Monday, December 26, 2011

Wall Street, Financial Meltdown, TARP, American Free Enterprise and Haman in the Book of Esther

Here's a personal story that should really capture your full attention and brand the whole sordid episode of the financial meltdown in 2008 deep into your brain so you can fully understand just how much you have been bamboozled by the financial 'wizards' and 'warlocks' on Wall Street and Main Street:

A friend of ours was at a party in New York City just over 3 years ago now in late 2008 on the weekend when all of the final negotiations were taking place about which investment banks to save and who to let die on Wall Street.

The New York investment banker, of course, had let it be known that he was 'worth in the vicinity of $100 million' prior to October, 2008. In pure money terms. Not personal integrity or valor, that is for sure.

Heading into that weekend, the deal to save AIG had been floated which was necessary since Goldman and other large investment banks had a lot of their capital tied up in the collateralized debt obligations (CDOs) and other guaranteed payments between all the large international investment banks.

If the deal was not completed that weekend, as it appeared on Friday evening, the debt liabilities of AIG would overcome all of the net assets of the large investment banks. By Monday morning at the opening of the day's markets, every one of them would be not only technically 'bankrupt' but officially bankrupt and unable to conduct any further transactions around the world.
'Joe' (names changed to protect the innocent) he said: 'Come with me out on the terrace and take a good look around!'
Our friend was more than a little nervous to accompany him for fear of watching him jump off the ledge as so many did during the Great Depression. The investment banker had been drinking heavily, and why not?  Our friend was probably more than a little afraid that the investment banker would actually jump and possibly take him with him.
'Take a look around, {Joe}. All of this, all of my life's work is now gone. Kaput, P-tooey! Nothing is left. We are going to watch AIG take down the whole banking system on Monday morning and with it will go all of this, my wealth and my world!'
We think our friend may have shown some compassion for this so-called 'gentlemen'. Maybe. He probably poured himself and his Wall Street buddy another stiff drink to ease both of their collective pain.

Well, to make a long story short, the AIG deal was cut over the weekend and the financial system of America was put on the life-support system known as the first tranche of the Banking Bailout Plan Part I.

And guess what? This 'so-called gentleman' has now had ALL of his wealth restored through the recovery of the Goldman stock! His net worth probably has topped $150 million this year as a result of your generosity and largesse.

Gives you sort of a 'tingly feeling' all up and down your leg like Chris Matthews, right?

We all know that the financial system of America was about to blow sky-high by the fall of 2008.

Years of extraordinary excess in the form of debt, speculation, greed, contempt and deceipt by the investment bankers on Wall Street and the regular bankers and mortgage bankers on Main Street, along with the usual suspects of real estate speculators, financiers and manipulators set the table for such a magnificent meltdown in October of 2008.  (it happens every single time there is a financial panic on America...or anywhere else in the last 800 years. See 'American Financial Panics' and read Kenneth Rogoff's book, 'This Time is Different: Eight Centuries of Financial Folly')

Couple this with extremely lax regulation, supervision and oversight by Capitol Hill and the White House from 2001-on (yes, that includes the W White House and the GOP-controlled Congress in both the House and Senate) and the stage was set for the American financial system being one short weekend away from completely melting down like Chernobyl or Three-Mile Island or the Fukushima Nuclear Reactors in Japan.

Perhaps less than 24 hours according to some accounts.

Read 'On the Brink' by Hank Paulson; 'The Big Short: Inside the Doomsday Machine' by Michael Lewis; and 'Too Big To Fail' by Andrew Ross Sorkin if you haven't done so already.  A small budget B-level movie producer truly could make a great slasher horror movie series based on these 3 accounts of those dark days in late 2008 which would rival any trilogy of Freddy Krueger, Leatherface and Michael Myers. Combined.

Why does any of this matter to us in 2011?

Well, because many, perhaps a majority of the Wall Street financiers and big-bank presidents profiled in these horror stories are still working in their chosen fields of 'mismanagement', er, 'malfeasance', er... 'work'!

And guess what? They have had almost all of their wealth regenerated and restored to them by the good folks of the United States of America. Namely you. The American Taxpayer. In the form of the TARP bailouts among other machinations of the federal government and the Federal Reserve over the past 3 years.

If it wasn't 100% solely the gift of you, the Great American Taxpayer, then the balance of the funds used to restore the wealth of Croesus to King Croesus himself came from the unknowing and/or unwitting government of Red China who provided funds in the form of more lending to our profligate ways of governance in America again.

Ultimately, how these things always have ended in history, the inflation that inevitably occurs following such financial debacles will provide the ultimate 'way out' for the federal government to get out of paying off these massive debts dollar-for-dollar.  Inflation is not going to be friendly to your standard of living, or your children's future, nor to your savings which will be eroded downward in a commensurate manner.

These guys might just be the 'Hamans' of the 21st century. Haman the Agagite was the manipulative Prince under King Xerxes who not only wanted to kill Mordecai in the Book of (Queen) Esther for failing to kneel before him but to destroy the entire Jewish people to boot. Haman plotted and connived and schemed to get poor innocent Mordecai to step up on the gallows and have that noose slipped around his neck but in the end,Haman got his just due comeuppance on the very same gallows he built to hang Mordecai.

Our modern-day financial manipulators just have not been called to account yet for their actions in the worldly sense.

Maybe they will in the spiritual, moral and justice realms one day.

We are assuming there must be some honest, God-fearing people on Wall Street and in the Main Street banking system somewhere in this great land of ours.  Someone who actually has taken their responsibility to manage depositors money seriously and at least tried to do the right thing when making money the easy way seemed to take precedence over doing it the right way.

But These Wall Street Bankers and Financial Services Execs.  They plotted and schemed and connived their way into protecting their wealth and way of life instead of doing 'the right thing' and just declaring bankruptcy in 2008.

Which would would have wiped out their personal wealth but it would have also allowed a planned reorganization of the assets of Goldman Sachs to continue doing business so the rest of the financial system would not have completely collapsed around us all.

It would have been the right thing to do. For them and for our country.

Friday, December 16, 2011

Congressional Salaries: Too High? Or Too Low?

LegisStorm has just announced the first successful electronic publication of all Congressional staff salaries for the past 10 years.

Go ahead. Click on the link and type in a few names of people you have known who worked on Capitol Hill since 2000. LegisStorm seems to think they have uncovered the Holy Grail lost since antiquity.

Big deal. Congressional staff salaries and office expenses have been public knowledge ever since the first Congress sat in 1789.

Did you know that 2/3's of the 14th Congress were voted out of office in 1816?  'Why?' you might ask.

Because the 14th Congress voted themselves a hefty pay raise to the lofty sum of $1500 per year. Henry Clay, the Speaker of the House, got the gargantuan (for then) salary of $3000.

Mr. Clay almost was defeated himself in 1816 in which case, the nation may never have come to know just how brilliant he was as a legislator and the 'Uncompromising Compromiser' as the authors of the great book, 'Henry Clay: The Essential American', Daniel and Jeanne Heidler, chose to characterize him. Read it over these holidays and learn more about how our government matured into the form it is today under his leadership in the early days of the Republic.

Here's the problem with the reporting of congressional salaries nowadays:  There is never any context in any reporting about them to provide the public any idea of what our elected representatives, senators and staff do on a regular day in Congress.

I have always challenged people who harrumph 'congressional pay was too high!' or staffers 'get paid too much' to either run for office or apply for a job on Capitol Hill and see what they think then.

Not one person has ever taken me up on my challenge.  Not a single solitary person.

Why is that? Let's go to the video tape.

Let's set the record clear from the get-go. Every Member of Congress and US Senator is paid the same base salary. This year it is $174,000. Majority Leaders and Speakers get paid additional amounts to account for their leadership responsibilities.

Which is more than a little 'weird' since a US Senator covers an entire state and a US Congressman 'only' represents the 690,000 or so constituents in one congressional district in the same state. Maybe Senators should be paid at least double for their work or maybe 10 times as much in a large state such as California or Texas. After all, when a state such as California has 37 million people living there as opposed to 563,000 people living in Wyoming, the 2 California Senators have about 74 times as much work to do representing them, correct?

