germany's Hypo Real Estate ($28.7 BILLION).  This last loan calculated out to about $21 million for each of Hypo's 1,366 employees. Banks in Belgium and France also received loans from America's central bank.
• The peak of the lending was $1.2 TRILLION which occurred in December, 2008. This amount was about three times the size of the Federal government that year and more than the cumulative earnings of ALL Federally insured banks for the past ten years.
• This total was 25 times larger than the actions the Fed took after the 9-11 attacks shook the U.S. economy.
• The Fed contends that it had no losses from this outrageous spending and loan spree and actually netted $13 billion in interest and loan fees. This comes out to a return on investment of 1.1% when calculated against the $1.2 TRILLION amount.
• The reason for extremely low returns could be the fact that the Fed made these loans to the biggest banks at less than one third of the current interbank rates at the time of these loans, obviously a great deal for the banks.
• Two weeks after Lehman Brothers folded in September, 2008, Morgan Stanley proclaimed that it had "strong capital and liquidity positions." They forget to mention that same day that the Fed loan's of $107.3 billion was almost all of Morgan Stanley's available cash. Thus, investors could have believed that Morgan Stanley was in good financial shape when in fact it was being kept alive by over $100 billion of Fed credit loans, distorting investors' investment decisions.
• While the Fed insisted on collateral to protect their loans, what started out as accepting only high quality collateral of the banks such as Treasuries, corporate bonds, and mortgage bonds, but as the program wore on, the Fed started to accept junk bonds, those that were rate below investment grade, endangering the taxpayer wealth on the line for these loans.
• Citigroup was the most chronic borrower among the largest U.S. banks, so much so that Richard herring, a finance professor at the University of Pennsylvania is quoted in the article stating that "Citibank basically was sustained by the Fed for a very long time." In other words, the U.S. taxpayer kept Citigroup from going bankrupt, all for about a 1% risky return on the taxpayer investment.

And the Fed and the banks wanted to keep all of these transactions secret. My conclusions about this dangerous use of taxpayer wealth:

• Keeping this all secret in a democracy is the biggest problem, it reinforces Wilson's observation that there is collusion above the current forms of democracy between the highest levels of government and the banking industry.
• By being kept secret, investment decisions of Americans were distorted since the banks were in far worse condition than the public information on their financial condition would show.
• Why the American taxpayer had to lend money to foreign banks is still unexplained. Shouldn't Americans be involved in any decisions like that which involves untold billions of dollars being loaned out at very favorable rates to foreign banks?
• Richard Herring, who is quoted above, stated that some banks may have used the lending program to "maximize profits by borrowing form the cheapest source, because this was supposed to be secret and never revealed." Thus, the professor has raised the obvious issue that American taxpayers may have subsidized the profitability, and payouts to high ranking banking executives, without their knowledge.
• Furthermore, the professor feels that the loans from the Fed "amounts to a free insurance policy for banks guaranteeing the arrival of funds in a disaster." In other words, the Fed's secret loan programs may have rescued bad bankers from their own bad practices which may lead these same bankers to assume that the Fed, using taxpayer wealth, will always rescue them from themselves.
• The IMF supports Herring's conclusions, stating in an IMF report that the banks should be charged a fee for accessing Fed funds to discourage using Fed loans as a source of profitability.
• Despite all of this risk, the latest issue of Business Week magazine indicates that many of these rescued banks are now in the financial doldrums. Bank of America's stock price is down 53% this year. The stock of JP Morgan is down 18%. The stock market index tracking financial stocks is down 21%. The revenues of the top ten investment banks are down 10% this year.
• Thus, the Fed may have risked over a TRILLION dollars on the bankers and the banks they operate, bankers who deserved to fail at their jobs, and despite such high levels of Fed/government support, the same executives continue to struggle to run a successive financial firm.

Wow, I think Woodrow Wilson was right. We have people in the Federal government (the Federal Reserve Board) who get little oversight from Congress, who prefer to keep their dealings secret, are not accountable to the American voter, and who may have been just plain lucky not to have lost up to over a TRILLION of taxpayer wealth.

How bad and out of sync have our government's priorities become to support this "invisible empire"? Consider the frustration of Congressman Walter Jones of North Carolina: "Why in hell does the Federal Reserve seem to be able to find the way to help these entities that are gigantic? They get help when the average businessperson down in eastern North Carolina, and probably across America, they can't even go to a bank they've been banking with for 15 or 20 years and get a loan?"

Great question, Congressman. Democracy and freedom cannot survive when government operations are so secret and risky. It is time for the Obama administration to step up to its transparency vow and work with Congress to make the the operations of the Fed as transparent as possible. It is the only way to defeat the "invisible empire" and break the too cozy relationship between private market bankers and Federal government banking enablers.









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 http://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:
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http://www.cato.org/
http://www.robertringer.com/
http://realpolichick.blogspot.com/
http://www.flipcongress2010.com
http://www.reason.com/
http://www.repealamendment.com/

One Reality Of The Obama Adminstraiton, Two Different Views

I once read there is only one reality but everyone has a different view or perception of that reality. That is what causes two people to look at the same reality and come up with two completely different interpretations of that single reality.

That philosophical view of life seemed appropriate when I read a recent op-ed piece in a major Tampa Bay newspaper. I will not identify the writer of the piece. In the past when I disagreed with the writer's analyses, I tried to contact them through the email address always included in the writer's column. However, the writer never even had the common decency to acknowledge the writer received my communications, never mind engaging in an adult conversation of the writer's article contents. Thus, I will not give the writer the benefit of identification here.

The writer had some definite views on how well the Obama administration was going, views that myself and the majority of Americans do not currently agree with. Same reality, different interpretations. Consider:

- "The President saved the Detroit car industry." - The President did not save the Detroit car industry, his administration meddled in what should have been a straightforward bankruptcy proceeding. American companies, big and small, have successfully gone through bankruptcy proceedings in the past and emerged a healthier entity.

General Motors and Chrysler would have done the same since they each had assets worth value. They may have survived in a different form, they may have survived with different owners but they would have survived as a result of a regular bankruptcy proceeding. And they would have survived without costing the American taxpayer tens of billions of dollars.

- "The President secured health reforms that will bring health insurance to nearly everyone." - We have thoroughly reviewed how pathetically bad Obama Care is in this blog. The reasons are too numerous to review here so let's only address the writer's assertion that nearly everyone will get health insurance as a result of President Obama's efforts.

The writer seems to ignore the reports, analyses, and experts that have shown American companies are already terminating their own health care insurance programs for their employees as a result of Obama Care. The writer seems to ignore the Forbes article from last year that interviewed the chairman of AT&T. The chairman declared there was an excellent chance AT&T could stop offering health care insurance to its employees and retirees since Obama Care made it a better financial business deal NOT to offer health care insurance programs. Verizon, John Deere and Caterpillar executives have come to the same conclusions as have other American companies.

Thus, rather than getting health care insurance for nearly everyone, Obama Care is likely to lead to millions of Americans losing their current health care insurance coverage.

