Taxes – The Old Guy Phd

America, We have a Problem!

G’Day!

Yes, if we can still call it our country, America has a problem and it is Obama’s continuing push for “Big Government.” The results of his socialist policies are increasing dependency on government, more central control over our lives, slow economic growth, higher taxes, and unsupportable debt financing for the increased spending and expansion of government. Obama, Congressional Democrats, and the liberal media are promoting this unnecessary federal enlargement primarily for political purposes. Simultaneously, they are trashing the Republican Party for trying to do the right thing for our country by offering intelligent fiscal policies to correct the liberals’ addiction to spending and debt. All of these left-wing groups are ignoring the results of their policies and believe they know more about what is best for us than we know for ourselves. These liberals are very wrong and are hurting our country. Obama and his supporters are transforming America from a nation of “makers” into a nation of “takers.”

Our great country was created by people who came here desiring religious and individual freedom, economic opportunities, limited government, a fair legal system to protect their rights, and a democratic process that prevents development of the autocracies from which they fled. They left everything behind in the hope of a better life for their families and themselves. Our Founding Fathers and the American patriots risked their wealth and their lives to establish our independence from tyranny and create the freedoms our ancestors wanted and which we have enjoyed for over 200 years. Liberal and especially Obama’s socialist policies are undermining the country our Founding Fathers created. America’s historic virtues are being replaced with left-wing policies that are slowing job & economic growth, are rapidly expanding a dependency class that relies on wealth-transfer from the success of others, and exploding and unsupportable debt. Currently, there is no end in sight to this potential result. Is this the future you want for yourself and your children?

For the last century starting with Woodrow Wilson, these so-called “progressive” policies have been systematically undermining our individual freedoms, our Constitution, our capitalist economy, and the very fundamentals upon which our country was founded. FDR, Lyndon Johnson, and now Barack Obama have expanded these economically destructive policies in major ways. Perhaps more importantly, these policies have accelerated with Obama and are increasing the probability of our financial failure as a country. America cannot continue to support our current entitlement programs and government, let alone their enlargement. Throughout history socialism has not succeeded and, over time, nearly always results in oppressive central government, a debt crisis, and economic collapse. Under Obama in only five years our National Debt has increased by 70% from $10.0 trillion to $17.2 trillion. Make no mistake; these liberal groups really do want to control every aspect of our lives from cradle to grave and are apparently willing to risk bankrupting our country to accomplish this. If we do not stop them, the America in which you and I grew up and loved will likely be lost for our children and ourselves.

It is totally beyond my comprehension how we twice elected an inexperienced, unqualified, aloof, and imperial-minded President with few, if any, managerial skills to lead the greatest nation on earth. Obama’s singular skill is to be an impressive “talking head” by reading from a teleprompter. He has shown little interest or ability in effective leadership. The list of Obama’s economic failures and his foreign & domestic policy disasters is extensive; of which Obamacare is just the most recent. History will be the ultimate judge of Obama’s two terms in office and it is not likely to be favorable.

One of the few things Obama got right was when he said in a recent speech, “Republicans need to win an Election!” Absolutely true! The only way America can change Obama’s failing liberal policies that are continuing to damage our country, is to vote out the “tax, spend, and borrow” Congressional Democrats in the 2014 election and in 2016 elect an unbiased and qualified President who understands economics, foreign policy, supports our Constitution & individual freedoms, and truly believes in American exceptionalism. Obama has not been that leader.

Yes, America, we have a big problem and the problem is Obama and his left-wing supporters of “Big Government.” As noted above, on one thing Obama is right, if we want to correct the problem, “Republicans need to win an election.” Are you ready to do your part?

The Old Guy PhD

Obama-A Socialist America?

G’Day!

I agree with Dr. Charles Krauthammer, who indicated on National TV after this week’s State of the Union address, that President Obama’s intention is to transform America into a European-style Socialist State. Many of my articles over the last two years have suggested that Obama is a “Neo-socialist” – a person who believes in government control over all aspects of the economy, including wealth redistribution, regulations, “Executive Orders,” and central planning. (Neo-socialism is different from traditional ‘Socialism,” which is based on government “Ownership” of businesses and industries.) Neo-socialists want political and economic central control over the country but not the responsibility of ownership or consequences. Unfortunately, both socialism and neo-socialism are equally destructive to economic growth and individual liberties and has historically failed or is failing in nations that have pursued it. Is this the future you want for America?

