Progressives are a funny group when it comes to investing, and I mean real investing, not the phony code word for spending. If they’re the ones controlling the money and especially if the money is not theirs, then investing is fine. If it will compete with one of their sacred social programs and you will directly benefit from it, then bar the door it’s an out of control casino.

The Big Ponzi Scheme

Yes, I said it. Social Security is a Ponzi scheme. I wrote about it that way in my book Liberty’s Lifeline, and I was happy to welcome some straight talking from Rick Perry on the same subject. If not run by the government, anyone who ran something like Social Security privately would be in jail, just like Bernie Madoff. The difference between Charles Ponzi or Bernie Madoff and Social Security, is that Ponzi and Madoff had to get people to volunteer their money to the scheme. With Social Security, the government just takes it.

That being said, let’s all agree that we can’t just abandon it. Those who are receiving benefits today and those who are within ten years of receiving benefits, must be protected. We allowed this scam to continue this long and our seniors planned their retirements around it. We cannot allow the rug to be pulled out from under them. But what about the next generation and those after them?

The best plan for going forward is private retirement accounts. The money put into the accounts by the next generations would be their money. They could leave it to their heirs if they don’t live long enough to collect it. If they invest wisely, they could probably live off the income alone and pass the principle to their children which would make saving for their retirement easier. This would have a compounding effect and work toward solving the retirement income problem completely, and privately.

“Invest, did you say,” the progressive asks, “in what? Not the stock market, of course!” Despite the growth through investing in stocks over the long-term is proven as one of the best investments, the progressives will scream, “What about 1929!!! What about 1987!!! Did you forget the dot.com bubble!!! Are you insane!!! It’s a casino, a crap shoot, legalized gambling.” What they are really saying is how will we control the senior vote if they are not fully dependent upon us? If private accounts take hold, the account holders will look for government policies that allow private companies to thrive, which is exactly what progressive policies don’t do.

So progressives don’t believe in investing in stocks, right? Not so fast.

Investing you Can Believe In

If progressives can take your tax dollars, and invest in companies funded by big campaign donors, that push forward their progressive agenda, they think investing is swell. If the investment turns out to be terribly bad, don’t expect to hear many “I told you so’s” from the left. You won’t hear about gambling, casinos, stock market crashes. No, it is about leadership.

That’s what they are saying about squandering $500 million taxpayer dollars on a bad investment called Solyndra, a maker of solar panels that filed for bankruptcy just one year after getting that pile of taxpayer cash. Evidence is leaking out that the green jobs agenda came before stewardship of our tax dollars. There appears to have been White House pressure to push this through before a politically staged photo opportunity for this administration. Oh, they are furiously backpedaling now, working on a timeline to blame it on Bush, naturally, but the stubborn fact that keeps getting in the way is that the Bush administration put a hold on it saying there wasn’t enough information to approve it. Then Obama happened, and it was all systems go.

I noticed that GM stock is trading at around $22.60 per share today. It has to climb to around $53 per share for us to break even on that investment that we positively, absolutely had to make. How’s that Chevy Volt doing? You know, the one that we subsidize to the tune of $7,500 per copy, because you can buy two Toyota hybrids for the cost of one Chevy Volt. Meanwhile, Ford, which turned down a bailout is doing well.

Our government takes our money for the Social Security trust fund and immediately spends it, but progressives tell us how foolhardy it would be to save for our own retirement. If you pay into Social Security all your life but die before you can collect any money, oh, so sorry.  But take more of your money and invest it to protect their union supporters, and campaign bundlers  and that’s okay.

Solyndra’s chief investor, George Kaiser, was also a bundler for Obama’s 2008 campaign, gathering over $50,000 in campaign contributions. Kaiser, together with Solyndra executives and board members, donated $87,050 to Obama’s campaign.

Is your blood boiling yet? There comes a point where you have to ask when does the mere incompetence end and criminal activity begin? While President Obama is jetting around the country trying to sell us on another jobs plan that is all about public sector employees, perhaps we should be looking to do something else.

How about we say goodbye to TurboTax Tim Geithner? He has failed miserably at his job. He should be fired. Next we should start a criminal investigation into the Energy Department people who pushed through this loan to Solyndra and then start a similar investigation over at the Justice Department regarding running guns to Mexico under the Fast and Furious program.

So if you want to invest your own money in some blue chip stocks to reduce your dependency on government programs and build a nest egg that you control and own, that is dangerously reckless. If you want to invest millions in a start-up company making heavily subsidized products, that is on the brink of bankruptcy, to pay back your fundraisers, that’s A-OK. It is time to start getting serious with what is going on in Washington and really clean house.

That’s my opinion; I’d like to know yours; Please comment below.

How many times are we going to hear asinine comments like the following from Zack Burgess at the Philadelphia Tribune?

