Fake News Practiced by All the Media

Is a reduction of federal government spending for a few days by 13% really a government shutdown? Of course not, though that was all that happened the last time Congress did not agree on a new budget authorization in time.  Especially not when government spending is at least four times that of a legitimate government abiding by the principle that its proper function is only to protect every American individual's right to life, liberty, self-ownership, property, freedom of conscience, freedom of association, freedom of speech and press, the freedom of self-defense, the right to the ownership of one's own labor and the fruits it produces, the freedom to trade and to contract, and the pursuit of one's own happiness -- all while free from others, including the government, initiating the use of force against the individual.

Yet once again, such a trivial prospective reduction in government spending on the 100th day of the Trump administration is being called a government shutdown.  Fox News, CNN, ABC, and NBC are all guilty of this alarmist, Yellow journalism.  It is a lie that promotes interest in their broadcasts. They clearly believe they are promoting their own self-interest with a lie.  Americans should be angry about this misrepresentation of the facts by our Fake News media.

ObamaCare Cost Increases in 2017

The Center for Health and Economy has released a study estimating the increased costs to taxpayers through the federal government in 2017.  ObamaCare premiums will be 22% higher in 2017, but the average monthly subsidy cost will go up by 26% from $291/month to $367/month.  The subsidy percentage increase is greater since incomes are losing ground relative to the premium increase.

The study says 11.1 million people per month are on ObamaCare in 2016 and this number is expected to increase to 11.4 million a month in 2017.  Of these 9.39 million in 2016 received tax credits and 9.65 million are expected to receive tax credits in 2017.  In 2016, 84.6% of the people on ObamaCare received a tax credit subsidy.  The study expects the same percentage in 2017. Clearly if you do not qualify for the tax credit subsidy, there is little likelihood that you will buy your health insurance through the ObamaCare exchanges.

The resulting increase in federal payouts from 2016 to 2017 is $9.8 billion.  The 2016 cost of the subsidies was $32.8 billion and the expected 2017 cost will be $42.6 billion.  The federal subsidies will therefore cost 29.9% more in 2017 than in 2016.  Those states that expanded their Medicaid rolls will also see large cost increases.

As an American, your health insurance premiums will go up, your deductible will likely go up, your co-pay will likely go up, your federal government costs will definitely go up, and in many states your state government costs will go up in 2017 thanks to ObamaCare.  Obama's transformation of America leaves those of us who are not subsidized with no hope.  Does it even provide hope to those who are subsidized as peons or serfs to the state?

One Person, One Vote?

The Supreme Court just heard a case on Tuesday, Evenwel v. Abbott, over whether state legislative districts must equalize the number of voters or the number of people.  The particular state in this case is Texas, where districts are apportioned by number of people and where the number of voters per district then differs greatly in some cases.

One person, one vote sounds nice -- until you give it some thought.  Of course children are persons, but we exclude them from voting.  Non-citizens are also not supposed to vote, though many do in some districts, especially those controlled by the Democratic Party.  Many people though eligible to become voters do not register to vote.  Many people who are registered to vote skip many or some elections.  There simply is no sense in which one person gets one vote and one share of representation.  There is no feasible way to achieve any such outcome in the future.

The Constitution originally handled the problem this way:

Representatives and direct taxes shall be apportioned among the several States which may be included within this Union, according to their respective numbers, which shall be determined by adding the whole Number of free Persons, including those bound to Service for a Term of Years, and Excluding Indians not taxed, three fifths of all other Persons.

Consequently, districts for the House of Representatives were equalized for the total number of people, excluding untaxed Indians and two-fifths of slaves.  The free Persons included non-citizens.  The idea at the time was that those men eligible to vote would represent all men with insufficient property to vote, children, women, non-citizens, those bound to service for a term of years, and all slaves.

The 14th Amendment changed the apportionment for the House Districts by only excluding Indians not taxed.  It went on to punish states that denied the right to vote to male citizens of 21 years of age or older by reducing the House representation in proportion to their numbers in ratio to the total number of male citizens 21 years of age and older.  The idea was still clearly that male citizens of 21 years or older would represent all women and all non-citizens.

But how should the House Districts properly be set up?  By extension, how should state legislative districts be set up?  Is it reasonable to assume that those who vote are trying and able to represent the good of those who cannot or will not vote when they cast their vote?  These are substantive questions.  It is not unreasonable for fairly reasonable people to disagree on the answers.

At the time the 14th Amendment was written, it was considered that House Districts should be apportioned in accordance with the number of voters or eligible voters.  That idea was shot down immediately when Representative James Blaine, Republican of Maine, examined the census data and found that since the ratio of men to women was much higher in Western states than in the Eastern states, the Eastern states would lose massive representation if it were based on the number of voters or eligible voters.  Women could not vote, but they were valuable for inflating the numbers of persons for representation, much as slaves had been in the South in the past.

It is now easy for all citizens of age to vote.  Despite this, in many areas very low fractions of the citizens chose to vote.  They are either not sufficiently interested or they are so infused with a sense of futility that they see no point in voting.  Should uninterested people or those so infused with a sense of doom and futility be given representation that they will not use? 

In most cases, such uninterested or futility-bound voters especially occupy highly Democrat districts.  So many Progressive Elitist Democrats believe such non-participating voters or potential voters should be represented because they, the Progressive Elitists, will cast their votes in the interest of the apathetic or doomed-in-futility persons.  Yet these same Progressive Elitists have long claimed to be doing this, especially to minimize economic inequality.  Nonetheless, the Congressional Districts with the worst economic inequality are almost exclusively Democratic and have been for decades.  Clearly, the Progressive Elitist voters, who do vote in high percentages, either do not actually vote to reduce economic inequality or they do so with a complete misunderstanding of the consequences of their votes.  They are clearly horrible at representing the interests of the less educated and less inclined to vote people in their districts.

In general, people who vote either vote their own interest or they vote for the interests of others without actually understanding their interests.  Let us be realists and recognize the facts and human nature.  People barely able to motivate themselves to vote rarely have any understanding of the legitimate role of government, the important political issues of the time, the principles of the candidates, and the manner in which new laws and regulations will affect our futures.  In the era of
Big Government these issues are often much more complex than they were in the past in America.

We should also note that it is clear that people are not good at representing the interests of children.  We see this in the miserable public education system we have, in the huge national debt, in the terrible future liabilities of Social Security and Medicare, and the complete disregard for the effect of compounded economic growth rates on the standard of living of Americans 30 or 40 years from now.  Few voters weigh the future enough to look to future outcomes.  Consequently, they are nearly worthless as representatives of the interests of today's children.

House districts, both federal and state, should simply be apportioned on the basis of the number of voters in the last several elections, assuming they do not exceed the number of eligible voters as they do in some Democrat districts.  This apportions representation according to the numbers of citizens of age to vote who actually have an interest in government.  Yes, many of them will not understand the issues and the consequences of their votes either, but this is the one form in which One Person, One Vote is actually achievable in the form of One Voter, One Vote.

Adding to the weight on political outcomes of those districts with higher voter turn-out is likely to raise the quality of the People's Voice about as high as one can accomplish by any means except an improved education system or other educational efforts.  If the reward in political outcomes is greater for those who already care enough to vote, perhaps they will make a greater effort in the future to think about their votes.  These more thoughtful voters then may even realize a bit greater responsibility not to do harm to others, including those others who do not care to vote.  But realistically, one will be giving a greater voting weight to those who are voting for the interests of those they know best, themselves and perhaps their immediate family and friends.  That is not a bad thing.  Most great wrongs are done when people vote or act for others they do not even know, or when they pretend to do so.

How might one determine the number of voters for these district apportionment purposes?  How about the last four elections in the previous decade with re-apportionment occurring once a decade?  It would be nice if one could just make this the last four elections, but the re-districting effort and battles would be too much.  As for why four elections, the fluctuations in voter turn-out are great, especially the differences between Presidential elections and those when voting on the President does not occur.  The last four elections will include two presidential and two non-presidential elections.  It will include elections when no vote was up in the state for Senator in Congress.  It is a good number to average out, though it may slightly lag overall population shifts.  I would gladly live with that population shift lag for the many benefits of One Voter, One Vote, One Share of Representation.

