The Threat of a Global Financial Collapse

By Alan Caruba

At present, the amount of the annual Gross Domestic Product, $14 trillion—the value of all the goods and services that generate income—is exceeded by the nation’s debts.

America is presently $15 trillion in debt and it grows daily.

In a November 21 Wall Street Journal interview, Erskine Bowles of the presidential advisory commission on the nation’s debt, said “If you take 100% of the revenue that came into the country last year, every single dime of it was consumed by our mandatory spending and interest on the debt.”

“Mandatory spending in English is basically the entitlement programs, Medicare, Medicaid and Social Security. That means that every single dollar we spent last year on national defense, homeland security, education, infrastructure, high-value added research—every single dollar was borrowed, and half of it was borrowed from foreign country.”

“That’s a formula for failure in anybody’s book.”

In truth, we are looking at a coming global financial collapse with experts from Credit Suisse to the Deutche Bank, the CEO of General Motors to Warren Buffett, all in agreement that the question is not if, but when.

It will come at a time when there is little, if any, real leadership to be found either in the U.S. or Europe, the most spendthrift of nations facing this crisis.

Thomas Jefferson, one of the most brilliant of our Founding Fathers, said “I predict future happiness for Americans if they can prevent the government from wasting the labors of the people under the pretense of taking care of them.” He also said that “It is incumbent on every generation to pay its own debts as it goes.”

Another Founding Father, James Madison, warned Americans against the concentration of power saying, “I believe there are more instances of the abridgement of freedom of the people by gradual and silent encroachments by those in power than by violent and sudden usurpation.”

Over the years, more and more power has been concentrated in the federal government and it requires the dismantlement and elimination of several of its components. Americans need to say no to the Departments of Education, Energy, along with the Department of Housing and Urban Development. These are all functions previously addressed by the states.

You will not find any of these activities specified in the Constitution. Consider when they came into being:

Education was established in 1953, originally as the Department of Health, Education and Welfare. In 1979, it was subdivided into Education and Health and Human Services.

The Department of Housing and Urban Affairs was created in 1965.

The Department of Energy was created in 1977.

Thus, between 1953 and 1979, a period of 26 years, the federal government took control of key factors of the nation’s affairs, most if not all are dealt with far better at the state and local level.

To these must be added Freddie Mac and Fanny Mae, two government “entities” responsible for the housing mortgage crisis and currently asking Congress for billions more to cover their losses.

The Tenth Amendment of the Constitution specifically says that “The powers not delegated to the United States by the Constitution, nor prohibited by it by the states, are reserved to the states respectively, or to the people.”

Congress is filled with men and women for whom their position has become a sinecure as they are elected and reelected, some for decades But Congress has proved itself unwilling to govern the financial affairs of the nation. A recent vote in the House rejecting a proposed balanced budget amendment reflects this.

In 2012, the voters will have the opportunity to reverse this failure, electing men and women who will vote for term limits, a balanced budget amendment, and other necessary changes.

We have witnessed what happens when Americans lose sight of the vision of our Founding Fathers and the Constitution they bequeathed to posterity.

We are that posterity.

The present generations of Americans are obligated to save the nation or see it fail.

© Alan Caruba, 2011

Public Fears of a Gangster Government

By Alan Caruba

Even though it has changed ownership over the years, I still go to the bank branch where I have conducted my affairs since I was in my teens and that is a long time ago. Bank of America runs it now and, by all reports, it is financially sound. Even so, these days, people tend to worry about such things.

A check on the number of banks that have failed thus far in 2011 reveals that it is in excess of a hundred and the year is not over yet. The process is overseen by the FDIC or Federal Deposit Insurance Corporation.

The U.S. government has layers of agencies responsible for the regulation and oversight of the financial community, but it doesn’t look like they’re doing a good job of it.

There’s the Treasury Department and the Federal Reserve. The latter regulates the U.S. monetary system along with monitoring the operations of holding companies that include traditional banks and banking groups.

Most famously, the Securities Exchange Commission which, despite having serious concerns called to its attention, totally missed identifying Bernard Madoff’s $50 billion Ponzi scheme. That is called lax enforcement and it appears to be the case across the spectrum of government's financial regulatory entities.

The Commodities Futures Trading Commission has regulatory responsibilities over the market for futures contracts. The traders it regulates formerly dealt primarily with commodities, but now they speculate on government securities like Treasury bonds and those of other nations. It is called sovereign debt.

The recent collapse of MF Global would have fallen under their purview. Reportedly there are major questions regarding about $633 million that is missing from MF Global’s customer accounts. A subpoena seeking information from its auditor, PricewaterhouseCoopers LLP. has been issued.

What makes MF Global stand out is the fact that the firm was one of a handful of prime dealers with the Federal Reserve, purchasing and selling U.S. treasury bonds in addition to speculating on foreign ones. Reports indicate that the firm had bet big on the soundness of Europe’s financial state. Some of the European Union’s nations have been in serious trouble for many years.

As I noted in an earlier commentary, the European Union may well come apart as a result of the monetary problems of Greece along with Spain, Italy, and others. In financial terms, what sank MF Global was that it was over-leveraged and unable to meet obligations to its investors. It was reportedly “worth” $41 billion when it closed its doors.

Here’s where it really gets scary. At one time Jon Corzine, the chairman and chief executive officer of MF Global, was under serious consideration to be Obama’s Secretary of the Treasury. That job went to Timothy Geithner who had managed to “accidentally” underpay his income taxes despite an impressive resume. Between Obama, Geithner, and Congress the national debt and deficit has skyrocketed.

The Obama administration and the Congress in which both branches were controlled by Democrats until 2010 is now famous for excessive spending of the national treasury, crony-capitalism, massive unemployment. The business community is understandably reluctant to expand or invest until Obama is long gone and Republicans control the Senate as well as the House.

For example, instead of allowing General Motors to go through bankruptcy and restructuring, the Obama administration intervened with a huge bailout, leaving its creditors unprotected against the loss of their investment. The Chevy Volt, an electric car whose production was foisted on GM continues to go begging for buyers.

Solyndra investors, for the most part, were similarly shafted when it declared bankruptcy, sticking taxpayers with the cost of a half billion dollar loan guarantee. At the end of October, Beacon Power which received a $43 million loan guarantee declared bankruptcy. This looks to repeat itself with other “renewable energy” companies that advanced claims for wind and solar energy, but cannot compete with traditional energy providers without various government mandates for the use of the pitiably small amount of electricity they generate.

Meanwhile, according to the U.S. Bureau of Labor Statistics, one in five jobs created since 2003 have come in the energy sector, specifically oil and gas drilling!

The Constitution does say the federal government should “promote the general welfare” that that has been so twisted beyond its original meaning and intent that we now have a federal government that is literally out of control; one that has become a speculative investor with our money.

Social Security, Medicare and Medicaid are either broke or soon will be. Was this ever truly a function of government?

Meanwhile, under Obamacare, the federal government has asserted the right to require Americans to purchase health insurance or face a stiff fine for failing to do so. That issue has been challenged by 26 states and is making its way to the Supreme Court. If it agrees that it is constitutional, look for massive state-by-state nullification efforts. It would be a major crisis.

