Holiday Political Class Insanity - Christmas Tree Tax Enacted

Just when you think you have seen it all from a political class insanity perspective, our politicians drop another "you cannot make this stuff up" situation on us. According to recent news reports from the Chicago Tribune and other news sources, the United States Department of Agriculture (USDA) has established a "Christmas Tree Tax" in time for this holiday season.


According to an article in the November 9, 2011 issue of the Chicago Tribune:

• The USDA will now require that a $.15 tax be paid on every imported and domestically produced fresh  Christmas tree, i.e. trees that were once alive.
• The collected tax will be directed to  "generic ads and other promotions, as well as research. The promotions, according to the USDA, will present 'a favorable image of Christmas trees to the general public,' with the intent of improving the public "perception" of Christmas trees and, hence, their sales."
• The news reports estimate that $2 million will be raised a year from the tax.
• The effort will be directed by a twelve member board which will oversee the program.
• After three years, the growers and importers will decide whether or not to continue the tax.
• Acting USDA Marketing Administrator David Shipman has publicly stated the 15-cent mandatory Christmas tree fee “is not a tax nor does it yield revenue for the Federal government”
• This is not a voluntary program, all domestic producers of Christmas trees and importers of once live Christmas trees are required by law to participate.
• Another quote from Mr. Shipman explained that the program is to include efforts to “enhance the image of Christmas trees and the Christmas tree industry in the United States.”

So many, many things wrong with this insanity

1. The most obvious question to ask, does the image of the Christmas tree need to be enhanced? What criteria was used to determine that enhancement was needed?
2. Is this the best way, the most cost effective way to enhance the Christmas tree's image?
3. Why is the Federal government involved, aren't there Christmas tree trade associations that are responsible for the image of the Christmas tree?
4. Given there is a twelve member board that oversees this program with the board likely being supported by staff people, how much of the $2 million will be left over to pay for any promotions once the board, their staff, and the associated expenses are paid out of the $2 million? Or are the board's expenses to come out of taxpayer funded expenses?
5. As with most corporate taxes, the cost will eventually be passed along to the consumer of Christmas trees. Also passed along will be the administrative cost of tracking and paying the tax and the paperwork and forms that go with it. While the amount is unlikely to be a lot, why have additional expenses at all?
6. Isn't this a blatant government slap against the parts of our economy that sell fake Christmas trees? Shouldn't retailers and manufacturers of fake Christmas trees also get government support in order to be treated just as fairly?
7. Can we expect the government to get involved in supporting the Hanukkah Bush industry? Does that industry need its image enhanced?
8. Given this industry is mostly a cash business, what is the effort and expense going to be to track this hard-to-track cash to make sure that a $.15 tax is levied on each separate tree? Impossible task.
9. The industry is also populated by a large number of landowners who allow people to cut down Christmas trees on  their property, usually paying cash for the right to do so. How is that revenue gong to be tracked and taxed?
10. Abe Lincoln quote: If you called a tail a leg, how many legs would a dog have? Answer: Four, calling a tail a leg does not make it a leg. Mr. Shipman, this is a tax no matter what you call it. It is a mandatory government fee which is most people's definition of a tax.
11. Some Christmas tree sellers do not want to be in the program, one of whom was quoted in the Tribune article. They would not have to participate if this was an industry operated program. However, these Christmas tree sellers are now forced against their will to contribute to the program they do not want to or be in violation of Federal law.
12. After three years, how will success be determined and who decides what success is? Like most government programs, that criteria has apparently not been established ahead of time. I am sure the 12 member board will have a very low threshold definition of success in order to perpetuate this cushy job.

And the biggest problem of all, does the USDA have nothing better to do than to put together programs that should be put together by the private sector? Are there USDA staffers sitting around with so little to do that they invent a program to tax Christmas trees?

Given the country's $15 TRILLION national debt, I would suggest that the first place to cut government spending might be this new Christmas tax program. This is a program that has no criteria for success, forces America business people to participate in a mandatory government program that they may not approve of, establishes an overwhelming bureaucracy to administer the program, introduces unnecessary expenses into a struggling economy, and will have little chance of reaching their goal of $2 million a year, given the cash dominance of the industry, making tax collection next to impossible.

The people associated with the program at the USDA should be laid off and their taxpayer funded salaries returned to the taxpayers, this is a totally unnecessary government expense. If the USDA does not want to fire these people, maybe they could be used to clean up the waste and fraud that permeate other USDA programs.

For example, Reason magazine reported in their December, 2007 issue that hundreds of people living in Manhattan receive checks from the Federal government every year from the government's farm subsidy programs. These checks total over $4 million every year.

Given that very few, if any, of these Manhattanites are doing farming in midtown Manhattan, why not put some of these USDA Christmas tree tax people on a project worth something important, saving the American taxpayer money by reducing this type of rampant fraud. By the way, two of those living in Manhattan are Mark and David Rockefeller, hardly two struggling farmers.

Political class insanity. Just when you think you have seen it all from a waste and bad priorities perspective, our politicians waste more and prioritize worse than ever imagined. Cannot wait to see what they do from an Easter egg perspective.


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/

What The President Should Have Said Vs. What He Actually Said About Jobs

Earlier last week we did a post that set forth some ideas on what President Obama should include in his jobs speech last Thursday and predicted what he would actually say. Would he be bold and innovative or would it be the same basic, tired political tactics that have been tried and have usually failed to live up to expectations?

Today's post will compare what he should have said and what he actually said. Unfortunately, the bottom line is that from a boldness, innovation, and courage perspective, the President came up well short of the goal line.

1) Infrastructure

As expected, the President did state that he wanted money and funding for infrastructure jobs to fix roads, bridges, dams, schools, etc. that were in need of repair, something we expected and were supportive of. However, the President's proposal came up short in two areas.

First, infrastructure spending and work done via the economic stimulus bill was woefully inefficient. According to various Associated Press investigations, thousands and thousands of government contracts were granted without competitive bidding. Half of the bridges that were repaired under the stimulus program were not in need of repairs. Powerful individual politicians in Congress snatched their share of the stimulus money and directed it to their voters regardless of whether of not the spending was actually fixing a real problem.

Millions of dollars from the stimulus plan were granted to companies that owed millions of dollars in back taxes. No where in the President's jobs speech do we get firm assurances that these atrocities have been recognized and will not happen again. He states that the money will be properly spent but we were promised that in the economic stimulus bill. As we pointed out last week, the only way to insure that this potential pot of money is well spent is to give the decision on what projects are done to the states via a block grant of money, taking Congress out of the decision process altogether.

