Tag: federal debt

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

Debt Crisis – Whatever happened to Bowles-Simpson?

G’Day!

The bipartisan Debt Reduction Commission co-chaired by Democrat Erskine Bowles and Republican Alan Simpson completed and submitted to President Obama in February a rational and comprehensive approach to our country’s fiscal and debt crises. I posted articles praising the work of the co-chairs and the commission members on April 1, April 16, and July 22. (See “Bowles & Simpson Have it Right!”, “Obama Ignores Bowles-Simpson Debt Reduction Commission – Again!”, and “Debt Reduction: Bowles & Simpson Have it Right – Redux!”) To date, President Obama, the Democrats and the Republicans in the House and Senate have fundamentally ignored their proposal. Why their recommendations have been ignored by our government, and especially by the President, who established the commission, is a “puzzlement”?

The final Co-Chair’s proposal, “The Moment of Truth”, included both long and short-term government actions to resolve our fiscal and debt crises, contains nearly $4 trillion in debt reduction over 10 years, and was approved by eleven (61%) of the eighteen bipartisan members of the commission. As stated in Guiding Principle #2 of the draft report, “The Problem is REAL – the Solution is Painful – There’s no Easy Way Out – Everything Must Be On the Table – and Washington Must Lead”. Their proposal is comprehensive. It includes cuts and caps on discretionary spending and revenue enhancements through major tax reform to broaden the tax base, simplify the code, reduce tax rates, and cap revenue at 21% of GDP. It reduces spending for entitlements including healthcare and social security and eventually caps total spending at 21% of GDP. The proposed plan stabilizes the debt by 2014, reduces debt to 60% of GDP by 2024 and 40% by 2037. What’s not to like??

As noted above, it is a mystery to me why this proposal, developed and approved with bipartisan support, was shelved by Obama and ignored by Congress since it was formally delivered to the President nine months ago. While these are difficult and trying times, we should expect and demand that our President and Congress put partisan bickering and reelection concerns aside and act for the benefit of the American People. Time spent on campaign fundraising does not reduce our debt or improve job creation and economic growth. We deserve rational behavior from our elected representatives and should demand the compromise and cooperation necessary to correct our economic problems and return our great nation to a path of growth and prosperity. Admittedly, the Co-Chair’s proposal is controversial. It is also realistic, responsible, comprehensive, and should be receiving the immediate and serious attention of our President, Congress, and currently the “Super-Committee” (who are looking for a mere $1.2 trillion over ten years).

Every sensible citizen knows America has an unsustainable debt crisis that, if not corrected quickly, will lead to financial and economic disaster for our country. Socialism does not work. Greece is not a role model for government in America. Our current government is too large, too oppressive and is out of control. Economic growth is based on opportunities not restrictions and lower tax rates not higher regulations. Escalating government spending must be halted and its intrusion in our lives and businesses reversed. Tax reform to broaden the tax base, simplify the code, lower rates (especially corporate), and increase revenues is essential. Our government MUST be business friendly and promote 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 be the greatest nation on earth. The Bowles-Simpson proposal is a good start.

The Old Guy PhD

Personal Responsibility – What Happened to Our Pioneer Spirit?

G’Day!

It is obvious that the current members of The Democratic Party did not create our great country. They would never have taken the risks and hardships of crossing the Atlantic and relying on their own abilities for survival without an established government “socialized safety net”. So what has happened to the original American “Pioneer Spirit” of personal responsibility and risk-taking, free of government interference and control? Why have so many of us allowed ourselves to be deluded by lawyers and politicians into believing that the government or “someone else” is responsible for our personal security, retirement, healthcare, employment, injury, or any problem that we face? Why is America becoming a European-style socialist “nanny” state at the same time Europe is finally realizing that unconstrained collective socialism not only does not work but also restricts economic growth AND is ultimately unaffordable? Greece and Portugal are current examples and others may follow. IT IS NOT POSSIBLE FOR THE GOVERNMENT TO SOLVE EVERY PROBLEM OR TAXPAYERS TO PAY FOR EVERY DESIRABLE SOCIAL GOAL OR ADDITIONAL REGULATION OR BUREAUCRACY OUR POLITICIANS WANT! Solving every social issue through additional taxation and government spending is neither affordable nor achievable and only retards economic growth and wealth creation for all. Wealth is not created by taking from those who earned it and giving it to those who did not.

