Tuesday, December 29, 2009

"We Have Met the Enemy…and He Is Us!”

Pogo the Swamp Possum in Walt Kelly’s great comic strip that ran from 1948-1975 parodied Commodore Perry’s famous message in 1813 after the Battle of Lake Erie: “We have met the enemy…and they are ours!”

After ruminating about the insatiable desire of Americans to buy cheap underwear from China and our overspending at the federal level which has since put us into a dangerous debtor status with the same nation, some of our readers got us to thinking about some other odd contradictions in modern American life where, in essence, “we” are our own worst enemy, just as Pogo opined.

And since this is the time of year when we all make New Year's resolutions and 'swear to do better next year!', maybe it is a good time to think about where we are as a society collectively and individually.

We think we can do better, all of us as individuals and as a national community. We know we can. We simply have to.

Seriously, is there any problem out there that is really and truly ‘someone else’s fault’, as we like to think and hope so we can ‘blame them’ for all of our current troubles?  Is there some ‘boogeyman’ out there, either here in America or overseas that we can just fix blame to and direct all of our anger for the public policy problems we now face?

We assert that the basic laws of classical supply-and-demand apply to maybe 99.9% of our problems since we Americans typically ‘demand’ to have it all now, regardless of the implications or costs down the line, unlike every other generation of Americans that has preceded us. It just doesn't seem to make a whole lot of sense to us, to be honest about it.

Surely there are some external culprits we can blame such as Osama Bin Laden and Al Qaeda but here are some that might not be 'their' fault, whoever 'they' might be:

  1. The drug crisis would disappear if we and our children stop using cocaine and marijuana for recreational purposes.  Drug pushers don’t force it down our throats; we willingly buy it and use it and talk about it as if it was something to be proud of.
  2. ½ of all health care costs in America, over $1 trillion per year, would disappear overnight if we collectively would lose 25% of our body weight with better diets, cessation of smoking, stop excessive use of alcohol and start exercising.  If you hate the trial lawyers for holding up tort reform or the big insurance companies for 'gouging' the public, maybe we should stop eating Ho-Hos and Fritos (mea culpa) and drinking so many soft drinks (yikes!) while smoking and drinking cases of beer on the weekend. (Stop it! I can't take any more criticism!) You’d be amazed how much smaller our health care costs might become in the near future.
  3. We could probably send the Saudi sheiks and Al Qaeda to the unemployment line if we all drove Priuses that got 60 mph or drove advanced diesel cars instead of the monstrous SUVs that get what, 12 mph on a good day?  We still have the freedom to choose what size car we want to drive but we can't complain about the Saudis if we do drive the gas-guzzlers.  Is there any wonder they have us over a barrel of oil today?
  4. What gives us the ‘unalienable right’ as declared in our precious Declaration of Independence to be ‘dependent’ on the government for anything, from entitlement program spending to special tax breaks for wealthy corporations or individuals? We don't mind helping out people in need or in medical distress who need help but does everyone in America need assistance from the government nowadays?
  5. Are we ‘for’ huge subsidies for Medicare to ‘help’ senior citizens, like we all hope we are going to be one day, or are we just doing it so we don’t have Grandma and Grandpa move in with us so we have to take care of them? (they took care of us growing up, didn’t they?)
  6. Is it fair to proclaim that we ‘hate’ illegal immigrants and want to send them all back to Latin America when, at the same time we hire them, without asking for their immigration papers beforehand, to put an addition on our mansions (by the world’s standards) for 1/3 of the market cost, take care of our landscapes and nanny our children, all for a fraction of the cost of hiring ‘legal’ American citizens?
  7. Is it right to be railing against the social mores of other people in our communities, most of whom we do not personally know, when there are dysfunctions in our own families, in mainline and evangelical churches as well as non-churchgoing families?  Trying to get the speck or log out of someone else's eyes is awfully hard to do under any circumstance.
  8. Shouldn’t we be doing a better job of teaching our own children about the faiths we choose and the morals we want them to adopt by teaching them and showing them what they mean in the sanctity of our own homes?  Do we really want to believe that is the duty and responsibility of underpaid and overworked professionals in the public school system to teach all of our kids good manners if they don't see it at home?
  9. Do we really want 'freedom' and 'free enterprise' or do we want some sort of national guaranteed insurance program to pay for all of our mistakes and poor decisions through congressional action?  We can't have it both ways...somewhere along the line, we have to decide which way we want our country to go: capitalism or socialism, take your pick.
We know there are some things going on that we really cannot control and truly are beyond our means to influence and change.  Human nature, for one, is so tricky and when you throw in international and cross-cultural differences, that makes for a Rubik’s Cube of infinite variations to solve.

But can we accept the fact that most of our current problems facing us as a nation are self-inflicted wounds caused by our own conflicting desires?

Pogo the Possum might say it is. He might also say we can do better because we have to, starting in 2010. We think we can do it. Don't you?

Thursday, December 24, 2009

The Jefferson Bible and Health Care Reform

Thomas Jefferson apparently found the life of Jesus to be of utmost fascination in that he considered Jesus to be the foremost of all philosophers who have ever lived to have conveyed the superior moral code by which we should all live.

Jefferson just didn’t think Christ was born of the Virgin Mary and performed all the miracles as the New Testament said He did, being the reasoned child of the Enlightenment that our third President was.

So one day at Monticello, he took some scissors and cut out all of the stories about the miracles Jesus performed from the Bible and hence, was left with a pure moral code that became known as 'Jefferson’s Bible’.

We suggest a similar effort be done with the health care bill that just passed the Senate this morning as sort of a Christmas tree gift to America, laden with all sorts of favors and ‘gimme-that’s’ such as the Medicaid-free-for-life cards given out to Senators Landrieu of Louisiana and Ben Nelson of Nebraska. 

(Why not just go ahead and make Medicaid free to all 50 states while we are at it?  If it is good enough for Nebraska and Louisiana, isn’t is good enough for North Carolina for example?)

Let’s take a look at all of the ‘miracles’ that will have to occur for this health care bill not to blow a monumental hole in the federal budget over the next 2 decades.  (We will wager dollars-to-doughnuts that this bill will wind up costing at least 3 times as CBO currently projects.  Why?  Because every other health care bill has always wound up costing at least that much and more)

Here is what the CBO Director, the one whom Senator Reid and President Obama are hailing as the guy who says this bill will ‘reduce budget deficits over the next 20 years’, has said in his letter to Senator Reid.

There is so much ‘CYA’ and caveating going on in this letter that you almost have to feel sorry for this guy.

‘In the subsequent decade, the collective effect of its provisions would probably be continued reductions in federal budget deficits if all of the provisions continued to be fully implemented. Those estimates are subject to substantial uncertainty.

Key Considerations. These longer-term calculations assume that the provisions are enacted and remain unchanged throughout the next two decades, which is often not the case for major legislation. 

The legislation would maintain and put into effect a number of procedures that might be difficult to sustain over a long period of time.

The long-term budgetary impact could be quite different if key provisions of the legislation were ultimately changed or not fully implemented.”

We suggest you curl up before the fire over the next couple of days and try to read the CBO director’s letter in its entirety before you make up your mind about this health care reform bill.  You won’t get this information anywhere on the cable news media or in the local newspaper.

In the spirit of Christian charity and Christmas, we hope that the President and Senator Reid are correct when they assert that this health care bill will indeed bring down future deficits for the sake of our children. We are cautious enough to want to hedge our bets on the downside that it won't.

And if this bill truly reduces the rate of growth in medical care cost inflation, we, once again, will commit to starting to raise funds to chisel the President’s visage alongside of the other great Presidents on Mount Rushmore.

So start saving your pennies….just in case.

Mount Rushmore picture courtesy of www.howstuffworks.com

Wednesday, December 16, 2009

Ben Franklin Was Right: Death and Taxes Are Certain, But Do They Have To Be At the Same Time?

(This was written as a response to an editorial in the Charlotte Observer on 12/13/09)

Elaine Meija of the NC Budget and Tax Center makes an impassioned plea to keep the federal estate tax at higher rates after it expires in 2010. The question everyone should ask is:  “Why do we ‘need’ to keep this tax in the first place?”

If the purpose of the estate tax is to ‘punish’ wealthy families for working hard, taking risks or just plain being lucky, then just say so. Don’t hide behind the pretense of taxing wealthy people by trying to do something ‘good’ in the public interest; we all want that.

