Thursday, April 26, 2018

The Scariest Budget Chart You Will Ever See

(first published in North State Journal 4/25/18)

Every single tax dollar collected by the US federal government in 2039 will be used to pay for just 4 things in the budget:

  • Medicare
  • Medicaid
  • Social Security
  • Interest on the national debt

This includes 100% of all individual and corporate income taxes; OASDI (Social Security) payroll taxes; Medicare payroll taxes, estate taxes and excise taxes.

Every dollar we spend on other federal programs will be borrowed from foreign governments such as China or Saudi Arabia; corporations and high net worth individuals.

That includes national defense, homeland security, environmental protection, welfare, subsidized housing, Pell grants and any other federal program you can think of or benefit from.

What does this ‘crowding out’ effect mean?

We can already see what it has done over the past 60 years. Non-entitlement discretionary funding, essentially the ‘guns-and-butter’ part of the budget, accounted for 68% of the 1962 federal budget.

Today, those same programs account for 32% of the budget. You can argue all you want about the need for more money to be dedicated to education, housing or welfare but the truth is, as a percentage of the federal budget, those programs have already been hit proportionally hard since 1980 by the slow but steady expansion of entitlement programs.

‘Why not raise taxes on the rich and corporations?’

‘Because it won’t work’ is the honest answer.

We have raised and lowered taxes on everyone and everything over the past 40 years. What has been the upshot of it all?

The American public has paid about 18% of GDP to Washington per year under all tax plans, regimes and disciplines. For whatever reason, either through aggressive tax-planning or deliberate underpayment of taxes, the American taxpayer has been remarkably consistent in paying taxes amounting to about 18% of GDP since 1970.

The only responsible way to run any budget for any government, corporation, organization or household is to control the rate of growth in spending or reduce it responsibly.

The sad, and odd, thing is that virtually all of our fiscal budget deficit and national debt issues today could have been avoided with a few legislative changes to both Medicare and Medicaid as far back as 1990. Had growth in both programs been held to the rate of inflation in the economy rather than allowed to grow at double or triple the rate of inflation annually since then, we would be talking about massive annual surpluses today and virtually zero national debt.

Annual tax cuts would have been the norm rather than the exception.

Social Security could have been reformed as well by changing the ‘bend point’ in calculation of benefits, which would have contributed to a further flattening out of federal spending as well.

Instead, after experiencing a too brief period of adult leadership and sensibility about the federal budget from 1997-2001 when 4 budgets produced surpluses instead of deficits, we now have to contend with the implications of dealing with rising interest rates on servicing national debt of $21 trillion and rising fast; critical national security concerns around the world, a burgeoning senior population due to millions of Boomers now retiring and a plethora of other public policy issues that have not been solved by either political party.

What can we do to solve our budget dilemma?

Congress can cut spending. Which it should.

Congress can try to raise taxes. But it won’t work as we have seen over the past 40 years.

The economy can expand at a 3% annual rate for 10 years instead of the desultory 1.9% average rate of growth under President Obama for 8 years.

Some believe we can grow at 4% per year or perhaps even 5% for some period of time.

If American economic growth out-runs our fiscal irresponsibility, it will be the greatest escape act since Harry Houdini.



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Wednesday, April 18, 2018

What To Do About College Athletics

(first published in North State Journal 4/18/18)

Big-time college athletics is out of control. But should universities lose their historical mission to educate young people as a result?

College athletics, primarily football, has been a lucrative way to make money for the school and get publicity for the university.

Wallace Wade was head coach of the Alabama Crimson Tide in the 1920s and led them to 3 national titles in 3 Rose Bowls. He started the Alabama dominance of college football.

Duke University Chancellor Preston Few was looking to bring much-needed publicity to the new campus that opened its doors in Durham in 1924.  The Alabama program under Coach Wade was doing pretty well so Few contacted Wade for his suggestions for a new head coach.

Coach Wade surprised everyone, including Chancellor Few, by saying he was interested in the job under the following conditions: he wanted to be head football coach, athletic director and intramural program director since he believed in using athletics to build men out of boys.

He got all three plus a generous salary during the Depression and a cut of the gate receipts. When he filled up Duke Stadium with 50,000 spectators to watch the Blue Devils play national powers such as Pittsburgh and go to 2 Rose Bowls, Duke University got the nationwide publicity Chancellor Few wanted and Coach Wade went to the Hall of Fame.

Coach Wade and universities offered athletes a free education with room and board which they could use to become doctors, lawyers or businessmen if they went to class, did their homework and did well on exams.

Which is the original purpose of higher education in the first place, right?

Back then, the allure of pro sports was not what it is today. College football players drafted in 1939 got paid $100/game to play against older men who had other jobs to make ends meet during the year.

Today, an elite athlete could make tens of millions of dollars if they go right to the pros from high school in basketball or leave after 3 years in college football.

However, such lucrative contracts are only given to approximately 1.5% of all college football or basketball players. 1 out of every 1860, or 0.054%, high school basketball players ever make it to the pros.

Going to college to get a free education plus room and board for 4 years is a good deal for almost every college athlete who plays football, basketball, baseball, lacrosse or soccer.

Especially benchwarmers.

The NCAA should consider the following proposal which is based one thing on which all Americans can agree:

Freedom to choose.

Any high school basketball phenom who wants to go right to the pros can choose to do so just as any high school baseball star can do right now.

Any player has 4 years of playing eligibility at any college from high school graduation. If they get cut from the pros after 1 year, they have 3 years of eligibility remaining; after 2 years, 2 years of eligibility remaining and so on. They can be recruited by any college at any time from the NBA to the G League to the Turkish League overseas.

If the goal of higher education is to give young players a great education in return for entertaining the rest of us who wished we could play basketball at their superior level, there should be no barriers to entry to any college if they flame out in the pros.

Coach Wade used to tell every prospect he recruited: ‘Duke University is going to do more for you over the course of your lifetime than you will ever do for Duke on the football field, young man. Take advantage of this marvelous gift of an education’.

Why not heed that same advice in the 21st century?