The collapse of the housing market predates the Obama administration and was the most predicable crash of the modern era. By 2008, Fannie Mae and Freddie Mac, two “government entities”—meaning their credit was backed by taxpayers even though they acted as private financial entities—owns about 50% of all the mortgages in the nation. After 2008, the federal government seized control of both.

As Bill O’Reilly recently noted, “Now we learn that the mortgage agencies Freddie Mac and Fannie Mae, in business with the federal government, paid almost $13 million in bonuses to their top executives in 2010. That is an outrage because those agencies currently owe the American taxpayer $141 billion.”

Why wasn’t this function left solely to banking institutions? Why did the federal government intervene in the housing market? The answer is the progressive belief in “social justice” as a function of the federal government. The programs instituted in its name are now broke and a huge burden on states and citizens alike. Blame has been assigned to the banks, a favorite whipping boy, but it is misplaced.

Like everyone with savings accounts, living off their pension funds and watching their 401K plans decline in value many are beginning to worry about an Obama administration that would happily seize those personal assets by declaring some kind of national emergency.

How bad is it? The liberal New York Times recently published an article, “New Poll Finds a Deep Distrust of Government”, noting that “Not only do 89 percent of Americans say they distrust government to do the right thing, but 74 percent say the country is on the wrong track and 84 percent disapprove of Congress—warnings for Democrats and Republicans alike.”

The Republicans, however, unanimously opposed the passage of Stimulus I and the latest “jobs bill” otherwise known as Stimulus II. Indeed, even the Democrats have opposed Stimulus II despite an absurd joint session of Congress in which Obama demanded “pass this bill now.” In the House, Republicans have led the effort to repeal Obamacare. Harry Reid, the Democrat Majority Leader in the Senate has thwarted consideration of the bill there.

As conservatives are known to opine, the government has to become much smaller and that taxes, particularly in a time of recession, be lowered. Meanwhile, the Obama administration has already redefined “millionaires” to include your local dry cleaner.

© Alan Caruba, 2011

The Turning Point for "Entitlement" Programs

By Alan Caruba

The result of all the drama emanating from Capitol Hill and the White House has been to get a lot of people wondering about the sustainability of Social Security and Medicare/Medicaid.

Both Democrats and Republicans agree that the “debt ceiling”, the limit on how much the federal government is permitted to borrow, must be raised. It is essentially an accounting fiction because, since 1960, it has been raised 78 times; 49 times by Republican presidents and 29 times by Democrat presidents.

What makes it an issue now? $14.3 trillion dollars worth of U.S. debt.

It is not just the size of this debt, probably the greatest that any nation has ever owed in history, it is that it was initially due to a financial rescue program in 2008 when President Bush and Congress sought to avoid a collapse of Wall Street and banks. The TARP funds were eventually repaid.

Part of the current debt is due to massive spending programs by the Obama administration, allegedly to “create or save” jobs and “stimulate” the economy. They did neither.

The Obama spending programs were, in essense, Democrat slush funds parceled out to the party’s faithful to ensure that teachers and other public service workers would be retained, that General Motors and Chrysler could avoid the normal bankruptcy procedures that would have restructured both companies—and likely reduce union power, and that favored contractors could receive funding for “shovel ready projects.”

A long term, on-going problem has been the current and future debt is attributed to meeting the obligations of Social Security, introduced in 1935 by President Franklin D. Roosevelt, and to the high costs of Medicare and Medicaid. The latter became law on July 30, 1965 as an amendment to the existing Social Security legislation.

In sum, both programs reflect the Democratic Party’s commitment to “social justice” (wealth redistribution) that began in the early part of the last century. Republicans were not immune to this. President George W. Bush added to the costs of Medicare with prescription coverage.

The battle on Capital Hill is between the Democrats, led by President Obama, who wants to raise taxes in the midst of what is called a recession but is truly a Depression 2.0. Raising taxes is what President Roosevelt did and it simply prolonged the Great Depression by sucking money out of the free market economy.

On the other side of the non-negotiating table are the Republicans who, thanks to the Tea Party members of the House, have been forced to reclaim their reputation as a party devoted to limited government and prudent fiscal policies.

It is assumed by all that the debt ceiling with be lifted. It is unknown whether the nation’s credit rating of AAA will be reduced as the result of a failure to substantially cut spending and, far more importantly, meet its obligation to repay its debt. Indeed, the central issue is all about credit.

A nation that must borrow billions every day to meet its obligations cannot afford to lose a rating that is rooted in the very beginning of its history when Alexander Hamilton, the first Secretary of the Treasury, insisted that all Revolutionary War debts be paid in full.

Social Security is the largest government benefit program in the world. It represents more than 20% of the federal budget and, together with Medicare/Medicaid, they accounted for 53% of total federal outlays in Fiscal Year 2008, with net interest payments accounting for an additional 8.5%.

Here’s the rub. At the time that Social Security was created, somewhere between 10 and 14 workers were paying into the system for every recipient receiving a check. By 2010, the ratio was about 3 workers paying in for 1 taking out.

Social Security is unsustainable.

When President Roosevelt was pitching Social Security, he promised that no worker would ever pay more than 1% of their income into the system. By 2010, self-employed persons like myself were paying 15.3% of their income into Social Security and Medicare/Medicaid.

President Roosevelt promised that Social Security would be self-sustaining and that its benefits “should not come from the proceeds of general taxation.” In practice, although a “trust fund” was set up, every dollar contributed to Social Security has gone into the general revenue fund and has been spent by Congress in any manner it saw fit.

In 1935 no one expected that Americans would routinely be living into their seventies, eighties, and nineties. The age at which recipients could begin to draw benefits was 65 and that coincided with the average lifespan nearly 80 years ago. Today, men on average live to age 78 and woman outlive them by a wide margin.

In the same fashion that the House has voted to repeal Obamacare and 26 States have joined together to argue in court that it is unconstitutional, Social Security and Medicare/Medicaid have arrived at a moment in time, a turning point, when both must be dismantled—assuming of course that the Congress and White House manage to avoid a financial catastrophe for all Americans.

© Alan Caruba, 2011

Destroying the Dollar

By Alan Caruba

Something I never thought I would ever see in my former hometown, a wealthy New Jersey suburb of New York City, was a Dollar Store, but one opened recently in a former supermarket. Dollar Stores are giving Wal-Mart, Target, and similar outlets a run for their money and it’s not hard to see why. The local one has just about everything you could need and all for astonishing low prices.

In countless ways people are looking to save money these days. The looming problem, however, is the question of what happens when Americans wake up to learn that even a dollar can no longer buy anything?

“When Faith in U.S. Dollars and U.S. Debt is Dead the Game is over – And that Day is Closer than You May Think” is the cheery title of an article recently posted on EconomicCollapse.com.

There’s a reason why both the mental condition and the financial condition are called a Depression. It’s hard to be happy about anything when your nation’s currency is not worth the paper on which it is printed. The Federal Reserve’s answer, some fear, is to print more money and to continue to buy U.S. debt with it. It is doubtful, however, this Ponzi scheme will continue.

