Telemachus

'Don't Know Much About History, Don't Know Much Biology...'

2012-05-29T05:28:00.002-07:00

You know these great words as coming from one of the great songs ever by Sam Cooke officially known as '(What A) Wonderful World'. It serves as the unmistakable background music to the scene in 'Animal House' where John Belushi as Bluto Blutarsky goes down the cafeteria line and stuffs his face and pockets with all sorts of 'free food' apparently as part of a meal plan which will serve as our object lesson of the day.

This time about how we all seem to think that we can consume as much government largess as we want and no one ever seems to have to pay for it directly.

We do. And will. One day. In the form of higher taxes, inflation, higher-than-normal interest rates, depreciated currency or 'all the above'. Perhaps soon in the future if the EU collapses and the euro is dismantled and all sorts of havoc is wreaked on the world economy just for starters.

Sam Cooke's great song should be amended for most Americans then to this, especially when it comes to the federal budget and public policy finance:

'Don't know much about economics.

Don't know much accounting.

Don't know much about a finance book.

Don't know what a calculator is for.'

As you read this, just keep the mental image in your mind of John Belushi going down the cafeteria line putting plate after plate of food on his tray in between squeezing enormous hamburgers into his mouth or slurping up green jello from the plate. You might want to click on the 'Wonderful World' link above to listen to as you read to keep your mood elevated.

We heard some simply astounding numbers about a recent surgery a friend of ours had recently and thought it would serve as a useful lesson for today.

We all know that knee and hip replacements have become almost as common-place as wisdom teeth extractions. It is simply amazing to think that after a lifetime of wear-and-tear on these joints and excruciating pain in most cases that within the space of an hour or two, a skilled orthopedic surgeon can saw the bones above and below your kneecap, insert a new knee joint and then push the whole leg back together so that in a manner of weeks or months, a person can be playing golf or walking like normal people do.

God bless America and God bless American medicine and medical colleges! We really do have one of the greatest medical systems the world has ever known in terms of medical advances and discoveries, wouldn't you have to agree?

We don't begrudge anyone wanting relief from pain and suffering. If it can be relieved, more power to them.

However, do you know what the costs of these types of surgeries are nowadays?

$60,000 to $90,000. Easily.

In the case of private insurance plans administered by businesses or individuals, there are certain percentages of the premium an employee pays each month for the right to have such coverage when they need it in the future. They also pay a deductible for such a procedure which could be substantial in these cases.

So in a manner of speaking, you and your private corporate employer have 'pre-paid' or 'invested' in a way to pay for your knee or hip to be replaced 30 years in the future if you are covered by a 'private' health care insurance plan.

In this case, though, the entire procedure was covered by Medicare. $90,000. Not private insurance.

Medicare is not a 'true' insurance plan where money is taken from your paycheck in the form of payroll taxes (as it already is on a weekly or bi-weekly basis) and 'invested' by an insurance company in some form of interest or dividend-bearing account that will be there to take money out of in the future to pay for your knee replacement.

Medicare (CMS) takes your payroll taxes paid this month and then pays out cash benefits next month to Granny or Grandpa when their surgeon sends that $60k to $90k bill to the Center for Medicare and Medicaid Services (CMS) formerly known as the dastardly 'HCFA'.

Since Medicare is fundamentally and technically bankrupt today, even that transfer of wealth from the younger working generation to the older generation is not enough to cover all these growing costs.

Hardly anyone will pay more in Medicare payroll taxes than they will receive in Medicare benefits unless they die before becoming eligible at age 65, die soon thereafter or live out their golden years in absolute picture-perfect health sans any major medical procedure. The fact is that roughly 85% of the Medicare Parts A and B programs are paid for by other taxpayers, not any particular individual enrolled in Medicare.

Couple these exorbitant surgical procedures with the fact that we are about to retire perhaps the most obese and unhealthy generations America has ever produced and you have a recipe for fiscal disaster when it comes to paying for the complications due to heart disease, diabetes, stroke and cancer in the next 20 years under Medicare as currently configured.

The mental image of John Belushi stuffing all sorts of food in his mouth is an apt analogy for where we as a nation have been in terms of doing whatever we want with our bodies in terms of diet or lack thereof...and then expecting someone else to pay for it all once on Medicare.

People who are currently eligible for Medicare should be taken care of, there is no question about that. They lived their lives under the assumption that Medicare as it was would be there for them in its present incarnation.

Plus, the obvious solution is to convert Medicare and Medicaid to provide true 'catastrophic coverage' to everyone in the nation to protect them against the humongous extended costs of a devastating head injury, cancer treatment, stroke or heart failure or similar long-term illness or situations. Other coverage can be offered on a need-based basis or allow wealthier individuals the chance to buy-in on an income/wealth-related basis. Use the world's secondary and tertiary reinsurance markets to further diffuse the risk undertaken, perhaps even our old friend Warren Buffett's vast network of reinsurance companies.

The Medicare program has got to be reformed very soon to account for:

1) The vast differences in retirement income and wealth of millions of retirees. There is no plausible, not-make-you-laugh-out-loud reason why Warren Buffett or Bill Gates should be subsidized by a $30,000/year blue collar worker for their SS or Medicare benefit.

2) The much-extended life expectancy of Americans due to much lower mortality rates among infants and much higher quality medical care and nutrition generally during life and in older age

3) The fact that more personal accountability for life decisions should be a part of Medicare than it is today.

If we solve the Medicare, and then the Medicaid problem, our fiscal budget problems start to dissolve almost overnight. Holding the rates of growth in just these two programs to the expected rates of inflation in the next 8 years would reduce the amount of expected debt accumulation over the next 10 years by close to 50%.

No major other cuts necessary, no major tax hikes either (unless, of course the Bush/Obama Tax Cuts (Obama has already failed to veto their expiration once in 2010 so he now owns them as much as Bush ever did) are extended in which case we still have some major work to do to balance the budget in our lifetimes)

That is worth the effort, don't you agree?

Then we can all sing with Sam Cooke '(What a Truly) Wonderful World' America really can be when our budget deficits are slain and our medical programs are rationalized to meet the current economic realities we face.

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Why Progressive Liberals Should All Be Fiscal Hawks

2012-05-23T07:33:00.003-07:00

This chart from the Heritage Foundation is just about as self-explanatory as anything can be about the threats we face as a nation in our federal over-spending proclivities and irresponsible non-action in Congress and the White House to arrest the accumulation of more exorbitant debt.

62% of our federal budget is now being spent on entitlement programs. Not defense. Not 'feriegn aid' as it is known in the South. Not education. Not road construction.

Programs such as the following:

529 program or Coverdell
Social Security--Retirement & Survivors
Pell Grants
Unemployment Insurance
Veterans Benefits
G.I. Bill
Medicare
Head Start
Social Security Disability
SSI--Supplemental Security Income
Medicaid
Welfare/Public Assistance
Government Subsidized Housing
Food Stamps

And you want to know the really weird thing?

Well over 50% of the American public doesn't think they have ever used or benefited from a US Federal Entitlement Program!

Well, someone is using those programs, aren't they?

Each year, another block in the chart above gets filled in with blue with another entitlement commitment such as by some provision of the Medicare Part D prescription benefit program passed under W or The Affordable Health Care Act passed under Obama.

If you are a progressive liberal, you should be far more concerned about this treacherous onslaught of more 'mandatory spending' than any fiscal conservative out there. (There is no guarantee that a 'social' conservative is a 'fiscal' conservative and vice versa so we are separating the two here today for this posting)

Why should a progressive liberal be concerned about these budget trends?

Because all of the 'discretionary' programs progressive liberals would love to see continued are being nibbled to death by ducks as each mandatory program such as Social Security, Medicare and Medicare continues to chew up more and more of scarce available resources at the local, state and federal level.

'Fiscal' conservatives don't mind that attrition in discretionary programs as much. They 'want' smaller, less intrusive government...supposedly. Unless it is in any defense program or some local road construction or agricultural support program that benefits their constituents. Then it becomes a 'vital national program!

For the life of us, we can't figure out why progressive liberals are not all fiscal hawks.

Why? Because if they would just take a look at the federal budget details, they would soon see that:

1) Tons of money goes each year to support very wealthy people on entitlement programs. (Think of what happens when a Warren Buffett or a Bill Gates gets his monthly SS check in the mail and says out loud: 'What the heck is this paltry amount of money....a gift card to Best Buy or something?)

2) Humongous amounts of wasteful spending is still going to programs that were created either before World War II to solve the problems America faced after the First World War! Either that or current funds are spent by the hundreds of millions of dollars to support jobs in a congressional district that were established by some long-gone defense appropriations committee chairman who went on to the Great Beyond decades ago and his successors have successfully kept such unwanted and unnecessary programs going for no reason other than political incumbency protection.

3) Hundreds of millions of dollars get spent each year on federal programs that do not receive the proper oversight from congressional committees and have out-lived their usefulness and purpose. No one even knows if they are working or not to alleviate the pain and suffering they were intended to eradicate in the first place.

We recently had the chance to train a young woman about running for public office who said the following statement during her on-camera training sessions with a seasoned political reporter and myself: 'I am a liberal and supported Obama in 2008. But I am also a finance major and a spending fiscal conservative. They are not mutually exclusive'

The political reporter and I almost fell off our chairs to the floor. We have simply never heard such rational reasonable talk in our 35+ years of being involved with the federal electoral process.

There is hope for America at least.

People need to take a strong hard look at this chart above and memorize it and then all sides; progressive liberals, fiscal conservatives and socially libertarian/fiscally conservative Independents need to band together to support like-minded candidates to run for Congress, the state houses and the local governments so we can put our house back in order.

The people who have been in office from all parties for the past 12 years at the very minimum have not done their jobs. Time to replace them all with some adults who will do their jobs.

The World of Economics and Politics According to 'Animal House'

2012-05-13T05:44:00.001-07:00

(with humble and abject apologies to Robert Short and his great work and book that came out in 1965, ‘The Gospel According to Peanuts’)

This is the first in an occasional series of insights into the complex inner-workings of our democratically-elected government at every level in America and how it impacts the free enterprise system from the perspectives of various characters in that political philosophy treasure trove of information, 'Animal House'.

‘Democracy is the worst form of government there is…except for every other’ as Sir Winston Churchill supposedly once said.

Well, if the actions of Congress and the past two presidents since 2000 are any indication of just how 'bad' democracy can be, then we have adequate empirical proof to be able to use 'Animal House' as an analogy, don't we?

We find that most everything in political life as it relates to our free enterprise system can be reduced to the mundane, funny and sometimes profane acts and quotes from this movie that seems to have captured the Zeitgeist of the Boomer Generation from beginning to end in its simple but insightful prognosticative transcript.

Looking back on the passage of time over the past 30 years since ‘Animal House’ came out to mixed reviews in 1978, it is fair to say that political life in America has more closely approximately ‘life’ and ‘philosophy’ in this one single movie more than art has imitated the real world of Congress and the state legislatures around the country.

Come along with us and see for yourself:

‘Grab a brew…don’t cost nothing!’

Isn’t this the prevailing attitude in America today in the 21st century?

We are ‘wandering freshman’ new to a college campus trying to figure out ‘who we are’ as a nation and society. We are just looking for some way to ‘fit in’ aren’t we, not only as a nation but on the international stage?

Are we the 'John Wayne' version of rugged individualistic America that Ronald Reagan so ably channeled during his two presidential campaigns of 1980 and 1984, thereby ushering in the ‘Reagan Revolution’ that promised 3 things and 3 things only:

1) smaller government by devolving responsibility to the states in the New Federalism model
2) lower taxes by balancing the budget through spending restraint
3) a very strong national defense to deter and then defeat communism?

That was it. We remember. We were there for the entire campaign in 1984 as candidates for Congress and advisors to those who did run. We lived through the first 4 years of President Reagan’s term and worked on Capitol Hill for his last 4.

These were the 3 legs to the stoolchair that Ronald Reagan and the Young Turk Republicans such as Newt Gingrich, Bob Walker, Vin Weber and Trent Lott stood upon.

Or are we the Bill Clinton version of America where we ‘feel each other’s pain’ and try to alleviate the suffering and heartache of all of our fellow neighbors and citizens?

It was Bill Clinton, you will remember, who declared with some gusto that ‘The Era of Big Government is Over!’

Oh, really? You coulda fooled us here in 2007-2012 then, President Clinton, we gotta be honest.

(It was also Bill and Hillary Clinton who declared their intention and desire to see that ‘Abortion was Safe, Legal and RARE!’. Not a lot of progress on the ‘rare’ part of that dream when roughly the same number of abortions are performed each year in America now as in 1977, 1.3 million)

Fast forward to the Obama years and see if you can define which America stage we are now in.

It is most definitely NOT the John Wayne-era of American swagger and confidence amidst growing prosperity in the 1980’s, is it?

It is more 'most definitely' not the era of ‘small government’ that President Clinton declared as the American economy boomed during the internet boom during his watch and the budget was balanced with the help of Erskine Bowles negotiating in good faith the Republican Congress of grown-up 'Older Turks' like Newt Gingrich, John Kasich, Dick Armey and Tom DeLay.

No, to us, it appears as if the prevailing paradigm of thought in America today under President Obama is best exemplified by a video from his very own re-election website that has been a big hit on the internet, both pro-and-con, called simply ‘The Life of Julia’.

In it, the President’s image-makers and handlers seek to shape President Obama and his philosophy as being the Benevolent Benefactor of everyone in America who seeks and/or needs his beneficent help.

At every stage of life, ‘Julia’ is taken care of by President Obama’s policies: Headstart paid for by the government at age 3; more federal funding for what used to be the purview and responsibility of the states, public education through the 'Race to the Top' program; student loans guaranteed by the government at below-market rates of interest; and coverage under that dream of any government bureaucratic lover’s dream, all-encompassing health care coverage paid for by the federal government;

Isn’t this just almost exactly the same sentiment stated by Bluto Blutarsky in the Delta House in 1978 when he says bluntly but precisely: ‘Grab a brew. Don’t cost nothing’?

Hardly anyone in college or post-collegiate America today seems to make the crucial connection anymore between: 1) someone getting a government benefit/check/subsidy/bailout and 2) someone paying for it in taxes!

Only about 1% of them even know what a FICA tax is! They will learn soon enough, or at least as soon as they are one of the 50% of the college graduates who are lucky enough to find a job within the first year of graduation or so.

Paying taxes to pay for government services and programs is the way it always has been in civilized societies and that is the way it will always be in civilized democratic republics, ‘as long as we can keep them’ as Ben Franklin replied to Mrs. Powel after the Constitution was signed in August, 1787 in Philadelphia.

But when younger Americans see:

The Fed ‘expanding its balance sheet’ (making up money out of thin air);
The federal government borrowing money from the Chinese and foreign sovereigns to the tune of almost $100 billion PER MONTH!!!! to pay for our lack of fiscal restraint, prudence and common-sense in Congress for the past decade now and running;
The US corporate and individual income tax system that just doesn’t work very well anymore to collect revenue to pay for the essential services of government as delineated in the US Constitution we all say we ‘revere’

It is no wonder they think it is ok to just ‘grab a brew’ (government program and check) since ‘it really does not cost them anything!’

Just yet, that is.

Wait til inflation hits and the dollar gets whacked hard one day. It may not come tomorrow but if and when it does rear its ugly head, everyone including Nancy Pelosi, Harry Reid, Barack Obama, George W. Bush and the GOP Congress from 2001-2007 will wish they had balanced the budgets and paid off the national debt when we had a chance to do so.

If we are now living in an America where the prevailing attitude and zeitgeist is this:

‘Don’t worry about anything, the federal government will take care of your ‘needs’ (which in some cases we agree, poor people for example); your ‘wants’ (not sure if we agree with most of them here) and/or your ‘mistakes’ (as in Wall Street or Detroit running for bailouts for mistakes THEY made on their very own with their eyes and brains wide-open which we do not agree with at all)...

…then how do we get back to the ‘free enterprise/capitalist system based on self-reliance with a premium on hard work, risk and inventiveness?

That is a question that perhaps future clips from ‘Animal House’ will help disclose.

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What Do These Unemployment Figures Really Mean, Especially If You Are A Recent College Grad?

2012-05-07T09:06:00.001-07:00

What do all of these convoluted unemployment data figures mean every month when they come out and every talking head on the tube starts yapping about them like they are some sort of expert or something?

If you are recent college grad facing an uncertain job market, it means one thing:

'Something ain't working right'.

If you are the incumbent President, you want the unemployment 'rate' to be trending downwards towards Election Day. Especially in order to get them under the magical 8% mark. No incumbent President has won the White House with unemployment over 8% on Election Day since FDR.

If you are against any incumbent President, you are sorta secretly 'pulling for' the unemployment rate to go up in the months before Election Day, aren't you? Political people say they don't...but they do behind closed doors.