Based on the President’s “Inaugural Speech” and the “State of the Union Address”, it appears evident that Obama and the Democrats have no real intention of reducing government spending, reforming entitlements, or even seriously addressing our federal deficit and debt crises. However, they are intent on more spending, more taxes, more regulations, more debt, and less freedom for the American people. Resuming the pattern of his first term, Obama also seems to be more interested in fixing “Blame” on everyone but himself (especially Republicans) for everything wrong, when he should be exercising bipartisan leadership to resolve our problems – especially the ones he has created or aggravated. In my opinion Obama’s idea of a “Grand Bargain” is to raise taxes by every means possible, including class warfare, to fund “Bigger Government,” “Entitlements,” “Green Energy,” “Climate Control,” “Wealth Redistribution” and any other project his neo-socialist ideology deems desirable. I believe America’s best days could be ahead but “Obammunism” is not the way to solve problems and is not good for jobs, the economy, the Middle Class, or the future of our great country. We need a President who is willing to represent ALL the people fairly, exercise impartial leadership, and take responsibility for the consequences of his actions and policies.

So how has Obama really performed so far? During his first Presidential Campaign, he promised “Change” to transform our government. Unfortunately, he has been remarkably successful in moving America in the direction of European-style socialism and a culture of dependency. In only four years the size of government has increased from 20% of GDP to 25% of GDP. Our annual Federal Spending has increased from $2.9 trillion to $3.8 trillion (an increase of over 30%) and is expected to continue for Obama’s second term. Our annual Federal Deficit has increased from $0.5 trillion to over $1 trillion (an increase of 50%). Our National Debt has increased from $10 trillion to over $16 trillion (a 60% increase and now more than 100% of GDP). In the first two years Democrats passed massive new legislation for government-controlled healthcare, sweeping regulations over the financial industry, and the use of “Executive Orders” by the EPA, the Department of Energy, and the unconstitutional appointments to the NLRB to regulate personal and business use of private property and erode personal freedoms. The Democrat controlled Senate has not passed a budget in nearly four years. Welfare dependency has increased significantly and forced wealth redistribution through higher taxes on the “Rich” was recently enacted (and Obama wants more). The economic results have been the worst recovery in decades and a decline in GDP in the 4th Quarter of 2012. Clearly, Obama has delivered on his promise to “Change” our country. Are these the “Changes” for which you voted? Do you believe continuing these policies will solve our problems and advance the future for our children?

In my opinion it is not too late to correct this adverse trend toward national decline and save our nation. America can resolve its fiscal and debt crisis and restore our country to a solid foundation of responsible government and future prosperity. However, this can only occur if we return to the principles that have made America the greatest and most exceptional country in the world. These principles are: Constitutionally protected individual liberties, free markets, sound fiscal and monetary policies, economic growth, and Constitutionally limited government. The “Obammunists” are rapidly leading us away from our founding principles and toward a future of economic stagnation, shared poverty, limited personal freedom, and dependence on government for much of our survival. Under Obama, America is quickly declining into a centrally controlled overregulated neo-socialist state with increasingly limited opportunities for aspiring individuals and companies to succeed.

So what should we do? We have a republic with democratically elected representatives. It is up to us to determine and vote for the representatives that place the future of America before politics and who will stand up for the best interests of the people and the nation. The first and most vital action we can take is to become informed about the issues and vote out the “Obammunists” in the 2014 election. This one single accomplishment will at least stop the decay and give us the opportunity to correct the damage being done by Obama and the Democrats. Currently, we should demand our President and Congress concentrate on resolving our fiscal/debt crisis, get our economy back on track, and create productive private sector jobs. As I outlined in many of my 45 previous articles, this can be done and we need to do it. The American People should not be the servants of the government. Government should be the servant of the people.

