THE 2012 ELECTION RESULTS-66

I was puzzled that every voting group that was broken out and analyzed except Latinos (+700,000), Whites (-7.8 million), Blacks (-1.6 million), ages 18-29 (-1.8 million), and women (-4.0 million) had a lower voter turnout in 2012 than in 2008. Why not Latinos? After thinking about it (taking into account my advanced age, I am likely a bit slow with my thought processes) I then came up with the answer. Between 2008 and 2012 the population of the country increased by circa 6 million and of this figure approximately 3 million were Latinos (they currently comprise 16.5% of the USA population). Therefore the RATE of the Latino turnout was lower as was every other group, but the inordinate increase in population caused an increase in their absolute votes. Republicans need not despair too deeply because elections in this country run in cycles, comsider the 2008 presidential election, won by Democrats; the 2010 midterm election won By Republicans (+63 House of Representatives seats); and of course this election. As an aside, for the only time in the history of this country, of the 16 United States presidents who won reelection, Barack Obama is the first president to win reelection by a narrower margin in his second term than in his first. Hardly an auspicious accomplishment is it? That is what is called a rhetorical question as all of you gentle readers know well. I will now expand on my theme of elections running in cycles. Following the 1920 elections, Republicans gained 62 seats in the House, holding a 302 to 131 majority and had 59 Senate seats to 37 for the Democrats. By 1928 the margins were 267 Republicans seats to 167 for the Democrats in the House and a 56 to 39 edge for Republicans in the Senate. After the Great Depression of 1929 where Republican Herbert Hoover was unfortunate to be president, the public turned on the Republicans with a vengeance in the election of 1932 where the House and Senate changed configuration to Democrats 313/Republicans 117 & Democrats 59/Republicans 36, respectively. In the midterm elections of 1934 Democrats increased their majorities to 332 in the House versus 117 for Republicans & 69 seats in the Senate to 25 for the Republicans. In the presidential election of 1936 the Democrats again increased their majorities to 334 seats in the House to 88 for the Republicans & 76 Senate seats to 16 for the Republicans (Can you imagine – the Republicans held only 16 Senate seats!). Franklin D. Roosevelt defeated Alfred Landon by 523 electoral votes to 8 in the presidential election that year. With the Depression taking a turn for the worst after some improvement had occurred in a couple of previous years and the infamous and unpopular "Court Packing" scheme of Roosevelt, the midterm elections of 1938 saw improvement for the Republicans with an increase of +81 seats in the House & +6 in the Senate. Still, the Republicans were so far behind that the alignment was still Democrats 262 seats in the House to 169 for the Republicans and 69 Democrat Senate seats to 23 for the Republicans. Fast forward to the presidential election of 1980. The country was in a blue funk and malaise (high unemployment, even higher inflation, and eroding public confidence) under the inept leadership of Jimmy Carter so the presidential election saw Ronald Reagan sweep to a 489 to 49 electoral victory and Reagan winning 44 states to 6 for Carter. With the economy now humming along at a robust level and confidence building with the American people under the sunny and optimistic direction of Ronald Reagan, "The Great Communicator", the election of 1984 was an overwhelming mandate for the president to the tune of 525 electoral votes and 49 states to 13 electoral votes and one state for the hapless Democrat, Walter Mondale. In 1994 in what was called "The Gingrich Revolution" the Republicans gained control of the House for the first time in 40 years, increasing their seats by +54 with 230 seats to 204 for the Democrats. The Republicans also gained control of the Senate 52 to 48 with a 9-seat increase. You may say this is all very well, but the country has now fundamental changed in our ethnic makeup and general approval of a big government welfare state that will permanently favor the Democrats. Nonsense! The country has been changing since its founding. Yes, there have been periods where change has occurred more rapidly than others, for instance during the latter half of the 19th century and early 20th century where immigration was even higher than now. Those people in the past assimilated into the mainstream of the American population and became more conservative and traditional as they did so. It was author & longshoreman Eric Hoffer who said the immigrants who build this great country were not the elite and upper class of mostly Europe and also Asia and Latin America, but were the common folk who possessed a hard-work ethic and were "lumpy with talent" and dissatisfied with their lot in their homeland. I do not know why modern immigrants will be fundamentally different from those in the past. Pat Buchanan and his ilk believe the USA will be overrun with illegal immigrants from south of our border putting our country at risk for permanent decline. He is so pessimistic about the future of conservatism in the USA that he seems to think it is fey. That goes against the grain of political history, some of which I detailed above. And there are those who believe that because these new immigrants have higher birth rates, or as demographers say “Total Fertility Rates (TFR)”, they will increase even faster than the settled population. Quoting Bergen Evans on another subject, this is like “The blind mouth of Demos babbling in darkness.” Read my blog essays on the subject or the 2004 book “Fewer” by Ben Wattenberg. This is only a temporary situation, as these immigrants become more prosperous and even before, as they realize a key to more prosperity is smaller families, they will respond accordingly. At one time Catholics in the United States, for what should be obvious reasons, had a higher TFR than Protestants. Now it is about the same. Likewise, currently in Europe some of the countries with the lowest TFR are the Catholic ones of Italy, Spain, and Portugal. The same is happening with Muslims countries around the world, and in fact in the world at large. Time will tell, but I am more optimistic about this issue than some others are. What I am concerned about is an expanding development of a "welfare mentality" among a troubling segment of the population that would enervate the work ethic that has characterized this country for so long and built our prosperity. Are people in this country really that different from people in the past? Perhaps, yet when one thinks how a president could be reelected with the economic conditions so dire in the country today, I hark back to the 1930's. Entirely in the Roosevelt administration during 1934 to 1940 the median annual unemployment rate was 17.2%. The highest unemployment was in 1933 at 24.9% and lowest at 14.3% in 1937. In 1937 there were 11 million unemployed people and 3 million who were underemployed. With a total country population of 130 million in 1937 that would be equivalent to unemployed and underemployed numbers of 26 1/2 million and 7 1/4 million today. You can believe no president today could have been reelected with such dismal numbers when that was his best employment year. Roosevelt was reelected in 1936 (16.9% unemployment) and 1940, all depression years, before the start of WWII, so it seems that the Americans of the 1930's were even more patient and forgiving of their president then than now. We, current Americans, may be different from Americans in the past, although hopefully not as different as some would postulate.

