Tag Archives: economy

The Jobs Spin

Watch this and then read below!

http://www.foxnews.com/politics/2012/11/02/unemployment-rate-rises-to-7-percent-economy-add-171000-jobs/

A few thoughts that will make you question the government jobs spin:

First the stats on 11/02/08:
Officially unemployed = 10,563,275 Actual unemployed* = 13,558,658
Food Stamps Recipients = 32,659,311

Compared to the stats today:
Officially unemployed = 11,992,107 Actual unemployed* = 22,645,113
Food Stamps Recipients = 47,109,282* = includes those who have given up

So in summary we are being told that the percentage of unemployment based only on the official number is within 0.1% (7.9% vs. 7.8%) of where it was when Obama took office. There are 2 problems with this misrepresentation. First the number does not include those who have given up. Second, the economy is growing so slow and families have lost so much that people are retiring at a slower rate plus new graduates are entering the workforce faster than they can be absorbed. So forget the percentage 22 million people need work – twice as many as when Obama took office. Time for a new strategy!!

 
Wake up America! Restore the Republic, Reject Socialism

Obama… the numbers don’t Lie!

So here are some stats to help you when you are discussing the election with your undecided friends. These are the facts and the numbers don’t lie. It doesn’t take a CPA to figure out if something doesn’t change quickly we are headed for an economic collapse. The tipping point is already on the horizon…

The Economy, Jobs & Taxes:

America’s Rank in Global Business Competitiveness: Before BO #1 Currently #7 (Source: US News & World Report)

Current National Debt – $16.2 Trillion   (Source: US Treasury)

New Debt Added Since Obama was elected – $5.5 Trillion  (Source: US Treasury)

Your share of the National Debt – $51,419 (Source: US Treasury)

Increase in your share since Obama took office – $17,554 (Source: US Treasury)

Federal Budget Deficits – 2 highest in history: 2009 – $1.416 Trillion & 2011 – $1.298 Trillion respectively (Source: CBO)

Proposed Tax Increases in Obama’s Proposed Budget – $1.9 Trillion (Source: OMB)

New Taxes Hidden in Obamacare – $810 Billion (Source: CBO)

Medicare cuts in Obamacare: $716 Billion (Source: CBO)

# of people Officially Unemployed: 12.014 Million (Source: US Labor Dept.)

# of people Unemployed, Underemployed or have given up – 22.728 Million (Source: US Labor Dept.)

The real Unemployment Rate: 14.7% (Source: US Labor Dept.)

# of people Unemployed More than 27 weeks: 5.0 Million (Source: US Labor Dept.)

Consecutive Months of Unemployment over 8% – 43 (Source: US Labor Dept.)

Pages of new Federal Regulations since Obama took office: 11,327 (Source: Federal Register)

Healthcare, Food, Gas & Education:

Avg. Increase in the cost of a family health plan since Obama took office: $3,065 or 24.2%  (Source: The Kaiser Foundation)

# of people on Food Stamps: 47,025,030 (Source: US Dept. of Agriculture)

Avg. increase in cost of Groceries for a family of 4: 5.15%  (Source: US Dept. of Agriculture)

Increase in the price of gas: 106%  up from $1.89 to $3.89 per gallon (Source: US Dept. of Transportation)

Avg. Increase for In-State Tuition since Obama took office: 25% (Source: The college Board)

So there you have it. The numbers speak for themselves. We can’t afford to keep spending at these levels and increasing taxes stunts growth while killing jobs. We saw the same trends during the Carter Administration. Reagan corrected the problem by managing down the size of government and cutting taxes to stimulate growth. We rode that wave all the way through the Clinton Administration. We can do it again but not with a president that is more interested in “redistribution” than growth and creating opportunity.

Wake up, America! Reject Socialism and Restore the Republic!

“If we can prevent the government from wasting the labors of the people, under the pretence of taking care of them, they must become happy” – Thomas Jefferson

Taxpayers vs. Unionized Government Workers – Defining Fair

The current uproar in Wisconsin has brought to the forefront the inequities of the ongoing economic crisis in the U.S. Yes, I said ongoing because despite a few improved economic indicators there is still massive unemployment and more U.S. families on food stamps than ever before.

Yet through this entire economic mess the least affected group has been unionized government workers. For example, the average union government employee pays less than 10% of their annual health insurance cost while in the private sector the average is over 25%. Nationally, union workers in both state and local government jobs earn approximately 45% more in total compensation than workers in the private sector.

It is estimated that the tab for the unfunded liabilities created by these government union contracts now exceed $3 trillion.

In the private sector during this time we have seen massive lay-offs, wage and benefit reductions or freezes. While in the public sector contractual wage and benefit increases hum along even though the economic conditions no longer support them.

The problem with the public unions at the state and local levels is simple to understand. The unions help elect the politicians that ultimately become their “bosses”. They make large campaign contributions and use their influence to rally union members to vote for candidates that they can count on to cooperate with them in future negotiations. The Center for Responsive Politics estimated that in the recent elections, public sector unions contributed over $20 million to candidates as well as another $90 million to the political parties. Over 90% of that has gone to the Democrats.

Meanwhile back in Wisconsin, the average teacher earns $77,857 per year (including benefits). Compare that to the median household income in Wisconsin which is only $50,000 and many households have more than one wage earner.