- "The President used a stimulus package to stop the hemorrhaging of American jobs and avoid a Depression." The writer seems to have several problems with reality here. First, it is asserted later in the article that the economic stimulus program cost $787 billion. This illustrates how loose and fast the writer plays with facts. The Congressional Budget Office has recently concluded that the American taxpayer actually paid out $830 billion on the stimulus program. Thus, the writer's  credibility takes a hit here, the writer did not even take the time to research the official government numbers before publication.

The second issue with reality is the writer conveniently passes over the fact that the President said that the unemployment rate could go as high as 8% if the economic stimulus package was not passed. It was passed and unemployment still soared well past 8%, hovering around 9% for lord knows how long.

The third issue I have with the writer is simple math. If you take the amount of money wasted by economic stimulus program, $830 billion, and divide it by the number of jobs the administration claims it created or saved, you find that the cost per job created or saved is well over $200,000 per job. You cannot claim you had a successful economic stimulus program if it costs you this outrageous amount of dollars per job.

- "The President put constraints on a reckless Wall Street." The bill the writer refers to is basically an empty shell of legislation, as pointed out by countless experts and pundits in the field. This bill punted/dodged the real work of reforming Wall Street, defaulting to nameless government  bureaucrats who have yet to write the reforms, guidelines, and regulation. Giving the President credit for reforms is a false conclusion. The reforms have yet to come into reality and existence.

- "The President got Congress to repeal the discriminatory "don't ask, don't tell" law." The writer ignores the reality that Obama showed absolutely no interest in this area for over a year and was moved to action only after a REPUBLICAN organization, the Log Cabin Republicans, successfully took "don't ask, don't tell" to court. Their actions and initiatives were the prime drivers to repeal, Obama was a late interloper into the legal action by the REPUBLICAN organization. The courts and the successful Log Cabin legal case would have led to the repeal in time with no help from Obama.

- "Obama has also kept Americans safe from another terrorist attack." This is just a blatantly wrong statement. I doubt that the Americans killed by the Ft. Hood shooter and their families would agree that the President has kept America safe from another terrorist attack. The Ft Hood shootings were a terror attack, plain and simple.

Also, being lucky does not constitute keeping Americans safe. America was only two defective fuses away from two other deadly terror attacks. If the Underwear Bomber's underwear fuse does not malfunction, we have dead Americans and debris reigning down on Detroit on a Christmas day. If a defective fuse actually ignites, we have an unknown number of dead Americans in Times Square. You should not get credit for being lucky.

"Then there was the other present that George W. Bush left behind for the new President: a whopping budget deficit." No disagreement here, the CBO is quoted by the writer as the source, something the writer did not take the time to research when discussing the cost of the failed economic stimulus program.

However, what the op-ed piece neglects to mention is two other facts. First, the Congressional architects of that budget deficit came about when both houses of Congress were controlled by Democrats. Nancy Pelosi in the House of Representatives and Harry Reid in the Senate were in control of those two chambers of Congress in the last two years of the Bush administration. They need to share equally in the blame with Bush for the high 2009 budget deficit that Obama inherited.

This blame has to fall hard especially on Pelosi since it is in the House where the Federal government's budgets are originated, according to the Constitution. Since the Democrats controlled both houses of Congress, if they had serious objections to these budget deficit numbers, they should have taken action to reduce them. They did not and Bush accepted the final budget. Thus, all three are to blame, Bush, Pelosi, and Reid.

In fact, if the writer had delved a little more into the historical budget deficit numbers, the writer would have seen that Bush administration budget deficit numbers were declining up to the point that the Democrats took over control of Congress in 2007. At that point, deficits started to rise again. Thus, the accusation of Bush being the sole bad guy in the government's budget deficit disgrace is a little thin, given the Democrats' behavior in Congress from 2007 until today.

Furthermore, the writer again omits data in order to support her version of reality. Not only was Bush administration deficits declining until the Democrats took control of Congress, a CBO report last week estimates that the Obama administration will add the same amount to the Federal government's national debt in four years that took eight years for the Bush administration to attain.

Yes, the budget deficit was over $1 TRILLION in the first year of the Obama administration. That was hand Obama was dealt, for better or worse. However, a great leader does not constantly gripe about how bad things are and blame someone else like President Obama has done for the first three years of his term. A great leader deals with the hand and reality he was dealt and uses that position as a starting point to move forward to resolving problems. That looking forward has not happened under Obama.

The writer ignores the other failures or at least the other non-resolutions of this Presidency:

• Americans, such as myself, who have had legitimate, nonviolent, well thought out contrary opinions against some of the President's policies have been unmercifully denigrated by members of his party. We have been called un-American by Democrat Nancy Pelosi, racists by Democrat Charles Rangel, members of the Klan by Democrat Shelia Jordan, knuckle dragging Neanderthals by Democrat Alan Grayson, and terrorists by Democrat Mike Dolye (and possibly also by Joe Biden). In each case, with the exception of the Doyle comment, the President has stood mum as ordinary Americans were attacked for having an opinion. Hardly a way to unite a divided country.
• The President himself is guilty of verbally attacking ordinary Americans. While campaigning last fall and speaking to a largely Latino audience, he explained how their "enemies,"  i.e. Americans who disagreed with the President's policies, needed to be defeated. Calling American citizens "enemies" is also no way to unite a country. The President is supposed to represent ALL citizens of the country.
• The President promised during his campaign to close the prison Guantanamo Bay. He has failed to do that.
• The President promised a during his campaign to quickly get our troops out of Iraq. It was assumed that it would not be on the Bush timetable, three years into his Presidency. And now he is considering extending the amount of time and troops we have stationed in the country, very Bush-like.
• The President involved us in an illegal war against Libyan assets. I am sure that if Bush did the same action, without Congressional approval, this writer would have been beside themselves. Given that Democrat Obama got us into this illegal military action, the writer is silent.
• Three years into this Presidency, Iran and North Korea are three years closer to being nuclear armed powers.
• Three years into this Presidency and we are no closer to resolving the Israel/Palestinian issue.
• A recent (mid-August, 2011)  Zogby opinion poll of citizens in six Arab countries show that the United States and President Obama have never been held in such low regard. In fact, the poll found that President Obama is less popular in the Middle east than Iran's tyrant, President Mahmoud Ahmadinejad, truly an insult.
• Three years into this Presidency and our schools are still failing, our war on drugs is still being lost, we still have do not have a national energy strategy and policy, we still do not have a comprehensive and compassionate immigration policy, our borders still leak, our social net programs (e.g. Social Security, Medicare, Medicaid) still are rife with fraud and mismanagement, wasting hundreds of billions of dollars a year, and our health care costs are still rising dramatically.

Could McCain have done a better job? Probably not. But in my reality, or my perception of reality, President Obama has performed no better than Jimmy Carter who I consider one of the worst Presidencies of all time. We are so divided as a nation with politicians calling American citizens such derogatory names. Our economy is in ruins, in much worse shape than when the President came into office, from a jobs, growth, debt, and hope perspective, despite having a Democratic party friendly Congress in charge. The President has done no better or worse than any other President when it comes to the Middle East and his other foreign policies have been lack luster at best. No major issue that is facing the majority of Americans is on a path for improvement.