INCOME DISTRIBUTION IN THE USA-65

It is a commonplace that political and social liberals (or if they prefer “progressives”) and other incompletely informed members of hoi polloi go on and on about the disparity between the rich, the poor, and the in between. And further, how the differences in income between them is increasing to the detriment of all but the “rich”; especially the “super rich.” There is an element of truth to this, but like the rare earth minerals this truth is rather minuscule when compared to what is the real significance behind these numbers. Firstly, these income comparisons do not take into consideration the largesse of state and federal governments to the lower income cohorts. It is now estimated that the bottom 50% of income earners receive subsidies from the federal or state governments, not counting Social Security and Medicare, in the form of the income tax credit, food stamps, aid for dependent children, school lunch programs, Medicaid, and a variety of other governmental charity programs. This real income is not counted when income statistics are compiled for the different income brackets. Secondly, there is an even more striking consideration when attempting to draw conclusions about the disparate income levels. My discussion which follows, about the important aspect of these income level differences is largely, but not completely, taken from the 2011 book The Thomas Sowell Reader by Dr. Thomas Sowell, currently a scholar in residence at the Hoover Institution. It is indeed true that both the amount of income and the proportion of all income received by those in the top 20% bracket have risen over the years, widening the gap between the top and bottom quintiles (from Latin, quintilis – meaning statistically divided into fifths), however U.S Treasury Dept. data show that the income of taxpayers who were in the bottom 20% in income in 1996 rose 91% by 2005. The incomes of those in the top 5% and top 1% actually declined in that period. Those taxpayers who were initially in the lowest income bracket had their incomes nearly double in a decade that moved them up and out of the bottom quintile. While those in the top 1% had their incomes cut by about 1/4 and that may well have dropped many, if not most, of them out of the top 1%. Despite the rise in income of the top 0.1% of taxpayers as a statistical category, both absolutely and relatively to the incomes in other categories, as flesh-and blood human beings, those individuals who were in that category initially had their incomes actually fall by a whopping 50% between 1996 and 2005. It is hardly surprising when people whose income is cut in half drop out of the top 0.1%. What happens to the income of the category over time is not the same as what happens to the people who were in that category at any given time. But many of the intellectual elite are ready to seize upon any numbers that seem to fit their vision of an unjust society. It is much the same story with data on the top 400 income earners in the country. As with other sets of data, data on those who were among the top 400 income earners from 1992 to 2000 were not data on the same 400 people throughout the span of time covered. During that time span there were thousands of people in the top 400; which is to say that turnover was high. Fewer than ¼ of all the people in that category during that span of years were in that category more than one year, and fewer than 13% were in that category more than two years. There is an important point, likely deliberately overlooked and certainly unstated by liberals, concerning these income levels. Most people begin their working careers at the bottom, earning entry-level salaries. Over time, as they acquire more skills and experience, their rising productivity leads to rising pay, putting them in successively higher income brackets. These are not rare cases, but common patterns among millions of people in the United States and some other countries. More than ¾ of those working Americans whose incomes were in the bottom 20% in 1975 were also in the top 40% of income earners at some point by 1991. Only 5% of those who were initially in the bottom quintile were still there in 1991, while 29% of those who were initially in the bottom quintile had risen to the top quintile. Yet the clueless or duplicitous left has transformed a transient cohort in a given statistical category into an enduring class called “the poor.” Just over half of all Americans earning at or near the minimum wage are from 16 to 24 years of age. And of course these individuals cannot remain from 16 to 24 years of age indefinitely, though certainly this age category can continue indefinitely, providing many liberals with data to fit their preconceptions. In this debate, liberals focus on the income brackets instead of actual people moving between these brackets in an attempt to create a “problem” that desperately needs a “solution.” They envision “classes” with “disparities” and “inequities” in income caused by “barriers” created by “society.” The routine rise of millions of people out of the lowest quintile over time makes a mockery of the “barriers” assumed by the liberal elite. A related, but somewhat different, confusion between statistical categories and human beings has led to many claims in the news media and in academia that Americans’ incomes have stagnated or grown only slowly over the years. For example, over the entire period from 1967 to 2005, median real household income; that is adjusted for inflation, rose by 31%. For selected periods within that long time span, real household incomes rose even less, and those selected periods have often been cited by liberals to claim that income and living standards have stagnated. Meanwhile, real per capita income rose by 122% over the same time span, from 1967 to 2005. When a more than doubling of real income per person is called “stagnation”, that is one of the many feats of liberal verbal virtuosity. The reason for the large discrepancy between growth rate trends in household income and individual income is straightforward: The number of persons per household has been declining over the years. As early as 1966, the U.S. Bureau of the Census reported that the number of households was increasing faster than the number of people and concluded: “The main reason for the more rapid rate of household formation is the increased tendency, particularly among unrelated individuals, to maintain their own homes or apartments rather than live with relatives or move into existing households as roomers, lodgers, and so forth.” Increasing individual incomes made this possible. As late as 1970, 21% of American households contained 5 or more people, but by 2007, only 10% did. As evidence that this difference of opinion on income distribution in the USA between conservatives and liberals is ongoing I refer you to an article in the September 13, 2012 Dallas Morning News strictly focusing on income brackets over individual incomes (The article was written by a reporter from the New York Times – who could have guessed that?). The article headline was: RICH GOT RICHER, POOR STAYED THE SAME IN 2011. The article went on to say in a sub-headline: “Wider income gap reveals unevenness of recovery, expert says.” It further states: “The income gap between the wealthiest 20% [top quintile] of U.S. households and the rest of the country grew sharply in 2011, the Census Bureau reported, as the overwhelming majority of Americans saw no gains from a weak economic recovery in its second year.” “Income from the top fifth of U.S. households rose 1.6% in 2011, driven by even larger increases for the top 5% of households, said David Johnson, the Census Bureau official who presented the findings. All households in the middle of the scale saw declines, while most of those at the very bottom stagnated.” And on and on it went in the same vein. The article considers only households, not individuals in the households, nor is there any mention of individuals within the income brackets moving up or down to different brackets. This is all so predictable by the left, yet I am sure there are myriad people who will read it (at least the ones who can read) and not give a moment’s thought to the other view of income distribution as put forth in this essay – with much credit to Dr. Thomas Sowell.