After Monday’s debates it seemed at times as if the GOP was focused on bashing the president vs. dealing with the problems that face the country. At this point I would like to hear from  presidential scholars, people within the GOP and the Democratic party about how the next nominee from the GOP will run their campaign. Does the GOP have a plan? Or will their platform be solely based on bashing the president? It really didn’t look as if they had an answer for high unemployment, a stalled economy  and soldiers bogged down in Afghanistan. And believe me, I’m not taking the president off the hook, but I want to know about the  GOP and where they seem to be going, because right now it doesn’t look like they have a clear strategy or answer…besides bashing the president. Is this strategy going to work? Most times it doesn’t. Your thoughts. Zack Burgess Enterprise Writer The Philadelphia Tribune

Let me try to explain it so that even Zack Burgess can understand it. The problem, my friend, is in Washington not out among the everyday folks. The Republicans, unlike your fellow travelers, do not think they are smarter than 340 million of their fellow Americans such that they can command and control the economy, like some Soviet politburo which, by the way, couldn’t do it either. This economy is recovering, far more slowly than it should, not because of Obama’s policies but in spite of them.

This administration has thrown more monkey wrenches into the economy than I thought existed. The housing market? It is still in the tank because the administration is trying to micromanage everyone’s mortgage. Get the hell out of the way, let the market find a natural bottom and it will resume its historical 3.5% per year growth rate. Unemployment? Stop throwing program after program on small and medium businesses so that they have no idea what it will cost to hire the next employee. That includes ObamaCare, Dodd-Frank, cap and trade, card check, QE2, subsidies for green energy, Chevy Volts. Stop throwing away money on stimulus that did not work, and if you don’t believe me, ask your president what a shovel ready project is. The stimulus was one big, massive, porkulus bill to pay off supporters with taxpayer dollars, e.g., public sector unions. Remember, in selling the stimulus program we were warned that if nothing was done, unemployment would rise to 9%. So, by that very definition the stimulus program made the problem worse than if we did nothing.

President Obama is the most inexperienced person ever elected to the office. He is so clueless he thinks ATM machines are the reason we have high unemployment. Shall we return to to using quill pens?

So here is what the Republicans stand for. We are spending too much money. Stop it. We are putting too many programs on small and medium businesses such that they cannot calculate the cost of hiring, so they are not hiring. Stop it. We have public sector unions who are bankrupting state and local governments and it cannot continue. Stop it. Businesses have trillions of dollars overseas that they don’t want to bring back because if they do, a very large chunk of it will go right into the government spending machine. Stop it. We have program after program in Washington that has no basis of authority in the Constitution (Article 2, Section 8). Stop them.

Mr. Burgess seems to believe that if you don’t like his massive government program, you have to show him your massive government program. He doesn’t seem to grasp the idea that massive government programs are the cause the problem. It wasn’t deregulation that caused the financial crisis, it was everyone following the government’s lead to have every Tom, Dick and Harry own a home whether they could afford it or not, and if you stood in the way, the government was going to steamroll you, paint you as racist, or otherwise destroy you. The government took the lead and Goldman Sachs, Lehman Brothers and others dutifully followed along.

The plan and the strategy of the Republicans is to cut government down to size. Limit it to the authority granted by the Constitution, stop running ponzi schemes that would make Bernie Madoff blush, and get spending under control (see Paul Ryan plan). I guess what confuses people like Mr. Burgess was that all seven candidates at the debate seemed to agree on this. The idea is to grow this great economy, not try to micromanage it by picking winners and losers.

As former New York City mayor Ed Koch once famously said to a reporter who kept asking him the same question, “I can explain it to you. I can’t comprehend it for you.”

That’s my opinion; I’d like to know yours. Please comment below.

It wasn’t long after the Paul Ryan budget was released that the disinformation Democrats began trumpeting seniors being starved, being unable to afford health care, and the usual demogogic scare tactics. But doctors are dropping coverage, the key slices of the pie above are growing much faster than inflation, and the Democrats have no plan other than the age old cut benefits (reimburse doctors less) and increase taxes, just enough to kick the can down the road for someone else to deal with. Congressman Ryan had the guts to come up with a plan to actually fix the system by giving seniors a choice and they seem to like the idea. Why?

Obama wants to have yet another commission that will experiment with different ideas and basically control and dictate medicine from Washington. Experiment? Isn’t that the concept behind federalism? Let the fifty different states experiment with solutions that work for their population and geography. But a centralized bureaucracy? How can that experiment without wildly jumping from idea to idea and dragging all of us along with it?

Seniors know what government bureaucracy looks and feels like and they don’t want it to the power of ten. The idea that they could actually control their medical care and not run into some bureaucrat with a clipboard who says you can have this, you can’t have that.

Ryan is being honest with the American people that Medicare is heading for the rocks and a change in course is imperitive. The other point that must be emphasized before the main stream media drowns it out is that seniors, those over 55, will see no change the in status quo. What exists today will continue to exist. So don’t start pricing cat food to see how to fit it into grandma’s diet.

But what is it with this administration and the left when it comes to private enterprise. What is the love affair with the government and the antipathy toward greedy private business? If your life depended on getting a letter delivered tomorrow, who would you turn to, the post office or Federal Express? Who would you rather get a letter from Wells Fargo or the IRS? How many organizations in the book In Search of Excellence are private enterprises and how many are government agencies? We have Securities and Exchange attorneys looking at pornography on their computers all day instead of catching Bernie Madoff; we have air traffic controllers asleep on the job instead of privatizing the whole thing like Canada did. Wake up, America, and realize that life could be a lot better, and you could be a lot wealthier if we took more out of the government’s hands than making Washington bigger and more powerful.

