Wednesday, November 30, 2011

Government Favors And Politicians For Sale! Election Year Specials! Act Now! - Basic Corruption

Many times we have covered the corruption and greed that, unfortunately, has become the trademark of our political class. A very small sample includes the following:
  • A major fund raiser for President Obama was illegally moved ahead of the American taxpayer in the Solyndra bankruptcy proceedings, resulting in taxpayers receiving nothing for their doomed $529 million loan guarantee to Solyndra.
  • Obama's Department of Energy approved a Federal government loan guarantee to a company that employs Nancy Pelosi's husband in an influential executive position.
  • Nancy Pelosi received upwards of nine corporate IPO opportunities, including one for the VISA IPO. VISA was somehow able get revenue restriction legislation delayed in the House Of Representatives when Pelosi was the Speaker of the House until after the IPO happened, resulting in a $100,000 profit for Ms. Pelosi in just a few days.
  • Congressman Spencer Bachus successfully shorted the financial sector of the stock market shortly after getting warnings of a financial meltdown from the Secretary Of Treasury and head of the Federal Reserve Board, days before the information became public.
  • Congressman Barney Frank received substantial re-election campaign funding support from various banking institutions, the very institutions the Congressman was supposed to be overseeing as a past chairman and current member of the House banking committee.
  • Congresswoman Ginny Waite-Brown invested in various banks based on non-public, secret information she received as a result of her membership on a House banking committee, the very committee that approved taxpayer bailout money for the very same banks the Congresswoman invested in.
  • Congressional members hand out $16-$20 billion worth of earmarks each year, earmarks and funding favors which are no more than thinly disguised campaign financing efforts.
  • The Fisker and Telsa auto companies received hundreds of millions of dollars worth of Federal government loan guarantees despite the fact that multiple people in each company are major fund raisers for Obama and the Democratic party.
  • Senator Harry Reid sold his oil company investments shortly before the oil industry took a major hit on price decreases and bought health care company stocks just before the health care reform legislation debate began in the Senate, making a tidy profit in the process. 
  • Ex-Senator Obama, ex-Senator Dodd, and Congressman Frank successfully derailed the auditing and reformation of Fannie Mae and Freddie Mac. This derailing that has already cost the American taxpayers over one hundred billion dollars in bailout funds, possibly because Obama, Dodd, and Frank were the top recipients of political campaign donations from Fannie and Freddie.
The historic list goes on and on. And current day government/politician favors and corruption continue. In the November 18, 2011 issue of The Week magazine, a synopsis of a Washington Post article reported that the top Wall Street financial institutions earned $77 billion during the eight years of the Bush administration. 

However, in less than three years of the Obama administration, years that included the worse economic downturn and banking crisis since the Great Depression, these same financial and banking  institutions earned $83 billion in profits. A coincidence or political class favors/corruption? Based on the historical data, I doubt it was a coincidence.

Need more proof that the government favors and political class members are for sale in this upcoming election year? Consider a set of examples that have already and recently taken place with our politicians, as reported in a recent Business Week magazine article within their Spring, 2011 Government Insider Special report:

  • New Jersey Senator Robert Menendez recently "championed" a plan to provide a temporary tax cut for small companies, a tax cut that would allow them to offset investments these companies might make in research on therapies to prevent and treat chronic diseases. Oh, by the way, the pharmaceutical industry in New Jersey just happened to contribute $434,043 to his 2010 reelection campaign and PAC.
  • Michigan Senator Debbie Stabenow sponsored a bill to give a tax rebate for consumers who purchase a gas/electric car or truck. The recently available Chevy Volt from General Motors certainly falls within this category. Oh, by the way, General Motors employees contributed $84,635 to Stabenow's reelection campaigns between 1995 and 2010.
  • New York Senator Charles Schumer has been accused by other Congressional members of making a proposed tax on carried interest of private equity managers so difficult that the measure never was passed into law. Oh, by the way, Schumer has received $8.8 million from the security and investment industry since 1989, an industry that certainly includes private equity managers.
  • Montana Senator Max Baucus obtained a provision in a recent farm bill "for tax exempt forestry conservation bonds to help purchase a 500 square mile patchwork of land owned by Plum Creek Timber." Oh, by the way, Plum Creek Timber has spent $3.7 million in lobbyists fees from 2006 to 2010 and its employees have contributed $19,100 to various Bachus reelection campaigns.
  • Iowa Senator Charles Grassley has backed tax credits for domestic production of corn based ethanol and tariffs on imports of ethanol. It just so happens that his home state has 40 ethanol plants that generate 3.5 billion gallons of ethanol each year. Oh, by the way, Grassley received $290,250 in reelection campaign donations from agriculturally based PACs in his 2010 election run.
  • Arizona Senator John Kyl is a major proponent of cutting taxes on inherited wealth, having been instrumental in the one year hiatus of the inheritance tax in 2010 and cutting a deal with Obama to keep the reinstatement of the tax at 35%. Oh, by the way, eliminating the estate tax is a major priority of the Club For Growth, which just has happened to donate $155,753 to the Senator's election campaigns since 1989.
  • Texas Senator John Cornyn has opposed Obama's attempts to repeal oil and gas industry tax breaks besides opposing the President's ban on Gulf oil drilling. Oh, by the way, oil and gas industry components have given the Senator $1.7 million since 2001.
Corruption or coincidence? You decide, but here seems to be a lot of confidences going on if it is not corruption. Just these seven Senators with just these seven instances of political favors for campaign funding donations comes out to over $11 million.

Think about how much money is involved when you include the other 43 U.S. Senators and all 435 members of the House of Representatives. If these other 478 politicians trade at the same rate as the seven Senatorial examples listed above, we are looking at almost $800 million that our politicians have traded government favors for their campaign funding needs.

This volume of trading has to be sub-optimal for the rest of the country's citizens that do not partake in this corruption. Rather than doing what is best for the whole nation's interests, this type of basic corruption does what is best for the politicians' careers and the special interests that fund their careers.

Since most of these political favors occur between incumbent politicians and special interests, Step 39 from "Love My Country, Loathe My Government" would go a long way to eliminating this type of corruption. Step 39 would impose term limits on all Federal politicians, "one and done." You get one term in office, either as a Senator, Congressman, or President, and then your Federal political career is over.

Maybe in such an environment, where a politician knows that they do not need to fund their perpetual reelection campaign since they only get one term, they would then make decisions that are right for the country, not what are optimal for their special interest campaign funding sources. Heaven knows that they are not doing that now, making the right choices for the country,  so how much worse could it get if they were "one and done?"

