Debt – The Old Guy Phd

‘Twas the Night Before Christmas #2

G’Day!

Time for some humor–again with apologies to Clement Moore & Democrats.

‘Twas the Night Before Christmas!

1 ‘Twas the night before Christmas, when all thro’ my house,

2 Not a creature was resting, not even a mouse;

3 The Stockings were hung by the Chimney with hope,

4 That in 2014, we’d be able to cope;

5 Sebelius was panicked, and feared for her job,

6 While Obamacare problems, stirred up the mob,

7 With no health insurance, or work through the land,

8 We added our assets, to see how much on hand.

9 When out on the lawn there arose such a clatter,

10 I sprang from depression to see what was the matter.

11 Away to the window I flew like a flash,

12 Tore open the shutters, and threw up the sash.

13 The moon on the breast of the new fallen snow,

14 Gave the lustre of mid-day to deficits below;

15 When, what to my desperate eyes should appear,

16 But a government golf cart, and eight progressive Reindeer,

17 With the President driving, so lively and quick,

18 I knew in a moment it must be a trick.

19 More rapid than eagles his supporters they came,

20 And he whistled, and shouted, and call’d them by name:

21 “Now Media! Now Wall Street! now Unions! and Wa’ Post!

22 “On Holder! on Carney! on Jarrett! and ‘Spend Most’!

23 “To the top of the Debt! To the top of the wall!

24 “Now Tax it all! Tax it all! Tax away all!”

25 As vague promises before the wild subsidies fly,

26 When they meet with an obstacle, mount to the sky;

27 So up to the heavens, the deficits they flew,

28 With the cart full of Regulations – and Executive Orders too:

29 And then in a twinkling, I heard on the roof

30 The laughing and gnashing of each little tooth.

31 As I drew in my head, and was turning around,

32 Down came Obama with a bag and a bound:

33 He was dress’d all in debts, from his head to his foot,

34 And his promises were stained with ‘misstatements’ and soot;

35 A bundle of taxes were hung on his back,

36 And he look’d like a peddler just opening his pack:

37 His promises – how many! His failures – how crippling,

38 His cheeks were like roses, his fingers were gripling;

39 His droll mouth was drawn up in a grin,

40 As he planned to build, bigger government again;

41 The bill for Obamacare he held tight in his teeth,

42 And joy encircled his head like a wreath.

43 He had a big smile, and blamed everyone else,

44 For all his disasters, all but himself:

45 He was happy and laughing, a right socialist old elf,

46 And I cringed when I saw him, in spite of myself;

47 A smile on his lips, and a twist of his ear,

48 Soon gave me to know, I had something to fear.

49 He spoke not a word, for him a big task,

50 And took all of value; then took off his mask,

51 And laying his golf club aside of his nose,

52 And taking my assets, up the chimney he rose.

53 He sprang to his golf cart, to his team gave a toot,

54 And away they all flew, after taking the loot:

55 And I heard him proclaim, as he drove by my eye;

56 Thanks for your help, kiss your healthcare and free markets goodbye!

Seriously, Merry Christmas & Happy New Year to everyone! Hopefully, 2014 will be better!

The Old Guy PhD

Save America – Elect Romney & Ryan in November!

G’Day!

Romney and Ryan! Hooray! The Republicans have chosen intelligent, honest, dedicated, and responsible candidates for President and Vice President of our country. Unfortunately, Obama and Biden are currently still in office. They cannot be replaced fast enough for me. The longer Obama and the Democrats continue in power, the greater the decline of America. In my opinion, a vote for Obama and the Democrats is suicidal for our exceptional nation. I trust and believe that the American people are wise enough to see through the rhetoric of deception, division, and blame and recognize the true economic and social failures of Obama’s centrally planned socialism. In November we must vote Obama and enough Democrats out of office to save our country from financial collapse under a mountain of unsustainable debt, which in the next week will reach $16 Trillion or over $50,000 for every man, woman, and child in America. This is an increase of approximately 60% since Obama was elected and is absolutely intolerable!

The team of Romney and Ryan are real Americans who personally share and support the opportunities and values inherent in “The American Dream”. They believe in the values expressed in “The Declaration of Independence” of equal opportunity for all to Life, Liberty, and the Pursuit of Happiness. They further believe in strong national defense, individual freedom, free market capitalism, sound fiscal and monetary policy, freedom of religion, and Constitutionally limited government. Unlike Obama, Romney actually has a business-friendly five point plan to correct our fiscal and debt crisis, create millions of new private-sector jobs, save Social Security & Medicare, and get America back on a path to prosperity. Fortune Magazine summarized the five key areas in the plan as follows: “(1) Aggressively promote domestic energy development, especially fossil fuels. (2) Expand the market for U.S. goods overseas by negotiating new trade agreements and standing up to China on intellectual-property and currency issues. (3) Improve workforce skills by transferring job-training programs to the states and going after teachers’ unions, which, he says, stand in the way of school choice and better instruction. (4) Attack the deficit through budget cuts, not tax increases. And (5), reshape the regulatory climate to “encourage and promote small business” rather than swamp it. That last item covers his most consistent and passionate campaign pledge, the repeal of the Affordable Care Act — “reshaping health care reform,” he says, “by replacing Obamacare with measures that will bring down the cost of health insurance rather than, as Obamacare does, increasing it.” This plan, combined with the Romney-Ryan Budget and a proposed “Cap” on Government Spending at 20% of GDP, is an excellent start.

On the other hand, Obama has America on a suicidal path to fiscal and economic failure with no serious plan to grow the economy, create private sector jobs, and reduce the national debt and deficit. Obama’s alternative is more of the same: more government spending, more government regulations, more government taxes, more government control, and less personal and business freedom. Obama doesn’t seem to care about our national security, the US Constitution, our allies abroad, personal liberty, private property rights, economic growth, free market capitalism, or traditional American values. Apparently, Obama cares more about wealth redistribution, bigger and bigger government, labor unions, and, most importantly, personal reelection. Unlike Obama, Romney and Ryan are telling us the truth about the economic crisis we face and have logical and reasonable plans to correct the Obama debacle over the next decade. Their plans are not radical but rational and should be supported by a majority of Americans who want our country to grow and prosper.