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Wednesday, April 11, 2018

How Many Business Regulations Are Enough in North Carolina?


(first published in North State Journal, 4/11/18

Does anyone in North Carolina know how many regulations exist in the North Carolina Administrative Code (NCAC)?

More importantly, is there anyone in the state of North Carolina who has read all of them and understands all of them and what their collective impact is on North Carolina business both good and bad?

If you guessed 109,350 restrictions in the form of regulations consisting of approximately 8.7 million words, you win.

Mark Twain estimated he wrote between 1400 and 1800 words per day on his way to becoming the most famous author in American history. At that rate, he would have had to write for 15 years straight to match the number of regulations now on the books in North Carolina.

According to the Mercatus Center at George Mason University, it would take 483 hours, or 12 weeks straight at 40 hours per week reading at a rate of 300 words per minute to read all existing North Carolina state regulations.

That is not too bad. They estimate it would take a person 3 years to read the 112 million words in the US Code of Federal Regulations (CFR), all of which affect businesses in North Carolina as much or more than state regulations do.

If you ever want to understand why so many business executives complain about the heavy hand of government bureaucracy, look no further than the 120+ million words in federal and state regulations.

What does it mean in practical terms for any business ranging from small businesses to the very large corporation?

It means that people must be hired to make sure the business complies with the state and federal regulations. It means time and effort must be diverted to complying with every regulation instead of selling more product. Any law or regulation opens the door for litigation which further depletes money and human capital from the primary objectives of the company which is to sell more product and produce a profit for the shareholders.

It means money from sales revenue or investment capital has to be diverted to pay for people who do not do anything more than read regulations and make sure the company complies with them which adds costs to the final product bought by the consumer.

Are all regulations ‘bad’?

Certainly not. Labor safety laws and environmental protection certainly have their place in the modern world of commerce and manufacturing.

But when is the number and scope of regulations ‘too much’ and in dire need of repeal or revision?

The National Association of Manufacturers (NAM) published a report in 2014, The Cost of Federal Regulation to the U.S. Economy, Manufacturing and Small Business’, that estimated federal regulation compliance alone costs businesses roughly $2 trillion per year, or about 12% of GDP annually. Federal regulations cost about $10,000 per employee with small businesses being more adversely affected than large corporations because of fewer employees over which to amortize the cost of compliance.

Added together with the costs of state regulatory compliance, the cost of complying with regulations to any business are enormous every year.

The North Carolina Administrative Code should be thoroughly examined and reviewed with the goal to remove as much administrative burden as possible from North Carolina business operators and entrepreneurs. Surely there are regulations that no longer apply to the current modern economy.

The Texas legislature, for example, has a one-year session but dedicates the off-year to a thorough review of one agency to determine whether it is efficient and achieving its stated intended mission. If they find antiquated regulations and laws on the books, they repeal them the next session.

It would be a surprise to find less than 25% of current NCAC regulations that could not be repealed with bipartisan support. It is worth the effort to find out.


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Wednesday, April 4, 2018

'I, Bowtie'*

Augusta Stripe Bowtie by High Cotton
(first published in North State Journal, 4/4/18)

‘I, Bowtie, simple though I appear to be, merit your wonder and awe. If you become aware of the miraculousness which I symbolize, you can help save the freedom we want in America.

Not a single person on the face of this earth knows how to make me. This sounds fantastic, doesn't it?

A bowtie appears simple. There's cotton or silk, dye, thread, a bit of metal and a printed label.

I, Bowtie begin with a bale of cotton, grown in the South. Think about the tractors and combines used in harvesting and taking the cotton to a nearby gin operation in New London, NC. Think of all the people and numberless skills that went into the fabrication of those magnificent machines: mining ore, making steel and its refinement into complicated machines and motors; farm hands that planted cotton seeds and tilled the soil and looked after the crop all summer long.

American cotton is shipped from the cotton gin to a spinning operation in Thomasville to be spun into usable thread. American cotton thread is shipped to weaving operations in England or Portugal to be woven into fabric that my Southern creators have designed, fabric which might come back to any one of the thousands of people involved in this miraculous journey in the form of bowties, long ties or cummerbunds if they order them on-line.

Thousands of workers transport fabric on ships or by air freight back across the Atlantic to a cut-and-sew operation in Pilot Mountain. Dozens of seamstresses take turns sewing bowties after this precious fabric has been cut to precise specifications. Then it is shipped to a fulfillment center in Butner where dozens of employees pack and ship bowties to individuals and retail stores across the globe.

No single worker does any of this work because he himself individually wants a bowtie.

There are many among this vast multitude who have never seen a bowtie nor would they know how to tie one if they had it. Each of these thousands of people sees that he can exchange his tiny know-how in the process for the goods and services he needs or wants even if it is not me, a simple Southern bowtie.

There is a fact still more astounding: the absence of a master mind, of anyone dictating or forcibly directing these countless actions which bring a bowtie into being.

Instead, we find the ‘Invisible Hand’ at work.

I, Bowtie, am a complex combination of miracles: cotton, metal, weaving and so on. An even more extraordinary miracle has been added: the configuration of creative human energies—millions of tiny know-hows configurating naturally and spontaneously in response to human necessity and desire and in the absence of any human master-minding!

Man can no more direct these millions of know-hows to bring me into being than he can put molecules together to create a cotton plant in the first place.

If one is aware that these know-hows will naturally arrange themselves into creative and productive patterns in response to human necessity and demand—that is, in the absence of governmental or any other coercive masterminding—then one will possess an absolutely essential ingredient for freedom: a faith in free people.

Freedom is impossible without this faith.

The lesson I have to teach is this: Leave all creative energies uninhibited. Merely organize society to act in harmony with this lesson. Let society's legal apparatus remove all obstacles the best it can.

Permit these creative know-hows freely to flow. Have faith that free men and women will respond to the ‘Invisible Hand’ of freedom and personal self-interest, integrity and fairness.

This faith will be confirmed. I, Bowtie, seemingly simple though I am, offer the miracle of my creation as testimony that this is a practical faith, as practical as the sun, the rain, a cotton plant and the good earth.’

