What Really Happens When You Cut Government Spending: A Real Life Example (The George Costanza Principle)

Today's post is a rerun of a post that was done back on July 14, 2010 but it is especially relevant today. While this post originally focused on the fallacy of stimulus spending, the example used below also applies to outlandish government spending. Our national debt has risen hundreds and hundreds of billions of dollars since last July and many concerned Americans realize that the country is heading for a financial meltdown if government spending is not gotten under control soon.

However, many in the Washington political class, especially Democrats, do not seem to have the same urgency or understanding of what is happening. Democrat after Democrat is opposing even the smallest decrease in government spending with such weak and lame excuses that it will result in another recession, it will increase unemployment, the economic recovery is still too weak, etc.

Anyone who suggests there is waste and fraud in government spending is vilified as heartless and ignorant. Most Democrats, and some Republicans, would put off drastic spending cuts until some unspecified point in the future in order to not have to take any kind of courageous stand for the good of the country. Only the good of their political careers and their next election is important to them. They would rather waste money and keep this dysfunctional government apparatus in a business as usual state then to show some leadership and fix what is obviously broken.

This is where the July 14, 2010 post comes into play. It is a real life example of what happens when government spending is drastically reduced to just essential services, Americans are allowed to keep more of their earnings and the government does not ring up record deficits every day, every week, and every year. The scenario below actually happened. it is not theoretical or some economist's thesis. It was reality in the 1940s, reducing government spending substantially increased the national wealth and reduced/avoided would should have been record shattering unemployment levels.

Let me say it again, this economic scenario actually happened. You can look it up. After you read the post, please explain it to your friends who happen to be Democrats and ask them to rebut this reality. They cannot since it was the reality that made this country great until the political class started to spend it into bankruptcy. Explaining this reality to them would make George Costanza so proud (read more to understand).

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Wednesday, July 14, 2010



Political Class Voodoo Economic Myths And Lies - Myth #3


The past two days we have disproven two long standing myths and lies that the political class has constantly shoved down our throats, namely that the so-called Bush tax cuts for the rich caused all of the economic trauma and skyrocketing deficits over the past few years and that Social Security is a far better and safer alternative compared to letting people invest their money for retirement the way they want to invest it. Two myths down, a few more to go.


Today we will disprove the myth that government spending is an effective way to stimulate the economy and create real jobs. This is a timely topic as the nation continues to struggle with very high unemployment (about 10%) and sluggish economic growth. The Obama administration launched their stimulus economic program last year and some in the political class are calling for another shot of stimulus spending since we are still in the economic doldrums.

But did the first stimulus package to any good? You can obviously make the case that it did not since unemployment is still so high, with over 14 million Americans still out of work. A vast majority of the 5% or so economic growth in the fourth quarter of 2009 can be proven to be from the temporary jolt of stimulus spending, spending that has resulted in no long lasting effect as economic growth has fallen off throughout 2010.

If we go back to our blog post of October 31, 2009, we see more distressing numbers. At that time, the Obama administration claimed that the stimulus plan had created or saved 650,000 jobs. It also reported that $180 billion of the stimulus funding had been spent. If you do the simple calculation, using all of Obama's numbers, you see that each of the jobs created/saved cost about $277,000 each to be created or saved. You cannot reduce unemployment through stimulus spending if it costs over a quarter million dollars to create or save one job that likely pays significantly less than that.


The sad truth that most in the political class do not understand or do not want to understand is that stimulus spending is an ineffective and inefficient way to spur the economy. It does not create jobs, it creates short term work, work that usually vanishes once the stimulus spending is spent, as illustrated by the decline in economic growth over the past year or so once the stimulus was spent. Governments cannot create wealth, they only can take wealth (via taxation) and redistribute it, usually less effectively than the free market. If that wealth had not been taken as taxes, it would have still entered the economy but would have entered the economy via individual citizens making individual choices. All the stimulus spending did was move around the money that was spent, it was not incremental spending to the economy.


A perfect counter example to this myth is what happened at the end of World War II. Consider the following information, mostly gathered from official U.S. government sources The first number/column is the calendar year, the second number is Federal budget in millions of dollars in that year, the third number is the unemployment rate and the fourth number is the GDP in billions of dollars:

1940: $9468, 14.6%, $101.4

1941:$13653, 9.9%, $126.7

1942: $35137, 4.7%, $161.9

1943: $78555, 1.9%, $198.6

1944: $91304, 1.2%, $219.8

1945: $92712, 1.9%, $223.0

1946: $55232, 3.9%, $222.2

1947: $34496, 3.9%, $244.1

1948: $29764, 3.8%, $269.1

1949: $38835, 5.9%, $267.2

1950: $42562, 5.3%, $293.7

1951: $45514, 3.3%, $339.3

Combine these facts with the facts that in 1945 there were conservatively about 10 million members of the armed services coming home to start civilian life and jobs (about 7% of the overall U.S. population). Did the U.S. government implement a stimulus spending program, significantly growing the deficit in order to create jobs for these returning members of the armed forces? It does not appear so from the above numbers:


- From a wartime high of about $93 billion in 1945, the Federal budget was reduced by about 40% in just one year in 1946 (from $93 billion to $55 billion)


- By 1948, just three years after the war ended, the Federal budget and spending was under $30 billion or almost 68% smaller than it was in 1945.


- However, despite these drastic cuts in Federal spending and about 7% of the population coming home to look for a job, the average unemployment rate for the six years immediately after the war was about 4.4%, a level that the Obama administration would kill for today.


- 7% of today's U.S. population equates to the creation of enough jobs for over 20 million Americans, enough to keep today's unemployment rate well under 5%.


- During the same time period, overall economic growth increased year over year for all but one year of the six years after the war and the U.S. government ran a budget surplus in four of the six years after the war (not on the chart).


