The Hypocrisy of Democrat Caring - Inflation, Another of Many Examples

The Democrats always claim to care for the well-being of the poor and the middle class.  When we examine this claim critically, all we see is hypocrisy and the maneuverings of flim-flam artists in most cases.  Let us consider another such case.

When faced with a recession brought on by a spike in oil prices which then burst the housing and credit bubbles, the Democrats produced a huge porkulus bill to funnel more than $800 billion preferentially to their political followers, mostly overblown state and local governments, crony big business merchantilists, labor unions, trial lawyers, environmentalists, and community organizers.  This was a huge transfer of money from the productive private sector to the non-productive government sector and away from the jobs-producing small businesses of the free market.  The Democrats further restricted the free market with ObamaCare, so-called financial reform favoring big Wall Street firms over banks and financial companies of a smaller scale, threatened and real tax increases, cutbacks in coal mining and oil and gas extraction, and increased regulation burdens, especially by the EPA.  Job loss was quick to follow.  In December 2008, we lacked 15,287,000 jobs and by February 2011 we lack 23,108,000 jobs.  The Democrat control of the House, Senate, and White House quickly added a loss of 7,821,000 jobs, which was added to the 4,254,000 jobs lost in the second year they controlled the House and Senate in 2008.  The under-educated and low-skilled people the Democrats always claim as their own and to be so close to their hearts, were preferentially found among those now without a job.  The Democrats could not have done a better job of targeting them for grief and deprivation.

Also in keeping with Keynesian economic theory, long known to be balderdash, but much beloved by governments always looking for reasons to spend more money, the Democrats increased the money supply hugely.  Once that is done, avoiding a future bout of price increases is very nearly impossible.  Cutting back on the growth rate of the money supply, once the economy begins to respond to having increased cash, but decreased saving and investment values due to dilution, becomes painful to many.  Among the many who cannot cut back are the governments themselves.  To spend so much, they create huge new debt and that debt has to be financed.  Presently, the Federal Reserve Bank is buying 70% of U.S. Treasury notes!  Without a fundamental change in spending policies by the government, which it is clearly loathe to do given the unwillingness to reduce spending by even $60 billion in the face of a deficit for 2011 of about $1,600 billion, the Federal Reserve Bank will be the only buyer of U.S. Treasury notes for a long time.  They will lighten that obligation by causing inflation, so the debt becomes less burdensome over time.  This is a favorite way for governments to effectively tax the people, without having to pass a tax increase.

This has further consequences for those who are poor, out of a job, on fixed income, or are in the middle class.  Let us examine the consumer price index trends we are now seeing clearly:

Since July 2010, there have been only increases in consumer costs.  These increases are given in terms of annual rates so that adding the last 12 months given adds to 2.0%, but round-off loses 0.1% of the total 2.1% increase over the last 12 months.  The alarming message is that zeroes and negative numbers have been replaced since July with large numbers.  The average monthly increase since July has been 0.2875.  Projecting that alone forward would give us a consumer price index (CPI) increase from July 2010 through June 2011 of 3.45%.  Still more alarming is the fact that the trend is actually upward over that time.  It is more realistic to project at least a 4% increase in the CPI for this period.  Such an increase generates further uncertainty which will make businesses more reluctant to add employees.

 

These increases have been led by increased food costs and fuel costs.  Food and fuel costs are particularly difficult for the poor, those on fixed incomes, and even middle class families to bear.  As we know, medical costs continue their high rate increases, accelerated by ObamaCare. The hardship is increased when many more people are unemployed.  In 2009, the median U.S. inflation-adjusted household income fell 0.7% from 2008.  It is estimated that the median inflation-adjusted household income in 2010 was down by 1.0% compared to 2008.  Income has been going down and now prices, especially unavoidable ones such as food and fuel prices, are going up at a great clip.

Democrats, this is really the way to show how much you care for the poor and the middle class!  Your slip is definitely showing.  No, that would be much too nice.  That can happen to anyone, or at least any woman.  No, you are clearly revealed for the con artists you are.  You cannot put this flim-flam game over on the American people for long.  Surely they will catch on.  A 5% decrease in the ability to purchase goods and services (4% CPI increase, 1% income decrease) is hardly likely to go unnoticed.  Your snake oil is not working and sick Americans are going to notice they are becoming sicker.  You had better hightail it out of town, you flim-flam Democrat con men and women!  This is pure shades of Jimmy Carter replayed and the hopey-changey misdirection magic is not working anymore.

Last Gasp Socialist Omnibus Spending Bill Defeat Gives Hope for New Era of Responsibility

This last week was quite a momentous one for individual rights and more legitimate government, with the continuation of almost all of the lower tax rates of the Bush presidency, the declaration by Judge Hudson that the individual mandate and the penalties in ObamaCare are unconstitutional, the end of the ignoble Don't Ask, Don't Tell Policy in the military, and the defeat of the last gasp effort of the Progressive Socialist Elitists to fund their program for the next year in an Omnibus Spending Bill.

The Democrats had completely neglected to fund the current fiscal year's federal government with the normal 13 appropriations bills, each to be studied, discussed, and debated by responsible adults in the Congress.  Instead, they proposed, in the manner this Congress has become accustomed to, to wrap the whole process into one massive, take it or leave it bill to be passed in the most rushed and ill-considered way possible.  Indeed, as with other bills in this Congress, this was a You Must Pass the Bill in Order to Find Out What Is in It kind of bill.  It was another Trust Us, We Know What is Best for You Bill.  The Omnibus Spending Bill had barely numerable evils embedded in it:

• 1,924 pages which few members of Congress had read and which were not debated appropriately.
• Total spending of about $1.27 trillion, which was way beyond the government's expected tax revenues.
• About 6700 earmarks costing about $8.3 billion, with the usual extra concentrations of earmarks for members of the Appropriations Committee.
• One year's worth of funding for ObamaCare so the coming Anti-ObamaCare House of Representatives would have no opportunity to defund ObamaCare for a year.  This socialist government wants to get a good start hiring those extra IRS agents to make sure everyone buys very expensive government-approved health insurance and that all businesses fill out and submit their 1099 Forms for every transaction or sum of transactions totaling more than $600 in a year with any vendor.
• The Legal Services Corporation would have its budget increased to $440 million so it could once again engage in class action lawsuits, which it had previously so abused that it was forced to stop class action lawsuits in the 1980s.  It says it now wants to force banks to stop predatory lending, which would just mean that more people would turn to payday lenders who charge up to 500% annual interest as banks are forced to bring down their interest rates.  Presumably the Legal Services Corporation would also presumably return to suing landlords and other targets it had previously chosen to harass and extort.

This sort of package deal with thousands of unrelated provisions is a strong bias toward wasteful and wrongheaded spending of the taxpayer's money.  The appropriate bias of Congress should always be against spending the taxpayer's money.  But just as our present-day interpretation of the Constitution is biased toward nearly unfettered governmental powers rather than toward maximal individual rights, the entire appropriations procedure of Congress has become biased toward thoughtless spending of the taxpayer's hard-earned money.  It is noteworthy that Senator Mitch McConnell actually marshalled the opposition of the Republicans to this bill, despite their own many earmarks in it, by correctly stating that this was no way to do business.  He noted that the bill was too expensive and that it was a grab-bag of junk provisions that flew in the face of the voters who made their disdain for such legislation only too well known in the November election.

Senator McConnell proposed a 60-day extending budget resolution, which I believe should have been a 30-day extension.  This would have been just enough time to let the incoming Congress deal with as much as possible of the 2011 fiscal year budget.  Unfortunately, I just heard that the continuing budget resolution will carry the government's excessive spending binge into March.  This will make the 2011 federal deficit much larger than it should be.  Socialism carries a very high price tag in lost individual freedom and the excessive spending of other people's money.

Eliminating the Deficit Is Not Hard

Daniel Mitchell of the Cato Institute has a prescription for a simple way to balance the federal budget without higher taxes.  He would freeze the budget where it is or allow either a 1% or 2% increase per year to achieve budget balance in a few years.  Freezing the budget where it is, projected tax revenues will slightly exceed the spending in 2016.  With 1% spending increases, a micro surplus would occur in 2017.  A 2% spending increase allows a surplus in 2020.  His is a simple response to the absurd claims by John Podesta of the Center for American Progress that the Bush tax cuts cannot be extended or made permanent because there is no reasonable way to downsize the government.