As for state legislative districts, a variety of formulas are fairly reasonable and determining what formula to use should be left up to the states.  Only very unreasonable state decisions should be corrected by the Supreme Court.  Among the unreasonable apportionments would be those that count non-citizens.  Perhaps counting citizen children should also be considered unreasonable, though I am less adamant about this than about the non-citizen count.

Which brings up the need to also tackle the problem of ineligible voters casting ballots as another aspect of the voter representation problem.

If the Great Recession has Ended, Why Are Fewer Prime Working Age Men Employed?

We are constantly being told that the economy is getting better, albeit slowly.  I have pointed out many times that the employment participation rate has not improved throughout 2010, 2011, 2012, or 2013.  I have pointed out many times that the real, per capita GDP has not grown, though this is a far better measure of our real condition than the GDP or that fake real GDP according to the government.

Another of many indicators that there is no improvement is the terrible plight of employment among men of the prime working ages 25 -54 years old.  Unemployment among men of these ages has continued to climb at rates in excess of population growth since the government declared recession supposedly ended.

It sure is difficult for Obama and the government to call a spade a spade.  This is some recovery when 12% of men of the prime working ages are unemployed!

13% Spending Reduction Is Called a Shutdown?

The media, even Fox News, is generally calling the 13% reduction in government spending a SHUTDOWN of the GOVERNMENT.  This is surely an exaggeration.  Perhaps in a society whose government-run and funded schools have long exaggerated student achievement with grade inflation, this is to be expected.  A society that has long inflated the ability of government to solve problems and do it much better than individuals can by managing their own lives, is bound to be terrified by a mere 13% reduction in government spending.

Of course life continues despite the Obama Regime paying federal employees to put up barriers and to wire those barriers together to keep veterans from approaching the WWII Memorial, which is not even attended by federal employees in routine times.  It is amazing to watch the pathetic efforts of this administration to convince the People that they should be terrified by a 13% reduction in government spending and the subsequent furloughs of some non-essential government employees.  Except, of course, those employees so essential for barricading the various facilities such as the WWII Memorial and the Grand Canyon which do not even require the attendance of federal employees.

It is even more pathetic that many people buy into these scare tactics by the power lusters who rule the USA.

The failure of the Senate to agree to a spending authorization coming from the House of Representatives to fund so-called discretionary funding, means only that the small part of government activities which are both discretionary and designated non-essential by the administration will not be available.  Discretionary spending is only 20% of actual government spending!  Weirdly, the constitutionally required provision of defense is classified by our insane government as discretionary spending, while all of the transfers of money from taxpayers to individuals is called mandatory spending.  Since defense spending and other security spending and Veterans Affairs spending are hardly being reduced despite the Democrat refusal to authorize it and the willingness of the House to so authorize it, the actual spending reduction is only about 13%.

Meanwhile, despite all of the scare mongering, the government continues to spend $2.5 trillion in the new fiscal year on Social Security, Medicare, Medicaid, disability payments, unemployment insurance, and the interest on the national debt.

The government is not shutdown.  The monster has not even been slimmed down.  This is like making the monster wait at most 45 minutes longer before dinner is served.  It is no big deal however angry the monster may get about not being able to fully indulge its all-devouring appetite.

What is Bad About a So-Called Government Shut-Down?

A so-called government shut-down is not really a shut-down of all government activities.  The defense of the country will continue to be provided.  Even Social Security checks and payments for Medicare will continue.  Yes, the employees of some meddling government regulatory agencies will be marked as non-essential and will be sent home.  That is the very least most of them are.  It is not at all essential that government interfere with the sovereign rights of the individual to life, liberty, and the pursuit of happiness, which is the mission of the government regulatory agencies.

Aside from defense, even the few powers the Constitution grants the federal government, are not very essential over short periods of time.  The power to establish post offices and post roads can surely go without exercise for a few months with no great consequences.  The power to establish a uniform rule of nationalization is already established in law, albeit not very good law.  Uniform laws on bankruptcy have also been established.  The regulation of commerce with foreign nations needs only to glide along established paths for a few months.  Protection against counterfeiting requires but a small group of specialists and it is clear that counterfeiters cannot even begin to compete with the Federal Reserve in watering down the value of the US currency in any case.  The Patent Office is also a small operation by the standards of the federal government.  Even the management of the federal courts is a very small fraction of the manpower used by the federal government.  The next Census is not to be held until 2020.  So, basically there is very little of the present mammoth government that is needed to perform its constitutionally granted functions, aside from the military.

And still the Social Security and Medicare checks will be also be issued, despite these activities clearly being beyond the constitutional grant of powers.  But, the EPA, NLRB, FEC, FAA, NOAA, NASA, NIH, FDA, the Agricultural Dept., the Energy Dept., the Education Dept., the Housing and Urban Affairs Dept., the Labor and Commerce Depts., SEC, HHS, and other agencies whose primary purpose is to control our lives and infringe upon our individual rights will have to designate many employees as non-essential and furlough them.  That is a very good thing.

Perhaps, these furloughs will even set aside many of the people writing regulations to implement such awful laws as ObamaCare and the Dodd-Frank cover-up of the government culpability for the financial melt-down of the Great Socialist Recession.  Perhaps Obama will not have enough aides to do the paperwork to give his supporters special subsidies and exclusions from laws such as ObamaCare.  Now that would be a most excellent consequence of a government slow-down.

In fact, let us make the government slow-down a permanent thing!  It will do much to return our government to its legitimate function of protecting our sovereign individual rights.  It will do much to decrease its many tyrannical activities.  If the slow-down lasts long enough, any of the slowed activities with any justification will be taken up by the private sector and performed much better than our incompetent government does them.

A Nation of Sovereign Individuals with Unalienable Rights

Obama's 6 July radio address said that on 4 July 1776, a small band of men declared that we Americans were created equal and free to think and worship as we pleased.  He said we were now a land of liberty and opportunity.

Obama did not say in what very limited manner we were equal because his agenda requires that to be vague.  He did not note that while we are still free to think and worship as we please, we are very often not free to speak and write what we think or to act upon our beliefs, religious or not.  He did not note that our liberties are constantly becoming fewer and that he wants them to become fewer.  He did not say that he also wants to dictate the nature of our ever more limited opportunities and pick who will be given greater opportunity than others with manipulative government policies.  He habitually defends unequal status before government as an honest effort to create equality among the People.

To understand how insulting this man's ideas and policies are to the sovereign rights of the individual, we really need a much better understanding of what our individual rights are than most people have.  Indeed, even our founding fathers had an inadequate view of them, though I generally admire them for having understood the problem as well as they did in their time.

The Declaration of Independence, agreed upon on 2 July and published on 4 July 1776, wonderfully stated that "all Men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty, and the Pursuit of Happiness -- That to secure these Rights, Governments are instituted among Men, deriving their just Powers from the Consent of the Governed, that whenever any Form of Government becomes destructive of these Ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its Foundation on such Principles, and organizing its Powers in such Form, as to them shall seem most likely to effect their Safety and Happiness."

Yes, I do not agree that our rights come from our "Creator", but they do derive as Ayn Rand observed from our nature.  At that time, almost everyone assumed the nature of man had been determined by man's Creator and therefore the rights that derived from man's nature were endowed by man's Creator.  This reference to our Creator is a big deal with many who are religious today and because they attribute many of their beliefs to the will of a god they know nothing about, there are unfortunate consequences to this.  Despite this error, there are many really great insights in this quoted statement of the Declaration of Independence.