A political process that relies on special interests, cronyism, and trading government favors for campaign funding and other perks is not a democracy. It is a central American banana republic, it is Iraq under Hussein or Libya under Ghaddafi, or it is the mob under Don Corrleone. In any of those examples, freedom and liberty are subservient to corruption.

Ashleigh Brilliant once said: "I either want less corruption or more of a chance to participate in it." Under our current political set-up, neither situation is likely to occur for the vast majority of hard working, honest Americans who play by the rules and have some sense of integrity. Thus, let's try term limits and try to lessen the corruption and increase the chances of freedom and liberty.

Please note: we will not stop just with these basic types of political corruption listed above. Tomorrow we will cover institutional corruption, the rules that the political class exempt themselves from to make their lives easier, and on Friday we will look at the somewhat curious and incestuous relationship between the Federal government and Goldman Sachs.

Our book, "Love My Country, Loathe My Government - Fifty First Steps To Restoring Our Freedom And Destroying The American Political Class" is now available at It is also available online at Amazon and Barnes and Noble. Please pass our message of freedom onward. Let your friends and family know about our websites and blogs, ask your library to carry the book, and respect freedom for both yourselves and others everyday.

Please visit the following sites for freedom:

Tuesday, November 29, 2011

Retro #13 - More Worthy Government Spending Cuts That Also Do Not Leave Poor Kids Hungry

Please note: given the numeorus family and holiday activities over the next week or so, we are rerunning some of our most popular posts from earlier this year. We will be back with fresh, new insanity from the political class next week. Happy Turkey Day!

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

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

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

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

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

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

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

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

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

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

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

- Transportation savings over ten years - $141.64 billion

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

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

- Income Security savings over ten years - $68.83 billion

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

- Allowances savings over ten years - $2.54 billion

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

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

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

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

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

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

  • The cuts include programs that are redundant with other government programs and thus, are not necessary.
  • The cuts include programs that are either obsolete or no longer unneeded.
  • The cuts include programs that should be paid for by the private sector of the economy and not the American taxpayer.
  • The cuts include programs that have been unsuccessful relative to their objectives or charter so canceling them will have no impact on Americans since they never had any impact on Americans in the first place.
While most Americans would be unaffected by the CBO cuts, that does not mean some people or organizations would not be negatively affected. These include military contractors that live off of the waste in the Pentagon's budget, the corporations that had successfully moved their company expenses onto the American taxpayer, and government employees who might lose their jobs as a result of the cuts. These CBO cuts are the right medicine, it is now a question of whether the political class has the courage and smarts to write the prescription.

And the political class should not stop here. The $1 TRILLION of expense reductions does not include other major other cuts:
  • Bring home thousands of U.S. troops unnecessarily deployed around the world.
  • Terminate more unneeded military hardware programs that were not covered by the CBO analysis.
  • Terminate the Department of Education and the rest of the Department of Energy, beyond what the CBO identified, since neither Department has ever been effective or efficient in carrying out their objectives.
  • Eliminate Congressional earmarks that serve only as a disguised way for incumbent politicians to raise money for their reelection campaigns.
  • The CBO analysis apparently did not address several Cabinet level organizations including Health and Human Services, the Treasury Department, the Labor Department, the EPA and other Federal government functions that would probably all contribute significant additional cost savings.
  • The analysis does not include the tens of thousands of buildings and properties around the world that the Federal government owns but does not use but which could be sold off to offset the national debt.
The CBO analysis also included a whole series of tax adjustments to raise money for the government. I will not go into them here for three reasons:

  1. I believe that the national debt crisis is primarily a spending problem, not a tax/revenue problem for government.
  2. Given the disgraceful history of wasting taxpayer wealth, I would not allow the political class to get its hands on any more of our wealth until they prove they will not waste it.
  3. The correct approach is to overhaul the entire U.S. tax code to increase fairness and encourage economic growth whereas the CBO tax adjustment section was a very tactical, piece meal approach.
However, given the above objections, there a were some worthwhile and fair changes to the tax code that could be applied to reducing our national debt:

  • Cap state and local government taxes on Americans Federal income tax returns at 2% of income, generating $625.7 billion in additional tax revenue over ten years, according to the CBO analysis.
  • Limit the Federal tax benefit of itemizing to no more than 15% of adjusted gross income, generating $1.3 TRILLION in additional tax collections.
  • Curtail charitable giving itemization, generating $221.5 billion over ten years.
  • Eliminate tax exclusion for companies providing life insurance coverage for their employees, generating $23.3 billion over ten years.
  • Tax foreign income on U.S. tax returns, encouraging citizens to not send their money overseas and avoid taxation, generating $71.2 billion over ten years.
These tax changes would generate well over $2 TRILLION in the next ten years to help fight the deficit spending of the political class. However, as discussed above, I would not approve these changes until there were ironclad guarantees that these additional sources of taxes would not be wasted by the political class. In fact, I would probably require that these additional taxes go directly to the Treasury Department to pay down the deficit and not expand government waste which is likely to happen if the political class gets their hands on the money.

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

  • Our analysis earlier this month found over $6 TRILLION in savings.
  • The Bipartisan Policy Center found over $6 TRILLION in debt reduction actions.
  • The President's debt reduction commission found over $4 TRILLION in debt reduction actions.
  • The CBO found over a TRILLION dollars in expense reductions and over two TRILLION dollars in tax increases by looking at only parts of the Federal government.
  • The Cato Institute is going through the Federal government line-by-line and has identified hundreds of billions of dollars in expense reductions from unnecessary government functions.
  • The National Taxpayer Union has done analysis that identified $600 billion in expense savings over just the next four years.
It is not hard. The waste and fraud is so widespread that it seems impossible not to cut Federal government spending. It is all teed up, with the hard work and analysis already done by the CBO, Cato, and many other smart Americans. All the political class has to do is step up to the tee and close the deal. Whether they have the courage to do so is yet to be seen, given their cowardly history.

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

Our book, "Love My Country, Loathe My Government - Fifty First Steps To Restoring Our Freedom And Destroying The American Political Class" is now available, at 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 ook, and respect freedom for both yourselves and others everyday.

Please visit the following sites for freedom:

Monday, November 28, 2011

Retro # 12 - Newsweek Magazine - First Financial Bankruptcy and Now Moral Bankruptcy

Please note: Given the holiday and family activities this Thanksgiving week, we are rerunning some of our most popular posts from earlier this year. We will be back with fresh, new political class insanity the week after Thanksgiving. Happy Turkey Day!

In following President Obama's reactions and words to the tragic Tuscon shootings from this weekend, I was finally impressed with his display of leadership. I can honestly say it was the first time, in my opinion, that he was a leader rather than just another Chicago politician. His words seemed sincere, his desire to finally address the venomous political climate and dialog in this country, of which he is partly responsible, also seemed sincere. The words he delivered at the gathering yesterday seemed heartfelt and appeared well received by everyone. Kudos for finally delivering some non-partisan leadership.