What is the reality? The op-ed writer who picks only certain issues to paint a rosy picture of this Presidency, using only selected data to make the point? Or my view of reality that looks at all aspects and issues of this Presidency, using as many facts and as much data that is available? You decide and contact me via the comment section below of what your reality is.

I promise I will at least have the common decency to engage you an adult conversation about what is the true reality of America today unlike the writer discussed above.



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 http://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:


http://www.loathemygovernment.com/
http://www.cato.org/
http://www.robertringer.com/
http://realpolichick.blogspot.com/
http://www.flipcongress2010.com
http://www.reason.com/
http://www.repealamendment.com/

Goat Herders, Food Stamp Water Scam, And Illegal Guitar Frets

Within the last year the political class in Washington spent time and resources passing legislation that gave the Federal Communications Commission (FCC) authority to regulate the sound of television commercials. They seemed to ignore the fact that modern technology gives the American consumer several options in avoiding television commercials and their sound without Federal government intervention:

• They can use the Mute button on their remote control to kill the commercials' sound volume.
• They can use the Sound Volume button on their remote control to deaden the commercials' sound volume.
• They can use the Channel button on their remote control to surf to other channels while the commercials are showing.
• They can use their DVR capability to record their favorite shows for later viewing, at which time they can use the Fast Forward button on their remote control to quickly bypass the commercials.

They can also do the old fashioned approach to avoiding television commercials: get up and go to the kitchen or bathroom to take care of business. All of these options show how inane, useless, and stupid this Federal government action was. It used up valuable Congressional time and resources and eventually will waste FCC time, resources, and creditability. While the political class was wasting time passing this unnecessary regulation legislation, the issues of failing public schools, leaky orders, illegal immigrants, the lack of a national energy policy, foreign wars, and other major issues went unsolved.

As bad and as embarrassing as this effort was, these extreme wastes of time and excessive regulations continue to emanate from Washington:

- Keeping in mind that there are 14 million unemployed Americans, consider the fact that on August 4th the Federal government's Labor Department recently used government resources to update and revise its rules on sheep and goatherders to make sure that foreign workers do not deprive Americans of these herder jobs. Imagine how much higher unemployment would be if the U.S. government allowed foreigners to take over goatherder jobs that normally would have gone to Americans!

Seriously, are you kidding me? The political class needs to be involved in goatherding activities? Consider the details that went into these unneeded regulations:

• Any American rancher that wants to hire a non-American sheepherder or goatherder has to submit a formal application to Federal and state bureaucrats no more than 75 calendar days and no less than 60 calendar days before the date of hiring.
• The application must attest that there are no qualified and able U.S. citizens available to fill the available sheepherder or goatherder job.
• The application must also swear that hiring a foreign herder will not negatively affect "the wages and working conditions of similarly employed U.S. workers."
• If a state bureaucrat finds an American shepherd available for the vacant job, the rancher must attempt to place the qualified American shepherd.
• The Federal government has developed an 87 word definition of what constitutes a shepherd job in order to know when these regulations should be enforced.
• A foreign shepherd's employment should not exceed one year although an extension for further employment can be submitted for review to the Department of Homeland Security.
• The hiring rancher must provide a cell phone to each shepherd that is hired.
• The hiring rancher must provide three meals a day for their shepherds.

You cannot make this stuff up. Two major Federal departments are involved, Labor and Homeland Security, involving lord knows how many Federal employees and resources for what has to be an extremely small part of our economy. What a waste of taxpayer money. Also, I would much rather have Homeland Security personnel dealing with real terrorist activities than dealing with sheepherder contract hiring extensions.

- While shepherding is a small, and unnecessary, government activity, food stamps are  not. The food stamp program in America involves tens of billions of dollars every year and millions of American households. In these times of dire economic conditions and high unemployment, there is definitely a need in our society to help feed the less fortunate. However, that does not mean this program should not be seriously reviewed and downsized by identifying and prosecuting those that defraud the program.

What is a major cause of fraud and waste in this government program? Apparently it is water. This is how the scam works:

• A person somehow qualifies for food stamps issued by the Federal government.
• The fraudster then takes their food stamps to a supermarket and buys a load of bottled water.
• Outside of the store, the food stamp recipient empties the water out of all of the water bottles.
• The fraudster takes the now empty water bottles back into the store, turns them in, and receives cash back for recycling the empty bottles.

The Bangor (Maine) Daily News reported on such a specific scam on August 19, 2011 (similar news stories recently ran in many other reputable publications). They identified an instance where a pair of men purchased $86.79 worth of bottled water using food stamps from Shaw's supermarket in Bangor. The men took the 20 cases, with each case containing 24 bottles of water, went behind the store, and dumped the contents of each of the 480 bottles on the ground. The reporter then witnessed the pair reenter the supermarket with their 480 now empty bottles and claim their bottle deposit redemption cash at the customer service counter. 

The reporter interviewed store employees who contend that this practice is pretty common. The taxpayer gets screwed while criminals translate food stamps for the needy into hard cash for the not needy. And it is a crime to do this kind of scam since the U.S. Congress, acting in 2008, passed legislation that makes it a crime to use Federal food stamps to obtain cash by intentionally discarding products for the redemption cash value. Seems like Congress, for once, nailed the real problem with a real solution.

However, almost two years after the law was passed, it appears that the Department Of Agriculture has yet to get around to setting the penalties and writing the regulations for prosecuting those wasting taxpayer money via the Federal food stamp program. Or according to a government spokesperson, the U.S. Department of Agriculture "is currently developing rulemaking that codifies this statuary provision and provides the program disqualifications periods for these infractions." Translation: we have not gotten around to figuring out how to stop this fraud and waste of taxpayer wealth. When pressed for a timetable, the article reports that the spokesperson was unable to even estimate when the fraud would be addressed, despite approaching the two year anniversary of making this action illegal.

While the Federal bureaucracy cannot implement a simple solution to this fraud, the article reports that state food stamp programs have easily  solved the problem of wasting state government food support funds. In Maine, they made the simple change that state food stamps could not be used for bottle deposit products. Those products must be paid for with a person's own cash. Problem solved without "codifying this statuary provisions." 

If Maine could make such a simple and effective change, why can't the Federal government make the same simple change? Instead, we end up waiting years for a bureaucratic solutions while untold billions of dollars are wasted.

- Ticked off yet by all of this government waste and stupidity? Let's try one more. According to the Wall Street Journal, reporting on August 26, 2011, Federal agents recently raided the facilities of Gibson Guitar in two cities, looking for illegal wood that might be used in the production of Gibson guitars. Gibson's CEO, Henry Juszkiewicz, issued a statement that his company only uses wood from a Forest Stewardship Council supplier and felt that the Federal government was overreaching.