Second, the President does not show any detail on how to pay for this increment Federal spending. He says he will unveil a plan within a week or so. Thus, his performance on this topic is an incomplete. He gave no indication of specifics like we did when we suggested reducing the Federal payroll back to 2008 levels, terminating unwanted and unneeded military projects such as the Osprey, terminating corporate welfare programs, ending agriculture subsidies, and directing high speed rail line funding to shorter term infrastructure needs.

Grade: Incomplete given the unnamed ways to fund this infrastructure spending that will be forth coming. However, worries about whether this will be another waste of money spent on things that do not need to be fixed, given the economic stimulus program, and the fact that the President has not taken Congress out of the decision making loop, continue to exist.

2) Obama Care

Ourselves, along with the majority of Americans, realize that Obama Care is an unfolding disaster. It will screw up existing health care insurance for tens of millions of Americans that already have coverage, it will significantly add to the deficit, it has created a large amount of tax and business uncertainty into the employment crisis in this country, and will not address the root causes of our escalating health care costs. Nowhere in his speech did he address this problem.

The President did make reference to the fact that we need to somehow reduce Medicare and Medicaid costs going forward in order to protect the long term solvency of both programs. He wisely wants to phase in any changes over time to ease the transition. However, he gave no indication of how he thinks we should do this, he gave no indication he has a plan to do this, and gave indication when this would be done.

Overall grade - D-. Obama Care is one of the biggest drags on the economy and unemployment today and he ignored it. The only reason he did not get an F here is that he may finally be realizing the need to reform Medicare and Medicaid, even if he does not have a plan on how to do that.

3) Tax Holiday For Overseas Profits

We suggested that the President announce that there would be a one time tax holiday for American companies that have stashed billions of dollars of their profits overseas because it is cheaper to leave those earning overseas than to bring them back to the country and get hit with a 35% tax hit. We suggested that this tax holiday be a one time deal that would be followed up immediately with a dedicated overhaul of the tax system.

Our reasoning was that it would be better to have that corporate cash sloshing around in the United States than sitting off in some foreign banks even if it was not taxed. The short term problem is jobs, not taxing overseas profits. However, in order to not train companies to wait for the next tax holiday, this would be a one time deal followed immediately by comprehensive tax reform. The President did not address this opportunity to get dollars flowing back into the country and economy.

Overall grade - F

4) Regulation - we suggested that the President terminate all Federal regulations that do not impact the health and safety of our citizens or the environment and he agreed with us in his speech. He addressed this issue, claiming that his administration had identified over 500  regulatory reforms that will free up billions of dollars over the next few years. 

However, he provided no specifics, such as the big reform we suggested, termination of the unneeded and unnecessary Sarbannes-Oxley legislation. His case would have been stronger if he had provided some concrete examples of what his administration has already done to ease the regulation overload.

He also did not address the overtly oppressive Federal government interference into individual business operations, specifically the overbearing and likely politically motivated harassment of Boeing and Gibson Guitars. This unnecessary type of government interference diverts companies' resources from business and job expansion.

Overall grade - B-. This could change if he does not follow through with the promises he made.

5) Energy

He made no reference at all to using the energy industry, and using oil and gas company resources, to expand our internal energy capacity and development. Since the country does not have an overall, longer term strategic energy plan and policy, fossil fuels will still be the major component of our energy mix for a long time.

Given that fact, it makes sense to not keep sending our wealth overseas to other energy providers when we could develop our own energy resources, again, using oil company money, not taxpayer money. Ending any Gulf drilling moratoriums, building the  Canadian crude oil pipeline, opening up drilling in the Arctic, etc. would create good, long term, needed jobs in our domestic energy industry.

Coupling that with a major initiative to develop alternative energy sources and an overarching energy strategy would cover both our long term and short term energy needs while creating a ton of jobs. The President missed this opportunity completely.

Overall grade - F

6) Education

We suggested a number of short term and long term changes in the nation's approach to education. First, given that the Federal government has dozens of independent organizations that provide severely fragmented job training services, we proposed that these dozens of job training entities be consolidated into a single, more efficient and more effective Federal job training organization, placed in the Health and Human Services Department.

This single organization would be a one stop shopping for citizens looking for training support and be a conduit between job seekers and those hiring. It would be more efficient than having the dozens of organizations that we currently have.

Long term, we proposed an initiative that would identify the root causes of our failing public schools and put together a comprehensive plan for fixing our education processes so that we stop under educating our kids relative to the rest of the world. A similar plan was laid out under the Reagan administration in 1983 but the American political class ignored those findings. As a result, our kids are not being educated as well as kids in dozens of other countries around the world.

Unfortunately, the President completely missed the needs in this category also. He made two references to education in his speech. First, he wants money to fix up 35,000 schools across the country. Second, he wants money to hire more teachers. However, if the country does not fix our failed public education processes, if we do not adopt curriculums to the current, fast paced world, if we do not improve teacher training and evaluation, etc., all the President's plans will do is have us continue to under educate our kids. Only now we will under educate them with more of the same kind of teachers in nicer buildings.

This is a typical solution from the political class. It is based on their inability to understand root causes of problems Having a nicer school building will not make for a better educated work force. Hiring the same types of teachers will not improve the learning process. We need fundamental changes to education to compete in the world economy.

None of the President's plans address this more serious problem. He just wants to hire some painters and electricians to make things look nice. The basic product, bad education results, will not change and will not positively affect job creation.

Overall grade - F

7) Taxes

We suggested that the President ask for an extension of the tax changes made last fall, i.e. the extension of the Bush tax cuts be extended for two years in order to introduce some more certainty into the tax planning of individuals and companies. From his speech it looks like he wants to extend it for another year. Not bad, but two years would have been better and provided the economy with more certainty.

In addition, the President asked for more tax changes, especially for small business. These include providing tax credits for newly hired employees and forgoing the payroll tax for a year to give businesses more cash. However, while these are positive steps, they are open for abuse (e.g. what would stop a business from firing all of its employees on Friday, hiring them back on Monday and claiming the tax credits ) and will further deplete the dwindling Social Security funding.

Their effectiveness is also worthy of doubting. Many economists have looked at similar tax programs in the past and found that unless there is a clear path to an improving economy and improving sales, a business will not likely take on new employees and assume that risk if there are still all types of uncertainty in the mix (e.g. next year's elections, Obama Care, over regulation, etc.)

The other tax area the President touched on his is unhealthy fixation with taxing the rich. The numbers prove that while taxing the rich more might be a healthy political move for some voters, the financial impact on the economy, government tax levels, and the national debt is extremely small. The President made some embarrassingly incorrect statements regarding taxing the rich in his speech that are worth reviewing:

"Warren Buffet pays a lower tax rate than his secretary." Likely a true statement since Buffet probably draws a smaller salary than his secretary. However, the President never brings up that fact that Buffet does not pay himself millions of dollars every year in salary, getting his money via legally approved other ways that minimize his tax burden. To not mention this fact is deceptive at best, a lie at worst.

