Thursday, November 29, 2012

Lotteries: 'An Appealing Tax On The Mathematically Challenged'

National Lottery To End All Deficits
'I find the concept of taxes that target the mathematically challenged to be especially appealing. 

This is in contrast to our present situation where the mathematically challenged design our tax code.' - Anonymous Ph.D

We caught a bit of lottery fever this week amidst all the hysteria about the $550 Million+ Powerball game that ended last night with 2 winning tickets sold in Arizona and Florida.

As the night went on, we found that the more and more we thought about the lottery, the more and more we think it might be the solution to our federal budget problems. And one that even conservatives might weigh in on positively.

No kidding.  Think out-loud and outside-the-box with us for a moment.

The quote above comes from a good friend of ours who is a double Ph.D in the sciences (engineering) and whom we think really wants to be a raging fiscal conservative but can't stand the social conservatism of the current Republican Party.

In fact, I would nominate him as one of the poster children for the budding 'new majority' that is building right now before our very eyes, the socially-libertarian/fiscally-conservative Independents who are registering as unaffiliateds by the millions across the nation where they can.

He is a math wizard so when I somewhat sarcastically noted that all we had to do was run a huge national lottery to balance our budgets, he responded with the quote noted above: 'I find the concept of taxes that target the mathematically-challenged especially appealing'.

Here's our line of thinking on this:
  1. Lotteries typically run on a 50/50 split:  50% of the revenues go to the government for whatever purpose their legislature and governor deemed 'appropriate' in the public interest. Enhanced financial support of public education usually comes first in each state.
  2. 50% of the revenues go to the lucky winner of the outrageously slim odds of lining up the right numbers for that particular drawing
  3. If last night's Powerball lottery generated over $1 billion in total revenues, what would it take to balance the federal budget with a similar stream of lottery money?
  4. $2 trillion since 1/2 or $1 trillion would go to the federal government to balance the budget. The other 1/2 or $1 trillion would go to some unbelievably lucky person or persons who band together to buy the tickets.
  5. What order of magnitude would that have to be relative to last night's Powerball?  'Just' 2000 times larger.
Ok.  That is a lot of money.  So is our current deficit situation.  Taxing the rich ain't gonna get us anywhere near balance. Maybe just over 5% of the way there if President Obama gets his Christmas wish come true and Donald Trump and his buddy Warren Buffett get stuck paying the same rate of tax they paid under President Bill Clinton.

'The National Super-Duper Powerball Lottery To End All Deficits Forever in the US'.

Even President Obama would support that, wouldn't he?

Everyone would be part of the solution.  Even those who now currently pay zero in federal income tax each year.

Why?  Because lotteries are well-known to be one of the most regressive of all taxes since lower and middle-income folks play the lottery at a much higher rate than upper-income, more educated taxpayers.

Apparently, no one on the progressive liberal side of the spectrum seems to worry too much about the negative impact lotteries have on the poor and disenfranchised.  They pour their meager resources into buying hundreds of tickets with the slim hope and prayer that it will lower their odds of winning substantially and no one seems to care about the 'injustice' of them doing that anywhere in the nation today, do they?

The odds of winning just doesn't go up appreciably by buying more tickets.  Just plain math tells you it is impossible to do.

As the professor says above, higher-income folks are less 'mathematically-challenged' and can recognize that you have about 170 times more of a chance to become President of the United States yourself or about 2000 times more of a chance to be hit by lightning than you do of ever winning such a big jackpot like last night.

The only fully 'mathematically-challenged' middle-or-higher-income people are the 535 individuals we send to the US Congress each session because they sure as heck can't subtract (but they sure as heck can add, can't they?)

One huge added side-side-benefit of this whole exercise?  When someone wins the $1 trillion in the jackpot by 'correctly' picking the string of 20 numbers in order like a long trifecta, roughly 30% of it would go right back to Uncle Sam in the US Treasury in the form of federal taxes!  How about that, ladies and gentlemen?

Not only would the government clear $1 trillion in new revenues to balance the budget each year, since apparently President Obama and the Senate Democrats don't believe that spending is the problem and neither are the entitlements (many of which go to benefit high-income people as well), but another big fat whopping check of $300 billion would flow into its coffers which would then be used to pay down the existing debt of $16 trillion...and climbing!

Do this national lottery for about 48 years...and we will have extinguished the debt forever.  And hope our great-great grandchildren has learned a sobering lesson in public finance.

We don't know about you but this 'national lottery to balance our budget' is looking like a simpler way to do so than Bowles-Simpson or any other plan out there right now.

Who could argue with that?

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Wednesday, November 28, 2012

Here's One 'Fiscal Cliff' You Will Not Be Able To Avoid

Here's the 'Real' Fiscal Cliff That Will Happen Jan 1, 2013
Do you know what the one new tax is that is going into effect on January 1, 2013....and there isn't a thing that can be done about it?

It is called the 'New Medicare Tax on Unearned Income'.  It is being assessed at a rate of 3.8% not on payroll or earned income as it has always been in the past but on the sale of personal or investment real estate, stocks, bonds, gold, farms, small business or anything else that might have a large capital gain over a prolonged period of time.

It was not passed as part of any normal budget reconciliation process on Capitol Hill.  That is almost impossible to do when you have a US Senate under the 'leadership' (sic) of Senator Harry Reid of Nevada that has not even tried to pass a budget for the past 3 years and doesn't look like it plans to do in 2013 either.

No, this ground-breaking tax was passed as part of the famous, or infamous, Obamacare bill of March, 2010. For the first time in US history, a payroll tax that has always been applied against earned income of a taxpayer has been freed from its moorings on salary and wages to roam to any and all sales of capital that may have large amounts of capital gains due to prudential investing on your part.

Now, proponents will rightly point out that this new tax will apply only to very high amounts of capital gains that are typically reserved only for high net worth individuals like Donald Trump and Warren Buffett.  You know, the guys who buy and sell billions of dollars worth of real estate before they have breakfast, companies before noon and gold bullion before they go to a gala in their honor at night.

The limits that have to be breached before the 3.8% Medicare tax is triggered is $200,000 for individuals and $250,000 for married couples filing jointly. That is a lot of money, the proverbial top 1% of all income-earners in the nation.

That sounds like a lot of money to the vast majority of Americans.

But here's our sincere question to you:

'When was the last time Congress and the President passed a new tax on anyone...that did not expand and filter down to moderate levels of income as time went on?'

For one thing, these 'limits' do not appear to be indexed for inflation.  Over a period of time, believe it or not, $200,000 will become considered 'middle-income' as long as we have a United States of America.  Once it does, this 3.8% Medicare tax will apply to every sale of stocks or bonds or anything that has any capital gain in it no matter how large or how small.

The second thing is that all it would take is another Congress with a like-minded higher tax advocate in the White House to lower the limits from $200,000 to say $100,000 or even $50,000 and get a large score from CBO for future deficit-reduction for higher revenues based on static analysis.  These things can get buried in a large omnibus tax bill somewhere down the road and many people might not even know about it until it hits them in the next tax year.

You didn't know about this 'floating' Medicare tax, did you?  Didn't think so.

Elections indeed have consequences.  The fact that President Obama was re-elected and the Senate Democratic majority was increased in the most recent election pretty much insures that this tax will not be repealed or even touched for the next 4 years at least.

According to the Annenberg Center's, there are actually two new taxes you need to be aware of:
'There will be a new 3.8 percent tax on “unearned” net investment income — such as capital gains from the sale of stocks or real estate, dividends, interest income, annuities, rents and royalties. Also starting Jan. 1 is a new 0.9 percent Medicare surcharge on top of the current Medicare payroll tax. Both taxes apply to taxable compensation that exceeds $200,000 for singles, or $250,000 for couples filing jointly. Those two taxes combined are projected to bring in nearly $210 billion over the next seven years, according to the nonpartisan Joint Committee on Taxation.'
We are not sure how much of this projected $210 billion will ever be collected by the US Treasury over the next 7 years. Our bet still lies with people making serious amounts of money over the $200,000 threshold finding smart tax accountants and lawyers to shelter their income or pair it off against other losses somehow so as to never pay these new taxes in the first place.