 *adapted from the classic "I, Pencil" essay by Leonard Read (1898-1983) who founded the Foundation for Economic Education (FEE ) in 1946 and served as its president until his death. 

"I, Pencil," was published in the December 1958 issue of The Freeman.

High Cotton website: https://www.highcottonties.com/collections/spring-2018

(My wife and sons started High Cotton in 2010 and have been an amazing example of how the free enterprise system works when people do the right thing with integrity and honor. It has been a privilege to walk alongside of them and this post is a tribute to their hard work and discipline and success)


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Wednesday, March 28, 2018

Why Did Evangelicals Vote For President Trump in 2016?

(first published in North State Journal 3/28/18)

Michael Gerson wrote ‘The Last Temptation’ in The Atlantic recently where he struggled to understand why, and how, evangelicals in America supported Donald Trump in the last election and have stood by him despite his flaws in moral judgment and character.

Political cognoscenti and #NeverTrumpers such as Mr. Gerson who grew up in the ‘values-based’ campaigns of the 1980s worry that the Trump Administration is ‘the beginning of the end for the American Republic’ or perhaps plain and simply ‘The End’ of all things sacred in American politics.

They fail to understand this simple premise: ‘Why would anyone want to vote for a candidate who will not support policies to make their lives better?’

American presidential campaigns are not about selecting the ‘nicest’ or ‘most moral’ person to occupy the White House and make the most important decisions in the world on a daily basis. It would be nice if they were, but history has shown they were mostly not.

American voters, be they Christian or not, want the following things in order:

  • A Job
  • A Good Job
  • A Better Paying Job
  • A Way to Support Themselves and Their Families 
  • Protection against crooks and criminals in the streets where they live
  • Defense against foreign invaders and attacks.
  • Freedom from being told what to do and how to think all the time by elected politicians
  • And then everything else comes in at about Priority #50 by comparison

Evangelicals, along with tens of millions of other citizens, did not see any appreciable wage gains adjusted for inflation under Bush 43 and certainly not under Obama for 16 long years.



They saw the US attacked on our soil for the first time since Pearl Harbor on 9/11. They saw the greatest economic crash since 1929 and the resulting Great Recession that ranked just behind the Great Depression 80 years previous.

They did not see any incumbent elected politician doing anything that helped them out personally in a major way. So they took a chance on the ultimate outsider and rolled the dice hoping he would shake things up in Washington, DC so they could find a good job or keep the one they had.

Being a ‘moral’ or ‘religious’ person is no guarantee of being an effective President. Jimmy Carter may have been a great Sunday School teacher but he was one of the worst decision-makers and leaders in White House history.

The dumbest thing a person can do is vote for someone who does not help them improve their station in life. What possible good would it do to vote for anyone who does not help them live better, more free and prosperous lives? Why would anyone intentionally vote for a candidate or party that passes legislation which leads to a lower standard of living and income for them and their families?

No one wants to elect someone who makes their lives more miserable. No sane person at least.

Political consultants always tell their candidates the same thing: 'This campaign is about JOBS, JOBS, JOBS!'

That is what fueled the evangelical support for Trump that is still strong. They now see their pay checks going up due to the tax cuts and the better economy; they see more job opportunities for themselves and their children and friends and they feel safe when Trump talks tough in his Queens way of talking to our adversaries overseas.

Just as other religious and non-religious people who voted for Trump across the board even though many held their nose doing it while thinking: 'Well at least he ain't Hillary!'

Politics is not about a candidate’s personal religious belief, manners or character as Michael Gerson and others want to believe. Politics is about citizens electing representatives who will get things done that help them lead better lives for themselves first and everyone else as well.


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Tuesday, March 20, 2018

"Enforcement of Trade Agreements' or 'Trade Wars'?

(first published in North State Journal 3/21/18)

President Trump’s announcement of tariffs on steel and aluminum set off a spate of comments comparing his actions to the Hawley-Smoot tariff act that many feel precipitated and certainly exacerbated the Great Depression of the 1930s.

Is he starting a ‘trade war’ for no good reason at all? Or is he positioning the US for a much-needed review and rewrite of NAFTA and other bilateral and multilateral trade agreements?

The history of American trade policy has not evolved much since the end of World War II. After the war, the highest priority was placed on establishing GATT (General Agreement on Tariffs and Trade) with devastated countries such as West Germany and Japan to help them develop free market economies that would support freedom and democracy.

Making trade concessions to help export freedom and democracy was far more preferable than fighting another world war against them, this time with nuclear weapons.

GATT morphed into the World Trade Organization (WTO) in 1995 which became the forum to govern international ‘free trade agreements’.  The WTO is currently the only mechanism we have to monitor trade between the US and Japan, the EU and China.

One of the industries that became a sacrificial lamb for trade agreements, sadly for North Carolina, was the textile industry. Textile manufacturing was labor-intensive and required relatively low working skills which was perfectly suited for workers in developing countries such as China and then southeast Asia.

As time went on, successive Administrations and State Departments continued to make trade concessions to help nations develop and create jobs primarily as a foreign policy tool, not as an economic tool to defend and protect American jobs.

The only problem is that China has failed to convert to democracy after all these years. And they are clearly taking advantage of our lax enforcement of existing agreements to become the second largest economic power in the world.

Now should be the time to stop using trade as a foreign policy tool and revert to rewriting trade agreements solely on economic fairness and equity grounds to all parties.

Most trade agreements have provisions that call for ‘countervailing tariffs’ in the event a country subsidizes manufacturing, manipulates currency or steals intellectual property rights that lead to a surge of exports to the US. The US, at the behest of the State Department, has routinely turned a blind eye to such grievances and allowed cheaper imports to flood into the States.

After all, who doesn’t want to buy a dozen T-shirts for $10 from Wal-Mart?

In Senator Elizabeth Dole’s office starting January 2, 2003, we sent weekly textile job loss reports to the Vice-President’s office. By August, the total was 52,000 and we were begging the Bush 43 Administration to invoke the surge protections, or countervailing tariffs, already existing in the textile agreements.