The truth of the matter, from a federal budget perspective, is that the estate tax does not raise a very high percentage of federal revenues. Ms. Mejia asserts that we would increase our debt by $1 trillion if we allow the estate tax to expire. We have not collected $1 trillion from the estate tax over its entire history since 1916! It is expected to raise only between $26-$30 billion per year as it is today and even that presumes many wealthy people will just pay the tax willingly without a fight and not use every available financial planning tool to minimize their exposure.

The estate tax has been never been that important in terms of raising substantial amounts of revenue relative to overall federal tax receipts. In 1969, estate taxes accounted for only 2% of all federal tax revenues.  By 2007, estate tax revenue had declined to 1% of all federal tax revenues.

Here is a revolutionary idea: How about if we ‘pay for’ these ‘lost’ estate taxes by cutting spending in other categories of the federal budget?

Surely we can find savings in the rest of the bloated federal budget of over $3.5 trillion to cover the $26 billion we would ‘lose’ from estate tax revenues, can’t we?

Check out the most powerful book in Washington from the Congressional Budget Office (CBO) Budget Options, Volume 2 that has a couple of trillion dollars of savings outlined in exquisite detail.

All Congress has to do is pass them.

How about in the defense budget to begin with?  We could save $17 billion, or just under the amount ‘lost’ by the repeal of the estate tax, by buying DDG-51 Destroyers to replace the canceled DDG-1000s.

How about in the area of welfare? We could increase the percentage of rent payments made by tenants in certain federally-assisted housing from 30% to 35% over a 5-year period and save $24 billion over a 10-year period.

How about in Medicare or Social Security, two of the largest cost components of the federal budget?  Here’s one idea that deserves some consideration: Take all senior billionaires and multimillionaires off of both programs. There is no reasonable rationale why Bill Gates and Warren Buffett should be ‘forced’ (yes, it is the law; they are forced to go on taxpayer-subsidized Medicare) into receiving Medicare benefits. They can buy their own hospitals if they so desired.

Ms. Mejia paints an attractive utopian ideal when she implores Senators Hagan and Burr to extend the estate tax so they can ‘(p)rovide opportunities to middle-class families or improve their economic status.”

You know how these families can have their lives improved?  By being able to start their own business or enterprise and not have the federal, state and local governments confiscate so much of their hard-earned profits (it is not easy to make a profit year after year…ask any banker or real estate person here in Charlotte). Or perhaps a wealthy person, or their progeny might invest the family fortune in a new business and then hire the same middle-or-lower income people to do a real-live paying job.

Government does not create wealth, ever.  Government can only redistribute wealth already created by clever and ambitious people willing to take a chance and sell a product or service to people who want it.

We have more than enough tax tools in our quiver through income and payroll taxes than to worry about taxing dead people in their graves, don’t we?

The problem is not that we don’t tax the American people and economy enough.  Our current fiscal dilemma has to do solely with the fact that we are spending too much on everything.  We have never cleared out the detritus from federal programs established as far back as 80 years ago and we continue to add on more daily it seems.

Before you fall victim to the popular populist notion of ‘making the rich pay their fair share’ (they already pay for 42% of our income tax revenue today as it is), think seriously about where you want this nation to go in the next 10 years.  Is it towards a higher tax, higher spending, higher debt-ridden national economy or one that is leaner and more efficient and allows the economy to grow and expand on its own?

It is up to you to decide in your political views and in your voting decisions in 2010, 2011, and 2012.

Ben Franklin courtesy of www.positivepsychologynews.com

Saturday, December 12, 2009

Would Modern Financial Disclosure Rules Have Kept Jefferson, Madison, and Washington Out of Federal Public Service?

Since it is a Saturday morning, let’s step back into the Wayback Machine with Sherman and Mr. Peabody and see what the conversation might have been with Mr. Jefferson when he was contemplating ‘standing’ for office (no ‘running for public office’ for those guys back then, too undignified):

“Let’s see, Mr. Jefferson, you’ll have to report all that land you have down there around Monticello, and of course, the slaves. How many books do you own, Mr. Jefferson, anyways? 25,000? They must be worth at least $10,000 Continental dollars, I would presume.

Just how many bottles of wine did you import from France last year, Tom? 10,000? Wow….those must have been some dinner parties! Were any of them ‘gifts’ from a foreign sovereign? You know how much we hate that….bad publicity for you there, my man.

Do you have a vacation place in the Poplar Forest?  Something along the Rappahannock River maybe?

And what about that nail-manufacturing operation you started a couple of years ago? Didn’t you make a mint off of that? What, oh I am sorry, I didn’t realize it went bankrupt. But still, you are going to have to disclose it and all that residue you poured in to the Rivanna River will surely make the environmentalists angry.

What do you mean ‘you don’t think it is worth it’ to file all these personal financial disclosure papers and ‘stand’ for office? You are the best we got! You went to William and Mary, for goodness sakes and studied Latin and Greek! Waddya mean you are just going to go back to Monticello and read books and study plants and fauna here in the New Country?”

How many Jeffersons and Madisons of our generation have declined to serve on the local county commission because of such heightened public scrutiny and financial disclosure rules? Our question is: Does it really make that much difference whether someone owns 100 shares of Coca-Cola or has inherited billions of dollars from a great-grandfather who invented toilet paper?

Let’s think about this seriously for a minute or two. Would you rather have people with real-live, real-world experience in the private business sector world try to solve these monstrous problems now facing us? Or would you rather continue to vote for professional politicians who have really done nothing but write legislation all their lives and have to learn about farming and manufacturing from paid lobbyists and lawyers?

One of the utopian hopes of Mr. Jefferson and Mr. Madison was that farmers, bakers, bankers and educators would run for office and bring their real-world life experiences to Congress and the state legislatures. We would all be better off  with a wide cross-section of viewpoints and experiences represented in the public discourse. For example, perhaps it would have been nice to have had more great accountants or auditors serving in Congress prior to the Wall Street meltdown last year who might have been able to see the danger signs coming and helped take steps to at least mitigate the damage that was caused.

We also strongly believe, and know from experience, that with close to 75% of elected officials having a law degree and very few having any sort of budgetary or corporate executive management experience, the chances of balancing budgets in Washington are practically non-existent.

Excessive financial disclosure rules mitigate against a successful businessperson from running for public office by pompously declaring that every single bit of investment and asset a person has is ‘in the public interest to know!”

What do we care if a guy has 100 shares of stock in Coca-Cola? Is he or she going to vote for more access to the marketplace than Coke already has? Except in some very extreme situations where a noble person would just recuse themselves from the vote, (and there are still some noble people who are in Congress, believe it or not) we can see very little use in such painful and excruciating financial disclosure reporting.

Abolish it, wipe it out and start over, we say.

And so it goes, ladies and gentlemen. In our effort to elect a Congress and legislatures full of the next Popes-in-waiting and Pollyannas, we are most likely keeping the next Jefferson, Madison and George Washington out of the arena.

It is our loss, not theirs.

courtesy of www.concurringopinions.com

Monday, December 7, 2009

US Debt to China and Cheap Underwear, Part II

Our last rumination on why the Chinese are content to earn such a low rate of interest when buying most of our enormous federal debt brought forth many responses, some curt, some erudite and all enlightening.

The following came from a certain gentleperson (so as to not give away their gender) who has worked at the highest levels of our citizen-run democratic republic and served on many business boards and international commissions…let’s call this person ‘Alex Hamilton’ for confidentiality’s sake:

‘As you know, many high-level business deals among men occur in two sacred places: the golf course and the men’s restroom.

I feel sure that if ever a U.S. Treasury Secretary confronted a Minister of Finance for China in the men's room away from the negotiating table with a complaint about the artificially low and manipulated official yuan exchange ratio to the US dollar, the Chinese Minister would probably say, "Screw you, Mr. Treasury Secretary-of-what-used-to-be-the-most-powerful-nation-on-earth!

Why do you think we enjoy an enormous trade surplus with the United States in the first place? Because the American desire to have everything they want at low prices has allowed us to put you over a barrel. We sell Chinese stuff like cheap underwear to the US at a 30% discount to real market costs. We have imposed a premium price of 130% through tariffs on imported US goods. And there is nothing you can do about either as long as your people keep buying our cheaper stuff so we gotcha there as well, Mr. Secretary!

