Default is Last Resort...Not First!

"The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned." from Section 4 of the 14th Amendment.

Believing that not raising the debt ceiling equals default means that you must believe that every penny the government is now spending is absolutely necessary...that not one penny can be cut.  The 14th Amendment spells out that the legally incurred debt of the United States cannot be questioned...in other words, it is a debt and must be paid.  Defaulting on debt, therefore is the last resort...after all other measures have been exhausted.  In this current "crisis," however, no other measures are being even considered or negotiated by our imperial dictator.

Before we default on debt, we should...must...cut other spending to the point where we can service our current debt.  We can reduce or eliminate discretionary spending.  We could eliminate departments of government that are inefficient, out-dated, corrupt, or unconstitutional...which is most of them.  We can stop maintaining national parks...national public radio.  We can pull out of the United Nations and eliminate that obligation.  We can eliminate federal funding for food stamps, welfare, and socialized medicine.  We can do very many other things that do not affect the rightful and constitutional operation of what is meant to be a very limited Federal government.  But we cannot constitutionally default on our debt.

If the President of the United States willfully defaults on our legal debt, he should be immediately removed from office and possibly imprisoned for breaking federal law.  If our Congress allows him to default, the States, from whom the Federal government gets it's power, must rise up and recall and replace them with those who will live up to the oath of defending the Constitution.

REPEAL THE 17th AMENDMENT!

ENFORCE THE 10th AMENDMENT!

Debt Limit and Default

President Obama is a liar and if HE CAUSES a default, he should immediately be removed from office. Representative Tom McClintock (R- CA) lays out the case that not only does failure to raise the debt limit not equal default, that it would have to be a conscience decision of the President, against the laws of the land, for the country to default.

We must destroy the Imperial Presidency in this country, along with the elitism of the Senate.  We must take back power to the States and the People and return these offices to their constitutionally proscribed limits.

REPEAL THE 17th AMENDMENT!

ENFORCE THE 10th AMENDMENT!

You're not exempt from the math

This is a very simple and unemotional explanation on why Obamacare sucks.  Dave Ramsey does a great job explaining that regardless of how people may want there to be some kind of magic that will allow this monstrosity of a law to work as we were promised it would...you can't escape the simple math of the situation.

Govt Shutdown - Report from Out Here

DAY 1:
Well, the government shut down and I looked around my neighborhood...drove through the area...Traffic lights were still working...businesses still operating...People were going about their lives as if nothing has changed. How can this be? I thought if we had a government shut down, it was the end of the world as we know it. I'll have to wait a few days...maybe weeks...and check again. I'm sure the world will have come to a crashing halt by then.

DAY 2:
Beginning of day two of the shutdown...or "Slimdown" as some are beginning to call it. Still, the lights are on...the Internet is operational (thank you Al Gore, LOL)...and life, for the VAST MAJORITY of us, continues as normal...Hmmm.

I propose that we insist that this continues for at least one month. That way, we can see the real effect of less government in our lives. At the end of that month, I suggest that we could discontinue most of what we have done without during the experimental period...permanently. And, I think, that is what government fears most and why they are so shrill in their predictions of doom...they fear you...we the people will realize that we *CAN* do with much less of them.

May I also suggest that this is the time for the State legislatures to stand up to their responsibilities.  In our Federal system, the States are *NOT* subjects of the central government in Washington...but rather sovereign entities who have entered a pact with other states to form a federation to their mutual benefits. Each State should look after the welfare of their own citizens and businesses with jealous zeal, not allowing anyone to cause them harm or limit their freedom...even the Federal government.  If the shenanigans in D.C. can truly have such a huge impact on the economy of the entire country, I stand with James Madison who declared in the Virginia Resolutions that the States "are duty bound, to interpose for arresting the progress of the evil."

It is time for the States to reverse the usurpation of their sovereign powers and insist that we return to the principles of the United States Constitution which is the bedrock document on which all other Federal law rests.  If roads need built in a State...the state should not send their money to the Federal government and beg to have it returned to build the road.  Likewise, if a State's people are in need, it is for that State to see to these needs...not to allow their own treasure to be used to control them so that some central politburo can decide how best to meet the needs.

The Federal government is rotten to the core...hopelessly corrupt.  It is time for the States to stand to their feet, reclaim their power, interpose and place the checks on the Federal government that the Constitution intends.

North Korea: The Mouse That Roared?

In 1959, a film starring Peter Sellers, called The Mouse That Roared, was released.  The Internet Movie Database (imdb.com) describes the plot like this:

"An impoverished backward nation declares a war on the United States of America, hoping to lose, but things don't go according to plan. The Duchy of Grand Fenwick decides that the only way to get out of their economic woes is to declare war on the United States, lose and accept foreign aid. They send an invasion force to New York (armed with longbows) which arrives during a nuclear drill that has cleared the streets."

This reminds me of current day North Korea.  North Korea is a country devastated by years of corrupt, centralized, communist control of the economy.  The CIA World Fact Book estimates the entire GDP of the country is only $40 Billion.  It further describes their economy:

North Korea, one of the world's most centrally directed and least open economies, faces chronic economic problems. Industrial capital stock is nearly beyond repair as a result of years of under-investment,  shortages of spare parts, and poor maintenance. Large-scale military spending draws off resources needed for investment and civilian consumption. Industrial and power output have stagnated for years at a fraction of pre-1990 levels. Frequent weather-related crop failures aggravated chronic food shortages caused by on-going systemic problems, including a lack of arable land, collective farming practices, poor soil quality, insufficient fertilization, and persistent shortages of tractors and fuel. Large-scale international food aid deliveries as well as aid from China has allowed the people of North Korea to escape widespread starvation since famine threatened in 1995, but the population continues to suffer from prolonged malnutrition and poor living conditions. 