That’s my opinion; I’d like to know yours. Please comment below.

Trailing his two challengers for the Republican nomination for Congress in New York’s First Congressional district, George Demos appeared to have scored a major coup by landing the endorsement of Rush Limbaugh.  As Demos puts it in a last minute letter, “I am so humbled that Rush Limbaugh, our nation’s leading Conservative voice, has endorsed our campaign.”

When I got the robo-call, I was stunned by the endorsement and went to Demos’ website to see or hear it firsthand.  I found a five minute clip of Rush and although he talks about George Demos, the word “endorse” never crosses his lips.  So who is George Demos?

George Demos was one of the first candidates to challenge the incumbent, Democrat Tim Bishop. But after a few early television ads, his campaign seemed to go quiet.  A new entrant, Randy Altschuler,  hit the airwaves with  a number of ads tying Bishop and his voting record to Nancy Pelosi’s.  Altschuler ran an issues based campaign and was soon endorsed by the Conservative Party of New York State.  He is pro-life and has the support of former NYS Right-to-Life Director Bill Doyle.  He also signed the American’s for Tax Reform, “Taxpayer Protection Pledge.”

Also in the campaign is the grandson of Richard Nixon, Christopher Cox, and it seemed like the battle was between Cox and Altschuler.  As the primary day neared Demos came back into the fight.  Oddly, considering today’s economic climate, Demos’ returning campaign theme seemed to be, “I’m pro-life and they’re not.” 

On his website, Demos touts his experience as an SEC enforcement attorney, fighting white collar crime and Rush mentions that in his video clip.  The odd thing is that Demos mentions being on the Bernie Madoff prosecution team, at the SEC.  It was the SEC that refused to believe it when Harry Markopolos tried for nine years to convince them that Bernie Madoff’s filings with the SEC were mathematically impossible, but he was ignored.  It’s not as if Demos cracked the case.  Demos later came under investigation for violating SEC rules for outing a whistleblower and resigned from the SEC shortly thereafter. 

The issues section of his campaign website are lightweight.  Here is a sampling of his position on cutting wasteful spending, “The government continues to spend taxpayer money on bloated projects and wasteful new programs. Congress promised the “stimulus” bill would create millions of new jobs, but now all we have are higher taxes, more unemployment, and mountains of debt.”  Both Altschuler and Cox have signed the Contract from America, while Demos has not.

So, where’s the endorsement?  In the video, Rush reads a letter that Demos wrote to him in 1995 and referred to Demos, proudly, as a real “Rush baby.”  It was a flattering letter about what a great job Rush did in helping the Republicans take control of Congress in 1994.  He mentions that Demos is opposed to the Ground Zero mosque, but he goes on to say that the “DC GOP sent a bunch of people in to run against him.”  The interesting thing is that Randy Altschuler is the only one of the three candidates who lives in the First Congressional District.  He has lived in his current house since early 2009 where he moved to from a nearby town, so it is an odd characterization from Rush that they “sent in” the only guy that already lived there.  Demos lives on the border of the district and Cox lives in Manhattan.

So what does Demos do?  He takes this video from Rush on the eve of the weekend of 9/11 and turns it into an endorsement and then queues up robo-calls announcing the endorsement, to blast out over the weekend and the day before the primary to try to overtake the leaders.  I don’t know how well Rush checked out Demos’ story or if he was just so taken with a “Rush baby” running for Congress that was hoping it was all true and that Rush could give him a lift, but it seems as if Mr. Demos is trying a primary eve Hail Mary.

President Obama wants to have it both ways.  He wants to appear to be fiscally responsible and he knows that to do so, that something has to include Social Security.  However, to try to keep as many Democrats in office that he can he has to play that other favorite card of the Democrats, that Republicans want to push grandma in her wheelchair down the stairs by privatizing Social Security.

In a campaign stop in Racine, Wisconsin the president had this to say, “”I’ll fight with everything I’ve got to stop those who would gamble your Social Security on Wall Street. Because you shouldn’t be worried that a sudden downturn in the stock market will put all you’ve worked so hard for—all you’ve earned—at risk.”  Oh, really, Mr. President?  Then perhaps you can show us where all the Social Security money is that you don’t want to put at risk.  The problem is that the government spent it all.  That’s right, there’s no lock box, no account, no bank vault, no hole in the ground were the money is buried, earning nothing.  I only wish I was able to put “at risk” all the money that the government took out of my paycheck along with my employer’s contributions. 

Based on my last annual statement from the Social Security administration, the government collected about $170,000 from me and my employers on my behalf.  Had I the opportunity to put that “at risk” in the stock market, the Dow Jones 30 industrials to be precise, including all the ups and downs, that $170,000 would be worth about $800,000 today.  Thank you Democrats for keeping me safe from accumulating that amount of wealth and instead “investing” it in ethanol, turtle crossings in Florida, bridges to nowhere, airports in John Murtha’s district that no one flies to, etc.  By Social Security estimates, that money they took from me and my employers, will be paid back to me and run out about ten to twelve years before I expire.  So instead of having a real nest egg that I can live off of and pass the rest on to my heirs, my getting Social Security will depend on the next generation getting taxed to the eyeballs to pay me and they can hope the next generation does not rise up in arms when they get the bill.