Apparently, the raid was conducted by agents of the Fish and Wildlife Service (who would have thought that these government employees could do "raids"?) who were trying to ensure that Gibson were not using endangered or illegal wood products in their manufacturing processes. It is an attempt to prevent illegally harvested hardwoods from protected forests.

The article also reports on another raid. This raid was conducted at the facilities of A-440 Pianos which had imported several antique pianos called Bosendorfers. While there was no doubt the pianos were not in violation of any illegal harvesting laws, the owner of A-440 did not get his import paperwork exactly right and as a result, two dozen Federal agents raided his business. Two dozen agents for a handful of antique pianos.

So many major issues facing the country and Americans and so many ways for the political class to screw up priorities, not address waste, and put too many resources on very minor problems and not enough resources on very big issues. Would it not be a better use of taxpayer money to take most of those two dozen piano raiders and put them on the billions of dollars wasted in the Federal food stamp program? Couldn't Congressional resources be better used to fix our schools than fretting about loud television commercials? Especially since there are so many ways for Americans to avoid this television sound nuisance, not a crisis , not a problem, just a nuisance? How about working towards getting 14 million Americans to work rather than worrying about sheepherders and goatherders?

Several steps from "Love my Country, Loathe My Government" are needed to address these major screw ups by the political class:

• Step 1 would reduce Federal government spending by 10% a year for five years. If you starve Federal functions of budget dollars, hopefully the extraneous, non-important government functions would whither up and die.
• Step 34 would remove politicians from their Congressional committee posts for poor or non-performance of their committee responsbilities. For example, anyone sitting on Congressional agriculture committees would be candidates for removal since two years after it became illegal to dump water and turn food stamps into cash, that law has yet to be implemented and it is unknown when it will be implemented. Definitely dereliction of duty if it takes over two years to implement a solution.
• Step 39 would restrict all Federal politicians to one term in office. These types of wastes and bad priorities have been gong on for decades. It is time to get rid of the long term politicians that have allowed these types of waste and bad priorities to go on. Term limits would ensure that these people who cannot solve any problem are not long term members of the Federal government.

I find it unbelievable that I can even write about Federal goatherding regulations, wasteful water use to defraud the American taxpayer, and massive manpower dedicated to wooden guitar frets and antique pianos. But that is the reality of what our government is today. I would prefer to write about how our politicians have fixed our failing public schools, about how they have sealed our leaky borders and have developed a fair and compassionate immigration plan, how they have fixed our losing war on drugs, how they have launched a comprehensive and effective national energy program, or how they have eliminated the billions of dollars of fraud in Social Security, Medicare, Medicaid, and the IRS. However, those posts will have to wait for a future date.


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 http://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:


http://www.loathemygovernment.com/
http://www.cato.org/
http://www.robertringer.com/
http://realpolichick.blogspot.com/
http://www.flipcongress2010.com
http://www.reason.com/
http://www.repealamendment.com/

They Somehow Did It Again - Another Week, Another Two Obama Care Calamities

Just when you thought there was no way there could be more bad news about Obama Care, another way, or in this post two ways, pop up to prove you wrong. This marks the fourth time out of the past five weeks where we have found it important enough to review the latest research, findings, analyses, conclusions, and bad news about Obama Care, the 2,000 page plus atrocious piece of legislation that was supposed to cure the nation of it skyrocketing health care cost burden.

Two sets of bad news this week. Let's start with a pair of business surveys, as reported by the Associated Press (AP) on August 24, 2011, regarding health care that were recently completed by Towers Watson and benefits consultant, Mercer:

• About one out of every ten midsized and large employers in the country expect to stop offering health care coverage to their employees once the Obama Care insurances exchanges begin operating in 2014.
• Additionally, another one in five companies are unsure about what they will do after the 2014 onset of the insurance exchanges.
• These companies would drop their insurance plans since it would be less expensive to stop offering health insurance to their employees and pay the Obama Care fines then to continue paying for health care insurance under the new tax rules of Obama Care.
• The AP article quotes Paul Fronstin of the Employee Benefit Research Institute: "If one employer does it (drop their employee health care insurance), other are likely to follow. You would see this playing out over the course of years, not months." In other words, if a company's major competitor drops their health care insurance program, than that company is likely to do the same to stay competitive.
• The article discusses the views of Michael Turpin, a national practice leader at broker and consultant USI Insurance services. He claims that one of his clients, a major entertainment industry company, plan to drop their insurance coverage the instance any of their competitors do the same in order to not be at a financial disadvantage, "In those industries...if somebody makes the first move, the others are going to follow like dominoes."
• The industries most likely to drop health care coverage for their employees are those companies in the retail and hospitality area, i.e. the companies mostly likely to employ lower wage, poorer employees.

Another recent survey, conducted by the National Business Group On Health, of 83 companies from the Fortune 500 list found the following results:

• These companies expect their health care insurance costs to rise 7.2% in 2012. The majority of those costs will be passed on to these companies' employees. Thus, Obama Care's early impacts are not reducing the health care cost burden on both companies and individuals as hoped for.
• 27% of the companies surveyed expect to change their insurance limits on preventive services and wellness service components in 2012 as a result of Obama Care. Although not explicitly stated, it can probably be safely assumed that these limit changes for these health services will make the companies' insurance plans less robust and useful to employees.
• 14% of the companies surveyed expect to change their insurance limits on mental health coverage and substance abuse in 2012 as a result of Obama Care. Although not explicitly stated, it can probably be safely assumed that these limit changes for these health services will also make the companies' insurance plans less robust and useful to employees.

More bad news and it keeps on coming. Nowhere have we seen a company, analysis, survey, or industry expert come out and state that Obama care will fulfill its stated objectives:

• Rather than reducing the number of Americans without health care insurance, it is highly likely to result in companies dropping their current health care insurance plans, resulting in millions of more Americans not having health care insurance.
• Rather than reducing costs, there is every indication that Obama Care will increase the cost, or at the very least not impact the rise in health care costs.
• Rather than solving the problem of high health care costs in this country, this legislation has introdced such uncertainty into the market and world that employers are cutting back on hiring and expansion, not knowing what the true impact on their businesses will be.

The Obama administration and the political class has done an absolute abysmal job of explaining what Obama Care's implications are likely to be. As a result, companies and businesses are like a deer in the headlights, trying to figure out how to survive in the uncertainty.

And that uncertainty is likely to increase going forward as this dangerous piece of legislation becomes a major issue in the 2012 Presidential campaign and as it gets closer and closer to review by the Supreme Court. Uncertainty results in conservative business thinking, expansion, and optimism. Is there any surprise that this rise in uncertainty as a result of Obama Care has a very high correlation with the lack of private market job growth over the past year or so? Deer in the headlights do not make for good job creators.

Can it get any worse? Guess we'll find out next week.