There isn’t a day that goes by when some U.S. government agency doesn’t send me a news release to announce that it is giving millions for something and, if our elected leaders are negotiating a solution to this insane spending and giving, there is precious little evidence of it.

New unemployment numbers are up. The administration continues to churn out thousands of pages of new regulations. It has stalled the energy sector from oil and gas exploration that could create thousands of jobs. And China is divesting itself of U.S. securities, anticipating a bad outcome for our economy.

Meanwhile, the so-called “entitlement” programs represent sixty percent of all the money the government spends. Without some changes, these programs are unsustainable. The Democrats’ answer is to depict Republicans as wanting to kill grandma.

The Gross Domestic Product

In a Mid-May article posted on American Thinker.com, Randal Hoven spelled out a number of facts that are overlooked in the political battles between liberals and conservatives. “The entire debate is about a difference that is less than 4% of GDP. According to International Monetary Fund figures, government in the U.S. is spending 41% of GDP in 2011. The current debate is about whether government spends 40% or 44% of GDP.”

The government is absorbing far too much of the Gross Domestic Product for its own purposes. We are in a league shared by Greece and other nations with a serious financial crisis.

While the federal and state governments plunders every cent they can extract from those still fortunate to have a job, any investments, or will die at some point, both Republicans and Democrats have participated in expanding government since the last Great Depression.

While President Obama’s constant blaming of George W. Bush for his first two years became a joke, Hoven notes that Bush expanded Medicare with a prescription program and many of the “liberal” programs we conservatives denounce occurred while Bush was president. “No Child Left Behind”? Bush. Outlawing light bulbs? Bush. Ethanol subsidies? Bush.

The absurdity of President Obama’s mantra that millionaires and billionaires be taxed more ignores the fact that such taxes, even if we took all of their money, would barely cover the rate at which government spends and wastes such income.

While negotiations, we’re told, are occurring or will, the greatest impediment is Obama’s open disdain and dislike for Republicans. This cannot be underestimated in terms of finding a solution.

At the heart of our current problems is that, having inherited a financial crisis, Obama devoted the last two years to a government takeover of both the health care industry and the financial sector with two bills, each of which exceeded 2,000 pages and vastly expanded government bureaucracy.

More government control of the economy is the last thing this nation needs at this time. Or any time.

Social Security will be insolvent by 2037 and, together with Medicare, they have unfunded liabilities of $107 trillion in today’s dollars. That is seven times the size of the U.S. economy and ten times the size of the national debt.

The real problem for the United States is the falling confidence and faith in the U.S. dollar. It is the default reserve currency of the world. Just about everything trades in U.S. dollars. It’s not only Americans losing faith in our government’s ability to maintain its value, it is everyone else.

In April, Standard & Poor’s downgraded its outlook on U.S. government debt from “stable” to “negative.” It warned that the U.S. could lose its prized AAA rating. Unless Congress and the current occupant of the White House take specific steps to fix Social Security and Medicare, the dollar compared to other major national currencies will continue to fall. It has fallen 17% since 2009. Moody’s rating service has also issued its own warning.

Pretty soon, nobody will want to buy U.S. securities used to currently borrow 41 cents of every dollar the government spends. The U.S. borrows about $168 million every single hour.

In April, CNSnews reported that “the federal government made $125 billion in ‘improper payments’ in fiscal 2010, more than eleven times the total 2010 spending by the U.S. State Department.”

That’s a government that doesn’t know what it’s doing and isn’t in a hurry to fix it.

That’s why a Dollar Store just opened in one of the most affluent suburbs of New Jersey.

I know the economists and others keep saying that the Recession that began in 2007, ended in 2009. I know they can and will cite all manner of good economic indicators, but if faith in the U.S. dollar continues to falter, it won’t matter.

© Alan Caruba, 2011

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

Spinning the Democrat Loss

By Alan Caruba

It is now generally agreed that the Democratic Party will sustain large losses in the midterm elections. It will be interesting to see how their candidates and leadership explain why they lost.

My guess is that we shall hear a lot of talk about racism. This is the chief charge leveled against the Tea Party movement and it is utterly without substance. Democrats, however, are very likely to spin the loss as bigotry in general and, in particular, directed against America’s first black president. Obama has been rejected for reasons obvious to anyone who is unemployed, has had their home foreclosed, and an electorate aware of multi-trillion dollar deficits as far as the eye can see.

The next fallback position will be, of course, to blame the economy, but the Democrats literally own the economy and have owned it going back decades to the 1930s when Franklin D. Roosevelt was elected and reelected while prolonging the Great Depression for ten years until the economy was rescued by a full-employment program called World War Two.

Those were the years when Social Security, a huge Ponzi scheme, was introduced, followed by Medicare. Both are now insolvent and, like all socialist schemes, have “run out of other people’s money.”

The effort to take over one-sixth of the nation’s economy with Obamacare is a major reason for the Democrat failure at the polls. Forced through a Democrat controlled Congress through bribery and arm-twisting in the face of enormous public rejection and protest, the Democratic Party experienced a paroxysm of hubris that ignored the will of the People.

There is, too, a widespread sense that Congress, including some RINOs, Republicans in Name Only, has failed the People. The critical role of the “independents”, voters who do not identify with either party, will be manifested and it can no longer be ignored by either party. Last week, a Rasmussen Reports poll revealed that an astonishing 65% say that Congress has failed to perform its critical duty to maintain the welfare of the nation.

The statistics of government failure whether it is Social Security, Medicare and Medicaid, Fannie Mae and Freddie Mac, all give voice for a return to the founding principles of the nation; a smaller, limited central government.

In a recent Wall Street Journal article, John Fund noted that “It took Democrats in the House of Representatives 40 years to become out-of-touch enough to get thrown out of office in 1994. It took 12 years for the Republicans who replaced them to abandon their principles and be repudiated in 2006. Now it appears that the current Democratic majority has lost voter confidence in only four years.”

What those inside the D.C. Beltway have failed to comprehend is that, in an era of the Internet and instant access to encyclopedic amounts of information about the legislative actions of Congress, they no longer can fool all of the people all of the time, nor even some of the people all of the time. A core of about 25% believes in liberalism. The rest of the population does not.

The voters, too, will have rejected a vicious Democrat campaign of personal destruction directed against Republican candidates, accusing them of sexual misbehavior, witchcraft, and other misdeeds that were not only lies, but totally irrelevant at a time when the nation’s economy is in serious trouble.

Along with the Democratic Party, the nation’s mainstream media will suffer a continuing loss of the credibility necessary to their existence. In media critic, Bernie Goldberg’s words, it was “a slobbering love affair” with Barack Obama that got him elected.

I think, too, that many saw the rally staged by Jon Stewart and Steven Colbert of the Comedy Channel as an insult to the seriousness of the nation’s problems. Having people like Muslim convert, Cat Steven, participate, or Sheryl Crow who advocates bizarre environmental ideas, simply degraded the event further. There were few laughs to be had from the small crowd that attended.

There will be payback as daily newspapers grow thinner, as news magazines like Newsweek get sold for $1 and the assumption of its debt. The network news programs will continue to lose viewers, while Fox News channel continues to thrive, along with a bevy of conservative radio hosts and commentators.

