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.”

UNITED STATES PRESIDENTS IN MY LIFETIME-59

The following is a thumbnail sketch of my evaluations of all the U.S. presidents in my lifetime. I trust that any reasonable reader will render the conclusion that my opinions of the individual presidents are neither overly censorious nor too encomiastic:

Franklin Delano Roosevelt (1933-1945) is widely credited by the public for ending the Great Depression with his greatly expanded federal spending by creating myriad of what were called “alphabet soup” agencies and programs (SEC, WLRB, TVA, NLRB, FHA, HOLC, PWA, CCC, LWA, WPA, NRA, AAA, USHA, etc.). Historians are increasingly coming to the conclusion that not only did this pythonically increased federal spending, regulation, and intrusion into the private sector (again contrary to population perception, this big government answer to the depression was started by Herbert Hoover) did not help to ameliorate the economic depression, but prolonged and deepened it. A recent historian of this persuasion is Amity Shlaes, a self described liberal, with her 2008 book, The Forgotten Man.

I rate the wartime Roosevelt differently. Leading up to WW II the country was in an isolationist mood, yet Roosevelt recognized that the totalitarian and expansionist regimes of Nazi Germany and Imperial Japan had to be confronted if the democratic nations were to preserve their freedoms. Roosevelt did as much as domestic politics would allow to aid Great Britain in its war with Germany. And once the USA got into the war, Roosevelt was an effective war time leader even if he trusted the Soviet Union, then an ally against Germany, a bit too much. By the summer of 1944 Roosevelt had serious heart disease and should not have run for a 4th term. After all, by that time the outcome of the 2nd World War was not really in doubt so he could have allowed another Democrat candidate to run for the presidency knowing that the war was essentially won. However, the downside was the likely outcome that the country would have been deprived of the services of Harry Truman as president (for much more on Roosevelt see my blog essay #23 titled FDR).

Harry S. Truman (1945-1953) left office with about a 25% approval rate owing mostly to the stalemated Korean War. Over the subsequent decades his rating has risen until now he is generally considered one of the best presidents of the 20th century. Truman’s recognition of the threat to the West from the Soviet Union and his Marshall Plan massive aid to Western Europe as well as his assistance to Greece in successfully opposing the Communists attempted takeover of that country have contributed substantially to his increased stature. Truman is now given more credit than formerly for being an honest plain speaking politician who said what he meant and meant what he said.

Dwight David Eisenhower (1953-1961) People really did “like Ike” not only in this country, but generally around the world, especially in Western Europe because of his position as Allied Commander in Europe during WWII. It has been suggested that his administration was a calm and tranquil one, which was exactly what the American people wanted after the dislocation and frenetic activity of WWII and the Korean War. Wartime taxes, especially individual income taxes, were kept too high during the Eisenhower years, a condition which would be corrected in the next administration. At the finish of his administration Eisenhower issued a valid warning about the “industrial – military complex.” Overall I would rate the Eisenhower administration a success, but not a particularly distinguished one.

John Fitzgerald Kennedy (1961-1963), the first U.S. president born in the 20th century, was one of the least experienced (although as we shall see experience is a necessary, but not sufficient condition for a completely successful presidency), certainly of the more modern presidents. The Bay of Pigs fiasco was a near disaster; then there were the comedic plans and even attempts to assassinate Fidel Castro, the dictator of Cuba. Also early in his administration Kennedy had a summit meeting in Vienna, Austria with the leader of the Soviet Union, Nikita Khrushchev, who came away with the impression that Kennedy was weak which led him to make the irrational decision to put missiles in Cuba capable of launching nukes. Kennedy faced down the Soviets, forcing them to remove the missiles. For that reckless action it was Khrushchev who was replaced by the Politburo and sent into involuntary retirement.

Kennedy was a fast learner and recovered quickly after this shaky start of his administration. He pushed for much needed civil rights legislation for minorities, especially blacks, cut the high tax rates, and through his brother, Robert, who he had appointed Attorney General (JFK jokingly said to give his brother legal experience), took on organized crime with a good deal of success. JFK’s charisma (as well as Jackie’s) not only made him increasingly popular in this country, but also around the world, thereby enhancing the image and prestige of the United States. Despite his personal peccadilloes (not unlike Bill Clinton) I would rate Kennedy as a good president who might have become a great one had he not been so tragically assassinated by that loser and cretin, Lee Harvey Oswald.