Democratic strategists such as James Carville were chortling 'It's the Economy, Stupid!' when Bush 41 was fighting a downward trending economy that led to Bill Clinton winning with only 43% of the popular vote.

But what do all these facts and figures mean, really, to the average citizen? Especially the average citizen who does not have a job currently or is working part-time or in a significantly diminished role or pay scale relative to what he/she was doing prior to 2008.

And sadly for the most recently graduated college classes of 2010, 2011 and now 2012. You have just graduated into perhaps the worst job market for college grads since the 1930's that basically all of the politicians who have been in office for the past decade and many of the financiers on Wall Street and speculators in the real estate markets have produced for you.

Take a look at the chart below from the Bureau of Labor Statistics and see for yourself. (If the chart below is somewhat unclear, go to the link above and see if it is any more clear. Or go directly to the BLS website yourself and download the original documents)

The key numbers in any unemployment report are not just the unemployment 'rate' as you can see in the chart. The key numbers are the absolute figures that estimate the number of American citizens who are actively working in the workforce this month versus last month; the number of people who are working part-time for slack economic or business reasons and the number of 'discouraged' workers who have stopped looking for work altogether on top of the 'marginally attached' to the work force people.

It is one thing to know what the percentage of unemployed people is each month. But relative to 'what' precisely?

If the rate is 'trending down' solely because the numerator is going down due to people leaving the workforce, how can that be the sole repository of information to tell us exactly what is going on in the economy?

Tell us how many people are working and how many are not working. If the absolute number of people actually working full-time goes up each month, then we will all feel better about this crummy economy, won't we?

(It is not going up steadily each month. It is one step forward, 2 steps back, 2 steps to the side, one step forward over the past 3 years)

So, to take last month's figures to task, we can see that while the 'official' unemployment 'rate' has dipped to 8.1%, down from a high of 10% in October, 2009, the number of people who left the workforce (and hence are still presumably 'unemployed') between March and April of 2012 was an astounding 522,000 people.

What the heck is going on here?

According to the black-and-white numbers staring you in the face, the civilian labor force dropped 342,000 just last month. 169,000 fewer people were working in the workforce in April than in March.

103,000 just quit looking for work ('discouraged workers') between March and April because either there were no jobs to be found or, more importantly, they thought and believed there were no jobs to be found. That is a crisis of confidence and that is one of the few things a President and our leaders in Congress can actually do that will stimulate an economy.

We don't have that confidence today, do we? Americans just need to see some glimmer of hope and then their 'animal spirits' of economic activity get turned on high gear and the economy will recover finally.

It just ain't happening today.

On top of the 'discouraged' workers category, we have close to 7.5 million Americans working part-time just because that is all the work they can find right now. That is close to 8.5 million Americans who are either discouraged or working part-time because they 'have to', not because they 'want to.'

Add that to the relative steady number of 12.5 million unemployed people and we have over 20 million Americans out of work or are tenuously hired for the time being.

In order to get to where most people start breathing a sigh of relief again, we probably need to be approaching what BLS economists and forecasters call the 'normalized' rate of unemployment in America which is typically between 5-6%.

That still would mean around 9 million people would be unemployed at any time in the future when this statistical survey is made (these reports are built around very large statistical surveys; have you ever participated in one or reported to the BLS when you have been out of work? Didn't think so)

So we 'only' have about 3 million jobs to create or about 500,000 per month over the next 6 months before Election Day to get back to where we were before this economic meltdown occurred in 2008.

It is quite a challenge. The question in the upcoming election is who do you think has the ability and leadership qualities to restore the confidence to the business community and economic system, President Obama or Mitt Romney?

We all know that Congress and the US Senate almost needs to be completely replaced by some thoughtful adult statesmen and women who will take the task of running this nation's business seriously and not as some kind of joke or long-term employment program for themselves.

But the next President for the next four years has got to be able to lead us out of these economic doldrums. Or else millions of American friends and citizens will face 4 more years of economic stagnation which might just be spiced up with some rampant inflation if we are not very careful.

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Marriage, Freedom and Liberty

2012-05-04T04:56:00.000-07:00

There is a heated debate going on in North Carolina now about a proposed amendment to the North Carolina Constitution on the May 8 ballot that would ban all gay marriages and civil unions in the state.

The question behind all of the campaigning and arguing seems to boil down to these salient points: 'Is 'marriage' a religious word that deserves to protected by the civil government? Or is it a word and concept that is so ensconced in American life now that it 'just is what it is' and that is all there is to it?'

One wag with whom we correspond frequently sent this acute observation in last week:

'You're missing the point with the linguistic part of the word, 'marriage'.

There is a reason why the state got into the what-was-previously-the-religious business of 'marriage' in the first place.

The state got into the marriage business to both control and reward certain behaviors. Before marriage laws, it was not uncommon for close relatives to wed and frequently they produced offspring that demanded a great deal of community support because they were 'not normal'.

So, the state came along and defined the degrees of relationship that may 'legally' marry.'

See? Long-time readers had to know that there would just have to be a budget component to even this societal issue. 'Community support' means welfare paid for by taxpayers, make no mistake about it.

This guy is from eastern Arkansas. He worked as a county clerk who issued licenses to 'normal' couples' and denied them to perhaps a few each month to those who were 'not'.

So he should know what he is talking about, right?

No matter what side of the debate you are on or fall on when you go to vote on May 8, the issue of a 'marriage protection' constitutional amendment does brings to mind the fundamental question of 'church and state' doesn't it?

Is this a matter of 'the state protecting a specific religious practice' or is it a case of a specific religion 'imposing its beliefs on the rest of society' through the legitimate legislative and constitutional process set up by the North Carolina state constitution?

If 'marriage' is inherently a religious word for a sacred vow and ceremony in the eyes of God taken in a church in front of an authorized religious figure such as a priest or preacher, where is the line between the two when the state, as in the state of North Carolina civil government, is in charge of deciding who is eligible to get a valid 'marriage' license in the first place as our Arkansan friend said?

One of the questions has to do with what would a {insert new word} be called outside of 'marriage' which has always been defined as between two religious heterosexual people.

What will we call the {insert new word} when an atheistic heterosexual couple who have no intention of ever exchanging religious vows in a church or ever living together under any Judeo-Christian, Hindu or Muslim pretext of spirituality whatsoever get {insert new word}?

Will they be considered 'married' under the new amendment if they get {insert new word} in the Justice of the Peace office in Mayberry? Why should they be considered 'married' in the religious sense of the word if they have zero intention of honoring or following any religious practice ever at all?

It won't be called a 'civil union'. The amendment makes that very clear.

We have typically chosen to bring to the fore a lot of information on a wide range of issue and let you make your own decisions as citizens. There is a lot going on in this campaign that we thought we would bring to the front of your brain so you can cogitate on it some today.

First, here is an explanation written by Charlotte attorney and widely and well-respected authority on North Carolina Constitutional law, Russell Robinson who is against The Marriage Protection Amendment. Russell is a 'big brain' when it comes to constitutional issues in North Carolina. Go into any law office in North Carolina and you will see rows of his books on the shelves.

Here is a detailed explanation from Lynn Buzzard et. al. from the Campbell University School of Law which doesn't endorse The Marriage Protection Amendment per se but certainly lays out the reasons why it should be passed.

Both are well-written, researched and well-argued, pretty much in a civil discourse way as it should be.

(Congratulations on being 'civil'! It used to be 'expected'. Nowadays, it is such as 'surprise' that we feel we should give both Mr. Robinson and Professor Buzzard et.al. a Nobel Peace Prize for Peace!)

We suggest you read both of these carefully and come to your own conclusions about how to vote on this amendment on May 8 if you live in the state of North Carolina.

We have been assiduously asking and re-asking and re-re-asking people on both sides of the debate about the details and 'unintended consequences and ramifications' of this amendment should it pass.

You know there are going to be some. There always are.

Here are some things we think we are hearing from advocates of the Marriage Protection Amendment:

1) This amendment will not disallow anyone from entering into legal contracts to live together and share assets in North Carolina. Gay couples will still be able to do so if the amendment passes even the advocates of the amendment say.

2) This amendment will make non-heterosexual, non-Christian couples 'jump through 3 extra hoops' to do so such as sign joint powers of attorney, living wills and other legal documents before the {insert new word} is recognized by the state of North Carolina as being 'legal' and 'enforceable'.

So, in essence, the question really isn't about whether two gay people can live together and share assets in the state of North Carolina in the event of one partner dying and leaving his/her assets to the survivor. Even the proponents of the amendment admit as much.

It comes down to a pure and simple question of whether a gay couple can use the word 'marriage' and be recognized legally as a couple in North Carolina.

Isn't that a religious issue that needs to be settled in every church and denomination across the state and nation?

Let's think on this for a moment or two.

'Marriage' is a term derived from the New Testament Greek word 'gameo' which literally means to 'bind' or 'unite'. Koine Greek had the advantage of being able to be differentiate words into about 40 different meanings based on context, time, condition and tense unlike English which is limited in many ways from being as nuanced.

When viewed in strictly legal or contract terms, it means one thing: a legal agreement to stay together and share all assets and legal privileges.

When used in context of making solemn vows in a church ceremony, viewed in the eyes of Holy God, however, the word 'marriage' takes on an entirely different, far more serious and committed connotation. 'Til Death Do You Part', 'So Help Me God!' and all that.

The Judeo-Christian heritage is special for many reasons but especially for this one that not too many people fully appreciate: It was about 3000 years ago that the Hebrews adopted the concept of monogamy through religious ceremonies where a man married one woman instead of having a harem of women serving as multiple concubines to the King or any wealthy man.

Women, for the first time in recorded history, were able to directly inherit wealth and assets from their husbands upon death. The Bible even instructed surviving brothers to marry the widow if not married themselves.

Think about that for a moment if you want to bring some more Biblical concepts into civil law.

You can read all about it in Thomas Cahill's very excellent book, 'The Gifts of the Jews: How a Tribe of Desert Nomads Changed the Way Everyone Thinks and Feels'

Which brings us to the Founders, once again.

Did they found this nation to be a theocracy, one where one faith dominated all others?

Nope. Plain and simple, they clearly stated that everyone should have the freedom of religion in the First Amendment in the Bill of Rights. They were protecting the rights of the lowly Baptists and Methodists in the 18th century from the dominance of the higher Episcopalians who prevented them from holding office in Virginia and Massachusetts.

Their sentiments were quite evident: No one had the right to tell anyone else what to believe or what not to believe or 'to abridge their freedom to do either'.

Religion is mentioned twice in the US Constitution. 1 as the 'freedom of' clause in the First Amendment. The second is in the 'no religious test' clause of Article VI for anyone to hold public office. That is it.

There was certainly the sense that faith and religion was essential to the self-governance that free democratic republics required to function effectively. James Madison, who was trained in Presbyterian theology at Princeton when they were putting out Presbyterian ministers by the bushel in the 18th century, said many times that the new republic would not survive unless the people remained predominately religious and Christian in thought, spirit and action.

But, they didn't write it into law or in the Constitution, even though they could have. They recognized from the very beginning that in a free society, the population would be ever-changing, diverse and dynamic and that meant a diversity of religious thought that needed to be tolerated by everyone if we were going to live together in peace and respect for one another.

We believe the single guiding principle of every one of the 55 or so gentlemen who gathered in Philadelphia to grind out this US Constitution at some time during the summer of 1787 could be summed up in 2 words:

Freedom and liberty. Plain and simple.

'For all people', as Thomas Jefferson penned in the Declaration of Independence. Not just the people we agree with or with whom we work, live or go to church with. Everyone who lives in America.

'We hold these truths to be self-evident that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness'.

And which Abraham Lincoln confirmed in his Gettysburg Address when he said in his opening sentence: '...our fathers brought forth on this continent, a new nation, conceived in Liberty, and dedicated to the proposition that all men are created equal'.

So we need to protect the 'religious' significance of marriage while also protecting the rights of every citizen to be 'free' and 'equal' in our civil society.

If a gay couple, has to jump through the '3 extra hoops' mentioned above, why not make every couple sign the same documents at the county courthouse if we are going to be truly 'equal' in the implementation of this new amendment?

And leave the religious significance of the word 'marriage' to reside in the churches and house of worship where it hopefully can be preserved and protected with a lot of work and prayer such that the divorce rate plummets dramatically from the stratospheric heights it has reached in modern America.

The Founders would be astounded by many things in modern America but doesn't it stand to reason that they would be saddened by the number of divorces this nation experiences each and every year?

Maybe we need to keep talking and debating about how to protect the institution of marriage after this referendum is over and keep thinking about how we can keep marriages intact and not dissolved or in the process of dissolution. Keeping the divorce rate even among Christians down to around the zero level would have magnificent impacts on the numbers of women who wind up living in poverty and the number of children who need welfare support just to bring in one other budget component for the time being.

Maybe there is another word we can start using for the civil ceremony that everyone can and should use in our pluralistic democratic republic.

There is the sacred religious context of marriage and the profane civil context of legal unions that we need to more clearly define it would seem.

Every non-religious or non-heterosexual person enjoys the same right as any other religious and/or heterosexual American citizen, as Jefferson and Lincoln pointed out, to live as freely and as happily as they so choose to do, don't they?

As long as anything anyone does not impinge on the freedom or rights of other people, isn't that what America is at its core in all things?

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How Do You Like Paying Twice For Social Security This Year?

2012-04-26T11:17:00.003-07:00

You know, we can't wait for the date when we can 'make your day!' as Clint Eastwood used to say and write these words in bold letters:

'Everything is getting better on the budget and entitlement fronts of the US federal budget!'

This is not that time yet. Sadly.

In fact, it is getting dreadfully worse on a daily basis as the most recent Social Security Trustees report lays out with excruciating and incriminating detail from our friend, Chuck Blahous with whom we worked on the 1994 Entitlement Commission.

Chuck is a good guy to follow on anything relating to Social Security or Medicare trust funds for that matter. You should sign up for his blog and follow him closely.

Like the old saying says: 'If Chuck doesn't know the answer to your questions about Social Security and Medicare trust funds, you don't need to know it in the first place!'

It used to be that all you had to do was quietly lip-sync the words: 'Social Security is going broke' and the Claude Peppers and the Tip O'Neills of the world would go running stark-raving mad down the middle of Constitution Avenue to the White House screaming for an emergency solution to be passed in Congress...immediately to SAVE SOCIAL SECURITY!'

Today? We are running multi-billion annual deficits in Social Security and the Obama Administration doesn't even offer a budget to fix it that can get one single vote in the House or Senate from Democrats or Republicans. The Senate Democrats who control the US Senate under the absentee leadership of Nevada Senator Harry Reid have now set a world record for not passing a budget to deal with Social Security or anything else for that matter...1,092 days now and counting.

The American Civil War was fought and prosecuted and brought to an end in only 1,458 days...and the US Senate can't pass a budget in Washington DC in less time than that terrible period in our nation's history?

At least the Republicans have passed the Ryan budget in the House of Representatives, we give them that much.

While we like much of what Congressman Ryan is trying to do to rein in the growth of federal spending, we would love to see more aggressive action on reforming both Social Security and Medicare which we think would actually produce stronger and more stable programs for all of us going forward on both the practical application and the budgetary implications of said reforms.

We urge you to read Mr. Blahous' pithy comments in detail because you will know far more about the stresses now facing Social Security and Medicare than you do right now today. 10,000% more probably.

While you read it though, we do want to plant this seed in your brain to mull over as you do so:

'How do you feel about paying for Social Security twice in this calendar year?'

Assuming, of course, you are one of the fortunate people to have a solid-paying job now and are also fortunate enough to have it pay you enough that you are in the 53% of the working population paying income taxes on top of the payroll taxes everyone pays up and down the wage-scale in the only 'true' flat-rate tax we have in America today.

That is a mouthful but hear us out here:

In most years, you are paying 7.65% of your salary in payroll taxes, FICA for short, that cover Social Security and Medicare Part A benefits for the most part if you are an employee or 15.3% of your earned income if you are self-employed. There is a wage maximum limit for payroll taxation of $106,800 in 2010 for Social Security and no limit on earned income for Medicare taxes.

For the years 2011 and 2012, the employee's contribution has been temporarily reduced to 4.2%, while the employer's portion remained at 6.2% due to one of the few bipartisan bills passed in the last 2 Congresses under President Obama.

But this accursed recession has thrown so many people out of work and destroyed so many businesses that the current payroll tax collection is falling way, way below current obligations being paid out on a daily basis to current retirees. Chuck says that the operating deficit for Social Security alone will be $165 billion in 2012 alone. (Medicare is worse but we are focusing on SS right now and can't process any more bad news, can we?)

What happens when payroll taxes fall short of meeting current SS benefit obligations? Does Congress raise payroll taxes immediately or cut benefits to bring them back into balance?