Let's review what happened after World War II: despite a massive influx of new people into the economy and the draconian reduction in Federal government spending immediately after the war ended, unemployment levels stayed low, the economy grew robustly, and the Federal government enjoyed budget surpluses for several years (four out of six) immediately after the war. No stimulus programs, no Cash For Clunker disasters, no skyrocketing national debt, minimal deficit spending. All of the things that the political class is doing today that are not working, the government in the 1940s did the opposite of and it worked beautifully.


Kind of reminds of the old Seinfeld episode where George Costanza does the exact opposite of what he has been doing because that behavior has always resulted in failure. Maybe the political class should learn a lesson from George and our analysis above: lose the myth that government stimulus spending actually works. When you start to look like George Costanza, you have a big problem, political class.


Let Americans keep most of their hard earned wealth, as outlined in Step 1 of "Love My Country, Loathe My Government," to spend it freely and personally how they want to spend it. They showed in the 1940s that their spending it on what they want and need is the surest way and mos efficient way to grow the economy. America came out of the war a healthy, robust nation with the strongest and freest economy in the world, something that we may not be able to claim today.
 
 
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One final note: the origin for the above analysis was not my own idea, it was put together after reading an excellent article from the CATO Institute where they explained what happened, economically, after the war. However, in order to prove it to myself, I did the actual data collection to verify their story. They are the ones responsible for this worthy historical insight, not me.


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

"Demagoguery Is The Last Refuge Of The Spineless Politician Willing To Do Anything To Win The Next Election"

The title words today comes from an op-ed piece that U.S. Senator Marco Rubio wrote for the April 4, 2011 St. Petersburg Times. He was writing about the impending financial collapse of the United States that is sure to happen, taking our freedom and liberty with it, if the Federal government does not gets its runaway spending under control. He began the piece with a review of some of the dire statistics:

• The Federal government is currently $14 TRILLION in debt.
• On average, the Federal government spends $4 billion a day that it does not have revenue to cover, requiring it to continually sell Treasury bonds on the open market.
• President Obama's latest budget plan would spend more than $46 TRILLION over the next decade, more than three times the current size of one year's worth of GDP. Although not mentioned in the op-ed piece, the Congressional Budget Office estimates that Obama's proposed budget would add over $9 TRILLION to the Federal debt.Depressing numbers.

And while the government spends $4 billion a day that it does not have, most of the political class in Washington is arguing over nits when it comes to budget cuts. The current plan being circulated for fiscal year 2011's budget, which is already over six months late, is to reduce the Federal budget this year by a mere $33 billion. And the Democrats think this is too much even though it is equal to only about a week of deficit spend by the Federal government. Certainly no way to solve this problem.


Many, many groups and organizations have done fantastic work to address and solve this crisis. The CATO Institute went through the current Federal budget line-by-line and identified hundreds of billions of dollars in savings from government expense cuts, the vast majority of which would have minimal impact on most Americans. The Concord Coalition, co-chaired by a former Democratic Senator and a former Republican Senator, have also actively addressed the issue. Last year, a detailed, joint analysis by the National Taxpayer Union, a right leaning organization and the U.S. Public Interest Research Group, a left leaning organization, published their results which showed they could take hundreds of billions of dollars out of the government expense stream, again with minimal impact to most Americans. The President's Deficit Reduction Commission, did a fine job also but was completely kicked aside by Obama, Reid, and Pelosi.


Most Americans also understand the need to get unnecessary spending under control. If you go to our sister site, www.loathemygovernment.com, you can vote on whether or not you think 43 Federal spending programs from the past few years, which cost the American taxpayer almost $600 million, were worthwhile uses of taxpayer money. Some of these actual expenditures including a $1 million study in Utah on how to cross the street, Federal funds for the construction of the Paper Industry Hall of Fame, and the construction of a bike path in Michigan. The overwhelming majority of site visitors who have voted have given each of the 43 Federal spending projects and programs a thumbs down with some of the expenditures never receiving a positive single vote indicating they were a good use of taxpayer money. Thus, most ordinary Americans recognize that the political class is wasting their taxpayer dollars on frivolous initiatives, all of which increase the deficit.

But is it not just these 43 programs that are unnecessary. Consider some recent news items that show how much money we waste as a country:

• The April 1, 2011 issue of The Week magazine reported that government expenditures in Afghanistan are so out of control that an Afghan vice President was discovered transporting $53 million in cash to Dubai. I am assuming this was not the only corrupt Afghan official, how many others have made off with million and millions of taxpayer dollars through such incompetence of our government and political class?
• The same article reported that the United States has given the country of Senegal $543 million in foreign aid, whose government recently spent $28 million to build a "bombastic 'African Renaissance' monument which is larger than the Statue of Liberty." Not a good use of U.S. foreign aid to a poor country.
• An Associated Press article from February 5, 2011 reported that the Federal government loses about $60 billion a year through Medicare and Medicaid fraud.
• One example in the article reported that one criminal bilked the government out of $1 million for motorized wheelchairs no one needed. Two sisters got $9 million from Medicare for pricey drugs that were never administered. Two brothers out of Miami scammed $119 million by billing for HIV drugs that patients never received or did not need. The list is endless as the deficit piles up and the waste and fraud keeps pace.
• According to a recent Wall Street Journal article, government auditors have found that the Federal government has 15 agencies in charge of food safety, 20 agencies in charge of homeless affairs, 80 agencies in charge of economic development, 46 agencies in charge of job training (at a cost of $18 billion a year), and 82 agencies  in charge of improving teacher quality (none of which seem to be dong a good job if you look at how poorly American kids fare vs. the education quality in the rest of the world.)

This is the kind of insanity that a few politicians like Rubio want to get under control. One way the Senator intends to accomplish this task is a forthright and committed stand to not raise the nation's debt limit when it comes up for a vote shortly unless there is a hard commitment across the political spectrum to rein in spending. He is taking this courageous stand, a least for a politician, to not delay this urgent matter until after the next election like many spineless politicians want to do. That type of behavior does not solve the problem it makes it worse, and the solution more painful.

