Sunday, September 25, 2016

'The Curse of Bigness'

We have been reading a pretty interesting book lately, 'Louis Brandeis: American Prophet' and been struck by many things he wrote in his opinions while on the High Court in Washington, DC but perhaps none more than this:

'Many of his most devoted disciples apparently didn't read all of his decisions or understand the totality of his philosophy towards government' 

It is not all that unusual. John Calvin, in many respects, would not understand what many of his Calvinist followers came to proclaim later in his name nor would Martin Luther agree with many doctrines of the Lutheran Church as the centuries rolled along.

Disciples of almost any belief have an interesting human way of distorting and contorting the words of a leader over time into ways and rituals they like and seek to control for future followers to follow.

Supreme Court Justices Sotomayor and Ginsberg wrote glowing accolades of Justice Brandeis for the cover of this book and called him their 'guiding light' for their judicial philosophy and decision-making processes.

There is no doubt that Brandeis would have considered himself a 'progressive' for his time in the late 19th century and early 20th century. Some of his ideas, such as raising the rates of taxation so high on big corporations in order to force them to stay small entities (somehow) might sound like Bernie Sanders on the campaign trail in 2016.

However, the recurring theme of 'American Prophet' is this:
Justice Brandeis' disdain for and distrust of anything 'big' where a concentration of enforced power could be concentrated in a few people's hands and hurt other people with their capricious behavior.
He talks about it over and over and over again. He overturned several programs of FDR's New Deal because he felt they overstepped the constitutional boundaries of executive power in the US Constitution and violated the aversion to concentrated power, especially in government, first put forth by his hero and guiding light, Thomas Jefferson.

He opposed oligopolies in business where wealthy businessmen could manipulate markets to their own benefit first.

He regularly deferred to the states as 'laboratories of democracy' (a phrase with which Brandeis became well-known for) where state and local government leaders closer to the situation had the freedom to experiment with different alternatives to see what worked best without interference from other judges or bureaucrats outside of the state or locality, especially from far-away Washington, DC with all of their inherent federal powers to regulate, tax and direct.

If you have been concerned or disturbed by executive power over-reach of the Obama Administration over the past 8 years and expansion of federal regulatory power, are you comfortable with Hillary Clinton following the same policies and line of attack when it comes to being President?

If you are not concerned or disturbed by executive power over-reach of the Obama Administration over the past 8 years and expansion of federal regulatory power, are you comfortable with Donald Trump following the same policies and line of attack when it comes to being President?

Either way, Justice Brandeis would have probably stepped in to rein in the executive powers of any 3 of these people as President and admonished the US Congress to exercise its constitutional authority and prerogative by withholding funds for any such expansion of executive power as a critical check on any individual gaining too much power in our constitutional form of democratic republican self-governance.

Here's the question to ponder, especially as we head to vote in the next several weeks for President down to school board:

'What is it about our federal government in Washington, DC that many people seem to think will become more altruistic and noble the larger it gets if those same people think BIG BUSINESS, or big churches or big anything are 'bad' in many ways?'

The way Justice Brandeis puts it in many of his opinions, leaders in virtually every institution, government entity, business or private or non-profit charitable organization are subject to the same human emotions and negative traits such as envy, anger, revenge, ego, power, money, accumulation of wealth and status that can be used to hurt other people in seemingly capricious ways, either unintended or, sadly in most cases, well-intended, thought-out and premeditated.

There is no rational reason to believe that people who run for office and want to be our local, state and federal leaders are more 'saintly' than any other human being, although we hope and wish and pray for our elected leaders to be so.

The larger our federal government becomes, the more tools and powers it accumulates with which to use against people who might be in disagreement with the prevailing political party in the White House or in control of Congress.

So why give anyone the keys to an ever-expanding bureaucracy with which THEY get to control more of your life through the law of this country than absolutely necessary if there is any chance of any or all of them turning to the dark side once elected?

It seems as if the limited government concepts put forth so forcefully by Thomas Jefferson at the beginning of the Republic should be some sort of rallying point for people of all political persuasions to start with and continue some reasoned discussions on what to do about many of our nation's problems.

It really doesn't even matter what your political philosophy is. All of us should be vigilant against electing people who can wind up being just as 'bad' as many people think the barons of Wall Street were in the years that led up to Great Crash of 2008 and wiped out trillions of dollars in savings, investments and equity of millions of American families only to see their federal government bail these same barons out with their tax money and federal backstop through the Federal Reserve.

Here are just a few of Justice Brandeis' pithy observations:

  • 'Curb of bigness is indispensable to true Democracy and Liberty. It is the very foundation also of wisdom in things human....(unless Progressives at the time could see this truth), 'we are apt to get Fascist manifestations...If the Lord had intended things to be big, he would have made man bigger--in brains and character'.
  • 'Those who won our independence believed that the final end of the state was to make men free to develop their faculties, and that in its government the deliberative forces should prevail over the arbitrary.

    They valued liberty both as an ends and a means.

    They believed liberty to be the secret of happiness and courage to be the secret of liberty.

    They believed that freedom to think as you will and to speak as you think are means indispensable to the discovery and spread of political truth; that without free speech and assembly discussion would be futile; that with them, discussion affords ordinarily adequate protection against the dissemination of noxious doctrine; that the greatest menace to freedom is an inert people; that public discussion is a political duty; and that this should be a fundamental principle of American government.'
  • 'I don't want money or property most. I want to be free'.
Thomas Jefferson was always in the back of Justice Brandeis' mind as he wrote his many opinions. His words still ring true today:
'We have nothing to fear from the demoralizing reasonings of some, if others are left free to demonstrate their errors and especially when the law stands ready to punish the first criminal act produced by the false reasonings; these are safer corrections than the conscience of the judge' 1)
'If there be any among us who wish to dissolve this union or change its republican form, let them stand undisturbed as monuments of the safety with which error of opinion may be tolerated where reason is left free to combat it' 2)
'American Prophet' is a book that might well be worth your time this campaign season. Before you vote, of course.

1) Jefferson 1801 letter to Elijah Boardman
2) Jefferson First Inaugural Address

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Friday, September 16, 2016

The Tale Of Two Polls

'It All Depends On Who Shows
Up to Play on Election Day!'
Your head must be spinning 360 degrees every day as you watch the news and see the various polls from the various states go up and down and jump all around.

These polls are not 'rigged'. The great ones are not, at least. Any pollster worth his salt will tell you outright they can write a poll question to elicit the answer and result they want for their client anytime they want.

However, they won't be in business long. Mainly because pollsters in political campaigns are like U2 reconnaissance planes over Iraq or J.E.B. Stuart riding around enemy lines for Robert E. Lee to determine the strength and weaknesses and most importantly, the numbers of the opposing forces.

Pollsters give key information to strategists and candidates as to that snapshot in time ONLY. They don't 'predict' or 'divine' who is going to win any more than a football prognosticator can tell you that one team on a particular weekend is going to win that particular football game 'for sure'.

The victor of the game in question depends solely on 'who showed up to play' that day. Most times, the team with overwhelming talent wins easily.

