Corrupt British Politcians - Minor League Vs. American Politicians

In case you have not heard, there has been a highly publicized expense spending scandal regarding members of the British Parliament. According to a February 4, 2010 Associated Press report, an inquiry into the misspending by British politicians has found that more than half of the House Of Commons members made excessive or fraudulent expense claims. Examples of these expense claims were for :

• Porn movies
• Horse manure
• An ornamental duck house
• Cleaning of a moat around a politician's castle
• A rope for a politician's flag pole
• Maid service
• Personal mortgage payments
• A luxury bed

The misspending extends beyond Parliament in that nine government ministers have already resigned because of their misspending in addition to members of Parliament who have also resigned. Law enforcement is looking into whether to prosecute some of the politicians.

This affair is sad on many levels. First, it rattles the trust that ordinary citizens have in their leaders, wasting taxpayer money at a time of economic hardship for many. Second, it took over five years for the details of the fraud to come out since since Parliament/government itself tried to block disclosure of the facts via the British court system, according to the article. The saddest facet though is that while the inquiry identified $1.6 million of abuse, the cost of the inquiry was almost $1.2 million. Thus, the net recovery for the British government will be less than half a million dollars. How an investigation of expense records could cost over a million dollars is beyond me.

However, no matter how far reaching and embarrassing the British scandal is, they cannot hold a candle to their U.S. political class counterparts. Consider the documented examples of taxpayer waste that I found listed in a fabulous website, http://www.flipcongress2010.com/:

• Alabama Senator Shelby - Earmarked $50 million of taxpayer funds for COLSA, COLSA in turn donated $400,000 to the Senator's re-election campaign and he also earmarked $1.6 million for Sikorsky and Scientific Reasearch, who gave back $4,000. Both companies do not even do business in Alabama. (Source: Bloomberg and Seattle Times)
• California Senator Boxer - Funneled $2.4 million in Federal taxpayer money to the city/county of San Francisco after the city/county gave the Senator's re-election campaign $1,000. Think about how perverted this is: city/county taxpayer money is given to a Federal member of Congress who gives back Federal taxpayer dollars. (Source: Seattle Times)
• California Senator Feinstein - The FDIC granted her husband's company a lucrative government contract to sell foreclosed property. Shortly thereafter, the Senator introduced legislation to increase the FDIC budget by $25 million. (Source: Washington Times)
• New York Senator Schumer - Earmarked $1.6 million for L-3 Communications who gave back $12,500 for the Senator's re-election and earmarked another $1.6 million for the New School For Social Research, receiving $4,000 back from the school. (Source: Seattle Times)
• House Speaker Pelosi - Earmarked $2.0 million for Sierra Nevada who donated back $1,000 for her re-election campaign. (Source: Seattle Times)
• New Jersey Congressman Frelinghuysen - http://www.freerepublic.com/ reported that the Congressman earmarked $7.3 million in taxpayer dollars for various clients of the PMA lobbyist group. Members of the group donated $29,129 to the Congressman's re-election campaign.

The list from http://www.flipcongress20102.com/ goes on forever and I will revisit it for the other tidbits of misbehavior they have gathered.

Thus, while the Brits are wasting their taxpayer dollars on such small potatoes as porn movies and horse manure, our political class takes waste to a whole other level, funneling billions of taxpayer dollars to companies in exchange for millions of dollars for their recoronation into another term of office. Something we can be proud of, our political class wastes more than yours.

Of course I joke. It is really disgusting that our taxpayer dollars are wasted so blatantly. Three steps from "Love My Country, Loathe My Government" would easily handle our waste. Step 6 would allow only individuals to contribute to election campaigns. No company, union, PAC, or lobbying firm would be allowed to contribute. Step 44 would not allow any Federal taxpayer dollars to be spent on any program that does not significantly impact residents in at least five states. Finally, Step 39 would impose term limits so that most, if not all politicians, would not have to create and grow re-election campaigns since they would not be able to run for re-election. Times are tough, eliminating waste should be foremost on everyone's mind including the political class. Being able to waste money faster than the British or any other foreign political class is nothing to be proud of.