Obama is the antithesis of nearly everything I believe about America & virtually everything that has made America exceptional. The centrally controlled “trickle up poverty” collectivist policies of dependency & unsustainable entitlements by Obama and the Democrats are not working in America, are creating crisis and potential disaster in Europe, and have failed historically. Obama has had his opportunity and he has failed as a leader. Perhaps his failure was inevitable given his serious lack of qualifications when he was elected. It is time to replace him and Vice President Biden with a truly qualified and experienced leadership team.

The growth of Western Civilization and especially the United States was fuelled by the expansion of individual liberties, private property rights, and a free market capitalist society. Our nation was established on the basic principle that government is the servant of the people, not that the people are the servants of government. It’s time to take back our country and return to the individual liberties, free markets, economic growth, and limited government we have long enjoyed. The United States of America is the greatest, most prosperous, most unselfish, and most exceptional country in history. There is still an opportunity to save The American Dream but time is rapidly running out. Vote for the real American “Hope & Change” offered by Romney and Ryan in November.

The Old Guy PhD

Obama’s 2013 Budget – More “Obammunism”!

G’Day!

Tax and Spend! Spend and Tax! Spend, Spend, Spend! These are the only fiscal policies the President appears to support. They were also reflected in his populist State of the Union oration in January. President Obama’s socialist concept for our country is painfully transparent. Higher taxes, excessive federal spending, unsustainable entitlements, reductions in National Defense, and another fiscal deficit of approximately $1 trillion for 2013 are all included in his push for more and bigger central government. Obama appears to believe in “Trickle-down Government”, where a parasitic government extracts wealth created by the productive private sector, adds an administrative processing fee, and returns the residual to government selected individuals and businesses in the hope for “stimulated” economic growth. Does this concept make any sense?

The Democrat-controlled Senate has not passed a budget in over three years. In every year of the Obama Administration federal deficits have exceeded $1 trillion (in 8 years of President Bush the maximum federal deficit was $0.5 trillion). Obama claims that his new budget “saves” approximately $4 trillion over the next ten years. It actually increases the cumulative deficit and debt over this ten-year period by approximately $6 trillion. Other than National Defense, his proposed budget makes no serious attempt to reduce government discretionary spending or entitlements. It appears that the President’s rhetoric is to create class warfare intended to improve his chances for reelection and not for the future benefit of our nation. How far behind Greece are we?

In my opinion, this budget and the State of the Union speech are more of what I call “Obammunism” and is bad for our country. “Obammunism” is essentially turning America into a centrally planned, European-style, bureaucratic, welfare state. This concept is based on a socialist doctrine of forced economic equality determined by an arbitrary bureaucratic definition of “Fairness” or “Fair Share”. Obama apparently wants to establish a socialist nanny state by transferring wealth from the successful businesses and individuals above a government-determined wealth “Threshold” to those below this level. “Obammunism” penalizes hard work and achievement and rewards idleness and failure. Simultaneously, it is stifling economic growth, promoting class warfare, lowering the potential standard of living for all citizens (especially the middle class), and continuing our nation’s decline under a mountain of debt. Obama’s policies continue to undermine our Constitution, our heritage, our culture, and our fundamental principles of individual freedom, free markets, sound fiscal and monetary policy, economic growth, and limited government.

Consider this, who determines “Fair Share”? Under Capitalism, “Fair Share” is objectively determined by the choices of the people in a free market. Under “Obammunism”, bureaucrats subjectively and arbitrarily determine “Fair Share” and impose it on the people. What is to protect you from the “Bureaucratic Elite” changing the wealth “Threshold” from $1 million, to $250,000, to $100,000, to $75,000 or lower? If you support Obama’s policies, nothing can prevent the “Government” from arbitrarily changing “Fair Share” to adversely penalize more and more successful people. If you work hard and succeed in improving yourself and your family, what is to prevent the government from penalizing you for becoming “Rich”?

A society built on “Obammunism” has few incentives for anyone to create value (except bureaucrats, who subjectively divide the wealth, frequently among themselves). If value is created, it is likely to be taken away and redistributed to others. Taking from those who earn and redistributing to those who do not does not create wealth and prosperity. Margaret Thatcher said it best, “The problem with Socialism is that you eventually run out of other people’s money!”

The Communists put it this way, “from each according to their abilities, to each according to their need”. This did not work well for the people in the former Soviet Union. Communism’s precursor, socialism, is currently eroding the freedom, growth, and prosperity of the European Union. The path from democracy based on personal freedoms and private property rights to authoritarian wealth-sharing socialism based on central planning and control is not necessarily a long one (see “The Road to Serfdom” by Nobel Prize winner, Friedrich A. Hayek). If it is allowed to continue in America, it will further damage and perhaps destroy both the culture of constitutionally protected personal liberty and opportunity that we have enjoyed for over 200 years. Socialist societies penalize success and reduce economic growth and living standards. Capitalist societies reward success and increase economic growth and living standards. Which future do you want for yourself, your children, and our country?

The growth of Western Civilization and especially the United States was fuelled by the expansion of individual liberties, property rights, and a free market capitalist society. Our nation was established on the fundamental principle that government is the servant of the people, not that the people are the servants of the government. It’s time to take back our country and return to the individual liberties, free markets, economic growth, and limited government we have long enjoyed.

The Old Guy PhD

Yes, We CAN Grow the Economy and Create Jobs – Redux

G’Day!

On June 10 I posted the below article on the above subject. To date the Obama Administration and Congress have failed to act on any of the issues and suggested solutions presented. The article is still essentially accurate after three (3) months of non-action and is repeated below for those who missed it. We must get our government working for the people and not for themselves. I hope you join with me in advocating responsible government that supports individual freedom, free markets, sound fiscal and monetary policy, economic growth, and limited government! Let’s get to work!