"I (Obama) believe that the vast majority of wealthy Americans and CEOs are willing to do just that (pay more in taxes) if it helps grow the economy." A number of problems with this tired, cliched statement. First, the President never cites a source or research that supports this statement. He states it as fact but no data supporting its truth is ever presented.

Second, if these people are so anxious to pay more in taxes, why don't they? The U.S. Treasury Department has had a program for many years that easily allows Americans to pay more than they owe in taxes to pay down the national debt. If these people were willing to pay more, there is nothing stopping them from doing so. The fact that this program gets very little money donated to it every year reinforces the doubt that the President's statement is right.

Third, if they do want to pay more in taxes, why didn't the President challenge them to contribute to the infrastructure program he is proposing? We could name bridges and streets and dams after them as as a side benefit.

Finally, the President implies that if only these people paid more in taxes, the economy would grow significantly. Certainly not a true statement if you examine the numbers. Another Obama statement bordering on deception.

The bottom line is we need a much simplified and much fairer tax code. A tax code where the rich pay their fair share and those Americans that use the income tax process as a money maker, i.e. 45% of Americans pay no Federal income taxes, also pay their fair share. However, beyond general statements about reforming the tax code, the President's provided no details, plans, or timetable on how to do that.

Which is a shame since such a plan would remove a large amount of uncertainty and wasted economic time complying with our complex tax code. This would have freed up money, time, resources, and energies to expand our economy and hire new workers.

Overall grade - D-

8) National Debt - we have reviewed many ways to take trillions and trillions of wasted dollars out of our national debt. Many smart Americans have already done the heavy analysis and work identifying waste and redundancy in our government. The President at least gave lip service to this need and claims to have an aggressive plan ready within the week. We shall see.

Grade - Incomplete

9) Unemployment Benefits

We suggested that the President start finding a way to get out of the unemployment benefit business since every major study conducted in this area, including one done by the new head of his economic advisor team, says that providing long term unemployment benefits contributes to chronic long term unemployment The President stated in his speech that he wants to extend long term unemployment benefits, the exact opposite of what all economic studies say is wise.

Overall grade - F, based on the results of the studies cited above, the fact that as we keep extending benefits, unemployment gets stronger, and the fact that there are jobs out there. Just go to Craigslist, Snag A Job's website or other employment websites and search for all jobs in a zip code.

Jobs are out there, they may not be great jobs, they may not be in someone's field but here has to be a creative way of melding unemployment benefits with the existing vacant job piles around the country so that everyone wins. In the President's speech, status quo wins and that is a failure.

10) Trade treaties.

We suggested that the President press for the passage of trade treaties that have already been negotiated and he did.

Overall grade - A

Overall, across all components, this speech gets no better than a D- minus in boldness, originality, in-depth understanding of our root causes to our problems, and needed specifics on how to move forward. His tax ideas are standard and very tactical, with histories of varying degrees of success. His call for tax reform was hollow. His ignoring of the devastating effects of Obama Care on hiring and uncertainty is unforgivable.

His strategy for paying for this increased spending is vague and yet to be unveiled or to be determined. His removal of unnecessary regulations was tepid at best.  He missed big strategic opportunities to free up uncertainty in the private sector by ignoring the wastefulness of Sarbannes-Oxley, failing to address the opportunities in the domestic energy field, and fixing our short term and long term education process. He missed a big time opportunity to declare a one time tax holiday to get off shore corporate earnings back into our economy and linking that to overall tax reform.

If these are such great ideas, which they are not, why haven't we moved on them previously? Could it be that we have and the results has been a steady dose of 9% unemployment? There was not a creative, ingenious, or bold idea in the lot.

His speech reinforces the belief that the President is like most other politicians, they do not know how to think strategically. All of their thought processes and plans are usually very short term and tactical, rarely addressing the underlying problems. Cash For Clunkers. Cash For Caulkers. One time rebate for first time home buyers. A scattering of small business tax credits but no overall tax reform that encourages business growth. Fix up the schools and make them look pretty without long term education reform. All failed concepts, all short term, doomed tactics.

Besides not being strategic. the plans set out by the President do not remove the major road blocks of uncertainty in the economy and marketplace:

- Short term, gimmicky tax adjustments with unknown future implications and changes.
- A complex and unwieldy tax code.
- High national debt.
- High taxes at every level of government.
- Over regulation.
- Obama Care.

Until the political class fixes these problems, unemployment will still stay high and businesses will continue with their conservative "deer in the headlights" planning. Enough said.

Tomorrow we will review some of the in-depth analyses done by the Associated Press of Obama's speech along with how he would have done much better if he had just used many of the steps from "Love My Country, Loathe My Government," an approach that would have given him a strategic framework for problem solving.



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/

So, What Kind Of (Tax) Money Are We Talking About?

As we discussed yesterday, the negotiations to raise the debt ceiling are basically bogged down because the Democrats and Obama want to raise taxes and reduce government spending while the Republicans only want to reduce government spending. This difference could cause the United States government to default on its debt obligations, triggering a default and who knows what kind of economic chaos and destruction since we have never gone down this road before.


President Obama has been preaching, empty posturing, and politicking around three main tax raising issues:

• He wants to close some tax loopholes that oil companies currently enjoy.
• He wants to close a tax loophole for corporate jet owners.
• He wants to raise taxes on the wealthy.

Yesterday we laid out some of Obama's bigger hypocrisies he has incurred while in office. The above list of tax issues also speaks to some further hypocrisies:

• Let us not forget that BP's biggest campaign contribution in the 2008 elections went to the Obama campaign. His outrage against BP and other oil companies would be a little more genuine if he had not taken large sums of money from them for his election.
• The corporate jet owner loophole he wants to close is actually one he supported and was included in his economic stimulus program. If it was a good idea to give this loophole in 2009 to stimulate a down industry in a down economy, why is it a bad idea now when we are still the same down economic condition?
• If he thinks it is such a good idea for the wealthy to pay more in taxes, why didn't he take the lead and do that when he filed his personal Federal income taxes in April? He has recently admitted that he is doing well financially. Would have been a nice gesture of leadership if he had walked the talk and paid extra in taxes. By not doing so, I believe he is being hypocritical in insisting that others pay more.

Okay, these are just opinions, let's look at  the numbers to see what we are arguing about and what we are about to default the country over. Let's start with the oil company loop tax loopholes. There are varying forecasts, all from reputable sources on the web, that say this loophole is worth anywhere from $20 billion to $40 billion over a ten year period. Let's split the difference and say that if Obama and the Democrats actually got the Republicans to agree to closing these loopholes, it would return $3 billion a year to the Treasury on average.