Sometimes, such as when the Appalachian State Mountaineers went into the Big House in Ann Arbor, Michigan on September 1, 2007 before 109,208 totally stunned Michigan fans, a team with lesser talent and resources upsets the favorite, this time defeating the Wolverines, 34-32.

App State showed up to play that day. UM did not. They lost. App State won.

The point of this is not to denigrate political polls. Most of the time they are right. Much as weathermen are 'most of the time' proven right when they say 'It won't rain today' or 'Tomorrow it will be hot'.

They are only 'wrong' if a huge tornado suddenly shows up or a massive thundercloud appears out of nowhere and proceeds to prove them 100% wrong.

It just depends on 'what happens that day'.

Which brings us to 'voter turnout'.

Pollsters are usually pretty good at predicting the presuming the past is prologue, that is. Most of the time, pollsters presume that because the voter turnout was a certain level with particular percentage breakdown of vote by age, sex, race, gender, and socio-economic factors in a previous similar election, say in the 2012 re-election of President Barack Obama,it is more than likely to happen the next time in the next similar election, such as in 2016.

That is why many polls early on seemed to overly favor Hillary Clinton. Many national polls just looked at the turnout and composition of the electorate in 2012, the last available data point for a presidential election in America, and assumed 'it will be just the same in every state in 2016'.

However, voting tendencies tend to change over time, ever so lightly every 2 years and a bit more every 4 years. If they didn't, we would still be voting for the Federalists and Anti-Federalists that erupted in Elections of 1796 and 1800, right?

What really WOULD be simply astounding would be if it was possible to accurately predict the exact percentages of who will actually show up to vote or vote absentee or by mail say 6 months to a year before any election.

It can't be done. Why? Because human beings are mercurial creatures. Sometimes they vote because of common sense and reason. Sometimes they don't.

Sometimes, they just don't like the sound or tone or tenor of a Presidential candidate's voice. Sometimes, people just don't like the way a candidate looks or acts or the way he or she dresses.

Sometimes, a candidate is so boring that millions of people just either 'forget' to show up to vote for him or her or they just plain don't have enough energy or interest to cast their one sole vote for them.

Here's two instances of where polls failed to adequately predict beforehand what the makeup and composition of the actual final voting electorate looked like:

  1. In 2002, we were working on the US Senate campaign for eventual winner, Elizabeth Dole.

    After a very long and very expensive campaign as we gathered together in Salisbury election night, our campaign manager came into a small room and said this to about 30 of us:

    'My advice to to to start drinking heavily. This is going to be a long, long night. We probably will not know the outcome of this Senate race until 4-5 am tomorrow morning. Every poll, both on our side and theirs and nationally predict this will be a race determined a a very few percentage points and maybe less than 25,000 out of over 2.3 million votes to be cast' 

    The polls closed at 8:00 pm.

    75 minutes later at 9:15 pm in the Salisbury depot that was serving as the election night headquarters for the Dole campaign, Candy Crowley or some other CNN reporter turned on her microphone, the camera lights were lit and said this to the world:

    'CNN is now declaring that Elizabeth Dole will win the US Senate seat in North Carolina 56-44%. Back to you, Wolf!' 

    She wound up winning by over 200,000 votes. In a race where EVERY SINGLE REPUTABLE POLL had the race almost exactly even just 3 hours previously.

    Had it been a presidential year, the margin of victory might have approached 500,000 since voting turnout roughly doubles when presidential races head the ticket.

    What happened? More people showed up than expected. Many more of them showed up to vote for Elizabeth Dole instead of her opponent.

    Next question.
  2. In 2014, NC House Speaker Thom Tillis was running against incumbent US Senator Kay Hagan who had knocked off Senator Elizabeth Dole 6 years earlier in 2008. (What goes around, comes around in politics)***

    Most polls, probably including his own internal polls, showed a tight race with Hagan ahead slightly...ASSUMING voter turnout in certain counties such as Wake and Mecklenburg would hit certain target levels, especially among the usually dependable African-American vote for Democrats.

    Senator Hagan came out of Mecklenburg and Wake Counties with over 100,000 more votes than Thom Tillis. However, the vote total margin of victory coming out of Mecklenburg County was 'only' about 56,000 instead of the 70,00+ target the Hagan campaign needed to combine with other margins of victory in the most populous cities and counties in North Carolina  to win re-election.

    Thom Tillis won the rural areas by comfortable margins across the state and won the election by 45,608 votes.
By most evaluations, Elizabeth Dole 'over-performed' with many sectors of the population across the state in 2002 based on election models and Kay Hagan 'under-performed' in 2014, especially with a depressed or 'much lower than hoped for or expected' turnout of the African-American voters in Charlotte/Mecklenburg and other large cities in North Carolina.

What is going to happen in 7 weeks here in North Carolina?

If you can tell us right now how many people will show up and what percent of the vote each voting category will break down into, we could tell you right now who was going to win each election without paying anyone to do an expensive poll for you.

If you think the voter turnout in absolute numbers and percent is going to be exactly what it was in 2008 when Barack Obama was running for President the first time, we would have to say Hillary Clinton would win the state and she might sweep in Roy Cooper for Governor and Deborah Ross for the US Senate.

However, the energy and enthusiasm that was on full display in 2008 (and even in 2012 when Obama lost NC to Mitt Romney by 80,000 votes) is not evident this time around for Hillary Clinton.

If there is a less-than-optimum turnout among African-American voters in the major cities in North Carolina this fall for Hillary Clinton, it is hard to see how she can win the state and become only the second Democratic candidate for President since 1976 (Carter) to win North Carolina's 15 electoral votes.

And if there is any kind of surprising 'surge' perhaps east of I-95 for Donald Trump a la the 2002 Elizabeth Dole landslide victory, then it is hard to see how Hillary Clinton could win the state's 15 electoral votes either.

One rule of thumb that has held true for decades if not most of the last century in North Carolina electoral politics is that if the conservative candidate can somehow make it out of the big cities and counties close to even west of where I-95 cuts south today, then they will roll up big margins of victory in the eastern part of the state and win statewide elections.

No one knows for sure if there will be a less-than-enthusiastic turnout among African-American voters for Hillary Clinton in North Carolina or not yet. Nor does anyone know if a 'surge' is building for Donald Trump in the more rural, agricultural and military-friendly base of eastern North Carolina.

It all depends on who shows up to play on Election Day. Just like when App State beat Michigan.

***(Side note and little known fact: NC has had 22 US Senators in Washington since WWII whereas other states such as South Carolina and Mississippi have had close to 1/3rd as many US Senators during the same time span)

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Friday, September 9, 2016

Changing People's Minds

'You're wrong! We need to raise taxes'
'You're stupid! We just need to cut spending!'

We have spent a lot of time over the past 8 years bemoaning the lack of 'civil discourse', 'comity' and 'compromise' in our national political life together.

'The Three Big C's' you can call them.

Either we recover them with the current incumbents we have (not likely) or we find great new candidates and leaders from the private sector who finally decide to help save us from ourselves and run for public office up-and-down the line....or we don't and suffer some severe consequences for our collective pig-headedness as a nation.

Those 3 concepts are that important to our democratic republican form of government.

