Fighting to Preserve Liberty in America
Photo by Violentz
Most presidents view an address to a joint session of Congress for serious non-partisan purposes. Outside the annual State of the Union address they are rare. President Bush only did it once, in the aftermath of 9/11, and while jobs are very important to the country at this time, it is no place for a lecture (saying pass this bill seventeen times) from the most inexperienced president in our history.
Vice President Joe Biden, the man President Barack Obama put in charge of the stimulus spending because, “nobody messes around with Joe,” met with Congressional leaders to talk about the budget for the remainder of this fiscal year. Jingling in his pocket was an additional $6.1 billion in change as all the Democrats had to offer, after the Republicans forced them to agree to $4 billion in cuts to get a two week extension from shutting down the government.
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:
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:
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.
“The Obama administration’s $75 billion program to protect homeowners from foreclosure has been widely pronounced a disappointment, and some economists and real estate experts now contend it has done more harm than good.” – New York Times, January 2, 2010
“The Treasury Department publicly maintains that its program is on track. “The program is meeting its intended goal of providing immediate relief to homeowners across the country,” a department spokeswoman, Meg Reilly, wrote in an e-mail message.” — same article, NYT
Hot on the heels of Janet Napolitano’s performance at the Department of Homeland Security, that things worked just swell and then, er, no it was a catastrophic failure, we have another example of this administration’s ineptitude. Let’s not let the marketplace work by flushing out the bad loans, have banks face up to the reality of their bad lending decisions, allow housing prices to reach a market level, all in a reasonably short time, no, let’s get another massive, taxpayer funded program in place to gum up the works and drag this out for years.
A Habit of Ignoring History
In 1929 Hoover mishandled the economy in a similar way bringing in the leaders of major industries and jawboning them to keep up production even in the face of falling demand so that jobs would not be lost. The businesses went along until that policy hit their financial statements in the form of plunging profitability. Stock prices fell sharply and more disastrous policies followed, first by Hoover and more by Roosevelt.
In 1920-21 there was a very steep and serious recession. However, companies cut wages and government didn’t interfere.
“The annual unemployment rate peaked at 11.7 percent in 1921, but it had fallen to 6.7 percent by the following year, and was down to an incredible 2.4 percent by 1923,” Murphy writes. “That is how a market with flexible wages and prices quickly corrects itself after a Fed-induced inflationary boom.”
Roosevelt’s policies followed Hoovers’ with more and more government interference. Throughout the Great Depression the programs didn’t work, government grew tremendously leaving us saddled with that legacy. On the other hand Reagan in the 1980s pursued a policy of cutting taxes and shrinking government. Roosevelt needed World War II to end the Great Depression, Reagan ushered in 25 years of unprecedented economic growth. Which one does Obama choose to follow? That’s right, Roosevelt. Brilliant!
Inexperience on Full Display
President Obama rides into town with no executive experience, but with wondrous rhetorical skills and a hard left agenda. He jams through a stimulus package that doesn’t stimulate. His security policy is to undo everything that worked under Bush to keep us safe. One of the first things Janet Napolitano does is release a report saying that the real threat is from our returning military that might become right wing zealots, Meanwhile Islamic terrorists, correct that, isolated extremists, continue to plot to kill us. Now the New York Times points out that the Emperor’s mortgage program, Making Home Affordable, has no clothes.
“Whatever the merits of its plans, the administration has clearly failed to reverse the foreclosure crisis.” — NYT
When asked by a Congressional Oversight Panel what the administration was going to do in the face of this lasting not a year or two but for many years into the future, Treasury Secretary Tim Geithner said:
“What to do about it,” he said. “That’s a hard thing.” — NYT
Sounds like the seeds of another government program to fix the other government program. Just like FDR did all through the 1930s. Trying to stop the market with government programs is like trying to stop the tides. You may divert it and you may end up with water in places you didn’t want it, but you are not going to stop it.
We have had several bubbles before, but if the Obama administration has their way, “you ain’t seen nothin’ yet.” Currently the budget for the federal government is $4 trillion dollars. That’s right, your federal government will spend approximately (which means probably more) $4 trillion in one year. Of that amount $202 billion is interest on the national debt. In an article in the New York Times today by 2019, a mere ten years from now, the portion of the budget directed to interest payments will be over $700 billion, or three and a half times what it is today. Many people have trouble grasping how much a trillion dollars are, and within ten years we will be paying three-quarters of a trillion dollars just to cover the interest without paying off any of the principle.
Family Budget Analogy
We all understand the dramatic effects of too much debt, as the point has been driven home every day throughout this financial crisis. Bankruptcy filings, home foreclosures, bailouts, all resulting from more debt than we can pay the interest on, let alone pay back the principle. You see commercials on television every day for companies that will help you renegotiate your credit card debt, your mortgage, intervene on your behalf with the IRS. None of those programs are available to the federal government as a debtor.