Ultimately, though, this is a loss to be laid at the feet of the first openly socialist president of the United States, Barack Obama, and it is testimony to the rejection of his political philosophy and his determination to “transform” the nation.

Washington, D.C., with its legions of lobbyists and the need to raise huge amounts of money to get reelected does strange things to the judgment of those in Congress. No matter how the numbers turn out following the election, Republicans must keep in mind that they did not so much “win”, as the Democrats lost.

The same forces are at work and will be on a faster schedule if Republicans do not prove responsive and fail to make the changes necessary to save the nation from economic ruin.

© Alan Caruba, 2010

Is the USA Too Big To Fail?

By Alan Caruba

Lately I have been playing with the question, is the United States of America too big to fail?

Greece’s bonds are now rated as “junk.” It will have to be bailed out with billions from the nations of the European Union, but Portugal is not far behind and so are Italy and Spain. Iceland went belly-up months ago. Meanwhile, the sovereign debt of the United Kingdom, plus the assets of its five largest banks, exceeds 500% of its gross domestic product (GDP)!

According to Forbes, in the United States the total federal debt, including debt held by government agencies like the Social Security fund has ballooned by 50% since 2006 to $12.3 trillion. The U.S. government debt-to-GDP radio is 84%. A tipping point into default is generally believed to be 90%.

Can the whole financial system be gamed? Well, yes. On September 15, 2008 there was a suspicious, coordinated withdrawal of $550 billion from American banks just before the end of the 2008 election campaigns. It forced the Federal Reserve to shut down the drain of funds leaving the nation.

Within days the then-Secretary of Treasury, Henry Paulson was asking Congress to cut him a blank check for billions in order to stave off the collapse of major financial institutions. Subsequently, one of them, Lehman Brothers, was allowed to fail while a forced marriage between Bank of America and Merrill Lynch ensued to keep the latter from failing.

Troubled asset or TARP funds were dispensed and repaid. It’s hard not to make a profit when the Federal Reserve is lending you billions at zero interest rates.

It is now official White House policy to berate Wall Street and threaten it with a ruinous expansion of regulation. Others considered enemies of the state by the Obama administration include insurance and pharmaceutical companies, along with producers of oil and coal.

The whole world of central banking is deliberately murky to the outsider. I have no idea how it works except that their first imperative is to remain solvent so that the sovereign entity they serve remains solvent as well.

That is not easy in an era when most nations have socialist regimes requiring very high taxes with which to redistribute their nation’s wealth. This is further complicated if the nation’s population is aging as is the case throughout Europe. America is aging too as the Baby Boomer generation begins to reach 65.

In point of fact, Social Security, the oldest Ponzi scheme in town, is now taking in less money than it is paying out.

Ironically, an element of this aging is the fact that America has had a remarkable healthcare system that has contributed to expanding average life expectancy to 78 among men and over 80 among women. That will change if Obamacare is allowed to make the rules. Old people will become expendable.

The other Ponzi scheme is Medicare and Medicaid. They are expected to go broke in about eight years or so. All of the billions collected from income taxes every year now go to Social Security, Medicare/Medicaid, and to defense spending. To pay all other government expenses, the money must be borrowed.

When you “reform” Medicare as the Obama administration and the Democrats in Congress just did and it turns out that it is going to cost billions more than the former system, you have to wonder about the depths of stupidity involved?

A child born today arrives with a debt of $30,000. To secure a college education, the average expense is around $100.000. Life in America is going to be ruinously expensive, including for the 40% of Americans who pay no income taxes.

Beyond the borrowing and spending is another factor that is being ignored or undermined. The nation requires a dependable supply of electricity to keep EVERYTHING going. When the electricity stops, the nation will stop. It will be unable to function. Computers, the banks, the trains, the airlines, the supermarkets, gas station pumps, television, heating and cooling systems, elevators….EVERYTHING.

This is hardly the time to be lavishing billions in federal subsidies on dubious “clean energy” systems such as wind and solar, but that is exactly what the Obama administration is doing.

The reality is that coal-fired, natural gas and nuclear energy generates 88% of the electricity we use. We need more, not less, as our population increases.

At what point do Americans begin to ask why the Obama administration:

# Has imposed a very expensive overhaul of the nation’s health system,

# Is opposing the development of traditional sources of electrical power and for transportation,

# And is attempting to impose the biggest tax on energy use (Cap-and-Trade) in the nation’s history.

Perhaps the worst idea is a VAT (value added) tax that will affect every purchase of, well, everything.

At what point will the economy of the United States of America simply fail under this very unpleasant set of conditions? The answer in part is when other nations decide not to buy our treasury notes.

The United States has gone from the greatest economy the world has ever seen to being a creditor nation whose currency is in danger of being devalued.

I don’t like thinking about such things. No one does, but someone must.

© Alan Caruba, 2010

Spendthrift Nation

By Alan Caruba

My late Father was a Certified Public Accountant. I am sure he must have wondered if I had been switched in the hospital with another baby who could actually add and subtract, do multiplication and fractions. I have always been a dismal failure with figures, but my older brother who also was a CPA, more than made up for this while I went on to make my living in the world as a writer.

Knowing my lack of skill with numbers, I long ago devised a weekly ledger in which I post expenses relative to my professional and personal life. Every Saturday I get out my calculator, add the new totals, and can tell you that thus far this year I have spent $74.93 on postage, paid AARP $535.60, and that my rent and my auto lease are by far my largest expenses.

So imagine how I and millions of my fellow Americans must feel about a president and a Congress that appear to be stark raving insane when it comes to spending the money they take in as taxes and then borrowing gobs more in order to keep spending?

Socialism gave us our present problems in the form of “entitlement” programs and neither Democrats nor Republicans have been able to resist adding new ones. A new government report from actuaries for Medicare and Medicare on the cost of Obamacare reveals that medical costs will skyrocket rising $389 billion in 10 years.

In my home State of New Jersey, we finally elected a Governor who understands that doing this is nuts. Chris Christie is demanding all manner of cuts in the budget to the distress of elected officials and education flunkies throughout the State who just want to keep on borrowing and spending. He has told the public service unions that the party is over and they are none too happy about it.

Meanwhile, back at the White House, the president of the Service Employees International Union (SEIU) brags, “We spent a fortune to elect Barack Obama--$60.7 million to be exact.” Well, thank you, Andy Stern.

And, while we’re thanking those that caused the 2008 financial crisis, thank you Fannie Mae and Freddie Mac, neither of which Obama mentioned in his recent smack-down to Wall Street. And thank the Congress for creating these entities in the name of “social justice.” The financial crisis, brought about by government entities, required banks and mortgage lending firms to provide loans with no down payment to people who could not afford them. These programs are still in effect.

It takes brass cojones to blame Wall Street for trying to make a dollar by following the rules!

President Obama is a virtual wrecking ball to the American economy.

Barely eight percent of his cabinet members have ever held a “real” job in the private sector. Those vaunted economists advising him are all loons. Several of his first choices for cabinet positions turned out to be tax cheats! And one of them, Tim Geithner, is now the Secretary of the Treasury!