Our pioneer ancestors came to this country searching for freedom from many different oppressions and the opportunity to build independent productive lives free from excessive government control and interference. Our ancestors accepted total personal responsibility for any risks they took. They understood that, whatever the outcome, their future and the future of their families were based on their own decisions and how well they made and executed them. Millions of immigrants have come to our country for the “opportunity” and not the “guarantee” of a better life. We need to rekindle this spirit in our country, get government off our backs, and retake personal responsibility for our lives.

For well over our first century as a country, we experienced essentially free markets and constitutionally protected individual liberties, which were largely free of federal government controls. We experienced problems but grew and prospered into a great nation. Major federal government intrusion in our commercial and personal lives really began with the passing of Constitutional Amendment XVI in 1913 authorizing direct federal income taxes. In 1913, federal government spending was less than 3% of GDP. From that year forward the size of our government and its control over our lives and commerce has inexorably increased over time, especially under F. D. Roosevelt’s “New Deal” in the ‘30s, Johnson’s “Great Society” in the ‘60s, and in this century Bush II’s “Prescription Drug Program” and Obama’s “Healthcare and Financial Regulation”. Except for WWII, the current size and scope of government spending has never been as high as it is now under the Obama Presidency at approximately 25% of our GDP! Just since Obama was elected, Federal Government ANNUAL spending has increased 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 $14.3 trillion! The Democrats in Congress have not passed a Federal Budget for over 800 days and have so far rejected all attempts this year by the Republicans to pass one for next year! To paraphrase Bill Clinton during the 1992 Presidential campaign, “It’s the Spending, Stupid!”

In July, my post highlighted the fact that our Founding Fathers risked their very lives, not just reelection, with “The Declaration of Independence”. Eventually, a new nation and a new government, unlike any other in history, were born based on their courage, vision, and desire to preserve this spirit of independence and freedom and to protect it for future generations. Our Founding Fathers were incredibly wise and shortly after gaining our independence from England, realized the potential flaws inherent in pure democracy, and created a written “Constitution” and subsequent “Bill of Rights” establishing the role of federal vs. state government, protecting the rights and freedoms of individual citizens from the government, and establishing appropriate mechanisms to amend the Constitution as necessary without destroying it from within.

Where are we today? We have an emerging “nanny-state” in which many believe that anything bad that happens is NOT personally their fault and it must be the fault of “someone else” or the responsibility of the government to correct. In other words, we are giving up personal freedoms and responsibilities and becoming a nation of dependency on government. Our ancestors would be appalled! The government cannot and should not try to protect us from all misfortunes or bad decisions we make ourselves. Historically, Americans don’t want or need a “handout”; they want an opportunity and the freedom to get a “leg up”. Today, only the Republicans, especially the “Tea Party”, are even attempting to risk reelection by taking a long-term view of our country’s needs. They are actually proposing fiscal solutions to correct the spending disaster that our governments have imposed on us. So what has been the “Tea Party’s” reward for standing up for what is right? They have been the subject of malicious vilification by the Obama Administration, Democrats, and segments of the media and have even been called “Terrorists”! Unbelievable! The Tea Party members are currently our true “Patriots” and should be praised for refusing to accept the short-term and totally inadequate fiscal “Band-Aids” proposed by the Democrats. Instead of addressing our long-term problems of unfunded and unsustainable entitlement programs, the Obama Administration and Congressional Democrats are ignoring the problem and are attempting to blame the Tea Party for our economic and political problems. The Administration and Democrats are not only continuing their failed policies down this path of national destruction but also seem to be intent on accelerating its speed of decline. More Liberal Madness!!

So what should be done to halt the increasing culture of dependency on the government and return prosperity and growth to the people and to our country? Our government must set priorities within “Capped” budget constraints (see “Is a Balanced Budget Amendment Necessary?”) and make rational cost-benefit trade-offs before commitments to any new or continuing government socially/politically motivated programs and bureaucracy are approved. For starters, every new law or program should have a built-in “Sunset Clause” specifying that it must be reapproved by a set date or it is terminated. As detailed in “Yes, We CAN Grow the Economy and Create Jobs!” at least six specific 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, and 6) Pass the three pending Free Trade bills and expand them to include other trading partners. More is possible but this would be a good beginning.

In short, we need to return to the principles of a constitutionally limited government and individual freedoms created by our Founding Fathers. Returning to our fundamental principles of individual freedoms, free markets, sound fiscal and monetary policy, economic growth, and limited government is the proper course of action. The government should get out of the road and let entrepreneurs and businesses generate the economic growth, job creation, and increasing wealth of which they are capable. Let’s get to work!

The Old Guy PhD