Visit our website at www.loathemygovernment.com to order an autographed copy of the book, "Love My Country, Loathe My Government -Fifty First Steps To Restoring Our Freedom and Destroying The American Political Class" and to sign up for the cause. The book is also available online at Amazon and Barnes And Noble.

World Wide Poitical Insanity and Sanity

Lets take a break from all of the eve of destruction talk from earlier this week and look at some more lighthearted political class acts. These acts are both good and bad, and many of them will just make you shake your head in disbelief.

First, some good news. As stated numerous times in "Love My Country, Loathe My Government" and in this blog, in the ideal America, where we believe and live the basic concept of freedom, every citizen should have the exact same rights. This basic right should be independent of race, sexual orientation, education, income level, ethnic background, or current job. To come short on any of these characteristics would fall short of the basic idea of liberty. According to an article in the November issue of The Week magazine, Argentina, a heavily Catholic country, has sanctioned/legalized gay marriage, a right that has not been extended to the gay community in America. The mayor of Buenos Aires, Maurico Macri, is quoted as saying: "We have to live with and accept this reality. The world is moving in this direction." Kudos to Argentina for providing the equal right of marriage to all of its citizens.

However, all is not lost relative to the denial of this right in America, as witnessed by an article in the St. Petersburg Times from January 31, 2010. The title of the article, "Gay Marriage Advocates," lists out those prominent Americans who favor gay marriage in America. The names might surprise you:

• Ted Olsen, who was George W. Bush's lawyer during the 2000 vote recount fiasco, has teamed up with David Bois, who was Al Gore's recount attorney, to challenge the California law that bans gay marriage. One would never have thought that a Bush cohort would ever be on the correct side of gay marriage.
• Even better, consider the quote from former Vice President Dick Cheney: "I think that freedom means freedom for everyone. I think people ought to be able to enter into any kind of union they wish. Any kind of arrangement they wish."
• The wife and daughter of Republican Senator John McCain both posed for a pro-gay marriage campaign.
• Steve Smith, McCain's chief political strategist during the campaign is quoted as saying: "It seems to me that denying two consenting adults of the same sex the right to form a lawful union that is protected and respected by the state denies them two of the most basic natural rights affirmed by the preamble of our Declaration of Independence: liberty and the pursuit of happiness."
• Conservative New York Times writer David Brooks wrote an essay where he said, " We shouldn't just allow gay marriage, we should insist on it."

Thus, it appears that both here and abroad the right and freedom of gay marriage is gaining traction and may very soon become a reality. By the way, Democrat President Obama still opposes gay marriage and has done nothing to make it legal since he came to office.

Figure out this little piece of legal and political insanity from England, as reported in the February 5, 2010 issue of The Week magazine. A British government job center rejected an ad from a company who needed to hire workers (one would think that in this down worldwide economy that a hiring company would be welcomed by the government) because the help wanted ad the company posted specified that applicants "must be reliable and hardworking." The government ruled that the company could get sued "for discriminating against unreliable people." Huh?

A good idea from Canada. In an article in Maclean's by Andrew Coyne, that was summarized in the January 29, 2010 issue of The Week magazine, Mr. Coyne suggested that Canada does not need its Parliament anymore. He wondered if the upcoming two month recess could be extended to six months and if the country would be worse off for giving the political class an extended vacation, under the following argument: "It's not as if we would miss it. Parliament has become a kind of vestigial ornament, like the monarchy, beloved by nostalgists but quite without any practical purpose." He goes on to explain that votes in Parliament are always by party lines anyway so what value added do those sitting Canadian politicians provide? Mr. Coyne suggests that we just for the party of our choice, let them run things until the next election and save a lot of time and money by not having to deal with a do-nothing Parliament. Given how bad our Senate and House of Representatives have served us over the past forty years (failing public schools, War On Drugs failure, deficit spending, Social Security and Medicare heading for insolvency, lead paint on imported toys, political corruption, no national energy strategy, rising health care costs, etc.), I wonder if his somewhat tongue-in-cheek suggestion might work in the U.S?