This is a country on the verge of collapse...if it weren't for foreign aid, they would have already collapsed and starved.

There is no way they can believe that they can actually prevail in a military contest against the South...let alone the United States.  In 1990, I remember the media telling us all how dangerous Iraq was.  We were told that they had the fourth largest standing-army in the world...the largest tank force...and they knew how to wage desert warfare.  The war was, in effect, over in 100 hours.  And, at least Iraq had oil money.  North Korea has no chance what-so-ever.  Even if they do have a nuclear weapon...it is probably only one, or two.  Then they have to be able to deliver it and set it off.  I think chances are better than even that, as in the movie, the bomb could be nothing but a dud.

It would not surprise me if Kim Jong Un's current saber rattling and bluster is nothing more than a scheme to get foreign countries to make concessions, in the form of pay-offs, as an attempt to keep his regime in power. I cannot think of any other possible reason for such foolhardy brinkmanship by North Korea other than hoping to get bought off for "peace."

While I don't think we should take any threat of nuclear attack lightly...I also can't quite take these clowns completely seriously either.  What will their price be?  $40 Billion and Starbucks franchise rights?  Maybe a McDoanlds in Pyongyang?  Whatever it is, we cannot pay it...we cannot allow ourselves to be shaken down by this ridiculous boy dictator.

The best thing for a roaring mouse is a simple mouse trap.

The More Things Change...

It's as true today as it was then...people don't know history...they are clueless about how the economy works...and don't know or care about the consequences of the way they vote.  People STILL believe that the Great Depression was a failure of the Free Market.  Why?  Because those really at fault, government, told them so.  But Friedman tells a different story:

"So the Great Depression was not produced by a failure of business.  On the contrary, it was produced by a failure of government...and a failure of government in an area in which responsibility had been assigned to government since the founding of this country...We have learned from that failure.  The Federal Reserve will not fail in the same way again.  This time it will fail in a different way.  This time it has been failing, not by producing a Great Depression, but by producing an inflation.  Because just as you will hear the story that it was business that was responsible for the depression, so you will today  hear the story that it is labor and management that are responsible for inflation.  It is the same kind of a myth."

The inflation he is speaking of here is in the 1970s when interest rates were in the double-digits and much of the American manufacturing base, such as steel, collapsed.  President Gerald Ford ran on a W.I.N. platform, which stood for Whip Inflation Now.  It was a time of what was being called "hyper-inflation," and it was devastating to our economy.

Today, we are on the verge of another devastation to our economy.  The Federal Reserve is printing more and more money.  This causes the value of the dollar to drop, and therefore, prices to raise...this is inflation.  But who is to blame.  Once again, Friedman tells it like it is:

"Inflation is made in one place, and one place only...Washington D.C.  And in Washington D.C., the chief source...immediate source of inflation...is a Greek temple on Constitution Avenue, which houses the Federal Reserve Board.  An accomplice, and a major accomplice of course, sits in the halls of Congress in Washington.  They are a major accomplice because you tell 'em to be.  The American people have been telling Congress for many years, 'Spend more money on us, please.'  But they've been telling us, 'Don't raise our taxes.'  Congress has been listening.  It's been spending more money on you, but, on the other hand, its been very unwilling to raise taxes.  As a result, its imposed inflation as a tax. That's one tax you don't have to vote for...but you have to pay."

I fear, though, that things are building to be even worse.  With the debt as high as it is, many in government today seem to have no problem both causing inflation and increasing taxes.

Watch the whole video.  It's an interesting history lesson, one that is very relevant for today.

Ashamed?

http://www.cato.org/blog/sequestration-cuts-perspective

On his March 21st show, Rush Limbaugh made the following statement: "Ladies and gentlemen, for the first time in my life, I am ashamed of my country." Audio can be found here.

Rush lists as his reason for shame the way we are having "our common sense and intelligence insulted the way it's being." The latest insult to our intelligence for which Rush has gotten so incensed is the maelstrom that is being whipped up over the so-called sequestration cuts to the budget.  As Rush said, it is only "44 billion dollars...that's the total amount of money that will not be spent that was scheduled to be spent this year.  And, in truth, we're gonna spend more this year than we spent last year...There is no real cut below a base-line of zero."  But we are to believe that any cuts at all to the planned spending of our bloated bureaucracy will cause a collapse of all of our necessary government services.  It's as if the line from the movie Ghost Busters is about to come true:

"What he means is Old Testament...real wrath of God type stuff...Fire and brimstone coming down from the skies! Rivers and seas boiling!...Forty years of darkness! Earthquakes, volcanoes...The dead rising from the grave!...Human sacrifice, dogs and cats living together... mass hysteria! "

All this over a $44 B cut to the baseline budget.  As Larry Kudlow states, "According to the CBO, budget outlays will come down by $44 billion, or one-quarter of 1 percent of GDP (GDP is $15.8 trillion). What's more, that $44 billion outlay reduction is only 1.25 percent of the $3.6 trillion government budget."  And remember, that is 1.25% of the proposed increased budget over last year...so no real cuts.  Kudlow also observed that:

"Federal outlays as a share of GDP peaked at 25.2 percent in fiscal-year 2009, fell to 24.1 percent in 2011, and came in at 22.8 percent in 2012. The long-term historical norm is about 19 percent, so spending is still way too high. But some progress has been made. And if the GOP sticks to its guns and implements the current sequester, a lot more progress will be made, opening the door to a stronger economy."

