Change the Conversation… it’s the wasteful spending, stupid!

“We don’t have a trillion-dollar debt because we haven’t taxed enough; we have a trillion dollar debt because we spend too much.” – Ronald Reagan

Truer words have never been spoken. Why is this so hard for politicians to understand? Probably because they are politicians not businessmen. It is time for America to look itself in the mirror and decide what kind of country we want to have – a government run “nanny state” where individual freedom and success is “sacrificed” for the “greater good” or an America that allows individual success to be rewarded and a government that follows its’ constitutional role?

The ongoing debate between the Republicans and Democrats has become exhausting. The never ending media coverage of the bickering is enough to disenfranchise most Americans but what is worse is the out of touch tone of the debate. Republicans want to reduce taxes and cut spending. The Democrats want to keep spending and raise taxes on the “rich”.

Also let’s not forget those “Patriotic Millionaires” they want their taxes raised – I guess they feel guilty about their success. But why do we need to raise their taxes? They can give as much as they want – just add a check box to the tax form for anyone who wants to pay more just like we have for the presidential campaign fund.

Here is the real bottom line – everyone is missing the real opportunity. Before we even start worrying about what programs to change, eliminate or whose benefits to cut, let’s first focus on the waste from inefficiency and fraud that we know exists at every level of the federal government. Too simple? Maybe but remember there probably hasn’t been a serious attempt at operational efficiency or cost control in Washington in the last 100 years. In business this is part of a never ending cycle to stay competitive or perish. However, the government has no competition so there is no imperative to be financially prudent. We have all heard the stories of agencies spending their full budget every year to avoid having it reduced.

Is there anyone out there that doubts that in a bureaucracy the size of the federal government there is not significant waste that could be reduced WITHOUT cutting into the core entitlements and services currently being offered? But do you hear politicians or bureaucrats talking about this – of course not!

So let’s try a little math. Let’s assume an annual federal budget of $3.7 trillion and for sake of argument, let’s say we could find 15% waste due to operating inefficiency, sloppy procurement practices and fraud. This hardly seems like a reach but the result would be a spending reduction of $555 billion off the original $3.7 trillion. The President could make such a demand of all government agencies by simply telling his cabinet that he is holding them responsible for the performance of their departments. After all aren’t government employees supposed to be professionals in their various fields of employment? Shouldn’t they be held accountable to a standard of performance similar to that of employees in private industry? If these workers would like to change the stereotype of government employees, one would think that they would embrace this challenge! Also this should become an annual challenge just like in private business, every year we build additional cost reduction and efficiency gains into our operating budgets, why shouldn’t the government do the same?

“Government does not have a revenue problem; government has a spending problem. Government does not have a revenue problem; government has a priority problem. It is time that we begin to fine tune our focus and decide what the priority of government ought to be.” – Marsha Blackburn

Unfortunately, part of the problem with this is it would result in a reduction of the federal workforce. This would be fought tooth and nail by the various unions that represent government employees. It would take courage and leadership for our senior leaders (both Democrats and Republicans) to go after these savings because there would be negative political consequences. But the truth is they are not in office to protect government jobs. By the way these jobs are a drag on the federal budget not a revenue generator so our leaders should be driving efficient operations to free up money for meeting our national needs. This approach doesn’t even begin to address other opportunities such as consolidation of redundant services, elimination of programs that are no longer valid or reform of entitlement programs and the tax code.

“No government ever voluntarily reduces itself in size. Government programs, once launched, never disappear. Actually, a government bureau is the nearest thing to eternal life we’ll ever see on this earth!” – Ronald Reagan

So before we start talking about which programs to eliminate, whose benefits to reduce or whose taxes to raise, let’s start with the most basic of fiscal responsibilities; let’s manage the beast that is the federal budget just like a successful private company would. Let’s focus on operating efficiency, good procurement practices and reducing fraud. After all, this seems like a $555 billion opportunity that all sides should be able to agree on.

