Attacking Paul Ryan, But Not the National Debt

By Alan Caruba

The White House and Democrats have been attacking Rep. Paul Ryan (R-WI), Chairman of the House Budget Committee, for having the audacity to put forth budget plans, something the Democrats in the Senate have failed to pass for well over a thousand days at this point.

The first words out of Rep. Steve Israel’s mouth, a Democrat from New York, were the pathetic blather about “billionaires.” Most Americans aren’t billionaires or even millionaires and are more concerned about the rising costs of gasoline, food, and everything else than whether the rich pay more taxes. In point of fact, the rich pay the vast bulk of the income taxes and some forty percent of workers pay none at all. If you earn more than $250,000 a year, Democrats think you’re rich.



Harry Reid

 Never mind that most of us are trying to live within our own budget, the Democrats have resisted passing any kind of a budget to address a looming fiscal crisis of their making. That was why voters in 2010 returned control of the House, where all appropriations are authorized, to Republicans. If they had done the same for the Senate, we might actually have had some budgets, but Harry Reid, the Senate Majority Leader, has ensured that every effort to address the fiscal mess fails.

The White House and the Senate, despite the Simpson-Bowles Commission, despite the so-called “super committee”, and despite the plans put forth by Ryan, have utterly failed to do anything but spend, spend, and spend. To do so, they must borrow, borrow, and borrow.

In February, the Congressional Budget Office (CBO) reported that annual spending over the Obama era had climbed to a projected $3.6 trillion this fiscal year from $2.98 trillion in fiscal 2008; more than 20%. It added up to an increase of about $5 trillion in just four years. This year will mark the highest deficit—the difference between government revenues and government spending—since 1946!

Robotically and moronically, the Democrats keep calling for higher taxes and even the CBO has concluded that the 2012 tax hike (ending the Bush tax cuts) on capital gains, dividends, estates and small businesses would impede economic growth, reducing it 1% the next year and raising the specter of unemployment rising from 8.5% to 9.1%--increasing the jobless to 750,000.

As The Wall Street Journal put it, “the CBO’s facts plainly show that Mr. Obama has the worst fiscal record of any President in modern times. No one else is even close.”

In addition to the tired rhetoric about billionaires and millionaires, the Democrats are also lying about Ryan’s plan as it relates to Medicare, claiming it wants to deprive older Americans of its benefits, but as Ryan points out, “Our budget’s Medicare reforms make no changes for those in or near retirement.” Without reform, Medicare will go broke as will Social Security.

Ryan’s plan “spurs economic growth with bold tax reform—eliminating complexity for individuals and families and boosting competitiveness for American job creators. Led by House Ways and Means Committee Chairman Dave Camp, our budget consolidates the current six income tax brackets into just two brackets of 10% and 25%”, the latter for corporations in order to permit them to be more competitive with nations that tax their corporations at a far lower rate than ours”, currently near the highest in the world.

“We reject calls to raise taxes,” says Ryan, preferring to close tax loopholes.

In brief, the Ryan budget would produce savings in federal spending of $5.3 trillion over ten years and reduce the deficit by $3.3 trillion. It proposes a 10% reduction of the federal work force over three years through attrition and it offers reforms to Medicaid, among others to pull the nation back from the brink of catastrophic collapse and default.

You don’t have to be a mathematical genius to know what is wrong with the way Obama and his Democrat trolls are running the government, despite Republican efforts to apply the brakes. They have increased spending to $3.8 trillion despite the fact that the government only takes in about $2.1 in revenue.

In just one term, Obama is on pace to borrow $6.2 trillion. The debt rises by $4.2 billion every day, $175 million per hour, nearly $3 million per minute.

Without a Republican in the White House and Republican control of both the House and Senate, the United States of America—you and I—are headed off a cliff. All the lies Obama tells between now and November 6, 2012 will not change that.

© Alan Caruba, 2012

Obama Weakens the Military

By Alan Caruba

“Si vis pacem, para bellum.” If you want peace, plan for war. The adage is attributed to the 4th or 5th century Latin author Publius Flavius Vegetius Renatus’s tract De Re Militari book 3. This fundamental wisdom is being ignored by President Obama, one of two recent Commanders-in-Chief who never spent a day in uniform, let alone under fire.

In a recent American Thinker commentary by Jim Yardley, he said, “It is apparent that the president, in developing his strategy, used the same extensive knowledge, his superior intellect, and worldly wealth of experience that he brought to his strategy for his $800-billion stimulus, his strategy for providing cost-free health care to millions of Americans, and his strategy for using ‘smart diplomacy’ to defuse not spots around the world.”

Perhaps receiving the Nobel Peace Prize barely months into his first year as President has convinced Obama that he is the man to get all our enemies to join hands and sing Kumbaya. Obama accepted the prize that has gone to other seekers of peace like Yassir Arafat, founder of the Palestinian Liberation Organization or co-winners, the Intergovernmental Panel on Climate Change and Al Gore. The IPCC and Gore have led the greatest hoax of the modern era, global warming, and Arafat rejected every effort at peace offered by Israel by going back on his word and using terrorism to achieve his goals.

There is no question that the announced cuts to the U.S. military budget are, in part, the result of the domestic run up of debt and borrowing the followed the financial crisis of 2008; itself the result of bad government policies regarding the wholesale granting of mortgages to people who could not afford homes, then bundling those bad mortgages and selling them as assets to the banks.

While the economy is showing some small signs of regaining its footing, the government is still borrowing forty cents of every dollar it spends and has shown no real intent to reduce spending.