I can only hope that he follows through with the message of cooperation and respect he delivered this week. The only other time he came close to displaying this level of leadership was in his Cairo speech early in his Presidency where he promised hope and a different way of doing things in U.S. foreign policy. However, he was not able to deliver, resulting in crashed expectations in countries around the world. Let us hope he can deliver on the bipartisan message he has been talking about this week.

I will not be so kind when talking about Tuscon and Newsweek, specifically Newsweek writer, Jonathan Alter. As many of you may know, Newsweek has been having serious financial problems over the past few years and recently merged with another organization to try and stay afloat. Thus, the "financial bankruptcy" phrase above. However, in a January 10, 2011 Newsweek article by Jonathan Alter, "Can Obama Turn Tragedy into Triumph?" Newsweek, in my opinion, has entered the region of "moral bankruptcy" relative to the Tucson shootings.

Consider two direct quotes from Mr. Alter's article:

'"You never want a serious crisis to go to waste." Rahm Emanuauel (formerly Obama's Chief of Staff) famously said in 2008. The same goes for a shooting spree that gravely wounds a beloved Congresswoman. Congress won't enact gun control, as it did in the wake of the assassinations of Martin Luther King and Robert F. Kennedy in 1968, but perhaps something positive (politically) can come of this.'

"Even if he (Obama) makes a good speech (State Of The Union), the President may find that the memory of the Tucson tragedy fades quickly. Sad to say, if Giffords had died, she would have been mourned and soon the conversation would have moved on. But Giffords lives, thank god, which offers other possibilities."

I have a lot of real problems with the whole article and these two quotes in particular:

  1. The first problem is one of respect. Congresswoman Giffords has been shot through the head and obviously is in very critical condition, fighting for her life first and the quality of her life second. The least Alter could have done is given her a little respect in her time of need and sympathy and rather than just address her as "Giffords", maybe "Congresswoman Giffords" would have showed a little more class and sympathy for her plight. For the most part throughout the article, he refers to the Federal judge who also died in the shootings as John Roll or Judge Roll. Why couldn't he extend that same level of respect to Congresswoman Giffords?
  2. Second, I find it highly disrespectful that her tragedy is even mentioned in the same sentence with the Rahm Emanuel quote, as if her suffering can be used to leverage political action on any issue. Was there not enough suffering already by those who died or were wounded and their families in Tucson? For Mr. Alter to look for opportunities to leverage their suffering for more gun control, and gains on other issues, is at the very least premature; many of these Tucson folks are still grieving or fighting for their lives.
  3. Third, why would Mr. Alter even hypothetically think about what would have happened if Congresswoman Giffords had died. She did not die, she is obviously a fighter and a hero to most of us for what she has gone through. Why in the world would you ever hypothesize what would have happened if the heroes around her that day had not done the right things or if the surgeons had not been as good as they are? Despicable to even talk about or contemplate the fatal alternative, which thankfully, will not come to fruition.
Since this past Saturday, I have made a vow to myself to not even waste my time, my breath, my eyes, and moments of my life with people that rant and rave and are obviously biased, whether they are politicians, bloggers, or Newsweek writers. Mr. Alter will be my first test to see if I can ignore him and others like Beck, Olberman, Hannity, Maddow, etc. who it has become clear contribute nothing to the world except possibly their TV ratings or magazine readership. I have too much respect for people like Congresswoman Giffords to think that her situation should be exploited for political good or to even think about what could have happened in the worst case.

In other words, I pledge to no longer have any patience with moral bankruptcy wherever and whenever I come across it.

Our book, "Love My Country, Loathe My Government - Fifty First Steps To Restoring Our Freedom And Destroying The American Political Class" is now available at It is also available online at Amazon and Barnes and Noble. Please pass our message of freedom onward. Let your friends and family know about our websites and blogs, ask your library to carry the book, and respect freedom for both yourselves and others everyday.

Please visit the following sites for freedom:

Friday, November 25, 2011

Retro # 11 - Any Politician Who Thinks The Federal Government Is Entiitled To More Of Any American's Wealth: Priceless

Please note: Due to Thanksgiving holiday week activitiess and family events, we will be rerunning some our most popular past posts from the past year over the next week or so. We will return with fresh, new political class insanity the week after Thanksgiving. Have a Happy Turkey Day!

  • Estimated annual amount of fraud and waste in the Medicare program: $60 - $90 billion
  • Estimated annual amount of fraud and waste in the Medicaid program: $30 - $40 billion
  • Estimated annual amount of personal taxes not collected by the IRS because of tax evaders: $200 billion
  • Estimated amount of fraud in just one of the Federal government's unemployment programs over the past year or so: $19 billion
  • Estimated amount of taxpayer money the political class diverted annually to budget earmarks, which are nothing more than thinly disguised re-election campaign fund raising efforts for incumbents: $16 billion
  • Estimated annual amount of taxpayer money wasted on unnecessary international U.S. troop deployments in Europe, South Korea, Iraq, and Japan, deployments that no longer serve any national defense purpose: $59 billion
  • Estimated annual savings by eliminating subsidies to large agriculture corporations: $8.9 billion
  • Estimated annual savings by eliminating tax credits for oil companies that blend gasoline with ethanol: $5.7 billion
  • Estimated annual amount the Defense Department spends on obsolete spare parts and supplies: $46 billion
  • Estimated savings if the production of the V22 Osprey aircraft was cancelled due to massive cost overruns and performance issues: $6.1 billion
  • Estimated savings if the production of the F-35 Joint Striker Fighter was canceled and replaced with more advanced, less expensive, and more reliable military alternatives: $22.5 billion
  • Estimated savings by terminating the effort to produce the military's Space Tracking and Surveillance System due to performance issues, delays, and cost overruns and replace it with less expensive, more reliable alternatives: $5 billion
  • Estimated savings from canceling the production of the outdated, unreliable, and unneeded Expeditionary Fighting Vehicle: $16.3 billion
  • Estimated savings by eliminating identified Homeland Security contracts already deemed to be wasteful: $34.3 billion
  • Estimated annual savings if the Federal government liquidated the 55,000 buildings and properties it currently owns, but does not use or severely under uses, at a rate of 10% a year for ten years: $9.6 billion
  • Estimated annual savings by realigning Medicare payments to teaching hospitals with actual costs: $5.1 billion
  • Estimated annual savings by eliminating over payments for Federal housing subsidies: $1.2 billion
  • Estimated number of U.S. bridges that were repaired under Obama's economic stimulus package that did not need any kind repair at all: About 1,100 or about 50% of all of the bridges that were repaired with stimulus dollars.
  • Estimated annual, recurring savings from having the Federal government work efficiently, efficiently, and fraud free from the above disasters and embarrassments: $460.5 - $500.5 billion
  • Additional savings from the one time expense and cost savings listed above: $93.8 billion
  • One year's worth of taxpayer savings if the political class just did their job (annual and onetime savings): $554.3 - $594.3 billion
  • President Obama stating that some Americans need to pay more in taxes in the face of this half trillion dollars worth of waste: Priceless
Bottom line is if the political class just did their job, Obama could finance his proposed jobs program without any American paying more in taxes. In fact, he would have about a $100 billion or so extra after one year. He wants to tax the rich in this country an extra $45 billion a year over TEN years to pay for his jobs program. If the Federal government and the political class cleaned up their act we could pay for the whole program, regardless of how inane it is, in ONE year.