Wake up, America! We are being scammed by the politicians. It is time to hold them accountable. They must eliminate waste, inefficiency and fraud before they cut benefits or raise taxes. Let’s change the conversation – contact your representatives and let them know we are on to them. We want accountable action and we want it now.

Restore the Republic, Reject politics as usual!

“Governments don’t reduce deficits by raising taxes on the people; governments reduce deficits by controlling spending and stimulating new wealth.” – Ronald Reagan

To see more specifics on ways to attack the deficit, see my earlier blog – How to Balance the Federal Budget, http://wp.me/pv8jP-mQ

Millions of US Tax $$ Repair Foreign Mosques

This is unbelievable! $770 million dollars in U.S. taxpayer funds are being used to save mosques overseas. No further comment is required watch this video…

http://www.wsbtv.com/video/25764282/index.html

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

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.

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.”

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. 

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

 

Spender-in-Chief Seeks Debt Counseling

On Thursday, President Obama used an executive order to create a debt commission. The commission will be charged with “taking on the impossible” and designing a plan to reduce the federal deficit.  To lead the commission Obama chose former Sen. Alan Simpson, R-WY., and Democrat Erskine Bowles, former chief of staff to President Clinton. 

“They’re going to try to restore reason to the fiscal debate and come up with answers,” said Obama. “The politics of dealing with chronic deficits is fraught with hard choices. And therefore it’s treacherous to officeholders here in Washington.”  

White House spokesman Robert Gibbs said Obama’s executive order sets up a debt commission to study options on spending and taxes because the U.S. Congress failed to create a congressional deficit panel of its own. The presidential commission will make recommendations but lacks the power to bind Congress to them.

Obama also signed the bill to raise government borrowing authority to $14.3 trillion and reinstall pay-as-you-go rules to require Congress to offset spending with cuts, Gibbs said. The White House is forecasting a record $1.56 trillion deficit in the fiscal year that ends on Sept. 30, 2010.

Vital creditors such as China and other investors question whether the White House is serious about fiscal responsibility. Failure to convince them will have a significant impact on the dollar and bond markets. They want to see a plan to control the deficit and spending. Obama’s current budget forecast show the debt level reaching 80% of GDP by 2020. The federal deficit reached an unprecedented $1.4 trillion in 2009 and most predict it will go even higher this year. 

The commission will consist of 18 members, six will be presidential appointees; there will be 12 sitting lawmakers, 6 appointed by Republican congressional leaders and 6 appointed by Democratic congressional leaders. A 14 vote majority would be required to implement any recommendation. The recommendations are due Dec. 1. 

The Republicans are wary but plan to participate. Their fear is that solutions may aim toward increasing taxes instead of cutting spending. 

“Americans know our problem is not that we tax too little but that Washington spends too much — that should be the focus of this commission,” McConnell said. 

House Minority Leader John Boehner, R-Ohio, says the GOP has proposed immediate spending cuts through a rescissions package. If they aren’t considered a Boehner spokesman said “That doesn’t mean we won’t participate in this commission, but it does indicate that Washington Democrats aren’t serious yet about shutting down their spending binge.”  

Jerry Lewis, R-CA., is the most vocal critic of the panel. “Instead of acting appropriately to rein in spending and control skyrocketing deficits, the Democrat Congress and the President have outsourced their constitutional responsibilities to a powerless commission apparently created to provide political cover,” Lewis said. “The American people are demanding accountability from their elected officials,” he added. “This commission, which isn’t slated to produce anything until after the November elections, is essentially a way to avoid this accountability.” 

Lewis is dead on in his assessment. Fixing the deficit will be a complex task to be sure but it starts with common sense. The first way to reduce a spending deficit is to stop spending. The way to stimulate growth in the tax base is to help it grow. The proven way to do that is to cut taxes and stimulate investment. The math is simple – example: would you rather have 5% of $10,000,000 (500,000) or 7.5% of $5,000,000 (375,000). 