UPDATED WORDS & PHRASES ABUSE-64

I wrote about the American language in a 2007 blog essay, Misused or Abused Words & Phrases and a short follow-up essay, Further Thoughts on Dissimilation, but now I feel compelled to write again. It is not only that the general public commits unbearable sins and embarrassing written and especially spoken gaffes in regard to our language to the point that sensitive souls want to feign blindness and deafness as mechanisms to bring about surcease from pain and suffering. No, it is people in which speech is central to their professions that are the most egregious culprits with the least excuse who annoy me the most. Journalists on TV, radio, and in the print media as well as TV and radio talk show hosts are equally guilty. Not to mention politicians, academics, and business leaders who also depend upon communication skills to do their jobs properly, yet they do not write and speak properly – that is to say without using clichés and repetitious, trite, and hackneyed expressions which diminish their ability to convince people, especially people like me, of anything. When it comes to not recognizing incompetent and lazy speech habits Ignorance is NOT Bliss. Rather it is confining and intellectually constricting not to be aware of speech, written and spoken, which is poorly put forth. This country is not going to fall like the Roman Empire because a big majority of people in all categories has lost their ability to communicate effectively and with style and grace. Nevertheless, I don’t believe that it will project a national sense of pride and confidence either. What in particular am I going on about? As I wrote in my 2007 essay, the word “very” is by far the most overused word in the American language. Since then it appears to me that this overuse has increased by an order of magnitude (one order of magnitude is 10, two orders 100, three 1000, etc.). I wrote back then that “very” had practically become a compound word as an adverb being used as a modifier for adjectives. I now see the necessity of excising the word “practically.” If you think I am exaggerating then you are clearly not paying attention to the way people, on TV and radio and in private conversations, are expressing themselves. I am fully conscious that if you have not noticed this then I may be doing you a disservice to call it to your attention. Once you become aware of it, perhaps you will want to upbraid me for the annoyance it will then cause you. Go right ahead if that will make you feel better. Not only does it become excruciatingly painful to keep hearing the word “very” being unceasingly overused, but also its function as an intensifier is so diminished that it becomes meaningless. If everything is emphasized, then nothing is. It is as if every negative situation is labeled as the direst, then none is or every positive situation is the greatest then, again, none is. I would only caution you NOT to interrupt and confront the speaker by telling her/him to damn well quit overusing that word (by at least one order of magnitude). That would not be proper manners and, who knows, might lead to fisticuffs or other physical violence. Even barring that, it could well result in an unpleasant oral argument that would be undignified to say the least. If you feel you must intervene, then by all means take the uninformed speaker aside and in private gently attempt to correct this wayward misuse of our language. What else? There is plenty more to come. You, gentle reader, are surely aware of the ubiquitous, unceasing, omnipresent use of the expression, “you know.” It is not even used as a question any more such as “You know?” It is merely a speech filler without any merit whatsoever. Some people use this phrase in their speech blissfully unconsciously and others as a nervous habit, also seemingly unconsciously. I was once discomfited by the inane insertion of this phrase into so many people’s speech, but now I am convinced that it is infuriating to the point of driving the insane, sane and the sane, insane (I am in an aporetic state whether I fit in the first category or the second – the reader may have no such doubt that I belong in a third state; insane before and after). Professional athletes are especially prone to incessantly insert “you know” in their responses to sportswriters during interviews. Even allowing that these athletes are known for their physical prowess rather than their mental acuity, many of them did go to college, albeit nominally. Perhaps the professional football players should have spent a bit more time learning to speak better rather than trying to knock each other senseless. The class action law suits now being undertaken by retired football players against the National Football League because the players claim they were not sufficiently warned by the league of the risk of damage to their brains indicates to me there wasn’t much there to damage in the first place. Just what the hell did they think would happen when they repeatedly banged each other in the head even when wearing helmets? Even though I have not had that experience, I am convinced I would rather undergo “water boarding” than continue hearing a speaker keep using that expression. Despite my previous imprecation against confronting people who keep saying “very” I might well resort to physical means to silence those bleating miscreants who keep babbling on incessantly with “you know”, “you know”, “you know” ad infinitum. I just might want to kick a few of them in the head, sans helmet no less. No sensible jury would convict me for whatever I do to achieve this highly desired result. How many times have you heard TV and radio newscasters as well as TV hosts of various programs breathlessly intone the mantra “You are not going to believe this.” when they are about to introduce a news story containing an unusual element? I’ll guess the answer is myriad times or even a myriad of times (When uses as an adjective “myriad” means many times and when uses as a noun “myriad” means precisely 10,000 times. Don’t take my word for it, look it up in an unabridged American lexicon.). If they opine that the listener is not going to believe what they are about to be told then why bother to tell them. I realize, as I have stated in the aforementioned essay, that the American language, in fact any language, is not to be confused with logic. Still, that does not mean that statements should be intentionally illogical. How about one being sensible? Is that too much to ask? To answer my own question – apparently it is. Despite my previous attempts to enlighten the ill educated among the Americans, it appears that I have failed. I will tell you straight out, I do not enjoy having to classify myself as an abject failure. Newscasters, especially on TV, are still calling the period after a disaster, an “aftermath”, as when, for example, the damage is still being assessed when a tornado has devastated a town or small city. “In the aftermath of the tornado the people who were in its path are coming together to deal with the destruction and pain.” Again, as I have previously explained, “after” means second and “math” means harvest. In this case it is a bitter harvest, yet there has not been a second destructive event following and caused by the first. The classic example of this is the fire following the 1906 San Francisco earthquake. Is that a concept difficult to grasp? To repeat myself, apparently it is. What actions have I taken in the past to educate those dummkopfs? I have repeatedly written e-mails informing them of their benighted language skills, yet it was all in vain as I never heard from any of them and the mistake keeps being repeated. Let us make a covenant. I will continue to tilt, a’ la Don Quixote, at the windmills of ignorance if you will take up a cudgel to combat language deficiencies wherever you encounter them. Deal? Do you hear the expression “at this point in time” still being used? I do. It is Nixon/Watergate era usage. How droll and dumb that it is being used in contemporary speech. There was precious little reason for it back in the 1970’s, say nothing for its continuation now, but at least then there was the element of originality. What just punishment should be imposed on its users today? I have a suggestion. For this and the other enumerated sins the following might be appropriate: Many years ago the brother of William F. Buckley put on a public speaking seminar for professional people such as top business leaders, university deans and presidents, and high level government officials. You could well imagine the fee was not unsubstantial. One of the techniques he used was to have the participants practice delivering a speech in front of the group. Immediately in back of the speaker was a gong that was loudly rung if said speaker made extraneous or unnecessary sounds such as “ah”, ”uh”, “you know”, “very this”, very that”, or other such unnecessary folderol. Can you imagine the shock and chagrin the speaker would experience on hearing that sound in such close proximity to his ears? For the modern language butcher I would substitute his head for the gong and make sure the instrument striking it contained substantial heft. Don’t be queasy – sacre blu! Those dummies deserve that and more. How common is it for people to exclaim “to tell you the truth”; “I am going to be honest with you”; “I am not going to lie to you”; or some similar formulation? We have all heard this repeatedly so the answer must be it is common. There is no cogent reason for any honest person to have to insist they will tell whomever they are talking to that they will be truthful. On the other hand maybe Mark Twain was right when he said, “I think we never become really and genuinely our entire and honest selves until we are dead - and not then until we have been dead years and years. People ought to start dead, and they would be honest so much earlier.” And some people believe I am a cynic. There is one language affliction that adult Americans do not seem to suffer. That one is the nonstop insertion of the word ”like” in their conversations. This seems to be restricted to teens and tweens. I suppose it is a bit unfair to criticize too harshly these immature humans as their brains are largely just a hash of mush. I once tried to mock my granddaughter and her friend over their continued use of “like” in what passed as conversation, but I might as well have been talking to the wind. I was either disdainfully or unconsciously ignored. With that young generation it is difficult to discern their thought processes. Despite my adjuring Americans, especially trained journalists, authors, and public speakers, about not using such modifiers as very, almost, quite, extremely, etc. with the word “unique” in my 2007 essay, it is readily apparent that in the years since absolutely no one has paid any attention to what I wrote. Yet, and yet, is there a word more universally misused, at least in the United States, than unique? If something is unique it is one-of-a-kind and therefore no modification allowed; that is if the speaker wants to be considered a truly educated and literate individual who has more than a basic understanding of the American language. An unhappy note, as least to me, was a recent C-SPAN Book TV event where author and American Enterprise Institute president, Arthur Brooks was introduced by House Majority Leader, Eric Cantor (R-VA). It was a stellar introduction until Cantor said in closing, “and now without further ado….” which is an expression that was a cliché at least 60 years ago. I had heard it used a couple of other times on Book TV in the past few years, but it was with great disappointment that such an esteemed person as Eric Cantor would employ it. How sad. “The reservation was made for Bob and myself.” Have you ever heard that type of construction? If so, what is wrong with it? The answer is plenty. People who use such monstrosities simply do not have the knowledge or confidence in their use of the American language to properly express themselves. The rule is simple and even easier to apply if one’s ear is at all attuned to the American language. First, for clarity, let me state the rule. If it is the subject of the sentence then the proper pronoun is “I”, “she”, “he”, “we”, “they”, or “who”, but if it is the object, then it is “me”, “her “, him”, “us”, “them”, or “whom.” The subjective pronouns are actors and the objective pronouns are acted upon. Consider the opening sentence of this paragraph: “Reservation” is the subject so the correct pronoun should the objective one, “me.” Whether it is a compound subject or object, as in this case, makes no difference. No native American speaker would say, the reservation was made for “I” or “myself”; “me” would unfailingly be used. Usually the objective pronoun comes after the subject in a sentence, but not always. If I say, “My wife has a better memory than me” I may be factually accurate, but I would not be grammatically correct. A simple test would be to ask her to name all 50 of the state capitals. No, just joking. By completing the sentence “My wife has a better memory than I have” the correct, subjective pronoun becomes obvious. The “self” pronouns are neither subjects nor objects. They are reflexives (I hurt myself – one would not say “I hurt I” or “I hurt me”) or intensifiers (I myself witnessed the accident). Do you not agree that when so explained, the proper use of pronouns becomes, like the Egg of Columbus, as clear as the sun at mid- day?