The fact that his jobs act will create nary a ripple in the national jobs scene is another reason not to approve of his jobs proposal as it current sits but also increasing taxes in an economy that is very likely in a recession or about to tumble into a recession is ludicrous:
  • By his own words, this $450 billion program will "create" 1.9 million jobs.
  • By his own words then, his program will cost just under a quarter million dollars for each job "created," and that assumes his program actually creates 1.9 million jobs. In the past, this administration has not been very accurate or consistent with how it defines "creates."
  • To get all of the unemployed and underemployed Americans back to work at this rate his program would have to be $3.3 TRILLION or about $29,000 for every U.S. household. Ludicrous.
  • The only thing this jobs program is good for now is a sounding board and sound bytes for the President's re-election campaign. Heck, even his buddy, Senate Majority Leader Harry Reid will not put it up for a vote in the Senate because he knows it will fail. All it is is a campaign wedge to energize his base, a wedge he will use for the next year or so while he allows the economy to whither on the vine.
Better to divide the nation and get a few votes than come up with a real economic strategy and do the dirty work of streamlining government and eliminating waste, fraud, and crime. But this President has never been big on dirty work. But seeing him actually do some government dirty work, cleaning up just one failed and wasteful government program would certainly be priceless.

Note: I can provide unbiased, hard, fact based data for all of the savings listed above if someone wants them. Many of them came from the fine work jointly done by Nicole Tichon of the U.S. Public Interest Research Group and Andrew Moylan of the National Taxpayers Union in their research entitled "Toward Common Ground: Bridging The Political Divide to Reduce Spending." Their work is extensive, detailed, documented and best of all, non-partisan. Other sources include reputable and mostly unbiased news organizations such as the Congressional Budget Office.

Also please note that I have not included the amount of fraud lost every year via the Social Security system because I could not find any up-to-date, reliable sources and estimates. However, if it loses money to criminals and fraud at the same rate as the other big Federal government programs, we are probably talking about another $60 to $80 billion lost every year in this program also.

Wednesday, November 23, 2011

Retro #10 - 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,, 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 It is also available online at Amazon and Barnes and Noble. Please pass our message of freedom onward. Let your friends and family know about our websites and blogs, ask your library to carry the book, and respect freedom for both yourselves and others everyday.

Please visit the following sites for freedom:

Tuesday, November 22, 2011

Retro #9 - Could The Mexican Drug Cartels "Red Dawn" The United States?

Please note: do to the busy time of year and family commitments for the Thanksgiving holiday, we will be rerunning some of our most popular posts from the past year or so. We will return with fresh, new political class iinsanity the Wednesday after Thanksgiving. Have a Happy Turkey Day!

Many times in this blog we have talked about the exponentially growing threat and violence of the ever larger and richer Mexican drug cartels. Those times usually reviewed how the government of Mexico always seems to be fighting a losing battle against the cartels from a military and corruption perspective. We have pointed out numerous acts of violence and terror that the Mexican people are under from a cartel perspective.

And since our last such post, the situation has not gotten any better:

- According to an Associated Press report from March 31, 2011, Mexican drug cartels threatened to kill U.S. Border agents in March by firing AK-47 assault rifles across the border. Those targeted included members of the Texas Ranger and Customs Enforcement agents. Although this news was just made public by a U.S. Congressman, the article quotes law enforcement officials as saying this is nothing new, with one them saying: "We get almost periodic reports of some informant saying there is a bounty. We realize the potential is there, the threat is there." Since the drug cartels are directly or indirectly responsibile for over 35,000 Mexican deaths since late 2006, it should come as no surprise that the cartels might eventually take on cross border law enforcement officers.

- An April 3, 2011 Associate Press article reported that while Mexico City has been relatively free from drug cartel violence over the past few years, it appears that violent, cartel-like street gangs have become a significant problem within in the city as each gang fights for its share of the local Mexican drug market riches. Recently a spate of killings and decapitations have vividly illustrated how prevalent these new street gangs have become in the Mexico City area, adding just another level of violence and lawlessness to the Mexican people. Many of the gangs are either splinter groups off of the larger drug cartels or are just using the drug cartel business model to enlarge their turf war in the illegal Mexican drug market.

- The final Associated Press today was published on April 6, 2011 and addressed the two fold issue of 1) drug cartels recruiting common criminals (e.g. street drug dealers, robbers, etc.) and converting them into cartel hitmen and 2) the recruitment of former, highly trained Guatemalan soldiers into their ranks. The first issue strains the Mexican anti-drug law enforcement resources since rather than just having to go after the big drug cartel bosses, these resources now must also go after much lower ranking cartel employees to stifle the increased hitmen killing.

The second issue is even more distressing, professional soldiers being brought into the drug cartel fold. The article asserts that the cartels have even set up training camps inside of Guatemala. The Guatemalan government is currently investigating the possibility that these ex-soldiers somehow got their hands on official Guatemalan military weaponry and transferred it to the drug cartels. In 2009, the Guatemalan authorities confiscated 563 grenades and 3,800 rounds of ammunition from the cartels that were stolen from their military.

Nasty stuff, seems like the drug cartels are getting bigger and bigger by recruiting at the low end of lawlessness, street hoods and gangs, and the high end of lawlessness, professionally trained soldiers. The really scary thing is that the cartels have made so much money off of the illegal drug trade in the United States, there is probably very few weapons or government and police officials they cannot buy or take out with force.

Which brings us to the "Red Dawn" reference in the title. "Red Dawn" was a hokey, if entertaining movie from a few decades ago. The central premise is that the Soviet Union is able to invade and control the Rocky Mountains within the United States, effectively dividing the country into two non congruent parts. The Russians attack so quickly that they establish themselves before a counter attack can push them out, resulting in a military stalemate within our borders. The United States controls the coastal areas, the Soviet Union troops control a geographic strip through the center of the country.

