The States Are Succeeding Where Washington Continues to Fail Miserably, Part 1

We are always pointing out the the overwhelming and wasteful spending of the Federal government and the Washington political class have us on a debt trajectory that will likely crash the financial stability of the Federal government, our economy and our freedoms in a relatively short time frame unless government spending and waste can be brought under control. Just in the seven plus years of the Obama administration, the national debt has grown about $8 TRILLION and 80%. By the time Obama leaves office, his administration will likely have incurred debt levels equal to ALL previous Presidential administrations COMBINED.

This debt accumulation cannot go on forever. The best illustration of how bad it will become and how soon it will happen is shown by the following chart from the Cato organization. Keep in mind that according to the White House budget website and spreadsheet, Federal government tax revenues in 2017 from all sources is expected to be just under $3.755 TRILLION:



A few observations:

• According to chart, by 2017 the Federal government will spend just over $2 TRILLION just on these three government programs.
• This is a whopping 55% of the entire Federal tax stream.
• This leaves only 45% of the tax stream to pay for the rest of the current Federal government’s activities including military, transportation, housing, food stamps/assistance, education, border patrol, etc.
• But it gets worse. If we assume that the Federal government’s tax stream grows 3% a year, the long term average growth in GDP, then by 2025 the Federal tax stream would be about $4.757 TRILLION.
• Cato estimates that by 2025 these three programs will pay out $3.337 TRILLION which will eat up a whopping 70% of the Federal government revenue stream.
• And this is probably a low ball estimate since the Washington political class has not shown the ability to grow the economy by at least three percent for at least the length of the Obama administration.

Despite this reality, there has been no trace of the ability or willingness to do something about the situation from Washington politicians. No discussion, no debate, no policy proposals, nothing. Nothing on how to change what is being done now, nothing on how to cleanup the massive amount of fraud and inefficiencies in these programs, etc. 

Of course, Washington will likely at some point say that higher taxes, rather than reduced spending and the eliminating of criminal fraud and waste, will resolve all of the problems illustrated above. The problem with that approach is two fold:

• The more Americans are taxed, the less they have to spend and grow the economy. As economic growth slows down as the tax burden increases, the Federal government tax stream starts to slow down or actually decrease, leaving us exactly where we were to start with.
• Second, increasing the tax burden decreases the amount of freedom that Americans deserve and desire. You cannot have political and real freedom without financial freedom and as the tax freedom day gets further and further out each year, that restriction on the amount of our earnings and wages we can keep further restricts the amount of everyday freedom we can enjoy.

If all of this sounds pessimistic and fatalistic to you, than you are getting it. Obviously, Washington politicians are not getting it even when such harrowing numbers and realities are right in front of their face.

But let’s try to stay optimistic today and tomorrow. Believe it or not, there actually are politicians in this country that are trying to get our of control government spending and entitlements under control. Unfortunately, none of them are in Washington. They are scattered across the country in state government positions who realize that the wasteful government spending and gouging of taxpayers has to be brought under control soon or the entire economy, financial stability, and freedoms of the country will implode.

Today and tomorrow we salute their brave efforts in this area and hope that somehow their efforts eventually take hold in Washington.

1) Georgia politicians have a simple solution to waste and fraud in their welfare programs: simply arrest and prosecute those that are abusing and stealing from the program. Specifically, in that state authorities are actively pursuing criminals who illegally obtain food stamps and then trade them for cash from crooked store owners, never using the food stamps to feed a hungry family or child.

Recently, 54 people there were arrested for opening grocery stores that cater to food stamp and welfare recipients. The primary purpose of these new stores was not to sell food but to illegally exchange food stamps for cash. Ninety other people were arrested for using these stores to commit food stamp fraud.

Pretty simple stuff: abuse the programs designed to help the poor and you will get arrested. So simple and yet Washington politicians have no programs like this to go after welfare abusers across the country.