How much of a difference will $3 billion make against the towering national debt numbers we know about:

• The 2011 Federal government expenditures are expected to be about $3.9 TRILLION - The annual $3 billion oil company loophole closure of $3 billion is .08% of the total 2011 expenditures.
• The 2011 Federal government deficit is expected to be about $1.65 TRILLION - The $3 billion oil company loop hole closure of $3 billion is .2% of the 2011 deficit.
• Obama's original Federal budget plan from back in the spring would have added another $9 TRILLION to the current debt levels of over $14 TRILLION - the ten year, $30 billion savings of closing the oil company tax loophole is .1% of the long term national debt.

The closing of the corporate jet tax loophole, the one he helped open up two years ago, would come out to about $3 billion over ten years or $300 million per year:

• $300 million is about .008% of the Federal government's 2011 expenditures.
• $300 million is about .02% of the Federal government's 2011 deficit.
• $3 billion over ten years is about .01% of the Federal government's long term national debt.

Between the two tax loopholes we are talking almost infinitesimally small impacts on our Federal government debt crisis. Should these loopholes be closed? Absolutely, we need to start the larger, overall process of weening every business off of corporate welfare from the Federal government.

This process should have been in place prior to the hundreds of billions of dollars that the political class showered and wasted on the reckless bailouts of Wall Street and auto industry businesses. Those taxpayer benefits would have added up to some real taxpayer savings rather than some relatively small corporate jet and oil company loopholes.

But when Medicare and Medicaid are sucking up about 13% of your budget and the Pentagon is sucking up about 16% of your budget, worrying about nits like corporate jets and small oil company tax loopholes is a rearranging deck chairs on the Titanic charade. There are so many ways to effectively cut government spending and waste in a big way that to nitpick these trivial ones is insane. And to have the fiscal integrity of the United States fall and live on these trivial issues is even more insane.

Let's move on to the infamous Bush tax cuts. Although Obama did not lead on this issue when he filed his taxes back in April and pay extra in his own tax bill, let's explore what impact would have happened if the "rich" in this country, those earning over $250,000 a year had their upper tax bracket raised from 35% to 39%. I have done the estimates and they are in line with other sources, the general consensus is that this action would increase taxes paid to the government by about $70 billion a year:

• $70 billion a year is about 1.8% of the Federal government's 2011 expenditures.
• $70 billion a year is about 4.2% of the Federal government's 2011 deficit.
• $700 billion over ten years is about 3% of the long term national debt.

Bigger numbers but still pathetically small when compared to the out-of-control political class spending. Thus, even if Obama got his way on these three tax issues, he would reduce spending and the debt by less than a measly 5% no matter how you cut the data.

Let's go even further. Last year we did a post on how wealthy the richest 400 Americans are from a total wealth perspective. The most comprehensive source of those estimates comes from Forbes magazine's  annual wealth survey. Last year the magazine estimated that the richest 400 Americans had a total wealth of about $2.5 TRILLION. Even if we confiscated the total wealth of these Americans, seized their homes, their cars, their boats, their financial assets, $2.5 TRILLION is less than 11% of the long term national debt.

The remaining 89% would have to be paid by the rest of the 112 million U.S. households, or about $180,000 per household. This does not include the annual tax increases each household would have to pay since once you wipe out the top 400 Americans, they would no longer be paying any taxes to the Federal government which is a very hefty sum.

Thus, even if you get crazy and start talking about government confiscation of private property, you cannot close the spending gap without involving the entire country. Corporate jets and oil company loophole closings are a travesty and only a distraction in this debt ceiling discussion and crisis. A long term, integrated, effective, coherent plan is needed to dig us out of this giant deficit spending hole the political class has gotten us into. It cannot be done in a matter of weeks like the political class is trying to do, it should have been started at least a year ago, using the President's own deficit reduction commission as a serious starting point.

But what am I thinking? Long term? Coherent? Integrated? Effective? When would we ever use these adjectives to describe the political class? Long term to them is next election or campaign fundraiser. Coherent to them is what ever they want their voters to believe. Integrated to them is how does any piece of legislation integrate into their re-election fund raising. Effective to them is any action that gets them through the next election.

Both parties are playing childish and selfish politics over trivial, unimportant financial travesties. And somehow we are going to pay big time when they finally decide that short term political survival trumps long term national financial survival.

Tomorrow we will look at some other tax scenarios of rich vs. poor to further confirm that Washington either does not understand simple math concepts or purposefully clouds simple math concepts to get votes.





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 Economic Uncertainty Caused By Political Uncertaintly

Although every single economic enhancement program launched by this administration has been a failure, you do have to give it credit for trying since the failures happened is so many different ways:

- Failure Type 1 - these failures spent a lot of taxpayer money to incentivize economic behavior that would have happened anyway. Two prime examples are the Cash For Clunkers program and the First Time Homeowner Rebate program. While these two programs created a temporary blip in demand, once the incentives ended, demand fell below a business as usual expectation, indicating that demand was moved up but not created since the uptick in demand during the program was offset by the down tick after the program ended.

- Failure Type 2 - these failures were programs that did not even have the temporary uptick to any substantial degree. Cash For Caulkers, which provided monetary incentives to people who insulated their homes, and Cash For Appliances, which provided monetary incentives for people to buy new, energy efficient appliances, never get mentioned in the administration's list of accomplishments. This implies that they even recognize how lame these programs were.

Another component of this type of failure was the HAMP program which was supposed to get mortgage relief for homeowners in distress and having difficulty paying their mortgages. The program severely underperformed relative to its forecasted participation rate and for many homeowners that did participate, they ended up with worst mortgage plans than when they started, the exact opposite of the intended consequence of this program. The inspector general of the program himself called it a failure and it was quietly put to death without much fanfare.

- Failure Type 3 - This failure is focused mostly on the massive waste of money called the economic stimulus program. Remember, this administration claimed that if this economic stimulus program was not passed, unemployment could go as high as 8%.

Well, it was passed and unemployment has soared to 9% and beyond and has stayed high for months on end. Thus, relative to the stated objective of the program, keep unemployment well under 8%, it was an utter failure.

Recent Congressional Budget Office estimates put the cost of the stimulus program at about $830 billion. The administration believes the program was a success since it claims the stimulus created about 3 million jobs. However, if you do some simple math and divide the 3 million jobs into the $830 billion cost, you end up with a cost of over $275,000 per job created, a ridiculous price to pay, assuming that 3 million jobs were even directly created by the stimulus.

Given what the stimulus money was wasted on, it is no surprise that it was an utter failure from an unemployment perspective and cost per job perspective.

