Tuesday, January 26, 2010

What matters in the end? Jobs, Jobs, Jobs

Those of you who read Constitutional Guardian with some regularity know I am a proponent of smaller government and greater economic freedom. Already I know there are some who will see this as a call for free-wheeling, unbridled capitalism. The kind that brought us Enron they will say. And to them I say: Never mind. Don't bother reading any further. Pull up a chair and turn on MSNC--better for your blood pressure.

If you are still reading... well, good. Here's my point.

Economic incentives-no matter how poorly conceived-are effective. Cash for Clunkers increased sales for the auto companies dramatically. The incentive worked by borrowing from future sales, providing an incentive for consumers in the form of a tax credit. When the program ended automotive sales plunged. Sales increased thanks to the incentive and decreased for the same reason. In other words, Cash for Clunkers did not necessarily increase demand for cars, it simply accelerated purchases that would have taken place anyway.

Economic growth--new demand that is--produces real, sustainable demand for products and services. There is no substitute.

Fast forward to the housing tax credit, originally the first-time buyer credit now expanded to include repeat buyers. So effective it was perceived (by our friends in Washington) to be, the deadline was extended to prop up the sagging housing market. Yet, the latest numbers reveal that despite the tax credit extension, sales fell off a cliff in December. According to The Wall Street Journal: "Regionally, December sales fell 19.5% in the Northeast, 25.8% in the Midwest, 16.3% in the South and 4.8% in the West."

The Obama Administration and the Democrat controlled Congress can incent people to spend money all they want. But until they solve the jobs problem, these programs will provide a temporary burst at best, but no long lasting growth. And, I have a little to share with the bureaucrats, people without jobs don't spend money they don't have. Unlike the government.

Rather than fiddle with our health care or our energy consumption, piling tax upon tax onto the backs of small business and individuals trying to provide a decent life for their families, this Congress and this President would do well to grab a copy of the Federalist Papers and Art Laffer's book, The End of Prosperity and hunker down for a good read. At the very least it will keep them away from Capitol Hill and the temptation to pass more ill-conceived legislation. And it just might cause them to consider what their real responsibilities are and why we sent them there in the first place.

Sunday, January 24, 2010

As the Pendulum Swings

"Oppressive government is fiercer than a tiger."

In his 1978 book, The Way the World Works, Jude Winniski makes the following observation: "The electorate, being wiser than any individual in society, is society's most precious resource." The political model he embraces holds that the collective voter is wiser than any of its individual parts. In other words, the voters know exactly what they are doing.

Consider the 1976 election he cites in Massachusetts, the only state to vote for George McGovern over Nixon in '72, a state that historically sends liberal representatives to Washington. Massachusetts voters were presented with nine, single-issue referendum questions. Despite the fact that President Carter carried the state by a large majority that same year, on each of referendum questions, a majority of voters sided with the "conservative" position. They opposed a ban on handguns, rejected a constitutional amendment that would have permitted a graduated state income tax, rejected a measure to require returnable bottles for beer and soft drinks and opposed a state power authority. Additionally, they supported the principal of a refinery and deepwater port for the state. Each of these measures passed by a two-to-one margin. (18)

And now they have elected Scott Brown to the Senate. The same state President Obama carried by 26 points in 2008, Brown carried by 5 points. In November, Virginia elected a Republican governor by 18 points. Only the year before, Obama won the state by six points. The same reversal occurred in the New Jersey governor's race. Obama took the state by 16 points in the fall of 2008, in the fall of 2009 the democrat candidate lost by 4. The pendulum swingeth.

Wanniski's prescience is spine tingling. He reminds us "that the emergence of keener politicians can happen overnight." The reason? "Decadence occurs in a political society only when the politicians themselves lose their way, which occurs most readily when they come to believe that a set of ideas exists which must be forced on an unwilling electorate for its own good." (17)

Thanks, Massachusetts. We owe you. Once again.

Monday, January 18, 2010

A Disturbing Pattern, To Say the Least

Some days, when I just can't take it any more, I lace up my hiking boots and head to the foothills behind my home.

I have been doing a great deal of that lately.

