Planes, Trains And Automobiles (And Boats!) - The Continuing Corruption of The Political Class

Definition of corruption - impairment of integrity, virtue, or moral principle

I was moved to find the definition of corruption recently, given the rampant and disgraceful behavior of the American political class in various situations. These situations are so varied, and yet so common to our politicians, that they reminded me of the 1987 movie featuring John Candy and Steven Martin, "Planes, Trains, and Automobiles."

In that movie, Candy and Martin, two completely different personalities end up on a cross country trip of misadventures, both trying to get home to Chicago for the holidays. Their misadventures  include various disasters on planes, trains, and automobiles. Their plight reminds me of the corruption trip of our politicians that also includes plans, trains, and automobiles with an additional misadventure into boats. All of which fulfill my above definition of corruption, the impairment of integrity, virtue, or moral principle.

Planes

I find it hard hard to believe I missed this political crisis of corruption and impairment of integrity from earlier this year but I did. It involves Democratic Senator Claire McCaskill of Missouri. In late March, 2011, she announced she was selling her private plane and paying the owed back property taxes on it of over $287,000. Apparently in Missouri, an airplane owner has to pay property taxes on any plane that they own, something that the Senator did not do.

But that is not her only potential integrity problem. First, according to Politico articles from earlier this year, she also had to write a check to the Federal government when she billed her Senate expense account for purely political trips she made using the plane.  This cost her to refund over $80,000 to the government.

Second, the plane is registered to a shell company that is registered as an LLC in the state of Delaware, a state that does not charge property taxes on private plans. Was this an attempt to shelter the plane from Missouri property taxes? Given that the Senator lives in Missouri, is a Senator from the state of Missouri, used to work for the state government of Missouri, and keeps the plane in a hangar in Missouri, it certainly gets suspicious when her plane gets registered in Delaware.

Finally, the Senator served as the state of Missouri auditor from 1999 to 2007 so claiming ignorance of the state laws on property taxes is not a viable defense. Makes you wonder how a smart, educated, politically savy individual could forget or neglect to pay over a quarter of a million dollars of property taxes. Corruption or incompetence, neither being a good adjective to describe a U.S. Senator.

In a final bit of irony, earlier in 2011, McCaskill signed on as a co-sponsor of Senate legislation that would fire Federal employees if they are “seriously delinquent” in paying their own Federal taxes. Looks like maybe we can add hypocrite onto the charges of incompetent or corrupt.

Trains

Reuters reported on October 27, 2011 that Federal authorities arrested and charged eleven people in connection with an alleged $1 billion fraud involving hundreds of railroad workers from the Long Island Railroad filing false disability claims. Some of the workers claimed that they were unable to work even though investigators found them playing golf, playing tennis, riding bikes, shoveling snow, and doing other strenuous activities.

Among those arrested were several doctors who participated in the scam. The doctors would write up false medical reports stating that the railroad employees were disabled and when the employees were approved for disability payments and disability retirements, the doctors got a kickback from the newly "disabled" employees.

How does the political class figure into this? Consider the following:

• This fraud has been going on for years and years, even before the New York Times reported on it back in 2008. Why was it not handled sooner by the New York political class? One billion dollars is a lot of money to lose, one would have thought it would have been visible much sooner.
• The Reuters report stated that just about every long time Long Island Railroad employee was on disability, far higher than other railroads. Thus, this should have been another glaring red light for those in charge of protecting taxpayer wealth and assets. If, as the New York Times reported, "almost every longtime LIRR employee was receiving disability payments, resulting in a disability rate sharply higher than other railroads," why was the political class so delinquent in its duties to punish the fraud?
• Finally, in the two examples cited in the Reuters article, both persons were receiving well over $100,000 a year in disability payments. Even if these were legitimate disability cases, why were the payments so high, almost double the average household income level of the average American household.

Thus, not only were the politicians delinquent and irresponsible in identifying the massive, $1 billion fraud, they were also irresponsible in allowing disability payments to be so out of whack with the reality of life in America.

Definitely impairment here, allowing a disability system to be so corrupt and wasteful of taxpayer wealth.

Automobiles

You have to love the Obama administration's Energy Department and their ability to constantly throw good money after bad when it comes to "green companies." The latest waste comes to us courtesy of ECOtality. ECOtality is another California based green company (why do all of the Obama administration's alternative energy failures seem to be in California?) that received another Federal government backed loan, this one valued at $115 million.

The objective of ECOtality was to install 14,000 plug in charging stations in 18 cities around the country so that consumers with electric vehicles could pull up and juice up their electric car batteries in a convenient, local manner.

However, things have not gone well, even though the company was mentioned in the President's state of the union message and touted by the head of the Energy Department, Steven Chu:

• The SEC has recently opened an investigation into the company related to insider trading.
• In the first six months of 2011, the company lost $12 million, $3 million more than the year before.
• Half of its first quarter income came from the Federal loan, not from operating or sales success, implying the financial losses were worse than $12 million from an operating perspective.
• The installation is behind schedule and the company may be asking for an extension to their original installation timeline.

I find it hard to believe that the company was to install 14,000 charging stations for a market that probably has no where close to 14,000 electric vehicles on the road. The logic escapes me. Even if all 14,000 were installed, how was anyone going to make money off of them?

How corrupt and non virtuous is your thought process for no one in government or the political class to understand how poorly this math works out: build out infrastructure across the country to the tune of 14,000 charging stations to handle a market size that is far less than 14,000 users of the 14,000 charging stations?  The corruption of their thought process makes your head spin.

Boats

Although Candy and Martin did not involve a boat in their travels to Chicago in the movie, the political class, as usual, goes one step further when it comes to corruption and impairment of integrity. We reported on this incident a while ago but it is worthwhile going over it again, given the theme for this post.

John Kerry is a U.S. Senator from the state of Massachusetts. He lives in Massachusetts and serves the state of Massachusetts. The Senator is one of the wealthiest people serving in Congress since he married into the Heinz family fortune, probably easily worth hundreds of billions of dollars.

However, as reported by the Associated Press in July, 2010, the Senator seemed to have had a little integrity and moral impairment back in the time frame when he purchased a new yacht worth about $7 million. Rather than berth it and maintain it in Massachusetts, he took the New Zealand built boat across the way to Rhode Island where he would not have to pay both Massachusetts sales tax and annual Massachusetts excise taxes.

These are not trivial sums. The Associated Press report estimated that the home state of the U.S. Senator was missing out on $437,500 in one time sales taxes and $70,000 a year in excise taxes. I would say this corruption puts him in the same class, using the same cheat-my-home-state out of legally due taxes, as the good Senator from Missouri did with her airplane registration in Delaware misadventure.  Just another instance of political corruption, a major impairment of integrity, virtue or moral principle.