To support this position, Senator Rubio cites the words of another young U.S. Senator who stated in 2006 that "Raising America's debt limit is a sign of leadership failure." Who was this other Senator? It was Barack Obama, the same person who now wants to add an astronomical amount of debt and doubt to the country's future. If anyone has failed  leadership in this area, it is the President. The country is willing, experts have already done the difficult and hard analyses, all that is missing is some leadership.

How could the politicians of the country get cracking on this issue? The Senator cites some examples that are good starts (but only starts):

• Congressman Dave Camp has introduced a plan to simplify tax rates and close tax loopholes while reducing tax rates, an idea that Rubio says Obama has spoken of doing.
• Senator Rand Paul wants to go through all Federal regulations that each cost the American eocnomy over $100 million a year and have a thumbs up or down vote in Congress to determine if they are each still worthwhile.
• Rubio recognizes that long term, fundamental changes are needed to Social Secuirty and Medicare, changes that would not effect people currently in the systems or close to being in the systems but changes which provide time for younger Americans to adjust to less robust spending in each area.
• Rubio would also introduce a concept that would tie public debt to a permanent, reasonable, and sustainable Debt to GDP ratio. Failure to meet this ratio would trigger across the board cuts in all Federal departments. This approach would place a "governor" switch on political class spending.

And what have the Demcorats come back with? We know Obama has come back with the same old tired and wasteful spending plans. (So much for his "Change" moniker). The Democrats in both the House and the Senate have come up with nothing except crticizing anyone who dares to cut expenses. They attack worthwhile ideas despite the massive amount of waste and fraud inherent in our government today. In other words, they have no plan whatsoever, at least they have no plan until after the 2012 election lest any plans upset a voter or two. Hardly what one would call leadership.

Rubio recognizes that these ideas are subject to severe political atttack and criticism. When he proposed some of these bold moves in his campaign for the Senate, he claims his opponent spent millions of dollars on ads to scare seniors. However, he was elected anyway, which would reinforce the notion stated above that Americans are ready for budget constraints.

He is willing to stand up and come forward, willing to make the difficult budget decisions for what is right for the country and not what is right for his political career. It's called leadership, when you know you will be attacked but make the right and courageous choice anyway. He seems ready to have the important and probably  painful discussions and actions on how to fix the country, all he needs is someone with a spine to sit across the table from him, face-to-face, to confront and solve the problems like adults and like Americans.



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

Nancy Pelosi and Morality? Really!

Just when you think it might be a tough day to find a topic to discuss, Nancy Pelosi rides to the rescue again. Ms. Pelosi has been a treasure of insanity, quotes, and madness over time and has provided fodder for many a post to this blog. Remember how she screamed that over 500 million Americans were losing their jobs every week even though there are barely 300 million people in the country? Remember how she explained we would not know what was in the health care reform legislation until the legislation got passed? Remember her voodoo economic lesson she gave us by proclaiming that unemployment benefit checks were one of the very best ways to create jobs, leaving one to ponder the extension of her logic: does this mean that the more unemployed people we have, the more jobs will be created? Priceless.

Today she has graced us with another Pelosiism that further illustrates how out of touch with reality she can be. Regarding the urgent need to get Federal government under control, Ms. Pelosi recently dropped this gem on the world: "I think this debate is on a higher ground of our values. It's not about money. It's about the morality of what we're doing." Thus, it appears that we should not make any cuts in the bloated federal government on morality grounds, not sensible budgeting and economic grounds. Ridiculous.

Any number of things wrong with Pelosi talking about morality. First of all, morality is a very personal, private sense of being. For her to dictate what is moral and what is not moral is an insult to free thought and overall freedom. If she wants to go down that road, then many Americans would reply that any political party that condones adultery and lying has no grounds to lecture any citizen about morality. Democrats John Edwards, Jim MacGreevey, Eliot Spitzer, and Bill Clinton were serious adulterers and liars.

Is breaking the law immoral? Many, many Democratic politicians in Illinois have served prison time for bribery, fraud, and other crimes. Democratic Congressman William J. Jefferson was convicted of bribery with the added twist of storing his bribery money in his freezer. Please, Ms. Pelosi, your peers and your party are in no position to lecture any American about morality.

Second, how moral would the decision to cut wasteful government spending in the following areas:

• Is it "moral" to waste billions and billions of taxpayer dollars to station tens of thousands of U.S. troops around the world in Germany, Japan, South Korea, and throughout Europe, defending us against threats that no longer exist or that can be better handled by local, friendly countries?
• Is it "moral" to waste billions and billions of taxpayer dollars on politicians' earmarks that are nothing more than thinly disguised ways for incumbent politicians to fund their re-election campaigns?
• Is it "moral" to waste billions and billions of taxpayer dollars to support the marketing activities of large corporations via the government's Overseas Private Investment Corporation, the Market Access Program, and other corporate welfare programs, shouldn't these marketing expenses be part of each corporation's marketing expense stream?
• Is it "moral" to not sell at least some of the 55,000 Federal government buildings that are currently vacant in order to reduce reduce taxpayer expenses and generate revenue via the sales of these buildings to reduce the deficit?
• Is it "moral" to not cancel the production of the V-22 Osprey aircraft and save billions of taxpayer dollars, an aircraft that has seen vast cost overruns and poor performance results and which much of the military does not want or need?
• Is it "moral" to not replace the highly expensive but poorly performing Space Tracking Surveillance System with lower cost and better performing alternatives (according to a Defense Department analysis, the users of the systems)?
• Is it "moral" to waste billions of taxpayer dollars by allowing the Army, Navy, and Air Force to continue ordering obsolete parts and supplies that are never used?