- Failure 4 - this is an interesting and often overlooked type failure since it is self inflicted by the political class on itself. Back in the first quarter of 2010, the political class passed a $35 billion small business jobs incentive program. But listen to the comments after the bill was passed from various politicians (and reported by the Associated Press on March 4, 2010):

• "If that's the only thing that I can vote on, I'll vote on it," said a New Jersey Congressman.
• "It's really not a jobs bill. It's only one small piece," said a California Congresswoman.
• "It's an insipid, weak piece of legalisation," said a Washington Congressman.
• "It's not that good but it's better than nothing," said a Massachusetts Congressman.
• "It simply encourages conduct that would occur anyway," said a Texas Congressman. See Cash For Clunkers  above.

If the people who constructed and passed the legislation think it stinks, what chance does the bill have of being successful? With everybody bad mouthing it and having no confidence in it before it is put in place, $35 billion is wasted since the bill was dead on arrival in the real world.

Wow, who thought that the political class could fail in so many ways? It would be comical if they were not wasting hundreds of billions of taxpayer dollars and driving us deeper and deeper into debt without any resultant benefit.

If all of these programs failed miserably, maybe it is time to take a totally different approach to managing the economy. The one area that the Obama administration and the political class has not tried is to do less, rather than more. Every time they do something, given their bungling, they interject more and more uncertainty into the market and economy. The last thing a business owner or operator wants in their business life is uncertainty. You can at least plan in a certain world, you cannot plan effectively in an uncertain world.

With high levels of uncertainty, retrenchment is a wiser business strategy than advancement. Consolidation is a wiser business strategy than expansion. Doing nothing is wiser than taking a risk. Certainty, even bad news certainty, is better than wide open uncertainty.

How has this administration and the political class as a whole contributed to uncertainty?  The ways are many and wide ranging:

- For a year, the two parties viciously debated the merits and downside of eliminating the Bush tax cuts for people earning over $250,000 a year. Within that set of taxpayers are millions of small businesses who file their business taxes within their personal tax returns who could en dup paying more in taxes. Given this uncertainty the political class injected into reality, will small business have to pay more in income taxes, small businesses went the safe route and did not hire since they did not know if they would have extra tax expenses.

- Continuing with the same insanity, when the political class finally decided to extend the Bush tax cuts for everyone including the rich, they could only agree on a two year extension. More uncertainty. What happens at the end of two years? Why should a small business owner hire more employees when his Federal income tax bill could go up significantly within two years? Better to stay put, business wise, until the uncertainty clears.

- There are not enough days to go into details about the uncertainty that Obama Care has injected into the thinking of all types of businesses but the uncertainty generally falls into four categories:

• Is it more tax advantageous to the business to drop health care for my employees and save money because of Obama Care?
• How many more scarce business resources will I have to devote to just filling out Obama Care paper work?
• How many more different taxes will I have to pay as a business owner under Obama Care?
• How much more in total business taxes will I have to under Obama Care?

The list goes on and on. And the truth is, no one, including the clowns who wrote the legislation, knows the answers to these questions. In the past two weeks we have seen totally unexpected bad consequences of this law arise as people plow through the 2,500 page legislation.

Given the people who wrote and hyped the law did  not foresee the latest snafus, it is highly unlikely that business owners and operators know what is going to happen either. More and more uncertainty.

The House Of Representatives Energy and Commerce Subcommittee had hearings last week on Obama Care. Presented at that hearing was a 3,500 page stack of forms, requirements, regulations, etc. that Oabma Care has already spawned. No one knows what is going on or what will fall out of these 3,500 pages. More uncertainty.

- Boeing wants to move some of its airplane production from Washington state to South Carolina in order to be more competitive. More competitive means more business means more jobs. They do not want to move these jobs to South Korea. They do not want to move these jobs to South Yemen. They want to move them to South Carolina, totally within the continental United States and give them to Americans.

However, the Obama administration via the National Labor Relations Board has intervened and sued Boeing over the move. Why? The real answer is so that Obama can protect some union votes for himself in 2012 since the jobs being moved from Washington to South Carolina will less likely still be union jobs when the move is done. Pure politics, more uncertainty.

Why would a business plan and try to improve its business and expand emloyment when the heavy hand of the government could intervene at any time and stop the plans purely for political gain proposes? Why bother going through the motions to expand when the sword of interference and uncertainly could chop down like it did on Boeing? Better to just hunker down, stay within the current business plan and operations, not hire more people, and avoid the potential government interference.

Given that any proactive economic program this administration has come up with has failed, maybe it is time to change strategies. Rather than continuing to waste taxpayer money we should be looking to remove uncertainty from the market and let the market heal itself? Wasting money has not worked,  no matter how it was spent or intended, maybe trusting the free market and private sector to act for its own good in a more certain business climate would work. There is no downside.

Zachary Karabell, writing in the July 4, 2011 issue of Business Week says the same thing better then me. His article examines the issue of whether government intervention in the market is a good thing. His conclusion:

"The government is one vital element among many, and society will thrive only when neither too much or too little is expected of it. This may not be as stirring as revolutions and crusades, but its better to accept limitations and work constructively within them than pin our hopes on policies such as the massive attempts to juice consumption that the U.S. government has repeatedly tried - and are bound to disappoint. Bold plans with no chance of success won't change employment patterns or make a nation competitive in a global system that is increasing complex and dynamic. Today's leaders need the humility to recognize what they can't change so that they can meaningfully change what they can."

Well said. And what they can change is to stop bickering over voting blocs, stop bickering over tax plans, stop bickering over programs that are doomed to failure, have a little humility, and start injecting some sound long term planning into the economy which would remove the blockade of uncertainty without wasting hundreds of billions of taxpayer money

By the way, repealing the abomination that is Obama Care would go a long way to breaking that blockade.




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

I Was Just Wondering...About Failing Public Schools, Government Waste, Airport Security And More

I was just wondering:

• When will the American public and the political class get serious about our failed education processes, given that 70% of the finalists in the latest Intel Sciences Talent Search were children born to immigrants, most of whom were from India and China, even though children of immigrants account for only 12% of the population. (The Week magazine - June 17, 2011)
• When will the American public and the political class get serious about our failed war on drugs, given that the Mexican government has discovered that Mexican drug cartels are building armored assault vehicles  equipped with battering rams, one inch thick steel armor, and gun turrets, especially since two of the vehicles were recently confiscated at a Mexican border town. (The Week magazine - June 17, 2011)
• When will the Democratic wing of the political class finally understand that raising taxes in an economic downturn makes no sense, especially since we now know that Sweden has dropped tax rates four times since 2006, a time period that has corresponded with annual national economic growth in Sweden well beyond economic growth in most other nations, including an annualized growth rate of 6.4% in the first quarter of 2011 and 5.7% in all of 2010. (Business Week - June 20, 2011)
• When will the California political class finally understand that some of the reasons why their state is a financial basket case is because it pays some of its lifeguards over $200,000 a year and that the AVERAGE salary of Bay Area Rapid Transit Authority (the light rail system that serves the San Francisco) employees is  $114,000. (Reason magazine - June 2011)
• When will the political class finally convince the TSA to revamp its security procedures and stop the insanity so that they no longer force a 95 year old, cancer-stricken American grandmother to remove her adult diaper in order to get through airport security (various late June news reports including (CNN)  but somehow missed the fact that actor Garret Dillahunt accidentally walked through TSA security check posts with a pocketknife in his pocket. (CBS News online, June 27, 2011)
• When will the political class finally realize that the entire Afghanistan venture is and will probably always be a disaster. Militarily, we have spent over ten years in the country, we have spent almost a half a TRILLION dollars, we have lost thousands of brave American soldiers to the fighting, the country is still grossly illiterate, astonishing poor, amazingly undeveloped, and as I am writing this, the Taliban have taken over a luxury hotel in the capital of Kabul. This takeover is happening despite ten years, half a TRILLION dollars and thousands of lives lost. Disgraceful.
• When will the political class finally understand that Medicare, as it is structured today, has no chance of surviving unchanged since, according to Robert Samuelson of the Washington Post, it currently costs the American taxpayer over half a TRILLION dollars a year (about $5,000 per year per American family) and is increasing so much that by 2016 it will consume over 30% of the Federal government budget.
• When will the political class finally understand that NATO is a broken, anachronistic, and dysfunctional military coalition that is running out of ammunition just weeks into its Libyan fiasco, requires the United States to pay for 75% of the organization's budget, and 23 out of 27 NATO members are in violation of the NATO treaty by not expending enough of their domestic budgets for defense. (The Week magazine - June 24, 2011)

I was just wondering... when will the political class get its act and pride together, finally start acting like leaders, and finally start resolving the issues facing America today.





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

Please visit the following sites for freedom:

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

Our Political Class: Still Clueless But Still Making Predictions

I really get a kick out of our politicians when they try to make predictions of any sort. They keep trying and they keep getting them wrong but they continue to show the fortitude to go on with more fruitless predictions. Before we review the latest prediction from Harry Reid, let's quickly review the recent past history of politicians' predictions:

- In the run up to the invasion of Iraq, I vaguely remember Bush predicting that the military effort would cost less than $100 billion. I do not remember the exact number, $60 billion sounds familiar, but it was less than $100 billion. Well, many years later we know he missed that prediction by hundreds and hundreds of billions of dollars in ongoing expense before you even count the long term expenses of continuing care for our wounded and the interest on the debt that was incurred to finance the invasion. In all probability, the true cost of the invasion will exceed at least a trillion dollars, conservatively at least ten times higher than the original Bush prediction.

- When the Obama administration was hyping its economic stimulus package, the threat was if the package was not passed, unemployment could get as high as 8%. In hindsight, I am sure that the Obama administration would welcome 8% since the unemployment rate zoomed right past 8% and has hovered just under 10% for a long time. Missed that prediction by just a little bit.

- I also got some laughs out of another economic stimulus prediction, one that involved changing the rules as time progressed. The original intent of the stimulus package was to create a couple of million permanent jobs. However, as the stimulus money got spent, nowhere near a couple of million permanent jobs got created. That was when the prediction was changed from jobs created to jobs create and jobs saved. When that definition did not work, the prediction was changed from jobs created and saved to include jobs touched. Somewhere along the line the criteria for a job being permanent was relaxed to any job, permanent or temporary. Even with all of these definitional changes, this prediction still has not come true, given the much higher than expected unemployment rate.

- The bank bailout prediction was also pretty funny. Think back to the end of the Bush administration and how Bush and Treasury Secretary Paulson were claiming that unless there was a massive taxpayer bailout of the U.S. banking system, the financial system of the world would crash and we would see the coming of the next Depression. Nice prediction but apparently way off base as far as being accurate. The bailout bill did get passed and signed and by November, 2009, the first "failing" banks were receiving their TARP bailout money.

However, one of the criteria for receiving the money was that severe restrictions were placed on the wage levels of bank executives. All of a sudden, many of these banks were scrambling to give back the TARP money, so much so that a mere seven months after the first TARP checks were cut, many of the banks had already returned their bailout money.

But let's reason this one out. If the banks that received the money were in such dire financial shape, how were they able to return the money so quickly? Couldn't they have muddled through these few months somehow by slashing costs, issuing more stock, selling off assets, or taken any number of actions to get them through this short period of time? Or were these banks never really in trouble in the first place and just wanted a free lunch from the taxpayers via the political class and government? We could not have been that close to a Depression if the majority of the banks returned their TARP funds so quickly, mere months, so that their executive pay levels would not suffer.

- And now to the latest grand prediction, this one from Harry Reid, majority leader in the Senate. In an Associated Press article today, Mr. Reid was extolling the Senate's passage of the bill that would extend the Bush tax cuts on January 1, 2011 as well as do a number of other things. Mr. Reid is quoted in the article as predicting that passage of the legislation would result in the creation of two million jobs.

If this was such a good idea and will actually create two million much needed jobs, why was this legislation not passed long ago? Wouldn't the Obama administration and the Democrats in Congress wanted this passed before they got whooped on election night?

Also, with the exception of decreasing the Social Security tax for one year and adjusting the estate tax numbers, isn't the vast bulk of this legislation designed to keep the status quo? If the status quo so far has not generated two million incremental jobs, what makes Harry think that it will now? For a family with a breadwinner making $50,000 a year, their Social Security savings will be about $20 a week, hardly enough to create demand for 2 million new jobs.

Thus, I have no idea how Mr. Reid comes up with two million more jobs by keeping the status quo and giving American families back $20 a week. It makes you wonder how these people come up with these numbers. Just as the two million job number makes no sense, neither did the Bush Iraq number, the TARP prediction, the unemployment estimate, etc.

I have a four part question that I would love to know the answers to:

1. Do our politicians really believe the numbers they spout out? 
2. Do our politicians even understand the derivation and the logic behind the numbers they spout out?
3. Are they ever embarrassed when the reality comes nowhere close to the numbers they so confidently predicted?
4. Are they aware up front that the numbers are bogus and use them just to get their way or legislation passed? If this is the case, then we have a more serious integrity issue with our politicians then we thought we did.

The bottom line is their track record is horrendous when it comes to predicting numbers and results and we would all be better off if we ignored future predictions from the political class. It is a waste of their time and credibility and usually a waste of our tax dollars. They should follow that old saying that goes something like this: "Better to remain silent and thought ignorant than to speak up and remove all doubt." Or in our case: "Better to not give a prediction and thought clueless of the future than to speak up and remove all doubt."