There is no 'magic' pension plan or medical benefit package available 'only' to Members of Congress and US Senators as one particularly idiotic email about the '28th Amendment That Should Be Passed!' which seems to have circled the globe in cyberspace at least 100 times asserts that 'they do!'

They don't. And here's the place for you to go to find out more: The Congressional Institute's great website called 'Mythbusters'.

Prepare to have all your preconceived notions about Congressional benefits popped like a balloon.

But getting back to Congressional and Senate salaries, everyone of them have to use those funds to:
  1. pay for their expenses to maintain their home in their home district; 
  2. pay for a place to live in the very expensive Washington market;  
  3. put their kids through school and college like other people in our country; 
  4. raise their families during the time they leave their other line of work in the 'real world' to enter politics and help try to save this republic of ours.
So it is more like they get paid $87,000 per year to maintain a home and support a family in their home district or state and $87,000 per year to pay for a home in Washington, DC.

Those are big numbers for millions of people struggling in this extended recession that just will not go away.  But if you think you have the experience, background and training to go to Washington and solve the complex immense problems of the budget, financial reform and foreign affairs, try working out a household budget sometime based on the numbers above.

Bet you come to the conclusion you won't do it in about 15 seconds.

I took a job as chief of staff to a congressman from North Carolina in 1985 (which I was thrilled and honored to do); took a 40% pay cut from the job I had in North Carolina to move to Washington, DC in less than 2 weeks time and eventually bought a townhouse in Arlington, Virginia that had less than half the space of the home I had in Durham, North Carolina...and which cost 3 times as much to boot.

There is a cost associated with working as a public servant, especially a young person working on Capitol Hill.

Which brings us to the congressional salaries LegisStorm has now announced the electronic publication thereof.

We would have ZERO need to pay ANY staffer if all of the following were not asked of them to do:
(By the way, most of the congressional staffers are fresh out of college. The average age of congressional staff people is around 23 today and perhaps 25 in the Senate. So how does that make you feel today when you are concerned about having experienced people on Capitol Hill help balance the budget?)
  1. Get a lost Social Security check for your grandma
  2. Get a visa and passport overnight for you since you 'forgot' to get one for your next trip to China or the Maldives
  3. Write legislation on any issue of concern to you
  4. Answer ANY of the 10,000 pieces of mail that come into a US Senate office each week or the 5,000 emails that come in each night or the 3000 automated faxes or answer any of the 1000 phone calls per day, multiplied times 10 when an issue is on the floor for a vote
  5. Help you get tours set up for your family when you visit Washington
  6. Take you on a personal tour of the US Capitol during said-same trip
  7. Help get information from the Pentagon on a relative who might be wounded in Iraq
  8. Balance the budget
  9. Push for the passage of the Greyhound Racing Act that you are so concerned about
  10. Argue with you about whether or not a bazooka or a Stinger missile should be re-categorized as a 'firearm' so you can own 1 or 2 of them in your local hometown under the freedoms guaranteed you in the Second Amendment. (Don't laugh. It happened. On more than one occasion)
So, any takers yet to go up on Capitol Hill as a congressional staffer? If I was still a chief of staff, I might could offer you today a starting salary of perhaps $25,000 right out of graduating from Duke University or Harvard, maybe $30,000.

If you had any relevant extensive experience in the field of interest my boss had interest in, such as banking since he was on the banking committee, I might be able to offer you $45,000 to start as his banking legislative assistant so you could spend hundreds of hours going to committee briefings and hearings to hear more testimony about Dodd-Frank, Glass-Steagall and God-Knows-What-Else.

Any takers? Send me your resume through the comment section below and I will forward it to anyone I know in Congress. I promise.

Congressional member and staff pay is one of the easiest things to focus on and 'hate' about our wonderful democratic republican form of government. Sure, there are some excesses in the legislative branch that could and should be culled back just like in every other part of the US budget today.

But it is not the boogeyman many try to make it out to be. 95% of the people on Capitol Hill, members and staffers alike, are well-meaning, serious, principled, motivated people trying to do what they think is right for the nation.

Just because Congress has failed to balance the budget, for example, is not reason to get mad at them and hurl insults their way over their pay.  Just vote their bosses out of office in 2012 and then see if you can help find better people to take their places and try it your way.

If anyone still wants to do any of those jobs for those salaries we have just now highlighted and given you some insight into the work you will be doing for the public interest, that is.

Let me know if you apply to take a job in Washington after learning these facts.  It is either that or stop complaining about how much they are being paid.  They are doing us all a big favor by offering to work as a public servant even for a short while.

Saturday, December 10, 2011

'The 'New Majority' Among Us' By Lee Atwater

Lee Atwater, love him or hate him, was a unique piece of work in American political history.

He was a South Carolina-born, guitar-playing rhythm-and-blues politico who helped start dozens of Red, Hot and Blue Barbecue restaurants around the South.  He also happened to help, in his spare time, Ronald Reagan and George H.W. Bush 41 get elected President of the United States along with hundreds of other US Senators, congressmen and governors.

There have been many imitators of the inimitable and sometimes harsh scorched-earth politics of Mr. Atwater but none have come close to commanding the political field like he did in his short 40 years of life on earth. Not Karl Rove. Not James Carville. And certainly not Dick Morris.

In 1986, Lee Atwater was the campaign consultant to former US Congressman Alex McMillan of North Carolina for whom I served as chief of staff for a decade. NC-9 was the #1 targeted congressional race in the nation as designated by the NRCC and the DCCC, the respective national political organizations dedicated to electing a majority of their candidates to the US House of Representatives.

We needed him and the very best campaign talent in the nation to help hold that seat since Mr. McMillan won his first race against formidable foe, D.G. Martin, in 1984 by a mere 321 votes. He won re-election with 4221 votes, a virtual landslide in a terrible year for Republicans nationwide.

We are not going to rehash that long-ago battle here today.  It was 'intense', let's just leave it at that.

We do want to point out a very prescient statement Mr. Atwater made back in 1986 while we were walking around the entire circumference of the City of Alexandria one day, mostly because Lee had so much energy coursing through his body that he could not sit still for more than like 5 minutes at a time.
'In 25 years, the predominant majority in American politics will be 'socially libertarian and fiscally conservative'. And neither the Democratic Party or the Republican Party will be able to get in front of that massive parade.' 
Let's get the obvious math out of the way for effect:  1986+25=2011.  So whatever Lee said in 1986 is supposed to be happening right now, correct?

He went on to describe how the political parties were going to be taking increasingly strident positions and tones over the ensuing quarter decade: the Democrats on expanding and maintaining the social welfare state while 'soaking the rich' to pay for it all; the Republicans on cutting taxes, maintaining a strong national defense and ending abortion, just to name one of many social issues that the religious right was just then getting into politics to solve in the 1984/86/88 elections.

Sound familiar?

The reason why we are bringing all this up today is that we have been struck recently by just how many people are clearly identifying themselves as 'not Republican' and 'not a Democrat' but as an 'Independent' or 'Unaffiliated' for voting registration purposes.

In two of the largest counties in North Carolina alone, the officially registered-to-vote rolls show that 30% or so of the officially registered voters are now registered as 'Independent' or 'Unaffiliated'.  Registered Democrats hover around 41% or so and Republican registration ranges between 24-28%.  A smattering of Libertarians and Whigs fill out the remainder of the officially registered voters.

We are not sure what the breakdown of the 'unofficial registered voters' in North Carolina are but we heard that 2200 deceased people voted in the 2010 election along party lines as well.  Voting illegally is not as hard as you might think it should be.

Here's the real reason why we wanted to bring this to your attention as we come to the close of 2011 and head into what is sure to be one of the most expensive, nasty and yes, vicious, presidential campaigns in American history:

'Where are you on the move to Independent voting status and political affiliation?'

We lost count about 1 year ago as we were talking with people about what party they were a member of anymore. Hundreds of former Republicans we know pretty well long ago went down to the local board of elections and changed their registration from R to I.  Dozens of Democrats have done the same thing.

We hear from virtually every person that we speak with that: 1) they are dissatisfied with both political parties (hence, the ridiculously low 8% Congressional approval ratings today); 2) they just want Congress and the President to 'get something done!' on this budget impasse before it swamps us all, rich and poor alike and 3) 'there has to be a better way!'