THE DECLINING USA-63

This essay will be hard-hitting and pull no punches (it is not always wrong to use clichés, it is just that one should not overuse them and never include mixed metaphors) and it is not intended to please far left or far right partisans. While I have seldom, if ever, been labeled a Pollyanna, I certainly have not been accused of being, as the Germans say, “Weltschmerz” either (inherently pessimistic). Where then does that leave me? I would like to believe it is realism that drives me, leads me, and forms the basis for my belief system. And so I shall continue to adhere to this philosophy unless and until I am definitively proven wrong. My thesis is that the United States, as many people I know believe, is in decline and has been for several decades. For evidence of this I will cite historical precedent and current data, both absolute and comparative. I do not mean to imply that the situation of the USA is unique; hardly. The European countries are finally now beginning to pay for their massive decades long “welfare state” policies and “entitlement mentalities.” We, the United States, are following the same downward path to an inexorably declining economic and social fate. It is just that the Europeans have a head start on us; pas de proble’me, never fret, we are gaining on them (there is always room for a bit of ironic humor). What about Asia? There are arcane and supposedly sage commentators who posit that Asia, and in particular, China and India, will be the dominant economic and social entities in the future and not in that distant a future either. I would challenge them to read the book, “The Empire of Lies” by French economic journalist Guy Sorman which makes the case that China has more serious problems than we in the West can comprehend, which I would characterize as, to quote the Bard of Avon, “There are more things in heaven and earth, Horatio, than are dreamt of in your philosophy.” As far as India is concerned even though it has made tremendous economic gains in the last couple of decades, emblematic of it problems is that it is still a country that is welded together, such as it is, with an English language which was imposed on the Indians by the hated English during their colonial period. Down through the centuries there have been oracles, or those who fancied themselves such, who have predicted or chronicled the downfall of various empires or civilizations and have done so with regularity. There is a famous quote discovered years ago which lamented the degenerated state of people and particularly the youth, stating, in effect, that they were going to hell in a hand-basket at that time compared to the caliber of people who came before. This was in the 3rd century BC following the “Golden Age of Greece” which claimed such notables as Socrates, Pericles, Plato, Thucydides, and Sophocles. If the Greeks in the century following their Golden Age failed to measure up to previous standards what about contemporary Greeks? Is there a more entitlement driven, to the point of inciting violent street protests and demonstrations, and a more whining group of ingrates anywhere on earth now or in the past than this current crop of Greeks? The Greeks gave the world democracy and look at that sorry lot now. The 18th century English historian, Edward Gibbon, chronicled “The Decline and Fall of the Roman Empire” in his book and British author Bernard Lewis has written sympathetically and eloquently about the literary and scientific achievements of the Ottoman Empire as well as its decline, especially in his 2002 book “What Went Wrong.” Lewis shows how the Ottomans failed to modernize, thereby falling behind the West in all aspects of military, economic and social categories. At one time it was said, quite accurately, “The sun never sets upon the British Empire.” Those days have long since past. The British did not seem to ever recovery from the enervating effort of winning World War II while the much younger United States seemingly went from strength to strength in the post war period even given the pitfalls or pratfalls, depending upon how one wants to define them, of the Korean and Vietnam Wars. It is since then that the USA has begun to slip appreciably. One who appeared to disagree with that timetable was Philip Wylie who wrote a 1942 book titled “Generation of Vipers” which was a jeremiad against politicians, businessmen, and the public in general at that time. Fortunately for him he died in 1971. One could speculate that he would be absolutely apoplectic given the much worse state of American society today. Two primary, but not exclusive, sources of more current data for detailing the decline of the United States are the books “The BATTLE: How the Fight Between Free Enterprise and Big Government Will Shape America’s Future” by Arthur C. Brooks and “FDR Goes to War” by Burton W. Folsom & Anita Folsom. I would, that these and other data were less compelling in supporting my thesis, yet how can I arrive at any other conclusion than where the facts unmistakably lead? N’est-ce pas? The federal government is “growing like Topsy” relative to the private sector. According to Brooks in 2009 the federal government added 13,000, mostly high paying, jobs. In 2012 the average federal worker earns 73% more than the average private sector worker (Does any observant person really believe that, on average, a public sector worker is more productive and efficient than a private sector worker?). From 2001 - 2008 (if I am not mistaken Bush The Younger was president) the Dept. of Energy grew by 54%. Medicare Part D (prescription drugs for seniors) became the largest medical entitlement program in history. The Congressional Budget Office (CBO) estimated that its cost to taxpayers between 2004 -2013 would be $593 billion. As president of these United States the gallant Bush signed spending bills that contained more than 55,000 earmarks without a single veto. It was the aforementioned Bush who offered up the notorious Troubled Asset Relief Program (TARP) with a price tag of $700 billion and bailed out General Motors and Chrysler with $17.4 billion. The bailouts of the auto companies may or may not have been sound moves, but that hardly squares with the idea that Republicans are always frugal while Democrats are profligate. By 1997 (the Clinton administration) Fannie Mae was buying sub-prime home loans secured with nothing more than a 3% down payment. Four years later (Bush admin.) it was buying mortgages with no down payment; yet congress pushed for making even more risky loans. New government mandates required Fannie Mae and Freddie Mac to increase their low and moderate loans to at least 55% of their mortgage purchases. From 2001 – 2006 subprime loans rose from 7% to nearly 19% of all mortgages. Two of the leading lights in congress who led this travesty of Freddie and Fannie taking on these risky mortgages which turned unto a worldwide financial disaster were the egregious Sen. Chris Dodd of Connecticut and the termagant and labile Rep. Barney Frank of Massachusetts. Both were too mendacious and dishonorable to accept any blame whatsoever for the debacle. Those two jokers were not known for their comity or comedy for that matter, especially the cranky Frank. True, the Wall Street greed-heads took advantage of the situation to profit mightily from that whole sorry business, yet it was the offal-smelling politicians who caused it. The increase in the national debt was $4.9 trillion (call it $5 trillion) during the 8 years of the George W. Bush administration, going from