Over the past three years government employees have not experienced the erosion in their standard of living that rest of the workforce has had to endure. Public sector employees must come to grips with the fact that their real employers, the taxpayers, will not continue to fund a lifestyle that indemnifies them from the national economic reality.

As states and local governments try to cut costs in a tough economy, the unions are facing a rising backlash against their pay, benefits and pensions.

Wisconsin is not alone in looking at aggressive changes to their relationship with unionized government workers. Other states (MI, IN, OH, TN, NY, NJ, ID, IA) are also looking at a variety of strategies to try to control union labor costs.

Some examples are:

Limiting their collective bargaining to base pay excluding benefits and some work rules

Aligning maximum raises to the Consumer Price Index

Requiring higher levels of contributions toward pensions

Requiring higher levels of contributions toward healthcare

Eliminating excessive fringe benefits (such as Viagra coverage)

These measures are not designed to eliminate the unions but rather to level the playing field. It gives the taxpayers and elected officials ability to negotiate in a more equitable manner with unions that control essential services. It seems we are tired of having a gun to our head.

What has developed is a death match between the old guard of the Democrats, organized labor and the new guard of the Republicans, small government, fiscal conservatives. In the end Americans want fairness, equity and fiscal responsibility from their government. The resentment toward public sector unions has been building for some time now. Taxpayers are fed up their taxes being squandered on union contracts for public employees that do not reflect the reality of the private sector job market. It isn’t like most people associate government employees with service and performance excellence as a whole.

It is time to end the excessive influence and continue appeasement of these unions over state and local governments. This influence for years has been the fuel for backroom deals, corruption. The result is economic crisis at the state and local government level across the nation with dozens of states teetering on the edge of bankruptcy.

Wake up, America! It’s time to face reality and make the changes necessary to save our country. We must end the circular relationship between unionized government employees and the politicians they help to elect!

To read more, check out these articles:

http://online.wsj.com/article/SB10001424052748704509704575019552907349936.html

http://www.nytimes.com/roomfordebate/2011/02/18/the-first-blow-against-public-employees/hitting-the-unions-where-it-hurts

How to Reduce Federal Spending

Now that republicans and conservatives have taken control of the House of Representatives, the air waves are filled with debate on how they will fulfill all their campaign promises regarding the economy. The biggest questions focus on their ability to reduce the deficit without raising taxes. Most commentators act as if this is impossible but here is a newsflash for the media as well as Washington – it can be done!

There are two big problems for the republicans – first, they only control one house of Congress and second, they have no direct control at the department level – that belongs to the President.

All that said, if either side was serious about fixing this problem and salvaging the economic future for the next generation they could work together because together they have the ability to do it. The truth is the solution is so simple politicians can’t seem to see it.

Here are 10 very simple, time tested methods used in the business world that if applied to government would fix the economy, create jobs and bring spending under control:

1. Run the government as if it were a for profit business. This means it must be a model of cost control and operational efficiency.

2. Declare an across the board 10-15% budget reduction in every department and agency in the federal government – period, no exceptions. Since this has never been done it should be easy the first year. We know there is a ton of waste in the way the government operates. We do this (set a reduction target) every year at the company I work for and every year we find more areas to improve or fine tune. This should be an annual ritual for the government, too. It’s called continuous improvement.

3. Declare that budget reductions can not be met by simply reducing services to citizens. Evaluate all service offerings to determine if they even fall within the constitutional scope of the federal government, if not eliminate them. Let the states provide the things that they should provide. Also we should sunset all agencies which have outlived their usefulness.

4. Declare budget reductions can not be met by cutting core entitlement programs such as Social Security and Medicare. The recipients shouldn’t lose their benefits to allow uncessary spending to continue, the government should be forced to eliminate waste first.

5. Eliminate all “nice to have” spending. In government just like private industry there are “nice to haves” that will not affect the quality of services provided if they were delayed or eliminated all together. These should not be credited toward the 15% reduction requirement. All eliminated “nice to haves” should come right off the top.

6. Consolidation of operations, workforce reduction and outsourcing should be considered. How many buildings, vehicles, people, etc. could be eliminated without changing the quality of services provided? The size of the government’s footprint is incredible. How much money could be brought in by selling off excess assets? How much manpower could be eliminated through improved processes, systems and automation?

7. Evaluate all discretionary spending. Examples: Review all foreign aid programs. Review the need for all foreign military bases. Get out of the business of “funding research” instead create incentives to stimulate research in the private sector.

8. Hold the management accountable. Where else in America do managers get to ask for larger and larger budgets each year while delivering such pathetic results? Why shouldn’t there be a culture that challenges these managers to do more with less? The taxpayers are their “shareholders” so where is our shareholder value proposition? It is simple – make the managers manage.

9. Cut government wages to align with industry average wages for comparable private sector jobs. Realign government benefits and retirement programs to those in the private sector.

10. Negotiate lower prices from all vendors and suppliers. Tell all suppliers that the government must lower costs and that they must lower their prices to retain business. This happens all the time in the private sector.

Last and not least there is the nasty business of generating government income to fund the things which are necessary such as infrastructure, homeland security and national defense. We must cut base tax rates for business to stimulate investment and job growth. Creating business growth builds a larger tax base and job growth creates more individual taxpayers.

