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We have not talked about the ongoing fiasco that is Obama Care for a little while but that does not mean the disasters have not continued to be uncovered as experts work their way through the 2,000+ page legislation. Every week it seems as if mutiple major problems are uncovered that either show how poorly the legislation was written, how dumbly the legislation was written, or how much more it will add to the national debt without addressing and resolving the root causes of our high health care costs:
- Howard Dean is the former Democratic governor of Vermont and former head of the Democratic National Committee. He is a die hard supporter of Democratic Party policies and politicians including President Obama.
However, according to various news reports, last week even Howard Dean admitted that many Americans will lose their current health care insurance coverage from the companies they work for: "Most small businesses are not going to be in the health insurance business anymore after this thing goes into effect." Sometimes even a member of the political class can state the obvious.
However, Mr. Dean went on and tried to actually spin this disaster as a positive, trying to position this loss of health care insurance as a cost reduction for small business. Thus, his brush with reality lasted only a short time. While businesses that drop their company health care plans will see an expense reduction, the need for health care insurance for their employees did not go away, it just moved to other sources. Obama Care did not fix anyting, it just changed the source of health care insurance for Americans working for these small businesses.
It also undercuts Obama's two main promises that he made in the run up to the passage of Obama Care. First, Americans could keep their current health care insurance coverage, the passage of Obama Care would not affect current coverage. He failed to mention, either intentionally or ignorantly, that you will not be able to keep your current coverage if your employer drops their company plans altogether.
The second broken promise is that this legislation would not add to the national deficit. Well, if numerous small businesses drop their coverage, forcing Americans into the Federally subsidized insurance exchanges, that will add significantly to the national debt. Again, this did not solve any insurance problems, it is just moving the costs from the private sector into the national debt riddled Federal government.
- Last week, news reports from various sources reported on how another part of Obama Care is collapsing. The old age, long term care component of the legislation, the CLASS Act, has failed miserably to live up to forecasted expectations. The Health and Human Services Department has put an indefinite hold on the program.
The Department has reassigned all of the employees working on the program since the benefits CLASS offers are meager while the price is high relative to other long term care program available in the private sector. High cost, low benefit, sounds like a typical government/political class program.
The bigger issue with this cessation is that the CLASS portion of Obama Care was a huge cash positive for the initial years of the Obama Care business plan. Since this program was for long term care, care that would not likely have been paid for until well into the future, the positive cash flow expected from CLASS made the overall financials of Obama Care somewhat palatable. However, with the termination of the program, at least temporarily, the financial underpinnings of Obama Care take a beating as does the national debt.
- But there's more. An article by Diana Furchtgott-Roth from September 15, 2011, writing for Real Clear Markets, vividly illustrates how ignorant the Washington political class is when it comes to basic business dynamics and financials. And this ignorance may be a leading cause for our persistently high unemployment rate.
According to Ms. Furchgott-Roth, as a result of Obama Care, starting in 2014, any business with more than 49 full time employees will be assessed an annual tax of $2,000 per worker if the company does not offer the right kind of health care insurance coverage. And although the tax does not take effect until 2014, Ms. Furchgott-Roth accurately sums up how people run a business: "Although the tax will not take effect until 2014, businesses are adjusting now. They are not stupid, they plan ahead."
Which is where the stupidity of our political class comes into play. In 2014, if a company employs 49 people and does not offer health care insurance, the annual Obama Care tax is $0. If that company employees 50 people and does not offer health care insurance, the annual tax is $40,000, since the first 30 employees are exempted from the tax. Thus, in this example, the annual Obama Care cost of adding one employee is $40,000, a substantial expense for a small business owner.
Most buisness owners are not stupid. They will not hire that 50th, 51st, 52nd, etc. employee and incur the unnecessary expense. But this behavior will contribute to the unemployment situation in the nation. The article points out that there are about 828,000 franchise businesses in American today, most of whom employ under 50 workers. If each of these businesses do not hire two people on average to avoid the deadly 50 employee level, than upwards of 1.5 -2.0 million jobs will not be created as a result of Obama Care tax implications. 1.5 million new jobs would reduce the national unemployment rate by at least a full percentage point just from franchise businesse. Additional jobs will not be created from non-franchise businesses.
Consider another example from the article. Assume a small business employs 55 full time workers and 7 part time workers and does not offer health care insurance. If the business owner does nothing, in 2014 he or she will have to pay an Obama Care tax of $50,000 a year. However, if the owner changes the employee mix to 49 full time and 19 part time, that $50,000 annual tax goes away.
Now ask youself, something the politicians in Washington obviously did not do: what will the ratiotnal business person do? Spend $50,000 more a year or contribute to the underemployment problem in this country by downgrading full time empoloyees to part time employees?
One more example of the bad unintended consequences of this legislation, particularly as it applies to franchise owners. Many franchise owners may own several franchises from the same company. Consider the hypothetical situation where a small business owner owns ten Dunkin Donut franchises.
While each location likely employs less than 50 employees, the business owner of the ten franchise locations will definitely employ over 50 people. Thus, unless he or she offers health care insurance, the owner will get hit for an annual tax of $2,000 a year for every full time employee over 30 across the ten locations.
What is the typical business owner likely to do? Not being stupid, he or she is not going to pay the tax. They are much likely to incur a one time legal expense to set up each location as a separate shell company with less than 50 full time employees to avoid the bigger, recurring annual expense of Obama Care. The other alternative is to make almost all of their employees part timers, further contributing to the underemployment situation in this country.
In either case, Obama Care is forcing small business owners to take time out from growing their businesses, and the economy, by finding ways to avoid the onerous financial implications of Obama Care. These implications are restricting employment growth and preventing unemployment and underemployment reductions, without solving the basic, core problems of escalating healthcare costs.
- And one last piece of avanlanche, courtesy of ana analsyis done by Investor's Business Daily that was published in late September, 2011. According to this analysis, some Americans may not be able to take advantage of some of the benefits in Obama Care because of how carelessly the law was written.
For Americans that are forced out of their current compny's health insurance plans or who never had coverage in the first place, Obama Care set up so-called health care exchanges where someone could purchase insurance coverage on their own. If their incomes fell in the 100% to 400% range of the Federal poverty level, they would be eligible for Federal taxpayer funded subsidies to help pay for their insurance exchange health care coverage.
Part of the Obama Care legislation instructs states to set up these health insurance exchanges but does not require them to do so. If a state does not set up exchanges, than the Federal government can set up a Federal health care exchange in the state.
However, and this is where the big screw up appears, the way the Obama Care law was written, an American cannot get subsidized health care insurance coverage from an exchange unless they are enrolled in a STATE run health care exchange. Those that are enrolled in the Federal exhcange, even though their state did not offer a state exchange, are out of luck.
