After the Can Kicking

I didn’t really plan on a third day related to the government shutdown. This one, however, is just commentary on the situation, rather than specifically related to contract keeping. So, while this isn’t exactly part III, you might want to first read Contract Keeping Part I and PartII.

One of my favorite responses to the WWII Memorial closure
photo from here

I don’t yet fully comprehend all the details of the bill that ended the shutdown. In short, it looks to me like, in the game of chicken, the GOP veered to the side—just as everyone expected. It was on day 16 of the shutdown. Seventeen years ago, the dreaded shutdown went to day 21, when the GOP caved (a day before President Clinton had planned to end things).

The continuing resolution issue comes up again mid-January. A week into February the debt ceiling issue resurfaces. At both of those moments, the government could shut down again, if there’s no agreement. In other words, the can has been kicked down the road.

But if anyone thinks the Republicans are going to grow a new spine in a quarter year, they’re likely to be disappointed. Our hope may have to be that we elect a few more Ted Cruzes and Mike Lees in every coming election. Meanwhile, it is hoped by the weaker-spined legislators that Obamacare might implode on its own, based on early signs of incompetence. Personally, I don’t trust dumb luck—even when that much “dumb” is involved. I want to see active efforts to remove the albatross from the neck of the free people.

A few people made good observations follow the end of this episode, that I’d like to share, concerning the propagandizing of the shutdown, and some of the things we’ve learned.

My friend Kim quoted something on Facebook, with a few details I hadn’t known (again, this is quoted, so I’m uncertain of origin):

Something I hadn’t thought about. How truckloads of those shutdown signs instantly materialized and were posted.

One of the pre-printed signs
photo from here

How did +21,000 signs (large, detailed, specific) just magically appear overnight at some 620 locations?

I have worked in the government on and off for 42 years. During that time I became completely familiar with requisitions, bidding, awarding contracts etc. It is a time-consuming process dealing with bean-counters and pencil-necked bureaucrats every step of the way. The simplest request takes months.

In less than 8 hours (probably within six hours) of the shutdown announcement professionally printed and painted 3X4 foot signs miraculously and simultaneously appeared all over the country, coast to coast and border to border, in the tens of thousands saying—"This (park, facility, etc. [with the appropriate custom logos for each of the hundreds of parks and monuments]) is closed due to the government shutdown.”

There has not been a government shutdown in 17 years, and it was for a matter of hours and no parks or monuments were closed. [Well, 3 weeks, and some park areas were closed; remember the guy with the sleigh ride concession in Yellowstone Park that was waylaid? But mostly accurate.]

Fact that can not be disputed: These signs were carefully designed, detailed specifications were determined, signs were then requisitioned, bids were posted and vetted, and government contracts were awarded. The materials were then ordered, and the signs were manufactured, then distributed nationwide from their manufacturing point by the U.S. Mail or freight companies.

This shutdown was orchestrated and planned well in advance, at least 6-8 month ago. Millions of tax dollars were appropriated and spent in this process. As usual there is a filthy paper trail a mile long leading directly to the Oval Office.

Americans do not realize just what cesspool-level of pathological lying, Chicago gutter trash, we are dealing with! What juvenile, 100% inept, phony, petty crooks and street hustlers are now running our nation! 

Another Facebook friend, Shawn Rogers, who frequently offers great political commentary, had this to say:

So, boys and girls, what did we learn?

·         We learned that during a "government shutdown" 83% of the government does not shut down.

·         We learned that during the "shutdown" most people are unaware that anything is shut down.

·         We learned that the Obama regime will punish the American people when he is displeased with them.

·         We learned that Obama had to spend money to shut down things which normally aren't shut down during a "shutdown" in order to make sure people are aware of a "shutdown." [I love this one.]

·         We learned that eventually the current Republican establishment will always cave. Well, some of us learned that. Many of us have known that for a long, long, sad time.

·         We learned that the Republican establishment would rather turn on its own than fight the liberal democrat agenda.

·         We learned that John McCain is a liberal sympathizer. We learned that Peter King is a vindictive, petty, and spiteful man. We learned that both of these men are beneath contempt because they put political party power ahead of the Constitution.

·         We learned that people like John Cornyn and Orrin Hatch think the citizenry is stupid and incapable of understanding the machinations and manipulations of the legislative process. [Cornyn did vote right in the end, and the airwaves are full of ads reminding us Texans of what he claims has been his fight against Obamacare; he is doing major damage control after his failure on the cloture vote.]

·         I learned that my ardent support for Senator Ted Cruz was the best political activity I've ever engaged in. I learned that Senator Lee is not one whit behind him in his defense of the Constitution.  [I strongly concur.]

·         We DIDN'T learn that Barack Obama is a tyrannical, spiteful, and evil leader of the country. We've known that for over five years.

That was the same evening the agreement was reached. Shawn had more the next morning: “That awkward (and pathetic) moment when 17% of the government starts back up and nobody notices a bit of difference.”