Obama and the Democrats have tried and failed with virtually every centrally controlled socialist alternative to stimulate the economy and create jobs. The only jobs they have really created are in government. The so-called recovery is the weakest in decades and may be about to “double dip”. Big collectivist government solutions have failed miserably (see “Big Government IS Our Problem!”). Obama and the Democrats only answer to this failure has been to blame it all on Bush. They claim that without their $4 trillion dollar taxpayer & debt funded stimulus, nationalization of businesses, increased healthcare regulations and spending, increased financial regulations, and extreme monetary easing by the Federal Reserve, it could be worse. The only thing that worked has been TARP and that was enacted under President Bush! It is time for government to stop regulating, remove the uncertainties facing business, get out of the way, and let the free market and capitalism work. You do not create jobs by taking wealth from those that generate it, siphon off government administration and oversight, and redistribute less of it back into the economy.

Economic growth and job creation is about free markets, minimum regulations, incentives, and opportunities in the private sector. Government doesn’t create jobs; the private sector creates jobs. Government also doesn’t create opportunities but it can discourage or prevent them (think energy policy) and it can and does distort the market through politically motivated subsidies or tax deductions for selected industries. If taxation and regulations are minimized to the level necessary to support the essential role of government as defined in our Constitution, business will take advantage of whatever opportunities are available in the marketplace and the economy will grow. Unfortunately, the Obama administration and the Democrats in Congress do not understand this. They apparently believe that a few “elites” (themselves) in government are smarter than the millions of consumers and business managers throughout the global economy. They have imposed on American business a climate of increasing regulatory restrictions, increasing healthcare costs, high business taxes, and increasing uncertainty as to what they will do next. In this centrally controlled environment, it is no surprise that American businesses are not currently hiring or investing in our country. The regulations and costs just in Obamacare and the Dodd-Frank Financial Regulations Act are particularly harmful and businesses are wisely waiting to see what the government will force on them next.

So what needs to be done to create jobs and get our economy back on track? At least six actions could and should to be taken: 1) Stop/Minimize non-essential regulations, 2) Have a business-friendly government, 3) Reduce tax rates, especially on business, through tax reform, 4) Enact an energy policy that encourages rather than discourages development of domestic sources of traditional energy, 5) Fix the fiscal and debt crises by cutting government spending, revising entitlements, and increasing tax revenues through tax reform, 6) Pass the three pending Free Trade bills and expand them to include other trading partners.

First, a moratorium on new regulations should be declared and all regulations associated with Obamacare and Dodd-Frank (especially the Consumer Protection Agency) halted until after the next election in 2012. The uncertainty overhang from these two bills alone is stifling hiring and investment by business. Ultimately, all regulations, both existing and new, should have a “sunset clause” that requires our government to formally reaffirm their need at pre-set intervals, perhaps every ten years. This would insure that outdated or unnecessary laws do not become permanent.

Second, President Obama needs to realize that his collectivist socialist policies don’t work and become truly business-friendly. It is no secret that the current administration is pro-union, pro-environmentalist, and anti-business as evidenced by numerous actions by himself and the Administration’s Departments and Agencies. The pro-union/anti-Constitution actions by the NLRB against Boeing in South Carolina (see “Attack on American Business by Obama “packed” NLRB!”) and the many actions of environmentalists against any form of energy development (drilling in the Gulf of Mexico, Shell Oil off the coast of Alaska (see “Obama Administration Attacks American Business Again!”) are not conducive to economic growth and job creation. This week the issue of an energy pipeline from Canada to Texas has also come under attack by environmentalists. These and other obviously pro-union and environmentally biased activities against businesses (and some States) should be halted and free markets given an opportunity to function.

Third, tax reform is essential to both economic growth and reduction in the deficit (see “Fiscal & Debt Crises – Tax Reform essential!”). As the referenced article indicates, there are several excellent proposals available and Republican presidential candidate, Tim Pawlenty, just added another this week. All are pro-growth and pro-job creation and all will work by providing incentives for private sector investment IN THIS COUNTRY, not abroad. Naturally, the Democrats, who believe in centralist government solutions and not in free markets, are generally opposed to all of them. Perhaps the easiest, most immediate, and most beneficial tax reform is to reduce (or eliminate) corporate tax rates to a level equal to or less than the major nations with whom we compete and simultaneously eliminate the politically motivated subsidies and deductions that distort the market. Currently US corporate taxes at 35% are highest in the developed world and actually represent double taxation on income, first at corporate level and again at personal level, when distributed as dividends. Additionally, the high US corporate tax rates discourage US based international companies from repatriating foreign profits back into the US because, if returned, they are taxed at the higher US tax rate. Our current tax policy encourages investment abroad and discourages repatriation of profits back into America. This is a job killer, not a job creator. Is our government crazy?

Fourth, enact a domestic energy policy that encourages rather than attacks development of domestic sources for traditional energy. This will create thousands of good jobs in our economy and reduce our dependence on foreign energy supply. For far too long we have allowed the environmentalists to dictate policy and stagnate domestic energy growth. Every rational person knows America will be dependent on fossil fuels for decades. Yes, development of alternative energy forms and technology is important but there is no chance “green energy” is going to be a replacement for traditional energy sources, including nuclear power, any time soon. It is madness to exclude active development of domestic fossil fuel sources and nuclear power from our alternatives just to satisfy a few environmentalists with unproven science and questionable computer projections. If “green energy” was a viable economic solution, we would not need a policy or subsidies to support it. Also, independent of the longer-term cost benefits from domestic production, the extremely high and increasing risk of supply from the foreign sources is a very dangerous national security concern. The Middle East is in turmoil and no one knows how it will turn out. Without domestic alternatives, American could find itself with an energy disaster, which could seriously endanger our economy. We must actively develop domestic energy to create jobs in America, sustain our economy, and reduce our global supply risk.

Fifth, resolve our short and long term deficit and debt crises. We must get government spending and the dual debt and deficit crises under control (see “Bowles & Simpson Have it Right!”, “Obama Ignores Bowles-Simpson Debt Reduction Commission – Again!”, “Is Obama Really Serious about Debt Reduction?”). Our Government is too big, too oppressive, and exercises too much control over the American people and business. The current policies are sucking money from business and taxpayers, adding more public sector union layers of government control, stifling business growth, and reducing America’s ability to grow and prosper. As stated above, in a free market economy with protection for the freedom of individuals and businesses, the private sector creates jobs. Since his election, Obama has expanded the size and scope of government control far beyond the level any freedom-minded citizen would have imagined possible. Simultaneously, Obama has also increased our federal deficit by $4 trillion and increased our national Debt by approximately 40% to $14.3 trillion. Relative to GDP the size of government has increased from approximately 20% of GDP to over 25.5% of GDP, a 5% increase in the size of government relative to our economy in less than three years. Without correction, our deficit next year is expected to be another $1.6 trillion and in ten years our national debt will grow to a staggering $22 trillion! Does anyone think this makes sense? My article last week, “Is Our Government Broken? – Redux!”, provides more information on this critical issue.