Let us look at this a bit further.  I have plotted the actual federal spending in 2005 dollars from 2000 through 2009 below, with the corresponding actual federal tax revenues.  Beginning in 2002, the tax revenues have been consistently lower than the spending, so we have become habitual deficit spenders.  The Obama government's expected spending and tax revenues for 2010 through 2015 are also plotted.  The Obama government intends to continue huge deficits through the 2015 fiscal year.  I have also plotted what government spending would have been if it had increased each year since 2000 at the same rate as the growth of our population.

For many decades, federal government spending has been excessive.  It was certainly excessive in fiscal 2000.  At least $2 of spending was unconstitutional even then for each $1 that might have made a reasonable claim for being constitutional.  If the federal government had increased its spending at the rate of population growth since then with a constant per capita spending rate, the tax revenue income would have been a match for spending except in the dip of revenue corresponding to the aftermath of the dot.com bubble bust and the present Great Socialist Recession in 2009 and 2010.  This would have been government we sorta, coulda have afforded.  Instead, we have had an insistence that at no time should the government feel any constraints on its spending.  In 2009 and 2010, the years whose spending Obama and the Democrats have completely controlled, the spending has been more than two-thirds higher than tax revenues.  I see no reason for the ridiculous spending of the years 2009 and 2010 to be continued, even without growth.  The new Republican House should insist that 2011 spending return to at least the absurdly high spending level of 2008.  The federal budget could then be allowed to grow at the population growth rate of 0.986% a year from 2000 to 2010.  The rate of spending from 2011 through 2015 is the curve I have called Spending Rationalized.

Under the Spending Rationalized plan, spending would be barely in excess of tax revenues with the extended Bush tax cuts in 2013 and there would be a small surplus in 2014.  There is no reason for government to grow faster than the population does.  In fact, while one might argue that the kind of protective services of local and state governments might justify growth at the population rate, there is no reason for the federal government to grow as fast as that.  At least there is no constitutional reason.  A constitutional government's main expense, by far, would be defense.  The threats to us defensively tend to be what they are, whether we have some more people or some fewer people.  Actually, with more people, enemies may be more reluctant to tangle with us, so the defense needs per capita may drop.

The socialists of the Obama government may argue that the recession will require on-going higher spending levels.  But, the many Obama attempts at stimulating the economy with massive spending bills have not worked.  It is clear that what is needed is a restoration of business confidence, both for large corporations and for medium and small businesses.  They need a known and not too expensive regulatory climate coupled with a reasonable tax policy that recognizes that many American companies are in direct or indirect competition in the world markets.  They need the government to get out of the way and let them produce. 

The only way to get out of the looming cost of government problems such as the Medicare, Medicaid, and Social Security underfunding problems is to cut back on those programs somewhat and foster real growth of the private sector.  The Obama idea of transferring wealth in larger and larger amounts from the private sector to the governments is a recipe for the collapse of the American economy, not just on the temporary scale he has forced in 2009 and 2010, but on a permanent basis.  Indeed, I have little confidence that Obama and the Democrats would even hold spending down to the very high levels they are projecting.  I am even more confident that under their management, the growth in tax revenues they are projecting for 2011 onward is unrealistically high.

Those increases in revenue are not too high if there is a sufficient change of philosophy in Washington that results from the Republicans gaining control of the House, which has to originate all spending bills.  If the Republicans manage to defund ObamaCare and to prevent the EPA from driving up the cost of energy due to their ridiculous declaration that CO2 is a pollutant, then there is hope the U.S. economy might become healthy enough to be able to generate the tax revenues projected.  If Obama takes over the many union pension funds that are underfunded and in critical condition and pushes through union card check so that many more businesses will be forced into a death spiral by being unionized during the lame duck session of Congress just after the election, then growth will be slowed for several years and things may be less rosy than the Democrat projection of tax revenues assumes.  Or, the Republican leadership may think it can ignore the Tea Party and its demands for smaller government and start making compromise after compromise with the socialists to grow government more and the business recovery will be impeded.  Many ifs remain and we will have to be aggressive in making demands of the Republicans once they are in office if the economy is to be set upright again.

The Bailouts and the Stimulus Bills provided gifts to many financial and large companies, but they hurt almost all other companies except for those in the green energy and global warming fraud business.  Obama's much touted small business loans came late and were not at all what small business needs.  Few small businessmen want Obama to become their partner.  Come to think of it, most large businesses belatedly learned that he is not usually a good business partner.  Most American businessmen, and especially small businessmen, agree that they just want government to stop constantly writing more laws and regulations to micromanage their businesses.  There are more laws and regulations than they can comprehend, which is not surprising given that the law makers themselves do not have the time to read the laws for which they vote.  Businessmen have to earn a living and then they are either supposed to read the voluminous laws themselves or have the surplus piles of cash to hire someone else to do it and constantly advise them.  This is a huge drain on small businesses and an unnecessary drain on any business of any size.

So, if government wants to have the tax revenues to spend for all the programs it is already committed to, then it had better change its tune and start recognizing that it is business that generates the income the government taxes or distributes money as wages and salaries, which the government taxes.  You could say that the business of America is business.  I think I have heard that before.  It is often held up to ridicule, but business is the way we all lead productive lives and generate the wealth that sustains the government and for that matter the charities of America.  It is high time we see the validity of that saying that the business of America is business.  So, in the name of the business of America, we need a federal government which knows to avoid being constantly in the way of those who are producing America's wealth.

Federal Spending and Revenue

Brian M. Riedl of the Thomas A. Roe Institute for Economic Policy Studies at The Heritage Foundation has put out a very useful report called Federal Spending by the Numbers 2010.  It is chock full of graphs of the spending and revenues of the recent past and projections to 2020.  For example:

It is interesting to note that the long term rate of federal revenues has been about 18.0% of GDP, but the federal spending rate has exceeded that level by 2.3% of GDP on average year after year.  It is clear we have long been politically unwilling to live within our means and that if we allow the Obama plan to stay in place, we will either have to tax ourselves at a much higher rate than we have historically or we will be spending at rates of about 8.3% of GDP higher than federal revenues.  Such rates of spending are unsustainable.  If taxes are increased that much, the economy will stumble and future growth in the economy and standard of living will suffer terribly.  If taxes are not increased drastically, the accumulated deficits will leave America bankrupt.  It is impossible not to see the critical necessity of drastically reigning in the Obama spending plans.

Here are two more fascinating plots from this Heritage Foundation report showing the effects of future spending on the three major entitlements:

Medicare in particular is an overwhelming spending problem.  By 2050, Medicare, Medicaid, and Social Security will require the complete historical average of federal revenues just to fund them.  Medicare was already going to be a major problem before ObamaCare was passed to make it an even worse problem.  Note that in today's dollars, the average extra tax burden of these three entitlement programs alone will be $12,636 per household!  Do you have that much money available to give to the federal government?  Think about it.

You Can Vote Directly to Cut Wasteful and Inappropriate Federal Programs

Eric Cantor, Republican of Virginia and House Minority Whip, has come up with a great idea to allow Americans to directly vote for one of five government funded programs each week to cut and eliminate it.  It is a good way to read a brief synopsis on five programs that should be cut each week.  The program receiving the most votes to be cut will be brought up by Republicans for a vote to defund and cut it in the House of Representatives.  The web page for the votes on the weekly program to cut is called YouCut.  So far, these federal programs have won the popular vote to be cut in previous weeks:

• New Non-Reformed Welfare Program, costs $2.5 billion a year.
  