Everyone who supports the Social Security system as it is today, acknowledging that we have to fulfill our commitment to those who have retired or are very near to retiring, should join Bernie Madoff in cell block C, for the Ponzi scheme the government created.  President Obama, it is time to stop lying to the American people.  We don’t want government to run our lives.  You have crammed your left wing agenda down our throats and we will give you our rebuttal on November 3.  Then your one term will be up two years hence.

It was like the movie Rocky the Democrats (Rocky) were getting pounded left and right over their heavy handed tactics.  They crammed through a health care bill that an overwhelming majority of the country opposed.  They moved on to financial reform and they still couldn’t get any traction.  Their poll numbers continued to drop and it was looking like a dismal election coming up in the fall. 

 And then, just like in the movie Rocky swings from his heels and connects knocking the champ to the canvas.  In this case it was the SEC charging Goldman Sachs with fraud.  Now they could fire a full fusillade of class warfare at the Republicans and either get Republicans to help pass the financial reform bill or be tarred as the party of the evil bankers and greedy Wall Street robber barons.  But unlike the movie, right after knocking the opponent down, when the referee sends Rocky back to a neutral corner he slips in his own sweat, flips on his back and knocks himself out.  By that I mean the news came out that employees of the SEC spent an inordinate amount of their time watching porn instead of the financial markets.  How do you expand the role of government on the heels of that disclosure?

 Trying to Make Up for Bernie Madoff?

When Bernie Madoff’s ponzi scheme was in full swing, Harry Markopolos brought the scam to the SEC practically tied in a bow.  The SEC did not respond.  Perhaps they were too busy…, well never mind.

With the Democrats trusty weapon, class warfare, holstered it’s time to delve more deeply into this financial reform legislation.

In a letter to Senate majority leader Harry Reid and minority leader Mitch McConnell, luminaries including former SEC Chief Accountant Lynn Turner, former Labor Secretary Robert Reich, hedge fund owner Jim Chanos, former Lehman Brothers Vice Chair Peter Solomon, former S&L investigator Bill Black, former Senate Banking Committee Chief Economist Rob Johnson, economists Dean Baker, Barry Eichengreen and others pointed out that Dodd’s proposed financial reform legislation wouldn’t have prevented the current crisis … and won’t prevent the next crisis.

So tell me again why we are doing this?  It’s all about more government control and more power in Washington, not about fixing any real problem.  Where are Fannie Mae and Freddie Mac in this bill?  They were at the very core of the financial meltdown.  In other words it’s all politics and it’s all straight out of the Saul Alinsky tome Rules for Radicals:

 Rule No. 13. Pick the target, freeze it, personalize it, and polarize it.  In conflict tactics there are certain rules that [should be regarded] as universalities. One is that the opposition must be singled out as the target and ‘frozen.’…

     “…any target can always say, ‘Why do you center on me when there are others to blame as well?’ When your ‘freeze the target,’ you disregard these [rational but distracting] arguments…. Then, as you zero in and freeze your target and carry out your attack, all the ‘others’ come out of the woodwork very soon. They become visible by their support of the target…’

     “One acts decisively only in the conviction that all the angels are on one side and all the devils on the other.” (pps.127-134)

The target in this case, is Wall Street and the Banks.  Demonize them.  When the “others”, meaning the Republicans, come out to challenge the ineffectiveness of the bill, then they can be attacked as being for the fat cats and against the little guys; class warfare at its ugliest.

 Follow the Money

But who is really in bed with the fat cats?  The Political Action Committees (PACs), employees, families of employees and other associates of Goldman Sachs gave almost $1 million in campaign contributions to Obama.  In this legislation, the concept of too big to fail remains untouched.  There will be a $50 billion fund created with money from the top banks to standby if needed for a bailout, but this also gives the impression that the largest banks are now safer because of this fund and therefore can get a lower interest rate on their borrowings compared to smaller banks.

 Democratic Congressman Brad Sherman said:

 “The Dodd bill has unlimited executive bailout authority. That’s something Wall Street desperately wants but doesn’t dare ask for. The bill contains permanent, unlimited bailout authority.”

 Why ask for it when the Obama administration will give it to you.  All you have to do is let them smack you around a bit to prime the class warfare pump, and you’re all set.

If you are backstopped by unlimited executive bailout, go ahead, take bigger and bigger risks.  The government will step in if you fail.  So here we have yet another fat cat (Wall Street/Big Banks) wolf dressed in sheep’s clothing (the little guy; Main Street). 

 If you want real financial reform, then in the name of capitalism, the big banks and Wall Street have to learn to play with their own money. If they hit a home run, good for them.  If they strikeout, they should lose their own money and if they don’t have enough to cover their losses, goodbye.   They should not be allowed to take huge risks and if they pay off, everybody there gets a new mansion in the Hamptons, but if they go bust, hand the bill to us.  Fannie Mae and Freddie Mac, we were told were private entities, not part of the government, but wink, wink, nudge, nudge, everyone knew the federal government was standing behind them and would not let them go bust.  So they too, got the kind of interest rates, half a point lower than their competitors, based on this implied backing not based on the strength of their balance sheet.