2) But Georgia is certainly not alone in cracking down on fraud in its programs that are supposed to help the poor. According to an article on the Heritage Foundation website by Sara Jones from November 17, 2015, the state of Michigan reduced its welfare population by an amazing 70% over a four year period. The article also reported that:

• In 2015, the number of state welfare recipients receiving cash assistance from the state government dropped to 64,492 people.
• As recently as 2011, there were 227,490 welfare recipients in the state.
• Part of the reason for the successful effort to drop the number of welfare recipients is that the state began enforcing a 48 month LIFETIME limit for its cash assistance program.
• According to a government spokesperson: “As the governor said at the time of the decision to enforce time limits, this was returning cash assistance to its original intent—a transitional program to help families as they work toward self-sufficiency while preserving the safety net for families most in need.”
• This enforcement of the time limit was coupled with a job placement effort to help those get off of welfare and become contributing members of society vs. parasitic members of society.
• Rachel Sheffield, a policy analysts at the Heritage Foundation summed up how the Michigan program should be a model for the rest of the  country including Washington when it comes to welfare: “Welfare should promote self-sufficiency for able-bodied adults. A crucial aspect of achieving this goal is a work requirement: Able-bodied adults should be required to work, prepare for work, or look for work in exchange for receiving assistance. Welfare is available for those who truly need it,” she said, “but the ultimate goal is self-sufficiency.”

Self sufficiency, not life long dependency, isn’t that what any welfare program should always be? Compassion to help those get over a rough patch vs. a way of life. That philosophy has taken root in Michigan with outstanding savings for state taxpayers without forcing people to starve to death.

Fixing government program and making them effective, efficient, and fraud resistant can be done, saving taxpayers money and citizens’ dignity in the process. Michigan and Georgia are already doing it successfully. 

Tomorrow we will highlight other states that are doing it successfully with the hope that Washington eventually takes notice and does it successfully. Failure to teach Washington will make the above financial picture from Cato a more likely scenario, with the dire consequences associated with it more likely.

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:

Term Limits Now: http://www.howmuchworsecoulditget.com
http://www.reason.com
http://www.cato.org
http://www.bankruptingamerica.org
http://www.conventionofstates.com
http://www.youtube.com/watch?v=08j0sYUOb5w

June, 2015, By The Numbers: A Woeful Economy, Long Term Fnancial Ruin, The Economic Anchor That Is obama Care and MOre

On a regular basis we review the latest numbers and statistics as they appear in the real world to find out what reality is. You see, you cannot listen to American politicians to find out what is going on. They have a vested interest in keeping the truth and reality out of sight, given how poorly, selfishly, and greedily they act and perform.

They will either ignore numbers and facts or distort them, anything to keep us from finding out what they are hiding from us and what it means to them personally. I once worked for a manager whose favorite saying was: “there is nothing more devastating to an opinion that the right number.” In this series we examine those “right numbers” to show how poorly we are being served by what has to be the worst set of politicians ever to serve the country.

So here we go, no spin, no political BS, just the numbers and the usual sad political, financial, and economic reality they represent:

1) As we have proven any number of times, we have had to live through the weakest economic recovery in the past few years than any in the past century or so. This is all due to the fact that Washington politicians have no concept of how to implement sound economic policies that encourage economic growth. The latest government statistics on the economy show that we cannot expect anything different into the near future:

• The Bureau of Economic Analysis recently their final view on the annual economic growth in the first quarter of 2015. Although their new forecast showed slightly better economic conditions, their view is that the economy is still contracting. Rather than estimating a .7% contraction in the first quarter, they now estimate a .2% contraction.
• The nation’s whopping trade deficit subtracted 1.9 percentage points off the GDP in the first quarter as export levels are way down and cheaper imports increased. Obviously, as exports drop dramatically, the jobs that rely on exports will become more and more endangered.
• Business investment shrunk by 2%, the worst performance since 2009, indicating that manufacturing jobs will also be difficult.

So despite spending over $800 billion on a failed economic stimulus program, despite living through an energy revolution that kept energy costs under control, and having the Fed printing trillions of dollars in false money, the Washington political class still cannot find a way to lead the country to a normal economic growth trend, leaving us stuck with anemic economic conditions and numbers.