We had an interesting discussion last weekend with someone who said he was 'doing his very best' to politely discuss a very sensitive political issue with someone who is on the other side politically and in philosophy towards life in general but they didn't seem to be getting anywhere.

'I just don't think either one of us is changing the other person's mind!' he lamented.

It occurred to us that his experience might be helpful to us as we head into this final 60 days of the presidential election cycle (thankfully!) and as we head into 2017 with a new President in the White House and probable new numbers in the majority in the US House and Senate, if not outright change of control in the Senate.

'Forget changing his mind' was the first thing that came out. 'Just look for common ground you can agree on and go from there'

Isn't that the essence of what our Founders did at Philadelphia when they wrote the US Constitution in that hot summer of 1787 with a group of Americans who may have had a collective IQ higher than any Congress since, with just 55 delegates who attended at least 1 session and 39 delegates who signed it at the end of that grueling process?

They didn't change everyone's mind 100% about slavery. They didn't change everyone's mind 100% about the role of big states versus the small states. They didn't change everyone's minds 100% about the fundamentals of almost any large political issue at the time.

They didn't have to. You never have to change someone's mind 100% to cut some political deal that might not be 100% perfect, but since 'perfection is the enemy of the good', less than perfect is better than no deal at all as we have seen for the past 16 years now.

Somehow, someway the Founders in Philadelphia managed to find a way to come to some common agreement and language that has become the model for constitutions for free nations the world over for the past 229 years without changing anyone's mind 100% at all.

It might make our task far easier if we just accept the cold-hearted fact that we do not have to 'change anyone's mind 100%'  about anything really if we want to get this country and our government back on track to do the things we want Congress and the next President to do for all of us in the public trust.

First of all, it is just too hard to completely change anyone's mind about anything quickly. Over a long period of time, maybe. But in this day of instantaneous news via social media and sideline commentators and activists jumping on every word like it is a fumble in the Super Bowl, it is very, very hard to have even an open and honest debate in public about the issues in a civil adult manner.

We desperately need 'deal-makers' and elected people who are smart enough to recognize 'victory' when they achieve some part of it in any session of Congress; vote to pass it, get it signed by the new President..and then come back the next year to try to get more of their political objectives then.

It could be progress towards balancing the budget. It could be progress towards having and paying for a smaller and more cost-efficient and effective government. It could be progress towards having a solid energy policy in America.

Any time you are making progress towards your stated political goals while in political office, and not retreating away from them, it is a success in any political science playbook.

Know who embodied that enlightened philosophy towards governing?

Republican President Ronald Reagan.

He allowed his team to cut more deals than you can imagine with a US Congress that was overwhelmingly controlled all 8 years of his term by Democrats, first led by Speaker Tip O'Neill of Massachusetts and then by Jim Wright of Texas.

So how would this work in a concrete example?

On the federal budget, something big has got to get done in 2017 or else we are really taking a huge gamble on our future prosperity. Far more than we have done over the past 16 years which has been a truly dismal time for any responsible budget observer or participant.

Republicans do not want to raise taxes. Democrats want to raise taxes. Mostly on the rich, as they say.

Neither side is going to change the other side's minds 100% on that right now. Or all the thousands of lobbyists with vested interests in protecting the status quo right now just as it is. Mainly because changing it in any way will gore their client or their own ox, as in their contractual employment.

We think whether we raise or lower taxes, it will have about as much effect on solving our future budget deficit problems as pouring a thimbleful of water on a gigantic wildfire out west. As we have shown many, many times by now, regardless of who is in the White House or who controls Congress or whether 'The Moon is in the Seventh House and Jupiter Aligns with Mars', revenues to the federal treasury will be about 18.7% of GDP when all is said and done.

Little more, little less over time depending on the economy at the time.

But what if mature adult leadership spontaneously erupts at both ends of Pennsylvania Avenue in Washington somehow starting January 20, 2017 and both sides see the gaping deficits that are due to go back up dramatically in each of the next 4 years absent any strong action by Congress to control spending and they say this:
'Look, Republicans, we know you don't want to raise taxes. Democrats, you want to raise taxes, that is just who you are.

Why don't we just forget spending all that time and energy over raising marginal tax rates on the wealthy when we know it just won't get done and won't raise all that much money anyway? They'll just find ways to hide their money in other tax shelters we don't even know about probably.

Let's focus on closing tax loopholes that mainly benefit very narrow sectors of the economy and are only there because some smart lobbyists got paid a lot of money to insert those tax provisions in tax bills in the past that no one understood then and probably don't understand now'
The chart below shows the impact of just the TOP TEN (10) tax breaks on the US federal budget each and every year. In the year 2014, these 10 tax breaks accounted for over $709 Billion or 50% of ALL of the $1.4 trillion in so-called 'tax expenditures' lost to the federal treasury because they are deductions, exemptions or outright tax credits in the tax code.

$709 billion in non-collected revenue receipts due to these 10 tax breaks is an annual number, not a 10-year estimate. Per. Year.

Assume that all of these 10 most-popular and wide-ranging tax breaks noted above are kept in force in the law and untouched. No need to stir up a hornet's nest and tick off all the businesses who provide health care, homeowners and churches and philanthropists by going anywhere near these top 10 tax breaks.

$709 billion in the rest of the tax expenditures could be freed-up as potential revenue each year which could be the basis for making some pretty important spending reduction deals.

Any spending reduction will be resisted by Democrats in every budget function outside of defense just as much as Republicans will resist cuts inside of defense outside of other budget functions, except in entitlements in both cases which really does make this a very difficult compromise to make given that.

Mainly because the growth of federal health care programs, Medicaid and Medicaid, plus Social Security and Net Interest are going to be the prime components of all the expected increase in federal spending between now and 2024.

One side would not have to convince the other side to change their mind 100% about 'raising taxes'. Both could agree on the need for 'simplifying the tax code' and 'reducing the number of special tax breaks' that are available only to a relatively select few number of taxpayers each year. Not available to all taxpayers.

The task would be then to come up with enough spending reductions, reforms and eliminations to make the relative 'pain' for the Republicans to support these elimination of tax breaks worth the effort and political risk back in their home district because they may be primaried by someone who would call the elimination of these hundreds of lesser known tax breaks as a 'tax hike'.

If we go many more years without some compromise such as this one on tax breaks, we won't have any additional revenue from higher tax rates coming into the Federal Treasury, that is for sure. But it will be 100% GUARANTEED that we will have a budget deficit that is totally out of control; a national debt approaching $30 trillion and financial and market forces starting to make the hard decisions for us in terms of currency valuation, higher interest rates and the vagaries of inflationary pressures to keep paying the national bills.

History should teach any civilized society that it is far better to keep control of the decisions regarding our financial and fiscal arrangements than to let market forces start to determine them for us. Just look at how Greece and other nations have frittered away their financial independence through irresponsible fiscal management on the part of government leaders.

In the past, Republicans typically used a 3-to-1 spending/revenue increase ratio to determine whether a 'Grand Bargain!' was worth voting for or not.

If 100% of the eliminated tax breaks above were paired 3-to-1 with spending restraint in the out-years, that would be a potential maximum of $2.86 trillion in deficit-reduction annually ($709Bx3=$2.127 + $709B+ $2.86T). The 10-year budget impact would be over $25 trillion in net budget deficit reduction/surplus accumulation when compounded and inflated spending is taken into effect.