It is also difficult to take this idea seriously from an administration that does not mention that it has nearly quadrupled the deficit in a year. It is kind of like asking Tiger Woods for advice on marital fidelity. 

Americans need to watch this closely as it appears as Rep. Lewis has pointed out to be another distraction from the real job of reining in out of control government spending. This gives the President a new way to avoid accountability and set up scapegoats if his policy failures continue. 

Wake up, America! It is time to clean house in Washington and start over with common sense solutions that cut spending and promote fiscal responsibility. Keep speaking out and letting your representatives know we are not going to take it anymore. 

Restore the Republic, Reject the Agenda of the Progressive Left, End Big Government Now! 

“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

Obama’s Rhetoric vs. Rep. Hensarling’s Facts

Last week when the President met with the Republicans at their retreat in Baltimore the Q&A session ended with an interesting exchange between Rep. Jeb Hensarling, TX 5th. Watch the exchange below and then view the Press Release put out Hensarling’s office providing the factual support of his comments. What makes this story even better is tht this week the President proposed a budget that was even larger than Hensarling had feared. Notice that the President again takes no ownership for the current economic situation and can’t man up with truth on what he is going to propose for the new budget. 

In his Stte of the Union speech, Obama said. “I know that some in my own party will argue that we can’t address the deficit or freeze government spending when so many are still hurting. I agree, which is why this freeze won’t take effect until next year, when the economy is stronger. But understand — if we don’t take meaningful steps to rein in our debt, it could damage our markets, increase the cost of borrowing, and jeopardize our recovery — all of which could have an even worse effect on our job growth and family incomes.” His idea of a responsible budget is 3.8 trillion dollars that is 25.5% of the GDP. 

Press Release

 

 

  

For Immediate Release January 29, 2010

Contact: George Rasley (202) 225-3484

WASHINGTON, DC — Congressman Jeb Hensarling, Vice Ranking Member of the House Budget Committee, released the following statement and fact summary sheet after President Obama challenged his facts on House Republican budget priorities verses Democrat budget priorities: 

“I asked the President today if he intended to propose the type of spending that has put our nation on the path to bankruptcy. Unfortunately, he didn’t assure taxpayers that he was committed to stopping the spending. 

“The President also challenged the facts I presented to him about House Republican budget priorities and Democrat budget priorities. I am happy to provide him with the following facts to back-up my statements. I stand by what I said. 

“I have great respect for President Obama. I am grateful he chose to address the House Republicans – and I give him credit for accepting our invitation. But, again, he didn’t answer my specific question on whether he would continue us on a path to tripling the national debt and increasing government spending to 24.5% of the economy. 

Assertion: “The Republicans proposed a (Fiscal Year 2010) budget that ensured that government did not grow beyond the historical standard of 20% of GDP.” 

FACT: Under the budget proposal put forward by House Republicans, spending as a percent of GDP is 20.7% of GDP in 2015, and in 10 years is at 20.7% of GDP. Source: House Budget Committee Republicans “The Path to American Prosperity” Budget Alternative, Table S-1 http://www.house.gov/budget_republicans/press/2007/pr20090401_gopbudget.pdf. Historical standard is 20.7% of GDP. Source: Heritage Foundation http://s3.amazonaws.com/thf_media/2010/pdf/wm_2780.pdf 

Assertion: “It was a budget that actually froze immediately nondefense, discretionary spending.” 

FACT: The House Republican budget froze non-defense/non-veteran spending for 5 years (FY2010-14). Source: House Budget Committee Republicans “The Path to American Prosperity” Budget Alternative, Page 39 http://www.house.gov/budget_republicans/press/2007/pr20090401_gopbudget.pdf 

Assertion: “It spent $5 trillion less than what was ultimately enacted into law.” 

FACT: The House Republican budget called for $36.913 trillion in spending over 10 years, whereas CBO estimated in March that the President’s budget would spend $41.726 trillion over 10 years. This is a difference of $4.813 trillion over a 10 year period. 