And he posted a link you might enjoy: “16 Things We Learned from the Government Shutdown.”

Thursday evening he added some hopeful words about Obamacare and the political future:

Prediction: Within 3 months the Regime will delay or otherwise stall the implementation of the Affordable Care Act, partially due to the horrifically incompetent roll-out, but also to the absolutely abysmal numbers of individuals signing up. You heard it here first.

Second Prediction: You will soon start to hear of democrats in the House and those up for re-election in the Senate pushing for some kind of delay or reduction in penalties under the ACA. They have to be getting extremely nervous right now.

Third Prediction: The 2014 mid-terms will be a repeat of 2010. It will be awful for the Democrats due to the failure of their policies.

Keep hope alive, people. We aren't always going to be in this adverse political climate. 

Thank you, Shawn. I appreciate encouragement to keep hope alive.

Contract Keeping, Part II

Part I of Contract Keeping covered some of the details of the current complicated situation surrounding debt ceiling, continuing resolutions, and implementation of Obamacare. There’s a contrast between what the president says about the high priority of keeping our contract to pay our debts and the way he disdains contracts and commitments at will.

So it is with thought of contract keeping that we take a look at presidential choices during the government partial (17%) shutdown.

·        He has shut down and refused access to a privately owned hotel and restaurant along the Blue Ridge Parkway—which wasn’t closed. He has used federal money to hire forces to barricade access, losing even the income the private entity would have paid if allowed to operate. I can’t tell from the story whether the inn is on private land or is private property on leased public land. I haven’t read the contract, but I believe this business owner and any others similarly affected have a right to sue over breach of contract, and certainly can sue for government’s seizure of private property.

·        He tried to shut down the parking lot to Mt. Vernon—a privately owned property on private land—because the parking lot is jointly owned between private entities and the federal government. Federal resources were used to blockade the parking lot, but no resources would have been spent to leave the space open. No word on what urgent treasury need was satisfied by this additional expense and intrusion on private property. Again, I haven’t read the contract about the jointly owned parking lot, but I bet there’s nothing in there warning that the government can arbitrarily cut off use without emergency safety cause.

·        He has evicted people from their privately owned homes located on park lands at Lake Mead. He used federal money to make the evictions happen. He didn’t simply say, “You won’t have federal services while in your home, so you’ll need to depend only on state and other jurisdictions.” No, he says you can’t live in your home that you own—on property for which you have a long-term lease contract. The president is saying that, if you have a lease contract with the federal government, it is null and void during a temporary partial shutdown, and you must therefore be prevented from using your personal property until the president gives his express permission. Any other landholder would be taken to court and would lose for this breach of contract. I would like to see a lawsuit against the president personally, since this is his doing.

Mt. Rushmore backside view,
because the front view was closed

·        The president not only shut down national parks, he used taxpayer dollars to pay officials to block views from the road. On the paid-for road leading through Mt. Rushmore National Park, all the viewpoints were barricaded, and officers were stationed to keep cars and buses from stopping to take photos of the very visible mountain. Certainly the only reason the whole Mt. Rushmore wasn’t covered with a curtain was the logistics of hooking up a piece of fabric so large.

·        There were four soldiers recently killed in Afghanistan. What usually happens is that there is a grant of $100,000 within three days, to cover funeral expenses and other immediate needs of the family at the time of crisis, while waiting for other death benefits to be issued. But our president couldn’t keep that promise—because it would hurt the public more if the promises weren’t kept. There was enough outcry over this failure to our troops that Fisher House, a private charity for injured veterans and their families, offered to make the payments as needed during the shutdown. The president accepted the offer, insuring he would have the government repay the debt after the end of the shutdown. Several problems here: first, we have plenty of money in the treasury for the essential government role of the military—including keeping our promises to our soldiers. Choosing to break this contract is despicable. In addition, the president has no power to commit the federal government to additional debt—as he did with Fisher House; only Congress can do that. Meanwhile, the House had two months ago passed a bill to fund the military, and just to be certain, also passed a bill to guarantee these payments to families after military losses be paid. The bill sat on Harry Reid’s desk—with him saying it was moot now that the Fisher House arrangement had been settled. Then, because of bad optics, he had it quietly passed in the dead of night.

There are additional ridiculous measures the president has taken, beyond outright breach of contract, simply to cause pain to the American people.

barricades removed from WWII Memorial

·        The open air Veterans Memorial in Washington, D.C., was closed, by barricade, to prevent aging veterans from visiting. Meanwhile a group of illegal aliens are granted access to the National Mall (where, if reports are true, the federal government built a platform stage for their use) to demonstrate for a path to citizenship. In response, this past weekend there was a peaceful, large gathering on the National Mall, where demonstrators cleaned up the space—including placing the unneeded barricades neatly in front of the White House.

·        In Utah, where 70% of land has been claimed by the federal government, local authorities decided to peacefully remove the barricades to allow people to drive through the people’s park land and look around; it was costing more to keep people out than to let them in. And it was harming the local economy, which is forced to depend on public lands. Eventually the state made a deal to pay for parks to be open during the shutdown, so the federal government couldn’t claim penury as the reason for forbidding access to most of the state.