Anyone want to bet dollars-to-doughnuts that when we talk again in 2019 that the US Treasury will not have collected half of the $210 billion that CBO projected they would collect?  1/4?

Democrats trying to raise taxes on the truly wealthy is exactly like Wile E. Coyote trying to out-smart the Roadrunner and hit him on the head with an anvil or a Rube Goldberg contraption from Acme:

It Never Works.

The people that this tax will hit though are the ones not in the super-wealthy category who can't afford any fancy tax accountants or lawyers to shelter their income.  And the people who have a one-in-a-lifetime chance to sell the family farm or grandma's house that the grandchildren wanted to sell so they could send their children to a good college.

So get used to it.  The Obama Administration and the Senate Democrats have already got some time-bombs of higher taxes deeply embedded into the tax code where there is no way for them to be repealed or blunted for at least the next 4 years.

Plan accordingly.

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Monday, November 26, 2012

Why Not Raise Taxes On The Super-Wealthy?

American Attitude Towards Higher Taxation
One of the most illuminating and humorous comment ever made by a US politician came from the colorful Senator Russell B. Long of Louisiana (of course!)

He was the long-term running Chairman of the Senate Finance Committee from 1966-1981 who once said no one really ever wants to pay higher taxes. Instead, here's what they really want Congress to do:

'Don't tax you.  Don't tax me.  Tax that fellow behind that tree!'

He was a Southern Democrat who also understood that 'you can't have capitalism without capital!' as he once said as well.

He was a Democrat who understood that money does not grow on trees and it doesn't come free from countries such as China when we borrow from them.  Would it be that the Democrat Party would return to such sound fiscal understanding sometime in the near future.

We have been intrigued and somewhat bemused by the following argument for a long, long time:

'We simply have to raise taxes on the wealthy in order to close this budget deficit!'

'Why?' we typically ask such people.

'Because it is the fair thing to do!' they usually throw back as well-worn bromide they have picked up along the way from college or MSNBC or one of their friends or colleagues.

Let's pick at this scab a little and see if a little logic might seep into this discussion perhaps:
1. When you are spending too much money in your household budget, what do you do first?
Precisely.  You stop overspending your income first and right away!  Sell your new car and buy a good used jalopy.  Put your kids in public school and take them out of private school.  No more vacations in Majorca when going to Dollywood is within a day's drive and back.
2. If a company you had invested in has been losing money because of poor management, do you keep shoveling your hard-earned money into it before or after they have committed to cleaning up their act and stop wasting so much of your money?  
Afterwards, of course, silly.  You would have to be a dumbbell of the first order to just open up your wallet and checkbook and say:  'Go ahead.  Take it.  Take ALL of it!  I know you need more money to waste and fritter away so take mine.  I don't need it or want it since I can't think of anything better I could do with it like cure cancer or solve world peace!' 
3. If you had cut previous deals with advocates of higher taxes in Congress (Democrats), and then they had failed completely to ever cut any spending as a result of your 'deal made in good faith'...would you do it again without ironclad 100% guarantees that spending will be cut first before any higher taxes are collected?  
Heck no!  That would be more stupid than Charlie Brown going to kick the football held by Lucy after about 1000 times.  Even conservative Republicans aren't that stupid! They may be thick as a brick but even an old dog that has been scalded a couple of times won't go near the stove anymore.
4. Just how much money are we talking about anyway when it comes to socking it to the wealthy? Will it come close to balancing the budget and delivering us to the utopian nirvana its advocates always seem to roar about?  
Darned little revenue when it is compared to the sheer magnitude of what we are facing nowadays.  If we went back to the higher tax rates just on the wealthy that were in place during the Clinton Administration, we can expect to maybe collect less than $60 billion per year for 10 years, assuming the wealthy are not smart enough to figure out how to shelter it from taxation anymore (which is highly doubtful).  
Such 'bold thinking' (sic) would reduce our annual deficits from $1.2 trillion to maybe $1.140 trillion per year. About 5%. Per year. Congratulations for making this the biggest mountain out of the smallest molehill in history.
Here's our favorite 'unintended consequence' of raising taxes on business or other people who run a business or invest in them or own one:

'Each and every time taxes are raised on a business sector, they don't pay the tax.  YOU DO! In the form of higher prices for the goods or services they provide. They just add that tax on to the price of everything they sell to you and then you pay a small part of it with each and every purchase.'

Keep in mind that while it might 'feel good' to stick it to 'The Man' or the rich people running big businesses or even small businesses, it will come back to haunt you in various and sundry ways.  It always does.

To be absolutely honest about it, aside from the fact that we are not real fans of raising taxes to pay for more government and we don't think raising taxes will balance the budget when over-spending is our prime problem to begin with, we really could care less about what happens to the Hollywood stars, the Silicon Valley superstars or the NBA/NFL/MLB players who make $100 million in any given year.  Or even just $10 million/year.

Super-wealthy people can more than take care of themselves...and they should.  They should not be eligible for any taxpayer-funded support or subsidy or bailout whether it is in the form of Social Security payments down the road or Medicare which is subsidized at about an 85% clip today or any federally-sponsored bailout ever if they make the wrong business decisions and have to declare bankruptcy to get out of it.

If they voted for Obama, then they have given their assent to being taxed at higher rates. Maybe we should just let them get their wish.  (But don't let any of the pro athletes transfer to play in the state of Florida like LeBron James did since Florida doesn't have an income tax...that is what is really 'not fair!')

The really odd thing, in a classic Mephistophelian 'Bargain with the Devil' sort of way, is that now we have conservative Republicans, Club for Growth and Tea Party members digging in their heels for a concrete 'No More Taxes On The Wealthy!' stance, even though a majority of people making over $100,000/year in annual income voted for President Obama on November 6!  It is the truth...just saw it in some polling briefings recently.

The higher the income, and the more liberal the area such as Hollywood, San Francisco/Silicon Valley, Washington DC and New York City, the more likely it is that these wealthy people voted for President Obama over Mitt Romney for some reason.

Maybe we should just let them get their wish.

Thursday, November 22, 2012

Here's a Novel Concept: Let Those Who Want More Government Help Pay For It!

President Obama won. He got 51% of the people to vote for him.  He won the electoral college handily.

What has he promised to do?

'Raise taxes to pay for more government'. That is his basic message, isn't it? If there was ever a case of 'truth in political advertising', he would win hands-down.  Because that is how he has governed for the first 4 years and now that he has been re-elected by a majority of people in the United States of America, we fully expect him to push the pedal to the metal and do it even more for his second term in the White House.

Why, he even said so himself many times during the campaign:

'You ain't seen nothing yet!'

Well, in the interest of fair play and democracy, perhaps Congress should let him have his wish.

And here's the way to do it:

Let all of the Bush Tax Cuts expire on December 31, 2012.  In about 5 weeks.  At Midnight.

We know, we know.  We have heard all about the 'Fiscal Cliff' and how we might go into recession if Congress doesn't come to some agreement before the strike of midnight on December 31.

We might.  We might go into recession even if we solve the 'Fiscal Cliff' as more and more companies lay off workers or make them go part-time in order to avoid having to pay for Obamacare.  We are already seeing scores of companies do that already, Darden Restaurants (Olive Garden, Red Lobster, Longhorn Steakhouse) being among the first of them.

So why not shake things up a bit and 'throw the long ball' as they say in football? Let the tax cuts expire on December 31 and see what happens. After all, that is current law on the books signed into law by President Obama in 2010, not President Bush or anyone else.

If President Obama really wants to return tax rates to what they were before President Bush took office in 2000, maybe Congress should consider not passing any legislation before year-end and let ALL of the Bush Tax Cuts from 2002-03 expire at the end of this year.  Every last one of them, not just those on the rich. Let every single tax rate and provision revert back to exactly what they were under President Bill Clinton just as current law is written.

Every single dime.