"Red Dawn" did not receive any Oscars but it does bring up an interesting point. Given the wealth, violence, and ever growing reach of the drug cartels, their non-reluctance to shoot U.S. border agents, who is to say they would not come over the border in numbers at some point like the Soviets in "Red Dawn?" This strategy has a historical precedent when you consider the so-called Zimmerman Telegram from 1917 and the World War I era.

This telegram originated from the German government and was sent to the Mexican government. The telegram proposed that Mexico invade the United States from the south and take over lands that originally belonged to Mexico. In return, the Germans would provide logistical and military support to the effort. The deal never went down but it was proposed.

Now, there is no longer a Soviet Union. There is no longer a German Kaiser or German military threat to the United States. But who is to say that the cartels could not come over the border and drive up U.S. Interstate 25 and cause all sorts of violence and problems? If they moved quick enough they could cut off the main east/west main arteries of Interstate 40, Interstate 70, Interstate 80 and Interstate 90. They could start further east and come up Interstate 83 and accomplish the same thing. They would not have the forces the Soviets had in "Red Dawn" to take and hold ground but a guerrilla warfare style attack would be a disaster.

With U.S. troops stationed all over the world, mostly serving no purpose at all, who is to say a rich, well armed force of drug cartel employees, which now include professional soldiers, could not at least cause a significant amount of havoc and mayhem? Let's throw an added wrinkle into the scenario. Given the chaos being caused by the cartels in Mexico and Central America, I would think it would be quite easy for the cartels to import some of Bin Laden's boys and join up with them. The cartels and Bin Laden may have different goals but together, they would get a lot closer to attaining each of their goals.

Likely? Probable? Probably not. But was it probable the Middle East would be afire for freedom just six months ago? Was it probable that the igniter of this fire would be a single individual in Tunisia of all places? Five years ago how probable was it that the United States would collapse not from an outside conquest from the likes of Hitler, the Kaiser, Mussolini, etc. but from the simple fact that our political class cannot stop spending money it does not have? How probable was it two months ago that the third largest economy in the world would be so brutalized by Mother Nature? How probable was it eleven years ago that 19 people from halfway around the world would kill about 3,000 Americans on American soil on September 11, 2001? None of these were very remotely probable yet they happened.

One of my favorite sayings is "Never say never." "Red Dawn" and the Zimmerman Telegraph give the drug cartels the strategy, who is to say they cannot find any use for it. This threat and the related threats of the heavily armed cartels will remain in place until the Washington political class finally finds some courage to actually come up with sane, enforceable strategies and policies to deal with our drug addiction problem in the country and our leaky borders/illegal immigration problems. Until then, nothing is off the table as regarding how far the drug cartels will extend their reach, wealth, and violence.

If the political class is not up to the task of such endeavors, they should reviews Steps 26 and 29 in "Love My Country, Loathe My Government," to see what a possible process would look like to finally resolve these issues. Lord knows what ever processes they are using now are not working. Although "Red Dawn" was a pretty bad movie, it had much more value than the current paralysis that is Washington and our political class.

Our book, "Love My Country, Loathe My Government - Fifty First Steps To Restoring Our Freedom And Destroying The American Political Class" is now available at It is also available online at Amazon and Barnes and Noble. Please pass our message of freedom onward. Let your friends and family know about our websites and blogs, ask your library to carry the book, and respect freedom for both yourselves and others everyday.

Please visit the following sites for freedom:

Monday, November 21, 2011

The Disgrace That Is Washington - A Quick Rant

I had not expected to blog this week, given visiting friends, family and Thanksgiving. I also wanted  to take a break from the sickness and disgrace that is the political class in Washington. However, given another failure by the political class, this time the failure of the Congressional "Super" Committee to come up with a coherent deficit reduction plan, I have to speak up.

First, though, let me apologize up front. I try to run a fact based, logical, forward looking blog. I hate it when bloggers use their blog to rant and rave only about their opinions, without facts or data or logic to back up their points of view. Personal rants and emotion-based blogs do nothing to address the underlying problems and crises facing the nation today.

Only by carefully understanding the underlying root causes of our problems and using all available information and data to apply against them for a solution, can we hope to have a passionate but sound approach to problem solving.

However, I may not be as logical and unemotional tonight as I strive to be and so I apologize up front for what might degenerate into a rant.

A few facts up front:
  • Since Democrats Pelosi and Reid took over Congress in early 2007, joined by Democrat Barack Obama as President in 2009, the Washington political class has added almost $7 TRILLION to our national debt in less than five years. Up until that point, every other President COMBINED had accumulated only $8.4 TRILLION in debt.
  • President Obama's long term budget plan that he submitted to Congress in the spring predicted that the Washington political class would add another $9 TRILLION to the national debt in the next ten years.
  • Last week our national debt exceed $15 TRILLION.
  • Thus, the track that these three Democrats have put us on as a nation would bring us to a national debt of over $24 TRILLION in ten years. This is the equivalent of a debt load of over $200,000 for EVERY American household.
Obviously, we will never reach $24 TRILLION in debt because the economy will crash and the nation will by destroyed long before we reach the end of the ten years.