No, silly! What are you smoking today? Do you think they would be that reasonable or fiscally responsible and mature about it all?

Here's what is basically happening:

1) Every single penny of payroll taxes being sent to Washington today is spent on SS benefit checks being sent out every month. Just like it has always been since inception in 1935.

2) The shortage of $165 billion in SS this year is essentially being paid by general revenues typically allocated to pay for defense, welfare, education, roads, environmental protection. All the programs that defense hawks, rural development advocates and progressive liberals like.

3) And if it is not being paid for by the general tax revenue dollars in whole, the SS shortage is either whole or in part being paid for by the same funding process that everything else is being paid for nowadays: with funds borrowed from the Chinese, other foreign sovereign nations and investors as well as domestic financial institutions. (Would you buy a bond now yielding about 2% when you just have to believe inflation is going to out-race that by a factor of 2 or 3 times in the next couple of years? Us neither)

So you are either paying out of general tax revenues for this shortage in SS this year or you are paying for the interest on the new debt being taken out to cover the shortfall. And your children and grandchildren....well, they'll be paying for this debt for the rest of their natural-born days, won't they either in annual interest payments on the national debt or in paying down the principle...somehow, someway, someday, right?

This stark fact should put to rest the absolutely silly and absurd notion that we have set aside any of your payroll taxes paid over your working career in a safe trust fund somewhere ('lockbox' as Al Gore said during his 2000 presidential campaign) that is 'earning' cash interest somehow out of the ethereal world.

That big mountain of 'cash' in a trust fund simply does not exist.

Because if it were, don't you think we would see President Obama, Majority Leader Reid and Speaker Boehner digging that cash out to pay for this SS shortage with pickaxes and dynamite like it is some silver or gold mine instead of borrowing it like a beggar on the street from the Chinese?

They ain't digging anywhere, are they?

We need to reform SS and Medicare today to modernize both and bring them up to the 21st century in terms of portability, stability and equity for every American citizen.

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'Curses! Foiled Again!'

2012-04-21T06:00:00.000-07:00

Snidely Whiplash

Do you ever get the feeling that 'something just ain't right' and that maybe, just maybe, the Wall Street guys have everything rigged so they always win and you, the taxpayer, always lose?

Well, get ready to wonder again.

Yadkin Valley Bank, headquartered in Elkin, North Carolina just made a filing to announce that it will auction the preferred shares they have as a result of their acceptance of TARP funds in 2008 to outside investors as part of the Obama Administration's Treasury plan to get the government out of the TARP business altogether.

Most likely to some of the same Wall Street banks and investors, who were probably at the core of the problem to begin with in 2008 with some of the worst financial decision-making this nation and world has ever known.

This story here is about the people who are going to benefit handsomely from the Federal Government’s desire to exit TARP. Yep. The same accursed TARP program everyone was screaming about in October 2008 that pumped billions of 'real' cash and digital manufactured credit on the spot from the Fed that put liquidity into the financial system and apparently saved the day, didn't it?

These are (for the most part) the same people who: 1) made all the bad and imprudent financial decisions 2) to lend money to unqualified buyers 3) and then bundled up the bad 1st, 2nd and 3rd mortgages into complex financial packages such as derivatives and then 4) sold them as 'great investments' to people around the globe.

They now say: 'It was the fault of Congress!' 'These people should have known they couldn't afford the loans to build homes they couldn't afford!' 'We were just following orders!' and/or 'doing our jobs!'

When you leverage your company's assets at the tune of 35-to-1 or 50-to-1, even a dumb bunny who has never been to one basic business class or much less attended Harvard MBA School or went through a rigorous training program at one of the most prestigious Wall Street investment firms would know that 'that just ain't right!'

This current iteration of the Wall Street Saga of 2008-2012 might make you yearn for some shots of the white whiskey from Troy & Sons we just wrote about.

Let's not gloss over one very important point. In 2008, when all of the major banks and investment houses were over-extended through no fault of anyone but their own due to their avarice and greed, the decision was made by then-Treasury Secretary Hank Paulson and former Goldman Sachs Chairman (coincidence?) that every bank in the nation was going to be forced to take on TARP debt 'just so the American business community and public would not know which banks were in REAL trouble'.

Thus avoiding 'disintermediation' (withdrawal of funds from banks) and all that banking nomenclature.

Once these TARP preferred shares are sold to new investors, they will then own the debt and the federal government will finally be out of TARP. The community bank is then responsible for repayment of 100% of the original amount to the new holder of the debt, not the government as originally planned and contracted.

Government has done its job. Check. Getting out of the banking business. Check. Taxpayer has been paid back for 100% of all the TARP money that was spewed out of the Fed firehose in 2008. Check.

All well and good up to this point.

Right? Wrong. The new private sector holders of the debt will have been given a huge gift and, in many instances, these beneficiaries are the 'bad guys' from the worst financial debacle of the last 80 years. They made their bed...and ruined the lives of millions of people they falsely led into believing they could buy homes well beyond their means. They sold billions of dollars of worthless derivative investments around the world to unsuspecting investors who had the rug pulled out from under them when the US housing market collapsed.

How can that be 'right' under any acceptable standards of human ethics and rectitude?

Specifically, let's say The Bubba Gump Bank of Greenbow, Alabama owes $60,000,000 to the government for their TARP obligation and has to pay 5% interest for the first 5 years of TARP and 9% thereafter. Now with 2 years remaining, the government wants out and they are willing to “sell” its interest for $40,000,000 or a discount of close to 30%.

If the government stayed in the TARP collection business, the American taxpayer would benefit from the repayment of their remaining $20 million owed plus receive the previously agreed-upon payments of interest to the federal treasury.

Surplus funds from repayments by the banks that could conceivably go to pay down existing debt or prevent equal amounts of new debt from being issued at the federal government level. God knows we need to find clever ways to pay down our national debt, don't we?

However, now that Snidely Whiplash, the Chairman of Dewey, Cheatam and Howe Brothers investment bank, owns the discounted debt from the federal government, THEY, the private investment bank and partners, will collect the original face amount of the loan of $60,000,000 for a tidy profit of $20,000,000 plus the interest for the time it takes to pay off the loan.

That is at least a 50% return on investment plus interest earned, all protected under the auspices of the US Federal Taxpayer-Supported Government (because do you think the Government is going to let any bank fail now after ALL this work and money and effort has been undertaken to save them?)

In other words, what could have been going to help reduce the debt of the United States of America is now going to line the pockets of the very same culprits still running our major banks who caused the debacle in the first place.

We think part of the problem is that our business schools no longer teach the classical education curricula that might bring up a full discussion of ethics and what it means to be a well-rounded honest businessperson in the modern world.

It is very easy to make cold-blooded decisions based on the 'numbers'. Numbers 'don't lie' and the 'bottom-line is the only thing that matters!' in a truly capitalistic system.

But is it 'right' and 'the right thing to do' in many instances?

That is what was missing in the investment banking world pre-Crash of 2008.

Maybe we have learned our lessons.

(but then again, based on this situation....maybe not)

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'White House Burning' and 'White Whiskey'

2012-04-17T04:30:00.002-07:00

The authors of this otherwise very educational and helpful primer on federal budgeting, 'White House Burning: The Founding Fathers, Our National Debt and Why It Matters to You' conclude their 'recommendations' with this honest disclaimer:

'Because there is no such thing as a free lunch, our proposals largely fill the long-term budget gap by increasing tax revenues. People who evaluate the federal government solely by the dollar value of taxes and spending will object that our proposals amount to 'big government'.

That is an understatement if there ever was one.

We will go even a step further: 'If you want to see what an unfettered President Obama would do in his second and last term if he also had congressional majorities in the House and the Senate, this book would be the 'roadmap to the future' for them'.

Apparently, these guys only read the ‘Revenue’ part of the CBO book, ‘Revenue AND Spending Options’ they refer to over 100 times in their footnotes.

We still strongly suggest you read the book, primarily for its educational value and extensive and complete footnotes and references just referenced.

We also 'strongly' recommend that you also buy a fifth of the truly great new North Carolina product from Asheville, Troy & Sons ‘White Whiskey’ Moonshine, and take a jiggerful shot each and every time you read the words 'higher taxes'.

Cause you are gonna need it.

Within about 3 pages of Chapter 6, you may be rendered speechless by the depth and scope and breadth of their tax-hiking prowess...and then by the Troy & Sons ‘White Whiskey’ itself. (Please use responsibly!)

When we started reading the book, we thought: 'Finally! An honest and open look at all the underlying intricacies of the federal budget, on the revenue, tax expenditure (loophole) and spending sides, all being fairly discussed out in the open by economists one typically would expect to be supporters of the Obama Administration!

We were actually thrilled to see any liberal economist or politician actually quote the 'invisible hand' theory of none other than Adam Smith who wrote 'The Wealth of Nations' the same year, 1776, that Thomas Jefferson penned The American Declaration of Independence.

And our heartbeat skipped a beat as we were reading about the 'necessity' to curb health care costs in the economy generally which we all know is the prime determinative driving upwards force on our federal budget through more than 3 times the average rate of inflation in Medicare, Medicaid and the various health benefit programs in the VA, the Pentagon and every other governmental agency.

Alas, we were wrong and left hanging at the altar like some jilted groom. Honestly, it appears as if these authors have never seen a federal program in need of reduction, reform or elimination.

They obviously have never sat in any House Budget Committee hearings then.

However, the basic premise of this book does allow us to set up a contrapuntal argument to most everything these authors recommend.

(It still is a very useful reservoir of information though and worthy of your reading, trust us. You will learn tons just from reading this one book)

Here are some fundamental retorts to most of these guys' general observations which, had they included these in their book, would have made it far more 'balanced' and believable as a 'serious' budget recommendation that Congress could and should consider:

1. 'Government is Our National Insurance Program!'- This is their view of how the US federal government is supposed to function. Virtually everything from what is 'explicit' in the Constitution (defense) to what has been interpreted as being 'implied' in the Constitution (Social Security/Medicare through the general welfare clause)

Retort #1- We are supposed to be living in a free enterprise/capitalistic system, aren't we? Isn't that why we have 'private' insurance companies that will insure your home, your car, your life, virtually everything you own?

Let 'insurance' be true 'insurance'. Let the government defend us and take care of the things that the private sector does not do well such as build roads, maintain laws that protect our property rights and commerce and ensure peace in our nation.

Is it the proper role of the federal government to provide 'insurance' for everything from health coverage to bailing out Wall Street to providing crop insurance for farmers and flood insurance for wealthy people who build expensive homes on the coast where hurricanes can rip them to shreds...which means the federal taxpayer will help them rebuild it?

We are not sure that the Founders thought the federal government was set up to be the ultimate 'backstop' insurance company for every negative contingency that happens in life. Ben Franklin started one of the first life insurance companies in America...and got pretty darned wealthy doing so as well.

2. ‘Social Security is Perfect! Don’t change a thing!’

Retort #2- SS is broke, to the tune of billions of dollars per year. Payroll taxes are not even paying the current obligations of retirees, much less setting aside enough money in a true financial instrument to pay for anyone in the future.

How about a serious and honest debate on the merits of shifting to something along the lines of the Chilean Social Security system which started in 1980, long about the time many of us started working, and which allowed each Chilean citizen to put aside a fixed amount of their monthly salary into an individualized Social Security account?

Result? An average Chilean could retire today with a $223,000 cash payment in hand PLUS an average annual pension of $53,000 to be used to pay for expenses in retirement.

Today’s average SS payment is about $13,000 PER YEAR to the average American.

The argument could be made that supporters of the status quo in Social Security are actually working against the better interests of the average American citizen, couldn't it?

So who is coming out ahead in that deal, the average American citizen or the average Chilean citizen?

The Chileans win! Hands-down. Let's have an honest open debate about it in public like during a political campaign. That is how American politics dealt with slavery, women's suffrage and civil rights, you know.

3. 'Health Care is a Right for All!

'The federal takeover of the American health care system was the right thing to do!'
The current system 'just needs to be tweaked' in order to ‘work better!’

Retort #3- When was the last time these authors went to the Post Office? Or the DMV?

Does anyone really believe the federal government can do a more efficient job of running our health care system 'at a lower cost over time'?

There was one brief mention in the book about some of the intrinsic upwards cost-drivers in health care but there was no mention of asking the Obama Administration to lead an effort to combat all of these for the general good of our nation.

We have named them before, so we'll name them again: tort reform; malpractice insurance reform; eliminating the conditions that lead to excessive 'defensive medical practices' by doctors and hospitals alike; duplicative medicine; false filing for Medicare/Medicaid claims...the list goes on seemingly forever.

Focus on these first...and the rate of inflation in medical costs will start to moderate and then perhaps plummet as private insurers start to see their claims go down.

4). There is no substitute for higher taxes and eliminating all tax loopholes to balance our federal budget.

Retort #4- Yes, there is. Read the 'Spending Options' of all of the books and reference materials you cited in your very own book. Just holding the federal government growth rate to around 2% per year will balance the budget before 2020, depending on whenever this economy turns around.

Still, all-in-all, you should read 'White House Burning' and read it soon. You'll know more about the federal budget than you do today. We just wish the authors had practiced what they initially were preaching: Use history as a guide to get fair and balanced results from our government.

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'White House Burning: The Founding Fathers, Our National Debt and Why It Matters to You'

2012-04-10T07:27:00.001-07:00

Here's a simply amazing astounding fact you need to know and contemplate as we go through this thought-bomb for today:

'The United States of America became the world's largest economy along about 1870.'

Let's think about that for a moment.

We had just endured the costliest war, and most deadly in terms of human loss of life, our nation has EVER experienced. More American people died in the Civil War than in all of the other wars we have fought, including World War II, combined.

In 1790, the population of America was just under 4 million people across mostly the 13 original colonies. By contrast, France had over 19 million people in population close to 100 years earlier in 1700! Britain had 9 million people way back then as well.

What in the world were our Founders thinking when they decided to take on the world's largest economic and military superpower in 1776 and actually thought they could defeat the King and his Empire?

Anyway, just after the end of the Civil War, within about 5 years or so, the United States of America became the world's largest economic power after only 81 years of existence. France and England and Holland and Spain had been around for centuries, if not millennia in the case of China.

Why was this so? How could this had been even remotely possible?

For one thing, America was blessed with an abundance of riches in terms of natural resources. Oil was discovered in Pennsylvania soon thereafter and literally fueled an explosion of economic activity from the internal combustion engine in our cars to our planes and heated our homes and other innovations improved the manufacture of steel and other products that made America the envy of every other civilization on Earth.

For another, most Americans in 1790 and 1870 had a ton of freedom and liberty to do pretty much what they wanted to, didn't they? (We understand the gravity of slavery and the ensuing civil right struggle that makes this statement hard to make for everyone in 19th and 20th century America which we would get to if we had room here)

If a person wanted to invent a product or process, there was very little they needed to do other than start working on it, aside from finding the money through friends and family to pay for all of that exploration or research and development.

The numbers of 'inventions' that have come out of America in the past 125 years simply boggles the imagination: Lightning rod; cotton gin; light bulbs; automobiles; airplanes; computers...the list goes on for days.

There was no income tax until 1913. No 2000-pages of promulgated regulations published in the Federal Register on a daily basis telling them what they could do and how they could do it.

What else was different in 1870?

Well, for one thing, the scope of the federal government was near about minuscule back then when compared to GDP. The Federal government has typically spent about 1% of our nation's GDP up until around 1930, mostly on defense-related items such as equipping our armies and navies over time. In case you have forgotten, 1930 was when something else 'really bad' happened and FDR grew the government to around 10% of GDP, which we would take in heartbeat today in 2012 America.

However, there was one very striking similarity to today's world in the federal budget:

'In the decades following the Civil War, income security—in the form of veterans’ pensions—also became a major responsibility of the federal government, accounting for one-third (1/3) of all spending in 1890.'

Even way back then, the US federal government was struggling with the first wave of 'entitlements' which is precisely what this expenditure was, wasn't it? Congress felt compelled to 'rightly' honor the Union soldiers and their spouses for their heroic service and sacrifice to keep the Union together in 1865 by providing a decent pension for them in their dotage or due to war-related injuries to the tune of 1/3 of their annual budgets by the turn of the 19th century.

Today, close to 56% of the US federal budget is consumed by entitlements. 56%+.

The difference between then and now? The Civil War veterans eventually died off, didn't they? (the last Civil War widow, Maudie Hopkins, died in 2006, believe it or not, and received a part of her husband's civil war pension until his death in 1937)

The entitlements of modern-day America are never going to go away. They are simply going to add on more recipients every single day as more and more Boomers retire and then their children after them.

And guess what? The cost of supporting such a huge aging population is going to keep going ever higher unless and until we elect people to our US Congress and to sit in our White House who can understand the gravity of this problem and do something about it.