Think about how stupid this set up is. The Federal government, which is setting up these Federal exchanges as required by the law, does not cover Americans with subsidized health care premiums that are in the Federal program.
The article reporting these findings indicated that six states have already said they will not set up state exchanges (12% of the nation's states) and numerous other states are likely to follow suit. Thus, a large segment of Americans will not be able to get the Federal help they need to purchase insurance, insurance that the Federal government is forcing them to purchase, even though other American citizens will get financial help. Insanity.
How important is the massive oversight? According to Michael Cannon, director of health policy studies at the Cato Institute, who was quoted in the article: "The whole structure of the law collapses without a state run exchange." Obviously, there are legal, Constitutional, and just plain fairness issues in this situation, issues that would probably have to be settled by reopening and fixing the legislation or going to court, adding more uncertainty to the world and the economy because of Obama Care's sloppiness and incoherence.
Unbelievable. A piece of legislation that was supposed to reduce health care costs does nothing of the sort. A piece of legislation that was supposed to allow people to retain their current health care coverage does nothing of the sort. A piece of legislation that was supposed to actually reduce the national debt does nothing of the sort. A piece of legislation that was supposed to add four million jobs to the economy (Nancy Pelosi's broken, inane promise), does nothing of the sort and actually reduces employment growth. A opiece of legislation that was supposed to help Americans pay for their forced purchase of health care insurance only helps certain Americans, based on geography. The avalanche continues.
As we get buried by the incompetence and negative unintended consequences of Obama Care, the root causes of the escalating health care costs in this country continue unabated:
- Americans eat too much.
- Americans eat too much of the wrong kind of food.
- Americans smoke too much.
- Americans do not get enough exercise.
- Americans have too much salt in their diet.
- America is getting older, leading to expensive health issues like cancer and dementia-like diseases.
- America has a busted health insurance competition model.
- America has a busted and expensive medical malpractice/legal model.
Until you fix these root causes, the problem of high medical costs in this country will never get resolved, especially by the ill formed, ill written, and ill thought out Obama Care. Can't wait to see what the avalanche brings 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/
A primary tenet of our book, "Love Our Country, Loathe My Government," is that the political class has undergone two negative transformations over the past few decades. First, our politicians have mostly abandoned all pretense of doing what is right for the country, replacing that noble goal with the selfish goals of enriching, entrenching, and ensconcing themselves in the false reality that is Washington.
To accomplish this negative transformation, they have manipulated the political system via gerrymandering. They have controlled the primary election process. They have adjusted and abused campaign finance rules and laws to their advantage. They have turned the Federal Election Commission into a toothless enforcement bureaucracy. They have used taxpayer wealth to gain favorable deals and contracts for their campaign contributors.
The second trend is that they have managed to turn American against American. Whether it is pro life vs. pro choice, straight vs. gay, old vs. young, etc., they have done a masterful job of creating so much animosity between Americans that we end up fighting each other. As a result, we lose focus on who is really to blame for the decades of waste and non resolution of our major issues, the political class.
Think about it. We have been losing the war on drugs for over forty years. We have known for almost forty years that we needed a comprehensive and strategic national energy policy but still do not have one. The major deficiencies of our pubic education processes was identified almost thirty years ago, via a Reagan blue ribbon commission, but our public schools still severely under educate our kids. Over ten years ago, we suffered the 9-11 attacks but a recent analysis shows there are still major deficiencies in our national defense.
Throughout this time, both parties have been in charge of the White House, the House of Representatives, and the Senate at various times. In fact, many existing members of Congress have been in office during this period when nothing ever got resolved.
Thus, we are in the worst possible place. We are ruled by a political class that cares more about themselves, a political class that controls and manipulates the nation's political processes, a political class that has had decades to solve any of several major issues without success, and a political class that has successfully pitted us against each other to divert attention from their incompetence.
This situation is best summarized and made real by journalist Charlie Reese. Mr. Reese has been a journalist for decades and I have taken the liberty of including one of his best works below, which has been circulating around the Internet for a while. He captures the frustration that many Americans feel in the current environment of dire economic and political stress and national self doubt.
Thus, a thanks to Mr. Reese for his thoughts and ability to cut to the heart of most of our problems:
********************************
545 vs. 300,000,000 People
-By Charlie Reese
Politicians are the only people in the world who create problems and then campaign against them.
Have you ever wondered, if both the Democrats and the Republicans are against deficits, WHY do we have deficits?
Have you ever wondered, if all the politicians are against inflation and high taxes, WHY do we have inflation and high taxes?
You and I don't propose a federal budget. The President does.
You and I don't have the Constitutional authority to vote on appropriations. The House of Representatives does.
You and I don't write the tax code, Congress does.
You and I don't set fiscal policy, Congress does.
You and I don't control monetary policy, the Federal Reserve Bank does.
One hundred senators, 435 congressmen, one President, and nine Supreme Court justices equates to 545 human beings out of the 300 million are directly, legally, morally, and individually responsible for the domestic problems that plague this country.
I excluded the members of the Federal Reserve Board because that problem was created by the Congress. In 1913, Congress delegated its Constitutional duty to provide a sound currency to a federally chartered, but private, central bank.
I excluded all the special interests and lobbyists for a sound reason. They have no legal authority. They have no ability to coerce a senator, a congressman, or a President to do one cotton-picking thing. I don't care if they offer a politician $1 million dollars in cash. The politician has the power to accept or reject it. No matter what the lobbyist promises, it is the legislator's responsibility to determine how he votes.
Those 545 human beings spend much of their energy convincing you that what they did is not their fault. They cooperate in this common con regardless of party.
What separates a politician from a normal human being is an excessive amount of gall. No normal human being would have the gall of a Speaker, who stood up and criticized the President for creating deficits. The President can only propose a budget. He cannot force the Congress to accept it.
The Constitution, which is the supreme law of the land, gives sole responsibility to the House of Representatives for originating and approving appropriations and taxes. Who is the speaker of the House now? He is the leader of the majority party. He and fellow House members, not the President, can approve any budget they want. If the President vetoes it, they can pass it over his veto if they agree to.
It seems inconceivable to me that a nation of 300 million cannot replace 545 people who stand convicted -- by present facts -- of incompetence and irresponsibility. I can't think of a single domestic problem that is not traceable directly to those 545 people. When you fully grasp the plain truth that 545 people exercise the power of the federal government, then it must follow that what exists is what they want to exist.
If the tax code is unfair, it's because they want it unfair...
If the budget is in the red, it's because they want it in the red...
If the Army and Marines are in Iraq and Afghanistan it's because they want them in Iraq and Afghanistan ...
If they do not receive social security but are on an elite retirement plan not available to the people, it's because they want it that way.
There are no insoluble government problems...