Source: House Budget Committee Republicans “The Path to American Prosperity” Budget Alternative, Table S-1 http://www.house.gov/budget_republicans/press/2007/pr20090401_gopbudget.pdf  and CBO’s Baseline and Estimate of the President’s Budget, June 2009 http://www.cbo.gov/ftpdocs/102xx/doc10296/06-16-AnalysisPresBudget_forWeb.pdf 

Assertion: “What were the old annual deficits under Republicans have now become the monthly deficits under Democrats.” 

FACT: According to CBO’s September 2009 Monthly Budget Review http://www.cbo.gov/ftpdocs/105xx/doc10552/09-08-mbr.htm  July 2009’s deficit was $181 billion. According to CBO’s December 2009 Monthly Budget Review http://www.cbo.gov/ftpdocs/108xx/doc10825/12-4-09MBR.htm  October 2009’s deficit was $176 billion. Comparatively, according to OMB’s Historical Tables (Table 1.1) http://www.whitehouse.gov/omb/budget/Historicals/  Republicans’ last annual deficit was $160.7 billion in FY2007. 

Assertion: “The national debt has increased 30%.” 

FACT: According to CBO’s January 2010 Budget and Economic Update (Table F-1) http://www.cbo.gov/ftpdocs/108xx/doc10871/AppendixF.shtml096834  the debt held by the public at the end of FY2008 was $5.803 trillion, and at the end of FY2009 was $7.544 trillion. This is an increase of 30%. 

Assertion: “Your administration proposed a budget that would triple the national debt over the next 10 years.” 

FACT: According to CBO’s June 2009 estimate of the President’s Budget http://www.cbo.gov/ftpdocs/102xx/doc10296/06-16-AnalysisPresBudget_forWeb.pdf  debt held by the public would rise from its 2008 level of $5.803 trillion to $17.126 trillion in 2019, which is 2.95 times larger than the 2008 level. 

Assertion: “Will that new budget, like your old budget, triple the national debt and continue to take us down a path of increasing the cost of government to almost 25% of our economy?” 

FACT: According to the President’s FY2010 budget (Table S-1) http://www.whitehouse.gov/omb/budget/fy2010/assets/summary.pdf debt held by the public is set to rise from $5.803 trillion in FY2008 to $16.027 trillion in FY2019, which is 2.76% times larger. Also, the President’s budget shows spending as a percentage of GDP at 24.4% for FY2010. CBO’s June 2009 estimate http://www.cbo.gov/ftpdocs/102xx/doc10296/06-16-AnalysisPresBudget_forWeb.pdf  of the President’s budget also shows federal outlays at 24.5% of GDP in 2019. 

UPDATE: “How did you arrive at the conclusion that what were the old annual deficits under Republicans have now become the monthly deficits under Democrats? And what is the back-up?” 

In the 12 years that Republicans controlled the House, the average deficit was $104 billion (average of final deficit/surplus FY1996-FY2007 data taken from Table F-1 below). In just 3 years under Democrats, the average deficit is now almost $1.1 trillion (average of final deficit/surplus FY2008 and 2009 data taken from Table F-1; FY2010 data taken from Table 1-3). Source: CBO January 2010 Budget and Economic Outlook http://www.cbo.gov/ftpdocs/108xx/doc10871/Chapter1.shtml 

It is time to stop the madness, stop the spending and lower taxes for businesses to stimulate the economy. We can not spend our way to prosperity. Keynesian Economics will not work now – they never have. The engine of the economy is private enterprise and free market economics. It is time to let them work. 

By the way, we need more people like Jeb Hensarling in the Congress – honest, articulate conservatives with principles and values. As for the President – learn from history, listen to the your citizens and start telling the truth. 

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

 

The 10th Amendment, a tool to control the federal government!