·        There were public drinking fountains in the Alleghenies and C&O Canal area, where he had faucet handles removed so water could not be accessed. The plumbing was already paid for. The water came from wells. It certainly cost more to remove water access than it could have cost to monitor water contamination for what is expected to be no more than days or weeks. Petty and mean-spirited? Yes.

There are a few clever phrases and appropriate epithets for the president that have come up during this shutdown:

·         The Spite House

·         Campaign of Pain

·         “Make It Hurt”

·         Barrycades

·         Intransigent

 

A couple of good pieces about the “make it hurt” policy are Bill Whittle’s Afterburner video and a piece by John Stossel called “Shutdown Theater.”

It may be that the ridiculousness of the “Spite House’s” “Campaign of Pain” is getting through to the lesser informed. The president’s approval rating is now historically low—lower than George Bush’s ever was, even with a continuous media screed against him. And this president still enjoys a fawning media (with just occasional chinks). An informal poll on a liberal college campus in Colorado showed overwhelming blame for the shutdown going to the president and democrats. I’m sure the president would see that as unexpected.

I am always in favor of clarity and truth. It may be that truth about the president is escaping into the general consciousness. It is possible that standing up to this bully at this moment in history could turn out to be a very worthwhile opportunity for truth to be better understood.

Bubbles

A few evenings ago I had the opportunity to hear BobWiedemer (eventually available here), one of the authors of Aftershock, a bestselling book on the economy. His main point is that, rather than the usual image of business cycles, it is more accurate to view America’s economy, at least during the last couple of decades, as a series of bubbles. While being diametrically opposed to the supposed experts, Wiedemer’s group identified and predicted the dot.com bubble, the housing bubble, the rise in the value of gold, and others. One of his main points was that, unlike cycles, where things eventually turn around and get better again, after a bubble pops, it’s not coming back. 

He warns that it is a mistake to assume that because things have always been a certain way means they always will be. Experts assumed housing prices would always rise. But when Wiedemer saw an unusually sharp rise in housing prices, that was a clue that something wasn’t right. Turns out that, as it often does, the bubble happened because of interference with the market. Mortgage standards were forced lower, with the goal of putting more people into their own homes (particularly those previously identified as not financially ready to take on a mortgage). More buyers meant more demand, which meant higher prices, which meant attracting more builders to the booming market, which meant oversupply—and combine that with much higher default rates causing insecurity in a previously safe investment, and housing prices suddenly plummeted. The bubble popped. 

When the government sees a bubble that threatens to pop, its tendency is to avoid (postpone) failure by propping up the industry—purposely allotting greater resources where there capital has obviously been ineffectually used. This is what they did with the bailout of GM and various other entities back in 2009. A better way would be to pop a bubble quickly, when it’s still small. Then the capital becomes available for more promising purposes.  

Serious trouble lurks on the horizon when the economy is a series of interwoven bubbles, so that the outcome is likely to be a domino effect once they start to pop. 

Wiedemer’s group identifies the bubbles, and, when possible, predicts when they will pop. He says the current bubbles are government debt and the dollar. We’ve seen the charts. Debt slowly creeps up over the previous century, and then spikes during Bush’s term, followed by approaching the asymptote as soon as Obama takes over.  

When there is debt, one way government deals with it is printing money to pay for it. (This is something counterfeiters do too, but when government does it, we don’t jail them. Maybe that’s the problem.) Sometimes money isn’t actually printed, just electronically produced by selling treasury bonds, where numbers change on computers, but no actual money gets hefted from place to place. But this “printed” money doesn’t represent wealth (surplus representing work completed that society is willing to pay for). It’s like monopoly money. Well, technically monopoly money has the value of functioning in a certain way for the purpose of playing the game, which is something people are willing to pay for. But, anyway, this printed money isn’t “real,” in the sense we regular mortals think of real wealth. 

The usefulness of printing money to pay your debts is that it doesn’t take as much of that tedious work and wealth building to pay things off. Instead, you use the wealth you’ve already created and call it double that amount (or whatever increase). Your creditor might not be happy about receiving $1Trillion that represents only the work of $500 Billion or so. They will feel cheated. Not as cheated as if they get stiffed for the whole amount, but at some point they’re going to say, “You’re not worth lending to.” When they say things like that, it translates as, “Your Triple-A rating is being downgraded,” which happened last month. And that means, as a higher risk, we don’t get the lowest interest rates when we turn over the debt, but we pay something higher that is still adequate to persuade creditors to take the risk. And then we go ahead and pay with even-lower-value dollars, so they downgrade further and eventually refuse to lend to us at all. At which point any current debt isn’t payable—unless we drastically increase our dollar printing to pay off the debts with paper that doesn’t represent actual wealth.