(Note: many of these wasteful examples of government spending come from a joint analysis and paper done by the U.S. Public Interest Research Group and the National Taxpayers Union. However, other reputable and educated American organizations such as the Cato Institute, the Concord Coalition, and Obama's own deficit reduction commission have also done thoughtful, thorough, and insightful analysis on ways to get government spending under control that are also "moral.")

You get the idea. By not knowing how to trim and budget of fat and excess or not wanting to trim the budget, Ms. Pelosi just lumps every government expense into this nebulous "moral" bucket that should not be touched because she and only she knows what is moral and what is not. A budget by definition is numbers. You can debate the impact reducing some of those numbers might have but a budget is numbers. Unfortunately, the Federal government's numbers are not good and need to be drastically reduced.

If Ms. Pelosi wants to talk morality, let me counter argue that the biggest atrocity to morality would be if this generation of America citizens and American politicians burden future generations of Americans with mountains of debt to pay off but who garnered none of the benefits of spending the money that caused the debt. That is the biggest moral tragedy of our time if we fail, not whether or not Pelosi thinks not cutting the bloated government is the moral thing to do.

It amazes me that she and others can continue to think that we are not in crisis/meltdown mode when the Federal deficit in February alone was over $200 billion. Not total spending, just the spending of the government that was done beyond what revenues were received. If we use $200 billion as a conservative estimate of the February deficit, then everyday Pelosi and her kind spent over $7 billion a day that they did not have cash for. Every hour they spent almost $300 million that they did not have.

Unbelievable numbers. This kind of reckless spending is immoral. It will wreck our economy and our freedom for decades to come. But we should not be surprised. The latest Obama budget has virtually no budget cuts despite the dismal February results. Obama totally ignored his own deficit reduction commission's recommendations.

And not to be outdone, Senate Majority Leader Harry Reid recently and erroneously stated that Social Security will be solvent for decades to come, a most insane statement that Ms. Pelosi cannot even match for unbridled ignorance. Currently, the Social Security Administration is paying tens of billions of dollars more than it collects. The Social Security Trust fund has been depleted by politicians over time for other uses, there is no trust fund of money sitting around the U.S. Treasury. The unfunded liabilities of Social Security is well into the TRILLIONS of dollars. And Harry thinks it is solvent for decades. That is the most immoral, misleading statement that any politician can make.

Thus, we have the triumvirate of Obama, Pelosi, and Reid who either see no problem, cannot solve the problem, or choose not to solve the problem. In any case, they do not have the high moral ground and future generations of Americans will see them for what they are: morally corrupt and inept.



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

Barack Obama, Where Are You? (Sung To The Tune Of "Car 54 Where Are You?")

There could have been a few alternative titles to today's post. The "Second Coming Of Jimmy Carter" would have been one alternative since it captures the rudderless, leaderless administration of Jimmy Carter that we are currently experiencing under the Obama administration. Another title could have been "Where's Barack?" based on the children's books, "Where's Waldo," where you try to find Waldo, or Barack, since it is not obvious where either are and what either are doing.

However, in a tribute to one of 1960's television sitcoms, today's post is based on the TV show, "Car 54 Where Are You?" The basis of the show revolved around two New York City policemen, Toody and Muldoon, who were assigned to car 54 and who were not the sharpest officers on the NYC police force. For those of you who have never seen the show, let's start with the original lyrics:

There's a holdup in the Bronx,
Brooklyn's broken out in fights,
There's a traffic jam in Harlem,
That's backed up to Jackson Heights.
There's a scout troop short a child,
Kruschev's due at Idlewild,
Car 54, where are you?

Now, lets replace these lyrics with lyrics from the new television show, "Barack Obama, Where Are You?"

There's a debt fight up in Congress,
Muammar's forces are a killing,
Unemployment still so high,
B-Ball picks get top billing,
Nuke reactors are on fire,
Gas prices soaring higher,
Barack Obama, where are you?

These new lyrics capture the state of the Obama adminstration, from the beginning until now. Leaderless as people die in Libya. Leaderless as the country heads for a financial meltdown. Leaderless as the lack of a national energy policy leads to soaring energy prices. Leaderless as unemployment stays unacceptably high. President Obama is as lost as Toody and Muldoon  were decades ago. Consider the following examples:

- The Federal government is spending well beyond its means, with a Federal budget deficit in February alone of about $225 billion. This is about half of what Bush's worst ANNUAL budget deficit was. Difficult decisions and cuts need to be made across all spending categories including the politically sensitive categories of defense, Social Security, and Medicare/Medicaid. This is a turning point, for better or worse, in the country's history as the next several months may decide whether or not the country makes the tough calls and fixes its financials or does not and suffers incalculable economic distress.

Where is Obama on this topic? According to a March 13, 2011 Associated Press article, the President had this to say on the $14 TRILLION national debt and the Congressional debate on how to tame it: "This is an appropriations task." This allows him to avoid any difficult decisions and make Congress do the dirty work and take any political hits. Hardly a leadership stance, let others do the heavy lifting.

- A member of his own party, Democratic Congressman Joe Manchin, recognizes the gravity of the budget situation and publicly yearned for the President to help resolve the issue. But according to a White House spokesperson: " There's a very strong gravitational pull in this town to try to drag the President to every single skirmish and new story." Fair enough, the President should not be involved in every national or local issue. However, what was he doing attending an anti-bullying session/forum rather than saving the economic health of the country? Seems like a bad sense of priorities and hardly a leadership stance, even though your own party's members are calling for you help.

- On the major problems and issues sweeping the Middle East, the President is no where to be found. He pops up on television for a quick hit here and there and speaks some meaningless garble, tied to no overall strategy or leadership position. As a result, the country's foreign policy is exposed for how weak it is as friendly despots disappear or are about to disappear in Egypt, Yemen, Bahrain, and possibly Saudi Arabia, with the long term replacements having unknown consequences for the United States. One would have thought that the President, leader of the free world would be putting together and implementing a consistent and sound, long term Middle East strategy.