The Old Guy PhD

It’s the Entitlements, Stupid!

G’Day!

With apologies to President Clinton for modifying his famous phrase, this time “It’s the Entitlements, Stupid!” Virtually everyone with a functioning brain knows that our exploding National Debt and $1 trillion annual Federal Deficits are unsustainable. Without a solution to this government-imposed national crisis, the American economy will continue to stagnate, unemployment will be high, job opportunities low, and the country may ultimately decline into bankruptcy. Also, anyone with a functioning brain knows that the solution to this problem must involve compromise and agreement among the three (3) fundamental contributors to the problem; “Entitlements,” “Discretionary Spending,” and “Tax Revenues.” By listening to the Media, President Obama, and the Democrats, you would conclude that the sole cause of our country’s fiscal and debt crisis is insufficient “Taxes on Rich.” Nothing could be further from the truth. This is like trying to stand on a 3-legged stool with two of the legs removed.

Let’s analyze President Obama’s only publicly proposed solution, “Tax the Rich.” Our annual federal deficit is currently $1.3 trillion. Obama’s proposal with possible outcomes is presented below:

Obama “Tax the Rich” Proposal	Possible Annual Revenue (billions)	% Deficit Solved
Raise top 2 rates on Incomes above $200-250,000 from 33 to 35% & 36 to 39.6%	$44.2	3.7%
Raise Dividend tax from 15% to Ordinary Income Rate	$20.6	1.7%
Raise Capital Gains tax fro 15% to 20%	$3.6	0.3%
Reinstate the Pease limit on Itemized Deduction	$12.3	1.0%
Reinstate the Personal Exemption Phase-out (PEP)	$4.2	0.4%
Subtotal Tax increase for Upper-income	$84.9	7.1%
Restore Estate & Gift Tax to 2009 levels	$11.9	1.0%
Total Government Tax Revenue	$96.8	8.1%

The above result is a static analysis and assumes no income or behavioral change by taxpayers (highly unlikely). In total, Obama’s “Tax the Rich” solution would potentially generate $96.8 billion per year and solve a mere 8.1% of our annual fiscal deficit problem. Since neither Obama nor the Democrat leaders have publicly suggested any change in either “Discretionary Spending” or “Entitlements,” this would leave a continuing federal deficit of approximately $1 trillion per year or 92% of the fiscal problem unresolved. (Interestingly, a $1 trillion annual deficit is the amount in Obama’s currently proposed budget for the next four (4) years.) This is blind insanity and “Ostrich Management.”

“Entitlement” reform for Medicare, Medicaid, and Social Security combined with growth oriented “Tax Reform” and “Discretionary Spending” cuts are the only ways we can avoid the trap that Greece and other European socialist countries have created for themselves. By insisting ONLY on “Taxing the Rich” with no consideration for “Discretionary Spending” cuts or “Entitlement” reform, Obama appears to be more interested in political ideology than in solving our nation’s economic problems. Without correction, we will create a European slow growth dependent society for America and potentially financial collapse. We must demand a better and more comprehensive performance from our government. I believe the Republicans are correct in demanding that any agreement on additional tax revenues must be accompanied by significant cuts in federal spending.

Let’s review some fundamental facts about our unsustainable National Debt and continuing Fiscal Deficits. The table below summarizes the major items in our national economy and Obama’s 2012 enacted budget.

Item	2012 Budget Amount (Billions)
Total Current National Debt	$16,200
Estimated Gross Domestic Product (GDP)	$15,797
Total Federal Government Receipts (Tax, etc.)	$2,469
Total Federal Government Outlays	$3,796
Annual Federal Surplus (Deficit)	($1,327)
Total Mandatory “Entitlement” Outlays	$2,252
Health (Medicaid, etc.)	$361
Medicare	$484
Social Security	$818
Income Security (Food Stamps, Unemployment, Housing, etc.)	$580
Net Interest on Debt	$225
Total “Discretionary” Outlays	$1338
National Defense	$702
Education	$79