Lyndon Baines Johnson (1963-1969) was an archetypal political hack. The Vietnam War did his presidency in, but not before he had damaged this country socially, economically, and in worldwide prestige. The sooner he is forgotten the better.

Richard Milhous Nixon (1969-1974). If he had not resigned in disgrace he would have been the only U.S. president to have been impeached and convicted – the votes were there in the House and the Senate. Nixon said that the American people had a right to know if their president was a crook and he said he was not a crook, which proved that he was a liar as well as a crook.

Gerald Rudolph Ford (1974-1977) was the only president of the USA not elected president or vice-president. Mediocrity seemed to be the watchword of his administration. One plus was that he was an innocuous person who was able to heal some of the ill will, which was extant in the country after the disaster of Richard Nixon.

James Earl Carter, jr. (1977-1981). Incredibly Jimmy Carter recently said that he considered his presidential administration a success based upon the amount of legislation he was able to get passed by Congress. Few Americans agree nor agreed at the time of his attempted reelected. Carter won only 6 of the 50 states and 49 electoral votes to 44 states and 489 electoral votes for Ronald Reagan in the election of 1980.

Not every position or decision Carter took was wrong headed. He led the effort to give sovereignty of the Panama Canal to Panama, which Reagan opposed. And the treaty even gave the United States government the right to keep the canal open, by force if necessary. Thus in turning over the canal to Panama one more contretemps with Latin America was avoided. Carter brokered an important peace agreement between Egypt and Israel that has stood up to this day, and for which he should have been given, but was not, the Nobel Peace Prize similar to President Theodore Roosevelt being awarded the Nobel Peace Prize in 1906 for his part in brokering peace in the Russo-Japanese War.

Carter’s being awarded the Nobel Peace Prize by the Norwegian Nobel Peace Price Committee during the George W. Bush presidency was more a repudiation of Bush and embracing of Carter because of his criticism of Bush than it was anything that Carter had accomplished in promoting peace around the world. In fact Carter has made it a habit of publically criticizing Republican presidents after he left office. This breaks with the tradition of former presidents not speaking ill of their successors and shows a distinct lack of character by Carter. Whatever faults one finds with Bush I & II, and that will be evident in what I have written further on, both of them had the class not to publically uttered any criticism of their successors.

Carter’s answer to the high inflationary conditions during his administration and accompanying high energy costs and shortages was to advise people to put on sweaters and to declare that the country was in a deep malaise. That was not what people wanted to hear or accepted. Carter’s inept and inherent weakness in responding to the Iran Hostage Crisis was the final dénouement in his defeat for reelection in 1980.

Ronald Wilson Reagan (1981-1989), similar to Barack Obama, inherited a horrible economic condition when he took office. Unlike Obama, however, Reagan reacted in an effective way to lead the country back to prosperity such that he was reelected by one of largest mandates in history, winning 49 out of 50 states and 525 electoral votes to one state and 13 electoral votes for Walter Mondale.

Reagan made people feel good about themselves and their economic future and proud of their country after the dour economic outlook and loss of standing in the in the world following the Nixon debacle and uncertainty of the Ford and, especially, Carter administrations.

One might argue, as I do, that Reagan convinced congress to spend too much money rebuilding our military, but what is abundantly clear is that the attempt to keep up with the United States spending on military preparedness, contributed mightily to the Soviet Union dissolution. Some credit also has to go to the Soviet leader and reformer, Mikhail Gorbachev, but clearly not all of the credit as the news media in the United States and elsewhere were wont to do.

I rate Reagan the greatest president of the 20th century. It is interesting that in the attempt to rebuild the reduced image of President Obama, the Main Stream Media have been describing Obama as “Reaganesque”, using it as a positive. Give me a break. During his presidency and for years after, the liberal media trashed Reagan, calling him a “dunce”, saying he delegated way too much, slept half the time he was in office, and was not very bright. Certainly not as bright as they were. These clowns must believe we will not remember what their description of Reagan was in the past.