In August of that year, Pillowtex in Kannapolis announced it was laying off 7000 people.

‘What is going on with the NC textile industry?’ asked the Vice-President’s office. After close to 60,000 jobs had been lost to unfair textile importation in 8 months.

President Bush signed an executive order raising tariffs on 3 categories of lingerie from China but by then, the damage was done and the response was too little, too late.

Enforcing trade agreements has been the US problem for decades. It is not a ‘trade war’ to demand our economic allies and partners abide by the rules of fair but free trade and not take advantage of US workers.

Perhaps President Trump is opening a gambit to force trading partners back to the table to get more favorable treatment for American workers and force China, among others, to play fair.

That is not a ‘trade war’. That is ‘insisting on fair play’, ‘demanding enforcement of trade agreements’ and ‘negotiating to win’.


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Wednesday, March 14, 2018

'We Will Have 5% GDP Growth Again In America!'

'Morning in America--Part 2', 2017-2018
(first published in North State Journal 3/14/18)

The great thing about making predictions is that people only remember when it is correct and the vast number of prognosticators were wrong.

Unless the prediction is so out-of-bounds proven wrong that it is never forgotten as one of the greatest bone-headed predictions ever.

Such as when Nobel Prize-winning economics professor Paul Krugman on Election Night, 2016 said: ‘If the question is when markets will recover, a first-pass answer is 'never'".

Ouch.

Economists get ridiculed, deservedly so, for breathlessly predicting '10 of the last 3 recessions!' However, in 2008, before the greatest Crash since the 1930s, hardly any economist was sounding any alarm bells.  Many were caught on tape saying how great everything seemed at the time and smooth sailing was ahead for the American economy ‘for the foreseeable future’.

Ouch again.

One private economic guru has made the following argument against the backdrop of an army of professional economic forecasts predicting an average of 2.5% quarterly and annual GDP growth for the next 3-5 years:

'We will see economic growth rates well in excess of 3% on a quarterly and yearly basis for the foreseeable future!'

His reasons for the extra economic growth are as follows:

  1. Lowering corporate tax rates to 21% down from 35% will raise retained earnings (profits) in American businesses by $2 trillion over the next 10 years according to former Reagan economic advisor Martin Feldstein, now at Harvard.
  2. Adding to that pool of available cash to invest is the immediate expensing of capital equipment in the first year versus depreciating such assets over 3, 5, 7 or 10 years. Depreciation is a complicated concept for non-accounting types but pairing off the cost of buying modern new equipment against current year revenues in 1 year is far better than spreading it out over a number of years.
  3. Cash kept in year one will be much larger due to the tax protection offered by immediate expensing even though new, more efficient machines will be financed over a number of years.
  4. Under old depreciation rules, companies had to account for future tax payments on their balance sheets for several years. With immediate expensing of new equipment, their deferred tax liability goes way down which means they can borrow more money to buy more modern equipment to replace more old inefficient broken-down equipment.
  5. Productivity rates go up across every industry sector that buys new equipment. When productivity goes up, wages go up; people take home more money in real wage growth on top of the $1000-$2000 tax cuts that are perennial in effect now and a vicious cycle starts to feed on itself upwards in a positive manner.
  6. The lower 21% tax rate will repatriate, or bring back, to the US $2-3 trillion in corporate profits corporations have held in Europe for a long time instead of being taxed at the previous high 35% rate.
  7. Large subchapter S corporations will convert to C corporations to take advantage of the new lower corporate tax rate.
  8. Wage growth should exceed 3% later in 2018 when these changes work their way through the economy.
  9. We should see slightly higher rates of inflation but that is a good sign after close to a decade of near zero inflation which reflected the relatively dormant state of the economy from 2008 to 2017.
  10. The capital expenditures of the corporate sector will supercharge companies that build plants and equipment.
'We may see several quarters where economic growth exceeds 5%’ says this expert.


If he is ‘wrong’ and it is ‘only’ 4%, that is far better than any growth rate we have seen since 2000. Young people may finally see what a booming economy looks and feels like.

To their benefit.

Wednesday, March 7, 2018

'The Best Welfare Program Is A Job'

(first published in North State Journal 3/7/18)

The difference between liberal and conservative ideology can best be seen when confronted with numbers such as the following from a recent Joint Legislative Committee hearing in the North Carolina state legislature on Medicaid enrollment:

  • 29 counties in North Carolina have experienced a decline in non-Family Planning enrollment for Medicaid since 6/30/16
  • Another 33 counties have experienced a decline in enrollment since 6/30/17
  • Over 60% of the counties are experiencing non-Family Planning enrollment declines in FY 2017-18 

To what specific factors can these declines be attributed?

Republicans tend to point to the improving economy and lower unemployment rates for much of the declines in Medicaid enrollment across the state. People who get jobs that provide health care coverage typically go off Medicaid eligibility and on to private plans.

The average stay on Medicaid for non-long-term disabled citizens is about 10 months contrary to public opinion where many assume once a person goes on Medicaid, they are there for life.

Democrats tend to focus on other reasons such as availability of information to people eligible for Medicaid but do not know how to enroll; possible flaws in collection of statistical data and fear by illegal aliens living in North Carolina to apply for Medicaid benefits and risk possible deportation.

All play into possible explanations.

What is the main 'correct' answer though?

President Ronald Reagan perhaps explained conservative thought on welfare best when he said the following two statements in different speeches over time:

'The best social program is a productive job for anyone who’s willing to work'.

'Welfare’s purpose should be to eliminate, as far as possible, the need for its own existence'.

To many unfamiliar with the liberal/conservative divide over the past 50 years, President Reagan’s words sound like common sense regardless of which side of that divide you may be on.

There was a time in modern American history where the majority of Republicans and Democrats ascribed to that notion of self-sufficiency and hard work.

However, since the advent of the Great Society programs under LBJ in 1965 and subsequent amendments and welfare programs added to our federal budget since then, many on the left have come to see increases in numbers of people on welfare or entitlement programs as a sign of 'success' of the modern welfare state in America.