Obama’s Out of Control Spending
The Obama administration seems oblivious to the problem. As bad as it is they just keep on spending or want to spend more:
The Truth About Government
The truth is that government doesn’t create anything. They don’t generate income. Everything that government has to spend comes from you and me. The government takes it from us (or throws us in jail for tax evasion) and then spends it. If they can’t get enough from us, they borrow the difference. But somewhere down the line, that money has to get paid back. A news report today said we have the opportunity to just write a check to the Treasury if we are concerned about the deficit and want to help pay it down! Let’s see how many of Obama’s wealthy supporters sign up for that program.
Runaway Train
Our federal government is a runaway train and if we don’t stop it very soon and pare it back to the functions enumerated in the Constitution, we will get hit with a bubble so big, that there is no Hollywood screenwriter that could even begin to conceive of how to portray it. $700 billion folks, that’s $2,059 in INTEREST for every man, woman and child in America. Ask yourself this, if you are a family of four are you prepared to write a check for $8,235 to the federal government for interest alone? You don’t get anything for your money, it just keeps your government from defaulting on what they already borrowed. This will be on top of your regular tax bill. And the next year you will have to pay it again and probably more. It’s time to stop the madness. It’s time to stop the spending. It’s time to stop the expansion of government and start shutting down departments. It’s what you would do at home in a financial crisis, it’s what a small business would do in a crisis. This is a crisis that we can still get under control, but if the debt continues to grow to the point where we can no longer afford to pay even the interest, America will be a footnote in history.
Do I have your attention now?
The New York Times had some, what was to me, shocking news today. The article said that there was now consensus that the Obama stimulus plan was working. Is this the same kind of consensus that man-made global warming was settled science, despite the glaring evidence that carbon dioxide emissions continue to grow while the globe stopped warming ten years ago? This is also close on the heels of breaking stories of extraordinary misinformation if not outright deceit on how the $787 billion is being spent.
Smoke and Mirrors
Early on in the article we have this gem:
“The legislation, a variety of economists say, is helping an economy in free fall a year ago to grow again and shed fewer jobs than it otherwise would. Mr. Obama’s promise to “save or create” about 3.5 million jobs by the end of 2010 is roughly on track, though far more jobs are being saved than created, especially among states and cities using their money to avoid cutting teachers, police officers and other workers.”
There is no mechanism that exists to measure a job saved. None. So how do they do it? It goes something like this:
“Here, Mr. Stimulus Funds applicant, I have this check for you for $642,000. No can you tell me, if I give this to you, how many jobs would you create or save?”
“Create? Er, none.”
“Hmmm,” the bureaucrat mutters, staring down at the check in his hand, “what about jobs you would save? You know, if I don’t give you this nice, rather large check, how many of your people would you be forced to lay off?”
“Oh, I get it,” the potential recipient says with a wink and a smile, “probably all of them!”
The bureaucrat scribbles down a number, and hands over the check, walking away shaking his head.
That’s about how it’s done. The government surveys the people getting the money and asks them what would have happened if they didn’t get the stimulus. And what would you expect them to say? Keep the check?
Revenue Starved States
What a concept, “Revenue Starved States.” The article complains that not enough money was provided to “Revenue Starved States.” Does he mean states like California and New York? I believe the correct term is states where spending is out of control. It means states where taxes are so high that people are moving out in droves, and among them the “wealthy” people they love to tax to the eyeballs, meaning a dramatically shrinking revenue base. After all, if one of the wealthiest people in the state, who is part of the group that pays 70% of the taxes, moves out of the state or (out of the country when it gets bad enough), that means a lot of people are going to see their taxes raised to make up for it. So the statists seem to think a stimulus package that keeps these bloated bureaucracies fat, dumb and happy is the way to go, until when exactly?
The Multiplier Fallacy
The other great fraud being foisted on us is the multiplier effect, where for each dollar of stimulus money spent more than a dollar of economic activity results:
That sort of impact is what makes federal aid to state governments rank high in economists’ reckoning of the stimulus value of various proposals. Every dollar of additional infrastructure spending means $1.57 in economic activity, according to Moody’s, and general aid to states carries a $1.41 “bang” for each federal buck.
Even more effective are increases for food stamps ($1.74) and unemployment checks ($1.61), because recipients quickly spend their benefits on goods and services.
Okay, then how is this for a solution. Let’s spend $10 trillion on infrastructure, food stamps and unemployment checks, since they will result in $15 trillion or so in economic activity, because of the multiplier, right? For that matter, let’s have the government spend $100 trillion and we’ll really be rocking.