Talk about reducing the growth in the size of government spending! At that magnitude of budget restraint, federal spending as a percentage of GDP would soon drop to the 18.7% of GDP level tax revenues have been historically and below which would produce surpluses once again.

Those are enormous numbers when you consider that past budget deals have 'only' reduced federal deficits on the order of $50-$100 billion per year. Not $2.86 trillion per year.

But consider this: Reducing our budget deficits by 'only' $100 billion per year would be only 0.5% of our overall GDP. We have budget deficits approaching 3% of GDP today as is today while we are doing absolutely nothing about it.

We need to find budget compromises of about $250 billion per year in the first couple of years and $500 billion+ from years 5-10 just to balance our budget and not even start to pay of what will soon be a $21 or $22 trillion national debt.

The probable outcome of all this?

The businesses and individuals who lose their tax exemptions and special tax breaks will most likely be wealthy enough to pay expensive tax lawyers and accountants a lot of money to find other ways to shelter their income and minimize their tax liability going forward.

Some marginal increase in revenues will be realized, mostly from 'the rich' so the Democrats can declare victory. If the spending reductions are real, we could actually put a bend point in the projections for our deficit and spending and head back into the world of financial and fiscal sanity once again. Hopefully.

The main thing to remember though is that no one's basic assumptions about political philosophy will have been changed 100% by the other side and they would be allowed to continue their political debates forever as they had done before. Republicans can keep hating higher taxes and Democrats can keep crowing about 'the need for the rich to pay more in taxes!' til kingdom come for all we care.

Perhaps the exercise will convince a majority of Congress and Senate that our current tax system is decrepit and sclerotic and needs to be replaced by a national consumption tax but that is another discussion for later.

If the next Congress and President could come together on such a compromise, and do it very early in the next Administration, they will have done something very, very important for the nation as a whole. Big deals such as this seem to happen about once every 20 years or so in American politics.

We are due.

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Saturday, September 3, 2016

Political Promises Are Like Drugs

Most Political Promises Come
From This Train
Over the course of this presidential campaign, we have all been hit with various proposals and promises about how this or that candidate is going to make our lives better.

Most are untrue. Most are physically and fiscally impossible to do.

But they sure sound great, don't they?

Political promises are like the mind-numbing effects of any stimulant drug usually taken illegally: they cause a 'loss of contact with reality, an intense feeling of happiness'....until they wear off, that is, and reality sets back in.

Let's take a look at some of the promises you may have heard and seen over the past year and see if we can't bring you back to reality before you get too giddy:

  1. 'We are going to make the rich pay their fair share!'

    This one sounds so good that almost everyone says it in one form or the other.

    What hardly anyone will tell the public is that the 'rich 1%' already pay 50% of all income taxes collected by the federal treasury. 50% of all Americans who are working do not pay any federal income taxes anymore.

    What is going to happen when the top 1% pay ALL of the federal income taxes each and every year? The battle cry to 'Make The Rich Pay Their Fair Share!' will look more than a little ridiculous, won't it?
  2. 'All We Gotta Do Is Raise More Tax Revenue To Balance The Budget!'

    This sounds so simple and easy to do, doesn't it?

    It will never happen.

    Take a look at this chart showing the historic level of spending and revenues in the federal budget for the past half-century:

    We have raised taxes multiple times over the past 50 years. We have cut taxes multiple times over the past 50 years.

    Any kind of statistical analysis will show you the percentage of GDP the federal government can expect in revenues to collect over time is about 18.7%. And that is just about it.

    Not 20%. Not the average 21.5% of GDP we would need to raise in taxes to cover the expected annual shortfall between spending and revenues currently.

    There is just something in the American taxpayer psyche that is willing to pay about 18.7% of GDP in overall federal tax collection over time. Wealthy taxpayers can avoid paying ANY higher marginal tax rates ANY Congress might want to pass on them simply because they can afford to hire the very best tax lawyers and accountants to find ways to avoid paying those higher levels of taxes.

    Lower-income wage-earners will find ways to avoid paying excessive taxes if passed on them by resorting to cash payments for labor rendered or barter arrangements for transaction purposes.

    Depending on economic conditions, if we experience an economic boom, and we experience an inordinate amount of capital gains being paid such as during the internet boom years of 1995-2000, we may from time-to-time see revenues approach 20% of GDP.

    However, such surges of income should be viewed as one-time events to be used to pay down national debt and NOT to raise the level of federal spending just because it looks like we are entering a new phase of increased federal tax collection levels relative to GDP.

    Like it or not, our national break-even level for budget and deficit-reduction purposes is 18.7% of GDP. Prudent budget-making would demand that our elected representatives, senators and President reduce spending levels to get at or under that 18.7% of GDP level and at least start us on a road to fiscal sanity in Washington.
  3. Massive Economic Growth Will NOT Solve All of Our Budget Problems!

    We had lunch recently with some budget experts from Washington, DC who have long been fighting for fiscal policies that would curb excessive spending and get us on the rational, if somewhat 'boring' path to financial freedom for everyone going forward.

    We say 'financial freedom' simply because the worst thing we can do as a nation is to keep doubling-down on dumb budget and economic policies and expect different results. The past 8 years have produced 1.7% annual GDP growth for the US economy and added on another $10 trillion in national debt that has to be paid off one way or the other.

    We don't need another 8 years of the same result.

    One of the budget experts mentioned a report put out several years ago that we are trying to find and dig out which we will post at a later time once we find it.

    In that report, some economic expert asked the simple question:

    'How long would it take to pay off the federal debt if we had 10% annual economic growth in America?' 

    Remember, mind you, that the average economic growth we had under President Obama was 1.7%. We only experienced average economic growth under President George W. Bush 43 of 2.3% per annum.

    If we had 10% growth for even one year, we should have fireworks and celebrations for the whole month of the following January.

    Anyway, the speculation put forth by this budget expert was that just to pay off the existing $20 trillion national debt, assuming we could freeze it at that point right now, we would need to experience close to 10% annual economic growth for the NEXT 100 YEARS! to meet the higher demands of providing for an aging retiring population and produce enough surplus revenue to pay down the national debt to zero.

    We are not going to experience 10% annual economic growth under any President or any new Congress.

    We are not going to produce any surplus to pay down any debt any time soon. In fact, we are on-schedule to INCREASE federal deficits back up to $1 trillion in the next 5 years absent any radical change in federal budget spending starting January, 2017.

    And if interest rates return to any sort of normalcy and return to 4-5% in the next couple of years, we will be spending $1 trillion per year on existing federal debt pretty soon which will further squeeze any spending priority on any part of the federal budget other than Social Security, Medicare and Medicaid.

    Which means national defense, homeland security, welfare, environmental protection or any other of the hundreds of federal programs you might think is important to maintain.

    So have a Happy Labor Day this year and get ready to elect a President and a US Congress and Senate who fully understands the gravity of the economic, financial and fiscal problems we face as a nation.

    Because we are going to need them.

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Saturday, August 20, 2016

How Much Of Your Tax-Paid Federal Tax Dollar Goes To Each Federal Program?