You need to get and read a great book on the history of debt in America, 'White House Burning: The Founding Fathers, Our National Debt and Why It Matters To You' and try to understand just how sticky of a wicket we face when it comes to ever balancing our budget again in the face of such humongous entitlement program claims on our national budget.

One of the authors, Simon Johnson is a former chief economist of the International Monetary Fund and now is a professor at the MIT Sloan School of Management. The other, James Kwak, is a professor at the Connecticut Law School.

This book is chock full of facts and details that would take you 30 years to find and get comfortable with (as it took us including a grueling 4-year stint on the House Budget Committee and Entitlement Commission in 1994). But please take it upon yourself to read it through and through so you will be able to talk and debate intelligently with the 99.999999% of the public who will not read this book or any other book on federal budgeting (just sounds boring, doesn't it?).

You might just change some people's minds on this critically important subject to us and our future.

The one thing we don't get? We just don't get how people who are as smart as Messrs. Johnson and Kwak and any other person who is enamored with an ever-expanding federal government bureaucracy and edifice will never say this out-loud and in public:

'We are liberals and we love more government to protect and preserve the health and safety and education of our fellow citizens. But we have combed through the budget and found hundreds of billions of dollars of wasted money each and every year and we think we should cut the hell out of such wasteful spending!

And not just in defense spending which we all know is used to oppress other people around the globe. As in Social Security and Medicare....why Americans have been duped to believe that Warren Buffett and Bill Gates 'deserve' to draw $2500/month from Social Security and be subsidized in their Medicare bennies for over 90% of their actual cost as seniors is beyond our cotton-pickin' MIT/Connecticut Law School brains!'

If liberals would all of sudden come to their senses and be fiscally responsible and conservative in this regard, they might close out the marketplace for there ever being a conservative Republican opposition party in the first place.

But they won't. At least they haven't for the past 40 years or so in Washington, DC.

Maybe the next generation will be more responsible once they read this book and get energized to throw all the old people out of government from both sides of the aisle. And start over again.

250 Things That Are Not True! (continued): 'The Supreme Court Can Not Strike Down Laws as Unconstitutional!'

2012-04-05T15:47:00.001-07:00

So said President Obama this past Monday when asked about whether he thought the Supreme Court will overturn the Obama Health Care individual mandate.

“Ultimately, I’m confident that the Supreme Court will not take what would be an unprecedented, extraordinary step of overturning a law that was passed by a strong majority of a democratically elected Congress."

First of all, the Obama Health Care Bill passed only by the slimmest of margins in the House, 219-212 with 34 Democrats joining the opposition in 2010.

Hardly a 'strong majority of a democratically elected Congress', is it?

Here's our question for the constitutional professor who is now our US President and Commander-in-Chief:

'What the heck is the Supreme Court supposed to do if it is not supposed to determine the constitutionality of laws passed by Congress and signed into law by an American President?'

Is the Supreme Court supposed to just be a 'potted plant' sitting in the corner watching the United States government operate right in front of them every day and never weigh in on weighty matters such as slavery, civil rights, abortion, commerce and just about everything else including health care coverage for every US citizen?

We got to being more than a little curious once we heard these comments by President Obama and looked up in the GPO database about how many laws have been found unconstitutional by the Supreme Court over these past 2 centuries or so.

Answer is: 1,315. One thousand, three hundred and fifteen laws, statutes and ordinances. All passed by democratically-elected legislatures and city councils.

Unconstitutional and Preempted Laws 1789-2002
According to the GPO (Government Printing Office Database):

1789-2002 Acts of Congress Held as Unconstitutional..............................158
1789-2002 State Statutes held unconstitutional......................................935
1789-2002 City Ordinances held unconstitutional....................................222
1789-2002 State and City laws preempted by Federal laws.......................224
Total State, Local and Federal Laws Declared Unconstitutional................1,315
Total State and Local Law Preempted by Federal Laws..............................224
Total Laws Overturned, all governments..............................................1,539

Now. look, everyone has a bad day at the office every now and then. Maybe Monday was one of those bad days for President Obama.

But seriously. He is a constitutional professor for goodness sakes! People tell us this was taught in Class Numero Uno at every law school in the nation: The Supreme Court has the authority through the concept of 'judicial review' (which is not explicitly stated in the Constitution by the way) to take a look at any law brought to the bench through the proper judicial channels to determine if it fits in the framework put forth by the geniuses who wrote the US Constitution in 1787.

So, this just proves that the general election campaign has already started with President Obama staking out his position 'just in case' the Court rules against him in this case and announces their decision in late June this summer.

He will run against the 'mean old conservative justices' on the Supreme Court who were nominated by Reagan, Bush 41 and 43 and seek to make the case to the American people they need to return him to a second term to appoint more 'competent and understanding' justices between 2013-2017.

'This is 'judicial activism' in its most egregious form!' President Obama and his handlers will scream if the Court rules against the individual mandate which may undo the entire health care law itself.

Blasting the Supreme Court is as old as the Republic itself. Both sides have done it going back to the days of the Federalists of John Adams days and the Democratic Republicans under Thomas Jefferson who disliked the courts so much that he one time zeroed out the entire budget for the judiciary in his annual budget submission!

We just thought President Obama would know better. He is a constitutional professor after all...and we are not.

Thankfully.

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Cut Federal Government Spending in Half!

2012-03-26T09:40:00.003-07:00

Sometimes, having a handy visual prop helps focus things in the mind.

Or at least a good song that stays in your head forever it seems.

'We could cut the federal budget in half...and still have a great military defense system, social safety net to take care of every poor person who needs it and help build the infrastructure and educational system we need to remain the greatest nation on earth'

You don't believe it? Go to this great CBO website, 'Reducing the Deficit' and call us in the morning. You will at least be one of the maybe dozens of people who have ever read this publication in its entirety.

Excluding incumbent Members of Congress, Senators and the President. Because apparently, they really just don't seem to care one whit about reducing the deficit, spending or ever balancing the budget.

The truth hurts, doesn't it?

We are willing to make this 'outrageous' claim simply because we have read every single page of this budget document backwards and forwards at least 4 times. If you have never read one single page of this document, then you really do not know what you are talking about, with all due respect. You are sort of like the people in the medieval days who listened to the Catholic priests give sermons and sing hymns in Latin...and you couldn't speak one word of Latin yourself.

Read it yourself. We had one person dispute our contention before we gave them the link to the budget and just recently, they came around to say: 'Both the Obama and the GOP budgets are sort of out of whack with reality, aren't they?'

'Good for you! Go to the head of the class!' was all we could say beaming with pride.

America is not great because of the size of our government and federal spending. We are 'great' because of the freedom and liberty we have to lead our lives as we see fit to pursue our dreams and ingenuity of our people and universities and business enterprises.

We need to reduce the impact of federal government on our lives and unleash the energy that got America to the place it was before we almost destroyed it 4 years ago in 2008. America grew strong when the size of the federal government relative to GDP was about 1% for most of our history and under 10% at the end of FDR's New Deal expansion.

It is close to 25% of GDP today.

We have been making the argument for these past 3 years now, as hard as that is to be believed, that the problem we have in Washington, and in most state capitals and local governments around the nation, is the unceasing proclivity of our elected officials to continue to spend money on programs they like and which they think will keep them in office forever...without ever having to raise taxes or cut spending elsewhere to pay for it.

Apparently, they were not educated in basic arithmetic at the very early stages of childhood because we all know that 'you can't get something for nothing'; 'balance is better than imbalance in most everything in this world' and 'we did not fall off the last turnip truck' so 'you can't fool all the people all of the time' as Abraham Lincoln once said.

Here's our contention: Every single federal program needs to be completely reviewed inside-and-out by Congress and evaluated for its efficacy and impact on the national good as a whole.

If it fails to meet strict criteria for performance and 'success', it needs to be eliminated.

If it meets some standard of success, it then needs to be examined for possible savings and reforms. Perhaps it needs to be modernized; many programs we now still fund were created between WWI and WWII and surely have become out-moded, unnecessary or inefficient in some manner of speaking.

Here's our proposal: Congress will take an entire session, two-years, starting January 2, 2013 and dissolve into the Committee of the Whole (meaning everyone in Congress has to sit through these sessions in the chamber with CSPAN lights and cameras on all the time) and go through the entire federal budget (cut-in-half above) and discuss it line-by-line in excruciating detail.

If it doesn't pass muster and 50%+1 don't vote for it, it is gone. Next item.

Once the entire budget is combed through, a Member can ask for a 're-do' and go back to revisit whether or not the Mohair Program in West Texas is important enough for national security to support with taxpayers dollars. One chance. If it fails again, it is gone completely.

Now, we all know that the biggest driver in the federal budget is the same thing driving up costs at home and in business: escalating health care costs. CBO has already said that the Obama Federal Takeover of our health care system is going to cost twice as much as previously predicted (big surprise there, huh?) and we all know how much more we are paying for health care now versus a decade ago, even if your employer is still paying for 50%+ of your health care premium.

We would propose that a Special Double-Secret Committee be formed to deal with the real cost-drivers in health care and report back to the Committee of the Whole with its recommendations to break the upward cost spiral in health care once and for all....and then have Congress vote on it in toto, up-or-down, right there on the floor of the House and Senate for all the world to see.

Defensive medicine, tort reform, liability insurance reform, duplicative medical practices, excessive paperwork, illegal double-billing by Medicare/Medicaid providers (up to 20% of all billings according to one auditing firm we know that does this sort of work on a daily basis), incentives for wellness, getting people to stop smoking, start exercising, quit drinking and over-eating so much that we are in danger of becoming the fattest, most unhealthy generation of human life forms that have ever walked this earth.....the list goes on forever it seems.

But is all has got to be done. January 2, 2013 would be a good time to start. NO recesses; no work periods back home; no junkets, no golf tournaments.

Just grind it out like the Founders did for 4 hot smelly months in Philadelphia, 1787 when they gave us this gift of freedom in the greatest nation ever established at that point in time.

Two years to clean up the mess the current and past incumbents have inflicted upon us as a nation doesn't seem to be too much of a sacrifice to ask, does it?

Elect people who will do this in the fall elections. Ask anyone of them on the campaign trail if they will do this or not. If they will, vote for them. If they won't, don't vote for them...they are not serious about facing the greatest problem we face today: fiscal disaster.

You'll feel better for having done so.

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250 Things That Just Are Not True! (Continued): "The Military Has Been Cut To The Bone!'

2012-03-15T16:02:00.001-07:00

Have you ever heard a defense hawk in Congress say the following?

'We can't cut any more out of our US defense budget! It has already been cut to the bone!

Oh, really? Is that really true, Congressman, Senator, Anyone Running for President?

We just saw a recent article from the Navy Times (The Navy Times, for goodness sakes!) 'Navy Admirals' that pretty much says the following in plain English so everyone can understand it:

'There is one (1) ship for every (1) US Admiral in the US Navy today.'

In WWII, there was 1 Admiral for every 130 ships.

Each Admiral costs the US Taxpayer about $230,000 per Admiral per year in salary and benefits. That is $53 million per year spent (as of 2010) across the entire navy.

That does not include the cost of the attendant staff, travel, office, support and all the other costs that go into supporting each Admiral as he does whatever he does every day now that he is not commanding 130 ships as his father did in World War II. We conservatively estimate it must cost about $1 million per year to support the activities of each US Admiral.

That is another $200 million to $300 million per year down the drain, er...thrown overboard, er....'wasted'.

Without being too flippant about it, and respecting the public service of each of these dedicated career naval officers, what does an Admiral do all day long if he/she is not commanding a fleet of aircraft carriers, battleships, destroyers and cruisers on the open sea in the 21st century? Sail a desk at the Pentagon?

Does it diminish the stature and strength of the US armed forces to have the Admiralty reduced to the point where no one really knows if he or she is commanding any ship of war on the high seas or just moving around ships on a board game like they are playing 'Battleship' all day long?

There is not much else anyone on any side of the political spectrum can say about reducing federal spending anywhere when such wasteful spending is accepted and even encouraged in any department agency. You can't argue that taxes need to be raised when $300 million or so per year is being wasted like this. And you certainly can't argue that we are any 'safer' from enemy attack when each Admiral is, in essence, 'managing' 1 ship in the US Navy, can you?

There's probably 200,000 more things that just are not true in American politics. We'll keep bringing them to you to consider so you can make up your own mind.

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250 Things That Just Are Not True

2012-03-11T14:19:00.000-07:00

We saw a book recently, 'Contrary {To Popular Belief}' that pointed out the fallacy of 250 widely-held beliefs such as the 'fact' that a leap year occurs every 4 years (it doesn't occur in years not divisible by 4, 100 and 400, for some reason; 2100 A.D. for example, is not a leap year), the Earl of Sandwich 'invented' the 'sandwich' (he didn't) and 'Lucy in the Sky with Diamonds' was a song written by John Lennon to extol the virtues of LSD (it was based on a drawing by his 4-year old son, Sean, about his friend in pre-school named 'Lucy')

We also have been engaged in long-term, on-going conversations about weighty things such as 'who is a 'true' conservative or not; do tax cuts yield more tax revenues for the government and can government really 'create' any new jobs?

The misguided precepts, shibboleths and talismans held by ardent advocates on both sides in politics could fill a book the size of '2500 Things That Are Just Not True!' or about 10 times larger than the one we read at CVS.

Let us address just a few to start with on the Republican conservative side of things (don't worry...we will get to the liberal Democratic side of things soon enough):

'Cutting Taxes Will Starve The Beast'- This has been a long-held presumption by many on the conservative right: 'ALL we have to do to make government MUCH smaller is cut taxes, cut taxes, cut taxes...and that will force the federal government to restrain spending so we will have balanced budgets once again!'

'D'oh!' We have empirical evidence now from the past 30 years that this 'just ain't so!', don't we? We have had repeated tax cuts after tax cuts after tax cuts and the federal government has continued to expand almost without fail, even during the most recent crushing recession. NO federal program today is at an absolute lower level today than 3, 5 or 10 years ago. Not one. Check it out yourself and read the federal budget, all 2400+ pages of it on-line: Federal Budget

The reason why this has not worked is because advocates of unabashed tax cuts unpaired with any responsible spending reductions do not understand the following: 1) There is no federal balanced budget amendment that requires annual balanced budgets as in every state. 2) The Fed can and will print up money every single time Congress fails to balance the budget...which keeps spending at levels now almost 40% higher than tax receipts per year.

'If you vote to raise taxes, you must be a communist!'- This comes from all the 'No Tax Hike' Pledge crowd. Somehow, when George H.W. Bush 'broke' his 'No. New.Taxes!' Pledge at the 1988 GOP Convention by agreeing to some taxes as part of the 1990 Budget Agreement hammered out at Andrews Air Force Base, the camel's back was broken and none of these people will ever agree to any tax hikes as part of any budget ever again.

The 1990 budget agreement instituted the critical PAYGO budget mechanism that led directly to the balanced budgets from 1998-2001 trumpeted by Newt Gingrich as being something he did solely by himself (which is simply untrue). By the way, Speaker Gingrich vehemently opposed the 1990 agreement after he had a handshake agreement with President Bush 41 to support it. So, truth be told, Mr. Gingrich had nothing to do with the institution of the 2 key elements of the budget process, PAYGO and the discretionary spending caps that actually led to a flattening out of federal expenditures during the 1990's as a result of his walking away from the deal.

Talk about 'integrity'! Teddy Roosevelt once said of a political opponent: 'I could carve a better backbone out of a banana!' You can choose your own fruit in this case.

You are not a 'communist' if you vote for a package of solid, bonafide and massive spending reductions that includes some tax revenue increases as a concession to the opposite party that controls now 2/3's of the federal government in Washington. You are a 'constitutional pragmatist' in the vein of 'small government' advocates Thomas Jefferson and James Madison who care more about the future of this nation than your own personal political career.

'Raising Taxes Always Kills Economic Growth!'- President Bill Clinton's tax hikes in 1993 certainly did not crush the economic boom fueled by the internet explosion in the 1990's which will be viewed one day as or more important to American history as the opening of the Erie Canal in 1825 or the completion of the Transcontinental Railroad in 1869.

The combined package of Clinton's tax hikes, the PAYGO budget mechanism and the discretionary budget caps from the 1990 Act, the dramatic reduction of interest rates because of the market view that the US was 'actually doing something profound' to reduce its budget deficits and the 1997 Budget Act all contributed to the explosion of jobs and the economy in the 1990's. That, and the fact that the Internet Geniuses in the Silicon Valley were figuring out practical applications to what had previously had been primarily a defense-related communications backup system in the event of nuclear war.