Even someone as arithmetically challenged as myself understands that something is terribly wrong when, in 2009, Americans paid $915 billion in income taxes and the federal government spent $3.5 trillion by borrowing the remainder.

According to the Tax Policy Center, in 2009 just under half of all U.S. households (71 million) will not pay any federal income tax. Now add in the eroding tax base as millions more become jobless. Many of the jobs going to other nations will never return.

As this is written, the U.S. debt comes to $7.5 trillion dollars. Just two years ago the federal deficit was about one-tenth of what it is today.

Please, please, please do not listen to or believe the lies about the economy and jobs coming out of the government these days. There are lots of other sources for business news. In the 1930s, during the Great Depression, fifteen percent of workers were unemployed. At 10.7 percent, we are closing in on that.

The government spent like crazy in the 1930s, too. Only the onset of World War Two in 1941 brought an end to a ten-year-long economic nightmare. You have to go back to the end of World War Two for a comparable level of national debt!

Despite blowing billions in a “stimulus” bill, there were no “saved” jobs, only the usual civil service ones as the money was spread around to the States. There will be no “green” jobs to replace those lost as the nation’s primary sources of energy are attacked.

The sensible people in the Tea Party movement know they are in danger of being dragged over the cliff by the hardcore twenty percent of morons, otherwise known as the Democrat Party base, who think that the government will always provide housing, hospitalization, retirement funds, and a full gas tank in everyone’s car.

© Alan Caruba, 2010

America in Decline

By Alan Caruba

There are tipping points in people’s lives and in the life of a nation. More and more I am inclined to believe that America has hit a tipping point and that its decline has been in progress now since the end of World War II. How can that be? We were and are a superpower.

While it is true that we have the greatest military power in the world, it is equally true that many of the planes being flown were brought on line in the 1950s, despite the extraordinary aircraft such as the stealth bombers. When Russia can put in a $40 billion bid to build refueling tankers after a major U.S. aircraft firm dropped out of the process, you have to ask yourself whether something is terribly wrong.

Militarily, we have worn out our forces, many of which are National Guard units, with six years of conflict in Iraq and renewed conflict in Afghanistan. All the hardware needed to maintain our troops in conflict zones need replacing. And the President of the United States wants to sign a treaty to reduce our nuclear arsenal.

It goes even deeper, however, than the capacity to wage war, let alone the will to face off with our enemies. Since around the 1960s the nation’s education system has grown steadily more costly and steadily worse in its capacity to produce students with fundamental skills of reading, writing, and arithmetic. American students consistently score behind students in other nations. An educated workforce is essential to maintain excellence, let alone parity with other nations.

At the heart of the Medicare reform battle was a very simple fact. The current Medicare program is broke. The current Social Security program is broke. Most of the States in the nation are broke. America must borrow a billion dollars a day to maintain its huge entitlement programs. The interest on treasury notes alone is daunting. Expanding Medicare under such conditions is sheer folly.

The nation and the States have become slaves of civil service unions and their government employees now make more than those in comparable private sector positions. The American Federation of State, County, and Municipal Employees now represent 1.6 million workers. There are two million federal workers. The benefits that have been negotiated for these workers are extraordinary, particularly in the area of pensions. Many of the services they provide, other than police and fire, could be contracted to the private sector.

Unemployment continues to rise and the billions in “stimulus” programs are having no effect. The Federal Reserve continues to print money that will invariably have less value.

The exodus from States now famed for heavy taxation, California, New York, New Jersey, continues apace. The value of the nation’s housing stock continues to decline. Other States are becoming manufacturing wastelands as this essential factor of prosperity leaves the nation for others with less taxation and friendlier regulatory environments.

The other problem America has not addressed or solved is that of illegal aliens. There are differing estimates of how many reside in the nation ranging from twelve to over fifteen million. They represent a drain on education systems, medical facilities, receive a variety of social services, and crowd our prisons. Previous amnesties have only served to swell the numbers of those crossing illegally into the nation in hopes of more amnesties. The Obama administration is known to want yet another amnesty enacted.

Increasingly, parts of the nation’s economy have been absorbed into the government, the most outstanding example being the takeover of General Motors and Chrysler, and control of the financial sector through bailouts.

Huge tracts of land, often with significant natural resources, continue to fall under the control of the federal government while others ban any extraction of oil, coal or natural gas. In the energy sector, more than nine million jobs exist and millions more could if the government would permit further exploration and extraction. Meanwhile, offshore of Florida in Cuba, Russians and Chinese are beginning to develop oil drilling in the Gulf of Mexico.

The Obama administration is totally devoted to the global warming fraud and the baseless assertion that human beings are influencing climate change through the generation of “greenhouse gases” such as carbon dioxide. The next major legislative initiation it proposes is the passage of Cap-and-Trade, a measure to impose the largest tax on the use of energy in the history of the nation.

At the same time, the electrical grid that is responsible for the distribution of energy has been aging and is in need of expansion. No new nuclear plants have been built since the 1970s and several are scheduled to be decommissioned. Nuclear represents twenty percent of the electricity used daily in the nation. The site in Nevada for the deposit of nuclear waste, built at the cost of billions, is still not open though it is ready to provide this necessary service.

The nation’s infrastructure of highways and bridges is in near desperate need of upgrade and continues to be neglected.

Nor should we ignore clear signs of moral decline as well. The abortion issue reflects the murder of millions of unborn babies. The push for same-sex marriage is a rejection of the ancient recognition that social stability depends on the marriage of a man and a woman. Pornography and violence permeate entertainment venues. Reality TV reflects the worst excesses of behavior. Illegal drugs are available anywhere in the nation.

The list of the indicators of decline is longer, but those cited are sufficient to suggest that an implosion is only a matter of time.

The truth that there is no free lunch remains in effect.

© Alan Caruba, 2010

Why You're Broke

By Alan Caruba

While it is incontestably true that a lot of people took out mortgage loans they could not afford to replay, it is just as true that they were encouraged to do so because banks were required by federal law to make these bad loans. Bankers even gave them an acronym, “Ninja” loans as in “No Income, No Job, No Assets.”

The result was the government created “housing bubble” that was coupled with the Federal Reserves’ policy of keeping interest rates so low that many were tempted to borrow beyond their means. When the financial crisis struck, these loans were called “toxic assets” requiring billions in taxpayer money to bail out the same banks forced to make them. Mortgage loan companies were not so fortunate.

Consistent with that government inspired economic disaster, however, has been the many ways federal and state governments have found to tax Americans directly and indirectly. A new book, “Bankrupting Joe the Taxpayer”, by D.J. Golio ($24.95/$16.95, Authorhouse, hard and softcover) reveals how taxation and irrational government spending has reached the present point and offers suggestions how to correct it.

A classic example of hidden taxes can be found in your telephone bill. This month mine was $63.00, but $14.00 of it was taxes, so my actual cost was less than $50. This occurs again every time I fill up my gas tank or pay my utility bill. For example, in 2007 the estimated take by states alone in gasoline taxes exceeded $50 billion.

The combined average of all taxes loaded into the price per gallon is approximately 56.4 cents. Fill up with twenty gallons and you’ve paid average federal and state taxes of more than $11.00! And the government has the nerve to call oil companies “greedy.”