One thing that is pretty scary is how very little the average, or any American taxpayer and voter really knows about where their tax dollar goes in the first place.

We are having a Presidential contest right now where the most 'important' things seem to be what one candidate says or what the other candidate has done wrong with emails and contributions.

Both are 'important'. However, they pale in comparison when you think about what they and the next Congress are going to do with YOUR tax dollar each and every day for the next 4-to-8 years while in the White House.

That is what we are doing, aren't we? Electing someone to lead this entire nation of 322 million people and lead the process to make decisions over how we fund everything in the country which not only has domestic ramifications but international as well.

And if you ask your spouse, partner, friend, family or colleague nearby right now, dollars-to-doughnuts they have no idea of where their taxpayer dollar is being spent right now, aside from the fact that they don't have that dollar in their pocket to spend on their families and what they want to do with it.

We grabbed the chart above from President Barack Obama's White House website where this simple calculation was posted up until 2014 but for some reason, has not been updated for 2015 and 2016 figures yet.

Go ahead and put in the amount of money you paid to Washington last year in total from your income, capital gains, payroll and any other federal tax you may have paid and see what the chart spits back out to you.

If you are an average American, you paid about $9000 in combined federal tax last year which is the figure we used for the example above.

Once you calculate your percentages and raw tax amount paid, stare at it a little while and ask yourself:

'Is that what I really want my federal tax dollar being spent on? And in that magnitude and amount?'

For example, $816.30 of that $9000 paid went to pay interest on the national debt. The national debt is the accumulated debt rung up by President Bush and Obama and Congresses over the past 16 years when neither have decided to be the fiscally prudent leaders we need and help facilitate making the decisions on the large public policy decisions that we elected them to do.

It has been the most damning indictment of our current leaders simply because the number has gone from about $5.8 trillion in overall gross national debt in 2001 when President Bill Clinton left office to $20 trillion today. 

Neither President Bush nor President Obama nor any of the Congresses since 2000 get any accolades for doing anything right when it comes to balancing federal revenues with federal expenditures. They are all culpable and blameworthy regardless of political party or good or bad intentions.

$20 trillion in national debt accumulation in relative peacetime compared to out-and-out war such as we experienced in World War II is $20 trillion in national debt accumulation no matter how you slice it.

And just wait until interest rates rise back to a more 'normal' level on T-bills and longer term US bonds. The next generation of taxpayers might see $2000 of their yearly $9000 tax payment go solely to pay off the interest on even more debt unless the next President and Congress puts a halt to this fiscal spiral of insanity and/or figures out how to stimulate or at least allow the economy to grow robustly again, unlike under President Obama who still has not figured out the fallacy of his economic philosophy and policies.

Take a look at Health Care. It is now the largest combined expenditure out of Washington when you add Medicare and Medicaid together. It exceeds our national defense spending by 3.5 percentage points.

An average taxpayer paid $2474 to pay for the health care of millions of other Americans last year when many of those same average American taxpayers were being hammered with rapidly escalating premiums, deductibles and co-payments on their own health insurance plans.

That same taxpayer paid $2152 for our collective national defense.

Go to the White House website and see what you paid in actual dollars for each program above. If you are a very high income taxpayer, your amounts are understandably going to be much higher than the average of $9000 noted above.

The rest of us should thank you and shake your hand every time we see you then. Mainly because you are paying for the vast preponderance of ALL of these programs above, not the rest of us. 50% of American taxpayers don't pay any income tax at all and only pay payroll taxes that ostensibly pay for SS and Medicare (but they really don't cover the entire cost of either, contrary to public perception)

The top 1% of all American taxpayers now pay approximately 1/2 of all income tax in America according to a CNBC report

Good Grief! Talk about a top-heavy tax system. Why would we ever want to dissuade wealthy people from making more money? They need to keep making it so they can pay the taxes everyone wants paid to fund the programs they like!

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Sunday, August 14, 2016

The Lost Obama Years: Want 8 More Years Of This?

We generally prefer to talk about public policy issues with facts and references to original data sources since we believe that is truly the only way to be honest with each other and then try to find the best solutions for us all as a nation.

There has been a lot of pirouetting, back-flipping and spinning coming out of the Obama White House and his economic advisors lately about just 'how great!' the American economy is today.

Hillary Clinton and her team, many of whom are from the Obama worldview of how to run government and the economy, are parroting the same lines as always:
  1. 'Things are just great!'
  2. 'Times under Reagan and Bush 41 and 43 were just terrible!'
  3. 'Trust in us and we will set you free!'
Well, things just are not all that great economically. It hasn't for the last 8 years.

We just got back from a trip through eastern North Carolina. In small town after small town, all we saw was boarded-up businesses, deteriorating homes and empty streets.

One town was so depressing and dusty that one could have sworn it was a ghost town from the Old West.

The question we will put to you, the jury representing the American people today, is this: 

'Do you really want 8 more years of the 'Lost Obama Years' as we can now honestly call it?'

Take a look at this chart above (all in billions of dollars) All we have done is taken the CBO 10-year projections from January 2008 and compared them to the CBO 10-year projections issued this summer.

Remember, at the beginning of 2009, the financial crash had already started and the economic and financial analysts were busy downgrading their forecasts for the American economy. Much of that was baked into their forecasts in January, 2009 so the slamming impact of the Crash of 2008 was already available to them.

What has basically happened since President Obama took office in 2009 is threefold:
  1. The American economy has under-performed CBO projections by at least $1.045 trillion. Some estimates put it at $2 trillion in lost economic potential.
  2. The debt held by the public is over $4 trillion higher than otherwise projected in 2009.
  3. The annual deficits are up over $200 billion more than projected and heading back up in an escalating manner to over $475 billion in 2019, not downward towards zero as it should be.
There was a lot of euphoria when the Bureau of Labor Statistics released data recently that pronounced '255,000 new jobs were created in July, 2016!'


What most media analysts failed to tell you was that anywhere between 100,000 to 150,000 of those 'new' jobs were just part-time jobs, a disturbing trend that started in 2009 as a result of the recession and as a response to mandatory compliance with Obamacare that has failed to dissipate even 8 years later.


Here's our take on all the economic numbers put out by the Obama Administration and the news media:

'If these sorry economic numbers had been produced under President George Bush 43 or any other Republican President, you would have thought there was blood in the water and sharks were splashing all about'

Just to repeat an old refrain:
  • There has been an average of under 1.76% per year GDP growth over all 8 years of President Barack Obama.
  • First time any modern US President has not presided over at least 1 year of 3%+ GDP growth
  • 2Q economic growth was a truly dismal 1.2%.
  • Economic growth begets job creation and general wealth creation for all Americans.
  • No economic growth hurts people at the middle and lowest economic levels in our society the most since they depend so much more on income from wages versus income from investments.
  • President Obama's policies of more taxes and far more regulation on the American economy have put the brakes on the economy, not helped return it to the normal 3%+ annual growth that has been the norm for decades in America
We can't think of one economic boom in modern American history that was preceded by a massive increase in the Big 3 of economic disincentives imposed upon the economy by the President or Congress in charge at the time: 

Taxes. Regulation. Federal spending.