And what do our politicians talk about? They cannot even get together to reduce the deficit by $1.2 TRILLION OVER TEN YEARS, the objective of the Super Committee. A pathetic, disgraceful effort. It is my understanding that the following is behind the failure:
  • The Super Committee has not met as a group since November 1. How did they expect to do any work by not constantly meeting? They should have been locked away in a remote site until they got the real job done, the real job being defined as more than a paltry $1.2 TRILLION, an amount they could not even get to.
  • This country has a spending issue, it does not have a "revenue" issue. You cannot solve this problem, or even come close to solving it, by raising taxes on the rich.
  • We have reported many times in this blog that even if you confiscated the total wealth of the richest 400 Americans, you would reduce the deficit by less than 10% over the next ten years. Since nobody has suggested that we do that, or anything close to that, raising taxes on the rich will produce significantly less than a 10% reduction in debt.
  • However, the Democrats insisted that taxes be raised and would not budge from their initial $1 TRILLION tax increase proposal, no compromise at all. The Republicans started with a no tax pledge, proposed a tax increase in $320 billion and the Democrats rejected it out of hand, refusing to negotiate. As a result of their intransigence, there is no Super Committee agreement..
  • President Obama was nowhere to be found in this process over the past few months, but not too busy to campaign all around the country and play some serious golf. Talk about a lack of leadership.
  • Obama just came on television tonight to speak about the failure and he is basically of no use. He blamed the Republicans for the failure, despite the fact that he has added more to the budget deficit and national debt in less than three years than any other President, EVER. Again, even if the Super Committee agreed to the outrageous $1 TRILLION increase in taxes, that would account for only about 4% of the $24 TRILLION national debt track we are on.
  • I know of no way to say this gracefully, but the President does "misspeak." He claims that the majority of Americans favor increased taxes to balance the budget but we reported last week on a recent Reason magazine opinion poll that shows that is not true. The President says all kinds of economists say we need to raise taxes but that is also not true. Any fourth grader, never mind an economist, can tell we have a government spending problem, we do not have an under taxation problem.
  • Two years ago, the President himself said that we should never raise taxes in a recession or poor economy, it makes no sense. If it made no sense two years ago. it makes no sense now. A few weeks ago, ex-President Clinton said no taxes should ever be raised when the economy is so weak. Did President Obama read those news reports?
In a total attempt to avoid blame for not getting government spending under control, Democratic members of Congress blamed Grover Norquist for the failure of the Super Committee. Mr. Norquist is not an elected official, he was not a member of the Super Committee, he is not the President of the United States, to my knowledge he has never held public office. He runs a conservative think tank that is against raising taxes in the face of excessive and wasteful government spending. Rather than accept the fact that Congress and the political class failed miserably to rein in spending, they blame a single, unelected American for their failure. How gutless can you be?

Did it have to come to this? Politics being used by both sides of the political class to kill the nation via excessive spending? A lot of smart Americans know how to do this job because they know how to solve problems and do a little math analysis, skills that are obviously lost on the people in Washington:
  1. Obama had a commission that did an excellent job of finding ways to reduce spending and reducing the national debt by TRILLIONS of dollars. He chose to completely ignore their fine work.
  2. The Cato Institute has gone through the Federal budget line by line and has come up with their own plan to reduce excessive government spending by TRILLIONS of dollars.
  3. The Tea Party has come up with their own plan to get spending under control with TRILLIONS of dollars in expense reductions, which it tried to present to Congress last week but were denied access to Congressional members to make their presentation.
  4. The Concord Coalition has come up with a comprehensive plan to reduce excessive government spending by TRILLIONS of dollars.
  5. If I had some time, I could list at least another three sources who have already done the hard work in reducing excessive and wasteful spending and I will do that by combing through past posts if anyone is interested.
  6. Using these above sources, in the spring I came up with over $6 TRILLION of expense cuts based on the above work. These cuts did not have a substantial impact on most ordinary Americans including the poor, the elderly, and the needy.
No matter how you cut it, this is a disgrace. The stock market took a major hit today and it is probably a good bet that the nation's credit rating is going to take another hit. All because every politician in Washington, from the President down to the freshmen in Congress need to be shamed into oblivion at the next election. They are are so worried about their personal political careers that they are incapable of showing any kind of courage or sanity when it comes to getting government spending under control.

At $15 TRILLION, we, as a nation, do not have much time left. We are officially a leaderless nation right now, the people in the White House and Congress are without a doubt, incapable of governing efficiently, wisely, and unselfishly.

We are about to waste another year of a leaderless government with the scavengers in Congress and the White House busy collecting their campaign funds and planning their continued reign over a sinking ship. We need a new crew that will right the ship, fix the spending leaks, and send Obama, Reid, Pelosi, the Super Committee and the rest of them out to sea and retirement in a life boat.

Sorry if this comes off as a rant, I promise to do better in the future of sticking to facts and logic. But I am convinced we are currently leaderless and that scares the life out of me.

Retro #8 - U.S. Navy Ships For Sale! Cheap, Never Used, Act Now

Please note:  Due to holiday week festivities, activities and family events, this week we will be rerunning some of our most popular posts from the past year or so. We will return with fresh, new political class insanity  after Thanksgiving. Have a happy Turkey Day!

Just when you think that you have identified the latest government waste of taxpayer money, some big new wastes jump into your face. Consider some recent news reports that reported on how the U.S. government was scrapping two of its Navy ships even though they had never seen one day of service. Details of the waste include:

  • Two large Navy ships, that have never been used, are headed for the scrap yard even though they are almost completely finished and ready for duty.
  • Work began on the USNS Benjamin Isherwood and the USNS Henry Eckford in 1985 at the Pennsylvania Shipbuilding Company and were intended to carry fuel to the Navy's ships around the world.
  • When the company defaulted on their Navy contract in 1989, the 600 foot ships were sent to Florida for completion. At the length of two football fields, these were not insignificant ships.
  • The ships were eventually moved to the James River Navy yard and have sat there at 95% and 84% complete the past 18 years.
  • A British company considered buying the ships and completing their build out for sale to a NATO country.
  • However, since the ships are single hulled and double hulls are required for today's fuel carriers, the British company decided not to complete the construction and instead, settled on a $10 million contract and taxpayer expense to scrap the ships altogether.
  • This week the ships are being towed to Texas to be cut up for scrap iron and scrap steel for recycling.
Thus, after spending $300 million to begin building the ships, almost finishing their construction, getting absolutely no use out of them, and paying to tow the ships from port to port, the taxpayers will get hit with one last insult and be charged $10 million to destroy the never used ships.

Where to start on this insanity:

  • Who is responsible for ordering the construction of these ships but never getting any use out of them? In the private market, if a business person was to incur that big of a screw up they would be out of a job.
  • Was there nowhere in the world that these ships could have been sold in order for taxpayers to get some money back rather than incurring another $10 million cost to have them destroyed?
  • Even though the could not be used to haul fuel, was there no company in the world who would not want a sturdy Navy ship to ship other goods in its hold that was not fuel related? There must be a Chinese shipping company who could use a new ship or two, especially since China's exports in the first half of 2011 was a record level of $874 billion, 20% higher than in 2010 (The Week, July 22, 2011). Thus, not only should the people responsible for building $300 million worth of ships be fired, the people who could not get anything in return by selling the ships should also be fired.
This is a classic example of Step 34 from "Love My Country, Loathe My Government." Step 34 would remove politicians from any Congressional committee that does not do its committee job to at least to minimum standards. Whatever Congressional committee or subcommittee members were responsible for flushing $310 million of taxpayer wealth down the drain need to be removed from their committee or subcommittee posts.

The article contains a quote from Joseph Keefe from who stated that the scrapping the ships will "close one of the saddest chapters in American shipbuilding history and for that matter, Federal fiduciary folly." In other words, what a waste of taxpayer money. Very well said, Mr. Keefe.

