Cuts? What Cuts?

Everyone seems to have their panties in a wad over the coming financial crisis known as the "Sequester".  Even Rush Limbaugh has gone so far as to assert that for the first time in his life he is ashamed of his country.  If you listen to the pundits--of either side--the looming catastrophe that are the "draconian cuts" required by the sequester will rain havoc on every part of the country and our economy.

For those on the left, the claim is that the "hatchet job" these cuts will do on the economy will result in fewer teachers, police, firemen & first responders; as well as risks to health due to fewer resources available for FDA food inspections and water quality testing.  In short, as they always do, the administration is pulling out all the stops; stuffing their campaign-style rallies as full of doom and gloom to the "little guy" as they can.  I even saw an interview on television with the head of the Dept. of Transportation, Ray LaHood, opining about the "impact of these cuts" on transportation.

Those on the right, predictably, are running around bemoaning the drastic cuts to the military and defense, giving the distinct impression that America will be nearly defenseless if these cuts go through.  Leon Panetta's comments that these cuts will necessitate the furlough of as many as 800,000 civilian contractors and Defense Dept. employees are being used by both sides.  And, of course, each side blames the other for our current mess.

It looks to me like both sides are attempting to "not let a crisis go to waste".

Let's just look at the  numbers.  The automatic "cuts" in the sequester amount to $1.2 Trillion over 10 years.  Firstly, that only amounts to $120 Billion each year out of a proposed budget of ~$3.6 Trillion.  Is there anyone who really believes that spending $3.48 Trillion, instead of $3.6 Trillion, is "draconian"?  Here's another way to look at it:  $3,600,000,000,000 vs $3,480,000,000,000.  Yet another: 3.3%.  It's about as "draconian" as leaving a teaspoon of sugar out of your morning coffee. 

But here's the dirty little secret:  There are no spending cuts!

Yep.  That's right.  NO ONE is proposing that we spend even one thin dime less this year, on anything, than we did last year.  In fact, even if the sequester, with it's supposed cuts, goes through and stays in place the entire ten years, our national debt would still rise by several trillions over the same ten years.

How can this be?  How can everything be on the verge of falling apart if we're going to actually keep spending more?  It all has to do with Washington math and something called "Baseline Budgeting".

In short, Baseline Budgeting is the practice of building automatic spending increases into the structural framework of the government's budgetary process.  You take what was allocated in the present year's budget (whether necessary or not) and assume a "need" for a certain percentage increase for the next year.  This increase can either be based on a projection of inflation or, just as likely, just a number they pull out of their ass in order to get to an amount they want to spend.

However they go about it, it is the presumed increase that forms the basis for all of the negotiations, not what is actually needed for each department to meet it's obligations.  This results in budget "cuts" that result in a net spending increase.   Example:  Last year you spent $100 Million on, widgets let's say, and you project that you will need to spend $150 Million next year, for the same widgets (whether that's true or not is irrelevant to budgetary discussions in Washington).  A member of the opposition stands up to say "the American people can't afford to have their hard-earned tax money wasted on these unnecessary widgets!" and both sides begin to "negotiate" "spending cuts".  In the end, you agree on a final figure of only $125 Million.  This is trumpeted by "conservative budget watchdogs" and decried by "widget proponents" as a "severe" 17% cut in spending  ($150 million down to $125 million) when in fact it's actually an increase of 25%!  ($100 million to $125 million) This is an over-simplification, but it accurately illustrates how the budget process works in Washington.

If they were truly serious about getting our fiscal house in order, they'd begin with zero-sum budgets.  I'm not an economist, but that's a term I think of.  It means that when you begin consideration of a new budget you start with exactly what was spent the previous year, with the person(s) responsible for the administration of the budget in question testifying before Congress to justify the expenses of the previous fiscal year before they even ask for any increases.  Any proposed increase in funding would likewise be subject to justification to the Congressional Committee(s) with oversight.  Ideally, these hearings would be held in full view of the public and subject to public comment before any decisions are made. 

This is how ordinary Americans approach their finances, by making the hard choices required and deciding spending priorities in light of available resources, NOT by deciding how much they want and stealing/borrowing what they don't have from others.  It's a lesson we need to teach our "leaders" in Washington, before they "cut spending" so much they put us all in the poor house.

I'm not ashamed of my country (yet), but I have little use for the bureaucrats  currently entrenched on Capitol Hill claiming to represent us while representing only themselves and their own personal fiefdoms.