  The program was recently created to incentivize states to increase their welfare caseloads without requiring able-bodied adults to work, get job training, or otherwise prepare to move off of taxpayer assistance. Reforming the welfare program was one of the great achievements of the mid 1990s, saving taxpayers billions of dollars and ending the cycle of dependency on welfare. This new program, created in 2009 is a backdoor way to undo those reforms.
• Eliminate Federal Employee Pay Raise, saving $2 billion next year and $30 billion over 10 years.  Cut was voted down by Congress by 183 - 227.  As part of his FY 2011 Budget submission President proposed raising federal civilian pay by 1.4% beginning in January of next year. This will be on top of the 2.0% raise federal civilian employees received this past January, the 3.9% raise they received the previous January, and the 3.5% raise they received the January before that. Freezing federal civilian pay at the current level for one year would save approximately $2 billion next year and $30 billion over ten years.  Eric Cantor says non-uniformed federal employees are paid 20% more than private sector workers.  Actually, they are paid a bigger differential than that according to recent studies and receive a benefits package worth about 4 times that of private sector employees.
• Reform Fannie Mae and Freddie Mac
  Savings estimated at $30 billion.  Cut was voted down by Congress 180 -230.
  Since taking over Fannie Mae and Freddie Mac, the two government sponsored mortgage-backing companies, taxpayers have injected over $145 billion into the two companies. Yet Congress still has not considered proposals to reform these companies and recoup taxpayer funds. The Congressional Budget Office has estimated that absent reform, costs to taxpayer will continue to grow. Taking action to reform these companies now (as opposed to delaying action as some have proposed) by ending their government conservatorship, shrinking their portfolios, establishing minimum capital standards, and bringing transparency to taxpayer exposure could generate savings of up to an estimated $30 billion.

Votes were required on each of these ill-conceived spending programs and despite the desperate deficits of the federal government, none of the spending programs was cut.  The votes were very nearly on party lines with the Republicans voting to cut these shameful and useless costs and the Democrats voting to maintain them.  Each vote is recorded, so you can look up how your Congressman voted.  Be aware that those Democrat Congressmen who pretend to be fiscal conservatives in their home districts have in almost every case voted to maintain the wasteful spending programs.  They occasionally vote in a fiscally conservative way on high profile programs that their constituents may be watching, but whenever they are not watching, which is most of the time, they vote the socialist party spendthrift way.  My mother was just recently telling me that Dan Boren, the only Oklahoma Democrat in Congress, is a good fiscal conservative, yet he voted to maintain the foolish spending on two of the above programs and did not vote on the other at all.

This week, my favorite choice is this:

Sell Excess Federal Property
The Office of Management and Budget estimated in 2007 that the federal government is holding $18 billion in real property that it does not need. Rather than selling this property, however, Federal law usually requires that it first be offered, often at no cost, to other government agencies, to state and local governments, to non-profits, and others. The federal government has conveyed at no cost: a building in Las Vegas that is intended to house the “mob museum,” land in Massachusetts for a private high school where tuition is over $29,000 a year, and a building in Florida that the federal government now leases back at a cost of over $100,000 a year. In addition, because of the red tape associated with selling property, federal agencies often hold onto the property (incurring more maintenance costs) because that is easier than selling it. This proposal would amend federal law to require an expedited process for selling unneeded federal property with 80% of the proceeds used to reduce the deficit. It would set an initial goal of disposing of $18 billion worth of property.  [There is actually much, much more federal property which should be sold than estimated here.  Many a western state is largely owned by the federal government, which greatly reduces the productive use of land.]

Please go to YouCut and vote yourself. The Democrats may prevent the cutting of any of the programs, but they have to go on record as voting to maintain a wasteful program each time. That wasteful program has been designated as particularly deserving of being eliminated by large numbers of Americans in a way that we have never before had an opportunity to do. We are establishing on vote after vote that our Congressmen are not listening to us and we are exposing those who are not and who are fiscally irresponsible week after week.  I hope more and more Americans will participate in this exercise so that the will of the American People is well-established with respect to the dire need to cut government spending.  In the process, we will be able to retain more of our hard-earned income and prevent some government meddling with our lives.

Obama's Change: Growing Government into Bankruptcy

When Obama promised CHANGE he intended to:

• Rid Americans of their individual rights, while laughing at the Constitution as just quaint
• Rid Americans of their health care choices and responsibilities
• Rid private employers of employees
• Make bankrupt Fanny Mae and Freddy Mac agencies of the federal government
• Rid private lenders of all future student loan business
• Rid hard working and productive Americans of much more of their earnings
• Rid the owners of GM and Chrysler of their investments
• Force banks and financial companies to take federal loans whether they need them or not
• End any concept of federal government fiscal responsibility
• Saddle the states with huge increases in already unpayable Medicaid bills
• Enlarge all governments and load them up with even more union employees with high salaries and sky-high benefits
• Bring Social Security to spending more in 2010 than its tax revenue
• Drag innovation in medicine to a painful crawl
• Induce doctors to retire early
• Increase medical costs with new taxes
• Increase taxes on investors so they will have less to invest in America's future
• Increase the size of the IRS
• Saddle employers with more tax and health insurance collection and paperwork duties
• Increased fuel costs due to drilling restrictions and increased ethanol use requirements
• Increased fuel costs due to declaring CO2 a pollutant
• Load tons of federal debt upon our children and grandchildren
• Print and spend money so recklessly that some are advocating a VAT lead weight on business

And these are just some of the changes which he has brought about with about 2.7 years left in office.  He is a very accomplished man in bringing about so many changes in such a short time.  He is a whirlwind of change and these changes are as useful as the change brought on to a small town when a tornado passes through it.  As I warned over and over during the presidential campaign, change is more often destructive than it is good, unless that change is planned and carried through by rational, knowledgeable, and wise people.  When a society is working as well as the American society did, change is best undertaken with much deliberation and consensus.  Change by madmen who scoff at the Constitution and do not read the 1,000 to 2,700 page legislative bills they vote for, will never be good.  Indeed, the tornado-like mass destruction is extremely evident.

Douglas Elmendorf, head of the Congressional Budget Office (CBO), yesterday said:

U.S. fiscal policy is unsustainable, and unsustainable to an extent that it can't be solved through minor changes.  It's a matter of arithmetic.

Numbers from the Treasury Department on the fiscal year 2010 federal budget deficit are staggering (from an e-mail from Grassfire Nation):

• A record $220.9 billion deficit in February alone
• For every dollar in taxes and other revenues the federal government took in, the government SPENT $3.05.
• Five-month deficit total: $651.6 billion, more than 10 percent higher than last year's record.
• The five-month total is larger than any YEAR in American history prior to 2009.
• The FY2010 budget deficit is now projected to be $1.56 trillion AFTER stealing from the Social Security Trust fund.
• The CBO projects that interest payments on the debt will total $916 BILLION annually by the end of the decade.

If the U.S. is paying out $916 billion in interest on the debt each year by 2020, who will be crazy enough to loan the federal government any money?  When Douglas Elmendorf says the U.S. fiscal policy is unsustainable, that is a nice way of saying the U.S. government will be bankrupt.  Do you suppose the Chinese government will put the U.S. government into a conservatorship, as the U.S. government recently did to Fanny Mae and Freddy Mac?  The federal government put them under a new agency in Washington, D.C. I suspect the Chinese government agency the American federal government will be put under will be in Peking.  Since Obama likes communism and Marxism so much, do you suppose this was his planned end point for the transformation of America and its People?  Clearly they would not accept communism given the choice outright, but as the means to be rescued from bankruptcy, Obama figures we will have to accept communist rule.  Since he thinks there is no such thing as American Exceptionalism, why not make us all peasants under the rule of the Chinese Communist Party?

Social Security is already operating at a loss!

For years I have been pointing out that although Social Security projected adequate income until some year well into the future (now 2037), the really important date was the date when current income was not enough to cover current outgo.  Until very recently, this was projected to happen between 2013 and 2017.  Because of the recession and the many unemployed, underemployed, those fully employed at lower incomes, and early retirements largely due to loss of jobs, Social Security will spend more money this year than payroll taxes will provide.  The Social Security Program must start cashing in the IOUs the government issued to it to borrow its income for spending on other programs over the last few decades.  This will now drive the federal government even deeper into its colossal hole of debt.