Almost every single time we speak with a person or group of people nowadays, we hear the following words come out of their mouth, almost eerily as if they were channeling Lee Atwater's predictions of 25 years ago:
'I don't really care so much about whether two men or women are sleeping together as I am about the inability of Congress to balance this budget and end this humongous $14.7 trillion national debt!
'I am for protecting America and defending our borders but we have spent way too much time and money in Iraq and Afghanistan at the same time we have been wrecking our nation's economy!' 
'If Congress and the President would focus more on cutting out wasteful spending and reforming entitlements like by raising the retirement age, I would support higher taxes in some form or another like the elimination of special tax loopholes for everyone just so we can finally say we have 'fixed' the budget and move on to fixing our economy.'
Sounds like a lot of people are now more socially libertarian in their outlook towards social issues than in the 1980's and '90s when the Christian right joined with traditional small government, low tax, strong national defense hawks like Ronald Reagan to form massive winning majorities at the presidential level. Even President Bill Clinton himself was able to connect with many Bible-believers in the South mainly because of his Southern charm and experience as an Arkansas Governor for 2 terms.

But guess what? This budding majority, if that is what is going on here, has nowhere to go politically in America in 2011. Nowhere. Nada. Zippo.

If you are 'socially libertarian', you are labeled a 'RINO' by many in the Republican Party and the Tea Party. Whatever that means. Ronald Reagan was a 'RINO' by the same definition: he signed bills that contained tax hikes, 2 of them massive tax hikes, 11 times between 1981-1988.

And if you are fiscally conservative, there is no room for you at the inn near the Democrat Party manger either. The last time they proposed any substantial cuts to anything other than defense was, well, never! And to see them fight vehemently against even the most sensible of all spending cuts and entitlement reforms in the recently discarded-to-the-trash-heap-of-history recommendation of the Bowles/Simpson Commission was truly a sickening moment in American political history.

There will be no one from the first decade of the 21st century to write about in a future edition of 'Profiles in Courage', will there?

So, maybe Lee Atwater was a prophet, a soothsayer and a crystal ball gazer to boot.  If the officially registered percentage of Independents is 32% today, (it was 4% in 1992 when Ross Perot won 19% of the general election vote but no electoral votes), it doesn't seem like too much of a stretch to imagine 10% of now-Democrats and 8.5% of now-Republicans voting for great Independent candidates across this land, if there were any running, now would it?

Successful people like the George Washingtons, Thomas Jeffersons and James Madisons of our day (they didn't 'have to run' back then either you know, but aren't you glad they had the guts to do so for our sakes today?).

You know who they are. They are all around you. The ones with the courage and guts to say:

'I am willing to run for public office and do the right thing and stop signing pledges and listening to unelected people who do not have the guts or kahunas to run for public office themselves!

The only oath I am ever going to sign is the one I will take when I get sworn in as your next Congressman or US Senator:
'I do solemnly swear (or affirm) that I will support and defend the Constitution of the United States against all enemies, foreign and domestic; that I will bear true faith and allegiance to the same; that I take this obligation freely, without any mental reservation or purpose of evasion; and that I will well and faithfully discharge the duties of the office on which I am about to enter: So help me God.'
There is nothing in here about never considering any new taxes.  Nothing about protecting SS and Medicare 'or else some burly senior citizen is going to come to your office and kick your butt!'

Isn't that the sort of representative you want to send to Congress to solve all these problems these current incumbents have completed swung and whiffed at for these past 10 years?  It sorta looks like Romper Room up there nowadays, doesn't it?

It is time to send 536 new people to Washington in 2012.  Maybe they will all be part of the 'Lee Atwater Revolution' he predicted in 1986. It can't come a moment too soon.

Sunday, December 4, 2011

'Suppose You Were An Idiot....

And suppose you were a member of Congress.  But I repeat myself.' (Mark Twain-'Biography')

We Americans often make fun of our elected officials, sometimes too much.  It is part of the our collective American heritage and DNA to not take any centralized concentration of power in any elected official 'too seriously.'

After all, the very best and smartest leaders we had in 1776-- Jefferson, Madison, Washington, Franklin, Adams all agreed that the young American colony should rise up and revolt against the capricious behavior of King George III and the British Empire to declare independence for our new nation.

After that, there was no way in Hades the citizens of the United States of America were ever going to bend over backwards and just give any President, or any Congress or elected Senate 100% obeisance and dutiful homage without reservation, directly or humorously.

If you have been following the news lately about the inability of Congress and the President to come to any sort of an agreement on the budget, however, you may come to the same conclusion as Mr. Twain himself.  And mean it this time.

Especially if you are a conservative, low-tax, strong national defense true blue believer.

Because the 'conservatives' of this Congress have painted themselves not only into the 'proverbial corner', but into the 'actual outhouse' of budget negotiations.

Here are two hard-rock certain realities in American public policy today that will directly affect you, the American citizen and taxpayer in 2013 absent any legislative changes between now and January 1 of the same year:
  1. Your taxes will go up effective December 31, 2012 at midnight.  Happy New Year!
  2. The budget sequester will cut major portions out of the existing defense and domestic budgets but more out of defense due to the way it is structured.
If you want lower taxes and a full defense budget, guess what?  As of January 1, 2013, as a result of these last several 'major' budget negotiations and deals in Washington, DC, absent any legislative changes, you. will. lose.

President Obama didn't veto the extension of the Bush Tax Cuts in December of 2012.  He ALLOWED them to be extended for every millionaire and billionaire in this country, completely contrary to his promise to 'raise the taxes of the wealthy and make them pay their 'fair share' (whatever that is).

Not only are these lower tax rates scheduled to expire on everyone, rich and medium-income, 24 million more Americans will be socked with the dreaded AMT (Alternative Minimum Tax) absent any further legislative action in the next 12 months.  Read about it and weep.

If you are an Obama supporter, you have to be cackling like a happy hen nowadays.

If (when) President Obama wins re-election in November, 2012, you get to see all of your dreams, beyond the national health care plan that is now law called 'Obama Care', go into full fruition:  1) higher tax revenues coming in to the tune of $4 trillion over the next 10 years and 2) the defense budget being gutted far above what is going to be a lower baseline simply due to the phase-down of troops in Afghanistan.  Full withdrawal is expected to be completed by the end of 2014.

Why in the world would President Obama want to negotiate against himself and his party's stated principles in 2012 heading into a presidential election and do anything with the Republicans in the upcoming year?  He has already 'won' on everything he wanted, hasn't he?

If he just lets the Bush Tax Cuts expire on 12/31/12 after his re-election, our projected budget deficits will plummet to about 2% of GDP, down from 8.5% of GDP this year in 2011.  See it for yourself at CBO Projections. (Remember, the 'baseline' already includes higher revenues from the expiration of the Bush Tax Cuts because that is 'current law')

President Obama could then take credit for being one of the greatest deficit-cutters in American history.  And he would not even need the acquiescence of the US Congress....all he would have to do is veto any extension by December 31, 2012.

His only Achilles' Heel is the fact that the expiration of the Bush Tax Cuts will really sock it to the middle-class with higher taxes that he has also 'promised' he would never raise on them.

But so what?  He is our duly-elected leader.  He has also 'promised' to bring our deficits down to less than half of what they were before he took office, especially since that dastardly old President Bush and a GOP Congress had raised deficits to about 3% of GDP in 2008 when he left office.

The ONLY way we see ANYTHING happening in 2012 is if President Obama's 'Chicago Guys' get a strong whiff of the swamp gas called 'Taxpayer Anger' in 2012 when everyone starts to figure out that their taxes are indeed going to skyrocket at the end of the year if nothing is done in Congress.

Then you will see the GOP work out a more favorable defense budget (meaning more spending and less cuts) with President Obama because they also want to extend ALL the Bush Tax cuts again and Obama wants everyone to keep their tax cuts...except the wealthy, yada-yada-yada.

In the end, we see the tax cuts being extended for the less-than-wealthy, the defense budgets being fully restored and some of the very-high end tax breaks for the wealthy being curtailed on a single-shot basis.

The budget deficits, however, will remain in the 5%+ of GDP range for the rest of this decade. Alas.