Federal outlays in 2012 are expected to be $3.8 trillion (24% of GDP) with a $1.3 trillion deficit after government revenues of $2.5 trillion. Mandatory “Entitlements” total $2.3 trillion, (60% of federal outlays and approximately 15% of GDP), AND are growing at an alarming and unsustainable rate. Discretionary federal outlays (including National Defense) are $1.3 trillion. Simple math indicates that to balance the budget without “Entitlement” reform, the entire Federal Government “Discretionary Spending” (including National Defense) must be eliminated or tax revenues increased across-the-board by approximately 50% to eliminate the deficit. Neither of these alternatives individually or in combination is feasible or desirable. Currently the largest federal “Entitlement” outlays are: Health (Medicaid) & Medicare $845 billion, Social Security $818 billion, Income Security $580 billion, and Interest on Debt $225 billion. (Please note that “Interest on Debt” is unusually small based on an artificially low interest rate (approximately 1-1.5%) resulting from global economic problems and monetary support by the FRS. When interest rates return to normal levels the $225 billion could easily double or more in a very short period of time. Remember, interest rates were in the double digits in the late 1970s and early 1980s. Just look at the recent government borrowing rates in the troubled countries in Europe.)

While the mandatory “Entitlement” programs have good intent and are desirable, they are not sustainable and are inconsistent with economic growth policies. “Entitlements” are where the big federal outlays reside and must be part of a major solution to our fiscal and debt crisis. “Entitlement” reform is the most significant fiscal spending problem we face. Fortunately, we have excellent proposals from Conservatives and bipartisan groups available on how to fix “Entitlements” (see Bowles-Simpson, “The Moment of Truth,” Domenici-Rivlin, “Restoring America’s Future,” and The Heritage Foundation, “Saving the American Dream”). It would be helpful if Obama and the Democrats would acknowledge these or offer proposals of their own. It won’t be easy but as I said in the title, “It’s the Entitlements, Stupid!”

Let’s get to work and save our country!

The Old Guy PhD

The November Election – A National Intelligence Test for America!

G’Day!

On November 6, 2012 Americans will have the most important opportunity in our lifetimes to determine the future course for our great country. At stake is nothing less than the fiscal survival of our currency, our individual freedoms, and our nation. Obama’s $1.3 Trillion annual deficits, the $16 Trillion National Debt, and our expanding entitlement programs are totally out of control. They will eventually destroy our country if they are not corrected. For important information about President Obama’s background and possible agenda, which have not been reported in the liberal media, I recommend that all voters regardless of political affiliation see the factual and unbiased documentary, “2016: Obama’s America”. This highly successful film is based on a NY Times Bestseller by Dinesh D’Souza and co-produced by Gerald R. Molen, who produced “Schindler’s List”. Before you vote, think very seriously and very deeply about Obama’s agenda, the policy alternatives presented by both parties, and their implications for the future of our children, ourselves, and America. Never in recent history has the intelligence and participation of American citizens been more crucial to our future.

President Obama in his Acceptance Speech at the DNC said, “This election is the clearest choice between two different visions for America.” ABSOLUTELY TRUE! At that same convention former President Bill Clinton regarding fixing the National Debt said, “It’s Arithmetic!” In the 1992 campaign Clinton also said, “It’s the Economy, Stupid!” Clinton is also right (no pun intended, but appropriate)! Unfortunately for America, the mistakes are that Obama and the Democrats are wrong with their “Vision”, wrong in their ability to do “Arithmetic”, and wrong in their performance on the “Economy”. The Democrats want to make this election about personality, misinformation, & blame of others for failure. Republicans want the election to be about rational policies, truth, and solutions. Obama and the Democrats, supported by a biased liberal media, are counting on the “Middle Class” to be too stupid to realize that they are being manipulated by words not action. Michael Knox Beran, author and contributing editor of City Journal, said, “A campaign based on so little comes perilously close to being an exercise in self-pity and a study in the very nearly pathological egotism of a man afraid to lose.”