approx. $5 ½ trillion to $10 ½ trillion. During the 3 ¼ years of the Obama administration the national debt increased by another $4.9 trilllion, culminating in a total national debt of more than $15 ½ trillion to date. To be fair, the economic conditions of the country were much more dire when Obama became president than when Bush did. However, also to be accurate, the Obama administration, except for the American Recovery & Reinvestment Act of $787 billion (stimulus package) signed into law by President Obama on Feb. 9, 2009, which is widely thought to have been largely wasteful and ineffective in ameliorating the financial woes of the nation, did not put the economic recovery of the country as its first priority. Everyone remembers that Obama’s Chief-of-Staff, Rahm Emanuel, said, “You never want a serious crisis to go to waste.” So President Obama and the Democrats in congress imposed what has turned out to be an unpopular healthcare reform, comprising 1/6 of the USA economy, on the American public as the signature legislation in the first two years of the Obama administration. No sensible person denies that a major change is needed in our healthcare system to keep it from imploding financially, yet to turn complete control of the healthcare system in this country over to the federal government is a proven recipe for inefficiency, medical rationing, and financial disaster. Respected economist Abba P. Lerner wrote a primer on economics titled “Everybody’s Business “ in 1961. In it he stated the national debt was not a problem in that “we owe it to ourselves.” He was correct in that the national debt was a fraction of what it is now, some $290 billion, and by 1970 just 5% of our debt was foreign held. By 1990 19% of our debt was foreign held and by 2011 this had ballooned to 46%. These last statistics came from Rep. Paul Ryan (R-WI) who is chairman of the important House Committee on the Budget. Ryan, 42 years old, is one of only a few people in congress who are truly looking out for the good of the whole country in trying to achieve fiscal reforms that will keep us from imploding. Most of the congress people, both Democrat and Republican, are not worth a rat’s posterior. Ryan also came up with the statistics that in the last 40 years the federal budget was approximately 20% of the economy. Given the growth of the government it is project that by mid-century this figure will be about 40% and by the end of the century close to 80%. Currently $0.40 of each dollar of the federal budget is borrowed. It certainly is not irrational to forecast that, unless drastic changes are made, on its current trend this country will become a collapsed financial and social society. There have been 47 defined depressions or recessions in the United States since 1790 and the average length of these economic downturns since the mid 1850’s is about 17 months. Why then is the current recession lasting so long? I would postulate it is the same reason that the Great Depression of the 1930’s lasted so long. What do they have in common? Both were punctuated by massive federal government intervention. First President Hoover then President Roosevelt, with the best of intentions (remember the old saw about what the Road to Hell is paved with), used the federal government to attempt to stimulate and control the economy. It is an eerily apropos example of first a Republican President then a Democrat President employing the federal government to “fix” the current economy as was done in the 1930’s. What comes to my mind are the words of philosopher George Santayana who said, “Those who can not remember the past are condemned to repeat it.” Of course these leaders have tremendous egos (or they would not have been driven to achieve the positions they held), which force then to believe they will succeed where other have failed. In addition to these four presidents there is a prime example of former Soviet Union leader Mikhail Sergeyevich Gorbachev who was convinced he could reform Soviet communism and make it into a viable and dynamic economic and social system. Communism had never worked anywhere at anytime in history and it eventually failed spectacularly in the case of the Soviet Union. What a surprise. President Obama has made clear that he favors a “redistributive fairness” mode of income, that is to say, leveling the amount of money Americans can keep simply because that would be “fair” rather, as Arthur Brooks calls it, a “meritocracy fairness” form of income – allowing people to keep most of what they earn based upon the merit of their efforts. What is “fair” as to the amount of income taxes that people pay is, as the saying goes, in the eye of the beholder. President Obama repeatedly stated that higher income people should pay even more in income taxes than they do now. But what is the breakdown of what people pay as a function of their income? Here it is: The top 1% of earners (1.4 million people) bring in 17% of the income, but pay 35% of federal income taxes; the top 5% of earners bring in 37% of the income, but pay 60% of federal income taxes; the bottom 50% earn 12% of the income, but pay 3% of federal income taxes. Further, this disparity is becoming more pronounced with time. From 1986 to 2006 the proportion of taxes that the top 1% of earners paid grew from circa 26% to 35%. In 2008 presidential candidate Barack Obama promised to raise taxes on individuals earning more than $200,000 per year and on couples earning more than $250,000. His rational was that we needed “a sense of balance and fairness in our tax code.” He has repeated this consistently every since. As of 2012 the bottom 50% of earners will soon, if not already, not only not pay federal income tax, but will be net takers from the government in the form of the Income Tax Credit, food stamps, Medicaid, and the school lunch program among other government largesse. That President Obama wants to fundamentally change this country into a more European type quasi-socialistic society cannot be gainsaid. However, conservatives who believe that all will be well if Obama is defeated in his re-election bid this fall and Republicans keep control of the House and regain control of the Senate are themselves a bit deluded. History is not on their side – such an outcome would doubtlessly slow, but not stop our inexorable descent into a financial and social abyss. This attitude by conservatives would be risible were it not so specious. As far as incontrovertible historical data to bolster my thesis that it is politicians in general, not just Democrats, who have created a too big, too intrusive, too powerful, too expensive, and an overweening government are concerned, the following study from Arthur Brooks is compelling: In 1913 the ratio of total taxes - local, state, and national, to the federal Gross Domestic Product (GDP) was 8%; in 1940 after the New Deal policies of FDR it was 15%; in 1980 it had reached 30%; in 2000 it was 33%; in 2009 it was 43%; and is projected to be 50% by 2038. During this period as taxes increased as a percentage of GDP there were local governments, state legislatures, and congresses which were alternately dominated by Democrats, by Republicans, and sometimes basically evenly split and there were 9 Republican presidents along with 8 Democrat presidents between 1913 and now. How else can one rationally interpret these data other than the way I have? I would welcome hearing dissenting opinions, just remember, to use an American Civil War expression, an opinion unsupported by facts is not worth “a pinch of owl’s dung.”

