Obama - Eighteen Months and Counting

We are approaching the eighteen month mark of the Obama Presidency and what a ride it has been. Despite Candidate Obama’s criticism of the deficit under the Bush administration, President Obama has presided over a quadrupling of deficit spending and has to date, added a whopping $2.36 trillion dollars to the national debt. The White House’s own calculations show that the spending levels outlined in the President’s budget will add another $9.7 trillion dollars to the national debt over the next ten years. That assumes of course, that we have a budget.

While the Federal government has been busy involving themselves in matters in which they have absolutely no constitutional authority such as healthcare, internet content and taking control of auto manufacturers, Congress has failed to focus on the things they are mandated by law to do such as securing the US borders, overseeing Federal agencies and adopting a budget. Of course, if you have no budget, you don’t have to make the hard choices of what to cut to keep it in balance. Instead, the Federal government continues to address spending by passing bill after bill that extend current spending levels and raising our debt ceiling to keep the cash flowing.

The Obama administration’s contribution to the national debt will shortly equal what Bush spent in the last four years of his presidency. Since his inauguration, Obama has raised the national debt 20% as a percentage of GDP (the entire national economy or Gross Domestic Product) and current calculations show that we will owe 100% of GDP by the year 2015. George Bush added $4.36 trillion to the debt during his entire eight years in office and even though Obama spoke harshly about the fiscal irresponsibility of the Bush administration, President Obama is now poised to far exceed that measure of irresponsibility within the next two years. Moody’s has already warned that America is on the verge of losing its triple A bond rating if we do not reign in our current spending craze. The loss of that rating would require us to pay higher interest on our existing debt and an increase of just a couple of points on a twelve trillion dollar debt would spell financial ruin for the nation but the spending continues unabated.

So what else has the last eighteen months brought us? The Obama administration has brought deep divisions between every race and economic strata in the country. The tactics used to promote their Socialist agenda has created an atmosphere of controversy that has pitted entire groups of people against each other. As the administration tries to gain support for its dangerous and short sighted energy bill, they have gone as far as suggesting it is a race issue; that minority communities are unfairly burdened with a disproportionate amount of industrial pollution. They have taken the seriousness of the civil rights movement of the 1960’s and are trying to frame every aspect of their agenda in terms of racial and economic justice. They are shamelessly using low income and minority communities to forward this agenda; an agenda that will drive those communities deeper into poverty as a very few of the Progressive elite sit back and watch their wealth and power multiply. Of course, since those elite Progressives are friends of the President and the Main Stream Press, those fat cats will be exempt from the same scrutiny used to examine the earnings of Wall Street executives.

Unions and former 1960’s radicals have been instrumental in writing the Stimulus bill, the Healthcare Bill and the Energy Bill. The language in those Bills has funneled billions of tax payer dollars into special projects that benefit the interests that helped write the bills. The President has already thumbed his nose at hard working Americans by issuing an executive order giving preference to Union contractors in government projects costing more than $25 million dollars. That order effectively blocks 80% of private contractors from those projects simply because their employees have not unionized. Under the Healthcare Bill, hospitals are only eligible for Federal funds for training programs if their staffs are unionized; clearly a gift to Andy Stern and the SEIU for their help during the election. Of course Union preferences won’t mean much if we continue on the path of national bankruptcy. After all, you need to have money to fund projects and training programs.

The Obama administration has adopted a policy of sheer luck where counter-terrorism is concerned. Catastrophe has only been avoided because the weapons training that our latest would-be assailants received was flawed and the devices they used failed to detonate. Still, Obama plans on only adding an additional 100 people to review and update the no-fly list but needs 17,000 new IRS agents to make sure you buy healthcare insurance. Our Attorney General, Eric Holder, has problems using the term Radical Islam in connection with these failed terrorists but Director of Homeland Security, Janet Napolitano has no problem using far more troubling descriptors when it comes to defining the dangers posed by Tea Party protestors. In fact, the only danger the Tea Party represents is that they mean to block the President’s agenda and that is something the current administration will not tolerate.

Cass Sunstein, Obama’s “Regulatory Czar” has even suggested that our government use tactics once reserved for the Soviet KGB and discretely infiltrate Tea Parties and other groups that protest the administration’s plans. Sunstein would also like to see the government use its power to organize information campaigns to counter the Tea Party message and promote the President’s agenda. Excuse me, but isn’t that called propaganda? If you don’t believe this administration has no problem using propaganda to gain support and power, take the case of Obama’s latest Supreme Court nominee, Elena Kagan. The White House has impeded any attempt by the press to gain access to Kagan for an interview. They even contacted a school where Kagan’s brother teaches and “suggested” the school deny news access to Kagan’s brother. Instead, an unnamed White House staffer conducted a sanitary interview of Elena Kagan and that is the only material that has been given to the press. What are they hiding? Even Kagan’s thesis has been scrubbed from the internet; a thesis that clearly said she lamented the failure of Socialism to gain momentum in the United States.

The past eighteen months has brought America closer to financial ruin that at any other time in history. The programs and policies of this administration have depleted our ability to respond quickly to additional economic downturns and have placed us dangerously close to the point where we may not be able to afford to adequately defend ourselves. While the Feds corral militia groups in Michigan, North Korea has been acting with impunity against South Korea, apparently unafraid of a meaningful American response. While Congress launches a harsh campaign against Toyota because of safety concerns, Iran continues on the path to nuclear arms without a worry in the world. While the Mexican drug war continues to spill over the border into Arizona and Texas, the Obama administration is seeking to seize private property in Vermont to strengthen our border with Canada.

