Money doesn't grow on trees?

Anyone else getting a government spending headache? I wonder when it will end. I say "when" rather than "if", because this level of spending is truly unsustainable.

From a Bloomberg article: "The U.S. government and the Federal Reserve have spent, lent or committed $12.8 trillion, an amount that approaches the value of everything produced in the country last year, to stem the longest recession since the 1930s.... The money works out to $42,105 for every man, woman and child in the U.S. and 14 times the $899.8 billion of currency in circulation."

Ouch. So, even if we assume that this is all money well spent (and I hope nobody out there is foolish enough to believe that!), there are only three ways to pay for all the spending: taxing, borrowing, or printing money. We're doing all three, but I wonder if the average American is aware of the consequences of these actions.

Taxing. Even if we were to take 100% of what all the "rich" people make, it wouldn't come close to covering these costs. Unavoidably, taxes are going to go up for all of us, but it still won't be enough to pay for what we have spent.

Borrowing. We're doing plenty of that, but that is money that has to be paid back with interest. Its our future money (our children's money) already spent. We're reaching the point where we'll be paying over $600 billion annually in interest alone on our debt -- debt which continues to skyrocket under the spending of the Obama administration.

Printing money. See a previous blog post about the Fed printing over a trillion dollars. Printing money is dangerous because it causes *inflation*; it devalues our currency (the dollar). Would any sane person choose a brutal beating later over a slap in the face now? Its very unwise to make decisions for short-term comfort without consideration for the long-term implications. No nation on earth has ever spent and printed money without it leading to inflation. To think we can spend our way to prosperity is as foolish as going on a wild spending spree when your credit cards are maxxed out and you can't pay your bills. Yikes.

There's an old saying that money doesn't grow on trees. I just wish some of our elected officials would realize that.

The Big Deal this week (and it wasn't the AIG bonus scandal)

Anyone following the news of politics in recent days might easily find themselves wondering what's really going on here. Obviously, Chris Dodd and Timothy Geithner got caught in a lie, and a big one at that. But I've been doing some reading on this, and it seems there may be more to all this than first appears.

First, Glenn Beck reminded us on his show that when the "right hand" is doing something, don't become so focused there that you miss what the "left hand" is doing. This week -- taking a backseat to all the noise over AIG bonuses -- the Fed announced a decision that most Americans aren't aware of and likely wouldn't understand anyway. As a last ditch effort to keep us out of a depression, they have printed a trillion dollars. This is a huge gamble; whether it accomplishes the goal of increasing lending and spending or not, it *will* increase inflation, and all Americans will feel the effect of this decision.

The Fed End Game reports that "the idea is that the treasury prints money, the Fed uses that to buy long term bonds to keep down interest rates and encourage investment, and then the money goes into circulation. Theoretically that money will cause inflation and — coupled with low interest rates — people will stop saving money and start buying stuff, getting out of the deflationary spiral and causing universal bliss. There are a few minor problems with this theory." [One that I can think of that isn't mentioned in the article is the fact that demographics are against that happening -- the baby boomers have peaked on spending and will be spending less for purely demographic reasons.]

Fishman summarizes, "In short, by trying to avoid a depression, they are punishing savers and rewarding debtors, and doing it in a way that makes the people that messed up have more wealth." And "they are, in practice, devaluing all industry and commerce which hasn’t failed." Swell. The worst part is that if it doesn't work, we're in for a MUCH worse depression than we would have experienced otherwise.

Obviously, I'm a much bigger fan of Reaganomic approaches to economic recovery. Pare back on goverment programs and spending, let people and businesses keep as much of their hard-earned tax money as they can (*especially* the wealthy and the corporations because they are the job-creators), and give the American people (with the greatest entrepreneurial spirit in the world) a chance to reclaim the spirit we found after 9/11 and work through this depression ourselves.

Larry Kudlow has a very insightful article on the implications (hidden agenda) behind the Congress' attempts to tax 90% of bonuses. One of the most interesting points he made:
"I wonder about this simply because there's a much better way to recoup the misbegotten AIG bonuses. Though no one in Congress is paying any attention to beleaguered Treasury man Tim Geithner, he explained in a March 17 letter to Nancy Pelosi that the Treasury "will impose on AIG a contractual commitment to pay the Treasury from the operations of the company the amount of the retention awards just paid. In addition, we will deduct from the $30 billion in assistance an amount equal to the amount of those payments." So the AIG bonus problem can be remedied in a much calmer and simpler way than returning to 90 percent tax rates."