Of course, the Obama economics ignorant followers will cry for an increase in tax rates.  But not on those who are now paying little in tax rates.  No, they will call for an increase on the wealthy.  That is, they will call for an increase on those who own small, medium, and large businesses and provide jobs and good incomes to many, many Americans.  Except, with higher marginal tax rates, they will produce less taxable income, fewer jobs, and invest less in capital equipment as I noted in my previous post.  This will slow down the growth of the economy and decrease government tax revenue over the longer haul and add to the Social Security and Medicare liability problems.  The only possible helpful thing to do is to cut the higher marginal tax rates and the corporate tax rate and allow the country to grow as best it can.  That may not solve the problem with the need to shovel money into the Social Security program and Medicare rather than borrow their excess income as we have come to be used to doing, but it is the least harmful present response to this problem any but an idiot has long seen coming.

Bush tried to deal with it, as Reagan had before, but the Democrats have always insisted we hide our heads in the sand on this one, as on so many other issues relating to matching our means and our wants as a nation.  Dealing with the need for net Social Security outgo, rather than income, is now going to be very painful.  This is now present pain, rather than future pain.

The Worst Economic Decade Since the Great Depression

First, let us consider the record for Gross Domestic Product or GDP increases by decade since the 1930s, as given in an article in The Economist, 27 February - 5 March 2010.  The data in each graph to follow will be the average annual growth rate for the decade:

GDP grew by a shade less than 1% in the 1930s, but then it grew rapidly in the 1940s at about an average 5.5% a year.  The growth rate for the 1940s may be a strange animal, given WWII.  The 1950s and 1960s were great years of growth, exceeding 4%.  The 1970s, 1980s, and 1990s were all about the same at 3% or a bit more.  Finally, we come to this last decade, the 2000s, and we managed only a 1.9% increase over the 10 years in GDP.  Why?  Let us look at some further figures to see if they might cast some light on the reason.

Here are the figures on Consumption and Income:

Of course the 1930s being dominated by the Great Depression, both consumption and income increases were very small.  The consumption increases were higher than that of income, as people used up savings to scrape by in the Great Depression.  Income was suppressed further by large tax increases during the Great Depression, not to mention the many anti-business acts of the Progressives Hoover and Roosevelt.  Among other foolish policies, they both tried to push industry to keep wages high, which led to industry employing many fewer people than they otherwise would have.  This in turn suppressed overall income growth and consumption.  In the 1940s, 1950s, and 1960s, consumption growth averaged about 4%.  In each of these decades, income growth averaged annual rates in the range of 4.3 to 4.5%.  Income growth in each decade was a bit higher than consumption growth.  In the next period of the 1970s, 1980s, and 1990s, the growth in consumption was somewhat greater than that in incomes.  Consumption grew between 3.2 and 3.5% a decade, while income growth was about 3% each decade.  Then come the 2000s and the growth in consumption is 2.5%, but the growth in income is a measly 1.5%!  Consumption was a full 1% greater than income.  No decade from 1930 could match such a large discrepancy between income and consumption.  In the 1940s and 1950s, income exceeded consumption by about 0.5%, but prior to the last decade, the worst case of consumption exceeding debt was the 0.4% of the 1930s.  Debt piled up very high in the 2000s.

Another important economic metric is the change in non-farm payroll employment, called non-farm payroll.  This is the number of jobs in construction and manufacturing or the goods-producing industries.

The average annual increase in non-farm payroll jobs in the 1940s - 1970s was between about 24% and 38%.  We managed only 20% increases in the 1980s and 1990s.  This last decade was abysmal, with an actual loss of goods-producing non-farm jobs.  Heavy government regulations and mandates coupled with our sharing the honors with Japan for the highest corporate income tax rates in the world in a global economy helped mightily to bring this situation about.

The reason the decade of the 2000s has been so unproductive is primarily the growth of federal, state, and local governments and their many strangling regulations and mandates.  Just as the Great Depression was a period of very little GDP growth and one of consumption exceeding income greatly, so has been the 2000s.  The Great Depression was a period of huge growth in the cost of government and of government regulations and mandates.  So has the decade of the 2000s been such a period.  This problem was already very apparent back in July 2008, when I wrote this from this blog post.

Americans for Tax Reform calculates the cost of government based on what they spend and on the cost of regulations. They calculated that 16 July was the day the average American stopped working for the governments. This was 4 days later than last year! Individuals worked 83.7 days this year for the federal government and 50.5 days for state and local governments. Government regulation costs each of us 62.6 days this year! If we nationalize health care or add a cap and trade bill to combat the mythical man-made global warming, these costs will go up dramatically. They are going to go up dramatically in any case because Baby Boomers are about to start retiring in large numbers, which will at once remove many high income earners from higher tax brackets and increase Social Security and Medicare costs.

Federal spending is up 11.4% more than the size of the economy since 2000. So despite the economy growing well over that period and federal taxes rising even faster than the economy did, Congress spent more money than the bonanza they were given in increased tax revenues. If the rate of government spending had been held to the rate of the growth of the economy, the federal deficit would have disappeared in 2006.

Regulation costs this year are 17.2% of the national income. These regulations hurt the economy and its growth in ways whose costs are not included in that figure. Reductions in output, jobs, lower wages, and slowed economic growth are estimated to cost as much as another $1.5 trillion per year.

State and local government expenditures have increased by 19.1% more than the national income since 1999. In Connecticut, the people will work until 31 July before they come even with the cost of government, while in New Jersey the date was 30 July, and in New York it was 29 July.

Since that time, Obama and the Democrat-controlled House and Senate have made huge transfers of wealth from the productive private sector to the mischief-causing and boondoggling public sector.  The situation is worsening and doing so very rapidly.  Throughout this last decade, the manipulations of the markets by the government have pushed the People more and more into more spending and consumption than their incomes can sustain.  More and more, the People are finding that they cannot both satisfy the heavy demands of government and make real profits.  If they are productive and make good money, the Democrats plan to tax nearly all the producers produce away to fund their visions of socialist government and socialist entitlements.  The Democrats have added the burdens of supporting the banking, auto, alternative energy, electric power grid, and investment industries to the backs of the American People.  They want to add many more health care and energy costs onto their wearily bent backs.  They want to transfer more of the management of American companies to labor union leaders.  It is the private sector that drives home the possibility of increased income for Americans, not the public sector.  The public sector only adds costs, once it surpasses its legitimate functions of defense of the nation, police protection, and the enforcement of contracts.  When the federal government exceeds its constitutional powers, as three-quarters of its spending surely does, it becomes a powerful engine carrying the whole nation ever deeper into the muck of a dismal swamp.

The dismal GDP and income results of the first decade of the 2000s was not just a matter of bad luck.  No, we achieved all this by design.  It took a lot of effort by our government office holders to ignore the costs of what they have promoted.  As the Baby Boomers retire and go on Medicare in huge numbers in the next few years, the drain of the public sector spending on the productive private sector is going to skyrocket.  Drastic cutbacks in all levels of government are direly needed.  Yet, we hear only of plans for further expansion of these governments from our current office holders.  This is ridiculously irresponsible.  We must not only turn these buffoons out of office in massive numbers, but we must eliminate many of their positions and replace those needed with people with a very much greater respect for the productive private sector.  We need office holders who are satisfied to be the servants of the People, rather than their arrogant rulers. We should also hunt down those most responsible for the many fraudulent claims that various government programs would cost much less than they did and provide much greater benefits than they did and prosecute them for fraud. 

Or, we could simply have a great Tea Party and Tar and Feather the worst offenders of our Constitution and run them out of town on a rail.  There ought to be a real payback for those who commit treason, which is what an office holder does when he purposely ignores his oath to protect, preserve, and defend the Constitution of the United States of America.  We the People, must make it clear that it is no longer acceptable for a public office holder to ignore the Constitution and its severe limits on his power to rule.  After all, the Constitution is a very simple document compared to the hundreds of thousands of pages of federal laws alone which we the People are expected to obey or face heavy fines or imprisonment.  We are told that ignorance of the hundreds of thousands of pages of federal law is no defense.  Well then, payback is due and We the People should be adamant that all public office holders are expected to comply with the limitations on their power of the Constitution and ignorance of the Supreme Law of the Land is no defense!