There was hardly any economic recovery during the entire 11-year period of massive federal spending after the Great Depression started . When it did look like the economy was about to break out of its long slump in 1936, another major recession occurred that drove unemployment back up to 19.2% up from what the FDR Administration officials were then touting as 'major progress', 14.3%.

The economic malaise under FDR lasted 9 years from 1933 until the US entered World War II in 1942. The massive onslaught of federal spending did not solve the economic problems faced by our parents, grandparents and great-grandparents; many economic historians say his policies prolonged it.

Unemployment averaged 18% during Roosevelt’s first two terms in the White House. Over the course of those two terms, U.S. industrial production and national income fell by 1/3, not expanded. Despite billions of taxpayer dollars being spent to do the opposite.

We are about to end our 8th year of sub-par, near about negligible economic growth under President Obama.  His top-down-from-Washington heavy-handed, high tax and non-effective federal stimulus government spending approach is now proven not to work. At all.

If you look closely at every economic boom, including the ones started under Democratic Presidents John Kennedy and Bill Clinton, they were triggered by the passage of a series of taxes cuts coupled with pledges and promises to reduce federal regulation and hamstringing of American business and hold the line on federal spending and be fiscally mature adults about everything during their terms.

In other words, the successful Presidents gave American business, both big and small, the most important things they can have when it comes to expanding their business and hiring more people:

More Freedom and Confidence In the Future. President Obama did not succeed at doing either and Hillary Clinton is promising to continue his economic and fiscal policies and in many ways, expand them considerably.

JFK defended his tax cuts by saying something to the effect of business being a friend of people who like to spend more money on federal programs because 'without their taxes, we won't be able to spend it on programs we want to spend it on'

At least he was pragmatically honest about it.

If you think that everything is going great, and you think the grow-government-first approach is the way to create tens of millions of new full-time jobs over the next 8 years, then Hillary Clinton definitely is the person you should vote for as President in November.

There is almost a 100% chance she will follow the FDR/Obama 'Heavy Hand of Government Model'.

Not the 'Allow The American Economy Freedom To Grow Model' that Ronald Reagan employed as did President Bill Clinton once Congress came under Republican control in 1995 and he worked with them to balance the only 4 budgets we have seen in our lifetimes.

charts from CBO long-term projections, the first from Jan 2009 and the second from summer 2016

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Saturday, August 6, 2016

Was $400 Million in Unmarked Bills 'Ransom' Or Not?

Things just keep getting
curiouser and curiouser
the more we look at the
Iran Nuclear Deal, yes?
Believe it or not, aside from the whole question about whether the Iran Nuclear Deal was a 'good idea' to begin with, and the second question about whether $400 million paid in cash was 'ransom' in conflict with centuries of standard American policy to never negotiate with terrorists who take American hostages, there is a fundamental federal budget question to ask:

'Out of which federal fund was this whole deal consummated?'

We worked for a fine gentleman who was CEO of Harris-Teeter before he ran for Congress in 1984, Alex McMillan who knew more about budgeting, accounting and fiscal management than perhaps any Congressman before or since he served from 1985-95.

He used to always say this: 'If you want to see what someone's policy is in any field, business, government or personal account, follow their spending decisions and how they allocate their money. That will tell you what their priorities are.'

Let's take a look at how the Obama White House handled the financial transaction to complete this Iran Nuclear Deal so you can determine for yourself what you think the Obama priorities were.

First: On January 21, 2016, the White House told the WSJ the entire $1.7 billion was 'wired' to the Iranians as part of the completion of this past arms deal that Iran says they were owed $400 million.
'The U.S. Treasury Department wired the money to Iran around the same time its theocratic government allowed three American prisoners to fly out of Tehran on Sunday aboard a Dassault Falcon jet owned by the Swiss air force'
Hold it right there: If the money was reported as having been 'wired' in January, why then the need for $400 million in cash on pallets in small denominations in Dutch guilders, French francs, euros and American dollars, unmarked and untraceable, of course?

That begs the question: 'If $400 million was sent in cash on pallets to Tehran in an unmarked jet in the middle of the dark of night prior to the release of the 4 hostages, as we now know happened for sure, where the heck did the other $1.3 billion go? And was it ever sent by wire transfer to a central bank in Tehran from anywhere as is the case with normal transactions government-to-government?

Second: The White House is trying to spin the $400 million as Iran's money from the canceled arms deal in 1979 that took place before the overthrow of the Shah of Iran but before American arms were shipped to Tehran. Perhaps, but if it was just that, the $400 million in cash received in 1979 was supposed to have been held in an escrow account earning since 1979.

Escrow accounts typically do not pay interest unless agreed to during the negotiations prior to the agreement being executed. Escrow accounts are typically established to insure the pure safekeeping of the cash until the deal is consummated or reconciled later.

However, it appears as if the Obama Administration and State Department acquiesced once again in negotiating with our adversaries and gave them the imputed accrued interest on that amount as if it had been earning interest for 37 years.  Which it hadn't.

$1.4 billion in past accrued interest they came up with. Somehow.

The Obama Administration is implying that this $1.3 billion in 'accrued interest' is coming from some financial investment such as a bond in which that $400 million originally received from the Shah of Iran in 1979 was deposited and has been just earning and compounding interest since then.

Nothing could be further from the truth.

This $1.3 billion did not come from any earned interest in such a manner.

Care to guess where that $1.3 billion came from?

Your federal taxpayer dollars.

Right out of a line item in the Treasury Department which is a permanent Treasury Department fund established to cover court judgments and settlements which is annually appropriated funds during the normal appropriations process on Capitol Hill.

Again to reiterate and re-emphasize: This $1.3 billion in imputed accrued interest is not from 'actual' paid accrued interest from the $400 million originally received in 1979. It came from your hard-earned taxpayer dollars. US federal tax paid for through and through.

Here's the link to the Judgment Fund at the Bureau of the Fiscal Service at the US Department of Treasury out of which this $1.3 billion was paid. Check it out for yourself.

So, to summarize:

  1. Was this a 'ransom' paid or not?
  2. If it was, then what is Congress going to do about it in terms of punishing President Obama and Secretary of State John Kerry for engaging in such surreptitious activity?
  3. If it was not 'ransom', then why all the secrecy what with the unmarked plane arriving in the dead of the night like it was  in the movie 'Casablanca' or something and all the pallets of $400 million in cash in unmarked bills from a bunch of different currencies?
  4. What happened to the rest of the $1.3 billion in accrued interest that was supposedly 'wired' along with the $400 million (that arrived in cash on the plane in the dead of night)?
  5. Why does it look like the Obama Administration is lying about this and trying to cover it all up?
To be honest, the only time we have ever heard of cash being used in government circles is to bribe a politician or a dictator of a foreign government or to cover up a secret arms deal that no one wanted to be in the public's eye in the first place.

Do the names Oliver North, Fawn Hall, Elliott Abrams or John Poindexter mean anything to you?

