Saturday, August 23, 2014

The Social Security Trust Fund Surplus Explained. Again.

'Confusing, Social Security is, hmmm?'
We have a friend, let's just call him 'Yoda'* because he knows everything there is to know about Social Security and then some.

You ever hear that something is not 'rocket science'?

Well, apparently, understanding the convoluted and byzantine cash glows of Social Security is 'rocket science'. No mere mortal average citizen understands it all and very few people in Congress or the White House understand it either.

Yoda not only graduated from Princeton but has a Ph.D in computational quantum chemistry from Berkeley.

He needs it. He is one of three Trustees on the Board that oversees the operations and health of Social Security and Medicaid.

We posted our last musing on the fact that SS payroll taxes do not cover 100% of all the cash that goes to senior citizens in their monthly SS check. We were trying to make the point that it is not a pay-as-you-go program as many think nor is it a true financial vehicle whereby every dollar you pay in SS payroll taxes goes into some individual interest-bearing and capital-appreciating account at Fort Knox with your name on it.

Which is true.

However, the chart we posted confused some, us included, when it had the largest share of indirect payments to SS recipients coming from 'interest' instead of direct payroll taxes.

So, of course, we contacted Yoda for assistance.

Here is his reply below. Read it and see what you think and we will conclude with some remarks at the end.
'The basics of SS Trust Fund operations are available at this link:
The second table, showing the components of Soc Sec trust fund receipts, is probably most relevant to your question.  Interest payments have actually been made from the beginning. They didn’t just start in 1983 (when the Alan Greenspan Commission on SS raised payroll taxes not only to cover current SS expenses but also to buy up the national debt (see Moynihan) – it’s just that starting in 1983 they became much more significant.
They’d never been more than $3 B a year until 1983, then they jumped to $8 B, and by 1991 they were topping $20 B a year and rising.
Basically any surpluses Soc Sec runs result in a bond being issued to the trust fund, and that bond earns interest which is paid from the general fund.  Pretend that we just started the program from scratch and in its first year we collected $10 B in payroll tax revenues and paid out $8 B in benefits.  That would result in $2 B in Treasury bonds being issued to the trust fund.
Those bonds earn interest.  Those interest payments are made from the general fund, just like any other interest payments the federal government makes on Treasury bonds.
I do think you’re right to think of the interest payments from 1983-2010 as basically being “imputed” in a sense because all that was involved was crediting the trust fund with interest and causing its balance to grow.

It’s not like the government had to go out and raise this money, it just issued a credit from the general government accounts to the trust fund accounts, adding to Social Security’s future spending authority.

Though, those interest credits DID count against the government’s statutory debt ceiling, because the debt ceiling includes debt held by the social security trust funds.
But starting in 2010, the interest payments became more “real” in the sense that payroll taxes were no longer sufficient to finance benefit payments. So part of the interest payment from the general funds to the trust funds went immediately out the door in cash to pay benefits. The remainder of the interest payments just added to the trust fund balance the way that they had historically, but since 2010 the federal government has been supporting benefit payments with cash payments of interest from the general fund.
Basically, since 2010, Soc Sec has been supported in part by payments from the general fund and it has added to the federal deficit because payroll taxes are now insufficient to finance benefit payments.  To the extent that benefits are financed by incoming payroll taxes, they don’t add to the federal deficit.

But to the extent that benefit payments are financed by interest payments from the general fund, they do add to the federal deficit because those interest payments are made from the government’s general fund and have no external revenue source.'
See what we mean about having a Ph.D in quantum computational physics when it comes to understanding Social Security cash flows? It is complicated. Very complicated.

Two points to keep in mind:
  1. The huge annual Social Security 'Surplus' you may have heard about being paid into the Trust Funds each year is gone. At one time, the excess receipt of SS payroll taxes over outgoing expenses was expected to last until well into the second decade of the 21st century, 2026 or so was the targeted expiration date.
  2. At some point or another, sooner now rather than later as planned in 1983, your payroll taxes will have to go up or your parent's (or maybe even you) Social Security benefits will be cut by 5%, 10% or up to 25% to make up for the fact that the Social Security 'Trust Fund' (sic) will be completely depleted.

    When it comes time to 'redeem' the bonds held in the SS 'Trust Fund' account, the only way to do that is to raise taxes or cut benefits. No other way. Unless you want the Fed to make up fake money again and bail SS out to the tune of multiple trillions of dollars again.

    We still maintain that the Social Security 'Trust Fund' (sic) still needs to asterisked just to differentiate it from the traditional 'true' trust funds you think of where money goes into some money manager's company; is invested in a wide array of bonds and stocks or real estate; grows in economic value; collects interest and dividends for the duration and, when the time to tap into the trust fund comes around, those segregated funds are available for you to use in your retirement, etc.
But at least we all now more fully understand the cash flows in Social Security. Yes?

