Budget Cutting For Dummies...And Washington Politicians, Part 6 - Odds and Ends

The past five posts in this blog have covered a variety of government spending areas that could be cut but which minimize any pain and suffering to typical Americans. These cuts ranged from overseas Defense Department commitments to Defense Department waste to Social Security reforms to eliminating government functions and programs that are unnecessary, wasteful, or redundant. These types of cuts are necessary to avoid the impending financial collapse of the Federal government's finances as the national debt soars above $14 TRILLION and the political class shows no ability or desire to rein in spending.

Today's post cleans up some loose ends and lists out some other opportunities to reduce government spending that were not covered in the previous, focused discussions of spending cuts. The first set listed below are explicitly outlined in the book, "Love My Country, Loathe My Government:"

• Step 9 - this step would terminate traditional government pension plans for all newly hired Federal government employees going forward. Very few Americans hired into the private sector of the economy are eligible for any type of traditional pension plan. They are forced to plan their retirement along the lines of tax free investment programs (e.g. IRAs and 401k plans) along with the hope that Social Security will still be available. It is not fair or financially viable to force these private sector employees to continue to finance something for Federal employees that they themselves are not capable of participating in.
• Step 13 - this step would stop using Federal taxpayer funds to fund for any aspect of Presidential political conventions by the two major parties. If they want to have a four or five day bash to celebrate themselves and their Presidential nominee, then they can pay for it themselves. This ban would also include security costs (e.g. Secret Service), no taxpayer funds for any aspect of political conventions.
• Step 26 - this step would do a ground up analysis of our failed "war on drugs," doing a comprehensive review of its effectiveness, its costs, and the ramifications of doing something different. The long term objectives of such an effort would include reducing the government costs of law enforcement, incarceration, and treatment while balancing the needs of crime reduction, personal freedom, and addiction reduction.
• Step 36 - this step would require all members of the political class to take and pass a course on basic economics in the hope that their future behavior would include an understanding of the economic ramifications of their actions. Today, lack of this basic economic understating almost always results in wasteful and ineffective government programs.
• Step 37 - would base annual pay raises for members of Congress on the quality of their performance. Lousy performance = lousy, if any, pay raise.
• Step 41 - I recently came across a list of the ten richest politicians currently serving in Congress. These ten richest members all had a personal wealth valued at over $100 million each. Thus, their annual government salary of about $170,000 a year or so is an infinitesimal nit relative to their overall wealth. If we still believe that serving your country is the highest calling, then these obscenely wealthy politicians should have no trouble foregoing their salaries for the good of the country. In fact, Step 41 would prohibit any politicians with personal wealth exceeding $3 million from drawing a Federal salary while in office.
• Step 42 - this step sets income and wealth levels for ex-Presidents that once exceeded, require these ex-Presidents to start paying for their own government services and Secret Service protection.
• Step 46 - this step would require that all government functions, including Congress, be submitted to the same intense accounting and financial reporting scrutiny that the private sector is subject to under the Sarbanes-Oxley law, enabling an in-depth audit function to constantly ferret out waste and fraud in all government operations.
• Step 49 - this step would cap the amount of an employee's compensation that a corporation could claim as a Federal tax deduction at $3 million. For example, this step would not prohibit a company form paying an executive $10 million a year in compensation. However, on their tax return, that company could only claim up to $3 million as a tax deductible expense. It is time that the American public no longer subsidize out sized compensation plans for executives and sports stars.

Other steps keep dropping out of the sky when it comes to cutting government spending:

- A February 25, 2011 Associated press article reported that government controlled home mortgage giants, Fannie Mae and Freddie Mac, each posted multi-billion dollar losses for the last quarter of 2010, combining to lose $3.8 billion. For all of 2010, their combined losses were $41.5 billion.

The article points out that while these losses were smaller than in previous quarters, they are expected to start growing again as the number of home foreclosures a is expected to grow again throughout 2011. So far, the American taxpayer has paid over a quarter of a TRILLION dollars to keep both organizations afloat.