Do not let these 545 people shift the blame to bureaucrats, whom they hire and whose jobs they can abolish; to lobbyists, whose gifts and advice they can reject; to regulators, to whom they give the power to regulate and from whom they can take this power. Above all, do not let them con you into the belief that there exists disembodied mystical forces like "the economy," "inflation," or "politics" that prevent them from doing what they take an oath to do.
Those 545 people, and they alone, are responsible.
They, and they alone, have the power.
They, and they alone, should be held accountable by the people who are their bosses.
******************************
Well said. And now you know who is to blame for our problems and it is not each of us.
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 quote in today's title is from P.J. O'Rourke and seems particularly apt in light of two developing scandals, one involving the former solar energy panel manufacturer Solyndra and one involving a wireless communications company called LightSquared. Both illustrate how much disregard the Washington political class has for taxpayer wealth, subjugating taxpayers' welfare to the needs and desires of individuals and companies who are politically connected.
Today let's stay with Solyndra. The basic story is that the Obama administration fast tracked over half a billion dollars in Federal loan guarantees for this solar energy panel company. The company promptly went bankrupt and took 1,100 jobs and the half a billion dollars worth of taxpayer wealth with it.
However, the details are much more gruesome. The details from the past few weeks include the following, in no particular order, that were compiled from various sources including the Associated Press, Bloomberg, and the Washington Post:
- Although President Obama visited the Solyndra plant in May, 2010 and extolled that "the promise of clean energy isn't just an article of faith," two months BEFORE his visit, the accounting firm PricewaterhouseCoopers LLP cautioned that the company, which had received $535 million in Federal loan guarantees in September, 2009, "had financial troubles deep enough to raise substantial doubt about its ability to continue as a going concern."
- Pricewaterhouse went on to state that "the company has suffered recurring losses from operations, negative cash flows since inception and has a net stockholders' loss." In other words, experts in the field knew that Solyndra was a troubled company and had been a troubled company for years.
- The fact this was a troubled company was validated within a month after Obama visited when the company withdrew its plan to implement a $300 million initial public offering, likely because it would have failed. This validation occurred just nine months after it received the Federal loan guarantees.
- Economic and company conditions deteriorated quickly when the prices for Chinese manufactured solar panels dropped by 30% over the past year, wrecking the marketing plans and product value of Solyndra's products.
- But financial problems occurred long before the Chinese problem, with Bloomberg News reporting that, according to government documents from December, 2010, a mere three months after the loan guarantees were approved, the government knew that Solyndra was only a month away from running out of cash. This indicates that little, if any, due diligence was done if within months of giving away a half a billion dollars of taxpayer money, the company was about to fold.
- As as result of the failing financials, the Energy Department agreed to take a back seat to funds from private and new investors to keep Solyndra solvent. In other words, if the company folded, taxpayers would not be paid back until other investors got their investment returned from any bankruptcy proceedings.
- Which is where it gets really interesting since one of those private investors is George Kaiser, a major Obama campaign fundraiser. The Kaiser Family Foundation owns about 37% of Solyndra. Records show that Kaiser had made 16 visits to the President's staff since 2009. The Foundation would be one of those investors that would jump in front of the American taxpayer in retrieving whatever value is left from the Solyndra's ashes. The Foundation denies that George Kaiser had to do with the Federal loan guarantees.
- While the company was running out of cash, U.S. Senate records show that it had already spent $480,000 this year to lobby Congress. This apparently included hiring a pubic relations and lobbying firm to prep Solyndra executives before they went before Congressional hearings. Two Democratic Congress members have publicly stated that Solyndra's chairman assured them in July, 2011 that the company was in a "strong financial position."
- At a House of Representatives investigating committee session this week, Solyndra executives claimed their fifth Amendment rights and refused to testify, lest they incriminate themselves in subsequent criminal investigations.
- The Washington Post reported that employees of Solyndra stated they saw questionable spending by upper management as soon as the loan guarantees were approved including a new factory with a conference room with glass walls, walls that, with a flip of a switch, turned a smoky gray to conceal the room's occupants. State-of-the art equipment was never unwrapped and ended up being sold for pennies on the dollar.
- Solyndra engineer Lindsey Eastburn was quoted as follows: "After we got the loan guarantee, they were just spending money left and right. Because we were doing well, nobody cared. Because of that infusion of money, it made people sloppy."
- Solyndra also applied for another government loan, this one for $400 million, which, fortunately, was not approved.
- In a July 13, 2011 letter from Solyndra's CEO to the House Energy and Commerce committee, only two months ago, the CEO asserted that the company was in good shape, it's future was bright, and 2011 revenue was expected to double. This was written even though employees were noticing that finished product inventory was backing up on the loading docks and not moving out.
- Emails from the Office Of Management and Budget (OMB) show that the Obama administration pressured the OMB to hurry up its analysis of Solyndra's financial viability in order to accommodate a September, 2009 factory visit from Joe Biden. One of those emails responded that "we (OMB) would prefer to have sufficient time to do our due diligence reviews and have the approval set the date for the announcement rather than the other way around."
- The AP reports that Solyandra has spent almost $2 million during the past four years lobbying the Federal government.
- Federal Election Commission records show that two Solyandra executives, along with George Kaiser, have contributed to Obama and Democratic Party groups in the past.
- The FBI and the Energy Department's inspector general are investigating the issue in addition to the Congressional committees. The chairman of the House Judiciary Committee has called for an independent investigator to look into the entire affair.
- The AP also examined regulatory filings which show that Solyndra was losing hundreds of millions of dollars for years prior to the loan guarantee. In other words, this was not a successful company before the guarantees, a sure red flag for any investor.
Lots of facts, none of them good if you pay Federal income taxes. There appear to be three potential outcomes from this mess:
1) General Incompetence - under this scenario, half a billion dollars was lost due to general incompetence by government employees and the Washington political class. No one took the time to understand this company had never turned a profit, indicating that its market offerings may have not been viable. No one took the time to understand the dire financial condition that this company was under prior to the loan guarantees. No one took the time to understood how poorly the loan guarantee money was being spent. No one took the time to understand what the Chinese threat was likely to be.
Under this scenario, general incompetence cost the country half a billion dollars. In this case, people in the Department of Energy need to be fired for their incompetence and lack of due diligence and members of Congressional committees and subcommittees who had responsibility for this fiasco should be removed from their committee posts, as proposed by Step 34 in "Love My Country, Loathe My Government."
2) Political Incompetence - under this scenario, the Obama administration forced government resources to bypass or short circuit due diligence processes and other analyses in order to meet photo op opportunities and to demonstrate to the Democratic Party base how the administration was going "green." As a result of this shortsighted, political approach to life and reality, the American taxpayer is out half a billion dollars and those photo ops don't look like such a good idea today.