What did you think would happen? President Obama, the GOP House and the Democrat Senate all of sudden become President George Washington, Thomas Jefferson and Henry Clay all at the same time and do something heroic for our nation?

Even Mark Twain knew better than to expect such a ridiculous outcome.

Sunday, November 27, 2011

The Pyrrhic 'Victory' (sic) of the Tea Party...and Progressives and President Obama

Nobody ever won a war with a string of Pyrrhic victories.  You remember King Pyrrhus, he who 'won' two major battles with the Romans only to 'lose' in the long run because he ran out of men?

Just like no football team ever won the national championship with a string of 'moral victories' (meaning 'close losses'. see Duke University, circa 2011).

We try to give you as much information, some off-the-wall admittedly, but important nonetheless, so you can make your own decisions about political goings-on in Washington.

Or plan to hunker down in a bunker somewhere with a hoard of gold, food and water and wait til this 'madness' is all over and done with.

Unfortunately, it is not 'over-and-done' with. Not by a long shot.

Did the Tea Party 'win' by the lack of an agreement by the now disgraced 'Super' Committee? How about the Progressive Liberals...did they 'win' anything due to the lack of any agreement?  How about the GOP in the House and President they now look like heroes or chumps in the eyes of the vast majority of the American populace, those who can still think and see things clearly and are not totally blinded by the poison of partisan politics on every single issue?

Let's look at this objectively as if you just landed on earth in a space ship:

The over-riding #1 Problem We Americans Face Today?  The Profound Budget Deficits And Debt.

Did anything that happened, or failed to happen, over the past 3 months, 6 months, 12 months, 3 years do one darned thing to stop this problem or even arrest its acceleration any at all?

If the question is posed as this: 'Are we any closer to solving the debt explosion now than we were in the past 3 years?', the answer is a resounding 'NO!', isn't it?

The Tea Party has 'failed' in this regard. The GOP has 'failed' in this regard. President Obama most certainly has 'failed' in this regard. The Progressive Liberals who are the majority party in the Senate have 'failed' in this regard as well.

We are being run as a nation by 536 collective 'failures' right now to address the biggest threat to our economic and national security we have seen since the Great Depression and WWII.

Our father and grandpas 'saved' the world from the Nazis and Imperial Japan in 4 years. Their generation of 'real' leaders made a lot of very difficult, tough decisions very quickly and they all made a huge sacrifice for the good of the nation. Many chose to enlist in the armed services when they knew they might not be coming back to their homes and family.

We, our current generation, have been running our great nation into the turf for the past 10 years now by not being smart about our fiscal decisions in Washington.

How does that make you feel when you read this blatant fact?

We need people to represent us in Washington who will 'solve the problem' and not worry so much about whether they are going to be re-elected or not.

Memo to All Current Incumbents in the White House, the US Senate and the US Congress: 'You are not that important! Especially not when you fail to solve our most pressing issues.'

You can be replaced. And you should. In 2012. In the primary or the general election by someone who can and will cut the deals necessary to solve our fiscal problems.

Take a look at the following chart based on most recent CBO projections of our debt with and without the sequester. This is the 'actual' debt outstanding to the public that has to be paid each month with 'real' interest payments, not the 'fake' intragovernmental debt like the so-called Social Security 'Trust Fund' that is never really going to ever be paid by with real money:

Despite the hand-wringing you are going to hear from all sides about the draconian cuts to their favorite part of the federal budget, the outstanding federal debt is expected to go up by close to 30% over the next 10 years.

So it is a little hard to believe that the cuts are going to be so terrible when the debt is still going up 30%, isn't it?

How can anyone in the Tea Party, the GOP, the White House or in the Democratic-controlled Senate claim 'victory' in the aftermath of the Super Committee and Congressional 'Failure' recently?

People in the Tea Party and the GOP will claim that 'Well, we prevented taxes from going up!' That you did.

People on the progressive liberal side of things, including President Obama will shout at the top of the rooftops: 'We saved Social Security, Medicare, Medicaid and every single domestic discretionary program we all love to grow and expand!' That you did as well.

But claiming 'victory' on such matters when our nation is at total risk of becoming the next Greece, Portugal, Spain, Ireland, Italy or Zimbabwe due to excessive debt and possible hyperinflation (it can happen you know, and when inflation does rear its ugly head out of that snakehole, there is zero legislation that can be passed to arrest it), then that is truly a Pyrrhic 'victory' (sic) by anyone in Washington now associated with the Tea Party, the GOP, the Democrat Party and the White House.

We have a US Congress, Senate and White House now made of up of people who apparently do not understand: 1) how to win 'The Big One!' or 2) The immense gravity of our current situation.

The main question you have to ask each incumbent when you see them on the campaign trail is this:
'Have you done anything that will reduce the future deficits and accumulation of debt by 1 penny?'

And since the answer so far is 'NO!', you can shake their hands and say: 'So long. It has been so nice to know you.'

As we said at the outset, it is up to you to decide what to do with the information we give you. Like run for office yourself and/or vote for a solid reasonable candidate opposing these 'failures' in the primaries and general election of 2012.

It is up to you. We don't have time for any more 'Pyrrhic victories' by any side of the political spectrum.

Tuesday, November 22, 2011

Is Anyone Surprised By The Failure of the So-Called 'Super Committee'?

Well, the Super Committee has failed to do its job.

Is anyone really that surprised? It is such a sad commentary on the lack of real statesmen and women in our federal government today from the White House to the US Senate to Congress.

They have folded their tent due to 'irreconcilable differences' between the 3 Republicans and the 3 Democrats on the committee. Sounds like a bad marriage, doesn't it?

Why didn't these leaders in Congress, which now 'enjoys' (sic?) an 8% approval rating in the American public eye, come to some agreement at the very minimum to save some face and prove that American representative democracy still offers the last great hope for mankind on earth?

We think there are a few basic reasons:

1) There was no immediate 'pain' associated with failure.  The automatic 'sequesters' or spending cuts, where 50% will come from the defense department are not scheduled to take place until FY 2013, almost a year from now.

A year is a very long time in politics and government. Waiting that long gives Congress and the President every chance possible to rewrite the law; try to figure out a way to neuter the sequester and find yet another way to avoid making the tough decisions we elect them to do.  They are good at that, aren't they?

We wonder what would have happened if Father Abraham (not Lincoln) had given the Hebrew men a full year to think about whether they would accept the terms of God's Covenant with them.
'Ummm, Abe, that is a mighty big sacrifice you and Jehovah are asking of us here.  I mean, can't He come up with a better way of us showing our faith in Him like wearing a badge or painting something on our foreheads instead of, well, using a sharp rock or shell to circumcise us?  Can you give us a full year to think about it first?
(Abraham would have never become the Father of Anything under those circumstances)

2) President Obama completely abdicated his responsibility as Chief Executive Officer of this nation to work with Congress and provide leadership for this Super Committee process. He started the process when he set up the Bowles-Simpson Commission in 2010 but failed to follow through and ask his fellow Democrats to introduce the Bowles-Simpson recommendations in legislative form earlier this year.

Apparently, he completely washed his hands of this process and did not participate in any of the negotiations this summer and fall. According to Keith HennesseyPresident Obama and his Treasury Secretary Tim Geithner spent more time negotiating with the European governments about reducing their budget deficits than he did with his own American government!

What is the deal, Mr. President? Is the fate of Europe more important than the fate of The United States of America, the country you took an oath to lead and protect against all danger?

3) There is not enough of a groundswell politically to rid ourselves of people now sitting in Congress who do not grasp the enormity or gravity of the fiscal and economic dilemma we now find ourselves deeply mired in.

When was the last time you got a solicitation to support a group called 'Get Rid of The Deficit, Now!'? You surely have seen commercials from the AARP growling that 'if anyone touches our Social Security or Medicare benefits, we will kill you!' or something to that effect.

You surely have seen news stories or read about Grover Norquist's 'Tax Pledge' (which makes us laugh every time we hear it as we remember Douglas C. Niedermeyer's famous words to Flounder in 'Animal House': 'A pledge pin! On your uniform? Just tell me, mister, what fraternity would pledge a man like you?') 