The statement firmly places sovereignty in the hands of the People, not with government.  It clearly takes individual rights to be of a very broad nature.  Note that it even implies rights beyond those of each individual to life, liberty, and the pursuit of their happiness with the word "among."  At the time, most Americans believed in the individual right to life, liberty, and property.  The substitution of pursuit of happiness for property was clearly a way of broadening the claim of individual rights.  Of course, the pursuit of happiness implied a freedom to acquire and keep property.  But, it also would imply such things as a freedom to choose one's own friends and domestic partners, to choose what books one would read, to choose a religion or not to choose one, to enter into trade with others of one's choosing for the purposes of one's choosing, to maintain the privacy one desires, and many more actions leading to any of the many means to and forms of happiness that individuals might choose.  This is a clear statement of a very broad concept of individual rights.

These rights are unalienable.  The existence of a government does not diminish these rights.  These rights are always sovereign in the individual.  These rights are not given to the individual by the government.  No, the government is only legitimate and able to claim a reason for its very existence to the extent that the government serves faithfully and well to protect these unalienable rights sovereign in the individual.  The government is the servant of individual rights and when it fails to protect them as a matter of principle, the sovereign individuals will reform and reorganize government by their right so that it does follow principles to protect their individual sovereign rights.

These are powerful, well-stated principles that are manifestly ignored and/or misunderstood by the Progressive Elitists who dominate most academic viewpoints on the role of government today.  This American principle of highly limited government with a legitimacy limited to its protection of individual rights held unalienably by sovereign individuals is unheard in academia, most media, and from most politicians.  The People, long educated in government-run and dominated schools, no longer have a clear concept of their sovereignty, of their broad rights, and of their equally unalienable claim to these rights.  Individuals are obviously unequal in most respects, but in the context of government, the most essential way in which they are equal is with respect to their equal and sovereign individual rights.  To give some people favored status by law is to abrogate this one critical respect in which we are equal before the law.  Those who most claim to believe in equality in the present political arena are most likely to destroy the most important sense in which we are equal.  For all of his talk promoting equality, the Progressive Elitist today believes in neither equal rights nor even one-man, one-vote.

The sovereignty of the individual is re-affirmed in the Preamble of the Constitution.  The statement of the highly limited powers of government issues from the sovereignty of the individuals who constitute that government.  The government is formed only to serve their needs by protecting their liberties and their general welfare.  This reference to general welfare is now often used in an out-of-context manner to support the welfare state and a massive redistribution of wealth.  This could not be further from the intention of the time.  No, then the general welfare implied government actions beneficial to everyone, not a bare majority or some special interest as it means today.  Securing individual rights would provide peace and tranquility, justice, and the general welfare for everyone.  No other government purpose can do this.  Other government actions will most likely be unjust to many, require threats of violence upon many, and will harm the interests of many.

The 9th Amendment of the Bill of Rights makes a clear statement that the rights of the individual are broad and are indeed unalienable.  They are not to be denied or disparaged by the government.  It is no small infraction of the principle of legitimate government that our government has long ignored this amendment and overtly claimed it to be meaningless.  Indeed, the Supreme Court has actually claimed that the government is sovereign, which it most manifestly is not.  Were this the case, then there would be no means by which a legitimate government could be formed and judged.  There would be no possible basis for overthrowing it when it became tyrannical and inimical to the rights of the individual.  Such a government would be inconsistent with both the Declaration of Independence and the Constitution.  Indeed, a sovereign government, rather than a government serving to protect the rights of sovereign individuals, is inconceivable in a human-centered morality in which individuals think and act as individuals for the purpose of preserving their lives, flourishing in liberty, and pursuing their own happiness.

This enlightenment and early American view of sovereign individual rights and very limited government legitimately protecting individual rights is very much at odds with the loose and hoary notions of government and rights held by Obama, the Progressive Elitists, and other advocates of big government today.  They assume that it is the purpose of government to grant individuals such rights as it may choose to give them.  They assume that government is supposed to hurt the interests of many for the purpose of helping some who are incompetent in living their lives.  They believe it is just and moral to propagate innumerable laws and regulations limiting our individual freedoms, even as each mandate is enforced by the threat of violence should anyone stand upon their individual rights.  No peace and tranquility are possible as faction upon faction, special interest upon special interest, and even race upon race, battle for control of the brutal power of government.  It is clear that by the criteria of our own Declaration of Independence, our government today is illegitimate.

The rational American does not celebrate the federal government on the 4th of July.  He celebrates the American Principle set forth by the Declaration of Independence and implemented in the Constitution by the mandate of American individuals.  The American Principle states that the individual is sovereign and each individual has equal and broad rights to life, liberty, and the pursuit of happiness.  It states that the only legitimate purpose of government is the protection of the unalienable rights of the individual.  Due to this very limited function, government has and can claim but few powers.  The sovereign individual retains his sovereignty with respect to the freedom to exercise his rights, while government is entirely his servant devoted to the sole task of protecting the rights of each and every individual American.  By adherence to this dedicated purpose, good government harms no one and never initiates the use of force against anyone.

Many of 49% of Americans are Slaves,

while 51% are wastrels responsible for massive government spending they pay no income tax to fund.  Yes, in 2009, the number of Americans not paying income taxes to the federal government became a 51% majority.  For them, it does not matter how wasteful government spending is, because it is not their money.  They can and do ask, "Why should I care what it costs, I do not pay for it."  Obama has succeeded in creating a majority of recipients of his redistributionist theft.  It gets worse, since some of those 49% who pay some income tax, actually do get more in government goodies than the amount they pay in taxes.

For instance, according to the Bureau of Labor Statistics, there were 1,909,000 civilian federal employees in November 2008, excluding the postal employees.  With their generally high salaries and extremely good benefits, they can be said to mostly be receiving more in government payments than they are paying in taxes.  It is interesting to note that the Bureau of Labor Statistics provides data on total employment in April 2011, but only provides the number of federal employees as recently as November 2008.  Do you suppose they do not want the taxpayer to easily find out how bloated the federal bureaucracy truly is?  On top of this, I have seen numbers for January 2009 civilian federal employees without security clearances reported to be 2,748,978.  The CIA, NSA, and other complete federal agencies were left out of that 2.7 million number.  This number may include the postal employees.  Does the federal government have as much trouble keeping track of how many employees it has as it does of how much land, how many buildings, and how much equipment it has?  I would not be surprised.

Then there are also those many businessmen so cozy with the government who are collecting subsidies and who benefit from mandates, such as those to use ethanol, wind energy, solar energy, and partially electric cars.  There are also crony mercantilists benefiting from many regulations designed to bury their competition, especially that of small businesses, under a mountain of government requirements and paperwork.  These people are often called crony capitalists, but that is a contradiction of terms.  Crony mercantilists have been around as long as there have been governed nation-states, which long predates the day of the capitalists with their philosophy of open markets and freedom of choice.  Capitalism is the manifestation of the equal, sovereign individual right to associate with whom one wants for the purposes of one's choosing.

Just recently, every business in America doing any business with FDA-regulated companies or with FAA and DOD regulated aerospace companies has been hit with a blizzard of quality assurance paperwork and the pressure is mounting for every company to become International Standards Organization (ISO) certified at huge expense both initially and in an on-going way.  This is expensive for large companies and will be the death of many a small company.  The small company that always had to try harder to provide good service or quality products will now be killed in many cases in the name of increased quality.  Ha.  We will see what the monopoly of the few companies that can bear the expense of this extra-governmental regulation required by government agencies will provide in future quality!  Every lab will have calibrated equipment, but will pay no attention to correctly interpreting the data provide to obtain the real properties of the materials investigated.  There will be no quality in the end product analytical report, but every laboratory will be a quality lab because ISO says they are.  As Ayn Rand noted long ago, regulation by government sets up lowest common denominator requirements and no company thereafter has as much pressure as before to exceed those low requirements.  But, many a tired, old, and large company is very happy with such regulations, whether set by the government or by a one-world organization such as ISO.  ISO also serves the function of providing import protection to Europe primarily, but secondarily to the U.S., Canada, and Japan.