Thus, the Federal government has proven that it cannot manage any aspect of home mortgage financing without a major hit to the taxpayer. An exit strategy needs to be implemented that extradites the Federal government from ANY financial exposure in the housing market (recently released plans aim to reduce, but not eliminate, all taxpayer exposure) and allow the private sector to experience the risks and rewards of lending money for mortgages without government and the political class meddling  in the process.

- Politico ran an article on February 24, 2011 that described how some members of the political class are calling for the termination of the Home Affordable modification Program (HAMP), a Federal subsidy program that was supposed to help homeowners avoid losing their homes  to foreclosure along with other such programs. Why cancel the program? Maybe following had something to do with it:

• Democratic Senator Spencer Bachus stated: "These programs may have been well intentioned, but they're not working and, in reality, are making things worse."
• Only $840 million of the allotted $29 billion for the HAMP program has been spent for a utilization percentage of less than 3%.
• The re-default rate for those in the program has been extremely high.
• The HAMP inspector general found that some people in the program ended up in worse financial condition then before they entered the program, claiming that "The Treasury's claim that 'every single person' who participates in HAMP gets 'a significant benefit' is either hopelessly out of touch... or a cynical attempt to define failure as success."

So we waste just under a billion taxpayer dollars to worsen the plight of many strapped Americans under a program whose owners are either liars or naive when it comes to the results. This is obviously a program that never had a chance at success, given it meager participation rte of 3%, and never should have been launched int he first place.

Once launched, it should have had break points installed much sooner to identify problems and failure before over $800 million was spent. This program and others like them throughout the Federal government need to be kept on a much tighter leash or launched in a test mode first in order to not waste any more taxpayer money. Those responsible for their failures need to suffer the consequences of the failures just like workers in the private sector do when their failed program waste shareholder money and value.

- A subtle form of  waste, as outlined in Step 1 of "Love My Country, Loathe My Government," comes from the realm of higher education. Harvard University sits on tens of billions of dollars worth of endowment funds. Step 1 shows that even if the university invested these funds very conservatively, they could completely finance the costs of each Harvard student's tuition, room, and board each year and still grow the endowment.

It makes no sense that Federal taxpayer money should be used to help a student finance their education at Harvard and other endowment rich universities. Thus, going forward, no student loans and grants from the Federal government should be made to students attending universities such as Harvard and the savings from this reduction should help pay down the deficit.

Obviously, Harvard would howl at this perceived discrimination but by putting this ban in place, Harvard would have to face a hard economic decision: do they allow valued potential students to go to less wealthy institutions where they would receive taxpayer assistance or do they they drop their prices and/or hand out more money from their endowment to equalize the playing fields? In either case, the American taxpayer wins.

While this is just one small example of government frugality, this is the type of thinking that must start to pervade our spending mindset. It is a type of thinking that must be installed in all facets of government spending. We cannot afford everything that we would like. We need to reduce government spending in such a way that those that can afford to pay, continue or start to pay, while we try to protect out limited resources to help out those in need and to provide for an economical but effective national defense.

This does not mean a wholesale raping of the wealth and income of more affluent Americans. It means that politicians and the government stop their wasteful spending ways in a manner that protects the earning power and freedom of each American while providing necessary help for those in need. As we see in so many examples , e.g. failed government mortgage entities, failed economic programs such as TARP, economic stimulus, and HAMP, antiquated defense deployments, etc., the American political class is not capable of managing large and complicated enterprises. The nature of politics dooms their participation to failure from the start. Better to reduce the responsibilities of the government and the political class that drives that government to a reasonable and much reduced portfolio that maybe, just maybe, they can handle effectively.

Worst case, even if they cannot handle a reduced set of responsibilities that focus on protecting the needy, at least their wasteful ways will not bankrupt and destroy the country. Any dummy would welcome that trade off.





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

Why There Will Not be Another British Invasion (And That Is Good News!)