We often wonder what would happen if a duly-elected sitting incumbent US Senator or Congressman just said: 'You know what?  In the best interests of this nation that I love and have the honor or representing, I am going to vote for this package of $10 trillion in spending cuts in return for a $1 tax hike on the head of every single taxpayer in this country'.

Would Mr. Norquist be duly chastened and embarrassed?  Such a simple trade-off exposes the weakness of the tax pledge; anyone who would reject such a deal would be lucky to even qualify to get into an insane asylum because people would think they were too nuts in the first place.

Or would Mr. Norquist go after said Senator or Congressman with tooth and nail like some crazed bully after he had been punched in the mouth?

No one looks good in this. Not President Obama.  Not the Democrats who control the Senate. Not the GOP which controls the House.  No one 'wins' when every part of our elective government looks like spoiled (and not very smart) school children hurling sand at each other in the sandbox at recess time.

We think the time has come to just unlock the floodgates to the dam that has been holding back many people from going down to their local Board of Elections today and change their registration to Independent. That way, neither the Democrats nor the AARP on the left or the Republicans and the Tax Pledgers on the right can hold you captive from supporting smart, reasonable people who can see this economic conflagration for what it truly is, which is a direct threat to the future economic health and prosperity of this nation.

And stop sending money to any organization like the AARP or Grover Norquist.  Send your money only to people you think are sentient, coherent people with experience in the private sector with integrity who decide to run for public office against the seemingly brain dead people who are now representing you in Congress.

Like in 2 months.  Next year is the year.  Maybe, just maybe, the good people of this nation will run against every incumbent in every congressional primary and general election, maybe dozens at a time and finally get rid of the people who have gotten us into this mess and who now are not doing a darned thing to get us out of it.

Nothing.  Nothing at all.  Not very inspirational, is it?

Thanks, President Obama and the US Senate and Congress.  For showing us how brave people in the past had to have been to make the sacrifices they did to get us to the 21st century.

Because you guys are not up to the job.

Saturday, November 19, 2011

‘The Chicago Guys Would Not Let Me Do It’

A very high-level and important person that you may know personally or have heard of said that this is the answer President Obama gave when he was asked why he did not introduce the Bowles-Simpson (let’s call it ‘BS’ for brevity’s sake) recommendations as a bill in the US Congress.

'The Chicago Guys would not let me do it'.

Just who is the President here and who are the minions serving whom?

President Obama might have had the best of intentions when he officially signed the document creating the BS Commission by Executive Order 13531. We’ll give him credit for that at least, although at the time, we speculated on January 29, 2010 that this commission would fail just like the other 18 before it. (see 'Graveyard')

But when the BS Commission failed to pass the recommendations by the required 14 votes out of the 18 members present in late 2010, President Obama still had it within his power to be the Chief Executive of this great nation of ours and ask the Democrat Majority in the Senate to introduce the BS recommendations and force a vote on the floor of the US Senate and then the US House.

It could have been one of the great debates of our time. A full-blown debate on what the proper size of our federal government should be; arguments about who should pay more taxes and who should not and an exposition of the grave dangers we are now facing should we fail to arrest the debt accumulation monster that is still multiplying and helps make this period of time one of the top 5 ‘financial follies’ of the past 800 years according to Harvard Professor of economic history, Kenneth Rogoff. (you need to read his book: ‘This Time Is Different’. Right. Now.)

Alas, President Obama blinked. And blinked again and again and again over this past year.  He has blinked so many times at taking real action to reduce this deficit that you really have to wonder if he is up to it at all.

The so-called ‘Gang of Six’ in the US Senate tried to take basic elements of the BS Bill and get them passed to no avail in 2011 as well.

Democratic Senator Mark Warner deserves special commendation for his courage to advance this approach. We wonder if it is because he is a businessman that he actually ‘understands’ the gravity of our current debt situation and trend lines whereas perhaps the other incumbents who are trial lawyers or not business-oriented simply can not fathom or grasp anything it seems.

But we now have it on good sources and corroborated by two people we respect and trust that President Barack Obama actually said the following words, in some fashion or another, when asked why he didn’t just get someone to introduce the BS Bill regardless of whether the Commission passed it or not with the requisite number of votes:

‘The Chicago guys (meaning his political advisor David Axelrod, among others) told me that if I did that (introduced the BS Bill), I would not win re-election in 2012.’

Honest to God Above. Our current sitting US President, the highest office and honor in the land, admitted that he lacked the courage to help save our Republic because his ‘Chicago guys’ told him not to touch it with a 10-foot pole.

Ladies and gentlemen of the jury: That is exactly what we elect our Presidents to do! And if they don’t lead, why keep them in the office?  Why is he listening more to David Axelrod and David Plouffe than to what he must know is the 'right thing' to do in his heart which is to reduce these enormous deficits?

Ronald Reagan came into office as a ‘small government, lower tax, strong national defense’ President. He achieved 2 out of 3. (Guess which one he fell short on)

But when he was forced to make a decision, he ‘led’. He got bills introduced. He negotiated with Congress.  He sent his congressional liaison teams to Capitol Hill to lobby for his position.  He called reluctant Congressmen and Senators to urge them to 'do the right thing for the country'.  He signed bills that raised taxes 11 different times over his two terms in the Oval Office. Each time, he told Senate Majority Leader or Republican Leader Bob Michel in the House to ‘get 75-80% of what we want, maybe 65%, and then I’ll sign the bill and we will come back next year to get more of what we want.’

That is the way our democratic republic is supposed to work. A President and Congress can raise taxes….and then come back to repeal them the next year. They can raise spending…and then come back to repeal and reduce that spending the next session of Congress.

It is a fluid process. But it needs a strong President in the White House working with all sides in both the House and the Senate who is actually taking risks to ‘lead’ the entire nation to economic health, prosperity and freedom.

Today, in the news, we learned that President Obama has basically taken a complete 'hands-off' approach and said: 'This is Congress' problem. Call me when you get something done...but not when I am on vacation or playing golf somewhere nice and sunny'.

By openly admitting that he failed to do so because his ‘Chicago Guys’ told him not to, President Barack Obama has demonstrated he is unfit to run this great nation of ours, in our humble opinion.

Nothing personal. He actually seems like a nice guy to have a beer with or shoot some hoops with and we hope his daughters grow up to be wonderful mature women who do honor to their examples as young women growing up in the public glare.

But this is the tough job we elected him to in 2008. He has succumbed to political advisor pressure when all he had to do was look at the portraits of Lincoln, Washington and Jefferson around him in the White House and realize that he had a chance to do something important and wonderful and marvelous to help save this great Republic of ours.

He blinked. And now, we need to find someone else to take his place who will not ‘blink’ and who will take action.

Erskine Bowles ran for the US Senate twice and lost from the Great State of North Carolina. But he, as well as Alan Simpson have shown tremendous courage and stamina in this whole BS process.

How about this: ‘Erskine Bowles. For President. Of The United States of America. 2012.’

Democrats: There is your man to run against the Republican candidate whoever he might be. At least we will know that 2 people running for President in 2012 will be serious about solving our deficit/debt dilemma.

Instead of only 1.

Thursday, November 10, 2011

When Football Stars Become Real American Heroes

My father, Dan Hill, Jr., was also known as 'Tiger'. For his fiery play on the football field back in 1936-1938 when he played center and middle linebacker (they played 60 minutes back then) for the undefeated, untied and unscored-upon Duke University 'Iron Duke' Blue Devils.

Imagine that.  Back then, Duke University was associated more with prominence in college football than in basketball, by a long shot.  The young school, started only 12 years earlier in 1924 in Durham, North Carolina, was coached by the legendary Wallace Wade and was regularly in the top 10 along with other prominent names such as Pittsburgh, Alabama, Southern Cal and Notre Dame under Knute Rockne.

He was an All-American and is now enshrined in the College Football Hall of Fame in recognition of being the real football star that he was.

His generation, our fathers and grandfathers, did not lead the life of leisure that many, or even most of us, have.  Even this desultory recession that just seems to want to linger on doesn't even come remotely close in orbit to the Great Economic Depression those guys and our moms and grandmoms suffered through for 10 long years before they were plunged into the largest and most terrible and horrific world war the world has ever known.