Sixth, pass the Free Trade Agreements for South Korea, Columbia, and Panama. These proposals go back to the Bush Administration and should be easy to pass. I believe nearly everyone including the President and many Democrats support them. As usual, politics is holding them up. Free trade works and provides value through additional products and services at lower costs to all American consumers. Only unions are opposed to free trade because, in the short term, it may reduce union jobs in non-competitive industries. Over 200 years ago, Adam Smith established the unchallenged principle that the wealth of a nation was based on the goods and services available to its citizens. Free trade allows this to work for the benefit of all consumers. It’s time for the unions to realize this and support what’s good for the nation over what’s good for the union.

Yes, we CAN solve our problems, if we have the political will to do so. This country was founded and prospered on the principles of individual freedom, free markets, sound fiscal and monetary policy, and limited government. Let’s get back to our foundations and demand that our elected representatives in government get to work.

The Old Guy PhD

The Tea Party – Patriots or Terrorists?

G’Day!

Members of The Tea Party ARE true American “Patriots” and definitely NOT “Terrorists” or “Racists” or “Crazies” or “Fanatics” as accused by liberal politicians! I am not a Tea Party member but am appalled by the inaccurate, unfounded, and demonstratively biased political attacks on them by the Obama Administration, Congressional Democrats, and segments of the Liberal Media. The ONLY reason for these attacks is that the Congressional members of the Tea Party movement are willing to stand up for our nation’s long-term constitutional principals of individual freedoms, free markets, sound fiscal and monetary policy, economic growth, and limited government. Congressional Tea Party members have NOT been willing to make the short-term compromises of these principles typically characteristic of our political representatives. GOOD FOR THEM! We need more elected members of Congress who are willing to take a stand for what is right for our country not for what is convenient for reelection or supportive of bigger and bigger federal bureaucracy and spending. Political compromise is not necessarily progress and, given our current fiscal and debt crises, is not in the long-term interests of the American people. OUR GOVERNMENT GROWTH IS OUT OF CONTROL, UNSUSTAINABLE, AND MUST BE STOPPED AND REVERSED! The Tea Party is trying to accomplish this.

So what is “The Tea Party” and why are Obama and the Democrats so terrified of them that they are aggressively engaging in political demagoguery in an attempt to discredit their positions and influence? First of all “The Tea Party” is not a political party (yet). The Tea Party is a “movement” by ordinary Americans of all parties who are fed up with the encroachment by federal government into our personal lives, our business commerce, and the inexorable increase in the magnitude of our government spending and debt. The Tea Party is trying to correct this, which is the primary reason the Obama Administration and Democrats with their tax and spend big government socialist policies are attacking them.

Perhaps the most accurate and concise summary of what The Tea Party stands for is on TheTeaParty.net website, which describes supporters as follows:

“The Tea Party movement is a grassroots movement of millions of like-minded Americans from all backgrounds and political parties. Tea Party members share similar core principles supporting the United States Constitution as the Founders intended, such as:

• Limited federal government• Individual freedoms• Personal responsibility• Free markets

• Returning political power to the states and the people

As a movement, The Tea Party is not a political party nor is looking to form a third political party any time soon. The Tea Party movement, is instead, about reforming all political parties and government so that the core principles of our Founding Fathers become, once again, the foundation upon which America stands.”

So what’s not to like? Who among true hard-working Americans willing to challenge forced dependency on government could object to these core principles? It is no wonder that Obama and the Democrats object to and attack them because The Tea Party’s core principles are diametrically opposed to those of Liberal Democrats. The Liberals are leading us down a path of less support for our Constitution, bigger federal government, greater government control over our lives, more regulation of what’s left of our free markets, more central power for the federal government and less freedoms for the states and the people. Contrary to the “Blame Game” against The Tea Party, the real “obstructionists” in government are Obama and the Congressional Democrats, who refuse to address the fundamental causes of our fiscal and debt crises, such as government growth and entitlement spending.

Let’s review a few of the activities Obama and Democrats have initiated in just the last two and one-half years. Since Obama was elected, Federal Government ANNUAL spending has increased “relatively” from 20% to 25% of GDP and “absolutely” from $2.9 trillion to $3.8 trillion, the ANNUAL deficit increased from $500 billion to 1.7 trillion, and our total National Debt has increased by 40% from $10 trillion to over $14 trillion (and an additional $2 trillion increase has just been authorized)! The Democrats in Congress have not passed a Federal Budget for over 800 days and have so far this year rejected all attempts by the Republicans to pass one for next year! The budget proposed by President Obama earlier this year continued his excessive government spending and added another $10 trillion in deficits and debt over ten years, (fortunately, both parties in Congress overwhelmingly rejected the President’s budget). Over the objections of a majority of the American people, they passed Obamacare and the Dodd-Frank Financial Regulations legislation, both of which add additional costs, additional regulations, and additional central control to our federal government. During a Congressional Recess without Senate approval, Obama appointed union activists to the National Labor Relations Board who have attacked Boeing’s implementation of a new non-union factory in Charleston, SC, (see “Attack on American Business by Obama “packed” NLRB!” and “Obama “packed” NLRB Continues Attack on Boeing & Free Markets!”) and the EPA under Lisa Jackson has stopped a Department of the Interior’s previously approved Shell Oil request to development a large oil reserve off the Alaskan coast, (see “Obama Administration Attacks American Business Again!”). They have allotted $27 billion for “Green Jobs”, which have not worked out well and have virtually shutdown oil and natural gas development (at a loss of thousands if not hundreds of thousands of good jobs). In summary, the obstructionist policies of Obama and the Democrats have produced a Congressional stalemate, hurt our economy, are stifling job growth, are hostile to business operations, and have increased our deficit and debt crises. What part of reckless and unsustainable spending, destructive regulations, and excessive government control of free markets and personal liberties don’t Liberal Democrats understand? It is no surprise that they feel threatened by The Tea Party.