"In other words, lower spending and limited government are the exact right medicine for free-market prosperity. The sequester cuts are pro-growth. Finish the job, please."

So, should this make Rush ashamed of his country?  Well, it makes me ashamed.  I love this country and what it has stood for in the history of the world.  But there are many things I am ashamed of when it comes to the current state of our country.  I am ashamed that as a whole, through our votes and indifference, we have allowed our country to come under the control of unscrupulous, power hungry statists.  I'm ashamed that the majority of citizens have given up on the founding principles that made this the freest and most prosperous country in the world.  More than that, they don't even know what those principles are, other than a few platitudes, and worse, don't care.

I am ashamed that after once being the most prosperous, productive and innovative country on the face of the planet, we have become a debtor nation, owing more in debt than the entire GDP of our economy.  That we have fallen behind in education and manufacturing. And that those on the government dole nearly exceeds those who make their own way.  I am ashamed that we seem to have become a country of spoiled, irresponsible children with an entitlement mentality who would rather pass their debt to posterity than give up their government freebies.

I am ashamed that after so much progress has been made since the struggles of the civil rights movement of the 1960s, so many have abandoned Dr. King's dream that people would "not be judged by the color of their skin but by the content of their character."  Too many people follow the purveyors of multiculturalism and class warfare who seek to divide and weaken us...benefiting only the purveyors themselves.  I am ashamed that so many voted for a presidential candidate with no qualifications for the job, an unknown and questionable background with very anti-American associations only because of the color of his skin, or because they believed he would deliver the goodies...like free cell phones.

I'm ashamed that our First Amendment rights are under assault from political correctness....that our Second Amendment rights are being attacked so viciously by the Progressive statists...and most people just shrug and say, "What are you gonna do?"  I'm ashamed that no one can seem to recognize any more that if the government can take rights from those you don't like...they can take them from you.

 Yes, I am ashamed of many aspects of the current state of affairs in this great country.  I am ashamed and afraid that my generation and my parent's generation may have allowed the erosion of our liberties to come to a point where they cannot be reclaimed.  That we may be witness to the final demise of the great American experiment in freedom.

What about you?

Aftermath

I'm a bit too shell shocked to go into any real analysis of the election, so I just wanted to get down some of my general thoughts:

• This is now the second presidential election in a row where the Republican party decided it was best to run a "nice" campaign.  They are so kowtowed by the threats of being called racist, that they would not deal directly and firmly with Obama's history and record.  They allowed the Democrats to continue to distort facts with very little response.  This is a complete lack of leadership and the Republican party deserved to lose.
• It seems to me that we have now become a country, as a whole, who is willing to follow Europe down the socialist debt hole toward insolvency.   Alexis de Tocqueville  is credited with saying, “A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largess from the public treasury. From that moment on, the majority always votes for the candidates promising the most benefits from the public treasury with the result that a democracy always collapses over loose fiscal policy, always followed by a dictatorship. The average age of the world's greatest civilizations has been 200 years.”  We seem to have reached this point.  We no longer ask what we can do for our country, but want only to know what our country can do for us.  We seem to be willing to sell our legacy for free health care, food stamps and Obama phones.
• The nation has reached a state of shallowness and vapidity from which I fear only truly hard times will shake us.  I saw polling information that said something like 43% of those responding to exit polling said that President Obama's handling of the hurricane Sandy disaster was "very important" to their decision.  This is absolutely astounding...and more than a little distressing...to me.  That someone could, after four years of broken promises, failed policy and nonexistent leadership, see the President acting "presidential" in a brief, staged photo-op after a storm and think that made him a good president is incomprehensible.  The fact that the response of the Federal government has been less than stellar since then means nothing to the Obama groupies with stars in their eyes.
• Half the country seems to be hopelessly invested in class warfare...just like the Russian people were before the communist revolution...or the Germans before the Nazi take over.  This has caused them to draw stark, black and white lines in their minds.  Corporations are always evil and Unions are always good.  Democrats always acts for the good of the people and tell the truth...Republicans are selfish liars who only care about what's best for them and their Corporate overlords.  The rich have stolen everything they have from the poor. They are blind to the fact that absolute power corrupts, absolutely...regardless of party, occupation or income.  They are easily fooled by 20 second sound bites and focus-group tested tag lines.
•  Facts and details mean nothing to many people.  They will not hear the truth that the largess they vote themselves is financed by trillions of dollars of indebtedness to our enemies.  They will not see that the policies of their chosen representatives have caused the financial woes we have been experiencing.   No discussion of corruption...no discussion of the rule of law moves them.  They mock, scoff at and ignore anything that does not agree with the approved party line...and this is on both sides of the political divide.  When confronted with hard issues, they do not answer them...they will only excuse, obfuscate or ignore them...but never deal with them.  If all else fails, they just blame Bush.
• There are no statesmen left...only power hungry politicians. 
• The Republicans are only marginally better than the Democrats...but we were unwilling to move even incrementally toward smaller, less intrusive government.
• I fear for our future.

Debt Limit Looming...Again!