*Chuck Blahous is the director of the Spending and Budget Initiative, a senior research fellow at the Mercatus Center at George Mason University and a public trustee for Social Security and Medicare. 
Blahous is the author of Social Security: The Unfinished Work and Pension Wise: Confronting Employer Pension Underfunding and Sparing Taxpayers the Next Bailout, as well as the influential study,“The Fiscal Consequences of the Affordable Care Act.”
He was formerly the deputy director of President Bush’s National Economic Council, special assistant to the president for economic policy, and executive director of the bipartisan President’s Commission to Strengthen Social Security.
He worked in Senator Alan Simpson's office where we met him during the 1994 Bipartisan Commission on Entitlement and Tax Reform set up by President Clinton.

Blahous received his PhD in computational quantum chemistry from the University of California at Berkeley and his BA from Princeton University.

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Wednesday, August 20, 2014

You Think Your Social Security Check Comes Just From Your Contributions Every Paycheck?

'Hey, Wait a minute! I thought I paid for everything
in my Social Security plan!'
Think again.

Social Security has been sold for close to 80 years now as a 'retirement plan' for senior citizens. It has been sold as a 'pay as you go' plan where you pay your payroll taxes every week and supposedly, you believe that it goes into an individual private savings account or something where it builds in value for the future.

Nothing could be further from the truth.

SS was originally conceived to be a way to pull millions of seniors out of abject poverty during the Great Depression of the 1930's which made the recent Great Recession look like a kindergarten party at the park. Get money to your grandma and grandpa or great-grandma and great-grandpa so they didn't starve to death during those terrible economic times.

It was originally sold as a 'social insurance' fund but morphed into a 'retirement plan' mode the more politicians made it sound like you had worked all your life and set aside money for your own Social Security plan.

Which you did not. Which you have not. Which you will not under current structure and operation.

Everyone you talk to who is on Social Security will swear up and down on a stack of Bibles: 'I paid all my life into Social Security every paycheck every week. Daggum it! I deserve to get it all back and then some now that I am retired!'

And elected officials in Washington have quivered at the very thought of telling them the truth ever since.

The AARP terrifies each and every one of them. However, the AARP doesn't consider themselves to be a 'political action committee' or a 527 or any sort of active political organization. It operates under a variety of 501(c)3 non-profit entities along with some for-profit divisions which make it a multi-billion dollar annual business, not just a small group of people advocating for the poor seniors.

Which they use to be the single most terrifying lobby group America has ever known. Mention one word about Social Security or Medicare reform and 44 million seniors who vote in EVERY election* will vote against you even if your opponent is Ernest T. Bass.
'I know. I was right dere in it'

According to the above chart above from the Committee for a Responsible Federal Budget, a whole lot of money comes from you, the general taxpayer, lately especially in the last 4 years or so to pay for current SS benefits. $230 billion to be exact from 2010-2014.

'What is that you say, sonny? I can't hear as good as I used to' you can already hear. 'I paid every nickel into SS and I am going to get every one of my nickels out!'

A whole lot of general revenue taxpayer money has been pumped into SS lately along with billions of dollars of taxes from SS benefits of higher-income people. This is all money that does not come from the payroll taxes any senior has paid into SS over the years.

So how can anyone really and truly say that Social Security is totally a 'self-funded' program by recipients?

Take a good look at this article 'General Revenue & The Social Security Trust Funds' and see what you think.

We have long argued that everyone would be far better off if we could truly put our SS payroll taxes into a defined contribution plan similar to what they did in Chile in 1980 and retire with far more assets and monthly income streams than the average $1700/month most people can expect to receive once they start receiving Social Security.

Having facts such as these from CFRB is helpful to start that ball rolling.

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Monday, August 18, 2014

Corporate Anthropomorphism and The Right to Assembly

'Oh No! I Am Home To A Big, Bad
'What is a corporation: A) an association of people or B) an inanimate object like a machine or a computer?'

It is always interesting when we hear people assign human qualities, emotions, virtues or faults to a company or corporation.

'Corporate Anthropomorphism' we'd like to call it.

Recently, on a relatively obscure financial issue, we have heard politicians from President Obama to Senator Dick Durbin (D-IL) and even Secretary of State John Kerry say that corporations that 'invert' their operations, or move them to somewhere overseas are 'unpatriotic' in some way.

George Will wrote a column that got us to thinking about this in more depth: 'In a Stew Over Inversion'

'Corporate Inversion' is defined as the following:
Re-incorporating a company overseas in order to reduce the tax burden on income earned abroad. Corporate inversion as a strategy is used by companies that receive a significant portion of their income from foreign sources, since that income is taxed both abroad and in the country of incorporation. Companies undertaking this strategy are likely to select a country that has lower tax rates and less stringent corporate governance requirements.*
If corporations are inanimate objects such as a machine or a computer, how can they be 'unpatriotic' or have any other human characteristic?

Think about it. If someone said: 'My computer started acting up today. It must be unpatriotic', that would be crazy. You would laugh them out of the room.

