Tag: Great Depression

The Presidential Debates – Romney Wins Round One!

G’Day!

Finally the American people were able to see both the real Romney and the real Obama on the same stage, at the same time, unfiltered by spokespersons or the biased Liberal Media. The debate was informative and enlightening and a huge victory for Presidential Candidate Romney.

Romney was enthusiastic and passionate, decisive, well prepared, well organized, and armed with better specifics of both his own proposals and those of Obama. Romney was more confident and professional in his delivery, firm but friendly in responding to the questions of the moderator, Jim Lehrer, and those of Obama, and quick to stand up for his principles and to correct the misinformation presented by the President. Romney stood solidly in favor the basic tenets established by our Founding Fathers in The Declaration of Independence, The Constitution, and The Bill of Rights. The most significant of which is a government limited to protecting national security, individual freedoms, private property rights, free markets, and providing fair and impartial justice. In his debate remarks Romney laid out a five part path to future growth and prosperity: Energy Independence, Free Trade, a Balanced Budget, Improved Education, and Tax Reform. I’m in – are you?

On the other hand, Obama was not well prepared, poorly organized (even rambling at times), and appeared uncomfortable in the setting and especially with Romney’s challenges and corrections of his misinformation. He was lackluster, hesitant, and vague in his presentation, repeatedly relying on the familiar “bumper sticker” slogans used during his campaign – “fair shot, fair share, same rules”, “failed policies of the past”, “saved us from the biggest recession since the Great Depression”, etc. How many times do we have to listen to this misinformation? During the debate President Obama looked bored, did not seem to want to be there, and became increasingly uneasy. Obama has not been seriously challenged since the primary against Hillary Clinton and even then the Liberal Press “had his back” as they have persisted in doing since his election. When everyone around you, including most of the Press, fawns over your very presence and you win the Nobel Peace Prize for actually doing nothing other than being elected, it is difficult, especially without a “teleprompter” or agents to spin the issues on your behalf, to be publicly challenged by an opponent who is equally or better educated, has far more experience, and has high religious and moral standards. It makes you wonder just how capable Obama is in serious negotiations with other world leaders? Obama did make it clear again that he believes Big Government, higher taxes, more regulations, less personal freedoms, and more spending are the answer to our economic, fiscal, and debt problems. Do you?

As stated in my last article, “The November Election-A National Intelligence Test for America!”, this election IS the clearest choice between two different visions for America: sound fiscal policy vs. unsustainable fiscal policy, less government vs. more government, more individual and business freedom vs. less individual and business freedom, lower taxes vs. higher taxes, free market capitalism vs. centrally controlled neo-socialism, stronger national defense vs. weaker national defense, private doctor-based healthcare vs. central government mandated healthcare, strong foreign policy vs. weak and apologetic foreign policy, and, perhaps most importantly, more support for The Constitution vs. less support for The Constitution. These are the real issues from the debate and which we will be voting for or against in November. Do not make the mistake of letting Obama’s campaign rhetoric and a prejudiced Liberal Media systematically brainwash and deceive you into failing to think for yourself and to vote for what is right for our county.

As I have stated in previous articles, our nation was established on the fundamental principle that government is the servant of the people, not vice versa. It’s time to take back our country. Vote in November!

The Old Guy PhD

Is a Balanced Budget Amendment Necessary?

G’Day!

Yes, the Constitutional Amendment is necessary given the dysfunctional behavior of our government, and No, it is not necessary (even undesirable) in economic theory because it limits the flexibility of our government. So what should we do??

Given the past and current inability of our Congresses and Presidents, both Democrats and Republicans, to act responsibly regarding fiscal budgets and debt policy for our nation, a “Balanced Budget Amendment” to the Constitution appears to be necessary. This amendment should mandate a federally balanced budget including a federal spending “Cap” of no more than 20% of GDP (preferably less), and with “Safety Valve” exceptions granted only for “War” or “National Emergency”. These exceptions should require a “Supermajority Vote” in Congress to authorize and the signature of the President to enact. Unfortunately, short-term personal political motivations appear to be stronger than the long-term fiscal responsibilities to our national economic needs. Therefore, we do need a “Balanced Budget Amendment” to protect the American People from continued irresponsible and dysfunctional fiscal and debt behavior by our federal legislators and Presidents. If we needed any additional indication of the necessity to curb government spending, the recent federal debt downgrade from AAA to AA+ by Standard & Poor’s should suffice.