We must also either lower income tax rates for individuals or better yet scrap the progressive income tax model in favor of a national sales tax. A national sales tax is the fairest tax for individuals because it taxes your ability to spend not your earnings. In other words, wealthy people buy stuff, the more stuff you buy – the more tax you pay. It also taxes the underground economy which eliminates significant tax fraud by those that are self employed working for cash and not reporting their real earnings.

If the government held itself to the same performance standards as private companies do, we would be able to fix the deficit. If every time the government borrowed money to spend they had to provide a justification and a return on investment model before they borrowed it – how much of the spending would be approved?

In the end, if the politicians could just stop trying to get elected long enough to look at the real problem solving it might be easier than everyone thinks – eliminate the waste and increase the value. The only politician that seemed to understand this in the last 20 years was Ross Perot – but then Perot wasn’t really a politician, he was a successful businessman.

Restore the Republic, Reject Socialism!

“The budget should be balanced, the treasury should be refilled, the public debt should be reduced and the arrogance of public officials should be controlled”. – Ross Perot

“Government is like a baby. An alimentary canal with a loud voice at one end and no responsibility at the other”. – Ronald Reagan

A Labor Day message from Ronald Reagan

If Ronald Reagan was around today he might give the same speech he gave on Labor Day, 30 years ago, with a few changes to reflect the current situation. While a few of the key factors are different the country finds itself in a very similar circumstance. So here is my modified version of Reagan‘s famous speech, I have provided both a video of the original speech and a link to the transcript for comparison. You can learn from history. The original speech should remind us we have been here before and fought our way back. We can do it again.

And now President Reagan…

Labor Day Speech at Liberty State Park, Jersey City, New Jersey, Updated for 2010 (Original Sep. 1, 1980)

“It is fitting that on Labor Day, we meet beside the waters of New York harbor, with the eyes of Miss Liberty on our gathering and in the words of the poet whose lines are inscribed at her feet, “The air bridged harbor that twin cities frame.”

Through this “Golden Door,” under the gaze of that “Mother of Exiles,” have come millions of men and women, who first stepped foot on American soil right there, on Ellis Island, so close to the Statue of Liberty.

These families came here to work. They came to build. Others came to America in different ways, from other lands, under different, often harrowing conditions, but this place symbolizes what they all managed to build, no matter where they came from or how they came or how much they suffered.

They helped to build that magnificent city across the river. They spread across the land building other cities and towns and incredibly productive farms. They came to make America work. They didn’t ask what this country could do for them but what they could do to make this refuge the greatest home of freedom in history. They brought with them courage, ambition and the values of family, neighborhood, work, peace and freedom. They came from different lands but they shared the same values, the same dream.

Today a President of the United States would have us believe that dream is over or at least in need of change. Barack Obama’s Administration tells us that the descendants of those who sacrificed to start again in this land of freedom may have to abandon the dream that drew their ancestors to a new life in a new land.

The Obama record is a litany of despair, of broken promises, of sacred trusts abandoned and forgotten.

Officially over 14.5 million or 9.8% are unemployed but actually 25 million are out of work. 41 million Americans are now on food stamps. 981,000 Americans have had their homes go into foreclosure this year. The federal deficit is now over $13.5 trillion which adds up to over$120k per U.S. taxpayer. Yet this year, Obama and his friends in Congress will add another $1.3 trillion to the deficit. They are trying to fix unemployment with government jobs and are threatening to increase taxes on the “wealthiest” Americans. Of course these are the very people who could reinvest if not over taxed to create the private sector jobs we so desperately need. This President is interfering in the private sector and leading a government takeover of both the financial markets and healthcare. He is on the wrong side of immigration reform, states rights and climate change. He has a decidedly socialist agenda that pushes redistribution of wealth, entitlement programs and “fundamental transformation of America”. His answer to all of this misery? He tries to tell us that the economy is getting better – just more slowly than expected, as if —words–relieve our suffering. Let it show on the record that when the American people cried out against his healthcare reform plan, Barack Obama ignored them. When the American people begged for economic relief through job creation, Barack Obama gave them the American Recovery and Reinvestment Act of 2009. The real recovery will begin when Barack Obama loses his job.

I have talked with unemployed workers all across this country. I have heard their views on what Barack Obama has done to help them and their families. They aren’t interested in hearing about George Bush any more. They are out of work and they help. And they know the difference between a real recovery and a sucker’s rally.

Let Mr. Obama go to their homes, look their children in the eye and argue with them that this is a recovery even though dad or mom can’t find work. Let him go to the unemployment lines and lecture those workers who have been betrayed on what is the proper definition for their widespread economic misery. Human tragedy, human misery, the crushing of the human spirit. They do not need defining–they need action.

And it is action, in the form of jobs, lower taxes, and an expanded economy that — as President — I intend to provide.

Call this human tragedy whatever you want. Whatever it is, it is Barack Obama’s. He isn’t fixing it. He tolerates it. And he is going to answer to the American people for it.

Last week, more than two years after be became President, he still blames George Bush. And today he announced a new economic program designed to create jobs rebuilding America‘s infrastructure creating jobs in the construction and engineering trades which are some of hardest hit segments of the workforce. But wait – didn’t we already invest in the once before, something called the American Recovery and Reinvestment Act of 2009. It is another new economic program based on government spending. He talks as if someone else has been in charge these past few years. With two months to go until the election he rides to the rescue now with a crazy-quilt of obvious election-year promises which might even include extending the Bush tax cuts – which he’ll ask Congress for– after the election.