Computers are machines. People make them. When people stop using them, they are thrown away and they are recycled or torn apart for parts or junked. They have no intrinsic value other than to help us live better, more productive lives.

Is a corporation a 'machine' or a 'computer'? The legal shell of it might be in some way. But those legal shells were created by Congress and state legislatures to provide certain protections from legal liability so people would be incentivized to take risks to grow that business without putting every personal asset at risk.

At the heart of any company or corporation are people led by some executive, president or board of directors who make decisions on a daily basis designed hopefully to extend the life of that company by making more products and selling them for more than it costs to produce them.

So when it comes to calling a big, bad corporation 'unpatriotic', aren't critics basically saying that the people who run those corporations and work for them are 'unpatriotic' for making such business decisions as 'inverting' them overseas?

Here's what we think is so interesting about this:

  • 'Big bad corporations' are considered 'human' by critics and politicians when it seems as if it might be a favorable potential political issues to their side such as inversion. 
  • 'Big bad corporations' are not considered 'human' when it comes to issues such as political free speech and campaign finance when it seems as if bashing them might be a favorable potential political issue for their side.
Which is it then? Are corporations made up of human beings? Or are they just mere 'machines'?

And what about the 'right to assembly' as defined in the First Amendment?
Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.
Aren't people who work for or run any company or corporation basically 'assembling peacefully' to work together for some common purpose such as producing vaccines for the Ebola virus, finding cures for cancer or making fuel-efficient automobiles for us to drive to work every day?
If so, why should they be denied the right as an assembly of people to participate in elective politics through funding or speaking out on the issues of concerns to them collectively....just as unions can do and have done for the past century?

Are unions 'human' or not as well? Or are they just like corporations where laws passed by our duly-elected legislators protect their right to 'assemble' and 'to petition the Government for a redress of grievances' such as work-related safety and conditions?

It is just something to think about the next time you hear some politician rant on about 'corporate inversions' or some other thing they think will rile up the electorate to vote for their side this fall.


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Thursday, August 14, 2014

'Government Is Not The Solution To Our Problem; Government IS the Problem'

'We are going to begin to act, beginning today'
Every Founder of America could have said this phrase at the beginning of the Republic.

'King George and his British Empire are not the solution to our problems! They want to tax everything we use or do and they don't give us the right to vote on our own self-determination. We want freedom in America, not servitude!'

The King of England is the problem; not the solution'

The quote in the title of this post was not uttered by the Founders, at least as far as we can find in historical writings.

President Ronald Reagan spoke these words boldly and confidently in his First Inaugural Address  on January 20, 1981 as he took over control of the executive branch from President Jimmy Carter.

President Carter's single term ended in total chaos which included the foreign policy 444-day debacle in Iran; 12% inflation and 21% interest rates on the domestic front and the most lop-sided loss for any US incumbent president in American history in 1980, 49 electoral votes for Carter to 489 electoral votes for Reagan.
'We must act today in order to preserve tomorrow. And let there be no misunderstanding--we are going to begin to act, beginning today.
The economic ills we suffer have come upon us over several decades. They will not go away in days, weeks, or months--but they will go away. They will go away because we, as Americans, have the capacity now, as we have had in the past, to do whatever needs to be done to preserve this last and greatest bastion of freedom.
In this present crisis, government is not the solution to our problem. Government is the problem.' 
Notice how President Reagan inspired hope in the future at a time when millions of Americans were out of work and really suffering. He didn't waste his entire Administration blaming President Carter for screwing things up so badly in the first place. He took over the reins of government on January 20, 1981 and set about correcting the problems 'beginning today'.

10 million or more Americans had been thrown out of work by the convulsions in the economy caused by the oil price spikes in the Middle East plus the bungling of both fiscal and monetary policy under President Reagan and the Democrat-controlled House and Senate at the time.

10 million people were unemployed when the population of America was 226 million. 30 years later, 13.6 million people were unemployed out of a population of 310 million people which was a very similar percentage of people out of work.

Reagan promised that the 'economic ills' would go away because 'Americans have the capacity to do whatever needs to be done to preserve this last and greatest bastion of freedom'

That we do. We just haven't the leadership out of Washington to deal with these issue forcefully or factually.

We have been consistent in our critique of the Bush 43 Administration and the GOP Congress that lost its way from 2002-2006. They spent too much money on too many things and expansions of programs and they let the debt genie out of the bag by not balancing the budgets.

We thought that was bad enough until President Obama took over the White House in 2009 and Democrats controlled both chambers of Congress from 2009-2011. He has only proceeded to preside over a doubling of our national debt with no plans to ever reduce it in any way, shape, fashion or form before he leaves office in 2017.

We have no problem with having a government that is run in an adult manner. In fact, we love it. We love the idea of having a military force that can and will defend us against any and all terrorists and nations that seek to do Americans harm.