One might be inclined to say that this money, if applied to highway and bridge repairs, was worth it, except that these repairs are often ignored by politicians who find that such expenditures are not sexy enough to garner reelection, so we end up with roads filled with potholes and, as occurred not long ago, a bridge collapse. Civil engineers have been warning about these failures for decades.

The gasoline tax is known as an excise tax and Golio points out that they have been around for more than 200 years and are older than income, estate, and gift taxes. They were initially imposed to finance wars.

In 1913, the income tax was introduced and, if the politicians could restrain themselves from spending every cent collected, government might not now be borrowing and, at the same time, raising its debt ceiling. Moreover, the nation might not be on the verge of losing its triple-A rating!

Federal and state governments have found ingenious ways to apply excise taxes. They include, in addition to gasoline and utility taxes, telephone services such as pre-paid phone cards, subscriber line charges, directory listings, WATS services, and long-distance toll charges, among others.

There are taxes on domestic and international air travel, wagering, occupation taxes covering importers and manufactures, firearms and ammunition, oil and chemicals, vaccines, and coal production sales.

As Americans are learning, the definition of “rich” now includes approximately 117 million households. In 2007, one group representing 28% of households that earned between $0 and $25,000 paid no income taxes, but received tax refunds in the form of credits such as earned income and child care. The federal government considers you to be wealthy if you earned $53,000 this year. About 25% of all tax filers fall into this category.

Golio is a Certified Public Accountant with an Masters degree in taxation. He has taught at the college level and knows the present tax system inside and out. He also knows that federal and state governments have long been spending beyond their means and places much of the blame for today’s high rates on the public employee unions that have negotiated huge pension programs well beyond those in the private sector.

These and other compensation, such as healthcare, cost taxpayers millions of dollars in the form of property and other local taxes as states and communities bludgeon homeowners to pay for generous contracts. Despite a failing educational system, teachers and administrators continue to enjoy exceptional terms.

That is why states also impose alcohol taxes, inheritance and estate (death) taxes, tobacco taxes, parking taxes, hotel occupancy taxes, leased vehicle gross receipts taxes, severance taxes in states fortunate enough to have natural resources, in addition to the aforementioned telecommunications and utilities taxes.

In 2008, forty-six states and the District of Columbia collected corporate income taxes and forty-four states and Washington, D.C., collected individual personal income taxes for the privilege of living there.

Entitlement programs like Social Security and Medicare, both of which could be addressed by private savings and insurance programs, are rapidly reaching insolvency which one might suppose was a strong argument against allowing the government to engage in their provision; particularly since Congress has dipped into the Social Security fund to pay for its endless pork-ridden spending programs.

And, of course, the Obama administration is currently engaged in trying to strip a trillion dollars out of Medicare and to sign up millions more so-called uninsured persons, many of whom are younger citizens, 20 to 40, who see no need to self-insure. If the Medicare “reform” passes, they will be hit up for thousands from their personal income.

It is, however, a matter of law that no one can be turned away and denied medical care at any hospital in the nation.

Americans are vaguely aware that illegal immigration adds enormous costs to the nation’s healthcare, education, and law enforcement functions, but right now in Congress, yet another “amnesty” bill has been introduced, virtually ensuring that millions more will enter the nation illegally in anticipation of a swift path to citizenship. It is a very bad idea.

Current costs associated with illegal immigration range upward to more than $636 billion. Meanwhile, some $235.8 billion is wired to Mexico and Latin America every year by those who have illegally entered the nation. There are 389,000 illegals incarcerated in our prisons and approximately 699,000 who are fugitives!

The real problem, however, in addition to federal spending, are the state legislatures that have abandoned all reason when it comes to spending. There are states like California and New Jersey that are, simply stated, broke.

The fact that the Obama administration has increased the national debt and appears indifferent to public protests against its Medicare “reform” and proposed new taxes on all energy use in the form of “Cap-and-Trade” suggests that it is either infantile or determined to bankrupt the entire nation.

The sad part is that Golio and many others are well aware of what must be done to correct and avoid the horror of America becoming another Zimbabwe, but many Americans have concluded they are powerless to stop it.

Liberals are Killing America

By Alan Caruba

It is not a new observation, but it is one that needs review and repeating every so often. Why do liberals always seem to get on the wrong side of any issue concerning America’s future? Its sovereignty? Its financial security? Its defense?

I think this question is particularly timely given the public discussion of Obamacare that included a huge peaceful protest march on Washington September 12th. The President’s non-stop campaign to get “reform” passed and the heated exchanges in Congress do not represent actual healthcare reform, but are testimony to a liberal obsession with a very bad idea.

You know something is desperately wrong when Democrats will not permit the proposed bill to enjoy a grace period of 72 hours during which both the public and members of Congress can actually read it before a vote is taken.

The irony of the current battle is that the bill will significantly change Medicare, a program advocated by liberals and, like Social Security, established by Democrats in Congress. It will destroy a free market for insurance programs individuals may choose to purchase. Or not.

There is no dispute that both programs, safety nets for Americans, have been helpful. Neither is voluntary There is no doubt that both are insolvent because they are unsustainable. This has been exacerbated by the way Congress has dipped into the funds intended to be set aside for them.

Obamacare will end up killing a lot of the people that Medicare was intended to save from the diseases and accidents that afflict the elderly.

It is not so much a “reform” as an admission of the failure of Congress to properly administer Medicare. Moreover, the “reform” will seize control of one sixth of the nation’s economy and dangerously, insidiously come between physician and patient.

It is a reform that is doomed to failure because there simply are not enough doctors, nurses, and other licensed and certified healthcare providers.

The global warming hoax and the arguments that “saving the environment” justifies a horrid “cap-and-trade” bill under consideration is another example of how liberal zeal for apparently noble “causes” reaps more harm than good. In the process, actual known, proven science has been abandoned.

In many ways, America has historically demonstrated an extraordinary commitment to Nature. The set asides of vast tracks of national forests and natural wonders such as the Grand Canyon and Yellowstone attest to this and the national effort to clean our waters and air attest to this.

The problem, one that was anticipated and feared by the Founding Fathers, is the continued expansion of the federal government’s control over all aspects of our lives. The creation and existence of the departments of education and energy have harmed America in countless ways. The Environmental Protection Agency is an assault on science and property rights. All are essentially unconstitutional.

There never was any scientific evidence for “global warming” and yet it has been the all-purpose “go to” justification for restrictions that range from toilets that lack sufficient power to flush and, soon, a prohibition on the incandescent light bulb. Environmental restrictions have done irreparable harm to the nation’s economic growth.

Natural phenomenon from hurricanes to floods to forest fires have been blamed on global warming and this continues even though the Earth has been in a cooling cycle for a decade and what warming occurred after 1850 was a natural cyclical response to a previous little ice age that had begun in the 1300s.

Liberals, however, lack common sense. Environmentalism has transformed from conservation to a wholesale attack on America’s industrial base and, in a larger sense, capitalism. The Left has always attacked capitalism and the free market system that is essentially self-regulating.