After two years of neglect, the misery of unemployment, foreclosures, the threat of higher taxes, dwindling earning power and inability to save–after all this, American workers have now been discovered by this administration.

Well it won’t work. It is cynical. It is political. And it is too late.

In 2009 he said the stimulus we could cap unemployment at 8% it is now at 9.8%.

In 2009 he said the stimulus would create shovel ready projects creating immediate employment opportunities – it didn’t. Who can believe him?

And most of us have begun to realize that so long as Obama’s policies are in effect, the next two years will be as dark as the last two. But here, beside the torch that many times before in our nation’s history has cast a golden light in times of gloom, I pledge to you I’ll bring a new message of hope to all America.

I look forward to meeting Mr. Obama in debate, confronting him with the whole sorry record of his Administration–the record he prefers not to mention. If he ever finally agrees to the kind of first debate the American people want–which I’m beginning to doubt–he’ll answer to them and to me.

This country needs a new Congress, with a renewed dedication to the dream of America–an administration that will give that dream new life and make America great again! An America that creates opportunity to create wealth not redistribute it, an America that follows the Constitution not fundamentally trying to transform it!

Restoring and revitalizing the American dream and American exceptionalism will take bold action.

On this day, dedicated to American working men and women, may I tell you the vision I have of a new administration and of a new Congress, filled with new members dedicated to the values we honor today?

Beginning in November of 2010, Americans will once again be heeded. Their needs and values will be acted upon in Washington. I will consult with representatives of management and organized labor on those matters concerning the welfare of the working people of this nation.

I happen to be the only president of a union ever to be President of the United States.

As president of my union — the Screen Actors Guild — I spent many hours with the late George Meany, whose love of this country and whose belief in a strong defense against all totalitarians is one of labor’s greatest legacies. Thirty one years ago today on Labor Day George Meany told the American people:

“As American workers and their families return from their summer vacations they face growing unemployment and inflation, a climate of economic anxiety and uncertainty.”

Well I pledge to you in his memory that the voice of the American worker will once again be heeded in Washington and that the climate of fear that he spoke of will no longer threaten workers and their families.

When we talk about tax reduction, when we talk about ending federal deficits by stopping it where it starts — in Washington — we are talking about a way to bring labor and management together for America. We are talking about jobs, and productivity and wages. We are talking about doing away with Barack Obama’s negative view of capitalism, and ever-shrinking economic pie with smaller pieces for each of us.

That’s no answer. We can have a bigger pie with bigger slices for everyone. I believe that together you and I can bake that bigger pie. We can make that dream that brought so many of us or our parents and grandparents to this land live once more.

Let us work to protect the human right to acquire and own a home, and make sure that that right is extended to as many Americans as possible. A home is part of that dream.

I want to work in Washington to roll back the crushing burden of taxation that limits investment, production, and the generation of real wealth for our people. A job, and savings, and hope for our children is part of that dream.

I want to help Americans of every race, creed and heritage keep and build that sense of community which is at the heart of America, for a decent neighborhood is part of that dream.

We will work to strengthen the small business sector which creates most of the new jobs we need for our people. Small business needs relief from government paperwork, relief from over-regulation, relief from a host of governmentally-created problems that defeat the effort of creative men and women. A chance to invest, build and produce new wealth is part of the dream.

But restoring the American dream requires more than restoring a sound, productive economy, vitally important as that is. It requires a return to spiritual and moral values, values so deeply held by those who came here to build a new life. We need to restore those values in our daily life, in our neighborhoods and in our government’s dealings with the other nations of the world.

We must remember that freedom is never more than one generation away from extinction. You and I must protect and preserve freedom here or it will not be passed on to our children.

I want more than anything I’ve ever wanted, to have a Congress that will, through its actions, at home and in the international arena, let millions of people know that Miss Liberty still “Lifts her lamp beside the golden door.” Through our international broadcasting stations — the Voice of America, Radio Free Europe, and the others — let us send, loud and clear, the message that this generation of Americans intends to keep that lamp shining; that this dream, this last best hope of man on earth, this nation under God, shall not perish from the earth. We will instead carry on the building of an American economy that once again holds forth real opportunity for all, we shall continue to be a symbol of freedom and guardian of the eternal values that so inspired those who came to this port of entry.

Let us pledge to each other, with this Great Lady looking on, that we can, and so help us God, we will make America great again.

Link to original speech transcript: http://www.reagan.utexas.edu/archives/reference/9.1.80.html

Wake up America! Restore the Republic, Reject Socialism!  

“Entrepreneurs and their small enterprises are responsible for almost all the economic growth in the United States”. – Ronald Reagan  

Update: The Tipping Point

In an effort to prove they are part of the mainstream media and are totally clueless about the national situation, Parade Magazine published the following story last Sunday (3/28/10). They also ran an online poll for Americans to respond to. Both were on the subject of our out of control spending and associated national debt. 

Just Sunday I wrote a post on the subject in an attempt to bring focus on the potential disastrous effects the debt could have on our struggling economy. Later I found this article and was blown away by the nonchalant attitude of the writer with regard to the magnitude of the problem. See Parade article below: 

Parade Magazine 3/28/10 – Rebecca Webber 

Does America Owe Too Much?

