Beyond the Cusp

October 8, 2013

The Ugly Side of a Government Shutdown

The Federal Government shutdown has turned ugly and vindictive by design with the Administration going through each and every service, historic sites, museums, web portals and other various forms of public-government interaction with an eye to shutting down anything and everything which would cause the public harm and inconvenience. They then claim that the Republicans own the shutdown and that the President feels the pains and hardships the public are experiencing and President Obama claims that the Republicans will not negotiate with him over the budget. This is the biggest fabrication I have ever heard from any politician even including President Nixon’s claim that he is “not a crook.” Some examples pretty much make obvious where the closings originate. At Andrews Air Force Base the PX is closed but the golf course which the President loves is open. The right lane of highways and byways from which one can snap pictures of Mount Rushmore have been coned off so people are unable to stop. The last straw and most unbelievable act committed by the Administration was forcing people, mostly elderly, to leave their homes which border Lake Meade claiming that since the government has found it impossible to guarantee services preventing possible harm such as flooding from endangering their lives, they must leave immediately. Many of those people had no clue that the government did anything other than monitor the Hoover Dam as far as protecting them and even understanding the extent and scope that the Administration has gone to in order to maximize harm to the people and citizens of the United States; I seriously doubt they have suspended monitoring the Hoover Dam. The almost ridiculous lengths employed to maximize harm has been unprecedented and should be the main critical consequence of the budget battle covered by the mainstream media but instead they simply follow the President’s lead claiming that the Republicans are the sole source of all evils emanating from the shutdown.

 

The future has taken on an ominous tinge due to a small fact that once any politician opens the door to a new venue of consequences or behaviors it becomes just another tool which virtually any politician from either party will add to their tool kit for future use. Future budget battles will now target services designed for the people which will be the first services where personnel will be furloughed in order to deny these services to the public. The fact that there have been some midlevel and operational workers reporting that they have been instructed to make the shutdown as inconveniencing and causing maximum hardships as they are able is the most frightening aspect of this shutdown. These specifically targeted closings of open air monuments where it is costing the government funds in order to barricade these places which under normal operation might entail their being cleaned periodically but otherwise operate at no cost to government is opening a level of vindictiveness that cannot be stressed too strongly. The same goes for the numerous sites such as Mount Vernon where private groups who take absolutely no government funds are being ordered to be shutdown presumably because the Federal Government services and provides upkeep for access roads or parking lots or even because they claim they will no longer be able to provide security support in case of an incident. These actions are simply an abomination revealing a level of contempt for the public by those in government who are behind these closures who, just like those responsible for the stand-down order during the assault in Benghazi, remain unidentified though it can be assumed they are high up in the Administration and their orders very probably come from the highest levels if not the President himself.

 

There is going to be a phase two to the budget battle approaching rapidly and that is raising the debt ceiling. The claims that raising the debt ceiling will not increase the actual level of United States government debt because it is only being increased to cover spending which has already been approved is false. If that argument sounds highly suspicious and disingenuous, then you very likely have a good grasp on budgeting and money handling. The fallacy in that argument is that once the government has made a commitment to provide services or other governmental functions which require funding that there is no way to fund these expenditures in the future other than by raising the debt limit in order to cover the expenditures. This would be the same idea as if you decided to take a vacation this summer and as the time for the vacation approached you did not make any adjustments to your daily expenditures nor decide to postpone some purchases and instead simply applied for a new charge card on which you would pay for everything while on vacation claiming that the new charge card was not going to increase the family’s level of indebtedness as you had decided on the vacation already so the new charge card to cover the expenditures was unavoidable. We can expect that should any members of the Congress suggest that there be spending cuts made to defray some of the future spending rather than simply take on all of the coming spending by taking the easiest route and just increasing the level of indebtedness of the United States Federal Government will be ridiculed by the President and his minions in the press. Some of the driving reasons that the debt limit is once again being crashed has a lot to do with the fact that there has yet to be a single budget passed during the entire Presidency of Barack Obama. This even includes the first two years of his first term when the Democrat Party held a filibuster proof majority of over sixty in the Senate and a comfortable majority in the House of Representatives which in theory should have allowed President Obama to pass any legislation and establish any program his heart desired. Despite this unopposable majority in Congress, President Obama never passed a single budget as even the Democrats attempted to prevent some of his spending and he never passed his Cap and Trade energy legislation though he did manage to force Obama Care through the Congress using brute force along a party line vote which had not a single Republican supporting the Patient Protection and Affordable Health Care Act.