While this is occurring we have a President who has made clear his antipathy of the role of the military. A recent Wall Street Journal editorial noted that “The Pentagon shouldn’t be immune to fiscal scrutiny, yet this Administration has targeted defense from its earliest days and has kept on squeezing. The White House last year settled with Congress on $450 billion in military budget cuts through 2012, on top of the $350 billion in weapons programs killed earlier,” adding “Taken altogether, the budget could shrink by over 30% in the next decade.”

Following a 1993 attempt to destroy the World Trade Center Osama bin Laden, a still largely obscure Islamic fanatic, declared war on the United States in 1996. In 2001, al Qaeda succeeded, killing nearly 3,000. To underestimate the intent of his successors to destroy the nation would be a grave error. To think that his assassination along with the killing of a relative handfull of other al Qaeda leaders has ended the threat is wishful thinking.

To think that the withdrawal of U.S. troops from Iraq will not at some point result in the possible breakup of that nation or the withdrawal from Afghanistan will rid us of the threat of Islamic fanaticsim is still more wishful thinking.

Right now and ever since 1979, the threat of Iran is the largest facing the Middle East and the West. Its leaders have never made a secret of its intent to acquire nuclear weapons, to threaten all other Middle Eastern nations, as well as Europe and America is on a par with the threat the rise of Nazism posed in Germany in the 1930s.

After World War Two, America emerged as a superpower and it took on the role of global policeman. No military prescience predicted the attack on South Korea by North Korea, nor was our strategy in Vietnam successful. We had earlier failed to anticipate the 1941 attack on Pearl Harbor despite efforts to keep out of the war that had begun in 1939.

The lesson that should have been learned is that overwhelming military strength contributes greatly to avoiding wars.

President Obama is ignoring that. It is not, however, to say that he is taking Iran lightly. In early January, thousands of U.S. troops were deployed to Israel and senior U.S. military sources say they anticipate they will remain through the year. Obstensively, they are there to participate in joint U.S.-Israeli war games. They will be joined by a U.S. aircraft carrier and, as we know, we have a task force in place in the event the Iranians try to close the Strait of Hormuz through which passes one sixth of the world’s oil supplies.

The U.S. could be energy independent in a decade if the Administration and Congress would remove the obstacles to accessing our enormous reserves of coal, oil and natural gas, but that remains unlikely as this is written.

The decision to reduce the size of our military to 490,000 troops from 570,000 could not come at a worse time. Air and naval assets, we’re told, will be maintained. Holding evacuated or captured territory requires “boots on the ground.” The decision of former President Bush to “surge” in Iraq by increasing troop strength turned a potential defeat into a success. A war-weary America and the current Iraqi regime wanted us out and we are out.

Meanwhile Egypt that underwent “the Arab Spring” has fallen into the hands of a militant, anti-American and anti-Israel Muslim Brotherhood. Turkey has joined the Islamic frenzy, the future of Syria remains unknown, so anyone who thinks that military action anywhere, but especially in Iran, is not a real potential is not paying attention.

President Obama’s claim that “the tide of war is receding” is likely to rank with British PM Neville Chamberlains claim of “peace in our time” after a visit with Hitler.

It is wishful thinking or worse. It is the deliberate effort to ignore the dangers in the world. Shifting military personnel and assets to Asia acknowledges China’s rising power, but U.S. military leaders have warned against a war in Asia for decades. It is doubtful the Chinese want one.

What is not in doubt is that this is the wrong time to reduce our military strength and capabilities. We did that after World War One and paid a price for it. President Obama’s policies put us in the same peril.

© Alan Caruba, 2012

Running the USA into the Ground

By Alan Caruba

I needed a mattress cover so I went over to the local dollar store today and discovered they have them in every size but twin. I returned home. I went online to Bed, Bath and beyond. With a few keystrokes I not only had the exact item I wanted, I also received an email confirmation of the sale and a notice that once shipped, I will be able to track its delivery from the warehouse to my front door.

If only the federal government operated with such efficiency. Instead, we have a government that has been operating on “continuing resolutions” for over a thousand days due to a lack of a budget. An essential job of the executive branch is to produce a budget, but if you don’t have one, you can egregiously waste billions.

Everybody else has a budget, but not the federal government.

As we head into an election year, even more political madness and maneuvering will ensue. As a Wednesday editorial in The Wall Street Journal said:

“The GOP leaders have somehow managed the remarkable feat of being blamed for opposing a one-year extension of a tax holiday that they are surely going to pass. This is no easy double play. Republicans have also achieved the small miracle of letting Mr. Obama position himself as an election-year tax cutter, although he's spent most of his Presidency promoting tax increases and he would hit the economy with one of the largest tax increases ever in 2013. This should be impossible.”

Serendipitously, the Journal also ran an opinion by Peter J. Wallison, a senior fellow at the American Enterprise Institute. “The Securities and Exchange Commission's lawsuits against six top executives of Fannie Mae and Freddie Mac, announced last week, are a seminal event. For the first time in a government report, the complaint has made it clear that the two government-sponsored enterprises played a major role in creating the demand for low-quality mortgages before the 2008 financial crisis.”

“More importantly, the SEC is saying that Fannie and Freddie—the largest buyers and securitizers of subprime and other low-quality mortgages—hid the size of their purchases from the market. Through these alleged acts of securities fraud, they did not just mislead investors; they deprived analysts, risk managers, rating agencies and even financial regulators of vital data about market risks that could have prevented the crisis.”

One member of Congress, among many who protected Fannie and Freddie, who will not be indicted, is Rep. Barney Frank who is retiring with full pension and benefits, no doubt more wealthy than he arrived.