Critics of government spending are voicing alarm about the growing national debt. In January, the U.S. public debt was $7.5 trillion—about 53% of the country’s total economic output, also known as gross domestic product (GDP). By comparison, Japan’s debt-to-GDP ratio was 192% and Saudi Arabia’s was 20% in 2009, according to the latest figures available. Economists use the ratio of public debt to GDP as an indicator of a country’s economic health. So what do these numbers mean? Is America’s debt level dangerous?

The short answer is, “No, but it might be soon.” A recent study from the National Bureau of Economic Research found that public-debt levels become perilous when they reach 90% of GDP. By that point, interest rates may be higher as investors demand greater returns on federal bonds, while massive interest payments detract from key government functions. “The interest can get so burdensome that the country can’t afford to repair its highways or educate its children or provide other essential services,” says Isabel Sawhill of the Brookings Institution. “You become a much weaker nation.” According to the Congressional Budget Office, U.S. public debt could approach 100% of GDP by 2020, given current spending levels and obligations for entitlement programs like Medicare, Medicaid, and Social Security.

Debt Around the World
America’s public debt is now 53% of GDP. Here’s how other countries stack up.

France 80% of GDP
Canada 72%
U.K. 69%
India 60%
China 18%

So seriously, the debt level is not dangerous yet – but will be soon? How bad is bad? America – it is time to do something besides worry… like STOP spending money we don’t have! Maybe if there were some still serious journalists working somewhere they would use the space to give this issue appropriate coverage. It really doesn’t make me feel better to see that we are in the same boat with France or India. 

They also included a link to a poll you could vote on. Here are the results of their on line poll: 

Parade Magazine Poll Results

Do you fear that our national debt will hurt our economy? 

Yes 93%

No 7%  

Thank God, Americans are smarter than the writer! 

To read my original post which includes several interesting charts and analysis of the national debt, go to:  The Tipping Point http://wp.me/pv8jP-jO 

If you would like to see the real time debt clock, go to:  US Debt & Population Clocks http://wp.me/Pv8jP-6z

Restore the Republic, Reject the Agenda of the Progressive Left!

Howard Dean: “This is a form of Redistribution”

At last they are starting to admit what their real agenda is… if you haven’t figured it out yet the goals are socialism and redistribution of wealth! The rats are no longer afraid to come out of the dark.    

Shortly after taking office Obama told us what he was going to do, but most people refused to believe or failed to listen: 

If  you still have any doubts that the Democrat/Progressive Party equals Marxist/Socialism, let former DNC Chair Howard Dean explain it to you:

Communitarianism is the philosophy of community organizers. Ultimately this leads to Communism. The President, many in his administration and Congress clearly subscribe to the Cloward/Piven school of thought. They are a threat to the original Constitutional Republic put in place by the founding fathers. 

So what debate is Howard Dean referring to… we never had a debate of capitalism versus socialism. During the campaign, when Joe the plumber asked the President about his plan, Obama offered the “spread the wealth around” comment. When those opposed to the concept tried to make it an issue, it was shut down and ridiculed by the media. Conservatives across the country would welcome a debate on the Constitution, capitalism and freedom versus Socialism, centralized government and “nanny state” control. 

In a recent appearance on Squawk Box, Dean explained how the Healthcare Reform Bill is a form of redistribution of wealth.

Or Max Baucus who says this is an income shift…

Notice that the idea of redistribution some how never quite reaches the political class who so desperately believe it is the “right medicine” for the rest of us. Congress has balked at giving up their “Cadillac health coverage”. They are not at all interested in joining the rest of us in the public pool. Maybe the Congress, the President and his staff, all of whom feel that they should decide what appropriate compensation for executives should be, would rethink their salaries. After all, since it is a privilege to serve, maybe they should earn a salary more in line with the national median income of $50,000 per year.  

Each day more and more of the radical left show their true colors. When will the country wake up? Yes, there is growing awareness but the clock is ticking and time is running out. With each bill they pass and each regulation they change the Progressives are pushing us down a path from which recovery will become increasingly more difficult. 

Make your voice heard. Demand the return to a Constitutional Republic, fee market capitalism and American liberty. 

Restore the Republic, Reject the Agenda of the Progressive Left! 

“If all of this seems like a great deal of trouble, think what’s at stake. We are faced with the most evil enemy mankind has known in his long climb from the swamp to the stars. There can be no security anywhere in the free world if there is no fiscal and economic stability within the United States. Those who ask us to trade our freedom for the soup kitchen of the welfare state are architects of a policy of accommodation.” – Ronald Reagan 

“Government growing beyond our consent had become a lumbering giant, slamming shut the gates of opportunity, threatening to crush the very roots of our freedom. What brought America back? The American people brought us back — with quiet courage and common sense; with undying faith that in this nation under God the future will be ours, for the future belongs to the free.”  – Ronald Reagan

The Tipping Point

The passage of the Healthcare Reform bill has accelerated the country down the road to financial disaster. By 2018 (if we don’t get there sooner) we will arrive at the tipping point. Here are the facts:

  • The President’s 2011 budget will generate nearly $10 trillion in cumulative budget deficits over the next 10 years
  • This is $1.2 trillion more than the administration projected. The White House Office of Management and Budget (OMB) originally projected a 10-year deficit total of $8.53 trillion.
  • The federal public debt was $6.3 trillion ($56,000 per household) when Obama took office. Today it stands at $8.2 trillion ($72,000 per household). Based on the new projections it will reach $20.3 trillion (more than $170,000 per household) by 2020, according to the CBO.
  • This will raise the federal debt to 90 percent of the nation’s economic output by 2020 according to the Congressional Budget Office. This is up from 40 percent at the end of fiscal 2008.
  • This means we are following in the foot prints of Greece. Their socialist and labor dominated government is on the verge of economic collapse with a debt to GDP ratio of 115%.
  • Typically in countries with debt-to-GDP ratios “above 90 percent, median growth rates fall by 1% and average growth falls considerably more,” according economists Kenneth S. Rogoff of Harvard and Carmen M. Reinhart of the University of Maryland.
  • The slower the job growth, the more the administration wants to spend “to stimulate the economy”. Yet spending is exactly what we must avoid according to Moody’s who says continued government spending could cause the U.S. to lose our AAA credit rating.
  • The loss of our AAA credit rating would result in higher interest rates on government borrowing that funds our spending deficits. This of course increases the deficit, creating the proverbial ‘vicious circle”.

 So what is the “tipping point” that could happen in 2018? The term “tipping point” can be applied to any process in which, beyond a certain point, the rate at which the process evolves (for better or worse) increases dramatically. United States is on the verge of reaching its’ tipping point (and not for the better) as it applies to the federal budget.

The event that may have marked the approaching tipping point may have recently occurred. The first Baby Boomer—born January 1, 1946—has applied for early retirement at age 62 and received her first Social Security check. An upturn in the Medicare growth rate is expected to begin in 2011 when the first Baby Boomers begin turning 65. From that point on, the number of retirees will continue to increase while at the same time, the number of workers per retiree will more rapidly start to decrease. This will result in the inevitable collapse of the Medicare & Social Security pyramid scheme.

Look at the chart below which shows the current distribution of funds taken in by the government.

Three Categories of Spending: Mandatory Spending, Interest on the National Debt and Discretionary Spending

Categories of Federal Spending for Selected=

Note: The percentage of the budget devoted to interest on the national debt was abnormally high in 1985 (14%) due to higher interest rates that were prevalent during the 1980s. Also in 2008, the  ratio of workers to retirees declined to 3.3 to 1. In 1945 it was 41.9 to 1. Simply put we have been burning up the reserves for years and judgment day is coming.

The other big factor affecting the federal budget is tax revenues which decline in a down economy. We have lost millions of jobs which will come back very slowly, if at all. So far this has been a jobless recovery. Yet the government must find ways to generate revenue to keep up with its’ obligations – not the least of which is all the entitlements owed to citizens who were forced to fund Social Security and Medicare throughout their work lives. Couple this with interest on the debt, the new healthcare reform and the results will be disastrous.

Indicative of the economy’s ongoing labor problems, is the fact that first-time claims for unemployment benefits remain relatively high at 442,000 last week. The number was a decline of only 14,000 over the previous week’s seasonally adjusted number.

“That level of debt (the deficit in the 2011 federal budget) is extremely problematic, particularly given the upward debt path beyond the 10-year budget window,” said Maya MacGuineas, president of the bipartisan Committee for a Responsible Federal Budget.

According to James R. Horney, a federal-budget analyst at the liberal Center on Budget and Policy Priorities, “The biggest part of the deficit difference (between the CBO and the OMB projections) is lower tax revenue due to the different economic assumptions. The administration assumes GDP and incomes will be higher, and that translates into higher revenues than CBO expects. Relatively small differences in economic assumptions can add up to big differences over 10 years.”

Ms. MacGuineas also added, “The proposed budget is woefully insufficient to achieve the president’s goal or the important fiscal goal of stabilizing the debt at a reasonable level in the medium and long term.” 

So here is the problem in a nutshell; many economists agree that the economy might get a short term bounce from all the corrective actions/interventions that the government has enacted. They project that it should result in a short downturn in the acceleration of the budget deficit but… they continue to fear the prospect of rising deficits later this decade, even after steady economic growth has returned and unemployment has declined. The CBO estimates that deficits will average more than 5% of GDP between 2016 -2020, even though they also project that the economy will be return to an average jobless rate of 5% during the same period.

Even Obama’s Director of the Office of Management and Budget, Peter Orszag, told reporters in March 2009, “Deficits in the, let’s say, 5 percent of GDP range would lead to rising debt-to-GDP ratios in a manner that would ultimately not be sustainable.”

The Spending Trend is not Sustainable

So who is going to pay for all this spending… if the administration has its’ way the “wealthy” and corporations are going to foot the bill. The question is how much more of the load can this group carry? Below is a table showing the current distribution of taxpayer burden. As you can see it is already disproportionate. 

Comparison of Share of Income to Income Taxes Paid in 2007

As this table clearly shows the top 10% of wage earners are now shouldering 61% of the total income tax load. Under a variety of ideas being discussed by the administration this imbalance will only get worse. To crack the top 10% you must have taxable income of just over $100K per year.

Wake up America! Many economists now say that the tipping point is in sight, with some saying that it could be as early as 2018. This means that there is still a small chance we can avert disaster… but time is running out. We must stop the spending and reduce taxes to stimulate the economy. A stimulated economy will result in government income growth but that alone will not fix the problem. Government can not be the sole guardian of the public. We must return to the model of government established by our founders. The federal government must let states and individuals become responsible for themselves. The federal government must focus on its’ enumerated constitutional powers. The states and local communities must take responsibility for everything else.