However, according to a New York Times article on March 10, 2011, the President apparently has no overall leadership or strategic plan in place. He is treating each Middle East country differently, based on what he sees as America's needs. Unfortunately, by standing for nothing and just reacting to each crisis, the article states: "This emphasis on pragmatism over idealism has left Mr. Obama vulnerable to criticism that he is losing the battle for the hearts and minds of the Arab street protesters."

The article goes on to contrast this piecemeal approach to the  way Ronald Reagan's emphasis on freedom ended the Cold War in a favorable way for the United States. Without a leadership stance and overarching vision on the Middle East, the President is hardly taking a leadership stance.

- Regarding Libya, the whole world is aghast as the Libyan government guns down, bombs, and slaughters some of the brave rebels who have risen up against the tyrant. Many have called for a no fly zone over Libya to give the rebels at least a fighting chance. France and Britain have called for a no fly zone. The 22 nation Arab League has called for a no fly zone. President Obama? No where to be found even though he boldly stated in early March that the Defense Department was looking at military options.

However, despite this little bit of saber rattling, it is now obvious that Obama will not commit to any military intervention, despite the slaughter. His rationale: "Anytime I send United States forces into a potentially hostile situation, there are risks involved and there are consequences. And it is my job as President to make sure that we have considered all those risks." How non-committal can you get? How weak of a leadership stance is this? By the time he considers all of the risks, no action would have been taken and the situation will be resolved, for better or for worse.

- It seems that more and more Americans are tuning into the rudderless and ineffective administration we are now being ruled by. As part of Obama's education initiative, the White House is sponsoring a contest where U.S. high schools can apply to have the President speak at their commencement as reward for having and extolling the virtues of their own high schools.

However, it seems the idea is falling flat on its face. As the deadline for applying approached recently, according to ABC News, the White House was scrambling to get more applications to be filed since only 14 applications had been received up to that point in time.

If you search the Internet to get the number of high schools in the country, you get widely varying estimates but they all seem to be around 20,000. If only 14 of them put in an application for the supposed honor of having the President speak at their school, then only a minuscule  .07% of eligible schools thought it worthwhile enough to have the President come talk to them. If he was a true leader, I am sure that he would draw applications at a better then .07% rate. Pitiful. Hardly a leadership performance.

This President has taken the lead on nothing. He appeared clueless and rudderless on the Gulf oil spill. He let Reid and Pelosi do the heavy work on health care reform. His business-as-usual budget is a disgrace in light of the huge national debt. He has instituted no bold and strategic intitiative in the areas of education, energy, illegal immigration, etc. Nothing, nada.

He insists on leading from the rear, lest his political aura take a hit. Consider a recent quote regarding the budget crisis: "What I have done is, every day, I talk to my team. I give them instructions in terms of how they can participate in the negotiations, indicate what's acceptable, indicate what's not acceptable."  Can you imagine Reagan, Churchill, General Eisenhower, General Patton, Coach Lombardi or any other great leader behaving this way?

This President should not be President, he should be a Prince, like Prince Charles in England. A prince likes to go to high profile, no risk events (anti-bullying session), a prince likes to state his opinion on trivial matters (March Madness basketball picks), a prince likes to go on a lot of vacations,  all princely duties. Let Obama be the Prince of The United States while we get a real doer and leader into the White House.

So, what is the answer to the question: Where is Barack Obama? This past week, the answer has been pretty obvious, and pretty petty:

• After a phone call reviewing the earthquake situation in Japan this weekend, he went out and played some golf. Never mind that thousands are dead, the world may soon get a dangerous dose of radioactivity, the U.S. military may be needed to help out, and there are probably many Americans in Japan, that are now dead, injured, lost, or in trouble. And the prince plays golf.
• With budget deficits hitting records, with unemployment still very high, with state governments in financial crisis, and with public schools still failing, the President attended an ant-bullying session. If you asked America where the bullying issue fell in their life priorities, do we really think that this issue would have cracked the top 25? I doubt it but that is where the prince was.
• With Mexico devolving into a lawless state, with our borders still leaking profusely with illegal immigrants, with the war on drugs still being lost, with his health care law under duress from the courts, Congress, and many well informed and educated citizens, the President had time to fill out his NCAA basketball brackets AND attend a taping session with ESPN where he took the time to discuss his picks. Again, where do we think the President's view on the basketball tournament would fall in a list of America's priorities?  I doubt it would be very high up there relative to other issues but it was important to the prince.

The Prince has been busy, golfing, attending non-critical forums, and worrying about his tourney picks. That is where he is and that is unacceptable. Toody and Mudoon could have done better work out of Car 54.


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

Note To Our Political Class: While You Were Out (Apparently Accomplishing Nothing)

Although the Federal wing of the American class has been in session in D.C. the past few weeks, they, as usual, appear to have accomplished nothing of note except to bicker. Thus, as a public service to them, while they were stuck in a state of inertia, I thought it might be worthwhile to let them know what is going on the world that is affecting Americans but which they have no clue or priority in addressing:

- Mexico continues to devolve into a lawless narco state, a condition that at some point in time very soon is will explode over the border in a violent convulsion that the political class has no contingency plan to deal with:

• The Associated Press (AP) reported on February 13, 2011 that armed men, thought to be members of a local drug cartel, opened gun fire on and threw a grenade into a crowded nightclub in Guadalajara, killing six people and wounding 37. The article pointed out that this section of Mexico had been relatively quiet until recently when drug cartel violence escalated. The U.S. State Department has warned U.S. citizens not to travel at night in the city due to road blocks set up by drug cartel members. The latest violence comes on the heels of another violent encounter last week when seven cartel gunmen were shot dead by soldiers.
• The AP reported on January 20, 2011 that Mexican soldiers captured the head of a Tijuana area drug cartel after a shootout in a coastal city. The drug kingpin has been linked to at least 50 killings. The article went on to document another shooting in another city where cartel gunmen in two SUVs with high powered weapons sprayed bullets at another car, killing five men inside that other car.
• And most recently, the AP reported that a U.S. Immigration and Customs Enforcement agent was killed and another was wounded when assumed gunmen attacked the agents' SUV in northern Mexico. Thus, now Americans are being gunned down by the drug cartels in addition to Mexican citizens

Thus, while the political class dawdles in D.C., the Mexican drug cartel powder keg gets larger and larger and it is just a matter of time before Americans are not only gunned down in Mexico, they will get gunned down in the U.S. Is that when this issue will get their interest? Will we eventually become Mexico, with U.S. troops involved with running gun battles with drug cartels in U.S. cities? All because the political class, after more than four decades, never got around to a coherent and sane drug policy.