The good thing about the movie is that it was funny and the misadventures were happening to someone else. The unfortunate thing about political class version of "Planes, Trains, and Automobiles (and Boats)," is the the misadventures happen to the taxpayers and the associated waste of taxpayer wealth. There is nothing funny about that.

This type of behavior needs to stop, it is a disgrace to the country and a waste of money that could be used for some many other good purposes. That is why Step 38 and Step 39 from "Love My Country, Loathe My Government" are so important.

Step 38 would require every politician to sign off on a shared value statement every year of which integrity would be a prime component. Hopefully, if they at least read and sign off on the promise to remain in integrity, we would have a chance of seeing behavior that does not remind us of  the political misadventures of "Planes, Trains and Automobiles."

Step 39 would impose term limits on every Federal government politician. We have to find a way to reform our political processes so that we get people into elected office that want to serve us, the citizens, rather than how can they improperly use government resources to keep themselves in office or use their position and knowledge of the system to avoid paying the taxes they rightfully owe.

Integrity, virtue and moral principle. Wouldn't that be a nice way to describe our politicians and leaders? It is certainly not the case today and that makes for a very sad movie ending.




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/

Two exmaples cited in the Reuters article stated that the two people involved int he fraud were receiving over $100,000 a year in disability payments. Even if they were legitmate disability claimants, how does the polticial class and the Long Isldan Railraod jsutify such high disability payments, almost twice the average income form an average American household?

In all cases, it is quite apprent that the polticial class has fialed in its fiduciary resonbitilies by not delaing with the fraud sooner and allwoing disapbility payemtns to be so high relative to average hosuehold income in the country.

Automobiles

While America Burned, The Political Class Fiddled (With Nothing Of Importance)

Consider the current burning issues facing America and Americans:

1. Unemployment is stubbornly stuck at around 9% with about 400,000 Americans filing for first time unemployment benefits every WEEK.
2. This 9% translates into about 14 million Americans and does not include those Americans who have given up looking for employment or who are underemployed.
3. We continue to wage a lost war on drugs with a lawless narco state evolving just south of our borders, a state controlled by violent drug cartels.
4. Our kids continue to be under educated vs. much of the rest of the world.
5. Our borders still leak and we have no effective or compassionate plan on how to deal with the millions of illegal aliens already in the country.
6. Our national debt is fast approaching $15 TRILLION, or about $132,000 per American household.
7. Health care costs continue to increase unabated, rising about 9% in 2010, with no relief or solution in sight (including the ill written, ill designed, and doomed Obama Care).
8. Gas prices are still up about 100% from a few years ago with no relief in sight along with also no national energy strategy in sight.
9. Corporate, union, PAC, and other organized big money sources continue to pervert and subvert our democratic and political processes, with the blatant cronyism of President Obama's failed alternative energy loans just the latest example of rampant government corruption.
10. Our political processes are so broken that incumbent politicians start running for re-election over a year before the election, about the same time when the resolution of our nation's issues become secondary in these incumbents' eyes.

This list probably includes most of the pressing issues that Americans would put on their personal list as being the biggest challenges and fears in their lives. However, while the country seems to be burning down, what have the Washington politicians been working on or fiddling with recently:

- This week, three members of Congress sent a letter to a fourth member of Congress, Fred Upton, who is the chairman of the House Energy and Commerce Committee. The letter urged Mr. Upton to hold a Congressional hearing on the use/abuse of human growth hormone in the National Football League, according to an October 25, 2011 Daily News article.

Let's do some simple math. There are 32 NFL teams with about 50 players on their roster at any one time. Thus, there are only about 1,600 members of the NFL at any one time. There are 14 million unemployed Americans.


So now at least four members of Congress, and more if hearings are actually held, are preoccupied with and will be investigating the potential of HGH abuse by a very small set of rich Americans rather than focusing on the generally non-rich 14 million unemployed Americans. Fiddling around while millions struggle economically.

- College football is undergoing a lot of changes lately, with conferences looking to expand and pick off schools from other conferences to expand the number of schools/teams in their own conference. The primary driver to the reshuffling of these conferences is the potential for increased television revenue. Bigger college football conferences usually equates to more revenue flowing to the schools already in the conferences.

One of the subplots to this whole situation is the competition between Louisville University and West Virginia University as they compete for one opening in the Big 12 Conference. Rather than work on reducing the onerous national debt of $15 TRILLION, Kentucky U.S. Senator Mitch McConnell reportedly personally called the Big 12 conference's officials to lobby for Louisville and West Virginia U.S. Senator Jay Rockefeller is reportedly to also be involved, according to an article in the October 27, 2011 issue of the St. Petersburg Times. Fiddling with college football while the nation burns.

- In the October 18, 2011 issue of New York Times, the following news blurb occurred:

The Senate stood up Tuesday for the humble white potato and rebuffed an effort by President Obama to limit its consumption by millions of schoolchildren around the country. The administration has proposed limiting the amount of potatoes and other starchy vegetables that can be served in school lunches to one cup per student per week, and banning them from school breakfasts.


The Senate on Tuesday moved to block the proposal by adopting an amendment to the 2012 spending bill for the Agriculture Department. The amendment, approved by unanimous consent, prohibits the department from setting “any maximum limits on the serving of vegetables in school meal programs.”

So let's review. At least four House members are worried about whether rich football players use HGH and now we find out that all 100 members of the Senate and major members of the executive branch are heatedly debating what should be the weekly ration of potatoes should for our kids. Our kids are going to school to be under educated while our so-called leaders debate about what the kids should eat while they are being under educated. Fiddling around in the cafeteria while they should be working to fix what goes on in the classrooms.


- The Obama administration recently declared that it will aggressively start to shut down and prosecute the owners/operators of medical marijuana clinics in California. Even though the clinics are legal under California state law, they are illegal under Federal law. The original purpose of the clinics was to provide marijuana pain relief to people suffering from various ailments and sicknesses, ailments and sicknesses that most medical authorities agree can be eased by smoking marijuana.


While a strong case can probably be made that the process has been subverted in some cases to get marijuana to people that really do not need it for pain relief, at least some Americans' lives are eased and made more bearable because of the clinics. By shutting down the clinics, there is no doubt that this Obama administration drive to shut down the clinics will add significant physical pain to the lives of many ailing Americans.


While the administration fiddles with some marijuana clinics, it has no plan in place to deal with the overwhelming violence, reach, and drug operations of the Mexican drug cartels. Seems the administration would rather hassle and persecute some small shop owners and medical marijuana users, entities that pose no threat to our national security, then deal with the real drug abuse problem, namely the Mexican cartels.


- Recent news reports indicate that Obama's economic stimulus initiative paid out about $230 million to various entities to  run anti-soda ads. The purpose of the ads was to address the obesity problem in the country by demonizing the drinking of sugary soda drinks such as Coke and Pepsi.