Representative Paul Ryan's Comments on ObamaCare Costs

Representative Paul Ryan is a Libertarian-oriented Republican Congressman of the 1st Congressional District of Wisconsin, which is bordered by Illinois, Lake Michigan, the southern suburbs of Milwaukee, and reaches out to Janesville in the west.  Racine and Kenosha are in his district.  Paul Ryan has read Ayn Rand's works and thinks highly of them.  I have heard him speak a number of times at events which the Atlas Society or the Competitive Enterprise Institute were participating in or sponsoring and he has always been a rational voice.  On 25 February, he spoke up at the Health Care Summit called for by Obama to discuss budgetary issues.  While I believe the primary, and completely sufficient, reason to oppose ObamaCare is the personal mandate and the idea that government has the power to decide what is and what is not acceptable health insurance and health care, the budgetary issues are also important.

Congressman Ryan said:

• Medicare has a $38 trillion unfunded liability already, but half a trillion dollars is to be taken from it, so 20% of present Medicare providers will either go out of business or stop serving people on Medicare.
• The cost of Medicaid is growing at a 21% annual rate and is about to bankrupt a number of states.
• The Majority Leader of the Senate claims the Senate bill will reduce the deficit by $131 billion over the next 10 years, which is nonsense.
• The bill collects half a trillion dollars of new taxes for 10 years and cuts Medicare for 10 years, in order to provide revenues for 6 years of ObamaCare spending.
• The first 10 years of ObamaCare will cost $2.3 trillion.
• The Senate bill takes $52 billion from Social Security, which has huge unfunded liabilities already.
• It takes $72 billion from the long-term care insurance program called the CLASS Act.
• The real 10-year cost of ObamaCare will cause a $460 billion deficit, despite the four-year delay in the program and counting taxes in that 4-year period.
• The second 10-year cost of the program is $1.4 trillion.
• For the last 7 years, Congress has not made the kind of 21% doctors payment cuts that are supposed to be part of the savings from Medicare according to the Senate bill.  The savings which will not occur from this cut is $371 billion.
• Far from reducing Medicare's costs as claimed by Obama, the chief actuary at Medicare says medical costs are going up $222 billion.

The Obama camp response to being in deep, deep debt and running deep, deep deficits, is to close your eyes and plow ahead with huge new spending plans.  After all, tomorrow we will all be dead.

The Sovereign Rights of the Individual

The sovereign rights of the individual are well summarized by The Declaration of Independence as the right to life, liberty, and the pursuit of happiness.  But what then are these rights?  Some of them are given in the original Constitution and some more are given in the Bill of Rights of the Constitution.  But, the 9th Amendment of the Bill of Rights implies that there are more rights which are not enumerated.  What might some of these additional rights be?

In modern politics, it is common for the socialists to claim that a person has a right to adequate food, clothing, education, housing, and a good job.  This is nonsense, since any of these "rights" as they understand them mean that someone else is expected to provide these goods and services to the "right" claimer and that someone else is then enslaved to the right claimer to some degree.  No right can entail the enslavement of others or their involuntary labor or the taking of their income or property.  When one person claims their rights, those of others must not be thereby diminished.

It has, however, been often noted that the right to free speech means little if you are starving to death or freezing to death on a cold winter's night.  Food is a necessity of life, as is adequate clothing.  There is no question that education better prepares us for sustaining our lives and may provide us the information and some of the wisdom needed to pursue happiness with a decent chance of success.  Although we have no right to be provided with food, clothing, housing, education, and jobs, we very much have the right to pursue the attainment of each of these values.  No one has the right to act to prevent us from growing our own food or from trading for food with those who will join us voluntarily in such a trade.  No one has the right to prevent us from having a home, provided we provide ourselves with the land on which it sits and build it, or we trade with others voluntarily for the land and the house or the rent of some housing someone else wishes to rent us by mutual agreement.  It is in this sense that we each have the right to food, clothing, housing, education, and a job.  Others are never obliged to give these things to us, but they are obliged not to use force to keep us from them either through our own work directly or through our trading with others in a mutually voluntary trade.

To be perfectly clear, when we assert our freedom of speech, we do not require others to rent us an auditorium in which we can comfortably address a crowd who are comfortably seated.  We do not have the right to force a radio or television station owner to broadcast our speech.  But, others cannot shut us up if we speak in our own home or if we carry on a normal conversation while walking along a sidewalk.  Others are not obliged to provide us with a bullhorn or even a soap box, nor are they obliged to listen to us.  But, they can only stop us from speaking if we are on their property.  Generally, we are free to speak our minds wherever we can make an arrangement with the owner of the land or facility where we will speak.

There is no way in which we can be said to meaningfully have the right to life, liberty, and the pursuit of happiness if we have no right to perform productive labor, to think, to trade with others, to acquire property, and to act to secure our good health.  These actions are all necessary to us if we really have the right to life, liberty, and the pursuit of happiness.  It is these rights and other rights also necessarily subsumed by our right to life, liberty, and the pursuit of happiness which are secured to each of us by the critically important 9th Amendment, which unfortunately is hardly ever enforced.

Why were these critical rights not explicitly mentioned as protected in the Constitution and the Bill of Rights?  I am sure it is because they were so well understood to be rights that they had not been seriously challenged in colonial times in America.  The quartering of troops in private homes during peacetime had been forced upon the colonists, so the Bill of Rights protected the right not to have to share one's home with troops involuntarily.  Implicit in this protection is the broader recognition that a man has a right to his property and he has a right to his home.

None of the enumerated powers of Congress give it any power to infringe upon the individual's right to their property without just compensation.  There is no power to prevent anyone from pursuing their chosen line of work.  There is no provision allowing the government to interfere with any citizen's education.  There is no power that allows Congress to interfere with the trades and arrangements any citizen might make for his health care.  None of these rights can be infringed by a Congress exercising its enumerated powers and no more. 

Yet all of these fundamental rights are routinely infringed by our unconstrained Congress and our similarly unrestrained state governments.  Sadly, many of our most fundamental individual rights are violated daily by the very governments which were instituted by sovereign individuals only for the purpose of securing our inalienable individual rights.  These governments are now generally illegitimate, since they are acting contrary to the purpose for which they exist and by which they are to be judged.

The U.S. Debt Clock

Stop in now and then for some great entertainment at US Debt Clock.org and watch the U.S. federal debt increase along with other liabilities such as Social Security and Medicare.  You can also watch how each citizen's portion of the debts and liabilities mount ever higher.  You can also see the annual figures on the GDP grow and check out the assets of small businesses, big businesses, and households as they change.  You can monitor the assets per citizen and the government liability per citizen.  You can also monitor such things as mortgage debt, personal debt, credit card debt, and debt per citizen.  You can watch the state and local government debt sums also.  You can watch the population estimate and the number of illegal aliens as they change.

Our Unsustainable Federal Spending

Democrats love to talk about sustainable energy policy, sustainable agriculture, sustainable environmental policies, sustainable cities, and sustainable housing.  But, they never give a fig about sustainable government, sustainable public sector spending, sustainable health care, and sustainable deficits.  Indeed, they almost seem to court governmental catastrophes as just an excuse for more government and a still bigger catastrophe.

Richard W. Rahn wrote an article in the Washington Times on 22 September about the growing problem of sustainability in the federal government.  He notes that the Congressional Budget Office (CBO) has estimated the additional federal debt grew by $4 trillion for the 2010-19 period in the last 8 months.  In the same 8 months, the amount of taxpayer debt grew from $5.9 to $7.5 trillion.

The taxpayers now own or insure about 80% of the $14.6 trillion of home mortgages outstanding debt in the United States.  This was not enough for the Democrat Congress, so it passed a bill outlawing bank student loans and requiring that all student loans be from the federal government.  Social Security, Medicare, Medicaid, and other entitlement programs are growing faster than the economy.  They will take more than 100% of federal tax revenues this year.  All other federal spending, including defense and interest payments on our debt, will be funded by government borrowing.