This election IS the clearest choice between two different visions for America, which I have identified as Republican (R) and Democrat (D) in the following comparisons. Ignoring personality, as we should, this election is a clear choice between sound fiscal policy (R) vs. unsustainable fiscal policy (D), less government (R) vs. more government (D), more individual and business freedom (R) vs. less individual and business freedom (D), lower taxes (R) vs. higher taxes (D), free market capitalism (R) vs. centrally controlled neo-socialism (D), stronger national defense (R) vs. weakened national defense (D), private doctor-based healthcare (R) vs. central government mandated healthcare (D), strong foreign policy (R) vs. weak and apologetic foreign policy, and, perhaps most importantly, more support for the US Constitution (R) vs. less support for the US Constitution (D). These are the real issues we will be voting for or against in November. Do not make the mistake of letting the soaring 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 the country.

The Democrats have tried hard to use slogans that imply that they alone care for the American people. Really? Can anyone NOT believe that both parties want everyone to have, “a fair shot”, “get a fair share”, and “play by the same rules” (see “Obammunism-What is ‘Fair’”)? Does anyone really think that Romney & Ryan are anti-women, anti-poor, anti-elderly, or anti-immigration? Can anyone seriously believe that Republicans will “end Medicare as we know it”, “throw grandma off the cliff”, or raise taxes on the “Middle Class”, when both Romney and Ryan categorically deny this. Can any intelligent person believe that a choice to support the overwhelming success of individual freedoms and free market capitalism vs. the historical and current failures in Europe of centrally planned socialism represent a “return to the failed policies of the past”? Can any thinking person believe that Obama’s “tax the rich and spend policy” will solve unsustainable entitlements, a $1.3 Trillion annual deficit, and the $16 Trillion National Debt Crisis? Does anyone believe that Democrats (other than Clinton) can do Math? As Clint Eastwood said at the RNC, “When someone doesn’t do the job we’ve got to let them go!” We will have our chance to “let them go” in November.

I believe that both Obama and Romney are essentially good men, as are Biden and Ryan. Many of the objectives for both parties overlap. Both want job creation, economic growth, and equal opportunities for all Americans. In addition, Romney/Ryan and the Republicans support The Constitution, private property rights, a realistic job-creating energy proposal, private doctor/patient-based healthcare, and actually have a plan to fix the Federal Deficit, solve the National Debt crisis, and balance the Federal Budget. The differences are in the communications, the vision and the policies.

This election IS a National Intelligence Test for the American people. Are we wise enough to study the issues, see through the fog, and vote our own minds for what is best for our country? What do you want, a President with a charming smile and clever rhetoric dedicated to his own reelection or a President dedicated to solving America’s problems with serious policies? I have faith in the ultimate wisdom of the American people to support individual freedom, free markets, sound fiscal and monetary policy, economic growth, and limited government over the Obama alternative. For me the answer is clear – “Save America-Elect Romney & Ryan in November!”

The Old Guy PhD

Wake Up America – Obama is Hazardous to Your Health (& Wealth)!

G’Day!

Not only is Obama hazardous to your health and wealth, he is even more hazardous to our Constitution, our personal freedoms, our national defense, our foreign policy, our economic growth, our energy independence, and our very fiscal survival as a country. If Obama and the Democrats are left unchecked (pun intended), our capitalist freedom-loving nation, that has been a model for the world for over two centuries, could become a centrally mandated, entitlement state of mostly parasites living off the productive endeavors of fewer and fewer successful hard-working citizens. At worst, America could turn into a failed bankrupt state. Given the apparent Obama agenda of dictated economic equality and oppressive federal government control over all aspects of our social, economic, and personal lives, the freedoms and opportunities for the hard working Americans will continue to be eroded through increasing regulations, restrictions, and taxes. It appears that Obama’s intent is to engage the nation in “class warfare” in order to make us all equally poor and dependent on the federal government for our survival. Unfortunately, it sounds a lot like communism to me. As “The Economist” headlined in February: “Over-regulated America: The home of laissez-faire is being suffocated by excessive and badly written regulation”. Regrettably, this appears to be true!!