A new book by Peter Schweizer, the William J. Casey Fellow at the Hoover Institute is titled, “Throw Them All Out: How Politicians and Their Friends Get Rich off Inside Stock tips, Land Deals, and Cronyism that would Send the Rest of Us to Prison.” At this point, the only bipartisan activity in Congress is the way, on both sides of the aisle our elected representatives increase their personal wealth. The book so rattled Congress it is now holding hearings on the extraordinary premise of requiring its members to obey the same laws as the rest of us!

A familiar theme of those of us that comment on government is its size, its waste of public funds, and its general inefficiency. It is a government that sends millions in checks to dead people. It is a government that has turned the process of flying anywhere into a nightmare because of its one-size-fits-all idiotic approach to getting on an airliner. The Israelis accomplish this with far less inconvenience to passengers and their system works.

My contention is that our metastasizing government has gotten progressively worse from the days of the Great Depression and now we learn—if we did not already know—that it was two “government sponsored enterprises” that brought about the mortgage crisis that plunged the nation into a pretty good imitation of the Great Depression.

Now we are forced to watch Congress play political gamesmanship while millions of Americans are out of work.

Now not a week goes by without another “green” enterprise going belly-up, taking our money with it or one of those wonderful electric cars has batteries that are likely to catch fire. The Mackinac Center for Public Policy just released a report that estimates that each of the Chevy Volt cars sold thus far has as much as $250,000 in state and federal dollars in incentives behind it—a total of $3 billion thus far. We never needed electric cars.

What kind of idiocy throws money away when the U.S. sits atop reserves of oil that are so vast they could end imports?

What kind of President refuses to permit Canada to ship its ample oil to Houston for refining?

Why are we holding our breath hoping that Congress will let us purchase Thomas Edison’s incandescent light bulbs, one of the greatest inventions of the modern era?

Little wonder that the polls demonstrate the record-setting low esteem in which Congress is held. It is running the nation into the ground. To the belated astonishment of everyone, the nation is led by the President whose greatest achievements have been to destroy jobs and plunge the nation into unimaginable debt.

November 6, 2012 cannot come soon enough.

A majority of the electorate wanted “change” in 2008. Let’s give it to Congress in 2012. Let’s support candidates who want to significantly reduce the size of the federal government, restructure the “entitlement” programs, and reduce the debt before it impoverishes the next generation and the one to follow.

© Alan Caruba, 2011

What the NBA & the 'Super Committee' Have in Common

By Alan Caruba

Considering that the National Basketball Association players individually make millions, it is hard to feel sorry for a bunch of guys who earn their living running back and forth trying to put a ball through a hoop.

Let me confess that I rarely watch any sport these days due to an extreme attention deficit problem brought on the by the endless commercials that interrupt the game. However, I am aware that the NBA and the players have reached an impasse in their negotiations. Their talks ended last Thursday despite or because of federal mediation efforts. Collective bargaining, as we have seen in Wisconsin and elsewhere, is an invitation to mayhem.

Here’s the problem. The league makes about $4 billion annually in revenue and the players who might otherwise be employed flipping hamburgers or washing cars want 52.5% of it. They previously wanted 53%. The league countered with an offer of 50%, up from 47%.

It happens that one of my friends is Jim Camp, an internationally known negotiation coach who has been coaching deals of every description for twenty-five years. He’s currently supervising one such deal that involves nearly a billion dollars. So he's been around the block when it comes to such things.

After reading about the negotiations in Friday's Wall Street Journal, I called him and asked what he thought and his response was that the talks will cost owners, players, and fans the 2011-2012 Season. That got my attention.

“Thanks to the conventional collective bargaining process, both sides are now mad at each other,” said Camp, “and unable to arrive at an agreement because ‘the other side’ is not doing what both parties believe they were supposed to do. Conflict is being created, not solved.”

“Once the season is lost and frustrations are lowered when both sides go home, they will realize that it was stupid, if not crazy, not to arrive at an agreement. Cooler heads will prevail, but under the current circumstances that is not possible,” said Camp.

How can grown men blow an entire NBA season over a few million? Camp put on his coach’s hat. “Based on the science of neuroscience, all negotiations are driven by emotion and not by the popular belief that facts are the driving force. That is the failure of bargaining.”

Warming to the subject, Camp pointed out that both sides hire lawyers to represent them. “How do lawyers get paid?” By the hour I replied. “Lawyers,” said Camp, “are paid to argue.” A light bulb went off in my head. The more they argue, the more they earn.

To those convinced that negotiation is more a game of chess moves than an effort to come to an agreement, that “mindset” dooms the effort.

Then Camp surprised me by comparing the NBA negotiations to those of the Congressional “super committee” that has been given the charge to find a way to cut $1.5 trillion from federal spending. According to some reports, they too are at an impasse. There would be no super committee if Congress took the issue of the budget and national debt seriously. Instead, it opted for automatic cuts to the budget if the committee cannot come up with a variety of cuts through a negotiation process.

“You can put money on the fact they will not find any common ground of agreement,” said Camp, “even though the current national debt exceeds $14 trillion dollars, an amount equal to the entire gross national product.”

It’s one thing for a bunch of basketball players and team owners to disagree over how to split revenue and quite another when the nation’s highest elected legislators are unable to come to grip with an insane amount of spending and debt.

Camp’s system is contrarian and spelled out in his 2007 book, “Start With No.” It is his view that if you arrive at any negotiation feeling needy and emotionally vulnerable, the guy on the other side of the desk is going to wipe the floor with you. If, however, you learn how to say no in a fashion that alters his mindset, conditions will be created for a mutually beneficial outcome.

My money is on Jim Camp!

