Debt Ceiling Debate Reveals The Real Problem For The Middle Class

Thanks to Richard Luzzi for sending us this link regarding the meaningfulness to America of the debt ceiling limit that is quickly approaching. Please don't let the numbers in the video overwhelm you - they would be significant @ a fraction of the current & growing magnitude.

There is no problem with the approaching debt ceiling if America lived within its means - meaning that we spend only what we collect in taxes. The federal government currently spends every $ we collect in income & payroll taxes (& all of the others) plus borrows another 40%.

The real problem for middle-class America is what the entrepreneurial creators of wealth & jobs decide regarding how much more of the burden of the losers in our society they will carry.

The Sky Is The Limit

Thanks to a subscriber to ReturnToExcellence.net for passing along this video & his comments : "If you are wondering why some folks are starting to question whether a college education is worth the cost, the video goes a long way towards explaining it. Recently, the University of Missouri-St. Louis (UMSL) and the University of Missouri-Kansas City (UMKC) sponsored two college courses: Introduction to Labor Studies and Labor Politics and Society, to be taught simultaneously through a video conference between the two campuses.

The Professors are Judy Ancel, Director of Labor Studies at UMKC and Don Giljum, business manager for the International Union of Operating Engineers at Ameren UE in St. Louis. (Bonus: he is a member of the Communist Party.)

In the class, the Professors not only advocate the occasional need for violence and industrial sabotage, they outline specific tactics that can be used. As one of our colleagues pointed out, its the matter-of-factness of it all that is so disturbing.

And yes, the schools, and the professors' salaries, are funded by taxpayers."

Now it does not have to be that desperate. On the same day I received this message from our subscriber (along with a ton of others on equally interesting topics) I also read the following letter in the WSJ written by a Professional Engineer who actually hires people of worth - much like I always thought I did when I managed engineering-construction projects all over the world. America has to choose between the sorry state outlined in the above video or the one described below where our properly educated young people, 23 years old, can command a $67,000 per year starting salary right out of college where the sky is the limit - for them & America.

Top Engineer Grads Should Get Good Jobs

Regarding "We Need Scientists and Engineers, and They Need Jobs" (Letters, April 20): I've been an engineer for 20 years, with bachelor and master of science degrees in mechanical engineering, and I manage an engineering business.

Engineering is built from the ground up with calculus and calculus-based physics. If students don't master these building blocks, they are not going to get anywhere with "real" engineering course work. Second, I don't know that engineering students need to have their loans forgiven or given massive tax deductions for their loan interest payments. Bachelor of science engineers pull down $58,000 in the upper Midwest, and master of science engineers pull down about $67,000 right out of college.

I don't understand the claim that engineers cannot find jobs out of school. We have hired engineers right through the depths of the recession, and competition for top talent while cooling a little remained hot.

We hire for strong engineering fundamentals with good communication skills. These qualities will always be in high demand. The bottom line: My experience is that smart and ambitious candidates are in high demand, but they had to be smart and ambitious back in their college days as well.

Jeffrey Ihnen, P.E.

Muslim Problem In France Status Report

Thanks to a member of our informal e-mail club for passing along this link showing the status of the Muslim problem in France . After looking @ the video, & if you are interested to see how this problem happened, please go to the May 30, 2009 posting on ReturnToExcellence.net entitled Free World Challenges - From Soviet Russia's Communism To Muslim Demographics.

Responses - Standard & Poors' Projection - Right On Schedule

The subject original message brought several interesting responses including the one from a subscriber to ReturnToExcellence.net that transmitted the above Zimbabwe note along with the message "Doug - An economist friend gave me a Zimbabwe note last week. Zimbabwe abandoned their dollar in the Spring of 2009, so this only has amusement value. Still, I thought you might appreciate the subtle message it leaves." The non too subtle message is that after trillions comes quadrillions.

Our Wall Street Finance VP who also subscribes to the blog responded: "BO's 'social compact' may be part of his extreme ideology and drive to level 'playing field' for all in U.S. and for leveling the U.S. comparatively in the world. This is our 21st Century Karl Marx, a Saul Alinksy disciple.

Left unchecked the U.S. dollar will collapse. Then the IMF/G20 may rescue the U.S. economy with a coordinated debt restructuring. This may include severe entitlements' 'haircuts'. At first, BO may gleam with delight and proclaim that capitalism killed the U.S. and world economy. BO may then expect a promotion – global leader of an economic New World Order (NOW). No way! The IMF and G20 will bluntly rebuke him and ask that he organize communities again. The IMF understands that the private economy must be re-established and allowed to thrive.