For those of you that, like me, came of age in the 1960s, you remember the so-called British invasion of that time. Great musical groups came to the U.S. from Britain and brought some great British rock and roll sounds with them including the Beatles, the Rolling Stones, The Animals, Herman's Hermits, Freddie and The Dreamers and who knows how many more. These "invasion" years were great times and great music.

But today, and in a different context, I think we can confidently say that there will not be another British invasion anytime soon and that is good news. Why? Consider the details from an Associated Press article from October 19, 2010 entitled, "UK's Cameron Announces Military Austerity Plan:"

• British Prime Minister David Cameron announced a sweeping military austerity plan for the British government to help reduce the national debt of the country.
• The country will reduce its armed forces by thousands of troops and a whopping 25,000 civilian staff.
• It will delay a program to upgrade its traditional nuclear defenses.
• While two new aircraft carriers will be built, one will be mothballed immediately and the other will not have enough aircraft for it to be serviceable until 2019, only because construction contracts and budgets have already been committed. In the universal and  perverted government budget process, it is less expensive to build the carriers and not use them than it is to stop building them. At least they thought through the process.
• Numerous military bases will be closed.
• The country's nuclear weapon stockpile will be reduced 25% from 160 warheads to 120 warheads.
• The changes would reduce the overall defense budget by 8% over current levels within four years.
• The new defense budget will still be more expensive than the recommended NATO guidelines.
• Planned expenditures to replace Britain's four nuclear-armed submarines will be delayed until 2016 and the number of warheads on each of the new submarines will be reduced, saving almost $1.2 billion.
• Cameron stated that Britain's military will refocus its defense efforts on its special forces and develop expertise to repel cyper threats.

Wow! A politician that has the courage to challenge his country's military-industrial complex, understands that the out sized and in many cases, unnecessary, military expenditures were helping to inflate an unacceptable national budget deficit, and realizes that the military Britain has in place today is ill-equipped to counter the new security threats in the world today. Kudos to Mr. Cameron for doing the right thing for his country vs. doing the right thing for his campaign donors and political future.

What could the U.S. learn from this positive and strategic effort in Britain?

• We should be able to downsize our out sized international military deployment by bringing home our 50,000 or so troops in Germany, our 10,000 or so troops in Britain, our 27,000 or so troops in South Korea, and our 50,000 or so troops from Japan. The Iron Curtain is down so we need much fewer troops stationed in Europe, South Korea has one of the strongest economies in the world so let them defend themselves against the North Koreans, and Japan is now an ally so there is no need to occupy their land. Realize that these deployments are from another age and era and are no longer necessary.
• Bring home the remaining 50,000 troops in Iraq as Obama the candidate promised to do but Obama the President has failed to do, with him just continuing the plan of deployment that Bush had in place.
• Stop recruiting new people for the armed forces and use attrition to reduce the hundreds of thousands of troops returning from around the world, substantially reducing military deployment costs and personnel costs.
• Refocus some of these freed up troops to counter the Islamic terrorism threat now facing the country in so many different ways including nuclear terrorism, biological terrorism, chemical terrorism, home grown terrorism, and cyber terrorism. As you can see, our biggest national security threat today and for the immediate future is terrorism, not the Iron Curtain, not North Korea's traditional military capacity, and not the potential of Pearl Harbor II.
• Close unnecessary military bases, doing it through another Base Closing Commission if the current members of the political class do not have the courage to do it themselves, further reducing the military budget.
• Delay or cancel new weapons systems, naval ship building, and other military build programs that do not address the terrorism threats listed above regardless of the impact on a local economy.
• Improve, enlarge, and redeploy special forces troops to counter foreign based terrorism threats, avoiding massive foreign military intrusions like Iraq and Afghanistan wherever possible.

Taking these steps would reduce our deficit spending, reduce our meddling in other countrys' affairs, and focus our armed forces on real threats, not past threats. It would help clean up our election processes since there would be less money available to give out as earmarks in exchange for re-election campaign contributions.