We have to fight this one too.  This is just more smoke and mirrors from the Obama administration.  Another power grab without any substantive benefit to the American people.

Democrats think they have a winner.  They want to lather on some more financial regulations because regulators dropped the ball on enforcing what already exists.  So as conservatives point out that what they are proposing is unnecessary or won’t work, they can gleefully say, “Republicans are for the fat cats, while we’re for the little guy.”

Broken Regulations

Harry Markopolos recognized within “minutes” that Bernie Madoff was a fraud.  He took his case to the SEC and was promptly ignored.  He took it to Forbes magazine…not interested.  Bernie Madoff himself was surprised how long it took to be found out. 

So what does the SEC do now?  It initiates a case against Goldman Sachs where professionals on both sides of a transaction knew what they were getting into.  One side bet on housing prices continuing to rise, the other betting the bubble would burst.  The decision on pursuing this was voted 3-2, with three Democrats voting in favor of pursuing the case, and two Republicans voting against.  It must be the Democrats looking out for the little guys and the Republicans looking out for evil Wall Street, right?

John Paulson is the investor who allegedly played unfairly by being able to choose the securities that went into the investment that Goldman Sachs allegedly didn’t disclose to the other party.  Mr. Paulson hasn’t been charged with anything.  Mr. Paulson also contributed $30,400 to the Democratic Senatorial Campaign Committee last June.  If you recall Jon Corzine, former Democratic Senator and Governor of New Jersey, used to be the chairman of Goldman Sachs.  The new head of the SEC enforcement division in the Obama Administration, Adam Storch, is a former Goldman Sachs Vice President.  So who’s in bed with Wall Street? 

Democrats Need a Diversion

With almost every measure of public opinion on government appointment sinking to all time lows, the Democrats need to ramp up the class warfare machine to find anything that will gain traction with the public.  They know they can’t fight on the facts so they have to start the fog machine.  Typical Saul Alinsky’s Rules for Radicals stuff.

Conservatives must focus the debate on the issues and not shrink from the fight.  It is far too easy to show that Big Government (Obama) and Big Business (GE, et al) are really partners in dividing up the spoils amongst themselves and telling the rest of us how to live our lives.

Remembering Reagan

Ronald Reagan famously said that the statists believe:

“If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.”

There is currently no more telling example of this than Senator Chuck Schumer bloviating about Spirit Air Lines charging passengers for carry on baggage.  He wants to introduce legislation prohibiting this.  Hey, Chuck, if you don’t like Spirit charging you for your carryon bags, pick another airline!  That’s how markets work.  But the genius that is Washington is, NO we have to regulate that!  So the idiots would pass a law prohibiting charging for carryon bags and the airlines will respond by raising ALL ticket prices to compensate.  So instead of my having a choice of carrying a bag on board or saving the money, or choosing another airline altogether, the government will make everything equal and more expensive.

So, Chuck, how are you and your pals doing as far as growing the economy and getting the unemployment rate down?   Maybe you should spend some time on that, no?

When will our President come to the realization that the government does not have any money save that which is provided by its citizens?  If he understood that, he wouldn’t have said this:

“Just as it would be a terrible mistake to borrow against our children’s future to pay our way today, it would be equally wrong to neglect their future by failing to invest in areas that will determine our economic success in this new century,” Mr. Obama said at the White House.

Let me posit a translation: we shouldn’t borrow against our children’s future, so we should borrow against our children’s future.  And let me add another pet peeve and that is how the statists have redefined the word “invest”.  What they really mean is spend, but invest sounds so much more grown up.  However, most intelligent people understand invest to mean when you put your money into something with the belief you will get all your money back plus a premium.  You don’t invest in the stock market with the idea you will never see your money again and will subsequently put more money into it next year.  You invest in a house with the idea that you will sell it later for more money.  You don’t invest in a house if you expect it to go down in value.  But our elected representatives would have you believe that pouring money down a rat hole is an investment.

Immature and Irresponsible

Like a child caught standing over his mother’s prized china lying shattered on the floor, President Obama wants us to believe it’s not his fault, no, we are going to have trillion dollar plus deficits for the next ten years because of Bush and the Republicans.  He is one year into his presidency.  This is his budget, not Bush’s.  If he can’t handle the job he should resign and turn it over to, er, Biden?  Check that.  Perhaps he can just go watch television in the White House for the next three years and leave the rest of us alone.  Doing nothing would cause less damage than what he has planned.  He jacked up spending 24% and then “courageously” instituted a freeze on that spending for three years.  Think about it.  If I gave you a 24% raise on Monday and then came back on Friday and said, “Gee, I’m really sorry to have to do this, but times are really tough.  I’m going to have to freeze your new salary for the next three years.  Can you ever forgive me?”  Could you not burst out laughing?