A PHILOSOPHICAL SOCIAL & ECONOMIC ESSAY-62

This essay is a philosophical one based on hard data concerning economic and social conditions in the USA. It contrasts the past and present and projects the near future path the country is on using current trends. While the trends are troubling, the situation is not completely hopeless. There are difficult choices that voters of this country will have to make in order to preserve and sustain the economic prosperity and freedom the vast majority has hitherto enjoyed.

The reader will discover this is not a partisan critique or screed. Fault, backed up by incontrovertible data, is shared by both Democrat and Republican politicos, remembering that in a democracy citizens are ultimately responsible for their own fate. This does not mean that Republicans and Democrats, liberals and conservatives, are equally to blame for our current and pending problems, just that all can be cited as not doing what is right and necessary for the good of the country.

I have used several sources for the data I am quoting to bolster my arguments with the latest being Arthur C. Brooks of the American Enterprise Institute.

In finally trying to address the problems of the current and future projected spiraling national debt and the stubbornly high unemployment and under employment rates, President Obama lectures incessantly about “fairness” in the current federal tax code. His solution is to raise federal income taxes on the “rich” as a basic matter of “fairness.” But just what is “fairness?”

There are basically two ways to define “fairness” in an economic sense where there is mal-distribution of income. One is “redistributive fairness” which President Obama and other liberals in and out of congress favor. The idea is through taxes or financial favoritism to take from wealthier Americans and give to less wealthy Americans and thereby to even out, to some degree, the income people have regardless of whether they have earned it.

The other definition is “meritocracy fairness” which holds that people should receive monetary compensation based on hard work, ingenuity, and innovation – i.e. the money that people make should come as a result of merit.

In his 2010 book The Battle: The Fight Between Free Enterprise and Big Government Will Shape America’s Future, Arthur Brooks states that inequality is “fair” if it is based on merit and equality would be “unfair” if what someone has earned on merit is redistributed to others who have not earned it. There should be penalties, not rewards, for corruption, stupidity, laziness, and incompetence. Where does the public come down in this? According to a comprehensive survey, 89% of Americans believe in “meritocracy fairness” and only 11% opt for “redistributive fairness.” People in the past, our ancestors, came to the United States for economic opportunity, not for redistribution of wealth.

What does a merit or opportunity society entail? It simply means the chance to move up the economic ladder. From the years 2001 to 2007 44% of the people in the bottom 20 percentile of the income spectrum moved up to a higher income group. However, this is, to use a cliché, a double-edged sword. In the true spirit of competition in this same time period 34% of the people in the top 20 percentile fell out of that group. C’est la vie.

Even considering the Obama, et al., redistributive philosophy what is the federal income tax breakdown per income group? The top 0.1% of income households pays 16½% of all federal income tax; the top 5% pays 59% (in 1980 they paid 35% - so much for the idea that the rich are paying less of the tax burden than formerly); the top 20% pays 89%. The next 20 percentile pays 15%; the following 20 percentile 4.0%; the one following that 20 percentile -4.3%; and the last 20 percentile pays -3.8%. On average the last combined 40 percentile groups receive more money from the IRS than they paid. Adding it up, the bottom 80 percentile income groups pays 11% of the tax burden which leaves the top 20% paying 89% of federal income taxes.

Between 47% and 51% (depending upon what year is being considered and who made the estimate) of families in this country paid no federal income tax. When questioned, 2/3 of these people say that everyone should pay something in income taxes. There is an estimated $1,000,000,000,000 per year in deductions, exceptions, and credits sheltered from federal income taxes that benefit people in all income levels.

Another way of stating the federal income tax burden is a breakdown of the amount of income levels: In 2009 1470 households with incomes of $1,000,000 or more paid no federal income taxes owing to tax deductions, shelters, and tax dodges. This represented 0.6% of all 237,000 households with incomes of $1,000,000 or more.

People with $1,000,000 or more of income paid 29% of the federal tax burden; those in the $50,000 - $75,000 income level paid 15% of federal income taxes; $40,000 - $50,000 paid 12½%; and $20,000 - $30,000 paid 5.7%.

What about business and capital gain taxes? The business tax in the USA is 35%, which is the highest in the industrialized world and puts this country at a competitive disadvantage. The president and congress need to get off their collective duffs and lighten this unnecessary weight to our global competitiveness. And the capital gains tax? In the USA it is 15% (on a capital asset held for at least one year). For other countries it is all over the place: Japan 20%; UK 18%; Switzerland 0%; Brazil 15%; Denmark & Finland 28%; Egypt 0%; France 20%; Germany 25% (before 2001 it was 0%); Israel 20%; Italy 12 1/5%; and Netherlands 0%. In many other countries these capital gain taxes are either comingled with other taxes or are dependent upon the capital gains amount. Should our capital gain tax be lower, higher, or the same? As far as I can tell economists are divided on that question. It might help our current economic recession if the rate were at least temporarily lowered a bit.
How about payroll taxes you ask? It is true that Social Security and Medicare taxes are regressive, however these are not the same as federal income taxes. Despite their financial problems one has an expectation of receiving benefits when one retires based on what one pays into these programs. There is no expectation of anyone receiving benefits from federal income taxes commensurate with what one pays.

How has the size of government varied over the years in the United States? In 1913 federal, state, and local government expenditures comprised 8% of our Gross Domestic Product (GDP); in1940 even after the massive New Deal federal spending of the FDR administration it was 15%; in 1980 at the start of the Ronald Reagan administration it was 30%; in 1988 at the end of his presidential term it was 32%; in 2008 at the end of the Geo. W. Bush administration it was 33% and in 2011 it is 36%. At this rate of growth the current administration estimates that by 2038 it will be 50%. In the interval from 1913 to 2011 there have been various periods where Republicans or Democrats have controlled either one or both houses of congress. And during this time there have been eight Democrat presidents and 9 Republican presidents.

An argument might be made that government was too small 100, 80, or even 60 years ago to supply essential services to its citizens which are properly the purvey of the federal government and to be vigilant and protective of people’s rights against business interests, big and small. If that were ever true it certainly is not now. The question today and in the future is who is going to protect the public and preserve basic freedoms from what has become a too big, too intrusive, and overweening federal government?

In 1970 our national debt was 40% of GDP; in 2011 it is 100%; and the Congressional Budget Office (CBO) estimates that by 2030 it will be 200%. These trends are clearly unsustainable – we are on what Friedrich A. Hayek titled his 1944 economics book, The Road to Serfdom.

Don’t despair too much because there are some rational reasons for hope. As quoted by Arthur Brooks, the Virginia Declaration of Rights was written by Founding Father, George Mason, 30 days before the U.S. Declaration of Independence and contained the phrase, “Unalienable Rights of Life, Liberty, and the Means of Acquiring and Possessing Property.” The writers of our Declaration of Independence copied that phrase, but changed it to “…they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty, and the Pursuit of Happiness…” because they believed there should be a moral rather than a material emphasis to the Declaration of Independence.

According to the Pew Research Center 76% of Americans favor free enterprise versus a more socialistic state and 69% want lower taxes and less government even if it means fewer services for themselves.

The Tea Party movement came into existence because Republican conservatives, independents, and moderate Democrats became alarmed that the country was on a road to an unsustainable and crippling national debt and a too big, too expense, and overly intrusive national government. The midterm 2010 elections marked these concerns with unmistaken finality. In the U.S. House of Representatives 63 seats changed from Democrat to Republican; in the state legislatures 680 seats changed from Democrat to Republican; and the governorships went from 23 being Republican to 29. Only an imaginary guru can know what will happen in 2012, however the signs are that Republicans will make additional gains at the expense of Democrats. If that eventuates does this means that the country will be out of the ditch and on the proper road as the image that politicians are so wont to put forth? Judging by the historical record, only if Republicans have at long last learned what the majority of rational voters have been demanding in the past couple of years. If not, then those miscreant politicos will be thrown out of office in turn.

Is wealth really what makes people happy? The correct answer is a resounding no. Really? Yes. Consider people who win a substantial lottery. They all put up their money in the hope (probabilistically insane) of winning the jackpot. Yet survey after survey finds that these same people by large majorities are less happy after they won than before for a variety of reasons. Again surveys reveal that people in relative wealthy countries are not happier than people in poorer countries so long as they are not starving and get a reasonable amount of healthcare. In 1972 31% of Americans said they were happy. Today still 31% of Americans say they are happy despite having, on average, 150% more purchasing power.