I acknowledge there are glimmers of good news here and there--Scott Brown of Massachusetts for one. But the overwhelming surge of news flow is, frankly, suffocatingly depressing. Take this morning's world headlines from The Wall Street Journal (in the order they were listed):
  1. "The Taliban launched a coordinated attack on the Afghan capital, setting off bombs..at least five people were killed."
  2. "Al Quaeda...issued fresh threats against the U.S. and its Mideast allies, promising to retaliate..."
  3. "Somali pirates released a Greek supertanker and its crew of 28 after a rival pirate group attacked the pirates onboard..."
  4. "Two terror suspects won the right to seek compensation from the British government..."
  5. "Angry Muslim youths set a church filled with worshippers ablaze in northern Nigeria..."
The top five headlines, in order, from the WSJ. See a pattern?

I see more than one and the most troublesome to me is number 4. The U.S. government is taking a page out of the British playbook, granting terrorists rights that should be accorded only to Americans. By doing so they are, in effect, granting greater rights to the terrorists than to our own citizens. Completely subjugating our security by exposing state secrets in civil trials; at great national security expense AND great economic expense.

If we handed this problem to a child and asked, for example: "Bobby killed 1/2 your Kindergarten class, what should happen to Bobby?" The answer would most surely not be, "I know, let's give Bobby a chance to explain why he felt he had to kill my all my friends. I think we should hold an assembly and give Bobby the microphone."

No, more likely our precious Kindergartner would say something along the lines of: "Nuke him." OK, maybe not "nuke him" but you get my point.

Each day, our liberties are being slowly confiscated. If Nancy Pelosi and her friends have their way, we will turn over all our energy and health care needs to the same government that so brilliantly managed the H1N1 vaccination this past fall. And is now so gallantly giving civil rights to people who have told us in no uncertain terms they want to kill us and are busy going about the business of doing so.

Thursday, January 14, 2010

Porker Alert

"It is incumbent on every generation to pay its own debts as it goes.
A principle which if acted on would save one-half the wars of the world."
Thomas Jefferson

Spending other people's money is, apparently, extremely addicting. Just ask Nancy Pelosi.

We have written about Ms. Pelosi's flower and bottle water expenditures and plenty has been said about her use of military jets to ferry her (and her family) back and forth between Washington and San Francisco. Her latest use of three military planes to fly her entourage to Copenhagen for the global warming conference is just the latest example of a woman drunk on power, abusing taxpayer money. Exactly the kind of despot our Founders intended to limit when they crafted the Constitution.

Jefferson said it best: "My reading of history convinces me that most bad government results from too much government." Yet, Ms. Pelosi continues to spend and abuse. As does her counterpart, Harry Reid. And, sadly our president. They are the epitome of too much bad government.

Citizen's Against Waste sponsors a citizen election of the biggest Porker of the Month and publishes an annual list of the most egregious earmarks. I write of one in my (in process) book on taxes: The Power to Destroy.

"In FY 2008, the U.S. Congress pushed through $17.2 billion in pork attached to 12 appropriations bills. There were many moments to cherish but we will consider but one here; certainly not the biggest earmark but one of the most interesting.

Rep. Charles Rangel (D-N.Y.), a nineteen term representative, asked for and got $1,950,000 for a library and archives at the Charles B. Rangel Center for Public Service at The City College of New York. In other words Congressman Rangel received $1.95 million dollars of my money and yours to finance a little library named for himself at a college in his district. He was challenged in his request by a mere two term republican from California, John Campbell who said, “You don’t agree with me or see any problem with us, as members, sending taxpayer funds in the creation of things named after ourselves while we’re still here?” Rangel did not. He responded, “I would have a problem if you did it, because I don’t think that you’ve been around long enough that having your name on something to inspire a building like this in a school. Huh?”

We would hope in today's devastating economic environment Congress would choose to act more responsibly, but alas our optimism is not rewarded. Maxine Waters just obtained an earmark for the Maxine Waters Employment Preparation Center. Ironic, to say the least. But, mostly, Ms. Waters simply demonstrates a cold, calculating lack of compassion for her constituents, the Constitution and for the dignity of her office. She rightly deserves to be awarded the CAGW Porker of the Month. And we suggest the award come with her very own copy of the Constitution.