No one can doubt that we do have an obseity problem in this country, a problem that directly contributes to disease and increases our health care costs. No argument there. But solving the obesity problem should be a long term, strategic, coordinated public health effort, not a one time set of anti-soda television ads.

Again, just another example of the Obama administration's blatant inability to think strategically, it only can develop short term tactical programs that seldom work without an overarching  strategic framework.

The point of the stimulus program was to immediately help create jobs and the conditions for an economic recovery. The stimulus plan has obviously failed, as witnessed by the 14 million Americans currently unemployed. Maybe it failed because the political class was on a sugar high and did not realize that another quarter million taxpayer dollars was not being used for its intended purpose, i.e. create economic recovery as soon as possible. Telling people to stop drinking soda does not create jobs and does not attack the obesity problem, it just fiddles away millions of taxpayer dollars.

Giving this inability to set priorities straight, always dealing with insignificant issues vs. our nation's most pressing issues, we must find a way to reform our political processes so that we start getting smart people in office that can resolve our economic, drug abuse, education, and other major issues.

Many of these processes are laid out in "Love My Country, Loathe My Government," with the most important process being a way to implement term limits for Federally elected officials. As a nation we deserve better than the fiddlers we currently have in Washington, fiddlers that would make Nero proud but who do nothing to stop the burning down of America.










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/

Joe Biden And Harry Reid Head Deep Into The Twilight Zone

If you follow too many of our politicians' exploits, quotes, press releases, and actions you really start to believe that they live in a different dimension or different reality than the rest of us. One of our most frequently viewed post in this blog was the one that debated whether Nancy Pelosi's activities belonged on the Twilight Zone or Comedy Central, based on a collection of the best (or worse) quotes from the former Speaker of the House.

Turns out that Joe Biden and Harry Reid might also belong in Ms. Pelosi's alternative reality. Let's start with the Vice President. Over the past week or so he has been on a rant that if the Republicans in Congress do not immediately pass one of the President's inane job creation bills, more women would get raped, more shop owners would get robbed, and crime would continue to go up:

“Murder will continue to rise, rape will continue to rise, all crime will continue to rise,” are his exact words.

However, the Vice President apparently did not let facts and trends get in the way of his rant. Take a look at the following graph that tracks violent crime over the past 50 years through the end of 2010:

It is pretty obvious from anyone who views these fifty years worth of crime statistics that violent crime, in total, rape, assault, murder, and robbery rose pretty steadily until 1990. Since 1990, all of the trends have been steeply downward, i.e. crime rates have been steadily dropping despite what the Vice President says. How the Vice President came away with the exact opposite conclusion is almost beyond comprehension.

But I wanted to give him the benefit of the doubt. I went to the FBI website to see if I could find FBI tracking numbers that would dispute the above graph and add at least some sort of minimal credibility to the Vice President's rant. However, on the FBI website I found a September 19, 2011 press release that contained the official 2010 crime statistics and the following insights:

"According to the figures released today by the FBI, the estimated number of violent crimes in 2010 declined for the fourth consecutive year. Property crimes also decreased, marking this the eighth straight year that the collective estimates for these offenses declined.

The 2010 statistics show that the estimated volumes of violent and property crimes declined 6.0 percent and 2.7 percent, respectively, when compared with the 2009 estimates. The violent crime rate for the year was 403.6 offenses per 100,000 inhabitants (a 6.5 percent decrease from the 2009 rate), and the property crime rate was 2,941.9 offenses per 100,000 persons (a 3.3 percent decrease from the 2009 figure)."

Given that the FBI did no release official 2010 crime statistics until September, 2011 and did not even release preliminary 2010 crime numbers until May, 2011 (another FBI press release), it is highly unlikely that the Vice President has any knowledge about 2011 crime statistics that would support his rant.

So let's review. The graph shows that violent crime is still declining, the FBI officially decrees that violent crime has been declining for the many years, and I cannot find any source, credible or non-credible, that would support Mr. Biden's assertion. But somehow the Vice President strongly asserts that crime, notably robbery and rape, is continuing to rise, contrary to all the available evidence. Only in the Twilight Zone of the political class world.

But if the Vice President is heading deep into the Twilight Zone, Senator Harry Reid is probably riding shotgun. Consider a recent assertion from the Senate Majority Leader:

"It is very clear that private-sector jobs are doing just fine," the Nevada Democrat said. "It’s the public-sector jobs where we have lost huge numbers."

Obviously, Mr. Reid is also not looking at the reality we are looking in. Let's start with the following graph, courtesy of the Heritage Foundation using data from the Bureau of Labor Statistics:

On a percentage basis, employment in the private sector of the economy is currently (September, 2011) down 5.4% which is three four times higher than the loss of employment in the government sector. Since the private sector is larger than the government sector, both the percentage and total number of jobs lost in the private sector dwarfs what has happened to government employment, completely opposite of what Mr. Reid believes happened.

Don't believe what the Heritage Foundation chart says? Consider some other charts I researched with more Bureau of Labor Statistics data. The above chart is the straight unemployment rate of the private sector vs. the government sector of employment. Currently, the private sector unemployment is over 10%, about three times higher than the unemployment rate of government workers. What part of this simple analysis does Mr. Reid not understand?

Don't like dealing with percentages? Consider the above chart which contains the total number of jobs in the private sector and government sector of the economy over the past ten years. Not only do we see the big drop in private sector jobs a result of the Great Recession, we also see how the number of private jobs also dropped in the early 2000s as the nation came out of another recession. In both cases, government job volumes suffer very little, contrary to what the Senator says.

I am pretty sure that I am not crazy. With a degree in statistics, I am pretty confident that I can accurately analyze some simple data and charts. In both cases, the assertions by Reid and Biden make absolutely no sense. Their views of the world are in complete contradiction to our reality and what the data tells us.

There are only two possible reasons for their Twilight Zone interpretation of the data. First, they may not truly understand how to read the data and the reality that we live in. If this is the case, we should not be surprised how impotent and ineffective our current political class has become. If they cannot understand simple data and graphs, how can we expect them to understand the major issues facing the nation and develop the necessary plans to address those issues?

Second, maybe they actually do understand the data, graphs, and the reality but chose to ignore them since the facts are not in line with their political games and objectives. If that is the case, then we are dealing with people that cannot be trusted since they are intentionally misleading the public.

In either case, not understanding reality or ignoring reality, these people do not deserve to serve us and the country any longer than necessary. They either do not know how to solve our problems because they do not understand the data associated with the root causes of our issues or they do not want to solve our problems since they are too busy politicking.

Best to send them off to the Twilight Zone as soon as possible and replace them with people that are smart enough to understand simple data analysis and who are honest enough to deal with the data and our issues honestly and in a straight forward manner.