What President Obama and his advisors have conveniently left out of his narrative when he speaks glowingly about the 'Golden Glory Hey-Days!' under President Clinton is that every single taxpaying citizen's taxes and tax rates were higher under Clinton than under W.  Clinton and the Democratic Congress raised tax rates on high-income taxpayers in 1993, to be sure, but he never cut the taxes for the middle-class as he promised to do during his entire 8-year term in office.

He promised middle-class tax cuts and promised them again and again and again...and they never came.  President Bush made them a centerpiece of his first term in office.

One of the major problems chipping away at the American democracy today is the palpable sense of being able to get something out of government and have other people pay for it.  It could be better schools.  It could be longer unemployment benefits.  It could be better roads.  It could be a more fortified defense.

It could be a string of tax breaks and deductions, although in that case, wealthy people are basically getting a 'refund' of the taxes they have already paid. Still, someone else will pay for all the government services a wealthy person will benefit from if by some chance they are able to shelter all of their income from taxation.

We believe that this is a very dangerous place for any democratically-elected republic to find itself in at any time in their history. Once a majority of people start thinking the government will provide them with more benefits they believe they will never have to pay one red cent more for in income taxes, or that the rich will always pay for it, or that we will keep borrowing ad infinitum, the connection and tension between taxes and spending is completely broken.

Unless something is done in a dramatic way to disabuse everyone of the notion that government can be expanded without any more income tax payments on their part, spending will increase unabated and the wealthy will just find more ways to cocoon and shelter their income from taxation. They always find a way, don't kid yourself that they won't.

Here's what the markets haven't figured in yet: What happens if President Obama caves in once he sees that Congress is not sending him a bill at all to extend the Bush tax cuts?  What does he do then?

First of all, he will have to almost certainly capitulate to Congress since Congress holds the constitutional upper hand when it comes to budget negotiations with the Executive Branch.  Close to 50% of words in the US Constitution deal with the enumerated powers of our US Congress, including the 'power of the purse' and powers reserved to the states. The powers allowed the Presidency accounts for only 14% of the amended Constitution today. Our Founders wanted to make darned sure that Congress holds virtually all of the money cards when it comes to running our government, not one person in the White House.

We Americans hate kings, remember?

A Democratic Congress made Republican President Reagan yield to their demands for more taxes in both the 1982 tax act and the 1983 Save Social Security (sic) Act.

A Democratic Congress made Republican President Bush 41 squeal 'uncle' in 1990 when they got him to break his 'Read my new taxes!' pledge from the 1988 convention and raise a few taxes. Bush 41 did get the PAYGO and discretionary caps in that bill which ultimately held spending down to an annual 2% overall increase for the last half of the 1990's and, lo and behold, we had 4 straight balanced budgets from 1998-2001.

Imagine that.

Maybe this Republican Congress could make Democrat President Obama squeal as well if they hold firm to just doing nothing to avert the tax hikes from coming and then hold the President to the true 3-to-1 spending cuts-to-tax hike ratio he has already said he would sign.

Letting the Bush tax cuts expire would bring in close to $4.7 trillion over 10 years, only $680 billion of that, 15% of the total coming from 'rich' people.

Holding Obama to a 3/1 ratio of spending cuts to tax hikes would generate close to $15 trillion of spending reductions and reforms on top of the $4.7 trillion in expired tax cuts.  Such a blockbuster Grand Compromise would total $20 trillion in deficit-reduction over 10 years.

A $20 trillion debt-avoidance package would be so unexpected in today's negative economic mood that the stock and bond markets would be stunned at first.  But since the markets have become so accustomed to governments around the globe kicking the can down the road and never solving the underlying structural problems causing their deficits and debt in the first place, such out-of-the-box thinking by the US Congress would shock them into the reality that America is not Europe and hopefully never will be.

It not only would hold the national debt down within reasonable levels, it would allow us to start paying down some of this ridiculous debt.  It was only around $3.5 trillion when President Bush took office in 2001, remember.

If Abe Lincoln were alive today, he would throw the long ball like Doug Flutie.  And complete it.

(You really should take your extended family and friends to see the movie 'Lincoln' this Thanksgiving weekend to see what a real leader in America history looked, sounded and most importantly, acted like in times of national stress)

Even if there is 'only' a $10 trillion 'Grand Bargain' where everyone has some skin in the game, that would be a major, major development in the current stalemate between the White House and Congress and prove that democratic republicanism can actually function again, right? Investors would cheer the fact that something 'big' got done and we might actually avert running into the debt iceberg that always brings down republics, monarchies and communist nations alike.

Excessive national debt that can't be repaid with sound currency doesn't give a damn what form of government you have.  Debt always wins.  You can look it up in the history books.  Try to find the Hapsburg Empire, the Roman Empire or even the Soviet Union if you can on the map today.

Seriously.  There are some very good reasons for Congress to allow the Bush tax cuts to expire.  The main reason?

'Every person in America will now be exposed to the simple concept that there is a cost to doing anything anywhere anytime.  Especially in government.'

54% of Americans think the government is too big right now as it is. Only 29% say they want a bigger government. The much-discussed Hispanic population is split evenly on that question but even the Latino cohort that overwhelming went for Obama think the country is 'on the wrong track' by a margin of 52-41%.  Yet, a majority voted him back into office for some reason

That 'reason' is because many people have never been confronted with the cold hard reality of having to come up with more money to pay higher taxes for anything in the last 12 years.  No one in America has been asked to dig deep and cut and scrape and sacrifice to pay the higher bills of our federal government since 2000.

We think once the cold hard steel of tax hikes hits everyone where it really hurts, right in the pocketbook and checkbook, they will be far more willing to support reductions of spending across-the-board, yes, even in the entitlement area that has been so difficult to contain over the past 30 years for the most part.

The good news for small government advocates is this:  those 54% of all Americans who think government is too big will swell to 64% or maybe even 75% once more people understand the direct connection between more spending and more taxes coming out of their pocket to pay for it.

All hard-working taxpaying Hispanics, African-Americans, Caucasians, men, women, heterosexuals, homosexuals know and understand one thing in common: Their hard work should be rewarded and higher taxes to pay for a bloated inefficient government is unjust and goes against common sense and reason.

This may be the only chance small government Jeffersonians will ever have to impress upon this generation of younger folk, African-Americans, Hispanics and big-government white folks that nothing comes for free, not even good intentions.

Leaders in Congress should consider this option.  It is not the 'nooclear' option as President Bush used to say but it is the most dramatic way we can get this country back on the right track towards fiscal sanity and balance.

Where America belongs.

Tuesday, November 20, 2012

What Is The Real Difference Between High-Income Earners and Low-Income Earners?

Income Disparity is not as big as you may think
Not as much as you would think, believe it or not.

Everyone is talking about 'taxing the rich!', 'redistributing the wealth!' and 'income inequality!' as if it is something from a fairy tale or something. If you didn't know better, you would think you were reading history from the French Revolution ('Off with their heads!) or the writings of Leon Trosky and the others who brought 'income-equality' (as in 'low' income for everyone but the rulers) in Soviet Russia for almost a century.

Let's take a very close look at the reality of the situation on the ground in real terms, how about it?

Does everyone know what a FICA tax is?  I have been lecturing at various universities over the past couple of years and hardly any student knows what a payroll or FICA tax is.

The FICA tax is the 'Federal Income Contributions Act' which is about as deliberate of a misnomer and  deceptive advertising as ever was one.  Since when did paying taxes ever become known as a 'contribution' anyway?

The thought here is that since you receive a benefit down the road, if you live long enough, you are making a 'contribution' to your future retirement needs. As we have seen in many previous posts, you are making no such 'contribution' to any such trust fund because:
A) They are all broke today
B) You are paying current benefits for current retirees, nothing more, nothing less
C) The only way you will get what you think your future SS and Medicare benefits should be is if your children and grandchildren pay far higher taxes than you do today
D) If you are under the age of 50, you can fully expect and count on receiving far, far less than you will ever 'contribute' in FICA taxes in SS and Medicare benefits when you retire.  Just the time-value of money and the lack of truly invested principal in any form guarantees that you will be underwater in terms of the benefits you will ever receive from either major entitlement program.
Anyway, with regards to the current debate over 'income-equality', let's take a close look at the real post-tax difference between a high-income self-employed individual and a person making $60,000 per year to support a family of four.