Our recent book, "Love My Country, Loathe My Government - Fifty First Steps To Restoring Our Freedom And Destroying The American Political Class" is now available at 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.cato.org/
http://www.robertringer.com
http://realpolichick.blogspot.com
http://www.flipcongress2010.com/
http://www.reason.com/

President Obama Finally Steps Up To The Plate

It is not often that I compliment any politician for their actions and positions, basically because they rarely provide the opportunity for me to do so. Thus, I find it heartening and required when a politician steps out of their political comfort zone, possibly endangering his or her relations with their respective political supporters, to do the right thing for the country.

To my surprise, President Obama has finally stepped up to the plate of responsibility lately and did the right thing. Three somewhat courageous recent actions come to mind:

- It looks like he finally was able to close the free trade treaty with South Korea that was mostly negotiated under the Bush presidency. The treaty negotiations had hit a snag or two a couple of weeks ago but it now looks like it has been finalized and awaits the Senate vote for it to be ratified. It appears that most interested parties are happy with the final product and that it should result in increased job opportunities for U.S. businesses, particularly agriculture and automotive.

When I heard that the treaty was in trouble a few weeks ago I figured it was Obama the politician playing to his union supporters, most of whom are on record opposing any kind of free trade agreements and that the treaty now had no chance of being finalized since it had entered the political zone. However, it looks like the President did the right thing, pushed, nudged, and negotiated the treaty to a successful agreement, even if it ruffled some union supporter feathers.

- An article in today's USA Today newspaper reported that the government had recently cracked down on over 500 people that were involved in Ponzi fraud schemes, stock price manipulations, and other financial shenanigans. The hundreds of criminal defendants cited involved over $8 billion in losses from over 120,000 unsuspecting investors. One situation involved a Texan who pleaded guilty in an oil and natural gas Ponzi scheme that stole more then $485 million from over 7,000 investors. A Florida man was convicted for an investment scheme that prayed on the local Haitian community.

The arrests, convictions, and confessions came about as a the result of the administration's creation of a multi-agency task force on fraud. This task force was put together a year ago to combat an increase in economic crimes and fake investment schemes. Nice work, done quickly, from a government that historically had no idea on how to stop these types of financial frauds. Enron, Worldcom, Madoff, and a host of other crooked economic schemes robbed Americans of billions and billions of dollars in the past while the government seemed helpless to prevent it.

This is the type of nitty-gritty work that basic government should provide. There is still a long way to go, especially when you see the estimates of how much fraud goes on within government programs, such as Medicare, but at least it proves that government can fight back if it focuses.

- The third act of stepping to the plate is a big one and it involves the potential compromise that Obama has worked out with all parties as it relates to the expiring Bush tax cuts. Basically, the Democrats did not want to renew the tax cuts for those American families earning over $250,000 a year and they wanted to renew unemployment benefits. The Republicans wanted to renew the Bush tax cuts for everyone and not renew the expiring unemployment benefits. Failure to find middle ground would result in every American paying higher income taxes on January 1 and the unemployment benefit pot would have run dry. Both of these situations would have been a disaster for the economy and for a while, it looked like the Democrats and Republicans were willing to screw the economy and its citizens just to prove a point.

Rather than play chicken with the future of the country, the President finally stepped forward and took charge, hopefully working out a compromise that saves what ever hope there is to getting the economy going again but still ticking off both die hard Republicans and die hard Democrats? Why the angst on both sides? Because the compromise keeps all of the tax cuts in place for two years (ticking off the Democrats) and also extends the unemployment benefits (ticking off the Republicans).

This was a pretty courageous move on Obama's part since he is taking some heavy hits from the more extreme left members of his voting block. But he realized that compromise was better for the country and finally took the reigns of leadership back from Pelosi and Reid and stepped to the plate. He had handed those reigns to them in his first two years, happier to act like a President than to actually be the President. He seemed happy to fly around the world and give speeches to adoring crowds and to mingle with athletic teams at the White House and to film television commercials for the George Lopez show and to discuss, at length, his NCAA basketball tournament picks, etc. As a result, Pelosi and Reid ran roughshod over him and did what they wanted.

Now he appears to have stepped back into the ring and is getting his hands dirty in actually governing for a change. He worked the details of the South Korean free trade treaty, his financial fraud task force is finally doing some good, basic government work and protecting the financial interests of Americans, and he his forging a compromise for the good of America, not the good of his career and political party. Will this type of behavior last or is it just a short term spurt? Will he revert back to the almost figure head President figure like he was before, acting like a President rather than being a President who works the details and the hard negotiations, especially since the Republicans will be much stronger and peskier in 2011? I have no idea if this selfless behavior will continue but felt it needed to be recognized while it lasted.


Our recent book, "Love My Country, Loathe My Government - Fifty First Steps To Restoring Our Freedom And Destroying The American Political Class" is now available at 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.cato.org/
http://www.robertringer.com
http://realpolichick.blogspot.com
http://www.flipcongress2010.com/
http://www.reason.com/

Leveraging The Bush Tax Cut Debate: Killing Multiple Birds With One Stone

As the lame duck session of Congress convenes, I am sure we will here a lot about whether or not and how the Bush tax cuts should be handled since they expire at the end of this year. If nothing is done, every U.S. tax payer will pay more in income taxes next year. If all of them are renewed, then everyone will not see any increases in taxes.

The main sticking point between the two factions within the American political class is whether or not to renew the tax cuts for those American families earning more than $250,000 a year or individual Americans making more than $200,000 a year. Obama and the Democrats want those hard working, higher earning Americans to pay more while the newly invigorated Republicans want all of the tax cuts renewed. Thus, I am sure that unless things change, we will have more childish debate, as we always do with our politicians, as they pit one group of Americans against another for their own political gain, the good of the country be damned.

However, it does no have to be that way. The following paragraphs explain a way for all parties to get what they want, the deficit and national debt gets addressed, and pertinent national needs are addressed. But before we explain what could accomplish all of this, let's review where we currently are:

- The Obama administration's economic stimulus program was supposed to address infrastructure needs, using stimulus funds to not only create work but also fix the country's crumbling infrastructure. However, an in-depth Associated Press investigation in late 2009 revealed that fully half of the stimulus construction money set aside to fix crumbling bridges was actually spent on fixing bridges that were in perfectly good condition.

How could this type of screw up occur? Because the political class wanted to direct taxpayer money to bridge projects in their home districts and states, regardless of whether or not it was needed. Thus, the political class ended up fixing things that did not need to be fixed and wasting the opportunity to create true infrastructure repair only where it was needed.