- And the Mexican drug cartel problem is not the only component of our failed War On Drugs initiative. In an article in The Economist from January 22, 2011, we learn that El Salvador, Guatemala, and Honduras have three of the highest murder rates in the world. Why? Because these countries serve as the geographic bridge from Columbia, the world's largest cocaine producer, to Mexico, which is the distribution focal point for drugs into the United States. The United Nations' Narcotics Control Board is quoted in the article as saying "Central America is entering an extraordinarily critical period in which its peace and security are threatened by the onslaught of the drug-trafficking organizations." 

Thus, not only Mexico is being shook to its foundations, other countries could follow Mexico down the narco state whirlpool. All because there is such a grand demand and fortunes to be made by smuggling illegal drugs into the United States. Do we really think that the American political class can get a coherent and doable drug strategy in place before civil governments and civil life disappears in several drug infested nations?  I know how I would bet in this race.

- The USA Today reported, as summarized in the February 4, 2011 issue of The Week magazine, that for the first time in General Motors 102 year history, it sold more cars in China than it did in the U.S., 2.35 million vs. 2.21 million. You can be sure that this condition will get more pronounced as time goes by and the Chinese economy grows faster than the United States' economy. I would also bet that most of those 2.35 million cars were not produced by American auto workers. If true, then the American taxpayer bailed out GM so that it could produce more and more cars overseas without using American labor. Nice job Washington.

- The Week in their February 4, 2011 issue also reported that private financial fund managers have earned a 27% percent return on toxic assets that the U.S. Treasury Department took off the hands from financial firms. Thus, tell me again why we had to tie up and risk hundreds of billions of taxpayer money to bail out financial firms when smart managers can earn a 27% return on these same assets? Wouldn't it have  been more prudent to make these same firms mange these troubled assets for better or and not risk taxpayer wealth? Just thought you would like to know that this is just another example proving that TARP was totally unnecessary but very risky for taxpayers.

- The New York Post reported on February 16, 2011 that two Federal TSA agents had been arrested for stealing $160,000 from travelers' bags that they had been screening at Kennedy Airport. The agents have admitted to the thefts including the day they stole $39,000 from a single bag in January. Apparently the agents used the screening machinery, the same machinery that is supposed to be used to protect us from terrorist attacks, and when they saw something of value on their security screens, they would take the bag to a private screening room where they would make the swipe.

The article also reported that TSA has confirmed there was a series of serious security lapses at Newark Airport within the past month. These lapses included a knife in carry on luggage that got through the screening process, two passengers that were allowed to board their flights despite issues with their body scans, and a dead dog carcass that was loaded onto a Continental Airlines flight without being properly screened.

Note to the political class: just thought you would like to know how poorly your TSA organization is protecting the nation's travelers.

- The January 31, 2011 issue of Business Week highlighted how Fannie Mae and Freddie Mac are becoming larger and larger owners of foreclosed residential properties. Given that Fannie and Freddie suck up billions of dollars every month in needed subsidies, a growing pool of foreclosed properties may make them even more unprofitable and more of a taxpayer drain every month. According to the article, they now possess $24 billion in properties, they own 242,000 properties which is five times more than they owned just a few years ago, and those properties represent a third of all repossessed properties in the country. This growing volume may require Fannie and Freddie to drop prices on their properties in order to move them off of their books, a move that would further depress the housing market.

Note to the political class: any idea when you are going to get around to fixing this taxpayer drain and government embarrassment? When will you finally understand the the Federal government does not belong in the housing mortgage business?

- Saving the best for last, did you in the political class happen to notice that according to the Federal Election Commission, 76 Americans have already filed paperwork with the Federal Election commission to run for President in 2012? According to one filer, Dennis Knill: "We have a bunch of idiots in Washington. They are ruining the country and somebody has to stop it."

Very well said, Mr. Knill. Given that the political class is apparently accomplishing nothing while in session in Washington, somebody has to confront some real issues such as the failed war on drugs and the fallout from drug cartel violence from Mexico to Columbia, the fact that taxpayer wealth was spent, wasted, and risked on helping GM make and sell cars in China, the fact that there was no need to bail out the shaky financial assets of bailed out companies since some smart Americans are making a great return on those same assets, the failure of the TSA in so many ways to protect American lives and assets, and the continuing joke and incompetency that is Fannie Mae and Freddie Mac. We did not even touch on our  failing public school issue, our non-existent integrated national energy policy, our leaky borders, our skyrocketing national debt, the failure that is Obama Care, and the loss of freedom and democracy in America. Just thought you would like to know what is going on in the real world outside of D.C.

And you should also know that Mr. Knill is not alone in his appraisel of your performance.


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

All I Really Need To Know I Learned In Kindergarten...Which Puts Me Way Ahead Of Our Political Class

I little while ago, author Robert Fulghum had a great deal of success with a little book he published entitled: "All I Really Need To Know I Learned In Kindergarten." He took an interesting view at life's little lessons and how many of them are taught to us by the time we leave kindergarten.