Let's assume the high-income person, as defined by the President, OMB, CBO and the Census Bureau makes $180,000 per year in a two-income family.  One spouse is in business for himself as an insurance agent and the other spouse is an independent researcher at a local university.

After family deductions and mortgage interest and charitable deductions, the net taxable income falls to $150,000.

So far, so good it seems for the higher-income family, huh?

Right off the top, this high income family can expect to pay $23,550 in payroll taxes since it is 15.7% of your earned income for self-employed people. All non-deductible from any other taxes they may pay.

Add to that approximately another $17,000 of federal income taxes and their take-home income is down to about $110,000.

State taxes will claim another $10,000 so now they are down to $100,000.  Local and property taxes, depending the number of cars they own, for example, could claim another couple of thousand or so.

So the higher-income self-employed couple is down to around $95,000 of disposable income when all is said and done after sales taxes and every other tax is added in each year.

Over $55,000 in taxes paid at some level or roughly what the average American household makes in income each year. Paid for by 1 couple.

Not bad.  It is far better than anyone in the middle-or-lower income categories, right?

But by how much?  And does the difference justify all of the polemics and class warfare we see out there coming from President Obama and the political left?

Consider a couple making $60,000 as employees at two companies, both making exactly $30,000/year in salary. For one thing, they immediately only have to pay half as much in FICA taxes as the self-employed couple because that is the law.  The reason is that the corporations they work for have to pay a matching percentage from the employer side to get to the 15.7% rate for FICA taxes.

Let's assume their mortgage interest and charitable contributions amount to $10,000/year.  Now they are down to $50,000 in income to spend.

That would mean that this couple has about $3850 total withheld from their paychecks during the year.  They may not fall low enough to not pay any federal income taxes each year but they are not close from it.  Let's say they pay $1250 in state taxes to get to a round $45,000 of disposable income for the year.

So with all of the discussion about rich versus poor, big versus small, fat cats versus the small guy, in many cases we are talking about a difference of $50,000 in income per year for American citizens.

Or about the income earned by an average American household, once again.

$50,000 is a lot of money, don't get us wrong.  We would rather have $50,000 more to spend on education,  vacations, clothes and cars than not have it, to be sure.

But we are not talking about the routine disparity in income in America as being $1 million+ or $10 billion+ per year amongst perhaps 98% of all American families.  The whole debate is driven by perceptions not reality.

Not all the rich people in America live or act like the Kardashian family on cable. (Thank God!)

Plus, we could tax the rich people out the wazoo and guess what would happen?
  1. They would find legal tax shelters and pay the same next year as this year.
  2. They would move to the Cayman Islands or somewhere that doesn't tax them as much and declare legal residence there.
  3. We would not balance our federal budget.  Not even come close.
  4. Or they would just quit investing in more business in America and just retire and enjoy life.
None of us should want any wealthy person to pull up stakes and just sit back and 'enjoy life'!  We want them to keep working their tails off and taking risks right and left with their money!  We should all be begging and encouraging them to make more investments so we can all get a job working at their new business!

We want them to be like those talented, somewhat crazy football coaches who win a national title at one school, retire to 'spend more time with the family' (which they never do) and then take the next job to lead another team to the national championship. Or the Super Bowl.

That is what great business people and entrepreneurs do.  They were put here on earth not to just make money for themselves but to provide jobs and help create wealth for the rest of us!

Sometimes they will fail.  But we would still get paid salary and benefits out of their capital (and the money they can borrow from banks that you and I can't) until the business failed.  And then, we should hope they would try again.

That is where we think this current debate over 'income-disparity' is so messed up.  We want everyone to have the chance to work for themselves or someone else and move up the income ladder, not drag everyone above them down to our level. 

We want wealthy people to keep investing in business in America.  We want them to become the next Apple.  If someone had gone to work at Apple just 10 years ago and had stock benefits in their compensation that included about $10,000 in value then, they would have over $660,000 in their nest egg today, give or take a few thousand dollars on any given day.

Now, let's stop all this class warfare and figure out ways to stop spending so much money on everything, balance our budgets and let this great American money-making, job-creating machine get back to work putting us back to work as well.

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Friday, November 16, 2012

Where's The Hostess Twinkie Bailout?

Twinkies, Cupcakes and Ding-Dongs...All Gone
Hostess, the baker maker of such great American iconic foods as Twinkies, Cupcakes and Ding-Dongs, as well as the relatively more healthy Wonder breads, has decided to file for bankruptcy after a prolonged strike by its workers eventually exhausted its remaining resources.

Here's our question of the day:

'When will the federal government and the Obama Administration propose a bailout for Hostess and their 18,000 union workers?

Why the heck not?  What makes the union workers who work for Hostess any different from the union workers who worked for GM or Chrysler in 2009 when things were falling apart at the seams for them?

Are the jobs of the people who make (fattening, artery-clogging) food any less important than the workers who make hurtling assemblages of metal and computers that carry us around on the nation's highways and byways?

18,000 people.  That is a lot of people.  That is about the number of people who can sit in the Dean Dome at Chapel Hill for a college basketball game.

Guess we will see how the new Obama health care exchanges will work now that they won't have the union health care plan paid for probably in total by the management of Hostess over the years.

Just to push at the comparison with the GM bailout for a moment, here's what we don't get:

  1. At what point is a government bailout 'ok'?
  2. If the Obama Administration does not propose a bailout for Hostess and their 18,000 workers, then who would be 'eligible' for any future federal bailout?
  3. Why not ask the union to buy the assets of Hostess and make them 'owners' of the company just like the Obama Administration installed the unions as major owners of GM?
  4. If the unions can run GM from a plurality of stock ownership position, can't they run a bakery?

Now is the chance for everyone to see how a 'managed bankruptcy' with Hostess would have worked for GM, Chrysler and even Wall Street investment banking firms and major banks in 2008.  The company would file for bankruptcy protection under the law; current stockholders equity would be wiped out; the creditors would get in line and get paid something, maybe 10 cents on the dollar of debt exposure they had with Hostess....and then the unions could negotiate with themselves to come up with a wage formula and benefit package plan that would allow Hostess to stay in business and keep 18,000 people employed.

Isn't that what American free enterprise is all about?  Take a risk, hope you succeed.  If not, file for bankruptcy and try again with another plan.

That is what the Obama Administration failed to allow happen in the case of GM and Wall Street and the 'Too Big To Fail' (TBTF) banks.  Operations could have still proceeded all during 2008 and 2009 and 2010 as these companies were rearranged, even with some short-term bridge-funded input of federal bailout assistance.  Most of the workers could have been retained during this transition period and employed, albeit with some major concessions to the gravity of the marketplace.

If something costs too much to make and sell, you can't make a profit and stay in business.  That is Business Economics 101.  But there is some level at which costs can be lowered that allow that product or service to be sold and make a profit.  That is what management of any enterprise has to decide as part of the reason why they 'get paid the big bucks'.

We are as sad as anyone to see a truly American icon such as Twinkies bite the proverbial dust. It feels like when the Beatles broke up, UCLA stopped winning NCAA basketball championships or you found out that Santa Claus just might not really fit in the chimney everyone said he came down out of every Christmas.

However, on the other hand, now perhaps even Mayor Bloomberg of New York City will be happy since no one will be able to be tempted by the empty high calories of Twinkies, Ding-Dongs and Ho-Ho's ever again.  
  • The body fat of Americans might drop in half just because of the unfortunate demise of Hostess.
  • Their body weight should start to return to some sort of 'normal' weight once again.  
  • Blood pressures will drop. 
  • Heart attacks and strokes will diminish substantially.  
  • People will not have to have expensive open heart surgery or transplants later in life now that their tickers won't be destroyed by the chemical compounds and fat content of Twinkies, Cupcakes, Ring-Dings and Sno-Balls for 65 years...if they make it that long.
  • Heck!  We are willing to bet that health care costs drop overnight by 50% or more simply because people will not be able to stuff boxes of Hostess products into their mouths while sitting on the couch watching tv when they should be walking, playing tennis or working out.
And then, guess what will happen?  We won't need Obamacare any more, or so many big bad health insurance companies or even so many gyms, diet plans or Spanx for Women (and now Men, from what we hear...bring out the 'Bro' from Kramer on 'Seinfield)

So maybe the bankruptcy of Hostess Twinkies is a 'good thing' for the American Republic!