'Cutting Taxes Always Generates More Tax Revenues!'- We have written about this before but take a look at these tables and make your own determination. Revenues to the federal government have doubled roughly every 8 years for the past 40 years, or approximately the time of any two-term incumbent president, regardless of whether the POTUS and Congress raised or lowered taxes! With normal economic growth, it stands to reason, that tax revenues will roughly double every eight years as well in the aggregate.

So, where is the evidence supporting the contention that higher tax revenues always follow massive income tax rate cuts at the federal level? If massive tax cuts increased tax revenues considerably, we would see it as a higher percentage relative to GDP, wouldn't we?

Just the math of it is a brain-twister. Cut taxes...and then more money will come in as tax revenues? That just doesn't stand to reason. That is like a business saying: 'Heck! Why not cut our prices on our products across-the-board?'. They might get a short-run bump up in revenues if they gain market share but if they don't, they are just cutting their own throats and will be in bankruptcy in no time flat.

We feel that the swelling of tax revenues to the federal coffers from 1983 to now can be more directly attributed to the 'Social Security Surplus' extracted in the form of SS payroll taxes that were hiked in the 1983 Save Social Security Act spearheaded by Alan Greenspan. The chart clearly shows that the 'surplus' now accounts for close to 1.4% of GDP as of 2007, up from 0% in 1982, and represents about $225 billion per year now, even in these depressed economic times.

These are not 'new revenues' generated by any new tax cut. These are flat-out tax revenues generated by higher tax rates in the form of payroll taxes instituted in 1983, plain and simple. Without the higher 'SS Surplus' tax rates since 1983, the average percentage of federal tax revenues generated over the past 15-20 years relative to GDP would have dropped to about 16.5%-17%, and most assuredly would not be the 18-19% rate always referred to by national commentators, Republican candidates and their spinmeisters.

We 'get' the fact that in the early stages of an economic recovery, the prospect of lowered income taxes might motivate an existing business to expand its operations and hire more people which will yield higher tax revenues in the near-term for the larger companies. However, to assert that 'lower taxes' stimulate entrepreneurs at the granular level is a bit preposterous, isn't it?

Do you really think that a young 17-year old Bill Gates in the 1970's actually was thinking about discounted cash flows and net present values of his future income stream relative to various personal and corporate income tax rates when he and his Microsoft-to-be compadres were hammering out computer code in Seattle, Washington? They probably didn't make any money for the first 5 years or so of their enterprise so 'tax rate cuts' meant absolutely nothing to them or to any other visionary at the early stages of brilliance and creativity. Most entrepreneurs (French meaning 'undertake an enterprise combining labor and capital') invent something cause they love what they are doing and then it turns into something great down the road.

And finally, (we promise!), this wonderful canard worthy of being broiled in the oven: 'I am only a 'true' conservative if I oppose every tax increase!'

This can be dispensed with with the following clear-as-a-crystal argument:

'Suppose you oppose any and all deals that includes any tax hike, tax exemption repeal, or moderation of any special tax rule benefit...to anyone. You then have to, by definition, summarily reject any and all budget deals that also contains $1 of spending restraint going forward; $100 billion; $1 trillion or $10 trillion.'

'Suppose I, on the other hand, will accept a $10 trillion spending reduction budget deal in return for a $1/person tax increase. That means we will have $10 trillion less spending in the future which means $10 trillion less debt incurred which means the federal government will far smaller than under the 'no spending cut accepted' posture of the 'no tax hike' crowd.

'Who then will have produced a smaller, more fiscally responsible, 'conservative' 'small government' budget for the federal government, by definition, then in this situation?'

We rest our case.

Think for yourself, not based on what other people tell you to think.

Look at the results around you. Isn't it time we do something different?

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Individual Mandates, Freddy the Freeloader, and Health Care

2012-03-08T07:41:00.001-08:00

Rick Santorum has been beating Mitt Romney over the head with the proverbial cane over his support for Romney Care in the state of Massachusetts during his term as Governor.

The main culprit? 'Romney's support of 'individual mandates' for everyone to be included in the system.

What is an 'individual mandate' anyway?

An individual mandate is a requirement passed by government that requires you as the citizen of that governing state or nation to 'buy' something just because you live in that state or nation. It is the quintessential issue over what is, or is not, a dispersed, smaller government in the original Federalism scheme where most decisions are pushed down to the lowest possible entity such as the city council or state legislature. Ronald Reagan ran on the platform of 'New Federalism', for example, extolling the Jeffersonian virtues of 'local governments making local decisions, not Washington.'

Passing 'individual mandates' at the federal level is a very hard thing to do. The Founders wanted to make it difficult, and they did.

The federal income tax of Civil War days was found unconstitutional by the Supreme Court in 1895 because it was an 'individual mandate' in the form of a direct tax and not apportioned by the state population as dictated in the Constitution. Article I, Section 2, Clause 3 says:

'Representatives and direct Taxes shall be apportioned among the several States which may be included within this Union, according to their respective Numbers.'

People at the beginning of our Republic were fearful of the direct tax mechanism because it reminded them so much of the capricious nature of the King of England, George III. Excise taxes could be avoided; you just do without the items to be taxed.

Direct taxes could not be avoided. Ever.

But with the passage of the 16th Amendment in 1913, all those concerns about 'capricious' taxation by a governing authority were set aside by our grandparents and great-grandparents and we have never had any problems with an overly-ambitious federal government taxing authority ever since. (in your dreams, maybe)

Aside from that, the next direct individual mandate from the federal, nationwide level to rear its ugly head didn't happen until the passage of the so-called Obama Care in 2010. That is right. 2 times in over 223 years, the US government has passed a serious 'individual mandate' to 'force' people to do something like pay taxes directly to Washington, not based on the apportionment clause.

The first was rectified by the passage of the 16th Amendment through the constitutional amendment process. Perhaps that means that Obama Care will need a constitutional amendment as well to be, well, 'constitutional'.

But the states, as in Massachusetts where Governor Romney served as chief executive, they are not beholding to the same restrictions on 'individual mandates' as the federal government supposedly has been until Obama Care was passed.

You have 'car insurance', don't you? Well, that is an 'individual mandate' at the state level that says: 'If you want to own and operate a car and get a driver's license within the borders of this state, you have got to buy car insurance from Geico or that annoying 'Flo' from Progressive or else, you can not own and operate a vehicle here'.

We are sure there are other examples. We just don't have them handy this morning.

States can do that sorta thing. The federal government can't. Supposedly. Unless you are in the Obama Administration or were in Nancy Pelosi's office when she famously said: 'We have to pass the bill to see what is in it' as if it was some sort of jack-in-the-box from which she didn't even know what would pop out when cranked.

Back in the early 1990's, when we were still on Capitol Hill, former Congressman Alex McMillan was a key player on health care reform on the House Health Subcommittee, the Budget Committee and the Leader's Task Force on Health Care Reform. Mainly because he understood the basic differences between Medicare and Medicaid, and then some, along with others such as Bill Gradison of Ohio, David Hobson of Ohio and John Kasich of Ohio. (How come so many Ohioans knew what they were doing on health care?)

They even met with First Lady Hillary Clinton and her Hillary Care team many times, one time most famously in the backyard of now-Ohio Governor John Kasich for hot dogs, hamburgers...and plenty of beer. Now that was some kinda cookout!

Our point in bringing all this up is that we can not remember one single Republican back then opposing any form of 'individual mandates'. Why?

Because Republicans were more concerned about the 'free rider' issue or the 'Freddy The Freeloader' case where people don't pay for their own health insurance but show up at the hospital emergency room with Stage 4 cancer and then the taxpayer and others who do have insurance wind up paying for that person who has never paid for their health care insurance. Just like what hapens today, as a matter of fact.

And they were mostly the young, healthy people we were most concerned about. You know, the strong healthy young strapping male of 25 years of age all full of vim and vigor who think they are immortal and invincible so they would never buy health insurance if not mandated to do so and somehow they get into a car wreck sadly and then spends 10 years on life support, all supported by someone else.

Here's our deal: 'Why not start all over and find a way to help every man, woman and child buy catastrophic health insurance coverage with the existing resources we have today in Medicare, Medicaid, VA, federal military health care and tax expenditures?'

'Cat Coverage' we could call it and it is far, far, far less expensive on a per person basis than the current system that pays every billing for a hangnail and then assumes you are committing attempted fraud if you file for it.

Cover everyone against the truly disastrous financial outcomes from cancer, stroke, car wrecks and gun shootings and then figure out private sector solutions to covering the other costs during the year.

The percentage of people every year who have such catastrophic bills are tiny in comparison to the general population which is predominantly healthy each year for the most part.

That is the way to go. Do it such that the individual mandates happen at the state level, where states have the flexibility to do such things, not at the federal level where it becomes 'constitutionally problematic' to say the least.

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When Does The State Have A 'Legitimate State Interest' In Telling Someone What To Do

2012-03-02T05:23:00.001-08:00

The recent furor over the Obama Administration's mandate to the Catholic Church to include birth control in any insurance plan offered by the Catholic Church to its employees has brought up a very interesting debate over the extent of what is or is not considered a 'legitimate state interest'.

President Obama and his Administration are saying that the 'state', meaning the federal government, has a 'legitimate state interest' in making sure that every women in this country has access to birth control, regardless of whether or not it violates the tenets of the sponsoring agency, in this case, the Catholic Church which opposes family planning on religious grounds.

Set aside the technical finer points of the law such as the 'rational basis test' or the 'strict scrutiny test' for the moment (we are not 'lawyers' in case you haven't noticed yet but 'budgeteers', 'wonks' or whatever you call people who are concerned about fiscal matters) and let us think together about the implications of this principle if carried out consistently throughout the federal government's budget.

If the federal government has a legitimate state interest in telling people they have to offer birth control to all of its members, why shouldn't the federal government be able to tell everyone who receives one dime of federal support, assistance, grants or appropriations what to do and when to do it in return?

In fact, that is generally the case throughout the federal government today. When a farmer receives agricultural assistance from Washington, he/she has to adhere to a myriad of federal standards and 'promulgated regulations' (love that word) regarding environmental protection and process or else they forfeit the right to get further funding.

Same with education. Same with transportation. Same with virtually every other federal program...they all come with major strings attached.

Except 2. Medicare and Medicaid.

For the most part, Medicare and Medicaid come with virtually no strings attached to the person who is using those federally authorized and spent taxpayer dollars. In fact, we can almost think of no federal restriction on what a person on Medicare or Medicaid can or can not do in return for receiving what is essentially an 85%+ federal subsidy for their health care.

There are plenty of restrictions on what a university medical center can or can not do with Medicare funds for, let's say, the Direct Medical Education program or any grants they might receive to build a new wing for gerontological research.

But not so for Medicare or Medicaid. A person receiving such direct subsidies from the federal government to support their Medicare or Medicaid benefits can continue to eat Twinkies by the box; smoke a carton of cigarettes every day and night; drink beer or alcohol until dawn and never lift a finger to get more exercise than to push the button on the remote control.

Shouldn't the federal taxpayers who pay 100% of the funds for Medicaid and 85% of the funds for Medicare be able to dictate to such individuals that they have to clean up their act and start a reasonable diet and get some exercise in return for continuing to pay their health care costs as a matter of 'legitimate state interest'?

We think there is.

Health care experts and administrators used to come into our offices on Capitol Hill and routinely tell us this astounding fact: 35-50%+ of ALL health care costs in America could be eliminated overnight if the American public did just these 4 things on their own:

Lost an average of 25% of their body weight
Quit smoking.
Quit drinking excessively. (a glass of red wine from time to time seems to be 'healthy' for some reason)
Get off the couch and at least walk at a fast pace for 30 minutes per day or climb the stairs instead of taking the elevator or the escalator to get to the Ben & Jerry's on the second floor of the mall. (hey! it would be a 'start' for some people)

Now, we know there are millions of people out there who are eligible for Medicare and Medicaid who do take care of themselves and their families. We know one spry octogenarian who essentially walked to Boston from North Carolina a couple of years ago during his regular daily walks during the year as they recorded the distances he walked each day. That is over 712 miles he walked or about 2 miles per day.

How many miles a day do you walk by contrast? This man is 83 years old today and will probably live to be 133 years old if he keeps this up!

But we also know there are millions of others who are not as motivated to keep trim and eat well or who may not know how to go about doing so in these days of being surrounded by fat-food (not just fast-food) restaurants and Super Duper Bug Deluxe Gulpers all the time.

We think the US taxpayer, through their contributions each year in the form of tax dollars to keep Medicare and Medicaid afloat not only have the right but the duty to demand that their elected representatives in Washington figure out a way to make sure that every recipient of Medicare and Medicaid know how to take care of themselves in return as part of their 'legitimate state interest' in continuing both programs.

Many seniors and poor people are too sick and too poor to take care of themselves and go to the local Whole Foods Market and buy the latest tofu or organic vegetables, we get that. They present an entirely different set of problems to address in a different, serious manner.

But with the heaviest and perhaps most 'unhealthy', in many ways, generation of Americans about to retire over the next 10-25 years, we had better do something almost immediately, like today in Congress, to help change the behavior of millions and millions of sedentary and obese fellow citizens or else we are going to be in a lot, lot worse financial trouble in 2025 than you can even imagine today.

If you don't believe so, just take a good hard look at this recent publication from the Concord Coalition called 'Structural Deficits' and why they matter. And then call us in the morning when your Stage 10000 migraine headache subsides and you can speak coherently again.

We all have a 'legitimate state interest' in driving down the cost of health care before it totally swamps us as a nation. Helping people live healthier lives is not just good for them but it would be great for all of us.

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The Insanity of Raising Taxes Before Spending Is Cut

2012-02-25T04:34:00.002-08:00

The truly 'silly season' in politics is upon us now in full force.

You see it arise when Republicans start arguing over contraception (because they don't want to talk about reforming/reducing 55%+ of the budget that is in Social Security, Medicare/Medicaid)

You also see it arise when Democrats start waving the bloody shirt of 'raise taxes only on the rich!' (because they don't want to talk about reforming/reducing 55%+ of the budget that is in Social Security, Medicare/Medicaid)

You see, the most important thing for EITHER political party is to never talk about how to restrain the growth of any entitlement program. Ever. Mainly because every incumbent, even Tea Party incumbents, want to get re-elected and they understand the incredible power the AARP and the high number of seniors who vote every election.

Close to 50 million people age 55 and over voted in the 2008 elections versus 32 million Americans aged 18-34 in the same elections. 50 beats 32 in anything.

Both parties want to return to Washington DC as the majority party each election. But since neither side talks about reforming any entitlement program during the campaign to build a mandate to do so, neither will ever take any action on the 3 largest components of our deficit/debt problems today: Social Security, Medicare and Medicaid.

You want 'proof': There have now been 20 Republican debates for the primaries so far. How much of those approximately 40 hours of televised debate broadcasts have been devoted to a sober, deep drill down examination of the upwards cost pressures in health care in general and in Medicare and Medicaid in particular?

About 30 seconds or so. Out of close to 2400 minutes or 144,000 seconds of the televised debates. 0.000208333333 or about .02% of the debates so far have been dedicated to the 3 federal programs that are chewing up over 50% of the federal budget or over $1.8 trillion this year. Of your hard-earned taxpayer money, or whatever the Chinese are still crazy enough to keep lending us.

Those are the primary components of the federal budget and the health care inflation in Medicare/Medicaid and in the VA and the military budget is the culprit in these exploding federal deficits for years to come.

Not talking about our biggest problems today is akin to Abraham Lincoln and Stephen Douglas completely ignoring the problem of the 'peculiar institution' called slavery during their great debates in 1858 in Illinois for the US Senate seat and talking about the weather and whether or not it was going to affect the winter wheat harvest that year or something more innocuous than that.

Social Security is technically drawing down the (fictitious) 'SS Trust Fund Surplus' as we speak today! We were not 'supposed' to be drawing down any of that surplus for at least another 10-15 years! Were we?

The SS Trust Fund 'Surplus' only exists in the imaginations of federal bureaucrats who thought it up 28 years ago in 1983 when Congress passed the last 'Save Social Security Act' after the Alan Greenspan Commission came up with accelerated payroll tax hikes and dramatically higher payroll taxes on self-employed people.

And yet, despite all of this 'silence' about addressing the fundamentals of our spending close to $3.6 trillion this year from Washington, there are still those, including President Barack Obama as the Drum Major-in-Chief beating the drums for 'higher taxes on the rich....so they can pay 'their fair share!'

Let us ask you the following questions:

1) Suppose you had an investment in a company that was poorly-run and bleeding cash every month through mismanagement and malfeasance from current execs. Would you pour any more of your hard-earned money into this company BEFORE they could prove to you that they had taken care of the wasteful spending under their control?

2) Suppose your child wanted an increase in his/her allowance even though they did no chores around the house, were making D's and F's in school and generally treated you, the parents, as the hired help to boss around every day. Would you raise the allowance to $1000/week 'just because they told you they needed the money?'