What then makes people happy? It is earned success. The money made from earned success is enjoyed, but it is the knowledge that one’s success was earned on merit that brings satisfaction and happiness to people. This should be a cautionary tale for those who want to take from those who produce and give to those who have not earned it.

I will close with the following comment: Societies that don’t believe in meritocracy and individual opportunity are motivated by envy and spite – this is characteristic of the hard left in America and elsewhere around the world.

THE BURGEONING NATIONAL DEBT-61

Given the burgeoning national debt which has now technically exceeded the $14.3 trillion debt limit mandated by congress I would like to ask the reader (1.) if you believe this country is on an unsustainable trajectory where the Obama administration projects the National Debt will be just under $21 trillion by 2016 if there are no changes in government policies and (2.) if the first answer is yes, then what should be done.

A few background data follow:

By mid 2011 the National Debt (ND) is now $14 ½ trillion and the Gross Domestic Product (GDP) is $14.7 trillion. By comparison the ND in 1946, at the end of WWII, was $269 billion ($3 trillion in inflation adjusted 2011 dollars) with a GDP of $222 billion ($2.5 trillion). In 1970, the first time the GDP reached a $ trillion, the figures were ND $371 billion ($2.1 trillion) and GDP $1.04 trillion ($5.8 trillion). In 2000 these figures were ND $5.7 trillion ($7.1 trillion) and GDP $9.8 trillion ($12.3 trillion).

Therefore for the first time since the understandably large spending by the federal government during WWII (after all the country was in a fight for survival) the ND will soon overtake the county’s GDP. Everyone, politician and layman alike, agrees that these large national deficits cannot continue to be piled up with the possible exception of hard left politicos such as Harry Reid, Nancy Pelosi, and other liberal loons in and out of congress. President Obama says he recognizes that the country cannot continue with these huge deficits, yet his actions, so far, belie his words. As I stated, the current National Debt is about $14 ½ trillion with the federal government currently running up a $4 ½ billion per day ($1.64 trillion per year) increase in the debt. Fortunately there is a brewing revolt of sensible Democrats in both the House and Senate, and not just the ones up for reelection in 2012, who are opting for meaningful federal budget cuts along with the Republicans.

How did this country get into this frightful financial mess? There is bipartisan blame and it will take a bipartisan solution to correct the problem. The George W. Bush administration increased the nation’s debt from approximately $5 ½ trillion to $10 ½ trillion in eight years. The two wars, Iraq and Afghanistan, the prescription drug program, and the No Child Left Behind initiative, all unfunded, were major causes. This damn “Nation building” effort under taken by Bush in Iraq and Afghanistan was a naïve policy destine to fail as any knowledgeable student of history could have surmised. I do not impugn the motives of President Bush. I believe the evidence shows that he was sincere and honorable in his actions. His intentions were good, but everyone knows what the road to hell is paved with.

How about the policies of President Obama where an approximate additional $4 trillion of debt has been run up in just 2 ½ years of his administration? His then chief-of-staff, Rahm Emanuel, infamously said “You never want a serious crisis to go to waste.” so after the colossal waste of the almost $1 trillion government stimulus package the next major item on the Obama and Democrat leadership in congress agenda was the health care overhaul representing 1/6 of the American economy. With no bipartisan support this increasingly unpopular legislation was rammed through congress. A sensible approach would have been to concentrate on improving the American economy and lowering unemployment.

What policies do I advocate? The following are a good start: Concentrate on lowering government spending in a major way rather than raising federal taxes (more on that later). It is axiomatic that most government spending tends to crowd out private spending thereby, on balance, increasing, not decreasing unemployment. Big Government advocates will never admit this fact even with the prime example of the greatly expanded federal government spending during the Great Depression of the 1930’s (first by President Hoover, then even more so by President Roosevelt) that contributed to the most protracted and severe economic downturn in American history.

Where the federal government can make positive contributions towards encouraging a robust economy is by not trying to overregulate private enterprise and by not imposing onerous individual and business taxes.

What am I referring to in particular? In West Texas there is an attempt by the EPA to curtail the exploration and production of oil & natural gas in order to save the habitat of one particular lizard that most people in that area have never even seen. The corporate tax rate is currently 35% in the United States. This is the highest rate in the industrialized world. There are myriad examples of these types of anti-business policies by congress and federal agencies. These noxious practices did not originate with the Obama administration or when Democrats gained control of congress, but they have been grossly expanded since 2008. In order to create a healthier economy the opposite should have occurred.

There is another positive aspect to downsizing government. There is and always has been waste, fraud, duplication, and inefficiencies in government; much more so than in the private sector of the economy where there is a self-correcting mechanism such that companies that are badly run or do not adapt to a changing business climate tend to go bankrupt. No such force exists with government agencies that always seem to grow like “Topsy” whether they are efficient or needed. Even given that waste, fraud, duplication, and inefficiencies are not palliated, these problems should, seemingly apodictically, be automatically reduced with significant shrinkage of government.

Apart from these decreases in government spending there should be $billions in savings for the government from better policing of their ubiquitous spending programs. For example, Medicare expenditures in 2010 were $528 billion with the Reuters News Agency estimating that $200 billion was due to fraud; the CBS “60 Minutes” TV program put this figure at $60 billion. New York State leads the nation in Medicaid expenditures with $44.5 billion spent in 2005 of which 40% or $18 billion was attributed to fraud or waste.

How about raising taxes to help lower the national debt? I previously suggested that our too high corporate tax rate has resulted in job loses by encouraging companies to transfer to other countries. The individual income tax rate is already heavily tilted towards upper income families such that, according to the latest data from the IRS, 51% of the lowest income families pay no federal income taxes. In fact, many of these families are paid by the federal and state governments (read tax payers) in the forms of the Income Tax Credit, food stamps (one in 7 families in the USA are currently receiving them), subsidies to dependent mothers, and other welfare programs. It is an unhealthy situation when half the population does not contribute to this major part of the financial maintenance of their country. There seems no better way to create a dependent and entitlement segment of the population with their temptation to encourage or at least not object to taxes being raised on everyone else. These people may fall into the trap of believing they would not be affected because they would still not pay taxes, but they would be affected in lost job opportunities.

Will congress and the president finally address this colossal national debt problem before the country fall into a second rate or worst financial and social status? The battle has been joined, but a definitive outcome will not be decided before the 2012 presidential and congressional elections by the voters of this still great country.

FDR & LBJ-60

I know that many people (mostly Democrats) believe Franklin Delano Roosevelt was a great president and they also believe that Lyndon Baines Johnson initiated or pushed many good government programs for the country. I may not dissuade them, but let me present a contrary view anyway, supported by facts, not just opinions and assertions.

First for the mensuration of FDR. Whenever government spends money there are bound to be recipients who benefit. Important questions to ask are: at the expense of whom and would there have been greater good done if the private sector of the economy had been allowed to operate in those areas instead of government? The TVA (Tennessee Valley Authority), initiated under FDR, brought electricity to many rural homes and businesses in that area – a good thing. The negative aspect is that it was done at the expense of other taxpayers who did not benefit at all. Private utility companies would have eventually provided electricity to that region as they did to other rural areas so it was just a matter of time for those people being electrified and how efficiently it was done.