Consider the political class ignorance reported in the February 1, 2010 issue of Sports Illustrated:

• Recently defeated Democrat Martha Coakley may have lost the race for Ted Kennedy's Senate seat when she mistakenly called Boston Red Sox hero Curt Schillling a "Yankee fan."
• Ronald Reagan welcomed the champion Boston Celtics to the White House and then proceeded to mispronounce the names of the stars on the team.
• In 1998, Ted Kennedy called Bill Clinton and Al Gore "home run kings for working families," comparing them to Mike McGwire and Sammy Sooser. Unfortunately, their real names are Mark McGwire and Sammy Sosa
• in 2004, Senator John Kerry incorrectly refers to Green Bay's Lambert field (correct name = Lambeau Field), calls to his favorite Red Sox player Manny Ortiz (no such player existed), and his all time favorite Red Sox player as Eddie Yost, who never played a single game for the Red Sox.

Reminds me of an old saying that went something like: "Better to remain quiet and thought ignorant than to speak up and remove all doubt."

Another overseas head scratcher. Reason magazine reported in its March, 2010 edition that an English bicycle shopkeeper recycles all of his cardboard that is used to ship him his bikes for his shop. He uses the cardboard to reship packages and also uses it as bedding for the chickens he raises. As a result of his earth friendly recycling habit the local town council fined him for not producing any garbage. Huh?

As I have said many times before, the material for blogs such as this will never end as long as the political class continue to speak and continue to focus on really, really unimportant stuff in people's lives.

Visit our website at www.loathemygovernment.com to order an autographed copy of the book, "Love My Country, Loathe My Government -Fifty First Steps To Restoring Our Freedom and Destroying The American Political Class" and to sign up for the cause. The book is also available online at Amazon and Barnes And Noble.

On The Eve Of (Financial) Destruction - Part 2

Today let's clean up a few loose details that we left out of yesterday's post, continuing the theme that the political class is bringing the country to the brink of financial destruction. One taxpayer benefit of the proposed budget we omitted yesterday, that is included in the Obama administration's outrageous $3.8 TRILLION budget proposal, is that single taxpayers would receive a $400 tax break and married couples would receive an $800 tax break when filing their taxes.

However, yesterday we calculated that an average U.S. household will end up paying an additional $44,000 in the four year period, starting with 2009, in order to cover the deficit spending that the Obama administration is proposing. Thus, a married couple will receive $3,200 over the same year four year period to offset the incremental tax liability and deficit liability of $44,000. Thus, each household will only to pay an additional $40,800 to cover the deficit spending, such a deal. I give you, the government $44,000, and you give me, the American taxpayer, $3,200.

If you are a Social Security recipient, the deal is even better. Each person on Social Security will receive $250 from the government in lieu of a cost of living increase this year. This benefit comes out to less than $.70 a day. Compare this $.70 a day to the increased taxes that everyone will have to pay to cover Obama's deficit spending and the high rates of inflation that are likely to occur when the deficit debt comes due, further eroding the value of that precious $.70.

More bad math from the Obama administration. The proposed budget calls for spending another $100 billion to create jobs. According to an AP article from January 31, 2010, "Formula Shows Why Its So Hard To Cut Jobless Rate," a well known economic theory, Okun's law, states that the economy needs to grow 5% in order to reduce the unemployment rate by one percentage point. According to the article, this law has held up pretty well on a historical basis when it comes to correlating economic growth to drops in unemployment. Let's do some math:

• According to a January, 2010 Bureau Of Labor Statistics report, the unemployment rate at the end of December was 10.0% which represented 15.3 million Americans.
• In order to get that unemployment number down to 9%, a simple ratio analysis tells us that about 1.53 million jobs would have to be created.
• If we divide the $100 billion by 1.53 million jobs, we find that each created job would cost about $65,000 to create.
• However, according to the article, in order to get that one percentage point drop, the economy would have to grow about 5%. Since the consensus view of most economists is that the economy will grow at about half that rate this year, the growth in jobs is about half of the 1.53 million or 765,000. This would than drive the cost of each job created to about $130,000 per job. Conclusion: you cannot expect to solve the unemployment problem with government spending when the cost of creating one job is $130,000 each.

