The IRS Gets Its Turn At Wasting Billions Of Taxpayer Dollars

Many times we have covered the enormous and growing amount of taxpayer wealth that is wasted every year by the Washington political class and the government it operates. We generally classify government waste into two categories, systemic/recurring waste and one time wasteful spending escapades.

Systemic/recurring waste is the type of waste that occurs every minute of every day of every hour of every year that the Federal government operates. The magnitude of this type of waste is illustrated by the following follies:

• Nonpartisan sources reliably estimate that Medicare and Medicaid lose anywhere from $110 to $150 billion a year due to incompetence, inefficiencies, and outright criminal fraud.
• Social Security likely loses about $100 billion a year due to incompetence, inefficiencies, and outright criminal fraud.
• One Federal unemployment insurance benefits program loses about $19 billion a year to incompetence, inefficiencies, and outright criminal fraud.
• Federal food stamp programs probably lose about $7 billion a year to incompetence, inefficiencies, and outright criminal fraud.
• The IRS has admitted that it fails to collect upwards of $380 billion a year from taxpayers who are legally required to pay that money in taxes.

Just in these few programs we see that the Federal government misuses and abuses over $600 billion every year of taxpayer wealth. But these examples do not include the one time wasteful spending abuses which have recently included the following instances:

• The U.S. Navy built two ships almost to completion at a cost of $300 million and then decided they were not needed. At that point, they spent another $10 million to turn the unused ships into scrap metal.
• The U.S. State Department spent $80 million to build a consulate in a northern Afghanistan city. Only after completion did they realize it would be a perfect target for a Taliban terrorist attack, requiring them to abandon the now completed construction.
• Employees of the General Services Administration threw themselves a lavish party in Las Vegas at a cost of over $800,000 of taxpayer wealth.
• The Huffington Post reported on May 5, 2012 that the TSA had purchased thousands of pieces of security equipment at a taxpayer cost estimated at about $184 million, equipment that was supposed to be installed at airport checkpoints to screen airline passengers. Unfortunately, that $184 million worth of equipment is collecting dust in government warehouses and will likely never be used, a finding that came to light at a recent joint Congressional panel hearing.

These are just a very, very small sample of the amount of waste that the Washington political class incurs every day and which we have covered extensively in the past.

And now we find out, not surprisingly, that the Treasury Department via the IRS has another way to waste billions of dollars. CNBC recently reported (http://www.cnbc.com/id/48462508) that thieves are fraudulently extracting billions of dollars from the IRS tax collection processes every year. The details of the fraud were laid out in the CNBC article by the IRS inspector general and include the following atrocities:

• In the report, the inspector general found that tax thieves are stealing the identities of taxpayers, then filing bogus returns on their behalf, and collecting fraudulent refunds as a result.
• The inspector general estimates that the IRS could issue as much as $21 billion in fraudulent tax refunds over the next five years.
• The scam is so blatant and bold that thieves are sending in false returns in bulk without even disguising the return mailing address on the returns. The report found one address in Lansing, Michigan that was the source of an unbelievable 2,137 tax returns, and to which the IRS directed more than $3.3 million in fraudulent tax refunds.
• In another instance, one residential address in Chicago was the location of 765 tax returns, worth more than $900,000 in fraudulent tax refunds.
• The tax identify theft crime is most prevalent in Florida, with two cities, Tampa and Miami, topping the list of criminal activity. Tampa had 88,724 fraudulent returns filed, worth more than $468 million. Miami had 74,496 fraudulent returns worth more than $280 million in probably false returns.
• In the year 2010, the inspector general's analysis identified about 1.5 million potential fraudulent tax returns worth more than $5.2 billion of lost taxpayer wealth.
• The inspector general concluded that this type of fraud is a “growing problem” involving criminal numbers that are increasing “exponentially.

Unbelievable. I am not a computer programmer expert but it seems it would be a simple programmer fix to flag a return that is, say the 500th return to the same address. I am not a law enforcement person but it seems that if the IRS knows that Miami and Tampa are hot beds of fraud, why not put together a task force and go to those two cities to crack down on the worst offenders. On May 7, 2012, we actually proposed a process for finally cracking down on such fraud via a proposed "National Bounty System:"

http://loathemygovernment.blogspot.com/search?q=National+bounty+system

Once you have identified the root causes of a problem, like this able IRS inspector general has done, most intelligent people could come with some simple, common sense solutions to the identified problems and causes. However, simple and intelligent is usually beyond the means and abilities of the Washington political class.

So what is the Obama administration doing about this IRS tax identity fraud and the other fraud examples listed above? The Hill reported on April 9, 2012, as did other news sources, that the Obama administration was diverting about half a billion dollars of budget/taxpayer money to the IRS to help that organization track down and prosecute ordinary, law abiding Americans that do not purchase health care insurance under Obama Care.

So let me get this straight? Criminal elements defraud and rob the U.S. government and American taxpayer of hundreds of billions of dollars every year. The IRS mistakenly pays out billions of dollars every year to identity theft criminals, a problem that is large and growing "exponentially."

And Obama ignores this massive, ongoing waste of taxpayer wealth and focuses limited law enforcement and IRS resources on going after ordinary Americans? We have surely fallen down the looking glass into another reality when this is what passes for sound judgement and correct priority setting in Washington.


Please visit our Presidential website, "The United States Of Purple," at:

http://www.unitedstatesofpurple.com/

The United States of Purple is a new grass roots approach to filling the office of President of The United States by focusing on the restoration of freedom in the United States, focusing on problem solving skills and results vs. personal political enrichment, and imposing term limits on all future Federal politicians. No more red states, no more blue states, just one United States Of America under the banner of Purple.

The United States Of Purple's website also provides you the formal opportunity to sign a petition to begin the process of implementing a Constitutional amendment to impose fixed term limits on all Federally elected politicians. Only by turning out the existing political class can we have a chance of addressing and finally resolving the major issues of or times.

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/
 

Monthly Political Class Insanity - February, 2012

For the past several posts, we have laid out detailed  plans on how the United States Of Purple Presidency would address, analyze, and solve the major issues of our times. By approaching each plan from a root cause perspective, using data and not politics to identify solutions without any political baggage to bias the analyses, we can finally develop some coherent plans that have a real chance of succeeding. Compare this approach with the meager solutions the political class has developed in the areas of energy policy, illegal immigration, escalating health care costs, etc. all of which have been abject failures. 

Before we finish laying out our detailed United States Of Purple plans, including our solutions to the crises of Social Security, government program fraud, and a few others, let us take a one day break and remind ourselves why our current politicians probably still have no chance to resolve any issue, large or small. Every month we review the antics and insanity that emanated out of the American political class over the past four weeks or so. It can get depressing when we do this review since it reminds us of a famous quote from Dante, "Abandon all hope, ye who enter here."