Another scary aspect of this story is the thought that this may not be an isolated incident. What other $300 million wastes are hanging around the Pentagon closets? With Pentagon resources deployed in three war zones, dozens of foreign countries, and probably most of the fifty states, I find it hard to believe that this is the only wasted money in the Pentagon budget. Eliminating this type of despicable behavior would reduce the Pentagon budget without further endangering the defense of the United States.

While we are on the topic of waste, let's move out of the Defense Department domain and move to another area of gross government waste. According to USA Today article, that was highlighted in the July 7, 2011 issue of The Week, the Federal government wastes about $17 billion of taxpayer wealth every year in the operation of its unemployment benefits program. Almost 12% of the program's budget is paid out fraudulently to Americans who are either collecting benefits they are not entitled to or are those people that have gotten a job but are still accepting unemployment benefits.

Compare these figures to the politically motivated ramblings of President Obama over the past few weeks. He has made a big deal about closing tax loopholes for oil companies and corporate jet users. Now, while I agree these loopholes should be closed, they are a pittance compared to the unemployment fraud.

Over ten years, the oil company loopholes would amount to about $20 billion and the corporate jets loophole would amount to about $3 billion, a total of $23 billion or so over 10 years. Ten years worth of this type of unemployment benefits waste comes out to $170 billion, which is almost eight times more than the political gamesmanship loopholes of Obama.

It never ends. The government cannot plan its Navy needs, resulting in wasting over $300 million on just two of its ships. The government cannot efficiently run a simple unemployment benefits program, wasting 12% of its budget and $17 billion a year. The politicians worry about the smaller, trivial wastes of taxpayer money while the bigger wastes go on and on every year.

The worst part of all, there is no apparent accountability. No one ever seems to be held responsible for all of the waste. Politicians continually get re-elected in the face of the waste. Government bureaucrats never seem to lose their jobs despite inefficiency and waste.

You wonder what kind of world those in DC live in where how well or bad you perform your job has no ramifications on your monetary reward and career paths. Its the kind of world I would like to live in where performance is unrelated to reality. But first, I need to see if any of those ships are still available, they are too good a deal to pass 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 It is also available online at Amazon and Barnes and Noble. Please pass our message of freedom onward. Let your friends and family know about our websites and blogs, ask your library to carry the book, and respect freedom for both yourselves and others everyday.

Please visit the following sites for freedom:

Friday, November 18, 2011

Fannie and Freddie Execs - Losing Billions For The Taxpayer, Earning Millions For Themselves

If the Federal government had a public relations chief, this would have been a very, very bad week for him or her:

- On Sunday, a story on the "60 Minutes" television show revealed that Congressional members, and only Congressional members, are exempt from stock market insider trading laws and regulations. This allows them to do something that enriches themselves but which is not available to any other U.S. citizen: use insider information and Congressional actions for their personal financial benefit without repercussions.

We reviewed the many instances of such corrupt and immoral behavior earlier this week when we reviewed the "60 Minutes" revelations, and other acts of government insider trading from previous posts, to illustrate how corrupt these Congressional politicians have become. Not a dream assignment for a public relations chief, trying to prove that sitting politicians are not treated better and differently than the rest of America in the face of such overwhelming immoral evidence.

- Yesterday, we reviewed how many, many government agencies and regulators were again delinquent, ignorant, or incompetent when it came to not foreseeing the collapse of MF Global, a financial industry company, headed by ex-politician Jon Corzine.

Despite all of the economic pain caused by dozens of government agencies missing the coming onslaught of the Great Recession and all of the hot air the political class huffed and puffed when they implemented the Dodd-Frank financial industries reform legislation, none of these past events were enough to foresee the collapse of MF Global and the potential loss of $600 million of investor assets that executives of the company may have illegally used and lost.

Not a dream assignment for a public relations chief. Such a person would be stuck trying to prove that all the kings' horses, i.e. the many, many agencies of the Federal government, are no better off regulating and minimizing economic danger today then they were three years ago when the markets crashed in 2008, with MF Global being the latest unforeseen economic disaster.

And, as an aside, according to news reports today, the collapse of MF Global is the 8th largest financial institution to collapse in the history of the United  States. Thus, this was not a little mom and pop operation that went sour somewhere out in the boondocks. This was a major financial services institution and it collapsed, possibly taking $600 million worth of client assets with it, before anyone in the Federal government was aware of what was happening. Imagine trying to spin this situation from a public relations perspective.

- Which brings us to the latest theoretical disaster and headache a Federal government public relations chief would have to deal with. Congressional hearings were held this week that involved Fannie Mae and Freddie Mac executives testifying before enraged members of both House of Representatives and Senate committees.

Because of lax accounting procedures, rampant political patronage, risky and unsafe investment practices, and pure incompetence in manging their business, Fannie Mae and Freddie Mac operations have already cost the American taxpayer about $170 billion. These billions are never going to be recovered and are likely to grow steadily if nothing else changes as these two entities need regular infusion of more taxpayer money to stay solvent.

However, despite losing billions and billions of dollars every month n the past few years, the management of both government entities recently rewarded their top ten executives with $13 million in bonus money. Please note this was not their salary, it was their BONUS rewards beyond their salary. Only in government work can you waste away billions dollars of taxpayer money and get rewarded with millions of dollars of more taxpayer money.

According to an Associated Press report from November 18, 2011, these top executives in both Fannie and Freddie received over $35 million over the past two years in both bonus and regular salary payments. They received this despite the fact that the Federal government expects the $170 billion loss to grow to $220 billion within three years and the fact that in October, Fannie asked for another $7.8 billion in more bailout money while Freddie asked for an additional $6 billion.

What would have made a chief public relations really crazy, beyond this disgraceful waste of taxpayer money, was a quote from one of those testifying, Edward DeMarco, the acting director of the FHFA, which regulates Fannie and Freddie. He testified that the Federal taxpayer support does not mean the Fannie and Freddie are government entities: "Fannie Mae and Freddie Mac employees are not government employees and these are not government agencies. They remain private corporations."

Excuse me, but if you have already cost the American taxpayer $170 billion (about $1,500 per U.S. household), if you require billions of dollars of additional taxpayer support every month, and if without this past and ongoing support you would have collapsed long ago, you are not a private company, you are a public albatross and burden on the American taxpayer.

The theoretical public relations chief could not even hide behind the bailout of private sector financial companies on this one. The $170 billion dwarfs the bailout sum any other private company or bank received, most of which were paid back. Fannie and Freddie are never paying us back. A public relations nightmare.

But those testifying before Congress are not the only ones to hold at fault. The political class knew long ago that Fannie and Freddie were a corrupt shell game where taxpayer assets were used to fulfill selfish political class needs and ambitions. That is why they were never serious candidates for reformation, the political campaign money that flowed from them to the politicians running for re-election was too lucrative.