-----------------------------------------------

Before I go, on a personal note I'd like to refer you to a new author I discovered through Twitter.  The author's name is  L. Todd Wood and his first novel is Currency, available on Amazon.com [Direct link: http://www.amazon.com/CURRENCY-ebook/dp/B006O1J0VY/ref=sr_1_2?ie=UTF8&qid=1358870355&sr=8-2&keywords=currency]

In Currency, Todd weaves the past and the near future in a web of piracy, political machinations and international intrigue and conspiracy aimed at the destruction of the last remaining superpower (America) and her economy.  It's well written and given the current world-wide economic climate more than a little plausible.  It's been endorsed by no less an economic authority than the Hon. David M. Walker, Former U.S. Comptroller General:  "Currency combines history, finance, romance and action into a timely and entertaining read on a subject that has serious economic and national security implications. My wife and I both enjoyed reading it."

I found Currency to be a well paced story with enough historical references that it piqued my curiosity to investigate the relationship between Alexander Hamilton, Aaron Burr, the pirate Captain Kidd and the early years of our country's beginning.  I can't recommend it enough.

About the Author:

Todd is a graduate of the U.S. Air Force Academy. He has been an aeronautical engineer and an Air Force helicopter pilot. In the Air Force he flew for the 20th Special Operations Squadron which started Desert Storm. For the past eighteen years he has been an international bond trader with expertise in Emerging Markets. He has conducted business in over forty countries. Todd has a keen understanding of politics and international finance. He has been published in the Armed Forces Journal. He lives on a 300+ year old farm in Connecticut deeded from King George of England with his children. www.LToddWood.com

 

 

 

 

 

Ignorant Americans?

There are many things worthy of comment this week.  Obama's most recent propaganda attempt in the State of the Union, the shameful treatment by our government of the un-named Navy Seal "shooter" who took down Osama bin Laden, the continuing lies by the pro-gun control crowd and the ongoing travesty that is the debate over our financial situation and budget (which, by the way, the Senate has still failed to produce).

What struck me the most this week, however, wasn't in the national news.  It wasn't on talk radio.  It was a one on one conversation I had with a fellow employee.  As we talked about current events, the economy, how hard it's getting just to get by sometimes, etc.,  you know, the usual things people talk/complain about, it struck me that I was seeing the real root cause of the decline of our country:

People really don't have any knowledge or understanding of how government works (or should) and the basics of the economy.

This person I was talking to wasn't some young 20-something OWSer.  They were a peer of mine, actually, maybe even a few years my senior.  Yet they were convinced that the government had an obligation to provide for everyone.  They even believed it was in the Constitution!  When I gently challenged them on their mistaken belief, they tossed out the template response of "the general welfare clause".  Even after I showed this person that there was no such clause in the Constitution and that the term "general welfare" was nothing more than a phrase appropriated by the left to legitimize governmental growth, increases in taxation and regulation of our private lives and rights, they continued to deny reality and insisted that it was government's job to distribute to the poor what they couldn't/wouldn't produce for themselves.

After going back and forth for several minutes I finally came to the realization that this person had given up their personal sovereignty to the government in return for what they perceived as security.  I attempted to explain that government has no money of it's own.  That it can't give a dollar to anyone until it takes a couple of bucks from someone else first, and that what they believe to be security is nothing more than an illusion. 

When I told them that even Social Security wasn't guaranteed, that government had determined that people did not have any individual right to the money taken out of their paychecks and deposited into the "lock box", even going so far as to show them the Supreme Court decision that confirmed the government's right to change, reduce, or even eliminate the Social Security program at any time at it's own discretion, I was met with a disbelieving blank stare.  They said, "Well, they can't do that!  It'd be illegal."  Really?  I pointed out that we were $16.5T in debt.  They didn't believe it was that high until I Googled the national debt clock and showed it to them.

They had a solution, though.  They asked me, "How many people are in living in the country?"

"About 310 million."  I told them.

"Why can't everyone just send in a check for their part and pay it all off?"  They asked.  I pointed out that the current debt would  equal a little more than $50,000 for every man, woman, and child in the United States.  They didn't get the math at first.  When they did, their eyes got a little wide, and I began to think I was making headway.  Then, they hit me with this:

"Who do we owe all of this money to?"  I explained that we owed some of it to ourselves, oddly enough, but that the majority of the debt was owed to other countries in the form of Treasury Bonds and other instruments (I didn't try to get into the explanation of the Fed monetizing our debt).  Their eyes lighted up with (I thought) understanding.  "It's simple!  Why can't the government just print the money it needs and pay the debts off?"

At this point, I begin to feel a little like Glenn Beck (my eyes are bleeding and I need to wrap my head in duct tape to keep it from exploding).  Does this person really not understand?  Or am I being punked?