© Alan Caruba, 2011

Disarming America's Military

By Alan Caruba

In the preamble of the Constitution, the founding fathers made clear their priorities and among them was “provide for the common defense” to “secure the blessings of liberty.”

Ramping up an army and navy was an early priority of the nation’s first presidents because, then as now, the United States had real enemies.

The congressional “super committee” charged with finding cuts in the budget is testimony to the failure of Congress to attend to one of its primary duties and to the gridlock of partisanship. The notion of an automatic across-the-boards budget cut of $1.5 trillion is aimed at the growth in spending over the next decade, not a reduction in those programs that are responsible for an unsustainable debt.

A Rasmussen Reports survey released on September 28 revealed that “Americans think that tax hikes are more likely than spending cuts in any deficit reduction deal that comes out of Congress and are more convinced than ever that any new tax monies will be spent on new government programs.”

Nearly two-thirds of American adults, 62%, have no confidence in Congress’s ability to actually reduce spending for the purpose of reducing the federal deficit. The latest poll on this topic represented an increase of four points over the previous one in February.

In an article posted on Military.com, a September 26 report released by the House Armed Services Committee warned that $465 billion in cuts to the defense budget over ten years would “transform a Superpower into a Regional Power” and return the military to funding levels of “the post-Vietnam Carter era of the late 1970s.”

The report contemplated cuts that would “eliminate 60 ships, two carrier battle groups, and over 200,000 troops through 2021. The Army would lose ground combat vehicles. The Navy would suffer cuts in ship building and replacements for older ships. The Air Force would likely lose the next generation bombers and aerial refueling tanker aircraft. The Marine Corps would lose personnel carriers and indefinitely postpone replacements for new amphibious assault vehicles and ships.

Michael M. Dunn, president of the Air Force Association, in a memo to its members, referred to the cuts as draconian, noting that “It would gut many programs, throw tens of thousands of troops out of work, cause major force reductions, and necessitate closing bases. Our allies would begin to question our commitments in both conventional and extended deterrence realms.”

The budget and debt problems the nation faces are based in large part on our so-called “entitlement” programs that are hugely wasteful and in need of reform. There are entire federal departments such as Education that could be eliminated to the benefit of the nation, returning this function to the states instead.

Lost in the current debate is the fact that it is Congress that authorizes the funding of the many programs that waste millions on a weekly basis. An across the boards cut ignores priorities and, among them all, defense is the most essential.

Lost, too, is the realization that the U.S. has entered into an entirely new era of warfare. In a speech in June to the Center for Strategic and International Studies in Washington, William J. Lyon, Deputy Secretary of Defense, noted that “For centuries, the most economically developed nations wielded the most lethal military power”, but not anymore.

How has war changed? Think about this, “Our deployments in Iraq and Afghanistan have now lasted longer than the U.S. participation in World War I and World War II combined,” said Lyon. “We must sustain long-term commitments for a range of plausible conflicts.” Moreover, today’s military must be ready for both high-end and low-end (insurgencies) threats." And the newest threat, cyberwarfare.

No one suggests that the Defense Department is a paragon or that it does not need to review issues such as its pension programs that begin at age 38 when retired personnel have twenty more years of productivity left. Even with aspects of the military that need revision, a United States of America with a military expected to fight with the weapons of the Vietnam era is an invitation to the nation’s enemies.

A look back over the era since the end of World War Two in 1945 demonstrates that the world has been a far safer place precisely because America has been a military superpower.

As China builds its military, non-state combatants challenge nations around the world, and the proliferation of nuclear weapons continues apace, this is no time to undermine a military that has answered the nation’s call to arms with courage and distinction.

© Alan Caruba, 2011

Giveaway Nation

By Alan Caruba

I am not sure that Americans, the generations born since the New Deal of the 1930s, are ready to give up all the goodies that the federal government provides.

My father’s and my generation found comfort in Social Security checks and Medicare payments, but as the late Nobel Prize winning economist, Milton Friedman, used to say, “There is no such thing as a free lunch” by which he meant you pay for what you get one way or the other, even it does not seem obvious at the time. When it comes to federal loans and guarantees, John Q. Public gets stuck with the bill.

As a result of government housing programs, Fannie Mae and Freddie Mac, the nation ran smack into a financial crisis in 2008 and got its credit rating downgraded in 2011.

Now Moody’s, another rating agency, is warning that the student loan program, dubbed Sallie Mae, could implode leaving Americans holding the tab for millions in unpaid loans as students graduate into an economy where no jobs would enable them to pay them back. There’s a long history of students who simply defaulted on these loans.

Typical of the idiotic double-down approach of the Obama administration, the volume of these loans has actually accelerated during the recession. The student loan debt now exceeds credit card debt. Put plainly, not all young people should go to college just as not all people should own a house. There was a time when some standards were expected, but no more when bankers and lenders just want to pig out at the federal trough.

There was a lot of talk about cutting the size of government and its programs during the debt ceiling debate. It ended with the largest historic increase, adding another trillion to the national debt. The result was Standard & Poor's downgrade of the nation’s credit rating! No more blank check said S&P and they were right.

A bogus congressional “super committee” has been created to do this, but it is doubtful a divided Congress can achieve this unless and until new elections put people in office that actually will. Turning this function over to a dozen Congress critters is a very bad idea.

Fox Business News anchor, John Stossel, published a commentary on his July 28 blog that cited some recommended reductions by libertarian and conservative experts at the Cato Institute and Heritage Foundation.

Many involved eliminating whole federal departments and agencies that included the Departments of Education, Housing and Urban Development, Transportation, Agriculture, Energy, Commerce, Interior, and Labor.