The economic NOW may struggle for several years. However new technologies plus global nanny state destruction will catapult the world economy to unprecedented heights.

BO cannot comprehend this. He has never created a dollar of genuine wealth. Finally his days of influence are waning every day as our public debt daily increases by $4-5 billion. Soon, however, Capitalism will thrive as never before!

Standard & Poors' Projection - Right On Schedule

"Just last month Standard & Poors projected that they would lower America's Triple A bond rating by 2012 if America's financial outlook continued to deteriorate - S&P cited growing government health care costs & specifically called out that Medicare Part D worsened the outlook."  Some long time readers of these messages may remember these words I posted on July 13, 2006.  The events of this week show that America is right on schedule for the bond downgrade & all of the problems for you & me that ensue.

 

Thanks to a long time member of our group (who probably remembers the above passage) for sending along the chart below that provides some statistics re America's current financial condition - everything that is up should be down & vice versa.

 

As BO continues full force unimpeded with his social compact plans for America we will become all too familiar with the terms - default, insolvency, haircut, bankrupt, & worst yet defunct.

 

Here is the "change" promised 2 years later-----  January 2009 TODAY % chg. Source Avg. retail price/gallon gas in U.S. $1.79 $3.59 100.6% 1 Crude oil, European Brent (barrel) $43.48 $99.02 127.7% 2 Crude oil, West TX Inter. (barrel) $38.70 $108.38 180.0% 2 Gold: London (per troy oz.) $853.25 $1,414.50 65.5% 2 Corn, No.2 yellow, Central IL $3.56 $6.33 78.1% 2 Soybeans, No. 1 yellow, IL $9.66 $13.75 42.3% 2 Sugar, cane, raw, world, lb. fob $13.37 $35.39 164.7% 2 Unemployment rate, non-farm, overall 7.6% 9.4% 23.7% 3 Unemployment rate, blacks 12.6% 15.8% 25.4% 3 Number of unemployed 11,616,000 14,485,000 24.7% 3 Number of fed. employees, ex. military (curr = 12/10 prelim) 2,779,000 2,840,000 2.2% 3 Real median household income (2008 v 2009) $50,112 $49,777 -0.7% 4 Number of food stamp recipients (curr = 10/10) 31,983,716 43,200,878 35.1% 5 Number of unemployment benefit recipients (curr = 12/10) 7,526,598 9,193,838 22.2% 6 Number of long-term unemployed 2,600,000 6,400,000 146.2% 3 Poverty rate, individuals (2008 v 2009) 13.2% 14.3% 8.3% 4 People in poverty in U.S. (2008 v 2009) 39,800,000 43,600,000 9.5% 4 U.S. rank in Economic Freedom World Rankings 5 9 n/a 10 Present Situation Index (curr = 12/10) 29.9 23.5 -21.4% 11 Failed banks (curr = 2010 + 2011 to date) 140 164 17.1% 12 U.S. dollar versus Japanese yen exchange rate (This is even after the earthquake.) 89.76 85.03 -5.6% 2 U.S. money supply, M1, in billions (curr = 12/10 prelim) 1,575.1 1,865.7 18.4% 13 U.S. money supply, M2, in billions (curr = 12/10 prelim) 8,310.9 8,871.3 6.7% 13 National debt, in trillions $10.627 $14.278 34.4% 14 Just take this last item:  In the last two years we have accumulated national debt at a rate more than 27 times as fast as during the rest of our entire nation's history. Over 27 times as fast! Metaphorically, speaking, if you are driving in the right lane doing 65 MPH and a car rockets past you in the left lane 27 times faster . . . it would be doing 1,755 MPH! This is a disaster! Sources: (1) U.S. Energy Information Administration; (2) Wall Street Journal; (3) Bureau of Labor Statistics; (4) Census Bureau; (5) USDA; (6) U.S. Dept. of Labor; (7) FHFA; (8) Standard & Poor's/Case-Shiller; (9) RealtyTrac; (10) Heritage Foundation and WSJ; (11) The Conference Board; (12) FDIC; (13) Federal Reserve; (14) U.S. Treasury

 

BO's Social Compact Contrasts With American Tradition

Last night Bill O'Reilly presented one of the clearest understandings ever of what BO's plan is for America when Bill explained exactly what BO meant by the term "social compact" in his speech last Wednesday @ GW University.