I told them that the government can't do this because "government money" doesn't exist.  Our fiat dollars are nothing more than an illusion of value that (for now) everyone has agreed to believe in, but that if the government did what they suggest, no one would accept the dollars as payment because they'd be worthless.  I got another, even more incredulous blank stare.  As if they couldn't believe that I could be so stupid!

I tried to explain in very basic terms the monetary system and how it's all interlinked in a worldwide economy.  The national currencies only have value to the extent that the other countries have faith in the issuing country.  Fiat currency is no more "money" than the checks in your checkbook.  Those checks only have value as long as someone is willing to accept them.  If/When other countries lose faith in the value of any currency, it doesn't matter how many federal reserve notes you have.  They're not worth anything.  We, the United States, are broke.  Printing more money is nothing more than counterfeiting.  No different than you laying a bunch of $100 bills on your printer and making as many as you want, except for the fact that businesses and countries are still willing (for now) to accept the U.S. counterfeiting scheme based on a promise of future solvency. 

They didn't get it.

I used an analogy of apples to explain the concept of supply & demand and how it plays a role in determining the relative value of things, including money:  When people are hungry, and food is scarce, if you have one apple, that is a very valuable apple.  When food in plentiful, and you have a truckload of apples, any one apple isn't worth so very much.  In the same way, if you limit the number of dollar bills in circulation, each dollar retains a certain value.  However, if you print an unlimited amount of dollar bills, they aren't worth much.  Each additional fiat dollar created lessens the value of the dollars that already exist.

They understood why the value of the apple changed, but couldn't grasp that the value of the U.S. dollar changed just the same way, for the same reasons.  They stubbornly insisted that "money" had value just because it was "money" and that a dollar was a dollar was a dollar, no matter what.

I tried again. 

"What makes gold and silver so valuable?" I asked. 

"Because they're rare." They said. 

I just looked at them and waited for them to make the connection between what they just said and their earlier argument that creating trillions in new dollars wouldn't reduce the value of the currency. 

Nothing.

I tried pointing out that since the early 1900's the U.S. dollar has lost nearly 95% of it's purchasing power, due to inflation of the currency and it's decoupling from the gold standard.

Still nothing.

This was an exquisitely painful  illustration of the real reason why we're in the situation we're in.  People, in general, have no appreciation of the true value of things (or the lack thereof).  Our schools no longer teach critical thinking, having discarded that rigorous discipline in favor of indoctrination into Progressive theories of economics and government.  U.S. History and Civics have been subject to populist revision for decades, where they haven't been eliminated altogether.  It wasn't this person's fault that they didn't understand.  They weren't necessarily stupid or unintelligent, but they were ignorant of even the basic facts underlining our system of government and how our capitalistic economy was intended to work by providing opportunity (not a guaranteed result) for all.

Sadly, I failed to completely get through to this person during our conversation.  I did manage to get them to agree to consider what I said and to think about it, the next time they were inclined to say that "the government should do/pay for/give me something". 

Maybe getting them to think was enough.  Maybe, once they open their eyes and see for themselves the economic realities involved in the promised Utopia we, as a country, can begin to retreat from the brink.  Time is growing short.


 

Dr. Ben Carson Schools Obama

This is another great dissection of the Liberal Utopian agenda.  Note the failure of "the smartest man in the room" to acknowledge any of the applause lines.  Even when his wife does.  Maybe the content of Dr. Carson's speech simply went over (or through) her head?

A Week Off

Not too long a post this week (all right, all right. Keep the applause to a minimum).

I've been home all week and decided to "detox".  I've paid little attention to the news this past week.  Hell, I didn't even watch FoxNews, O'Reilly, Hannity or listen to Rush.  You know how it gets.  Sometimes it's just too much to take and you need a break, thus the self-imposed detox.

As I'm writing this, here in Vermont we're beginning to dig out from winter storm "Nemo".  Really?  I know that they decided to begin naming significant winter storms the same as they do hurricanes (presumably out of a perceived need for drama to make people take their pronouncements of  "Snowmaggedon" seriously), but Nemo?  I guess nothing makes you take severe weather seriously as much as naming the storm after a cartoon fish.

-------------------------------------------------------

Under the heading of "The Left Never Gives Up":  Apparently the smart meter proponents here have continued to quietly pursue their cause of getting the meters installed statewide.  My mother recently received notice in the mail from our utility that installation would begin soon in our area.  She does have the option of continuing with the current meter with the payment of a small monthly fee, but she seems to be inclined to let them install the smart meter and "save" the $10 fee.