We’re Going to Make Some Tough Decisions…Next Year

We are in a fiscal crisis, but don’t think for a moment you are going to see any tough decisions in an election year, particularly when so many Democrats are in danger of having to find jobs in the real world.  So this year is tough talk.  Next year we get busy!

Democrats or Republicans or maybe the Tea Party movement is going to have to act, sooner rather than later.  Here is how the federal government breaks down:

• Medicare and Medicaid — 33%
• Social Security — 21%
• Interest on the Debt — 8%
• Defense — 20%
• Non-Defense Discretionary — 18%

The first three items continue to grow with no signs of slowing and interest will really take off when the Fed stops the easy money program.  Defense can shrink as Iraq and Afghanistan stabilize, but not a lot as this is still job number one for the federal government.  So do you see the problem?  You can thank Democratic President Lyndon Baines Johnson for the first ticking time bomb above.  You can thank Democratic President Franklin Delano Roosevelt for the second ticking time bomb.  You can now thank President Barack Obama for what is becoming the third ticking time bomb and that is without his Health Care, and Cap and Trade.

So how is President Obama going to “solve” this problem?  By tinkering with the last item, Non-Defense Discretionary spending.  But don’t worry, he will also tax those evil rich and make sure they pay their fair share.  But before he goes too far down that path I have a suggestion for him:

1. Listen closely to the Beatles song “Taxman“
2. Ask yourself why the members of the band moved to the United States?

High tax states like New York and California are finding that a significant number of their wealthy citizenry are moving to lower tax states, exacerbating those states’ fiscal problems.  If you look at the percentage of the population that pays the lion’s share of the taxes you will quickly see that if a relatively small percentage of the population, who can afford to live anywhere, actually decide to leave the United States of Tax the Rich, the resulting fiscal problem will be very, very severe. Obama can only poke his tax stick in that cage so long before he gets a nasty reaction.

We’re All Standing On the Third Rail

Social Security has been called the third rail of politics, but the reality is that we are all standing on the third rail trying to keep our balance and if anyone slips and touches the ground, we’re all fried.  We have to suck up the courage to address Social Security, Medicare, and Medicaid.  If we can’t slow the growth of these programs so that they take a smaller amount of the budget pie each year, we are toast.  None of those programs is in the Constitution, but the liberals/progressives created them with empty promises of benefits without costs.  This should have been the first clue:

“Ida May Fuller worked for three years under the Social Security program. The accumulated taxes on her salary during those three years was a total of $24.75. Her initial monthly check was $22.54. During her lifetime she collected a total of $22,888.92 in Social Security benefits.”

Ida May Fuller was the first recipient of monthly S.S. checks when she retired in 1940. She lived to be 100.

She almost got paid back in full with her first check. She got 926 times more than what she paid in. That’s a 92,600% return on “investment.” Not bad, huh?

She got back almost everything she paid in with her first check.  Instead of ringing alarm bells all over the country, politicians patted themselves on the back for the great system they created.  We sent Bernie Madoff to jail, why should Congress be exempt?  What Bernie Madoff did was child’s play in comparison.  Where he fell short was that he couldn’t force people to participate through payroll taxes, and he couldn’t print money.  So why is what he did criminal and what Congress is doing not?  He had to get his participants to voluntarily turn over their money.  He promised returns of 40% per year.  Ida may got 92,600% return on her investment.

Burn the Ships

There is the story of a general who landed on a beach to face an formidable enemy.  He ordered that the ships that brought them there be burned.  By doing so, he knew his men would fight ferociously because there was no escape, either they fought to win or they died.  Perhaps we should do the same with Congress and President Obama.  Fix Social Security and Medicare/Medicaid or you join Bernie Madoff in Cell Block “C”, for running a massive Ponzi scheme.  What has kept Congress from fixing this in the past is the fear of not getting reelected.  Let’s raise the stakes so that not getting reelected would pale in comparison to incarceration.  It’s time our elected officials started paying attention to the people and not their perks.  The disaster train is going downhill and picking up speed, headed for a cliff.  It’s time ALL politicians put the country first and fixed this problem that, after all, they created.  It’s fun to give out the goodies, but this is a crisis that cannot be shunned.  It must be dealt with head on.

Who doesn’t love a freebie?  Who does not get a thrill of good fortune by finding money in the street, no matter how insignificant the amount?  We may not believe in the Tooth Fairy, but many of us believe we have a rich benevolent uncle, Uncle Sam, who is willing to lavish upon us his wealth if only we would ask.  The sad truth is that Uncle Sam is not rich, but penniless and is running a ponzi scheme that would make Bernie Madoff blush.