If you wonder why it is so hard to reduce the size of government or to reduce its out-of-control spending, this is why.  There are too few people paying taxes and many too many people getting payments, subsidies, and protection from effort.  The many have truly enslaved the productive and wealth-creating few.  But it is these few who create the jobs.  As our society has become most determined to enslave and whip these few, they have responded by laying off many of the employees they can no longer support and by refusing to hire more new employees even as they struggle to increase productivity while robbed of the capital with which to do it.

The Deception of the Reduced Employee Share of Payroll Tax

I am sure there are many employees who are delighted that the government has decided to make the total 2.0% reduction in the rate of the Social Security tax in the employee's contribution and not in the employer's contribution.  In fact, this is a nearly meaningless distinction, except that it plays well with those who have not thought the problem through.  I can tell you from my experience with mostly quite intelligent employees that very few people have thought this issue through.

In view of this ignorance, the ploy makes great political sense.  First, there are many more employees than there are employers, so it wins more votes for the politicians.  Second, the disappointed Progressive Elitists who so badly wanted to raise taxes on those guilty of being productive enough to earn more than $200,000 or somewhat less or couples earning more than $250,000 together or somewhat less are likely to feel that the reduction of the Social Security tax only on employees making less than $106,800 helps to equalize their disappointment in not getting to soak the rich.  They are also getting even with those rich, exploitative employers by not letting them have a share of the tax break for 2011 offered by this Social Security tax reduction.  Progressive Elitists hate business, profits, and businessmen, so this plays well.  But then this little triumph is entirely based on their own ignorance of employee compensation, which they display in many ways in addition to the present case.

Why is the distinction of employee and employer shares of the Social Security and the Medicare taxes meaningless?  On one level, it is because they are both paid by the employer.  The employee does not take his paycheck home and then send his Social Security withholding of 6.2% and his Medicare withholding of 1.45% in to the IRS.  His employer does that, unless he is self-employed, in which case he sends 12.4% in Social Security tax and 2.9% in Medicare tax.  But while this fact is important, it is not the hard part to understand.  Let us get to that.

An employer hires an employee because he wants the employee to help him produce goods and services and hiring the employee is calculated to produce enough more goods and services that the employer can cover all the costs of hiring the additional employee and make some profit as well.  The employer and the employee make a deal that the employee will be so productive that the employer can rationally afford to keep him employed.  There are two sides to this issue that need to be considered.  What will the employee add in company income and what he costs the employer.  For our purposes here, we will mostly consider what the employee costs the employer.

Adding an employee will generally require more work space and more equipment.  Workman's Compensation Insurance payments will go up.  The company may need to do more advertising to bring in more customers for the employee to provide goods or services for.  There will be an incremental increase in liability insurance in many cases.  There will be generally added expenses for business cards, office supplies, pollution controls and other regulation compliance, and the materials and goods the employee must use to make the company's finished goods or provide services.  There will also be overhead expenses due to the added work in doing payroll and keeping records for the IRS and reporting to them and other government agencies on tax and labor issues, and to provide and keep track of benefits.

Finally, there is the matter of providing the compensation package to the employee.  His compensation cannot rationally be greater than his additions to the company's income minus the many expenses of the previous paragraph.  If they are, for more than a brief training period, he should be fired.  Now every company is also in a bidding war with every other employer and even with the employee's potential thoughts of being self-employed, so that he has little leeway on the downside as to what he can offer in a compensation package.  He may increase that leeway somewhat by providing a nice work environment, good people to work with, good customers to work with, extra freedom in hours worked, and interesting work to do.  But one way or another, he is still in a stiff competition to keep desirable employees, who are likely to be desirable to other employers as well.  But most important of all, the employee's total compensation has a strict upper bound determined by what he adds to the company income minus the expenses associated with his doing so.

The compensation package is usually considered to be his wages or salary plus the costs of his benefits such as health insurance, retirement plans, vacation, sick leave, etc.  One could say that the employer's share of the Social Security tax and the Medicare tax, that state and federal unemployment taxes, and Workman's Compensation costs are all overhead expenses.  But if you do, the employer still needs to consider them as part of the costs of adding an employee and the employee still has to cover those costs or lose his job.  But, unlike added equipment, office or warehouse space, advertising, and other common overhead expenses, these taxes, which Workman's Compensation also is for all intents and purposes, are very easy to attribute to each particular employee and most rational employer's will do just exactly that.  They are part of your compensation package then.  Sure, most employees do not think of them as such, but that is the real case.

Why is this?  It is because the employer would have been just as happy to have given these tax monies to you as to give them to various governments or insurance companies.  If you are employed, you are worth the sum of these taxes, your take-home pay, the other taxes fictionally paid by you though he pays them for you, and all of your benefits.  In fact, if the employer could hand all of this money to you he should be happier.  He probably likes you and he would surely be very happy not to have go to all the trouble of separating the amount you are worth into separate piles with all the associated record keeping, report filings, and payments needed to

• Withhold income taxes for the state.
• Pay unemployment insurance to the state.
• Withhold income taxes for the federal government.
• Withhold Social Security taxes for the federal government.
• Withhold Medicare taxes for the federal government.
• Pay unemployment insurance to the federal government.
• Pay Workmen's Compensation insurance.

I can certainly vouch for the fact that I would love to give all this money to my employees and if any of these taxes had to be paid, I would be delighted if they would relieve me of all the tedious work involved and do it themselves.  Of course, I have a devious motive.  I know that that would create so many very angry voters that we would soon have a much simpler tax system and much smaller governments.  Many more people would pay more attention to how much they were paying in taxes.  The present system is designed to fool them into underestimating the amount of taxes they pay.  That deception works with most people.

Now, let us consider the case of a tax increase.  It does not matter a bit whether the tax increase is designated as paid by the employer or the employee.  The employer is still the one who is actually going to make the payments, though the employee is involved in some minor adjustments on the income tax.  Let us suppose that either the Social Security or the Medicare tax goes up.  If it does, the employer will have to do one of a few things:

• If he has many employees, he can easily fire one or more of the least productive employees to compensate for the cost increase.
• He may crack the whip and say all employees must work harder.
• He may defer pay increases until increases in worker productivity match the increased tax cost.
• He probably will be loathe to take on new workers who will not be able to match their cost of employment for an initial period of time as they learn the job.
• He may cut back on benefits.
• He might have to decrease wages or salaries, though this is usually psychologically a tough choice for everyone.

The employer has options and he will have to exercise them.  Losing money is not a choice he can handle for long.  But, you should note that such compensatory actions are harder on small businessmen than on big companies.  If your costs go up 2% and that wipes out your profit, but you have four employees, firing one causes you to lose 25% of your income.  That is most often not an option.  So you have to use the remaining options or go out of business altogether.  The going out of business option is very frequently exercised by small businesses, especially since they are usually already working very hard and productivity increases are often harder for them to come by.

Now let us return to the 2% decrease in the employee share of the Social Security tax.  Each employee gets to now take that 2% home and spend it as he wishes.  But, what would have happened if the 2% decrease had been in the employer's share of the Social Security tax?  Well, perhaps for a few weeks the employer might have had a few extra dollars to reinvest in his company or to call net income and to be taxed, but there would be a very rapid readjustment in the marketplace in which employers found that they must offer employees 2% more to retain them or to get them to come to work for them.  Why?  Because the worker in question has already proven that his labor is worth that extra 2%.  That is why he had a job in the first place.

Good, productive employees are a scare resource.  There is always an active bidding process for their services, just as there is a market for plumbers, accountants, gold, wheat, pork, televisions, and other goods and services.  The inescapable Law of Supply and Demand applies here as it generally does in life.  Governments often pretend that they are above the Law of Supply and Demand, but all they do is shift the equation is some way, usually some bad way, but some new Supply and Demand equilibrium ensues.