With this year's Veterans Day upon us, we thought we would try to fathom the sacrifice men like my father and millions of others made to insure our freedoms in this great democratic republic called America. We many times take America for granted that it will 'always be here' doing what it always has done:  allow a prosperous free people to pursue their hopes and dreams in life as they choose.

Dad served on the USS Lexington, the massive aircraft carrier as a lieutenant commander in the artillery division. Just to show you how little Dad ever talked about his war experience, which was never, consider this:

It took a meeting with John Hanford of Charlotte in 2002 for me to have ever known the circumstances and even the place where dad was burned over 70% of his body when the Lexington was hit by a Japanese plane.

In 2002, I was helping then-US Senate Candidate Elizabeth Dole on her election campaign against Erskine Bowles, specifically on policy papers and debate preparation.

One day, we met in Charlotte at the home of her older brother, John Hanford and his wife, Bunny.  John had been at Duke when Dad was playing on the football team and knew him socially as well from the on-campus and fraternity scene.

As we were speaking, Mr. Hanford said:  ‘You know, I was on the Lexington when your dad was evacuated after we were hit.’

‘I did not know that’, I said, mainly because no one ever told us the details of what happened, when and why especially since Dad had never done so.

All we had ever seen in our den closet was a small case where Dad had his 2 Purple Hearts stored. They are quite the sight to see and very striking when you first open the case. But as a kid, you just can never grasp the context or the enormity of what you might be holding in your hands unless someone stops and tells you point-blank.

John went into some room of his house and brought out a scrapbook of sorts and pulled out a map of the Philippines where The Battle of Leyte Gulf was fought in 1944.

‘Right there, where that X is, you see it?  That is where we were when your dad was hit by flaming oil from a Japanese plane that hit the tower in which he was directing artillery fire.’

Inside of my head I was thinking to myself: ‘Mr. Hanford, are you telling me that my father who had been a college football star and an assistant AD and chief football recruiter at Duke University was trained; shipped out; placed in command of the artillery unit on the largest carrier the United States had left at the time and was in active combat fighting for our freedom in the largest and greatest world war mankind has ever known?

We just can’t hardly grasp the magnitude of the challenges our parents faced in the immediate moments, days, months and years following Pearl Harbor.  How did they do it?

‘Yes, Frank, right there where the X is.  We were attacked by many Japanese fighters and bombers and one struck the tower where your dad was and he was severely burned over most of his body from the flaming oil from the Japanese plane that we had hit but that steered his plane right into the tower before it exploded.’

Now Dad had told us a few times that he had seen a Japanese plane that his artillery team had shot and hit almost go down near the Lexington only to turn up at the last moment and come close to the edge of the Lexington…and he had seen the edge of the wing cut off the heads of perhaps 100’s of sailors who were leaning over the side of the ship to see what was going on.

That was about as far as he would go with that story.  Ever.

But apparently, it must have been the same one that hit his tower and burned him over 70% of his body.

John Hanford went on to say: ‘Yes, I remember it like it was yesterday.  I knew your dad at Duke and we were good friends. He, of course, was the big football star and everyone knew him.

But I remember the day after the Battle of Leyte Gulf was over and seeing them pulley your dad over the open seas on a gurney from the Lexington to the medical rescue ship that had come alongside to take the most critically wounded off the ship first.

He was wrapped in white gauze from head to toe and the big thick wire cable between the much larger carrier and the tiny medical ship looked thin as a hair from where I was standing.  The big ship went up and the little ship went down as the waves filled and lowered beneath us.  All I can remember is thinking how small Dan looked wrapped white in that gurney and how all of us hoped he would make it across to the hospital ship without the cable breaking somehow and him being dumped into shark-infested waters out there.

When he made it across safely, me and most of the men on the ship cheered, just as we cheered every other wounded sailor who made it across that day.’

The USS Lexington was damaged beyond repair this time, far worse than it had been at Pearl Harbor so it was scuttled and sunk to the bottom of the Pacific soon thereafter.

Odd name for an ocean that saw so much terror and bloodshed over the ages and especially during the Second World War.

But that day in the home of John and Bunny Hanford in 2002 was the first time I knew for sure what had happened to my Dad in World War II, how and why.

He spent the next year or so in Navy hospitals on the west coast recovering from his wounds.  He had suffered 3rd degree burns over much of the 70% of his skin that had been burned and he had very translucent light Irish skin to begin with.  You can almost see the blue veins through the skin of many Irish guys, especially as they age.

Dad would cover up in a white sheet and cover his head with a hard African safari hat and spread zinc oxide over his gnarled nose and much of his face when we went to the beach and stay under a pitched tent of some sort.  It looked like he was enjoying it about as much as being in an outdoor torture chamber, truth be told.

After learning the extent of the pain and suffering he went through on the USS Lexington in 1944, I wish we had never bugged him about going to the beach or laughed at him when he came out of the cottage looking like a modern-day Lawrence of Arabia.

He was a real American Hero.  And not because of his football exploits this time around.

Wednesday, November 2, 2011


We believe that the OWS crowd has a legitimate beef with the Wall Street Barons who:
-Made all the financial/investment mistakes imaginable leading up to the Crash of 2008 that is still lingering with us;
-Ran to Washington to get bailed out; and
-Now have had all of their wealth restored and kept their jobs with the help of the US Taxpayer and the seemingly-oblivious Chinese and foreign sovereign lenders who keep shoveling money to the US absent any substantive reform at any level of business or government.

Here is something that the OWS crowd is finally getting around to that will really and truly make a difference though.  We suggest you consider seriously doing the same if you are 'mad' about anything and everything.

Apparently, the OWS crowd is suggesting that everyone transfer their checking and savings and business accounts away from the banks that made such disastrous decisions in the first place and then put them all in smaller community banks that did not engage in such idiotic behavior.

We. Salute. That. Approach!

Seriously. It is called 'market pressure'. The only way anyone in the world of business ever really 'gets' the message is when sales drop and revenues dry up and profits evaporate and their pay is threatened and reduced.

It is the only way.

For banks, it is also called 'disintermediation'. Meaning deposits dry up faster than dew on a desert flower in the morning. But it gets the attention of their senior executives fast and then they start doing anything they can to make you happy so you will keep your money with them and not with someone else.

Which brings us back to the AARP.

We think it is time everyone knew the real truth about the AARP.

They may not know it but their 'Burly-Man' ad we spoke of in the prior posting pretty much rubbed a lot of people wrong. Including several seniors we have spoken with over the last couple of days.

Besides being just basically 'offensive' in tone and manner, these responsible seniors said the ad also completely reflected a total lack of concern about the United States of America as a whole.

'They apparently don't care if we fall into another major economic/financial collapse or if we have hyperinflation or a weaker economy as a result of these devastating debts we owe as a nation' they said.

Why is that? Why would the executives of the AARP be so diffident about the future prospects of the United States of America?

The AARP started out as a noble mission: help poor seniors survive end of life circumstances with dignity.

We get that. We support that. Everyone does. Liberal, Conservative, Independent, the Martian who just landed on Planet Earth.

But what has the AARP become over the past 30 years of its existence?

A monolithic, monstrous health care insurance, car insurance, life insurance behemoth! $1.4 billion in annual revenues! What kind of benevolent charitable organization lobbying for the interests of Ma and Pa Kettle racks up $1.4 billion in annual revenues from any source?

Check out the compensation for their chief executive. 'Thomas C. Nelson, Past Ex-Officio/Past COO AARP Foundation; AARP, respectively $1,176,614. Includes a separation payment of $682,285. The full amount of Thomas Nelson's compensation was paid by AARP, not AARP Foundation.'

Wow! That sure is a lot of $10 annual memberships if that is all they are doing at the AARP. 117,661 seniors would have had to have paid the $10 annual membership fee just to pay one person at AARP, Mr. Thomas Nelson.

Sounds like Wall Street overcompensation to us.

We never thought of the AARP as a benign, saintly, Mother Teresa-type organization in Washington seeking to bring solace and hope for the downtrodden seniors of this nation.  They are a bare-knuckled, hardcore political machine that seeks to destroy any politician who dares speak the truth about our out-of-control entitlement spending programs.  We have seen them do it time and time again in this nation supposedly that worships 'free and open speech'.

They have protected Social Security and Medicare benefits for the less-fortunate, we grant them that.