Obama refuses to answer questions about the radical past of his closest advisors. He refuses to answer questions about why his campaign spent nearly a million dollars to seal documents and information about his past. He refuses to answer questions about why his Social Security number was part of a group of numbers reserved for residents of Connecticut, a State in which he never resided and why that number was issued a full three years after his first known job at a Hawaiian ice cream shop. He refuses to answer questions about why his application for student aid was filed stating he was a foreign student of Indonesian patronage. He even refuses to answer the question about why the birth certificate he submitted to the Federal Elections Commission, a birth certificate issued in 1961, has no State seal and shows his father’s race as African when African is neither a race nor a nation; nor would it have been used as a description of race in 1961 America.

We have a long way to go before November 2012….I only hope the nation can survive that long.

Paul

Mythbusters

The discussions we just had on the Constitution will be useful as we gauge what is happening now, against what should be happening within the framework of the Constitution but as we enter the 2010 campaign season, I also want to expose some myths surrounding modern “political speak” in that context to begin our next segment.

Myth one – FDR’s policies and programs ended the Great Depression.

False - Since President Obama’s proponents are touting him as the new FDR, this myth is the first that needs to be debunked. Nothing can be further from the truth. FDR’s programs were nothing more than keep busy government works projects that kept most at or below the poverty level; actually very similar to today’s Stimulus bill. World War Two sent millions of American men to war taking them off home relief and placing them on the front lines to defend the nation and during the war years, the country’s economy shifted to war production. Since general provisions were limited by the war, a combination of rationing and the tax structure were used to prevent runaway inflation. At the conclusion of the war, nearly every manufacturing center around the world had been destroyed in the fighting except for those located safely within the borders of the United States. From 1945 through the late 1050’s, if you wanted to buy anything, you had to buy it here and that is what ended the Great Depression.

Myth two – Reagan’s tax cuts and policies of “trickle down economics” failed and ultimately quadrupled the National Debt.

Partially true - First of all, to gain the tax cuts Reagan wanted to stimulate the economy, Reagan had to agree to the TEFRA act (Tax Equity and Reform Act) of 1986. Before the Reagan tax cuts, the tax on the wealthiest Americans were roughly 50% (already down from the top marginal tax rates of 80% to 95% during the world war two years). TEFRA eliminated many of the deductions that high earning American’s used to reduce their taxable income. You may want to note that even after the marginal tax rates for the top earners began to climb during the first Bush administration, none of the deductions eliminated under TEFRA had been restored. The only mistake Reagan made was in phasing in his tax cuts over a period of a few years. This stalled the economy for a further two years as business held back, waiting for the goodies that were coming.

Now to the bare facts: OMB figures indicate that the explosion of the economy directly related the Reagan tax cuts resulted in a tripling of revenues to the United States Treasury. Unfortunately, the Congress immediately wrote legislation that spent $1.34 for every new dollar they received. Admittedly, part of that was to fund the military expansion that Reagan insisted was necessary for the security of the nation; but a great deal were pork barrel projects injected into the legislation. Don’t forget, Reagan asked for the line item veto to be able to weed that reckless spending out of the legislation but Congress refused to offer him that power. If he were to move forward on the agenda he felt was vital to the nation, Reagan was given no alternative but to sign these pork laden bills into law. President Clinton was eventually given the power of the line item veto and never used it to weed out frivolous spending. In all fairness, neither did the second Bush administration.

Myth three - Deregulation created the mortgage crisis of 2007.

Partially true - Deregulation certainly allowed for the lapse in accountability that made this possible but to find the roots of the crisis, we need to travel back in time to the Clinton administration. During the Clinton administration there was a push to expand the “American Dream” of home ownership to a segment of the population where it had never existed before. That “push” was in the form of the Federal government fining banks that would not issue what were traditionally considered high risk loans to allow low income people access to home mortgages.

That practice drove the median prices of homes skyward since the law of supply and demand was now challenged by an artificially created marketplace. Those that already owned homes took advantage of the lenient lending terms and free flow of cash to refinance their mortgages based on the inflated value of the property, in essence turning their homes into an ATM machine with a garage and two and a half baths. Many took adjustable rate or interest only loans because they were cheaper thinking they would get into a conventional loan later. They took the difference in cash with some, purchasing additional properties with the idea that property values would continue to go nowhere but up.

Well, you knew it would happen sooner or later but an awful lot of those high risk loans started going sour. Banks that saw trouble on the horizon packaged these loans and sold them to investors. They sold them as securities thinking that the good paper would offset the bad paper, because property values always go up. Well that might have worked if property values weren’t artificially inflated and if property owners hadn’t already cashed in on that.

The net result was due to the high rate of loan failures (the high risk ones the government had forced on lenders) property values plummeted. When it came time for the ATM people to refinance, their home were worth substantially less that the principal they already owed. Unfortunately, the cash they withdrew from the “ATM” was already spent. You already know the story from there.

Myth four - The Stimulus plan (The American Recovery and Reinvestment Act of 2009) is responsible for the creation of millions of jobs.

False - Again, no; only a portion of the $800 billion allocated in the stimulus bill has actually been distributed. As opposed to The Economic Stimulus Act of 2008 which consisted of tax rebate checks put into the hands of tax payers, the American Recovery and Reinvestment Act of 2009 doled out money to the States and Cities. As a note, The Economic Stimulus Act of 2008 consisted of roughly $152 billion given back to the tax payers while The American Recovery and Reinvestment Act of 2009 scripted over $800 billion to fund projects administrated through the States and Cities. They still haven’t figured out that we spend money far better than they do.

In my home town of Phoenix, the stimulus money they received was used to purchase additional traffic enforcement cameras; cameras that will likely be voted out of existence in the next few years as referendum ballots opposing them gain ground. Well that put a lot of people to work, now didn’t it? Much of the stimulus money in other areas was used to fund other previously committed spending like roads or transportation projects.