 

President Obama’s Presidency could be defined as an Administration which never found an increase or new expenditure it didn’t love. Since President Obama, possibly to his credit, did close down two fronts in what was originally labeled the War on Terror by ending much of our deployments to Iraq and Afghanistan, there should have been a savings which would have been reflected in budgetary savings, lower debt, and an economic peace dividend. The fact that we not only did not receive such a bonus and instead have found ourselves raising the debt ceiling repeatedly and facing budgetary shortfalls and an anemic economic recovery if any is just another result of an Administration whose spending is completely out of control. President Obama has craftily and cunningly used Continuing Resolutions in order to compound the spending increases thus causing vast additional spending across the boards on social programs. Even draconian spending cuts to the Military budget and cuts to the NASA budget (which never garner much savings as the NASA budget is less than 1% of the total budget) have failed to balance the excessive added spending on existing social programs and on the new social programs initiated by the Obama Administration. Yet, when the debate over raising the debt ceiling begins we can expect the usual blame game claiming the Republicans are trying to refuse to pay for spending which has already been approved and that these despicable Republicans would default on the United States payments on her debt. There is not an ounce of truth in either of those accusations. The Treasury Department receives inflow of cash every day from the Internal Revenue Service and from other taxes, tariffs, fines, and other revenue sources which are vastly greater on a daily basis than is the scheduled debt payment. Simply put, the debt payment can be made out of what we could call ready cash which the government takes in each and every day. Any claim that by not raising the debt ceiling we would default on our debt payment is simple demagoguery and absolutely false, but I guess we have all gotten used to lies from Washington no matter which party has the majority.

 

Beyond the Cusp

 

October 5, 2013

Challenge President Obama and Change the Entire Budget Battle

A single undeniable truth that can be said about the budget battle is that the Republicans are getting the worst end of the blame. It stands to reason as the Republicans decided to pick their fight over Obama Care (Patient Protection and Affordable Care Act) by defunding it specifically in this continuing resolution knowing that they would be facing opposition from President Obama, Senate Majority Leader Reid and the majority of the mainstream press. The blame falling on the Republicans for any budget battle has a long-standing history and it does not matter which political party holds the different position, the Republicans are always the ones who are shutting down the government and denying services to the population. The only break the Republicans have received was due to the overreach by the Obama Administration who sought to go to ridiculous extremes to make their point. When the Administration gave the orders to the numerous separate Cabinet Departments to shutter everything and anything they possibly could close in order to inconvenience the most number of people, they perhaps should have said within reason instead of everything and anything possible. When the Park Service cordoned off the World War II Memorial which sits in an open area which had to have barricades erected and guards placed to enforce the no trespass the monument is closed order, they perhaps chose badly. The Republican legislators gained a photo-op as they came down from Capitol Hill and removed a few barricades and opened the memorial allowing a number of World War II veterans, who were all elderly making the scene that much more poignant, to visit. The same became the case when some news services reported that the very same Park Service had barricaded the parking lot at Mount Vernon. This was made to appear even worse as Mount Vernon is run by the Mount Vernon Ladies’ Association who also own the parking lot which is serviced by the Park Service making their closure appear as exactly what it was, a spiteful move done purely to hurt as many people as possible over the government shutdown. Despite these few examples, you cannot tune in to a news broadcast without hearing at least three and as many as uncountable references to the Republican shutdown of the government as if the Democrats are clean of any blame for the impasse.

 

The Republicans in the House of Representatives, the branch of the Federal Government tasked exclusively with initially formulating the budget and the place where all financial outlays must begin although these items must then pass the Senate and the President, could change the entire fight over Obama Care and instead make the battle over the fact that they are doing something which would be revolutionary for the years of the Obama Presidency, passing an actual and real budget and ending this deceitful practice of running the government by passing Continuing Resolutions every few months. Ever since President Obama first took the oath of office the United States Federal Government has failed to pass a single budget. There are some advantages and opposing disadvantages to running the Federal Government, or any government, by passing Continuing Resolutions every few months in place of formulating an actual budget for the entire year. Should you wish to be able to increase spending radically more than usual then the Continuing Resolutions is your ticket while passing an annual budget restricts the increase in spending. The reason for this is when you have to stick to an annual budget the increase is measurable and can be debated while with the Continuing Resolutions you can increase spending with each resolution which even if the exact same percentage is the rate of increase, the fact that these increases are being applied compounding their effect, this actually has the effect of increasing the spending by a greater amount. For example, if you increased a department’s budget 10% and say their budget had been $1,000,000; then their budget for the next year will be $1,000,000. If instead you passed a Continuing Resolution every three months with each employing the same 10% increase, a quarterly budgeting, then you would take the budget for the first quarter which would be $250,000 and increase it to $275,000. When you get to the second quarter the 10% is applied to the budgeted amount after the last increase so you apply the 10% to $275,000 resulting in $302,500. At the third quarter you apply the 10% to the $302,500 which yields $332,750 and in the final quarter you apply the 10% to $332,750 yielding $366,025. When you add the spending up you have $275,000 + $302,500 + $332,750 + $366,025 resulting in an annual budget totaling $1,276,275 which is $176,275 more than if you had made an annual budget. That is almost triple the increase in spending just by passing four Continuing Resolution instead of one annual budget.