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/



One Last Look (For Now) At The Solyndra Cronyism Mess

Yesterday we took a detailed look at the scandals, cronyism, and waste of taxpayer money that the Obama administration has institutionalized relative to alternative energy projects and programs. The poster child for failure in this area is Solyndra, a former California solar panel company that received over half a billion in taxpayer loan guarantees, despite warnings from man sources that it was not a viable long term company. It promptly went out of business, taking the half a billion with it.

This is just one of the dangerous "bets" (Joe Biden's words) that the Obama administration is making in the alternative energy industry. Odds are the American taxpayer will lose many of these bets, wasting wealth of the nation in the process. These bets are going to be lost because, as always, the Obama administration continues to think very tactical about life, never doing their necessary strategic thinking ahead of time that might result in more efficient use of taxpayer resources. Consider a few different approaches that might be a better use of our tax dollars in the strategic energy field:

1) Several years ago, the Nova television on public television did an excellent piece regarding solar energy (http://www.pbs.org/wgbh/nova/solar/house.html). Their approach was to completely retrofit a typical southern California home with solar energy technology at that time, with the intent to make that one home as nearly energy independent as possible. If my recollection is correct, they accomplished this task for the cost of about $60,000. (side note - the payback for the project in electricity savings was less than eight years)

Let's make a few simple assumptions and see where some basic math leads us. Let's assume that one third ($20,000) of that installation cost was for labor and two thirds ($40,000) was for materials, primarily the solar panels that were installed on the roof of the house. We know from the many Solyndra news reports, that a primary reason the company failed is that the cost of Chinese solar panels have dropped over 30% in the past year, with some reports indicating the price drop has been closer to 40%.

Let's assume that the actual cost drop was one third so that that original solar panel cost of $40,000 is now about $26,000. Thus, to replicate the Nova experiment today, the installation cost would not be $60,000 but closer to $46,000. This $46,000 cost would be for a sure thing since Nova already proved in the concept from a technology perspective years ago. In other words, there would not be any Joe Biden "bets" involved, it would b e a sure thing.

Now we know from yesterday that Solyndra has already cost the American taxpayer about $530 million. We know that another Federal government loan to a company that involves Nancy Pelosi's brother-in-law involves $737 million. This project will attempt to build a massive solar energy farm in the Nevada desert, certainly not a sure thing. If it is successful, it will eventually provide electricity to 43,000 homes.

$530 million and $737 million worth of "bets" comes out to a grand total of $1.267 billion. Theoretically, if the Obama administration had been honest (i.e. cronyism was not part of their agenda) and had thought strategically, they could have diverted that $1.267 billion and could have made about 27,000 U.S. homes very close to energy independence ($1.267 billion divide by the $46,000 cost per house discussed above). This approach:

• Would have been a sure thing (not a "bet") since we know this technology already works from Nova.
• Would have contributed to energy independence almost immediately, we would have not had to wait for years for a theoretical solar farm to be constructed in the Nevada desert.
• Would have protected the some of the perceived honesty of government and political class, which would not have been called into question because of the cronyism and favoritism of the current approach.
• The 27,000 actual households affected would have accounted for about 60% of the theoretical households that the Nevada project may affect. If we slightly changed the approached and had the Federal government finance only half of the installation and made each homeowner finance the other half, that 27,000 number jumps to over 50,000 households, more than what the Nevada solar farm could impact.

2) Let's take this example one step further. It is my opinion, and no one has been able to convince me differently, that the Department of Energy is quite useless. They have never backed a research project that made a significant contribution to the country and they have yet to come up with a strategic, comprehensive, and effective national energy program.

The Cato Institute has done an outstanding job going through every government department and function, identifying those that need to be changed, downsized, or terminated. Their detailed work can be found at their website. They strongly recommend that the Energy Department be terminated immediately and their annual budget of about $38 billion be redirected.

If we use the Nova model discussed above, over just a ten year period, the annual redirected Department of Energy budget could be used to retrofit over 8 million U.S. homes with existing solar technology to make them nearly energy independent. If the homeowner picked up half the cost, then in only ten years, over 16 million U.S. homes could be made solar powered.

Ten years, a sure bet. Compare that to massive solar and wind farms that have not even been designed yet, never mind construction started.

3) As another example of how the Obama administration thinks only tactically, consider President Obama's own words from the press conference he conducted on Solyndra n early October:

"What's also a problem, as I said, is that other countries are subsidizing these industries much more aggressively than we do. Hundreds of billions of dollars the Chinese government is pouring into the clean energy sector, partly because they're projecting what's gonna happen ten or twenty years from now."

So let me get this straight. We need to make "bets" of hundreds of MILLIONS of dollars on clean energy while the Chinese are spending hundreds of BILLIONS of dollars on clean energy? It is like bringing a gun to a knife fight, we have the knife and the Chinese have the gun, who wins that battle? If the Chinese government is spending a thousand times more (hundreds of billions vs. hundreds of millions), they have the winning gun and we have the losing knife in this fight.

All we end doing in this situation is waste taxpayer money, millions will almost always lose out to billions. As the old saying goes, it is like spitting in a hurricane, the impact will never be felt. The Chinese have already won, placing losing bets of hundreds of millions of dollars to political cronies only buys you campaign donations, it does nothing to help the country's energy situation. And it is certainly not strategic thinking.

4) Consider an example of the types of problems that arise when you do not have an overarching strategic energy plan. The Obama administration is busy with these tactical efforts without considering how and if they fit into an overall plan.

In an article in the October 14, 2011 issue of Business Week, the writer points out a major problem with solar and wind power, namely there is no good way to store the energy when the wind does not blow and the sun does not shine. Thus, even if the large Nevada solar farm comes online, it will only be a part of the puzzle. The ability to store the energy from these alternative sources will not be solved for many years, according to the article.

Thus, even if every one of these Obama energy bets come to pass, it may not matter if there is not a solution to the grid storage problem and the ramifications of the problem as laid out in the article. If a good strategic plan was in  place, the grid storage problem would be done in synch with the energy generation problem.

Also, if we as a nation had a good strategic energy plan, it would have already identified the reality that the Chinese own the generation technology. They have already solved that puzzle and they own that part of the market. 

Our nation's strategic plan, however, would have also identified the opportunity to excel in the unsolved grid storage problem for alternative energy technology. That is where we should be investing, from a strategic perspective. Without a national strategic energy plan, the political class is just spitting in that hurricane with their cronyism friends and long shot bets.

Obama is investing in the wrong area of the market strategically, although he is investing in the right area of the market politically. Unfortunately, that wastes taxpayer money with no return. He should have read Steps 23, 24, and 25 from "Love My Country, Loathe My Government." These steps provide a process for putting that strategic energy plan together and keeping that plan in harmony with the environment. Better yet, it does not involve Obama style cronyism.