Of course, I offered to cover the cost, but she seems to have decided to go ahead with the installation, under the belief that she "can always change her mind later" and go back to the old meter.  I've tried to tell her that once the meter has been changed, she will not have the option of going back to the old meter.   They will say that it would be too costly to have to pay to send out a tech just to read one meter.  Once these have been installed, there's no going back.  Homeowners are barred by law from removing or otherwise "tampering with" any utility meters.  They are the property of the utility and the utilities are all for property rights when it involves their property.

-------------------------------------------------------------

Tax Time:  It's that time of year when we try to remember where we put all those receipts and get ready to calculate the exact burden of government over the previous year, using all the legal tricks available to us to mitigate it's impact on our bank balances.  I've got one tip that may make things easier for those who frequently travel away from home on business.

If you itemize, it may not be necessary for you to keep all of your receipts for meal expenses.  The IRS has a schedule of standard "per diem" allowances available to taxpayers that can be taken without the need for actual receipts.  All you need is to establish proof that you were away from home overnight on business.  Depending on the area you travel to, you can take a set amount that replaces the meals allowance.  For example, in the northeastern sector of the country the IRS per diem allowance is $59/day.  It's likely that the per diem is higher than what you would actually have spent on meals, so you potentially can get a bigger deduction without the hassle of having to keep track of your receipts.  Check with your tax preparer, it could make a big difference.  [Disclaimer:  I am not a tax professional and am not qualified to give specific tax advice.  Look into this and make your own decision, based on your individual situation.]

That's all for this week (told you it'd be a short post).  I'll start paying attention next week and I'm sure I'll see or hear something that'll get my knickers in a twist and provide fodder for a new rant.  Until then, be safe and be well.

Command and Control Government?

Forgive the tinfoil-hat, conspiracy theorist title but, are we seeing the opening moves of the Progressive endgame?

The impetus for my first post of this blog was the attempt to require installation of smart-meters in my home state of Vermont (You can access that post through the Archives in the sidebar). As of this writing, the state and the utility have backed off and will allow people to keep their old dial-type analog meters, if they agree to pay a $10 monthly fee for the labor of the worker to physically read the meter.  The time may come, however, when things aren't quite so reasonable.

There have been smart meter protests in several places across the country almost since their inception.  Early on, when information was limited, the states, municipalities, and utilities were able to steamroll objections and go ahead with the installations.  They point to the lack of active protests from those who were switched over to the new meters as proof of their harmlessness.  With the "new" media, however, they have been unable to keep rumbles of discontent under wraps.  In several counties in California, of all places, people have been very vocal and active in their resistance to this intrusion into their lives.  Some on concerns over the radiation and EMPs, others concerned over the potential violation of privacy and the very real risk of some hacker gaining access to the information in order to determine when someone is at home or away, opening them up to possible burglary.  Still others are wary of the government having too much information on people's private lives and restriction of access to energy.  Authorities have sometimes been called to deal with the protests, and there have been several allegations by some citizens that authorities with the power company have engaged in a pattern of intimidation, threatening customers with illegal disconnection if they don't agree to the installations.

Most recently, two housewives in Naperville, IL were handcuffed and arrested by local police officers for refusing utility workers' access to their private property for the purpose of installing these smart-meters--which they have expressly told the utility they do not want and will not accept.  The utilities response, with the full cooperation of the municipal board, was to send the local PD to assist the workers in the forced installation.  Since when did our local law enforcement officers become muscle for the utility?  Isn't it customary in such cases for the municipality or utility to bring charges in civil court and not use government force on the citizens until and unless they have obtained the Court's order following due process?  The utility and the municipality claim that the purpose of the new meters is to better "manage" the grid and to help people by giving them more detailed information about their energy usage.  The utility will "allow" people to continue to use the traditional analog meters, IF they agree to pay an initial $68.35 fee for the "non-wireless meter", as well as an additional  $24.75 service fee added to their bill each month.  Excuse me?  Charge people a fee for the meter they already have on their home?  The same one they've had for years, if not decades?  And the "service fee"!  I know public employees are greatly overpaid, but $25 for a task that takes appx 30-60 sec?  It makes one wonder why they are so desperate to complete the installation of these meters, in the face of such opposition.  It can't be a simple urge towards efficiency.  Since when have power companies and governments been concerned with being efficient? 

Do  those of us living in areas where these meters have not yet been forced on us have to worry about similar actions being taken against those of us who don't want the new technology?  Will we be arrested if we resist the violation of our Constitutional rights to be secure in our homes and to privacy?  The people in Naperville who are protesting the installation of these meters have a lawsuit filed against the municipality and the utility.  It has not yet been resolved.