If we achieved Britain's target of 8% reduction in military spending, we would be able to trim about $60 to $70 billion out of our huge military budget. I believe that 8% is a conservative estimate since we have so much more wasted resources deployed under our Defense Department budget. In fact, if our defense spending was in line with the NATO benchmark of 2% of a country's gross domestic product, our defense budget would be about $280 billion or about $420 billion less than it currently is. Thus, an 8% reduction seems to be very doable and a little on the low side.

Why would we not do this? Because it does not appear that we have the forward thinking, problem solving politicians that Britain has. Obama has been in office for almost two years and nothing has changed relative to what the Bush administration would have done it if was still in control. The defense budget is still way too big, our troop deployment around the world is still too extensive, we are building and planning weapons systems that nobody thinks will be useful in the terrorism world we live in today, and most of our troops are trained and deployed to fight the types of wars we are highly unlikely to face any time soon. As a result, we spend a lot of money for less protection than we probably had years ago. Not a good deal but a deal I do not see changing anytime soon, based on the current administration's actions and plans and the lack of backbone of our current political class.

Thus, it is good we will not be seeing another British invasion soon since they are focused on evolving their national defense resources so that they more effectively and more efficiently protect their nation from today's threats, and are far less likely to invade any nation under this progressive strategy. Maybe we can take a hint from Mr. Cameron and his associates and ensure that the United States does not do any invasions either while simultaneously increasing the protection per defense dollar spent.


Our new 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://www.realpolichick.blogspot.com/
http://www.flipcongress2010.com/
http://www.reason.com/

The Leaky Boat Of U.S. Political Class Corruption - Home and Away

Today's post will discuss the corruption that tends to follow our political class around, both on our domestic shores and overseas. Let's start first with a story that appeared in the September 24, 2010 issue of The Week Magazine entitled, "The Fight Against Corruption In Afghanistan." According to the article: 

• Afghan President Hamid Karzai has recently blocked several investigations of graft in his administration.
• There have been ongoing complaints of corruption related to members of his government including his two half brothers who are allegedly involved with drug trafficking, bribery, and smuggling cash out of the country.
• Karzai recently freed one of his senior aides from prison who had been arrested on corruption charges.
• A recent in-country survey in Afghanistan found that 70% of those Afghans surveyed said that their local government officials are engaged in drug trafficking.  

In return for this web of corruption and deceit from the Afghan government, the United States taxpayer pays roughly $100 billion a year and many dead American soldiers trying to get this situation right. I do not who to be more mad at, the Afghan government officials and crooks who get away with this theft or the American political class that allows them to get away with it.

Another article on foreign corruption of U.S. taxpayer money comes from a New York Times article that appeared in the St. Petersburg Times on September 26, 2010, "Corruption Gobbles Up Gifts To Children." This article reviewed a program that the U.S. political class put in place to get almost 8,100 laptop computers into the hands of Iraqi children. The computers' value was estimate to be $1.8 million. The laptops arrived in Iraq last February but were not distributed right away.

While trying to track them down, it became known that in August, 4,200 of them had been auctioned off by some Iraqis for $45,700. The location of the other 3,900 computers was unknown at that time and still unknown today. Now, the article does acknowledge that 10 government-employed customs people have been arrested int his case. However, seven months after the taxpayer funded computers landed in country, not a single on has been distributed to an Iraqi child and the location of the computers has apparently not been determined.

These are just two of the myriad of corruption instances that the American taxpayer has paid for in both war zones, Iraq and Afghanistan. And, as always, there does not appear to have been any person in the government or political class held accountable for the corruption and the waste. From $100 billion a year we waste in Afghanistan supporting a thoroughly corrupted government down to the relatively small, but symbolic loss of $1.8 million of laptop computers in Iraq, we are left with the classic political class situation: everyone is in charge but no one is accountable.