George Herbert Walker Bush (1989-1993) convincingly proves my assertion that experience is a necessary, but not sufficient condition for a successful presidency from start to finish. Bush was a U.S. Representative in Congress; the Director of the CIA; Ambassador to China; Ambassador to the United Nations; Chairman of the Republican National Committee; and two term Vice-President of the United States. How much more government experience could a person have? I would rate Bush a mediocre president. He was not defeated for reelection for nothing. Yes, Bush was brilliant in putting together a coalition of many countries including the Europeans, and the Arab countries of Saudi Arabia, Syria, and the United Arab Emirates to expel the Iraqi army under Saddam Hussein from Kuwait. Even with this great success, Bush committed a grave error by not giving his commanding general, Norman Schwarzkopf, 48 more hours to destroy Hussein’s army and thereby driving that brutal dictator from power. Bush compounded his error after the armistice by giving Hussein permission to fly his helicopters in the South of Iraq ostensibly to supply Iraqis with essential supplies, but actually to suppress the rebellious Shiites who were opposed to the regime of Hussein. Seemingly the Bush administration allowed Hussein’s army to do this because of the fear that the Shiites in the South of Iraq would align with the Shiite government of Iran to the detriment of the United States.

Then who can forget Bush’s infamous “Read my lips – no new taxes” statement? After getting the Democrat controlled congress to promise they would significantly cut expenditures, Bush agreed to raise taxes on the American people. Of course congress did no such thing as cut government spending. What good does all of that experience do if one can be fooled so easily?

William Jefferson Clinton (1993-2001) Unlike the previous Democrat president, Clinton was reelected. Presidents are doing something right if they get reelected. True, one could fault Clinton for not taking the threat of Islamic Terrorism seriously enough, but at least he did not get this country bogged down in foreign wars the way his successor did. After the midterm election defeats in 1994 suffered by Democrats, and therefore which reflected a repudiation of his policies, President Clinton made a course change to the right. Co-operating with the then Republican Congress, Clinton cut federal spending, including welfare reform and continued his cutting of military spending. Most conservatives were opposed to that;
not me however (for an explanatory view of my position on the United States military read my blog essay #55 The USA Military). Without factoring in the liabilities of Social Security, Medicare, or Medicaid, in Clinton’s first five years the budget deficits were relatively low and in his last three years and in the first year of Bush’s administration there were budget surpluses. In his entire eight years there was a modest $700 billion increase in the national dept. Owing to the growth of the GDP (gross domestic product) during that time this $700 billion deficit actually became a smaller percentage in relation to the GDP than previously. How appealing does that sound now in our current fiscal funk?

On the negative side Bill Clinton had the sexual morals of an alley cat (If one can attribute moral standards to animals.). For lying under oath about his escapades with “that woman”, Monica Lewinsky, the House of Representatives impeached Clinton – the Senate then proceeded to find him not guilty, at least his crime (lying under oath about a personal matter) was not considered significantly serious to remove him from the elected office of president. Republicans should give thanks for this outcome because it would have been highly likely that as the succeeding president, the insufferable Al Gone would have been elected president in his own right in 2000. What grade do I give the boy president (as R. Emmitt Tyrrell, jr. called him)? A low one for his first two years (again there is the inexperience factor owing to Clinton’s relative youth); considerably higher for the last 5 or 6 years thanks to the repudiation voters gave the Democrats in the mid term elections and the change of course for the president, even taking into account the impeachment verdict meted out to Clinton by congress.

George Walker Bush (2001-2009). Before I excoriate this president, justifiably in my opinion, I will recount a couple of positives for him. His income tax cuts, which he convinced congress to pass, were justified and highly stimulative for the economy through the proper mode; that is through the private sector rather than the government. Bush wanted to make the cuts permanent, but had to settle for a 10-year period in a compromise with congress. At least from a conservative viewpoint the appointments of John Roberts and Samuel Alito to SCOTUS were excellent choices, but who can forget the abortive nomination of his White House Counsel, the unqualified Harriet Miers to the Supreme Court where even Republicans in congress rebelled and forced Bush to withdraw his candidate.

Now to the objurgatory part of the evaluation of President Bush – and where to start? How about the circa $5 trillion increase in the national debt, from $5 ½ trillion to $10 ½ trillion, that occurred in the eight years of the Bush presidency? What caused this colossal doubling of the national debt? It was federal spending of course. The unfunded wars in Iraq and Afghanistan and the unfunded prescription drug program contributed mightily to this debt and there were other expansions of federal spending. Many on the left are wont to say that the “Bush tax cuts” added to the debt because they look at it as a zero sum game. This is disingenuous and wrong. Every time federal taxes are cut the revenues to the government go up. You do not have to take my word for this – read what two of the preeminent economists in the country today, Drs. Thomas Sowell (for more on Dr. Sowell read my blog essay #20 titled Thomas Sowell) and Walter Williams, have written.