Where’s the So Called Consensus
From what I read in the article, there was only one economist that could be called a conservative, Martin Feldstein, that they were willing or able to quote, and this was his take on the stimulus.
While some conservatives remain as skeptical as ever that big increases in government spending give the economy a jolt that is worth the cost, Martin Feldstein, a conservative Harvard economist who served in the Reagan administration, said the problem with the package was that some of its tax cuts and spending programs were of a variety that did little to spur the economy.
“There should have been more direct federal spending that would have added to aggregate demand,” he said. “Temporary tax cuts and one-time transfers to seniors were largely saved and didn’t stimulate spending.”
That’s it? That’s the consensus? It seems to me that he is pointing out what was wrong with the package rather than what was right. He was in the Reagan administration and he knows what works: permanent cuts in marginal tax rates. Those dreaded tax cuts for the “rich.” The thing is that when the people above the subsistence level get to keep more of what they earn, yes it does belong to them and not to the government, they tend to invest it, which means the provide capital to businesses that grow and create jobs. Yes, capitalism. What the stimulus does is take money away from these people, or borrows it and steals it from future generations, and gives that money, as in the example above, to highway projects, food stamps and unemployment checks. The first of these may create jobs until the road project is completed, but the latter two only increase the dependency of those recipients on the government. So how exactly does the stimulus plan that puts money into a highway project and unemployment benefits, help a banker who got laid off? How does it help the unemployed executive from United Technologies? It doesn’t. It’s like a drug fix. You may feel good for a while, but then it wears off and you need another fix.
The Genius of Government
You would think that with all the examples of government planning lying on the waste heap of history, the statists will finally catch on that they can’t successfully pick the winners and losers in an economy. Government has to get out of the way and let the market work.
Government must be drastically cut down to size. Think of the popular TV show “The Biggest Loser.” Picture the governments of the United States, California, New York, New Jersey, Rhode Island, Michigan, Nevada, for starters, as contestants. Let’s see who can lose the most weight. Ready? Go.
Baby's Not Happy About the Stimulus Bill She's Stuck With
The colorful brochure arrived in the mail today titled, “Fighting For Long Island.” In it Congressman Tim Bishop extols the virtues of the American Recovery and Reinvestment Act, and how much bacon he brought home for the district. Inside the folder is a map of the 1st Congressional District with callout balloons showing all the locations where stimulus money will land. On first blush one is tempted to think, good job Congressman! But then I reached for the calculator.
By the Numbers
If you take the $787 billion and divide it by the 535 members of Congress (425 Congressman and 100 Senators) the stimulus bill works out to $1.47 billion per member. That’s a lot of dough. I then took out my calculator and tallied up all the monies on the map that “CONGRESSMAN TIM BISHOP Delivers Economic Recovery Funds To Long Island.” Just to be sure, I checked my numbers three times and the projects added up to $274 million. That’s not good. That means that our Congressman brought home less than 19% of his share, which means that a lot more backslapping members of Congress got more than their share. Throw into the mix that every Republican voted against the bill and probably were not considered too kindly on the receiving end, then we really got short changed.
Money In vs. Money Out
Although there are many people who like to believe that Uncle Sam is really some independently wealthy tycoon who showers his nieces and nephews with his largess, the sad reality is that the money all comes from us. So I wondered how much do we send to the Treasury?
The federal government does a pretty good job of concealing how taxes are broken down by congressional district, which is understandable as accountability at election time can be problematic. In 2004 the First Congressional District in New York ranked 60th in the nation in average income tax liability per tax return, at $8,310 per return. What percentile is that? Let’s see 60 out of 435 comes out to be about the 14th percentile, well above the midpoint. How much stimulus did our esteemed representative bring home? Somewhere around the 81st percentile well below the midpoint. So the bottom line is that our Congressman voted to have his constituents pay a very large share of stimulus money that will go to every other part of the country, while we spend years working off the debt. Brilliant!
Historically, New York gets about $0.79 from the federal government for every $1 that New Yorkers pay in taxes. So why do New Yorkers keep overwhelmingly electing Democrats to Congress who love to increase taxes that ultimately end up being sent to other states? Who are they working for (perhaps themselves)?
The Stimulus Was Really About Jobs
So let’s not get bogged down in costs when it’s jobs we’re really talking about. After all, passing the stimulus would keep the unemployment rate at 8% instead of 9% without it. Oops, it’s already at 9.5% and climbing.