So, what happens when government presses its luck and prints so much that the value of each dollar shrinks to something infinitesimally small? Hyperinflation. What are the signs that this could be on the horizon? Other countries don’t want to use the dollar as their base currency anymore—they don’t trust its value. (Although, so many countries have inflated their currencies that there isn’t an obvious replacement—which has been propping up the dollar for a while already.)  

Another signal is the price of gold. When we were on the gold standard, in theory you could go to your local bank and turn in your dollars (bank notes) in exchange for that value in gold. When that got too limiting for government experts (back in the 1960s), we left the gold standard, and the dollars are just backed by the federal government’s promise that the dollar has worth. So when we know the dollar represents a lower value, it buys less. So prices rise. Inflation.  

Gold is more stable. If you look at the amount of gold it takes to purchase a home, for example, it would stay relatively stable. But the dollars you would exchange for gold change as trust in the dollar changes. So, right now, while the value of the dollar is drastically shrinking, gold prices are drastically rising.  

He didn’t say this, but I think gold is a bubble. If you’re trying to protect the value of your savings, doing it with gold is a good way. If you started doing that at $300 an ounce, instead of now, even better. It looks like you’ve made huge profits. But actually the profits are in less valuable dollars. At some point you’ll need a wheelbarrow full of dollars in exchange for an ounce of gold. This “bubble” will continue as long as distrust of the dollar continues.  

But even gold has its limits. There is the following exchange about the value of gold in Terry Pratchett’s Making Money (I talked about it here). Moist von Lipwig is talking with journalist Sacharissa Cripslock. 

Moist: “What are we, magpies? Is it all about the gleam? Good heavens, potatoes are worth more than gold!”

Sacharissa: “Surely not!”

Moist: "If you were shipwrecked on a desert island, what would you prefer, a bag of potatoes or a bag of gold?”

Sacharissa: “Yes, but a desert island isn’t Ankh-Morpork!”

Moist: "And that proves gold is only valuable because we agree it is, right? It’s just a dream. But a potato is always worth a potato, anywhere. Add a knob of butter and a pinch of salt and you’ve got a meal, anywhere. Bury gold in the ground and you’ll be worrying about thieves forever. Bury a potato and in due season you could be looking at a dividend of a thousand percent.” (p. 108) 

In other words, even gold’s value is limited to either its usefulness or to whatever we decide to call its value. You can’t eat it. So in famine, when food is scarce, it will take more gold to buy a sack of flour. But it’s traditionally the best we’ve got for being a stable money base value. Certainly better than a piece of paper (or digital message) that the government no longer even claims to represent a given amount of work. 

What is going to happen? I don’t know. I’m just beginning to read the book. Maybe before it’s too late we will elect an administration that will stop the insane rise in debt and government spending. Then maybe trust will continue so that getting out of the bubble will be less painful than if it continues to grow before popping. Maybe we can keep enough trust in the dollar that hyperinflation and collapse won’t be the inevitable only way to stop the current practice. 

One thing in our favor is that we are used to being a free, hard-working, inventive and entrepreneurial people. Our behavior has always created real wealth. The system of exchanging that wealth is the problem—and it’s a big problem. But it’s not as big a problem as many countries face: a growing entitlement mentality. OK, we have that problem too. But maybe it’s not too late to pop that bubble quickly and move along with a better allocation of resources. 

We Need Change to Recover Hope

Last night on the car radio I happened to hear Charles Krauthammer talking with Dennis Miller. I love a good analogy, or way to visualize something that is otherwise difficult to grasp. And he had one of those good images. He used some of this in his July 7 piece, so you can read that in full. 

He was talking about Obama’s insistence that much of our debt problem could be healed if we only taxed the rich more heavily—specifically those evil people who flit around the country on private corporate jets. OK. So, how much revenue would that bring in (assuming no change in behavior that would diminish use of those jets)? Here’s what Krauthammer said: 

I did the math. If you collect that tax for the next 5,000 years—that is not a type—it would equal the new debt Obama racked up last year alone. To put it another way, if we had levied this tax [on corporate jets] at the time of John the Baptist [he said the time of Herod the Great in his radio version] and collected it every year since—first in shekels, then in dollars—we would have 500 years to go before we could offset half of the debt added by Obama last year alone. 

When I was looking up this piece, I came upon a blog referring to it that adds a little more irony (here.) 

The hypocrisy on vilifying the jet class is hysterical. Included in the Democrat’s stimulus package was an incentive for corporations to purchase private jets. The incentive allows corporations to depreciate the purchase of these planes over five years instead of the standard seven. Why did they do this? Because they believed that this would stimulate the industry. It has been estimated that this “tax break” amounts to $300 million per year. That’s $3 billion over ten years when we’re running an annual deficit of about $1.5 trillion. But now this becomes the symbol of corporate greed and favors to big business. A symbol that the rich are not paying their fair share.

How many Republicans voted for the Obama stimulus that included this tax incentive? Zero. 