A quick primer on the 10^th Amendment…… 

Amendment X – The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or the people.
– The United States Constitution

Ever heard of the 10th Amendment? It was put in the U.S. Constitution by the founding fathers to protect us from a run away federal government. The Constitution clearly and deliberately delegates the authority that is allocated to the federal government. Everything else falls to either state or local government and allows the will of the citizens to be the deciding factor in many aspects of the law. The idea being that local and state governments would be better able to determine community needs than the federal government.

Why were the founding fathers so intent on delineating state and federal government? Probably because many of them or their families had left Europe to escape oppressive governments or monarchies that thought they knew what was best for everyone on all issues from religion to taxes. By limiting the scope of the federal government they were creating a union of sovereign states that allowed for unique differences based on the desires of each states’ population.

“The powers delegated to the federal government are few and defined. Those which are to remain in the state governments are numerous and indefinite. The former will be exercised principally on external objects, [such] as war, peace, negotiation, and foreign commerce. The powers reserved to the several states will extend to all the objects which, in the ordinary course of affairs, concern the lives, liberties, and properties of the people.” James Madison, The Federalist

Continuous over reaching by the federal government for the last twenty years is causing a backlash at the state level. The current administration and their agenda have only accelerated this trend. The movement for state sovereignty has gained momentum because the balance of power has tilted too far and for too long in the direction of the federal government. These bills are not political statements of independence. They are a rejection of the increasing cost of unfunded mandates being placed upon the states by the federal government. Currently, there are at least 30 states with bills before their state legislatures. As out of control federal spending increases, the odds are that some of these sovereignty bills will pass next year increases as well.

Earlier this year, just in time for April 15th and the Tax Day Tea Parties that had been announced, the Department of Homeland Security released a report that detailed the department’s concerns about increased security threats from “right wing extremists”. One of the ideologies warned about in the report was … states’ rights. 

We also saw a backlash against our citizens during the Congressional summer break as members held town halls on the healthcare reform issues in their home states. Washington is not listening and the people are growing frustrated with the federal government. A recent Rasmussen poll shows 71% of Americans are angry with the federal government. 

This lack of respect is fueling activities at the state level for citizens and state legislators to review their options with regard to the 10^th Amendment. States which still have healthier or more stable economies and reasonable state budgets are concerned by Washington’s directives. They do not want to be driven toward bankruptcy by the federal government which seems to have latched on to the California model of how to run a state. 

Contrary to rumors and media innuendo, most supporters of states’ rights are not interested in secession or avoiding their tax obligations but rather restoring the appropriate balance (as defined by the Constitution) between states and the federal government. Make no mistake those in power at the federal level are not in favor of reducing the size and scope of Washington’s authority. As this movement gains momentum expect increased friction and fighting over this important issue.

More things to consider as this story continues to unfold…..

“Right wing extremists” and tea parties are not the problem – radical legislators and activist judges are a bigger threat. This is a threat that the founding fathers anticipated, so they provided no Constitutional power for Congress to override state laws. Also if they really intended to give Congress the authority to act in the interest of the “general welfare,” why would Article I, Section 8, have been included ? Keep in mind, it also did not give the judicial branch unlimited jurisdiction over the states.

The Tenth Amendment was written after the Constitutional was ratified. It was added to reinforce that the states remained individual and unique sovereignties and as such, were empowered in areas that the Constitution did not delegate to the federal government. Therefore, any federal attempt to legislate beyond the Constitutional limits of Congress’ authority is a usurpation of state sovereignty making it illegal.

As the Administration and the Congress continue to assert their radical agenda of more   bailouts, health care reform and expanded social programs, state governments are wondering where the money will come from. If they don’t comply they can lose federal funding. If they do comply, they are faced with unfunded obligations as many of these programs come with long strings that keep the programs in place long after the money runs out. Reasserting a state’s sovereignty maybe the only way to take a stand against these unfunded, mandated programs. 

Wake up America! Use the Constitution and the protection it offers from an overbearing federal government.

 Restore the Republic, Reject Federal Mandates! Contact your legislators and tell them that you support the 10^th Amendment and reject federal mandates.