 

On the 105th anniversary of the Great San Francisco Earthquake of 1906 please compare the pitiful weak socialist points below to the fact that it was the survivors only of that earthquake who rebuilt their city entirely on their own with no government assistance whatsoever - source - Professor Williams November 18, 2005.

 

Talking Points Memo - April 18, 2011     President Obama and the 'social compact'
	"This week President Obama will hold town hall meetings around the country trying to sell his vision of a strong America based on responsible spending and the 'social compact.'  The social compact was made popular by French philosopher Jean-Jacques Rousseau in the 18th century; basically he said the central government has an obligation to help its citizens in pretty much every way.  America largely avoided the social compact until the Great Depression, when so many people were suffering that President Roosevelt began the entitlement society.  America now faces economic ruin because it owes more than $14-trillion.  Still, many Americans, including President Obama, do not want to cut entitlement programs very much.  This is the war raging throughout America - between conservatives who emphasize personal responsibility and achievement against liberals who say the government must take from the wealthy and give to the poor.  So it will be interesting to see if President Obama can rally the country to support his vision of a strong social compact.  He has compassion on his side; few Americans want to see their fellow citizens suffer.  But the President does have that fiscal responsibility issue haunting him because the country remains in dire trouble."   The Factor pursued the notion of a 'social compact' with Fox News analyst Brit Hume.  "We're talking about the social safety net or the welfare state that has grown up since the New Deal," Hume began.  "If the President is saying that Paul Ryan and the Republicans in the House are trying to change that social compact, he's certainly not wrong, but that social compact is about to collapse of its own weight if we look at the budget projections.  Even the President would acknowledge that we have unsustainable levels of debt and spending, but he has proposed absolutely nothing specific." The Factor predicted the President Obama will fight entitlement cuts with all his power:  "I think he firmly believes it is his job to expand the federal government to take from the wealthy and give to the poor and to set up a quasi-socialist society."

Analysis Of Income Tax Systems

With income tax filing day 2011 upon us I present the above graph showing the history of income tax rates for both individuals & corporations from 1913 to the present along with the table below for individuals presented by FairTax National (with note from me in red) comparing the current system to the flat tax to the FairTax.  Please do your own analysis for your exact situation if you are so inclined - something I have personally never done.

 

Please note on the graph how fast the top marginal rates rose from their inception which is the problem with any income tax based system - the top rate for individuals went from 7% in 1913 to over 75% by 1920.

 

With re to corporations paying (or not paying) income taxes I hope that everyone (starting with Bill O'Reilly & Stuart Varney) listened to my explanation of why GE paid no corporate income tax in 2010 in my March 31 WRNJ FairTax interview.  The entire WRNJ broadcast is on ReturnToExcellence.net.  For starters only people pay corporate income taxes - whether consumers, shareowners, or employees.  The FairTax eliminates the corporate income tax meaning that none of us will ever pay this embedded tax again.  Please be assured that we did pay the compliance cost of the lobbyists & tax attorneys who prepared GE's 24,000 page return - people who were paid to create (with the help of Congress) or find the loopholes that let GE not pay any corporate income tax in America.  It is just that GE found paying the lobbyists & tax attorneys more advantageous & less costly than paying the corporate income tax rate shown on the above graph.

 

The below comparison uses a family of four (two adults & two children) making $100,000 per year.  To keep things simple there are no itemized deductions & the total income does not include any interest, dividends, or capital gains.  Also, it is presumed that the amount of payroll tax withheld equals the amount of tax paid & that there is no state income tax & the family spent their entire gross income on new goods & services in the case of the FairTax.  (Note from Doug - Both the employees' & employers' share of FICA payroll taxes are paid as part of the FairTax so the current & flat income tax systems' FICA payroll tax line item below should be doubled to 15.3% to properly compare this portion of these two tax systems to the FairTax.  Currently employees really pay the employers' share of FICA payroll taxes through their productivity-output that is compensated for by employers' paying the tax on the employees' behalf as part of employee total compensation.  Employers' share of FICA payroll taxes continue to be paid under both the current tax system & the flat tax - these FICA payroll taxes are just another embedded tax that is eliminated under the FairTax.)  