The fact is we accept 'below normal' rates of interest income on U.S. Treasuries because it is a fraction of the dollar trade advantage we enjoy with your country nowadays. It is more than worth it to us on a cost/benefit analysis.

So what if we 'lose' $50 billion per year in lost interest income from you guys?  Last year, 2008, we exported over $338 Billion worth of goods to US consumers alone. Just our exports to the US in 2008 represents the 28th largest entity in the world if ranked by GDP...ahead of the entire GDP of Argentina and not far behind both of the GDPs of the oil-exporting nations of Saudi Arabia and Iran!

Not to mention the enormous benefit of having a robust economy and generating jobs for our peasants at about 100,000 new jobs per week and funds for our capital investments. (sotto voce….And if we don’t keep the peasants busy, 1 billion of them will come rushing the Capital City of Beijing and cut our heads off so we have GOT to keep those rags and machines humming’*)

We don't buy your Treasuries, Mr. Secretary, as a sound financial investment. It's just ‘payola’ or ‘baksheesh’ to keep your economy open to our products.”

One other investment advisor informed us that there is a relatively new bond the US offers that offers inflation-protection against the loss of any asset value called TIPS (Treasury Inflation-Protected Security).  TIPS adjust the principal of the bond to the CPI so the interest payments increase to offset the negative effects of inflation.  The Chinese government basically demanded them as a pre-condition for future bond purchases.

So while the stated interest rate stays the same, TIPS offer a much higher return in actual effect plus protection against inflation's deteriorating effect on bond value.  Good for the lender; not so good for the borrower…i.e. starring you, as the American taxpayer…once again.

So much for the standard laws of economics as put out by Adam Smith and all the other classical liberal economists of the Enlightenment put forth. ‘Heads you win; tails, the American taxpayer loses’ should become the new national slogan that printed on every U.S. dollar bill and bond issued from now on.

Between the need for preventing a billion-person Revolution in China, (pretty hard to imagine 1 billion angry people since during our Revolution of 1776-1781, almost as long as our current occupation in Iraq and Afghanistan, we never had more than maybe 17,000 American militia in the field fighting the dreaded Redcoats) and the adroit way the Chinese government has forced the US to issue things like TIPS to protect their investment in our debt, it looks like the Chinese are going to be in the driver’s seat for a long, long time when it comes to influencing American policies.

And as long as President Obama, the Democrat-controlled Congress (for the next year anyway) and the GOP probably after that, continue to spend recklessly unlike any government since the latter days of the Roman Empire, we are always going to be under some influence of our symbiotic relationship with the Chinese like some lichen on a tree.

Choose your own bad analogy if you wish…lichen, fungus on a host, cancer…they all apply.

picture courtesy of www.nysportsjournalism.com
song lyrics courtesy of Rose Royce, 'Car Wash'

Friday, December 4, 2009

Why Don’t the Chinese Just Stick It To Us And Charge 10% Interest to Hold Our National Debt?

If you think about it, the Chinese government, which is holding close to $1 trillion of our national debt and another $1 trillion in dollar reserves, already has us by the throat in terms of dictating what we can or can’t do regarding any more federal spending.

And, in fact, the Chinese government might be the only thing that will finally force Congress and us spendthrift Americans to change our wicked ways and start balancing out budgets once again.

Take a look at this attached article, ‘The Last Great Dollar Crisis’, written for the Wall Street Journal by Joel Harris, a smart young whipper-snapper now graduated from Oxford University whom we knew on Capitol Hill.  (One of the cardinal rules of the jungle on Capitol Hill is to be nice to everyone you meet on your way up, and on your way down, cause they might wind up being the next Secretary of Treasury, like Young Harris might wind up becoming one day)

In it, he argues pretty persuasively that in the late 1970’s, the Carter Administration and Congress didn’t start to take inflation of our currency seriously until Saudi Arabia and the other OPEC nations started to threaten to buy oil in other currencies than the dollar and make investments in other denominations around Europe.  Less demand for the dollar would only exacerbate the falling value of the dollar, hence, American political leaders finally ‘got the message’ and brought in Paul Volcker to clamp down on inflation from the Fed.

Here’s something we think, and fear, the Chinese might do one day to us in the 21st century (don’t we read history anymore and will we ever learn not to be so stupid?):

-Demand a 10% interest coupon on all future US bonds the Chinese buys from the US for all this debt we are projectiling out right now.

As it is, we are probably paying the Chinese 1-2% interest to buy our new bonds.  And they keep doing it!  Why and for what on earth reason could that be a ‘good deal’ for them?

After all, the incipient risk to the Chinese government is that they are holding $2 trillion in dollar reserves and growing mainly because no one else has the reserves to buy such humongous amounts to finance our profligacy.  And if and when inflation rears its ugly head like maybe to 5% or 7% after this recession ends, the value of their US bonds might fall by 10-20% overnight.  Try losing $400 billion in asset value overnight and you won’t like it one bit.

Why do the Chinese not demand a 10% premium to take on any more debt from us?  We might do it to them if the tables were turned and we had very little confidence they were going to shape up and balance their budgets anytime soon.

One main reason we always heard was that the Chinese have ‘more to risk’ than we do in this transaction.  Why?  Because everything we want to buy cheap, and they want to sell, comes from China!  They fear rising protectionism from the US government if they ding us on not buying any more debt.

"Memo to the Chinese leaders:  The American public is not going to rise up in arms if you demand higher interest rates to hold our debt.  They will rise up in arms if Congress clamps down on imports from China and we have to start paying $5 for every pair of undershorts we buy at Wal-Mart instead of a pack of 3 for $3.99!"

As Tip O’Neill once said: “In politics, everything is local.”

And there is nothing more ‘local’ than cheap underwear, we always say.

The point is this:  The Chinese have us over a barrel and they can basically do whatever they want now because we have stupidly opened up ourselves up now to foreign manipulation of our internal policies because they are the holders of our debt. 

Like the old Gospel tune: “He’s got the whole world in His Hands!”…the Chinese have our whole future in their hands.

And nothing would get us out of that dilemma faster than balancing our budgets and paying off our debt obligations to the Chinese government first and foremost.

Tuesday, December 1, 2009

The Next “‘Profile’ in Courage”?

A loyal reader wrote and asked if there was ‘any hope’ that this health care reform (sic?) bill will die an ignoble death in the US Senate because it is so expensive, cumbersome and won’t improve health care in America.

Which are the exact opposite outcomes we all wanted from it in the first place.

President John Kennedy supposedly wrote 'Profiles in Courage’ before his run for the White House as a way to get his name out there among the American people.  Ted Sorenson actually wrote it, just as he wrote many or most of Kennedy’s speeches, but you gotta have great assistants and staff if you are going to succeed in American politics, don’t you?

We think the next book might be very brief, like 2-3 pages long, because it might be named: “A Single Solitary Profile In Courage’ starring either Senator Joe Lieberman of Connecticut, Ben Nelson of Nebraska, Blanche Lincoln-Lambert of Arkansas or Mary Landrieu of Louisiana.

Those are the 4 Democrat Senators who have expressed ‘serious reservations’ about the health care bill, although Senator Landrieu acceded to the old Louisianan adage, ‘My vote can’t be bought…but it can be rented for a little while!’ when she got $100 million in Medicaid funding for Louisiana to vote for cloture and allow debate to begin last week.

It will only take 1 Democratic Senator (as long as Republicans such as Voinovich of Ohio and Snowe and Collins of Maine vote ‘no’ which is an ‘iffy’ proposition) to stand up in opposition to this health care bill on final passage to send it back to the drawing board, or the trash heap of history, as another failed attempt to install a massive government-run and controlled health care system in America.

We think it will be Senator Lieberman…we hope and pray, and we’ll explain why.

First of all, you have to understand the rules of the U.S. Senate, the ‘World’s Greatest Deliberative Body’, like when political giants and orators such as Daniel Webster and Henry Clay are there, not so much lately with the current crop of Senators.

We went through several days of training by a former Senate parliamentarian early in the term of Senator Elizabeth Dole in 2003 and learned all about the history of the rules and procedures.