We will try to stay away from the stench and waste of Solyndra and related Obama cronyism for a little while. However, I doubt this is the last time we will review the issue, cronyism is a cancer that refuses to die a peaceful death, especially in an election year.


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 Obama Adminstration's Bad Bets On Alternative Energy - Disgusting, Scandalous Cronyism

Definition: Crony capitalism - a term describing a capitalist economy in which success in business depends on close relationships between business people and government officials. It may be exhibited by favoritism in the distribution of legal permits, government grants, special tax breaks, and so forth.


The crony capitalism of the Obama administration has been on full display the last month or so, focusing on the unrelenting compulsion of the administration to waste away taxpayer money and wealth on ill deserving, non-profitable business ventures of the political friends of the Democratic party and the President. I cannot recall any other Presidency in my lifetime that was so blatant and careless with our money in rewarding it's friends with little value in return.

The Obama administration's version of crony capitalism seems to be focused on alternative energy companies, starting with Solyndra, a bankrupt solar panel manufacturer company in California. As you may recall from previous posts in this blog, the administration approved a half a billion dollar loan to the company even though PriceWaterhouse, the Office Of Budget Management, White House officials, the Treasury Secretary, the head of the President's Economic Council, and other informed sources warned, ahead of granting the loan, that the company was unlikely to survive or flourish.

Within two years after granting the loan, the company went under and the FBI, Congress, and other government organizations are investigating potentially criminal behavior. Solyndra's top executives have claimed their fifth amendment rights in front of Congressional hearings in order to protect themselves in any subsequent criminal actions.

The latest disgraces from the Solyndra disaster include:

• It has become known that the Department of Energy likely broke the law by subordinating the Federal loan to the investments of private investors, a clear violation of the loan program. This subordination included putting the  interests of a foundation with strong ties to a major Obama fundraiser, George Kaiser, ahead those of the American taxpayer. Crony capitalism?
• This subordination will make it impossible for the government to recoup any of its loan since the assets of the bankrupt company will likely fall short of satisfying even the private investors that were moved ahead of the taxpayer.
• In a circular conflict of interest twist, an Obama appointed advisor to the Energy Department, Steven Spinner, was a major driver of approving the Solyndra Federal loan even though his wife worked for Solyndra's law firm. A New York Times article from early October discussed Solyndra-related emails: "The emails show Spinner discussed the pending final decision often with Solyndra officials, Energy Department colleagues, and the White House budget office. Crony capitalism?
• An LA Times article from September 26, 2011 quoted a person who was involved with these discussions as saying, "It was completely predictable that there would be a colossal failure among the bets." I assume the bets included giving a half a billion dollar loan guarantee to Solyndra without doing proper due diligence. See more about how the government "bets" using taxpayer money as explained from Joe Biden below.
• Numerous sources are now reporting that California-based Solyndra donated $7,500 to the California Democratic Party and company employees had also contributed more than $20,000 to Democratic candidates. Crony capitalism supreme?

In an earlier post we referred to the "stench of Solyndra." If I could find a stronger word than stench, I would use it here. Solyndra is pure cronyism and it cost the American taxpayer over half a billion dollars for nothing in return.

But solar panels are not the only source of alternative energy capitalism cronyism. Comparable cronyism, waste, and stench is also prevalent in the Obama administration's support of alternative auto technology.

According to a recent ABC News report, Fisker Motors is a Finland based automotive company that is working to develop electric cars. Unfortunately, two years ago the Obama administration approved a taxpayer backed loan for $529 million for this Finnish company to help with their technology development.

Why U.S. taxpayer dollars went to back a government loan to a Finnish auto company should have every American up in arms, especially considering how fragile and desperate our domestic car industry was. However, since then, the following distressing situations have arisen:

• The first line of cars from Fisker is being assembled in a rural Finland auto plant owned by a another Finish company, Valmet.
• The reason given for building the U.S. financed cars in the Finland boondocks, according to the Fisker owner and founder, Henrik Fisker, is that: “There was no contract manufacturer in the U.S. that could actually produce our vehicle. They don’t exist here.”
• This situation arose despite the fact that Vice President Joe Biden hyped the loan as a way to create thousands of American manufacturing jobs. Two years after the half billion dollar loan and risk, no U.S. Jobs have been created beyond some preliminary engineering work but no manufacturing jobs.
• Fisker went on to say: "We're not in the business of failing; we're in the business of winning. So we make the right decision for the business. That's why we went to Finland."
• Fisker is more than a year behind in rolling out its $97,000 luxury electric vehicle. Only forty units of this luxury model have been made and only two of the forty have actually been sold.
• The ultimate objective of the Federal loan to the Finnish company was to get a viable, low cost electric car developed but two years after the loan was approved, no one outside of the company has even said an artist's conception of what this car might look like.
• Joe Biden still believes that the company will eventually build tens of thousands of electric cars at a closed down GM factory Fisker
• A General Accounting Office review found: "DOE cannot be assured that the projects are on track to deliver the vehicles as agreed. It also means that U.S. taxpayers do not know whether they are getting what they paid for through the loans."
• The Department of Energy has also invested almost another half a billion taxpayer dollars with a loan to another electric car manufacturer, Telsa Motors.
• SEC filings show that Telsa has never had a profitable quarter and has no experience in mass auto production. It eventually wants to “mass produce” an electric car that costs about $57,000.

Boy, this really smells like another Solyndra. Hundreds of millions of taxpayer dollars, if not billions, put at risk with start up companies that could not raise enough capital from the private investment market, an investment market that is run by people who actually know what they are doing from a venture capital perspective. Why would the Federal government be so careless with our money? Easy question to answer if you delve into the ABC report:

• One of Fisker's biggest financial supporters, records show, is the California venture capital firm Kleiner Perkins Caufield & Byers. Kleiner Perkins partner John Doerr, a California billionaire, hosted President Obama at a February dinner for high-tech executives at his secluded estate south of San Francisco.
• Doerr and Kleiner Perkins executives have contributed more than $1 million to Federal political causes and campaigns over the last two decades, primarily supporting Democrats.
• Doerr serves on Obama's Council on Jobs and Competitiveness.
• Former Vice President Al Gore is another Kleiner Perkins senior partner. Gore could not be reached for comment.
• A former Tesla board member, Steve Westly, is an Obama bundler who raised hundreds of thousands of dollars for the president in 2008 and for his 2012 re-election campaign.
• The Westly Group was also a financial supporter of Tesla Motors until Tesla went public in 2010, and Westly continues to back the company.
• Tesla's founder and CEO, Elon Musk, is a major political contributor who has primarily backed Democrats, including Obama.
• According to published reports, another Tesla investor is Nick Pritzker, a donor to Obama and a cousin of Penny Pritzker, the national finance chair of Obama's 2008 campaign.