On top of this, you have the continuing debate over the 2nd Amendment, and the media's seeming conspiracy to promote the left's agenda.  Whenever there is any incident of gun violence you can count on the media to make mention of the fact.  Oddly, there has been little or no mention of the incidences where the use of a gun, or even the mere presence of an armed individual has limited or prevented a tragedy similar to what happened in Connecticut:

On Thursday, an armed off duty security guard/resource officer at an Atlanta school prevented a potential massacre by disarming a student who shot a 14yr old, wounding him in the neck.  The police say the actions of the guard "ensured that the incident went no further".  Odd how the presence of an armed guard at a school prevented the death of at least one student and gets no press.  Or, when it does get mentioned, it gets discounted.  CNN's Piers Morgan dismissed the actions of the security guard, saying that he did nothing to prevent a shooting, because one student did get shot.  Let's see, one wounded, no fatalities, gunman taken down and disarmed.  Sounds to me like the guard (the "good guy with a gun") had a positive effect on the outcome of this situation.

As bad as that is, you have MSNBC (again) selectively editing tape to promote the Liberal objective.  This time on gun control.  They edited a tape of the testimony of Neil Heslin, the father of one of the victims of the Sandy Hook shooting to show "gun nuts heckling the grieving father".  After viewing the whole, unedited recording, it is clear that Mr. Heslin was challenging the room for anyone to answer why they should not have greater restrictions on guns, and that they weren't "heckling", but simply answering his challenge.

Let me take this moment to answer the two most often asked questions by the gun control advocates:
1) "Why does any American "need" an assault rifle for self-defense and personal protection?"
Answer: Precisely because they are "scary looking".  Whether you are male/female, old/young, physically fit or flabby, if you are able to intimidate your opponent with your weapon, you will be less likely to need to use it.

2) "Why do you need a "high capacity" magazine?  How many bullets do you need?"
Answer:  Again, the answer is the same regardless of gender:  I need at least one more round than the number of people attacking me.  Unless you can guarantee me that I will never face more than 2 assailants, don't presume to dictate how much defense I will be allowed to put up.

Hey, here's an idea.  Since the Progressives want to have a debate on the suitability of the 2nd Amendment in modern-day America, let's have a parallel conversation about the suitability of the Voting Rights Act in light of our current financial situation.  Specifically, let's consider limiting the right to vote to those who actually pay income taxes.  After all, if you're not one of the one's pulling the cart, why should you be allowed to vote on how heavily the cart is loaded?

There you go, simple enough for even Piers Morgan or an American Progressive to understand.

The government (and the media) seems hell bent on preventing Americans from obtaining the tools necessary for self-defense and protection of our homes and property, saying that civilians have no need for such "assault weapons" for personal defense; yet, the Department of Homeland Security has put in an order for 7000 5.56x45mm NATO "personal defense weapons" with 30-round magazines (also known as "assault weapons" if an American citizen wants to own one), under the decision that these weapons are effective for personal defense in close quarters.  The kicker?  These weapons are what's known militarily as "select fire", which means that with the flick of a switch, they can go from semi-automatic, to fully automatic! 

Call me paranoid, but when someone is telling me that I can't have something because I don't have a "need" for it, while granting themselves permission to do so, I have a problem.

One of the most powerful testimonials given in the government hearing on proposed gun control measures wasn't given by Wayne Lapierre of the NRA or by Gabriel Giffords.  It was given by a legal immigrant by the name of Henson Ong.  The Blaze recounts his testimony.  In it, he reminded lawmakers that our ".... history is replete with high school rifle teams, boy scout marksmanship merit badges.  You could buy rifles at hardware stores, you could order them… your country was awash in readily available firearms and ammunition, and yet in your past you did not have mass school shootings.  What changed?  It was not that the availability of guns suddenly exploded or increased, it actually was decreased. What changed was societal decay.”  Go to TheBlaze.com and read his testimony and watch the video.  It's powerful stuff.

Government monitoring.  Restriction and (potentially) eventual elimination of the rights of the citizen to adequate self defense.  Executive Orders aimed at circumscribing the lives of the individual, often circumventing the authority of Congress.  Federal government's take over of industries and healthcare.  Government control over the financial sector and energy production.  Are we just riding out another changing of the political winds?  Or is it something more serious, and sinister?  I'm not rushing out to buy gold and silver, stockpiling weapons and 1000's of rounds of ammunition, buying months' worth of freeze dried food and becoming a "prepper" (yet).  But I am becoming more concerned with the actions I see  my government taking around me, and I wonder,  "What is happening that I DON'T see?"