Read his entire article -- its short and concise -- but he summarizes by saying, "You see, taxes matter. They hugely impact economic behavior. The whole economic system is run on incentives to work, invest and take risks. And it must pay, after tax, to ignite the entrepreneurial activity that really drives the economy. Like it or not, our free-market capitalist system is driven by the economic activist, provided he or she is properly rewarded."

Taxes matter, folks. Don't get so caught up in populist anger at greed and bonuses that you miss the big picture of what is really going on here. The real travesty is the government involvement.

Live by the Teleprompter, Die by the Teleprompter

The teleprompter jokes going around due to the recent hilarious teleprompter blunders help us gain a bit of levity in a difficult time. Although the video has not yet surfaced (and there are rumors circulating that its being suppressed to keep Obama from becoming an even bigger object of ridicule), the most recent teleprompter gaffe involved President Obama thanking himself by name (as in, "Thank you, President Obama...." for throwing a party as he was accidentally fed a speech that was meant for the Irish Prime minister. Whoopsie. Read more here.

See also

Some funny Youtube videos of TFS (Teleprompter Failure Syndrome):
http://www.youtube.com/watch?v=omHUsRTYFAU
http://www.youtube.com/watch?v=3hSnEMV58F8&feature=related

Barack Obama's Teleprompter starts a blog:
http://baracksteleprompter.blogspot.com/

We the People Video

We the People Stimulus Package -- this is a MUST SEE video, invoking founding father Thomas Paine's reaction to what is going on in American government today:

http://www.youtube.com/watch?v=jeYscnFpEyA&feature=channel_page

Enjoy!

Government is a Lemon and I Want My Money Back!

The AIG bonus structure has been 'known information' for months now. Chris Dodd definitely knew about the amendment to allow bonuses since he was the one who put it in there (and received over $100,000 in campaign contributions from AIG in 2008, as did Obama himself). Tim Geithner put the whole AIG package together in the first place according to the AIG, so he has no excuse for not having known about it.

So why, suddenly, is the news plastered with quotes and clips of outraged Congressmen and Senators exclaiming about how they won't rest until they reclaim the $165 million paid out (by contract) to AIG employees. They're going to break the contracts to do that. If they can break contracts, might I venture to ask what it might be that would (or COULD) stop them from taking anything they want that anyone has?

I don't know about the rest of Americans, but I personally think the AIG employees would probably do a better job stimulating the economy with their bonus money (which they are to be paid as part of their contracts) than the government could possibly do. Why bother getting money back from AIG employees when you're only going to spend it on Swine Odor Research or some other equally wasteful pet project?

The 'Bridge to Nowhere' earmark was *twice* the amount of money as these bonuses, so where does Congress get off feigning outrage at AIG when their own unique mixture of incompetence and corruption has cost taxpayers so much that $165 million is practically chump change?

Forget the AIG bonuses. That may be the only money spent well in recent months. Congress, if you must be outraged about something, how about doing something to get our money back from all the ridiculous pork projects you've passed lately. That would certainly make Americans applaud.

Here's a message for Congress: We're not outraged at AIG. We're outraged at YOU.

OK, forget everything I just said. Michelle Malkin says it so much better here: Spare us Your Fury, DC Hypocrites

Senator Judd Gregg on Obama's Budget

Here is what Senator Judd Gregg had to say in yesterday's Washington Post about Obama's budget:

"The budget the Obama administration has presented to the American people is a new type of budget: it expands our government in unprecedented ways and presents the largest tax increase in history. It raises total spending to $3.9 trillion in 2009, or 28 percent of gross domestic product, the highest level as a share of GDP since World War II.

In the next five years, the debt will double, and in 10 years, it will triple. This budget creates more debt than under every president from George Washington to George W. Bush combined … the Obama administration’s proposal is not a budget that the rest of America would recognize as a document for living within one’s means. It simply spends too much, taxes too much and borrows too much. It is a game plan for an explosive expansion of the size and intrusiveness of the national government based on a belief that bureaucrats can more effectively manage large segments of our economy and our daily lives than the private sector or the individual."