3) Incompetence, Cronyism, and Criminal Behavior - under this scenario, three nasty issues come together. There is incompetence because of forcing a failing company to live up to expectations with half a billion dollars support, failure to do adequate due diligence, failure to understand the dynamics of the market, and short cutting standards of analyses for political photo ops.
There is cronyism as we see a failing company use government support to heavily lobby that same government and to direct taxpayer dollars to political supporters.
There is possible illegal behavior if private investors were moved ahead of taxpayers in the bankruptcy proceedings, something that was deemed illegal under the conditions of the loan guarantees. This particularly repugnant if those moved ahead of taxpayers were those that had lobbied and financially contributed to political class factions.
No matter how you cut it, the whole situation reeks. I wholeheartedly support the naming of an independent special investigator to determine what firings, reforms, and criminal charges need to be forthcoming. This investigator would have full subpoena and prosecution powers. Until we as a nation get to the bottom of these shenanigans, it will continue to divert attention from the real issues facing America.
Which gets us back to the quote in our title. The American political class cannot help but end up in as failures in these types of ventures since our politicians are more interested in their own political well being, not the nation's well being.
That is why we get these disasters and why billions of dollars are wasted every year. Resources and arrangements are established for the good of the political class, not the efficient allocation of resources. "Green" jobs is just one category of bad allocation of taxpayer resources and Solyndra is just one company of several that have turned into disasters and giant wastes of taxpayer money:
- Evergreen Solar in Massachusetts received $5.3 million in stimulus money through a state grant to install solar electric panels at 13 Massachusetts locations. The company recently filed for bankruptcy protection in order to reorganize and in an ironic twist, intends to now focus on building up its manufacturing factory in, wait for it, China.
- Spectra Watt received a half million dollar grant under the Obama economic stimulus program to improve the performance of existing solar cells in June, 2009. It has already gone out of business.
- Olsen Mills Acquisition received a $64 million government support package in January, 2010 to increase employment, buy equipment, and acquire land. Less than two years later, the company filed for bankruptcy, probably destroying the value of the government's $64 million government and taxpayer support.
- Mountain Plaza in Tennessee received $424,000 grant to reduce truck pollution at truck stops despite the fact the company had already filed for bankruptcy twice.
And in the face of all this, Obama wants to raise the taxes on subsets of Americans. Until this missallocation of taxpayer resources is resolved, no one in America should pay more taxes for this incompetence. And this misallocation will not stop until politicians realize that they cannot create jobs because 1) they are not smart enough to create jobs and 2) the market creates jobs, not government bureaucrats.
The following truth is so relevant here: If a technology is viable, it does not need any government support. If a technology is not viable, no amount of government support will make it viable. How true.
Unfortunately, the Obama administration and its Energy Department did not follow this simple fact of reality and it cost us at least half a billion dollars of wealth. Our only hope now is that all those responsible pay with their jobs, their careers, or their freedom if guilty of criminal behavior.
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 following is strictly hypothetical. It is not based on any hard core evidence or findings or investigations. It is strictly conjecture.
But it is logical conjecture, based on the coming together of a large set of circumstances. These circumstances could be strictly coincidental or just another instance of Obama administration cronyism and political maneuvering for political gain, not the best interests of the nation.
Let's start with Warren Buffet. We know that over the past month or so, he has come out strongly in support of President Obama's unhealthy and irrational fixation with increasing the tax burden of the wealthy in this country, claiming that on a percentage basis, he pays less in Federal income taxes than members of his staff.
This obviously has added some degree of credibility to the President's call for higher taxes in the midst of a recession with some voters. Never mind that this is a lame economic policy to pursue while on the brink of another recession and even if implemented, it would have an infinitesimally small impact on the nation's financial situation.
Also, within the past month, late August, Warren Buffet announced that his company would invest $5 billion in Bank Of America. There was universal consensus in the press that this was a sweet financial deal for Buffet, given the terms of the deal, as highlighted in a New York Times article on August 25, 2011:
- Buffet's company, Berkshire Hathaway, will get special preferred stock for its $5 billion investment.
- This special stock will pay a guaranteed annual 6% dividend, a great/impossible return in these difficult economic times for most individual Americans and companies.
- This 6% is guaranteed forever, until Bank Of America goes out of business, or until Bank of America decides to buy back the shares at a 5% premium.
- If Bank Of America does go out of business, Buffet's company would be first in line in any bankruptcy proceedings, ahead of all other creditors, in retrieving part of its investment back.
- Berkshire Hathaway also received warrants for 700 million common shares of Bank Of America stock at $7.14 per share, good for the next ten years. I believe this means that anytime in the next ten years, Buffet's company can buy up to 700 million common shares of Bank of America for $7.14 even if the market price of the price of these common shares are substantially higher. For example, if the stock price is $14.14 in two years, Buffet can buy 700 million shares at only $7.14 and instantly be almost $5 billion ahead on his investment, exclusive of the 6% annual dividend.
- In fact, an online article from a local Charlotte, North Carolina business journal, the hometown of Bank Of America, estimated that if Bank of America stayed in business for three years and attained a stock price level that it had as recently as 2010, then Buffet's $5 billion investment would grow to $9.9 billion in three years. This comes out to an annualized return of just over 25%, not too bad in these dire economic times.
Obviously a sweetheart deal for Buffet's Berkshire Hathaway company.
But why would Bank Of America do such a deal? Probably because Bank of America is not doing well financially, again as reported in the New York Times article cited above and other news sources:
- Bank Of America's common stock price was down over 30% just in the month before this deal was done, is down more than 50% in 2010, and down almost two thirds since 2010.
- The bank is under intense investigations over its foreclosure practices.
- Its mortgage division has run up billions of dollars in legal fees and defaults on all mortgages are not expected to let up anytime soon.
- The whole mortgage mess was the main reason behind the bank's $8.8 billion loss in its financials in the second quarter of this year.
- The financial losses have caused bank management to focus on selling assets such as some of its international credit card divisions and to downsizing its workforce, including 3,500 job cuts it announced in late August.
This is obviously a company under duress. However, an investment from an investor as widely respected and followed as Buffet adds a tremendous amount of credibility to Bank Of America's public assertions that it is moving in the right direction and that it will survive as a viable financial institution going forward. Short term, the strategy seemed to work in late August as the stock price initially jumped 25% and then settled down to an 8% increase. This move also juiced other financial stocks.
Thus, in the short term, Bank Of America got a positive jolt of confidence and share price increase by Buffet's investment.
Now, where does Obama fit in? Obviously, the only thing that this President is currently focused on is how to get himself re-elected in November, 2012, the rest of the nation's problems be damned. Imagine what would happen if Bank of America continued to free fall financially, so much so that its collapse was imminent:
- As the largest, or one of the largest banks in the nation, and world, depending on how you measure, a collapse of Bank Of America would have catastrophic economic implications, no doubt throwing the country and the world into another deep recession.