President Obama not only seems intent on being known as the American President who lost the Middle East by future historians, he doesn't even seem interested in protecting the borders which is clearly a federal executive issue.

We want to have the best roads possible so we don't keep hitting potholes that knock our cars out of alignment.

We want our public school systems (which are primarily the responsibility of state and local governments, not the federal government) to produce smart, productive and respectful citizens of the United States of America so they can keep it going long into the future.

We have major problems with elected officials from the White House on down who don't understand the simple concepts of balanced budgets; being frugal with scarce taxpayer dollars and the dangers of explosive national debt and fictitious monetary policy on our nation's future.

In short, we need a Ronald Reagan to come in after President Obama and help restore us to some sort of national sanity about the role of the federal government in our lives vis-a-vis the correlated roles of state and local governments to do the jobs we ask them to do on a daily basis.

President Reagan said it best: 

Now, so there will be no misunderstanding, it's not my intention to do away with government. It is rather to make it work--work with us, not over us; to stand by our side, not ride on our back. Government can and must provide opportunity, not smother it; foster productivity, not stifle it.
When done right, 'self-government is great'. Best the world has ever seen.

It has been a long, long time since any of us can say we are happy as clams about who is leading us in the White House or in Congress.

As President Reagan said, we Americans have the 'capacity to do whatever needs to be done to preserve this last and greatest bastion of freedom.'

 The best way to do it is to vote people out of office this fall in the November elections who don't have the capacity to lead and make us whole again. And the best way going forward is to vote for new great leaders to replace the ones who simply have failed to get the job done on both sides of the aisle.

Exercise your right to vote carefully on November 4. It is your best chance to change things for the better in America.

* Complete text of Reagan's First Inaugural Address below)
Senator Hatfield, Mr. Chief Justice, Mr. President, Vice President Bush, Vice President Mondale, Senator Baker, Speaker O'Neill, Reverend Moomaw, and my fellow citizens:
To a few of us here today this is a solemn and most momentous occasion, and yet in the history of our nation it is a commonplace occurrence. The orderly transfer of authority as called for in the Constitution routinely takes place, as it has for almost two centuries, and few of us stop to think how unique we really are. In the eyes of many in the world, this every 4-year ceremony we accept as normal is nothing less than a miracle.

Mr. President, I want our fellow citizens to know how much you did to carry on this tradition. By your gracious cooperation in the transition process, you have shown a watching world that we are a united people pledged to maintaining a political system which guarantees individual liberty to a greater degree than any other, and I thank you and your people for all your help in maintaining the continuity which is the bulwark of our Republic.

The business of our nation goes forward. These United States are confronted with an economic affliction of great proportions. We suffer from the longest and one of the worst sustained inflations in our national history. It distorts our economic decisions, penalizes thrift, and crushes the struggling young and the fixed-income elderly alike. It threatens to shatter the lives of millions of our people.

Idle industries have cast workers into unemployment, human misery, and personal indignity. Those who do work are denied a fair return for their labor by a tax system which penalizes successful achievement and keeps us from maintaining full productivity.

But great as our tax burden is, it has not kept pace with public spending. For decades we have piled deficit upon deficit, mortgaging our future and our children's future for the temporary convenience of the present. To continue this long trend is to guarantee tremendous social, cultural, political, and economic upheavals.

You and I, as individuals, can, by borrowing, live beyond our means, but for only a limited period of time. Why, then, should we think that collectively, as a nation, we're not bound by that same limitation? We must act today in order to preserve tomorrow. And let there be no misunderstanding: We are going to begin to act, beginning today.

The economic ills we suffer have come upon us over several decades. They will not go away in days, weeks, or months, but they will go away. They will go away because we as Americans have the capacity now, as we've had in the past, to do whatever needs to be done to preserve this last and greatest bastion of freedom.

In this present crisis, government is not the solution to our problem; government is the problem.
From time to time we've been tempted to believe that society has become too complex to be managed by self-rule, that government by an elite group is superior to government for, by, and of the people. Well, if no one among us is capable of governing himself, then who among us has the capacity to govern someone else? All of us together, in and out of government, must bear the burden. The solutions we seek must be equitable, with no one group singled out to pay a higher price.

We hear much of special interest groups. Well, our concern must be for a special interest group that has been too long neglected. It knows no sectional boundaries or ethnic and racial divisions, and it crosses political party lines. It is made up of men and women who raise our food, patrol our streets, man our mines and factories, teach our children, keep our homes, and heal us when we're sick—professionals, industrialists, shopkeepers, clerks, cabbies, and truck drivers. They are, in short, "We the people," this breed called Americans.

Well, this administration's objective will be a healthy, vigorous, growing economy that provides equal opportunities for all Americans, with no barriers born of bigotry or discrimination. Putting America back to work means putting all Americans back to work. Ending inflation means freeing all Americans from the terror of runaway living costs. All must share in the productive work of this "new beginning," and all must share in the bounty of a revived economy. With the idealism and fair play which are the core of our system and our strength, we can have a strong and prosperous America, at peace with itself and the world.