And here is what he told Secretary Treasurer Tim Geithner in Congress yesterday about the budget:

“This budget, as it’s presently constructed, pass[es] on to our children a nation which they will not be able to afford. … I think we’re putting at risk not only our children’s future, we’re clearly putting at risk the value of a dollar and our ability to sell debt.”

Lobbyists, Tax Cheats, and Earmarks, Oh My!

Trying to keep up with the lies and broken promises of Barack Obama is enough to boggle the mind.

Obama Promise: President Obama promised during his campaign that lobbyists "won't find a job in my White House."

Truth: "So far, though, at least a dozen former lobbyists have found top jobs in his administration, according to an analysis done by Republican sources and corroborated by Politico." (Source)

Obama Promise: on January 6, 2009,"We are going to ban all earmarks, the process by which individual members insert pet projects without review." He also said he would go "line by line to make sure that we are not spending money unwisely."

Truth: Wednesday, Obama signed the massive $410 billion dollar omnibus bill which has over 9,000 unnecessarily and wasteful earmarks. (See also 'Obama Decries Earmarks, Signs Bill with 9,000 of them')

Obama Promise: To allow five days of public comment before signing bills. From his campaign web site: "As president, Obama will not sign any non-emergency bill without giving the American public an opportunity to review and comment on the White House website for five days."

Truth: Politifact reports this as "promise broken". (Source) Both the first and second bills Obama signed, in no way considered emergency legislation, were signed before they could be posted for public consideration. Read more... Of course, Congress hasn't even had enough time to read the bills before they vote on them, so perhaps we need to start there.

Obama Promise: After criticizing President Bush for using signing statements, Obama says "We're not going to use signing statements as a way of doing an end-run around Congress." (Source - video)

Truth: "Two days after he promised to roll back the use of presidential signing statements (and ordered the heads of federal agencies to ignore those issued by his predecessor), President Obama issued his first signing statement Wednesday as he set Congress's $410 billion omnibus spending bill into law." (Source)

These are just a few of the most blatant transgressions, but the outright contradictions are adding up:

--Campaigning as a tax-cutter and then letting the Bush tax cuts expire, raising taxes on the wealthy (small businesses and job creators included), and seeking a Cap & Trade program that would effectively raise taxes significantly (and disproportionately) on even the poorest Americans.

--Holding a farce of a "Fiscal Responsibility" summit hard on the heels of the Stimulus Bill which democrat and Obama supporter Camille Paglia called "that chaotic pig rut of a stimulus package, which let House Democrats throw a thousand crazy kitchen sinks into what should have been a focused blueprint for economic recovery" (Source).

--Talking about sweeping ethics reforms while appointing several people who didn't pay their taxes to his administration, the most notable of which is Secretary Treasurer Tim 'Turbo Tax Cheat' Geithner who is ironically now running the IRS and explaining to Congress his plans to crack down on tax cheats.

--Saying he doesn't believe in big government ("Not because I believe in bigger government - I don't.") as he proposes a budget that increases government beaurocracy, government spending, the deficit, and the national debt in unprecedented ways.

I find myself in complete agreement with Eric Kohn who wrote: "we are now left with two unavoidable conclusions: that Obama is a contradiction-in-terms and has personally invested himself fully in his own clearly contradictory rhetoric, or that he's simply duplicitous..." In summary, he's not making sense or he's a liar. Either way, it's not looking good for the rest of us. It's going to be a long four years.

How Many American Taxpayers Does It Take to Buy an Earmark?

Forget, momentarily, that Barack Obama promised to go through the budget line-by-line to eliminate wasteful spending. Forget (also), momentarily, that he promised to "eliminate earmarks". Forget also that we're not even spending our own tax money anymore, but printing and borrowing money that our children and grandchildren will have to pay with interest.

How many tax-payers does it actually take to pay for the $7.7 billion in earmarks in the $410 billion Omnibus bill?

According to the latest IRS data (for 2004), the average American taxpayer reported income of $51,100 and paid income taxes of $9,377 or 18% of income. (Source) If we do the math, that means it takes 821,158 tax-paying Americans to pay FOR THE EARMARKS ALONE in the Omnibus bill.