This gives us an opportunity to laugh (so we don’t cry) about the ridiculous and preventable situation we’re in. But we need to face some facts: either the leadership (and I mean mostly the Obama administration, the Democratic-led Senate, and the fawning media) is intent on forcing a collapse followed by government takeover resulting in European socialism or worse—or they are incompetent. 

This morning the news said that Moody’s had downgraded the US from its triple-A rating for borrowing [as predicted in yesterday’s post]. Because we defaulted after Republicans failed to go along with raising the debt? Nope—because that’s not what happened. It’s because we have out-of-control spending, with no hope of taking any steps to remedy the mess. Would this have happened if Republicans had just rubberstamped the debt ceiling rise? No, because it didn’t have anything to do with the level of the limit or even a threat of default, which would have been totally avoidable; it had to do with the inability or unwillingness to stop surpassing a debt ceiling no matter how high. 

And the only solution we get from our president for increasing revenue has to do with taking more money out of the private sector so it can’t be used for capital projects? Wait, Krauthammer reminds us of one more suggestion from this transformative leader: 

Obama’s other favorite debt-reduction refrain is canceling an oil-company tax break. Well, if you collect that oil tax and the corporate jet tax for the next 50 years—you will not yet have offset Obama’s deficit spending for February 2011. 

Should we have any faith (or blind wishful thinking) that this administration can do anything to improve our dire economic situation? I don’t. If we want hope, we have to change the leadership.

D-Day Panel

You are probably as weary of the debt ceiling discussion as I am. But, this being d-day, I’m following up with a report of a panel discussion I witnessed last night. Catherine Engelbrecht of King Street Patriots was in Washington, DC (for a Judicial Watch panel to be held today, along with Christian Adams and John Fund, which will be streamed live). So while she was there, she took the opportunity to host a panel discussion on the debt ceiling with Congressman Kevin Brady, R. TX, and Dean Mitchell from the Cato Institute. The Cato Institute is, I believe, a Libertarian think tank; on economic issues their views nearly always fit on the Spherical Model well into the free-enterprise zone. 

On the back wall at King Street Patriots

Back at the KSP home in Houston, radio host Chris Baker played the role of liaison with the live audience. At the time of the panel, nothing had been signed, but it was considered inevitable (and has indeed been signed by this writing). Not everyone is happy with the outcome. But there were some slightly positive observations. I was writing notes, so my apologies for any inexact quotes. 

Dean Mitchell, when asked about how he would sum up the results, said, “We would like to have gone further, but with Harry Reid, etc., it’s a good first step. We can be happy to be having the debate about reducing government rather than what’s been going on for years and years—moving toward Greek style bigger government.” 

Chris Baker was asked what he’d been hearing back in Texas: “Many Tea Party citizens are highly offended at being called terrorists by Vice-President Biden today. Terrorists kill babies…. It’s a personal insult to every freedom-loving person in America. When did you become a terrorist just by asking if we can follow the Constitution?” 

Catherine Engelbrecht added, “Call us what you will; we’re not going away.” 

There was some discussion about the “supercommittee” that is part of the bill, described by Rep. Brady as a way to fast-track cuts, with the focus on entitlements. He assured that, “with only three GOP House members, out of 204, on the supercommittee, you can be certain that they will be solid conservatives.” 

Dean Mitchell then talked a bit about the MAP (Maximizing America’s Prosperity) Act, put forward by Congressman Brady, as a procedural way to deal with budget process reform. “How do you bind a future congress? You can’t—unless you change the budgeting process.” 

Rep. Brady added that he had designed the MAP Act using lessons learned from what hasn’t worked, to create guardrails around the Ryan plan, to make sure we never face gridlock. (I was unaware of the MAP Act prior to last night, so you might want to give it a fair reading yourself.) Rep. Brady added, “You can’t control interest rates, but if you keep shrinking the principle of the debt, you’re going the right direction.” He also pointed out that, through this legislation, every program has a sunset, “like we have in Texas, which has worked so well.” 

The big question for me, and apparently for others in the room, was whether downgrading is inevitable. The short answer is yes, if not now, then eventually, and probably deserved. The entire debt ceiling debate, as a crisis meant to avert downgrading, has been pretty much a sham. Nothing was debated that will convince these agencies that we are getting a handle on our debt/overspending problem. Rep. Brady admitted there will be an impact. Interest rates will increase. Institutions that can only hold the highest rated assets will not be able to hold ours. The question, really, is why we’re just now looking at the possibility of a downgrade. “Many are still in denial, but we’re still at risk after this bill.” 

Mitchell was a little less fatalistic about this mysterious process. He said that the agencies aren’t that accurate historically. They missed the housing crisis and financial meltdowns. They did nothing about Obamacare or the bailouts or stimulus spending. So they aren’t all that accurate at predicting volatility to begin with. “We probably deserve to be downgraded,” he said, “but the question for international investors is, where else do you have to invest? The US is benefitting because everyone else is messing up so badly.” 