There is no way to tax ourselves out of this dilemma, especially not by only taxing the rich.  The only thing that can happen is that the entitlement programs will have to be cut back.  The growing Medicare, Medicaid, and Social Security entitlements will have to be cut.  In other words, rationed retirement and health care are coming.

Planned increased taxes and anti-trade policies such as the tariff on Chinese tires and the failure of Congress to approve the trade treaties with South Korea, Colombia, and Panama will make it harder to grow the economy to produce more tax revenues for the federal government.  The Chinese, who have bought a large part of our debt, are looking to diversify their investments.  We are driving other debt buyers away also, so we will have to offer higher interest rates to attract more bond and debt buyers.  This will make business investment less attractive, further retarding growth of the economy.

Rahn concludes:

What is particularly frightening is that neither political party has offered a serious plan to defuse the debt bomb. The Democrats are just piling up more debt as if there were no limit, and the Republicans, to date, are only proposing measures to reduce the increase, rather than reverse it. When the debt bomb explodes — within the next one to three years — expect to see record high real interest rates and/or inflation, coupled with a collapse of many "entitlements." It will be like the neutron bomb, the buildings will be left standing, but the people will not.

So much for the Democrat commitment to sustainability.

Pro-Capitalism, Anti-Socialism March in Washington, D.C.

My wife Anna and I went to the Washington, D.C. march on the Capitol on Saturday, 12 September 2009 to demonstrate in favor of:

• The sovereign Rights of the Individual to his own life, his own liberty and property, and to the pursuit of his own happiness.
• The moral and practical superiority of Capitalism over Socialism.
• To defend and protect the Constitution with its severe limits on the power of the federal government in order to protect the General Welfare served by the Rights of the Individual, the violation of which is Tyranny.
• To oppose the huge Debts destroying the future of our Children.
• To reduce taxes and stop government spending.
  
• To oppose the Chicago Politics of Special Interests and Thieves feeding in a frenzy upon the taxpayers.
• To send the Czars back to Russia.
• To prevent the government takeover of Health Care and allow insurance to be bought across state lines and to implement tort reform.
• To protest the nonsense of Man-Made Global Warming and the Control of Energy Use by government.
• To protest the Bank and Auto Company Bailouts.
• To protest the Loss of Jobs due to the Pursuit of Socialism.
• To protest the government's Anti-Business Bias and the intent to Kill Entire Industries.
• To protest against Class Warfare and Racism.
• To protest Congress's failure to read the bills it passes.
  
• To protest the Arrogance of King Obama, Queen "Let them eat cake" Pelosi, and Jack "Jackal" Harry Reid and their band of power-lusting allies who refuse to listen to their bosses, The People.

I was impressed that so many Americans have come to understand what is going on and have discovered what the basic principles of good American government are. The media is mostly downplaying the number of people who showed up and is, of course, characterizing them in unflattering terms. The Democrat DC authorities apparently estimated the size of the crowd at 60,000 to 70,000 people, but there was a click head count at one portal into the demonstration area which reached 500,000 counted. The demonstration lasted at least 7 hours. I arrived several hours into the demonstration and I believe there were 100,000s there when I worked my way onto the East Capitol lawn. What is more, on the way there, the trash cans were full of many thousands of signs which had already been discarded by people who had left the demonstration before I got there! I am confident that there were at least about 1,000,000 people who attended the demonstration. You should look at the pictures of people there shown here. Most of the MSM reported that 10,000s of demonstrators attended the protest and many simply said 1,000s protested. How unbelievable! How obviously untrustworthy the MSM is!

I encountered people I knew to be from Maryland, Virginia, Texas, Tennessee, Connecticut, Maine, New Jersey, Florida, Georgia, North Carolina, and Michigan. I found that many understood that the global climate is primarily a function of sun cycles rather than man's emissions of CO2 from burning fossil fuels. I found that many understood that the real number of unemployed is much higher than the 9.7% the federal government claims it is. Others understood that the Democrat reform of health care was motivated by a desire to control the People's health and lives, not to improve health care. But most of all, I was impressed that most people understood that our government is one of limited powers given in our Constitution. They also understood that those limitations are primarily so that individuals will be free to manage their own lives, rather than being reduced to dependent slaves by their government.

Hurrah!!!! The American people cannot all be fooled for very long!

Whalen: We Broke the Bank!

Mike Whalen, founder, president, and CEO of Heart of America Restaurants and Inns and also policy chairman at the National Center for Policy Analysis, summarized the debt situation of the federal government in an excellent commentary in the 11 August 2009 Washington Times called We Broke the Bank! We need to rein in our overspending. Let us examine some of his key points:

• On-the-books national debt is $11.6 trillion.
• Off-the-books debt including Medicare and Social Security, is $107 trillion.
• Even these amounts do not include pensions and benefits of federal workers and veterans.

Adding just the $11.6 trillion [expected to be $12 trillion by October] to the $107 trillion gives us $119 trillion in debt. The GDP is about $14.3 trillion and federal revenues are about $2.5 trillion, so the debt to federal revenue ratio is 48. But, he points out that there is no available cash in the government revenues to pay the debt, since it is all obligated elsewhere already.

Looking at this another way:

• Total national private net worth is $51.5 trillion.
• Federal unfunded liabilities are 2.3 times the nation's net worth.
• "That's pretty darn broke."

Whalen says there is no way to service this debt. The game is up. "Even if we significantly slash the federal entitlements by half, we cannot fix this problem. Even if we increase federal receipts from the 50 year average of 18.5 percent of GDP to say 27 percent, killing private sector growth, we cannot fix the problem."

Indeed, the problem may well be fixed only after the U.S. goes bankrupt and forfeits on its obligations. The best we can do is to rein in spending drastically and do the opposite of Mike Whalen's suggestion on increasing federal receipts as a fraction of GDP. We know that attempts to increase tax rates result in a drop in federal revenues, while decreases in rates result in increases in federal revenues.

Many people absolutely cannot understand this. But, first, it has been demonstrated when Presidents Coolidge, Kennedy, Reagan, and George W. Bush reduced income tax rates and when Clinton reduced the capital gains tax. Tax decreases result in added growth of the economy, which contributes to more tax receipts for the federal government. But, this is not the only effect. Lower taxes make people feel better and make them more confident about their future, which helps them to deal with the federal debt they are saddled with.

Finally, and this is really important, people work very hard to avoid high taxes. Business decisions that make great sense with low tax rates, make no sense with high tax rates and are not undertaken. People also cheat much more when the tax rates are high. The size of our underground economy, while not proportionally as large as that in Italy, will increase as tax rates increase. Another hugely important factor is the velocity of transactions. When tax rates are low, especially capital gains taxes, people buy and sell with much greater frequency. Taxing 10 transactions of $10,000 at a rate of 12% yields $12,000, but taxing 4 transactions of $10,000 at a rate of 20% yields only $8,000. The frequency of taxable transactions is critical in government revenues.

In summary, our best hope in minimizing the damage is to reduce government spending, stop making unfunded future obligations such as throwing more people into Medicaid, and accelerate the economy with tax cuts for investors and hardworking businessmen. The more business investment, the sooner the unemployment rate comes down and this helps to decrease government spending on unemployment and increases income tax revenues. The more business investment, the more profits are realized and this adds to tax revenues. If there is a solution, this is it.

Unfortunately, the Democrat Congress and Obama will not hear of any of this. Unless the American People throw them out of office as soon as possible, we are doomed to bankruptcy as a nation. Then, of course, the People must demand reductions in spending and tax rates, or we are still doomed. They must learn to appreciate the ability of Americans to manage their own lives and to grow the economy while making life richer and easier for almost everyone.

1804 Federal Subsidy Programs

No, I am not going to discuss the federal government subsidy programs of 1804. The number in the title is the number of federal subsidy programs in 2008 according to a recent Cato Institute study by Chris Edwards.