The facts: much of the stimulus money was used to fund projects that were already awarded to contractors (no new jobs) or was used for “make work” jobs, some of which lasted a total of 36 hours, less than a full work week, before these people were once again, unemployed. The “new jobs” were far less than temporary and the balance of what they claimed credit for, were jobs that had already existed.

As a note, The Economic Stimulus Act of 2008 only failed because people used the money they received to satisfy existing personal debt. In essence, the government had already taken too much and waited too long only to give too little back.

So where am I going with this and is there a common thread? Those of you that have read my work before already know there must be something that ties all of this together. That “thread” is the Federal government’s inability to affect positive change through the manipulation of the free market system. Every time they have tried they have failed and failed miserably. Partly, because they are following an ideology that mainstream America does not share and partly, because they have still been divided amongst themselves for years.

The nation’s capitol has become nothing more that a battlefield of the extreme right and the radical left with the bulk of the nation, meaning you and me, caught in the crossfire. Accusation is met with counter-accusation and whatever party is in control tries to force their agenda through while accusing the other of having no vision and no alternatives.

Since there is apparently a lack of common sense solutions in Congress, let’s see if we can’t frame the real issues and identify some reasonable solutions for them. I know, I know….we are just regular people. Truthfully, I can’t think of any better reason to try since the “professional” legislators have made such an unholy mess of things already. Besides, this is still our country….isn’t it?Paul

More Tax and Spend But Where Are The Jobs?

So the news these days is that the stock market is rallying after the passage of healthcare and the stimulus bill is finally bringing us out of the recession. Newsweek (or is it News Weak? I never can remember) ran a story recently that America is back; claiming the recession is over. Well, if we are actually recovering from the recession, where are the jobs? The increase we see in the Dow has nothing to do with the stimulus bill and while it is on the rise, it is not because companies are hopeful about healthcare savings but because they are trying to mitigate the negative effects the tax increases will bring in the future.

There are massive new taxes on the way because of the healthcare bill in addition to the increases business will see after the Bush tax cuts expire at the end of 2010. Corporations operate under different tax rules than private citizens and are able to shift their losses around to offset earnings where it will provide the most benefit. In fact, corporations can amend previous returns and move losses back three years or use them as far as twenty years into the future to offset future income. That is what we are seeing this year in the Dow. Companies know their taxes will be substantially higher in 2011 and are posting their income in 2010 when the taxes aren’t great, but they aren’t as insane as they will be next year. Once the tax cuts disappear and the new tax impositions from the healthcare bill are in place, the losses and expenses from this year will be used to offset the tax liabilities in 2011 and that will have a drastic effect on the Dow Jones.

Reagan made the same mistake when he took office. He promised tax cuts to rouse the economy but rather than make them immediate, he phased the cuts in, which allowed companies to post losses during the years of higher taxes; biding their time until the tax cuts took affect. Once the tax cuts were in place, the economy soared, ushering in one of the largest peace-time expansions of the GDP in history but before those cuts were actually made, the economy lagged and jobs suffered. Conversely, businesses are now taking advantage of the temporarily lower tax rates knowing that those rates are guaranteed to rise sharply in 2011. Furthermore, business is counting on the November 2010 elections to restore some sanity to government. While the Republicans cannot secure enough seats to repeal healthcare, they can certainly block the funding needed to implement it; stalling the healthcare legislation until 2012 can bring in a new Congress and a new President.

The President can try to put a happy face on the prospects Democrats are facing this election but he knows that a vote for the healthcare bill was a vote for their own retirement. Going into the healthcare vote, Republicans were no more liked than Democrats were but the scandalous way this legislation was forced through Congress against the will of the people has severely damaged the Democrats. While people are not quite sure they can trust Republicans right now, Republicans do have the distinct advantage in not being Democrats. The President has been trying to label Republicans as “the Party of no” but the Democrats have labeled themselves “the Party of sit down and be quiet you silly people”. In the whole grand scheme of things there is an awful lot you can do to Americans before they get truly angry but ignoring them just isn’t an option.

The frightening part about the President’s predicament is that it has fostered another sense of urgency in the White House and now every program and policy the President really wants is going to be desperately rushed in much the same way that TARP, the Stimulus and Healthcare was. Don’t forget that TARP had to be done right then and there or banks were going to fail, throwing America into a new depression. Well, TARP passed and Tim Geithner, Ben Bernanke and the President claimed credit for averting financial disaster but isn’t it funny that as soon as executive salaries were capped in the companies that accepted TARP money, those silly companies discovered that they actually did have liquidity and paid the TARP money back as fast as humanly possible. Well, most of them did. Curiously, the only ones that couldn’t pay the taxpayers back, and in fact, still needed more money, were the government’s own Fannie Mae and Freddie Mac. Imagine that!

Then there was the Stimulus Bill. We had to pass that one without thinking about it because joblessness was on the rise and without this critical infusion of money, the unemployment rate would get as high as 8%. Well, we passed that without thinking about it and unemployment climbed above 10% before stagnating at a miserable 9.7%. Recovery.gov still has no idea how much of your money was wasted on frivolous projects like amphibian underpasses so that frogs and salamanders can safely cross the road or funding studies about the drinking habits of Indonesian transgender prostitutes. Billions are listed as being given to Congressional districts that do not exist and since the government cannot say with any accuracy how many (if any) jobs were actually created, the White House has had to claim that the Stimulus Bill saved two million jobs knowing full well there is no way to substantiate a “saved job”.