Healthcare Reform, rescue bills and all the entitlements are the straws that will break the camel’s back! The only way out of the mess we are in is to cut – spending and taxes – a lot! We have built a model that is unsustainable. We have to come to grips with the idea that big government is not the answer – it is the problem. The federal government must reduce its’ services to only those which are essential – national defense, infra structure and basic services. Social programs and luxury pork barrel spending must be eliminated. We ALL must sacrifice to fix this problem. Each citizen must be allowed to keep as much as possible so they can reinvest in their savings, in their communities or build businesses that will jump start the economy. If we don’t stop the wasteful spending now, we are headed for some form of socialistic government where we can all live together as peasants. 

Restore the Republic, Reject the Agenda of the Progressive Left, Stop Federal Spending! There is no other answer – Keynesian Economics do not work! We can not SPEND our way to prosperity! 

“Government’s view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.” – Ronald Reagan  

“Entrepreneurs and their small enterprises are responsible for almost all the economic growth in the United States.” – Ronald Reagan

“The inherent vice of capitalism is the unequal sharing of blessings; the inherent virtue of socialism is the equal sharing of miseries.” – Winston Churchill

 

Obama Approval Index Hits -21

According to Rasmussen Reports, President Obama has matched his lowest Approval Index rating. This is the second time his Approval Index has gone this low. The last time was in late December as the Senate prepared to approve its version of health care reform. It hardly seems a coincidence given this week’s health care summit.

Also a new Rasmussen Reports phone survey finds that 56% of those surveyed oppose the proposed health care reform plans. This includes 45% who strongly oppose the plans while only 23% strongly favor it. The level of opposition has remained strong and consistent since last November.

The president called for a bipartisan summit meeting to get his health care reform plan back on track. The meeting was held this week. In response to the meeting surveys show that 61% of voters said Congress should scrap the current proposals and go back to the drawing board. The president is adamant that he won’t start over and that he will pass something this year. This has resulted in 50% of those surveyed saying the president has done a poor job in handling the health care reform issue.

Other Observations from Rasmussen:

Eighty-three percent (83%) of Americans say the size of the federal budget deficit is due more to the unwillingness of politicians to cut government spending than to the reluctance of taxpayers to pay more in taxes.

Only 11% of American adults think the nation needs to increase its deficit spending to improve the economy. A new Rasmussen Reports national telephone survey finds that 70% disagree and say it would be better to cut the deficit.

Rasmussen By the Numbers:

Mood of the Country

The US is on the Wrong Track – 65%

Generic Congressional Ballot – GOP +9

Trust on the Issues: Democrats vs. Republicans

The Republicans now lead the Democrats by wide margins in trust factor on every major issue the country is facing:

Economy: D = 42% R = 46%

National Security: D = 40% R = 49%

War in Iraq: D = 38% R = 46%

Immigration: D = 36% R = 43%

Education: D = 36% R = 40%

Health Care: D = 37% R = 49%

Social Security: D = 35% R = 45%

Abortion: D = 32% R = 46%

Taxes: D = 34% R = 50%

President Obama – what will it take to get you to listen. The will of the people is clear. They want reduced spending, lower taxes and start over on health care reform. They want more jobs and they believe that the free market is the answer to solving that problem. The priority is jobs not health care.

For the second straight week there was bad news in the weekly job report. In the week ending Feb. 20, the advance figure for seasonally adjusted initial claims was 496,000, an increase of 22,000 from the previous week’s revised figure of 474,000. The previous week’s labor department job report showed initial claims for unemployment benefits increased 31,000 to 473,000.

Most of us do not believe the economy is growing stronger just because the bleeding has slowed. We are still losing jobs; more people have become discouraged and quit looking which is the only reason the unemployment rate dropped to 9.7% in January. Officially there are 14,453,421 unemployed but the real number is 24,197,207 with 38,917,749 receiving food stamps. The 2010 year to date figures show another 856,357 foreclosures have occurred as well as 1,406,434 bankruptcies were filed, indicating the problem is far from over.

Conservatives need to keep the heat on. The Republicans are not necessarily the answer as they have proven in the past. Hold everyone accountable! The free market and non governmental job growth coupled with tax cuts and a major spending reduction are the only things that will save our economy.

Restore the Republic, Restore the Free Market Economy – Reject the Agenda of the Progressive Left, Reject Big Government and Government Run Health Care!

“If we can prevent the government from wasting the labors of the people, under the pretence of taking care of them, they must become happy.” – Thomas Jefferson, letter to Thomas Cooper, Nov 29, 1802 

“The principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale.” – Thomas Jefferson, letter to John Taylor, May 28, 1816

Fiat Money and the Fort of Gold

According to the government, Fort Knox contains about 147 million troy ounces of gold. The government has a total of 248 million troy ounces of gold, mostly in bars that are 400 troy ounces each. Most of the gold in Fort Knox came from melting of the gold coins confiscated by FDR, and from other government operations while the US was still on the gold standard which we abandoned entirely in 1971.

At today’s prices the gold (248 million troy oz) would be worth an estimated $275,776,000,000 dollars which used to seem like a lot – until we started spending a trillion dollars at a time!

The Treasury Department still operates the United States Bullion Depository at Fort Knox, Kentucky, so what is the gold’s connection to U.S. currency and who owns it?