That kind of draconian approach—his blog was titled “Take a Chainsaw to the Budget”—has a certain kind of appeal, but only if one puts aside that some of these departments actually have some good programs amidst the questionable ones. We tend to forget that the Preamble to the Constitution includes the objective to “promote the general welfare” of Americans, though it has been much abused, like the commerce clause, by progressives over the years.

The Constitution authorizes the government “to borrow money on the credit of the United States” while also stating that “No money shall be drawn from the treasury, but in consequence of appropriations made by law” while calling for a budget to be “published from time to time.” The Democrats haven't submitted a budget in over 800 days, though the Republicans did when they took control of the House.

The debt the nation has incurred has been authorized by a succession of Congresses, but mostly dates to the exigencies of the Great Depression of the 1930s when “entitlement” and make-work projects—among them the Hoover Dam and the Tennessee Valley Authority—were initiated to relieve the plight of American workers and provide electrification of significant benefit.

Future events are impossible to predict. Neither the consequences of those programs, nor a Second World War, the threat of the Soviet Union posed, nor were the recessions that followed were entirely predictable at the time. As in the case of 9/11, Congresses reacted within their existing time frame.

There is, for example, no justification for public broadcasting subsidies when it is clear that PBS is controlled by politically motivated liberals.

Cutting the Defense Department budget is pure folly as a weak nation will surely be attacked. There’s room for reductions, but maintaining a strong military is necessary to “provide for the common defense” as set forth in the Constitution. Eliminating many of our foreign bases would save billions.

There are, among the recommendations, many good ones such as privatizing the Army Corps of Engineers and the Post Office. Leasing the coastal plain of ANWR would generate $1.5 billion in addition to providing billions of barrels of oil to reduce our dependence on foreign oil. The Gulf of Mexico must be reopened to more drilling.

The “War on Drugs”, estimated to cost $15 billion, is widely regarded as a failure. Drug laws fill our prisons to the point where the U.S. has more people in prison, often for minor drug offenses, than any other nation. Greater efforts at interdiction at our porous borders would help. Legalizing marijuana would help.

Eliminating Fannie Mae and Freddie Mac, two “government sponsored entities” that currently own half of all mortgages would take the government out of the housing mortgage business and return it to banks and mortgage firms that would be forced to be more prudent. The housing bubble was largely caused by these two agencies and the banks and mortgage lenders that knew a government bailout was guaranteed no matter how many bad loans they made.

Instead, the White House is talking about renting homes back to those foreclosed upon, thereby making the central government the largest holder of private property! That is Communism, pure and simple.

Stossel and the Washington, D.C. think tanks offered lots of other options, but the greatest option of all is an end to mindless, often insane, government spending and that includes major, rapid changes to Social Security and Medicare/Medicaid. Don’t look for that to happen anytime soon.

© Alan Caruba, 2011

Cartoon Round Up

The Fog of Numbers

By Alan Caruba

There are several reasons why Rep. Paul Ryan and his fellow Republicans in Congress want to cut four trillion dollars from the 2012 budget. Here are just four of them:

• The 1994-1996 Social Security Advisory Council

• The 1995 Bipartisan Commission on Entitlement and Tax Reform.

• The 1999 National Bipartisan Commission on the Future of Medicare

• The December 2010 bipartisan Commission on Fiscal Responsibility and Reform.

Most of us have heard of “the fog of war” in which the participants have difficulty finding the enemy, get disconnected from their own lines, suffer “friendly fire” deaths because of the confusion of the battlefield, and must contend with the awful fear that war embodies.

Lately, I’ve been thinking about the fog of numbers as Americans struggle to understand just how seriously our entire national economy is threatened. Like some weird kabuki theatre, we watch politicians engage in insane disputes over cutting a few billion from the torrent of spending and borrowing that has got us to this point.

In late March, the Cato Institute published Policy Analysis No. 673, authored by Michael Tanner. The title was “Bankrupt: Entitlements and the Federal Budget.” I grant you this does not have the enticement of an article about Charlie Sheen or Kim Kardashian, but it does have the mordant power of reading one’s own obituary in advance.

Tanner begins by noting that the U.S. government “is about to exceed its statutory debt limit of $14.3 trillion” noting that “if one considers the unfunded liabilities of programs such as Medicare and Social Security, the true national debt could run as high as $119.5 trillion.

To put this in perspective, the entire annual gross domestic product, GDP, of the United States is about $14 trillion, so the debt limit means that the government needs every single dollar earned from the sale of all products and services just to meet its current debt limit. Some limit! And Congress will have to increase it in order to avoid having the U.S. default on the trillions it has borrowed.

Starting with the Roosevelt era during the Great Depression Congress looked for “a safety net” that would protect seniors who had worked their entire life. The answer was Social Security, but at the time, most people died well before the payback began at age 65. The government got to keep all the money they were required to pay in. What no one anticipated was that people in 2010 would have a life expectancy of 78 years of age and many lived well into their 80s and 90s.

This was followed by Medicare, an expansion of the Social Security program to provide health insurance coverage to people 65 and over or for those meeting other special criteria. It was signed into law on July 30, 1965 by Lyndon B. Johnson, famed for the failed “War on Poverty” and the failed Vietnam War which he escalated while in office.

Now add to those programs the fact that the Bush43 and Obama presidencies “have been the two most profligate political eras of modern times. Federal government spending has nearly doubled over the last ten years. As a result, we now face budget deficits that are unprecedented in the post-World War II era.”

A deficit is the difference between the revenue the government takes in and what it pays out. “In Fiscal Year 2011, the federal government will spend $1.65 trillion more than it takes in…this represents the second largest budget deficit in the last 65 years.”