However, we would modify the quote to read something like this: "Given the antics, insanity, waste, and ineffectiveness of the American political class, abandon all hope, ye who think our politicians have any kind of clue on how to resolve the major issues of our times." The politicians of our time focus only on the small issues that they think they understand, if they even do that.

They are generally more focused on protecting their personal enrichment and their perpetual reelection, that is needed to ensure that continued personal enrichment. Lord forbid they do any analysis, focus on major/difficult issues, or possibly enrage a few voters for the good of the country.

Thus, review this insanity from the past month of so and then ask yourself: do these people really have an ability or the willingness to tackle the rough issues of our times, given their behavior below, or are you willing to give the United States Of Purple a chance:

- Reason magazine is a great monthly magazine that provides thorough analyses of the issues of our times, focusing on how the American political class not only does not know how to resolve those issues but how the insanity of their actions continually reduce the amount of liberty and freedom in this country. The current month of Reason is full of robust examples of the insanity put forth by our political class:

* Congress passed legislation in November that contained updated guidelines for Federally subsidized school lunches. The guidelines proclaimed that pizza would count as a vegetable since it contained tomato sauce. This line of reasoning continued in January when the Obama administration proposed changes to school rules which would reduce the amount of salt in school lunches while increasing the amount of whole grain offerings.

Earlier in 2011, the administration had addressed the tomato issue by proposing changes to how tomato sauce, and the resultant pizzas, should be treated. Seems like a lot of Federal government resources are being spent on the daring issue of pizza and tomato sauce. A lost war on drugs, which affects many of our kids, a skyrocketing national debt that affect all of our kids, a non-existent energy policy that will affect all of our kids, and many other major issues lay unattended while our so-called leaders debate if pizza and its sauce is a vegetable.

And the real absurdity, according to Reason: only about 20% of the schools in the country follow the Federal guidelines to begin with. A waste of time, energy, resources, and pride.

* Up until last November, it was illegal in the state of Washington for any retailer outside of state government operated stores to sell distilled liquors and spirits. In other words, the state government granted itself a monopoly on a lucrative part of the retail market, something that would have gotten any non-government entity thrown into jail for.

Starting last month, a new law allowed any grocery store to start selling hard liquor and also allowed distilleries to sell their products directly to retailers and vendors, bypassing the the previously mandated, fee collecting state government distributor. Everybody wins here: retailers get an enhanced, profitable product line to sell, distilleries have a freer market with less government fees, more jobs will be created (offsetting the loss of about 900 state government jobs that existed solely because of the monopoly), and consumers will probably see lower prices, now that the government monopoly has been broken, and competition takes hold.

So why is this insanity on behalf of the political class? Simple, why did it take so long and how dare the state political class of  Washington hoard a lucrative piece of the retail market for itself? The government, at any level, should not be both an overseer and a competitor in America.

* Many times government and government organizations get so large and so out of touch with reality that it is down right hilarious. Take the infamous Transportation Security Administration (TSA), those wonderful people that seem to always be in a surly mood at airport check in lines and who often pat down grandmothers and little kids for no apparent reason. Government should be providing an efficient, well needed service, not be an encumbrance to innocent citizens.

Which is exactly what it did, via the TSA, to 17 year old Vanessa Gibbs. it appears that Vanessa wanted to get onto a plane but was denied the ability to board, resulting in her missing her flight, because there was a pistol design on her purse.

There was not a pistol on her purse. There was not a pistol in her purse. There was not a pistol, or any other dangerous substance, on her person. There was a simple, flat, non lethal design of a pistol on her purse. How big and out of touch with reality has our Federal government become when style is now deemed to be a Federal terrorism offense?

* But this type of behavior from the TSA should not surprise us. The agency is only 10 years old but it already has the old age symptoms of most other, much older, ineffective Federal agencies. A House Of Representatives report from last November stated that "the agency suffers from bureaucratic bloat, cost overruns, high staff turnover, mission creep, and a lack of preparedness." Feel safer now?

Oh, the report also noted that there had been over 25,000 security breaches in those ten years. Rough math would find that, on average, there were about 2,500 security breaches a year or about SEVEN A DAY over those ten years. Feel really safe now?

These security breaches happen despite the fact that: 1) the agency is now four times larger than it was initially even though airline passenger volumes are only up about 12% over that same time frame, 2) the agency has spent over $2.4 billion in training over the same time period (mostly because more people have left the TSA since 2002 than currently work there) and 3) there are well over 14,000 TSA administrators and managers around the country that never check a passenger, more employees than what the entire agency had on staff just ten years ago.

Take about waste, turnover, ineffectiveness, and most of all, the danger we are all in when we travel by air. At seven security breaches a day, seven that the TSA knows about and will admit to, it does not appear that we are getting the safety we are paying for as taxpayers and as Americans. However, those pistol design purses are being stopped.

* Why not go for a triple play on the TSA? According to another short article in Reason this month, a TSA agent was arrested for stealing $50,000 worth of electronics equipment from the luggage of airline passengers in the Fort Lauderdale-Hollywood, Florida International Airport. Fortunately, he was caught in the act of taking an iPad out of the suitcase by another employee. This was not to be confused with a case a few months ago where a TSA employee was caught taking money of of travelers' luggage.

Any wonder why we have seven security breaches a day, some of the TSA employees are too busy imitating our politicians, i.e. using their government position solely for their personal enrichment.

* Back to Washington state. According to another Reason blurb this month, the state political class of Washington state has established its own little Orwellian world when it comes to your personal medicine usage. Under a new drug monitoring program, just about anyone with a pulse can get access to your drug and medicine history, without your permission, including state, local, and Federal law enforcement officials, doctors, pharmacists, health licensing agencies, regulatory agencies, medical examiners, coroners, Medicaid officials, state workers who work with worker's compensation programs, Department of Corrections employees, health department officials, and other government entities.

Freedom and liberty always take a hit when any American's privacy is ravaged like this. Any government entity should have to go through a stringent review process, the exact opposite what appears to be happening here, before it can intrude on anyone's private medical records.

* A study released last November by Citizens For Responsibility and Ethics In Washington (CREW) found that chairmen and ranking members of Congressional committees receive plenty of campaign contributions from the industries affected by the work and responsibilities of each committee. The study also found that as a Congressional member gets more and more senior on a committee, they receive more and more campaign contributions from the affected industries and companies.

One of their measures was that from 1998 to 2010, industry campaign donations to chairmen and ranking members went up almost 600% while overall contributions went up only 230%. Disgusting.