But they have assiduously expanded the scope of both programs under the guise of 'protecting the elderly' when many seniors are now living much higher standards of living than their children who are struggling to keep up with paying for their highly-subsidized SS and Medicare benefits!

Again, why in heaven's name are we still paying for over half of Warren Buffett's Medicare benefits from the general taxpayer revenue and loans from China? He and millions of other well-off senior citizens 'don't need SS or Medicare and can take care of themselves!'

Do we have pass an Emancipation Proclamation for Seniors to free them to do so?

Here's what let's do today:

Everyone who reads this article, and agrees with it, please tear up your AARP card if you have one.

Send a note to the AARP in Washington that you will not re-join until they get serious about rectifying the out-of-whack budgets for SS and Medicare in the federal budget.

In addition, send this article to everyone you know on your email lists; Twitter accounts, Facebook pages and let's call this the virtual 'OCCUPY AARP' movement in cyberspace.

We don't want you to go camp out in the cold, sleep in dirty clothes or starve to death on hunger strike or anything hard like that.

We just want you to sit at your computer in the warmth and security of your home today and help 'starve' the beast called the AARP until their senior executives 'get with the program' and start supporting even some of the President's own Bowles-Simpson recommendations on entitlements that he has never properly introduced in legislative form for some odd reason.

If the AARP starts seeing the 'disintermediation' of thousands and then hundreds of thousands of sub-60 year old people (and above 60-year old people who agree with us), they will change their tune and they will change it fast.

They are just like the bankers on Wall Street. Send them a message. And keep it going til they change their ways.

Sunday, October 30, 2011

When You See That Macho 'Burly-Man' Senior On The AARP Commercials Threatening The Super Committee From Discussing Any Reductions to SS/Medicare.....

Show him this chart.
Chart C—Medicare Cost and Non-Interest Income by Source as a Percentage of GDP
You know the ad we are talking about. The one where the burly-looking senior looks in the camera like John Wayne and intones something to this effect:

'You mess with our Social Security and Medicare benefits...and we are gonna kick your butt!'

How is that for 'thoughtful, rational civil discourse' in America today, huh?

See it for yourself here: 'Burly-Man Senior Threatens Congress!'

We wouldn't want to face that guy in a showdown death match on the golf course or the shuffleboard court.

But here is the problem, ladies and gentlemen of the jury. Medicare never has and never will be 100% 'paid for' completely individually by any senior citizen for his/her coverage. Not during his or her working career. And most assuredly not from the monthly premiums they pay for the right to have Medicare Part B physician services.

Take a magnifying glass out and take a good long solid look at the chart above. In it, you will notice that, lo and behold!, in 1970, a mere 5 years after Medicare was passed, the program cost was virtually all covered by payroll taxes on then-working Americans (not the retirees themselves) and premiums imposed on the retirees themselves.

So far, so good as of 1970, right? Almost all paid for by the smaller payroll taxes on workers back then plus premiums paid for by the seniors who were on Medicare at the time.

But look at what happened to those two trend lines over the past 41 years since then. The payroll taxes on current workers, (again, not the retirees because they have already 'retired') has grown to account for about 1.25% of GDP. That is 'GDP' as in 'the size of our national economy'. Not percentage of overall health care costs or something 'small' like that.

Premiums on retired seniors have also grown, to an astounding 0.5%+ of GDP as well.

Since inception, Congress has added on taxation of retirement entitlement benefits on more wealthy seniors plus added certain state transfer funds and associated drug fees.

Add up all of those fees coming from payroll taxes paid by workers and premiums paid by seniors and they account for around 1.75% of GDP.

In a national economy that is still over $14 trillion despite this ridiculously long, lingering 'Second Contraction' as Harvard Professor Kenneth Rogoff calls it, 1.75% of GDP is a lot of money. $245 billion per year right now to be more exact.

Wouldn't you think that would be more than enough to pay for the medical needs of our less able and unhealthy senior citizens of America?

Not by a long shot. You, the American taxpayer, plus the still-willing (for some reason) lenders from China and other sovereign nations such as Saudi Arabia, foot the bill for over 50% of the cost of Medicare each year. The taxpayer subsidy part of Medicare is almost 1.5% of GDP today or another $210 billion per year.

Those are simply astounding numbers, aren't they?

And guess what? The Medicare Part A Hospital Insurance (HI) program is fundamentally broke today (that is what the {HI Deficit} brackets mean at the top of the chart)

This means that payroll taxes imposed on current workers are not even covering the cost of taking care of the elderly who need hospital care today much less setting aside anything for when the Boomers start to retire in full force this year and next.

And that all means that absent any substantive reform in Medicare this year beginning with the Super Committee's recommendations in November, your payroll taxes plus those of your children now entering the workforce are probably going to go way up to cover the shortfall.

Can you afford it? Can your sons or daughters readily find work in this troubled economy and then be able to pay a much higher payroll tax to support this already crumbling system?

Our suggestion to the 'Burly Man' in the AARP commercial is to send someone from the AARP with some diplomatic skills and appreciation for the dire straits our nation is now in financially to Congress and sit down with both sides and admit the following:
  1. The system is broke.
  2. We can't afford this system any more.
  3. Fundamental reform must take place now.
  4. Change Medicare so that it is 100% available for those seniors who can not afford health care at all on their own.
  5. Scale down any subsidy from the taxpayer to wealthier seniors as you go up the income scale.
  6. Warren Buffett and his mega-billionaire friends do not need Medicare and probably don't use it anyway since it limits their choice of finding the very best doctors and surgeons in the world to treat them when they fall ill.  So cut them off of the entitlement rolls.  We can't afford to subsidize poor people AND the super wealthy any more.
  7. Start a transition period whereby over the next 20 years, Medicare will become an income-support program based on income and household wealth when seniors will be able to use taxpayer subsidized funds to buy their own health insurance.
There are probably another 1000 things that can be done to fundamentally reform Medicare, much of which we have written about before but don't have room to do so today.

But this 'Burly-Man' AARP ad. It makes us want to burn up our AARP card because of the damage the AARP is costing our children and our children's children in terms of kicking the can down the road once again. Just like they have always advocated.

If we had an AARP card to begin with. Which we don't. You should burn yours up today as well. In silent but peaceful protest of their intransigence and inability to the see the forest fire out there for the trees.

Wednesday, October 26, 2011

Herman Cain's 9-9-9 Plan: Digging Down A Little Deeper

What is the MAIN reason why Herman Cain's 9-9-9 Plan has resonated so soundly with the Republicans lately?

And it has absolutely nothing to do with his race in case you haven't noticed that already.

How can there be so many 'white racist rich Republican people' in the nation and at all the country clubs around the country when Herman Cain is now leading white-as-Sunshine Bread Mitt Romney in the GOP presidential race?

Here's the answer:  'The 9-9-9 Plan  is NOT the current convoluted and corrupt US income, payroll, excise, estate (death), corporate tax system!'

'There just has to be a better way!' the primary voters on the Republican side are screaming at the top of their lungs.

Truth be told, this is at the heart of the Tea Party movement, the huge increase in registered and actual Independent voters across the nation and many Democrats as well.

The only people who seem to 'love' the existing tax code are the people who have learned to game the system and make full use of all the exemptions, loopholes and tax favoritism; the labor unions and guys like Chris Matthews of 'Hardball' and George Soros.

Wouldn't you love to see their tax returns to see if they are paying their 'fair share' according to the tax rules and not sheltering one thin dime anywhere!

Here's what the 9-9-9 Plan appears to do, although more details are 'forthcoming' which should have been prior to its publication:

1) Establishes a 9% flat rate income tax on all taxpayers.
2) Establishes a 9% national sales tax on all transactions, not just at final consumer purchase level but at every transaction in-process.
3) Establishes a 9% corporate income tax rate on all US corporations.

Embedded within this new regimen are the following assumptions of which you need to be apprised:

1) No deductions (except for charitable deductions) at the individual level.  Including home mortgage interest deduction. Including mortgage interest for your second, third and fourth homes.
2) No deductions at the US corporate level rate.  Including health insurance premium deduction; oil and gas depletion allowances; and ...oh goodness gracious!  There are close to 10 million words in the US Tax Code right now detailing hundreds of thousands of special tax breaks and favors that would be

K Street lobbyists in Washington, DC will be joining the 'Occupy Wall Street' crowds in tents.  Not by choice but because they will be unemployed and their PACs will be dissolved.  No corporate tax code to find loopholes in/No lobbyists needed/No PACs to pay for incumbent-protection programs.