This leads us tothe continued political class fallacy that government creates jobs. Many of these jobs will disappear once the $100 billion is spent. All the government did was take money from current and future taxpayers and spent it to create temporary jobs such as building infrastructure. They redistributed wealth, they did not create it. The economy creates jobs, not the government. The best thing the government could due is stop wasting money through earmarks, excessive defense spending, redundant and useless government operations, fraud as perpetrated through Social Security, Medicare, and other programs and siphoning off credit and capital to feed its spending frenzy, freezing out worthwhile business expansion projects in the private sector where real jobs are created. This severe reduction in government spending would permanently increase households' disposable income that individual Americans could then spend as they see fit. It's called freedom and freedom cannot exist when the government controls so much of what you earn and then wastes it like it does every day.

Let me leave you with one more depressing thought as it pertains to the deficit spending. According to the article we discussed yesterday, the one year proposed Obama budget would leave us with an new deficit of about $1.56 TRILLION. Now, if you look at the March, 2009 issue of Forbes magazine, which listed the assets of the richest people in the world, you will find that the net worth, not the net income, of the twenty richest Americans is about $340 billion. Thus, if the government confiscated the total worth of these twenty Americans, it would only pay for about 22% of ONE YEAR'S DEFICIT spending. The rest would have to be paid for by the rest of America.

Over the next ten years, according to the proposed Obama budget, the incremental deficit would be about $8.5 TRILLION. Thus, confiscating the wealth of the twenty richest Americans would only cover 4% of the incremental deficit. Of course, you can only confiscate the wealth once, one it is gone it is gone. The remaining 96%, $7.68 TRILLION would have to be covered by the rest of us. This does not include paying off the existing debt and the regular taxes. Bottom line: you cannot tax the rich, even if you take their entire fortunes, to cover this wreckless spending as some in the political class would like you to believe.

The Eve of Financial Destruction is near and with that goes the political and daily freedom and liberty we should be enjoying as Americans. Only the steps that we outlined yesterday from "Love My Country, Loathe My Government" have any chance of bringing us back from the brink along with some political fortitude and honesty from our current politicians. The steps will work, but will the politicians step up to the task? Doubtful, very doubtful.

Visit our website at www.loathemygovernment.com to order an autographed copy of the book, "Love My Country, Loathe My Government -Fifty First Steps To Restoring Our Freedom and Destroying The American Political Class" and to sign up for the cause. The book is also available online at Amazon and Barnes And Noble.

On The Eve Of (Financial ) Destruction - Part 1

One of the great protest songs from the late 1960s was Barry McGuire's "Eve Of Destruction." The song came to mind today while reading an Associated Press (AP) report describing Obama's 2011 Federal budget. His proposed budget calls for a record breaking spending level of $3.8 TRILLION and a one year deficit of $1.56 TRILLION. In other words, his budget will require the Federal government to spend 40% more than the expected tax revenue it will collect. Obviously, the government will have to borrow money from any individual or nation who will lend it to us, sinking the country's financials deeper into debt. Further, he expects the deficit to "shrink" to just under $1.3 TRILLION the next fiscal year.