2) Investor’s Business Daily recently reviewed the latest catastrophic condition of the country’s national debt situation, as estimated by the Congressional Budget Office (CBO). Unless we start forcing our politicians to have any kind of financial discipline, this is what the sad future economic numbers and condition of the U.S. looks like:

• The CBO view is a 25 year forecast based on current trends.
• The Investor’s Business Daily concluded that the findings are terrifying with the latest CBO estimate showing a whopping $7.4 TRILLION being added to the current level of $18 TRILLION of national debt.
• If Washington does not change its spending ways, the national debt will almost triple by 2040 to a horrifying $54 TRILLION.
• Since this would put the national debt at multiple times larger the the nation’s annual GDP, it is highly likely the economy and the country will collapse long before the $54 TRILLION level is reached.
• This type of debt will cause Washington politicians to raise tax rates to pay off the ever rising debt which will result in lower economic growth and tax streams which will result in lower tax revenue which will result in higher tax rates…..
• At the same time, as the debt grows out of control, investors of U.S. government debt will require higher and higher interest rates which will also add to larger debt to cover the higher interest rates which will require higher tax rates….
• At some point the majority, if not all, of the tax revenue goes solely to paying interest payments on the debt which eliminates funding needed for defense, infrastructure, human needs, etc.

But as we said above, if the CBO numbers are right, the country will collapse long before funding for other government functions dries up.

3) We have often pointed out that criminal elements often take advantage of inept Federal government programs, bureaucrats, and politicians to steal taxpayer wealth from the Social Security program. Well, according to some recent inspector general findings and numbers, we do not need criminals to waste taxpayer wealth via Social Security:

• A recent inspector general report found that over a ten year period, the Social Security Administration (SSA) overpaid benefits to 44.5% of its beneficiaries.
• “Our review of 1,532 beneficiaries in current pay status as of October 2003 found that over a 10-year period (from October 2003 through February 2014), SSA assessed overpayments for 44.5 percent of sampled beneficiaries.” 
• This translates into 4 million beneficiaries getting an extra $16.8 billion from the American taxpayer.
• The SSA did eventually recover $1.8 billion in those overpayments but that amounts to only a little over 10%

Fraud and incompetence is still alive and well throughout Washington as these Social Security Administration numbers point out.

4) We have discussed other sources of this type of analyses before but let's look at what the Congressional Budget office says would likely happen if Obama Care was repealed:

• The latest CBO says that repealing Obama Care would boost annual economic growth by an average of .7%. 
• If correct, such a boost would get annual GDP numbers back almost inline with historical averages, way above the anemic economic recovery the Obama administration has crafted.
• "CBO has determined what many in Congress have known all along," Republican Senate Budget Committee Chairman Mike Enzi of Wyoming said in a statement. "This law acts as an anchor on our economy by dragging down employment and reducing labor force participation."
• Based on the CBO's most recent economic projections, this additional economic growth amounts to between $100 billion and $200 billion in today's dollars.
• This economic growth is mostly driven by the fact that with Obamacare in place, some people face incentives to work less because they might lose subsidies or credits if their earnings rise. Removing those incentives leads to more hours worked and more jobs.
• Another factor is that repealing some of Obamacare's taxes would cause businesses to invest and grow more.

Those are the latest insane numbers out of Washington. Obama Care is stifling economic growth (no secret here based on the multiple analyses we review every month in our “unfolding disaster that is Obama Care” series), Social Security continues to give away taxpayer money it should not be giving away, long term we are heading ever faster to a fiscal and financial disaster that we will never recover from, and short term,our economic prognosis continues to look tepid and weak. Have a good day.

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:

Term Limits Now: http://www.howmuchworsecoulditget.com
http://www.reason.com
http://www.cato.org
http://www.bankruptingamerica.org
http://www.conventionofstates.com
http://www.youtube.com/watch?v=08j0sYUOb5w

November, 2013 Pollitical Class Insanity, Part 3: Losing Guns, Let Them Drink Water!, More Failed Economics, and More Insanity

Our review of the latest political class insanity continues today, the third post this month to cover the lunacy. Much of the latest craziness from the political class has been focused on the unfolding disaster that is Obama Care, craziness we will get into next week. But there is more than enough of other idiocy to keep us busy this week.

1) We have often made the case that those in the Washington political class are completely out of touch with the reality of America, that they are living in a “Hunger Games” world where much of America suffers while those inside the Beltway celebrate, ignorant or non-considering of those outside the D.C. area.

That situation was driven home again this past September 11, the anniversary of the 9-11 terrorist attacks that killed almost three thousand Americans on our own shores. Rather than join in the day of remembrance activities around the country, rather than share in the grief and sorrow of those that died or were severely injured that day, First Lady Michelle Obama thought it would be a great time to announce her latest idea, "New Effort To Encourage Everyone to Drink More Water." 