You will hear that the cost of the wars we have been fighting since 9/11 is to blame, but those coasts are in actuality “only a small fraction of the deficits.” What you probably have heard is that government workers are actually making more money than those employed in the private sector.

Here, too, the numbers are scary. Those employed producing goods of all kinds peaked in 2000 at 24.6 million. By 2007 the numbers for government works and private sector workers were about equal at 22.2 million. By March 2010 the private sector workers had decreased to 18.6 million, but the government employees had increased. We are reaching a point where too few people are making things and they are being taxed to pay for government workers who push paper.

These are numbers worth keeping in mind as we begin the early stages of the 2012 election campaigns and we watch the present Congress address an unsustainable situation created by previous congresses going back to the 1930s.

The Republican caucus will announce its budget and it will seek to trim trillions over the next decade. That’s all to the good, but it may not be enough if government continues to grow and continues to spend.

© Alan Caruba, 2011

The Party's Over

By Alan Caruba

We all see the world through the prism of where we live. Most of us live in the cities and suburbs. From the early 1940s when my parents moved to the picture postcard town of Maplewood, N.J. that is where I grew up and have spent most of my life.

Maplewood is a quick half hour train trip into downtown Manhattan and is a bedroom community for many executives that work there. It is famous for its many tree lined streets, manicured lawns, and homes, many of which were built starting around the 1920s after the Erie Lackawanna made it a regular stop. Its school system was renowned. It’s still a beautiful town and its village shopping area was the setting for scenes in the film “One True Thing.”

When the property taxes on my home there continued to rise, myself and many other senior citizens who had lived in the township elected to move. My older brother had already set up house in Florida, God’s waiting room, but I elected to move one town over into a swanky new apartment complex, allowing me to make the short drive into the “village” of town every day to purchase sundries and get what, for me, passes for exercise.

What struck me today was the way the small office building in which my CPA’s firm is headquartered is bereft of any other firms. It used to house a photographer’s business and one that sold insurance. I left off my 2010 tax records. Across the street a take-out food store had closed its doors. The town’s pet store had departed not long ago.

As I walked toward my car I realized that yet another gift shop had bit the dust. Other shops, too. One of the town’s busiest real estate firms had a window filled with pictures and descriptions of homes for sale. My former home where I had lived for more than sixty years had changed owners twice in seven years.

The short drive back to my apartment complex included passing homes with for-sale signs, too numerous to ignore.

When the phone rings these days it’s usually one of a small circle of longtime friends. One of them runs a longtime, successful enterprise that matches people of differing expertise with reporters needing some quick information and insight, a quote on some subject. Talk radio and TV producers use it to find guests.

Over the twenty-seven years I have known my friend he went from running the business from his apartment to a large office with a full staff. He now runs it from his apartment and it is a virtual business. His directory of experts is print-on-demand for those who request a copy and many of the computer and web services he uses are provided from Bangalore, India.

Like a fish in water, it occurred to me that I haven’t met face to face with any of my clients in years. We communicate mostly via email or occasionally on the phone. I am trying to remember when I last put on a suit and tie. I can’t.

When I turn on the television news or listen to it on the radio, what I really hear is that everyone is waiting for the megalith we call the federal government to come up with a budget and to fund its function for another two weeks!

When a nation cannot operate in a predictable, rational way, it forces people to put a lot of ordinary decisions on hold.

That’s why a great swath of businesses is just waiting for someone to buy something. The ones that provide goods that are essential, food, toilet paper, things to keep the house clean, medications, are okay, but anything that is non-essential is moving far more slowly. Even the catalog operations that depend on moving all manner of household items are slashing their prices. The $10 “rehab exercise ball” is now $6.00. The $14 “ratchet pruner” is now $8.00.

I used to go to a nearby mall to purchase things. Now I go on the Internet and they are delivered in two or three days at most. The most extraordinary business in America is the delivery business, whether it’s Fedex or UPS.

As the price of gasoline goes up, reflecting the turmoil throughout the Middle East as it recedes further into its dark ages people are going to travel less. Visiting grandma will be by iphone. The huge business of trade conferences will be hard hit. In turn, hotels, airlines, and tourism will feel the affect.

Nobody has any idea how America will pay off the huge debt it has acquired—the bulk of it in just the last two years—and still Congress critters argue over cutting pitifully small pieces of it.

We have huge government departments and agencies that should simply be shuttered, along with their matrix of duplicated and overlapping programs that suck up millions, if not billions, annually. It won’t happen.

There is a lull in the life of the nation. Shops are closing. Homes are going unsold or foreclosed or both. Everything looks “normal”, but it isn’t. The party’s over.

© Alan Caruba, 2011

Shut It Down

By Alan Caruba

With exquisite timing, I sent my passport renewal application to the agency responsible for issuing a new one at precisely the time when the federal government may be shut down over a dispute between a Republican House and the White House regarding U.S. debt and spending. It’s not like I am going anywhere and need it, but if I wanted to flee to country, I would be flat out of luck.

In 1995 there was a famous government shutdown when then-Speaker of the House, Newt Gingrich and former President Bill Clinton locked horns over the Republican demand that some attention be paid to the funding for Medicare, education, the environment and public health.

Today, Medicare’s costs continue to imperil the fiscal stability of the nation, a prospect made worse by Obamacare, a so-called repair that managed to add millions more to its roles while taking millions from its funding. Lost in the current discussion of another shutdown is the way the Clinton’s “Hillarycare” went down in flames after the public soundly rejected it. Apparently socialists cannot take no for an answer.