Catherine Engelbrecht asked, “What is our best strategy out in the Tea Party? Rep. Brady answered, “Do what brought you here, that you do so well. The Tea Party is great at getting policy right and then going after the votes. Mitchell added that there’s another debt ceiling debate coming, and Obama will try to get more entitlements, and reminded us, “Eternal vigilance is the price of liberty.” 

Mitchell pointed out that government has doubled in size in the past decade. “If we would go back to spending levels like we had at the end of Clinton’s presidency, we’d have savings overnight.” He made sure we understood that the problem is not with the House. “The House passed the Ryan budget; the Senate didn’t even take it up. The House passed Cut, Cap and Balance; the Senate hasn’t even voted on a budget the past two years. The House has pulled its weight. The problem is the Senate. The Problem is the White House.” [I’ve had this question: why, when the House has already passed multiple solutions to the debt ceiling, did they feel obligated than to do anything other than wait for the Senate to respond? Please explain.] 

Regarding baseline budgeting, and whether the current bill contains any actual cuts, Rep. Brady said a qualified yes, a little, $22 Billion this year, which in comparison to the debt is not even noticeable. After the laughter died down, Brady added seriously, “All projections are we’ll add trillions in debt over the next decade. If you want to change the projections, you have to change the lawmakers.” To this, Catherine added, “We have to clean up the Senate, clean up the presidency. So, hold the line and then go get ‘em in ’12.” 

Mitchell used a dieting analogy. “Imagine I go on a diet, and I report that it has been successful. I gained 10 pounds. But I let you know I was going to gain 15 pounds, but I only gained 10, so I lost 5 pounds. (pause) If this makes sense to you, then you’ll understand how government thinks. The Ryan plan took 5% down to a 2% increase per year. They complained about cuts. It’s a dishonest approach.” 

Next Monday, after people have had a chance to read the final bill, KSP will discuss the details and outcome. If you’re interested, it will be streamed live, 7:00 PM CDT, from KingStreetPatriots.org. 

After the cameras went off, Chris Baker took a moment to make these comments to those of us in the audience: “I am awed by what I see here, and what Catherine has been able to build. You may not realize the victory, but Tea Party citizens here put Washington on notice, and you haven’t backed down. This is a good conservative free TV channel—no one even thought this could happen. They don’t understand your commitment to liberty. It’s better than a gun. There’s a revolution going on and you don’t need a gun.” 

Just a word about KSP. King Street is the street in Boston that the original tea partiers had to cross to throw tea into Boston Harbor. In itself, it isn’t a Tea Party organization. It is a grassroots entity designed to help get information to citizens, so it can be a resource to Tea Parties. It has a strong focus on free and fair elections, training poll watchers and trying to prevent voter fraud. And it has weekly one-hour meetings with speakers and panels that are meant to provide citizens with information they’re looking for as they try to take appropriate actions. It functions totally on donations and almost all on volunteer labor. It’s easy to donate online, if you’re so inclined.

I am not anything but an interested citizen; I've been through KSP's poll watcher training and served as a poll watcher, and I attend the informative meetings when I can. And lately I've been using what I've learned there for the occasional blog post. I hope you find the info valuable.

Standing Firm

In March of 2010, the day after Obamacare was rammed through the legislature with a series of questionable but certainly unethical technical tactics, many of us felt righteous indignation and wanted to figure out—what can we do? Out of that a group called Not On This Watch was born. It is a facebook group; you can go to Not On This Watch on facebook and “like” it to get frequent updates. The administrators are an energetic and intelligent crew.   

Yesterday, one of the administrators, Shawn Rogers, posted his analysis regarding the debt ceiling debate. And it got me thinking: 

1. It is an attempt by the old guard Republicans to break the back of the 2010 freshmen class by getting them to go along.
2. An attempt by Obama to do the same thing as 1.
3. The usual class warfare, socialistic, Marxist rhetoric from Obama.
4. Cloward-Piven attempts to gin up a crisis and use it to further their ideology.
5. An attempt to make this issue the distraction of the day. Distraction from what, you may ask:
1. The continued healthcare debate.
2. Fast and furious controversy (a weapons scandal related to selling arms to Mexican drug lords—one article here).
3. The war in Libya.
4. The price of gas.
5. Obama’s horrible polls and satisfaction [rating].
6. Inflation that is creeping in.
7. Continued wicked-bad employment numbers.    This has successfully knocked all of the above out of the media.
6. An attempt to knock the legs out from under Michelle Bachmann and her near-front-runner status.
7. An attempt by Obama to preserve his chances for [re-]election.
8. An attempt by Boehner to find a way to raise taxes but provide the conservatives “plausible deniability”—the proposed commission will take the fall for raising taxes and allow all of the other incumbent Republicans (H/T to Mark Levin) to claim they kept their promises.

It’s foul-smelling, deceptive, manipulative politics at its worst. And it’s almost making me physically ill from disgust…. 

