Economic history of the United States

The Great Reagan Mistake

by Kevin Dixon on February 10, 2011

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The common themes in each presidential race turn on a hope and dream for the future, defining a common purpose and a call to action. Candidates usually win on the success of their ability to marshal these themes into a cohesive series of arguments for their nomination and eventually election to office. Few were as effective as Ronald Reagan at recruiting the support of the average listener. If he could get your ear, he could get your vote. Candidate Barack Obama frequently compared himself with Ronald Reagan during his campaign. His media cohorts happily aligned themselves with this maladapted relationship, with the centrist and even right leaning (business friendly and low/fair taxes) themes hinted by Obama’s vague comparisons.

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Another Government Program Falls Flat

by Bill O'Connell on June 24, 2010

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Did anyone not see this coming?  An article in yesterday’s Wall Street Journal reports that new home sales plunged.  Why?  The government’s meddling tax credit for first time home buyers expired and gee, the trend didn’t continue?  What a surprise.  Meanwhile the government has another program, Making Home Affordable, to help homeowners refinance their home mortgages that they can no longer afford.  Instead of letting the chips fall where they may and have prices find a bottom and adjust, we have the drip-drip-drip torture of these programs and the recession drags on.

New home sales fell 32.7% from April to a record low seasonally adjusted annual rate of 300,000.  Compared to last year the sales fell 18.3%.  In addition the previously reported sales numbers for March and April were adjusted downward.

Here is what we have.  Our government is taking our tax dollars and giving them to people to help them buy a house.  You may be struggling to pay your own mortgage and instead of the government letting you keep more of your own money and perhaps make an extra payment on your own mortgage to lower your outstanding debt or increase spending which would help grow the economy, you are paying for your mortgage and your neighbor’s.  Instead of letting those who can’t afford their mortgage face that reality, the government steps in and drags out the process.  If government got out of the way, then the banks would have the incentive to negotiate in good faith rather than looking for a government bailout.  If a mortgage is salvageable, they should renegotiate with the homeowner and take a small loss rather than a big one.  If the mortgage is not salvageable, then foreclose or short sell it and be done with it.  The housing overhang on the economy would get quickly sorted out and we could return to a more stable housing market.  Get the government out of the way and let us keep our tax dollars.

In 1920-21 there was a steep and serious recession.  This was before the age of government intervention of Hoover, FDR and all who followed.  Businesses were able to cut wages and react to the circumstances in that freer market.  Unemployment peaked at 11.7%, almost 2% higher than we have now, but by the following year it was down to 6.7% and they year after it fell further to 2.4%.  We are a year and a half into the current mess and the current administration seems intent on matching FDR’s record of stretching this out for eight years.  We have a robust economy that can rebound sharply, if the government gets out of the way.  But this government keeps tinkering and the economy keeps bouncing along the bottom.  And let’s not forget fraud.

The Treasury’s Inspector General for Tax Administration, J. Russell George, reported that 19,000 filers for the first time home buyers credit hadn’t purchased a home and there were 74,000 filers had purchased a home but it was not their first.  In additiona there were 53 cases where IRS employees filed “illegal or inappropriate” claims for the credit and today we learn that $9 million was stolen by prisoners who were incarcerated when they filed for the credit.  So don’t worry folks your tax dollars are not only prolonging the recession, but they are being stolen as well.  Feel better about your benevolent government?  Aren’t you glad we live in a country where your government can forcefully take the fruit of your labor and throw it to the wind?

Government that governs least governs best.  Let’s cut the beast down to size.

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Is the Groundswell Starting?

by Bill O'Connell on February 20, 2009

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The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people — Amendment X, United States Constitution

“I’m Mad as Hell and I’m Not Going To Take It Any More”

That quote from the movie “Network” popped into my head as I read about a legislator in Oklahoma, calling for legislative support for the 10th Amendment to the Constitution.  It passed the state assembly unanimously.  So what does this mean?  The sponsor of the bill, State Senator Randy Brogdan, explains:

The “federal government has been putting the screws on (the states) a little tighter and tighter each year” along with unfunded mandates of varying sorts.

And each time this happens, Brogdon explained, “We lose a little bit of our freedom and liberty.”

The federal government has been growing enormously and taking on more and more things that used to be handled locally, such as education, and welfare.  Other programs have not changed as the economy has, for example, as the percentage of the population that farms has decreased dramatically has the Department of Agriculture shrunk accordingly?

You Must Obey!

The way the federal government works around this is by saying, okay, you don’t have to do what we tell you, but you will get no federal funding if you don’t.  It seems like a Catch-22, no?  Since the 16th Amendment, which authorized the income tax, the federal government can decide how much to tax incomes and there is little that the states can do about it.  They take money from your pocket under threat of imprisonment, and will give it back to you only if you comply with their rules.

How Do We Fix This One?

It may require a constitutional amendment to fix as the 16th Amendment says:

The Congress shall have the power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration. — 16th Amendment to the Constitution

I’ll leave the legal mechanics to those better qualified, but I would propose the following.  That the federal budget shall include a breakdown of projected revenues derived from income taxes, broken down by source: individual, corporate, etc.  A state should then be allowed to refuse mandates and programs from, say, the Department of Education, and withhold from the IRS that proportion of tax dollars destined for the Department of Education from that state.

Certain departments should be deemed mandatory, such as Defense, State, Treasure, to name a few as these departments serve all citizens.

The legislation under consideration in Oklahoma will have little effect if the federal government can suck up as much money as it wants to from the states, via their citizens and then just keep the money if the states refuse to participate in the programs.  How do you determine which programs should be subject to the states discretion?  No money should flow from a state, to Washington, and then back to the state.  That is just plain stupid and wasteful, or a distribution of wealth, none of which is a government function. Paying for roads and infrastructure that does not cross state lines should be funded locally.  It is ridiculous that the federal government pays 90% of the cost of a highway that lies entirely within a city.  Look at the scandalous “Big Dig” in Boston.  Billions of dollars spent and parts of it are falling down.  Why should any of this be paid for by the people of Kansas, Oklahoma, Alaska, New York, Florida, et al.?

But the real answer is following the 10th Amendment.  It clearly states that the role of the federal government is spelled out in the Constitution.  If it’s not in the Constitution then that responsibility is left to the states or the people.  Show me where in the Constitution it says that the federal government is responsible for education.  It’s not in there and that department should be shut down tomorrow.

It’s Time to Rein the Monster In

The anger in the country is growing.  Those who acted responsibly are being told they have to bail out the irresponsible.  They are being told by “Buck a Day Biden” that it is their patriotic duty to pay higher taxes to help out.  Meanwhile half a dozen Obama appointees haven’t paid the taxes they owe, let alone paying more.  I give Biden the “Buck a Day Biden” moniker because that is how much this millionaire gives to charity.  He doesn’t want to spend his own money on charity, he wants the government to take your money to fund government programs to do that.

If you don’t think the anger is growing take a look at this.  Rick Santelli

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