 

Of Course when passing these Continuing Resolution there will always be the crisis, real or manufactured, that requires an extra amount to be put into a budget which simply compounds and makes for even higher increases in spending. An example of such is the current debate over funding for Food Stamps where the Democrats wish to increase the spending by 25% more than the Republican desire though the Republicans are still offering to give the Food Stamp Program a healthy increase. Of course the news is reporting that the Republicans are attempting to cut Food Stamps by 25%, the exact difference between the increases proposed by both parties. When you are convicted by those who give the public their news of decreasing or cutting funding whenever you offer to increase spending by less than the other party you will constantly be portrayed dishonestly as being Scrooge before the ghostly visitations.

 

If the Republicans took a novel route and came up with a budget that would extend through the entirety of the fiscal year they could argue that they were only being responsible and proposing an annual budget like anybody else does when it comes to spending. They could point to the fact that even when President Obama had a solid opposition proof majority in both Houses of Congress that the Democrats still refused to pass an actual annual budget choosing instead to utilize numerous Continuing Resolutions in order to allow for massive increases in spending made with smaller steps which together added up and produced a record deficit beyond any previous Presidential budget, even double that produced by President George W. Bush who according to President Obama spent beyond all reason. They could further advise that they were proposing that Obama Care be financed on an as needed basis so that the public could be informed of the actual costs used to implement this untested venture into government assured medical care. They could press the fact that they also desired some changes chiefly among them that if those who President Obama granted a one year exemption are not to be held to their obligations under Obama Care then the American people should also be given the same one year exemption from their obligations under Obama Care. The concept is a simple one learned by most of us in our youth, if it is good for the goose, it is good for the gander. America has always been based on equality as well as freedom and liberty. We have equal opportunity, equal application of the law, except when some are exempted from Obama Care, we have equal responsibility and we have equal representation in governance. Exempting those few favored sectors of our society from their equal obligations under Obama Care while it is being applied in its entirety on the people simply because they do not have the cadre of lobbyists, lawyers and influence peddlers to argue and pressure those in power to give them favors is against everything America was founded upon. To punish the individual while catering to big business, unions and others who wield political clout is an abomination and this is the wrong that the Republicans need to stress when they have any opportunity to get their message out. Of course it would help if all of the Republicans actually were supporting the people instead of their political pals in Washington. That is another problem with the attempt to equalize the application of Obama Care, too many in Washington simply support anything which further empowers Washington and tough luck to the people back home. Hopefully the people will have a message for those who so callously disregard the wellbeing of their constituents.

 

Beyond the Cusp

 

October 1, 2013

October Could Result as a Teaching Month for America

This month of October may end up teaching both Americans and anybody who wishes to pay attention some lessons in what has gone wrong with the United States Federal Government. These lessons could potentially be far more fright inducing than even the scariest Halloween costume and may have consequences far worse than even the nastiest prank gone bad. The lesson plan looks something like this; first lesson is the not so smooth rollout of Obama Care today, second lesson will be the shut-down of all nonessential government functions and the final lesson later this month could be what happens when the government runs completely out of borrowed monies as that is basically what the United States runs the government on, borrowed money. So, what are we to take from each of these examples of how not to run a business, organization or even a government?

 

The rollout of Obama Care today was supposed to feature health exchanges where people could go and find affordable, government approved health insurance. Anybody attempting to get in early and avoid the potential long lines as the deadline for having insurance approaches at the beginning of the new year, the very beginning as in right after the ball drops in Times Square or whichever time zone one resides, are going to probably be unhappy as at least thirty-five states have claimed they will not be ready on October 1 to issue health insurance through the exchange system and the majority claim it will be mid to late November before they will be even close to prepared to be up and limping. The Federal Government also is saying they will not quite be ready either and will also require at least six weeks before their system can be put to the test. The more that everybody looks at the difficulties the many separate appendages of the layers of government are having in getting even the basics out and ready in order to facilitate the start of Obama Care, perhaps the idea floated by some Republicans in Congress of simply postponing everything to do with Obama Care for one year, you know, just like all those businesses, unions, and others who were given one year waivers, so that then everybody will be on the same page instead of pushing a half-baked program on the people while allowing the President and Congress to play favorites with waivers and exemptions. I do believe that somewhere in the Amendments to the Constitution there is this cute little idea of equal protection and application of the law; I believe it is in the Fourteenth Amendment. One thing for sure, we can also gain a lesson on how the connected, powerful, wealthy and privileged classes are all dancing their way around being constrained by Obama Care while the ordinary Joe like most of us are being subjected to the whims of an untried system and we are going to be the guinea pigs who get to suffer the bumps, bruises and every trail first run error that this system that has been patched together on the fly just to even get it out over a month late. Does anybody really believe that the government will have even the slightest idea what they are doing by Christmas? I did not think so.