Regarding taking responsibility and showing leadership, Obama has been demonstratively invisible. During his recent “Black Bus Tour” (in a bus made in Canada), Obama has blamed Bush, The Tea Party, Republicans, Congress in general, the earthquake in Japan, the Arab Spring, and the European Debt Crisis for our current economic problems. Never once did he admit or even suggest that his policies of irresponsible spending, uncontrolled borrowing, and increased federal regulation were part of the problem (see “Government Imposed Uncertainties Hurt Economic Growth!”). Other than the President’s outrageous budget proposal noted above and his endless generic campaign speeches, Obama has offered NO SPECIFIC PLAN to solve our economic problems and create jobs. Like Democrats in Congress he has been content to “kick-the-can-down-the-road”. Astounding behavior for the so-called leader of the free world! Again, it is no surprise that the President is afraid of the patriots in The Tea Party, who actually have a plan to get America back on track and are willing to take responsibility for it.

So, can we resolve our problems? In a previous article I outlined, six (6) specific suggestions, which I believe would improve our situation (see “Yes, We CAN Grow the Economy and Create Jobs!”). If our President and Congress are serious about solving our problems and restoring our economy, all of these suggestions could be accomplished quickly and all are consistent with the goals of The Tea Party. Overall, the message is to reverse the socialist movement toward a “nanny state”, get government off our backs, and return our country to the American people. Because most of my suggestions require reversal of Obama’s policies, it is unlikely that they can be pursued before the next election in 2012. Therefore, the 2012 election will be critical to our future as a great nation. Think about it and act accordingly!!

The Old Guy PhD

Debt Reduction: Bowles & Simpson Have it Right – Redux!

G’Day!

On April 1, I posted the article, “Bowles & Simpson Have it Right!”, suggesting that the Bowles-Simpson Debt Reduction Commission’s proposal was a good solution to our country’s deficit and debt crises. Subsequent articles have repeatedly referred to this proposal as a reasonable bipartisan way to address our federal fiscal problems, especially long-term debt, (see “Obama Ignores Bowles-Simpson Debt Reduction Commission – AGAIN!”, “Is Obama Really Serious about Debt Reduction?”, “Fiscal and Debt Crises – Tax Reform Essential!”). Approximately eight months after publishing the Commission’s preliminary report and 5 months after formal submission to President Obama, the “Gang of Six” in the Senate finally appears to be considering it. Perhaps there is some intelligent life in Washington after all. I hope so.

To resolve our unsustainable deficit and debt crises, we need significant comprehensive changes to improve revenues through comprehensive tax reform, to reduce discretionary spending including defense, and reduction/reform in entitlement programs for Medicare, Medicaid, and Social Security. All of these reforms: taxation, government spending, and entitlements, are essential to a comprehensive solution for our country’s problems and ALL must be addressed if we are to succeed.

Bowles-Simpson, which is still an appropriate bipartisan starting point, addresses all of these issues and was approved by 61% of the commission members. I hope it now gets the attention it deserves. The “Gang of Six” and Bowles-Simpson have identified nearly $4 Trillion in deficit reductions over ten years with an immediate reduction of $500 Billion. Both plans rely on government spending cuts and tax reform to lower tax rates, broaden the tax base, and increase tax revenues. These are all good initial actions and I would also suggest the addition of the House “Cut, Cap, and Balance Act, which specifically “Caps” government spending relative to GDP and includes a “Balanced Budget Amendment” provision to insure that our government performs its future fiscal requirements in a responsible way. Currently, polls indicate that over two-thirds of the American people want a “Balanced Budget Amendment” and do not want a further increase in our National Debt. Now is an appropriate time to deal with these issues to insure not only our own future but also more importantly, the future of our children.

If Congress and the President had seriously considered Bowles-Simpson earlier in the year, the debt crisis could already be resolved. We must bring responsibility to the country back into our government and significantly reduce its size.

The Old Guy PhD

Note: The original Bowles-Simpson article with “links” is repeated below for those who missed it.

Bowles & Simpson Have it Right!

In my previous posts, “Big Government IS Our Problem” and “Is Our Government Broken”, I laid out the current and projected fiscal and debt problems facing our nation and argued that significant contraction in government spending is immediately essential. Also essential is tax reform. Our taxes MUST be simplified, the tax base broadened, and tax rates reduced (especially business taxes), if we are to be able to compete in a global economy.

The Debt Reduction Commission’s “Co-Chair’s Proposal” released in December 2010 by the Co-Chairs, Democrat Erskine Bowles and Republican Alan Simpson and submitted to the President in February 2011, is an excellent and understandable overview of the recommendations, which, with minor modification, were approved by 11 of the 18 bipartisan members (61% approval) in December 2010. Unfortunately, the final vote fell short of the 14 votes necessary for the “Supermajority” needed to directly submit the recommendations to Congress. While the Co-Chair’s Draft Proposal differs slightly from the final report submitted to the President, it is worth reviewing for its importance, focus, clarity, and brevity. They have done an excellent job and their proposal deserves the immediate attention of the President and Congress. While no one will be fully happy with all of the commission’s proposals, rational behavior combined with cooperation and compromise by our elected government is necessary if we are to remain a solvent and great nation. The time for government to act is NOW!

The bipartisan Debt Reduction Commission worked from April – December 2010 to develop and present overall comprehensive recommendations to solve our country’s short and long term fiscal and debt crises. They have done their work well. The report addresses all the necessary areas required to resolve the issues including setting out ten (10) objectives, “Guiding Principles and Values”, beginning with “#1-We have a patriotic duty to come together on a plan that will make America better off tomorrow than it is today”; and “#2-The Problem is REAL – the Solution is Painful – There’s no Easy Way Out – Everything Must Be On the Table – and Washington Must Lead”. The other 8 can be read by clicking the link in paragraph above. After establishing the Guiding Principles, the following comprehensive “Five Part Plan” is recommended:

1.Enact tough discretionary spending caps and provide $200 billion in illustrative domestic and defense savings in 2015.

