Month: August 2011

In spite of appeals for civility from President Obama, acrimony continues in Washington, with prominent administration and Congressional personalities calling Republicans “terrorists” for refusing to roll over on budgets, the debt ceiling, etc.

The heart of the controversy is a difference in philosophy about the purpose of government.  Most Democrats believe government should do as much as possible; Republicans mostly believe government’s role should be limited and as much as possible should be done by the private sector.  Should the government provide/control your health care (Hillarycare/Obamacare), your retirement (Social Security), your food (15% of Americans are on food stamps) and even your consumer goods (Obama’s takeover of General Motors)?

Democrats would say “yes” to the above questions.  Many Republicans and most Libertarians would say those things would be better done by the private sector.  The latter would go further and say education (public schools) and infrastructure (airports, utilities, prisons, roads) could be done better by private companies than the government.

I’m fond of saying “Government is a Necessary Evil, with the operative word being ‘Evil'”.  I don’t say that to be cute or hyperbolic.  While I know we must have some  government functions to maintain order and protect borders etc. (one thing the current Federal government refuses to do!), government by nature is evil and it should do as little as possible.

What do I mean by “government by nature is evil”?

Consider how government gets its money.  This is crucial, since more and more people see the government as a SOURCE of money for them, whether paid to them directly or to the business they work for through grants, contracts or “corporate welfare”.  The government has one main source of funds: taxes.  How does it collect taxes?  In most cases it takes money from you BEFORE you get your paycheck.  You never see it.  You worked to earn the money, but the government believes it can use the money better than you can, so it just takes it.  That’s evil.  You worked hard for that money, but the government takes it by force.

What do I mean, “by force”?  If you evade (as opposed to “avoid”) paying your taxes, you will be fined and ultimately men with guns will come and take you to prison.  So the government takes your money or they take your freedom.  For that reason all government money is “dirty”.  It’s taken by force and tainted by the threat of violence.  That’s why taxes should be as low as possible and the government should do as little as possible.  I’m not saying there should be no taxes.  I know some is necessary, since the government doesn’t really do anything that people would willingly pay for.

Which brings us to the other side of the argument.  Private business is “clean” in my estimation, because business gets its money from people voluntarily.  When you buy corn flakes for your breakfast, you can choose Kellogg’s, Post Toasties, or a store brand.  The corporations may use advertising and colorful packaging to convince you to buy their brand, but you have choices and there’s no danger that you’ll go to jail if you decide to buy English muffins instead.

The same can be said of charity.  Democrats wail about children and the elderly starving if any cut in government spending is proposed, but there’s a big difference in the checks I happily write to my church or the items I give to Goodwill and the money that’s forcibly taken from me in taxes.  There’s no way I can feel very charitable about the latter.

With the government, even the most benign government, choice (i.e. freedom) is always limited, and the penalties for breaking the rules are always severe.  Hence Obamacare, like Hillarycare before it, includes fines and jail time if you go to a doctor out of network or if your doctor prescribes a treatment the program hasn’t approved for you.  There can be no better argument against government involvement in health care.  How can we see that as anything but evil?

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Today the Dow Jones Average dropped 500 points after dropping 800 over the past 10 days.  How is that possible?  I thought Congress and the president had saved us by raising the debt ceiling.

I thought Wall Street liked certainty and Tuesday’s deal for raising the debt ceiling would soothe the financial jitters.  But apparently, Wall Street also likes solvency, and the Federal government doesn’t have much chance of that.  Therefore today we got panic on The Street.

To me that just means one thing: the whole debt ceiling scare was bogus from the start.  The press, pundits and politicians alike told us that unless they raised the debt ceiling, the country “can’t pay its bills.”  It would “default”.

I knew all along that that was not true.  For that to be true, the government would have to have no source of funds but borrowed money.  But the Federal government receives tax money EVERY DAY.  I sent them about $2,500 this week myself.  It was the payroll taxes from my itty bitty small business.  I’ll send them another $2,500 give-or-take in two weeks.  Multiply that by several hundred thousand businesses, many much bigger than mine, and the Feds are piling in the moolah.

So it simply wasn’t true that the United States would default on ALL its obligations.  They just might have been forced to prioritize for once, like the rest of us.  And that’s what makes politicians panic.

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Well, the Debt Ceiling debate has ended.  The deadline was August 2 and that’s when the politicians finally got around to doing something.  The “whimper-instead-of-bang” conclusion to the debate had few surprises: the debt ceiling was raised (yawn), the Democrats are upset that the Bush tax cuts are still in place (of course) and the Republicans caved, although the MSM is insistent that the Tea Party caucus has destroyed the country (always predictable).

Meanwhile, the ship of state continues to sink beneath the waves of red ink and the raising of the debt ceiling has just made the red tide deeper.  Before raising the debt ceiling, 43 cents of every dollar the Federal Government spent was borrowed.  Now what will it be? 50%?

Today, the day after the debt ceiling agreement, there is puzzlement in the media and on Capitol Hill.  The stock market continued a nine-day losing streak, the DOW barely turning up $30 at the closing bell after losing $850.  Didn’t they hear that the government raised the debt ceiling and all’s right with the world?

Even more puzzling, Moody’s continues to say they may still downgrade the Fed’s credit rating.  Why?  Didn’t Congress save us?

Actually, reality can now set in.  The stock market and Moody’s weren’t threatening disaster UNLESS the debt ceiling was raised, but BECAUSE of the debt itself.  In just five years, President Bush , but mostly Obama and the Democrat-controlled Congress added as much to the national debt as had accumulated over the previous 235 years( ! ).

Do you need to reread that last sentence?

The debt ceiling deal, in spite of hard-won, but insignificant Republican cuts, will add no less than 10 trillion dollars to the national debt over 10 years.  That will mean the total debt will be $24 trillion dollars.

How much is that?  I have no idea.  I understand $24,000.  1,000 times $24,000 is $24 million.   What about $24 BILLION?  $24 billion is 1,000 times $24 million and 1 million times $24,000.  The last year of the Clinton Administration, the annual deficit (not the same as the national debt) was less than $24 billion.

But, $24 trillion is 1,000 times $24 billion and a MILLION times $24 million.  24 million-million dollars of debt.  That’s roughly $80,000 for every man, woman and child living in America today.  That’s where we are going.

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