The present House Republicans are striving mightily to trim a proposed Obama budget that everyone agrees is detached from reality after the past two years in which the nation’s debt has been obscenely increased in the midst of an economic crisis dating back to late 2008. At issue is the need to raise the “debt ceiling”, so Treasury can continue to borrow billions every day to keep the government functioning.

In 1995 President Clinton vetoed the spending bill sent to him and thus triggered a shutdown of “non-essential government workers” put on furlough, suspending “non-essential services” from November 14 through November 19 and from December 16 to January 6, 1996.

Speaker Gingrich had the misfortune of the shutdown occurring over the Christmas and New Year’s holidays and this was made infamous by a Newsweek cover that blamed him, not the President, for it.

To borrow a phrase from media critic, Bernard Goldberg, the same “slobbering love affair” that the media had with President Clinton has been the hallmark of the first two years of President Obama’s administration and policies. Blaming Speaker Gingrich was just too easy for the liberal mainstream media.

It is nothing less than tragic and stupid that we have to revisit 1995 sixteen years after the first shutdown because the issues then are the issues we have now. Except that now the stakes in terms of the nation’s financial and economic survival are just so much higher. Republicans in the House knew that then and know that now.

This is everyone’s fault because Americans, the voters, have apparently learned nothing in the interim. The borrowing and spending has metastasized to the point where it threatens the foundation of the federal government. For this the blame is shared by both political parties and their leaders.

So, shut it down.

I can wait for my passport renewal. If visitors to our national parks can’t get in, well, the bison, elk, and other wildlife will not notice. If folks cannot hike or camp it is a minor inconvenience. Some Washington D.C. museums will be closed. Meanwhile essential services such as our military, national security and law enforcement will continue. Social Security and other entitlement checks will be sent.

The only people rioting these days are privileged public sector union members who are wearing out their welcome. It is unlikely the public will respond any differently now than they did in 1995 which, if I recall, was with indifference.

Indeed, it was a holiday from the federal government and a learning experience as to just how vast it had become. Today it is even larger. And that’s the problem.

Simply put, the U.S. does not need a Department of Education that has managed to lower the scores of a generation or two of students squeezed through our schools like so much sausage. It surely no longer needs an Environment Protection Agency that is slowing economic development in every way possible.

What good is a Department of the Interior that denies American companies the opportunity to mine our huge deposits of coal—enough for several hundred years of electricity production—or to drill offshore or in ANWR for billions of barrels of oil and cubic feet of natural gas?

The Department of Health is responsible for administering Obamacare which at this time means issuing thousands of waivers, proof of the sheer idiocy of this legislative nightmare. If you’re old and need an organ transplant, go home and die.

In fact, department by department, agency by agency, we can find countless examples of costly programs that duplicate one another, regulators who do not regulate, and the prospect of thousands more to be hired by the Internal Revenue Service.

Shut it down. Let the House sort it out. Cut, cut, cut all the billions and trillions that must either be squeezed from those still holding a job or borrowed from China and Saudi Arabia.

Let the mainstream media howl like mad dogs because they never have and never will understand the logic of a budget that requires the nation to live within its means.

Shut it down. If it brings a scintilla of common sense and fiscal prudence in its wake, I am all for it.

© Alan Caruba, 2011

Bankrupting America

By Alan Caruba

The very word “budget” suggests a financial plan that one expects to live within, based on how much money one earns. It suggests prudence, plus the intention to put aside some earnings as savings for future or unexpected needs.

None of this applies to the Congress of the United States of America, nor White House administrations stretching back to the days when Franklin Delano Roosevelt won election in 1932, 1936, 1940, and 1944. He would die in 1945, three months into his fourth term.

That’s right, his fourth term! This was so unprecedented and so fearful that, in 1951 the 22nd Amendment was added to the Constitution, limiting any future president to two elected terms.

The financial crisis in which the nation finds itself today can be traced to FDR’s four terms, during which the nation went through the Great Depression. It was an economic event that could have and should have been much shorter if liberal “solutions” had not been initiated. FDR never saw an entitlement or regulatory program he would not endorse, starting with Social Security. His successor to office, Harry Truman, pushed through Medicare.

The debacle known as Fannie Mae and Freddie Mac began back then, growing out of the notion that the government had to guarantee everyone they could live in their own home. By the time they neared collapse, they owned more than half of all the mortgages in the nation.

My friend, Ziad K. Abdelnour, president and CEO of Blackhawk Partners, Inc., a venture capital firm, recently had one of his excellent commentaries posted on the website of the Financial Policy Council.

The collapse of Fannie Mae and Freddie Mac led to their being put in a conservatorship. If you owned stock in either of these “government-sponsored entitles” its worth dropped to pennies while, noted Abdelnour, all Americans “became the underwriters of $5 trillion in mortgage backed securities.”

“In September of 2008, we witnessed one of the most brazen and daring crimes ever to take place,” wrote Abdelnour. “It was pulled off, for the most part, in broad daylight and in full view of the whole world. In the space of a few days, this nation was the victim of an orchestrated theft of nearly six trillion dollars.”

September 2008 was when then-Secretary of the Treasury, Henry Paulson, former chairman of Goldman Sachs, told Americans that he had just asked Congress to give him a blank check to spend billions of public funds to bail out Wall Street and avoid a financial collapse.

Among the financial firms bailed out was Goldman Sachs that ended up with “at least $53 billion dollars from the U.S. government via the AIG bailout, Paulson’s ‘Troubled Assets Relief Program’, and Timothy Geithner’s later FDIC bailout called the ‘Temporary Liquidity Guarantee Program.’” Geithner is the present Secretary of the Treasury.