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Monday, November 12, 2012

Obama and Boehner: Who Is Lucy and Who is Charlie Brown?

Will They Do It Again Over the Fiscal Cliff?
Ok, you might want to sit down for this one.  And pour yourself a cup of hot coffee if you are reading this in the morning and a good stiff bourbon if you are reading it in the evening.

Remember all the hubbub and hullabaloo over the 'Obama/Boehner Budget Deal' that failed in late 2011?  The Obama Administration 'blamed' the mean old House Republicans for not agreeing with the President.  The House GOP 'blamed' President Obama for acting like Lucy when she pulled the football away from Charlie Brown once again when he was trying to kick it.

Bob Woodward just 'unveiled' this 'secret memo' on 'Meet the Press' today which he obtained  from someone close to the negotiations that outlined the deal President Obama and Speaker Boehner were negotiating over in the summer of 2011.  

Take a a quick look at it. They do look just like some of the hieroglyphics that Indiana Jones might have uncovered along the way:

Several things jump out at you at once, if they were indeed as close to an agreement as both sides say they were as of July, 2011:

1) They were going to repeal the AMT totally, not just extend it at lower levels.  This has a monumental effect on higher middle-income families trying to move up into the higher-income level since it means they won't ever have to worry about the AMT swooping in unbeknownst to them to take a bigger tax bite out of their success.

2) 'Alteration in the eligibility age for Medicare'-  meaning 'at least raise it to increase in line with the increase in Social Security eligibility that is now 66 and will be 67 in about 10 years.  This is something that has to be done as a first step to insure any sort of long-term viability and reform of Medicare which still needs to be done in toto.

3) This appears to be a 3-to-1 or maybe a 4-to-1 ratio of spending reductions to 'increased tax revenues'.

Notice how President Obama and Speaker Boehner parsed their words very, very carefully after the elections last week.  Neither spoke specifically about 'raising the marginal tax rates' but rather spoke in generalities about getting more 'tax revenue' from reforming the tax code, eliminating some deductions and in Boehner's case, 'more tax revenue due to a growing economy where businesses once again have confidence that Washington can get things done'.

Finally.  Perhaps.  We are still holding our breath.

Take a look once again at the extensive Tax Expenditures chart we showed you before the election.  This is a list of the tax exemptions, deductions, exclusions, whathaveyou that amount to close to $1 trillion in tax revenue not being collected each and every year by the IRS.

This is where President Obama and Speaker Boehner will get their 'tax revenue' they were talking about last week. They could limit the deductions on home mortgage interest for the 5th, 6th or 7th vacation homes of the rich and famous.  They could reduce the deduction for Cadillac health care plans favored by unions.  They could even put some limits on the amounts of tax-exempt activities of charities and religious groups that go beyond the strict interpretation of their 'mission' as defined by the IRS tax code.

For our money, we would bet on the bottom half of the tax expenditure chart as being 'fair game' for this deal to get done to accompany the resolution of the so-called 'fiscal cliff' you have all heard about by now.

The reason?

For one thing, each of these special tax breaks are targeted to a very few number of individuals or businesses relative to the entire economy. 'Rifle-shot' tax breaks they are known as and usually stuck in the tax code when some powerful Ways and Means or Finance Committee Chairman or ranking member got it in some omnibus budget reconciliation package long ago that no one noticed because they didn't (or couldn't) read it all on time.

These 75+ tax breaks account for about $1 trillion exactly in higher tax revenues over a 10-year period if eliminated. Which is exactly the number these negotiations are aiming to hit.

So if you are currently enjoying any of the tax breaks of the bottom 50% of the tax breaks outlined in this chart, such as 'exclusions for imputed interest rules', you might want to call your tax accountant today.

Because it probably won't be there next year when you file your taxes in 2014.

If they were 'this close' to a $4 trillion deal in the summer of 2011 along these lines and points of agreement and they failed to pull the trigger, then that is nothing short of a colossal crying shame.

We have added close to another $1.6 trillion in debt since then but more importantly, the business and financial community were spooked into thinking our representative democratic form of government didn't work any more.  Much of their reluctance to hire people, aside from the deleterious effect they think Obamacare will have on their business and the nation, stemmed from that perception of our elected leaders then.

Will it be any different now if this deal is completed before year-end?

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Thursday, November 8, 2012

Will Obama Be Like Nixon and 'Go to China'?

Nixon Goes To China
First things first:  Does anyone believe that had the Democratic nominee this year been Joe Biden or even Hillary Clinton that we would not be talking about the agenda of 'President Mitt Romney-45th President of the United States of America' today?

Seriously.  With this economic record and really no mandate or even an agenda going forward, could any other person in America have been re-elected to the highest office in the land?

Let's call it the 'cult of personality' and leave it to future historians to dissect and analyze how Barack Obama was able to pull off re-election in 2012 in spite of 23 million people being un/underemployed in an economy that is about as still as a stagnant pond that doesn't have any fresh water running through it.

That plus the simply enormous get-out-the-vote machinery he had in every swing state except Indiana and North Carolina that he carried Tuesday night.

He has the charisma and mass appeal of a Ronald Reagan and they come around about as often as Haley's Comet in American political life.  We just happen to have had 2 of them in the last 32 years.

Our question for today is this:
1) What exactly is President Obama's agenda for the next four years, other than 'doing the same things we have done for the last 4 years' which haven't exactly gone gangbusters yet, has it?
2) Will President Obama take a cue from President Nixon (no, not resign over 'Benghazi-gate', you know that investigation is coming, don't you?) and 'Go To China!'?
What we mean by that is will President Obama go against his own rhetoric and political stripes and spots and show the same 'flexibility' with the Republican Congress as he has promised to show Russian President Vladimir Putin in his 'private' talks with Prime Minister Dmitry Medvedev that wound up being 'not so private 'when picked up by a hot microphone?

President Richard Nixon, when elected in 1968 and way before then, was known as a rock-ribbed, staunch anti-communist. However, in 1972, after a round of 'ping-pong diplomacy' engineered by Henry Kissinger, President Nixon physically went to visit Chairman Mao Zedong on the soil of Communist Red China in an act of diplomacy that stunned the Western and Eastern worlds.

It opened up trade relations with China and ushered in a economic revolution in China that is running unabated for the most part today.

But the term: 'Nixon goes to China' has come to mean any time a politician goes against his/her stated principles in order to achieve some higher order of good for the nation'.

It doesn't happen very often.  George H. W. Bush 41 did it in 1990 when he signed the 1990 Budget Act that instituted PAYGO rules and discretionary spending caps and included some tax hikes such as cigarette and yacht taxes.  However, it is well-established fact by now that the 1990 Budget Act established a direct line to the balanced budgets America enjoyed from 1998-2001.

Here's our question:

'Will Barack Obama, now that he has been re-elected for the next 4 years, abandon his staunch adherence to the AARP's principles and agree to sign a budget bill that includes raising the retirement age of entitlement programs to 67 or higher for future retirees?'

That one single provision would save trillions of dollars over coming decades in America. Raising it to 70 would do it that much faster.

There is a plethora of other spending restrictions that President Obama can agree to if the Republican Congress and Democrat Senate will agree to send them to him to sign.  Congress will always hold the upper hand in budget negotiations with any President simply because close to half the Constitution deals with the powers vested in Congress in this regard.

The President?  He has exactly one power in any budget matter.  The veto.  That is it.  You can look it up yourself.

Tip O'Neill 'made' President Reagan yield to the demands of a Democratic Congress when they 'saved Social Security' in 1983.  The Democratic Congress 'made' President Bush 41 yield to the minor tax increases in 1990 in return for his insistence on the PAYGO requirements among other budget process reforms.