 

family of four, married filed jointly	Current	flat income tax	Fair Tax
marginal tax bracket	25.00%	17.00%	23.00%
gross income with no adjustments (wages only)	$100,000	$100,000	$100,000
personal exemptions	$14,600	$30,000	$0
Standard deduction (no itemizing)	$11,400	$0	$0
total taxable income	$74,000	$70,000	$100,000
1040 tax paid	$10,875	$0	$0
Flat tax paid	$0	$11,900	$0
Fair Tax (23%)	$0	$0	$23,000
Fair Tax rebate (23% of federal poverty level ($24,800)	$0	$0	-$5,704
total net taxes	$10,875	$11,900	$17,296
FICA payroll tax (7.65% of gross income)	$7,650	$7,650	$0
total tax paid	$18,525	$19,550	$17,296
tax paid as a percentage of gross income	18.53%	19.55%	17.30%
file return for refund	yes	yes	no

Continuation - Responses - Only 21 Of 87 Freshmen House Republicans Are Still With You

During the past few days I received many more responses to the original two subject messages such as "The person  who sent 'response #1'  hit the nail on the head.  If the dollar continues its decline, more and more nations will stop accepting dollars for payments and will redeem their large holdings of dollars.  This is very bad for our country."  I have also had many conversations re the FY 2011 Budget Deal & just like the previous response none of it has been good. 

 

I know that many of you are fans of Dick Morris.  Below is Dick's latest column entitled "House Freshmen Flunk The First Test" sent to us by a subscriber to ReturnToExcellence.net.  As you can well imagine Dick is not afraid to name names either.  I just hope we all remember them.

 

BTW - as asked by several people - the four Republican Congressmen who voted on Friday against the FY 2012 Ryan Budget Resolution were Ron Paul (TX), Denny Rehberg (MT), Walter Jones (NC), and David McKinley (WV) - all for various reasons.  Mine would have been that the Ryan plan would still increase the national debt by some $5 trillion over the next 10 years and continue $400 billion annual budget deficits through at least 2021.  Nearly all of the deficit reduction in the Ryan plan starts years from now.  Ryan would cut only $80 billion from the cumulative deficit total for FYs 2012 & 2013 - the original collective Republican campaign promise in 2010 was for a $100 billon spending cut for what I thought was calendar year 2011 not $80 billion for the next two year total.  Ryan's figures also rely upon continued favorable interest rates for financing the U.S. debt.  Interest rates have been at artificially manipulated (by the Fed) historic lows that have devastated seniors' CD interest income way too long.  A rise of one percent in the interest rate in financing the national debt would mean an extra $140 billion in spending that is not accounted for in the Ryan budget - such figure would be added to the national debt.  In short we are stuck in this financial mess & it will become more & more evident as the losers we elected pretend to proceed in our behalf. 

HOUSE FRESHMEN FLUNK THE FIRST TEST

By DICK MORRIS & EILEEN MCGANN

Published on DickMorris.com on April 15, 2011

Three-quarters of the freshman class of Republican Congressmen - the group that was going to change America - succumbed to party pressure and voted to accept the Boehner sellout deal he struck with President Obama.  How disappointing for those of us who worked hard to elect them and vested such hopes for change in their candidacies.
 
Please go to DickMorris.com for a list of the House freshmen who voted for the Boehner deal - sixty-one of them.  The link is in the top left column.  Also, please find on our site the names of the 59 men and women of courage and conviction who voted against the sellout compromise.
 
We cannot read the names of those who folded without a sense of exquisite pain.  These were the people who were going to change Washington.  Now it is evident that Washington is changing them.
 
It is not only the paltry nature of the $39 billion in cuts they accepted or even that they broke the basic campaign promise - and premise - on which they were elected, but that they were too frightened to use the lever available to them - shutting down the government.  The Republicans would have won that fight. We had hoped that those freshmen who battled the odds so bravely to secure their seats would continue to fight just as vigorously to save America from fiscal ruin, but it was not to be.
 
Please go to DickMorris.com and read the names of the freshmen Republicans who voted for this deal.  Again, the link is in the top left column.  It is very important that you write or call them to give them a simple message: either they show more backbone next time or you will withdraw your support.
 
Theodore Roosevelt said of William Howard Taft that he had the "backbone of a chocolate éclair."  The same could be said for three-quarters of our freshmen.
 