In the case of the 2% reduction from 6.2% to 4.2% in the employee share of Social Security, there will be more money available in the short run for people to spend.  Generally, I favor reductions in taxes.  However, this reduction is going to make the financial straits of the Social Security system all the worse.  The Baby Boomers are about to start retiring in large numbers.  The politicians have been unwilling to face that program's severe underfunding.  The Ponzi scheme is about to collapse upon us all.  The best solution is simple, but few will yet accept it.  The problem is the size of the Baby Boomer wave and the fact that retirees are living a long time.  The life expectancy of the 65 year old in 2006 was 18.5 years.  That is a long time in retirement, particularly given that many people aged 70 are now in good enough health to be working.  The retirement age should be at least age 70.  I expect to work at least until I am 75 and longer if my health allows, which it probably will.

Given that the federal government has long been using Social Security tax revenues to generally pay for the obscenely excessive spending of the government, either major retirement age increases or major tax increases will be required.  Taxes are already much too high and they are already very much degrading the health of the private sector.  What we generally need are massive government spending decreases.  They are coming because the People will not put up with higher taxes and they are coming to understand the fatal nature of government deficit spending.  The process by which the necessary spending decreases will occur is going to be very interesting to observe.  Because a simple problem has so very long been ignored, its solution will now be all the tougher and may be catastrophic for some.

Obama's Jobs Creation Mythology

Obama gave a speech upon wrapping up the G20 Summit Meeting in Seoul, South Korea on 12 November in which he said that 1 million jobs had been created in the U.S. in the last year.  Let us check this statement out.

The year for which jobs statistics are available as of now and as of his talk was November 2009 through October 2010.  In November 2009, 139,132,000 Americans had jobs.  In October 2010, the number of Americans with jobs was 139,749,000.  This is an increase of 617,000 jobs.  These numbers are for the actual numbers of Americans working and are not seasonally adjusted.  This deep into a recession, the seasonally adjusted numbers may not be very meaningful.  They are also subject to some judgment, which makes them wobbly figures, as evidenced by their frequent adjustment in subsequent months after they are announced even though the unadjusted number remains rock steady.

Now, perhaps Obama was rounding off the number of jobs created to the nearest million.  Reasonable rounding practice would say that was fine if the number being rounded was quite a few million, but at 617,000, the reasonable rounding would have been to the nearest 100,000 or to 600,000 in this case.  On the other hand, we never know if he is only counting new jobs and not subtracting the jobs lost in that time-frame.  Or maybe he is still trying to convince us that his stimulus programs created many more jobs than they destroyed.  We cannot know what he had in mind.  But, we know that most people who heard him talk think he was saying that 1 million more people are working now as compared to a year ago.  That is not the case.

Worse yet, the American population is growing and we have an increase in the number of people of working age and therefore need more jobs now than we did one year ago.  To maintain a constant percentage of the population in jobs, the economy has to create many new jobs each year.  Since looking at the unemployment rate when long into a recession commonly tells us little about how many jobs are desired, I largely ignore the so-called unemployment number.  On examining the history of employment numbers, I found that few Americans were unemployed in the late 1990s and that in January 2000, at the start of the decade, the unemployment rate was 4.04% and 67.49% of the working age, non-institutionalized, population was employed or actively looking for work.  If the economy were robust and able to generate jobs that people would want as much as they did then, we should figure that 67.49% of the working age population would still want jobs today.  This allows us to calculate the number of jobs needed to satisfy those who would work if the jobs were available and reasonably enticing.

The Great Socialist Recession began in December 2007 in the United States.  It started earlier in most other areas of the world, having been kicked off by a spike in oil prices, which soon caused a financial crisis since much of the world was working on easy credit.  Our jobs problem in this decade did not start in December 2007, however.  In January 2000, we needed another 5,689,000 jobs to put everyone looking for work in a job.  That number corresponded to a 4.04% unemployment rate with some fraction of the unemployed being unemployable due to minimum wage laws and some fraction due to people changing jobs by choice.  By December 2007, the number of missing jobs had already grown to 11,023,000 jobs due to a growing population and a higher unemployment rate of 4.80%.  It also appears that the desirability of jobs had fallen somewhat by then.  I believe this was caused by the huge growth of local, state, and federal governments throughout the decade.  By December 2007, these excessive governments were already draining the private sector of much of its wealth and had dragged down its job creation powers.  The growth of government mandate expenses on businesses had grown even faster than had the governments themselves.

By December 2008, the U.S. economy was missing 15,287,000 jobs.  By December 2009, it was missing a gigantic 22,108,000 jobs.  Let us examine the number of missing jobs by month from November 2009 to the latest statistics of October 2010.

Please note that bottom of each bar for the missing jobs starts at 20 million jobs, so we can observe the variation in the number of missing jobs more readily.  Also, in November 2009, the number of missing jobs was 20,646,000 jobs and in October 2010 the number of missing jobs had increased by 589,000 jobs to a total of 21,235,000 jobs.  So, contrary to Obama's claim of creating 1 million jobs and the implication that most people would draw from that of progress in supplying the demand for jobs, we find that the problem of missing jobs has actually become worse.  617,000 more people are working but just to remain in the bad situation we had already been in during November 2009, we needed to have created 1,206,000 jobs rather than about half that number which were created.  Things are still getting worse.

Examining the graph, we see that the job situation worsened in December 2009 and again in January 2010.  It then slowly improved through July 2010.  But it got worse again in August, September, and October 2010.  Obama has nothing to crow about.  But, that does not stop him from trying to convince us that he does.

Don't Ask, Don't Tell, Don't Enforce

U.S. District Judge Virginia Phillips, who earlier decided that the military's policy of Don't Ask, Don't Tell with respect to people in the military having or being inclined to same-sex sex was unconstitutional, earlier this week ordered the military to stop enforcing that policy.  I discussed her decision on its constitutionality here and expressed my agreement with her decision.  She had given the government time to respond to her decision with a plan to end the policy, which it failed to do.   The Democrats did try to pass legislation in Congress to strike the policy, but despite their overwhelming majority, they could not pass the legislation.  The Republicans, to their shame, largely opposed the legislation, as did numerous Democrats.  So, Judge Phillips has acted to halt enforcement of the policy that Obama and the chairman of the Joint Chiefs of Staff have said they wanted ended.  Nonetheless, the Justice Department has decided to appeal the decision.

This is one of those Go Figure moments.  The Democrats have long claimed they were the champions of homosexuals, but have not ended this policy in the last nearly two years despite having the Congress and the presidency locked up.  Laws discriminating against same-sex relationships and sexual acts are mostly popular with the People yet, though the discriminatory attitude is very much tied to the older generations.  Mostly religious conservatives favor discrimination.  Because of that, the Republican Party is mostly on-board for such discriminatory acts.  This is one of its grievous faults.  Faced with a disastrous election in a few weeks, many Democrats did not have the nerve to defend the equal rights of homosexuals and bisexuals to their lives, liberty, and pursuit of their happiness.  Judge Phillips gave the Democrats an out, which they should have taken.

It is claimed that when a U.S. District Judge rules a law unconstitutional, the Justice Department must appeal the case, which is what it is doing.  This is nonsense.  The President is sworn to preserve, defend, and protect the Constitution of the United States, which of course the members of Congress are also.  The Justice Department reports to the President and he should have ordered them not to appeal the ruling of Judge Phillips because he is suppose to recognize the excellent argument she made as a correct interpretation of the constitutionality of Don't Ask, Don't Tell.  Perhaps, in the now well-established tradition of the Democrat Party, he has not bothered to read her decision.  If he did, he is failing us with his judgment of her argument.  If he did not, he is failing us with his turpitude.  He should be taking his duty to the Constitution more seriously.  Of course, from many things he has said and done, we know that he does not care to actually follow the Constitution since he sees it as being in opposition to many of his socialist policies.  For instance, he faults it for being a roadblock to redistributive policies.