3) Suppose your federal government had done a terrible, awful job of managing the money you have been sending to them for the past decade; have never addressed any of the real problems in the biggest entitlement programs the world has ever known; spent money on wars overseas without budgeting for them or raising taxes to pay for them from the current generation; and generally made a mess of US federal finances by never even trying to balance the budget through spending restraint first.

Should you or would you just willingly send more of your money to Washington to 535 elected officials who apparently have zero capacity to: read, write, add, subtract, balance or compromise...in that order?

Heck, no! That would be the pure-T definition of insanity to the nth degree. Only truly stupid people throw good money after bad....and we see evidence of it every single day.

Now we are 'on-record' as saying that we would take a $1/head tax hike on everyone in return for a $10 trillion spending reduction package over 10 years. We understand that there are a majority of Democrat US Senators under the spell of Nevada Senator Harry Reid who apparently are so spellbound by his charisma and leadership that they just do everything he says and tells them to do.

He tells them to stand firm on 'raising taxes on the rich!' and waves the bloody shirt just like David Axelrod tells President Obama to do about every 3 weeks. Count 'em and see if that is not the interval of these 'soak the rich' speeches.

But if we could get $10 trillion in spending reductions in return for a measly $1/head tax hike, we would do it in a split second simply because it would be in the best interests of this nation to take bold action to reduce these deficits today so we don't become like Greece tomorrow.

It would be in the grand American spirit of 'compromise' which is as deeply embedded in the US Constitution as the DNA in your own body identifies you as the son or daughter of two parents.

We understand that there are some people on Planet Earth, such as the majority of Democrats who control the US Senate under the spell of Senator Harry Reid, who just do not want to cut spending anywhere, anytime or any place (They have not even passed a budget for the past 1000 days or close to 3 years running for Goodness Sakes!!). Since we have a civil government that demands compromise, people who want smaller government spending have to work with people who want to raise taxes to get something we want done for the good of the nation: lower debt.

It would still be throwing $1 in tax hikes in the gutter because there would be trillions more in spending that can and should be reformed or eliminated. But we would get $10 trillion in spending reductions which means $10 trillion in lower deficits and $10 trillion in less debt incurred to pass on to our children and grandchildren to pay.

Raising taxes to pay for an ever-expanding, not optimally managed federal government without dramatic spending cuts or reforms is simply 'insane'.

Cut the spending first. And then let's see if any taxes are needed to to plug the deficit gap.

Our guess is that they will not be needed. From the rich or anyone else.

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'Augustinian Sensibility' and Politics

2012-02-18T12:32:00.000-08:00

St. Augustine of Hippo

What does that mean?

We were honored and had the distinct pleasure to have Michael Cromartie of the Washington, D.C.-based Ethics and Public Policy Center (yes, that is not an oxymoron; there does exist such a place in our nation's capital) speak at two recent classes we held at Duke University for budding citizen-politicians we are now training at The Institute for the Public Trust. (see below)

Michael is an expert at the nexus where public policy, faith and the media intersect...and if the recent brouhaha over the Obama mandate for health insurance issued by the Catholic Church was any indication, his services will be needed now more than ever it seems.

His lecture was insightful, entertaining and helpful, as it always is, but one thing really struck us this time when he explained what 'augustinian sensibility' should really mean to people in the public arena and all of their varied supporters:

'Don't expect too much out of your elected leader(s) because you are surely going to be disappointed when they don't deliver what they promise during the campaign.'

Think about it. We all want our favorite leader to lead us all to the Promised Land, just as Moses led the Israelites out of the desert and to the River Jordan's very edge. (Remember, Moses screwed up and didn't get to lead his people into the Promised Land. Joshua did)

But how can 1 person in a pluralistic society like America ever lead ALL of us to the Promised Land when we all have such different and varied definitions of what the 'Promised Land' looks like?

Ronald Reagan came to Washington in 1981 after trouncing Jimmy Carter in the lop-sided 1980 election on a wave of 'American Pride and Western Cowboy Spit and Determination!' only to fall short of his stated claims to balance the budget and make the federal government 'smaller' during his term.

It doubled in size. From $591 billion in 1980 to $1.143 trillion in 1989.

President Barack Obama came into Washington in 2009 on a palpable sense of 'Hope and Change' because many people believed he was a 'transformational' leader on the order of Mahatma Gandhi of India and Abraham Lincoln combined with FDR and was somehow going to make life better for everyone...and balance the budgets at the same time.

He failed as well.

What the heck happens between a campaign and actually having to do the hard work of governing?

Everything it seems. Campaigns are 'fun' and promises are 'easy to say' on the campaign trail. Just ask George H.W. Bush 41, he of the 'Read My Lips; No NEW Taxes!' promise at the 1988 Republican Convention.

But the Founders wisely set up a gauntlet course where no one person or faction could ever get 100% of everything they wanted in any single session of Congress or presidential term.

Although you have to admit that Obamacare came pretty darned close to getting everything the President and the Democratic Party wanted in terms of passing a massive new piece of legislation that will permeate every sector of the nation, including the Catholic Church, for decades to come, don't you?

Part of it is because many people confuse our democratic republic with pure 'democracy' where majority votes rules in every instance.

It doesn't in Congress. Not by a long shot. In fact, the way the rules of the Senate are set up, many times a minority of 41 Senators can, and will, slow down legislation to make sure that the rights of the minority party, be they Republicans or Democrats, will not be trampled by a stampede of legislation from the dominating majority led by a President of the same party.

Just as the Founders envisioned it. They were as opposed to concentrated power in any office of government as they were for the promotion of liberty and freedom for the citizenry. It can be a confusing and yet delicate balance especially to millions of voters who vote for someone and expect everything the winner says will get done will actually 'get done!'.

Let's take a look at where an 'augustinian sensibility' might help cool the flames of politics out there and bring some reason and common-sense to our public discussions about civic issues:

Will any President bring total happiness and 'fairness' in terms of creature comforts to the entire population? Not likely unless he is a total magician or Santa Claus. It is simply impossible for any President or Congress to change the American system overnight and start redistributing all of the assets and wealth any better than the current free enterprise system does on a daily basis where owners pay workers out of their savings or investments.

Will any President or elected Member of Congress or Senate be able to keep the price of gasoline from skyrocketing if Iran closes off the Straits of Hormuz? Nope. Gasoline prices are a function of supply-and-demand and/or 'fear' of future supplies versus demand. Foreign policy might help dictate the direction of gas prices but unless we elect a future Jed Clampett President one day who controls a supply of newly-discovered oil greater than all OPEC countries combined in the Tennessee foothills, a US President has very little to do with the price of oil in the world markets.

Will any President or Congress ban any abortion from being legal in the United States again? Or, to the converse side, remove any restrictions now on abortion in the country so that abortion-on-demand will happen anytime, anywhere and for any reason? No. In fact, it can be argued that American politics has been held hostage to the abortion debate since Roe vs Wade in 1973 and the debate has raged between the 49-yard lines, to borrow from a football analogy. Being 'pro-life' or 'pro-choice' has become sort of a proxy that has further polarized our national discussions to the point where we can not even get pro-lifers and pro-choicers to agree that balanced budgets are a good thing anymore. To our collective detriment.

Will any POTUS or Congress ever solve anything anymore? That is a good question in these days and times.

Two other quotes Michael passed along bear repeating in this context:

Max Weber : 'Politics is the strong and slow boring of very hard boards' and

Reinhold Niebuhr: 'Politics is the method of finding approximate solutions to basically insoluble problems.'

Maybe we should listen to these guys, St. Augustine and Michael Cromartie while we are at it. Then maybe we will stop trying to kill each other all the time in the public square.

Augustine did have one great quote that might apply to politicians as well when they say they want to be a 'uniter, not a divider': 'Lord, make me chaste. Just not yet'. (from his great book, 'Confessions'. Read it. You'll see why for a long time, it was the second-most read book in the world behind the Bible)

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Contraception, Health Care Plans and The Constitution

2012-02-09T15:43:00.000-08:00

Why has the contraception edict by the Obama White House caused so much trouble?

It drives Catholics and other church-goers bonkers.

For good reason. It goes against the very essence of who we are as Americans as you will soon see.

The Catholics were understandably upset over the forced mandate of contraceptives being included on any health care plan offered by the Catholic Church to any of its millions of people across the nation or group plans offered through any of its entities. That goes against their religious belief that contraceptives are not acceptable to use as for family-planning purposes.

But Protestant religious groups across the nation were irate as well, even though their denominations accept the use of contraceptives for family-planning.

What gives? What was at the heart of this enervated opposition to President Obama's health care policy?

We think this edict bore right through the mantle of the often-shallow American political game and went right through to the magma of what it means to be an American. It is worth examining just so everyone understands where it came from.

What people with religious faith vehemently disagree with is the heavy-handed intrusion of the power of the federal government into matters of their faith. If there is anything that is a core American principle, it is the protection of everyone's right to believe, or not believe for that matter, in any particular religion.

It is a clearly enunciated right in the US Constitution. The Constitution speaks of religion in two phrases: The first is the freedom of religion clause in the First Amendment: 'Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof;'.

The second is Article VI: '...but no religious Test shall ever be required as a Qualification to any Office or public Trust under the United States.' Go tell that to Mitt Romney.

And that, ladies and gentlemen, is about it for the Constitutional language on religion and religious freedom.

There are 3 other 'foundational' documents, however, that you need to be aware of and understand whenever it comes to religious freedom issues in America, even though they are not in the US Constitution.

The Virginia Statute on Religious Freedom, penned by Thomas Jefferson in 1779.
The Danbury Baptists Letter to President Thomas Jefferson in October, 1801.
President Thomas Jefferson's Response to the Danbury Baptists on January 1, 1802.

Click on the links above and take a look at these important American documents. It is simply impossible to come away with any other conclusion than the fact that Thomas Jefferson, speaking on the behalf of many of the Revolutionaries and Patriots of the day, wanted to make painfully clear that one of the prime motivations for fighting the War for Independence and establishing the new Republic was to guarantee the free exercise of religion without ANY interference or hindrance or mandate from the federal government. Whatsoever. Ever.

Jefferson's language in the Virginia Statute is rife with 'liberty' and 'freedom' words and themes written in only a way that he seemed able to and catch the spirit of the human need to be able to worship freely without any interference from anyone or any state-sponsored government.

The point to keep in mind as you read these documents is that paramount in their minds was the experience of the state-sponsored Anglican Church of England as well as the state-sponsored Anglican Church of Virginia in colonial and post-revolutionary war days.

Did you know that you could not hold office in the Commonwealth of Virginia unless you were a solid Anglican or Episcopalian in good standing? Not only that, taxes were collected from the taxpayers of the Commonwealth of Virginia to support, you guessed it, The Anglican Church of Virginia! The word 'antidisestablishmentarianism' comes from the political battles in England and Virginia over the 'disestablishment' of the Church 'from' the state.

Can you imagine that? Collecting taxes today to support any church in your state, be it Catholic, Methodist, Episcopalian, Presbyterian, Mormon, Jewish, Muslim or Rastafarian?

Jefferson and his founding brothers rejected that notion for the new Republic in 1789. His response to the Danbury Baptists was written to assure them that he had no interest or desire as President to do anything that would be construed or mis-construed as recognizing or establishing any particular religion as the 'state-sponsored' religion of the new federal government.

The Danbury Baptists were aggrieved just like the Virginia Baptists or Methodists must have been in the sense that they were not allowed to hold public office and participate fully in the new republic's business.

Jefferson's letter back to them sought to assure them of his independence in this issue and he included this phrase: '...thus building a wall of separation between Church & State' to emphasize his understanding that the state should not impose a state-sponsored religion on anyone anywhere in this nation.

That phrase has been noodled, dissected, mis-represented and mis-handled ever since then by parties on all sides of various issues, depending on whether it suited their political purposes or not.

This is the landmine that the Obama Administration stepped on which has blown up in their face. It flies in the face of the American experience that any President or Congress can tell any religious group what to do and that includes whether the Catholic Church has to offer coverage for contraceptives or not in their offering of insurance plans.

Reading some of the foundational documents might actually be helpful to everyone involved, wouldn't you agree?

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'Render Unto Caesar What Is Caesar's'

2012-02-03T04:54:00.000-08:00

From Politico:

'President Barack Obama on Thursday tied his proposal to raise taxes on wealthy Americans to his faith, telling leaders gathered for the National Prayer Breakfast that Jesus’s teachings have shaped that conclusion.

The rich should pay more not only because “I actually think that is going to make economic sense, but for me as a Christian, it also coincides with Jesus’s teaching that ‘for unto whom much is given, much shall be required,’” Obama said at the Washington Hilton, delivering remarks at an annual event that every president has attended since Dwight D. Eisenhower.'

Well, this brings up a lot of other verses to consider, doesn't it?

Jesus Himself Paid Taxes! (Matthew 17:24-27)
'Render Unto Caesar What Is Caesar's' (Matthew 22:15-22; Mark 12:13-17; Luke 20:20-26)
Submit Yourself To The Governing Authorities (Romans 13:1)
Pay Taxes Because The 'Governing Authorities' Are God's Servants (Romans 13:5-7)

Now, politicians always have to be very careful when they are mixing Scripture with advocating public policy. What about the confusion between 'church and state' here? Didn't President Obama just step over the line by 'invoking' the Holy Lord by intimating that He thinks higher taxes on rich Americans is a 'good thing' to cure our budget deficits as if Jesus is some sort of OMB Director?

But more to the point, what do these verses actually tell us about the American Experience as a nation over these past 223 years?

That we are a nation of 'rebels' who don't look kindly on despotic leaders and rulers, that is what it says.

Here's what we mean:

Apparently, none of the Revolutionary Founders of this nation paid too much attention to the admonition to 'submit to the governing authorities' very well, did they? What did they do?

They stuck more than their finger into the chest and then the eyes of King George III and told him through a bloody war (which anytime really is 'politics by other means) to go stuff it somewhere and don't ever bother us again.

And then, they did something truly amazing.

They wrote a Constitution of self-rule that completely eliminated any vestige of single person rule in America.

No, not the one we live under now. The Articles of Confederation, adopted in 1781. The 'first' Constitution and the one that coined the phrase 'The United States of America' for the first time.

There was no President. There was no Supreme Court. There was no bicameral legislature. Just one unicameral legislative body where 13 representatives of the 13 states would meet and have to arrive at a unanimous vote to get anything done.

So, in God's eyes, who then became the 'governing authority' under which to submit and pay taxes and do other things the 'government' ('of the people, by the people, for the people'...you know, what Lincoln said at Gettysburg) told them to do? Who is the 'Caesar' now?

You see the difference? It is one thing to have a single person make decisions for the rest of us all based on his/her personal feelings and predilections.

It is an entirely other thing to have a group of people hammer out a deal under which they know themselves that they are going to have to live under the rules they hammer out and then return home to face the approbation or the disgust of their many neighbors and friends who live near them, not across the ocean or in Washington, DC far removed from the 'real world'.

We think President Obama has made the mistake in assuming that we live in an America under the rule of a 'Caesar' or at least a very powerful President during his term in the White House.

To some extent and to be fair about it all, the power assumed by the President has been steadily escalating over the past 80 years since FDR took the reins of the White House during the last (but far more severe) Great Depression in 1933. Ronald Reagan consolidated power during his term in the White House through his charm and personality and George W. Bush did some things that still give us heartburn to be honest about it.

But we really don't live under a Caesar and never have. We don't live in a nation ruled by a King, a czar, a potentate or even a Grand Poobah of the Loyal Order of Water Buffaloes like in the Flintstones cartoons.

We live in a democratic republic where we are supposedly ruled by fellow citizens who are supposed to argue, debate, scream if they have to over policy differences in Congress and our state legislatures....and then come to some reasonable compromises and conclusions and go home.

The problem is that Americans seem to have become inured to the idea that The President and the Executive Branch of our government is far more important and powerful than the Congress (of the People) is. Take a look at this chart and see what we mean.

Maybe this 2012 presidential election cycle is a good time to discuss, maybe at least for 10 minutes in one of these interminable debates, the proper role and perspectives on self-governance nowadays.

The Founders spent 13 years in, first, a bloody, protracted war on the battlefields and then heated debates in the councils and pubs over what to do next between 1776 and 1789 to set up what they thought was the 'ideal' structure for people to govern themselves in a free society.

We think now that the 'governing authorities' are ourselves, and not a Caesar, that it is time we start acting like we care about what is happening to our nation and get involved in some tangible worthwhile manner this election cycle.

Like maybe you running for some elective office for example or at least coughing up some significant dough for candidates who do have the courage to run for something.

'Rendering Unto Caesar' when you are actually the 'governing authority' takes on a completely different light, doesn't it?