Let's salute the Congressmen who showed that they would keep their word to their voters.  Freshmen Scott Rigells (Va), Steve Chabot (Ohio), Cory Gardener (Col), Morgan Griffith (Va), Andy Harris (Md), Robert Hurt (Va), Raul Labrador, Steve Pearce (NM), Scott Tipton (Col), Alan West (Fla) and Ben Quayle (Ariz).
 
Engraved beside each name, in our minds, is the time we spent campaigning for them and we cannot but feel a warm glow that we helped to put them in office.  Those of you who donated to their campaigns should feel especial pride.
 
For the others, we apologize.  If they continue to act as pawns for the Speaker, we need to admit that we should not have asked you to donate funds to them or to help them get elected.  And we won't again.
 
Of course, there is still room for redemption.  There will soon be bitter fights over the 2012 budget and legislation to raise the debt limit. Our straying freshmen may yet discover their courage.  Your calls and letters to them will help.  Please, if you recognize the name of your Congressmen on the list of compliant freshmen or the name of someone to whom you have donated, please call them and express your shock and chagrin.  Maybe, maybe they will get the message.

 

Responses - Only 21 Of 87 Freshman House Republicans Are Still With You

Below are two responses to the subject message that add to the discussion. I purposely did not highlight one obvious Rep that did not vote the right way yesterday - congrats to the few who noticed & commented that Paul Ryan was not on the list of Members who voted against the phony FY 2011 Budget Bill. Ryan is now the lead sponsor of the FY 2012 Republican Budget.

---Response #1---

Yesterday Senator Coburn reported on Greta's FOX hour that the IMF stated its displeasure with the 2011 budget deal. No surprise. The main surprise is that our congressmen are putting their careers over our nation's economic health. If the Fed ends QE2 this summer and our debt continues to grow 4 to 5 billion per day, interest rates will spike and the dollar may collapse. How short sighted our Congress people are. We need term limits ASAP.

---Response #2---

Doug - Question for you.... Will you be doing a piece on your blog re: What does it mean to be a FairTax co-sponsor other than signing up for a congressional bill?

Only 21 Of 87 Freshman House Republicans Are Still With You

The Continuing Resolution (CR) - 2011 FY Budget deal that was negotiated last Friday night was reported by Speaker John Boehner to have resulted in a $38.5 billion reduction below FY 2010 spending levels.  Since last Friday that $38.5 billion number has evaporated until it may really be only $300 million of real spending cuts or less than 1% of what was announced after considering how real such things as a $6.2 billion savings for not spending money left from the 2010 Census is.  The WSJ reported the $38.5 billion figure included phantom cuts, one time gimmicks that will be restored in FY 2012, etc.  How pitiful after Republicans campaigned & promised to reduce spending $100 billion their first year starting January 2011 & also promised to repeal or @ least defund ObamaCare as much as possible - none of which was included in this Budget deal.

 

The above described Budget Bill for FY 2011 passed the House & Senate earlier today & of course BO will sign it since he got virtually everything he wanted as indicated above.  Even after last fall's Republican House takeover & good gains in the Senate America is still on BO's glide path vision for deterioration - seems like BO doesn't even have to run - he can walk past this competition using the corrupting atmosphere in Washington DC to his benefit without raising a sweat.  In 2008 we had a no win election of BO - Socialist/Communist vs. McCain Socialist-light who voted for the Budget Bill today exactly as BO wanted.

 

The vote in the House supporting the Budget Bill was 260 to 167.  Of the 167 voting against the measure 59 were financially responsible Republicans - far too few.  The numbers keep getting worse when you realize that only 21 of the 87 freshman House Republicans voted against the measure  What happened to the other 66 freshman House Republicans in only three short months - as if you don't know?

 

Most disappointing once again was that Rob Woodall (GA), James Lankford (OK), & Kristi Noem (SD) voted with the establishment old guard Republicans - is this what they were sent to Washington for?  Below is the list of House Members who voted in your interest.  Naturally NJ's Frelinghuysen, Lance, Runyan (one of the 66 disappointing freshman), & LoBiondo voted the wrong way.