In July of 2011, I did a post with two videos arguing against raising the Federal debt ceiling.  Well, of course they did it...they raised the ceiling.  At that time, we were about to come up against a $14.2 trillion debt limit.  We were told we had to raise the debt ceiling or we would be in default...a lie.  Now, less than a year and a half later, Newsmax,com reports that, "The Obama administration said on Wednesday that the nation would hit the legal limit on its debt near the year's end..."  That's right, now the Central Spending Machine is only "$235 billion below the $16.4 trillion statutory ceiling on the amount it can borrow."  The Debt now exceeds the GDP of the entire country at just over $15 trillion.

In an October 2011 post, when we were a mere $14 trillion in debt, I tried to put the National Debt in Perspective.  In that post I said:

"In 2010, The US government spent more than $413 Billion on interest payments alone. This is more than was spent on The Department of Health and Human Services…The Departments of Transportation, Energy, Veterans Affairs, Housing and Urban Development, Justice, Homeland Security, Agriculture, Commerce…hold on, I’m almost done…The Department of Treasury, Department of Labor and the Small Business Administration …COMBINED. Just to service current debt. And, according to the non-partisan Congressional Budget Office, the interest payments on the debt are projected to be $1.1 Trillion a year by 2021, a mere 10 years from now."

I also pointed out that then it would have taken 384 years to pay off the debt if government stopped spending any other money and just paid $100,000,000 a day on the debt.  That time frame has increased by 65 years to 449 years...in a year and a half.

Let me remind you that candidate Obama said of President Bush's addition of $4 trillion to the debt in eight years, "That's irresponsible. It's unpatriotic."  Which I agreed with.  Now Obama will have raised the debt by more than $6 trillion in four years.

The Debt ceiling has been raised 10 times in the last decade, from $5.9 trillion to $16.4 trillion. And now, the Treasury is already calling for another hike, "As we saw last summer, it is important that the debt limit is raised in a timely manner," said Treasury Assistant Secretary Matthew Rutherford.  

Our credit rating has already fallen.  Our spending is out of control.  We cannot continue to raise the debt ceiling.  We cannot continue to pass results of the current government's irresponsibility down to our children, grandchildren ..and great, great grandchildren.  We need to take responsibility.  We need people who do not allow their votes to be bought with government hand-outs.  We need serious adult leadership in government.  We need to reduce the size and scope of government...and we can't put it off.

Obamanomics

Andrew Klaven provides another humorous and irreverent look at Obama's policies and understanding...or rather lack of understanding of how the economy works.

Klaven refers to James R, Otteson's article, An Audacious Promise: The Moral Case for Capitalism for The Manhattan Institute.   In this article, Otteson points out that while Obama said that "the market" or capitalism "doesn't work. It has never worked," this flies in the face of historical facts:

"Since 1800, the world’s population has increased sixfold; yet despite this enormous increase, real income per person has increased approximately 16-fold. That is a truly amazing achievement. In America, the increase is even more dramatic: in 1800, the total population in America was 5.3 million, life expectancy was 39, and the real gross domestic product per capita was $1,343 (in 2010 dollars); in 2011, our population was 308 million, our life expectancy was 78, and our GDP per capita was $48,800. Thus even while the population increased 58-fold, our life expectancy doubled, and our GDP per capita increased almost 36-fold. Such growth is unprecedented in the history of humankind. Considering that worldwide per-capita real income for the previous 99.9 percent of human existence averaged consistently around $1 per day, that is extraordinary. "

"What explains it? It would seem that it is due principally to the complex of institutions usually included under the term “capitalism,” since the main thing that changed between 200 years ago and the previous 100,000 years of human history was the introduction and embrace of so-called capitalist institutions—particularly, private property and markets."

The article goes on to show that, contrary to socialist propaganda, capitalism is actually the system that benefits the most people and is, in fact, the moral choice.  Some of his key points are:

• "(M)arkets allow us to 'serve' one another even when we do not love one another—even when we do not know of one another’s existence."
• "(V)oluntary exchanges that take place in the free-enterprise system are positive-sum, not zero-sum—meaning not that one person benefits only at another’s expense but rather that all parties to the transaction benefit."
• "Even if we do not all get rich at the same rate, we all still get richer."
• Rescuing hundreds of millions of people from grinding poverty is, however, nothing to sneeze at—and nothing to take for granted."

Otteson admitts that, "Capitalism is not perfect."  But, he points out that, "The benefits of the free-enterprise society are enormous and unprecedented; they have meant the difference between life and death for hundreds of millions of people and have afforded a dignity to populations that are otherwise forgotten. We should wish to extend these benefits rather than to curtail them."

"It would be all too easy for us, among the wealthiest people who have ever lived, in one of the richest places on earth, to disdain the institutions that have enabled us to escape the strictures of poverty and disrespect that have plagued humanity for the vast majority of its existence. Our crime today, however, would lie not in our inequalities but rather in our refusal to uphold the institutions that give humanity the only hope it has ever known of rising out of its natural state of destitution. The great and precious blessings of freedom and prosperity that we Americans have enjoyed, and that some, but not enough, others around the world have also experienced, deserve nothing less."

Do you really want a president who is so completely ignorant of how the economy really works?  I don't.

Enjoy the video, but don't miss it's point.

Retire the Debt Overnight?

For another way to look at the Federal debt, I thought it would be helpful to do a little thought experiment:

If the Federal debt of $16.2 Trillion were divided among all Americans, each of our more than 314 million citizens would owe in excess of  $51,000 to retire it.  Let's say that there was a way, through great effort and sacrifice by all of the patriotic people of the country, to collect this amount from every citizen and retire the debt ...maybe some would pay more than others...corporations would also contribute.  What if we could do this and erase the debt overnight?  Would you be in favor of this?