Of all the projects identified on the map of the district, one had an actual figure, in bold, stating that it would create 1,000 jobs. That’s a nice figure, but let’s put it in perspective. There are about 233,000 people employed in the district. At a 9.5% unemployment rate that would mean about 22,135 jobs have been lost in this recession. So creating 1,000 jobs equates to about 0.4% employment. The particular project that was identifed with creating these 1,000 jobs was getting $184.3 million in stimulus money or two-thirds of all the stimulus in the district. That works out to us spending $187,300 per job created. Call me a conservative, but somehow I think that if we cut taxes by $184.3 million we would create a lot more than 1,000 jobs. But what we will have to do is raise taxes to cover the $184.3 million that we are spending to create these jobs which will probably turn right around and kill them or an equivalent number.
What Federalism Means to Me
Here is a “top ten” list of stimulus projects compiled by Senator Tom Coburn [R-OK]:
Now if someone in Florida (No. 5) want to spend $3.4 million for a wildlife “eco-passage” (i.e., roadway tunnel for turtles) project, fine. The good people of Florida can pay for it. If the people of John Murtha’s district want to spend $800,000 (No. 4) to repave a backup runway in Johnstown, fine. Let those folks pay for it.
If it doesn’t cross a state line, or have a benefit for ALL Americans, it’s not the federal government’s business. That is my litmus test for federalism. There is nothing more idiotic than having me pay for your project while you pay for mine. Because it comes down to a perpetual power grab where those who stay in the government the longest get everyone to pay for their projects (so their constituents will re-elect them) and everyone else gets the bill. Just ask yourself how many federal functions have been moved to West Virginia (Robert Byrd 50+ years in the Senate). How much pork goes in to John Murtha’s district (38 years in Congress).
Spinning it for All it’s Worth
So look for the brightly colored brochure from your Congressman crowing about how many stimulus dollars they brought home, but just remember, if your Congressman hasn’t been serving for 20 years, he or she probably got fleeced and you got screwed. Enjoy holding the bag.
Goodbye Liberty
The cat is finally out of the bag. President Obama, after passing a huge spending increase, proposed cutting the budget deficit in half by the end of his current term primarily by raising taxes and cutting defense spending. This is the same old tired liberal policies that brought us the economic morass of Jimmy Carter, the unpreparedness to deal with al Qaeda under Clinton, and now in the midst of a deep recession, President Obama wants to spend more and tax more.
Just when we need to move more money into the private economy, President Obama wants to take out his Hoover vacuum cleaner and suck up whatever cash he can find and hoard it in Washington.
The real problem is government has gotten too big, too wasteful, too profligate, and too out of touch with the American people. Instead of the original vision of the founding fathers of limited federal government, pretty soon your lives will be directed by four people: your Congressman/Congresswoman, your two US Senators, and the President. All local government will become irrelevant. You can see the beginnings of it now. We have the federal government paying for local roads, local schools, local police, local unemployment. And you can also see the power plays: you do the will of the federal government or you get no money. The federal government takes your money in the form of taxes and will refuse to give it back unless you follow their liberal agenda.
Goodbye Liberty.
We heard President Obama say pretty starkly that the enormous Wall Street bonuses were outrageous. While I stop short of government dictating compensation to private businesses, I do put the Wall Street clowns in the same category of the Big Three auto CEOs flying to Washington in their private jets looking for handouts. Very bad form.
The more I pondered the idea of salary caps, whether they were fair or not, whether it was government taking away another liberty, it finally hit me, that this just might work. So I now propose a salary cap, on the FEDERAL GOVERNMENT. And why not?
Who Got Us Into This Mess?
It was the housing bubble that triggered the financial debacle. What drove the housing bubble? Let’s start with Fannie and Freddie. They were created by Congress. Next came the Community Reinvestment Act that forced banks to make riskier housing loans. Next the Clinton Administration under the direction of Janet Reno, drove the banks harder to make more housing loans to people who couldn’t afford them. Then was the Federal Reserve that kept interest rates too low for too long. And right up until the end we had Barney Frank and Christopher Dodd saying all was well with Fannie and Freddie.
We have Charlie Rangel, chairman of the House Ways and Means Committee, the committee responsible for writing the tax laws, cheats on his income taxes.
Bernie Madoff runs a Ponzi scheme that bilks people out of $50 billion while a guy named Markopolis figured the whole thing out in five minutes and spent the last nine years trying to get someone in government to care.
The government imposes CAFE standards on the auto industry and drives them to the brink of bankruptcy and then says we have to bail them out.
Now they are proposing a “stimulus” package that is just a bunch of pork.
Solution
So I propose that we, their employers, cap their salaries at $100,000 (from their current $162,500) until such time as they fix this mess. I further propose that if a congressman/woman can prove that they didn’t vote for any of the crap that got us into this mess, that they be exempt from the cap.
What say you?