With the Healthcare Bill we all watched in horror as the legislative process was subverted into a corrupt and underhanded push to pass something nobody wanted. Harry Reid, Nancy Pelosi and Barack Obama all blamed the Republicans for trying to stonewall the legislation when the bare fact is that the resistance that nearly derailed the bill was entirely on the other side of the aisle. Reluctant Democrats had to be bullied, threatened and bought off just to get the votes they needed to push this through. Once Scott Brown had been elected to the Senate, it was thought that the bill would finally die the death it deserved but the Senate Bill was taken behind closed doors once more where Pelosi and Obama abused House Democrats. They would use the same tactics Harry Reid used, forcing them to vote for the Senate Bill so they could ram it through under reconciliation; requiring only a simple majority in the Senate, effectively negating Scott Brown’s vote.

Now that the healthcare bill has passed all the nasty little details are emerging. The Medicare cuts, the tax increases and the admission by Senate Finance Committee Chairman Max Baucus, that the healthcare bill is designed to “correct a mal-distribution” of wealth in America. For those of us that warned about the redistributive goals of the bill, a healthy “told you so” might certainly be warranted but what good would that do now? Then there are the unintended consequences to deal with. America’s largest corporations are reporting that they will loose hundreds of millions in profits because of the healthcare bill; something that Henry Waxman fumed over, demanding that these companies appear before his committee and explain themselves. Waxman claimed that a report prepared prior to the passage of the bill said these companies would see a decrease in healthcare costs amounting to roughly three-thousand dollars per employee and he insisted upon knowing why they were not taking those savings into consideration. As it turns out, the report to which Henry Waxman was referring had nothing to do with the Senate healthcare bill and was based on a limited and incremental approach to healthcare reform similar to what the Republicans had proposed.

I suppose the funniest story came out last week when the Congress found out that the healthcare bill they all told us they read contained a little secret none of them knew about. Unless they act to correct the bill, Congress and their staff members are all going to lose their health insurance and will be forced into the exchange market. The only problem for them is that the way the law is written, they must lose the insurance now and the market they have to purchase from won’t even exist until 2014.

Despite the President’s promise that jobs are going to be his priority in the coming year his next race to get something past the Senate is on the financial reform bill. This bill places drastic and dangerous limits on American financial institutions placing them at a severe disadvantage when competing against foreign banks that are curiously not mentioned in this “much needed” reform bill. Even though Harry Reid said it may not be possible in an election year, the President insists that immigration reform is right behind his Financial Reform Bill. Also tucking into the White House fast track to destroy the country is the infamous Cap and Trade massive energy tax. The Senate is threatening to unveil their copy of that scam as early as the end of next week. So I have to ask the same question I started this article with….Where are the jobs?

Paul

The Man of Change?

Well here we are just six days away from the much publicized summit on healthcare reform the President announced during the State of the Union Address. Some foolishly believed that his invitation to ranking Republican’s signaled his understanding of the message voters had sent in the New Jersey and Virginia gubernatorial elections and finally, the Massachusetts special election to fill Ted Kennedy’s Senate seat. Apparently that assumption was premature and the election of Republicans to all three of these vital races is being dismissed as easily as the town hall meetings and Tea Parties have been.

It is bizarre that the Democrats can be this blatant as to their intentions. Behind the scenes work to reconcile the Healthcare Bill is still progressing even as the President continues to at least say, that he wants the best ideas from both Parties. Harry Reid and Nancy Pelosi have both signaled their intention to “go nuclear” and rely on a reconciliation tactic to pass the bill with a simple majority, causing reasonable people to ask what kind of summit can this be if these negotiation are till taking place in secret and these kind of plans are being made before Congressional Republicans are even given the opportunity to present their ideas and compromises?

Scott Brown was not simply a message for the Democrats. His campaign was centered on the promise that he would be the 41st vote that would stop the race to pass a healthcare reform bill that the majority of American’s do not want. As support for the President wanes, the trust the American people have in the Democrat’s healthcare plan evaporates at an astounding rate. In recent polls, most Americans would prefer that the plan be scrapped and that the government turn its attention to the economy and the faltering job market.

Regardless of the loud and clear voice of the people, Congressional Democrats are standing firm because their President said they must move forward and also because the Progressive movement has been holding the Democratic Party hostage for decades. That is why Indiana Democrat Evan Bayh decided to throw in the towel and refuse to run for another term. He was bitter in his statements about the ineffectiveness of Congress and said that he could accomplish more as a private citizen than he ever could as a member of the Senate. Alabama Congressman Parker Griffith recently switched Parties for much the same reason. He joined the Republican Party because the Democrats under the Progressive assault had lost their way. They were no longer the Party of the people but some weird group of far left elitists that no longer cared to hear the people. That is why the President’s agenda is being propelled forward as the economy continues to crumble; they have been in effect, deafened by their own rhetoric.

To continue their push for healthcare reform and cap and trade they must convince you that the economy is already in recovery. As the President and the DNC struggle to convince people that the Recovery Act (Stimulus Bill) is working fine and has “saved or created” two million jobs, the U.S. Department of Labor’s own website says the job loss average for the past month has been 467,500 jobs lost in each of the last four weeks. Of course “saved jobs” is the new catch phrase since it is as impossible to disprove as it is to quantify. You know, that we might have even begun to believe some of that if Joe Biden hadn’t spilled the beans in an interview on Wednesday. As he spouted the administration line of “saved jobs” he added that the Recovery Act is a two phase program with the money for actual job creation loaded in the second half of the program. He explained that most of the funds spent in phase one had been targeted to offset the cost of State unemployment benefits and to provide tax relief.

Ok, I admit I’m a little confused here. The job creation funds have not been disbursed yet but the Recovery Act has already saved or created two million jobs? “Most of the funds spent in phase one were to offset the cost of State unemployment benefits and to provide tax relief” but the Recovery Act has already saved or created two million jobs? Is Vice President Biden saying that the act of collecting unemployment insurance is now considered a job? If so, is it a created job or a saved job? Maybe it’s both. If you had already been collecting benefits and are now drawing on an emergency extension then it is clearly a saved job but if you are one of the unfortunate 467,500 that are still losing their jobs every week; well, then that must be a created job.