From about the year 2000 there was a housing boom where unrealistic prices for housing rose at an unsustainable rate and it should have been inevitable and predictable that a correction was overdue, but the correction, a housing bust, when it came, seemed to have been a Black Swan (for a definition and examples of a Black Swan see my blog #42, Black Swans). The worldwide economic downturn starting in 2007 was triggered by the housing bust and led to banks, other lending institutions, auto companies, Wall Street financial firms, and other businesses ostensibly to need government bailouts to keep them from going bankrupt and causing an even much more ruinous economic and social catastrophe. What would have happened without government intervention is a matter of speculation, so perhaps intervention was the better option to have taken. Was this economic collapse avoidable? I believe it was, but there were multi-varied factors involved in its cause too numerous to comment on here. For a cogent explanation and quick read of the whole mess I refer you to a 2009 book by Thomas Sowell titled The Housing Boom and Bust.

The charge by the far left that Bush (and Cheney, Rumsfeld, et. al) had evil and rapacious intentions in invading and occupying Iraq and Afghanistan is absolutely bogus. Bush is and was a good and decent man who, in my opinion and many others, was tragically wrong in his attempt at “nation building” by use of military force. Although a final verdict is not in on the outcome of the type of societies and governments which will eventuate in Iraq, Afghanistan, and other counties in the Muslim world and therefore whether stability will ensue, at this juncture it appears that the sacrifice in blood and treasure was not nearly worth it. George W. Bush will not be considered a mediocre president like his father; he will be either a resounding success or a dismal failure.

Barack Hussein Obama (2009 - ?). As with his presidential predecessor, it is too soon to give Obama a final evaluation on his presidency, however, based upon what he has done so far, midway through his term, it does not portend positive for him. During his campaign for the presidency, Obama characterized himself as a new style politician, one that evoked the slogan of “hope and change” and he sold himself as a unifier, not a divider; bipartisan not partisan, and a post racial president (He did not say that, but his acolytes did). True, the president inherited a financial mess, none of which was his fault. Unlike Reagan, Obama chose the strategy of using the coffers of the federal government to bring the country out of the recession with massive (nearly a trillion dollars) stimulus spending, with no more success than FDR had in the 1930’s.

Obama’s first important legislative program after the abortive stimulus package was an effective federal takeover of the healthcare system in this country, representing approx. 1/6 of the U.S. economy. With the country stuck in an economic morass, Obama’s Chief of Staff, Rahm Emanuel, candidly said, “Never let a crisis go to waste.” Using overwhelming majorities in both the House and Senate, Obama and the Democrat leadership were able to pass this legislation against the will of a majority of the American voters and increasingly so as more became known about this monstrosity of a healthcare bill. Much of the first year and one-half of Obama’s term was devoted to selling and passing healthcare legislation that has become the centerpiece of the first two years of the president’s term. The unpopularity this and the stimulus, as well as unrelenting deficits contributing to an ever burgeoning national debt combined with a high and intransigent unemployment rate were resoundingly reflected in the mid-term elections where Republicans easily recaptured the majority in the House and closed the gap in the Senate. Obama himself said that he and the congressional Democrats took a “shellacking.”

So has Obama learned anything from his historic midterm election defeat? Despite some early sounds that he had; apparently not. His proposed fiscal budget was a joke as far a trying to curtail spending thereby shrinking the deficit and lowering the national debt. Instead spending increases were the order of the day (what Obama and Democrats refer to as “investments”). In the four years of the Obama administration the national debt has expanded from $10 ½ trillion to over 16 trillion with yearly deficits of over $1 trillion as far down the road as can be forecasted. During the Obama presidency 200,000 federal jobs have been added while total employment jobs have diminished by 3.3 million. The Obama budget for the coming fiscal year is $3.7 trillion. “….O, that way madness lies; let me shun that; No more of that.” King Lear Act III, scene IV. Truly, the direction the country is going is madness. Further if this trend is not reversed the country will slide into second rate and worst status. The way Obama and the left wing Democrats in Congress (led by Nancy Pelosi and Harry Reid) are reacting it seems as if the mid-term elections never happened.