Think about it, all the problems that arise from such a large debt that I and others have chronicled...gone over night.  No more indebtedness to China...no more credit problems.  This would be great, right?  Well, the problem is that Federal spending exceeds revenue every year by about $1.1 Trillion at today's spending levels. This would mean that one year after the country went to extraordinary measures and sacrifice to retire the debt, each citizen would already owe an additional  $3,500 above their normal tax burden..that's every citizen, children, old, sick, handicapped, ...everyone. Additionally, with current programs and rates, there are future, unfunded liabilities for spending on things like Social Security and Medicare in excess of $61 Trillion...or more than $500,000 per household.   Of course this is not current debt, but gives a view of future debt.

What does this all mean?  Well, it's as I've said again and again, we don't have a revenue problem, we have a spending problem. Even if we got the revenue to retire the debt overnight, the government would be back in debt in no time.  With current spending, there's no way to get things in check.  Government is like an out-of-control teen with credit cards.  Even if they consolidate all of their cards,  they will just run them up again.  We have to take away the cards.  We must return to small, decentralized and limited central government as as was intended by our founders and is in fact law through the Constitution.  We must return our States to a place of prominence, where they can apply checks on the power if the Federal body.  We cannot sustain...cannot long endure...under the current, corrupted system.

This does not, regardless of what the desperate central planners would have you believe, mean that the poor would be left to live or die on  their own.  It does not mean old people would be forced to eat cat food to survive.  States could look after their own citizens as they see fit, without the burden of overhead caused by the huge Federal bureaucracy.  Each State, according to the wishes of their own electorate, can deal with these problems on their own terms.  If some states wish to pursue a "socialist-like" solution, they are able to...but with no bailouts from the Federal government if it fails.

With this arrangement, I believe States will quickly find viable solutions.  They will have to balance policies that keep and attract business for full employment with the needs of their less fortunate citizens.  They will have to compete for services and opportunity to keep people from moving to states that better meet their needs and expectations.  To do this with no bail-outs means they will have to do what works, and not engage in wild,  Utopian experiments.  They will only be able to provide safety nets to the "truly needy," as they define it in their own States.  In short, they will have to run their affairs like responsible adults and not spoiled kids.  This is the Utility of Federalism that I have posted about in the past.

Ask yourself, would you trust your money to an investment that created ever-increasing, crushing debt, no matter how much money you contributed?  An investment with huge overhead and red tape?  Of course not.  Why would you then trust our current government?  This may go against what you have always believed, but it is what the founders intended.  As for myself, I would rather stand with the learned, patriotic statesmen of the founding than the power-hungry, corrupt politicians of today.

Tax the Rich?

I know I have posted several Antony Davies videos, but he is very good at putting debt and deficit issues in very clear perspective.

One thing that Liberals, Keynesians, and Class Warriors of all stripes always ignore is that there are consequences to their policies.  Namely, that higher taxes are a disincentive to business and economic activity in general.  Davies points out that to balance the budget (not reduce the debt) you would have to raise the taxes of the top 5% of Americans to 88%.  This would reduce the average "rich household's" real income to about $36,000/year.  "Making the average rich household worse off than the average household."

Would you, or anyone, continue to work hard to make a lot of money if it were going to be taken from you, redistributed to the less productive, and make you worse off than someone with an average job?  History tells us no.  Whether the pilgrims of Plymouth Colony who became lazy and unproductive in their commune established by the Mayflower Compact, or the Soviet people who had a common saying that "as long as they pretend to pay us, we will pretend to work."  Socialism has never worked.  Taking from the rich simply makes the rich less productive...taxing corporations simply passes on the cost to the consumer, who buys less product.  Raising taxes on any activity reduces the activity...which reduces the tax revenue.  Many central planners have been surprised and dismayed, for example, that raising taxes on cigarettes has actually resulted in decreased revenue as some people stop smoking or cut back, and some find other, lower taxed sources.

Here is another great video where Professor Davies shows how ridiculous it is to continue to call for taxing the rich to deal with our deficit   The answer is to CUT SPENDING.  As he says in the last line of the video:

"The budget deficit is so large that there simply aren't enough rich people to tax to raise enough to balance the budget."

How Do We Balance The Budget?

Regardless of who wins the upcoming Presidential election, there are hard decisions to be made to avoid a financial disaster in our country.  Federal spending is out of control with no apparent end in site. At the time of this posting the Federal debt exceeds $16 Trillion.  That's:

$16,000,000,000,000

In past posts I have put this kind of debt in perspective (and that was in 2011 when the debt was only $14 Trillion)...I have shown that it is not a revenue problem, but a spending problem.  Raising taxes can't fix it, because you could tax corporations and everyone who is considered rich at 100% and still not have enough money to feed the government's spending habit.

Though everyone knows that we have an unsustainable debt problem...that our deficits continue to grow, government continues to expand programs...and therefore spending.  Not only that, but the government has been actively advertising and recruiting to get more people on the roles of programs like food stamps.  Today the Washington Times reported that "Overall, welfare spending as measured by obligations has grown from $563 billion in fiscal 2008 to $746 billion in fiscal 2011, or a jump of 32 percent."  While welfare programs were cut during the Clinton administration, the Obama administration has been redoubling their efforts to increase this spending.

We are headed in the wrong direction.   I agree with then candidate Obama when he said of the much smaller debt under Bush, "That's irresponsible.  It's unpatriotic." We must first stop the bleeding, and then begin to return to fiscal responsibility and prudence.  This can only happen through a return to the principles of limited and decentralized government.  Come on folks, let's get patriotic again.