Forty-nine States have some version of a balanced budget requirement (only Vermont does not). Interestingly, Germany and Switzerland, both strong financial nations, also have a balanced budget requirement. This forces their legislators to behave in a responsible manner that protects the national fiscal and long-term debt interests of the people they were elected to serve. Without such a constitutionally protected provision, including the “Cap” on federal spending above, lawmakers are prone to ignore the long-term fiscal consequences of the laws they pass and focus on their own short-term reelections. The relentless historical increase in our national debt and especially the current deficit and debt crises are clear evidence of irresponsible short-term decisions by our Federal Government.

Prior to the passage of 16th Amendment in 1913, which permits federal income taxes directly on the people, we had governments that were forced to limit their size and spending to a level reasonably consistent with federal revenues. The funds available required adherence to the provisions for limited federal government defined in our Constitution and required the establishment of appropriate priorities for federal programs and services. In other words, our government was reasonably forced to live within its means. What a revolutionary concept!! After the 16th Amendment, our government could (and did) simply increase income taxes or borrow to meet whatever programs or bureaucracy they deemed desirable, not necessarily important or essential. In 1913 federal spending was less than 3% of GDP. In 2008, President Bush’s last year, federal spending was approximately 20% of GDP and this year under Obama, the federal spending is estimated to be 25% of GDP. This is madness and does not serve the American people.

As mentioned above, since 1913 our elected officials have relied on increasing income taxes on the American people or debt to pay the increased costs of the programs and bureaucracy they desired, regardless of the cost, need, or even importance of these programs to the American people. It is easier for politicians to identify a socially “desirable” program than to identify and justify its costs and priority to the taxpaying public and its overall benefits to society. Our government has merely increased taxes to pay for these new or expanded social entitlement programs or added to our National Debt by borrowing the missing funds (increasingly from foreign sources, like China). In 2008 our National Debt was $10.0 trillion, a $4 trillion increase in eight years under President Bush. Currently, under President Obama in only two and one-half years, our National Debt has increased another $4 trillion (a 40% increase) to $14.3 trillion and, even after this week’s debt agreement, is projected to grow another $8 trillion to approximately $22 trillion over the next 10 years. This is more than 100% of projected GDP, is not sustainable, and must be corrected.

In economic theory (especially Keynesian), a balanced budget amendment would limit our government’s flexibility. It would restrict government fiscal actions to correct imbalances in our economy, such as running “deficits” to stimulate the economy during recessions and the use of “surpluses” to retard excessive and unsustainable growth. In theory, this should smooth economic growth by limiting the magnitude of peaks and valleys in the business cycle. This in turn would restrain “booms”, minimize “busts”, stabilize economic growth to reasonably sustainable levels, and avoid excessive fluctuations in job markets. Nearly all economists believe that prudent use of this power is good but excessive use is bad. All good stuff in theory! Unfortunately, the behavior of our governments and the actual results have not followed the theory. “Excessive use” has repeatedly hurt our economy and job growth starting with FDR in the “Great Depression” and currently with the Obama Administration’s “Stimulus”, expansion of government size, and spending to support his big government agenda. Also, when federal surpluses were possible, as with the Kennedy, Reagan, and Bush tax rate reductions (all of which increased economic growth and tax revenues), Congress quickly initiated new spending programs to use the money (Johnson’s “Great Society”, Bush’s wars, and the Democrat Congress’ Prescription Drug Program in Bush’s second term). As I have repeatedly said, socialism and long-term economic growth are not compatible. Most other nations, including many in Europe, and especially Russia, India, and China, have learned this and are increasingly relying on free market economies and prudent fiscal and monetary policies.

Since the founding of our nation, balanced budget legislation has been discussed. Thomas Jefferson was the first President to think seriously about requiring balanced budget legislation to maintain fiscal discipline and he actually wanted to ban federal borrowing power to limit the potential size of federal government. Ultimately, he concluded this would be too restrictive in times of emergencies, especially wars. For over 200 years our nation has relied on the wisdom and responsibility of our elected officials to act appropriately on behalf of the American people. The introduction of the federal income tax amendment above combined with the evolution of our short-term political reelection process has unfortunately undermined the ability of our legislators to perform their fiscal duties to serve the long-term interests of the American people. It is time to renew the effort to force our federal government to behave responsibly. Clearly, history, since 1913 has shown that they cannot be trusted to do it on their own.

So “Yes”, we do need a Constitutional “Balanced Budget Amendment” with federal spending “Caps” and a “Safety valve” for national emergencies to rein in the reckless fiscal behavior of our elected officials. Our governments are increasingly turning our nation into a centrally controlled socialist debtor nation. These policies are not the foundation of freedoms upon which our country was created and which made America great. It’s time to return our country to the individual liberties, free markets, sound fiscal and monetary policy, economic growth, and limited government upon which it was founded.

The Old Guy PhD