 

In the Senate the vote supporting the Budget Bill was 81 to 19.   The fifteen Republican senators who voted against the measure were led by Jim DeMint (SC), Mike Lee (UT), & Rand Paul (KY) who were recently joined by Lindsey Graham (SC) in a separate caucus.  The others were Coburn (OK), Crapo (ID), Ensign (NV), Hatch (UT), Inhofe (OK), Johnson (WI), Risch (ID), Rubio (FL), Shelby (AL), Toomey (PA), & Vitter (LA).  What happened to Saxby Chambliss (GA), Johnny Isakson (GA), John Cornyn (TX), Richard Burr (NC), Jerry Moran (KS), & Jeff Sessions (AL)?

 

The only encouragement I can take from the above is that we now know where the people who supported this bill stand - & it is not with us, it is with their congressional careers.  Still, how discouraging it is to have elected 87 new House Members only to find that 66 of them have already abandoned ship.  It doesn't give much hope for the deficit ceiling fight (I barely have the strength tonight to call it that) or the fight for trillions in the 2012 budget negotiations.  It is looking pretty hopeless for America @ this point.

 

FINAL VOTE RESULTS FOR ROLL CALL 268 (Republicans in roman; Democrats in italic; Independents underlined)
      H R 1473      YEA-AND-NAY      14-Apr-2011      3:00 PM
      QUESTION:  On Passage
      BILL TITLE: Department of Defense and Full-Year Continuing Appropriations Act, 2011

	Yeas	Nays	PRES	NV
Republican	179	59		3
Democratic	81	108		3
Independent
TOTALS	260	167		6

 

---- NAYS    167 ---

Ackerman Adams Amash Bachmann Baldwin Bartlett Barton (TX) Bass (CA) Becerra Blackburn Blumenauer Brady (PA) Braley (IA) Broun (GA) Brown (FL) Butterfield Capps Capuano Carson (IN) Chabot Chaffetz Chu Clarke (MI) Clarke (NY) Clay Cleaver Clyburn Cohen Conyers Cravaack Crowley Cummings Davis (IL) DeGette DeLauro Deutch Doggett Doyle Duncan (SC) Duncan (TN) Edwards Ellison Engel Farr Filner Flake Fleming Forbes Frank (MA) Franks (AZ) Fudge Garamendi Gardner Garrett Gingrey (GA) Gonzalez

Gowdy Graves (GA) Green, Al Green, Gene Griffith (VA) Grijalva Gutierrez Harris Hastings (FL) Heller Higgins Hinchey Hirono Holt Honda Huelskamp Huizenga (MI) Hurt Jackson (IL) Jackson Lee (TX) Johnson (IL) Johnson, E. B. Jordan Kaptur King (IA) Kingston Kucinich Labrador Lamborn Larson (CT) Lee (CA) Lewis (GA) Loebsack Lofgren, Zoe Long Luján Lynch Mack Maloney Markey Matsui McClintock McCotter McDermott McGovern McHenry McNerney Miller (MI) Miller (NC) Miller, George Moore Mulvaney Murphy (CT) Nadler Napolitano Neugebauer

Pallone Pastor (AZ) Paul Payne Pearce Pelosi Pence Pingree (ME) Poe (TX) Polis Price (NC) Quayle Quigley Rangel Rehberg Reyes Richardson Richmond Rigell Ross (FL) Roybal-Allard Rush Ryan (OH) Sánchez, Linda T. Sanchez, Loretta Schakowsky Schmidt Schweikert Scott (SC) Scott (VA) Serrano Slaughter Southerland Stark Stutzman Sutton Thompson (MS) Tierney Tipton Tonko Towns Velázquez Walsh (IL) Waters Watt Waxman Weiner Welch West Wilson (FL) Wilson (SC) Woolsey Wu Yarmuth Yoder

---- NOT VOTING    6 ---

Giffords Gohmert

McCaul Meeks

Olver Reichert

WSJ Letter Summarizes America's Dilemmas & Choices

Below is an excellent summary from today's WSJ by Ted Phillips of Richmond Virginia concerning America's dilemmas & choices in the immediate future - my emphasis in red.  For more in-depth information re the main points of this summary please go to ReturnToExcellence.net & click on Death Of Democracy & The Five Points Of Citizen Control - both on the left hand side of the blog in what I refer to as the "timeless section."  I know many of you have read all of the pieces there but a refresher re what we can & should be doing ourselves to help quite often is beneficial.  I know it is for me. 