President Obama inherited the wars in Iraq and Afghanistan and in a responsible way is trying to extricate the United States from these unfortunately conflicts after making naïve and unrealistic promises to do so during the election campaign and in the embryonic days of his administration. Personally I wish he would get on with the withdrawal, but I understand the political and security factors that have to be considered.

Nowhere, except perhaps with the economy, has Obama’s inexperience, arrogance, and naiveté shown itself more clearly than his attempts to negotiate with America’s enemies such as Iran and North Korea. Clinton was played for a fool in trying (partly through the uninvited auspices of the meddlesome Jimmy Carter) to deal unsuccessfully with North Korea and Obama learned nothing from that failure. When it comes to Iran, Obama failed even more miserably and with even greater negative consequences. Apparently fancying himself the anti-Bush, Obama seemed convinced he could successfully talk Iran into giving up their nuclear bomb ambitions. Of course he could not as any sensible person would have fathomed. The outcome was even more potentially disastrous than his dealings with North Korea. In an attempt to curry favor with the Iranian régime, Obama did not wholeheartedly support the Iranian people when they came out in the streets in the summer of 2009 to protest against the repressive, brutal, and fanatically fundamental Islamic government. Perhaps the overthrow of the Iranian government still would not have occurred even if the Obama administration had given overt and covert support to the rebellious Iranian people, but that is an outcome that will forever be unknown.

Starting in the presidential campaign and continuing into his presidency, Obama criticized past actions of the United States in a series of speeches in Cairo, Istanbul, London, and at the United Nations. When asked if he thought the United States was an exceptional country he replied that many countries believe they are, thereby strongly suggesting that he did not consider the United States exceptional. And as if to cement that belief he made a number of bows to foreign leaders from around the world when he first met them: He made a deep bow to King Abdullah of Saudi Arabia in April 2009 (It is true that President Bush held the hand of then Crown Prince Abdullah, who was the actual ruler of Saudi Arabia, at his Crawford ranch in April 2005, which was dopey, but not demeaning); He made a slight bow to Russian Prime Minister Putin in July 2009; another deep bow to Emperor Akihito of Japan in November 2009; and a pronounced bow to President Hu Jintao of China in April 2010. This obeisance by the president of the United States is demeaning to the presidency, the country, and to Obama himself. Why did he repeatedly do it? The answer may lie in Obama’s attitude toward this country as he implied in his statement about the USA not being exceptional which is in sharp contrast to President Reagan’s characterizing the United States as a “Shining City Upon a Hill.”

I will close with this quote from over 2000 years ago to show that the fiscal problems and their solutions we face at this time are hardly new or original:

“The budget should be balanced; the treasury should be refilled; public debt should be reduced; and the arrogance of public officials should be controlled.”

Marcus Tullius Cicero (106 – 43 BC)

LIBERTY AND SECURITY-58

“Those who can give up essential liberty, to obtain a little temporary safety, deserve neither liberty nor safety.” Benjamin Franklin, to the Pennsylvania Assembly in 1755. There have been attributions of this sentiment by various people over the centuries, but Franklin’s is the one most quoted.

I could stand it no longer so I have decided to weigh in with my own exegetic thoughts on the U.S. airports security screening brouhaha. As one could surmise from the foregoing quote, I am more than adumbrating that I am not in favor of what the TSA (Transportation Safety Administration) is doing to that portion of the American public who fly on commercial airlines. In fact I find these procedures of full body scans and intrusive body pat-downs highly offensive. Paralogistical bureaucrats asseverate, ipse dixit, the necessity of these outrageous practices which is so highly predictable: It is solely to make the flying public as safe as is possible. What offal! I would wager that the overriding concern of the TSA and the rest of the Obama administration, and Obama, himself, in case an Islamic terrorist blows up an airplane in mid-flight, is to claim they did everything humanly possible to thwart it. But did they? As has been stated myriad times, the Israelis have the best airport security system in the world. So what do they do? They profile. The passenger list is scrutinized before the flight to attempt to identify any potential terrorist; certain passengers are questioned; and all are observed to spot any nervous or peculiar behavior. Particular attention is paid to young Middle Eastern, Eastern, or North African looking types (after all where are these Islamic terrorists from, Muslim countries or Scandinavian countries?). Isn’t that profiling? Absolutely, and we should be doing the same thing, except political correctness is so rampant in this country that we put ourselves at risk and endure humiliating procedures just to avoid contravening it.