They were involved in the Iran-Contra Affair in the 1980s where lots and lots of cash was exchanged for arms and hostages and Iran and Israel and the Contras in Nicaragua were involved as was the terrorist group, Hezbollah, supported by Iran and should read the whole story sometime because back in 1986, the Democrats went bonkers on Capitol Hill once they found out about it being surreptitious and illegal and all that.
'In 1985, the Reagan Administration sought the release of American hostages held in Lebanon by Hezbollah, and Iranian-backed terrorist organization. The U.S., without Congress’s knowledge, clandestinely sent American-made weapons to Iran through Israel in exchange for the release of the hostages.
The cash generated from the exchange was then used to purchase weapons that were funneled to the Contras, a guerrilla organization fighting the Sandinistas in Nicaragua. The Americans held in Lebanon were released, but Hezbollah took more American hostages afterwards'
If you don't think the current Iran Nuclear/Hostage/Arms Deal Settlement episode raises the same sort of eyebrows on the Republican side of the aisle as Iran-Contra, you haven't been paying a lot of attention over the past 8 years.

Things just keep getting 'curiouser and curiouser' as Alice said in her 'Wonderland'.

Maybe the truth will come out in the House hearings soon. Maybe there is an aspiring young honest and fair and balanced reporter out there who really wants to do some serious investigative journalism like Woodward and Bernstein did long ago.

Then again, maybe pigs will fly one day as well. One of the very real dangers to our American democratic republic is when the free press decides to choose one side or the other and become a mouthpiece or spokesman for either party instead of presenting the truth to the American people.

Maybe one day, we will see a return to a truly free press as well, one free from the constraints of being political first  so they can become newsworthy and trustworthy once again.

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Sunday, July 31, 2016

The 'Monty Hall Election' or 'Let's Make A Deal!'

WASHINGTON, D.C. – House Budget Committee Chairman Tom Price, M.D. (GA-06) issued the following statement today after the Congressional Budget Office (CBO) released its latest Long-Term Budget Outlook showing the national debt climbing to 141 percent of GDP by 2046, with real economic growth remaining at a depressed 2.1 percent on average over the next 30 years, and Medicare and Social Security facing insolvency.
“One wonders how anyone can look at this report and not feel compelled to take action.
We have no choice. The Congressional Budget Office is sending yet another wake-up call, and policymakers better listen. These debt projections portend a horrible fiscal legacy that is being left to our kids and grandkids with a correspondingly weak economic growth outlook that will mean less opportunity for our nation and its citizens in the years to come.
“The good news is that we can enact policies that ensure a more responsible fiscal outlook. A balanced budget would help deliver greater economic growth. We can protect current seniors and tomorrow's retirees from insolvent Medicare and Social Security programs. We can do all this while embracing policies that support a healthier and more vibrant economy.”

Let's take a look at what is really important about this upcoming election on November 8:

Our future. Your kid's future. Your grandkid's future.

No pressure, right?

We have written about this so many times before that we will just urge you once again to download and print out this 162-page CBO Long-Term Budget Outlook and read it in its entirety.

Keep it handy so you can take notes and scribble in the margins as you listen to the talk show hosts and the evening news and  see just how far off the mark all of them are when they misspeak or misquote the facts about our somewhat dire fiscal situation.

Just don't read it before you go to bed at night or else you will have nightmares.

The key to this election is electing a President who will lead the US Congress and Senate into a workable compromise on balancing our budget primarily through limitations on federal spending, reducing federal regulatory burdens on US businesses and passing legislation that basically frees up the creative energetic power of the free market to grow business which will then lead to more jobs and higher employment.

It sounds so simple. How can it be so hard to put into practice, then?

Which brings us to the great Monty Hall, host of the long-running 'Let's Make a Deal!' television show which ran from 1963 to 1976.

Despite this being perhaps one of the most raucous elections since those of 'Old Hickory' 'Gen'l Andy' Andrew Jackson's presidential campaigns near the beginning of the Republic (you ought to read about them and see how really nasty American campaigns used to be), we still have some very serious public policy decisions to make as a country and we are electing either Donald Trump or Hillary Clinton to lead us to those conclusions.

Who do you think has the best chance of being able to make deals with Congress to fix our national finances? Donald Trump or Hillary Clinton?

Monty Hall used to bring wild, enthusiastic people down from the audience, many dressed up in costume and paraphernalia that would make a French masquerade party seem tame by comparison, and offer them deals based on this simple premise:

'Do you keep what you know for sure is behind Door #1 or do you take a risk and trade it for what you hope will be a far greater prize behind Door #3?'

Sometimes behind Door #3, a contestant would see a bright new shiny red Mustang convertible behind the curtain which would make his/her trade of a Fridgidaire behind Door #1 seem like a great deal.

But sometimes behind Door #3 would be a booby prize which meant the contestant essentially traded down for nothing.

After decades of seeing and hearing and watching and investigating Hillary Clinton, we seem to know her pretty well inside and out, don't we? 26 years in the national limelight is plenty of time for people to form impressions of people in public life, whether rightly or wrongly. After that long of a time, it is difficult to imagine that the person you see in public is going to be much different for the rest of their lives.

Richard Nixon is the first person many people equate Hillary Clinton with when you ask them who she reminds you of in public life. Abraham Lincoln and Dwight Eisenhower are not usually the first two comparisons you hear made.

Hillary Clinton is behind Door #1. Like her or hate her, she is a 'known quantity' when it comes to public life because she has made thousands of decisions either by vote in the US Senate or as Secretary of State under President Barack Obama for 4 years.

She has a record of supporting so many more government and liberal causes that her 'variance from the norm' based on her past will be relatively small if elected to the White House. Her tack further left to satisfy the Bernie Sanders wing of the Democratic Party on issues such as forgiving $1 trillion in student debt (guess who would pay for that, taxpayers?) virtually assures that she will be boxed into the same ideological corners as far to the left that Tea Party Republicans get boxed in to the right.

However, she is still a 'known quantity'. The chances of her reversing course and becoming a staunch advocate of the free market and fiscal sanity such as by curtailing federal spending first and foremost is about 10% perhaps.

On the other hand, you have Donald Trump who might be have as wide of a range of variance as any presidential candidate in modern history when it comes to being put in some political philosophical silo. He has no official voting record as an elected official so no one can point to this vote or that vote as 'proof' of what he would do if elected President in about 3 months now. He has no record as a Cabinet official such as Secretary of State, Treasury, Commerce or Defense that anyone can point to either as evidence of his 'good judgement' or 'lack thereof'.

Which is THE primary reason he has defeated every other candidate who had a record of elective service this past year when you come to think about it. 'None of the people with elective experience have solved many big problems we face' say his voters, 'so why not Donald Trump?'

Donald Trump is behind Door #3. He might be the 'bright new shiny red Mustang convertible' or, as many of his detractors believe, he might be the 'Unsafe at Any Speed' Corvair, as Ralph Nader coined it and killed it forever.
Is this 'Donald Trump' or 'Hillary Clinton'?

Let's say there is a 50/50 chance he could be either the shiny red Mustang or the Corvair. Are you willing to take that chance on the upside knowing that what you are going to get in Hillary Clinton has very little chance of ever turning out to be like the thrill of riding down the highway in a bright red Mustang convertible with your hair blowing in the wind like Donald Trump's blond hair one day?