This is particularly evident in liberal efforts to render the nation unable to access its own vast energy reserves of oil, natural gas, and coal. Energy is called the “master resource” because, without it, life can be harsh and progress in the form of innovation and invention, slows. Industrialized nations are differentiated from “undeveloped” nations almost entirely on the basis of the availability and widespread use of affordable energy.

Liberals, however, would not just leave vast parts and populations of the world bereft of the energy needed to grow crops, create jobs, and serve the basic needs of their people, but continue to use environmentalism to denigrate everything from driving one’s car to the use of plush toilet paper.

While America has always been “a nation of immigrants”, the process of accepting new citizens has been undermined in recent decades by the ceaseless flow of illegal aliens entering the nation and not merely ignoring the naturalization process, but also taking wrongful advantage of social programs such as welfare, our educational system, and our healthcare system. Liberals, however, continue to campaign for amnesty programs.

The liberal attack on the institution of marriage, on the free expression of religious faith, and other elements necessary to a civil society is yet another example of the way a nation they profess to love is undermined as its core values are systematically destroyed.

And let it be said that in the decades since the 1960s and 70s, men and women who have been elected to Congress and to occupy the White House on the basis of their avowed conservatism, have too often yielded to liberal arguments and programs. Tax and spend is now a bipartisan philosophy.

Liberals now hold majority political power in Congress and the White House, and the nation has been witness to the abandonment of our allies abroad and an appalling level of corruption, wasteful spending on pet projects, of which ACORN is just one example.

Liberals created the programs that led to massive mortgage loan failures; liberal programs enacted to impose “fairness” ignored the inability of everyone to own their own home. Something was desperately wrong when government entitles such as Fannie Mae and Freddy Mac owned over half of all mortgage loans.

The government’s failure to exercise oversight and regulation over all elements of the nation’s financial system, based on existing laws, has resulted in the greatest ponzi scheme of the modern era and the failure of banks and investment houses. The Federal Reserve is neither federal nor a reserve.

Lastly, the grasp for ever more power, the introduction of unelected “czars” in the executive branch, and the possibility that the most liberal president ever elected is seeking the destruction of the nation call for both action and an increased devotion to conservative principles.

Americans are demanding a return to governance based on the limits of the Constitution and the reduction of senseless spending and borrowing. America belongs to “We the People” and We the People must defend it from those who see America only as a nation to be plundered.

When You're Listening to Obama

Call Him Irresponsible

By Alan Caruba

Is it just me or does President Obama look and sound more desperate with every passing day? He thought he could fool all of the people all of the time and it turns out that he can’t.

Mark your calendar for Saturday, September 12, 2009. That’s when a Washington, D.C. protest march is planned. Led by FreedomWorks, their website says they will be joined by many other national co-sponsors such as the National Taxpayers Union, Americans for Tax Reform, Young America’s Foundation, and Tea Party Patriots, to name just a few.

This is why the First Amendment to the U.S. Constitution guarantees “the right of the people peaceably to assemble, and to petition the government for a redress of grievances.”

I doubt that President Obama will be among the speakers that day, although he has been out on the stump of late trying to convince Americans that things will improve if the government is given control over the nation’s health system. He’s already nationalized part of the auto industry, a major insurance company, banks, and probably little Bobby’s lemonade stand in front of his home.

Obama’s relentless assault on the private sector of the nation’s economy can be seen in the following percentages of the Gross Domestic Product: Healthcare represents 17%, energy is 9.8%, and financial services are 8% of GDP. These are the sectors that have been targeted for takeover by the Obama administration. It adds up to 35% of GDP!

In May, columnist Robert Samuelson, writing in Investor’s Business Daily, asked “Just how much government debt does a president have to endorse before he’s labeled ‘irresponsible’?”

“From 2010 to 2019,” wrote Samuelson, “Obama projects annual deficits totaling $7.1 trillion; that’s atop the $1.8 trillion deficit for 2009”, adding that “By various estimates, Obama’s health plan might cost $1.2 trillion over a decade; he has budgeted only $635 billion.”

Deficits are the annual gap between government’s spending and its tax revenues. The debt is the total borrowing caused by past deficits. As confidence in the U.S. dollar and the credit of the United States decreases, the amount of interest on borrowing will increase.

While it is true that the federal government has run deficits in all but five years, the debt has always remained below fifty percent of GDP.

I submit that NOTHING Obama says about deficits or debt can be trusted and his pet project, the horrid “Cap-and-Trade” program, a tax on energy use—electricity—that will drive up utility rates for all Americans. It will reduce the amount of money consumers will have for their other needs. It will drive manufacturing to other nations.

Cap-and-Trade, a carbon tax, is based on the utterly FALSE assertion that CO2 and other greenhouse gas emissions contribute to a “global warming” this is NOT happening.

Obama’s proposed healthcare reform is a nightmare. There is no such thing as free healthcare. It is financially unsustainable. This has already been demonstrated in Massachusetts. Utah has just passed a program to institute rationing of healthcare options.

The “entitlement” programs the government instituted in the last century are already facing major financial stress. Social Security will grow by between one and two million new beneficiaries from 2008 to 2032, up from 500,000 a year in the 1990s. The government taxes its benefits. It is not, as originally planned, a “voluntary” program.

More than one million people a year will join Medicare as of 2011 when the first Baby Boomer turns 65.

Nor has the government set aside money to pay military and civil servant pensions or health care for retirees. These unfunded obligations have increased an average of $300 billion since 2003 and now amount to $5.3 trillion.

Because of President Obama’s budgets and the Democrat-controlled Congress, the nation will be faced with trillion dollar deficits for the foreseeable future. It will destroy jobs that will move to other nations and leave future generations with huge financial burdens.

As the Associated Press reported on July 14, “The federal deficit has topped $1 trillion for the first time ever and could grow to nearly $2 trillion by this fall, intensifying fears about higher interest rates, inflation and the strength of the U.S. dollar.”

The GOVERNMENT has done this to us. Obama has exponentially increased the problem.

Only a major reduction in the size of the federal government can provide any remedy. I suggest it begin by ending the Education and Energy Departments, along with the Environmental Protection Agency. It’s a start.

The Real Crisis is Obamacare

By Alan Caruba

President Obama has never met a crisis he didn’t love; particularly the ones that involve spending trillions of dollars. What fun it is to propose programs that involve borrowing or taxing Americans to death.

On June 9, the Associated Press reported, “President Barack Obama on Tuesday proposed budget rules that would allow Congress to borrow tens of billions of dollars and put the nation deeper in debt to jump-start the administration’s emerging health care overhaul.”

Since the stealth heathcare “reform” that Bill and Hillary Clinton tried to foist on Americans during the 1993-94 Congress, this “crisis” has been off the radar screen of Americans who have the audacity to think they should decide whether and how much health insurance they want and to expect healthcare that is not rationed on the basis of how old they are and other factors determined by some faceless government bureaucrat.

Liberals obsess over healthcare options because, of course, they want “fairness” no matter how much it will cost Americans in general and the economy in particular.

To that end, various “progressive” (liberal) groups have gotten together and have launched an $82 million campaign to support President Obama’s healthcare program. The umbrella for this massive public brainwashing is called Health Care for America Now. Why is it that everything Obama wants has to be done “now”? Oh yes, I forgot. It’s a “crisis.”