- Its collapse would bring into doubt the viability and stability of all financial institutions.
- This situation would surely freeze up credit markets, making business expansion and growth next to impossible.
- No business expansion means stagnant or deteriorating unemployment rates and increasing mortgage defaults.
- The effectiveness of one of Obama's big legislative victories, the Dodd-Franks financial reform law, would be called into doubt if such a catastrophic bank crisis could arise within a year or so of the legislation being passed.
- Citizens, and voters, would have no appetite for another round of bank bailouts even though too big to fail has become even a bigger problem under Obama's watch.
In other words, the economy would be imploding just months before the Presidential elections, certainly dooming his overarching need to get re-elected.
Thus, is it all coincidental or is it, in fact, all related? From a conspiracy perspective, was there a mutual beneficial society troika (troika - any group of three persons, nations, etc., acting equally in unison to exert influence, control, or the like) formed between Buffet-Obama-Bank Of America:
- Obama has to prevent Bank of America from going under at all costs from an election year perspective.
- He calls Bank of America's leaders and says he can get them both a cash infusion and a credibility infusion but it has to be made worthwhile, financially, for that investor to come forward.
- He then calls Warren Buffet up and says he can get Buffet a sweetheart deal down at Bank Of America, a deal that would guarantee a sweet annual rate of return, would hold the promise to make billions more, and would minimize his downsize risk by moving Buffet's company to the head of the line of creditors in case of a bank default.
- In return for some easy, low risk money, Buffet needs to do a little politicking for the President's irrational "tax the rich more" platform and maybe host a few re-election fund raising dinners with Buffet's rich friends.
- Everybody involved in the troika is a winner. Buffet gets a great financial deal, Bank of America gets at least some temporary relief, financially and confidence wise, and the President averts an economic disaster and gets some PR help on his tax plan.
Just a conspiracy theory but not a far fetched conspiracy theory, based on the Obama administration's past relationships with other corporations to further the President's personal political needs at the expense of the taxpayer:
- Most people should be familiar with the disaster that is Solyndra, the California solar panel company that went out of business and took over half a billion dollars of taxpayer money with it. This money came out of the President's economic stimulus program, a program that legally required the U.S. taxpayer be first in line to recover assets and money if a company which received stimulus funds went out of business.
However, it now appears that the Obama administration moved a private investor in Solyndra ahead of the U.S. taxpayer in bankruptcy arrangements. This private investor has been a big contributor and fund raiser for Obama in the past. Conspiracy or coincidence?
- LightSquared is a communications company that wants to build out a satellite wireless communications system. However, there is concern that its technology will have a severe interference impact on civilian and military GPS signals. Thus, Congress scheduled hearings to determine if this was the case and whether the LightSquared effort should be blocked.
A Pentagon general was set to testify in front of a Congressional committee and was to testify that yes, indeed, LightSquared's technology would interfere with Defense Department communications. However, it is alleged, and the General testified to the fact, that the White House tried to get the General to falsely testify that military communications would not be impaired. Turns out that the owner of LightSquared was also a big donator and fund raiser of President Obama's past elections efforts. Conspiracy or conincidence?
- According to a September 23, 2011 article from Politico, in early October, Tom Carnahan will host a $25,000 per person fundraiser for the President's re-election campaign. The Carnahan family has long been a Democratic Party power in the state of Missouri. The article also explains that Carnahan is the owner of an energy development firm, Wind Capital Group, which has received a $107 million Federal tax credit from the Obama administration to develop a wind power facility in Missouri.
Even if no quid pro quo was involved, the appearance of conflict of interest is just as bad as an actual conflict of interest. It just smells bad that someone who gets free Federal tax treatment turns around to host fund raisers for the administration that granted the tax credit. Just a smelly affair. Conspiracy or coincidence, or in this case, a severe conflict of interest?
- And finally, our favorite conspiracy or coincidence company, General Electric. Jeffery Immelt, the Chairman of General Electric always seems to be with the President. He is the chairman of the President's economic council and gives the President credibility that he is a friend of business. Immelt has been a big fund raiser and contributor to previous Obama campaigns.
However, General Electric gets benefits also. The President has not moved to change the tax laws that specifically benefit GE, which allowed the company to generate billions in profits, pay no Federal income taxes, and receive a multi-billion dollar Federal income tax credit in 2010. When GE received TARP funds a few years ago, the program that was supposed to bail out financial firms, GE executives did not have to abide by executive pay restrictions like all other TARP recipient firms.
If it has not already, it would not be a surprise of GE's wind turbine division received some kind of favorable tax treatment, to the American taxpayer's detriment, from the Obama administration in the future. Conspiracy or coincidence?
Even if there are no conspiracies involved, the whole situation just smells. The relationship between politicians, elections, and Federal taxpayer money is way too entangled to avoid even the appearance of conflict of interest.
That is why Step 1, Step 6 and Step 39 from "Love My Country" are so important. Step 1 would reduce Federal government spending by 10% a year for five years. This would reduce our debilitating national debt and reduce the amount of money floating around that politicians can misdirect to their favorite re-election supporters, at the expense of ordinary taxpayers.
Step 6 would prohibit anyone or any organization from contributing to an election campaign unless it was an individual American. No more corporations, PACs, or unions contributing to politicians' campaigns in hope of getting taxpayer wealth, in whatever form possible, in return.
Step 39 would impose term limits on all Federal politicians. Most of these shenanigans occur when a politician wants to get re-elected. By restricting them to one term and on term only, much of the conspiracy, coincidence, and conflicts of interest would disappear, helping to purify the original intend of our election system.
Conspiracy or coincidence? It would make for a good political thriller but it makes for a lousy way to run a country and a government.
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 last two weeks the President has made two assertions that do not stand up to the facts of reality if you do just the barest amount of research. Recall that two years ago he also publicly asserted how stupid it was to raise taxes during tough economic times.
Let's start with his comments at a rally last week where he verbally asserted that taxes had to be raised on the wealthiest Americans in order to provide funding for Social Security checks for the elderly. There should be no doubt among intelligent and informed citizens that Social Security is approaching financial insolvency. Demographic changes alone will make the current financial situation untenable.
But before any American has more of their wealth confiscated by an inefficient government, maybe our inefficient government should step up and fix itself before looking to the American taxpayer, even if only the rich ones, to bail it out again:
- Money magazine reported in March, 2008 that the IRS fails to collect upwards of $200 billion a year in taxes that should have been paid but were not paid by American citizens. Fixing this problem would provide over 26% percent of the entire Social Security budget's benefits paid out in 2010 without raising taxes. The article did not discuss how much business tax is not collected that should have been collected in addition to this $200 billion shortfall.