Pass tax reform that dramatically reduces rates, simplifies the code, broadens the base, and reduces the deficit.
Address the “Doc Fix” not through deficit spending but through savings from payment reforms, cost-sharing, and malpractice reform, and long-term measures to control health care cost growth.
Achieve mandatory savings from farm subsidies, military and civil service retirement.
Ensure Social Security solvency for the next 75 years while reducing poverty among seniors.

Implementation of the comprehensive Five Part Plan is projected to achieve nearly $4 trillion in deficit reduction through 2020, in addition to other specific improvements in debt and budget reductions summarized below:

Achieves nearly $4 trillion in deficit reduction through 2020: 50+ specific ways to cut outdated programs and strengthen competitiveness by making Washington cut and invest, not borrow and spend.
Reduces the deficit to 2.2% of GDP by 2015, exceeding President’s goal of primary balance (about 3% of GDP).
Reduces tax rates, abolishes the AMT, and cuts backdoor spending in the tax code.
Caps revenue at or below 21% of GDP and gets spending down to 22% and eventually to 21%.
Stabilizes debt by 2014 and reduces debt to 60% of GDP by 2024 and 40% by 2037.
Ensures lasting Social Security solvency, prevents projected 22% cuts in 2037, reduces elderly poverty, and distributes burden fairly.

The proposal outlines how to achieve the above results through specific recommended actions to improve revenues through “Comprehensive Tax Reform” alternatives, to reduce spending through “Discretionary Budget Options” including Defense cuts, reductions for entitlement programs through “Mandatory Budget Options” for healthcare and “Reforming Social Security”. All of these reforms: taxation, government spending, entitlements for healthcare and social security, are essential to a comprehensive solution for our country’s problems and all must be addressed if we are to succeed.

The Co-Chair’s Proposal is controversial but responsible, realistic, and deserves the serious consideration of the President and Congress, who are currently engaged in irrelevant political bickering over trivial spending cuts instead of the substantive fiscal and debt problems we face. Congress and the President should get together, agree on or revise as appropriate the “Guiding Principles and Values” above, and start to work for the American people and our country. Political posturing for re-election is NOT a valid course of action.

Currently, neither the Congress nor the President is addressing our fiscal and debt crises with any sense of urgency. The President and the Democrats are not only totally ignoring the problem but are fighting to avoid even minimal reductions from the inflated budget spending of the last 2-3 years. Federal Budget inflation nearly tripled our federal deficit from $0.459 trillion in 2008 to $1.3 trillion in 2010 and is expected to increase again to $1.7 trillion this fiscal year. Obama’s recent budget proposal for 2012 continues spending at $3.7 trillion and the deficit at $1.6 trillion. Additionally, Obama’s new budget projects a further cumulative deficit of $7.2 trillion for the next ten years – bringing our debt to approximately $22 trillion! This is not leadership; it is madness! Only the Republicans are even attempting to address the issue and, to date, their proposals are woefully inadequate. To be fair, the House Republicans through Representative Paul Ryan are promising to present a comprehensive budget in April that does address the looming long-term catastrophe we face. I hope they deliver.

Given the magnitude of our fiscal and debt problems, the current congressional squabbling is an inappropriate distraction from solving the overall crises facing our nation! Without an agreement on debt limits and/or spending cuts by April 8, our government may shut down. As noted in “Is Our Government Broken”, except for national security and some essential services, shutting down might actually be a good thing. Our government is too big, too irresponsible, and too self-centered. Can’t our Congress or Administration do math?

Where is President Obama’s leadership in all of this? Actually, at the time of this writing he’s currently travelling again and making speeches at a Democratic Party Fundraiser – big surprise. As usual, when leadership and responsibility for our country are required, Obama is absent. Last week with a national debt deadline imminent, Congress took a week off rather than stay in session to attempt to resolve the current national debt limit issue. Brilliant! Our elected representatives need to make financial solvency and economic growth a priority and get to work NOW!

We are on unsustainable fiscal and debt crises that, if not corrected quickly, will lead to potential financial and economic disaster for our country. Our government is oppressive and out of control, its growth must be stopped, and its intrusion in our lives and businesses reversed. We MUST maintain the entrepreneurial spirit necessary for economic growth and global competitiveness. We need to bring back the constitutional freedoms and personal liberties that led us to become the greatest nation on earth. Our government should immediately take up the Bowles-Simpson Co-Chairs’ Proposal.

The Old Guy PhD

Yes, We CAN Grow the Economy & Create Jobs

G’Day!

The Old Guy PhD

Is Obama Really Serious about Debt Reduction?

G’Day!

The answer is apparently “NO”, based on the 1^st & 2^nd Obama budget proposals for 2012 and the Democrats tooth-and-nail fight before agreeing to a miniscule and questionable $38 billion (a mere 3-4 days) in spending cuts this year from a current projected deficit of $1.7 trillion for 2011! However, they are serious about political posturing, fear mongering, and demagoguery against Paul Ryan and the Republicans for even proposing an earnest plan to resolve the crisis. As indicated last week in “Obama Ignores Bowles-Simpson Debt Reduction Commission – AGAIN!”, their answer is SPEND, SPEND, SPEND and TAX the success of the real investors and hard-working small businesses who are the genuine creators of economic growth, job creation, and wealth in our country. Their only solution is to tax the “Rich” when approximately 45% of the households pay no federal income taxes at all and the “Rich” (Top 2%, incomes over $250,000) already pay over 40% of the total! Tax reform is necessary but Obama’s proposals are neither the serious leadership our country needs nor even a nod of recognition for the fiscal and debt crises we face.

The Fed can’t print enough money to solve this problem without major devaluation of our currency and significant increases in inflation and interest rates. History has repeatedly shown that excessive government spending financed by debt combined with extreme increases in money supply usually results in a collapsed economy and crisis in government. Many other nations have tried this and failed miserably. For example, France tried this before and during the French Revolution and it ultimately led to the collapse of their currency, their economy, the failure of their government, and the rise of Napoleon as dictator. Germany tried this after WWI and it lead to the collapse of their currency, their economy, the failure of their government, and the rise of Hitler as dictator. For more information about financial crises see, “This Time is Different: Eight Centuries of Financial Folly”, by Carmen M. Reinhart & Kenneth S. Rogoff, who analyze financial crises in 66 countries in their 2009 book. Regarding “This Time is Different” they conclude, “It almost never is.”