Health Care for America is directed by Richard Kirsch and has been joined by AFL-CIO, MoveOn.org, and Democracy for America, a group founded by former Democratic National Committee Chairman, Howard “the scream” Dean. The group is essentially a re-branded version of liberal lunatic groups.

An excellent analysis of Obamacare has been published by the Cato Institute in a May 21 Policy Analysis (No. 638) titled appropriately as “Seven Bad Ideas for Health Care Reform. Authored by Michael Tanner, it points out some very ugly truths.

--At the time of rising unemployment, the government would raise the cost of hiring workers by requiring employers to provide health insurance to their workers or pay a fee (tax) to subsidize government coverage.

--Every American would be required to buy an insurance policy that meets certain government requirements.

--A government-run plan similar to Medicare would be set up in competition with private insurance.

--The government would undertake comparative-effectiveness research and cost-effectiveness research and use the results to impose practice guidelines on providers, initially in Medicare and Medicaid, but ultimately extending the rationing to private insurance plans.

--Private insurance would face a host of new regulations.

--Subsidies would be available to help middle-income people purchase insurance while expanding Medicare and Medicaid.

--Finally, the government would subsidize and manage the development of a national system of electronic medical records.

According to a June 8 Bloomberg News report, “President Barack Obama wants Congress to consider taxing the wealthy instead of workers to pay for a health-care overhaul.” This is yet one more lie by the Obama administration in the run-up to impose the most vile form of government control over everyone’s lives imaginable.

The American Medical Association, the nation’s largest physician organization, has let it be known that it will oppose creation of a government-sponsored insurance plan.

The promise of the Declaration of Independence that everyone has a right to life, liberty and the pursuit of happiness will be rendered meaningless by Obamacare if your life depends on government policies regarding healthcare.

A June 1 Business Week commentary pointed out that “there are only three ways to pay for universal coverage: Raise taxes, cut payments to medical providers, or ration care.” All three are the worst possible options imaginable.

“The Congressional Budget Office estimates that covering the uninsured could add anywhere from $1 trillion to $2 trillion to the federal budget over ten years,” said the BW commentary. “On top of that, government economists expect Medicare to run out of money in 2017 if current spending trends continue.”

Here’s a handy tip regarding estimates by government economists. Multiply them by a factor of ten!

As this healthcare horror awaits its run through Congress, think of it as a massive Medicare, the government program for seniors that cost 3.2 percent of the country’s Gross Domestic Product in 2008 and which will become insolvent this year! Medicare faces $34 trillion in unfunded liabilities; the cost of services for which seniors are eligible in the future.

According to the Medicare Trustees, the program will require a 134 percent increase in the payroll tax paid by every working American in order to remain solvent!

And this insane Democrat-controlled Congress wants to expand on Medicare while requiring everyone to purchase healthcare insurance, even if they don’t want to. Then it will compete against existing private insurance companies without having to have the funds in place as they must to meet their obligations.

This isn’t healthcare reform. It is the destruction of the best healthcare system in the world. It is the destruction of the nation’s economy. It, along with the tax on energy use, must be stopped.

We are being attacked by one “crisis” after another when the only one that matters is the restoration of the full faith and credit of the U.S. dollar. If the “health” of the U.S. dollar is not restored, nothing else will matter very much.

Tell me again. What is this Election About?

By Alan Caruba

This was supposed to be a campaign decided by the issue of bringing troops home from Iraq. That had been Barack Obama’s theme over months of campaigning in the primaries.

The troops are coming home, but only because we are close to saying “Mission accomplished” and this time it’s true. The first time, as best as I can remember, President Bush was referring to the initial success of the Iraq invasion that routed Saddam Hussein’s army.

After that, well, the “liberated” Iraqis went nuts with a lot of help from al Qaeda and the Iranians stirring up sectarian discord. It didn’t take much effort. Eventually, though, even the Iraqis tired of the senseless killing.

As the U.S. draws down most of its troops, leaving enough to provide back up to the Iraqi military, Iraq will return to business-as-usual which means a high level of corruption, all focusing around the distribution of oil wealth. Meanwhile, countless al Qaeda martyrs have been hunted down and granted their wish for 72 virgins. So, yes, “Mission accomplished.”

The election is no longer about Iraq. Or even Afghanistan. I suspect that most Americans couldn’t find either on a map.

Then the election was supposed to be about energy. The advent of $4.00-a-gallon gasoline put issues of senseless ethanol mandates and the fact that Congress has forbidden oil and natural gas drilling for 85% of our nation’s coastlines right at the top of voter’s concerns. As oil prices began to fall, however, so did the urgency of energy as a compelling issue.

Now the election is about the economy. In a way, all elections are about the economy. What is nothing less than astonishing, however, is the public’s rather blase attitude to problems that would in previous times have people panicking in the streets and trying to pull their money out the bank.

A lot of this has to do with the view that the federal government has an endless supply of money and can make good the mortgage loans made to people who could not really afford a home and, if normal lending judgments were exercised, would have been denied a loan. You don’t have to exercise such judgment, however, if you know the federal government is good for every dollar you lend.

The result is that Fannie Mae and Freddie Mac were literally “seized” by the federal government in order to keep the entire banking system from going belly up. This is certainly a better response than the bad old days of President Herbert Hoover who did nothing and gave us the Great Depression.

The legacy of the Great Depression of the 1930s was Franklin D. Roosevelt’s efforts to try anything that would restore confidence in the banks and put some dollars into people’s pockets because money was not circulating or being invested as behooves a market economy.

What remains from those desperate days are entitlement programs like Social Security, Medicare and Medicaid that did not anticipate people living much beyond age 65. They do now and where is the money going to come from to send them their monthly check or pick up their hospital bills?

The fact is government has intruded into the marketplace to a point where normal banking and investing judgments were suspended and the inevitable “bail out” came due. One of the most essential functions of government is to protect the value of the U.S. dollar. Anything government does that undermines that should be subject to criminal charges. That means, of course, that everyone serving in Congress since the 1940s has been derelict.

Generations born during and since the 1950s have been educated to blithely believe that government is the answer to all their needs from cradle to grave. The result is a lot of people who have few savings and a lot of debt.

The reality is that government is so intrusive with its high taxation of both corporations and individuals, with its massive regulation of all commercial and agricultural activity, with its entitlement programs that distort the budget, and with its mind-boggling wastefulness, that if Sen. McCain could make good on just a small part of the change he promises, it would be a very good thing for America.

Obama will give you higher taxes, but the money will just be plowed into more entitlement programs for the “poor.” We have had generations of poor people because government has not demanded they stay in school, learn a trade, qualify for higher education, or get a job. We didn’t get any real welfare reform until the Clinton years and that was because of the famed 1994 Republican Congress.

And through it all, despite the headlines, the public is just merrily going along. Will they spend a bit less this Christmas? Probably. Will they put off any big purchases? Probably. Will they finally figure out that America needs to tap its vast natural resources even if it means disturbing some caribou? Probably.

If this election season is any indication, Americans have the attention span of fungus.

They haven’t quite figured out that the government will have to get the bailout money from somewhere and that “somewhere” is them, their children, and their grandchildren.