The important thing to remember is that the Senate is an organism governed by seniority first and foremost and senatorial courtesy and comity second.  One senator can muck up the whole process for the 99 other senators through such mechanisms as ‘unanimous consent’ (necessary to advance a bill on the floor) and the senatorial ‘hold’ where 1 senator can place a hold on any bill that would prevent it from being considered by the entire body.

Such procedures are an out-growth of James Madison and Thomas Jefferson’s reading and complete understanding of the Roman Republic and how those ancient senators considered legislation.

But the most telling thing we ever heard out of the former parliamentarian’s mouth was this stunning comment:  “Just always remember:  In the U.S. Senate, the only rule is that there are no rules!”

Which we found to be true. So basically, a U.S. Senator has more power to directly or indirectly influence legislation than the President or any member of the House of Representatives.

Which brings us back to Senator Joe Lieberman.

He was spurned by the Democratic Party in Connecticut and then elected as a true blue Independent Senator by the constituents of his state. He has no reason not to be objective and clear-headed about his decision on final passage.  He is a deeply devout Jew who regularly attends Scripture reading groups on Capitol Hill and regularly votes his conscience despite his political affiliation.

We can all hope and pray he votes on the health care bill in the best interests of the nation with a clear conscience.

He has the power to shut this whole health care debate down on final passage if he withholds his vote on cloture which will deny the Democrats the 60-votes necessary to do so.  Otherwise, debate can go on forever and ever like it used to do during the great filibusters of our history.

Senators would read the Bible and the dictionary into the Senate record and stay on their feet for days at a time and hold the floor so no one else could talk about anything. Senators would do anything possible to delay the final vote which was one significant way the senate rules sought to allow the minority party some leverage and power to shape final legislation.  The tactic was used to shape some reasonable compromise more in the middle of the political spectrum, not stay on the fringes of either side as we have gravitated to over the past two decades.

And, if voting in the national interest is not enough, Senator Lieberman has one more over-riding prime objective to defeat the health care bill if it has a ‘public option’ in it in any way, shape or form:  He is from Connecticut, the home to the major health insurance companies, and hundreds of thousands of employees who are his constituents and who can either vote for him or against him.

Always remember that this is the most important factor in the minds of any elected politician: re-election.

As Professor Venkman said to the Mayor in ‘Ghostbusters':  "But if we're right, and we can stop this thing, Lenny (Joe Lieberman)...you will have saved the lives of millions of registered voters!"

And saved future generations trillions of dollars we don't have to spend.

courtesy of www.afpn.org

Tuesday, November 24, 2009

‘What is the More Important 'Sustainability Issue' of Today: Global Warming or Explosive Federal Debt?’

“Wave of debt payments facing U.S. government” is the somewhat innocuous-sounding headline for the recent 11/23/09 NY Times article, above the fold on the front page of the Monday edition paper, no less. (click on the highlighted article and read it before continuing)

Sounds sort of like a headline for when global warming swells the sea from frozen icecaps melting and the ocean waves rise 10 feet over the mainland.  Which is an apt analogy to use when you consider how much debt we are piling on right now.

What is the more urgent immediate 'sustainability' problem facing America today: global warming or excessive debt by the federal government? 

We contend the more urgent, pressing problem is excessive federal spending.  Now that the esteemed New York Times has jumped on the debt bandwagon, maybe everyone can now agree that it is a massive problem we have to fix…now…today.

It is a lot easier to fix than global warming, believe us.  All we need to do is: 1) stop adding on more spending at the federal level and 2) reduce spending already on the books.  (some programs have been in effect essentially unchecked or reformed for over 80 years)

For some reason, like an alcoholic bumming money for his next drink or a crack cocaine addict stealing money for his next fix, American politicians just keep on spending gleefully as if there is nothing to worry about tomorrow. 

Like with this current health care reform (sic?) bill now pending on the Senate floor.

The earth indeed did suffer from a massive global warming event 250 million years ago when a comet or meteor smashed into the Siberian coal fields and ignited a supervolcano that emitted gigatons of carbon that led to the Permian mass extinction. (You can look it up)

However, during the comparatively very short time of recorded human history of less than 5000 years, thousands, hundreds of thousands, or maybe millions of government units have succumbed to a more deadly disease: bankruptcy caused by overspending and self-aggrandizement of leaders and people.

We don’t really know how many for sure since the Great Library of Alexandria with all of the written history up until that point in time was burned up when Julius Caesar stupidly set fire to Cleopatra’s ships in the Alexandrian harbor. 

Maybe there was some book in there warning future democratic republics about the dangers of government over-spending and accumulated debt.  We will never know.

Here are some points that strike us from this article:

1. For the first time in any publication we have seen, the Times refers to current interest payments as being $202 billion.  That is odd, since most the time, the news media has said it is more like $500 billion per year.

The difference is because the Times apparently has chosen to focus on what is the ‘real’ cost of our interest on the national debt that HAS got to be repaid, not the imputed interest ‘owed’ to the fictitious Social Security Trust Fund, which is non-existent in real economic terms as admitted by the current CBO director.

So maybe the Times has ‘gotten religion’ when it comes to reporting on real federal budget issues and we can move ahead without worrying about the consequences of ever paying back the Social Security Trust Fund or the imputed interest that has been added to it over the years…because it is impossible to do so.

2.  “An additional $500 billion a year in interest expense would total more than the combined federal budgets this year for education, energy, homeland security and the wars in Iraq and Afghanistan.”

Let’s think about this statement very carefully.  When interest rates go back up to their more normal rates, (not if, but when) we are going to be paying an additional $500 billion more per year in interest payments than today.  And you thought the amount we are spending on Iraq and Afghanistan was wasteful and exorbitant for the past 8 years? 

Wait til you get a load of paying all of your taxpayer money in interest expense to the Chinese government just for the privilege of having them loan us more money because we don’t have the guts to control our spending or raise taxes to pay for it all.  How wasteful will you feel that will be?  Not only do we buy all our products from China from jobs we have shipped over there; now we will be sending even higher amounts of our interest payments to them as well.

3.  Who in the world is going to buy and hold our bonds for a long-term, 30-year basis unless they get a very high premium on interest rates given that everyone expects inflation to rear its ugly head as soon as this recession ends?  The rule of thumb is that when interest rates go up, the value of existing bonds go down so how are we going to find long-term buyers under those circumstances?

Just remember, when you see newspapers such as the NY Times that previously paid little to no attention to the dangers of debt accumulation and federal over-spending, start to explain the debt situation, then something serious is going on.

And it ain’t good.

picture courtesy of sxmprivateeye.com

Sunday, November 22, 2009

The Obama Health Care Bill: ‘Is This The Straw That Breaks the Camel’s Back’?

What is it with ‘camels’, ancient proverbs and analogies anyway?

The poor camel gets stuck with all the bad consequences of human actions.  He gets his ‘back broken’ when the last marginal straw is added to his workload.  He gets bad press every time he ‘sticks his nose in the tent’ with the assumption that the rest of his sweaty, smelly body will soon follow suit.

And poor old ‘Joe Camel’ got banned from advertising the brand of cigarette that bears the name “Camel’ in the first place.

Is this health care bill the ‘final straw’ of American legislation that breaks our economy?

We won’t know for awhile, now will we?  What will be the effect on the value of the dollar if it passes?  How about on interest rates?  The ability of the Chinese to continue to buy up our exploding debt?

Are we willing to roll the dice on this monstrous health care bill right now at this precarious time in our national economy and history?  What if the proponents of this bill in Congress and the White House are wrong?  Can we punish them with like they tried to punish the Wall Street and Detroit executives who got it all wrong last year?

Why take such a big chance when our children’s future is at stake?

Somebody’s ‘lying’ in this whole escapade, and no…we are not trying to emulate Congressman Joe Wilson’s emotional outburst during President Obama’s address to Congress on this health care bill several months ago.

Let’s go to the videotape:

1)  ‘This bill will not add one dime to the federal deficit!”

Computer answers:  ‘Of course it will!'

How can it not?  Just look at the cash-flows of the tax increases that begin immediately and the spending starts to kick in big-time in 2014, after the next presidential campaign, conveniently enough.  (see Anne-Marie Turner; Galen Institute)

What these people in Washington deliberately are failing to tell you is that over the 10-year period that occurs after the start of the health care spending portion of the bill, between 2014-2024, the spending will total at least $2.5 trillion. (We have been telling you the same thing for the past 5 months)

One budget expert says this bill will cost close to $4.9 trillion in new authorized spending between 2014 and 2034.