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 http://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:


http://www.loathemygovernment.com/
http://www.cato.org/
http://www.robertringer.com/
http://realpolichick.blogspot.com/
http://www.flipcongress2010.com
http://www.reason.com/
http://www.repealamendment.com/

The Rise Of Oppression and The Decline Of Freedom In America

As a long time observer of the political class, I have become increasingly distressed by the rise of oppression in this country that has resulted in the dramatic decline in our freedoms and liberties. Many Americans assume that just because they vote every few years, they are still living in a free country. They forget, or never knew, that people living behind the Iron Curtain and in Russia during the Cold War also voted.

No one could ever make the case that these people were living in a free country. This fact was recognized long ago by Communist revolutionary Karl Marx: "The oppressed are allowed every few years to decide which particular representatives of the oppressing class are to represent them and repress them."

Unfortunately, most Americans are too busy going about their lives, managing their careers and families, to keep track of the many ways our political class goes about sacrificing our liberties for their own careers. Our politicians are willing to take whatever shortcuts are needed to get into elected office and to stay in office even if it goes against the principles of freedom established by the Constitution and Bill Of Rights.

Consider the variety of ways where the political class has turned up the dial on oppression and repression over just the past few years:

Congressional District Gerrymandering - Every ten years, based on Census population estimates, the House Of Representatives rearranges itself into new Congressional districts. Unfortunately, we allow the political class to rearrange and redraw those districts according to their needs and advantage, not to the advantage of the voters and citizens.

After the 2000 Census, I distinctly remember reading an article in the Newark Star Ledger that described the New Jersey process for drawing new Congressional districts (to my disappointment, I could not locate that article). The conclusion of the article was that the New Jersey Republican Party and New Jersey Democratic Party had jointly agreed on how to draw the districts that would almost guarantee that just under half of the new New Jersey Congressional districts would always have a Republican Congressperson and just over half of the new New Jersey districts would always have a Democratic Congressperson.

Nowhere in the article did it discuss whether either party cared about how to ensure that every citizen in New Jersey would be fairly represented, probably because they didn't care. As a result of their work, Democrats in Republican-designated districts would probably never have a Democrat representing them in Congress. Republicans living in Democratic-designated districts would probably never have a Republican representing them in Congress.

Thus, even though these New Jersey citizens could vote in their newly formed Congressional elections, many of them had no real choice since the New Jersey political class had already rigged each Congressional district boundaries. Doubt my conclusions? Check out the last set of New Jersey Congressional districts. Their boundaries follow no logical or pre-existing geographic or other existing boundaries political boundaries (county or city lines). As Marx knew, even though you vote, it does not make you free.

Organizational Campaign Financing - Even though the politicians need your vote to get into office, they are really not indebted to you. You give them only one vote, corporations, unions, PACs, etc. give each politician millions of dollars in campaign donations to further the aims of their particular organization, not the needs and freedom of individual Americans.

Who do you think President Obama cares more about? The one vote you may have given him in 2008 or Microsoft who gave his campaign $833,617 or Goldman Sachs which gave him $994,795? Given that the politicians in Congress give out about 10,000 earmarks a year worth billions of dollars to these same organizations, what do you think they care about more - their ability to pay for their re-election or your vote? Once the politicians do not care about you, they also do not care about your liberties.

Presidential Primary Schedule - Historically, Iowa and New Hampshire are allowed to have the first say on who might be the Presidential candidates for the two major parties. Many candidates, both unworthy and worthy, have seen their chances of becoming President be enhanced or destroyed by their performance in Iowa and New Hampshire.

However, with no disrespect to the good people of Iowa or New Hampshire, they constitute a very small percentage of the voters in this country and are certainly not representative of America. Given these problems, why then do we have this current system if it does not provide everyone in America with an equal voice in deciding who will be the Presidential candidates?

It allows the political bosses in each party to control the primary election process. By spreading out primaries and caucuses out over months, they can control access to money, voters, and primary elections. If the those in control of the primary process really cared about equality and freedom of choice, we would move to a single Super primary voting day where everyone, in every state voted in a state Presidential caucus or primary election at the same time and each of their votes carried the same weight.

In the past paragraph I usually used the word "control" three times. Control always results in less freedom in whatever context it is used.

Disdain For American Citizens, Part 1, Obama Care - Many citizens did not agree with the legislation that eventually became Obama Care. They felt it was the wrong approach, would increase the national debt, would not solve the health care problems in this country, and would give the government and political class much more control over our lives at the expense of our freedom. The most glaring example is the requirement that every America must purchase a government mandated product, health care insurance, whether or not they wanted it or could afford it.

However, one of the most despicable aspect of Obama Care from a freedom perspective was the venomous words and attitudes that our so called elected leaders came after ordinary Americans citizens for simply having a difference of opinion than those politicians. Consider the following accusations that Democratic Party politicians made against ordinary Americans:

• Speaker Of the House - those Americans opposed to Obama Care or un-American.
• Congressman Charles Rangel - those Americans opposed to Obama Care are just like the racists that opposed the Civil Rights movement in the 1960s.
• Congresswoman Shelia Jordan Lee - those Americans opposed to Obama Care are no better than Ku Klux Klan members.
• Congressman Alan Grayson - those Americans opposed to Obama Care are knuckle dragging Neanderthals and racists.

When the political class has no respect for the opinions of regular Americans, disrespecting and attacking their right to have a personal and independent opinion, then we are in deep trouble. We are in danger of having an elitist political class starting to dictate policy and behavior rather than serving those that they were elected to serve, not rule over.

Disdain For American Citizens, Part 2, Political Opponents - As the Obama administration has stumbled along the past few years, not solving any major or minor issue facing the American people, the President has seen his popularity plummet. Every facet of the economy has continued to crater, the national debt has skyrocketed, endangering the financial stability of the country and future generations to come, and America's standing in the world continues to slide.

This dissatisfaction has resulted in the rise of the Tea Party politics. The Tea Party movement has supported successful candidates for Congress and has helped forward the need for more prudent government spending and performance. They have operated within all confines of the laws and political processes. regardless of what you think of their political agenda. As Americans they have the right to petition their government for changes, they have the right to support certain political candidates that support their non-violent agenda, they have the right to be involved in the politics of the nation that affect their lives.

However, their success has resulted in some unbelievable resentment of their actions from the political class. Certain members of the political establishment, the establishment that has been the cause of the country's myriad of problems, vehemently and disgustingly despise the work and freedom of speech of these fellow Americans:

• President Obama, in a speech supporting Democrats running for office last fall, declared that "our enemies need to be defeated." Unfortunately, his "enemies" were nothing more than American citizens with a difference opinion from the President. A President is supposed to represent all Americans, not divide the country into friends and "enemies," regardless of their opinions.
• This week, California Congresswoman Maxine Walters, speaking at a job opportunity even, stated: "As far as I am concerned, the Tea Party can go straight to hell." Rather than engage in adult, mature discussion and negotiation, Ms. Walters would rather than just sling the slurs of hate, wanting to see fellow Americans, who are simply expressing their freedom of opinion, to just go to hell. Also, since the Tea Party helped elect 78 people to the House Of Representatives, Ms. Walters not only wants a large segment of ordinary Americans to go to hell, but also 18% of her peers in the House Of Representatives to go to hell also. Despicable behavior and attitude. No wonder Congress gets nothing done with this type of venom and trash mouth being tossed around.
• Not to be outdone by the Congresswoman, Massachusetts Senator John Kerry, speaking on a recent  MSNBC morning news show, stated that the mainstream media has the "responsibility" to not give equal time to Tea Party actions and views/viewpoints. As a lover of freedom, this type of behavior is just beyond belief. When did having a difference of opinion become a reason to suppress ideas? When the government and the political class that operate it actively look to kill off ideas in a democracy, it will not only kill ideas it will also kill the democracy.
• And worst of all, in the midst of the debt ceiling negotiations, Congressman Mike Doyle of Pennsylvania declared that Tea Party people were "terrorists." Speak about contempt for Americans having an opinion and point of view. How despicable is associating mass murders of civilians and terror mongers with Americans' freedom of speech? [Side note: although he has denied it, independent sources have stated that Vice President Joe Biden made the same terrorist accusation as Doyle.]