Now, the only problem will be if the Republican-led Congress doesn't make President Obama 'yield' to their stated demands of fiscal sanity and restraint by not sending him any legislation with anything like PAYGO or spending caps or budget reform in it to sign.

If they don't, then they will become as inept and worthless on budget restraint as the GOP Congress was from 2001-2006 when they spent money like drunken sailors...'with all due respects to drunken sailors' as Ronald Reagan once said.

Let the games begin...again.

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Tuesday, November 6, 2012

'Only Those Who Dare To Fail Greatly Can Ever Achieve Greatly'

Robert Kennedy at Capetown, South Africa 1966
If you just read the words of this great speech below and don't listen to the audio version, you could swear that Ronald Reagan wrote and delivered this speech long ago.

This speech was the basis for the Teddy Kennedy eulogy of Robert F. Kenney in 1968 after he was felled by assassin Sirhan Bishara Sirhan after his victory in the California primary.

Not only is it a brilliant speech that enunciates clearly the need for vision, reason and courage in modern American life, it also quite starkly shows the difference between modern-day Democratic rhetoric and that of hard-core anti-communist Democrats of the past who were not afraid to freely talk about the role of faith in the American experience. It is hard to see how this speech would have been warmly received at the recent DNC Convention in Charlotte, for example, where the debate over the inclusion of any reference to God in their platform elicited boos from the crowd.

As you watch the returns come in today during this momentous election, keep in mind the words and the challenges presented below by Robert Kennedy as he spoke to a mostly white Afrikaner audience of college students in Capetown, South Africa 46 years ago. Many of whom, we have no doubt, participated in the transition of South Africa from a nation of apartheid to a nation of freedom and democracy today.

Regardless of the outcome of today's election, as important as it may truly be, this is not the 'last' election we will ever have. We have not seen the 'last' political ad in our lifetimes either, sadly, in most cases.

This speech is a call to action for every person concerned about the life and future of our nation.

Take it to heart.  And then act.

Listen to the audio of this speech here as you read the transcript below:

Robert F. Kennedy
Day of Affirmation Speech
University of Capetown
Capetown, South Africa
June 6, 1966