There is no way on God’s green earth that the Pelosi/Reid/Obama tax hikes will be enough to cover this massive increase in spending over the next 30 years.  No way.  You think the payroll tax increases on the upper-income taxpayers will stay only on the upper-income wealthy people? Think again.  The same argument was used when the income tax began in 1913…are you middle-to-higher income salaried people not paying any income taxes nowadays?

Doubt it.

2) “This bill will not hurt anyone now on Medicare!”

Computer says: ‘Not!’

Of course it will.  Particularly those who are now using the Medicare Advantage program that allows a broader range of services at a slighter higher premium than the basic Medigap insurance that the AARP wants to restrict you too.  This bill will reduce the Medicare Advantage program to a shell of its former self by taking those funds and spending them elsewhere in this monstrous Rube Goldberg apparatus of government manipulation and tinkering.

3)  ‘This bill will cover everyone in America with health insurance!”

Computer says: “Heck, no, silly!  Are you kidding me?"

What will all these 'do-gooding' Congressmen and Senators have to do if they actually solved the whole problem in one fell swoop?  That would take away future excuses to continue to meddle in the health care industry and not allow it to take its own normal course based on supply-and-demand principles and risk/cost tradeoffs.

In fact, many independent studies confirm that this health care bill will NOT cover all uninsured Americans.  It will leave perhaps 10 million+ people uncovered by insurance while at the same time, drive up premiums on the rest of the Americans who have private health insurance they do like which might knock up to 5 million of them out of the private insurance market to boot!

How about that for an unintended detrimental domino effect?

So far, all we can see is that not only will the camel soon get completely into our tents, we will have to bind him up to fix his broken back and then smoke Camel cigarettes to calm our nerves down.

Poor health care camel.  Poor us.

picture courtesy of cache.gawker.com/.../2009/07/joe_camel.gif

Saturday, November 14, 2009

“Mr. Obama: Tear Up Your ‘Stimulus Package’!”

 The Berlin Wall fell 20 years ago which liberated Eastern Europe from centralized planning and control (sound familiar?).

President Obama has announced a ‘jobs summit’ to be held at the White House later this year.  We think it is painfully clear what needs to be done to create the millions of jobs we all want and need here in America:  “Tear up the rest of the first stimulus package!”; don’t spend any more money on the TARP program and cut corporate income taxes in America to zero.

Perhaps a brave staffer at the White House will send the following memo along to President Obama:

“Mr. President:

Calling for an economic ‘jobs summit’ at the White House next month is not going to create any more jobs just because you say so.  You are a great orator but you can't just speak and create jobs out of thin air.

Your economic stimulus package has failed to stimulate anything, no matter how much spin your press office puts on it.  It did save teachers jobs in states such as California that were under tremendous financial stress and might build some new bridges and roads over the next several years. However, most businesses are sitting tight on their cash and not expanding or creating jobs due to all the uncertainty out there today.

Government can not ‘create jobs’ any more than it can ‘create wealth’. It can only redistribute wealth already created by the private sector first.

This economy needs an economic jolt unlike any other we have seen in modern times so that business people will be energized, motivated and incentivized to make the capital investments necessary to expand their business which will create the jobs we all want and need right now.

To do that, we suggest the following, bold and yet disarmingly simple solution:

-Eliminate the corporate income tax code from American business.

There. We said it.  Millions of jobs will be created from 2010 to 2012 and you will be re-elected in a landslide of monumental proportions akin to President Reagan in 1984.

Without the onerous yoke of corporate income taxes on American business to pay, corporations with hundreds of thousands of employees on down to companies with only 10 people will see a magnificent window of opportunity open up before their every eyes to expand their businesses and make more money for their stockholders. After all, Mr. President, that has been the primary objective of any profit-making entity since the dawn of time.  Without making a significant profit, there is no reason for any sane person to invest their capital and take the risks necessary to bring a service or product to market.

Once they see that, they will start hiring people right and left and drive the unemployment rate back towards zero where it belongs.

Corporations do not pay taxes; people pay those taxes.  They pay them in the form of higher prices for goods and services each time they consume them.  Consider this a secondary tax cut for 310 million of your fellow citizens, 200 million or so of them who are registered to vote either for you or against you in 2012.

Cancel the rest of the first stimulus package, of which close to $400 billion remains yet to be spent on infrastructure projects. When Mr. Gorbachev allowed the Berlin Wall to crumble in 1989 without a shot being fired, even they recognized that old-style, centralized, top-down government spending programs do not work to create the jobs and lifestyles everyone wants in today’s world.

By repealing the first stimulus bill, and canceling what is left of the TARP package, we could eliminate the corporate income tax and not affect the future budget deficits at all. This approach would cost far less on an annual basis that all of the plans you have put forward so far, like maybe 70% less.

Did you hear that India recently purchased 200 tons of gold which is driving gold prices through the roof?  (see Indian GoldLike the Chinese, they are growing increasingly more concerned that the US does not have a grasp on its economic situation (we don’t) and that the dollar will continue to fall in value.

Mr. President:  All we can conclude with is this statement:  If you and Congress passes nothing else but this one single one sentence bill tomorrow, all of this economic gloom-and-doom will evaporate into a morning mist of fresh air optimism immediately.

Do it for yourself, if you want to get re-elected.  But more importantly, do it for your country.  That is what you were sworn into office to do anyway, sir.”

Respectfully submitted,


Tuesday, November 10, 2009

‘Follow the Money’ and You Will Find the AARP

During the Watergate scandal, Washington Post reporters Bob Woodward and Carl Bernstein were instructed by the secret informant, ‘Deep Throat’, (finally admitted to being a former FBI operative, Mark Rich), to ‘Follow the Money’.

It all led to a chain of corruption and ‘dirty tricks’ all the way up to the ‘Trickster’ himself, “Tricky Dick” President Richard M. Nixon.

Have you ever wondered why and how an august organization such as the AARP could take a political stand and support the House-passed version of the Pelosi Health Care Bill?

The AARP is supposed to be ‘non-partisan’ and operate under the protection and advantages of the non-profit tax status of the US tax code. They are also not supposed to engage in political ‘advocacy’ since they are supposedly ‘just trying to take care of grandma and grandpa’ through getting the facts out there for them to make decisions on when they vote.

Oh, and have they ever told grandma and grandpa that they are engaged in a billion-dollar enterprise to sell Medigap insurance to them on as much of a captive basis as possible?

You didn’t know that? You just thought you paid your little old $10 annual AARP fee and got discounts on movie tickets, rental cars and hotels and maybe an additional discount off of the senior citizens’ dinner special at the Blue Plate restaurant around the corner?

If you ‘follow the money’ in anything close to politics in general and in Washington specifically, you will find your answer to why everything is ultimately done under the guise of advancing the ‘correct’ public policy.

‘Follow the Money’ on the AARP special interests in this bill and you will find that it leads directly to protecting $500 million worth of annual business they have selling Medigap insurance to senior citizens.

$½ Billion. And they will do anything they can to keep it that way for themselves.

Take a look at this very fine piece of journalistic excellence by a dogged advocate for better health care reform by the name of Grace-Marie Turner of the Galen Institute, "AARP Gets What It Wants"

(Galen, by the way, was a Roman physician who was the first person to use methodical, ‘scientific’ ways to analyze physiology and perform medicine around the year 160 A.D. or so. I wonder if he would survive as a physician under the new Obama/Pelosi/Reid health program?)

If you are mad at big business for taking all of that bailout money last year, you ought to be mad about the AARP trying to manipulate the emotions of 39 million seniors by not disclosing the reasons why they want this bill so badly. It has nothing to do with helping seniors have ‘choice’ in their selection of their health care supplemental plans under Medicare. In fact, the AARP wants seniors to have as few choices as possible…as long as the choices are all under the purview and control of, you guessed it….the AARP.