Despicable is too mild a word to use in describing these politicians' disdain for anything that would break the monopoly of power the established political class holds over this country.

Patriot Act - first enacted during the Bush administration as a knee jerk reaction to the 9-11 attacks, this ominous law was renewed by the Obama administration. It involves secret courts with secret judges issuing secret warrants to snoop into just about any aspect of an American's life. Wire taps, both stationary and roving, library activity tracking, etc., the government and the political class that operates it can pry into just about any aspect of your life without you ever knowing it. When privacy can be violated so easily, you are not living in a free country anymore.

Financial Freedom - yesterday we introduced the concept that you cannot have political freedom without also having financial freedom. If you spend more than half of your working life supporting the apparatus of government, sending your hard earned wealth all government levels to support their onerous taxation levels and regulations, you are not free.

The less wealth you retain, the less wealth you have for just about any facet of your life. You have less freedom to send your kids to better schools, you have less freedom to support your favorite charities, you have less freedom on where you live, what your drive, where you work, and less freedom to live your life the way you want to since your economic freedom, keeping what you own, has been severely restricted by our political class.

The saddest part is that in exchange of losing our freedom via onerous taxes is that we get very little in return from government and the political class. They still provide failing public schools, crumbling infrastructure, wasteful spending, inefficient operations, etc. The worst of all possible worlds: high cost via high taxation and low quality on government's services.

Let's review: we lose freedom every time the political class controls and alters our political processes to ensure their political careers rather than allowing voters to have freedom of choice, we are liable to lose our privacy without cause via the Patriot Act, we lose our personal wealth supporting an overbearing government taxation and regulatory structure that provide no solutions, and we are insulted with disdain and condescension for daring to challenge the existing direction of the country and those politicians that run it.

If politicians do not respect your opinions, they certainly are not going to respect your freedoms and liberties. They will look for every possible way to oppress and suppress that freedom and your opinions in order to protect their careers. Harry Truman, one of the last politicians who put America and its citizens first, before personal needs and careers, recognized the danger of the altitudes illustrated above by President Obama, Senator Kerry, Congresswoman Walters and others:



"Once a government is committed to the principle of silencing the voice of the opposition, it has only one way to go, and that is down the path of increasingly repressive measures, until it becomes a source of terror to all its citizens and creates a country where everyone lives in fear." Telling Americans to go to hell and calling them terrorists is a long way down that path of "increasingly repressive measures."

Today's political class would make George Orwell's Big Brother proud.  In order to stay out of an Orwellian world, numerous steps from "Love My Country, Loath My Government" need to be implemented to reverse this rush towards oppression and repression. From fixing our political processes to getting outrageous government spending under control to reviewing and possibly repealing the Patriot Act, these steps need to start as soon as possible. Otherwise, the decline towards Big Brother's world will be unstoppable.




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 http://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:
http://www.loathemygovernment.com/
http://www.cato.org/
http://www.robertringer.com/
http://realpolichick.blogspot.com/
http://www.flipcongress2010.com/
http://www.reason.com/
http://www.repealamendment.com/

Our Overwhelming Tax Burden - You Cannot Have Political Freedom Without Financial Freedom

I always shake my head when I hear an American comment that we are not taxed enough as citizens. Whether it is Warren Buffet stating that American billionaires are not taxed enough, even though he gladly accepts his under taxation every year, or a friend or relative who thinks that we should give the government even more of our wealth. They incorrectly believe that government can create jobs and that government is some kind of efficient, effective machine, something that readers of this blog and observers of government incompetence know is false.

Long ago I read a phrase that has stuck with me over the years: You cannot have political freedom without financial freedom. If you are so overburdened with government taxes, regulations, and fees that your choices of how to spend your wealth, where to send your kids to school, how much to give to charities, what kind of car or house you should buy, what kind of profession you should go into, etc. is dictated by how little of your wealth you have left after paying off the government, you are not living in a free country.

Under this definition of freedom, the linkage of taxation and freedom of choice, two recent research reports show how little freedom we still enjoy in this country. The first report is a 48 page, in-depth report from the organization, Americans for Tax Reform. They calculate the "Cost Of Government Day (COGD)," which is an estimate of how far into the year a typical American has to work to pay off their Federal tax burden, their state and local tax burden, the cost of Federal regulations, and the cost of state and local regulations.

Their latest estimates of COGD include the following highlights:

• In 2011, the report estimates that the average American works until August 12th before he or she has paid off all of the expense involved with government taxes and regulations.
• Since the Obama administration has taken over, the COGD has increase 29 days and 2011 marks the third year in a row that the COGD day has fallen in August. Prior to the Obama administration, the COGD day had never occurred as late as August.
• In 2011, the average American worked 103 days of the year just to pay off the Federal government's spending.
• Connecticut residents had the worse government expense burden in the country, working into September to get to their state COGD day. The other bad states included New Jersey, New York, Maryland, Wisconsin,Washington, Minnesota, California, Illinois, and Pennsylvania.
• Mississippi had the best COGD day, finishing up paying for their government obligations on July 19. Other states with shorter COGD days included Tennessee, South Carolina, New Mexico, South Dakota, West Virginia, Alabama, Arizona, Kentucky, and Nevada.
• Historically, the COGD for Federal taxes declined steadily during the Clinton Presidency and rose early in the Bush Presidency before leveling off at around 84 days a year. The Federal taxes COGD began escalating again in 2007, when Democrats took control of both houses of Congress, and really jumped up once Obama was in the White House in 2009, to its current level of 103 days. This is more than ten percent longer than the last year of the Bush Presidency.
• The report contains some detailed Congressional Budget Office (CBO) data that shows during the Bush Presidency, the ratio of Federal government spending to the nation's GDP ratio stayed quite constant year over year, about 20%, but accelerated during the Obama administration to the 25% level in the past three years.
• The CBO also estimated the relationship of the Federal government's budget deficit to the nation's GDP, a number that was usually in the 2-3% range. It declined in the latter years of the Bush administration but jumped dramatically to the 9-10% negative range in the first three years of the Obama administration.
• The report also includes Federal government personnel data from the U.S. Office of Personnel. This data shows that the number of Federal employees jumped by over 53,000 people just from 2010 to 2011, despite the fact the private sector job creation was virtually nonexistent and the economy's unemployment rate continued at extremely high levels. This translates to 14 million Americans unable to find a job. This one year hiring spree likely added billions of dollars  to the Federal government's annual expense stream.
• Some of the Federal government's organizations had almost obscene hiring increases. The Department of Education increased its workforce by 8.5%, despite overseeing a public school process that severely under educates our kids, the Air Force increased its size by 6.6%, the State Department increased its personnel size by 5.4%, and the Health and Human Services Department increase its size by 5.0%. These numbers far outstrip the economic conditions and hiring going on in the rest of the country.
• The Federal Register is the know all and be all of Federal regulations since it contains every Federal regulation that is in effect. The size (number of pages) of the Federal Register in 2010 was the third largest ever, eclipsed only by the size of the Register in the last year of the Carter administration and the last year of the Clinton administration, both Democrats. The distressing aspect of 2010 is that the Obama administration has attained the third highest size of government regulations in just its second year, how large will it be by the end of the current administration?
• Historically, it usually took about 61 days for an average American to pay off the cost of Federal regulations. However, the COGD estimates that measure has increased to 77 days in just the first two years of the Obama administration.