Professor Antony Davies has another great video on the issue:

The Sin of Redistribution

Professor Walter E. Williams makes the case that redistribution of wealth by government is theft, and therefore a sin.

The Problem of The Poor

Milton Friedman is as relevant on this point today as he was in 1978...maybe more so.  In 1978, we did not have a $16 TRILLION Federal debt with an even larger unfunded future entitlement liability.

"Stimulus" Doesn't Stimulate

Facts are facts.

Do Words Matter?

Obama says "Don't tell me words don't matter."  I agree...they do.  This video takes a look at Obama's own words...and the truth.

Side Effects

I'm always amazed, after hearing the possible side-effects of drugs on the TV commercials, how quick Americans are to swallow pills for nearly any symptom.  I mean, have you paid attention to the legally required fast-talker at the end of any of these commercials?

Symptoms may include drowsiness, dizziness, thoughts of suicide...headaches... diarrhea... nausea...may cause heart damage...liver damage...may result in decreased sex drive.  Call your doctor if you have trouble breathing... sleeping...going to the bathroom..or if it lasts more than four hours.  Don't take this product if you are pregnant...may ever become pregnant...are around anyone who is pregnant.  Rare...but not so rare that we can't mention it...side effects can include hair loss...blindness...stroke...heart attack...or DEATH.

Seriously?  I think, in most cases, I'd rather put up with the original symptoms than risk the kind of side effects I hear on these commercials.  Now, don't get me wrong, I know modern drugs have helped to improve and prolong the lives of millions upon millions of people  Too many times, though, people risk these serious complications for symptoms that are not life threatening, or which could be treated through a lifestyle change...stop smoking...get some exercise...stop eating donuts five times a day...you know, stuff like that.

But, I realize that this is the kind of society we live in now.  Most people want a quick fix.  Just give them a pill that they can pop and let them go on their way.  Many times, they have to take other pills to counteract the side effects of the first pills and before you know it, nobody is sure what is causing which symptom.  I have seen this happen with my own family members, being on so many drugs from different doctors that it causes unforeseen reactions. But, on the whole,we as a society continue to blindly trust our health to the pills and potions dispensed by our doctors...regardless of the possible side effects.  But really, wouldn't most of us be better taking less drugs and understanding all of the possible side effects and interactions of what we do take?

I have also come to realize that this same societal propensity for the quick-fix pill has given us our current state of all-invasive government.  When we see something we don't like, some perceived injustice, immorality, or even just an inconvenience, we too often turn to government for a quick fix.  Over the years, too many have come to trust elected officials as they do doctors...without questioning, trusting that that their council and prescriptions must be what's best.  Unlike doctors though, government's prescriptions -- laws, taxes, regulations, fines, programs and pork -- don't just affect those seeking symptom relief, but spills over onto all of society.

The United States of America was founded by people who rebelled against an overreaching, tyrannical government.  They saw that, as George Washington said, "Government is not reason; it is not eloquent; it is force. Like fire, it is a dangerous servant and a fearful master."  These founders sought to decentralize and limit government to it's bare minimum required to allow people to live in a civil society.  The big debate during the Constitutional Convention was between those who wanted a very limited central government (the Federalists) and those who wanted an even more limited government (the Anti-federalists).  They realized that there was a place for government, but that it should be used as a last resort and as little as possible for the over-all health of society.

Today, though, many see government, like pills, as the first recourse for nearly any perceived ill in society...seemingly with absolutely no regard for possible side effects.  The side effects and interactions of government are not rare and are very detrimental to the health of society and liberty.  Let's look at just a couple of examples of side effects of government:

As laws are the main prescription dispensed from the government apothecary, many citizens believe that the main job of their representatives is to churn out new laws.  There are thousands and thousands of laws on the books with new ones being passed every year.  Most of these laws have penalties for those who break them.    Penalties typically consist of fines or incarceration.  Every new law creates potential for people to break them...and therefore new enforcement.  A side effect of so many laws is the high rate of incarceration we have in this country, higher than all of the other developed countries in the world...combined.  With only 4.5% of the world's population, we imprison 23% of the world's prisoners.  Ask yourself, is this because America is such an evil den of criminals?   Are we worse than China...than Russia?  Are we on the verge of some dystopian collapse or is it that the thousands and thousands of laws we have on the books provides huge opportunity for the use of government force?  John Stossel has a great program on the subject called Illegal Everything.

What about the laws that are made to help people?  Surely these are okay, right?  Well, let's look at one of government's attempts to help people.  Back in the 1990s, during the Clinton administration, the government said it was just unfair that everyone wasn't able to own their own home.  President Clinton launched The National Homeownership Strategy which spawned the Community Reinvestment Act (CRA) in 1994 to encourage more lending in poor and minority neighborhood (article on details).  To make a long story short, government meddling, through Fannie Mae and Freddie Mac caused the banks to offer loans to families that they wouldn't have normally been able to afford.  This meant demand for housing went up, and with increased demand there is increased pricing. Raising prices caused real estate speculation to raise.  Government then strong-armed the banks to increase level of lending and create more favorable terms to allow families to cope with the rising costs.  This all caused the housing bubble that eventually burst and was a major cause of our current economic woes.  The end result is that the very people the law was intended to help were hurt the worst...along with the rest of the country.