What a surprise, just like Solyndra, Obama cronies and supporters get free use of taxpayer money. In return, Obama and Biden and other Democrats get campaign re-election funds and support. A cozy, scandalous, significant conflict of interest that raises numerous, odious questions:

• Why were hundreds of millions of U.S. taxpayer dollars shipped out of the country to the benefit of the friends of the political class and a foreign car manufacturer?
• Why were hundreds of millions of taxpayer dollars spent on vehicle development on cars that the vast majority of Americans will never be able to afford?
• How many American jobs do we really think will be created if these companies are to make the small amount of autos that cost anywhere from $57,000 to $97,000? Most new cars sold in America go for far less than even the $57,000 price.
• Are we to believe there really was not any U.S. auto manufacturing facility that could have been used to begin the Fisker manufacturing process vs. going out into the Finnish countryside for the factory? How much more advanced could a rural Finnish factory be over any number of U.S. factories?
• Shouldn’t the money been given to a U.S. car manufacturer o build up the domestic expertise of design and manufacturing of electric cars in this country and not Finland?
• Why were conditions not put in place that would have at least provided Americans with a look at what their loan guarantee was going to look like?
• Since both Solyndra and Telsa have never had a profitable quarter of financial results, isn’t Telsa closer to a Solyndra fate than a successful loan?

Answers to these questions can all be covered by a classic Joe Biden statement relative to these alternative energy projects: “Folks, we're making a bet," Biden said on Oct. 27, 2009. "We're making a bet on the future, we're making a bet on the American people, we're making a bet on the market, we're making a bet on innovation.”

Great, billions of taxpayer dollars at risk via all of the administration’s energy loans and Biden thinks we are just betting on some quite large long shots, given the financial track record and operations records of Telsa, Fisker, and Solyndra. Betting taxpayer money in support of political supporters. Disgusting.

But the cronyism and favoritism in alternative energy does not end with these car companies and Solyndra. Consider just a sampling of other Obama administration conflicts of interest:

• In late September, the Department of Energy approved a $737 million loan guarantee to  a company Solarserve that is working on a solar plant in Nevada. Given Obama's history of cronyism with Solyndra, Fisker, and Telsa, it should come as no surprise that this project was also infected with cronyism. Turns out that the brother-in-law of Nancy Pelosi, Ronald Pelosi, is second in command at the primary energy investment fund that backs the Solarserve effort. Surprise, surprise.
• The Department of Energy also recently granted a $135 million loan guarantee to a wind power company, Brookfield Asset Management. For the past two years, the company has been represented by the lobbying firm called Heather Podesta and Partners, LLC. If the name Podesta sounds familiar, it should be.  Heather Podesta, a top election campaign fundraiser for Obama, is married to Tony Podesta who is the brother of John Podesta who has served long and loyally in Obama's past political efforts. Disgusting conflict of interest.
• It seems to never end. News reports indicate that the Department of Energy handed out another Federal loan guarantee to another solar company in September, this one worth $1.37 billion, to BrightSource energy. This company wants to build the largest solar power plant in the world. A former board member of the company, John Bruson, is Obama's nominee for Commerce Department secretary.

Unbelievable. Risky bets on risky companies by people in government that know nothing about standard business processes, never mind alternative energy technologies. One of the consistent things about these guaranteed loans is that we do not hear any Democrats complaining that loans were made to Republican-friendly companies. You know if that was the case, that word would surely get out. It has not, so we can safely assume that the rampant capitalism cronyism going on is purely Democratic.

We have got to find a way to get money and corporations out of our election processes in order to minimize this cronyism. Step 6 from "Love My Country, Loathe My Government" would be a good first step since it would forbid any organization from contributing to any political campaign. Only individual Americans could contribute. I see no other way to minimize this disgraceful waste of taxpayer money and corruption of our political processes.

Two quotes come to mind:

1. "If a technology is viable in the market, no government support is required. If a technology is not viable in the market, no amount of government support will make it viable." Author unknown. If any of these companies and their products were viable in the market, smart venture capitalists would provide all of the needed funding and money required to bring the products to market.
2. "These cronyism connections suggest that the Obama administration was not only 'felony dumb' in its handling of the DOE loan program, but consciously corrupt." Congressman Brian Bilbray, as reported in the National Review on September 29, 2011.

Disgusting, scandalous and felony dumb, that about sums it up.




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/

Why All Incumbents Need To Be Dumped In November, 2012, Economically Speaking

If we look at where the economy sits today, a little over a year before the next national elections, it has become unmistakeably clear that we need to make some serious changes to the economic policies, strategies, and directions of the country. Keeping the same people in office, the ones that gave us these failed economic policies, strategies, and directions, beyond next November would seem foolish since these are the same people who created the following malaise:

- Most people should know that the overall unemployment rate in America has been unacceptably high in the 9% range, equivalent to about 14 million Americans, for what seems forever with the underemployed rate adding millions more to the 14 million. However, according to a recent article on the Mainstreet website, for those adults that are over 25 years old:

• The unemployment rate for those adults with only a high school or less education is 14%.
• The unemployment rate for those with less than a four year college education is 9.7%.

- In the first quarter of 2011, the average number of private sector jobs created was 191,000 per month. In the second quarter, the average number of private sector jobs created was 138,000 per month. In the third quarter, the average number of private sector jobs created was 117,000.

Obviously, the economy seems to be weakening as we go through the year even though we are out of the recession. Unfortunately, Harry Reid thinks just the opposite relative to job growth with his recent, inane statement that the private sector job situation is just fine. More on his denial of reality in a few days in another post.

- The number of Americans in the long term unemployed situation (unemployed more than 27 weeks) was 6.1 million in September, 2010 and despite the end of the recession, was 6.2 million in September, 2011. As with the private sector job creation trend, the long term unemployment trend is also not positive.

- At the end of 2008, the average price of a gallon of gas was about $1.61. At the end of 2010, the average price of a gallon of gas was about $3.00. Today, I doubt anyone in America is buying gas for less than $3.20 per gallon. Thus, American households are spending more and more on gas which leaves less and less disposable income to grow the economy in other market areas.

Bernard Baumohl, chief global economist of the Economic Outlook Group, told Mainstreet he expects gas prices to stay in the $3 to $5 range for the next three years. If true, this will contribute little relief to any improvement in overall economic conditions.

- Mr. Baumohl's view of 2012 is pretty consistent with many, many economists. He foresees a little uptick in consumer spending in the fourth quarter for the holidays but once the holiday bills hit early in 2012, the potential for economic contraction is a real and growing threat.