That is why Step 6 from "Love My Country, Loathe my Government" is so important. Step 6 would allow only individual Americans to contribute to election campaigns. PACs, businesses, unions, lobbyists, etc. would be banned form contributing to any Federal politicians. The conflict of interest and the subordinating Americans' needs to the need of a politicians to constantly get reelected  needs to be squashed once and for all. Otherwise, we need up with the disgraceful conflict of interest situation that CREW has found, but which probably surprise no one.

But political class insanity does not only come from Reason magazine:

- A recent Associated Press article reported that the Washington political class recently passed a law that increased the criminal penalties of using ultra light aircraft to smuggle illegal drugs into this country. Now ask yourself: do we really think that this law will inhibit the actions of Mexican drug cartels in their ever growing, ever more violent, and ever more lucrative drug trade?

Do we really think that the drug lords, who preside over tens of billions of dollars in money and assets, who sit on piles of weapons, who have corrupted much of the government functions in Mexico are now worrying about what to do, given the passage of this law?

These are the same people who cleverly developed catapults to launch illegal drugs over the fence the political class built along the U.S./Mexican border. These are the same people that have been building submarines in the jungles of Central and South America to deliver illegal drugs to the U.S. 

Increasing the penalties for using ultra lights in the drug smuggling portion of our lost war on drugs will have absolutely no impact on the drug cartels' ability to do their business. Rather than dealing with the larger, more complex  issues of illegal drug demand, treatment, and prevention within this country, we have the entire Federal legislative machine worrying about ultra light aircraft and the small amount of drugs each one of these aircrafts could smuggle into the country. Insanity.

- According to an article in the February 10 , 2012 issue of The Week magazine, Joe Biden, second in line of succession to the most powerful political office in the world, recently embarrassed every American  and insulted the the entire population of India, one of our strongest allies. While giving a speech at a manufacturing plant in New Hampshire, he "slipped into an Indian accent" while talking about U.S. job losses to call centers around the world.

This is not to be confused with the time last year when the Vice President stated: "You cannot go to a 7-Eleven or a Dunkin Donuts unless you have a slight Indian accident." Making us proud everyday, Mr. Vice President.

- In the same issue of The Week magazine was an article about electronics manufacturers in China. While our so-called leaders were debating the merits of whether pizza sauce should count as a vegetable serving, China's schools and universities are graduating 600,000 engineers every year, American schools and universities are turning out about 70,000 engineers.

Now granted, our engineers might have eaten healthier than their Chinese counterparts, particularly if they ate a lot of pizza. But seriously, how screwed up are the priorities of our politicians when they waste time and effort on salt content while our main economic competitor is turning out more than four times the type of university graduates we need to compete in the world of high technology?

Just a few examples of what our politicians have been up to the past few weeks and months. Hopefully, their bad priorities, selfish, greedy enrichment activities, overall embarrassment, and general ineffectiveness will at least encourage you to check out the United States Of Purple effort at http://www.unitedstatesofpurple.com/.

We will resume with our solutions to today's pressing national issues tomorrow.


“We cannot solve our problems with the same thinking we used when we created them.” Albert Einstein

We invite all readers of this blog to visit our new website, "The United States Of Purple," at

http://www.unitedstatesofpurple.com/

The United States of Purple is a new grass roots approach to filling the office of President of The United States by focusing on the restoration of freedom in the United States, focusing on problem solving skills and results vs. personal political enrichment, and imposing term limits on all future Federal politicians. No more red states, no more blue states, just one United States Of America under the banner of Purple.

The United States Of Purple's website also provides you the formal opportunity to sign a petition to begin the process of implementing a Constitutional amendment to impose fixed term limits on all Federally elected politicians. Only by turning out the existing political class can we have a chance of addressing and finally resolving the major issues of or times.

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 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/

The Magnitude Of Our National Debt Made Real And Understandable

We have talked about our skyrocketing national debt many times in this blog. For those that may have missed some of our graphical representations of the crisis, take a look at the following graphs (all of the graphed data are from official U.S. Federal government sources):

You can double click on each graph to get a larger and better view of each graph. As you can see, no matter how you measure our national debt, in absolute dollars, in dollars as a percentage of GDP, government spending as a percentage of GDP, etc., our Federal government spending is out of control and getting worse. It has been particularly devastating and out of control ever since the Democrats took control of both houses of Congress after the midterm elections of 2006.

Another way to look at our $15 TRILLION national debt is to actually see it written out:

                         $15,000,000,000,000

That's a lot of zeros. Since it is our national debt and all Americans are going to have to pay it off at some point in the future, the personal household share of $15 TRILLION comes out to about $132,000 for each household. Think about how you are going to work that new expense into your household budget this year.

And remember, the $15 TRILLION is not a fixed amount. Under the long term, 10 year budget Obama proposed back in the spring, a budget that was unanimously rejected by the Senate, under the most optimistic assumptions Obama's proposed budget would add another $9 TRILLION on top of the $15 TRILLION.

But, we are getting crazy, the numbers are almost too large to understand. So let's make it simple. The late 2011 Federal budget disaster looked like the following:

* 2011 U.S. Tax revenue: $2,170,000,000,000

* 2011 Federal budget: $3,820,000,000,000

* New debt in 2011: $ 1,650,000,000,000

* National debt as of late 2011: $14,271,000,000,000

* Recent budget cuts: $ 38,500,000,000

Let's now remove 8 zeros and pretend it's a reasonable but low income household budget:

* Annual family income: $21,700

* Money the family spent: $38,200

* New debt on the credit card: $16,500

* Outstanding balance on the credit card: $142,710

* Total budget cuts: $385

Thus, if the U.S. Federal national debt was scaled to a reasonable low income, U.S. household budget, that household would never again get any credit since no one and no company, short of a loan shark, would ever extend credit to a household in this financial situation. This household would never get a mortgage to own a house, would never get a car loan for a new car, or be able to attend a reputable college since they would not get any kind of student loan. Nice life.

Another way to view the national debt scaled down to a reasonable household level is to imagine that the household did not eat, did not drive a car, did not shop for clothes, Christmas gifts, or anything else, or pay taxes or utility bills for seven years. If it did this abstaining for seven years, then and only then would it be able to pay off its $142,710 credit card debt, given their current household income stream.

And that is assuming a credit card interest rate of 0%. Not very realistic, which makes the debt situation even more distressing since a household cannot go seven years without eating, driving, etc.

Once we scale the problem down to a household level, you can begin to imagine and comprehend the dire straits the nation's financial situation is in. In fact, it will likely take decades and generations of Americans, acting frugally, to tame the wild spending of the American political class over the past decades and especially over the past five years of Democratic Party rule.