Each of the three branches of the federal government has the obligation to preserve, protect, and defend the Constitution.  This is not a task given only to one branch.  When any of the three branches fails to exercise its independent judgment, the exercise of our individual rights is harmed.  When Congress considers legislation, it is obliged to consider whether it is constitutional.  If any Congressman thinks it is not, he is obligated to vote against it.  In fact, if he is not sure that it is constitutional, he is obliged to vote against it.  If the President is presented with a proposed law passed by Congress, he is obliged to decide whether it is constitutional or not.  If it is not, he is obliged to veto it.  Because it is the nature of government to try to expand its powers, it should be the practice to recognize that if any of the three branches of government believe a law is unconstitutional, we should be disposed to refusing to allow the force of government to be used to enforce that law.  The bias of the People should be toward limited government and a maximization of the rights of the individual.  If the federal courts rule a law limiting individual freedom of choice unconstitutional, then we have recognized in recent times that the law cannot be enforced.  Unfortunately, we seem to have lost the idea that the Congress and the President are also supposed to be bulwarks against the encroachment of government against our equal, sovereign individual rights as well.  A three-legged foundation is much more stable than a one-legged foundation.

On a related issue, the Justice Department is also wrongheadedly appealing two decisions of a federal judge in Massachusetts that the 1996 Defense of Marriage Act federal law is unconstitutional.  The judge ruled that the states, not the federal government, have the power to define marriage.  He also ruled the federal law violated citizens due process rights.  I have never seen any power given to Congress by the Constitution which would allow it to decide who has a valid marriage contract and who does not. 

In actual fact, I believe it very unwise to allow any government to define marriage.  Marriage is a spiritual union of people and there is no way to preserve fundamental freedoms of conscience and the right to pursue happiness if governments are allowed the power to define what constitutes such a spiritual bond.  What they do have within their purview is the job of enforcing domestic partnership contracts, which is done at the state and local government levels, not the federal level.  My views on this are given here, here, here, and here.  Domestic partnerships should no more define and limit the number and sex of partners than does a small business contract.  A single heterosexual couple, gay men, lesbians, bisexual people, multiple heterosexual couples, and polyamorous people should all be allowed the protections and benefits of domestic partnerships suitable to their needs and as agreed upon as free adults.

Solar Power Increased Cost for German Electricity

Both the federal government and many of the state governments are mandating much increased use of so-called renewable power such as solar and wind generated electricity.  We should be very aware of the costs of doing this.  Germany has gone far down this road.  What are the results in Germany?

Germany makes Germans pay high levies on their electricity bills to pay people to invest in offshore wind turbines and roof-mounted solar panels.  These levies are guaranteed for 20 years.  Offshore wind turbine generated electricity is supported with a levy of $0.21 per kilowatt-hour and roof-mounted solar panels are given $0.46 per kilowatt-hour!  As a result, Germans have rushed to put solar panels on their roofs and the levies paid for wind, solar, and hydro power will be $11.3 billion this year, which is a 55% increase from last year.  About 8 gigawatts of new solar panel installations are projected for this year.  This is the electricity output of 4 large nuclear power plants, or would be if the sun always shone brightly in Germany 24 hours a day.  Those installing solar panels after this summer, will be paid 16% less for the electricity they produce.

The result is that on a German's electric bill, taxes and levies are now 41% of the bill and that percentage has been climbing rapidly.  VZBV, the German consumer association, says the solar panels installed in 2010 alone will cause additional electricity charges of $36 billion over the next 20 years.  Similar mandated renewable energy is constantly being advocated by Democrats, our version of socialists, in the U.S.  Our costs, especially if you live in California, have been cranked up as a result also.  Texas and Colorado are other states where the cost of electricity has been cranked upward significantly.  Read more about this here.

Incurring these increased energy costs is pointless.  Political central planners are frightening people around the world with stories of almost immediate failures of our energy supplies and catastrophic man-made global warming which require us to turn to incredibly expensive renewable energy.  The renewal they are talking about is apparently the renewed poverty of people around the world, who have often been improving their standards of living recently.  Their improved standard of living is offensive to Democrats and will be greatly impeded by nonsensical requirements to drive energy costs sky-high in accordance with the otherworldly dreams of Obama, Pelosi, Waxman, Markey, and others of the lunatic fringe of American socialist politics.

The Race to the Top and Over the Cliff

The federal government Race to the Top program has just made its Phase 2 awards this last week.  This program is designed to increase state and federal control over school systems.  The states are supposed to establish changes to:

• Adopt standards and assessments to assure student success in college and employment.
• Establish data systems to measure student knowledge and to allow educators to improve instruction.
• Recruit, develop, reward, and retain good teachers and principals, especially in the worst performing schools.
• Improve the performance of the worst schools.

The new standards and testing are in reading and math.  The states to date have often set these standards so low that they are virtually meaningless.

The Phase 1 awards were to Delaware and Tennessee.  A total of 46 states and the District of Columbia have applied for the Phase 1 or Phase 2 awards.  The Phase 2 awards were just given to 9 states and the District of Columbia.  These awards totaled $4 billion at a time when many states are facing deficits due to their high spending habits adopted prior to the recession, the drop in state revenues due to high unemployment and lowered company spending, and the increased costs of expanded entitlement programs due to the same unemployment.  The time was ripe for the federal government to exercise greater control over the many needy state governments.  Many a state was in crisis and vulnerable to a further federal grab of control of education.  The pressure for states to take more control from local school districts was a key "reform" in this program, as was pressure to put more resources into the worst schools, largely in the inner cities.

Aspects of the program try to reduce the power of the stultifying teachers unions.  They are opposing education reforms in more states than not.  The Race to the Top program favors charter schools, evaluating teachers based on their student's test scores, and firing large fractions of teachers and the principals of the worst performing schools.  The teachers unions are critical allies of the Democrat Party.  They vote solidly for the Democrats, their unions contribute huge sums of money, and the teachers can always be relied upon to donate large amounts of their time to support the Democrat candidates for office.  This critical role was recognized by the House and Senate returning from their summer recess and the start of many of the congressional campaigns in order to add $26 billion of a new stimulus round expressly for teachers and schools.  This was viewed as so critical, that the Democrats even reduced the Food Stamps program to find the money for it just prior to the mid-term elections!  Now, few teachers were in danger of being fired due to the decrease in state revenues, since the schools are nearly sacrosanct in most school districts.  Cuts are usually made elsewhere in government.  But, this infusion of money will have made the teachers unions more enthusiastic about the upcoming election and was to offset their concerns about the Race to the Top program and its threats to  poor teachers.  If the teachers unions signed on to the proposed state reforms in the Race to the Top program proposals, extra points were given to the state in the competition.

During the Great Depression, FDR was very efficient in giving money and programs to those states which were important in his re-election plans.  He drained money from the South, since he was assured of the votes of the South.  He poured money into a number of western states he thought he could win with their higher ratios of electoral votes to their populations.  Bearing in mind that virtually every state applied for the Race to the Top program educational money, examine the table below for a balance of Democrat and Republican governors, legislatures, and the 2008 presidential election vote:

D = Democrat, R = Republican, I = Independent, S = Split, Y = yes.

The most evenly divided category is the governor's party.  Three are Republicans, six are Democrats, and one, Charlie Crist of Florida, was elected as a Republican, but is now serving the Democrats.  Seven of the legislatures are Democrat, 2 are Republican, and one is split.  All but two of the states voted for Obama in 2008.  Apparently, Democrat dominated states are much better managers of statewide education reform, according to these results.  One of the consequences of more federal control over our education system will be a continued such politicization of our schools, already heavily Democrat influenced via the control of the socialist teachers unions!

Aspects of the Race to the Top program seem to actually address some educational problems, specifically that of low expectations for principals, teachers, and students.  This makes the program for more federal control seem to be less objectionable.  However, this is really a Trojan Horse and that may be why at least 4 of  the states were able to persuade the teachers unions to back their reform plan.  Actually, in the case of Hawaii that was easy since their plan was very light on reform anyway.  In the longer run, this plan will enable more federal control and that will be used to increase the power of the unions and will also be used to push the unions to give even more support to the Democrats in order to influence that power to favor the unions.