“The Constitution is not an instrument for the government to restrain the people, it is an instrument for the people to restrain the government — lest it come to dominate our lives and interests.” — Patrick Henry

“With respect to the two words ‘general welfare,’ I have always regarded them as qualified by the detail of powers connected with them. To take them in a literal and unlimited sense would be a metamorphosis of the Constitution into a character which there is a host of proofs was not contemplated by its creators.” — James Madison

The Geography of a Recession

Watch this video which provides a time elapsed county by county update to the advancing unemployment. It is both unsettling and confirming. America is being fundamentally transformed right before our eyes.

or you can watch it here:

http://cohort11.americanobserver.net/latoyaegwuekwe/multimediafinal.html

We are in trouble and the administration is not addressing the real issue – UNEMPLOYMENT! No more phony stimulus plans – we need tax cuts and the government to get out of the way.

In the week ending Dec. 12, the advance figure for seasonally adjusted initial claims was 480,000, an increase of 7,000 from the previous week’s revised figure of 473,000. Insured unemployment during the week ending Dec. 5 was 5,186,000, an increase of 5,000 from the preceding week’s revised level of 5,181,000.

Currently, there are 38,093,394 Americans on food stamps. With 15,407,486 Americans “officially unemployed” and 26,486,807 actually unemployed; stimulating job creation should be the primary focus of Congress. However, their role is only to create tax breaks that reward investment the markets will do the rest. The only reason business owners are not investing is because of the government’s over involvement in the market. The government has created fear with talk of Cap & Trade, Healthcare Reform and tax increases so everyone has taken a wait and see attitude.

Wake up America – we can not survive this level of unemployment for long. It will bring another collapse. A jobless recovery is not a recovery. We can not afford anymore wasteful spending or pork barrel politics.

Restore the Republic, Reject the Agenda of the Democrats!

Government Employees are Tax Delinquents!

The IRS says that unpaid taxes by federal employees has reached about $3.04 billion.

According to Internal Revenue Service data the U.S. Postal Service has more employees who are delinquent on their taxes any other federal agency. Their total is $297.93 million which is almost 10% of the total.

The Treasury which includes the IRS (and Tim Geithner) owes $6.99 million. At the IRS employees can be fired for failing to pay taxes. (I sense an opportunity.)

And then there is the Congress and the Executive Branch: $2.47 million for the U.S. Senate; $5.81 million for the House of Representatives; and about $813,000 for the Executive Office of the President.

Ironic isn’t it? This should be embarrassing since the federal government has record deficits and wants to raise the debt limit to $12 trillion so that it can continue spending at record levels next year. You would think that they would at least want to avoid this type of press since all government employees re paid with tax revenue. They do not create wealth – their jobs consume wealth.

“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

“To take from one, because it is thought his own industry and that of his fathers has acquired too much, in order to spare to others, who, or whose fathers, have not exercised equal industry and skill, is to violate arbitrarily the first principle of association, the guarantee to everyone the free exercise of his industry and the fruits acquired by it.” — Thomas Jefferson

Economic and Employment Update – Losses Continue

Despite what the administration is saying, the economy is still very sick.

From http://www.economicindicators.gov/

The U.S. Census Bureau announced today that advance estimates of U.S. retail and food services sales for August, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $351.4 billion, an increase of 2.7 percent (±0.5%) from the previous month, but 5.3 percent (±0.7%) below August 2008. Total sales for the June through August 2009 period were down 7.6 percent (±0.3%) from the same period a year ago. The June to July 2009 percent change was revised from -0.1 percent (±0.5%)* to -0.2 percent (±0.2%)*.

Retail trade sales were up 3.0 percent (±0.7%) from July 2009, but 6.0 percent (±0.7%) below last year. Gasoline stations sales were down 26.7 percent (±1.5%) from August 2008 and building material and garden equipment and supplies dealers were down 13.6 percent (±2.0%) from last year.