However, if you overlay these life lessons with the behavior we usually have gotten from the politicians in the United States' political class, it makes you wonder if most of them never made it past the final exam in kindergarten. For example:

- "Share everything." It does not seem like many of the Democrats in Congress are used to this little rule. President Obama has made a compromise agreement with the Republicans this week concerning the extension of unemployment benefits for the unemployed in this country and extending the expiring Bush tax cuts for every American, including those earning over $250,000 a year, something that many Democrats oppose.

Many of these Democrats do not want to share their power and have made fools of themselves this week acting like kindergartners, upset that they did not get their way like they have over the past few years when they ruled the House Of Representatives, had a filibuster proof majority in the Senate, and occupied the White House. They could have done anything they wanted and not shared the power with the Republicans.

However, they have no one to blame but themselves for missing that historic power window. They could have solved this issue to their liking two years ago but frittered away their time and advantage, accomplishing virtually nothing. With the recently empowered Republicans flexing their muscles and demanding the Democrats finally share some of the power, the Democrats are acting like spoiled kindergartners who have to share for the first time.

- "Don't hit people." Over the past few years, those Americans who had legitimate and rightful disagreements with the policies of Obama and the Democrats were called un-American, likened to the racists of the Civil Rights era, were called knuckle dragging Neanderthals, were called a--h----s by a member of the President's czar staff, and were likened to the sheet wearing Ku Klux Klan. Although none of these Americans were "hit" physically, the were hit with uncalled for names. As we should have all learned in kindergarten, you should not hit people, either physically or verbally.

A corollary to this rule is another from the book: "Say you're sorry when you hurt somebody." In life, nothing ever gets accomplished while you are calling someone bad names and nothing will ever get accomplished until you say you are sorry for calling them those names. Maybe that is why in the past five decades or so the American political class has never solved any issue of consequence. They never say they are sorry, they never show any respect or compassion for anyone that dares to disagree with their position.

- "Play fair." As stated above, the Democrats had a historic power window for two years where they controlled all facets of Washington. Rather than recognize this window of opportunity, they did nothing until Scott Brown busted their filibuster power with an upset Senate election in Massachusetts. All of a sudden they realized that their dream of passing Obama Care was in danger because of their incompetence in managing time. Rather than play fair and by the rules of the Senate, they snuck this important, and soon to be disastrous piece of legislation through the back door of reconciliation for approval, bypassing all standard and traditional legislative practices.

This is certainly not playing fair. You screwed up by not moving fast enough and now you want to change the rules in midstream, sounds very kindergarten-like to me.

- "Clean up your own mess."  Over the past three fiscal years, years when the Democrats controlled both parts of Congress, the location where government budgets are developed and passed, the United States Federal government has increased its national debt by over $4 TRILLION. This comes out to about a $36,000 debt burden for each American household.

Now, all of a sudden, the Congressional Democrats want to tax the rich in order to help balance the budget that they managed to screw up so royally. If they got their way, the Treasury would get another $70 billion a year by taxing the so-called rich. Over three years they would get an additional $210 billion or cover about only 5% of the additional debt hole the Democrats created during their three year unchallenged reign.

They screwed up the budget and national debt, they should clean up this mess with real budget reform and not dump their problem onto hard working Americans who happen to be very successful. You know as well as it that if given an additional $210 billion, they would wastefully spend it and not reduce the budget black hole they created. If they were serious in this matter, they would have taken our advice and created a virtual lock box where the additional tax dollars would have been managed by the Treasury Department to pay down the debt, untouched by any politician's hands.. They did not propose this and thus, they themselves need to clean up this mess they created.

- "Don't take things that are not yours." This is related to the previous topic of cleaning up your messes. The political class has created so much national debt that it is unlikely that this generation of Americans, which has created the debt mess, will be able to clean it up in our lifetimes, it is that bad. The recent approaches and suggestions to fix this deficit spending habit in this country cannot find a way to fix the national debt problem for decades. Thus, we have allowed our political class to steal the financial freedom from future generations of Americans, something that is not theirs to steal.

-"Flush." The Federal government has never had a good flushing, getting rid of waste matter that no longer is of use to the living organism of government:

• Several years ago headlines were made when the Federal government finally decided to shut down a World War I program that had existed for decades after the war ended. Apparently, back during the war, the government was worried that we would run out of helium gas for our military's dirigible balloons and passed a law that ensured that the U.S. military maintained a back up supply of helium for these balloons, long after that need became extinct.
• It was recently reported that a Christopher Columbus-focused  government agency which was created in the early 1990s to celebrate the five hundred year anniversary of Columbus discovering the new world was still being funded, more than fifteen years after it was supposed to be terminated.
• Last week we reported in this blog that the government of Florida was still maintaining over 6 million paper ballots from the 2000 Presidential election in a temperature controlled room at an annual cost of over $40,000.

We need to flush out these and the tens of thousands of other useless government functions, programs, and agencies in order to get the Federal government under control and get the political class focused on a smaller but far more important set of priorities.

- "Wash your hands before you eat." In the future, the political class should eliminate earmarks which are generally a sneaky and dirty way to give out our taxpayer money in return for re-election campaign donations. That way, when they come to us during election campaigns and ask for our support, we know that they have already washed their hands of the special interests and are looking out only for our interests in a clean, non-politically dirty and hypocritical way.

- "Take a nap every afternoon." Given that the political class has not won the war on drugs, developed a national energy strategy and policy, fixed our failing schools, protected us from terrorists attacks, protected us from the effects of the Great Recession, etc. but have managed to wasted trillions of dollars in he process of doing nothing, maybe if they slept more and governed less we would all be better off. Seems the more they do, the worse off we get. At the very least, after one term they should all take a nap because term limits would have kicked in and their return to private life after serving the country would give them plenty of time to nap.

If our politicians still do not understand kindergarten, maybe they should read "Love My Country, Loathe My Government" which provides fifty steps necessary to implement most of these basic kindergarten tenets. These steps include a 50% downsizing of the government and its budget over five years, how to eliminate earmarks, procedures to address the drug, education, energy and other social problems facing Americans and other basic kindergarten rules.