Health Care for $20

One of the major reasons that health care costs are rising out of control is that no one is minding the store.  While Washington twists itself in knots to rearrange deck chairs on the Titanic of health care, we have little to no say in how our health care dollars are spent.  Our health care “insurance” system is not really insurance.  Insurance is meant to protect us from a financial catastrophe.  Going to the doctor for a checkup is not a catastrophe.  Paying a $20 co-pay for that checkup is like finding money on the street.  There is no way anyone can get a physical exam, except by a hooker, for $20.  It is a good idea to get a physical checkup every year?  Yes, then pay the bill and ask what you are paying for and make sure you need it.  You take your car in for service don’t you?  Do you file an insurance claim when you do?  Can you get it done for $20.  Let’s get real.  What we have is called third party payer and when someone else is picking up the tab, do we care what it costs?  Really?  But someone is picking up the tab.  Look in your other pocket, because you are.  If you are generally healthy and you get your annual checkup, your insurance premium (here in New York at least) will probably run around $10,000 per year.  But, hey, you only paid $20 for that physical!  What if you paid the full amount for the physical, say, $500.  What if your insurance premium was cut to $5,000 because you would pay most routine medical costs out of your pocket and what if you could put the $4,500 left over ($10,000 original premium, minus $5,000 current premium, minus $500 cost of checkup), into a tax free account that can be used for future medical expenses or retirement if you don’t use it?  If you are a young person and stay healthy into your mid-40s, you would have accumulated over $90,000 in your medical savings account and you still have catastrophic insurance coverage and the government stays out of the picture.

Retirement for Free

Like many well intentioned Government programs, Social Security, enacted during the Great Depression, seemed like a good idea at the time.  When enacted there was about 15 workers paying in for each recipient drawing out.  Today there are about a little over 3 workers paying in for each beneficiary.  Bernie Madoff would blush at the audacity of it.  On top of that the money that is paid into Social Security can only be “invested” in Treasury Securities so the return is lousy, but safe.  People reacted to Social Security by saving less because the government safety net was there.  Had people been encouraged to save for their own retirement, they would not be leaving their children this legacy of a ticking time bomb.  So today, many young people feel the government’s hand in their pocket when they look at the FICA line on their pay stub, but don’t believe they will ever get a penny back.  Nice concept.

Bring Home the Bacon!

What’s the measure of a good Congressman or Senator?  Bringing home pork for the district, no?  If you are like me, you get flyers every year or several times per year, touting how Congresswoman Jones obtained federal funding for that pier at the amusement park.  With 435 Congressmen you can count on this, for each $1 that your Representative brings home $434 leaves the Treasury for each of the other Congressional districts and probably more, depending on the power and seniority of your Representative.  Guess who’s paying for that Turtle Crossing in Florida?  that bridge to nowhere in Alaska? that airport in Johnstown, PA that no one uses?  That’s right, you are.  What if we decided locally if we really needed a pier at the amusement park, and if we did, pay for it ourselves?  Then we could let the people of Florida decide if they want to build a turtle crossing, the people of Alaska decide if they wanted a bridge to nowhere and the people of Pennsylvania decide if they wanted an airport that no one used.  Then we could cut federal taxes by an equal amount to keep them out of mischief and help us pay for these projects if we really wanted them.

Let’s Get Organized

There was a time in our history where labor unions performed a valuable service.  In those times when many industrial jobs were unskilled or semi-skilled, employers could dismiss someone on a whim and replace them within the hour.  Unions gave those workers some counterbalancing power and fairer treatment.  Today, we have a much more sophisticated economy and workers have more skills and mobility.  Union membership has declined accordingly, in the private sector at least.  Why is union membership still growing in the public sector?  What is different about workers in the public sector that they still need unions?  Are we suggesting that all government workers are unskilled?  Why do teachers need a union?  Are they not skilled such that they could sell their services to the highest bidder?  Why do unions fight merit pay for teachers?  Why are school principals, the de facto CEO of the school and who in New York easily make six figures, unionized?  Do you get an idea why our K-12 public school system is trailing the world in performance?

In Michigan, privately owned small businesses that provided day-care services suddenly discovered that they were part of a union and union dues were being withheld from their government contractual payments.

Ms. Berry owns her own business—yet the Michigan Department of Human Services claims she is a government employee and union member. The agency thus withholds union dues from the child-care subsidies it sends to her on behalf of her low-income clients. Those dues are funneled to a public-employee union that claims to represent her. The situation is crazy—and it’s happening elsewhere in the country.

Ms. Berry, runs “The Berry Patch” a private day care center she operates from her home catering to low income clients.  The money that was once paid to her, now goes to a union that does little for her.  She is “self employed and wants nothing to do with the union.”  Don’t you think we need more of these tactics in America?  Card Check anyone?

Going Postal

And let’s not forget the Postal Service.  As postal rates are again scheduled to increase on January 4, let’s look at this paragon of efficiency, that is actually authorized by the Constitution.  In 2008, the Postal Service lost $3 billion, and the Postmaster General John Potter pulled down $800,000 in compensation including $135,000 in incentive bonuses.  What do we have to pay this guy if he actually breaks even?  Also, let us not forget this is also a very heavily unionized operation.

Don’t Worry, You Won’t Feel a Thing

During World War II, FDR needed to raise more revenue to pay for the war.  Fearing a backlash, his team hit upon the idea of payroll withholding.  Knowing the potential backlash that would result when taxpayers had to write that big check on April 15th, he rightly figured that if he took a little bit each week, he could take a lot more in total.  Statists in Washington have never looked back.  It’s like the tax that was imposed on telephone service to pay for the Spanish American War that is still in place today.  Instead of picking our pockets every week, what do you think most Americans would say about the size of the federal government if they had to write one big check on April 15th?  There would be no tax rebates, because there would be no tax withheld.  Do you think Americans would force Congress to sharpen their pencils and scale back the size of government?