Does it ever make you wonder why the AARP is so entrenched in Washington nowadays? What would happen if, let’s say, 10 million people aged 55-65 did not join the AARP? (I got my card a couple of years ago and promptly burned it like all you older crazy former Hippie Boomers did in the ‘60’s when you burned your draft cards instead of going to Vietnam)

Well, 10 million fewer AARP members coming in when another 10 million of them are aging on over the years would mean approximately $200 million less per year in revenue to the organization. Talk about the cutbacks in staff that would entail! They would also start to lose their biggest weapon, their legendary “see you at the polls’ threat they always use on any politician who even asks a question about whether we can continue to afford Social Security and Medicare in its current formats. (We can’t)

And if you are in your 20’s, 30’s, 40’s and early 50’s, the AARP could not care less about whether or not you have to pay any consequences for these tremendous debts we are running up on your tab. They just don’t give a damn…or else they would not have stood in the doorway to any reasonable changes over the years.

So read Grace-Marie Turner’s great insight one more time before you move on to other things. And then tear up your AARP card, burn it and do not ever join it again….they do not speak for your best interests and the best interests of the nation as a whole.

They care about one thing and one thing only…market share and keeping up their revenues. Sounds just like the Wall Street gang and the Detroit automakers (except Ford Motor..go buy a Ford today!) last year.

“Follow the Money!” It is going from your pockets right into whatever the AARP tells the White House and Congress to put it in.


Thursday, November 5, 2009

‘The Plan’ to Balance Our Budget…and Pay Off National Debt

Here is something neither side is bothering to tell you nowadays, even though we have crushing budget deficits, a Mount Vesuvius of national debt to contend with, an aging Boomer generation that is about to enter and bankrupt Medicare and Social Security completely and the Chinese government getting pretty squeamish about holding US dollar-denominated bonds when they know they are going down in value, not up:

“We don’t have a long-term, or even a short-term plan, to deal with any of our budget problems.  None. Nada. Not one!”

Scary, isn’t it?  It is like we are flying in a blinding snowstorm in the mountains and the pilot comes on the intercom to say: “We are not quite sure where we are going but we are sorta sure we will land alright.  We promise. Trust us.”

If you have heard anyone from the White House to Congress on either side of the aisle say they have 'a plan', please recite it for us in 30 seconds or less.   We have not heard one yet.

Let’s put something out there to show you just what we are up against.  Take a look at the CBO budget projections and sort down to page 4, 'CBO Baseline Projections'.

We are spending $3.5 trillion in outlays this year, 2009, including this 'not-really-doing-its-job' ‘stimulus’ money and all of the financial bailouts ad infinitum. The federal budget was less than $1 trillion in 1985, just for frame of reference.

Take a look at the revenue line in the CBO projections.  We won’t even be taking in $3.6 trillion in tax revenues from all sources until 2016….7 long years from now! 

Your beloved 5th grader or grandchild will be going to college by the time we have enough revenue to cover the expenses we are incurring right now in 2009

That just ain’t right, ladies and gentlemen.  In fact, it is downright dishonest, immoral, unethical and stupid, to be honest about it.  We used to berate banana republics in Latin America for running such huge deficits and being so irresponsible in the management of their nations.  We are making them look great by comparison.

The only way to hold down spending is to stop spending in the first place.  Period. We can’t afford any of these new programs really, regardless of what anyone in the fantasyland of Washington wants you to believe.

We ought to repeal what remains to be spent from the stimulus bill and the bailout bills right now. Instead of worrying about if this health care bill will be 'budget-neutral' over 10 years or not, (it really isn't due to some funny business going on budget accounting-wise), we ought to start over and not add any more spending above what was spent last year.

No one is willing to raise taxes on everyone, including the 50% who now pay zero income tax, because it will guarantee their loss in the next election. Most very wealthy people are going to be able to hide from it anyway so why even suggest it in the first place?

Here is a very simple way to balance the budget in the rest of our lifetimes: Hold overall federal spending at current FY 2009 levels of roughly $3.5 trillion. Like for the next decade or more. Once we do that, we can run annual surpluses to pay down the debt over the next 25 years or so.

What is so difficult about that?  We bet you have held your spending to a flat level, or below, over the past two years.

We know for a fact that there are enough obsolete, archaic, mismanaged federal programs across-the-board from defense to education to health care that we could save 3% in federal spending per year for the next 10 years to get us out of this mess in which we are now mired.  There is nothing 'magical' about increasing federal spending every year by 3%+; that is just the cowardly way out of making the hard decisions we elect people to go to Washington to make on our behalf.

There is a very simple-to-understand, albeit blunt, legislative instrument to enact this crucial national goal.

There is this thing called the “CR” or ‘continuing resolution’ that Congress passes almost every year to continue funding the operations of the federal government at last year’s ‘authorized levels’.

Did you know that we can’t borrow any more money unless Congress authorizes it by passing a new ‘debt ceiling’ which they are getting ready to do soon?  If we keep passing CRs for the next 10 years, then we won’t ever need to raise the debt ceiling, now at around $12 billion, now will we?  At least the debt wouldn’t go to $20 trillion as currently projected.

We would have to also pass annual ‘budget reconciliation’ bills to accommodate the many changes we will have to make in Social Security, Medicare and Medicaid in order to stay under the current $3.6 trillion spending limit for the next decade.  These two budget bills would force Congress to stay in session all night long for a couple of months to come up with reductions in spending.  But that is ok by us.  Congress can do it.  We have made major changes in entitlement programs every year a reconciliation bill is passed, even though these programs are called ‘mandatory’ and considered ‘untouchable’.

Former Congressman McMillan and a few nutty budget staff people like me presented $177 billion in Medicare reductions alone over a 5-year period in 1993 and no bolt of lightning struck us down then.  The core of those changes finally passed in 1997…it takes awhile for things to get done in Washington.

So there you have it.  A ‘plan’ to balance the budget, stop adding to the national debt and start paying down the debt in 2016 so your kids will not absolutely think you are part of the craziest and stupidest generation in American history.

Have you heard President Obama state a better plan?  The Republicans?  Anyone? Bueller? Ferris Bueller?

In the absence of a better alternative, we have to take the initiative and sound the charge. This is one selfless act we Boomers have to make and win.

Mount Vesuvius picture courtesy of www.bible-history.com

Saturday, October 31, 2009

What Actually Happens ‘When Good Men Do Nothing’?

We love politics and we love Washington, believe it or not.

It is the one place on earth where the free exchange of grandiose dreams, ideas, philosophies and proposals come crashing together on a daily basis, ostensibly to help the Republic known as America stay great and free for centuries to come.

Some people compare it to ‘watching sausage being made’, full of, well….all of the parts of the hog that didn’t make it into good hams or bacon, we suppose.

We prefer to think of it like waves crashing into each other at a point on the coast…some from the west, some from the east, and some from the north and south.  Somehow, the oceans rage for periods of time and find calm in between.

But what happens if the winds blow the waves too long from the west, or the east for that matter?  It won’t be too long before the sand dunes are reshaped and the currents changed forever.

Just like in politics. When there are no viable countervailing forces, as in much of the 21st century so far, one side or the other ‘wins’ and reshapes our national landscape and economy.  And no amount of ‘beach re-nourishment’ can restore the shoreline easily to what it was before.

Here’s our question directly to you today, and to the thousands of friends you might want to send this to:  “What happens to our national politics if ‘I’ Do Nothing About It?”

Not your daddy, or momma, or hoping some some single person running for president will be our savior. You, period…along with an army of other like-minded citizens.

Here’s another reason why we ‘love’ Washington politics:  No one ever does the research to get the quotes exactly right.  In this regard, it is so predictable.  99 times out of 100, if you hear something that sounds really great in a speech, it has been lifted, without attribution, by the person saying it.  Barry Goldwater was not “Goldwater’ without numerous references to the ancient Roman ‘Great Speechifier’ himself who would put even President Obama and Reagan to shame, Marcus Tullius Cicero (which meant ‘chick pea’ in Latin…what a name for a leading public citizen)

JFK would have been another backbencher without speechwriter Ted Sorenson lifting quotes from George Bernard Shaw all the time….and RFK and Teddy Kennedy used the Irish writer’s words abundantly as well.

So people in Washington often times puff up and say:  “Edmund Burke once said: “When good men do nothing, evil will prevail!”

Except the great British philosopher of the Enlightenment ages never said that, ever.

What he did say, in fact, was this:  “When bad men combine, the good must associate; else they will fall one by one, an unpitied sacrifice in a contemptible struggle.”

Doesn’t roll off the modern American tongue quite as well but you get the point.