The Great Depression was one of many depressions or recessions in the history of United States. There have been 47 defined recessions or depressions in the USA since 1790. The difference between a depression and recession is not well defined, but is simply its severity. An old joke is: A recession is when your neighbor loses his job; a depression is when you lose yours. The Great Depression of the 1930’s was the longest in American history. There has to be a reason for that, so the question is why. Never in previous economic downturns has the federal government intruded into the private economy nearly to the degree that, first President Hoover, then President Roosevelt did even much more so. There is a perception by some people that WWII brought us out of the depression. I do not subscribe to that position; it is too facile. What the war did was to effectively create full employment. When there is rationing or a scarcity of basic commodities such as autos, gasoline, tires, sugar, clothing, shoes, and many other items, in my opinion, that is hardly an economic boom one would expect coming out of an economic depression. After the war the pent up demand and money people had saved did cause an economic boom. When new automobiles started being sold, such was the demand that for a while customers were paying more than the auto companies suggested retail price. I remember one slogan from the period immediately following the war was “beer in cans will soon be back”, although for the life of me, why beer in cans was better than beer in bottles left me, and still leaves me, perplexed.

From 1934 to 1940 the median annual unemployment rate in the United States was 17.2%. At no point during the 1930’s did unemployment go below 14%. Year by year the unemployment rates were: 1931,15.9%; 1932, 23.6%; 1933, 24.9%; 1934, 21.7%; 1935, 20.1%; 1936, 16.9%; 1937, 14.3%; 1938, 19.0%; and 1939, 17.2%. Our current rate of unemployment seems a bit benign by comparison. While there was episodic recovery between 1933 and 1937, the 1937 peak was lower than the previous peak in 1929, a highly unusual occurrence. Progress had and has been the norm. In addition, the 1937 peak was followed by a crash. As economics Nobel laureate Milton Freidman observed, this was “the only occasion in our record when one deep recession was followed immediately on the heels of another.”

Owing to this intensifying of the recession in 1937 the stock market went into a nosedive and by November 1937 unemployment had soared to 11 million with another 3 million working only part time (the population of the country was approx. 130 million). Statistics showed that the United States was lagging far behind other countries in recovering from the depression. American national income in 1937 was 86% of the 1929 high water mark while Great Britain’s was 124%. Japan’s employment figure was 75% above the 1929 number. Chile, Sweden, and Australia had economic growth rates in the range of 20% compared to the United States’ dismal -7%.

During the Hoover administration congress passed the Smoot-Hawley Tariff Act – a bill that more accurately could be called the Smoot-Hawley-Hoover Act because Hoover not only signed it, but supported it all the way through congress. So when the United States imposed tariffs on foreign imported goods, surprise, guess what? Go to the head of the class, you are correct; these other countries retaliated by imposing tariffs on imported American goods thereby compounding the worldwide depression. While FDR cannot be blamed for passing this destructive piece of legislation he did nothing to attempt to repeal it.

What FDR did was triple taxes during the Great Depression, from $1.6 billion (when a $ billion was more than chump change) in 1933 to $5.3 billion in 1940. Federal taxes as a percentage of the gross domestic product (GDP) jumped from 3.5% in 1933 to 6.9% in 1940. FDR increased the tax burden with higher personnel income taxes, higher corporate income taxes, higher excise taxes, higher estate taxes, and higher gift taxes. He introduced the undistributed profits tax. Ordinary people were hit with higher liquor taxes and Social Security payroll taxes. All these taxes meant there was less capital for businesses to create jobs, and people had less money in their pockets.

At this point the well-known admonition of philosopher George Santayana (1863-1952) comes to mind: “Those who do not know history are condemned to repeat its mistakes.” Despite the deleterious effect of raising taxes during the Great Depression, Obama and the Democrat leadership in congress wanted to raise taxes in this current recession. Of course they only wanted to raise taxes on the wealthy; that is to say on the people who create jobs, so perhaps we can excuse them – not.

Lyndon Baines Johnson won a Democrat primary election (which was tantamount to the general election in Texas at that time) as a United States Senator in 1948 by a margin of 87 votes over former Texas Governor Coke Stevenson. It has been widely believed since and documented by Democrat leaning LBJ biographers Robert Caro and Robert Dallek that there were more than 200 fraudulent votes, and in some estimates double that given to Johnson. For this extremely slim and questionable margin of victory, Johnson acquired the moniker ‘Landslide Lyndon’.

The Gulf of Tonkin Resolution was passed by congress in 1964 to allow President Johnson to carry the Vietnam War to North Vietnam. Even Johnson himself later admitted that the circumstance of the military naval incident with North Vietnam was misrepresented to congress at the time. Do you get the idea that LBJ was far more dishonest than the average American politician?

To his credit President Johnson pushed through the Civil Rights Act in 1964 and the Voting Rights Act in 1965, both initiatives of President Kennedy, with the help of Northern Republicans – many of Johnson’s fellow Southern Democrats opposed him on these pieces of legislation.

So much for the good legislation Johnson passed. How about the rest? His overarching anti-poverty programs such as the Food Stamp Act and Revenue Act in 1964 and the Economic Opportunity Act, Head Start Act, and the Vista program in 1965 were all intended to eliminate poverty in America. Over the decades these programs have cost $ trillions, but is poverty a condition of the past? Not according to official statistics and the definition of poverty in this country. All of the federal aid to single mothers has done one thing – it has created more of them. Bill Bennett did a study of single motherhood in the 1960’s and declared there was a crisis in the big inter-cities. That rate of single mothers in now similar to the average of all populations in this country with the rate in the big inter-cities approaching 90%. It is the old, old story of the best of intentions being negated by unintended consequences.

And speaking of unintended consequences, let us consider one of FDR’s social programs, Social Security (created in 1935) and two of LBJ’s, Medicare and Medicaid (created in 1965). One could argue that millions of Americans (and some illegal immigrants) have benefited from these programs. However, let us consider what are the biggest threats to the financial wellbeing of this country today. Yes indeed, these are the ever-increasing unfunded liabilities of those three federal programs. When these benevolent programs were initiated it seems nobody anticipated the overwhelming financial burden that would accrue for the country in the future. There is considerable debate over how big the unfunded liabilities of Social Security, Medicare, and Medicaid are and over what time period, but all agree that the number is in the 10’s of $trillions. Medicare and Medicaid are creating more than 5 times the unfunded liabilities than Social Security so they are the bigger problem. According to the nonpartisan CBO (Congressional Budget Office) if these three programs continuing growing 2.5% greater than the GDP then they will consume nearly the entire federal budget by 2050!

There are now only two choices: (1) significantly reduce the payouts and increase the pay-ins of the participants in these programs or, (2) let the country collapse economically and socially. Anyone game for that? It is a truism that once entitlement programs are given curtailment of the benefits are greatly resisted. But done it must be, whether by so called “means testing” or across the board cuts in payouts, or reduced or withheld services, or all of these. The solution will not be pleasant or welcomed by the public. By all means let us give thanks to FDR and LBJ for the unavoidable coming pain.

If anyone either agrees or disagrees with my thesis in this essay I would welcome hearing it. Just remember the oft quoted words of the late Democrat U.S. Senator from New York, Daniel Patrick Moynihan (1927-2003), “Everyone is entitled to their own opinion, but not their own facts.”