All of this nonsense of saved jobs and created jobs flies in the face of the statements made by White House Economic Advisor Christina Romer in a Congressional hearing in October of 2009. Romer testified “Most analysts predict that the fiscal stimulus will have its greatest impact on growth in the second and third quarters of 2009 and by mid-2010 fiscal stimulus will likely be contributing little to further growth.” Of course when the economy did not respond as hoped, Romer was obviously asked by the White House to revise her assessment. While recently appearing on the February 17th edition of Good Morning America, Romer said in response to questions about the economy that the greatest effects of the Stimulus Bill have yet to be realized.

The inconsistencies aren’t something shocking. In fact, this administration is amazingly consistent in its inconsistency. If you speak with five different people in this administration you will get five different numbers of the jobs the stimulus bill has “saved or created”. What doesn’t change is the mindless defense of the actions they have already taken or are hell bent on passing into law. Regardless of every possible economic index you can look at, the stimulus bill is not only a failure but has resulted in a “job deficit” as the economy fails to respond. What they absolutely refuse to see is that they can have another five stimulus bills of equal amount and still not create lasting private sector employment. Business is not responding because as this administration continues to apply its short term fiscal Band-Aid, the threat of future tax hikes and new regulations are still part of the overall plan.

The Healthcare Bill is just one of those black holes that are making businesses apprehensive. We still don’t know what is being crafted in the dark up on Capitol Hill. What will the tax liability be? At what income level does it begin? How many employees can I have before the mandate to provide coverage hits me? Will the plan I already provide have an additional tax levied against it? How can responsible business owners make a decision to hire additional employees until they know if they can even remain profitable after the Bush tax cuts expire and the capital gains tax go up in 2011?

Cap and trade, if passed, will increase energy costs by 65% in the first few years and more that 100% by 2015. The only thing that has allowed American businesses to remain even marginally competitive against nations that pay their employees five dollars a day is affordable and abundant energy. Proponents of cap and trade claim the difference is pennies a day but California has already installed Smart Meters, a major component of Smart Grid, the key to cap and trade. California energy costs to PS&G customers have skyrocketed and they are ready to revolt at the increases they are experiencing. Bear in mind that the cost of purchasing carbon credits to produce their electricity aren’t even part of that increase yet. That is where the real kick in the pants will come from. There are estimates that claim cap and trade will cost America five million jobs or two jobs for every so-called “green job” it creates. Looking at Spain, I think that estimate is conservative if not overly optimistic. Spain was suckered into the whole plan of creating a green economy that Obama is trying to sell us and unemployment in Spain has already passed 19%.

So where is the change? The actions of this administration are bordering on criminal; there is no transparency other than a few carefully orchestrated photo ops and the President has broken every promise he made during his campaign. The legislative process itself has been hijacked by Progressive radicals and special interests and even Obama’s friends in the Community Organizing business have been writing key parts of costly legislation that Congress won’t bother to read before passing. If Progressive Democrats continue to ignore the impact their plans are having on the economy and force healthcare through while unemployment is still close to 10%, the backlash will cost them both the House and the Senate in 2010. The damage they are doing now has already insured a long and hard road to recovery and the measures that will have to be taken to right the wrongs will be painful and unpopular. I can only hope that the American people will wean themselves from the public teat so we can actually address the spending problems in Congress before the world economy forces even more drastic change against our will.

Paul

The State of Confusion Address

The President took to the air last night to deliver his State of the Union Address after a day filled with one prediction after another of what this critical speech will contain. Obama is in a very difficult position as he enters his second year in office. The antics of his administration and Congressional Democrats have isolated him from Republicans, moderate Democrats and independents alike; his failure to deliver the most radical portions of his agenda have the far left nearly as angry with Obama as they were with Bush and the hundreds of billions he spent for “economic recovery” have not prevented the loss of an additional three million jobs since the Stimulus Bill was signed into law.

The dramatic losses for Democrats in Virginia, New Jersey and Massachusetts have so far managed to quiet the biggest (the pun is definitely intended) loud mouth in the pro-Obama arsenal, Bob Beckel. Beckel, who was Deputy Assistant Secretary of State for the Carter administration and a vociferous supporter of Obama as well as every bit of this administration’s most radical proposals. There is no government program or tax hike that could be too big for Beckel and even after Corzine’s loss in the New Jersey gubernatorial race, still maintained that this President would go down in history as the greatest President of all time. Well, if current events can shut even Beckel up, what chance does this President have that this speech will reverse his fortunes and restore his plummeting approval ratings?

Many have insisting that the President should step to the right; cutting taxes to stimulate business and begin an earnest assault on runaway Federal spending. Of course the Democratic strategists have already been saying that Obama finally gets it and his announcement that he intends to freeze discretionary spending for the next three years is proof that he is serious about tackling the economy which is one of the clear priorities of the American people. Of course that might have worked a couple of years ago or with another President but I doubt that will mean much now. Other Presidents didn’t have the additional baggage of not only breaking this many campaign promises but he has also been caught on a number of occasions just plain lying to the American people .

As they occurred, C Span reported on the closed door meetings that Obama had with Congressional Democrats, Senate Democrats, Heath Insurance and Pharmaceutical industry leaders as well as labor Unions, in his attempts to broker support for healthcare reform and yet he (Obama) appeared on network television this week and said that he held no closed door meetings on healthcare and made no closed door deals to buy support for healthcare. Really?