- Most expert sources estimate that Medicare loses at least $60 billion a year through fraud and Medicaid loses at least $30 billion a year through fraud. Together, this conservative fraud estimate of $90 billion would have accounted for over 12% of Social Security's 2010 benefit payouts.
- Last week it was reported that over $19 billion in the Federal government's unemployment benefits budget has been lost to fraud in the past year or so, about 10% of its overall budget. This would have accounted for about 2.5% of the 2010 Social Security benefit stream.
- The Obama administration has added about 250,000 Federal employees to the federal government payroll above the historical average of civilian employment without a corresponding increase in government efficiency or service to Americans. Rolling back this unnecessary increase in employment would save about $25 billion a year or about 3.4% of the 2010 Social Security benefit stream.
- The United States has unnecessarily continued the deployment of 140,000 troops in Europe, Japan, and South Korea at an annual cost of about $28 billion a year, or about 3.8% of 2010 benefits.
- The Washington political class hands out about $16 billion a year in government earmarks which are nothing more than thinly disguised favors that politicians give to their most important re-election campaign donors. $16 billion in annual waste is about 2.2% of 2010 benefits.
I could go on and on but you get the idea. Just fixing these six areas of government waste, fraud, and inefficiency would account for over 50% of what the Social Security Administration paid out in benefits in 2010 without significant detriment to any American citizen. The only affected citizens would be the crooks that are bilking the government's social programs and tax system to the tune of hundreds of billions of dollars a year.
Thus, the President's first deception: we do not have to tax the rich any more to support paying Social Security checks for the elderly. Its the government, that is run by the Obama administration, that needs to tax itself more in an effort to fix the leaks of fraud throughout its operations. As the President himself said, it is not good economic policy to raise taxes during difficult economic times. It is even worse policy to do so when you do not have to.
The second deception was attempted in cahoots with Warren Buffet, who stated that the rich in this country, including himself, need to be taxed more. Buffet gave the example that on a percentage basis, he pays less in taxes than members of his staff. This was supposed to make the President look good and righteous in his call for higher taxes on the rich.
This deception is pretty easy to refute, starting with the fact that if Mr. Buffet is so upset that he is not paying enough in taxes, why hasn't he simply wrote a check and sent it to the U.S. Treasury for the amount that he thinks he should have paid? If he feels that strongly, then actions, writing a large check to the government, would certainly back up his words.
And to take it a step further, why didn't the President do the same thing earlier this year when he filed his taxes? His 2010 household income was in the millions of dollars, certainly putting him in the "rich" category of American citizens. What a noble gesture that would have been if he had actually taken actions based on his own "tax the rich more" obsession and written an additional check to the Treasury. However, nobility has never been an overriding trait of this administration.
But enough with these what-ifs. The Associated Press, in a September 20, 2011 article, actually looked at the reality of the situation in their article entitled: "Fact Check: Are The Rich Taxed Less Than Secretaries:"
- Overall conclusion from the analysis: "On average, the wealthiest people in America pay a lot more taxes than the middle class or the poor, according to private and government data. They pay at a higher rate, and as a group, they contribute a much higher share of the overall taxes collected by the Federal government."
- The 10% of American households with the highest incomes pay more than half of all Federal taxes. (Note: this estimate and the following estimates are from the Tax Policy Center and include Federal income taxes, Federal payroll taxes, and other Federal taxes)
- They pay more than 70% of all Federal income taxes.
- In 2011, households making more than $1 million will pay an average of 29.1% of their income in Federal taxes
- Households making between $50,000 and $75,000 will pay an average of 15% of their income in Federal taxes.
- Households making between $40,000 and $50,000 will pay an average of 12.5% and households making between $20,000 and $30,000 will pay an average of 5.7%.
- 46% of American households, mostly middle class and poorer households, pay no Federal income tax all.
- IRS percentage estimates, which include only Federal income taxes, are in line with these estimates, with those earning over $1 million a year paying 24.4 of their earnings in Federal income taxes compared to those earning between $50,000 and $60,000 paying an average of 6.3%.
Thus, it is really hard to come away with any other conclusion that Obama is either totally ignorant of the reality or is being deceptive in his assertion that the rich pay less, on a percentage basis, than the middle class and poor. That statement could not be any further form the truth, on average.
The reason that this truth does not apply to Warren Buffet is that he does not draw a big salary, getting most of his income from lower taxed income options. He is obviously an exception to the rule, as seen by the reality of the Tax Policy Center and IRS analyses.
It is an exception that the President is deceptively trying to leverage to get his base of voters excited about the Presidential election in 2012, it has no basis in fact. That is what irritates me about most politicians and this one politician in particular. He assumes that the average American is too stupid to understand the facts of the world and that we will blindly vote for someone based on what they say, no matter how idiotic and wrong and out of step with reality it is.
The rich in this country do pay more in both absolute terms and percentage terms than any other income group in the country. To assert anything differently is nothing more than a shallow, political lie.
Now, just to be clear, I am not rich. My family lives in a typical 2,000 square foot suburban home. I drive a seven year old vehicle and my wife drives a five year old vehicle. We both attended less expensive public universities as did our son. We do not take exotic vacations, we do not own a yacht or a private plane. Thus, I am not trying to defend the rich, just going through the facts of the situation and show how shallow and conniving this President can be.
We do not have an under taxation problem in this country, we have a government overspending and waste problem in this country. For example, if Obama got his way and made every millionaire earner in the country pay an extra $100,000 a year in Federal income taxes, the resulting $24 billion a year or so would cover less than 1% of the Federal government's 2011 budget.
If you get really ridiculous, and had Obama bill every American earning over a million a year pay an extra $1,000,000 a year in Federal income taxes, this would only account for about 6.4% of the 2011 Federal budget. You cannot make a significant improvement in the financial woes of the country under the mantra of taxing the rich. It is divisive class warfare that does not solve the underlying problem: government and politicians spend too much.
Do we need to reform the tax code? Absolutely, to make it fairer and simpler and less cumbersome and expensive to abide by.
Do we need to reform the Social Security system? Absolutely, including raising the retirement age for those that can afford to wait and introducing a means test so that people like Warren Buffet would not receive Social Security payments because of their personal wealth.
Do we need to do these reforms fairly, logically, truthfully, and analytically, removed from the personal career aspirations of the political class? Absolutely, which makes it highly unlikely these steps can be attained under the Presidency of Barack Obama, deceiver in chief.
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/
When you look at some of the antics and insanity that comes out of Washington, you have to ask yourself if they ever do any simple math to check the reasonableness and logic of their actions. Apparently not, if you consider the following simple math calculations:
- The granddaddy of all stupid math comes from the President's economic stimulus program. The Congressional Budget Office estimated the final cost of the stimulus program to be $830 billion. The White House claims that this expenditure saved or created about 2.7 million jobs. Thus, by dividing the total cost by the generous estimate of 2.7 million jobs, you end up with a cost per job of over $300,000 per job. How can this be called successful when it costs so much to create or save a job? How can this be called successful relative to the average annual income of an average American household which is around $60,000?