The up tick in consumer spending was artificially created by the Cash for Clunkers program. This may ultimately hurt the car companies by pulling forward sales that would have occurred naturally over several months. This created a short term but unsustainable spike which may be followed by a long sales slump. Note that this is a straight spending comparison and that prices are not considered, so if prices go up on essentials the increase in spending will follow out of necessity. Also note that while spending is up slightly it remains significantly down from last year.

From http://www.economicindicators.gov/

New orders for manufactured goods in July, up five of the last six months, increased $4.6 billion or 1.3 percent to $355.5 billion, the U.S. Census Bureau reported today. This followed a 0.9 percent June increase. Excluding transportation, new orders decreased 0.7 percent. Shipments, down eleven of the last twelve months, decreased $0.2 billion to $359.7 billion. This followed a 1.8 percent June increase. Unfilled orders, down ten consecutive months, decreased $0.1 billion to $740.6 billion. This was the longest streak of consecutive monthly decreases since the series was first published on a NAICS basis in 1992. This followed a 0.8 percent June decrease. The unfilled orders-to-shipments ratio was 5.95, down from 6.00 in June. Inventories, down eleven consecutive months, decreased $3.6 billion or 0.7 percent to $503.1 billion. This was the longest streak of consecutive monthly decreases since March 2003-January 2004 and followed a 1.1 percent June decrease. The inventories-to-shipments ratio was 1.40, down from 1.41 in June.

Other areas of concern are the residential real estate market and what appears to be an attempt to re-inflate the housing market.

From The Center for American Progress (this source proves even the left is not buying the fairy tales)

http://www.americanprogress.org/pressroom/statements/2008/08/foreclosures.html

It’s 1930 all over again. While cheerleaders for the real estate industry proclaim the housing markets are ready to turn the corner, with first-time homebuyers ready to jump into the market, the reported 55 percent increase in foreclosure activity over last July should put a damper on the excitement. July marks the third month of accelerating increases in foreclosure activity reported by RealtyTrac and an unbroken streak going back to January 2006 of year-over-year increases in monthly foreclosures. With RealtyTrac reporting in excess of 750,000 bank-owned properties, we estimate that nearly 0.6 percent of all housing units in the United States are now bank-owned. While this may appear to be a small slice of the total housing stock, this is the same ratio of foreclosed properties to housing units in 1930. Foreclosures increased steadily from 1930 until peaking in 1933, at which point 10 percent of all homes had become bank-owned. They did not return to pre-Depression levels until 1938.

Now that Congress has passed and the president has signed housing legislation, there is a danger of complacency in thinking the problem has been addressed. The ball is in the loan servicers’ court to see if they will participate at meaningful rates in the new FHA loan program to refinance at-risk borrowers into sustainable loans. The Hope Now alliance of over 30 major loan services holding vast numbers of home mortgage loans reported modifying 220,000 loans during the second quarter of this year. To put that figure in context, RealtyTrac reported 272,121 foreclosure actions (notices of default, auctions, or repossessions) in July alone. If the mortgage industry doesn’t pick up the pace and more rapidly restructure or refinance existing mortgages headed for default and foreclosure, things will get worse before they get better.

Whether the situation is truly a harbinger of things becoming as dire as they did between 1930 and 1933 is something we will only know after the fact. But foreclosures are mounting, with 1 in 11 American families with a home loan in trouble as of June. If voluntary programs do not begin taking effective advantage of the tools offered by the recent housing bill, we would expect to see calls for still greater government action to avert a 1930s-like economic plunge.

The last line of this article is cause for concern , “we would expect to see calls for still greater government action to avert a 1930s-like economic plunge”.

Excerpts From The Associated Press

It could be another year before the final taxpayer tab for Fannie and Freddie is known, and that outcome will depend on when delinquencies and foreclosures finally crest.

The Obama administration doesn’t expect to announce its plans for the two companies until early next year, but powerful interest groups aren’t waiting until then. The Mortgage Bankers Association on Wednesday offered a detailed plan to replace Fannie and Freddie with several federally regulated private companies.