Conservatives take an opposing view. They tend to see reductions in enrollment numbers as evidenced in the Medicaid hearing as a sign of great success in economic growth policy since many people who were not on Medicaid since 2016 must have found a job and are now working in a productive capacity to provide for themselves and their families.

Republicans see ‘success’ in welfare programs when the need for or dependency on them is dramatically reduced. Every able-bodied individual who can work should work is their line of thinking. It helps self-worth, self-esteem and keeps families and communities together.

If liberals want to help to achieve such a utopian goal, every effort should be made to allow private businesses to expand and hire as many people as possible. Any effort to hamstring American business with over-regulation, higher taxes and more government debt almost by definition frustrates their ability to hire new workers, many of whom need job training and residual education usually provided by the new employer to leave public welfare for good.

Whenever a liberal politician seeks to punish a rich person who has built a business with higher taxes or regulation, they need to keep in mind that the people they are really hurting are the lower-income people currently surviving on welfare programs who will not be hired if taxes, spending and regulations go up.

What is going to be: more government welfare or more personal work opportunities?


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Wednesday, February 28, 2018

Anatomy of Gun Control Debates in Congress

(first published in North State Journal 2/28/18)

As shocking as the Parkland school shootings were, there have been other school shootings in American history that have been equally as ‘shocking’: the Columbine murders in 1999, the Virginia Tech massacre in 2007 and perhaps the most disturbing school shooting ever, Sandy Hook Elementary School in Newtown, Massachusetts in 2012.

They followed the same pattern: mentally-disturbed individuals somehow gained access to semi-automatic weapons and went to the school to exact revenge for bullying or because ‘demons told them’ to do so.

Sadly, the debate following each massacre usually follows the following script and rhythm:
  1. Anti-gun activists call for more gun control.
  2. Pro-gun groups assert Second Amendment rights.
  3. People call for more early intervention for severely-disturbed psychiatric patients.
  4. Conservatives call for more family values and better parenting.
  5. People start pointing fingers at violent video games to try to stop them.
  6. Congress passes something minor that supposedly closes some gun show loophole.
And then the energy dissipates like a passing thunderstorm. Until the next mass shooting on a school campus.

What can be different this time around?

First of all, some facts might help frame the debate:

  • It is estimated close to 80 million people own a firearm in the United States, perhaps 30% of all adults in the nation.
  • 120 million people live in a household where a gun is present.
  • An estimated 300 million firearms are in someone’s hands in America today.
  • 3% of all adults in America, roughly 7.2 million, own close to 50% of all firearms, roughly 20 per owner, mostly gun collectors and avid hunters.
  • 30,000 deaths per year can be attributed to a firearm. Close to 2/3rds are suicides; the rest are homicides. 
  • 10 million assault rifles may be in circulation in the US today.

When it comes to politics, legislators have to first consider ‘the art of the possible’. Federal government confiscation of 10 million assault rifles or 300 million firearms simply is not a viable solution when one considers the magnitude and danger of such an undertaking.

Those are simply massive numbers.

99.99% of all gun owners do not use guns for violent purposes against another person each year.

Plus they have Second Amendment rights to own a gun. Gun control activists would have a greater chance of repealing the 2nd Amendment than they would confiscating some, part or all of the firearms in America today. Which would be next to zero.

Instead of considering comprehensive legislation which will probably peter out as so many have done before, perhaps there is one issue where all sides could agree to focus legislative attention and see if a small change can yield at least some positive results.

As in no more mass shootings in public schools.

In 1967, California passed the landmark Lanterman-Petris-Short (LPS) Act which made it very difficult for one person to commit another person involuntarily through the judicial system to a psychiatric hospital without evidence of that person harming someone or themselves. The criteria for involuntary admission shifted from proof of the individual’s inability to make ‘responsible choices’ to the ‘presence of dangerousness’ of that person.

We have had a collision of individual personal privacy rights versus protecting the common welfare of our citizens and schools ever since with no clear rectification on the horizon. We can’t sit back and wait to see if another mentally disturbed person kills more school children before committing them to a mental hospital.

Perhaps everyone needs to start looking at this issue through the other end of their telescope and worldview and focus on finding one solution that might work.

Correcting our admittance standards and process for committing seriously mentally-ill people like the shooter in Parkland Florida to a mental institution before they kill dozens of young students is a place to start.


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Wednesday, February 21, 2018

Is Health Care A 'Right'?

(first published in North State Journal 2/21/18)

A young man recently asked this question:

'Is health care a right? Explain'

"'Individual Rights' tend to be free” was the reflexive answer. “Everything else is negotiated between parties and factions in the legislative process about who is going to pay for whatever government program is being proposed'.

The first 10 Bill of Rights amendments concern freedoms that would be guaranteed in the new democratic republic. 

We are free to speak at no monetary cost to anyone. We are free to worship in any religious tradition we choose and no one is forced to pay for our actions. We can print anything in the press as long as we pay for the computers, internet and printers to circulate our thoughts.

Not the government.

The 2nd Amendment guarantees the right for an individual to bear arms. The government does not pay for them.

The 3rd Amendment restricts the quartering of soldiers in our homes. Freedom of privacy in one form in essence.

The 4th Amendment protects us all from unwarranted invasion of our homes for search and seizure of evidence without a warrant based on probable cause. Another defense of our right to privacy essentially.

The 5th Amendment guarantees our right to be considered 'innocent until proven guilty'.  It might cost a lot in legal fees to defend that innocence but not from appropriated tax dollars unless you are indigent and need legal aid.

The 6th Amendment guarantees our right to a speedy and fair trial which might cost money for legal defense but not from appropriated tax dollars.

The 7th Amendment guarantees our right to jury trials in federal civil cases involving amounts of more than $20. 

The 8th Amendment protects us from excessive bail or 'cruel and unusual punishment'. No federal governmental appropriations are involved unless you count the billions of dollars spent each year to house hundreds of thousands of prisoners convicted of felonies, many of whom are in for life sentences instead of receiving the ‘cruel and usual punishment’ of the death penalty.

The 9th Amendment recognizes other fundamental individual rights not enumerated in the Constitution but doesn't say what they are. None of which seem to require federal appropriations.