At this rate, to get all 14 million unemployed Americans a job, it would cost $4.3 TRILLION. Of course, as a nation we would never do this, we could never do this since we would never find the money to pay for this. Plus, this kind of pseudo economic policy is based on the false premise that government can actually create jobs. All governments do is take wealth out of one part of the economy and put it into another part of the economy, there is no net gain.
There is no multiplier effect where somehow when government spends a dollar, via a stimulus program, in the economy it miraculously creates multiples of that in economic activity but when individuals and businesses are allowed to keep their wealth and they spend it in the same economy, there is no multiplier effect.
The fallacy of this multiplier effect was on full display when the President warned us that if his stimulus program was not enacted, unemployment in this country could go as high as 8%. The program was enacted and unemployment soared up and over 9% and has stayed in that area for what seems forever. So much for the magic multiplier effect.
- And the economic stimulus cost per job of $300,000 is very generous if you consider an analysis that was included in the October issue of Reason magazine. According to an analysis of the stimulus program done by economist Bill Dupor from Ohio State University and economist Timothy Conley from the University of Western Ontario, Obama's economic stimulus program did not create or save 2.7 million jobs.
Their analysis shows that the program created or saved about 450,000 jobs, mostly in the government sector while delaying or destroying about a million jobs in the private sector. In these economists' most optimistic forecast, their best case, if you stretch the assumptions, the stimulus program may have created 659,000 jobs, again mostly in the government sector. Under this best case scenario, the cost per job is almost $1.3 million per job. Outrageous, you cannot make this stuff up. Didn't they do the math in Washington?
Why was the payback so bad? According to the article and the analysis, much of the stimulus spending was used to continue existing state and Federal government programs, the money was not spent to create incremental activity. California, for example, used some of its stimulus cut to fund its existing state unemployment benefits program. Hardly an elegant, creative, and, in the end, an effective way to stimulate economic activity.
Other states took their economic stimulus money and also used it as a pure substitute for existing spending, not incremental economic actions and spending. Traditionally, according to the authors, when the Feds give state governments funding, the states are required to match those funds with their own money to ensure that the money is spent the way the Federal government intends it to be spent.
The economic stimulus plan was written so poorly that this type of control language was not included, resulting in the states spending Federal taxpayer money anyway they wanted. This resulted in such poor economic payback for over $800 billion worth of stimulus.
- And now the President wants to do it all again. He wants Congress to pass his newest economic stimulus program which will cost the Federal government and Federal taxpayer about $450 billion. Last week the President publicly asserted that his new plan will "create" about 1.9 million jobs.
As always, some serious math problems with this misguided view of reality. Simple math indicates that the cost per job created using Obama's own numbers comes out to almost $237,000 per job. Remember, the average annual household income in this country is about $60,000 so this latest problem would cost about four times what the average American household makes in a year. So even if the President was right, the payback is still atrociously bad.
And this assumes that he is right. Remember, in his first stimulus plan he said that unemployment would go as high as 8% if his plan was not passed. It was passed and it went beyond 9%. Thus, this President does not have a good accuracy record when it comes to economic projections. How many times are we going to believe him when he has been wrong so often and so badly in the past?
Doing some additional math, if the President's optimistic forecast is right, this latest stimulus approach would take about $3.3 TRILLION to get all of the 14 unemployed Americans a job. Certainly not an efficient way to get people jobs.
One more math calculation. The President claims that his latest plan will "create" 1.9 million jobs and reduce the unemployment rate by one full percentage point. But, every week, about 400,000 Americans have been filing for first time unemployment benefits, indicating that roughly 400,000 Americans are losing their jobs every week. Do the math, if the President can create 1.9 million jobs in a year, i.e. in time for the next Presidential election, this would average out to about 37,000 jobs created per week.
Thus, we end up with this serious disconnect: 400,000 people file for first time unemployment benefits every week while the President will create 37,000 incremental jobs per week, best case, which is less than 10% of the unemployment benefits filers. This raises they obvious disconnect: how is the unemployment rate going to go down to about 8% when there is this 10 to 1 ratio? As always with the political class, the math makes no sense.
- But for the worse math of all, consider the numbers from a Washington Post article last week. According to the Post article, using tracking data from the Department of Energy Loan Program website, $17.2 billion was loaned to companies to create so-called "green" jobs. These companies turned around to "create" 3,545 jobs. Using some simple math, this comes out to about $4.8 million for each job created. Again, you cannot make this stuff up.
The poster child for this waste is, of course, the Solyndra solar energy panel manufacturer in California. This company received over half a billion in Federal loan guarantees and they not only did not create any incremental jobs, they went bankrupt, went out of business, and took 1,100 existing jobs and the $500 million of taxpayer wealth down the drain with them.
Note: we will dedicate an entire post to this disaster in the next week or so. Disastrous is too mild a word to describe the political class behavior in this situation. Words like cronyism, kickbacks, and criminal are more apt to be accurate.
Just some simple math, I wish the politicians in Washington were good at this basic math. They cook up these grand plans that are based on nothing more than hope and their own, personal political positioning. Basic, simple math and looking at previous economic failures would help avoid the wasting of hundreds of billions of taxpayer dollars.
Instead, we pay around a quarter million dollars for each job attributed to these failed economic programs, with a 15 times premium to fund "green jobs." Will they ever realize that "government" cannot create jobs? They are not smart enough to do that.
Only individual citizens and businesses can effectively expend their wealth and money in such a way that economic activity is focused and efficient. Spending over $4 million to the government to create one green job is neither focused or efficient, it borders on criminal.
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/
An interesting email was sent to me recently by a friend that purported to list out all of the taxes Americans are subject to. Of course, I was familiar with many of them including:
- Federal income taxes
- State income taxes
- Sales taxes
- Property taxes
- Social Security payroll taxes
- Medicare taxes
- Telephone excise taxes
- Gasoline taxes
- Estate/Death taxes
- Hotel/motel taxes
- Rental car taxes
- Other excise taxes
However, his email showed that I was quite restrictive compared to the government taxes and fees (another form of taxation but with a different name given to it by the political class to make it seem more palatable) I did not know about or forgot about:
- Ad valorem taxes
- Cigarette taxes
- Corporate income taxes
- Federal unemployment taxes
- Gross receipts taxes
- Alcohol taxes
- State unemployment taxes
- Telephone Universal Service fees
- Inventory taxes
- Business equipment taxes
- Telephone surcharge taxes
- Utility taxes
- Sewer taxes
- Water taxes
- Hunting licenses
- Dog/pet licenses
- Fishing licenses
- School taxes
- Toll road tolls
- Marriage taxes
- Food license taxes
- Building permit taxes
- Commercial driver's license taxes
- Airline gate taxes
- Tire recycling fees
- Gift tax
- Homes sales tax (Obama Care)
- Medical devices tax (Obama Care)
- Home sales tax (Obama Care)
- Other Obama Care taxes
- Professional license fees (hair stylists, doctors, dentists, etc.)