Amendment IV to the United States Constitution says, “The right of the people to be secure in their persons, houses, papers, and effects against unreasonable searches and seizures, shall not be violated…..” Is what the TSA doing to the American flying public in violation of their constitutional right not to be subjected to unreasonable searches? I believe most of these flying passengers and certainly the airline flight crews would agree. If this issue would ever reach the U.S. Supreme Court, how it would be ruled on is problematic.

Far more liberals than conservatives do not object to the governmental enhanced airport screening techniques now being used. Many of those same liberals opposed every method used by the Bush administration to interdict the terrorist acts of the Islamic extremists including warrantless wire taps, rendition, and enhanced interrogations of known terrorists, especially, horror of horrors, water-boarding all of three high profile Islamic terrorist chiefs. The claim was always that the civil rights of these people were being violated by an overweening government. Yet with the civil and privacy rights of ordinary Americans now being violated by enhanced airport screening, these liberals have no problem with it. Let’s see, do you suppose that what is now being done by the Obama administration rather than the Bush administration has anything to do with the attitude of liberals?

A recent poll showed that 50% of the American public thinks the intrusive body pat-downs go too far and 48% do not think so. Who are these benighted 48%? In his play A Midsummer Night’s Dream, Act III, scene II, Shakespeare wrote “What fools these mortals be.” The label fits those idiots perfectly. The poll also said that by a 2:1 ratio they were not troubled by the full body scans. In fairness to the American public I believe it highly likely that if only the flying public were polled the outcome would be considerably different in favor of more opposition to an overly intrusive government. As far as the non-flying American public is concerned when and in what society have the Plebeians ever been introspective or critically thoughtful?

Do these enhanced airport security methods actually make people in airplanes safer as the TSA and liberals who have no problem with an overbearing government claim? Ask yourself: How many terrorists have been apprehended with these “safety” procedures? The answer is zero, none, nada. The would-be “shoe bomber” was foiled by other passengers and the failed “underwear bomber” by his own ineptness after they were already on an airplane. The upshot was airline passengers were required to remove their shoes for inspection and have their underwear searched. It is always the same with these bumbling and fatuous government employees in their inchoate and always reactive, but never proactive response to the tactics of Islamic terrorists. If these Islamic Jihads start making buses and trains in the USA their targets of attacks will the federal government then expand their current “security” protocols in airports to bus and train stations? By what violation of apodictic reasoning could anyone doubt that the proven unimaginative and obtuse government bureaucrats would react any differently to that situation than they have to past threats? N’est-ce pas?

There was a Drudge Report headline that stated: The Terrorists Have Won. That may be a bit premature, but given the reaction of the U.S. government to the attempts (unsuccessfully) since 9/11 by Islamic terrorists to perpetrate acts of terrorism against the United States and given the cravenly acceptance by so many of the American people to these government actions then the direction in this war with terrorists is definitive. The airport so-called “security” methods which are gross intrusions of the civil and privacy rights of American citizens do not demonstrably make anyone any safer. It clearly is not necessary for these Islamic fanatics to success in their quest to bring down the West in general and the United States in particular by killing and maiming hundreds or thousands of people with violent acts. Once they have cowed a sufficient number of people such that the will to resist is gone and their spirits crushed, then the Islamic terrorists have indeed won. With the American public surrendering their liberty for a little perceived safety to an increasingly expansive government is to lose the first battle in the war with Islamic terrorists. If this trend continues can there be little doubt that the war will be eventually lost one step at a time?