In the meantime, both Fannie and Freddie have been drafted to implement the Obama administration’s effort to reduce the number of foreclosures.

The early results have been disappointing. For example, while Fannie or Freddie refinanced 2.9 million loans from January through July, only about 60,000 were taking advantage of an Obama administration plan to help “underwater” borrowers who owe more than their homes are worth.

At the same time, nearly 70 percent of U.S. mortgages made in the first half of this year went through Fannie or Freddie, up from 62 percent last year, according to Inside Mortgage Finance, a trade publication.

See full article at:

http://www2.timesdispatch.com/rtd/business/local/article/B-MORT05_20090904-213604/290762/

Again the story is in the last paragraph, if “nearly 70 percent of U.S. mortgages made in the first half of this year went through Fannie or Freddie”, that means that the “government” is still guaranteeing these loans – which really means unfunded taxpayer liabilities continue to grow.

Jobs:

Excerpts From The Associated Press 

By CHRISTOPHER S. RUGABER 

WASHINGTON – September 18, 2009 — Forty-two states lost jobs last month, up from 29 in July, with the biggest net payroll cuts coming in Texas, Michigan, Georgia and Ohio.

The Labor Department also reported Friday that 27 states saw their unemployment rates increase in August, and 14 states and Washington D.C., reported unemployment rates of 10 percent or above.

The jobless rate nationwide is expected to peak above 10 percent next year, from its current 9.7 percent

The United States lost 216,000 jobs in August, the department said earlier this month, down from 276,000 in July. Employers have eliminated 6.9 million jobs since the recession began in December 2007.

Texas lost 62,200 jobs as its unemployment rate rose to 8 percent in August for the first time in 22 years.

Michigan saw 42,900 jobs disappear, including 25,000 in manufacturing, as the state continued to suffer along with its struggling auto industry. Michigan’s unemployment rate rose to 15.2 percent, the highest in the nation.

Nevada has the second-highest rate at 13.2 percent, followed by Rhode Island at 12.8 percent and California and Oregon at 12.2 percent each.

The jobless rates in California, Nevada and Rhode Island were the highest on records dating to 1976. California and Nevada have been slammed by the housing bust, while Rhode Island has lost thousands of manufacturing and government jobs in the past year.

Georgia and Ohio reported the third and fourth-highest job losses… respectively,

New Jersey added 800 jobs, but its jobless rate jumped to 9.7 percent, the highest in 33 years, from 9.3 percent.

Bottom line: The recovery so far is not creating new jobs in the private sector. The majority of new hires right now are in the government sector which will not result in boosting the GDP. Government does on create earnings, it consumes them.

The facts are this, we have unemployment of 9.7%. The stimulus was supposed to prevent us from going over 8.0%. What happened to those shovel ready projects that were going to put people to work right away? We have lost an additional 2.5 million job since Feb. 2009. We have more people on food stamps than ever before. Since the stimulus money is not creating jobs, maybe we should return all the unspent money to the Treasury. Then we can use it to pay down the debt, fund tax credits for business and capital investment to jump start the economy.

Even more concerning is; if the administration is successful in its’ efforts to put through Tax and Cap, Health Care Reform and tax increases more jobs will be lost.

It is time for a new plan. It is time to start telling your representatives that; we want the unused portion of the stimulus money returned to the Treasury, no more bailouts as well as tax breaks to stimulate business investment and job creation. We need to create jobs! We need to create them immediately. Government can hire people but that does not create revenue or national economic prosperity. No good will come from more government regulation and involvement in the markets. We do not want or need a welfare state. If the government spending does not stop and the free market be allowed to function on its’ own, we will bankrupt America. I for one have no desire to become part of a global nation that takes away my rights, liberties, freedom and the American Dream.

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

“But with respect to future debt; would it not be wise and just for that nation to declare in the constitution they are forming that neither the legislature, nor the nation itself can validly contract more debt, than they may pay within their own age, or within the term of 19 years”.….. 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