(News Release Text)
'I came here because of my deep interest and affection for a land settled by the Dutch in the mid-seventeenth century, then taken over by the British, and at last independent; a land in which the native inhabitants were at first subdued, but relations with whom remain a problem to this day; a land which defined itself on a hostile frontier; a land which has tamed rich natural resources through the energetic application of modern technology; a land which once imported slaves, and now must struggle to wipe out the last traces of that former bondage. I refer, of course, to the United States of America.
But I am glad to come here to South Africa. I am already enjoying my visit. I am making an effort to meet and exchange views with people from all walks of life, and all segments of South African opinion, including those who represent the views of the government. Today I am glad to meet with the National Union of South African Students. For a decade, NUSAS has stood and worked for the principles of the Universal Declaration of Human Rights - principles which embody the collective hopes of men of good will all around the world.
Your work, at home and in international student affairs, has brought great credit to yourselves and to your country. I know the National Student Association in the United States feels a particularly close relationship to NUSAS. And I wish to thank especially Mr. Ian Robertson, who first extended this invitation on behalf of NUSAS, for his kindness to me. It's too bad he can't be with us today.
This is a Day of Affirmation, a celebration of liberty. We stand here in the name of freedom.
At the heart of that Western freedom and democracy is the belief that the individual man, the child of God, is the touchstone of value, and all society, groups, the state, exist for his benefit. Therefore the enlargement of liberty for individual human beings must be the supreme goal and the abiding practice of any Western society.
The first element of this individual liberty is the freedom of speech: the right to express and communicate ideas, to set oneself apart from the dumb beasts of field and forest; to recall governments to their duties and obligations; above all, the right to affirm one's membership and allegiance to the body politic - to society - to the men with whom we share our land, our heritage, and our children's future.
Hand-in-hand with freedom of speech goes the power to be heard, to share in the decisions of government which shape men's lives. Everything that makes man's life worthwhile - family, work, education, a place to rear one's children and a place to rest one's head - all this depends on decisions of government; all can be swept away by a government which does not heed the demands of its people. Therefore, the essential humanity of men can be protected and preserved only where government must answer - not just to the wealthy, not just to those of a particular religion, or a particular race, but to all its people.
And even government by the consent of the governed, as in our own Constitution, must be limited in its power to act against its people; so that there may be no interference with the right to worship, or with the security of the home; no arbitrary imposition of pains or penalties by officials high or low; no restrictions on the freedom of men to seek education or work or opportunity of any kind, so that each man may become all he is capable of becoming.
These are the sacred rights of Western society. These were the essential differences between us and Nazi Germany, as they were between Athens and Persia.
They are the essence of our differences with communism today. I am unalterably opposed to communism because it exalts the state over the individual and the family, and because of the lack of freedom of speech, of protest, of religion, and of the press, which is the characteristic of totalitarian states. The way of opposition to communism is not to imitate its dictatorship, but to enlarge individual freedom, in our own countries and all over the globe. There are those in every land who would label as Communist every threat to their privilege.
But as I have seen on my travels in all sections of the world, reform is not communism. And the denial of freedom, in whatever name, only strengthens the very communism it claims to oppose.
Many nations have set forth their own definitions and declarations of these principles. And there have often been wide and tragic gaps between promise and performance, ideal and reality. Yet the great ideals have constantly recalled us to our duties. And - with painful slowness - we have extended and enlarged the meaning and the practice of freedom for all our people.
For two centuries, my own country has struggled to overcome the self-imposed handicap of prejudice and discrimination based on nationality, social class, or race - discrimination profoundly repugnant to the theory and command of our Constitution.
Even as my father grew up in Boston, signs told him that No Irish Need Apply. Two generations later President Kennedy became the first Catholic to head the nation; but how many men of ability had, before 1961, been denied the opportunity to contribute to the nation's progress because they were Catholic, or of Irish extraction? How many sons of Italian or Jewish or Polish parents slumbered in slums - untaught, unlearned, their potential lost forever to the nation and human race? Even today, what price will we pay before we have assured full opportunity to millions of Negro Americans?
In the last five years we have done more to assure equality to our Negro citizens, and to help the deprived both white and black, than in the hundred years before. But much more remains to be done.
For there are millions of Negroes untrained for the simplest of jobs, and thousands every day denied their full equal rights under the law; and the violence of the disinherited, the insulted and injured, looms over the streets of Harlem and Watts and South Side Chicago.
But a Negro American trains as an astronaut, one of mankind's first explorers into outer space; another is the chief barrister of the United States government, and dozens sit on the benches of court; and another, Dr.Martin Luther King, is the second man of African descent to win the Nobel Peace Prize for his nonviolent efforts for social justice between races.
We have passed laws prohibiting discrimination in education, in employment, in housing, but these laws alone cannot overcome the heritage of centuries - of broken families and stunted children, and poverty and degradation and pain.
So the road toward equality of freedom is not easy, and great cost and danger march alongside us. We are committed to peaceful and nonviolent change, and that is important for all to understand - though all change is unsettling. Still, even in the turbulence of protest and struggle is greater hope for the future, as men learn to claim and achieve for themselves the rights formerly petitioned from others.
And most important of all, all the panoply of government power has been committed to the goal of equality before the law, as we are now committing ourselves to the achievement of equal opportunity in fact.
We must recognize the full human equality of all of our people before God, before the law, and in the councils of government. We must do this, not because it is economically advantageous, although it is; not because of the laws of God command it, although they do; not because people in other lands wish it so. We must do it for the single and fundamental reason that it is the right thing to do.
We recognize that there are problems and obstacles before the fulfillment of these ideals in the United States, as we recognize that other nations, in Latin America and Asia and Africa, have their own political, economic, and social problems, their unique barriers to the elimination of injustices.
In some, there is concern that change will submerge the rights of a minority, particularly where the minority is of a different race from the majority. We in the United States believe in the protection of minorities; we recognize the contributions they can make and the leadership they can provide; and we do not believe that any people - whether minority, majority, or individual human beings - are "expendable" in the cause of theory or policy. We recognize also that justice between men and nations is imperfect, and that humanity sometimes progresses slowly.
All do not develop in the same manner, or at the same pace. Nations, like men, often march to the beat of different drummers, and the precise solutions of the United States can neither be dictated nor transplanted to others. What is important is that all nations must march toward increasing freedom; toward justice for all; toward a society strong and flexible enough to meet the demands of all its own people, and a world of immense and dizzying change.
In a few hours, the plane that brought me to this country crossed over oceans and countries which have been a crucible of human history. In minutes we traced the migration of men over thousands of years; seconds, the briefest glimpse, and we passed battlefields on which millions of men once struggled and died. We could see no national boundaries, no vast gulfs or high walls dividing people from people; only nature and the works of man - homes and factories and farms - everywhere reflecting Man's common effort to enrich his life.
Everywhere new technology and communications bring men and nations closer together, the concerns of one inevitably becoming the concerns of all. And our new closeness is stripping away the false masks, the illusion of difference which is at the root of injustice and hate and war. Only earthbound man still clings to the dark and poisoning superstition that his world is bounded by the nearest hill, his universe ended at river shore, his common humanity enclosed in the tight circle of those who share his town and views and the color of his skin.
It is your job, the task of the young people of this world, to strip the last remnants of that ancient, cruel belief from the civilization of man.
Each nation has different obstacles and different goals, shaped by the vagaries of history and of experience.
Yet as I talk to young people around the world I am impressed not by the diversity but by the closeness of their goals, their desires and their concerns and their hope for the future. There is discrimination in New York, the racial inequality of apartheid in South Africa, and serfdom in the mountains of Peru. People starve in the streets of India, a former Prime Minister is summarily executed in the Congo, intellectuals go to jail in Russia, and thousands are slaughtered in Indonesia; wealth is lavished on armaments everywhere in the world. These are differing evils; but they are the common works of man. They reflect the imperfections of human justice, the inadequacy of human compassion, the defectiveness of our sensibility toward the sufferings of our fellows; they mark the limit of our ability to use knowledge for the well-being of our fellow human beings throughout the world. And therefore they call upon common qualities of conscience and indignation, a shared determination to wipe away the unnecessary sufferings of our fellow human beings at home and around the world.
It is these qualities which make of youth today the only true international community. More than this I think that we could agree on what kind of a world we would all want to build. it would be a world of independent nations, moving toward international community, each of which protected and respected the basic human freedoms. It would be a world which demanded of each government that it accept its responsibility to insure social justice. It would be a world of constantly accelerating economic progress - not material welfare as an end in itself, but as a means to liberate the capacity of every human being to pursue his talents and to pursue his hopes. It would, in short, be a world that we would be proud to have built.
Just to the north of here are lands of challenge and opportunity rich in natural resources, land and minerals and people. Yet they are also lands confronted by the greatest odds - overwhelming ignorance, internal tensions and strife, and great obstacles of climate and geography. Many of these nations, as colonies, were oppressed and exploited. Yet they have not estranged themselves from the broad traditions of the West; they are hoping and gambling their progress and stability on the chance that we will meet our responsibilities to help them overcome their poverty.
In the world we would like to build, South Africa could play an outstanding role in that effort. This is without question a preeminent repository of the wealth and knowledge and skill of the continent. Here are the greater part of Africa's research scientists and steel production, most of its reservoirs of coal and electric power.
Many South Africans have made major contributions to African technical development and world science; the names of some are known wherever men seek to eliminate the ravages of tropical diseases and pestilence. In your faculties and councils, here in this very audience, are hundreds and thousands of men who could transform the lives of millions for all time to come.
But the help and the leadership of South Africa or the United States cannot be accepted if we - within our own countries or in our relations with others - deny individual integrity, human dignity, and the common humanity of man. If we would lead outside our borders, if we would help those who need our assistance, if we would meet our responsibilities to mankind, we must first, all of us, demolish the borders which history has erected between men within our own nations - barriers of race and religion, social class and ignorance.
Our answer is the world's hope; it is to rely on youth. The cruelties and obstacles of this swiftly changing planet will not yield to obsolete dogmas and outworn slogans. It cannot be moved by those who cling to a present which is already dying, who prefer the illusion of security to the excitement and danger which comes with even the most peaceful progress.
This world demands the qualities of youth; not a time of life but a state of mind, a temper of the will, a quality of the imagination, a predominance of courage over timidity, of the appetite for adventure over the love of ease. It is a revolutionary world we live in, and thus, as I have said in Latin America and Asia, in Europe and in the United States, it is young people who must take the lead. Thus you, and your young compatriots everywhere, have had thrust upon you a greater burden of responsibility than any generation that has ever lived.
"There is," said an Italian philosopher, (Machiavelli) "nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success than to take the lead in the introduction of a new order of things." Yet this is the measure of the task of your generation, and the road is strewn with many dangers.
First, is the danger of futility: the belief there is nothing one man or one woman can do against the enormous array of the world's ills - against misery and ignorance, injustice and violence. Yet many of the world's greatest movements, of thought and action, have flowed from the work of a single man. A young monk began the Protestant Reformation, a young general extended an empire from Macedonia to the borders of the earth, and a young woman reclaimed the territory of France. It was a young Italian explorer who discovered the New World, and the thirty-two-year-old Thomas Jefferson who proclaimed that all men are created equal.
"Give me a place to stand," said Archimedes, "and I will move the world." These men moved the world, and so can we all. Few will have the greatness to bend history itself, but each of us can work to change a small portion of events, and in the total of all those acts will be written the history of this generation. Thousands of Peace Corps volunteers are making a difference in isolated villages and city slums in dozens of countries.
Thousands of unknown men and women in Europe resisted the occupation of the Nazis and many died, but all added to the ultimate strength and freedom of their countries. It is from numberless diverse acts of courage and belief that human history is shaped.
Each time a man stands up for an ideal, or acts to improve the lot of others, or strikes out against injustice, he sends forth a tiny ripple of hope, and crossing each other from a million different centers of energy and daring those ripples build a current which can sweep down the mightiest walls of oppression and resistance.
"If Athens shall appear great to you," said Pericles, "consider then that her glories were purchased by valiant men, and by men who learned their duty." That is the source of all greatness in all societies, and it is the key to progress in our time.
The second danger is that of expediency; of those who say that hopes and beliefs must bend before immediate necessities. Of course, if we would act effectively we must deal with the world as it is. We must get things done. But if there was one thing President Kennedy stood for that touched the most profound feelings of young people around the world, it was the belief that idealism, high aspirations, and deep convictions are not incompatible with the most practical and efficient of programs - that there is no basic inconsistency between ideals and realistic possibilities, no separation between the deepest desires of heart and of mind and the rational application of human effort to human problems.
It is not realistic or hardheaded to solve problems and take action unguided by ultimate moral aims and values, although we all know some who claim that it is so. In my judgment, it is thoughtless folly. For it ignores the realities of human faith and of passion and of belief - forces ultimately more powerful than all of the calculations of our economists or of our generals.
Of course to adhere to standards, to idealism, to vision in the face of immediate dangers takes great courage and takes self-confidence. But we also know that only those who dare to fail greatly, can ever achieve greatly.
It is this new idealism which is also, I believe, the common heritage of a generation which has learned that while efficiency can lead to the camps at Auschwitz, or the streets of Budapest, only the ideals of humanity and love can climb the hills of the Acropolis.
A third danger is timidity. Few men are willing to brave the disapproval of their fellows, the censure of their colleagues, the wrath of their society. Moral courage is a rarer commodity than bravery in battle or great intelligence. Yet it is the one essential, vital quality of those who seek to change a world which yields most painfully to change.
Aristotle tells us that "At the Olympic games it is not the finest and the strongest men who are crowned, but they who enter the lists.... So too in the life of the honorable and the good it is they who act rightly who win the prize." I believe that in this generation those with the courage to enter the moral conflict will find themselves with companions in every corner of the world.
For the fortunate among us, the fourth danger is comfort, the temptation to follow the easy and familiar paths of personal ambition and financial success so grandly spread before those who have the privilege of education. But that is not the road history has marked out for us.
There is a Chinese curse which says "May he live in interesting times." Like it or not we live in interesting times. They are times of danger and uncertainty; but they are also more open to the creative energy of men than any other time in history. And everyone here will ultimately be judged - will ultimately judge himself - on the effort he has contributed to building a new world society and the extent to which his ideals and goals have shaped that effort.
So we part, I to my country and you to remain. We are - if a man of forty can claim that privilege - fellow members of the world's largest younger generation. Each of us have our own work to do. I know at times you must feel very alone with your problems and difficulties. But I want to say how impressed I am with what you stand for and the effort you are making; and I say this not just for myself, but for men and women everywhere.
And I hope you will often take heart from the knowledge that you are joined with fellow young people in every land, they struggling with their problems and you with yours, but all joined in a common purpose; that, like the young people of my own country and of every country I have visited, you are all in many ways more closely united to the brothers of your time than to the older generations of any of these nations; and that you are determined to build a better future. President Kennedy was speaking to the young people of America, but beyond them to young people everywhere, when he said that "the energy, the faith, the devotion which we bring to this endeavor will light our country and all who serve it - and the glow from that fire can truly light the world."
And, he added, "With a good conscience our only sure reward, with history the final judge of our deeds, let us go forth to lead the land we love, asking His blessing and His help, but knowing that here on earth God's work must truly be our own." (JFK Inaugural Speech, 1961)