How liberating, for the average American taxpayer, to know that they contributed 1/821,158th of the money needed for such illustrious and critical projects as $250,000 for "lobster research" and "lobster boat rides", $100,000 for the 'Seals as Sentinel' program, $238,000 for the Polynesian Voyaging Society, $381,000 for Jazz at Lincoln Center, and these are just a few.

On behalf of all Americans, thank you to our elected representatives for representing us so incredibly poorly and wasting our hard-earned tax money on crap (literally, in the case of the $1.8 million swine odor research project). Our tax money -- hard at work or hardly working? Would you ever spend your own money and resources as poorly and unwisely as you have spent ours?

Since Congress and the President clearly aren't "getting it" yet, let me spell it out for you. Americans don't mind paying taxes. We are willing to pay for our country to have a strong defense and for important infrastructure projects. We are sick of the wasteful spending and knowing full well that our tax money goes into a big black hole of nonsense once it reaches Washington. I wonder how many of us it takes to pay for Nancy Pelosi's jet? Then again, maybe I don't even want to know the answer to that one.

What's At Stake: Private Choice

"There is a whole school of economics called "Public Choice".... Public Choice economics demonstrates that government is populated by self-interested utility maximizers just as are other sectors of the economy, and, as Thomas Sowell has observed, the primary self-interest of politicians is to get reelected. That is Job One." (Source)

Americans have made the mistake of assuming that the government (and our elected officials) actually have our best interests at heart and that we can trust them to take care of us. What we are handing over is our freedom and liberty, and we will not be "happy" or impressed with government solutions (nor can we afford them): health care, education, retirement, etc.

It is "Public Choice vs. Private Choice", and what we lose in the equation is the very heart of the American Dream. How bitterly ironic is it that the party of "choice" is the very party ramming socialist policy down our throats that will result in the death of private choice. What are we buying into when we give the government power to impose public choice? Public choice is when the government chooses FOR you. To make the assumption that government as a bloated bureaucratic body of corrupt officials acting in their own self-interest will (by some miracle) act in your best interests is incredibly naive.

Caroline Baum gives us food for thought on what happens when the government becomes too powerful and over-reaches itself:

"Government is nothing more than a collection of individuals acting in their own -- yes, their own -- self-interest, in much the same way that Wall Street does. The only difference, according to advocates of public choice theory, is that governments make public, not private, choices: They choose for us, in other words. And we aren’t free to reject those choices.

Whereas transactions in the private sector are voluntary, the government coerces us (threat of imprisonment) to pay for goods and services via taxes." (Source)

Wow. "And we aren't free to reject those choices." What all this spending legislation means is the permanent creation of more and more bureaucracy that will -- in the guise of trying to help and save us, claiming to have our best interests at heart, but actually grasping for wealth and power -- reduce our freedom and our choices. Private choice is what this country is founded upon. Private choice is not just eroded by the Obama administration and Congress's recent legislation, its obliterated.

Reclaiming our Heritage and our Freedom: The American Eagle

I strongly encourage everyone to study up on the Declaration of Independence, the Constitution and its Amendments, and the writings of the founding fathers. One thing all Americans would hopefully agree upon (regardless of party or leanings) is that America was founded on truly exceptional and worthy ideas, principles, and precepts. If we are far off course now -- and we are -- the answer isn't to try to re-create America as a socialist or communist country (none of which have ever or could ever provide the kind of quality of life and prosperity we have right here right now in the U.S.A.). The answer lies in getting back on course with the principles upon which this great country was founded: reclaiming our heritage and our freedom.

I've just started reading the 5,000 Year Leap: The 28 Great Ideas that Changed the World to gain a better understanding of the founding fathers and the creation of our government. Skousen describes the "polemic process" of our founders to get "the American Eagle in the balanced center of the political spectrum". Our eagle has a right wing (responsible for conserving the nation's resources and protecting the people's freedom) and a left wing (the problem-solving wing, sensitive to the needs of people and dreaming of elaborate plans to solve these problems). When both wings work together and balance the government, the eagle (our country) flies straight and high. Maintaining the balance is crucial, as the founding father's were acutely aware. "If wing #1 becomes infatuated with the idea of solving all the problems of the nation, regardless of the cost, and wing #2 fails to bring its power to play to sober the problem-solvers with a more realistic approach, the eagle will spin off to the left, which is tyranny. On the other hand, if wing #1 fails to see the problems which need solving and wing #2 becomes so inflexible in its course of not solving problems simply to save money, or not disturb the status quo, then the machinery of government loses its credibility, and the eagle drifts over toward the right where the people decide to take matters into their own hands[, anarchy]".