Regarding health, all I need to say is “Obamacare”. Approximately two-thirds of the country doesn’t want it. It has and will continue to increase both healthcare and business costs and will inhibit job and economic growth. It will penalize medical innovation, decrease incentives for doctors, and increase direct and indirect taxes for those who actually pay them. It is a massive increase in government’s intrusion in our lives and will ultimately result in government-rationed healthcare including end-of-life decisions by bureaucrats. Hopefully, the Supreme Court will correctly declare the act unconstitutional and we can return to a logical and rational free-market based system with reasonable government support for the truly needy. I lived in Europe for approximately ten years and can assure you even our current system, which can be improved, is far better than “Obamacare”.

Obama is clearly an “elitist” who does not support our Constitution. The Constitution is the foundation of our individual liberties and places strict limits on federal government power. Obama appears to believe that he and his administration are smarter than our Founding Fathers and are more qualified than Congress or the people to make decisions and rules controlling our lives and our economy. Obama’s agenda is found throughout his administration and especially in his policies for Energy, Environment, Labor, Defense, and the Department of Justice, not to mention his appropriately named “Czars”. Look at the damage these federal bureaucracies have done during his brief term in office. Obama is trying to force his socialist agenda of an all-powerful federal government on the American people. He is even trying to bypass Congress with excessive use of executive power through administrative mandates. This is not the way our Founding Fathers intended the three branches of our government to function and is not good for our country.

Obama’s financial and economic policies have been and continue to be an accelerating train wreck for America. Suffice it to say that in only three years he has increased our national debt by over $1 trillion every year and in total by $5 trillion to more than $15 trillion (+50%), so much for electing a Community Organizer to run the country. Over the last year I have written many articles about how totally unsustainable and incomprehensible his financial and fiscal policies are. His Presidential budgets and the Dodd-Frank regulations are obvious examples of bad proposals and legislation. President Obama may be charming but he is a disaster for the future of our nation.

How many of you really believe Obama’s National Defense and Foreign Policies over the last three years have been favorable? Do you believe our country is safer and that our influence throughout the world has improved under Obama’s guidance? Do you feel that ignoring European desires, especially Poland and the Czech Republic, and caving in to Russia’s demands to eliminate the European missile defense shield has made Europe or the United States more secure? Has this concession to Russia resulted in any change in Russia’s willingness to cooperate with us on Iran, Syria, the Israel-Palestinian conflict or any important foreign issue? Has the abrupt withdrawal of armed forces from Iraq caused the Iraqi to experience less internal hostilities and regard us more favorably than before? Has the ill-advised announcement of a specific timetable for unilateral withdrawal from Afghanistan improved our relations with the Afghan government and the Taliban or resulted in a reduction of hostilities? Has his policy regarding Israel improved or worsened their conflict with the Palestinians in the West Bank? Have the unilateral defense cuts, including cancelling of the NASA Space Program with the immediate lost of thousands of highly trained technology jobs improved our ability to defend ourselves or compete scientifically in space with China, Russia, Iran, or even North Korea? Have our relations with China and Pakistan improved under Obama? And finally, how is the containment of Iran’s nuclear program going? Are these the policies you want continued by our government? I know that I do not.

Regarding Energy, the arbitrary Energy Department and EPA restrictions on fossil energy use, exploration, and development have made us more dependent on foreign energy sources from unstable regions of the world and increase our energy costs. Does the stoppage of the Keystone Pipeline from Canada and the associated loss of desperately needed domestic jobs make any sense to anyone other than radical environmentalists? Will the newly released emission standards on coal-fired power plants kill the coal industry and result in thousands of lost jobs. These administrative mandates will result in higher gas prices, higher energy prices, lower employment and less economic growth at a time when our country is struggling to recover. Obama and his administration should realize that our nation and the world will be dependent on fossil fuel energy for years and probably decades. We have abundant domestic sources of oil, natural gas, and coal available if our government would let us develop and use them. And, if we do not, the security of America will be in jeopardy and we will be at the mercy of unstable nations that do not like us. I for one am totally mystified. What is Obama thinking? I do not want to believe that Obama intentionally wants to destroy our country but his policies are certainly trending in this direction. This is not good.

As I said in last month’s article, “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.” WAKE UP AMERICA!

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

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

Bowles & Simpson Have it Right!

G’Day!

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.

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 Old Guy PhD