I don’t buy into the hype that it is the crisis they are making it out to be. There are ways this can go beyond the 2^nd and not be a collapse of the economy. However, if it is going to collapse, as I believe it inevitably will at some point, I say let it be on my watch while I still have the energy and fight within me to help rebuild it for my kids. The plans I’m seeing are so full of smoke and mirrors that it’s just another kick down the road at the cost of at least $2 Trillion more that our kids are going to be shackled with. We’ve had one commission already, and its recommendations have been ignored because they were too controversial. If they succeed in neutering the freshmen class that were sent there to reign in the agenda, we’ve lost all of our 2010 gains.

 

While I frequently talk about ideas that are in the political realm, I am not attracted to politics, to the strategy of manipulating the beliefs of the masses to gain personal power. Sharing and persuading with ideas is what I see myself doing. So it has been a difficult week facing this debt ceiling “crisis,” and I share a number of Shawn’s concerns. 

But the part of his commentary that got my attention was the part about hyping the crisis, maybe Cloward/Piven style. I am reminded of 2008, when it appeared there was going to be a financial collapse if government didn’t step in and “do something!” Remember when George W. Bush said, “I have abandoned free-market principles to save the free market system”?  

There were a few days there when I was a little shaky about what should be done—not because I didn’t know what the free-market solutions would be, but because there were so many trusted conservatives who were being persuaded. Should we bail out these failing companies? If we don’t, won’t it be disastrous? During that week even Glenn Beck had a few days when he admitted that he was persuaded the bailouts were necessary. I thought, “Really? If Glenn Beck thinks that, maybe he has sources of information I don’t have.” But within days, he was back on track, realizing the principles still held true. 

Following those original bailouts—which I believe were a mistake—the companies in question mostly repaid the bailouts. These were banks and financial institutions. The ones who would have been solvent anyway had to press the government to take the money back quickly, because government was refusing. The ones that were going to fail anyway either collapsed or were bought out by more successful companies—all of which would have happened smoother and without the expense to taxpayers, if the bailouts hadn’t happened. 

So I’m looking at the current “crisis.” There is always tumult on the other side—because they must convince people that they are powerless, so they will yield control over their own lives to government power-mongers. But when we really get into trouble is when the conservative side fails to stand up to that continual onslaught. “If you don’t stand for something, you’ll fall for anything,” as the saying goes. So our conservative elected officials absolutely must know what they stand for. 

What they must stand for is the Constitution and the limits it spells out. If they can stand strong now—despite threats that the entire world economy will break down unless we take on infinite debt without responsibility—they might find a way back to the safety of the Constitution. 

Seriously, do you believe that taking on additional debt will bring greater prosperity? That would be like getting to this near bankruptcy spending problem in your real life and saying, “If we don’t take on a bigger mortgage, we will go bankrupt.” The real answer is, if you stop overspending and tackle your debts as aggressively as you can manage, you’ll free yourself of the threat. That model fits the US economy exactly the same way it fits yours. 

On Obama’s side there is nothing but more debt as far as the imagination can reach. On the conservative side there is fear that they will be blamed for catastrophe. But fear of blame is no reason to do anything other than the right thing.

Baseline Budgeting Magic

It’s hard to concentrate on anything but the debt ceiling debate right now. So, here’s another aspect or two.

Baseline budgeting, according to Wikipedia:

An estimate of spending, revenue, the deficit or surplus, and the public debt expected during a fiscal year under current laws and current policy. The baseline is a benchmark for measuring the budgetary effects of proposed changes in revenues and spending. It assumes that receipts and mandatory spending will continue or expire in the future as required by law and that the future funding for discretionary programs will equal the most recently enacted appropriation, adjusted for inflation. Under the Budget Enforcement Act (BEA), which will expire at the end of fiscal year 2006, the baseline is defined as the projection of current-year levels of new budget authority, outlays, revenues, and the surplus or deficit into the budget year and outyears based on laws enacted through the applicable date. 

Dry, I know. On Rush’s radio show this morning, he used an analogy to make this easier to visualize. I am paraphrasing here. Suppose your family has decided you can afford the payments for a new $40,000 car [this is not my family, just saying; we prefer the $5-$10,000 range]. So that is your plan, and you go out car shopping. But what you find is a $70,000 car that you love—that happens to be marked down to just $60,000. You can get it for less than expected, so that’s a $10,000 savings! You got for it. 

But it isn’t a savings of $10,000; it is an increase of $20,000 over what you had intended to spend and could afford. So now you’re in debt an additional $20,000, and you’re still just driving one (albeit marginally nicer) new car.  

So compare this to the budget debate. Because of the weird way government looks at their budget, they could freeze this year’s spending to exactly last year’s spending (something I think would have been at least the decent thing to do, since they haven’t written and voted on a budget since Obama took office), and we all know that would be an increase of zero, but no cut. Because we live in the real world. But in government-world, this is considered a $9 Trillion cut. Even though there are no cuts. [Pausing here to let you re-read that last sentence and let it sink in.] There is just a lower expectation back to the $40,000 new car, instead of spending on the unbudgeted but more appealing $70,000 car (that is a steal for $60,000—a $10,000 savings).  