Fascinating, and it should prove to us that working together, with the core principles of freedom at the heart of all involved, we can continue to hold our government in the balanced center, where it serves the people the way it was intended to. "With both of the eagle's wings flying -- one solving problems, the other preserving resources and freedom -- the American future couldn not help but ascend to unprecedented heights of wealth and influence."

So right now we are in a tailspin, and those in Washington are too entrenched in their own positions and too intent upon their own agendas to be effective in achieving the vision of our founding fathers for balanced government. Add incredible and widespread corruption to that; while there is nothing new under the sun, this is more than just tainting those holding public office, it indicates a self-interest that is in direct opposition to the responsibility of serving the people in moral and ethical ways. Can you imagine what our constitution might have looked like if lobbyist and special interest groups were buying off the founding fathers and embroiling them in a web of mass corruption (which is realistically what we have in Washington today, with the exception of a small handful of individuals)?

As much as some people might like to believe that our Constitution is not up to the challenge of our times, the founding fathers in actuality warned against the very thing that is happening in our country today. Far from being "out of touch" with modern times, great ideas transcend times. The Founders warned against the drift toward the collectivist left. From the 5,000 Year Leap, "They warned against the 'welfare state' where the government endeavors to take care of everyone from the cradle fo the grave.... They warned against confiscatory taxation and deficit spending." Sound familiar?

Thomas Jefferson wrote, "If we can prevent the government from wasting the labors of the people, under the pretense of taking care of them, they must become happy." There is a very real danger to Americans coming to believe that it is the government's job to take care of them, as American Idle as well as numerous polls are now showing. This is the direct opposite of "becoming happy". Placing government in charge of our lives out of a sense of entitlement is directly in opposition to what this country was founded upon. It will not create happiness, it will destroy happiness. It will also destroy liberty and freedom by forcing "public choice" and disallowing "private choice" (see an earlier blog entry for my thoughts on public vs. private choice).

The founding fathers also warned against confiscatory taxation and deficit spending, both of which are now well past alarming and downright dangerous. In Fiscal Year 2008, the U. S. Government spent $412 Billion of your money on interest payments to the holders of the National Debt. As of 28 February 2009, the total interest spent so far this fiscal year is $148 Billion. The interest expense paid on the National Debt is the third largest expense in the federal budget. However, these numbers do not include the spending being proposed and signed by Obama. The spending of the Obama administration this year alone will give us the first trillion-dollar deficits the world has ever seen.

Addressing the immorality of passing "the results of its extravagance in the form of debts to the next generation", Thomas Jefferson wrote "we shall all consider ourselves unauthorized to saddle posterity with our debts, and morally bound to pay them ourselves; and consequently within what may be deemed the period of a generation, or the life of the majority." Failing to heed that principle, we have already spent our children's and our grandchildren's tax money -- money which hasn't even been created or earned yet. How can we justify this? Worse still, how will we explain it to our children?

What are we spending this money on? Sickening pork projects like swine odor research, grape genetics, the promotion of astonomy in Hawaii, green golf carts, Buffalo Bill Historical Center, the Polynesian Voyaging Society, sustainable Las Vegas, Jazz in Lincoln Center, coral reef research and preservation, Montana World Trade Center, Myrtle Beach International Trade and Convention Center, and $30 million dollars to the salt marsh harvest mouse (oops, I mean "wetlands restoration"). This kind of wasteful spending would be an abomination if we actually had the money to pay for it. The fact that we are printing and borrowing money that future generations will have to pay for WITH INTEREST is beyond the pale and a travesty of the worst kind to perpetrate on our children.

As forward-looking as the founding fathers were, I wonder if even they could have envisioned a government that would bring the people to its knees with this inconceivable level of debt, even though they did envision a people who would be willing to enslave themselves to government for the sake of entitlement and under the precept of being taken care of (and deserving it). We may have that government, but we are not those people. We've got to get back to basics and firmly re-establish the principles the country was founded on, then maintain the balance (of an American eagle flying straight and high) between ideas to solve problems and the judicious use of resources to do it as well as the freedom of the people, which is non-negotiable.