Let's do some math:

• If each U.S. household had to pay for the $1.56 TRILLION deficit, the cost per household would come to about $12,000 per household. This would be above and beyond the taxes needed to cover the non-deficit portion of the budget.
• If we look at last year's deficit level, this year's deficit level, and the proposed deficit for the next two years, the political class in Washington is expected to overspend its tax collections by about $5.7 TRILLION. On a per household basis, this comes to about $44,000 per household.
• As discussed in previous posts, the Obama administration has proposed to freeze spending levels in some Federal government areas, claiming that this action will save about $250 billion over the next ten years, or about $25 billion per year. If those savings ever materialize, the $100 billion savings over four years would result in each American household theoretically getting back $769 in savings. The $769 in savings represents less than 2% ($769/$44,000) of the additional taxes that are going to be required at some point to pay for the deficit spending of Washington.
• Many U.S. household will not even save this much since Obama's budget proposal calls for letting the so-called Bush tax cuts expire when they come up for renewal.
• The cost over the next decade, according to the proposed budget, would be about $8.5 TRILLION. If you add in the $2.8 TRILLION deficits from the past year and this year. the total deficit spending of the political class could be $11.3 TRILLION or a whopping $87,000 per household. As mentioned in a previous post, the government is notorious for underestimating costs, this $87,000 estimate is probably understated.

Looks like Barry McGuire was right, he just got the cause wrong, we are on the eve of destruction. We are on the eve of destruction from a financial perspective. As the deficit gets bigger and bigger, the available credit and capital required to support that deficit will drain money out of the private credit markets. Businesses will find it harder to get affordable credit and loans to expand, stifling employment growth. As the deficits get larger, those buying the bonds to support the deficit spending will require higher and higher returns as the risk of default accelerates, causing the deficit to get bigger even faster, sucking even more capital out of the private sector. Taxes must go up eventually for everyone, not just the rich, to feed the deficit beast in order to avoid or delay a government default, taking more wealth out of the economy. With less disposable income, households will purchase fewer products and services, further depressing the jobs market.

Apparently, the Obama administration does not get it, even though they received a good kick in the pants a few weeks ago in Massachusetts. When a Republican can take over Ted Kennedy's Senate seat in a state like Massachusetts, you know the ordinary American is not happy. They are not happy about this administration's deficit spending, bailing out of banks, insurance companies and car companies, and the expansion of big government at the expense of freedom and control over their own lives.

In response, this administration continues on a reckless spending spree, still thinking that spending an additional trillion or two on a fatally flawed health care reform plan is a good idea, wasting billions of dollars on earmarks and wasteful pork barrel projects, continuing to expand our military presence around the world, and offering token spending freezes on only a portion of the Federal budget. The proposed $25 billion a year savings is less than 1% of the total $3.8 TRILLION budget. It is less than 2% of the just the deficit amount from this year. Pitiful.

What could be done to help Obama reduce the deficit? There are any number of suggestions listed in "Love My Country, Loathe My Government:"