But it is so much more descriptive, don’t you think?

Garrett Morris, who used to do a brilliant SNL routine with Chevy Chase in the early days called “News for the Hard of Hearing” would cup his hands and shout out the very words Chevy Chase had just uttered on “Weekend Update”.   We think many Americans are apparently ‘hard of hearing’ nowadays because they just don’t seem to believe what they are hearing or seeing coming out of Washington anymore.

Except in this case, Morris would modify Mr. Burke’s words and shout at the top of his lungs: “Hey, you! Get up off of your rear end and run for some political office! If you don’t, and you really don’t like what they are doing, you are going to be picked off, man, one-by-one, like Sergeant York shooting wild turkeys from the back of the line to the front!”

We believe it is time for every “Good Man” and “Good Woman” to consider seriously running for any political office of their choosing in the next 5 election cycles.  There are elections in every year around the nation: municipal elections every two years, including this year; congressional, legislative and most gubernatorial elections in 2010 and the big presidential cycle again in 2012.

You can be one of the ‘good ones’ who associate and help end this ‘contemptible struggle’.  Believe us when we say, with total confidence, that you are better than 95% of all elected officials who are now serving in office around the country.  Why?  Take a look around....you mean we can't do better than this with newly elected 'citizen-politicians' like you and me?

Say these words to yourself out loud as you read them:  “Who else is going to do it, if it is not “Me”?

That is why we have a civil government in the first place...so citizens will rule and not some tyrant, king or dictator.  Think about it....you might be in the right place 'for such a time as this'.

It is up to us as individuals to change things.  Great new leaders don't come out of some factory somewhere.  They come from people like you.

pictures courtesy of Wikipedia...

Wednesday, October 28, 2009

“How Do You Know When A Politician is Lying?”

“When his lips are moving!” goes the old joke.

How do you know when a legislative bill is a "good one"?

When almost all of the special interests are squealing about it and how it is going to devastate their constituencies.

You don’t hear any of that surrounding this health care ‘reform’ (sic) bill, now do you?

You don’t hear any of the trial lawyers yelling about the tort reform in it.  Why?  Because there is none to speak about.

You don’t hear the labor unions screaming bloody murder because the tax treatment of their overly generous health care plans are being reduced to cover only a basic standard BCBS plan, instead of the Cadillac version they now enjoy.  You are ‘subsidizing’ those plans whether you know it or not through the excessive tax deductions being taken by the major automobile companies (which you just bailed out this spring) to satisfy the unions while you are paying for the standard plans.

You don’t see the AARP waving the bloody shirt because, well..because there really is very little that is going to change anything a senior on Medicare is now getting.  Most seniors will continue to be able to pay about $100/month for Medicare Part B premiums and get approximately a $12,000+ per year subsidy from the taxpayers and future generations while you will either pay an increasing share of the health care premiums through your business for reduced coverage, most likely, or close to $1000/month or more if you are self-employed.

How's that working out for you?

We are not going to defend the health insurance companies to within an inch of our lives although they do play an important role in this whole health care game.  But they are not really squealing either.  We just heard of a so-called 'non-profit' health insurance company that shall remain nameless which notified a small business they were ‘terminating’ their plan without notice or reasons explained.  The small business has a surviving cancer patient as an executive, an administrative assistant with MS and a few others with health problems associated with high blood pressure and obesity.  They have never missed paying a health insurance premium on time for the past 33 years and have always complied with any request made of them by the company.

That just ain’t right.  Any reform that will rectify that situation is ok by us.  We need insurance to cover adverse health outcomes and costs, not to cover our hangnail removal or routine checkups.

But we are more than a little bit ‘troubled’ by the lack of screaming and shouting and carrying-on that usually attends the passage of any major legislation in Washington.  In times past, when certain major interest groups were getting their ox gored (don’t ask us why this is a popular political analogy…it just is), there was all sorts of gnashing of teeth, rending of garments and lamentations being offered on the front steps of the Capitol and the back ones too.

What that tells us is that this bill is more of the ‘same-old, same-old’ and all of the major structural issues such as higher retirement ages for Medicare eligibility and other necessary reforms for the good of the Republic as a whole have once again been kicked down the road like an old soda can.  “Our kids will figure it out” current ‘leaders’ (sic?) such as Speaker Pelosi and Senator Reid seem to be saying.

The French have a saying to describe such insouciance to the damage we are doing to the public fisc and common welfare:  “Plus ca change, plus c'est la meme chose!”  ‘The more things change, the more they stay the same!”

This is not the change we can believe in, ladies and gentleman, and it saddens us to say that.  Next up:  higher inflation rates and interest rates to follow.  You can almost see it now.

Friday, October 23, 2009

What is in a Name for a Political Party, Anyways?

Our recent ruminations about the rise of the officially registered independent voters exceeding 30% in many states across the nation apparently struck a chord among many people.

Out of many emails and phone calls we received, one gentleman wrote to ask how to change his registration and when we asked why, he said: “I didn’t know you could ever change your registration!”

Talk about blind party loyalty! From birth, no doubt.

But his question brought to mind this question: “Just what do these political party names mean anyway anymore?” After all, if you are going to call yourself a ‘Republican’ or a ‘Democrat’, it might be a good idea to know what they really mean in the first place.

Because quite frankly, political party names in the American history have changed and shifted over time such that what constituted a Democrat or a Republican in the late 1880’s is scarcely recognizable any longer today.

There have been basically 6 main political party names over our history, pretty much divided over the role of government.  One side has advocated more centralized government power and control, and taxes and higher spending, in Washington and in the state capitals.  The other has advocated less government control, lower taxes and more individual independence and freedom.

They have blended lines at times like cream in a coffee cup to where they can be barely indistinguishable at times.  Like today for example....many people feel like we have two ‘centralized power’ parties in Washington, both of which advocate more spending and more debt, the only difference being that one tries to say they want ‘less’ of it than the other.

Like ‘Bud-Lite’.

Let’s go to the very beginning.  We supposedly have a ‘democratic republic’ based on models the Founding Fathers read about in the original Greek and Latin histories of the Greek democracies and the Roman Republics.  The Greek word for democracy meant “of the people’.  The Latin word, ‘Res Publica’ literally meant ‘the people thing’.

We technically and literally have a form of government than means “The People Thing Of The People’.

So far, so good.  At least we started out on solid ground in 1789.

Since that time, here are the major political factions that have coalesced around some common shared goals:  ‘Federalists’, ‘Anti-Federalists’; ‘Democratic-Republicans’ under Jefferson (that would really confuse people today…or would it?); ‘Whigs’, ‘Democrats’ under Andrew Jackson and Republicans formed under Abraham Lincoln through the historical Jeffersonian roots.

Madison warned us against ‘factionalism’ which would take us down the road to the British parliamentary system, which they obviously abhorred.  They deliberately built-in safeguards to prevent such factionalism from getting out of hand, such as the Electoral College.

Those guys knew what they were doing.

We have had isolationist republicans, silver democrats, southern “Dixiecrats’, 'Blue Dog' Democrats, Teddy Rooseveltian ‘Bull-Moose’ Republicans, Rockefeller Republicans and all sorts of various adjectives attached to both major parties over time.  A ‘classical liberal’ in economics during the Enlightenment days would have been a ‘free-market capitalist' of the 1980’s.

So things have gotten confusing from time to time in our history.

What about now, today, in American politics? What do we really have anyways?

That is really up to this generation to decide for themselves, as Thomas Jefferson hoped we would do.

Frankly, we wouldn’t mind going back to the early days of the Greek democracies where the political parties were designated as such:  ‘Men of the Coast’. ‘Men of the Plains’. ‘Men of the Mountains’. And forget all the current connotations of the words "Republican' and 'Democrat'.  Maybe this would restart our national political dialogue along towards a more productive outcome.

Change the word ‘men’ to ‘People’ to be politically correct and inclusive. That seems to describe the current divisions of interests in many states around the nation.

As long as at least one political party in American stands for fiscal sanity, ferreting out wasteful government spending at every level, instituting the lowest possible and fair tax burden to produce balanced budgets forever after we pay off this enormous debt and protect us from terrorist attack ever again, we really don’t care what that party will be called.

Maybe call it the “Martian Party’ after Marvin the Martian whose tag line was “You earth creatures make me sooooo angry!” 