And that assumes the current politicians we are stuck with finally grow a backbone and begin to honestly level with Americans on how bad they have made the problem and the painful steps that will have to be taken to remedy the situation. That is asking a lot and that is why we need to start implementing some steps from "Love My Country, Loathe My Government:"

Step 1 would reduce Federal government spending by 10% a year for the next five years by reducing Federal government employee headcount, stop deploying American troops all over the world for no good reasons, eliminating government agency and department redundancies, eliminating obsolete or dysfunctional government functions, reforming Medicare, Medicaid, and Social Security, and eliminating fraud and criminal activity in Federal Government programs..

We have talked about all of these steps in previous posts. There is no rational reason for us to still have well over 100,000 troops deployed in Europe, South Korea, and Japan. The need for these deployments went away long ago.

We need to clean up the fraud in government social programs and tax evasion which wastes up to half a TRILLION dollars a year.

We need to have our politicians do a lot of the boring, government efficiency things and not be so concerned about their own political careers and only dealing with big issues, that never get resolved anyway.

And the really scary part of this whole plan is that even if the Federal government had reduced its 2011 spending of $3.820 TRILLION by 10% a year for five years, it still would not get to a balanced budget in which expenses had been reduced enough to equal of be less than the 2011 revenue stream of $2.170 TRILLION.

It would be close, within about 4% or so, but expenses would still exceed revenue in this hypothetical case. That is how bad the deficit spending situation has become just in the two years since "Love My Country, Loathe My Government" was published. Five years of 10% reductions a year might still not be enough to get a balanced budget. And it certainly will not be enough to start paying down the $15 TRILLION national debt.

- Step 39 from "Love My Country, Loathe My Government" would impose term limits on all Federal politicians, "one and done." The current set of people in Washington got us into this mess. I doubt they know how to get us out of the mess they created or even have the will to do so. We need to start generating a new class of politicians who will do the hard job of governing efficiently rather than the bad job of politicking inefficiently.


We invite all readers of this blog to visit our new website, "The United States Of Purple," at:

http://www.unitedstatesofpurple.com/

The United States of Purple is a new grass roots approach to filling the office of President of The United States by focusing on the restoration of freedom in the United States, focusing on problem solving skills and results vs. personal political enrichment, and imposing term limits on all future Federal politicians. No more red states, no more blue states, just one United States Of America under the banner of Purple.






The United States Of Purple's website also provides you the formal opportunity to sign a petition to begin the process of implementing a Constitutional amendment to impose fixed term limits on all Federally elected politicians. Only by turning out the existing political class can we have a chance of addressing and finally resolving the major issues of or times.



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 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/

American Politicians: Bad For Our Investments, Great For Their Own Investments

I was struck by a dichotomy of results from two recent investment studies. They seem to indicate that when it concerns the average American's investment portfolio, political class actions are really bad news for getting good investment returns. However, when it concerns our politicians' personal investment portfolios, political class actions are really good news for getting investment returns. How could this disconnect be possible, he asked sarcastically?

Let's start with the first investment study, one we have already referenced in a previous post. An investment fund manager by the the name of Eric Singer recently completed his analysis and developed something he called the "Congressional Effect." His overall conclusion from his analysis was as follows: "Over long periods of time the stock market performs dramatically better on days when Congress is out of session as compared to days when Congress is in session."

More specially, over the January, 1965 through December, 2010 time period:

1. The stock market returned less than 1% on an average annualized basis when Congress was in session.
2. The stock market returned 16.6% on an average annualized basis when Congress was not in session, a difference in return of almost 16% annually.
3. However, results get even more dramatic over the past ten years since the annualized rate of return when Congress was in session over the past ten years was -7.6% while it was 12.7% when it was not in session.
4. The difference was 20.3% in the past ten years vs. about 16% over the entire time frame.

Thus, it would appear that listening to politicians talk, squabble, and wander aimlessly through their Congressional sessions does not instill confidence in the market, resulting in everyone's investment portfolio getting bad returns when Congress is actively doing their job.

But this is really not a true statement, not everyone suffers as a result of the politicians being in office. Paradoxically, the very politicians that cause everyone elses' investment returns to nose dive actually do extremely well with their own investments when they are in office. A recent analytical report titled, "Abnormal Returns From the Common Stock Investments of Members of The U.S. House Of Representatives," shows that between 1985 and 2001, members of the House enjoyed a considerable advantage over members of the public on their personal investment returns. These results are totally congruent with a similar, previous report the four authors of this report did with U.S. Senators.

Specifically:

1. The study measured 16,000 of House Of Representatives' common stock transactions made by 300 House members between 1985 and 2001.
2. These stock transactions returned "significant positive abnormal results" (vs. total market returns).
3. These abnormal returns  showed that a portfolio that mimicked the common stock purchases of House members would have beaten the market, on average, by about 6.6% annually.
4. This is smaller than the advantage the Senators from the previous study incurred but still significantly ahead of total market returns.
5. A $100,000 investment getting average stock market returns of 11% over a 17 year period (such as from 1985 to 2001, the period of the House study), would have grown to $589,000.
6. That same $100,000 investment invested along the lines of the House of Representatives average return, 6.6% higher than the market, would have grown to about $1.6 million, about three times as much.
7. If the House of Representatives $1.6 million got only average returns for the next twenty years, that House member would have grown the initial $100,000 to about $13 million while the average Senator would have grown their initial $100,000 to about $18 million.

Is it any wonder why politicians do anything they can to stay in office, regardless of how their behavior and Congressional votes and behavior negatively affect the average American? Most of these people are not in it for the service they can do to their country, they are in it for the service they can do to their investment portfolio. The study concluded : "We find strong evidence that members of the House have some type of nonpublic information which they use for personal gain." Well, duh, I think so.

Just consider a few of Senator Majority Leader Harry Reid's investment strategies over the past few years. According to John Ransom, writing for Townhall.com on September 30, 2011, in 2008, one month before oil prices took a historical plunge, the good Senator sold between $15,000 and $50,000 of energy stock holdings he held in the Dow Jones Energy index. Shortly thereafter, he purchased between $15,000 and $50,000 worth of health care holdings in the Dow Jones Health Care Index at a time when he was considering rewriting the nation's health care laws.

Or consider the shenanigans of Congresswoman Ginny Brown-Waite. According to an article that was written by John Frank for the June 30, 2009 St. Petersburg Times, one day before the House of Representatives approved a massive bank bailout plan in October, 2008, the Congresswoman bought stock in Citigroup, one of the major banks that received a significant portion of the bank bailout funding. About two weeks later, on the day Treasurer Henry Paulson announced he would invest $250 billion of taxpayer money in nine major banks, the Congresswoman bought stock in Bank of America, one of those nine banks.

Both cases just smell to high heaven. If ordinary Americans behaved like this, we would be going to jail for insider trading. When members of the political class do this type of thing, nothing happens except that they continue to enrich themselves rather than focusing on fixing the issues facing America today.