It is difficult to communicate, to work with, to live with, people whose grasp on reality is tentative at best. The reality is, we ran out of money about $14.3 Trillion ago (that’s the current national debt, now hitting the ceiling). If you’re a family that is in debt nearly 1/4 the money you have been able to earn (gross) in your lifetime, it might not be a good time to buy a luxury car. It might be a better time to learn to function below your income, so that the mounting debt doesn’t bankrupt you. 

This could take prioritizing what you spend on. At home, this would be (besides covering your debt payments) shelter, food, and clothing—Walmart brands, not Armani. Then, if you can cover transportation and education (if needed), they might be next in priority—just beyond being able to survive. You don’t get to entertainment, vacations, new furniture, etc. at all until you get your debt completely under control. 

So, if Congress were to prioritize, maybe this order might work:

• Pay debt payments to prevent default (prevent bankruptcy).
• Pay essential government purposes as outlined in the Constitution (mainly protection of life, liberty, and property from international and local threats), so military and interstate police forces, and judiciary.
• Keep essential obligations that have already been promised to those who have no alternative way to make up for government default (SS, Medicaid for current recipients in need).
• Then, if it is possible to pay for anything else, open up each item for debate. (My plan here is to refuse anything in this debate that isn’t Constitutionally allowed.)

In the meantime, encourage our elected officials to call the president’s bluff (and he told us it was a bluff when he told Congress not to call his bluff—oops!) and then outline the spending he will be allowed to control. Because that is Congress’s job, to handle the purse strings; and it is the president’s job to use the available money to carry out his Constitutional duties—something he seems a little fuzzy on.

Williams and Sowell

Last night I spent some time (virtually) with two of my favorite economists: Walter Williams and Thomas Sowell. This always makes for a good evening. I listened to Walter Williams speaking to a group of college students on the proper role of government; it’s hard to get better than that. The lecture is from Intercollegiate Studies Institute, linked in their newsletter. I believe you’ll be able to access the whole speech (plus 20 minutes of Q&A) here. (You can sign up for the ISI newsletter, free, at www.ISI.org.)

I wrote down a few quotes: 

For moral people, we cannot allow legality alone to be our guide. 

Economic planning is nothing more than the forcible superseding of somebody else’s plan by the powerful elite. 

[This one is paraphrased only, and refers to what elected officials should be asking]: The relevant question is not “Is it a good idea?” The relevant question is, “Is it permissible by the Constitution?” 

Ah, good times! 

Also last night I read Thomas Sowell’s latest Townhall piece, “Debt-Ceiling Chicken,” which has given me something to think about. 

I am against government spending on anything not listed in the Constitution as powers granted to the federal government. The only caveat to that is that we have, unfortunately, made many promises, by way of elected officials who don’t carefully and respectfully read the Constitution. And these promises have affected people’s lives. When you have taken a sizable chunk out of someone’s paycheck for their entire lives, while simultaneously promising them a certain amount (tied to inflation) to cover their basic living income in their retirement years, you can’t after-the-fact suddenly say, “Since we have to cut back, you’re going to have to do without.” It was immoral to take their money (and continue to take our money) in the first place; but it is even more immoral to suddenly refuse to give them what they’ve been promised—at a time when they have no way to make up the difference. 

Some Medicare and Medicaid expenses also fit into these categories. That doesn’t mean these programs can’t be reformed; they must be reformed. But they must be reformed in a way that doesn’t starve or otherwise deprive the elderly and infirm. (The long-term solution will include encouraging thrift and savings, as well as taking care of one another through families and philanthropy. Depriving the most vulnerable is not part of any conservative’s long-term plan.) 

So, I continue to be very much against unconstitutional spending, and running up the national debt. And in that vein I have been against yielding on the debt ceiling. 

But Sowell points out that the debt ceiling, while a good idea in theory, as many things seem to be, has not done what it was meant to do in reality. Namely, it has never limited spending nor forced accountability for spending. In fact, he believes it is harmful; it allows the party in power to spend recklessly on anything they want to “give” to their voting constituents, and then, periodically when the ceiling is approached, bring in the nonparticipating party and share the duty and responsibility of cutting back. In other words, they give themselves credit for “giving” goodies to buy votes while simultaneously blaming their opponents as the bad guys who want to “take” those goodies away from those same voters. It’s a scam—at our expense. 

The scam has the additional affect of upsetting worldwide markets, simply because of the insecurity of the argument times surrounding the debt ceiling dates. 

So, here’s what I’m rethinking: The Republicans (and any Democrats with either integrity or an understanding of economics) must stand firm and use this moment to cut back on spending. We have to know that it is possible to both stand firm and stop the profligacy. And much of the predicted harm that comes from the debt ceiling has already happened.

So, stand firm this time. Then, sometime in the future, maybe we need to rethink the arbitrary debt ceiling. Not because limiting debt is a bad idea—we need to actually get rid of it over time. But because the debt ceiling simply doesn’t do what it is meant to do, and does instead quite a lot of harm.