The 10th Amendment reserves powers not delegated by the Constitution to Washington to the states and to the individuals. Another declaration of reserving powers to the states and the individual.

When it comes to health care, Social Security, Medicare, Medicaid, national defense, interest on the national debt, environmental protection, welfare, education and agricultural subsidies, they are legislative issues that have to be debated, negotiated and voted-upon by our elected representatives in the US Congress and Senate as opposed to being ‘rights’ or even ‘entitlements’ that are conferred upon each person at birth.

In the private world, no one has the right to ‘demand’ another person ‘pay for’ their retirement, housing, education or health care needs. Charitable wealthy people often pay for such services out of the goodness of their hearts through eleemosynary organizations such as churches and non-profits but no one really has to do it unless they choose to do so freely on their own accord.

Providing social safety nets and all government programs require political efforts to coerce others to pay for them through majority vote and democratic republicanism.

One ‘freedom’ which should have been enumerated in the Constitution would have guaranteed the freedom of one generation from having to pay the debts of previous generations. Every generation should be forced to pay for the government services they vote into law, except for perhaps the cost of preserving freedom in world wars.

Not the next generation of unborn children who can’t vote yet.

Maybe it is time for a 28th Amendment to say so.


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Wednesday, February 14, 2018

A Parade of Debt

Excessive Debt Can Lead to Big Problems Down the Road

























(first published in North State Journal 2/14/18)

The two 'easiest' things a politician can do while in elective office are the following:

1) Cut Taxes
2) Raise Spending

No Republican is afraid to let voters keep more of their hard-earned money. No Democrat is afraid to spend more tax money on federal domestic programs. Their core constituencies will love them even more for doing so.

On December 22, 2017, President Donald Trump and the Republicans in Congress and the Senate cut taxes without any Democrat votes at all. On February 8, 2018, a substantial bipartisan majority of both Congress and the US Senate passed a massive budget bill that increases domestic spending, which includes military spending, by $1.7 trillion over the next decade.

One can almost hear Congress singing 'I Love A Parade! in unison.

‘A Parade of Debt’, that is.

$2.7 trillion of new debt has been loaded up on the backs of our children, grandchildren and great-to-the-nth degree grandchildren in just the last 6 weeks.

President Donald Trump signed both bills. Republicans are 100% responsible for at least $1.07 trillion in new debt from the tax bill. Democrats and Republicans who voted for the budget deal are now on the hook for an additional $1.7 trillion in new debt.

Both tonnages of debt come on top of the additional debt of $10 trillion that was already-baked-in-cake in the budget baselines before President Trump was even elected in 2016.

Adding $2.7 trillion in new debt on top of what CBO already anticipated to be incurred by 2027 means US debt held by the public will exceed 100% of GDP 10 years from now.

Unless, that is, everything works out absolutely perfectly with higher economic growth and employment with hardly a centimeter to spare in terms of margin of error with respect to inflation and interest rate projections.

In 2016, CBO published a document stating one of their 'rules of thumb' for estimation purposes was that if US economic growth exceeded their current projections by 0.3% per year for a decade, our federal deficits at the time could be essentially reduced to zero by 2026. Assuming no other changes to inflation expectations, interest rate shocks or terrorist attacks on domestic soil.

Now that number might have to be 0.4% excess GDP growth annually. Or 0.5%.

The most direct way to get our fiscal house in order rather than hope and pray for higher-than-expected growth rates is for our President and Congress to control and curtail federal spending at every cost and turn.

President ‘Silent Cal’ Coolidge and Republicans in Congress proved the efficacy of spending cuts, followed by tax cuts, followed by economic growth, followed by reduction in federal debt from 1924-1928 when debt was reduced by 25%.

Maybe history will repeat itself.

But Congress and the President have to want to seriously control spending first.

In 1993, I was part of a team on the Republican side of the House Budget Committee that produced a proposed budget which reduced projected federal spending by $500 billion over 5 years, about 5% in total, from a base budget of $1.38 trillion in FY 1992.

We were about laughed out of Congress by the then-Republican leadership and caucus members plus the Democrats and the national media.

4 years later, the core of that document, 'Cutting Spending First' was passed as the base legislative language of The Balanced Budget Agreement of 1997 which produced the first, and only, 4 balanced budgets since the 1950s.

There were heroic Republicans and Democrats who came together over those 5 years to do something great for this nation at the time which quite honestly, most people thought would last for decades.

The euphoria lasted until September 11. 2001. 9/11.

It is time for another crop of heroic Americans to do the same now.

Who will they be in Washington this time around?


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Wednesday, February 7, 2018

'30 Million Jobs Have Been Created Since President Trump Took Office!'


(first published in the North State Journal 2/7/18)

The headline above could have been written with a straight-face by any media outlet and been technically 'true' about the American economy in the last year since President Trump took office.

The only problem is that the following sub-headline would have to have been published below it stating this other ‘inconvenient truth' about the dynamic American economy:

'27.8 Million Jobs Also Have Been Destroyed Under President Trump, Too!'

The net difference though is a solid increase of over 2.2 million in 'net new jobs' created since Election Day, November 8, 2016. The key to any understanding of employment numbers under any US President or political party controlling Congress and the US Senate is to look at the net difference in jobs created versus jobs lost during any particular term in office.

Presidents get way too much credit for economic job growth when it is good and way too much blame when the numbers are bad. Except for Presidents Herbert Hoover and Martin van Buren, both of whom made perhaps the exact wrong policy decisions at the exact wrong time when faced with economic downturns and only made bad situations devastatingly worse.

The American economy is a thoroughly dynamic jobs machine that sees roughly 10% of all jobs change during any particular quarter of the year. 5% of total employed positions are created and 5% of existing jobs are eliminated.

The potency of the American economy would make the author of the 'creative destruction' theory of employment in 1942, Joseph Schumpeter, blush with pride.

Businesses are either hiring people for new companies or expanding older ones to meet business demand or they are shedding workers because of loss of business and revenue regardless of who is sitting in the White House or on Capitol Hill every day.