The appearance of conflict of interest is just as loathsome as actual conflicts of interest and these two examples are definitively in loathsome neighborhood. Maybe if they had been more focused on fixing our energy problems, our health care problems, or our dysfunctional banking system problems than trying to maximize their portfolios returns, the country would be in much better shape.

Two steps are urgently needed here. First, any Federally elected official needs to put all of their investments in a blind trust for as long as they are in office, a trust that they have no control over, both the investments within that trust and the timing of trades within that trust. There needs to be a wall of silence built between the politician and the entity managing their trust, absolutely no communication at all.

The second step is Step 39 from "Love My Country, Loathe My Government." This step would impose term limits on all Federal politicians so that they do not get into office to enrich themselves, they get into office to fix the problems of the country. By limiting their long term potential, via term limits, to use their elected position to enrich themselves and forbidding them any control over their investment portfolios while in office, we should attain two positive results. First, these people might actually do what is right for the country vs. what is right for their personal wealth. And second, by eliminating the temptation to dabble in the stock market via blind trusts, they may actually spend more time working on problem resolutions vs. working on personal enrichment.

In the face tens of millions of Americans that are unemployed, underemployed, or having given up looking for work, this type of behavior is despicable and should be criminal. It is no wonder that  members of Congress, as a whole, receive single digit approval ratings. The least they can do is not be in session since according to Mr. Singer that would at least give us a fighting chance to catch up to their out sized investment gains.

But what does that say about our politicians' abilities: we would rather have them do nothing than do what they usually do. Very scary, very scary indeed.



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


Please visit the following sites for freedom:


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

Solyndra - When Politics Are Used To Allocate Resources, The Resources All End Up Being Allocated To Politics

The quote in today's title is from P.J. O'Rourke and seems particularly apt in light of two developing scandals, one involving the former solar energy panel manufacturer Solyndra and one involving a wireless communications company called LightSquared. Both illustrate how much disregard the Washington political class has for taxpayer wealth, subjugating taxpayers' welfare to the needs and desires of individuals and companies who are politically connected.

Today let's stay with Solyndra. The basic story is that the Obama administration fast tracked over half a billion dollars in Federal loan guarantees for this solar energy panel company. The company promptly went bankrupt and took 1,100 jobs and the half a billion dollars worth of taxpayer wealth with it.

However, the details are much more gruesome. The details from the past few weeks include the following, in no particular order, that were compiled from various sources including the Associated Press, Bloomberg, and the Washington Post:

- Although President Obama visited the Solyndra plant in May, 2010 and extolled that  "the promise of clean energy isn't just an article of faith," two months BEFORE his visit, the accounting firm PricewaterhouseCoopers LLP cautioned that the company, which had  received $535 million in Federal loan guarantees in September, 2009, "had financial troubles deep enough to raise substantial doubt about its ability to continue as a going concern."
- Pricewaterhouse went on to state that "the company has suffered recurring losses from operations, negative cash flows since inception and has a net stockholders' loss." In other words, experts in the field knew that Solyndra was a troubled company and had been a troubled company for years.
- The fact this was a troubled company was validated within a month after Obama visited when the company withdrew its plan to implement a $300 million initial public offering, likely because it would have failed. This validation occurred just nine months after it received the Federal loan guarantees.
- Economic and company conditions deteriorated quickly when the prices for Chinese manufactured solar panels dropped by 30% over the past year, wrecking the marketing plans and product value of Solyndra's products.
- But financial problems occurred long before the Chinese problem, with Bloomberg News reporting that, according to government documents from December, 2010, a mere three months after the loan guarantees were approved, the government knew that Solyndra was only a month away from running out of cash. This indicates that little, if any, due diligence was done if within months of giving away a half a billion dollars of taxpayer money, the company was about to fold.
- As as result of the failing financials, the Energy Department agreed to take a back seat to funds from private and new investors to keep Solyndra solvent. In other words, if the company folded, taxpayers would not be paid back until other investors got their investment returned from any bankruptcy proceedings.
- Which is where it gets really interesting since one of those private investors is George Kaiser, a major Obama campaign fundraiser. The Kaiser Family Foundation owns about 37% of Solyndra. Records show that Kaiser had made 16 visits to the President's staff since 2009. The Foundation would be one of those investors that would jump in front of the American taxpayer in retrieving whatever value is left from the Solyndra's ashes. The Foundation denies that George Kaiser had to do with the Federal loan guarantees.
- While the company was running out of cash, U.S. Senate records show that it had already spent $480,000 this year to lobby Congress. This apparently included hiring a pubic relations and lobbying firm to prep Solyndra executives before they went before Congressional hearings. Two Democratic Congress members have publicly stated that Solyndra's chairman assured them in July, 2011 that the company was in a "strong financial position."
- At a House of Representatives investigating committee session this week, Solyndra executives claimed their fifth Amendment rights and refused to testify, lest they incriminate themselves in subsequent criminal investigations.
- The Washington Post reported that employees of Solyndra stated they saw questionable spending by upper management as soon as the loan guarantees were approved including a new factory with a conference room with glass walls, walls that, with a flip of a switch, turned a smoky gray to conceal the room's occupants. State-of-the art equipment was never unwrapped and ended up being sold for pennies on the dollar.
- Solyndra engineer Lindsey Eastburn was quoted as follows: "After we got the loan guarantee, they were just spending money left and right. Because we were doing well, nobody cared. Because of that infusion of money, it made people sloppy."
- Solyndra also applied for another government loan, this one for $400 million, which, fortunately, was not approved.
- In a July 13, 2011 letter from Solyndra's CEO to the House Energy and Commerce committee, only two months ago, the CEO asserted that the company was in good shape, it's future was bright, and 2011 revenue was expected to double. This was written even though employees were noticing that finished product inventory was backing up on the loading docks and not moving out.
- Emails from the Office Of Management and Budget (OMB) show that the Obama administration pressured the OMB to hurry up its analysis of Solyndra's financial viability in order to accommodate a September, 2009 factory visit from Joe Biden. One of those emails responded that "we (OMB) would prefer to have sufficient time to do our due diligence reviews and have the approval set the date for the announcement rather than the other way around."
- The AP reports that Solyandra has spent almost $2 million during the past four years lobbying the Federal government.
- Federal Election Commission records show that two Solyandra executives, along with George Kaiser, have contributed to Obama and Democratic Party groups in the past.
- The FBI and the Energy Department's inspector general are investigating the issue in addition to the Congressional committees. The chairman of the House Judiciary Committee has called for an independent investigator to look into the entire affair.
- The AP also examined regulatory filings which show that Solyndra was losing hundreds of millions of dollars for years prior to the loan guarantee. In other words, this was not a successful company before the guarantees, a sure red flag for any investor.