PERCEIVED INCIVILITY IN POLITICS AND THE TRUE PERIL OF THE USA-57

Let me contribute a few cautionary comments from my perspective of decades of observing the contemporary scene and being a student of history that one need not fear for our country because of perceived incivility in the body politic today. The history of politics in our country is replete with more personal attacks, vitriolic discourse, and shameless slanders since the founding of the Republic than what takes place today. Two of the Founding Fathers, John Adams and Thomas Jefferson were political allies and personnel friends in the revolutionary days and during the George Washington presidency. In the contest to succeed Washington, Adams and Jefferson became bitter enemies accusing each other of particularly unflattering calumnies and down right falsehoods. Fortunately, Abigail Adams, the accomplished and intellectually gifted wife of John Adams, had been a good friend of Jefferson and her persistence in trying to reconcile the pair finally allowed the two former friends, turned enemies, to resolve their differences during the last 17 years of their lives, after their political careers were over. Thus were created and preserved many priceless letters exchanged between them in those 17 years. As a matter of historical note they both died (Adams was 7½ years older than Jefferson) on the same day; the 50th anniversary of the founding of the Republic.

In 1856, leading up to the Civil War, antislavery Sen. Charles Sumner of Massachusetts made an intemperate speech on the floor of the Senate criticizing proslavery Sen. Andrew Butler of South Carolina. Three days later Rep. Preston Brooks of South Carolina, a relative of Butler, walked up to Sumner who was seated at his desk in the Senate chamber and beat him with his cane so severely that Sumner was absence from the Senate for three years while recovering. The people of South Carolina sent Brooks dozens of canes to replace the one he had broken while he was pummeling Sumner. For weeks afterwards many of the senators and representatives carried pistols and knives on them while they were in the Senate or House chambers and in their offices. Still think there is relatively gross incivility in politics today?

Even, along with George Washington, our most respected, admired, and honorable president, Abraham Lincoln, was not above nasty politics in his youth as a politician in Illinois. As people were wont to do at that time, Lincoln anonymously wrote a scathing, not to say slanderous, parody in the local newspaper of one of his political opponents. Lincoln was soon discovered to be the author and his opponent challenged him to a duel. Friends of both of them interceded so that the dispute was settled without the antagonists resorting to shooting at each other – fortunately, else the country might have been deprived of one of its greatest presidents.

Historians have well documented that during the late 19th and early 20th centuries, what was called the era of “yellow” journalism, newspapers and politicians put forth the most outrageous and villainous descriptions of their opponents than anything that could be imagined today.

Audrey, a little advice from an old codger who has seen it all. If you use an example to illustrate a finer point make sure the example has validity. Other than former respected civil rights activist and now Representative in the House, John Lewis (D-GA) who allegedly said he heard the “N” word used against him by the Tea Party protestors in Washington D.C. there is no evidence that it occurred. Lewis would not go on any TV network, not Fox News or the other left leaning networks, and repeat that claim. Lewis himself had used over the top and therefore uncivil criticism during the presidential campaign, calling John McCain and Sarah Palin segregationists and comparing them to George Wallace. Prior to that Lewis was the first major House member to call for the impeachment of George W. Bush.

A website owner and conservative Jew, Andrew Breitbart, was suspicious of the claim that Tea Party participants had used foul or racist language toward black members of congress so he offered a $10,000 reward to anyone who could produce any camera cell phone recording or other evidence that it happened. He had no takers so he increased the amount to $100,000 and is still waiting. Given how ubiquitous camera cell phones are now (just consider what happened to the owner of the Dallas Cowboys, Jerry Jones. If you have not heard the story this past week I could relate it to you) one would think that someone would have recorded it. Also not one of the dozens and dozens of Capital Police has said they heard anything untoward directed toward black members of congress. I am just saying be sure your “facts” can not be reasonably disputed by someone like me.

There are always fringe people in any group and the current government protestors are no exception. These yahoos go beyond acceptable bounds and Bill Clinton was right to point this out a couple of days ago. However, if one is to be a moral arbitrator, then it is imperative to be consistent in this position. Where was Clinton a few years ago when some of the anti Iraq and Afghanistan wars protestors were calling George W. Bush a murderer, liking him to Hitler, and displaying signs with crosshairs on the forehead of a picture of Bush? It is necessary to be fair and consistent when impugning the character and motives of others in order to avoid the appellation of hypocrite.

Is there a reason to be concerned about the course of our country today? Yes there is, but it is not about incivility in politics – it has to do with the economic well being of the country. The vast majority of the protestors today are deeply concerned about the explosive growth of and expansion of the power of the federal government and the burgeoning, seemingly out of control, federal dept. The cause of the rapidly increasing dept is bipartisan and the solution to this grave problem will have to be bipartisan also.