- Household income at the end of the last recession was estimated to be $53,528. Two years later, after the recession, Sentier Research estimates that average household income has decreased by 6.7% to only $49,909. But what is worse than the overall average:

• Single parent households have seen their average household income decrease 7.3%.
• Households headed by a young adults less than 25 years old lost about 9.5% of their household income on average.
• African-American households saw their average household income decline 9.4%.

- A recent survey conducted by consulting firm FICO of bank risk managers said housing prices are unlikely to return to pre-recession 2007 levels before 2020, nine years from now. Thus, housing is unlikely to contribute to economic growth in the coming years. 73% of those surveyed expect to see home foreclosures to be a major problem for at least another five years, further depressing housing industry economic activity.

- In August of 2011, there were about 8.8  million Americans who considered them selves involuntary part time workers, workers who were working at part time jobs but who desired full time employment. Unfortunately, within one month, by September, 2011 9.3 million Americans considered themselves involuntary part time workers.

The Mainstreet article reporting these statistics correctly point out that these involuntary workers have less disposable income given their part time status, are more likely to not have company benefits which imposes additional costs on the part time workers, and the typical part time worker is likely to have higher work-related expenses since they could be traveling to more than one job to increase their income. All of these factors are a drag on consumer spending and the potential for the economy to grow.

- The Census Bureau recently reported that the percentage of Americans living below the poverty line was up to 15.1% in 2010 vs. 14.3% in 2009, despite the end of the recession.

- A recent Gallup survey found that American adults with health care insurance coverage dropped from 85.9% in September, 2008 to 82.3% in September, 2011 despite the end of the recession.

- IRS tax return statistics show that the number of American tax filers who had Adjusted Gross Incomes above one million dollars has dropped by about one third when you compare total 2007 tax returns vs. 2009 tax returns.

- Mainstreet reports that home mortgage defaults and student loan defaults are up significantly despite the end of the recession. These defaults will likely severely damage the future credit worthiness rating of many Americans, especially younger Americans, making it more difficult for them to get affordable credit treatment in the future, further depressing the potential for economic growth.

- Mainstreet reports that the Federal government's national debt load has already gotten to about the $14.9 TRILLION level, placing an individual debt burden on every American household of about $130,000. Since there is no indication that the political class has any clue or inclination on how to reduce this number, we can assume that the $130,000 load will only get worse, further burdening economic growth going forward.

So, where will economic growth come from:

• If the negative housing, foreclosure, and mortgage trends do not change, economic growth will not come from the housing industry.
• If the negative unemployment and underemployment trends do not change, economic growth will not come from putting more people to work.
• If the negative trend in private sector job growth does not change, economic growth will not come from putting more people back to work, regardless of what Harry Reid says.
• If the negative trends in household and student defaults do not change, the inability to get credit for future purchases and economic growth will not come from credit worthiness improvement.
• If the negative trend in gasoline prices does not change, disposable income will continue to be diverted into increased gas prices and not be available for economic growth.
• If the negative trends in those without health care insurance does not change, the amount of household income at risk to cover unexpected health costs will not be available for economic growth.
• If the negative trend in government spending and national debt does not change, more and more of taxpayer wealth will be diverted to pay interest on the national debt and not be available for economic growth.

Certainly not a pretty picture. It is especially grim for the long term unemployed, single parent households, younger adults, African Americans, the chances of becoming a millionaire earner, and the less educated in America, as the above statistics show. In other words, given the gross mismanagement of the American economy, no American of any type should think that any Washington politician deserves to be in office a single day longer than their current term.

From President Obama to long term Congressional veterans to first time Congressional members, they all need to go. I am now convinced that they are 1) unable to grasp the complexities of their office and responsibilities and 2) are also unwillingly to step up and learn and work at solving the nation's major issues. They are so preoccupied with their own self importance, their own re-election campaigns, and their long term political and financial status that they have allowed the economy and the nation's future to degenerate into the above situation, a situation where sources of future economic seem non-existent.

What have our incumbent politicians been involved with recently in the face of these dire economic conditions:

• President Obama has been on a campaign tour bus and on Air Force One traveling around the country on his perpetual re-election campaign, pushing his weak, likely ineffective, and unimaginative short term jobs package.
• Congress gave itself a five week vacation in August despite the economic conditions.
• Over the past week or so Congress has been debating legislation that would establish how many potato servings should be served to kids in school cafeterias.
• Rumors have it that the Congressional Super Committee that is supposed to come up with rational, sane plans to cut government spending is making no progress.

What a disgrace. The country is facing serious, long term economic growth challenges and these people are worried about potato servings. No obvious focus on problem resolution, no obvious desire for problem resolution, no obvious ability to execute problem resolution.

Long term we need to implement term limits on Federal government politicians as outlined in Step 39 of "Love My Country, Loathe My Government." Short term, we need to implement our own form of term limits by dumping out all incumbents in 2012. I do not believe the country's economy can survive re-election of many current incumbents.

Rich or poor, young or old, African-American or not, highly educated or not, there should be no American who is happy or satisfied with the disastrous and failed economic leadership, policies, and strategies of the current crop of Washington  politicians. Dump 'em!




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/

Occupy Wall Street and The Ignorance Of Their Math

As most Americans know, there have been protests going on in major U.S. and international cities called Occupy Wall Street. They are a loose knit group, to say the least, with confused and divergent objectives. The most frequently occurring complaints are that corporations in general, and Wall Street banks in particular, are too greedy, that 1% of the population controls too much of the nation's wealth and the wealthy 1% need to be arbitrarily punished for being in that situation.

We could probably do any number of posts on the philosophy of soaking the rich, taxing the rich more, greedy banks, etc. However, rather than get into an endless and pointless loop of emotionally arguing with Occupy Wall Street supporters, let's look at the math behind their demands and positions. I find in life that if you understand the underlying math and the reality of that math, you can understand the world a lot more clearly, a lot less emotionally.

Let's start with some basic assumptions and basic math, mostly taken from government and other, respectable sources, (sources include the official IRS website, http://www.usgovernmentrevenue.com/, U.S. Census Department):

• Number of U.S. households - 114,000,000 households
• Population of the United States - 308,745,538 according to U.S. Census reports
• Number of U.S. individual income tax returns filed with the IRS in 2009, the latest year data was available - 140,494,127 returns
• Number of individual income tax returns filed with the IRS in 2009 showing more than $1,000,000 income - 236,883 returns
• Total amount of income of those tax returns with more than $1,000,000 in income in 2009 - $726,910,880,000
• Percentage of 2009 Federal income taxes paid by top 1% of earners in the country - 40%
• Expected 2011 Federal government revenue - $2.174 TRILLION
• Expected 2011 Federal government budget deficit - $1.3 TRILLION
• Percentage of 2011 Federal government revenue that comes from individual income taxes - 53%
• Percentage of 2011 Federal government revenue that comes from payroll taxes - 37%
• Percentage of 2011 Federal government revenue that comes from individual income taxes and payroll taxes - 71.5% (53% plus half of the 37% that is paid by individuals)
• Estimated 2010 total revenue of the nation's four largest banks - $350 billion
• Estimated national debt - Approaching $15 TRILLION
• Estimated total wealth (money, stocks, bonds, cars, real estate, etc.) of the richest 400 Americans according to Forbes magazine - $2.4 TRILLION

Let's do some basic math, thinking relative to how the occupy Wall Street people think:

- Percentage of U.S. tax returns filed by people making more than $1,000,000 a year = .17%, significantly less than 1%. This number surprises many people, with the vast majority of people thinking that there are certainly must be more than about 236,000 Americans earning over $1,000,000 a year. Thus, there are not a lot of American millionaire earners that could be taxed more to support the rest of the country.