 

Big Government Dodged the Bullet

Before William McGurn puts the finishing touches on his obituary for the American welfare state ("After the Welfare State," Main Street, April 5), he may want to reconsider the hurdles that lie ahead. Recall that 15 years ago President Bill Clinton announced that the era of big government was over. Federal spending is projected to exceed $3.8 trillion this year, 140% higher than the $1.6 trillion spent when big government's death knell was sounded by Mr. Clinton.

Curtailing big government today is an infinitely more challenging task than it was in 1996, despite the obvious failings of the welfare state model. First, the nation is much closer now to a tipping point where those who pay no income taxes will outnumber those who foot the bill. As widely reported, 10% of tax filers pay 70% of federal income taxes, but Democrats scream that those filers are not paying enough.

Second, polls suggest that class-warfare rhetoric has been effective in reinforcing a culture of dependency and envy. A recent WSJ/NBC poll indicated that nearly 70% of respondents prefer to see the budget deficit closed by raising taxes on families earning more than $250,000 (rather than cutting entitlement spending). Third, another generation of Americans has been subjected to a decidedly left-wing bias in our educational system. In most U.S. colleges, it is practically impossible for conservatives to get hired, much less tenured.

President Obama's plan to transform America certainly wasn't to craft a post-welfare state return to limited government and individualism. Mr. Obama may have more than a billion dollars of campaign cash to spend on his re-election next year. Beneficiaries of the welfare state, along with idealistic young people steeped in collectivistic mythology, are likely to be highly motivated on President Obama's behalf. The welfare state could very well limp through a second term for Mr. Obama, and the nature of a post-collapse replacement at that point is impossible to predict.

Missed Instant Opportunity

"The deal that was reached tonight is a disappointment for me and for millions of Americans who expected $100 billion in cuts, who wanted to make sure their tax dollars stopped flowing to the nation's largest abortion provider, and who wanted us to defund ObamaCare. Instead, we've been asked to settle for $39 billion in cuts, even as we continue to fund Planned Parenthood and the implementation of ObamaCare. Sadly, we're missing the mandate given us by voters last November, and for that reason I voted against the Continuing Resolution."  These are the words of Minnesota Congresswoman Michele Bachman - Leader of the House Tea Party Caucus following the literal 11th hour vote (actually 12:40 AM) to reach a deal to fund the government for the remainder of FY 2011 thereby averting a government shutdown.

 

After the completely Democrat controlled government (Pelosi, Reid, BO) of calendar year 2010 would not make their big government spending intentions known by voting for a budget for FY 2011 - which started October 1, 2010 - they provided an instant opportunity for the new House Republicans to take command the first day of January.  Had these Democrats voted in a budget last year the Republicans would not have had this instant opportunity to stop the socialization of America.  What we found was that the Republicans' campaign promise in 2010 to cut spending $100 billion their first year in office & to repeal &/or defund ObamaCare to whatever degree possible really meant that it was $100 billion on a prorata FY basis as a negotiating starting point that would ultimately be reduced from $61 billion to $38.5 billion & to postpone the fight re ObamaCare.  The latest promise is to save the real 2012 FY budget fight of trillions of dollars for another day & include the defunding of ObamaCare months from now after it is even more entrenched.  What a disappointment.

 

Worst yet, before Boehner & the old guard Republicans consummated the deal just before midnight Friday they called lobbyists (not their constituents) on K street in Washington DC to confirm approval of the deal - source Greta van Susteren FNC.  For people who consider themselves conservatives - let alone Tea Partiers - this should clearly show who these politicians work for & it is not you.  But who in power would ask for approval of people not involved in sufficient number in their own destiny?

 

A Wall Street Finance VP subscriber to ReturnToExcellence.net posted a comment of disappointment directly on the April 1 blog posting & also let me know "I am very angry at Boehner and now more worried than ever about a US Dollar collapse.  Today's politicians know zilch about finance.  Many never produced a dollar for the economy.  Incredible that politicians could not approve even a 2% budget haircut for a budget that has grown 24% in 2 years.  The $38.5 billion is not a done deal.  We must convince our representatives to vote it down, ask for more -- or have the IMF and G20 take control of our finances after dollar collapse and give all of America a 50% or more entitlements haircut."

 

The three Republican freshmen that I have been following closely - Woodall, Lankford, & Scott (SC) - split their votes this time.  I am so happy to report that Tim Scott voted with Michele Bachman & Steve King.  One of my last nights in Hilton Head this past winter Congressman Scott personally called my best friend in Hilton Head during one of our many dinner meetings to assure her that he was the real deal.  Scott is a FairTax co-sponsor & it looks like he has learned a great lesson for America in his first days in Congress.  We just need so many more.