Help is On the Way

Ronald Reagan said, “The nine most terrifying words in the English language are, ‘I’m from the government and I’m here to help!’”  But perhaps the best example of how far from our founding principles our government has strayed comes from Congresswoman Rosa DeLauro of Connecticut as she spoke during a House End of Year Wrap Up Session:

“This House–we understand, we’re there,” she said.  “You can count on us because we believe that it’s our moral responsibility to make sure that you and your family need our help.” 

I don’t know about you, but I don’t need the House of Representatives making sure I need their help.  I need as little interference as possible from them.  Their meddlesome intrusions in our lives is killing what made this country great.  It is a point we cannot make often enough.

There was a commercial not too long ago where a young man looked out his window to the village green where a bundle of money had just fallen.  He calls his wife/girlfriend over to show her.  She suggests running down and getting it, but he says, no, let’s wait.  Next you see a frizzy headed guy down on the green who screams, “MONEY!!!!”  In seconds, people came out of the woodwork and scoffed up all the money while the young couple looked on.

The image of that commercial popped into my head as I considered the job summit being led by President Obama.  To me, the young couple represented the government pondering how to direct the economy to achieve this specific goal or that.  The mob on the green was the free market.  While the government dithers over what kind of legislation to write, which special interest groups to pay off to pass it, how to develop incentives to get private industry to do this or that, if they would just cut taxes and get out of the way, the free market would get to work creating jobs where they are needed, not where some bureaucrat thinks they should go.

Uncertainty

The biggest cloud overhanging this economy is uncertainty.  The Obama administration is slamming through enormous changes: a $787 billion Porkulus package, cap and trade, health care.  Businesses look at this combined with the accumulation of massive government debt, tax increases rather than cuts (yes letting the Bush tax cuts expire is a tax increase, not just the expiration of tax cuts as Speaker Pelosi tries to spin it) and they don’t know what hiring that extra employee is going to cost, let alone what it will cost to keep the employees they already have.  So they don’t hire until the dust  settles and they can calculate the impact.

“Tax incentives for job creation are “worthy of further consideration,” he said, while adding that the administration is also set on making a big push in the area of green jobs.” – President Obama at Jobs Summit

“Worthy of further consideration”?  Since conservatives have been calling for tax cuts for a year now, this kind of statement in Obama-ese translates thusly, “I have to make a nod to the right, to acknowledge that I heard them, but it ain’t happening.”  Couple that with the “big push in the area of green jobs.”  We are in the midst of the scientific scandal that the “settled science” of man-made global warming could be the greatest hoax since Bernie Madoff, and Obama wants a big push in the area of green jobs.  What if that area collapses because the urgency that Al Gore has been screaming about is no longer urgent?  It’s government planning on the order of Soviet five-year plans or Mao’s Great Leap Forward programs.  It harkens back to Jimmy Carter’s giant Synfuels project that was going to convert coal into oil, until oil prices fell and the project imploded, but not before billions of tax dollars were poured into that rat hole.

How Simulating!

If you listen to Joe Biden, the stimulus plan is working better than expected.  But let’s take a closer look.  As of about three weeks ago only $120 billion of the stimulus money had been spent. (So why is Congress looking at another stimulus with over $600 billion left to spend in the first one?)  Of that money, 80% went to the Department of Education, Health and Human Services, and the Department of Labor.  What about all the “shovel ready” projects?  Only about $4 billion has gone to the Department of Transportation.  Feel better?

Jobs Summit Attendees

So who is meeting with President Obama at the jobs summit?  Well first let’s look at who was not invited:

• U.S. Chamber of Commerce — they have butted heads with Obama over health care and climate change policies
• National Federation of Independent Businesses

I don’t know about you, but I think they might have an idea or two about how to create conditions that let the free market create jobs.  As for the attendees:

• Service Employees International Union (SEIU) officer
• President of the American Federation of Teachers — a union of workers in a government run monopoly
• United Food & Commercial Workers International Union
• CEOs of some Fortune 500 companies

How many jobs do unions create, not occupy, create?  Think of the auto industry, steel industry, public K-12 education, the Postal Service, and government in general.  Do they bring images of thriving, vibrant, engines of job creation?  Or is the image more of the basket cases of the U.S. economy?  This is not a slight against the union workers themselves, but rather of their leadership who create so many restrictions on job rules to artificially create the need for more jobs.  There motto is: why have three people do the work, when you have five do it?

As far as big business is concerned, let me dispel the thought that conservatives and big business go hand in hand.  In many cases big business looks to cut deals with the government to protect their industries and markets from upstart companies.  They have gotten big and lethargic, rather than nimble and vibrant.  Small businesses create about 80% of the jobs in the U.S. and they didn’t have a seat at the table.

So was the jobs summit about creating jobs or just jive talk?  If you want a real jobs summit see what American Solutions was hosting in Cincinnati, Ohio and Jackson, Mississippi.  They actually discussed ideas that would work.