• As we have stated previous, the U.S. currently has over 50,000 troops stationed in Germany, almost 50,000 troops stationed in Japan, and about 30,000 troops stationed in Korea. These deployments are from another age and time, we can no longer afford to garrison these types of troop levels around the world. In his Afghanistan speech, the President claimed that it costs about a million dollars a year per soldier to deploy them in that country. If we assume that the cost is less than that in non-fighting zones (say we arbitrarily reduce the $1,000,000 cost down to $600,000) then by bringing back the 130,000 troops we have just in Germany, Korea, and Japan, we could save about $78 billion a year, every year going forward. We could reduce the size of our military and focus those remaining forces where they are needed to fight terrorism. Additional savings could be found by reducing the thousands of active troops we have in countries such as Spain, England, and other European countries. (Step 30 in "Love My Country, Loathe My Government").
• One of the primary attractions of voting for Obama the candidate was his promise to get us out of Iraq as soon as possible. That promise has not been fulfilled as of today and worse yet, he has vowed to keep 50,000 troops in that country for the foreseeable future. If we go conservative and use the $600,000 estimate per year per soldier, the savings of getting everyone out of Iraq would be about $30 billion a year. (Step 30)
• We need to review all military costs we are shouldering for other nations and determine if paying all of the costs is worthwhile or cost effective. The perfect example of this type of cost savings was reviewed in an article from the New York Times that was reprinted int he St. Petersburg Times this past Sunday. It described the missile defense system that the Obama administration is deploying in the Persian Gulf to protect the world from the threat of Iranian missiles. If we are protecting the world, specifically oil rich nations in the Persian Gulf, how about we ask those nations to pay for the privilege of being protected by our missle defense system? They can certainly afford the likely billions of dollars it will cost to permanently deploy the system, why shouldn't they pay for it? There are probably hundreds of these types of programs where we pay for everything to the benefit of others. Those times are over, we cannot afford them any more.
• As mentioned in previous posts, Obama the candidate promised to keep wasteful earmarks below 2,000 per year, the same levels as early in the Bush administration. Unfortunately, the current Federal budget, that President Obama signed in the fall, has over 11,000 earmarks, wasting tens of billions of dollars every year. One way to get this problem under control is to institute a rule that no Federal spending, project, or program would be funded unless it materially affected a large number of residents in at least five states. If a program did not meet this criteria, it would not be done or it would be funded by state and local governments in the states where the project would be implemented. In this way, the Federal government would not be building farmers' markets in Kentucky, building bike trails in Michigan, or do any other wasteful programs such as these. (Step 44)
• Social Security will soon not be able to pay its benefits from the taxes it collects. Thus, fair and financially sound actions are required to get this expense stream under control. These actions should include raising the retirement age, changing the funding requirement for the program so that the program is funded as it goes (depriving the political class from raiding the Social Security trusts), and reducing Social Security benefits based on the wealth level of each American. People such as Donald Trump, Bill Gates, and Warren Buffet are too wealthy to receive a monthly Social Security check. In order to keep the system and its financials solvent, benefits for the wealthy should be cut to provide for those that are not wealthy (Steps 10, 11, 12)
• Benefit and retirement perks for future Federal employees need to be reduced. Since most Americans do not currently get both a pension and access to a 401k retirement plan (in fact, many, many Americans have access to neither), it is not fair for future Federal employees to get both. Thus, the Federal employee pension system should be phased out over time with new employees having access only to a fair 401k type retirement option, putting them on a par with most other Americans. (Step 9)
• Every government agency needs to do a ground up review of all of its expense lines and programs. Many Federal programs take on a life of their own even when their original purpose has disappeared. There is great redundancy across multiple Federal entities that could be reduced along with the corresponding budgets. We need to do a basic business and functional analysis of all government functions, giving each department and agency an aggressive budget reduction (say 10% a year for five years) in order for the hard cuts to be made in nonessential expenditures. (Step 1)
• Rather than increase funding by deficit spending, the Federal government needs to self fund itself by wringing fraud out of the big programs such as Social Security and Medicare. If you are losing dollars from fraudulent activities, increasing spending is likely to increase the waste lost to fraud. An investment in additional policing resources for Social Security and Medicare should pay many dividends in government spending savings. (Step 5)
• An independent panel, without politicians and without lobbyists, needs to be formed, and staffed by smart Americans like we did with the Manhattan Project, the Apollo space mission, the military base closing commission, etc., which would take a comprehensive look at how to reduce the escalating health care and Medicare costs, currently about half a trillion dollars a year. The past year has proven that the political class is incapable of creating fair, effective, and cost reduction national health care legislation. (Step 28)

The above nine ideas would go a long way to getting the Federal budget under control. I am sure that other, smarter people could come up with many other smart, insightful ideas for getting the government's growth contained. Unfortunately, no one in the political class has shown the bravery to tackle such a task, leaving us all on the "Eve Of Destruction."

Visit our website at www.loathemygovernment.com to order an autographed copy of the book, "Love My Country, Loathe My Government -Fifty First Steps To Restoring Our Freedom and Destroying The American Political Class" and to sign up for the cause. The book is also available online at Amazon and Barnes And Noble.