Pretty depressing numbers. If true, these numbers show that we spend over half the year just to carry the burden of taxation and regulations that seem to increase every year. Remember, every dollar of wealth that is sent to all of our government levels is a dollar you cannot spend on your kids, your education and their education, charities you support, homes you live in, cars you drive, etc., a severe restriction on your freedom and life.

But are these numbers reasonably correct? Let's look at another data source and analysis. This comes form the Tax Foundation. The Foundation calculates its famous Tax Freedom Day every year, i.e. that calendar day when you stop working to pay your taxes and start working for yourself and your family. In 2011, the Foundation estimates that the average American works until April 12 to pay off their taxes, 102 days into the year.

At first glance this number does not seem to line up with the Americans For Tax Reform's numbers. Their work estimated that it took 103 days to pay off Federal taxes and 44 days to pay off state and local taxes, 147 days total. However, the Tax Foundation also estimates that it takes the average American until May 23rd to pay of both Federal taxes, state and local taxes, AND the Federal deficit. May 23 is the 143rd day of the year, putting it in line with the COGD for taxes.

The second validation of both approaches is the Tax Freedom Day calculations at the state level. The Tax Foundation estimates that the states with the worst Tax Freedom Days are Connecticut, New Jersey, New York, Maryland and Washington. The states with the best, least onerous Tax Freedom Days are Mississippi, Tennessee, South Carolina, Louisiana, and South Dakota. These best and worse lists from the Tax Foundation are almost identical to the COGD lists, reinforcing the assumption that both approaches are consistent, logical, and valid.

A few more observations about the Tax Foundation analysis:

• Their analysis shows that the average American family now pays more in taxes than they spend on groceries, clothing, and shelter COMBINED.
• The 2010 May 23 Tax Freedom Day, including the Federal budget deficit, is up from May 2, the Tax Freedom Day the year before President Obama took over. Thus, in just three short years, the Obama administration has added three weeks to the tax burden of the average American.
• I find it interesting that the states with the longest and worse COGDs and the longest and worse Tax Freedom Days are generally the same states that lost population and Congressional seats over the past ten years. If you take the nine of the ten states that lost Congressional seats as of the 2010 census, their average rank in the COGD analysis is 16.8. If you take the eight states that gained Congressional seats, their COGD average rank is 28.6, twelve positions better from a taxation perspective. [note: I have left Louisiana out of the calculations since their population loss was probably caused more by Hurricane Katrina and not their tax situation.]

In my eyes, this last observation verifies my belief that humans crave freedom, moving to states where they are more likely to keep their wealth, keep more of their freedom, and improve their lives.

Based on the hard numbers and analysis reviewed above, please do not tell me that any American is not taxed enough. The Federal, state, and local government spend too much, no matter how you measure it. If you are spending more than half of your working life supporting government bureaucracy and waste, something is wrong.

That is why Step 1 from "Love My Country, Loathe My Government" is so important. Step 1 would systematically reduce government spending by 10% a year for five years. This approach would ease the downsizing of government's scope and waste, while somewhat quickly restoring our missing freedom. Working for the government until the spring or summer each year (depending on how your measure the burden) is no longer acceptable, especially given the meager return we get for the loss of wealth and freedom.

I think that the words of James Dale Davidson are appropriate: "The politicians don't just want your money. They want your soul. They want you to be worn down by taxes until you are dependent and hopeless. When you subsidize poverty and failure, you get more of both." Certainly feels likely America today, worn down, soul searching, and without a lot of our money and freedom.


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 http://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:
http://www.loathemygovernment.com/
http://www.cato.org/
http://www.robertringer.com/
http://realpolichick.blogspot.com/
http://www.flipcongress2010.com/
http://www.reason.com/
http://www.repealamendment.com/

More Worthy Government Spending Cuts That Also Do Not Leave Poor Kids Hungry

As you probably have concluded, I was not a big fan of President Obama when he claimed that unless he got his way in the debt ceiling negotiations that poor kids would go hungry and needy Social Security recipients would not get their checks. Both assertions were false and just reinforced the President's DNA of promoting class warfare in this country and exaggerating the pitfalls of not agreeing  with his position. Thus, I will continue to point out how real Federal government spending cuts can be done without undue hardship to most American citizens, unlike the political class who seem to think that EVERY government expense and function is critical to EVERY American's life.

Today's cuts come from a very comprehensive Congressional Budget Office (CBO) Report that was developed a couple of years ago. It went through many facets of the Federal government and put together a 284 page report highlighting where budget cuts in spending were possible and reasonable and where tax increases were also possible and reasonable. They highlighted the reasons and justifications for cutting an expense or increasing a tax and what the negative ramifications, if any, might be if the expense was cut or the tax raised. It is a thorough and worthy analysis.

I will not go through all 284 pages and the details of every conclusion. The following summarizes the results from well over a hundred Federal programs and organizations. While their 284 page is extensive and detailed, it does not come close to covering all of the different Federal functions so the following debt reductions are only a subset of all that is possible:

- The analysis did not look at military strategy, only military discretionary spending programs. Thus, it does not estimate how much money could be saved by bringing home the almost 200,000 troops that are needlessly deployed around the world. It does not include the waste of money, and lives, we are expending in Afghanistan following a strategy that has little chance of succeeding.

However, just by terminating failed military hardware programs, making operations more efficient, canceling weapons systems that are not needed, and taking other common sense actions, the CBO team found discretionary military budget expense savings of over $220 billion over the next ten years.

- The analysis identified $22.4 billion from the Department of Energy that could be realized over the next ten years, primarily by getting the government out of energy research initiatives that have never created anything worthwhile over the whole history of the Department.