It is only when they collapsed and starting becoming a public relations nightmare did the political class work up some outrage. While this outrage is a good thing, I predict two bad things will eventually occur. First, the outrage will subside and these ten executives will walk away with and be allowed to keep the millions of dollars bonus paid for their nickel-dime results.

Second, once the outrage subsides, the political class will never get around to doing the real hard, but necessary, work that needs to be done: find a way to efficiently terminate both Fannie and Freddie and also terminate the Federal government's interference in the U.S. housing market.

The historical political class interference in the housing market has cost us at least $170 billion and the Great Recession, it is now time to go in a completely different direction. It could not get any worse than the expensive jams our politicians have gotten us into today, just ask any public relations 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 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 respectfreedom for both yourselves and others everyday.

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Thursday, November 17, 2011

How Is That Financial Industry Reform Process Working Out?

Back in 2008, the following agencies of the Federal government failed to see the oncoming disaster known as a Great Recession, a recession that grew out of risky, shady, possibly illegal, and stupid financial activities of banks and other financial institutions:
  • SEC
  • FDIC
  • HUD
  • FHA
  • Fannie Mae
  • Freddie Mac
  • Treasury Department
  • Federal Reserve Board
  • Senate banking committees
  • Senate financial industry committees
  • House Of Representatives banking committees
  • House Of Representatives financial industry committees
None of these government agencies foresaw or acted to avert or minimize the impact of the recession. We all know the economic stress and pain this oversight caused just about every American.

As a result, the political class belatedly jumped into action with the Dodd-Frank Financial Industry Reform legislation. Although the horses were out of the economic gate, the politicians rushed in late to build and create new gate. As always, a dollar short and a day late.

But they did act so I guess they should get some credit for that. Unfortunately, there was not much meat on the bone of the legislation, once it was passed. The legislation was very general and non-specific and left the hard work of financial industry reform to various organizations of the executive branch.  That is where the actual government reform regulations would be written.

However, as we reported earlier this week, 75% of those regulations that should have already been written already have not made their expected deadlines  Thus, financial reform is very much work in progress, or work far behind schedule.

That may explain why the biggest financial business crash since the Great Recession, which recently happened, collapsed almost immediately, seemingly minutes before anyone realized it was going to collapse. Very reminiscent of Lehman Brothers, Bear Sterns, and others back in 2008, healthy companies one day, extinct companies the next day.

As before, no one in the list of suspects in the list above seemed to know MF Global was going over the edge. Could it be the delayed implementation of Dodd-Frank left the country and the industry no better off than three years ago? Details of the collapse were summarized in an article in the November 18, 2011 issue of The Week magazine, "Were The Rules Too Lax For MF Global?":

  • Jon Corzine, former U.S. Senator, former chairman of Goldman Sachs, and former Governor of New Jersey took over MF Global last year.
  • According to Daniel Wagner of the Associated Press, Corzine "set out to create a mini-Goldman Sachs but ended up creating a mini-Lehman Brothers" when MF Global collapsed.
  • Not only did the company collapse, but the FBI is investigating whether or not Corzine and MF Global illegally co-mingled the firm's money with the money of the clients whose investments they were managing, with a reported $600 million of client money now missing.
  • Jay Hancock writing in the Baltimore Sun called the regulators "negligent and clueless," stating MF Global made the same type of risky, irrational decisions on investments that helped cause the Great Recession.
  • Francesco Guerra, writing in the Wall Street Journal, called for the formation of a "lead regulator" to replace the "crazy quilt of watchdogs" for non-bank financial institutions." Since there were at least four government regulators who were supposed to be keeping a watchful on firms like MF Global, and just like the run up to the Great Recession, none of the four saw the collapse coming until it was too late and $600 million went missing.
  • The article concludes that the political class has been so busy just worrying about he handful of very large banks that they have been negligent in covering other financial institutions. I guess that Dodd -Frank reform bill was not as comprehensive as we were led to believe.
  • Adam Ahmed writing in the New York Times claims some effort and potential rules were actually proposed for smaller companies like MF Global but they were thwarted by an influential opponent to these rules, the one and only Jon Corzine. The Times article claims that Corzine "personally pressed regulators to halt their plans" for this type of oversight. Corzine's argument won out, the additional oversight never took place, and now clients are potentially out $600 million.
So let's review:

  1. A former member of the political class still has enough pull to get his way on lax oversight, a way that crashed a company and possibly lost hundreds of millions of client dollars of investment.
  2. The rest of the current political class is so worried about only a handful of large institutions that this type of behavior goes unseen and not paid attention to until it is too late.
  3. At least four government agencies are so inept, even after the lessons of the Great Recession, that they failed again to foresee a major financial collapse before it happened and ordinary American investors get screwed.
  4. Risky Wall Street behavior still goes on despite the lessons learned from the Great Recession.
Or were no lessons learned? According to Alexandra Alper, writing for Reuters, even if the the Dodd-Frank legislation was on schedule for implementation, as opposed to being 75% behind schedule, it would not have made any difference in preventing an MF Global collapse since the main parts of the law would not have applied and MF Global was too small for the Federal Reserve to care about. Little solace to those who lost money within the $600 million mystery.

You get tired of saying it, but this is just another example of why Step 39 from "Love My Country, Loathe My Government" is so important. Step 39 would impose term limits on every Federal government politician. This is just another example of how our sitting politicians are just so ineffective in everything they do and everything they touch. There is no follow through to make sure laws get implemented in the proper way, no one ever seems to be accountable in the Federal government bureaucracy or the political class.

Tragedies and collapses are not seen ahead of time. Situations fall through gigantic cracks. Disasters are repeated over and over, costing American taxpayers and investors dearly. Even when they do try to fix something, e.g. Dodd-Frank, the effort is not comprehensive, not strategic, not effective, and in this case, not even completed on time.

And worse of all, the political class continues to take care of itself and its own members, in this case allowing Corzine to override some basic safeguards that may have prevented another financial institution collapse. Personal enrichment of themselves vs. doing the right thing for America. Sound familiar? Seems we have been writing about this disturbing trait often lately.

Thus, the answer to the question posed by today's title, "how is that financial industry reform process working out" Answer: not very well, at the cost of upwards of $600 million.

Our book, "Love My Country, Loathe My Government - Fifty First Steps To Restoring Our Freedom And Destroying The American Political Class" is now available, at .It is also available online at Amazon and Barnes and Noble. Please pass our message of freedom onward. Let your friends and family know about our websites and blogs, ask your library to carry the book, and respectfreedom for both yourselves and others everyday.
Please visit the following sites for freedom: