Budget “Deal” Shows Why You Shouldn’t Trust Politicians to Fix Anything

House Republican Paul Ryan and Senate Democrat Pat Murray proudly emerged from crafting their back-room budget deal. Finally, an end to the dreaded “sequester” budget cuts that were promised to be so intense and so devastating that the sky might literally fall if they were enacted. Finally, an end to the threat of another government shut down when the continuing resolution passed in October expires in mid-January.

House Majority Leader Eric Cantor praised Ryan for “the hard work behind trying to get a deal in this divided government we’re in.”

Speaker John Boehner was so angry that conservatives in his caucus weren’t widely supporting the budget deal, he yelled “Are you kidding me?” at one point into a microphone at his press conference earlier today.

That’s funny. We think the question really should be asked of him and those who support the budget “deal” and think that something meaningful has actually been accomplished.  Maybe a better question is “who are you trying to kid?”

The non-partisan Congressional Budget Office scores the deficit impact of the laws Congress passes.  They evaluated this budget deal and reported the law would result in about $150 billion in deficit reductions. Over ten years.

Of course Representatives have two-year terms–meaning there will be five elections between now and the end of this projection. Even the Senate will go through nearly two full election cycles of its members during this timeline. What is the chance that the cuts enacted will be left in place? If you need a hint, the budget cuts that went into effect January 2, 2013 lasted until…well until about today, so not even a full year. What’s the likelihood that budget cuts enacted ten years from now actually remain in place?

This is the dishonesty of budget projections. All the budget pain is in the later years of the timeline. But politicians claim to have made “the hard choices” now and done “the hard work” now of getting a deal done today. They’re hoping you don’t notice when the cuts go into effect.

The “hard choice” made in the House today is to make NO change to the projected deficit in 2014. That’s right. Zero change. All changes take place after 2014. And we know 2014 is an election year, meaning in 2015, fresh faces in Congress may alter this budget blueprint at will.

The pie chart below shows the dollar value of deficit cuts in each year of the budget plan.  Yes, 2014, the year when Congress could have actually enacted something that would stick, is zero. As each year passes, the likelihood of the cuts remaining in place drops–so we shaded the chart to reflect lighter pie slices until 2023 when the final slice is a pale white-green color.

Seventy cents of every dollar in proposed cuts won’t take place until after the 5 year mid-point (2019) of the budget plan. We won’t even have the same president by then. The remaining 30 cents in cuts will be realized between 2015 and 2019.

But the size of the cuts themselves are unbelievably small. Sure, politicians will claim to have cut the deficit by $150 billion (…*cough*overtenyears*cough*…)

But what does that mean? Even if every penny that is proposed to be on the budget chopping block remains on the chopping block, the size of the cuts is insignificant.

Over the same 10 year period where Republicans and Democrats are slapping each other on the back over their $150 billion in deficit reductions (…*cough*overtenyears*cough*…) your government is expected to spend some $46.6 TRILLION. Suddenly the $150 billion in reductions (your turn! *cough*overtenyears*cough) is little more than an insignificant rounding error–just 0.3% of funds to be spent.

We colored the area of the rectangle below green in a sea of red to represent the value of the cuts as a percentage of expected spending. You might need to zoom in to find the cuts.

This inability of Congress to address the country’s fiscal woes will lead to economic ruin in the form of crippling tax increases, inflation, and a damaged US Dollar in foreign currency markets. These effects in turn limit the freedom we have to enjoy a fruitful and prosperous lifestyle as we have less disposable income, must pay more for basic goods and services with the money the government was gracious enough not to tax, and an inability to afford goods and services that are not produced here.

All of which begs the question of Speaker Boehner and those who voted for the measure, “Are you kidding us?”

This…Actually Won Money…Money…Money…

The US Department of Health and Human Services and Young Invincibles teamed up to spend a sum of some thousands (we think $5,000 but it’s not clear, if you can interpret the beaucra-speak from the contest prizes rules and press release let us know) on this mess…


Even the White House joined in the fun of ripping off a pop song to try to turn it into political propaganda for an age group that so far  is largely not interested in buying into Obamacare.

Here’s why the video isn’t worth whatever price the government and its unwitting partner paid:

1. The video, which received financial compensation, makes heavy and unattributed use of a copyrighted song by Jessie J without attribution. We’re pretty sure if a Tea Party group had used a copyrighted song to illustrate a point against the Affordable Care Act, that concerted teams of IRS agents, left-wing activists, media types, lawyers, FBI swat teams, heavily armed Predator drones, even Eric Holder himself would descend on the Tea Party group to capture those involved and dispense whatever mob justice seemed appropriate at the time.

2. The video’s chorus asks you to “Forget About the Price Tag” for a program that’s been plagued with upward cost estimate revisions since the president claimed it would cost only $90 billion per year. Coming up on 5 years and 5 revisions later the current estimate stands at $2.7 trillion (3 times the president’s original figure) factored in a 10-year CBO projection. Forget about that price tag, indeed…

3. The program’s signature product website healthcare.gov cost taxpayers more than $600 million, and was nowhere near ready for prime time on the administration’s launch date of October 1 of this year. Negligence and gross mismanagement abounded, but no one has been held accountable. But forget about the price tag; we guess it “ain’t about the uh-cha-ching cha-ching.”

4. Speaking of “cha-ching cha-ching,” the $600 million the federal government blew on a non-working website still has NO payment transfer mechanism to pay insurance companies those subsidies the federal government promised. As one observer has pointed out, the Armed Forces of the United States mobilized, deployed, fought, and defeated the Axis Powers, winning World War II in less time than it took the government to develop a non-functional website.

5. In a lilting exhortation, our singer says “there’s no excuse to be uninsured.” But the law applies to all Americans. You get a government-approved health plan, or you get fined. But “just stop for a minute to think.”  Do the super-wealthy like Bill Gates, Oprah Winfrey, Mark Zuckerberg, and Warren Buffet really need to purchase individual health insurance?

6. “Keep your mind at ease and get some security.” Like the 5 million+ people who had an individual health insurance policy and have had their plans cancelled due to the Obama Administration’s implementing regulations for the Affordable Care Act? But don’t worry about the “yeah bla-bling bla-bling”!

7. “We just wanna make it more fair with affordable health caaaare.”  But having an insurance policy that has the Obama administration’s gold (or maybe even red!) star seal of approval, does NOT mean you will be getting any health caaaare. It means you have coverage and now have to find a doctor that participates with that insurance program.

8. When coverage expands? Well coverage so far has only contracted with millions of cancellation notices and the president’s extra-legal request that insurers extend policies that his law, as his administration has chosen to implement it, are barred from having…  Even as Obamacare enters maturity as a federal program, the CBO projects we will still have 30 million some uninsured Americans.  But wasn’t that close to the number of uninsured before the government seized control of the health insurance industry?

9. “Take advantage of this opportunity!” What opportunity? Insurance actuarial tables work thusly: a population or risk pool pays premiums. Premiums are used to pay for the bad things that happen to members of the risk pool. Young people in general have far fewer health care requirements–and thus many could benefit from a plan offering catastrophic coverage and socking money into a Health Savings Account, which they control, for later in life when their needs, unfortunately, are destined to change. But like Social Security, the young are paying higher premiums into a program that will pay NOW for sicker people and will not have enough future money coming in to pay for the young when they advance in age and require more costly care.

10. “Why is everyone so oblivious?” Well, many aren’t. A recent poll suggests that only 1 in 4 young people (the target of the video) plan to sign up for “Obamacare,” suggesting that at least the remaining 3 out of 4 aren’t so oblivious and can do the simple math above and see that the program is not a good deal for them. It’s too bad we can’t count the video author among the un-oblivious.

11. “I know we’re in our prime. About time we opened our eyes.” Agreed!

We think the video’s author, Erin McDonald, could have gotten more benefit and closer to the truth if she had stuck with words from the original song:

“Seems like everybody’s got a price” (Like the Louisiana Purchase–Right, Sen Landrieu?)

“…when the sale comes first, and the truth comes second” (Ain’t that the truth? Right, Pres Obama? And your close to 40 recorded promises of “if you like your doctor/health plan you can keep your doctor/health plan.”

“It’s not about the money, money, money//We don’t need your money, money, money.” While Obamacare is precisely about the money, money, money, we’d much prefer a government that espoused this idea!

“Money can’t buy us happiness//can we all slow down and enjoy right now.” This sounds an awful lot like freedom to us. If government would stop worrying about what you and I do with our money and stop trying to steal it to buy votes, corruption, and political power, perhaps we could all just “make the world dance.”

Thirty Straight Years of Thanksgiving Dinner!?!

The American Farm Bureau Federation reported that the average cost of feeding 10 people at a “typical” Thanksgiving dinner is approximately $49.04, a decrease of 44 cents over last year.

This week, total federal government borrowing closed in on $17.2 TRILLION.

Thanks to the federal government’s gross negligence of managing the country’s finances, our current national debt could have paid for each and every American man, woman, and child living today to have Thanksgiving dinners, every single day for 30 years and 4 months! We’re talking about some serious left overs…

But the real turkeys still occupy the Capitol Building in Washington DC, and they’re still spending like there’s no tomorrow–thereby robbing future generations of Americans of their tomorrows.

Photo Credit: “Sliced Turkey Dinner” by Justin Smith “diettogo1“.

Obama’s Syria Address Another Example of Misunderstanding America’s Founding Values

President Obama discussed American exceptionalism during his Syria speech. But he knows nothing of America’s true exceptionalism and its role in preserving freedom.

In the closing lines of his address to the nation attempting to justify the use of military strikes against Syria, President Obama showed yet again how little he understands (or values) America’s founding principles, which are essential to freedom.

The president said this:

America is not the world’s policeman.  Terrible things happen across the globe, and it is beyond our means to right every wrong.  But when, with modest effort and risk, we can stop children from being gassed to death, and thereby make our own children safer over the long run, I believe we should act.  That’s what makes America different.  That’s what makes us exceptional.  With humility, but with resolve, let us never lose sight of that essential truth.

Here we pause for just a moment to remind you–and the president, of his earlier remarks regarding “American exceptionalism.”

“I believe in American exceptionalism, just as I expect the Brits believe in British exceptionalism; just as the Greeks believe in Greek exceptionalism.” Which at its core meaning is to say, he does NOT believe in exceptionalism at all. If everyone is exceptional, then no one is. As the word suggests, “exceptional” refers to something being unusual or an “exception” to the rule.

Does the president truly believes in American exceptionalism? Or was he merely using it as the tagline for a 15-minute commercial attempting to swing wildly unpopular opinion for his desire to start another military conflict in the Middle East?

American exceptionalism is not to say that the US is the world’s policeman or is unusual because it has economic or military strength. It does not mean that Americans are “better” than Obama’s Brits or Greeks–or anyone else for that matter. It doesn’t mean America deserves a larger seat at the world’s table of decision makers because we think we are special.

The true meaning of American exceptionalism can be traced back to the founding of the country and the values and principles that were infused into the Constitution as written in 1787.  America was exceptional or an exception to the rule at that time because in an age of kings and queens and despotic rulers, a country was founded where rule would be by the consent of the governed not by a “divine right of kings” or a “mandate from heaven” claimed by despots.

At a time in the world’s history of serfs and subjects, existing by the grace and mercy of a liege lord or a sovereign, the American Declaration of Independence boldy declared that “We hold these truths to be self evident, that all men are created equal, that they are endowed by their Creator with certain inalienable rights.” Put another way, rights were recognized as existing in nature, as blessings from a Creator, not as privileges that are granted by a government. In America the government’s purpose is to secure these rights, not to grant them in exchange for political favors.

The US Constitution limits government’s power–establishing the principle of governing by consent of the people or the idea that Americans are citizens, not subjects. But this principle is lost on one such as Barack Obama. He views the US Constitution not as promoting freedom and individual liberty. No, to him, the Constitution is like “a charter of negative liberties” because it only states what the government cannot do to its citizens; it does not charge the government to take actions (such as redistributing wealth) on  behalf of citizens.

Imagine the rights guaranteed by the Bill of Rights that you hold dear, whatever they may be (or all of them). Freedom of speech, freedom of the press, freedom to keep and bear arms in one’s own defense, freedom from unreasonable search and seizure, right to a jury trial, freedom from testifying against yourself, freedom from cruel and unusual punishment (partial list). To Barack Obama these things are “negative liberties.” They do not grant the government the power to do what it wants, these rights only provide people guarantees of freedom from government action.

Thus, to Obama, and those that think the way he does, the Constitution is not a great document. It is not great because it tells the government it cannot infringe on people’s rights. The Constitution is flawed because it does not empower the government to act on the behalf of some, at the expense of others. Examples of what progressive statists have in mind of what the government should be empowered to do are similar to the “rights” that the Soviet constitution offered its subjects–or the rights that FDR attempted to propose in a “Second Bill of Rights” in the 1940s, such as a right to employment, a right to a living wage, healthcare, housing, education and social security–even food, clothing, and recreation.

But Liberty is:  the quality or state of being free (thank you Merriam-Webster):

a :  the power to do as one pleases
b :  freedom from physical restraint
c :  freedom from arbitrary or despotic control
d :  the positive enjoyment of various social, political, or economic rights and privileges
e :  the power of choice

Because to give the kinds of things to people that progressive statists want, the government needs more power, not less. They need the power to tell you what to eat; what to put in your car–if you even get to have one; power to decide if you will receive medical treatment, or the power to kill you if it deems you are too expensive and too useless to keep around. They need power to tell you where you can live, how big of a house is too much, when you’ve made too much money, how much electricity you will be allowed to consume, and so on.

But these are not liberties according to the common sense definition above. Freedom and liberty exist when people are not told what to do–this is the exact opposite. To Barack Obama, the obvious definition of freedom and liberty doesn’t come about by limiting the government’s power over its people. To him those are “negative liberties” (even though they apply only to the government). To Barack Obama, liberty only exists when the government has the power to grant its citizens the material things that will seem to bring them happiness. And while some may claim this fits into definition “d” above, that is not true. The things that the government grants must be produced by or paid for by someone. The arbitrary seizure of property in order to redistribute it to someone else fits clearly into a definition of “arbitrary or despotic control.”

The meaning of actual freedom–that is the real world definition and not that of a learned constitutional scholar–matches the idea present at America’s birth: that freedom exists in nature and it is government’s job to secure it for their people. Barack Obama’s interpretation is more in line with the vision that governments must take more power in order to grant rights to their people. But this idea, despite being forwarded by self-proclaimed “progressives” as they like to call themselves, is quite regressive. It diverts us back to the world from which America emerged as an exceptional nation–a world where citizens are subjects rather than the masters of their own destiny that they can be in a free society.

Barack Obama does not identify with the values that were forged into the American constitution. These are the ideas that allowed individual freedom to take hold and propel the country to its present stature. These ideas and values are foreign to him. Leaving us to ask, if Barack Obama knows nothing of the true exceptionalism from whence America came, how can he claim the moral authority to lead its government?

US Senate Says “Presto” And Free Money Appears!

Senate Proposed Marketplace “Fairness” Act Limits Personal Freedom, Choice

Freedom Forge Press

Yesterday the US Senate approved its version of the “Marketplace Fairness Act.” The proposed law seeks to require online retailers to collect and pay sales taxes to state and local jurisdictions. On the face of it, it seems like a good idea. After all, shouldn’t individuals buying goods across state lines have to pay sales tax? It’s only fair because if they went to their local store they would have to pay sales tax. Right? People who rudely seek a deal across state lines rob schools, police, and firefighters of their state and local tax funding.

Enter Senators Mike Enzi (R-Wyoming), Lamar Alexander (R-Tennessee), Dick Durban (D-Illinois), and Heidi Heitkamp (D-North Dakota) with the “Marketplace Fairness Act,” which should be renamed the “Free Money from Thin Air Act.”

In the world before the bill, retailers did not have to collect and pay sales taxes on goods sold online to out of state customers. That is, unless, and we are over simplifying here, a) the seller had a physical location in the same state as the buyer; or b) the seller’s state had an agreement with the buyer’s state that would require sales taxes to be collected and paid to the buyer’s state.

The National Conference of State Legislatures (NCSL) is one group lobbying Congress in favor of the law.  According to the NCSL, states lost an estimated $23.3 billion in 2012 alone from their inability to collect taxes on online and out-of-state purchases. $11.4 billion of that figure is estimated to be lost from an inability to tax online sales. To make up for lost revenue, many states passed “sales and use” tax filing requirements. When filing state tax returns, residents would have to report on the amount of goods and services they purchased from outside their home state and pay their state’s sales tax. That attempt was about as successful as starting a fire with two wet sticks.

As a solution, states could opt to step up enforcement on their own residents who were not paying the sales and use taxes.  But we can only imagine how well the voting public would reward their politicians for dumping this increased tax bill on their laps. Plan B would be to impose the tax collection requirements on the seller of the goods and services. This is a more attractive option for politicians because the out of state sellers often have no local representation and no ability to hold politicians accountable for their actions. The only problem to date has been that if the seller resides in another state it is well outside the reach of the clutches of the home state’s taxing agency thanks a Supreme Court ruling that said such taxation was not constitutional unless authorized by Congress,

Enter the Senate with its “Free Money from Thin Air Act,” which if passed by the House of Representatives and signed by the president would provide the very authorization needed to overrule the Supreme Court and permit states to levy taxes on out of state businesses.

And it is only out of fairness (the bill’s name is the Marketplace FairnessAct didn’t you know?!) that states are requiring out of state Internet sellers collect and pay the same taxes as their in-state competitors. The politicians say it’s very unfair for the “bricks and mortar” store to have to inconvenience their customers by collecting taxes when the buyer can order the same item from an out of state online seller and avoid the sales tax. This argument completely overlooks the problem of shipping costs from the out of state seller’s point of view. Many customers have come to expect free shipping from online retailers. So adding a local sales tax on top of a shipping cost will place the online out of state store at a disadvantage. Where is the “fairness” now?

More than once, advocates of the law say, it’s not a new tax, it’s a “due” tax. But if the tax bill hasn’t been collected in the past, it seems like the Senate is expecting the $23 billion to materialize out of thin air–with no impact to consumers. If the issue is state budget pressures, one solution could be to stop dumping unfunded mandates (e.g., Obamacare) onto state budgets. This would relieve the pressure from state budgets without expecting consumers to fork over another $23 billion in “taxes due.”

Of course there’s no reasonable way to comply with the law without some complex tax accounting software. This may explain why Amazon.com made a sudden U-turn from its vigorous opposition to applying state and local taxes to its sales and now supports the law. Trying to find the answer to this reversal and new found friend for politicians doesn’t require much sleuthing. Amazon isn’t looking for tax fairness, it’s looking for customers. Amazon’s convenient new Tax Collection Services offers online merchants a convenient 3% fee for figuring out all that tax mess.  Three percent of $11.4 billion is likely a rich enough potential customer base to come out in support of the new taxing measure.

As usual, Congress, and in this case Democrats and several Republicans in the Senate show an abysmal intelligence of how commerce works outside of their DC dreamland. A few oversights that the Senate made:

1. Complexity. Suddenly, online retailers would be required to have a working knowledge of nearly 9,600 state and local tax laws and regulations affecting everything from different tax rates for different goods and whether certain items are exempted from sales taxes.

2. Enforcement. The bill authorizes state taxing authorities to target online retailers with audits to verify compliance. Businesses simply do not have the financial resources to put into defending and answering auditor’s questions from a variety of taxing authorities.  Not to mention that responding to audits takes them away from much more efficient uses of their time, like running their businesses. The Senate was generous to limit the audits to one from each state. (The Government speak looks like this: “single audit of a remote seller for all State and local taxing jurisdictions within that State”)

3. Ambiguity over what a “State” means. Most people grew up (at least those who were in school since 1959) understanding there are 50 states. This bill extends the “state” definition to include the District of Columbia, Puerto Rico, Guam, American Samoa, US Virgin Islands, Northern Mariana Islands, and “and any other territory or possession of the United States.”

4. Native American Tribes recognized as state taxing authorities. “And any tribal organization (as defined in 18 section 4 of the Indian Self-Determination and Education Assistance Act (25 U.S.C. 450b)).” There are 566 such tribal organizations.

5. What does an “audit” mean. State taxing authorities–to include the 550 new states the Senate found–can engage in all kinds of harassment of businesses without initiating a formal audit.

The bill introduced by Sen. Enzi was supposed to limit a small business’s risk of visits from state tax auditors to one per state. But with final bill markup, a small business is potentially at risk of more than 600 audits with the expanded definition of what a “state taxing authority” means.

The Wall Street Journal reports asking Senator Enzi’s office for clarification on the above issue. When the answer (today!) was that the Senator was still trying to figure out the answer when the bill was passed last night reminds us of the “have to pass the bill in order to find out what’s in it” stupidity started by then Speaker of the House Nancy Pelosi when referring to ambiguity in the Affordable Care Act.

The proposed law serves as another example of Washington ignorance of the private economy. It also illustrates the politicians’ ongoing search for free money at the expense of the freedom of small business owners who operate across state lines. While the search goes ever on and on, 69 Senators waved a magic wand and expected “free money” to come flying out of a magician’s hat. Sixty-nine Senators want you the taxpayer to believe their illusion that they’ve found a cost-free way to fund state and local budgets without harming consumers–ignoring the fact that the money will come from somewhere.

These politicians think they’ve done their part to spread the pain of state and local sales tax in a way that makes the process “more fair” for brick and mortar and online retailers. But they’ve failed to consider a more reasonable alternative–that instead of simply spreading around the tax pain, they could have acted to reduce or eliminate the tax pain by eliminating wasteful spending, ending duplicate government programs, and pretending that unfunded federal mandates such as education, Obamacare, and environmental regulations magically fund themselves

Political Coercion in the Windy City

Several sources are reporting that Chicago mayor Rahm Emanuel penned a letter to the CEOs of Bank of America and TD Bank. The letter encourages the banks to stop providing banking services to gun manufacturers unless they begin supporting government gun control measures.

Where do we begin?

First, guns are constitutionally protected. So for an elected official, a mayor of one of America’s major cities, to be engaging in this behavior goes beyond the pale. A reasonable question is why would Emanuel want the banks to stop providing services only if manufacturers refuse to support government gun control proposals? Why not just encourage the banks to shut off services to gun manufacturers until they stop production and sale of weapons to any entity other than government agencies?

We’ll tell you why. Because the mayor knows that what he’s doing is wrong. Guns are legal to manufacture and sell to individuals, and the process already requires a background check to search for previous violent criminal behavior that would disqualify a person from owning a gun. But he knows that as a constitutionally protected right, he can’t stop the manufacture and sale of weapons to individuals. At least, not without getting individuals to willingly give up their rights. Rather than expend political capital on seeking a gun ban, Emanuel employs a Machiavellian strategy of trying to get the banks to willingly apply pressure to coerce gun manufacturers to stop selling their products (legally!) to civilians.

Why Emanuel? Why Chicago’s mayor? As it turns out, Illinois (not Chicago) has four gun manufacturers based within the state borders: ArmaLite, Lewis Machine and Tool of Milan, Rock River Arms of Colona, and Springfield Armory of Geneseo.

We assume Emanuel, like most other politicians, has an agenda of securing a political future rather than actually fixing problems. Let’s assume the banks give in and gun manufacturers are brought to their knees and agree to stop selling their products to civilians. This would play well in a variety of political theaters: an Illinois governorship, a senatorial campaign, perhaps even a White House run in 2016 (note other politicians with presidential aspirations include the governors of Maryland and New York, both of whom recently launched anti-gun rhetoric at a screech-level decibel).

But voluntarily giving the government what it wants is far easier than passing a law, or, worse yet, the government taking what it wants by force.

Assuming Emanuel were successful in his bid to politically terrorize gun manufacturers, and assuming other banks didn’t fill the void (perhaps not wanting to become political targets themselves), it would be easier to achieve a goal of making weapons unavailable to the public.

It would also be easier if gun manufacturers willingly adopted “gun control” by not making their products available to non-government customers.

And it would be far easier to get people to accept government “gun control” on their own and voluntarily turn in their weapons rather than deal with such pesky things as constitutional rights and trying to amend the Constitution.

We hope Bank of America and TD Bank’s answer is a resounding, “NO!” Attempting to coerce private banks to kiss the mayor’s ring and implement “gun control” via back door and under-the-table tactics is disgraceful. Chicago’s mayor has disgraced himself and the city he represents. But he’ll likely not be held accountable for such behavior.

We hope gun manufacturers understand the role they play in the private lives of citizens. They provide a tool that is used in sports, hunting, and most importantly, self-defense. It is legal. It is constitutionally protected. And if the mayor should come calling hoping that they will willingly stop selling a legal product to a law-abiding public, we hope that answer is also a resounding, “NO!”

And lastly, if the mayor should come to law-abiding citizens, asking them to turn in their lawfully purchased and owned weapons, we hope the answer they give is a clear and resounding, “NO!”

It’s far easier for the government to take away its citizens’ freedoms with a willing and cooperative public. But the time has come when We the People must put our foot down and say, “NO!”

No, you can’t take away our freedom and our rights.

No, you can’t coerce us to give them up willingly.

No, you cannot come to the back door attempting to sell what you would dare not sell at the front door.

Udderly Ridiculous

The federal government is at it again–meddling in the private marketplace, creating messes, and then trying to sell shoddy, temporary solutions in exchange for people forgetting about the freedom that the government has taken from them.

Recent media stories have stated that if Congress doesn’t act, the price of milk could skyrocket, perhaps more than double from a current average of $3.20 per gallon to more than $7.00 per gallon. What?! You may be asking yourself, why in the world would the price of milk require Congress to pass a law?

Politically motivated simpletons playing at “TV news reporter” wasted no time trying to fan the flames by working up headlines like “GOP Obstinacy May Force Milk Price Spike.” Any honest-minded reporter worthy of the title would have the intellectual honesty to ask how we arrived in our present situation instead of trying a sucker punch to score cheap political points.

As it turns out, more than 60 years ago, Congress passed a law called the Agricultural Act of 1949.  The law gave the federal government the authority and responsibility to “stabilize” the market prices of milk and a variety of other farm products. Government used its extensive knowledge of market forces in agricultural production, such as labor inputs and land yields, to establish a government-mandated formula that would establish a price floor for farm commodities. If the price of milk fell below the “stabilization rate” the federal government could, via the Commodity Credit Corporation (an agency still in existence today), buy up inventories of milk to artificially raise the price of milk to the price the government deemed to be the correct (or “stabilized”) price. The government would then give away the milk it purchased to “friendly countries” or approved non-governmental organizations to further distribute.

Some may say helping farmers makes sense and is worthy of a government program, funded by taxpayers. A price guarantee is a great thing if you’re a farmer–not such a great deal if you’re a taxpayer. The statist response goes something like, “well you like to eat don’t you? So you should be willing to have your taxes support farmers.” But this  argument completely ignores the dynamic facets of a free market system. If enough farmers go bust to affect the food supply, prices will rise and attract new suppliers into the marketplace.

The point is that a free market system that is unfettered by government interference is the most efficient way to allocate resources. The federal government is not smart enough to effectively formulate a one-size-fits-all solution to an agricultural market with multiple commodities.

As time has gone on and agricultural methods have shifted away from labor in favor of machines, the federal pricing formula has…remained the same. More than half a century after original passage, the same funding formula remains in effect as a permanent law. The federal law has made less and less sense over time. Of course Congress’s response to an out-of-date law wasn’t to repeal it, it was to pass temporary waivers and exclusions to the permanent law.

An adequate analogy is to think of a nasty house with a nasty plumbing problem that backs up sewage into the house. If Congress owned this house, instead of fixing the plumbing, it would spray air freshener whenever the air became too foul to breathe, and pretend like this was a permanent solution.

Recently, Republicans had the opportunity to repeal the bad law when they held both houses of Congress in the mid 2000s. They failed and kicked the can down the road. Democrats had a similar opportunity in 2009 when they held both houses of Congress (as well as the White House), but again failed to act.

It seems to us that rather than fixing problems, Congress is happy to be a malpracticing contractor who creates more problems than it fixes–but continues to charge for its shoddy services in terms of taking more taxes and more freedoms from the people they are supposed to be serving. The government solving rather than creating a problem? That will probably happen when cows learn to fly.

Photo Credit: Sin Amigos at www.flickr.com

An Unexpected Debt Burden

NATO reported in August that the cost of an average US movie ticket topped $8.12, setting a record high since statistics have been kept since 1948. That’s the other NATO, the National Association of Theater Owners.

At $8.12, the US national debt could have purchased nearly 2 trillion movie tickets to see The Hobbit this weekend. That’s enough tickets for every man, woman, and child in the US to see the movie (or your favorite) 6,315 times.

Clocking in at 169 minutes, it would take Americans a full 2 years of working together for nonstop movie watching to use up those tickets.

 

One Hundred Years of Government Mismanged Money

After a century of loose money policies, it’s clear the government needs to do a better job of managing the nation’s financial affairs and its currency. Of course asking Congress to exercise restraint when it comes to exercising its power of the purse is a bit like asking an alcoholic to just have one drink for a night cap.

In 1913, the same year as our coin below, Congress and President Woodrow Wilson created the Federal Reserve System, which today is still in place with the two pronged (and often contradictory) goal of low inflation and low unemployment.

The picture illustrates how well they’ve done.  In 1913, the US had a silver coin known as “the Barber Half Dollar.” It had 0.3617 ounces of silver and a face value of 50 cents. Today the relative buying power of the Barber Half Dollar is 2 cents, having lost nearly 96 percent of its value.

If you still held a Barber Half Dollar, and didn’t want to try to sell your coin to any collectors, the approximate 1/3 ounce of silver would be worth a little over $12.00 as of the date of this article.

But the face value would still be 50 cents, and that 50 cents will get your far less today than it did in 1913.

This is one of the reasons inflation is known as a silent and hidden tax. Politicians may not enact it directly by hiking tax rates, but the lost value to dollars held by citizens is real no matter what political party they are in and no matter what income bracket they are in.

It’s one of the reasons that arbitrarily setting a “minimum” or “living” wage will do little to help the people the government pretends to help with such measures. If all of a sudden convenience store clerks, fast food workers, and dishwashers earned $15.00 per hour, the price of candy bars, cheeseburgers, and a plate of your favorite restaurant dish will go up in price too–eroding not only your purchasing power, but the minimum wage employee as well.

A similar thing happens when government routinely spends beyond its means. More and more dollars are created and released into the economy, either with people buying government-issued bonds, foreign currency exchange rates, or the government simply printing up more greenbacks–something this administration and Federal Reserve have embraced as a national strategy via the various rounds of “quantitative easing” programs overseen by the Federal Reserve and US Treasury. The government is quantitatively “easing” the value right out of the dollar bills, bank accounts, and dollar-valued investments that you own.

The sad fact of pursuing such misguided policies is the loss of economic freedom, which tends to impact those least able to protect themselves from it. This is the price citizens pay when their government engages in reckless spending habits as the US government has done over the past 12 years.  I continually hear complaints that capitalism doesn’t work because the poor haven’t seen their wages increase in the past decade and that means the rich “got richer” and are hoarding all their money.

But the truth is that government, through a combination of overregulation, overtaxation, and overspending has created an environment and culture that is hostile to business success. In so doing, overspending without maintaining economic growth continues to devalue the US dollar, driving up prices on everything the US imports. This has a devastating consequence for anyone in the business of trying to save for the long term, but especially lower-income families as they must pay more for the same goods and services over time while seeing the value of their earnings decline over time.

7 Billion Days of Christmas!?

PNC released its annual update to the Christmas Price Index. Buying all items in the “Twelve Days of Christmas” song will set you back $25,431.18. Without any repeats! But if you’re a “true love” who buys everything on the list (repeating the verses from the song) you’ll have to spend $107,300 for that special someone.

If we consider the national debt, we find that all the money the US owes could have paid for everything on the “12 Days of Christmas” gift list for more than 629 MILLION special someones. (We would definitely not want to be found in the return line of that store the day after Christmas.)

That figure multiplied by 12 gives us the potential for a whopping 7.5 BILLION Days of Christmas–enough to fill about 20.6 million years of holiday fun.  We think we speak for many, if not all, when we say there’s only so much eggnog that we can handle and only so much nonstop Christmas music we can listen to.

The “12 Days” list provides another visual for how irresponsible the US federal government has been in managing the country’s finances. As you complete your own holiday shopping for your special someones, consider how having to pay for 20 million years worth of Golden Rings, Ladies Dancing, and Drummers Drumming would impact your own personal and economic freedoms.

 

Photo Credit:Biblio Archives/Library ArchivesFrank Royal. Canada. National Film Board of Canada. Photothèque. Library and Archives Canada, e010966655