During the first five years of the Bill Clinton administration the federal government ran what by now seem like exceedingly small budget deficits and during his last three years and the first year of the Bush administration (thanks to the Clinton and congress policies) there were budget surpluses. In the entire eight year Clinton administration there was a modest $700 billion increase in the national dept, which, because of the growth in the GDP (gross domestic product), actually caused the debt to became a smaller percentage in relation to the GDP. Whatever the moral failings of Bill Clinton and his under emphasis on the Islamic Terrorist threat during his presidency, there is no denying that the Clinton administration was fiscally conservative and responsible.

For the eight years of the Bush administration the national dept increased by circa $5 trillion, from $5½ to $10½ trillion. Much of this debt increase was due to the unfunded wars in Iraq and Afghanistan and the increase in the subsidies of the Medicare/Medicaid prescription drug program. In my opinion this was highly irresponsible because if wars are worth fighting and federal subsidies worth granting then they are worth paying for by either cutting other federal expenditures or raising taxes or both.

In the 21 months of the current presidential administration the national debt increased by $3 trillion, from $10 1/2 to $13 1/2 trillion. A severe financial crises and recession were inherited, true enough, yet instead of sensibly concentrating on improving the economy, lowering unemployment, and trying to control the rapidly increasing national debt, the Obama administration zeroed in on healthcare reform as its primary program.

The debt and its projected growth over the next ten years are unsustainable and if not reversed will do irreversible damage to our economy and society. As of Oct. 2007 the national dept has increased an average of $4.16 billion per day! This explains why the idea of a VAT (Value Added Tax) which means that in every step of the manufacturing or production of goods a tax is added. The concept of going to a VAT in this country is now starting to be bandied about by both liberals and conservatives, but for political reasons will not be proposed before the November bi-year elections. There is simply not enough money available from raising income taxes on the rich to have a significant impact on the dept. As it is, according to the latest figures from the IRS, 47% of the bottom income group of USA households does not pay federal income taxes. In fact the lowest 40% of income households actually receive subsidies from the federal government each year to the tune of $70 billion. The top 1% of income earners (making $390,000 or more per year) pay about the same amount of federal income tax ($450 billion) as the lowest 95% (making $150,000 per year or less). The top 50% of wage earners pay 97% of all federal income tax leaving the bottom 50% paying only 3%. Thus the only realistic alternative of raising significant amounts of revenue for the federal government is the VAT which will be paid by everyone. The estimate is that every 1% of VAT in this country would generate about $100 billion in revenues. Therefore a 10% VAT would mean one trillion dollars for the government coffers. That is quite a temptation for politicians.

The European nations pay for their welfare programs with income taxes and a VAT. In Western Europe the top income tax rate varies from 40% to 54% with the average being 48% and the VAT varying from 16% to 25% with the average being 20%. In Eastern Europe the top income tax rate ranges from 10% to 45% with the average being 22½% and the VAT from 15% to 23% with an average of 19%. Do we really want to go down the road to European socialism?

In the United States the top federal income rate is currently 35%. When the so called Bush tax cuts expire at the end of 2010 the top income tax rate will go back to 39.6%. What is a comparable tax in this country to the European VAT is the state and local sales tax. In Plano it is 8¼%, not quite at the 20% European level. If a VAT were enacted here it would be added to, not replace, the sales tax.

Is there any justification for the USA to have a VAT to help bring down our dangerously high and rapidly increasing national dept? I think yes – with several caveats. (1.) It should not be enacted until our economy and unemployment level have shown clear signs of improvement. (2.) It should be a temporary tax of “X” years where “X” is just long enough to have a measurable and significant impact on lowering our debt. (3.) It should expire after “X” years with a 2/3 majority in both houses of congress required to extend it. (4.) Congress has to enact legislation, signed by the president, for major reductions in government spending including the military and entitlement programs (Social Security and Medicare/Medicaid) as well as pork barrel spending so favored by the rascals in congress (Is it any wonder that congress has a 50 year high disapproval rating of 75% to 80%?).

I may be overly optimistic, but I believe when the ever increasing national financial peril of our country is at last appreciated by a large majority of the voters then our elected representatives will finally act to correct this dire situation. Not this year perhaps; still the way the national dept is mushrooming, not so far in the future that it will be too late to save this great nation.