Lots of facts, none of them good if you pay Federal income taxes. There appear to be three potential outcomes from this mess:

1) General Incompetence - under this scenario, half a billion dollars was lost due to general incompetence by government employees and the Washington political class. No one took the time to understand this company had never turned a profit, indicating that its market offerings may have not been viable. No one took the time to understand the dire financial condition that this company was under prior to the loan guarantees. No one took the time to understood how poorly the loan guarantee money was being spent. No one took the time to understand what the Chinese threat was likely to be.

Under this scenario, general incompetence cost the country half a billion dollars. In this case, people in the Department of Energy need to be fired for their incompetence and lack of due diligence and members of Congressional committees and subcommittees who had responsibility for this fiasco should be removed from their committee posts, as proposed by Step 34 in "Love My Country, Loathe My Government."

2) Political Incompetence - under this scenario, the Obama administration forced government resources to bypass or short circuit due diligence processes and other analyses in order to meet photo op opportunities and to demonstrate to the Democratic Party base how the administration was going "green." As a result of this shortsighted, political approach to life and reality, the American taxpayer is out half a billion dollars and those photo ops don't look like such a good idea today.

3) Incompetence, Cronyism, and Criminal Behavior - under this scenario, three nasty issues come together. There is incompetence because of forcing a failing company to live up to expectations with half a billion dollars support, failure to do adequate due diligence, failure to understand the dynamics of the market, and short cutting standards of analyses for political photo ops.

There is cronyism as we see a failing company use government support to heavily lobby that same government and to direct taxpayer dollars to political supporters.

There is possible illegal behavior if private investors were moved ahead of taxpayers in the bankruptcy proceedings, something that was deemed illegal under the conditions of the loan guarantees. This particularly repugnant if those moved ahead of taxpayers were those that had lobbied and financially contributed to political class factions.

No matter how you cut it, the whole situation reeks. I wholeheartedly support the naming of an independent special investigator to determine what firings, reforms, and criminal charges need to be forthcoming. This investigator would have full subpoena and prosecution powers. Until we as a nation get to the bottom of these shenanigans, it will continue to divert attention from the real issues facing America.

Which gets us back to the quote in our title. The American political class cannot help but end up in as failures in these types of ventures since our politicians are more interested in their own political well being, not the nation's well being.

That is why we get these disasters and why billions of dollars are wasted every year. Resources and arrangements are established for the good of the political class, not the efficient allocation of resources. "Green" jobs is just one category of bad allocation of  taxpayer resources and Solyndra is just one company of several that have turned into disasters and giant wastes of taxpayer money:

• Evergreen Solar in Massachusetts received $5.3 million in stimulus money through a state grant to install solar electric panels at 13 Massachusetts locations. The company recently filed for bankruptcy protection in order to reorganize and in an ironic twist, intends to now focus on building up its manufacturing factory in, wait for it, China.
• Spectra Watt received a half million dollar grant under the Obama economic stimulus program to improve the performance of existing solar cells in June, 2009. It has already gone out of business.
• Olsen Mills Acquisition received a $64 million government support package in January, 2010 to increase employment, buy equipment, and acquire land. Less than two years later, the company filed for bankruptcy, probably destroying the value of the government's $64 million government and taxpayer support.
• Mountain Plaza in Tennessee received $424,000 grant to reduce truck pollution at truck stops despite the fact the company had already filed for bankruptcy twice.

And in the face of all this, Obama wants to raise the taxes on subsets of Americans. Until this missallocation of taxpayer resources is resolved, no one in America should pay more taxes for this incompetence. And this misallocation will not stop until politicians realize that they cannot create jobs because 1) they are not smart enough to create jobs and 2) the market creates jobs, not government bureaucrats.

The following truth is so relevant here: If a technology is viable, it does not need any government support. If a technology is not viable, no amount of government support will make it viable. How true.

Unfortunately, the Obama administration and its Energy Department did not follow this simple fact of reality and it cost us at least half a billion dollars of wealth. Our only hope now is that all those responsible pay with their jobs, their careers, or their freedom if guilty of criminal behavior.


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


Please visit the following sites for freedom:
http://www.loathemygovernment.com/
http://www.cato.org/
http://www.robertringer.com/
http://realpolichick.blogspot.com/
http://www.flipcongress2010.com/
http://www.reason.com/
http://www.repealamendment.com/

Another Call For Ending President Obama's Presidency, This One From His Home Town

Yesterday, we reviewed the far less than stellar performance of President Obama's first three years in office. Unfortunately, when you look at his body of work you find that his policies have been short sighted, nonstrategic, and mostly failures, his ability to grab history and lead has been non-existent, and he has stood idly by as his staff, his political party members, and others have insulted, threatened, and defamed honest Americans who had legitimate  differences of opinions with his policies.

As a result of this review, yesterday we called on the President to resign immediately. We do not expect his policies, attitudes, and compassion to change in the last year of his Presidency and we have witnessed the politicizing of the office of President so much so that just about everything President Obama does these days is totally focused on his future political career and not the best interests of America.

While it is next to impossible that the President will follow our resignation recommendation, we are not alone in our distaste and disappointment with this administration. Earlier this week, Steve Chapman, a well known columnist for the Chicago Tribune, one of the main papers in President Obama's home town called for the President not to seek re-election and step aside in 2012, presuming that Hillary Clinton would then become the Democratic Party Presidential candidate in 2012. Mr. Chapman is a 30 year member of the paper's editorial board, a paper that endorsed Obama for President in 2008.

The reasons for calling for a one term Presidency included the following:

• The President's approval rating is at its lowest level since the beginning of his term.
• His political party just lost two seats in the House Of Representatives, one of which has been held by the Democratic party for the past 88 years.
• He is going all in with his latest jobs bill, a bill that most Americans do not think will work.
• The weak economy is getting weaker.
• Unemployment is stubbornly high.
• Home foreclosures are still rampant.
• He battles daily with the Republicans who are quite likely to retain control of the House and possibly gain control of the Senate after the 2012 elections.

More broadly, Mr. Chapman points out that second terms are not often friendly for Presidents. Nixon resigned in his second term, Reagan had to deal with the serious Iran Contra scandal in his second term, and Bill Clinton got entangled with Monica Lewinsky during his second term.

Additionally, many veteran, established staff members decide to move on after the first term, leaving the second term President with a less experienced staff: "Administration officials get weary after four years and leave in droves. The junior varsity has to be put into service. New ideas are hard to come by."

Not a pretty picture. Imagine how far this Presidency has fallen. Less than three years ago Obama had sky high approval ratings. Today they have never been lower. He was supported not only by his home town newspapers but support from major newspapers and news magazines across the country and even across the world. Today, at least one of those home town papers are saying enough is enough. "Hope" and 'change" were actual things to aspire to rather than being bumper sticker fodder.