3) All current federal payroll, excise, estate (death), sales, gas taxes would be repealed.  You would have zero $ taken out of your paycheck ever again for FICA, UI, and presumably, for your share of the health care premiums provided by your employer because they most likely would stop paying for your insurance once this huge deduction is wiped out.

You would be on your own to find the best insurance plan you could on the open market.  Or you could join the purchasing co-ops supposedly being set-up by Obama Care....unless it is not funded by Congress, which doesn't appear likely at the point.

4)  No taxes on capital gains, investment or dividend income or other personal savings accounts.  You will be free to invest in whatever business, stock, real estate or gold program you want without ANY concern or regard for possible taxation down the line.

5) What happens to the employer matching share of the FICA payroll taxes and the health care premiums they no longer will have to pay?  Well, it being the free enterprise system and all that, presumably the corporations and company owners could try to just keep all of that sudden-found windfall for themselves in terms of retained earnings and profits.

As long as every competitor does the same, there will be spectacular profits on the order of which American business may not have seen for a century.

But what happens the day one competitor cuts his price to gain market share?  Everyone else will follow suit in short order.  Revenues and profits will start to compress down to some new 'normal' level similar to what they were before this new tax reform tsunami hit.

What happens the day one of your competitors decides to use some of that new-found wealth to pay one of your workers more money to come work for him/her?  You either match it or lose a great employee.  And if the others see that you are unwilling to pay more money to keep them, they will start to leave in dribbles and then in droves.

In short, no one really knows for sure what will happen when and if a seismic change in tax policy hits America after the Inauguration of our 45th President, Herman Cain in 2013. The preliminary very negative projections have been done by the self-professed and designated 'non-partisan' Tax Policy Center which is hardly such a creature.  It is comprised of tax policy wonks from the Urban Institute and the Brookings Institution, neither of which has ever been very kind to radical tax reform ideas mainly because they like the current one just the way it is.

Most economic and econometric forecasts used in Washington are not 'dynamic' but 'static' meaning they can only focus on changing one variable at a time and can't predict very well what changes in human behavior will be to different incentives and policy changes.  There is no way to accurately forecast what businesses will do with their extra cash.  There is no way to really know exactly what someone will do with the extra cash in their pocket after these changes are made.

Our gut tells us that this 9-9-9 Plan has all the markings of setting up a titanic national debate in 2012 that we desperately need to have out in the public.  On the one hand, you will have President Obama defending the old and archaic and sclerotic current tax system, when you would think he, as a young, energetic President would be for something 'different' since this one doesn't work very well.

On the other, you may have another African-American, Herman Cain, promoting the most drastic and dramatic tax reform effort in America since the Kemp-Roth tax cuts advocated by President Reagan in the early 1980's.

Let the games begin.

Friday, October 21, 2011

Herman Cain's 9-9-9 Plan: 'Is It 'Wacky' or 'Constitutional'?

We have heard some pundits say that Herman Cain's '9-9-9' plan is a 'bad idea'.

'Compared to 'what'?', you have to ask yourself.

And you have to ask the brain surgeons such as Chris Matthews of 'Hardball' who deify themselves as the arbiters of all that is good about this great nation of ours.

(Why do the images of the Pharisees and Sadducees come to mind on the rare occasions we happen to catch Mr. Matthews harrumphing on a channel hardly anyone watches anymore?)

'Just how flipping 'great' is the current US progressive income tax system working out for ya, Chris?  With all the loopholes and exemptions, it looks like a case of moldy swiss cheese that is crippling the ingenuity and vigor of the American economy, especially now when we need clarity and certainty to get our economy going again'.

We heard Mr. Matthews sniff and snuffle and look down his nose at those who 'dare disagree' with him about how the 'grand tradition' of American public policy has 'long been the progressive tax system where people who earn more pay more of their income in taxes for the privilege of living in this great country of ours.' (paraphrased)

Oh, really?

Where in the US Constitution does it say anything about the vaunted 'progressive income tax system'?


Where does the 'progressive income tax system' come into play in the Declaration of Independence, The Emancipation Proclamation or maybe even going back to the Magna Carta, all of which are 'freedom' documents of the nth degree?

Let's take a step back into time and think about what the early settlers of America and the Founding Fathers were thinking when they were forming this new great land that we have inherited from them and their sacrifice and labor:

'Well, after we pioneer our way from the East Coast into the Midwest and fight all the Indians and the French soldiers and conquer this land, let's make sure we institute the 'progressive income tax system' so all of the people who took those risks pay more of their income for the things the rest of us all want.'

(Overheard at the crossing of the Delaware on a freezing cold Christmas night in 1776)

'You know, George (Washington), after we surprise the British here on Christmas day, we think the best thing we can do for this new republic we are fighting to start is to institute the 'progressive income tax system' so primarily only the rich people will pay for most of the huge public sector we are sure we are going to need down the road.'

Nothing could be further from the truth. They were fighting for freedom, plain and simple.

Much of that freedom was tied into being freed from the capricious taxation decision-making of King George III who seemingly popped out new taxes on the colonists like popcorn from a Jiffy Pop Popcorn aluminum bubble.

You know what the very first order of business was in the very first Congress in 1789?

Finding a way to pay for the new Republic.

You can look it up in the Congressional Record in the Archives in the basement of the Senate Dirksen Building. Page 1 of Volume 1 starts out with the call to order and then dives right into the issue of instituting and raising revenues to pay for the new country through import taxes.

What are 'import taxes', class?

Right. 'Consumption taxes' based on the importation of goods from overseas.

And who would be more likely to buy expensive perfumes from France and fine linens from England in 1789 America?

Correct. The rich people. The more they bought, the more taxes that were collected for the young republic.

Talk about 'progressive'!  We have a feeling that the wealthy back then paid perhaps 75-90% of all import taxes whether they were consuming the goods or importing them and then re-selling them to the general public.

Here's an interesting 'fact' that many people, including the savant Mr. Matthews, don't know:

In 1805, President Thomas Jefferson reported to Congress that revenues from import taxes in 1804 totaled $11.8 million for the past fiscal year. Expenses totaled $8.7 million for the young nation.

The surplus in 1804 was $3.1 million. Which is about $80 billion in 2012 terms.

All of the revenue back then came from import taxes. It stayed mostly that way in America up until the Civil War when Abraham Lincoln instituted an income tax to help pay for the Union side of the things in that bloody war.

Which was summarily repealed in 1872 after years of heated debate. Income taxes were revived in 1894. The U.S. Supreme Court ruled the income tax to be unconstitutional in 1895.

Congress proposed the 16th Amendment in 1909 to make the income tax constitutional and it was ratified in 1913.

Here is the entire text of the 16th Amendment:
The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.
It says absolutely nothing about the 'progressive' income tax system.  It could be a flat tax.  In fact, the first income tax system under Lincoln was a 'flat tax' of 3% on any income above $800 earned in a year so there is some precedent for the flat tax from one of our 3 greatest Presidents, yes?

So for over half of our nation's history, import 'consumption' taxes were the way we funded virtually all of our federal government's activities. 'Consumption taxes' have always been a part of the US landscape ranging from import taxes to excise taxes to sales taxes.

They all work the same.  And guess what?  They all produce far more income from people who buy more goods and purchase large consumer goods such as Bentleys than from people who purchase 30 year-old used Gremlins. If they were applied to new mansions as a true consumption tax would work if truly universal, a person buying a $10 million home might pay 9% in a consumption tax to the federal government at closing.

Today, he/she pays zero to the federal government for a purchase of a new home.  Or a Bentley.

More later on the details of the 9-9-9 plan as we get the chance to study it in more detail.

But the operative question we want to leave you with today is this:

'Are you willing to keep putting up with a bankrupt and corrupt current federal income tax system?  Or are you willing to try something simpler and more transparent and direct?

If you answer affirmatively to the second question, you need to take a deeper look at Herman Cain's 9-9-9 plan.