From 1879 to 1971, the U.S. dollar was backed by gold using what is commonly referred to as the Gold Standard. This meant that the bearer of U.S. currency could exchange it from currency to gold or silver. The government owned large stores of both and used them to maintain a balanced relationship between the value of the currency and gold or silver. This gold standard allowed the government to maintain stable purchasing power for the dollar in both the domestic and international markets.

From 1879 to 1933, the dollar was fully convertible to gold for both domestic and international traders. Gold convertibility was eliminated domestically in 1934 due in large part to the Great Depression. On April 3, 1933 FDR, declared a national emergency and prohibited the “hoarding” of gold coins and bullion by US corporations and citizens, requiring all stockpiles to be returned to the treasury in exchange for paper currency.  However it was maintained for foreign monetary entities until 1971. From 1934 until 1971 Americans could no longer redeem currency for gold. Also during this period private citizens were not allowed to have holdings of gold bullion.

Using a gold standard, the government has a legal limit on how much paper money it can print. During the Johnson administration, the U.S. could print paper dollars equal only to four times the value of the nation’s gold reserves. This sets the stage for trouble if foreign investors decide to cash out their dollars for gold which is exactly what happened. 

In the years leading up to 1971 the US government began printing more and more money to pay for the Vietnam War and other investments.  The excess printing of paper dollars, and the negative balance of U.S. trade, resulted in foreign countries demanding that America make good on its’ “promise to pay”. They began demanding gold from the U.S. in exchange for paper dollars. This led to a run on gold in the late 60’s/early 70’s that resulted in over $22 billion dollars of gold leaving the US Treasury. 

So in 1971 Nixon unilaterally canceled the Bretton Woods system and ending the direct convertibility of the US dollar to gold. In 1971, the United States government abandoned the gold standard. The US dollar was no longer a fixed currency. The dollar became fiat money, meaning it was no longer backed by gold or silver and was not necessarily redeemable even in coin.

This move opened the door for government spending and abuse on a scale never before possible by the federal government. From 1934 until 1971 the US paper money supply doubled. From 1971 until 2005 it multiplied 13 times. This does not even take into consideration what has happened in the last 18 months. 

So now, some not so deep thinkers are suggesting that the U.S. sell off our remaining gold assets. See excerpt from Parade Magazine, Sunday Feb. 14, 2010:

Should the U.S. Sell Its Gold?  

The U.S. has the world’s largest gold reserve—more than 8000 metric tons. That’s far more than Germany’s, which comes in second with 3400. At current prices, our reserve is worth an estimated $288 billion. Since the U.S. government could certainly use the funds, why not sell this valuable commodity? Does our country need to keep all of that gold?

“The gold reserve is a remnant of the monetary system we abandoned in 1971,” says Jeremy Siegel, a finance professor at the University of Pennsylvania’s Wharton School. “We could have sold it then, and maybe we should have. Since 1971, the return on gold has been 8.86% a year, while the return on stocks has been 9.76%. Even with the disastrous year we just had, stocks have done better over the long run.”

But there are good reasons not to sell now. “Our gold holdings swamp annual demand,” says Andrew Williams of the U.S. Treasury. “Even talk by the government of perhaps selling gold might cause the price to drop,” adds James Barth of the Milken Institute, an economic think-tank. He says that selling gold “could be viewed as a sign of weakness” by other countries and send the undesirable message that the U.S. is desperate for revenue.

While the President can authorize the Treasury to sell gold, that hasn’t happened since 1979. But even if he were to authorize a sale, he couldn’t spend the funds on health care, defense, or any other programs—the law requires that “all proceeds from the sale of government gold be used to pay down the national debt,” according to Williams. Despite how large the reserve seems, liquidating it would barely make a dent in the $12.3 trillion debt. Still, economists like Siegel argue that the stored gold brings the federal government little benefit, and the U.S. also spends a significant amount to safeguard it.  

The first question is; do we still have it? There have been rumors circulating for years that the gold may have already been spent by the government. However according to an independent by KPMG, LLP, it is all there. 

For audit info, go to: http://www.financialsense.com/fsu/editorials/2007/0423.html 

The next question is not as easily answered – is the gold encumbered? In other words, does it still belong to the United States government or has the Federal Reserve laid claim to it? The Treasury and the Federal Reserve Board have employed a range of strategies to try to minimize the role and importance of gold in the international monetary system. 

The U.S. Treasury has facilitated; selling, swapping, trading, and lending of gold by other countries, gold-holders, and mines in order to maintain an atmosphere of “oversupply” to bolster the dollar. All of this manipulation may have resulted in the encumbering the U.S. gold reserves which you would think would be the last thing they would want to do. Unfortunately, there is evidence that this may have happened so even though it is still there; the question remains –is it ours? This question needs to be answered. 

In the end if it is still property of the U.S. Treasury we should not sell it we should keep it! The way things are going it maybe the best collateral the country has left. It gives us a little security in case of a national emergency. 

Secure the Republic, Save the Gold, Stop the Spending, End the Fed! 

If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and the corporations which grow up around them will deprive the people of all property until their children wake up homeless on the continent their fathers conquered.” –Thomas Jefferson 

“The trifling economy of paper, as a cheaper medium, or its convenience for transmission, weighs nothing in opposition to the advantages of the precious metals… it is liable to be abused, has been, is, and forever will be abused, in every country in which it is permitted.” –Thomas Jefferson