The reasons we outlined yesterday are basically in line with Mr. Chapman's recommendation of one term. This Presidency has fallen short of all expectations, life in the country is worse than it was just three years ago, his administration has introduced unheard of levels economic uncertainty, tax uncertainty, and self doubt into the national conscious, and this President is more focused on next year's election than reversing the multitude of serious negative trends.

Thus, maybe he should accept Mr. Chapman's recommendation, as laid out in his column: "If he runs for re-election, Obama may find that the only fate worse than losing and is winning. But he might arrange things so it will be (Hillary) Clinton who has the unenviable job of reviving the economy, balancing the budget, getting out of Afghanistan, and grappling with House Majority Leaders Eric Cantor. Obama, meanwhile, will be on a Hawaiian beach, wrestling the cap off a Corona."

It is a scenario that many Americans, Republicans, Democrats, and independents, are becoming increasingly comfortable with.


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


Please visit the following sites for freedom:
http://www.loathemygovernment.com/
http://www.cato.org/
http://www.robertringer.com/
http://realpolichick.blogspot.com/
http://www.flipcongress2010.com/
http://www.reason.com/
http://www.repealamendment.com/

Small Time Thinking By Small Time Polticians - Tax Edition

In my lifetime there have been very few members of the political class that I would call big thinkers. Big thinkers, in my opinion, focus only on the big issues and challenges that affect the most people. They have a grand plan in mind that they have meticulously constructed by identifying underlying root causes of a problem, they understand how various components interact under various action plans, they know how to integrate and leverage those components into an overarching strategy, and they provide the leadership needed to unselfishly and fairly move the plan towards success. Ask yourself, how many of today's politicians fit that description?

I started thinking about these types of positive traits when confronted by the small demands and small thinking from the Obama/Pelosi/Reid triumvirate over the past few weeks. Specifically, their unending demands to "tax the rich" and close the loopholes in our tax code in the following areas:

• Close tax loopholes that oil companies currently enjoy, bringing an additional $2-3 billion a year into the Treasury.
• Close the tax loophole that Obama supported in his economic stimulus plan for corporate jet owners, bringing in an additional $300 million a year.
• Eliminate the Bush tax cuts for those Americans earning over $250,000 a year, bringing in an additional $70 billion a year.

The drone around these three items is almost constant. And the smallness of their view is also constant. Let's assume that Obama, Reid, and Pelosi somehow got their wish and these three ideas became reality. This would increase government revenue by about $72 to $73 billion a year. What would that do to the Federal government's budget outlook:

• $73 billion would reduce this year's government deficit by a little over 4%.
• $73 billion would represent about 2% of the overall budget number.
• 2% and 4%, pretty small thinking. But if you listen to the bluster from these three Democrats, you would think these three tax issues were the biggest injustices possible to inflict on the country and these three steps are the root of all evil.

But what would large, important thinking look like:

- In March, 2008, Money magazine reported on IRS statistics that showed how the IRS estimated they do not collect $197 billion a year in unpaid taxes. $197 billion is about 12% of the 2011 deficit and over 5% of the total budget. A big thinker would find a way of getting their hands on this type of money which is much larger than corporate jet taxes. This one success of big thinking would be more than two and half times more than the small thinking of Obama, Pelosi, and Reid.

- Numerous times we have cited credible sources who estimated that the Social Security, Medicare, and Medicaid programs lose $200 billion a year via fraud and waste. A big thinker would find a way to get the waste and fraud out of these programs. Combine this big thinking with tracking down tax evaders and all of a sudden you are talking big numbers, covering more than 20% of the 2011 deficit.

- In the spring, it became news that even though General Electric had 2010 profits of over $14 billion, it paid absolutely no Federal taxes. Adding insult to injury, the Federal government's tax code, a code created, amended and operated by the political class, provided General Electric with a $3.2 billion tax credit.

If the U.S., had a simple 15% flat tax rate, GE would have had a 2010 tax burden of about $2.1 billion, resulting in an additional $5 billion for the U.S. Treasury (the flat tax amount plus the rescinding of the tax credit.) That would be big thinking, getting everyone to pay a fair amount of taxes including corporations. This simple fix would have gotten more for the Treasury from one company than closing the tax loopholes for ALL of the oil companies.

But Obama would probably never go after GE for their legal tax evasion. He has appointed the GE chairman as the head of his Presidential jobs commission. The GE chairman has been a big contributor and supporter of Obama's election efforts. The White House allowed GE executives to escape compensation limitations for GE's financial executives when the company received Federal bank bailout funds under TARP, even though every other corporation that accepted TARP funds had to also accept executive compensation limits.

In return, it is a distinct possibility that Obama received more than favorable press coverage through GE's historical ownership of MSNBC (an ownership that is now controlled by Comcast). A big thinker, a true leader would insist on fairness for all and favoritism for none, something that cannot happen given the incestuous relationship between the President and GE.

Just a few examples where small thinking results in small effects. Should the oil company and jet owner tax breaks be rescinded? Probably. Should GE pay Federal income taxes regardless of his relationship to Obama? Probably. However, these would be moot points if we had some true leaders in Washington who were looking at overhauling, not tweaking or politicizing, the tax code.

If you did a great job of putting a fair and simple to understand tax code in place, this type of small time thinking would go away, it would be easily handled by the revised tax code. In the absence of such grand thinking, the political class drone goes on with small time thinking, small time issues, and small time results.

While this type of symbolic but small time thinking may be attractive to voting blocs, it does nothing to fix what ails the country. We are faced with big time problems and are stuck with small time politicians and their small time thinking.




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

Please visit the following sites for freedom:

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

The Mexican Drug Cartel Terror Threat Continues to Grow: A Potential, Short Term Solution

Terror is a word that can take on various meanings and different connotations. Unfortunately, given the 9-11 terrorist attacks, we have tended to think only about Bin Laden-like terror threats over the past ten years. The reason why is clear: Bin Laden and his followers, in whatever form they took, were dedicated to destroying the United States in anyway possible and killing as many U.S. civilians and military personnel as possible in the process. This type of terror has occupied most of our attention.

This is not to say this is a bad thing, Bin Laden and his followers were, and will continue to be, a large threat. But at least most of their actions were stunted by sheer geography, thousands and thousand of miles and two vast oceans, geographic barriers to their terror plans.

However, there are other types of terror in this world and unfortunately, one type is growing in strength, violence,  and ferocity just south of our southern borders. For this type of terror we do not have the luxury and safety of geography, this terror is right next door.