Or is it just 'too risky'? In which case, you just keep riding along in the same old Edsel we are riding in now that is running out of gas and heading towards a financial and fiscal cliff with each passing day? (The Obama Economy, which Hillary Clinton would extend and continue as President Obama's third term legacy, just clocked in at a dismal 1.2% growth rate for 2Q, 2016)

Presidents rarely have campaigned in the past on one platform or set of basic philosophical political principles and then done a complete 180 degree about-face once elected and done the complete opposite in terms of proposing legislation and signing whatever came back from Congress.

FDR campaigned as a tight-fisted fiscal conservative in 1932, for example. Once elected, however, he went completely over to expanding the welfare state, first as a means to get people fed during the Great Depression, but then as a matter of leadership and getting re-elected despite repeated challenges and over-rulings from Chief Justice Louis Brandeis on the US Supreme Court that FDR had vastly overstepped his boundaries as Chief Executive of the nation.

Presidents have to be malleable to deal with any contingency that may arrive under their leadership. It would be very difficult to imagine a pacifist, anti-war President who promised to stay out of war, for example, not declare war against Japan the day after Pearl Harbor on December 8, 1941.

Most of the time, they change once in office. Slightly. Hardly ever do US Presidents completely lie about what they will do once elected because if they do, they get beat in the next election usually.

The question you have to decide is this: Which person do you think can lead us out of this morass of fiscal and economic problems we face today....based on your reading of the problems we face in the Long-Term Budget Outlook we have just given you as an assignment to read?

Just make sure you read that as soon as you can. You don't want to make the wrong decision for the future of this country, do you?

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Friday, July 22, 2016

The 'Stag-Nothing' of President Obama's 8 Years In The White House

Remember the term 'stagflation'?

Unless you came of age during the late 70s/early 80s, this term will mean absolutely nothing to you.

It was a term coined by British Conservative politician, Iain Macleod, in 1965 who later became chancellor of the exchequer in England in 1970.

Generally, 'stagflation' was used to describe a horrible economic mess of a condition where bone-headed and wrong-minded government fiscal and monetary policies combined to produce high inflation, stagnant economic growth and high unemployment.

It was used to hammer President Jimmy Carter in the 1980 presidential campaign by Ronald Reagan to great effect.


Because President Carter's almost completely inept leadership on fiscal and monetary policy during his only term in office led to outrageous rates of inflation, up to 12% by end of his term; 21% interest rates; unemployment rates that hit 10% less than a year after he left office on January 20, 1981 and a general sense of 'wrong direction' for the country such that even he had to admit it was a 'malaise' in a national address that was almost too hard to even watch.

Know what the 'dissatisfied with the way things are going' poll numbers under President Carter' were as recorded by Gallup in 1980?


Know what they are today under President Barack Obama?


That looks like the American people are about as 'unhappy' with the results they have gotten under President Obama's leadership as they were under President Jimmy Carter, doesn't it?

Look at those economic indicator numbers. They also led to the 'misery index' which Ronald Reagan used to ask people: 'Are you better off than you were four years ago?' to great effect and great success as he walloped Carter in the largest electoral wipeout of an incumbent President in American history.

We don't have rampant inflation rates today. We don't have rampant interest rates today. We don't have rampant 'official' unemployment rates today, although we do have 'rampant' under-employment and people leaving the workforce which does not affect the official unemployment rate because they are simply not looking for work due to discouragement and other factors.

What we have today after 8 years of President Obama's leadership (sic) and policies in America is this:


Seriously, think about it. We don't have anything even remotely close to an economic boom going on in America today.

Oddly enough, if we did have massive job creation and hiring going on, you would see interest rates and inflation start to drift up due to higher demand for money and the material and services that almost always accompany any even modest economic recovery.

It has now been 7.5 years under the leadership of President Obama who can not possibly still be blaming George W. Bush 43 for this lackluster economy, can he? (don't answer that)

We have somehow 'successfully' (sic) managed to rein in our humongous national economy, the most diverse and productive economy the world has ever seen, to slow to a virtual crawl after 8 years of increased taxes and regulations emanating from Washington federal bureaucracies like millions of fire ants spoiling a picnic.
What we need is a President who doesn't like more
fire ant regulation of American business

Since Barack Obama took office, and before he leaves on January 20, 2017, a record number of federal regulations will be issued by his Administration, did you know that? He will have presided over the record number of close to 640,000 pages as published in the Federal Register spewing bureaucratic verbiage to install over 24,000 new final rules and regulations to tell our nation's businesses mostly what they can and can not do.

FDR in his heyday of virtually nationalizing everything under his New Deal for 12 years probably didn't exceed those mind-numbing generation of promulgated regs.

People who like more government write more laws and more regulations. It just goes together like a hand-in-a-glove.

As a result of the wet blanket of these mind-numbing new regs when coupled with all the new taxes and deficit-spending under President Obama, we are now at the virtual stage of an economic standstill if there ever was one.

Let's review the cold hard facts of our economic situation today from official government sources:
  1. Inflation for the last year has averaged about 1%.
  2. Federal funds rate at the Federal Reserve is now 0.5%.
  3. US prime interest rate is 3.5%
  4. 'Official' Unemployment Rate is 5%.
  5. 'Real' Unemployment (U-6) Rate from Department of Labor is 9.6%.
  6. Close to 8 million Americans are 'officially' unemployed *
  7. Another 7.6 million Americans are under-employed or part-time looking for full-time *
  8. 15.6 million unemployed or under-employed Americans today *
  9. The Average Economic Growth Rate for the last 7.5 years under President Obama is 1.76%
1.76% average GDP growth for 8 long years. When we worked on Capitol Hill, any projection of growth rates below 3% per year were considered 'decimal dust' and 'ridiculous'.

'How could the greatest economic engine the world has ever known be kept BELOW 3%?' was the sentiment.

Well, we did it. Yippee. Congratulations.

In otherwise 'normal' economic times, inflation at near-zero levels would be terrific for business, economic expansion and massive job creation.

In otherwise 'normal' economic times, interest rates at historically low levels would be terrific for business, economic expansion and massive job creation.

In otherwise 'normal' economic times, unemployment rates at below 5% levels would be terrific for business and economic expansion since, obviously, massive job creation had presumably occurred.

In otherwise 'normal' economic times, unemployed people who wanted to work and make a living and provide for their family would be sprinting towards the job market, not leaving it in droves, as in many months under President Obama, when more people left the job market than the number of people who found jobs,

We have 'none' of that today, do we? Ask around. Ask your friends and families if they feel a sense of exuberance about their economic prospects and financial situation today.

Ask them if they are finding job opportunities jumping out at them from every source they meet.

That is what a 'normal' economic expansion would look and feel like. Older folks who experienced such expansions in the 1980s and mid-to-late 1990s can tell you that is exactly what it looked and felt like when they experienced it.

They don't see it happening right now. They have not seen it happen for the past 7.5 years.

So ask yourself this serious question in the privacy of your own home:
  • Are you better off now than you were 4 years ago? By a lot, by a little or not by much?
Any continuation of the same economic policies for the next 8 years will most likely yield the same desultory results.


Is that what you really want for the next 8 years?

*(see Jobenomics for a full in-depth analysis of all the employment numbers)

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