Economic cycles come and go. Political leaders, however, can make decisions and set policies that allow recessions to go away rather quickly and enter into another round of growth and economic expansion. Or they can throw wet blankets on the economy such as we saw under President Obama where super excessive numbers of federal regulations were loaded up on business and higher taxes imposed on individuals that essentially forced much of the American business community to go ‘on strike’ for most of his 8 years in office.

The fact that President Obama is the first, and only, President in recorded modern history to have never presided over a single year where GDP annual growth rates exceeded 3% should tell everyone something about his economic policies. The average annual GDP growth rate during his entire 8 years as President was only about 1.6%.

The key thing to remember whenever you see news reports about 'unemployment rates' is that the only true barometer of such things is the absolute number of people who are currently working in a full-time job, not the unemployment rate.

The ‘unemployment rate’ is an easily manipulated and misunderstood statistic that should be retired forever. It is based on the number of people who are ‘actively looking’ for a job which can distort the unemployment rate if people get discouraged and leave the workforce altogether.

The much more meaningful statistic is the absolute number of people who are working full-time which at the end of 2017 was 153,337,000 people as indicated in the chart below. If you follow the monthly reports from the Bureau of Labor Statistics (BLS) and chart it like you would do a baseball game, you would very clearly see the relative health or sickness of the US economy due to the total number of people working full-time.

If the US economy is allowed to function without excessive regulation and taxation, 200,000 or more Americans each month might be able to find that great job that has eluded them for the past decade.




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Thursday, February 1, 2018

President Andrew Jackson Responds to 'The Sanctuary State Nullification Act of California'

'Old Hickory' himself, President Andrew Jackson
Flag of the State of South Carolina

(Note: South Carolina threatened to resist federal tariff acts of 1828 and 1832 and thereby ‘nullify’ federal authority to pass national laws. President Andrew Jackson, a staunch ‘state’s rights’ supporter and patron saint of the modern Democratic Party, nonetheless recognized such efforts would destroy the young nation and issued his ‘Proclamation Regarding Nullification’ on December 10, 1832.

We wondered what President Jackson's response would look like if amended slightly and edited down considerably from his original 8800-word proclamation to respond to the California declaration of being a sanctuary state along with dozens of other cities in the country recently)

(first published in North State Journal 1/31/18)

'The State of California has declared itself to be a Sanctuary State in contradiction of all Federal Law and authority.

The ordinance is founded on the strange position that any one State may not only declare an act of Congress null and void, but prohibit its execution.  California wants to assert that the ‘true’ construction of the Constitution permits a State to retain its place in the Union and be bound by none of its laws other than those it may choose to consider as ‘constitutional’.

It is evident that to give the right of resisting laws in such a manner, coupled with the uncontrolled right to decide what federal laws to follow, is to give each state the power to resist all federal laws.

If California considers federal immigration laws null and void, there would be a clear constitutional objection to enforcement in every state, and no immigration law could be enforced anywhere; for all federal law must be equally applied across the entire nation.

If this doctrine had been established at an earlier day, the Union would have been dissolved in its infancy.

Article XIII of the Articles of Confederation states that "every State shall abide by the determinations of Congress on all questions which by that Confederation should be submitted to them."

The most important objective in the Constitution was "to form a more perfect Union" than that which existed under the Confederation.

Is it possible that our Constitution written and ratified to "form a more perfect Union" could create a national government solely dependent for its existence on the local interest, the party spirit or a prevailing faction in a single State?

The power to annul a law of the United States, assumed by one State, incompatible with the existence of the Union, contradicted expressly by the letter of the Constitution, unauthorized by its spirit, inconsistent with every principle on which It was founded, and destructive of the great object for which it was formed must be negated.

Our Constitution does not contain the absurdity of giving power to Congress to make laws and another power to the States to resist them.

The States ratified the Constitution knowing that a veto on the laws of the United States was not reserved to them to exercise by any application on federal law.

The Constitution gave the right of determining immigration law expressly to Congress, not each individual state. The States have no control over the exercise of this right other than changing congressional representatives through bi-annual elections.

The Constitution gave immigration policy power to the representatives of all the people, checked by the representatives of the States, and by the executive branch. California gives this power to the legislature, or the convention of a single State, where neither the people of the different States, nor the States in their separate capacity, nor the chief magistrate elected by all the people in the Union, have any representation or say in the matter.

Whenever any law of the United States displeased any State, such as regarding abortion, taxation, or environmental protection, and they acted to nullify it as California is doing now on federal immigration law, we would soon cease to be a nation.

The States have not retained their sovereignty. When they joined the Union, they surrendered essential parts of their sovereignty such as the right to make treaties, declare war, levy taxes, exercise exclusive judicial and legislative powers and make national immigration policy. The States are no longer sovereign.

The allegiance of their citizens was transferred to the government of the United States. They became American citizens first and owed primary obedience to the Constitution of the United States and to laws made in conformity with the powers vested in Congress.

Not the States.

The inclination of states such as California to declare themselves ‘Sanctuary States’ and thereby nullify federal immigration law unilaterally must therefore be opposed and reversed'

(Jackson's full Proclamation can be accessed here)

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Wednesday, January 24, 2018

Is This Really An 'Obama Economic Expansion'?

In 2015, Rookie Head Coach Steve Kerr led the Golden State Warriors to
their first NBA Championship in 40 years
(first published in North State Journal, 1/24/18)

Some news media outlets and liberal politicians are claiming that the expanding US economy is 'really due to the wonderful economy and policies President Obama passed on to President Trump!'.

Really?

There is only one thing different from an economic standpoint today than before the 2016 election: President Donald Trump is in the White House and President Obama and his preferred successor, Hillary Clinton, are not.

We have the same workers in America now as we did in 2016 before the election. The same level of low interest rates. The same expectations of low inflation amidst international economic competition. The same control of Congress and the Senate.

Yet we now have economic growth projections of up to 4% per year whereas CBO projected 1.9% GDP growth rates for years to come in their 2016 update before the election.

What happened?

President Trump came in and changed economic perceptions and expectations of the US business community right away. He is a businessman; President Obama was not.