America is not immune to the workings of economic forces and cannot continue as a great nation if we do not put our bloated and inefficient government spending on a sound fiscal path, cap government spending as a percentage of GDP, and appropriately modify (not eliminate) our currently unsustainable entitlement and social programs for long-term viability. Recent history suggests the sustainable level for federal government spending has been approximately 20% of GDP. Federal government spending was 20.7% of GDP in 2008, 23.8% in 2010, and is expected to be over 25.5% in the current year (the highest level in history, other than WWII). This is a +5% increase in the size of our federal government in the first 2-3 years of the Obama Administration! This is madness and must be corrected!

There is no question that many (but not all) government social programs are desirable; they are just not affordable or consistent with a vibrant, innovative, expanding economy, and rising standard of living for the American people. As I said last week, “We cannot continue as a great nation if we base economic policies on the failed socialistic principles of taking from those who work hard and succeed and redistributing their earnings to those who don’t.” Most other developed nations, including Russia, have learned the incentives and benefits of free market capitalism and our government needs to relearn them as well.

If President Obama was sincere about debt reduction, he would be listening to and acting on the recommendations from the bipartisan Debt Reduction Commission he established. The Bowles-Simpson Co-Chairs’ Proposal outlines how to achieve results through comprehensive and specific actions to improve revenues through tax reform, to reduce government discretionary spending including defense, and to reduce entitlement programs through healthcare and social security reform. All of these reforms: taxation, discretionary spending, entitlements for healthcare and social security are essential to a comprehensive solution for our country’s problems and, if we are to succeed, ALL must be addressed.

Our fiscal and debt problems are correctable if our government seriously addresses the needs of the country and not their political desires for reelection. If Obama, Democrats, and Republicans can’t agree on comprehensive legislation to reduce government spending and bring the size of government back to sustainable levels consistent with a growth economy, our country faces a potential sovereign debt crisis similar to those described in the book by Reinhart & Rogoff referenced above. I agree with Standard & Poor’s downgrading of the “outlook” for US Debt based on the political turmoil in our Government. The outlook for a government solution before the 2012 election is not good and I don’t believe Obama and the Democrats want a real solution. Currently, it appears Obama and the Democrats believe the American people are not intelligent enough to see the need for real government spending reform and are too self-interested to revise the social programs to sustainable levels. I do not agree with this view. I believe the American people are intelligent and don’t want to leave to future generations of Americans a damaged economy with an authoritarian bureaucratic government controlling our lives.

In my first post on this website, “Big Government IS Our Problem!”, I described in more detail the current Administration’s trend toward big government collectivism and the dangerous omens it portends for the future of our lives and our nation. In the 2 months since that posting, the situation has become worse and the socialist agenda of our President and the Democrats has become very clear. They do not appear to be serious about debt reduction or reducing government spending. If we are to have a successful and prosperous country in the future, we must take back our country and reestablish the principles of limited government, free markets, individual liberties, and sound fiscal & monetary policies. Get “Big Brother” out of the way and off our backs, reform taxation & spending, and our economy will recover faster and the future of our nation will be assured.

The Old Guy PhD

Obama Ignores Bowles-Simpson Debt Reduction Commission – Again!

G’Day!

Spend and Tax! Tax and Spend! Spend, Spend, Spend! This is the clearly defined policy framework outlined in Wednesday’s political speech by President Barack Hussein Obama. As noted in a previous post, “Big Government IS Our Problem!”. Unless we replace Obama and the Senate Democrats in 2012, big government, reduced personal freedoms, and unsustainable economic policies will continue to be with us for the foreseeable future. Why does the President continue to reject the bipartisan comprehensive proposal by the Debt Reduction Commission, (“Bowles & Simpson have It Right!”)? Can’t Obama and the Democrats do math?

In President Obama’s speech presenting his 2^nd new 2012 budget proposal in two months, he again, as usual, failed to exercise leadership by trashing the serious Republican debt-reduction budget plan of Paul Ryan, and by again refusing to incorporate important recommendations from the Debt Reduction Commission’s proposal. The President’s theme was to incorrectly accuse Republicans of taking money from Senior Citizens and Medicare to provide tax cuts for the “wealthy”. Obama knows better and, as President, should be ashamed of his attempt to mislead the American people. The Bowles-Simpson Debt Reduction Commission’s proposal is excellent and the President, the Democrats, and the Republicans should immediately and seriously pursue this comprehensive bipartisan recommendation, which was approved by a majority (61%) of the commission members. Our economic, fiscal, and debt problems cannot be solved by half-hearted and halfway measures. Everything must be on the table, considered, and acted on through an overall, thoughtful, bipartisan solution that benefits the American people not the political ambitions of the politicians.

In this regard, Obama’s speech was disappointing and pure politics, apparently intended to support his announcement to rerun for President in 2012 (hopefully unsuccessfully). The speech essentially ignored the Debt Reduction Commission’s recommendations and lacked real substance or specifics. In response to the Republican’s budget, Obama did propose to reduce the fiscal deficit from his 1^st 2012 budget by promising to raise taxes on the successful job-creators in our economy – not a good idea for growth and innovation if you understand economics. The speech primarily engaged in inaccurate political demagoguery aimed at Republican Paul Ryan’s 2012 budget proposal. VP Joe Biden was so impressed that he dozed off during the President’s delivery! The prospect of either the 1^st or 2^nd Obama 2012 budget proposal is potentially the same: a larger, bankrupt nanny-state in a slow-growth economy with lower than possible living standards, and a devalued currency with entitlements for non-producers supported by the few motivated and successful business managers, investors, and job-creators. Obama’s plan is an arrow aimed at the heart of entrepreneurs, innovators, and commerce.