She held a formal press conference on September 11 to unveil this plan, diverting attention and support from those that were grieving the anniversary of the 9-11 attacks. She couldn’t wait a day, she had to have the attention on herself on this solemn occasion. Pathetic.

2) Senator Max Baucus, an original avid supporter of Obama Care, correctly called it a train wreck earlier this year, an assertion that has proven correct. However, there is an actual train wreck of a program going on in California, a plan that is  supposed to link the San Francisco area and the L.A. area with a high speed rail line.

But according to a recent Associated Press article from October 20, 2013, things are not going well with that effort either:

• Local opposite to the effort has grown, given the now better known impacts that the lines construction will have on local farms and communities.
• While voters in 2008 approved $10 billion in bonds to start construction on an 800-mile (1,300-kilometer) rail line to transport passengers between San Francisco and Los Angeles, the price tag has fluctuated wildly, from $45 billion in 2008 to more than $100 billion in 2011 and, now, $68 billion.
• The original plan and hype is that the rail line would be able to move people between San Francisco and L.A. in 2 hours and 40 minutes. But political and financial compromises have caused officials to scale back plans which now mean trains will be forced to slow down and share tracks in major cities, making it  no longer a “high speed” rail line that was promised to the voters when it came up on the ballot, just another typical rail line.
• Former chairman of the California High-Speed Rail Authority, Quentin Kopp, has turned against the current project, saying in court papers that it "is no longer a genuine high speed rail system."

And given that the line is not supposed to be completed until 2029, sixteen years from now, who knows how much the final cost will be and who knows how much technology will change by then. For all we know we might have personal jet packs or super efficient Jetson’s-like private planes to shuttle us between metro areas while the California taxpayer is paying off an obsolete and probably under used transportation rail system.

As with just about every other American political class program, its cost was underestimated, its benefits were over promised, and its timeframe was never met. Again, pathetic performance, this time of the bait and switch genre.

3) Earlier this month, the Federal government entered into lock down mode due to a failure of the political class to pass a budget. Federal workers were furloughed and visitors to national parks and monuments were denied admission. Serious stuff and a serious embarrassment to the White House and Congress in front of America and the world.

What was President Obama doing during this crisis? First, according to an article by the Associated Press on October 4, 2013, he was being interviewed on his opinion on whether or not the NFL’s Washington Redskins should change their team name.  Actually took time out of his working day to weigh on this matter while the government was in shutdown mode.

Second, according to the Facebook page of well known photographer Tony Powell, the President took time off from whatever his schedule was on October 2, a few days into the shutdown, to have a photo session with Mr. Powell.

How do we know this? Well, Mr. Powell posted the final, new photo of the President on his Facebook page two days later for all to see and comment on. Yep, parks are closed, Federal workers unpaid, over 20 million Americans unemployed or underemployed, national debt is skyrocketing, Obama Care is about to implode, Iran and Israel are getting nasty, drug cartels are getting established all over the country, etc. and the President somehow found time to get a formal portrait photo taken and to discuss the dire situation with the name of the Washington NFL team. A pathetic set of priorities.

4) We have made fun, and backed it up with data and realities, any number of times in this blog, when reviewing the epic failure that was Obama’s $800 billion economic stimulus program. Now, based on unbiased analysis by the International Monetary Fund (IMF), we have another analysis that proves our point:  

• IMF analysts looked at data covering 194 different countries’ economies from 1988 to 2011.
• They found “robust evidence that public employment crowds out private employment.”
• Overall, they found that spending government money such as for economic stimulus usually wipes out one private sector job for every public sector job generated and thus does not provide a net gain in either employment or economic growth. All it does is waste money and add to a nation’s debt load.
• This finding is consistent with other studies of Obama’s economic stimulus program which found that almost all of the reduction in unemployment levels associated with public spending came via increase government employment rather than private employment.

This latest analysis just drives home the basic reality again, namely that government policies usually do not create incremental job growth and economic growth, the private market creates jobs and economic growth. This lesson continues to be lost on the Washington political class.