So, as we begin, let us take inventory. We are a nation that has a government—not the other way around. And this makes us special among the nations of the Earth. Our government has no power except that granted it by the people. It is time to check and reverse the growth of government, which shows signs of having grown beyond the consent of the governed.

It is my intention to curb the size and influence of the Federal establishment and to demand recognition of the distinction between the powers granted to the Federal Government and those reserved to the States or to the people. All of us need to be reminded that the Federal Government did not create the States; the States created the Federal Government.

Now, so there will be no misunderstanding, it's not my intention to do away with government. It is rather to make it work--work with us, not over us; to stand by our side, not ride on our back. Government can and must provide opportunity, not smother it; foster productivity, not stifle it.

If we look to the answer as to why for so many years we achieved so much, prospered as no other people on Earth, it was because here in this land we unleashed the energy and individual genius of man to a greater extent than has ever been done before. Freedom and the dignity of the individual have been more available and assured here than in any other place on Earth. The price for this freedom at times has been high, but we have never been unwilling to pay that price.

It is no coincidence that our present troubles parallel and are proportionate to the intervention and intrusion in our lives that result from unnecessary and excessive growth of government. It is time for us to realize that we're too great a nation to limit ourselves to small dreams. We're not, as some would have us believe, doomed to an inevitable decline. I do not believe in a fate that will fall on us no matter what we do. I do believe in a fate that will fall on us if we do nothing. So, with all the creative energy at our command, let us begin an era of national renewal. Let us renew our determination, our courage, and our strength. And let us renew our faith and our hope.

We have every right to dream heroic dreams. Those who say that we're in a time when there are not heroes, they just don't know where to look. You can see heroes every day going in and out of factory gates. Others, a handful in number, produce enough food to feed all of us and then the world beyond. You meet heroes across a counter, and they're on both sides of that counter. There are entrepreneurs with faith in themselves and faith in an idea who create new jobs, new wealth and opportunity. They're individuals and families whose taxes support the government and whose voluntary gifts support church, charity, culture, art, and education. Their patriotism is quiet, but deep. Their values sustain our national life.

Now, I have used the words "they" and "their" in speaking of these heroes. I could say "you" and "your," because I'm addressing the heroes of whom I speak—you, the citizens of this blessed land. Your dreams, your hopes, your goals are going to be the dreams, the hopes, and the goals of this administration, so help me God.

We shall reflect the compassion that is so much a part of your makeup. How can we love our country and not love our countrymen; and loving them, reach out a hand when they fall, heal them when they're sick, and provide opportunity to make them self-sufficient so they will be equal in fact and not just in theory?

Can we solve the problems confronting us? Well, the answer is an unequivocal and emphatic "yes." To paraphrase Winston Churchill, I did not take the oath I've just taken with the intention of presiding over the dissolution of the world's strongest economy.

In the days ahead I will propose removing the roadblocks that have slowed our economy and reduced productivity. Steps will be taken aimed at restoring the balance between the various levels of government. Progress may be slow, measured in inches and feet, not miles, but we will progress. It is time to reawaken this industrial giant, to get government back within its means, and to lighten our punitive tax burden. And these will be our first priorities, and on these principles there will be no compromise.

On the eve of our struggle for independence a man who might have been one of the greatest among the Founding Fathers, Dr. Joseph Warren, president of the Massachusetts Congress, said to his fellow Americans, "Our country is in danger, but not to be despaired of . . . . On you depend the fortunes of America. You are to decide the important questions upon which rests the happiness and the liberty of millions yet unborn. Act worthy of yourselves."

Well, I believe we, the Americans of today, are ready to act worthy of ourselves, ready to do what must be done to ensure happiness and liberty for ourselves, our children, and our children's children. And as we renew ourselves here in our own land, we will be seen as having greater strength throughout the world. We will again be the exemplar of freedom and a beacon of hope for those who do not now have freedom.

To those neighbors and allies who share our freedom, we will strengthen our historic ties and assure them of our support and firm commitment. We will match loyalty with loyalty. We will strive for mutually beneficial relations. We will not use our friendship to impose on their sovereignty, for our own sovereignty is not for sale.

As for the enemies of freedom, those who are potential adversaries, they will be reminded that peace is the highest aspiration of the American people. We will negotiate for it, sacrifice for it; we will not surrender for it, now or ever.

Our forbearance should never be misunderstood. Our reluctance for conflict should not be misjudged as a failure of will. When action is required to preserve our national security, we will act. We will maintain sufficient strength to prevail if need be, knowing that if we do so we have the best chance of never having to use that strength.

Above all, we must realize that no arsenal or no weapon in the arsenals of the world is so formidable as the will and moral courage of free men and women. It is a weapon our adversaries in today's world do not have. It is a weapon that we as Americans do have. Let that be understood by those who practice terrorism and prey upon their neighbors.