The Catalog of Federal Domestic Assistance, 2,205 pages, lists federal programs for aid, subsidies, grants, loans, insurance, scholarships, and other benefits. The number of such programs by year is reproduced below:

2008 1804
2006 1696 [Edwards, Cato Institute, Tax and Budget Bulletin of 2006]
2005 1645
2000 1425
1995 1390
1990 1176
1985 1013 [Cutbacks by President Ronald Reagan]
1980 1123
1975 1009
1970 1019

The biggest new subsidy program was the $62 billion prescription drug program. Among the other programs are:

Homeland Security Grants $1,040,000,000
Local Firefighter Staffing $180,500,000
Clean Diesel Funding Assistance $156,000,000
Healthy Marriage Promotion $150,000,000
Community Abstinence Education $117,054,000
Education Data Systems Grants $100,000,000
Small Shipyard Grants $98,000,000
Bioenergy Fuels Grants $80,000,000
Specialty Crop Block Grant $49,000,000
Anti-gang State Grants $45,000,000
Laura Bush Librarian Program $26,500,000
Senior Farmers Market Program $22,000,000

As Edwards points out there is more and more funding and, no doubt, interference of the federal government in state and local government affairs revealed in these programs. What on earth is the federal government doing to promote healthy marriages? Frankly, no government has any business messing with marriages. The only proper role of government is to issue domestic partnership contracts as far as I am concerned. Then there is the nonsense and uselessness of the Community Abstinence Education grants! Stay out of our sex lives government! In fact, if government would also stay out of the education business and allow private schooling its proper role, we would have much more rational people and many of their sexual and marriage problems would be ameliorated. Then there are the subsidized fuel programs for clean diesel and for biofuels in this list. The two massively bloated farm bill of 2008 added many subsidies. Examples are apparently the Specialty Crop Block Grants and the Senior Farmers Market Programs above. Why on earth do Senior Farmers need a special market program?

What areas gave rise to the biggest increases in numbers of programs? Here is the list:

Interior, +88
Agriculture, +74
Homeland Security, +64
Transportation, +33
Health & Human Services, +27
Justice, +15

So, not only does Interior hog huge fractions of the land of many states, especially in the west, but it also is especially prolific in producing subsidy programs. I wonder what kind of mischief they are up to, other than refusing to allow anywhere near enough drilling for oil and gas and interfering with attempts to develop coal, tar sands, and oil shale extractions. Both the 2002 and 2008 huge farm bills produced the big increase in the subsidies of the Agriculture Department.

The reasons offered for most of these programs have little to do with their real purpose. The real purpose is always to buy votes in elections. There is little effort ever made to determine the effectiveness of these programs. When a program is shown to be ineffective, it is very rarely ended. Commonly, a completely false assertion is made that they are effective, with the facts being so blatantly ignored that one cannot help but know that the politicians and bureaucrats are lying.

I am still waiting for Congress to end the Ethanol Mandates now that it is well-known scientifically that there is no net energy production from corn-based ethanol and there is no pollution reduction advantage to mixing ethanol in with gasoline. I expect to have to wait a very long time because the program's real reason for existence was always as an excuse to subsidize farming and the ethanol refining companies such as ADM. Meanwhile, the program drives up the cost of corn, corn oil, corn syrup, beef, chicken, and pork directly and because farmland, water, and fertilizer are diverted to corn production, fewer soybean, wheat, and other crops are grown and the farm inputs cost more, which causes their prices to go up due to the ever-present law of supply and demand. This is just an example of the way in which subsidies for one thing drive up costs for many other things in our economy.

If you want to start putting some pressure on the politicians, go to www.usaspending.gov and look up the subsidy programs and who is getting the money and start complaining about it.

Meanwhile, government debt soars and will continue to do so until Americans finally throw the bums out of Washington. Then, the voters must return to the principle that the only non-tyrannical government is that which exists only to protect and defend the sovereign individual right to his own life, his liberty, his property, and his pursuit of happiness. We must insist that politicians are not appointed to choose our values for us and then to force us to live our lives in accordance with the values they have chosen.

CNN Reporter: Are you aware we are giving you glass beads and shiny objects?

Susan Roesgen did an infamously horrendous interview with a man with a very young child and a sign that says she is already deep in debt at the Chicago Tea Party on 15 April, which you should check out here, if you have not yet seen it. She asks the man why he is there and allows him a two sentence explanation in which he says that Obama says he agrees with Lincoln, but Lincoln believed in personal freedom. Susan Roesgen interrupted him in a very aggressive voice. "What does this have to do with taxes? What does this have to do with your taxes? Do you realize you are eligible for a $400 credit?" The man tries to reply, but Susan interrupts immediately with "Did you know that the state of Lincoln gets $50 billion out of this stimulus?"

The man tries again to speak, but he is clearly flustered and repeats himself, while someone, perhaps a CNN cameraman, keeps shouting "Sir" at him as though he is trying to control him, perhaps to keep him from attacking the reporter. The man is still holding his child and showing no indication that he is about to attack her, so it looks as though CNN is trying to create a message of violence from nothing. Then the reporter backs away and starts saying that this is clearly not family viewing and she cannot hear. Some crowd members had shouted at her to shut up, which was actually rather reasonable given that the interview was clearly a pretense and her purpose was clearly to be the primary speaker rather than a listener. She also said that the crowd was composed of radical right wingers stirred up by the right wing Fox network.

What I am most interested in is the implication that a man with a small child and probably a wife is supposed to drop to his knees when told that he has no reason to complain about lost liberties because the socialists have paid for his soul, his daughter's soul, and his wife's soul with a $400 tax credit. This gives us deep insight into the souls of these "progressives." There is an ambiguity here. Which is it that the "progressive" believes?

• A father, a wife, and a child together should be happy to sell their freedom, and hence their souls, for a $400 tax credit, or a small part of the $1300 that a southern plantation owner might pay for a prime male field hand in 1837 dollars.
• The progressive believes the fair market value of the freedom of a man, his wife, and his child is $400.
• The man is too stupid to know that he is valuing the freedom of his wife, his child, and himself at a mere $400.

It may be that the "progressive" believes any of these or any combination of these. We will have to live with the uncertainty, but we do know that none of the above beliefs make "progressivism" anything less than monstrous.

Susan also believed it a fair means of purchase to offer his state of Illinois $50 billion of stimulus money. Now, this does figure out to be about $3890 per person (using a state population of 12,852,548 estimated in July 2007). But, it was clear from the in debt sign this man was holding under his child that he understands that this surplus windfall will have to be paid by him and his child. Is that not part of the very debt he was complaining about? How can this "progressive" reporter, so bright as to be hired by CNN, have made such a fallacious argument?

This pretentious, foolish, and insulting young woman is very representative of a large segment of the young "progressives." She is most enlightening and a most horrifying ghoul. Yet, she is a great example of the prime product of our public school system and of our universities. These people actually do believe that liberty is worth very little and it should be easily purchased with bobbles and beads offered by the socialist elite to the vast unthinking rabble of America.

I hope Americans continue rapidly with the process of understanding how threatened our liberties are by Obama and his 40 "progressive" Thieves. These Tea Parties indicate that this process is further underway than one could have imagined during the last Presidential and Congressional elections. The socialists clearly believed there was no longer anyone in their way and able to block them from forming a socialist tyranny. They will do great harm before they are stopped, but it is beginning to look as though there is some hope that they will be. We need to see bigger protests soon and we need to see people become more coherent in stating their purposes in opposing socialism and in espousing the sovereign freedom of the individual.

Steyn: Regulation, globally speaking, Crisis used to put Government in the Driver's Seat

Mark Steyn has written a very powerful commentary on how Obama and the Democrat Congress have used the economic crises to shift control of the private sector into the hands of government. Obama has written in the Chicago Tribune "But I also know that we need not choose between a chaotic and unforgiving capitalism and an oppressive government-run economy. That is a false choice which will not serve our people or any people." Steyn replies to this itself is a false choice, that Obama has made oppressive government the only game in town.

He points out that federal spending is to increase to 28.5% of GDP this year. This is higher than ever before in our history, except in WWII. Obama plans to double our national debt in the next 6 years and to triple it in the next 10 years. Steyn says that the government is annexing our economy and in the process our very lives. Every business, no matter how small, will face the burden of more permits, more paperwork, and more bureaucracy.