(This was not written as a plug for The Institute for the Public Trust that we are running now to help train new people to run for public office but if you want to learn more go to the link below and/or contribute to help us complete this mission and goal)

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The Gordian Knot of Medicare

2012-01-31T03:39:00.000-08:00

We saw an interesting article asking what would happen if a person wanted to leave Medicare and got to wondering:

'Is it 'constitutional' to force everyone who is aged 65 or older into and then stay on Medicare even if they don't want to or can afford their own non-government-run and paid-for health care coverage?'

(You can choose to dis-enroll from Medicare Part B whenever you want to but you are automatically enrolled in Medicare Part A and B when you turn 65. You can not dis-enroll from Part A, and for reasons cited below, you may never want to either)

We think any time you can get 50%+1 of both the House and the Senate to agree on a package that the President doesn't veto is pretty much as 'constitutional' as you will ever get.

If you really want to get picky about it, add in the 27 Amendments to the US Constitution we have passed over these last 223 years that all passed Congress by 2/3rd's majority and were sent to the states where 3/4's of them had to ratify it as well in their state legislatures (except for the 21st Amendment that was ratified by 3/4's of the state conventions)

Those are the two 'constitutional ways' to change things in America. It is a slow, very deliberate and difficult process. Just like Mr. Madison and Mr. Jefferson wanted it to be.

The 'constitutional' way to overturn Obama Care is through the same process: Congress and the White House. Elect enough new people to overturn Obama Care if you don't like it, that is the way to do it. It requires gutsy candidates and lots of money but that is the way to do it, not wait on the decision of 9 people on the high court.

For that reason, we don't put too much stock in the argument that the Supreme Court will overturn Obama Care because of the individual mandate issue. It passed Congress with the requisite number of votes and was signed into law by the President.

What can be more 'constitutional' than that?

But getting back to the question at hand: Should a senior be able to leave Medicare if he/she wanted to and had their own private health insurance or were 'self-insured', in effect, because they were super-duper wealthy like Warren Buffett, let's say, or Bill Gates?

Take a very close look at the chart below:

Medicare (A+B) Sources of Income as Percentage of Total Income

Part B
Year Payroll Taxes Tax on Benefits Premiums State Transfers General Revenue
2010 38.9% 2.9% 13.2% 0.9 % 44%

What this chart is screaming out to the American public, even though most people don't want to see it, hear it or believe it, is this: 'Medicare is one of the largest 'welfare' programs now run in America'.

(Merriam-Webster dictionary definition of 'welfare':

aid in the form of money or necessities for those 'in need'
an agency or program through which such aid is distributed

If you have a problem with the definition of 'welfare', take it up with the intellectual descendants of Noah Webster who developed this line of dictionaries in America. But Medicare qualifies on every word in this definition except for these two: 'in need')

Medicare is not targeted towards just to those 'in need'; the poverty-stricken; the poor or even the-close-to-being-near-poor! There are millions and millions of upper-income and very wealthy people now on Medicare simply because they know they have one of the best deals in the history of mankind!

Having Warren Buffett and Bill Gates on any sort of federal subsidy program is just plain wrong, wouldn't you have to agree?

Let's think on this for a second:

Out of all of the $520 billion spent by the federal government on all Medicare services in 2010, all but $68 billion or so of the funds to pay for it all came from other people than the senior retirees. Seniors on Medicare Part B pay roughly $320+/month through premiums for physician services but virtually zero for the Part A hospital costs which account for about 50% of Medicare expenditures annually.

13.2% of the total was paid by roughly 44 million seniors currently on Medicare. 13.2%.

Who pays for the 'rest' of Medicare?

You do, silly.

In the form of FICA payroll taxes from your work (38.9% of the total). Or in the form of general revenue taxes you pay (or what the government obligates your children to pay through more debt to the Chinese, that is, or 44%)

Taxes on wealthy seniors accounts for 2.9% of the total and .9% is a transfer from the states for some reason which hardly seems worth the effort, does it?

So, where does that leave us?

Since Medicare is almost all paid for (84%) by the general taxpayer anyways today, why don't we just go ahead and make it all 'free' to every senior citizen?

That is right. FREE. As in a 'Free Ben & Jerry's Ice Cream Cone' or 'Free Lunch at the Snappy Lunch in Mayberry, NC!'

With the following compromise, that is. (There is always a deal to be made in Washington if you listen closely enough)

In return for making Medicare 'free' for eligible seniors, the following changes/reforms will be made to Medicare this year:

1. The Medicare eligibility age will start to rise at the end of 2012 in annual 4-month increments from age 65 to age 70 over the next 15 years. After all, if you reach age 65 in the year 2020, you can expect to live another 15 years if you are a man and perhaps 18 if you are a woman.

In many ways (besides eating too many Twinkies), we are the 'healthiest' generation of Americans who have ever lived. And unless you have been doing manual labor all your life instead of flying a desk or driving a computer mouse all day, you are probably in pretty good health relative to our parents and grandparents who worked and sweated their way through the Great Depression AND then were 'rewarded' with the 'booby prize' behind Door #3, World War II.

2. Every senior citizen who is either very wealthy or ridiculously wealthy will no longer be eligible for Medicare (or SS for that matter).

They have done exceptionally well in life and the payroll taxes they did pay over their lifetimes went to the retirees who were living then, not into a trust fund or ERISA-protected benefits plan where those contributions could have then built wealth over time.

And they don't 'need' or even 'want' 'welfare' from the other American people. Do they?

Some estimates run as high as $70 billion per year that could be saved (or debt averted) annually from here on out if entitlement programs were truly 'means-tested'. That would be over $1 trillion between today and 2022 alone.

It would 'cost' the taxpayer 'only' the $68 billion or so per year in lost Part B premium payments, probably starting in the year 2020, adjusting for inflation and phasing up as the current senior generation expires.

But the 'means-testing' (it is not a bad word in this deal, is it?) would yield close to $70 billion in savings from both Medicare and Social Security. PLUS the structural budget trend-lines in future Medicare costs would start to crumble somewhat as the age eligibility component is factored into projections.

People who are currently on Medicare would continue in the current system until they die which would keep the $68 billion+/year coming in for at least a little while as the age cohort ages.

On a very simple marginal cost/benefit analysis, we would save multiples of whatever amount of revenues we would lose in the 'lost' Part B premiums that would no longer be paid once the current senior generation expires. Maybe on the order of 10-1 over the long-term.

The people who need federal help the most would be protected and then we could focus on the other factors that are still driving up health care costs such as defensive medicine, liability insurance, tort law, third-party payors and the granddaddy of them all...getting people to take care of themselves and stop eating so many Twinkies, smoking and drinking excessively and generally being a couch potato the size of the couch.

What do you think? Would you take this 'deal' if you thought it would help get us out of this budget and economic ditch in which we seem mired?

Maybe you should talk with your kids or grandkids about it as well before you answer that question.

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If You Want 'Smaller Government', Use The Threat of Higher Taxes on Everyone To Get There

2012-01-26T04:05:00.000-08:00

It is a truism in business, conservative circles and general human common knowledge that if you want more of something to be used, give it away 'for free' and voila!....more of it will in fact be consumed.

How 'self-evident' is that? We are surprised that was not put in the Declaration of Independence or the US Constitution.

Many conservatives won't go to Ben & Jerry's any longer because of their liberal views and donations to liberal causes.

Except when they give away free ice cream cones all day long in April each year, that is. Then they line up like every other person who wants what? A great ice cream cone that tastes even better when it is given away for 'free'.

So why don't conservative small government advocates use the same logic when it comes to trying to reduce the size of government they say they want to do so badly?

'If you want more government, we are going to support raising taxes on everyone, not just a select few such as the rich or the importers or the consumers of carbon, etc. etc. etc.'

The converse would be true as well: 'If you want less government, we will tax everyone less by a proportionate amount.

Right? Isn't that what is supposed to be done in a society where everyone has an equal vote in the matter? Shouldn't everyone also have an equal amount of 'skin in the game' in terms of exposure to paying for all the services government provides, including when these programs are increased in cost?

We think that over the past 50 years in America, the inherent tension between paying for the government we all seem to want has been completely decoupled and broken. The more that politicians such as President Obama seek to play the 'class warfare' card in this high-stakes game of poker, the more dissolved we become as a nation in terms of having a collective stake in the game, i.e. paying taxes for our collective good.

As a result, we seem to believe as a society that all we have to do is pass new laws which increase the cost of our government and 'someone else will pay for it'.

Who the hell is that supposed to be?

Does 1 person get more protection from our wonderful national defense military and homeland security teams than any other person? Nope.

Does one class of citizens, such as the top 1% of income-earners, get more than 1% of the total protection offered by the same defense teams? Nope. Rich people and poor people were slaughtered on an equal opportunity basis when those planes slammed into the Twin Towers and the Pentagon on 9/11.

We are either all protected or not protected at all. That is the way it goes in a democratic republic supposedly.

For just one example of what happens when 'someone else pays for it', consider the current 'third party payor' system in the otherwise truly wondrous health care system in America.

Medicare is at least 50% paid for by 'other' younger taxpayers; Medicaid is totally supported by other people who pay taxes; and employer-paid health care plans are paid 'by my boss and company who pay 50-75% of my health care premium each month'.

We will all go get multiple opinions from different doctors if we don't like the first one we get when we are feeling bad and want to feel better, won't we? As long as we don't have to pay for the full cost of any of the visits or procedures or drugs, we will get as much of it as we possibly can even if the malady is minor or not life-threatening.

That is just standard human nature, isn't it? Nothing insidious about that fact. It is just the plain honest truth.

In ancient Greece, the Athenians did not have the benefit of a beneficent Federal Reserve to print up money or just 'make it up out of thin air' whenever they had to raise an army and navy and pay soldiers and hoplites to go to war to protect their freedom and interests around the known world at the time as they did in the 30-year Peloponnesian War from 431-403 BC.

Guess what they had to do? They had to raise money the old-fashioned way: from their own pockets, in chunks of gold, silver or talents and put it in the hands of the Athenian treasury so the state could pay the costs of war.

How did they do that? They held humongous town meetings out in the open square to discuss the advantages of going to war versus not going to war. As in 'becoming slaves' to the Spartans or Persians or suffering outright annihilation.

Once they decided to go to war, they had to decide how to pay for the soldiers, hoplites, boats and armaments to win the war. So they assessed 'taxes' on every citizen in some fashion or another.

They also usually voted to conscript every able-bodied man to go to war as well. Not many draft-dodgers back then we don't think. It was a total battle for survival and every person knew it.

Talk about a 'participatory democracy'!

But think of how difficult it must have been to make these collective decisions. If you had to pay higher taxes immediately to support a war, hypothetically speaking, of course, in Iraq, let's say, in 2003 AND you had to go to battle as long as you were an able-bodied man, would we have taken that momentous step as a nation?

No, of course not! But as long as 'someone else' was paying for it and 'I' didn't have to actually join the military and go fight the Iraqis for real, then 'that is OK by us!'

The Greeks 'participated' in every major decision by voting for services to be rendered by the government (entitlements, defense, road construction); they 'participated' by paying for those services with their taxes and the men were told to take up arms and go to war to defend their freedom.

We have lost sight of that direct connection between taxation and spending in America. Completely.

Returning to the tension between taxes and spending at the federal government level just might be the constraining factor that Alexander Hamilton referred to when he said that a consumption tax contains within itself a self-limiting limit on the size of government. (see Hamiltonian Federalists)*

So why not bring back that aspect of the Greek system to the modern American democratic republic in the 21st century to a new political party should it ever emerge?

It would look something like this: 'If Congress votes for more government spending, taxes will rise on EVERY US taxpayer in order to pay for it, not just the rich. That would include prescription drug benefits; going to war, homeland security, and building a 'Bridge to Somewhere' in Moosehide, Montana.'

Right now, 50% of the American taxpaying public have zero threat of their federal income taxes ever going up to pay for any increase in federal government spending for any purpose. Both political parties never tell any of these citizens to pay even $1 in federal income taxes to pay for anything above what they pay for Social Security and Medicare benefits in payroll taxes.

Most people don't even think of SS and Medicare FICA taxes as being 'taxes' anyway. They think they are actually making 'defined contributions' to their own private retirement and health savings plan in some way that 'just has to be' like what they do in the private sector.

They are sadly 'mistaken' and deliberately misled on that score.

So what do they care about how Congress spends money on anything outside of SS and Medicare? They could care less if Congress wants to build a 'Bridge to Nowhere' or a 'Tunnel to Somewhere' or go to war in Zimbabwe or put money into a Solyndra-like green energy project that goes under.

We think the moment every US citizen feels they have a stake in paying for any new federal program as in new taxes to be imposed on them, the historic political tension between taxes and spending will return to the process and once again put a damper on rampant, unchecked spending.

Even the threat of a $1 tax hike per head on everyone would reintroduce the balance between taxation and the size and scope of our federal government. And the harder it is for a politician to raise taxes on everyone to pay for more government, the harder it will be for them to keep increasing the size and cost of government at warp speed like we have been doing for the past decade or more.

*'It is a signal advantage of taxes on articles of consumption that they contain in their own nature a security against excess. They prescribe their own limit; which cannot be exceeded without defeating the end proposed, that is, an extension of the revenue.'- Alexander Hamilton

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What is True 'Tax Fairness' Anyway, Mr. Obama?

2012-01-25T04:40:00.000-08:00

Don't you just love the theatre of politics?

President Obama gave a great speech last night for the State of the Union. He's a great speaker, what can anyone say about that?

But the backdrop of the SOTU speech was clearly outlined by the release of Mitt Romney's tax returns the previous day which showed that he paid 'only' an effective tax rate of 15%, 'lower than the tax rate of Warren Buffett's secretary yada, yada, yada'.

One of President Obama's campaign tactics will clearly be 'class warfare'. Call it whatever you want but his political handlers obviously see trends in national polling that tell them that 'running against the rich' and talking about disparity in income might help him win re-election in November.

The sleight-of-hand in his delivery is what bothers us more than anything. Sure there are different tax 'rates' in the tax code but those were passed by Congress over the years for different reasons. Long-term invested capital has been determined by Congress (which is the constitutional way to do it) to be 'more valuable' since it helps create jobs in the long-run and if you tax less of it, the natural human tendency is to do more of it.

That just stands to reason, doesn't it?

But to even come close to asserting that Mitt Romney paid 'less' taxes in any way, shape, form or fashion than Warren Buffett's secretary is mental gymnastics on LSD, crack cocaine and crystal meth to the nth degree. No national figure should be able to make such an absurd assertion without full disclosure. Which is why President Obama deserves to be chastised for doing so last night.

Mitt Romney pays about $3 million in taxes each year. That is one single American taxpayer among 140 million households who wrote a check to Uncle Sam at the US Department of Treasury for 3 million smackers. 3 million of legal US tender greenbacks.

Have we gotten your attention yet, class? $3 million is $3 million from 1 single person!

All we would need is 866,667 other taxpayers just like Mitt Romney paying $3 million per year...and then no one else, including Warren Buffett's secretary, would have to pay one thin dime in income or payroll taxes or corporate income taxes or excise taxes or estate taxes next year!

Now we have your attention, don't we class? Not a single other solitary person in the entire country! Wouldn't you like to not have to write any more checks to the IRS or have that niggling 'FICA' tax deducted from your paycheck every other week?

Heck! President Obama has got it all wrong! Why not try to find a way to get 866,666 other Americans out of 140 million taxpaying households to make so much money that they just fund our entire government for the rest of us?

Of course, we are being facetious...up to a point.

Our main fear has long been that as we seek to drop more and more people off of the tax rolls, our democracy gets 'weaker' as the tension between 'paying taxes' and 'receiving the benefits' of what those said-same taxes provide for you (defense, education, roads) diminishes.

We know enough about history to fear when a very concentrated few very wealthy people or single individual controls the purse-strings to any country. (See the Oligarchs in ancient Athens)

We also think it is very healthy for EVERYONE to contribute something to the national treasury in the form of taxes because that makes their vote really 'count' each and every time they cast it during an election cycle. (more on that in the next posting)

So take this 'the rich don't pay their fair share' malarkey with a huge block of salt. It is just pure political posturing and gamesmenship played by professional consultants who have one goal and one goal only: 'Get my man re-elected in November.'

These guys would tell the President to promise each one of you a peanut butter-and-jelly sandwich every day for the rest of your lives if their polling told them that it would work and you would vote for Obama based on that delicious promise.

So be careful what you tell any pollster when they call your home. You might just get it.

We will explain further in our next post why we think the trick to getting smaller, more efficiently-spending and spendthrift government is to threaten to raise taxes on everyone if we want more government.

It is just common-sensical human nature at work as well.

'So, Mr. Lincoln, Will You Show Us Your Tax Returns And Did You Ever Sleep With Barnyard Animals'?

2012-01-24T03:11:00.000-08:00

'Umm, the primary issue in this campaign of 1860 is whether the Union will survive or not, Brian with all due respect.'