- Science, Space and Technology savings over ten years - $25.26 billion

- International Affairs - Ten years savings of $421 million, all from terminating a marketing and advertising program for American companies that should be paid for by the companies themselves, not the American taxpayer. It does not include savings from trimming unnecessary and wasted foreign aid to dictators around the world.

- Agriculture savings over ten years - $3.87 billion. This does not include the termination of unneeded ethanol subsidies and other farm support programs that are no longer needed, given how well the American farming industry is dong today.

- Natural Resources and Environment savings over ten years - $32.23 billion. These savings are mostly concentrated in programs that support corporations, not endangering basic government environmental programs.

- Commerce and Housing savings over ten years - $5.42 billion. This does not include the savings that could be found by cutting back on the widespread fraud and mismanagement in government housing programs.

- Transportation savings over ten years - $141.64 billion

- Community and Regional Development savings over ten years - $21.94 billion

- Education, Training, Employment, and Social Services savings over ten years - $45.42 billion

- Income Security savings over ten years - $68.83 billion

- Veterans Benefits and Services  savings over ten years - $21.50 billion

- Allowances savings over ten years - $2.54 billion

- Administrative of Justice savings over ten years - $10.26 billion

- Social Security savings over ten years - $388.52 billion. Part of these savings are compatible with the recommendation from "Love My Country, Loathe My Government" which was to raise the retirement age to 70. Not included the $388 billion is another step from "Love my Country,Loathe My Government," which was to uncap the total amount of earnings subject to Social Security tax. The CBO estimates that raising the cap amount the way they want to would provide an additional revenue of $503.4 billion to the Social Security finances over ten years.

This estimate also does not include the final "Love My Country, Loathe My Government" Social Security recommendation which was to terminate Security payments to anyone whose net worth is over $3 million in assets, i.e. people like Donald Trump, Warrren Buffet and Bill Gates who do not need the checks to live comfortably will not get them.

And finally, these savings do not include the hundreds of billions of dollars that need to be recovered from fraud in Social Security and the Medicare/Medicaid programs.

- General Government expense savings over ten years - $5.21 billion

If I added these proposed expense savings correctly, then the CBO analysts have identified over $1 TRILLION in ten years of expense savings. These savings would have minimal negative to the government operations since:

• The cuts include programs that are redundant with other government programs and thus, are not necessary.
• The cuts include programs that are either obsolete or no longer unneeded.
• The cuts include programs that should be paid for by the private sector of the economy and not the American taxpayer.
• The cuts include programs that have been unsuccessful relative to their objectives or charter so canceling them will have no impact on Americans since they never had any impact on Americans in the first place.

While most Americans would be unaffected by the CBO cuts, that does not mean some people or organizations would not be negatively affected. These include military contractors that live off of the waste in the Pentagon's budget, the corporations that had successfully moved their company expenses onto the American taxpayer, and government employees who might lose their jobs as a result of the cuts. These CBO cuts are the right medicine, it is now a question of whether the political class has the courage and smarts to write the prescription.

And the political class should not stop here. The $1 TRILLION of expense reductions does not include other major other cuts:

• Bring home thousands of U.S. troops unnecessarily deployed around the world.
• Terminate more unneeded military hardware programs that were not covered by the CBO analysis.
• Terminate the Department of Education and the rest of the Department of Energy, beyond what the CBO identified, since neither Department has ever been effective or efficient in carrying out their objectives.
• Eliminate Congressional earmarks that serve only as a disguised way for incumbent politicians to raise money for their reelection campaigns.
• The CBO analysis apparently did not address several Cabinet level organizations including Health and Human Services, the Treasury Department, the Labor Department, the EPA and other Federal government functions that would probably all contribute significant additional cost savings.
• The analysis does not include the tens of thousands of buildings and properties around the world that the Federal government owns but does not use but which could be sold off to offset the national debt.

The CBO analysis also included a whole series of tax adjustments to raise money for the government. I will not go into them here for three reasons:

• I believe that the national debt crisis is primarily a spending problem, not a tax/revenue problem for government.
• Given the disgraceful history of wasting taxpayer wealth, I would not allow the political class to get its hands on any more of our wealth until they prove they will not waste it.
• The correct approach is to overhaul the entire U.S. tax code to increase fairness and encourage economic growth whereas the CBO tax adjustment section was a very tactical, piece meal approach.

However, given the above objections, there a were some worthwhile and fair changes to the tax code that could be applied to reducing our national debt:

• Cap state and local government taxes on Americans Federal income tax returns at 2% of income, generating $625.7 billion in additional tax revenue over ten years, according to the CBO analysis.
• Limit the Federal tax benefit of itemizing to no more than 15% of adjusted gross income, generating $1.3 TRILLION in additional tax collections.
• Curtail charitable giving itemization, generating $221.5 billion over ten years.
• Eliminate tax exclusion for companies providing life insurance coverage for their employees, generating $23.3 billion over ten years.
• Tax foreign income on U.S. tax returns, encouraging citizens to not send their money overseas and avoid taxation, generating $71.2 billion over ten years.

These tax changes would generate well over $2 TRILLION in the next ten years to help fight the deficit spending of the political class. However, as discussed above, I would not approve these changes until there were ironclad guarantees that these additional sources of taxes would not be wasted by the political class. In fact, I would probably require that these additional taxes go directly to the Treasury Department to pay down the deficit and not expand government waste which is likely to happen if the political class gets their hands on the money.

In all of these examples, no poor kids went hungry and needy elderly citizens did not lose their Social Security benefits. It is not hard, if you tally how much of the work has already been done at getting government spending and debt under control:

1. Our analysis earlier this month found over $6 TRILLION in savings.
2. The Bipartisan Policy Center found over $6 TRILLION in debt reduction actions.
3. The President's debt reduction commission found over $4 TRILLION in debt reduction actions.
4. The CBO found over a TRILLION dollars in expense reductions and over two TRILLION dollars in tax increases by looking at only parts of the Federal government.
5. The Cato Institute is going through the Federal government line-by-line and has identified hundreds of billions of dollars in expense reductions from unnecessary government functions.
6. The National Taxpayer Union has done analysis that identified $600 billion in expense savings over just the next four years.

It is not hard. The waste and fraud is so widespread that it seems impossible not to cut federal government spending. It is all teed up, with the hard work and analysis already done by the CBO, Cato, and many other smart Americans. All the political class has to do is step up to the tee and close the deal. Whether they have the courage to do so is yet to be seen, given their cowardly history.

Let's hope the political class does not degenerate into their typical fear mongering and demagoguery since if done correctly, no animals will be harmed, no poor kids will go hungry, and needy Social Security recipients will still get their checks. The bigger challenge is if the political class does not step up and perform, needy kids will go hungry and the needy will not get their Social Security checks since the economy will eventually crash under the weight of its debt, taking all worthy government programs with it.


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 http://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:

http://www.loathemygovernment.com/
http://www.cato.org/
http://www.robertringer.com/
http://realpolichick.blogspot.com/
http://www.flipcongress2010.com/
http://www.reason.com/
http://www.repealamendment.com/