Does he really believe that if he says that often enough and loud enough that we will suddenly forget what we saw with our own eyes? The spending freeze that he is planning is yet another lie. When he announced his plan to freeze Federal discretionary spending he left out a few little details. The discretionary spending the President refers to only represents a very small portion of the current Federal budget, roughly 17%, and I’m sure it just slipped his mind but he also forgot to mention that he had already raised discretionary spending 24% just in the past year. His freeze will do nothing more than lock in an average 8% annual increase over the spending levels of the Bush administration; spending levels that Candidate Obama called reckless.

To dispel any rumors; the President said little, if anything. What I thought was amusing was that Harry Reid was actually caught yawning as the President announced that two million jobs were saved and taxes were cut for 95% of all Americans. Well of course you would have to ignore that three million jobs were lost since the Stimulus Bill was signed into law or that seven million jobs were lost since Obama took office for that to even be a half truth. But let’s not let petty little numbers stand in the way of progress. Oh by the way…..shifting the tax burden from the individuals to businesses does not yield a tax cut. Business NEVER pays taxes. Those taxes are always passed on to the consumer as a rise in the price of goods or services; in essence, a middle class tax increase.

Oh but fear not. Obama promised, well he suggested, a small business tax break to incentivize hiring but like so many of his promises, that is something only Congress can do. Congressional Republicans would agree, at least most of them, but Democrats would have to surrender their chief guarantor of reelection…..class warfare. How could any self-respecting, OK….I take that back…how could any Democrat hope to gain reelection if they took the side of those evil business owners? After all, they have railed against them for years!

I empathize with the President. It must be exceedingly hard to stand before all of Congress, not to mention the nation, and lie your butt off but then again, he wanted the job. Perhaps he thought it would be like Chicago where animated speech mattered more than content. Perhaps he thought it was more like it was a dozen years ago and no one would pay attention. But this is 2010 and we are all watching the shell game (for a change).

The fact is, Obama said nothing I didn’t expect. Even his call for exploiting America’s energy resources is a red herring. He has already appointed the radical left to positions of power within the EPA that will trump any chance that we will develop nuclear, coal or oil powered plants within the United States. That is apparently the domain of developing nations and he cannot develop those resources and keep his promise to the United Nations.

The most important thing in his speech took place nearly at the end. Despite the failing economy and the continuing decline in employment, our President still thinks that driving the nation into the budget-busting abyss of the current healthcare reform legislation and an equally devastating climate agreement is something he can talk us into supporting. I will give him a little credit though. He all but admitted that this was an effort that has been underway for one-hundred years. Not climate change….healthcare. Theodore Roosevelt started that. Fortunately he failed, and everyone who has tried it since has thankfully failed as well.

It is apparent that the President still doesn’t get it and probably never will. He called for another jobs bill, in essence a third stimulus bill, which only proves he is a hopeless ideologue. It seems that everyone but the Federal government knows that government does not create jobs, the private sector does and the private sector can not flourish as long as government is picking their pockets. The job prospects in this country will not improve as long as business remains skeptical about what their tax liability or energy costs will be but this President still wants healthcare reform and cap and trade. He has empowered the EPA to unilaterally curtail carbon emissions with total disregard to the economic damage that will cause if the Congress rejects the climate bill. He wants to invest in high speed rail even though 10% of this nation no longer needs a ride to work. He wants to accelerate green initiatives claiming this is the wave of the future but where is our manufacturing base? Those “green” jobs will be located in countries that will not have the added burden of skyrocketing energy costs because of the government regulation of greenhouse gasses; regulations imposed because of corrupt climate studies and United Nations interference.

Obama said in a recent interview that he would rather be a really good one term President than a mediocre two term President. I don’t think he looked behind door number three. If this President and his co-conspirators on Capitol Hill do not halt this crazy march towards socialism; if they keep giving speeches instead of listening to the American people; if they keep huddling behind closed doors, the current trend will continue through the November election and Barack Obama will be a lame duck in the second year of his first term. He can call the Republicans the party of no if that suits him. What he fails to see is that at the request of the American people, the Republicans will be the party of no more!

Paul

What is the Stimulus Bill Actually Stimulating?

In yesterday’s article I laid out the need to force fiscal responsibility upon the Federal government. As if on cue, the government was kind enough to provide me with more examples of their excesses. But first, why hasn’t the stimulus bill brought jobs back to the private sector? The easy (and correct) answer is that government is a parasite that lives off the blood of its people. It consumes, it does not produce and therefore, will never create jobs outside of its own bloated bureaucracy.

The other truth is that government does not understand what a job is, particularly when the government is now controlled by progressive Democrats. A job is not an entitlement, it is not an offshoot of a government program and it is definitely not something that can be created in the stroke of a pen held by someone that has never worked outside of the lurid world of politics. Jobs exist for one reason and one reason only…because someone has more work than they can do themselves. Many of today’s large corporations had modest beginnings and in many cases, the original owners worked by themselves or with a small core group of people until they created a demand that they could no longer meet. To expand, they needed more money than they personally had on hand and the banks for the most part, do not lend on dreams. They lend only to those that already have the means to pay them back and the best business plans in the world are still, for the most part, the dreams of the owners.

Business owners would all love to be able to create an enterprise that will grow into something lasting and something bigger than themselves. This begins with an idea and a plan that excites investors who in turn, place their faith and money behind those ideas to set them in motion. It is an educated gamble with the hope that a small investment will yield larger results and give the investors a reward in return for risking their money on a dream. That is the essence of Capitalism.

So let’s take a close look at some of what the government invested your money in through the stimulus bill as reported in “The Hill”, a Congressional newspaper.