In 2-3 short years Obama has increased government spending from an annual rate of $2.9 trillion in 2008 to an expected $3.8 trillion in 2011, increased our budget deficits by over $4 trillion and increased our National Debt by approximately 40% to nearly $14.3 trillion (over $1 trillion owed to China). In addition to this massive increase in the size and scope of government (which Obama now wants to “lock in”, not reverse), he has reduced our individual freedoms in healthcare choices (Obamacare), increased government control over our financial and consumer markets (Financial Regulation Bill including the powerful new Consumer Financial Protection Bureau), taken over private companies, halted domestic oil development, and expanded unsustainable fiscal and monetary policies. Obama is eroding virtually all the policies in which I personally believe and which made our country great, (see “Is Obama Our Worst President or Just the Weakest?”). How did we ever allow ourselves to believe his campaign rhetoric and fail to see through his lack of experience, leadership, and knowledge of the workings of an economy and foreign relations?

What is now quite clear is Obama’s personal commitment to increasing an already bloated and inefficient federal government and expanding bureaucratic control over our lives and our economy. He is attempting to change our entrepreneurial spirit of independence and freedom into a socialist state of citizens dependent on government handouts for our very survival. I would not be totally surprised if Obama adopted Herbert Hoover’s campaign slogan, “A chicken in every pot and a car in every garage”, with this addition: “Paid for by the US Government”.

We cannot continue as a great nation if we base economic policies on the failed socialistic principles of taking from those who work hard and succeed and redistributing their earnings to those who don’t. Even Russia learned that Karl Marx was wrong when he said, “From each, according to his ability; to each, according to his need.” History has shown that socialist policies, if pursued to their ultimate end, result in reduced individual incentive, slower economic growth, lower living standards, and domination by state bureaucrats over the lives of people, (see Nobel Prize Winner in Economics, “The Road to Serfdom”, F. A. Hayek). Obama and the Democrats do not appear to have learned this yet. They appear to have the elitist belief that government bureaucrats can make better decisions for the people than people can make for themselves. Capitalism and democracy aren’t perfect but they are far better than a government-controlled command economy and authoritarianism.

The incentives of capitalism combined with free markets, individual freedoms, and limited government are the best ways to achieve economic growth, prosperity, improved living standards, AND to remain competitive in the global economy. Our US Constitution supposedly protects these fundamental principles but they appear to be increasingly in jeopardy through the actions of our current government. Let’s stop this decay, get back to our traditional foundations, and correct the trend as soon as possible.

The Old Guy PhD

Government Shutdown, Who’s to Blame?

G’Day!

Our federal government is facing the distinct possibility of a shutdown this week. If the government is shut down, President Obama and the Democrats will have no one to blame for the crisis other than themselves.

Last year Obama and the Democrats devoted their time and effort on passing an ill-advised and budget-busting healthcare bill, which added significantly to an already unsustainable debt problem for our country. During this same period, President Obama and the Democrats, with total control of Congress and the Administration did not even pass a budget for our current 2011 Federal Fiscal Year!! This is not leadership and represents a total disregard of their responsibility to our country. If Obama and Democrats had performed their duties to the American people last year, the current budget crisis would have been avoided and there would be no possibility of a government shut down this week. They have NOT performed responsibly and did not fulfill their obligations to the nation.

As bad as last year’s performance was, it is now history and must be corrected by the new Congress with the old President. So, what has happened in 2011 to handle the current Democrat-created budget crisis? The new Republican-led House of Representatives passed a bill over 40 days ago repealing the Obamacare healthcare fiscal disaster, passed a bill calling for only $61 billion in spending reductions this year (approximately 6 days of government spending, see “Is Our Government Broken?”), agreed to Continuing Resolutions to keep our government functioning until April 8, and have just proposed another Continuing Resolution to avoid a government shutdown.

On the Democrat’s side, Obama submitted his 2012 Budget to Congress (an irresponsible fiscal and debt-busting budget disaster), which ADDS an expected $1.6 trillion to the deficit next year and $7.2 trillion over the next 10 years (see “Is Our Government Broken?”). The President’s 2012 Budget Proposal includes NONE of the suggestions from the Bowles-Simpson Debt Reduction Commission Proposal submitted in December, (see “Bowles & Simpson Have it Right!”). Until this week when, at the 12^th hour, he finally called Congressional Leaders together, Obama has been absent from the process of resolving this critical problem. Even the Democrats have complained about his lack of leadership on this issue. In addition, Obama has rejected the current Republican’s proposal for another Continuing Resolution beyond April 8. Obama has, however, found sufficient time during the first 3 months of 2011 to engage in golf, political speeches and fundraisers, and “Presidential Tourism”, while displaying a remarkable lack of leadership in the various Middle East crises, especially Libya. For their part, the Democrats in the Senate have failed to pass ANY bills regarding the budget problem, have stifled any progress on legislation to resolve it, and have engaged in political posturing by persistently blaming Republicans, especially the “Tea Party”, for the stalemate. Specifically, they did initially offer $10 billion in spending reductions this year (1 day’s government spending) and, reportedly are now offering a “non-specific” reduction of $33 billion (3 day’s government spending). It is important to repeat that the Senate, under the direction of Harry Reid (D-NV), has FAILED TO PASS a single piece of legislation on this year’s budget issue except the Continuing Resolutions, which end April 8. The House, under the direction of John Boehner (R-OH), passed legislation over 40 days ago.

It seems absolutely clear that President Obama and the Congressional Democrats are not serious about resolving the issue of this year’s spending and resolving the limit on our National Debt. My suspicions are they want a government shutdown and expect the Republicans will get the blame. I believe the history and facts are clear, if non-essential government services are forced to close, President Obama and Democrats in the Senate are fully responsible for the closure. I also believe that the American people are sufficiently intelligent and informed to recognize this and will properly hold President Obama and the Democratic Party accountable at the next election in 2012.

Frankly, as I have said before, other than national defense and essential services, shutting down the Federal Government might be a good thing. Certainly our government is too big and its growth, especially under Obama and the Democrats, is out of control. If all “non-essential” government workers were furloughed, we should have a clear indication of what size our government should be. By definition, “non-essential” means unnecessary. A case can always be made for “desirable” but “unnecessary” services. The key is the cost to the American taxpayer of the “desirable” service provided. The American people cannot afford to pay for every “desirable” idea and should not be forced to do so through taxation.

“Big Government Is Our Problem” and we MUST stop its growth and reduce its size. We need to return to our nation’s principles of free markets, sound fiscal and monetary policy, and limited government. Let’s elect national and state leaders that support these views.

The Old Guy PhD