If the Race to the Top program really were very serious about improving education reform, it would have encouraged the states to produce voucher programs to replace poor performing public schools with private schools.  It would have allowed schools to experiment with the curriculum, rather than standardizing just on reading and writing and that on what is likely to be low standards.  It is unlikely any teachers union would sign on to support a true reform of our education system.  Of course, a decentralization of power over the schools and the increased exercise of smaller local school boards would be a most critical part of any real reform plan.  It is necessary to produce schools that are responsive to the parents and that emphasize the role of the professional, not the blue-collar, educator.

You cannot interest students in reading unless you give them interesting things to read.  To do that, you must emphasize literature, history, economics, and science.  Math is a great tool, but it is a tool.  Its study is commonly best motivated by teaching its applications to science, economics, engineering, and business.  Finally, programs teaching that some people are victims by virtue of their race simply provide the people of those races with excuses and encourage lower expectations.  They need to be told that they will individually be judged on the basis of their character and that many people will judge that in good part on what they know and on their commitment to knowing more throughout their lives.  The Democrats are not willing to deliver this essential message.  Without it, their so-called reform cannot be taken seriously.  Unfortunately, their grab for national control of our complete public school system should be taken very seriously.

Rasmussen Defines the Political Class

John Fund interviewed pollster Scott Rasmussen after he gave a speech at the American Legislative Exchange Council.  Rasmussen notes that he takes care to define whether his polled people belong to the Political Class or to the Mainstream Public.  The Political Class favors government in at least two of the following three questions:

1. Whose judgment do you trust more, that of the American people or America's political leaders?
2. Has the federal government become its own special interest group?
3. Do government and big business often work together in ways that hurt consumers and investors?

My answers to these questions are:

1. The American people, unless we mean the Founding Fathers and the Framers of the Constitution.
2. The federal government is a voracious special interest group.
3. Big business is often happy to use the force of government to protect itself from competition and to harm small business.  Politicians are often happy to offer big business and labor unions plums for their contributions upon which the public is choked.

The Political Class has shrunk since the recession began hurting Americans in late 2008, while the Mainstream Public has grown slightly.  I find it puzzling that still more people have not lost their faith in government, but faith in government is a stubbornly held religion.  Strangely enough, a majority of Democrats, of Republicans, and of independents are Mainstream Public.  The Political Class believe or favor these views:

• 67% believe the U.S. is moving in the right direction.
• They overwhelmingly support the bailouts of the financial and auto industries, ObamaCare, and suing the state of Arizona on its immigration bill.

84% of the Mainstream Public believe the U.S. is moving in the wrong direction!  The Mainstream Public intensely oppose the bailouts, ObamaCare, and suing the state of Arizona.

On the Democrat congressional agenda:

• 91% of Political Class think it mainstream
• 70% of Mainstream Public think it extreme

On the Republican congressional agenda:

• 81% of the Political Class think it extreme
• 53% of Mainstream Public find it mainstream

Rasmussen points at polling questions from the Political Class that make no sense to the Mainstream Public.  An example is "Should policymakers spend more to improve the economy or reduce spending to cut the deficit?"  Rasmussen says 52% of Americans think more government spending hurts the economy, while only 28% think it helps.  Consequently, while the pollster thinks he is asking for a trade-off, the public only sees the reduction in spending as good.

The week the bailout plan passed Congress, 62% of the voters wanted more tax cuts and less government spending.  They understood from the beginning that spending bailout was unlikely to succeed in helping the economy.  When Obama told Americans that ObamaCare would reduce health care spending and cut the deficit, most Americans already knew otherwise.  60% thought it would increase the deficit and 81% thought it would be more expensive than the Congressional Budget Office numbers said it would be.  The Mainstream Public is much harder to make fools of than is the Political Class.

Rasmussen noted that the American people voted against the party in power in the last three elections.  While Republicans will gain from this in November, 75% of Republicans say the Republicans in Congress are out of touch with the party base.  Rasmussen says Republican leaders will have to move quickly after the election to convince Republicans that they have regained contact with and understanding of the party base.

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.

The Most Naive People in America

The Pew Research Center conducted a poll released on 18 April 2010 based upon four surveys conducted from 11 March to 11 April of about 5,500 adults reached on land and cell phone lines.  22% of the people said they trust Washington almost always or most of the time.  Apparently, the most naive and gullible people in America are this 22% of the adult population!  Only 19% said they are basically content with the federal government.  So, only about one in five Americans are happy with the federal government.

Since the 1950s, there have been only two periods with similar levels of distrust.  From 1992 to 1995, the first term of Bill Clinton and following on the heels of the George H. W. Bush "read my lips" tax increases, those trusting Washington fell to 17%.  From 1978 to 1980, the last years of Jimmy Carter's administration, those retaining trust in Washington fell to a low of 25%.

Today's adults were mostly born between the Census' of 1920 and 1990.  Of course some adults born in that time-frame have died and are not included in the Pew poll.  To keep things simple, we will ignore that for the following calculation.  How many people have been born per minute on average in that time?  The answer is about 3.88 per minute.  If 22% of these people are suckers, then the old saying that a sucker is born every minute is nearly true, but Americans are a wee bit better than that.  Apparently about 0.85 suckers are born every minute.

About half the people said they wanted smaller government, which is fewer than those saying this in other recent surveys.  About 40% want government to provide more services.  The Pew Center does tend to produce results slightly more favorable to the left than many polls over the years, in my opinion.

The Gross National Debt and Our Gross National Politicians

The Gross National Debt is the sum of the Public Debt and the money the government owes to itself, such as to Medicare and Social Security.  The Public Debt is important in that the government has to find people willing to hold that debt in exchange for interest, but the real government debt is the Gross National Debt.  This is because when the Social Security Fund starts requiring the government to make good on its IOUs to Social Security so that retired people can be paid their benefits, the government will have to come up with that money or default on the Social Security program.  Coming up with the money may mean borrowing it from the public, finding additional tax revenues, or simply devaluing the money by printing it and paying the money back with less valuable dollars.  The devalued dollars will dilute the benefits.

Let us look at the public debt and the gross debt through the year 2008 graphed in terms of the national Gross Domestic Product (GDP):

The y-axis is mislabeled. The plot is as a function of the percentage of the GDP, not the fraction. The reason for looking at it as a percentage of GDP is because as the economy grows, it is better able to support a given level of debt. In 2008, the gross debt (in black) was 1.72 times the public debt (in red). We already owed the Medicare and Social Security Funds a huge debt. As you can see, the ratio of gross debt to public debt has been increasing in recent decades.

In 2001, Bush's first year in office, the Congress was divided with the Democrats in control of the Senate.  The gross debt was 57.4% of GDP.  In 2003, the Republicans came to control both the House and the Senate.  The 2007 budget was the last one enacted by the Republican controlled House and Senate and the gross debt at the end of 2007 was 65.6% of GDP.  The increase in the gross debt from 2001 to 2007 was 8.2% ( an average yearly increase of 1.17%), which Democrats like to blame on the Bush tax cuts.  Actually, government revenues went up by $576.8 billion a year in this time, so, as is so often the case, the reason for our expanding debt was clearly huge spending increases.  In 2007, despite the increased revenue of $576.8 billion, the government increased its gross debt by $499.3 billion.  That debt was caused by an increase of government expenditures since 2001 of $1.076 trillion!  Many of us Republicans were furious with our party and became very unenthusiastic supporters and that only because we recognized the Democrats as even worse.  The gross debt was, however, not quite as bad as it had been for a couple of years in the 1990s.