$54,000,000.00 for the Napa Valley Wine Train
$2,200,000.00 to help a failing golf course in San Francisco
$1,700,000.00 for fossil research in Argentina by Penn State
$400,000.00 for Malt Liquor and Marijuana Journals
$220,000.00 to study sex habits of birds and rats and the caste system and division of labor within an ant colony.
$200,000.00 for a study on how college students “hook up”
$100,000.00 for socially conscious puppet shows in the “Heart of the Beast” theater in MN (the theater is named after a Che Guevera quote)
$50,000.00 for a Facebook study

A White House spokesperson said “Even if there were a few unwise projects, it’s only a handful out of the over 50,000 projects approved to date.” With the United States $12 trillion dollars in debt, why should we accept any “unwise” projects or are these more payoffs for votes?

First I would say that it is very curious that the two projects that top the list of irresponsible waste are in or near Nancy Pelosi’s neck of the woods. The Wine Train is a tour business that uses vintage rail cars to tour the Napa Valley Wine Country. Of course we know that Nancy Pelosi owns a winery in Napa Valley. I’m sure San Francisco golf courses are important to the Congresswoman from San Francisco, even though we know golf courses use extraordinary amounts of water in an area that cries out for the responsible use of water. Oh, I forgot….the rest of us are supposed to use water responsibly not actually San Francisco, the birthplace of the American Environmental movement. They have apparently paid their dues by wearing ribbons and carrying signs to make us all aware of the problem so they are exempt from actually doing the heavy lifting.

Why are infusing $2.2 million to save a golf course while the EPA has shut the water off to farmers in the nearby San Joaquin Valley? Their land was once an abundantly fertile area that supplied 15% of America’s produce and it has been left to dry up and return to desert conditions because a two inch fish on the EPA’s protected list was getting sucked into the irritation pumps. Why hasn’t there been any stimulus money to fund a technical solution to what is in essence, a dumb fish problem that would save the forty-thousand lost jobs in the San Joaquin farms? Because our government is apparently dumber than the fish are. But maybe their not dumb….

I am a big believer in the premise that when something makes no sense at all, it’s time to follow the money. Since shutting off the water is forcing America to buy foreign produce to replace what can no longer be grown in the San Joaquin Valley, I would be curious to know which one of this administration’s friends was uniquely positioned to capitalize on the importation of foreign produce. Of course it could be something even simpler. These were mostly private farms with non-union workers. Was this punitive measure against those farms offered as a gift to the SEIU? Unfortunate, the tide of interest has turned against the farmers and all eyes are on healthcare and the climate debate so we may never know the truth.

What we do know is that seven million jobs have been lost since the recession began and over four million of those were lost since Obama was inaugurated; three million since passage of the stimulus bill. Obama does have a jobs program though…the Federal government has been recently adding new jobs at the rate of ten-thousand per month. Not only that, but the existing jobs are getting better compensation than ever before. While the nation slides deeper into recession, the number of Federal employees whose salaries are over $170,000 rose from a pre-recession total of one to over one-thousand six-hundred and ninety today. The average salary in the United States is $40,331 while the Average Federal employee salary is $71,206 and lawmakers are now seeking to eliminate the mandated caps on Federal salaries even as they debate adding salary caps to the banking industry. In fact, Max Baucus, the chairman of the Senate Finance Committee recommended a $14,000 raise for one of his people….that is until we discovered that he was romantically involved with her. Tiger Woods would be proud of old Max!

The Congress recently voted to raise our national debt ceiling by an additional $1.8 trillion dollars to be able to continue their reckless spending spree. We already owe $12 trillion and while many experts say that debt level is unsustainable now, the White House estimates our national debt will double to $24 trillion dollars by 2019 and that is without the cost estimates for healthcare and cap and trade added in.

I can’t imagine why the Federal government does not seem to realize we are racing towards a brick wall. Foreign interests have already spoken about replacing the dollar as the currency of international trade and there is talk about downgrading our bond status from triple “A”, which has never happened before, even during our worst financial crisis’s. Maybe they all ready believe all is lost and this is a race to do as much as possible while other nations will still lend us money. They will worry about how to restructure our nation after the collapse when everyone will be busy fighting for survival instead of marching on Washington. If it all goes to hell, imagine the power these people will have then and no matter what, it is all about power…isn’t it.

Recent gains in the stock market have given some a sigh of relief but is that a real indicator that the economy is recovering? Unfortunately, the stock market is reflecting an increase in activity from casual traders and retirement portfolios. The people with real wealth like Soros and institutions with large sums of money to protect are fleeing the market and buying T-Bills even though the current rate of return is 0%. Why would they invest in bonds that offer nothing in return? That is the billionaire’s equivalent of hiding their money in their mattresses. They have such a fear over the state of the economy that they are willing to hand over their fortunes to the Federal government for safe keeping; in essence, “Don’t worry about paying interest, just make sure I get it back later.” Keep a close eye on these people…when they start bailing out of T-Bills and investing in gold and real estate, that will signal a real fear that they believe the economy will actually and irretrievably, collapse.

Paul

Mythbusters

We just spent nearly two weeks discussing the Declaration of Independence, The United States Constitution and the Bill of Rights. I had toyed with the idea of continuing through the additional list of the seventeen Amendments that were added over the years but most are pretty straight forward such as civil rights, women’s voting rights and term limits for the President. When I reached the sixteenth Amendment clarifying Income tax, my fear was that some of my readers may become suicidal. Honestly, I felt that covering those measures would just delay us from important discussion on the issues of the day.

The discussions we did have on the Constitution will be useful as we gauge what is happening now, against what should be happening within the framework of the Constitution. I also want to expose some myths surrounding modern “political speak” in that context to begin our next segment.

Myth one – FDR’s policies and programs ended the Great Depression.