But I guess we should not be too upset that taxpayer dollars are being wasted via corruption half a world away. Consider just a handful of political class corruption examples we have faced domestically in recent years:

• Hawaiian Senator Daniel Inuoye has been accused of using the leverage of his Senate office to coerce government regulators to bailout a distressed Hawaiian bank in which the Senator had made a significant investment, an investment that would go away if the bank was allowed to fail like the regulators wanted.
• California Congresswoman Maxine Walters is accused of doing the same deal in order to save a bank that her husband had heavily invested in.
• New York Congressman Charles Rangel is likely to go on trial later this year in Congress for his alleged misdealings and corruption in many areas.
• Florida Congresswoman Ginny Waite Brown was reported by the Associated Press to have been trading stocks in financial institutions at the same time she was sitting on a House committee that would determine which financial institutions got how much government/taxpayer bailout money. For most Americans, this is called insider trading and is a felony. For political class members this is called business as usual.
• Many of President Obama's nominees for high level government positions were found to have not paid their fair share of taxes including Tom Daschle, ex-long time Senator, and Tim Geithner, currently the Secretary of the Treasury. Again for most Americans, this type of tax evasion is at least a misdemeanor. For the political class, it sometimes feels like it is a way of life.
• The government organization that runs Medicare is so rife with corruption and mismanagement that it wastes, loses, and misspends almost $100 billion a year in government/taxpayer funds.
• Various Associated Press reports have reported that employees in the Securities and Exchange Commission, the Interior Department and most recently in the Defense Department (The Week - September 17, 2010) have been extensively involved, on work time and on government computers, searching and downloading pornography off of the Internet. The latest Defense Department pornography finding identified over 250 Pentagon employees and contractors, some with the highest security clearance, had viewed and purchased child pornography,sometime with their government issued computers. This form of corruption at best involves the misuse of government salaries dollars and equipment, at worst sets up users of pornography for blackmail and other forms of corruption.

And as with the corruption that wastes our foreign policy dollars, nobody (so far) of any importance has faced an consequences from these domestic acts of corruption. That is what is frustrating the American people today, we pay and pay and pay through taxes and our dead soldiers just to have these types of wasteful corruption instances thrown back in our faces.

And the sources of the corruption are never fixed. We are so afraid of losing to the Taliban in Afghanistan that our political class tolerates the corruption from Afghan officials who are more concerned with their wealth and well being then fixing their country. We prop up another government in Iraq that is so corrupt that it would deny the simplest joys to their children, the ability to have a free computer. Our politicians feast for themselves on the taxpayer dollar while comparable behavior by those same taxpayers gets them jail time. Obama passes a multi TRILLION health care plan but never fixed the leaks of corruption in the current government health care plans. Thus, we will have a bigger boat that leaks more taxpayer money quicker.

When does it end and how do we fix the leaks? Several steps from "Love My Country, Loathe My Government" might be a good start for patching the boat:

1. Step 1 would reduce Federal spending by 10% a year for five years. If the political class has less money to spend, they are likely to waste less money also.
2. Step 5 would make a conscious and determined effort to crack down on tax and other government fraud and waste, aggressively bringing those crooks and fraudsters to justice. This step would also include the strengthening of ethics violations of current politicians in office.
3. Step 30 would bring home almost all of our foreign deployed troops. The world is full of corruption and criminals, why should we put them into office and then watch as they misspent our money? Using this step and a much more restrained foreign policy should reduce the Defense Department budget significantly and eliminate the type of fraud that our political class subsidizes in places like Afghanistan and Iraq.
4. Step 34 would remove those members of Congress sitting on those committees that are responsible for the waste,corruption and fraud from their committee posts. For example, whatever House and Senate committees are responsible for those missing laptops, and the other billions and billions of taxpayer dollars that have been flushed down the Iraqi hole of corruption, should be removed from their committee posts and replaced. No more being charge but not accountable.

Until you fix the leaks in the boat, corruption will find a way in and our tax dollars will find a way out. With TRILLIONS of dollars national debts piling up, every patch is needed if you are to fix our financial situation. Hopefully, the above suggestions from "Love My Country, Loathe My Government" float your boat also.



 

 

Our new 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 these other sites for freedom:

 

www.cato.org

www.robertringer.com

http://www.reason.com/

http://www.flipcongress2010.com/

www.realpolichick.blogspot.com