In fact, these two lists are still not all inclusive. Do a few Internet searches and you end up with dozens, if not hundreds, of other taxes and fees including the infamous Septic Tank Field tax.
Wow. In previous posts we have reported on how different tax policy and consumer organizations have come to the same conclusions:
- Most Americans work for more than half the year to pay for government functions, taxes, fees, and regulations.
- Most American households now pay more in taxes each year than they pay for food, shelter, and gasoline COMBINED.
And some politicians still think that Americans are not taxed enough, that if there was just some more taxes paid to our governments and political class, all of our problems would be resolved. Given the lists above and the analyses that shows how much we pay in taxes already, it is obvious to anyone, except our politicians, that America has an excessive government spending and waste problem, not an under taxation problem.
And it is not as if the politicians are efficient with the wealth they confiscate from us today:
- Social Security, Medicare, and Medicaid programs waste/lose over a hundred billion dollars a year, possibly up towards two hundred billion a year, through fraud, waste, and criminal enterprises.
- Recent news reports indicate that the Federal unemployment insurance program has lost at least $19 billion over the past year or so through fraud, more than 10% of its entire budget.
- The Federal government recently wasted over half a billion dollars by not doing its due diligence on a California solar energy company when the company went bankrupt and took the taxpayer Federal loan guarantee money with it.
- The Federal government continues to operate numerous military weapons initiatives that are either no longer needed, can be done by cheaper technologies, or are behind schedule or are way over budget, easily wasting tens of billions of dollars a year.
- The Federal government continues to unnecessarily deploy almost 200,000 U.S. troops around the world (Europe, South Korea, Japan, Iraq) to serve historic needs that no longer exist, wasting upwards of $40 billion a year.
- Federal government civilian employment levels are almost 250,000 people higher than it has ever been, an increase in government size that has not resulted in better government service. This unnecessary increase in Federal employment, if reversed, could save about $20 billion a year.
You get the idea, this list of waste is also certainly not all inclusive. The political class, at all government levels, wastes hundreds of billions of dollars a year, trillions of dollars over a decade, and they want more money from us via taxes and fees. Give me a break.
In light of the list of taxes and the list of waste, Step 1 from "Love my Country, Loathe My Government" becomes so important. Step 1 would reduce Federal government spending by 10% a year for five years, forcing the political class to clean up waste, eliminate fraud, terminate redundancy, and focus on a smaller set of of only the most important issues facing Americans.
You should not put a new heating system into a house that leaks air everywhere. You should not raise taxes and give it to a government that leaks fraud, waste, and political patronage everywhere. You patch the house leaks before putting the new heating system in. You patch government dysfunctionality before giving it more wealth to waste, if then.
Politicians need to remember two basic facts of life. When they tax us, it is our wealth and our hard work that created it, it is not theirs or their rights to it. They are entrusted with our tax dollars, not entitled to our tax dollars. Second, there cannot be political and personal freedom without economic freedom. If you are overwhelmed by an onerous tax burden, you cannot be free or live a life of liberty.
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/
Yesterday, we reviewed the far less than stellar performance of President Obama's first three years in office. Unfortunately, when you look at his body of work you find that his policies have been short sighted, nonstrategic, and mostly failures, his ability to grab history and lead has been non-existent, and he has stood idly by as his staff, his political party members, and others have insulted, threatened, and defamed honest Americans who had legitimate differences of opinions with his policies.
As a result of this review, yesterday we called on the President to resign immediately. We do not expect his policies, attitudes, and compassion to change in the last year of his Presidency and we have witnessed the politicizing of the office of President so much so that just about everything President Obama does these days is totally focused on his future political career and not the best interests of America.
While it is next to impossible that the President will follow our resignation recommendation, we are not alone in our distaste and disappointment with this administration. Earlier this week, Steve Chapman, a well known columnist for the Chicago Tribune, one of the main papers in President Obama's home town called for the President not to seek re-election and step aside in 2012, presuming that Hillary Clinton would then become the Democratic Party Presidential candidate in 2012. Mr. Chapman is a 30 year member of the paper's editorial board, a paper that endorsed Obama for President in 2008.
The reasons for calling for a one term Presidency included the following:
- The President's approval rating is at its lowest level since the beginning of his term.
- His political party just lost two seats in the House Of Representatives, one of which has been held by the Democratic party for the past 88 years.
- He is going all in with his latest jobs bill, a bill that most Americans do not think will work.
- The weak economy is getting weaker.
- Unemployment is stubbornly high.
- Home foreclosures are still rampant.
- He battles daily with the Republicans who are quite likely to retain control of the House and possibly gain control of the Senate after the 2012 elections.
More broadly, Mr. Chapman points out that second terms are not often friendly for Presidents. Nixon resigned in his second term, Reagan had to deal with the serious Iran Contra scandal in his second term, and Bill Clinton got entangled with Monica Lewinsky during his second term.
Additionally, many veteran, established staff members decide to move on after the first term, leaving the second term President with a less experienced staff: "Administration officials get weary after four years and leave in droves. The junior varsity has to be put into service. New ideas are hard to come by."
Not a pretty picture. Imagine how far this Presidency has fallen. Less than three years ago Obama had sky high approval ratings. Today they have never been lower. He was supported not only by his home town newspapers but support from major newspapers and news magazines across the country and even across the world. Today, at least one of those home town papers are saying enough is enough. "Hope" and 'change" were actual things to aspire to rather than being bumper sticker fodder.
The reasons we outlined yesterday are basically in line with Mr. Chapman's recommendation of one term. This Presidency has fallen short of all expectations, life in the country is worse than it was just three years ago, his administration has introduced unheard of levels economic uncertainty, tax uncertainty, and self doubt into the national conscious, and this President is more focused on next year's election than reversing the multitude of serious negative trends.
Thus, maybe he should accept Mr. Chapman's recommendation, as laid out in his column: "If he runs for re-election, Obama may find that the only fate worse than losing and is winning. But he might arrange things so it will be (Hillary) Clinton who has the unenviable job of reviving the economy, balancing the budget, getting out of Afghanistan, and grappling with House Majority Leaders Eric Cantor. Obama, meanwhile, will be on a Hawaiian beach, wrestling the cap off a Corona."
It is a scenario that many Americans, Republicans, Democrats, and independents, are becoming increasingly comfortable with.
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