I'm told that tens of thousands of prayer meetings are being held on this day, and for that I'm deeply grateful. We are a nation under God, and I believe God intended for us to be free. It would be fitting and good, I think, if on each Inaugural Day in future years it should be declared a day of prayer.

This is the first time in our history that this ceremony has been held, as you've been told, on this West Front of the Capitol. Standing here, one faces a magnificent vista, opening up on this city's special beauty and history. At the end of this open mall are those shrines to the giants on whose shoulders we stand.

Directly in front of me, the monument to a monumental man, George Washington, father of our country. A man of humility who came to greatness reluctantly. He led America out of revolutionary victory into infant nationhood. Off to one side, the stately memorial to Thomas Jefferson. The Declaration of Independence flames with his eloquence. And then, beyond the Reflecting Pool, the dignified columns of the Lincoln Memorial. Whoever would understand in his heart the meaning of America will find it in the life of Abraham Lincoln.

Beyond those monuments to heroism is the Potomac River, and on the far shore the sloping hills of Arlington National Cemetery, with its row upon row of simple white markers bearing crosses or Stars of David. They add up to only a tiny fraction of the price that has been paid for our freedom.

Each one of those markers is a monument to the kind of hero I spoke of earlier. Their lives ended in places called Belleau Wood, The Argonne, Omaha Beach, Salerno, and halfway around the world on Guadalcanal, Tarawa, Pork Chop Hill, the Chosin Reservoir, and in a hundred rice paddies and jungles of a place called Vietnam.

Under one such marker lies a young man, Martin Treptow, who left his job in a small town barbershop in 1917 to go to France with the famed Rainbow Division. There, on the western front, he was killed trying to carry a message between battalions under heavy artillery fire.

We're told that on his body was found a diary. On the flyleaf under the heading, "My Pledge," he had written these words: "America must win this war. Therefore I will work, I will save, I will sacrifice, I will endure, I will fight cheerfully and do my utmost, as if the issue of the whole struggle depended on me alone."

The crisis we are facing today does not require of us the kind of sacrifice that Martin Treptow and so many thousands of others were called upon to make. It does require, however, our best effort and our willingness to believe in ourselves and to believe in our capacity to perform great deeds, to believe that together with God's help we can and will resolve the problems which now confront us.

And after all, why shouldn't we believe that? We are Americans.
God bless you, and thank you.

Note: The President spoke at 12 noon from a platform erected at the West Front of the Capitol. Immediately before the address, the oath of office was administered by Chief Justice Warren E. Burger.
In his opening remarks, the President referred to Rev. Donn D. Moomaw, senior pastor, Bel Air Presbyterian Church, Los Angeles, California.

The address was broadcast live on radio and television.

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Saturday, August 9, 2014

'Leading From Behind' Doesn't Make Any Sense When It Comes to US Foreign Policy

The Obama Foreign Policy Explained
One thing we learned from President Ronald Reagan during our time on Capitol Hill was this:

'Peace Through Strength'

The Berlin Wall came down soon after Reagan left office. The Soviet Union fell apart after that. The 1990's were generally a time of peace and democracy spreading throughout the globe

One thing we have learned watching President Obama's foreign policy for the past 5.5 years now is this:

'Leading from Behind' doesn't work.

Look at all of the hotspots around the globe today. Ukraine. Israel-Gaza. ISIS all over Iraq building a caliphate to end all caliphates. We have a flood of illegal immigrants coming over the southern border of the United States and still this Administration does nothing to stem the flow.

The closest thing we have seen to this period of waning US influence overseas were the last years of the presidency of Jimmy Carter 1979-80. Ayatollah Khomeini first focused American and worldwide attention on the fundamentalist Muslim movement when they ousted the Shah of Iran and established the Islamic Republic of Iran.

They held 52 American hostages at the US embassy for 444 days which spawned the advent of such late night news shows as 'Nightline' with Ted Koppel who covered every day of this ordeal. Round the clock cable news followed soon thereafter.

Guess when the Ayatollah released these 52 brave hostages? About 30 minutes before Ronald Reagan was sworn in as President of the United States on January 20, 1981.

Why would the radical Islamists of 1981 release these hostages after thumbing their nose at the previous President Carter for 444 days? They were afraid of the new President for his comments about restoring American military might and prestige around the globe. They knew he meant business and they didn't want to take the chance or the risk that Tehran would be Ground Zero for one of the new Cowboy President's displays of American confidence and might.

Aren't we almost exactly in the same position today in international affairs? Hardly anyone seems to worry about what President Obama might do on the world stage if they invade another country, domestic or foreign. Not even the death of Osama bin Laden has magnified President Obama on the world stage.

He and Secretary of State John Kerry have drawn so many lines in the sand in Syria, Ukraine, Gaza, the Texas border and other places around the world and not enforced them that the bad guys see this time as their chance to expand their power while the getting is good.