And, he says do not think you can move out from under the jurisdiction of this overweening government. Treasury Secretary Tim Geithner, our favorite tax evader, is calling for global regulation at the G20 summit in London this week. He does not want people and companies to be able to look for new locations with fewer regulations and lower taxes. Steyn replies

Just as a matter of interest -- why not? If you don't want to be subject to punitive "oversight" of economically illiterate, demagogic legislators-for-life like Rep. Barney Frank, Massachussetts Democrat, why shouldn't you be "allowed" to move your business to some jurisdiction with a lighter regulatory touch?

Steyn points out that even Bono, the global do-gooder, has moved much of his business from low tax Ireland to the Netherlands, where taxes are even lower for him. Of course, Geithner himself does not have a history of paying his taxes.

If you listen to the principal spokesmen for U.S. economic policy -- Mr. Obama and Mr. Geithner -- they grow daily ever more explicitly hostile to the private sector and ever more comfortable with the language of micromanaged, government-approved capitalism. That, of course, isn't capitalism at all. They'll have an easier time getting away with it in a world of "global oversight" where there's nowhere to move to.

But then he adds:

Think about it: It takes extraordinary skill to create and manage a billion-dollar company; there are very few human beings on Earth who can do it. Now look at Mr. Obama and Mr. Geithner, the two men currently "managing" more money than any individuals in human history -- not billions, but trillions of dollars.

He then discusses the Bolsheviks inability to manage even the simple agricultural society in their tragic experiment of the last century. He points out how much more daunting managing the American economy with its much greater complexity, extent, and international ties and dependencies would be. Can Geithner, who cannot do his own taxes, be expected to do this? Well, no! Emphatically no!

He then describes Obama as uninterested in economics. Obama is a social engineer, a community organizer. Period. His plan to remove the tax deduction for charitable giving for the wealthy was born of nothing more than a desire to put the government and only the government in control of all charity. His plans for socialized health care, a green economy, and universal college education are likewise only about extending the control of government.

But this all costs money and the government does not have it. Last week, the similarly pressed British government, could not sell its "gilt-edged" 40-year bonds at auction. Germany has had two such bond auctions fail. The U.S. could not sell $34 billion of 5-year bonds until it increased the interest rate. There simply is no source of funding large enough to buy the bonds which must be issued to cover our projected debts. The Chinese and the Saudis cannot do it at these levels.

Steyn concludes:

In their first two months, Mr. Obama and Mr. Geithner have done nothing but vaporize your wealth and your children's future. What began as an economic crisis is now principally a political usurpation. And, to return to the president's "false choice", that "chaotic and unforgiving capitalism" is exactly what we need right now. It's the quickest, cheapest, fairest, most efficient route to economic stabilization and renewal. A regimented and eternally forgiving global command economy with no moral hazard will destroy us all.

How many times have I made this same point? But, it is good to have Steyn on the same page with me. I think that younger Americans are going to learn a very important lesson on the superiority of Capitalism, lessons their state-managed educations have withheld from them. Unfortunately, they will be paying dearly for this lesson the rest of their lives. Their idol Obama has proven, as it was clear he would to any rational observer with some knowledge of history, that he is nothing but a craven idol.

Treasury Secretary Andrew Mellon

Treasury Secretary Andrew Mellon served under President Coolidge and published a book called Taxation: The People's Business in the early 1920s. My source for information on this is Amity Shlaes' book The Forgotten Man, 2007. At that time, income taxes were only paid by the very rich, but they were very, very high. The top rate was 73%!!!! Mellon believed the rate was too high and prevented investment and job creation. He proposed in his book that lowering the tax rates would result in more revenue for the government. He thought over-taxation was un-American.

"Any man of energy and initiative in this country can get what he wants in life. But when initiative is crippled by legislation or by a tax system which denies him the right to receive a reasonable share of his earnings, then he will no longer exert himself and the country will be deprived of the energy on which its continued greatness depends."

"High taxation, even if levied upon an economic basis, affects the prosperity of the country because in its ultimate analysis the burden of taxes rests only in part upon the individual or property taxed. It is largely borne by the ultimate consumer."

Mellon had the high income tax rates cut and the economy grew handsomely. So too did the government's revenue, allowing the government surpluses.

This process was repeated under Presidents Kennedy, Reagan, and George W. Bush. They cut tax rates and watched government revenues increase. The amount of revenue the government gets from taxes depends on the tax rate, the frequency with which the government tax is paid, and the amount of money or value upon which it is paid. If a lower tax rate results in more taxable transactions or an increase in the size of the taxable transactions, then the government revenue from a tax may go up even with a tax rate cut.

It is very clear that what we need now to create investment and jobs is a very broad-based tax cut program. We should not be stingy in giving tax cuts to investors. The result would be the same that it has been the 4 times it was tried in the 1900s. Investment would increase, unemployment would go down, and government revenues would go up.

What is not to like about this? Why are we not doing this again? Because class warfare is the name of the Democrat game and they are determined to punish the wealthy and those with high incomes, even if it is a case of cutting off the American nose to spite itself. High taxes are about punishment and about control, not about doing anyone any good. If the Democrats wanted to do good for the poor, they would cut taxes and allow investors to create more jobs for the poor. They would also reduce or eliminate the minimum wage which only kills jobs for the low-skilled worker. These actions would create more government revenue to use for programs for the poor as well. But, this is clearly not their priority.

The Democrat priority is to hurt the able and the hardworking and to exercise control over their lives. It is not to help anyone, especially not those with lower incomes.

Excessive Federal Land Ownership

The map above shows the fraction of each state owned by the federal government. It is clear that federal land ownership, especially in the West, is excessive. The federal government owns 84.5% of Nevada. For all intents and purposes, Nevada is really a little state. In fact, so much of the state is owned by the federal government, that people in Reno have difficulty finding land on which to build a home. As a result, home prices are unreasonably high there. Meanwhile, the federal government is under-utilizing the land.

Since the federal government has just taken on more than a trillion dollars of additional debt with the failing bailout, this would be a great opportunity for it to sell most of its land holdings to reduce its debt and as a strong stimulant for the economy. Putting most of the federal lands into private hands would ensure their more productive use. Property owners would also have much greater reason to improve and safeguard their property than the federal government does. A great deal of oil and natural gas field development could then take place. Private individuals would find ways to put land to use better for ranching, farming, housing, retail, and lumbering as it best makes sense. Private investment has always been superior to communist ownership of property in common.

The states listed in the order of the most federal ownership are:

Nevada 84.5%
Alaska 69.1
Utah 57.4
Oregon 53.1
Idaho 50.2
Arizona 48.1
California 45.3
Wyoming 42.3
New Mexico 41.8
Colorado 36.6
Washington 30.3
Montana 29.9
Hawaii 19.4
New Hampshire 13.4
North Carolina 11.8
Michigan 10.0
Virginia 9.9
Florida 8.2
Vermont 7.5
West Virginia 7.4
Mississippi 7.3
Arkansas 7.2
South Dakota 6.2
Wisconsin 5.6
Minnesota 5.6
Kentucky 5.4
Louisiana 5.1

Five states are mostly under communist ownership. Sixteen states are 10% or more owned under the communist system of common land ownership, in which no one really owns anything. Another 11 states are deprived of more than 5% of their land, making a total of 27 states in which the federal government owns 5.1% or more of the land.

The states with the lowest federal land ownership are:

Rhode Island 0.4%
Connecticut 0.4
New York 0.5
Iowa 0.5

Thanks to Paul Cohen for sending this map to me.

Our Federal Government Debt

While considering which problems the Federal government should add to its goals to find and develop solutions, we should consider the size of the national debt. It is now over $9.5 trillion, with each and every family owing an $80,831 share of that amount. This is just the money we have already overspent.

Far more alarming is the unfunded future obligations to Social Security, Medicare, and other social programs. These unfunded promises now amount to $53 trillion.

Maybe we should stop to think about Obama's promises to spend still more on alternative energy, ending global climate change, and funding a national health care system, among many other new programs. Possibly, our resources are limited, despite his rhetoric being unlimited.