Or how about the ‘Telemachian Party’?  Nah, sounds too much like ‘telemarketing’ to be a success.

Marvin Martian courtesy of www.sprintusers.com

Tuesday, October 20, 2009

"I'd Gladly Pay You Tuesday for a Hamburger Today"

If J. Wellington Wimpy's famous quote is not the quintessential slogan that describes the current American attitude towards massive over-consumption of government services without paying for it, then we don't know what is.

We are putting Popeye the Sailor Man's best friend to shame by the way we spend and borrow as a nation.  Take a look at the news today:  The so-called 'public option' is now back in the health care bill mix and that one provision alone is almost guaranteed to drive up the costs of this bill by a factor of 3 when all is said and done over the next decade. Mostly all borrowed, by the way.

'Tax-and-spend liberals' used to be an epithet hurled by the opposite side.  But what do we call both political parties when they spend like there is no tomorrow and borrow like there is? "Spend-and-borrow lunatics"?

There is some real redistribution of wealth going on right now and it isn't from the wealthy to the poor, as some would have you believe. They want you to believe that all we have to do is slap a big tax on the wealthy, big insurance, big tobacco or big oil and everything will be fine and dandy.

Except the truly rich can afford to hire expensive tax lawyers and accountants to help them minimize their taxes to almost any level they so choose.  And the increased taxes on all the companies mentioned above are paid for by you and me in the higher prices they charge for their products and services as a result of the higher taxes we are 'punishing' them to pay.

So don't buy that Robin Hood stuff about taking from the rich and giving to the poor. In fact, it is far worse than that, and more sinister and deceitful when you really sit down and think about who is going to pay for all of this borrowing we are now allowing Congress to get away with.

Where does this redistribution come from? Your children and grandchildren’s pocketbooks and wallets, just like always.  Where else can a government systematically raid a defenseless and unrepresented group of people year after year to get the funds they want to provide current benefits to living voters?  The young and unborn children can not vote and the ones who are aged 18-35 barely vote at all on a regular basis.  Young voters came out in droves to be a part of history last year during the Obama campaign but are you willing to bet the mortgage that they will vote again in the off-off year elections this fall in Virginia and New Jersey or any of the municipal elections across the country?  (You didn’t even know that these elections were full-bore, did you?)

There are a lot of people who think the main purpose of government is to ‘redistribute the wealth’ from the rich to the poor in some sort of noble effort to pursue peace and justice. So they continue to advocate loudly for 'higher taxes on the wealthy' to 'pay their fair share'...even though the top 1% of American taxpayers now pay more in income taxes than the 'bottom' (?) 95% of all taxpayers combined.

The only 'redistribution of wealth' that we have actually been able to accomplish over the past 30 years is from our children and grandchildren to us and our parents and grandparents now living. We have borrowed now close to $6 trillion from them in the form of bonds. Like Wimpy, we all have eaten our hamburgers today and 'promised' investors we'll pay you next Tuesday...like in 2032.

Will 'we' be the ones paying them back? Heck no, most of us will be long dead and gone.

A lot of the bonds we 'owe' are somewhat fictional as we have pointed out in previous postings.  They are associated with the Social Security 'trust fund' that is really no more than an accounting entry and can only be paid off by higher taxes or savings from future spending programs. 

But over half of the bonds now outstanding are 'real' meaning institutional investors and the Chinese government who will demand they get paid regular interest payments and principal, period.  Who will pay off the obligations we are making to them?  Our kids and grandkids.

Is that what we really want to do as a nation?  Are you 'proud' of being part of a nation that does that to our children?

Here's what might happen in the interim:  We may very well experience higher inflation rates and lower currency valuations of the dollar, both of which make paying back these bonds less expensive in real terms.  Neither are great for any economy in the long-run.  Plus our kids will have to pay the interest on these bonds regardless of who owns them....and our current interest payments are close to $500 billion in the budget today.

So forget about trying to drain the pockets of the current living breathing billionaires…there ain’t enough of them to shake down completely anyway to solve our fiscal problems in the first place.

Focus on what we are doing surreptitiously to our children and grandchildren.  And then tell your elected politicians to stop it, first by not voting for any more expansion of spending at any level of government.  And then, by paying down the debt with savings from programs already on the books and not run very well.

You’ll feel better about things.  Like next Tuesday.

courtesy of creditbrain.wordpress.com

Saturday, October 17, 2009

What is 'Really' at Stake in The Health Care Reform Bill?

Now that the health care debate has moved out of the Senate Finance Committee and spilled onto the floor of the U.S. Senate, it is important to remember the main reason why getting the ‘correct’ form of health care reform is so critical at this point in time.

Popping the inflationary balloon in health care costs would save us trillions of dollars that will otherwise have to be borrowed over the next 20-30 years from your kids and grandkids. Did you know that just from 2000-2007, medical care (and college tuition costs...but that is for another posting) have exploded while things like computers, software and even new automobiles have dropped? (see chart above, 1)

Reducing the medical inflation rates to some 'normal' level would be the modern-day equivalent of Alexander the Great cutting the Gordian Knot with one fell swoop of his sharp sword.  The former congressman I served as chief of staff, John ‘Alexander’ McMillan, III, used to refer often to this legendary tale when dealing with seemingly intractable issues in Congress.

There were always ‘solutions’ to problems and sometimes, making the bold stroke is the surest and fastest way to solve the problem.  Now is the time to make such a bold stroke.

(It didn’t hurt that ‘Alexander’ meant ‘leader of men’ so where are all the ‘Alexanders’ out there anyways?)

The upward spiral in health care costs has not abated for the past 30 years, no matter what Congress has done or we do as consumers of health care. The reasons are ‘legion’, to borrow a particularly damning Biblical reference, but they range from third-party payors of health care premiums, lack of substantive tort reform, expensive but effective advances in medical technology, terrible health habits of millions of Americans and the list can go on and on.

Whatever the reason, this current iteration of health care ‘reform’ has got to be compared to a Gordian Knot-type of complete reform or else it will just be another wasted opportunity to do the public’s business for the good of the entire country, first and foremost.

Take a look at the next chart. Medicare costs are expected to go through the roof over the next 30 years. A large part of it has to do with the sheer increase in the number of old geezers (us in the Baby Boom generation) who are going to be loading up on the Medicare bandwagon.  The ‘excess cost growth’, as it is known, is the growth in health costs over and above the expected increases due to 'normal' inflation and more Boomer enrollees.  It compounds with each passing year and we all know that compound interest is ‘the most powerful force in the universe’ according to none other than Albert Einstein himself.

Looking at it another way, if we could just hold the annual rate of inflation in overall health costs to JUST the rate of normal overall inflation in the economy, $200 billion in Medicare costs alone could be saved in FY 2019. That would mean we would have to seriously change our eating and exercise habits as an entire nation; drive down costs through the use of computer technology and medical advances and dramatically raise the retirement ages for Medicare eligibility, all critical 'structural reforms' that have to be undertaken to account for the huge number of new Boomer Medicare recipients with longer lifespans.

That is it.  Plain and Simple. But enormously complex in implementation. The Gordian Knot will have been cut, the budget will have been balanced,the dollar will rebound and we will all live in the land of milk and honey once again

And our children and grandkids will LOVE us for it….we will not be judged as the ‘craziest’ or ‘stupidest’ generation of Americans to have ever walked the face of earth after all.  We will have 'won one for the Gipper' (Reagan); 'done what we should have done for our country' (Kennedy) and made 'one giant leap for American-kind' (Neil Armstrong?)

BUT, and this is a tremendously large ‘but’, it all depends upon this current health care reform bill being done right and breaking the back of the structural factors in the whole health care industry that has led to very high rates of inflation in health care over the past 3 decades.

There is some serious doubt that any of the current bills under consideration by Congress can accomplish this goal. In fact, many experts believe this bill will do nothing to break the structural factors dealing with the inexorable rise in medical costs because, well, frankly, because no one in the White House or Congress is brave enough to deal with them right now.

"If not us, who?  And if not now, when?" President Reagan rhetorically asked in his Second Inaugural Address.

If they don’t deal with these structural problems now in the next 3 months, we’ll have to start all over again to get it right. In January of 2010.  We don’t have any other options.

1. Chart courtesy of Stephen Moore, Wall Street Journal
2. Chart courtesy of CBO