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Sunday, November 4, 2012

''A Good and Decent Man Who Saw Wrong and Tried to Right It...'

Senator Robert F. Kennedy 1968
Regardless of your political background or persuasion, no one can take a look at the vintage film of former Senator Ted Kennedy early in his life giving a moving eulogy for his older brother, Robert F. Kennedy at St. Patrick's Cathedral in New York in June, 1968 and not be moved by his words and affections for his slain brother.

'My brother need not be idealized, or enlarged in death beyond what he was in life; to be remembered simply as a good and decent man, who saw wrong and tried to right it, saw suffering and tried to heal it, saw war and tried to stop it'.

The text and the transcript of the speech can be found here. Try to read through it if you can because it really is one of the great speeches in American history.

It also contains some golden nuggets for all of us to consider as we await the outcome of this momentous election on Tuesday, November 6 for President of the United States of America.

In the eulogy, Senator Ted Kennedy refers to a speech Robert Kennedy (RFK) gave in South Africa two years earlier in 1966.  The words of that speech (truncated below) resonate as soundly today as they did back then.
'There is discrimination in this world and slavery and slaughter and starvation. Governments repress their people; millions are trapped in poverty while the nation grows rich and wealth is lavished on armaments everywhere. These are differing evils, but they are the common works of man. They reflect the imperfection of human justice, the inadequacy of human compassion, our lack of sensibility towards the suffering of our fellows.
But we can perhaps remember -- even if only for a time -- that those who live with us are our brothers; that they share with us the same short moment of life; that they seek -- as we do -- nothing but the chance to live out their lives in purpose and happiness, winning what satisfaction and fulfillment they can.
Surely, this bond of common faith, this bond of common goal, can begin to teach us something. Surely, we can learn, at least, to look at those around us as fellow men. And surely we can begin to work a little harder to bind up the wounds among us and to become in our own hearts brothers and countrymen once again....
Some believe there is nothing one man or one woman can do against the enormous array of the world's ills.
Yet many of the world's great movements, of thought and action, have flowed from the work of a single man. A young monk began the Protestant reformation; a young general extended an empire from Macedonia to the borders of the earth; a young woman reclaimed the territory of France; and it was a young Italian explorer who discovered the New World, and the 32 year-old Thomas Jefferson who [pro]claimed that "all men are created equal."
These (people) moved the world, and so can we all. Few will have the greatness to bend history itself, but each of us can work to change a small portion of events, and in the total of all those acts will be written the history of this generation....
Few are willing to brave the disapproval of their fellows, the censure of their colleagues, the wrath of their society. Moral courage is a rarer commodity than bravery in battle or great intelligence. Yet it is the one essential, vital quality for those who seek to change a world that yields most painfully to change. And I believe that in this generation those with the courage to enter the moral conflict will find themselves with companions in every corner of the globe.....
The future does not belong to those who are content with today, apathetic toward common problems and their fellow man alike, timid and fearful in the face of new ideas and bold projects. Rather it will belong to those who can blend vision, reason and courage in a personal commitment to the ideals and great enterprises of American Society. Our future may lie beyond our vision, but it is not completely beyond our control....'

'Reason'. 'Vision'. 'Courage'.

Keep those in mind from here on out.  Those are the essential ingredients to the leadership stew we need to get this country back on track.

Why are the words in this speech so timeless and still pertinent in America today after these intervening 44 years since RFK was senselessly assassinated in the basement of the Ambassador Hotel in Los Angeles in 1968 by Sirhan B. Sirhan (who is still alive in prison by the way)?

Because they inspire us all to do more to help make this nation, and world, a better place to live.

Despite the rhetoric of this presidential campaign that has lasted longer than any campaign should, and the truly horrendous, insulting and somewhat insane words by many on both ends of the political spectrum, we still think America is a pretty darn good place to live, work and worship in freedom and relative 'luxury' when compared to the rest of the world.

We think Mitt Romney is a 'good and decent man'.  We think President Obama 'saw wrong and tried to right it'. We think both of them 'see suffering and want to heal it'.  No one wants war so why would anyone not want to 'stop it' when they see it happening?

Each one has different ways to try to achieve these noble ends.  President Obama believes strongly in the power of the federal government and the executive office of the President to get things done his way in much more of the classical Federalist concept of top-down governance (although the Federalists of those days would be truly shaken by the size and scope of the federal government in place today).

Governor Romney believes in more executive and legislative power devolving back to the states and localities to let them solve problems closer to their source in more of a Jeffersonian-Madisonian view of the world.

We just happen to agree far more with Mitt Romney's view of the role of government in the United States of America than we do President Obama's view.  Anytime we see a concentration of power in the hands of a very few anywhere, to be honest about it, including Wall Street for example, the hair on the back of our necks stands straight up and alarm bells go off in our heads.

History teaches us that people with power can do good things for others...and not-so-good things in many cases, horrific in nature as well.  Lord Acton said it best, and based on what we have seen over the past 30 years in-and-out of government, we whole-heartedly agree:
'Power corrupts and absolute power corrupts absolutely'.  
Plus, we absolutely hate and detest the grotesque waste of your hard-earned taxpayer dollars while we are, at the same time, borrowing money in the most profligate manner and running up exorbitant amounts of debt for our children and grandchildren to deal with.  We had hoped that President Obama would show some sort of concern as perhaps the 'transformational President' that millions of his supporters in 2008 thought he was going to be....but over past 4 years, he did not. Sadly. For everyone concerned.

We think we have shown that concern for fiscal discipline and budget creativity in spades in this blog over the years to your heart's content.  We hope we have satisfied your curiosity as to whether we can reform federal spending and balance our budgets that way first before considering any more confiscation of your hard-earned tax dollars.

Having such differences about public policy in a democratic republic doesn't make us 'bad people'.

Having these differences and being able to talk about them in public and on the airwaves is one of the pure gifts given to us by the Founders of this nation and the Bill of Rights amendments to the US Constitution.  We wouldn't be America without such a free-spirited discussion of the issues that concern us about self-governance.

May it ever be so in the United States.

Try to remember these inspirational words about Robert F. Kennedy regardless of who wins the White House, the Senate and the US Congress in any given election. We, the people of the United States of America, are what gives essence and credence to the American Dream and way of life, not any single or group of politicians at any given moment in time.

But we do have to have good and decent elective leaders to help keep our way of life going.  Choose wisely or run yourself.  Those are the only two options we are ever going to have in America.

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