[Side note: the total number of Americans earning over $1,000,000 is down by about a third relative to the 2007 IRS statistics, a reduction in taxes that will have to be made up by other non-millionaire American tax filers. At this rate, Obama, Reid, and Pelosi should wipe out high earning Americans within four years.]

- Four of the largest banks in America (Bank Of America, Wells Fargo, JP MOrgan, Citigroup) had 2010 revenue of about $418 billion in 2010. Let's use that number since 2011 is not yet done and their revenue is probably down year over year, given the bad economy. Occupy Wall Street people think that these banks make too much money.

If we made the banks set aside 10% of their revenue a year for ordinary Americans as a result of these demonstrations, each American would receive about $135, assuming that the bureaucracy of distributing the money did not eat up a lot of the 10%. Hardly enough for the Occupy Wall Street demonstrators to pay off their student loans or substantially improve their lives.

- Almost two thirds of the those Americans earning over $1,000,000 earned between $1.0 and $2.0 million in 2009. Thus, it is not like there are that many Americans earning billions of dollars that would make a substantially dent in any financial aspect of the nation's financials.

The average earnings for these two thirds is about $1.4 million, hardly enough to make everyone in the so-called 99% rich or even moderately better off. In fact, just over 8,000 American tax filers in 2009 made over $10 million. These people represent just .01% of tax filers in America.

- Harry Reid wants to impose a 5% tax on the income above $1,000,000 of any American who earns over $1,000,000. If he somehow got this inane proposal passed, it would generate about $28 billion additional revenue a year. This would reduce the tax burden of every other American taxpayer by only about $198, it would account for a mere .8% of  the 2011 Federal government budget, and only 2% or so of the 2011 Federal budget deficit.

In other words, the Harry Reid proposal would have basically no impact on any American or government spending excess. All it would do is remove disposable income from the economy, quite possibly resulting in more unemployment, less economic growth, and more government inefficiency.

- Let's get absurd and assume that the Federal government confiscated EVERY dollar from these 236,000 Americans who earned over a million dollars in 2009. These people earned about $727 billion, that if it was distributed to other American households, each one would receive about $6,400.

Now, the Occupy Wall Street people would say we are getting some serious change or justice for the so-called 99%. However, these 2009 American millionaires would be unlikely to ever work hard again if the government took ALL of their earnings. The taxes they would have paid in subsequent years would now have to be paid by the 99%.

If we assume that the millionaires paid about 30% of their earnings to the Federal government, the non-millionaires would have to pay about $1,550 more each year to keep government revenue at the same level. Thus, beginning in the fifth year, the non-millionaires would be in a losing proposition since the they would have been past the break even point of the initial $6,400 they received and would be paying $1,550 extra in taxes a year, forever.

- If the Federal government confiscated the wealth of the 400 richest Americans, (cars, boats, real estate, cars, investments, etc.), they would end up with about $2.4 TRILLION of wealth that they could use to cover about 69% of the Federal government's 2011 spending. In other words, stealing the total wealth of the richest 400 Americans could not cover even one year's worth of political class spending and waste.

It could be safely assumed that these 400 Americans would never go to the effort to earn a lot of money again, forcing the remaining U.S. taxpayers to make up the difference in every succeeding year in Federal government taxes that these 400 Americans would have paid.

- This $2.4 TRILLION of confiscated wealth would cover only about 16% of the country's current national debt. The remaining national debt would have to be paid off by the rest of America, most of whom earn far less than $1,000,000 a year. Thus, "eat the rich," the despicable slogan the Occupy Wall Street people often use, would have a very short term desired effect but the long term effect would place a significant and ongoing burden on the non-millionaire taxpayers relative to the national debt.

- According to a Washington Post article that was summarized in The Week magazine in the October 21, 2011 issue, the average household wealth of the top 1% of households in America was $14 million in 2009. If we confiscated all of this wealth and redistributed to the so-called 99%, each household would receive about $141,000. Wow, now we are talking about true socialism or even communism,  power to the people.

However, now matter how attractive this windfall appears, it would have devastating long term consequences to most households and our nation. It is probably a safe assumption that the 1% of American households who had their entire wealth stolen and redistributed would never work hard again, given the threat of confiscation. Thus, the so-called 99% would have to pay more in annual income and payroll taxes to make up for what the 1% pay each year.

This incremental annual payment for each of the households in the 99% would be about $8,800 to cover what the Federal government spends each year. Thus, unless government spending was reduced, in sixteen years the 99% would get to their break even point and starting in year seventeen and going on forever, the 99% households would be paying $8,800 incremental a year, an ongoing penalty for killing off the vile 1%.

You get the idea. The math shows that even in the highly unlikely scenarios where the government confiscates the entire wealth of certain Americans, the impact, both short term and long term, on the rest of America eventually becomes negative. The math also shows that confiscating 10% of big bank revenue has a negligible effect on the 99%. Anything less than full confiscation is even less effective in changing the lives of the Occupy Wall Street crowd.

However, there is one avenue where a change in behavior would have long term positive consequences for EVERY American. In our October 6, 2011 post, we easily identified over $500 billion a year in government spending savings that could be incurred  on an annual basis if we clean up the fraud, waste, and excesses in Medicare, Medicaid, Social Security, IRS, the military budget, and other government wastelands. If these savings were realized, these savings would be worth about $4,300 a year, EVERY year, for each American household without raising the taxes of anyone.

The October 6 post was not inclusive of all changes in government spending reductions, efficiencies, and savings that are available so this $4,300 is a worst case. Thus, the Occupy Wall Street people need to be down in Washington and getting into the face of the political class, that is where hundreds and hundreds of billions of dollars can be recovered EVERY year for the good of the country and the good of every American.

Insisting that the banks and wealthy Americans give up their wealth, even in a total confiscation scenario, just does not add up, as the above math proves. As usual, the enemy is not our fellow Americans, the enemy is the incompetent and wasteful politicians in office in D.C.




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/