False - Since President Obama’s proponents are touting him as the new FDR, this myth is the first that needs to be debunked. Nothing can be further from the truth. FDR’s programs were nothing more than keep busy government works projects that kept most at or below the poverty level; actually very similar to today’s Stimulus bill. World War Two sent millions of American men to war taking them off home relief and placing them on the front lines to defend the nation and during the war years, the country’s economy shifted to war production. Since general provisions were limited by the war, a combination of rationing and the tax structure were used to prevent runaway inflation. At the conclusion of the war, nearly every manufacturing center around the world had been destroyed in the fighting except for those located safely within the borders of the United States. From 1945 through the late 1050’s, if you wanted to buy anything, you had to buy it here and that is what ended the Great Depression.

Myth two – Reagan’s tax cuts and policies of “trickle down economics” failed and ultimately quadrupled the National Debt.

Partially true - First of all, to gain the tax cuts Reagan wanted to stimulate the economy, Reagan had to agree to the TEFRA act (Tax Equity and Reform Act) of 1986. Before the Reagan tax cuts, the tax on the wealthiest Americans were roughly 50% (already down from the top marginal tax rates of 80% to 95% during the world war two years). TEFRA eliminated many of the deductions that high earning American’s used to reduce their taxable income. You may want to note that even after the marginal tax rates for the top earners began to climb during the first Bush administration, none of the deductions eliminated under TEFRA had been restored.

Now to the bare facts: OMB figures indicate that the explosion of the economy directly related the Reagan tax cuts resulted in a tripling of revenues to the United States Treasury. Unfortunately, the Congress immediately wrote legislation that spent $1.34 for every new dollar they received. Admittedly, part of that was to fund the military expansion that Reagan insisted was necessary for the security of the nation; but a great deal were pork barrel projects injected into the legislation. Don’t forget, Reagan asked for the line item veto to be able to weed that reckless spending out of the legislation but Congress refused to offer him that power. If he were to move forward on the agenda he felt was vital to the nation, Reagan was given no alternative but to sign these pork laden bills into law. President Clinton was eventually given the power of the line item veto and never used it to weed out frivolous spending. In all fairness, neither did the second Bush administration.

Myth three - Deregulation created the mortgage crisis of 2007.

Partially true - Deregulation certainly allowed for the lapse in accountability that made this possible but to find the roots of the crisis, we need to travel back in time to the Clinton administration. During the Clinton administration there was a push to expand the “American Dream” of home ownership to a segment of the population where it had never existed before. That “push” was in the form of the Federal government fining banks that would not issue what were traditionally considered high risk loans to allow low income people access to home mortgages.

That practice drove the median prices of homes skyward since the law of supply and demand was now challenged by an artificially created marketplace. Those that already owned homes took advantage of the lenient lending terms and free flow of cash to refinance their mortgages based on the inflated value of the property, in essence turning their homes into an ATM machine with a garage and two and a half baths. Many took adjustable rate or interest only loans because they were cheaper thinking they would get into a conventional loan later. They took the difference in cash with some, purchasing additional properties with the idea that property values would continue to go nowhere but up.

Well, you knew it would happen sooner or later but an awful lot of those high risk loans started going sour. Banks that saw trouble on the horizon packaged these loans and sold them to investors. They sold them as securities thinking that the good paper would offset the bad paper, because property values always go up. Well that might have worked if property values weren’t artificially inflated and if property owners hadn’t already cashed in on that.

The net result was due to the high rate of loan failures (the high risk ones the government had forced on lenders) property values plummeted. When it came time for the ATM people to refinance, their home were worth substantially less that the principal they already owed. Unfortunately, the cash they withdrew from the “ATM” was already spent. You already know the story from there.

Myth four - The Stimulus plan (The American Recovery and Reinvestment Act of 2009) is responsible for the creation of millions of jobs.

False - Again, no; only a portion of the $800 billion allocated in the stimulus bill has actually been distributed. As opposed to The Economic Stimulus Act of 2008 which consisted of tax rebate checks put into the hands of tax payers, the American Recovery and Reinvestment Act of 2009 doled out money to the States and Cities. As a note, The Economic Stimulus Act of 2008 consisted of roughly $152 billion given back to the tax payers while The American Recovery and Reinvestment Act of 2009 scripted over $800 billion to fund projects administrated through the States and Cities. They still haven’t figured out that we spend money far better than they do.

In my home town of Phoenix, the stimulus money they received was used to purchase additional traffic enforcement cameras. Well that put a lot of people to work, now didn’t it? Much of the stimulus money in other areas was used to fund other previously committed projects like roads or transportation.

The facts: much of the stimulus money was used to fund projects that were already awarded to contractors (no new jobs) or was used for “make work” jobs, some of which lasted a total of 36 hours, less than a full work week, before these people were once again, unemployed. The “new jobs” were far less than temporary and the balance of what they claimed credit for, were jobs that had already existed.

As a note, The Economic Stimulus Act of 2008 only failed because people used the money they received to satisfy existing debt. In essence, the government had already taken too much and waited too long only to give too little back.

So where am I going with this and is there a common thread? Those of you that have read my work before already know there must be something that ties all of this together. That “thread” is the Federal government’s inability to affect positive change through the manipulation of the free market system. Every time they have tried they have failed and failed miserably. Partly because they are following an ideology that mainstream America does not share and partly because they are so divided amongst themselves.

The nation’s capitol has become nothing more that a battlefield of the extreme right and the radical left with the bulk of the nation, meaning you and me, caught in the crossfire. Accusation is met with counter-accusation and whatever party is in control tries to force their agenda through while accusing the other of having no vision and no alternatives.

Since there is apparently a lack of common sense solutions in Congress, over the next few days let’s see if we can’t frame the real issues and identify some reasonable solutions for them. I know, I know….we are just regular people. Truthfully, I can’t think of any better reason to try since the “professional” legislators have made such an unholy mess of things already. Besides, this is still our country….isn’t it?

Paul