Don't you just wish the media would actually ask questions of these presidential candidates that are important to us as a nation?

Honestly, what net effect does the release of Mitt Romney's tax returns for the past decade have on whether you will ever get a job again or your business will succeed?

And, (pardon the French), who the hell really cares whether Newt Gingrich ever 'consulted' or 'lobbied' for Freddie Mac? (Answer: Companies don't hire people with legislative experience to teach them history about the Crimean War or the impact of the Whiskey Rebellion on the young United States.)

We have much bigger problems than either of those two questions, Brian Williams and John King, with all due respect.

We decided to go back in the Wayback Machine to see just how ridiculous most of modern-day journalism has gotten with these seemingly interminable debates, especially when we are confronted with the greatest economic challenges since: 1) The Great Depression and 2) any of the economic depressions that followed the Civil War, in that order.

John King, American Telegraph: 'Mr. Lincoln, did you actually get paid by Illinois Central Railroad for the legal work you did for them when they were becoming a big bad giant railroad company?'

Honest Abe: 'Well, why yes I did, Mr. King. I am a lawyer. And a darned good one at that I might add'.

Brian Williams, News Courier Services: 'Mr. Lincoln, is it true that you have actually slept in the same bed with other men during your travels about the Midwest?

Lincoln: 'Mr. Williams, there are many times when there is only one straw bed in the hotel and 5 men will sleep in the same bed after a long journey on horseback. It is 1860, you ninny! Now can we get back to what the real problems are in this country, namely keeping this Union together and what to do about the issue of slavery and state's rights?

Now, of course, the press was just as mean and insolent back in antebellum days as they are today in 21st century America. Abraham Lincoln was routinely called a 'baboon' and a big dumb backwoodsman from Illinois by his opponents and columnists alike.

But don't you wish that for just once, we could have a debate with these following questions, mainly because they get at the root of what our problems are as a nation today?

Would you veto every spending bill that comes to your desk in the Oval Office regardless of whether it comes from a GOP or Democrat-controlled Congress unless it actually reduced spending each year?
Would you sign a bill to repeal Obama Care, assuming it was passed by Congress?
If you repealed Obama Care, what would you propose to Congress to take its place so that everyone could have access to affordable health care insurance? (trick question..'insurance' is different from having access to 'health care'. see 'Do You Have Gutter Insurance?')
Would you respect the Constitution and defer to the wishes of the majority of Congress or do things by executive order?
Do you presume you and you alone can 'create' millions of new jobs in America or do the American people do that with their own ingenuity and sweat and investment given the right conditions to do so?
Will you lead the charge to help reform Medicare, Medicaid and Social Security, the Triple Towers of our problems in the federal budget?
Will you propose a consumption tax in lieu of every existing federal tax to get rid of all the loopholes, deductions and exemptions that make the current tax code a complete farce?
Do you think we should keep cutting taxes regardless of the debt and deficit outlook as some advocate to stimulate the economy?
Will you support a strong and vigorous national defense program and does that include keeping a naval fleet in the Straits of Hormuz to insure safe shipping lanes so we can keep importing more oil from the Middle East?
How do you plan to defeat President Obama in November? Please be specific.
Do you actually still believe there is intelligent life on this planet?

(We threw that last one in to see if you were paying attention. We wonder sometimes if all intelligent life has not just vanished from the modern media and modern political scene, though)

Let's hope future reporters will actually get their heads screwed on straight before asking any more questions to these candidates, one of whom will be trying to unseat President Barack Obama in November.

The list of questions we want answered are above and very simple to ask. Send them along to John King and Brian Williams, et. al. if you know them. They will be doing the American Republic a great favor if they will focus on questions that actually mean something to our future.

What Do James Madison's Views On Constitutional 'Checks and Balances' Have To Do With The South Carolina Primary Today?

2012-01-21T05:50:00.000-08:00

Here's the quaint little diagram most textbooks have taught American schoolchildren over the last century about the so-called 'checks and balances' in the American democratic republic system.

Looks simple, right? It almost looks like a 'peace-and-love' symbol from the early 1970's.

It is also vastly 'wrong' when considering just exactly what sort of government James Madison and his good friend, Thomas Jefferson, were trying to establish in 1787, even though Mr. Jefferson was in Paris, France busy trying to establish trade treaties and beg for money to help pay the debts of the newly-minted young American Republic.

France and Holland were the Chinese money-lenders of the time. America hasn't learned much about borrowing in 223 years, have we?

Here's why these simplified school charts are so 'wrong': James Madison, Thomas Jefferson and even Alexander Hamilton for the most part had zero intention of creating any system where the legislative branch did not reign supreme. As in having every single last card to play whenever it came to making public policy changes in America.

A better way to consider what our Founders really wanted in the new democratic republic would be to consider the words to one of The Rolling Stones' greatest hits, 'Under My Thumb' in 1966 and think of them in terms of what the Founders were trying to do back then:

'The squirmin' dog who's just had her day...The way she does just what she's told. Down to me, the change has come. She's under my thumb.'

The 'squirming dog' back then was the King of England who had just lost his total monarchical power over the former colonies. For good reason. He was too oppressive, too capricious and too over-bearing in his demands of the American taxpayers.

Who would be the 'squirming dog' today in modern-day America should Messrs. Madison and Jefferson come back from the dead to lead us again? Or better yet, some modern-day Madisons and Jeffersons with a pretty solid understanding of their constitutional genius and ability to lead our nation again?

The omnipotent and over-reaching President of the United States and the Executive Branch of our government. All of which have been fed and fueled by the sometimes coherent (but mostly not) decisions of our elective representatives for the past 80 years but for the most part, the past 20 and certainly the past 10 years with almost a childlike reckless abandon.

This is not a direct slam at President Barack Obama, although we believe he has taken the control of the executive branch and taken it to the extreme in off-the-constitutional-backroad-driving contest. This is a direct slam at the proclivity of the once-free nation of the United States of America that seemingly has defaulted its right to be a self-governing nation where 50%+1 of their number in Congress got to choose how we were run as a nation. Not the President and his minions.

Take a look at this 'revised' chart of Constitutional checks-and-balances that we think more realistically reflects the intent of the framers of the Constitution in 1787: (You may have to click on the chart to open it in a more clear and easier to read new window)

We think Mr. Madison and the other Founders 'stacked the deck', deservedly so, in Philadelphia in 1787 so that Congress, not the President, and certainly not the Supreme Court, would be the ultimate arbiter in all things relating to the conduct of the affairs of this nation.

Sure, they wanted a 'single voice' to speak for the nation when it came to foreign affairs and being the Commander-in-Chief of our armed forces. But they also reserved the right to 'declare' war to Congress so that we didn't have some modern-day Alexander The Great gallivanting all over the globe extending his imperialistic dreams everywhere with the blood of American citizen-soldiers instead of just focusing on defending our borders and interests around the world when necessary. (as in World War II as a prime example)

The 1787 Constitutional Convention was so vague about the scope and range of the Supreme Court and the judicial branch that the words 'judicial review' never even show up in the vaunted language of the US Constitution.

The power to overrule another branch of government did not occur for the Supreme Court until the 1803 Marbury vs. Madison ruling, 14 years after the founding of the Republic. And in another strange twist, President Jefferson sent a budget to the US Congress asking for $0 to fund the entire judicial branch around about the same time 'because the courts had gotten too political'.

Imagine that.

Why does any of this matter today, of all days?

The South Carolina primary takes place today and with it goes the next step in determining who the nominee will be for the Republicans to challenge the incumbency of President Barack Obama who wants to serve another 4 years as our Chief Executive of this great nation of ours.

With the fall presidential elections coming up, we also get one more quadrennial chance to decide what sort of Republic we want to have: Do we want to continue building an ever-expanding and expansive government built on executive privilege and prerogative?

Or do we really and truly want to progress to a day when a normally-functioning, sentient and coherent Congress will meet to discuss our problems in a sane and rational manner and actually come to some reasoned conclusions based on compromise where at least 50%+1 of the Members of Congress and Senate vote 'Aye' to save the Republic?

You know, like the Founders really wanted us to do. Forever.

'You Might Be A Small Government Conservative If You....

2012-01-16T16:43:00.000-08:00

...are for Raising the Ages of Eligibility for Medicare and Social Security!' as described in a recent CBO blog by the Director of the CBO.

We have always enjoyed the comedy of Jeff Foxworthy of 'You Might Be A Redneck' fame. (You know who you are. We went to school with you when you bragged about being a redneck!)

But what we are really having difficulty figuring out is who is really and truly for 'less government'. The book would be pretty small if it was called 'You Might Be A Small Government Conservative If....'

Would it be the GOP? 'You might be a small government conservative if you cut spending and balanced the budgets every now and then!'

Raucous laughter in the audience.

Is it the Tea Party? If so, perhaps they will adopt the age 70 retirement age as a solid plank in their platform going forward. Has anyone seen any Tea Party advocate do this? If so, please steer them our way.

Is it President Obama and the current Democratic Party? (Sorry. In the interests of fairness we just had to ask full well knowing the answer is a resounding 'No!')

Raising the retirement ages almost immediately to 70 (the Early Retirement Age would have to be raised precipitously as well) would flush out the 'true conservatives' from all the pretenders it seems to us.

Reason #1 is the fact that 'true conservatives' supposedly don't want government programs and certainly not 'welfare'. (SS and Medicare are not trust funds or any sort of 'actual' investments when funds are invested to grow and be taken out later for each individual)

Every SS $ received by you will be just a dollar taken out of your children's tax payment to Washington every other week; a dollar taken from another trillion or so borrowed from the Chinese in more debt or from money just 'made up out of thin air' by the Fed if the dollar is still in currency in 2025 or so.

#2 is the fact that 'true conservatives' want smaller government and balanced budgets. Right? Is that still correct? We are asking.

Raising the retirement age is a triple, if not a home run, for 'true conservatives' then!

Raise your hand if you are willing to adopt that as a critical plank in the new political majority that is budding out there.

Implementing the higher age thresholds for both Medicare and Social Security on a phased-in basis will solve close to a minimum of 16% of the long-term budget deficit problem just by doing those two things alone by 2035. Accelerating the hike to age 70 in both Medicare and SS in the next 10 years may solve close to 50% of our structural deficit problems.

People will say: 'You can't make everyone wait til 70 to retire!'

Ok, you are right. Offer exemptions due to physical and mental health conditions. You are most likely going to have to work to age 70 anyway due to the financial losses incurred over the past 4 years in your retirement plans.

Honestly, who in the later Baby Boom Generation and younger has ever really believed Social Security was going to be there for them anyway when they retired? Many people have long planned for zero Social Security benefits in retirement.

Take a look at what the CBO Director has to say about this important issue. We have reprinted it below to make it extremely easy for you to read and not ignore. It is a big deal.

'Raising the ages at which people can begin to collect Medicare and Social Security benefits would be one way to lower federal outlays, raise revenues, and reduce long-term fiscal imbalances. A CBO issue brief released today reviews how ages of eligibility affect beneficiaries under current law and how delaying eligibility would affect beneficiaries, the federal budget, and the economy. (CBO has explored this issue in other publications, most recently in March 2011 in Reducing the Deficit: Spending and Revenue Options.)

Policy Option	Long-Term Budget Impact	Implications for Beneficiaries
Raise the Medicare eligibility age from 65 to 67	Medicare spending declines by about 5 percent	Access to Medicare would be delayed for most people; many of the affected people would pay more for health care
Raise the full retirement age for Social Security from 67 to 70	Social Security spending declines by about 13 percent	People would face reduced benefits over a lifetime
Raise the early eligibility age for Social Security from 62 to 64	Social Security spending changes little	Access to Social Security benefits would be delayed for many people, but their monthly benefit amounts would increase

Raising any of the ages of eligibility would cause some people to work longer, thereby increasing the size of the workforce and the economy. Although the magnitude of those effects is difficult to predict, CBO estimates that:

Raising Social Security’s early eligibility age to 64 or the full retirement age to 70 would, in the long term, boost the size of the workforce and the economy by slightly more than 1 percent.

Raising Medicare’s eligibility age to 67 would also boost the size of the workforce and the economy, but by a much smaller amount.

Effects of Raising the Medicare Eligibility Age (MEA) from 65 to 67

Medicare provides health insurance to almost everyone who is 65 or older. If the eligibility age was raised above 65, fewer people would be eligible for Medicare, and outlays for the program would decline relative to those projected under current law. CBO expects that most people affected by the change would obtain health insurance from other sources, primarily employers or other government programs, although some would have no health insurance. Federal spending on those other programs would increase, partially offsetting the Medicare savings. Many of the people who would otherwise have enrolled in Medicare would face higher premiums for health insurance, higher out-of-pocket costs for health care, or both.

CBO estimates that raising the MEA would reduce Medicare outlays, net of premiums and other offsetting receipts, by $148 billion from 2012 through 2021. By 2035, Medicare’s net spending would be about 5 percent below what it otherwise would be—4.7 percent of GDP rather than 5.0 percent under current law. A rise in the MEA would cut by a larger percentage the number of years during which the average person would receive Medicare benefits, but the percentage reduction in outlays would be smaller because the people affected would be the youngest beneficiaries, who tend to be the healthiest and thus to require the least costly health care.

Effects of Raising the Full Retirement Age (FRA) for Social Security from 67 to 70

The FRA under Social Security—the age at which participants are eligible to receive full benefits—is currently 66 but is scheduled to increase to 67 for people who were born after 1959. Beneficiaries may choose to begin collecting benefits before the FRA, but then they receive less per month. Therefore, raising the FRA would result in a reduction in lifetime benefits relative to what people would receive otherwise.

On average, raising the FRA would induce people to work longer to offset the lost income. Moreover, the amount of additional work would probably be greater than would occur if an equivalent benefit reduction was implemented without changing the FRA because more people would be inclined to claim benefits later.

The reduction in monthly benefits for some beneficiaries would lower average income and increase poverty rates in the future among the elderly. The increase in the FRA would be particularly burdensome for people with low income, who tend to rely heavily on Social Security benefits, and especially for those who could neither qualify for Social Security Disability Insurance nor adjust their work patterns.

CBO has estimated the effects of one option for gradually increasing the FRA to age 70 by two months per year. The result would be to shrink federal outlays by $120 billion through 2021. By 2035, the option would reduce Social Security outlays by about 4 percent relative to what would occur under current law. The effect of the changes would continue to grow; by 2060, outlays would be reduced by about 13 percent.

Effects of Raising the Early Eligibility Age (EEA) for Social Security from 62 to 64

Currently, more than half of nondisabled beneficiaries who receive Social Security benefits based on their own work history claim benefits at 62, and almost 60 percent claim before 64. Therefore, if the EEA for Social Security was increased from age 62 to age 64, many people would be forced to claim benefits later than they otherwise would. They would receive larger benefits each month for fewer months overall, but currently those factors would approximately balance and an average beneficiary would receive roughly the same total benefits over a lifetime.

However, people with lower earnings would tend to experience a greater percentage reduction in living standards than would people with higher earnings. That difference would arise in part because people with lower earnings tend to have fewer assets, to have shorter lifespans, to have less in retirement savings and private pension benefits, and to be less likely to have health insurance through former employers.

Federal outlays would decline in the short term—by $144 billion through 2021, slightly more than 1 percent of projected Social Security spending—because people would have to wait until they were older to apply for Social Security benefits. Outlays would continue to be slightly lower than under current law until about 2035 and would be slightly higher thereafter, as higher subsequent monthly benefits would offset an increasing share of the savings from delayed eligibility.

Effects on Labor Supply and the Economy

Because the experience of changes in the eligibility ages is limited, CBO’s estimates of the effects of such changes on work decisions are highly uncertain. CBO estimates that increasing the EEA by two years would induce people who would have claimed benefits at age 62 or 63 to work an additional 11 months, on average. Once the new EEA or FRA applied to all people close to retirement, the policy change would increase the size of the labor force by slightly more than 1 percent and increase GDP by slightly more than 1 percent. Raising the MEA to 67 would result in an additional month of work per worker, on average, and would increase the size of the labor force and GDP by about 0.1 percent.

Effects of Simultaneously Raising the Ages of Eligibility for Medicare and Social Security

In the absence of evidence on how to project behavioral responses to simultaneous increases in all three eligibility ages, CBO assumes that the effects of simultaneous increases in the eligibility ages would equal the sum of the effects of increasing each age separately. CBO estimates that by 2035, the set of increases just described would cause outlays for Social Security and Medicare to fall by 0.4 percent of GDP and federal revenues to rise by around a half percent of GDP—leading to a reduction in the budget deficit of nearly 1 percent of GDP, not including the effects of lower interest outlays. Altogether, by 2060, the federal budget deficit would be reduced by about 1¾ percent of GDP.'