Loop holes are a side effect of the interactions of laws.  It seems that no sooner than a law is passed, there are people lobbying congress for relief from aspects of the law that caused new, undesirable symptoms.  Politicians, of course, are more than happy to offer new laws or adjustments for the proper...ah, remunerations to their reelection funds.  The latest example of this is the hundreds (about 1200 to be exact) of companies who lined up and received exemptions from Obamacare.  

If we accept the truism that "power corrupts," it should also be noted that power emboldens.  As we have ceded more of our power to the politicians and trusted them to always make the right decisions for us, they have become like physicians with a god complex.  At least doctors are well trained and tested to perform their roles.  Politicians need only convince people to vote for them to get their jobs.  Being elected does not make them an expert in anything, but they increasingly act as if they know what's best for us and will inflict their will on us whether we agree or not.  The passage of Obamacare is a good recent example of this side effect also.  We were told that we just didn't understand the issues...that we had to pass the law before we could know what was in it.   Over the stringent protests of a majority of the American people, in an act of supreme arrogance, the Democratically controlled Congress, lead by Reid and Pelosi, passed the largest tax hike in the history of the country in the Patient Protection and Affordable Care Act, aka Obamacare.

These are just a few examples of the side effects of an overreaching government.  Multiply this by the thousands and thousands of laws, regulations and policies that are inflicted on us by government.  Don't get me wrong, though I lean very heavily libertarian, I do believe there is a place for government.  I just believe, as the founders did, that it should be dispensed sparingly with great care and with close attention to possible side effects:

Government: CAUTION, possible side effects include incarceration, high taxation, over regulation, bankruptcy, market bubbles, loop holes, corruption, huge debt, deficits and a general loss of liberty.

The Truth Behind "You Didn't Build That"

When Obama made his now infamous "You didn't build that," speech, we got a deeper insight into the true beliefs and motivations of this president.  As Daren Jonescu points out in his article in the American Thinker, Obama is espousing a central tenet of communist doctrine, namely, there is no private ownership of property.

It was Pierre-Joseph Proudhon who first proposed the idea that "property is theft" in his book What Is Property.  An excerpt from this book gives the basis of the doctrine:

"If I were asked to answer the following question: What is slavery? and I should answer in one word, It is murder!, my meaning would be understood at once. No extended argument would be required . . . Why, then, to this other question: What is property? may I not likewise answer, It is robbery!, without the certainty of being misunderstood; the second proposition being no other than a transformation of the first?"

As you can see here, Proudhon called property ownership robbery and drew a direct equivalency between private property ownership and slavery and murder.  It was this same book that led Karl Marx to call for the abolishment of all private property.  

Another of the fathers of communist thought, Jean-Jacques Rousseau made a similar assertion when he said, "The first man who, having enclosed a piece of ground, bethought himself of saying 'This is mine,' and found people simple enough to believe him, was the real founder of civil society. From how many crimes, wars, and murders, from how many horrors and misfortunes might not any one have saved mankind, by pulling up the stakes, or filling up the ditch, and crying to his fellows: Beware of listening to this imposter; you are undone if you once forget that the fruits of the earth belong to us all, and the earth itself to nobody."

 This has been a standard mantra for collectivists and central planners throughout the years...and Obama carries the banner forward.  As Jonescu points out, "The 'fundamental transformation' Obama seeks to impose on America has many practical manifestations, but all his sundry means relate to one basic end. This is the permanent 'transformation' of a nation grounded in the principle of individual self-ownership (the philosophical foundation of property rights) into a nation grounded in the principle that everything you have is merely on loan to you from the great gods of collectivism -- 'society,' 'history,' and 'government.' "  As much as they try to deny it, Obama is a communist/socialist/ collectivist/central planner.  These are all just labels for the same basic worldview with roots in the political philosophy of writers like Proudhon and Rousseau.

This philosophy is in direct opposition to the foundational principles of our country.  The United States was based, in no small part, on the idea of personal property rights.  One of the key philosophers who influenced the American founders was John Locke.  As Jonescu points out, Locke had a completely different view of property.  Lock stated that  "Though the earth and all inferior creatures be common to all men [in the state of nature], yet every man has a 'property' in his own 'person.' This nobody has any right to but himself."  Additionally, Locke said, "The 'labour' of his body and the 'work' of his hands, we may say, are properly his. Whatsoever, then, he removes out of the state that Nature hath provided and left it in, he hath mixed his labour with it, and joined to it something that is his own, and thereby makes it his property. It being by him removed from the common state Nature placed it in, it hath by this labour something annexed to it that excludes the common right of other men."  In other words, Your body is your own...all that your labor has earned belongs to you...and not to anyone else.

But, Obama and his fellow communists believe, that all property is held in common, and, therefore, it is only natural that someone who has more should have to give up what he has to those who have less. This is his point when he says. "If you've got a business, you didn't build that. Somebody else made that happen."  He is just repeating what he has learned through his life being influenced by communist thought.  We know that he sought out Marxist professors in college...that he has been mentored by Marxists like Frank Marshall Davis and Bill Ayers.  He believes in redistribution of wealth, and that allowing people to keep their own money is equivalent to government spending, as if all money belongs to government to begin with.  So..."You didn't build that," shouldn't surprise us.  In his mind, nothing can be done outside the collective and without a central government...and that, my friends, is communism, pure and simple.

Jonescu summarizes:

"The reason why one has no right to the fruit of another man's labor is not to be casually glossed, and it cannot be overemphasized: the other man's labor is itself his property, derived from his most fundamental property, namely himself.  (This explains why state-controlled medicine is the ultimate policy prize of leftists; it directly attacks the heart of property rights, the right to the use and preservation of your own person.)"