So, in 2007 the Democrats took over the House and the Senate.  Their first real budget was in 2008 and it increased the gross national debt from 65.6% to 70.2% of GDP in one year for an increase of 4.6%!  In 2009, with no worry that Obama would veto anything the Congress passed, they really went to town.  The Gross national debt increased to 86.1% of GDP.  In two years of Democrat control, the total increase in gross debt was 20.5%!  According to the OMB, the 2010 gross national debt is estimated to be 98.1% of GDP, for a three year increase of 32.5%!!!!!  This is an average of 10.83% increase per year under the Democrats, compared to the 1.17% yearly increase I used to think was awful between 2001 and 2007.  Actually, I still do think that was awful, but now it is more than 9 times more awful.  How do you express an order of magnitude more than awful?  Does that make the present regime's growth of the gross national debt awesomely awful?  The deficit this year may well be an underestimate, since it is also based on growth in the economy and in government tax receipts which many think are rosy projections, indeed.

Now, this is where reality falls off a cliff.  Next, we enter a real fantasy world.  In 2011, the new Obama budget submission to Congress hopes (it springs eternal) that the gross national debt will only increase to 101.0% of GDP.  They have some very, very rosy projections on how well the economy will do, despite Obama's heavy new taxes.  His proposed new taxes are expected to bring in $2 trillion more over the next 10 years.  Yes, this madman actually thinks he can lower the boom on the economy with backbreaking taxes and it will thrive and throw increased tribute at the feet of the great leader.  The leader will then be free to choose his friends and party lavishly with them, while most Americans carry some lazy and wrongheaded bureaucrat on their back to the feast.

Well, I have news for you kleptocrats.  It is well proven that increasing the tax rate on capital gains results in so many fewer capital gains transactions that tax revenues will go down, not up.  The expected increase in tax revenues of $105.4 billion from that source will never happen.  If you really wanted more revenues in time, you would decrease the capital gains tax rate.  But, if you want the People to think you are a socialist, redistributionist hero and you are trampling the necks of wealthy Capitalists, this sounds good.  But, Capitalists will change their investment behavior to thwart your evil plans and you will get less.  Way to shoot yourselves in the foot!

Obama plans to make the unemployment insurance surtax permanent.  Great, so employers will hire fewer people since that will raise the cost of labor, as will the preferential treatment for labor union goons.  He will increase taxes on oil and gas.  Great, that will result in less oil and gas on the American market and higher prices.  The economy will slow down everywhere.  An increase in oil prices is what started the recession in the first place, even before the collapse of the sub-prime mortgage market.

He will increase taxes on companies with operations abroad.  These companies already share the world's highest corporation taxes with Japan.  This is one of the reasons they have been increasing their operations aboard so much.  This is not rocket science.  If you want corporations to hire more people and produce more in the U.S., lower the corporation tax rate.  No, if you are wrongheaded socialist, you find a way to increase their taxes even more.  The proper response is for these companies to reduce their American operations even more and move their headquarters abroad to countries with lower tax rates.  This will happen in time, if these new taxes are not repealed and if the super-high corporation income tax is not lowered.  Then there is the brilliant idea of putting a special tax on banks.  Now how is that going to result in banks loaning more money to companies as they try to expand to grow us out of this recession?  How much of this tax is going to be passed on to every customer of a bank?  All, or almost all, of it!

Brilliant, Obama, just brilliant.  You claim you could not find a credible economist who would back any other policy when you spoke to the Republican Congressmen.  I will suggest two really good economists you might talk to:  Dr. Thomas Sowell and Prof. Walter E. Williams.  I could list numerous others as well, but I thought I would stick with two who would have been much better guardians of the Constitution and the economy than you are and who would have provided the American People a genuine pleasure in having a black American President.  It really is unfortunate that our first one had to be such an incompetent fool.

Public Sector vs. Private Sector Employment

Scott Brown appeared on ABC's This Week and said, "We need to put a freeze on federal hires and federal raises because, as you know, federal employees are making twice as much as their private counterparts."  Is he right?

The average federal civilian employee makes $119,982 per year, which given there are 1.9 million of them, is about about $227,965,800,000 or just under $228 billion.  The average private sector employee makes $59,909 per year.  From 2000 to 2008, the pay for federal civilian employees increased by 57%!  Private sector employees saw their pay go up only 31% in that time, and many of them are unemployed now.  Not surprisingly, federal workers quit their jobs at a rate which is only one-third that of workers in the private sector.  They enjoy a great deal more job security as seen in the graph below.  The red line is government sector employment, federal, state, and local.  The blue line with the roller coaster variations in employment, is the private sector.

It is almost impossible to fire a federal employee, but the government would work much better if at least 20% of them were fired.  That is just the one's who are not even trying to do their jobs.  If you were to fire the ones who are trying somewhat, but doing their jobs badly, that would eliminate another 30% of federal workers.  Then there are those who are doing what they are assigned to do adequately well, but what they are doing is so wrongheaded that it is hurting the country.  Fire them and you will have eliminated another 25%.  The remaining 25% might largely be federal employees who are doing things that ought to be done and doing them well enough that it is reasonable to spare them the axe.

There are many agencies so screwed up, they should be shut down.  Among them are the Dept. of Labor, Dept. of Agriculture, Dept. of Health and Human Services, Dept. of Education, the National Atmospheric and Oceanic Administration, and NASA.  These agencies are among the many which are both incompetent and wrongheaded.  In so far as they have a few legitimate functions, those might be rolled into other agencies.

The Real Unemployment Rate in January 2010

The announcement one hears on the jobs situation with the release of the new unemployment figures today is that while more jobs were lost in January, the unemployment rate improved from 10.0 to 9.7%.  This is based upon the game of seasonally adjusted rates and those seasonal adjustment factors may or may not be valid in the depths of long and deep recession.  There is surely room to play games with such figures and given that NOAA and NASA have played fast and loose games with the temperature records for political and ideological reasons, it is best to keep our guard up and consider the raw numbers.  So, let us look at those.

The table below gives the Bureau of Labor Statistics numbers in the Noninstitutional Civilian Working Age Population, the Employed, and the Officially Unemployed as released on 5 February 2010.  These are not seasonally adjusted numbers.  First, let us take note that though the Noninstitutional Civilian Working Age Population grew by 2,185,000 people from January 2009 to December 2009 and it grew from November 2009 to December 2009 according to the Bureau of Labor Statistics, this working age population decreased by 88,000 from December 2009 to January 2010.  This is very strange.  We must have had a lot of people go to jail or join the military in January!  Then I performed the calculations of the number of jobs which would be desired if the employment situation were as good as it was in January 1990 once again as I did in my posting of 13 January 2010 on the December unemployment figures.  The December number of employed has been adjusted upward since that time.

 

The raw unemployment rate in December 2009 was 9.65%, rather than the seasonally adjusted 1.0% rate officially used.  For course, this is based only upon those people known to the government to have been seeking work in December and does not include those who have given up or were seeking work through channels unknown to the government.  The evidence has been that the numbers of such people have been steadily increasing throughout the recession.  In comparison, the raw number unemployment % in January 2010 is 10.56%.  This is a far cry from the announced seasonally adjusted 9.7%!  According to these numbers, the number of employed Americans decreased by 1,144,000 people in January 2010 compared to December 2009.  There is not much for the federal government to boast about as a job creator here.

So, the government number of unemployed increased from December to January by 1,407,000 people to 16,147,000 people.  But, the situation is really much worse.  If the American people were as fully employed as they clearly wanted to be in January 2000, then we have a short-fall of 23,029,000 jobs!  As January 2000 shows, some people will be unemployed in the best of times.  Some because they lack the skills, some because they want work, but they do not want to work hard, and some because they are in-transit between jobs.  But, compared to the 4.04% unemployment of that time, the comparative unemployment in January 2010 is 14.41%, or 10.37% higher than then.  Of course this is also 3.57 times greater unemployment than then.

The numbers of long-term unemployed continued to increase.  There are also very large numbers of part-time employed people.  The average number of hours worked a week by non-farm private sector employees was up 0.1 hour from December to 33.9 hours.  The federal government hired 33,000 more employees in January, while the state and local governments had a small reduction in non-school employees.  Until the private sector starts hiring many more people, the unemployment reality will remain grim.