If necessary, I would be happy to read these steps to them over some warm cookies and milk, the best suggestion of all in Mr. Fulghum's book.



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/

Are The Failed Japanese Economic Policies and Obamanomics One And The Same?

Robert Samuelson had an interesting article in the latest issue of Newsweek magazine, "Why Japan Fell And What It teaches Us." Mr. Samuelson reviews how Japan got into its current and long running economic slump, highlights of which include the following:

• Japan's economic problems started after several economic bubbles arose in the late 1980s including a tripling of their stock market's value from 1985 to 1989 and the tripling of its real estate values by 1991.
• However, by the end of 1992, the stock market had lost 57% of its peak value and land prices fell so low that they are still at early 1980s level.
• Banks weakened as the bubbles burst and they did not have enough collateral, with some banks going bankrupt.
• Economic growth stalled and grew only about 1% a year for the entire decade of the 1990s. This was a fraction of the annual 4% average growth in the 1980s in Japan.
• Despite implementing massive government stimulus spending programs, the economy is still stalled two decades later.
• They increased government spending while cutting taxes, resulting in massive budget deficits. Government debt as a percent of Japan's GDP went from 63% in 1991 to 101% by 1997 to 200% today. 
• The Bank Of Japan, their equivalent of the Federal Reserve Bank in the U.S., cut interest rates all the way down to zero percent by 1999 with no discernible impact on the economy.
• Japan has an aging and shrinking population which tends to dampen domestic economic demand and growth.

All of these policies and facts have led to twenty years of anemic economic growth in what used to be a power house economic engine.

Do the symptoms of the Japanese experience sound familiar? They are almost identical to the economic policies of the Obama administration and Democratic Congress, policies that have been successful in only creating a skyrocketing national debt. Our political class and other arms of the Federal government never saw the devastating impact of the impending real estate bubble burst before it happened, just like in Japan. Our national bank continues to support very low interest rates with not positive results, just like in Japan. Our political class spends hundreds of billions of dollars on stimulus programs that do not work, just like in Japan. Our annual GDP growth has been steadily below the long term GDP growth rate, just like in Japan. Our national debt as a percentage of GDP is getting dangerously close to 100%, just like in Japan. We have an aging population, just like in Japan.

Sounds like we are going down the same road as the Japanese went through and that is not good. Everything that the Obama administration has done from an economic policy has mimicked the failed Japanese model with the same results: low growth, high unemployment, growing national debt, no apparent way out.

However, there may be some ways out if we look at our own history and some of the contrarian economic actions being taken by governments around the world:

• After Word War II, the United States faced an economic quandary. Much of the civilian workforce worked in the war factories making goods to support the war effort. Their current jobs were no longer needed once the war was over. Millions of military people were about to be discharged into civilian life, all of whom would be looking for a job. What did the Truman administration do? Did they significantly increase government spending to provide government jobs for everyone? Did they raise the national debt to frightening levels? Did they drop interest rates to near zero? No, between 1945 and 1948, the budget of the United States government was shrunk by over 60%. Unemployment, despite this high influx of new workers, never got about 4.5%. Economic growth, even without massive government stimulus and deficit spending, was robust every year. In other words, they did the exact opposite what Japan did and Obama, and the got outstanding economic results.
• In Europe, France has taken the bold step of increasing its retirement age by two years to alleviate the financial pressure on their national retirement system caused by its aging population, i.e. they are cutting government spending. England is making substantial cuts in its military budget and is cutting nearly half a million government employees from its payroll, i.e. they are cutting government spending. Other western European countries are also cutting government spending, contrary to what the Obama administration budget busting spending is doing.
• Other countries outside of western Europe are also shrinking its itself by selling off government assets. According to an article in the November 1, 2010 issue of Businessweek, the Russian government is selling some of its government ownership in over 900 government companies, India plans to sell some government stakes in at least eight companies in the next five months, Poland is selling shares in its energy, insurance, copper, telecom, and power companies, and Malaysia is selling government interests in its postal system, its national chemical company, and other companies. In other words, while the Obama administration is becoming more and more entangled with U.S. businesses, e.g. General Motors, Chrysler, banks, the rest of the world is trying to shrink its government footprint in its domestic industries and shrink its national debt.

While the rest of the world is trying to get its government spending under control, the Obama adminstration has ruled over astronomical growth government spending, just like in Japan. In fact, everything that this administration is doing on the economic front is just like what did not succeed in Japan. Albert Einstein once said that the definition of stupidity is doing the same thing over and over and expecting the same results. Japan has been doing the same thing over and over with a failed twenty year track record. Could the Obama administration be fulfilling Einstein's insight?

Mr. Samuelson concludes his article with the remedy for our ailing economy and a way to not follow Japan down the failed rabbit hole of economic policy. He is one of many Americans, most of whom do not currently hold an elected office,  who recognize that lasting economic prosperity and employment opportunities lie not with governments and politicians since governments and politicians do not create jobs. Only the private sector creates true, lasting jobs and wealth. Unless we reduce the thicket of business regulations, create a viable and low cost tax policy, reduce government spending and, most importantly, remove uncertainty from the equation, Mr. Samuelson predicts, probably correctly, that we will follow the path of a faltering Japan.

Removing uncertainty is the key. The Obama administration has introduced never before seen levels of uncertainty in the economy. Uncertainty as it results from a 2,500 page health care reform bill, uncertainty as it applies to the delay in finalizing tax rates for small business, historically the engine of this nation's economic growth, uncertainty from what would happen if cap and trade ever occurred, uncertainty from a financial sector regulation bill that left all of the details to unknown Federal government bureaucrats, etc. No wonder no American businesses are hiring, they have no idea what the future holds due to Obama's uncertainty factor but understand that the future is starting to look like Japan's past, and that is plain stupid.




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