"This brings us back to modern progressivism, and its chief mouthpiece, Barack Obama.  By denying the inviolable right of the 'successful' to the legitimately acquired result of their intellectual and physical efforts, Obama and his cohorts are denying the successful man's ownership of himself."

Today, Obama only calls for the fruits of those he deems as "rich."  This is the essence of class warfare.  But, if "the rich" can have their property so casually confiscated, what will keep them for coming for yours and mine?  Communist philosophy has never in the history of the world lead to societies with more freedom and prosperity.  It has only lead to totalitarianism by a group of elite central rulers at the expense of the masses. 

Obama and his cohorts represent a clear and present danger to our liberties.  They stand against the founding principles of this great country and on the shoulders of their Marxist mentors.  They must be defeated, both politically and in the hearts and minds of the people.  

Obama must be voted out of office in November!

Obama Tax Hikes Will Cost Jobs

A study recently released by Earnst & Young, LLP says that if the Bush-era tax cuts for wage earners over $250,000 are allowed to expire, the country will lose 710,000 jobs while the economy declines by $200 billion.  The report's author, Robert Carroll wrote, “The higher tax rates will have significant adverse economic effects in the long run: lowering output, employment, investment, the capital stock and real after-tax wages when the resulting revenue is used to finance additional government spending.”

Of course, the Democrats are rushing to dismiss the report's assumptions, methodology, and conclusions because it does not fit their tax-and-spend doctrine.   White House spokeswoman, Amy Brundage posted analysis from Jason Furman of the National Economic Council which says that the report “fallaciously assumes that the tax cuts are used to finance additional spending, ignoring the benefits of what the president actually proposed, which was to use the revenue as part of a balanced plan to reduce the deficit and stabilize the debt.”  Even if all of the revenues raised by this tax hike went to helping reduce the deficit, it is only estimated to raise enough to fund the deficit for about eight days...not eight days of government spending, mind you, just the deficit spending.

Furman claims that Obama's plan "includes $2.50 of spending cuts for every $1.00 of revenue."  What in the history of Obama, or the Democrats...or the Republicans, for that matter...would lead anyone to believe that they won't continue to increase spending?  This president has presided over the largest accumulation of national debt in the history of the country, by far.  Debt has increased by more than $5 TRILLION in less than four years.  This claim is eerily familiar to when the Democratically controlled Congress promised President George H. W. Bush three dollars in spending cuts for every one dollar of tax hikes. Bush famously capitulated, breaking his "read my lips, no new taxes" pledge.  What he got was not spending cuts, but...you know what's coming, don't you...that's right, increased spending. 

Frum says that the study "leaves out the President’s proposed new tax cuts for business hiring and investment."  This is proposed, of course, and not actual, enacted tax cuts. Obama's cuts will, supposedly provide a "10 percent tax credit for business hiring and wage increases and allowing immediate write-offs of new investment through the end of 2012."  So, with these cuts, Obama is trying once again to micromanage the economy.  Businesses do not hire because they get tax credits for doing so; they hire when demand for their products and/or services is high enough to justify adding head count.  In prolonged downturns of the economy, businesses are even more hesitant to hire, due to the uncertainties of the market.  Instead, they make due with the employees they have working more and more overtime before hiring.  This is why hiring is always a lagging indicator for economic recovery.

In a May article on the NPR web site, columnist Fred Barnes said there are problems with, what he calls
"Obama's phantom tax breaks." Here's what he said:

"There are three big problems here. The first is that his 17 tax cuts have had little if any impact on small businesses or the economy. Basically, they failed. Second, his new cuts are much like the earlier ones. They're temporary, narrow, and not what small business owners are asking for, which are fewer regulations and a permanent cut in the personal income tax rate or at least no hike in that rate. Third, they have no chance of being enacted in 2012."

Frum continues by saying that even the Earnst & Young report acknowledges "that the short-run impact of extending the high-income tax cuts will be proportionately less than the impact of the middle-income cuts, noting that a 'disproportionate share of the tax change is likely to be channeled through savings for taxpayers facing the top tax rates as compared to other taxpayers.'  As I have been prone to saying a lot lately, SO WHAT?  This is just basically saying that raising taxes on the middle-income earners is also a bad idea.  It does not negate the claims that there will be job loss and economic downturn.

The main reason for the job loss seems to be that a large number of small businesses file at an individual rate rather than a corporate rate.  Obama claims that he will be giving "tax cuts for 97 percent of all small-business owners in America." and his proposal "isn’t about taxing job creators, this is about helping job creators.”  But, the businesses under $250,000 a year are not job creators.  These are mostly small, one or two person shops...consultants and freelancers.  The Heritage Foundation calculated that "the average American with $250,000 or more in income can expect an average $24,888 tax increase next year under Obama’s proposed policies."  Looking at Treasury Department data they determined that "1.2 million small businesses both had employees and earned more than $200,000 in 2007. So the President is putting about 1.2 million jobs—perhaps even more—at risk with this tax hike." 

Obama is a big-government socialist.  He claims that, in his words, "It is only government that can break the vicious cycle where lost jobs leads to people spending less money, which leads to even more layoffs."  He believes that not raising taxes on Americans is spending by the government.  And so far, all of his policies that are supposedly aimed at fixing the economy through big-government solutions have been complete failures.  So please excuse me if I might tend to accept the conclusions of the Earnst & Young report over anything this failed president or his minions might offer as evidence supporting their plans.   Expecting more of the same to work this time is the very definition of insanity.