We recently had the chance to visit with some missionary friends of ours who were relocated from Ukraine (it is most definitely not 'The Ukraine) to another nation in Europe where they continue their work.

The husband told us an interesting story that we have not seen on the evening news or the cable stations yet.
'There are no Russian separatists still left in Ukraine', he began saying. 'What you see now in Ukraine are almost totally mercenary armies hired by the former President of Ukraine, Viktor Yushchenko, who fled to Russia with about $2 billion in funds he absconded with, most likely skimmed from US aid accounts we had been sending them.
Their strategy is to destabilize Ukraine to the point where Russian thug and president, Vladimir Putin, can make a calculation as to whether he can send in Russian troops not only to secure Crimea, as they have done, but the entirety of Ukraine. If he thinks America and the Allies will not make a strategic move to stop them, he will do it'
'What could have been done to send a signal to Putin to back off?' I asked him.
'President Obama sending in a few SEAL Team VI or Ranger units would have been enough for Putin to back away. All he wanted to see was whether western nations were going to let him move into Ukraine unimpeded, in which case he would go, or put up even a small fight, in which case he wouldn't.
'It is that simple' he concluded.
Foreign affairs is never simple we have found over these past 30+ years of being around it. There is almost always some complication that the general public doesn't know about nor do they need to know about.

However, brutish dictators, thugs, terrorists and overall 'bad guys' do fear one thing and one thing only: A nation with the military might and expertise to turn their lives into a living terror or their deserts into sheets of glass.

Ever since President Obama embarked on his world-wide tour from the beginning of his presidency in 2009 where he bowed to foreign leaders (something no US President has ever done anywhere, not even to the Queen of England) and apologized for every sin under the sun whether America committed them or not, bad guys like the Muslim Brotherhood and Putin have chosen to expand their spheres of influence, not reduce it.

US foreign policy can not be dictated by other nations. We have to be able to project US military might and protection around the globe or else we will rue the day when we retreated to our home borders and let the bad actors run free across the globe.

Know what the only nation in recorded human history is that has repeatedly gone into foreign nations to free them from oppression...and then willingly gone home soon thereafter?

Correct. The United States of America.

The Roman Empire never went into a nation, freed it from oppression and then left. Neither did Alexander the Great, the British Empire or the Soviet Union, just to name a very few conquering superpowers of the past.

Our great-grandfathers and grandfathers help rescue the French and other European nations during WWI; our grandfathers and fathers rescued the entire world from the monomaniacal plans of Hitler, Mussolini and the Emperor of Japan.

We kept troops in Europe long enough to secure the peace but the majority of troops were home almost immediately after both World Wars to End All World Wars. We still have troops in Korea and Japan and other places but that is more because those countries want the protection of American military might to keep them free from any aggressive action from the Chinese.

Even in Iraq and Afghanistan, the plan was to keep troops there as long as necessary to secure the peace and allow both nations to covert to democratic principles and practice.

At this rate under the Obama 'Lead from Behind' policy, ISIS will have overrun Iraq and Afghanistan in about 1 month after the targeted withdrawal of troops by President Obama and all of those lives lost and taxpayer funds spent will be for naught.

President Obama's foreign policy and domestic border strategies of 'Leading from Behind' have clearly failed.

'Speak softly and carry no stick' clearly doesn't work.

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Tuesday, August 5, 2014

Legislative Supremacy and Suing the Executive in the White House

You should read this book.
We are not constitutional scholars.

But we have been around enough of them to know what they are and what they might say from time to time.

We are not big fans of President Obama. We thought there was a slight glimmer of hope the more we watched re-runs of his truly great speech at the 2004 Democratic National Convention where he declared:

'There is not a Black America and a White America and Latino America and Asian America—there's the United States of America.'

Alas, we may be more divided now than at any time in modern history. George W. Bush wanted to be a 'uniter, not a divider'. President Obama said the right things in 2004 but he has not been very uniting, has he, as a President?

Oh well. Another two-term presidency almost down the drain. Why we allow Presidents to run for re-election is almost getting ridiculous. Most, if not all, second terms of Presidents turn out to be disasters in one way or another.

Regardless of how you feel about President Obama, should the US GOP House sue him for not performing his executive duty as President?

That's a loaded question. It brings in so many constitutional questions and basic gray areas in our representative democracy form of government that we are not sure anyone has a clear answer to it just yet.

However, that has not stopped us before from thinking out loud. Maybe you can help us figure it out as well.

From our constitutional scholars, we do know 2 things are certain:
  1. There is a real question of 'standing' as in 'does the US House have the legal standing or authority to be able to sue another branch of our tripartite government'?
  2. The Supreme Court has shied away from getting involved in such disputes between the executive and the legislative branch in the past.
One law professor we know might put it this way: 'The Supreme Court of America has not come within a 10-foot pole of ruling on the War Powers Act and the Executive power as commander-in-chief after 225 years of our shared history. You think they are going to be dumb enough to wade into this minefield?'