5) Reason magazine, in its October 2013 issue, reported on a dangerous embarrassment to the Federal government, namely that the government had lost track of over 1,000 guns, and probably a lot more, that were in their possession:

• Working off an anonymous tip that the U.S. Park Police had lost possession of many weapons, the Inspector General of the Interior Department launched an inquiry.
• The inquiry verified the reality of the tip, reporting that the Park Police record keeping was so bad that it was actually not possible to even figure out how many weapons had gotten lost or stolen.
• The audit also found that about 1,400 guns had no official status within the Park Police records.
• Almost 200 weapons that were supposed to have been destroyed were instead stored away but not inventoried.
• On Park Police officer who was working a the Presidential inauguration had simply taken a government issued rifle home with him one night.

These are the same type of government bureaucracies that want to put gun control efforts and laws in place but are so incompetent that they cannot even keep track of their own guns, never mind the nation’s guns. Pathetic.

6) Many well informed Americans, unlike the Washington political class, are scared to death at the record amount of debt that the Federal government has accumulated, especially during the Obama administration where annual deficit spending over one TRILLION dollars a year was the norm, not the exception. 

Our current national debt load just passed $17 TRILLION or about $54,000 for every man, woman, and child in the country. A very dangerous and scary number, that must be reined in soon or at some point the debt load will crash the dollar’s value, our economy, and our liberties.

But according to a new study by the National Bureau of Economic research which was done by economist James D. Hamilton from the University of California, San Diego, the $17 TRILLION is child’s play when compared against the real Federal government debt load. You see, the $17 TRILLION is today’s debt load, passed on promises the Federal government made to its Treasury bond holders in the past.

This study takes this past incurred debt load and adds it to the future debt obligations of the Federal government. These are estimated payments and promises that the Federal government, and the Washington political class, have made into the future. These debt promises include payments for :

• Social Security
• Medicare
• Medicaid
• Guaranteed housing
• Education loans
• Bank deposit insurance
• Civil service pension obligations
• Military pension obligations

According to the study’s findings, these so-called off balance sheet commitments, will require American citizens to pay off the whopping $70 TRILLION that the politicians in Washington have promised for these programs. This is almost four times as much as the debt load that Washington will admit to, as you can see that debt is really so much higher.

Now, that $70 TRILLION will not all come due in one year. The article does not give the $70 TRILLION timeframe but lets’ make a few simple assumptions and say it is over the next 50 years. This comes out to about $1.4 TRILLION a year. For simplicity, lets also assume the population of the United States stays the same as it is today. 

If we divide $1.4 TRILLION by the population of the U.S., we see that every citizen would ANNUALLY have to pay a tax of just over $12,000 a year just to cover these Federal government commitments.

A twenty year old citizen today who lived for the next fifty years would have to pay over $608,000 during that timeframe to pay off this debt. If we assume that the population will actually grow over the next fifty years, the individual debt load would go down but I bet it would still be well over $500,000, given the relatively slow growth of the nation’s population. Ridiculous numbers, insane numbers but the math does not lie. $70 TRILLION.

Why have we not heard about this God awful number sooner? Because unlike every business in America that has to list their future obligations in their financial statements and tax filings, the Washington political class exempted themselves from his requirement of every other American in order to make the debt crisis look better than it actually is (as if $17 TRILLION was not bad enough). Trickery and lies form the political class, who would have thought.

This is what makes citizens like Tea Party members so crazy and insane, we are almost drowning in debt and taking on more and the Washington political class either is not smart enough to figure out we are in crisis or does not want to do anything about the crisis. They are getting theirs today and will probably get theirs for the rest of their lives, having little concern about future generations of Americans or the country they are supposed to be protecting. Again, pathetic.

As we said a few days ago, a lot of the political class insanity is now being funneled and focused into the unfolding disaster that is Obama Care. We will cover that lunacy next week. Over the past three posts we just wanted to make sure you knew that your political class across the country was still on the job, screwing things up from fictitious balance sheets, to skyrocketing debt to silly high speed rail lines to losing guns to getting their picture taken to…….

Remember, you can help stop the insanity by joining our term limits effort at:

www.howmuchworsecoulditget.com

More November political class insanity tomorrow.

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:

Term Limits Now:http://www.howmuchworsecoulditget.com
http://www.reason.com
http://www.cato.org
http://www.robertringer.com/
http://www.youtube.com/watch?v=08j0sYUOb5w