 

 

Update - FairTax On The Radio March 31

Thanks to everyone for the tremendous support Carol & I felt regarding the subject radio appearance last week. Comments from people who listened live like "Hi Doug - I listened this morning. Very good job to you and to Jim Gawron. I took notes. If you'd like to discuss, give me a call. I was sorry that there was no time for call-ins." or from people who missed the live broadcast like "I was at a meeting this morning at that time...will look forward to hearing it on the blog" were both very gratifying. No matter how many of these radio shows you do it is always important to feel support which we certainly did.

Although I got in virtually all of the FairTax technical points I had hoped to the bigger story is WRNJ's support of the FairTax - this is the third time they have had me on & they have been broadcasting FairTax PSAs since November 2009. Just think of how much farther along we would be if every radio station across America did this.

This program also gave former congressional candidate Jim Gawron an opportunity to demonstrate his superior economic knowledge - candidates of Jim's caliber & sincerity unfortunately come along only ever so often & it is important for all of us to try to find them & support them when we do.

For Jim, Carol, & me our relationship for America started one Saturday morning last July when I called Jim @ his home after learning he was running for Congress. After completing his own study Jim called for a FairTax briefing - a briefing that was hardly necessary. Jim took some time during his lunch hour to meet with us & Sandy Sherman around my dining room table. A humble beginning that I hope has a tremendous future.

The audio of the program has been posted on ReturnToExcellence.net - just click on "The FairTax" on the left hand side of the blog - it is the last entry.

Look Beyond BO & Newt

It is widely expected that BO will kick off the 2012 presidential campaign season by filing paperwork this coming week, possibly as early as Monday, with the Federal Election Commission - the regulatory agency created to administer & enforce the statute that governs the financing of federal elections - thereby officially indicating he seeks reelection. Filing with the FEC allows BO to start raising money for the 2012 campaign that is expected to shatter records in political spending - thereby providing the funds for him to use all of his Alinsky method community organizing skills that got him elected in 2008.

Most of us think BO has never left the campaign mode since he became a national figure.

Now in a scoop of all of the major broadcast networks our SC businessman provides this link of BO's first 2012 TV ad .

Now after watching the above spoof BO video please notice that there is no contrast between its facetious points & this real video that I researched of Newt Gingrich flip flopping on his position regarding Libya.

We are a long way from November 2012 but we certainly can say that BO & Newt really DQ themselves already based on the above two videos.

Mike Huckabee points out in his latest book, A Simple Government, that the experts & just about everyone else thought it would be Hillary & Rudy squaring off in 2008. So don't be fooled by early polls. Just keep looking for people like Mike Huckabee, Jim DeMint, Herman Cain, & Mike Pence - they all pass my litmus test - you will get the FairTax if one of them is elected President.

Responses - One Big Government Party - Two Wings

Below are two responses to the original subject message that add to the discussion along with my own letter to the WSJ submitted earlier today.

 

Dear Editor,

 

In response to your editorial The Spending Fight (April 1) - Most freshmen Republicans campaigned in 2010 on cutting spending $100 billion their first year in office.  Since they never specified differently it was thought they would start in January and go right on through New Year's.  Please let me know what fiscally responsible voter in 2010 thought they voted for any candidate who promised to negotiate spending cuts starting at $100 billion per year on a prorata fiscal year basis? 

 

---Response #1---

 

Doug - Luzzi hit it out of the park.  Like you, his writing is clear, concise, & very informative.  The 2010 elections will go into the history books as The Big Fleece.

 

---Response #2---

 

Message is clear - to make a career in politics you cannot be seen as the one causing pain for the people - you must be able to twist principles so the majority never recognize you are the root cause of the problem .  Keep people poorly educated through government schools & you are almost home free.

 

Only mention deficits when you are trying to scare people especially after you have not cared one whit about them forever - like BO.  Many will overlook your talk of deficits because it will cause 'mental pain' to correct it.

 

It is almost a no win situation.  Possible solution - like I know you & Carol believe - when things get really nasty - deficits, loss of jobs, etc, possibly will wake the masses up so they re-consider their views & join in to help our country rather than just be a burden on it.

 

If you know how to bring us back from the brink without lots of pain for the government dependent public let me know.