Wednesday, January 13, 2010

The End Justifies the Means Crowd

We have all encountered these people. The mother who wheedles, cajoles and nudges her daughter onto the elite soccer team. The father who lobbies the high school football coach to start his son over another at quarterback. These parents don't care how their actions might hurt other people's children, they don't consider the implications for the team they may be impacting or even what they are teaching their own children, they simply care about getting what they want. About achieving the desired end result.

We all know these kind of people. Now, they are running the country. And they are laser- beam focused on their desired end result with a determination and ruthlessness like I have never seen.

  • The lies: In early February of 2009, President Obama spoke to a crowd at a Virginia construction site promising that his stimulus plan (being whisked through Congress then) would create 100,000 more construction jobs across the nation. 11 months later none of those jobs (or others promised) have materialized. Instead, since the "stimulus" bill was passed earlier this year the economy has lost 2.7 million jobs. (3.4 million since Obama became President.) But yesterday Nancy Pelosi claimed President Obama's stimulus has "created or saved" 1.6 million jobs. So there.
  • The method: Despite promising a transparent government and bi-partisan legislative process, President Obama has stacked his Administration with over 30 "Czar's" generally unapproved by the Senate and unaccountable to the people. The health care bill has been a partisan, closed door (Republicans literally locked out of the debate) secretive process where legislator's votes are bought with taxpayer money and our representatives are voting down party lines on a bill they have not read. Though our president promised during the campaign he would televise the debates on C-Span, those cameras have been kept out as have the Republicans. So much for transparency and bi-partisanship.
  • The end: The goal is to increase government control over our lives. The goal is not to improve or even expand health care coverage. If it were, universal coverage would be a goal of the bill, competition would be increased and the changes would be implemented immediately, not four years hence.
When I think the behavior can't get any more despicable it does. Over the weekend, The Weekly Standard reporter John McCormack was walking out of a fundraiser for Martha Coakley, democrat candidate for the Senate seat vacated by the late Senator Kennedy, attempting to ask her a question when he was pushed to the ground by Coakley staffer Mike Meehan. The video shows Meehan shoving him over a metal railing, picking him up then shoving and taunting him as McCormack tried to walk away while Coakley stood by and watched. In 2010. In our nation's Capitol.

I guess when you are Martha Coakley and running for the 60th vote needed to pass the Democrat's health care legislation in the Senate the end is all you care about. And you will do whatever it takes to achieve it.

Saturday, January 9, 2010

Tax Tsunami

In the storm of the daily news flow: unemployment; terrorists on planes, terrorists being tried in our courts, terrorists shooting our soldiers on a U.S. base; the president vacationing in Hawaii in the midst of the Pantie Bomber crisis, playing golf and basketball, cool as a cucumber; corruption in his Cabinet, Timothy Geitner the tax cheat again; a failed $800 billion plus stimulus; the secretive, partisan, unconstitutional health care bill being finalized behind closed doors between Nancy Pelosi, Harry Reid and the President despite his repeated assurance of transparency; it is easy to miss the real storm brewing: the overwhelming tax increases headed our way on January 1, 2011. This isn't just a storm, my friends, it's a tsunami.

Before, we even consider the impact to the average American of health care and cap and trade taxes, let's examine the increase that will automatically take effect when the Bush tax cuts are allowed to expire at the end of 2010.
  • the personal income tax rate will rise from 35% to 39.6%.
  • taxes on dividend income will rise from 15% to the taxpayer's top rate on ordinary income (most likely 39.6%).
  • taxes on capital gains will rise to 20% from 15%.
  • payroll taxes on incomes over $200,000 will rise by 1.9%.
Now consider that the PelosiReidObama health care plan (from what little we know) will add a 5.4% increase on all income and capital gains. This means, the top federal income tax rate will rise to 45%. Same for dividends. Taxes on capital gains will rise to 25%. Cap and trade taxes will increase the burden even further.

Whether health care is passed or not, Americans are in for a significant increase to the federal tax burden they already pay.