Reaganomics vs. Obamanomics

Interesting article by Peter Ferrera on Reaganomics vs. Obamanomics: quick summary below:

Reaganomics brought us the greatest period of wealth creation in the history of the country. How?
1) Reductions in tax rates to restore incentives for economic growth,
2) Spending Reductions
3) Anti-inflation monetary policy to restrain money supply growth
4) Deregulation

Obamanomics, on the other hand, is currently accomplishing the greatest wealth destruction in the history of the country (and this, from Jim Cramer, liberal democrat and host of Mad Money). How? By doing EXACTLY the OPPOSITE of what Ronald Reagan did. From the article:
"–He is still promising tax rate increases, at least by letting the Bush tax cuts expire.
–He just passed the greatest increase in government spending in the history of the planet.
–He is promising massive increases in regulatory burdens, including global warming cap and trade regulation that would cost the economy another trillion dollars a year.
–The Fed is already furiously reinflating the money supply, sowing seeds of further havoc in the future."

What I'm having trouble understanding is why the American people haven't figured this out yet? It doesn't take a rocket scientist; this is common sense.

We should -- ALL of us -- be demanding that Obama retract the economic policies and "transformative" agenda that is tanking the economy. The radical Obama agenda is a sinking ship; let's not wait until the last minute to get off. Wake up, America, before its too late.

Criticizing Obama

"The President is merely the most important among a large number of public servants. He should be supported or opposed exactly to the degree which is warranted by his good conduct or bad conduct, his efficiency or inefficiency in rendering loyal, able, and disinterested service to the Nation as a whole. Therefore it is absolutely necessary that there should be full liberty to tell the truth about his acts, and this means that it is exactly necessary to blame him when he does wrong as to praise him when he does right. Any other attitude in an American citizen is both base and servile. To announce that there must be no criticism of the President, or that we are to stand by the President, right or wrong, is not only unpatriotic and servile, but is morally treasonable to the American public. Nothing but the truth should be spoken about him or any one else. But it is even more important to tell the truth, pleasant or unpleasant, about him than about any one else." -- President Theodore (Teddy) Roosevelt

Bringing the DOW Jones Down....

I write this on a day when the DOW Jones Industrial Average has dropped well below the 7000 mark. How is our economy faring under President Obama's management?

• November 5, 2008: Dow drops 530 points the day after President Obama is elected.
• January 20, 2009: Dow drops 359 points the day the President delivers his inaugural address.
• January 28, 2009: The House passes their stimulus proposal after trading hours. The next day, the Dow drops 224 points.
• February 9, 2009: President Obama has his first prime-time press conference, followed by Treasury Secretary Geithner’s speech on the credit markets the next day. The Dow drops 381 points on February 10.
• February 13, 2009: The House passes the conference version of the stimulus bill in the afternoon, and the Dow closes 83 points down. After the Senate passes the final version late in the evening, the Dow drops 343 points the next day.
• February 17, 2009: The President signs the stimulus bill into law in Denver, CO. The Dow drops 293 points.
• February 25, 2009: The Dow drops 226 points the day after President Obama delivers his address to a Joint Session of Congress.

"Now, this type of data runs the risk of cherry-picking. So, in 2008, the Dow under President Bush averaged a loss of roughly 86 points per week. Since taking office, the Dow under President Obama dropped 1,217 points and has averaged a loss of approximately 202 points per week, or roughly 43 points per trading day. This is a rate approximately 2.5 times greater than under President Bush last year." [From Source]

When does President Obama stop and realize that maybe his economic policies of tax (the producers and job-creators) and spend (entitlement, pork, pet projects, big government) are killing our economy? Let me rephrase that, is President Obama even capable of changing course in the face of overwhelming evidence that his economic policies are destructive?

Recessions are a normal part of a cycling economy (thats what economies do, they cycle up and down, sort of like climate change cycles). President Obama is mimicking (actually well beyond mimicking, but raising the level of spending to an unprecedented level) the failed policies of the 'New Deal', which actually created and lengthened our country's great depression. These are the same failed policies implemented by Japan that led to their "lost decade". History shows that tax cuts, especially on the wealth-producers and job-creators, is what helps restore economic growth. So why are we doing the exact opposite and taxing them? Anyone? Anyone?