Of course, we are talking about the drug cartel violence and situation in Mexico. We have blogged many times about the drug cartel situation and its associated violence in Mexico, they have been some of our most popular posts. And although, we have not revisited the issue for a little while, that does not mean things have settled down. In fact, based on the following press accounts, the situation and the potential for drug cartel violence to spill over into this country have grown significantly over the past month or so:

- In the April 29, 2011 issue of The Week magazine, an article described how sixteen police officers were arrested and connected to the killings of 145 fellow Mexicans. The police were accused of providing protection for the actual killers who are suspected of being from the Zetas, Mexico's most violent drug cartel. The 145 victims were bus riders who were kidnapped and then killed when the probably refused to join the cartel as gunmen or drug carriers.

The article reports that over 15,000 people have been killed in drug-related violence in Mexico just in 2010. Serious stuff when innocent people are given the choice of either joining a criminal gang or being executed.

- A May 15, 2011 Associated Press report told how at least 27 Guatemalans were killed by assailants who in addition to killing them also decapitated most of the bodies. Police believe that these killings were related to a 2008 ambush of an alleged Guatemalan drug boss by the Mexican Zetas drug cartel. In that attack, the Zetas allegedly killed eight other people.

This activity is viewed as the Zetas' attempt to control international drug operations, not just Mexican drug operations. According to the article, Guatemala has become a major shipping point for illegal drugs headed for the United States.

- A May 26, 2011 Associated Press article reported that a gun battle between two rival drug gangs in a Mexican city left 29 people dead. The article reported that the gun battle took place along a highway and the scene was littered with fake military uniforms, bulletproof vests, hand grenades, and thousands of rounds of ammunition.

In a related story within the same article, AP reported that Mexican military troops had been deployed after another gun battle between rival drug gangs had resulted in 1,200 civilians leaving their homes to find safety in the military guarded shelters in nearby towns. This was similar to an incident last November when 400 civilians left their homes and took refuge in surrounding towns to get away from cartel gun battles.

- A May 15, 2011 Associated Press article discussed another frontier when it comes to drug smuggling. The article reports that the Mexican drug cartels have moved some of their smuggling operations into Canada which also serves as a transport place to move the drugs into the United States. This is viewed as an easier way into the country because the U.S./Canadian border does not have as much anti-smuggling resources as the Mexican/United States border.

The article explained the preferred method of smuggling, namely small planes flying low into U.S. air space from Canada, land at a multitude of small airports along the border where they are met by their partners to unload the contraband form the plane. One example cited explained the the entire unloading operation took about 90 seconds and involved the smuggling of 175 pounds of marijuana and 400,000 Ecstasy pills. The efficiency and small footprint of the operation makes it almost impossible to stop.

- But drugs are not the only things being smuggled into the United States. A May 19, 2011 Associated press report described how 513 people from South America and Central America were recently found being transported in two tractor trailers. Their destination: the United States. Each had paid about the equivalent of $7,000 to an organized smuggling ring to get into this country. The United Nations estimates that this type of smuggling is about a $6.5 billion business annually. The article reports that 95% of Mexicans now crossing illegally into America were paying smugglers to help them get across.

The more disturbing fact was that included in the 513 people were not just poor people looking for work from South and Central America. The 513 people also included Nepalese and Chinese. Who is to say that for the right price, these smugglers would not consider smuggling in Bin Laden followers into the the United States. I am sure they could afford the $7,000 fee.

- An article in the May 20, issue of The Week magazine reported that a rally was recently held in Mexico to protest both the actions of the drug cartels and the government's military-like reaction to the cartels. The article stated that almost 14,000 people have been killed since the Mexican government began using its  military against the drug cartels.

Kidnapping, refugees, unspeakable violence (e.g. decapitations), smugglers of both drugs and human beings, crooked cops, etc., certainly a defined and dangerous source of terror. And all of these incidents occurred just within the past month or so and probably does not capture all of the terror-like actions of the drug and smuggling cartels. Again, this is happening right outside our borders, both our southern and northern borders. We do  not have that geographic safety afforded to us against Islamic terrorists.

Unless the political class and the government does something soon, there is little doubt in my mind that this form of drug cartel terror will intensify within Mexico and soon spill over into our country. Unfortunately, with the 2012 Presidential election process already preoccupying every politician, the odds of this terror infecting the United States is very, very high as our politicians become more and more distracted by their own political careers in 2012 vs. our safety.

"Love My Country, Loathe My Government" proposed a serious of steps that need to be taken to solve these intertwined problems of leaky borders, illegal immigrants, and the war on drugs. In order to do a comprehensive root cause analysis, formulate the proper solutions to these problems' root causes, sell solutions to the country, and execute the plans, time and focus is needed. However, I do not believe we have the time, given the growing violence and strength of the drug cartels or the focus of our politicians, given the 2012 elections.

In order to get around these problems, I would propose the following, short term band aid fix in order to stave off this terror threat:

1. First, I would recall the tens of thousands of U.S. troops we currently have stationed around the world that are serving no strategic or military purposes. This would involve bringing home the 84,000 U.S. troops stationed throughout Europe, the 30,000 troops stationed in South Korea, the 30,000 troops stationed in japan, and the 50,000 or so U.S. troops in Iraq. Bringing these troops home would not compromise our nation's effort to counteract Islamic terrorism abroad.
2. The United States border with Mexico is about 2,000 miles long.
3. The number of troops being brought home would total about 194,000.
4. These troops would be deployed into three eight hours shifts of about 67,000 troops per shift.
5. At any one time during a 24 hour day, there would be 67,000 trained U.S. troops lined up along the Mexican border, facing south, with the mission of blocking the smuggling of people looking for work, drug cartel refugees, and contraband both into and out of the country. This would be the equivalent of putting one soldier every 50 yards along the border.
6. This type of deployment would relieve some of the U.S. border agents who would be moved to the northern border to handle the more difficult job of intercepting contraband coming in from Canada.

This would help seal our borders from illegal activity, would certainly be less costly than deploying these 194,000 troops all over the world, would not compromise our other anti-terror efforts, and would at least temporarily restrict the wealth, growth, and influence of the drug cartels.

In the meantime, the steps regarding illegal aliens, leaky borders, and drugs form "Love my Country, Loathe My Government" would be undertaken to come up with a long term solution to this problem. Long term options to be explored would include the legalization or decriminalization of drugs, increasing or decreasing the penalties for drug dealing and usage, increasing drug abuse treatment research and services, exploring how other countries deal with their drug cultures, etc.

Until our political class has the will, focus, and brains to attack these problems, we need to secure the borders from this ever growing, ever present terror threat. Failure to do so may eventually result in a 9-11-like debacle that far away terrorists unleashed on this country. The Mexican drug cartels apparently do not hesitate when it comes to murdering, butchering, and kidnapping their own countrymen, I doubt they would have any problems doing the same to any American if it served the cartel's interest.




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


Please visit the following sites for freedom:

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