He talks about the bright potential of the US economy whereas President Obama only saw the negative side of American businesses. As a result, American businesses and workers have responded to this new freedom from over-regulation and over-taxation in a very positive manner.

Think leadership and freedom don’t make a huge difference?

Consider what happened in San Francisco with the Golden State Warriors. In 2014, Steph Curry was in his 5th year and Klay Thompson was in his 3rd season. They had turned things around modestly from a disastrous string of seasons previously but were not really going anywhere under Coach Mark Jackson who was described as being temperamental, mercurial and ‘heavy-handed’ at times.

The Warriors fired Mark Jackson and brought in Steve Kerr to coach the same players in the same city and in the same stadium with a more up-tempo, free-flowing and from all outside observations, a more fun way of playing basketball at any level.

In 2015, the Warriors won their first NBA title in 40 years. Great talent was unleashed and given the freedom to do what they knew how to do: shoot the ball from everywhere and run the other team ragged.

President Obama's economic policies were 'heavy-handed' as well and government-first centric. Businessmen complained about his use of the heavy coercive hand of the federal government to 'solve' any problem at hand. The over-regulation of Dodd-Frank legislation frustrated financial lending institutions and his $1 trillion in a 'shovel-ready' infrastructure stimulus package didn't stimulate much of anything but more national debt.

And the ACA. If there ever was a poster child for government over-reach, it was Obamacare.

Had any of President Obama’s economic policies worked, we would have seen explosive GDP growth in 2011, 2012, 2013, 2014, 2015 or 2016 up to Election Day, 2016. 8 years of a presidential term is a long time to see if policies work or not.

Nobel Prize winner Paul Krugman said on election night, 2016: 'If the question is when will markets recover (from the Trump election), the answer is NEVER!'

‘DEWEY DEFEATS TRUMAN!’ comes to mind immediately.

Due to the recently-passed tax cuts, 125 million households will start to see up to $200/month more in their paychecks starting in February.

3 million+ employees and counting will receive $1000 bonuses or more from their employers who are passing along the benefits of the lower corporate tax cuts to them this year.

Apple is bringing back $350 billion of profits from overseas to invest in 20,000 new jobs here in America on top of paying $38 billion in corporate taxes from repatriated profits that alone will reduce the federal budget deficit by close to 10% all by itself this year.

We can only hope that this freedom and economic good news continues as long as the Warriors continue winning NBA Championships. It might be awhile.



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Wednesday, January 17, 2018

Ending The Sisyphean Task of Recruiting Car Companies To North Carolina

Senator Lee Overman-NC
1910-1931, Chairman
Senate Appropriations
Committee. Served around
the time there was a
passenger pigeon still alive.
(first published in North State Journal, 1/17/18)

Want to get a major car manufacturing plant to come to North Carolina?

Vote for a US Senator who will get on the Senate Defense Appropriations Subcommittee first. Then a car manufacturing plant may follow sometime in the future.

North Carolina has spent a lot of time, money and effort to get an automobile company to come to North Carolina over the past 25 years with nothing to show for it yet.

North Carolina just lost out to Alabama for the Toyota Mazda plant after losing to South Carolina for the crucial BMW plant long ago and then to Alabama for a Mercedes-Benz operation soon after. Volvo and Volkswagen deals have come and gone to other states along with others over the years.

We might as well save our taxpayer money, time and effort for other projects that have a higher chance of actually coming to North Carolina.

Until we get a US senator on Senate Defense Appropriations, that is.

North Carolina is the only Southern state that does not have a major defense manufacturing facility building military jets, tanks or ships. There is a direct correlation between that fact and the absence of a North Carolina senator sitting on Senate Defense Appropriations.

North Carolina is the only Southern state without a major automobile manufacturing facility such as BMW in South Carolina or VW in Tennessee. There is an indirect but strong correlation between that fact and no defense facilities due to the inconvenient fact that no North Carolina Senator currently is sitting on Senate Defense Appropriations and hasn’t for what seems like an eternity.

It has only been close to a century.

The last time a North Carolina US Senator served on the all-powerful Senate Appropriations Committee for any appreciable length of time was a decade before World War II.  1931. Senator Lee Overman.

He retired 87 years ago.

North Carolina has sent more US Senators to Washington since World War II than perhaps any other state in the South. Perhaps the entire nation, exempting Hawaii and Alaska.

20 North Carolinians have served in the US Senate since WWII. None have served on Senate Defense Appropriations. Not Senators Reynolds, Hoey, Broughton, Graham, Smith, Lennon, Scott, Ervin, Jordan, Helms, Morgan, East, Broyhill, Sanford, Faircloth, Edwards, Dole, Hagan, Burr or Tillis.

Lots of economic and business factors go into the decision-making for any major corporation to move to a new state to set up manufacturing facilities. However, when it comes to defense manufacturing plants and jobs, nothing is more important than having a US Senator on Senate Appropriations to steer investments to their state and support the appropriations necessary to build and sustain the program.

States such as South Carolina, Alabama and Mississippi have elected and kept US senators in office long enough to get on Appropriations and then serve on the Defense Appropriations Subcommittee where all the major defense programs and materiel production are considered every year.

Once a US senator gets on Defense Approps and steers a few defense contracts to their home states, then the level of specialized training for defense workers goes way up in that state and other companies such as automobile companies can come in and poach qualified workers and technicians for their manufacturing facilities.

As one missile defense engineer told me in Senator Dole’s office: ‘Why would we come to North Carolina when we can go to Alabama and throw a rock into Huntsville and hit hundreds of highly-trained and skilled aerospace and metallurgical engineers in their helmets and recruit them to come work for us after the federal government has basically paid for all of their training in these specialized areas?’

Electing a US Senator from North Carolina to serve on the Senate Defense Appropriations Subcommittee would end this Sisyphean effort for good.

(footnote: Cameron Morrison was on the Senate Appropriations Committee for 2 short years from 1931-1933. Lauch Faircloth was the last NC Senator on Senate Appropriations for 2 short years as well from 1997-1999 and served on the District of Columbia subcommittee)


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