We think there is some real danger in President Obama playing foot-loose and fancy-free with not enforcing certain provisions of the law with which he disagrees. More on that later.

We think Congress has one 'nuclear option' that they can always play and it happens to be fully 100% bonafide and guaranteed by the US Constitution. That is the 'power of the purse'.

All bills to spend money and all bills to raise revenues must originate in the US House of Representatives. That is enormous power in and of itself. If Congress doesn't authorize the payment of appropriations, the government-sponsored activity will cease, plain and simple.

If Congress doesn't like the fact that the President of the United States is not performing his executive duties to enact the bills that Congress has passed, they can withhold funding. For anything in the budget.

For example, if President Obama delays the implementation of Obamacare because he and the Democrats are fearful of the backlash they will suffer at the polls (which he has done twice now, to extend beyond the 2012 and now the 2014 elections), Congress can strip funding for the federal employees who were supposed to implement and enforce Obamacare once it is allowed to take place after this fall's elections.

'But hey!' you might say. 'The Democrat Senate under Harry Reid won't agree to that and won't pass the same bill in the Senate!'

That is very true. However, guess what happens if the House and the Senate can't agree on a budget (which is hard to do given that Harry Reid and the US Senate has never passed a budget yet under Obama) or any of the 13 appropriations bills in any given year?

That is right. Congress will be forced to pass a Continuing Resolution which will fund government at last year's levels, not a new higher level.

Given that Medicare and Medicaid are entitlement programs that operate outside of the annual appropriations process*, the savings will only be in the domestic discretionary side of the budget which includes defense, education, welfare, foreign aid and environmental protection.

But over time, these annual savings would build up, yes? We don't have the figures handy but funding these domestic programs at FY 2014 levels until 2020 might come darn close to balancing the budget all on its own.

'Is that fair?' you may ask.

'Is it 'fair'  that the President can and will take unilateral action to implement those parts of the ACA that he likes for political advantage and not the parts that a Democrat Congress passed and sent to him to sign that he doesn't like or will cause him and the Democrats electoral pain at the polls?' you can ask back.

Neither is a great way to run a railroad or a nation as great as the United States of America, truth be told. In fact, it is childish as heck. But it is a powerful tool Congress can and should use to assert its authority, its 'legislative supremacy', if you will, that Henry Clay spoke of so often in the early days of the Republic.

None of us should pray for the day when one person, no matter how much you may love him or her or agree with their political philosophy, can exact their will on a nation of 310 million people with a pen or a cell phone, as President Obama so prominently promised (threatened) to do in his State of the Union speech.

Because if it can be done by someone you 'agree with', it can also be done by someone you 'disagree with' and that will be a very dark day for American democracy.

Speaking of which, let's get back to the dangerous precedents President Obama may be laying down right now that could come back to haunt him and you if you agree with his unilateral executive actions today.

What would prevent a Republican President in 2017 from assuming office and saying this:
'You know, I have never really liked the corporate income tax, or the capital gains tax, or the estate tax for that matter. Therefore, I am instructing the Treasury Department and the IRS to not prosecute or persecute any corporations or persons who decide not to file any of them on their tax returns for the next 4 years'.
'While I am at it, I think the environmental protection laws are too restrictive and onerous for the private sector in America to compete on a fair basis with China and other nations across the globe. Therefore, I am instructing the EPA to stand-down in their on-site inspections of companies who may be violating environmental laws in favor of adding more jobs to this moribund economy I have inherited from my predecessor'.
And so on....
You may scoff at such a suggestion but be aware that Thomas Jefferson asked Congress to zero out the federal budget for the judicial branch as President because he thought the courts 'had become too political'.

Imagine that. Politics in the courtroom. Sakes alive.

We will be as shocked as these constitutional scholars we know if this congressional lawsuit makes it to the Supreme Court.  We will be electrocuted throughout our entire being if the Supreme Court actually takes up the case and then rules in favor of Congress against the executive powers of the President.

Until then, just know that the Founders of the Constitution did everything in their power to write a template for government that made darned sure that one person, one tyrant, and even one small faction of representatives or senators could not run roughshod over the rest of us and government just because they wanted to.

One mighty way to check any abuse of power in the White House would be for the US House to use their constitutional power of the purse to surgically neuter the power of President Obama in the White House.

If the Republicans pick up the 6 seats necessary this fall in the Senate (even though recent polls show a total of 12-14 seats are now in play as potential Republican pickups), this lawsuit would become moot because a Republican House and Senate should be able to force President Obama to do what they tell him to do by the money they allow in the various parts of the federal budget.

Or the money they deny him to use. It all comes from Congress. Not the White House.

*(although we think both Medicare and Medicaid should be dealt with each year either in the appropriations process or through annual budget reconciliation procedures...but that is too Inside-The-Beltway talk to go over again right now)
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