The implications for the economy are great. Every dollar paid to the government in the form of taxes is a dollar that is removed from the private sector economy, the one that still supplies the majority of jobs in America. And if people know their taxes are going to rise in the following year, those with flexibility will push as much income into the lower tax year as possible (2010). That may inflate GDP and stock market performance in 2010 but as quickly and powerfully as the tsunami tide of growth rides into 2010 it will withdraw in 2011.

Our country has been set on a reckless economic path during the last year. The annual deficit has tripled, our long-term debt has risen significantly. Unemployment has risen, GDP has declined and yet we spend and spend and spend. Congress views our money as theirs and they use it to buy votes for their programs and pet projects (the health care payoffs of Senator Ben Nelson from Nebraska and Mary Landrieu of Louisiana being the most recent and the most egregious, though there are a multitude of others--just ask Chris Dodd of Connecticut). With tax rates high and rising it is fair to wonder how much more juice the government thinks it can squeeze from us turnips. Margaret Thatcher once said that the problem with socialism is eventually you run out of other people's money. Whether it is ours or the Chinese who are buying our debt, the spendthrifts in Congress would do well to wake up and start living within their means.

Monday, January 4, 2010

The Struggle of Memory against Forgetting

In his 1978 novel, The Book of Laughter and Forgetting, Milan Kundera writes: "The struggle of man against power is the struggle of memory against forgetting."

We are doomed to repeat the history of failed republics if we do not remember why they failed.

If we choose to forget how much our enemies hate us and how determined they are to destroy us, we will expose ourselves to terrorism once more.

From the Heritage Foundation Morning Bell: "This past weekend the American public learned that not only was the Obama administration briefed about the bombing technique attempted on Flight 253, not only did the United States have information that a Nigerian was being prepared for a terrorist attack by al Qaeda in Yemen, but our government also knew that an Umar Farouk was involved."

Yet this Administration claims the system is working. But for the brave flying Dutchman who threw himself on the Pantie Bomber, the truth of the failed system would, sadly, have likely resulted in death. Continued claims that the system is working in the face of the facts which argue otherwise are reckless and irresponsible.

Heritage reports there have been 28 failed terrorist attacks against the US since 2001. Which is an average of about three per year. In 2009, there were six. Still, our President refuses to characterize a war on terror. Each attack is labeled an isolated incident. We are told: the system is working.

Let us take to heart the words of Kundera, a man who fled the communist regime that invaded Czechoslovakia after the Second World War. If we forget, we are likely to lose the struggle.

Saturday, January 2, 2010

Government is Obliged to Control Itself

In Federalist 51, James Madison writes about the checks and balances provided by the Constitution. It is in this paper he penned these famous words:

"...But what is government itself, but the greatest of all reflections on human nature. If men were angels, no government would be necessary. If angels were to govern men, neither external or internal controls on government would be necessary."

And, of course, we know that men (read: our elected officials and bureaucrats) are not angels. Yet somehow our respect for the government our Founders gave us has blinded us to the reality that government is simply a collection of people with good and bad intentions, not some benign, beneficent parent.

"In framing a government which is to be administered by men over men, the great difficulty lies in this: you must first enable the government to control the governed; and in the next place oblige it to control itself. " (emphasis mine)

If we have learned anything this first year of the Democrat controlled Legislative and Executive branch, we have learned that our representatives are completely out of control. They are spending as if there were no tomorrow. They are invading every aspect of our pocketbooks and our lives. They are treading where no U.S. government has dared to go and they are doing so without the sanction of the Constitution.

In today's Wall Street Journal, Senator Orrin Hatch, Blackwell and Klukowski write an editorial explaining why the health care bill in unconstitutional. The final paragraph is chilling.
"America's founders intended the federal government to have limited powers and that the states have an independent sovereign place in our system of government. The Obama/Reid/Pelosi legislation to take control of the American health-care system is the most sweeping and intrusive federal program ever devised. If the federal government can do this, then it can do anything, and the limits on government power that our liberty requires will be more myth than reality."

If they can do this, they can do anything. 2009 was the watermark of a government out of control. Let's ensure 2010 is the year American citizens reassert our claim to the representative government our Founders gave us--a government that controls itself: "A dependence on the people is no doubt, the primary control on the government; but experience has taught mankind the necessity of auxiliary precautions."