Throughout Abdelnour’s commentary, the same names keep showing up, Henry Paulson, Timothy Geithner, Goldman Sachs, the Federal Reserve.

Events do not just “happen.” They are caused.

On Thursday, September 15, 2008, in the midst of the Obama-McCain election campaigns, the Federal Reserve stepped in after noticing a tremendous drawdown of money market accounts in the U.S. in the amount of $550 billion dollars. It occurred in barely an hour or two as money was taken out electronically. The Fed closed the accounts. Had they not done so, $5.5 trillion would have been withdrawn and the U.S. economy would have collapsed.

The financial crisis catapulted Barack Obama into the Oval Office with his promise of hope and change.

Obama has just submitted his 2012 budget to Congress proposing to spend $3.75 trillion and still have a deficit of $1.65 trillion. Several leading D.C. think tanks have rational proposals for downsizing the federal government, but the Obama White House is not interested.

The nation’s Gross Domestic Product, the value of what we produce annually, is around $14 trillion. Obama’s budget would increase the debt to $15 trillion. His budget has so few cuts in it you need a magnifying glass to find them.

Meanwhile, the Republicans in the House, where all spending bills must originate, are fussing and feuding over whether to cut $50 billion or $100 billion from the budget. Someone needs to tell them that the U.S. is broke. We are rapidly on our way to becoming Greece, Italy, Ireland, or Zimbabwe.

“Current unemployment is officially about 9%; unofficially, it is almost twice that. Forty-five million Americans now receive government assistance to purchase food; nearly two million have filed bankruptcy, and more than a million have lost their homes in foreclosure proceedings.” Abdelnour cites factors few in Congress want to address.

Despite this, in his first two years in office, President Obama has increased the size of U.S. debt more than all previous presidents combined. His new budget proposes $3.75 trillion in spending.

I have always been wary of conspiracy theories, but sometimes the dates, the facts, and the personalities involved come together in too neat a package to ignore.

© Alan Caruba, 2011

Obama, the Great Bloviator

By Alan Caruba

If Ronald Reagan was the "great communicator", then surely Barack Obama is the Great Bloviator.

We have reached the unhappy point in his first term when virtually everything he said to get elected and everything he’s said since being elected is either a lie or of such dubious merit as to be easily dismissed.

Consider his 2008 promise to go through the federal budget “line by line” to eliminate waste. At this point his administration has not produced a budget for the fiscal year. Even so it is unlikely he would find any element of any budget merits a reduction. This man is all about spending.

Watching him grandstand on Friday, Jan 7th, concerning the Bureau of Labor and Statistics announcement that the U.S. economy added 103,000 jobs in December and that the unemployment rate had dropped from 9.8% to 9.4%, I was happy that the Heritage Foundation’s “Morning Bell” analysis pointed out that that we are in the twentieth month in which the unemployment rate is over 9%, a post-World War II record.

Let us pause now while everyone at the White House says in unison, “It’s Bush’s fault!”

The Morning Bell noted that “The reality is that the only reason the unemployment rate dropped is because the U.S. labor force decreased by 435,000. More importantly, 260,000 Americans dropped out of the labor force entirely. This means that the Obama economy is now driving Americans out of the labor force faster than it is bringing them in.”

The Democrat Party is bleeding members, particularly white ones. I wonder why? Maybe it’s because from early 2007 through the end of 2010 when they had strong majorities in both houses of Congress, they did not do so well in comparison to when Republicans were in charge from 2003 to 2006.

In an American Thinker article by Yossi Gestetner, he noted that by comparison, under the Democrats 1,583,000 jobs were lost whereas, under Republicans1,672,000 were added.

The average budget deficits were $1.143 trillion for the Democrats and $285 billion for the Republicans.

The Dow Jones Averages went from 11.4% under the Republicans to 0.13% under the Democrats. Bank failures under Republicans totaled seven. Under Democrats, it was 317 and counting!

This isn’t rocket science. The numbers tell you everything you need to know, but listening to Obama’s numbers as he does another “photo op” can be as mentally destabilizing as his economic policies have been on the economy.

He just waved goodbye to his first team of economic advisors and everyone in the business community is praying that their replacements are not aliens from outer space.

You want to know what socialism looks like? Let’s just take tax rates as a measurement.

Bear in mind, we all had to suffer through a down-to-the-wire “compromise” to get Obama to go along with merely extending the Bush tax rates.

When you add income tax rates and value-added taxes that all Europeans must also pay whenever they purchase anything, it looks like this:

United Kingdom: Income tax 50%, VAT 17.5%. Total 67.5%

France: Income tax 40%, VAT 19.6%. Total 59.6%

Greece: Income tax 40%, VAT l6%. Total 65%

Denmark: Income tax 58%, VAT 25%. Total 83%

Suffice to say, I will not be moving to Denmark any time soon!

Under socialism, Europeans pretty much work for their government, giving up the majority of their earnings to taxation.

As Obama begins the final two years of his first—and hopefully last term—a December Bloomberg National Poll survey indicated that “more than 50 percent of Americans say they are worse off now than they were two years ago when President Obama took office, and two-thirds believe the country is heading in the wrong direction.” It was noteworthy that “The pessimism cuts across political parties and age groups, and is common to both sexes.”

Here’s a prediction, Democrats in Congress will fight any and all Republican efforts to get the budget under control before the nation goes belly-up. Why? Because they're socialists!

Oh-oh, I think I hear Obama about to give another TelePrompter-perfect speech on how great things are. Excuse me while I reach for the remote and hit the mute button.

© Alan Caruba, 2011