- Other parts of the economic stimulus budget was spent on out of control and useless projects. These wasteful projects ranged from using taxpayer money to research and photograph exotic ants in east Africa to spending hundreds of thousands of stimulus dollars to replace windows in a Mt. St. Helen's government visitors center that is currently shut down and will probably never be opened up again. Thus, the political  class spent and wasted money on projects that had not chance of being successful in fixing a national problem, spent funds on projects that affected very few U.S. households,  and created no long lasting jobs, all objectives of the stimulus program.

- If the Bush tax cuts are not renewed for the higher earning Americans, the budget deficit will be expanded by about $70 billion a year for the next ten years. While everyone wants to reduce the deficit, Obama and Democrats seem fixated on this group of Americans and their relationship to the budget deficit even though the Democrats have increased the budget deficit about $1.4 TRILLION a year for the past four years. Thus, this $70 billion would have reduced the Democrat's annual wild spending by only about 5%. And this assumes that the $70 billion was actually saved and used to reduce the deficit and national debt. In all likelihood, if this additional $70 billion is sent to Washington, it will be wasted by the political class.

- Our national debt is currently over $13 TRILLION and growing steadily. One of the biggest drivers of the national debt is the ever growing budget required by Social Security to meet their obligations.

- I came across  an interesting article by Joseph DiStefano in the Philadelphia Inquirer this past Sunday. According to the article, a lot of super-rich and regular rich Americans think that they should be taxed at a higher rate. More than 400 hundred of these richer than average Americans signed a petition that called on Obama and Congress to let the Bush tax cuts expire for the higher earning Americans. Consider a quote form Warren Buffet in the article:

"People at the high end - people like myself - should be paying a lot more in taxes."

Many of those quoted in the article wanted to see their additional taxes go for investment in education, health, job creation, transportation, infrastructure, and renewable energy. Many of them lambasted past tax cuts for ruining the economy.

While I find it interesting that these rich Americans is that none of them claimed to have paid higher than required income taxes through the years. If they really felt so bad about not paying enough taxes and felt that their lower than historical tax rates were destroying the country, their words would have had a lot more meaning if they had proudly stepped forward over the past few decades and written checks for additional tax dollars, payable to the U.S. Treasury.

Okay, the above paragraphs set the stage. Now, let's solve the problem:

1) First step is to maintain the Bush tax cuts for those American families earning less than $500,000 a year and let them expire for families earning more than $500,000. This keeps the tax structure unchanged for over 99% of the population and raises taxes for less than 1% of Americans.

2) By raising the Obama target from the $250,000 to $500,000, my calculations show that only about $56 billion additional dollars will annually flow to the government and political class, not the currently estimated $70 billion a year. This difference would be made up by upping the taxes imposed on those patriotic-minded Americans like those that signed the petition described above. The IRS would go back over the past ten years of tax returns for these super-rich Americans who think they underpaid their past taxes and re-calculate their taxes as if they were taxed at the higher rates, pre-Bush tax cuts. Since they want to be so patriotic, let them put their money where their mouth is.

The IRS would allow these super rich Americans to make up their additional taxes over a ten year period. For example, if Warren Buffet should have paid an additional $100 million if the Bush tax cuts had never been implemented, he would now have ten years to repay that deficit. That way those who think they have been under taxed over the years can make the amends for their shortfall. It would certainly make their signing of the petition more impactful.

3) At the same time, we would adjust the Social Security rules according to Step 11 in "Love My Country, Loathe My Government."  Step11 calls for the Social Security eligibility rules to be changed so that any American with over $3 million in assets and wealth, not income, would not be able to draw any checks from Social Security until their net worth was under $3 million.

$3 million in assets should be able to conservatively generate about $150,000 a year in income, placing that person's income in the top 5-6% of all U.S. earners, i.e. they do not need the extra Social Security money to live comfortably. This sacrifice on the part of those types of Americans that signed the above petition would allow them to further contribute to the good of the country. By not paying out to those Americans that seem to have too much money and wealth, we can protect the program for those Americans that truly need the Social Security coverage for basic living needs and reduce the national debt at the same time. Two birds with one shot.

4) The biggest component of the program would be that two virtual lock boxes would be created to protect additional tax dollars from the political class. Half of the additional dollars from allowing the Bush tax cuts to expire for those earning over $500,000 a year would be put in a lock box that would only be used to pay down the national debt. The political class would never be able to get its hands on the additional funds, it would go straight from the Treasury to the pay down of the national debt.

The other half of the additional dollars would be put into a lock box that would be used to address the issues that Warren Buffet and others who signed the petition discussed in the article. Infrastructure projects would be determined on their merit and not on how well a politician would earmark money for unneeded projects in their home state or district like they did with the bridge stimulus money. The last thing we want to see is all of this additional money be spent as foolishly as the stimulus money was spent.

An independent commission would be set up to screen projects based on needs. No politicians would sit on the commission. One model might be the Public/Private Consortium that is buying up distressed mortgage securities in order to clean up the financial mess in the housing industry. I would have no problem allowing those 400 signers of the petition to run the commission since it is their money we would be spending. Whatever process is used, it has to keep the political class out of the decision making process and be totally transparent relative to how projects are selected for funding, how the funding is spent, and how the results turn out.

Executing this plan would make everyone happy:

• The Republicans would be happy since they protected more Americans from tax hikes (those making over $500,000 would pay more vs. those making more than $250,000) but still got the tax breaks extended for most Americans.
• The Republicans would also be happy because they could claim they helped solve Social Security's shortfall and reduced the national debt by reigning in Social Security costs by ending payments to those Americans with more than $3 million in assets and wealth.
• Obama would be happy since his irrational disdain for higher earning Americans would be mostly satisfied with the Bush tax cuts expiring for the richest Americans.
• Obama would also be able to claim that he is a deficit cutter with the rich sacrificing for Social Security solvency.
• People like Warren Buffet would be especially happy since they would not only be paying more taxes going forward, like they want to, but they also would be able to make up for their low taxes paid over the past ten years with the IRS billing them for their shortfall.
• The economy would be happy since we would have some certainty in tax policy, reducing the uncertainty in the minds of consumers and small business owners.
• We would all be happy since we would know that the additional taxes would be put to good use via the lock boxes, i.e. the actual reduction in the national debt and the spending of money on only needy infrastructure and other worthwhile projects. 

Thus, we would solve some important problems with a little compromising on everyone's part, i.e. killing multiple birds with one shot. The only people that would be unhappy would be those politicians that could not spend the additional taxes on their pet projects and unneeded expenditures. But that would be a good thing. We do not need more ant research and photographs and replacement windows that no one will ever look through.




Our recent book, "Love My Country, Loathe My Government - Fifty First Steps To Restoring Our Freedom And Destroying The American Political Class" is now available at 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.cato.org/
http://www.robertringer.com/
http://realpolichick.blogspot.com
http://www.flipcongress2010.com/
http://www.reason.com/