 

The second lesson could follow right on the heels of the rolling fiasco releasing Obama Care before its fully ready and functioning which would be a government shutdown due to the lack of funding set aside to run the Federal Government. The whole idea that we have been running the Federal Government of the United States on continuing spending bills is absolutely ludicrous and embarrassing in that our Federal representatives along with the President have been unable to agree on a budget to fund the Federal Government.  Producing an annual budget is presumably the first item of business the Congress is supposed to accomplish before they tackle anything else. The problem is partisan bickering or at least that has been the excuse for no budget being passed since the 2010 elections. The reason the excuse is not used for the two previous budgets not being agreed to and forcing continuing resolution be the manner for funding the government before then is simply because during the first two years of no budget both houses of Congress were so overwhelmingly Democrat that President Obama had a filibuster proof echo chamber for a Congress made up of members of his own party to an extent most Presidents could only dream about. Even with such a majority in both houses, the President and the Congress still were unable to produce a single budget. Truth is there has not been a budget passed since President Obama was sworn into office. There have been numerous theories and excuses pushed to try and explain why no budget has been passed during the Obama Presidency with the overt partisanship having become the number one excuse despite the inconvenient fact that even with an overwhelmingly Democrat Congress supporting President Obama there was no agreement and thus no budget. I have my own pet reason for there not being a budget and it even works for those first two years when there really was no other excuse not to have submitted and passed a formal budget. As long as there is no annual budget there can be no evaluations as to what the level of spending is related to other years by comparing the budgets. Furthermore, by using continuing resolution the spending for separate items can be passed separately and there can be numerous schedules such that there is no easily discerned way to total government expenditures for each year. One can also hide larger than normal increases in those areas and departments while using the lack of straightforwardness to deny increases or even make actual cuts to those areas where the President and his allies are inclined to do so. An example would be if you wished to increase a particular program’s spending allowance in the budget more than the usual say ten percent, all one need do is schedule it for receiving its funding monthly by continuing resolution and each month increase the spending by what at first appears to be the same ten percent but just as compound interest boosts your savings account and compound interest adds significantly to your mortgage total payment, it also greatly increases the budget well past the ten percent that you are claiming to use. Simply put, continuing resolutions as the method for approving government spending allows for far greater amounts of spending than would otherwise be budgeted if an annual budget were debated and enacted.

 

Should the Federal Government actually shutdown we would be treated to a lesson many of us should have already learned long ago, namely how little such a shutdown affects our daily lives. The Republicans are worried that they will get the blame for any government shutdown and they are therefore very likely to not find their spines and fold to whatever the President and the Democrat leadership demand just to avoid a partial shutdown. Partial, that is the word that everybody needs to put the emphasis on, not shutdown. If the Republicans were at all savvy they could utilize such a shutdown as a public learning experience in much the same way as the sequester turned out. President Obama spent weeks upon weeks warning how the sequester cuts would bring life as we know it to a standstill. He predicted near collisions due to no air traffic controllers, potential disasters from lack of health and other inspectors and the one item he got almost correct, long waits at airports for the TSA inspections. The thing was the lines at the airports were not any longer than normal but by simply having news crews and their cameras at some of the busiest airports during the busiest part of the day and the supervisor being instructed to send a number of his people on break at that time, instant photo-op of the sequester making life impossible. A government shutdown which only places what are deemed unessential personnel on leave, with pay if things are as they have been in past shutdowns as we cannot have these poor unfortunates go without their paychecks just because they are not working as it is not their fault their job is considered unessential, thus all essential services continue unfettered and hopefully smoothly. The Social Security checks, Food Stamps vouchers cards, Welfare payments, Air Traffic Controllers, FBI, CIA, IRS, BATFE and other enforcement personnel and all military personnel will remain at their posts doing their jobs. There is an inconvenience one might face, that would be the Federal Parks being closed, but the State Parks would still be operating as usual for an alternative. While I am aware that some of the Federal Government workers who fall under the classification of nonessential actually provide valuable services or are performing research and other tasks which are quite necessary; still, it does get one to thinking as to whether or not all of the nonessential Federal Government employees are really needed or could we actually do without some percentage and not notice any real difference? When one reads those articles which appear every so often which list some of the inane, insane, and utterly absurd items the Federal Government has either purchased or is researching and you just know that whoever approved these items we would have been better served had that unessential employee been dismissed before that fateful decision on how to waste our tax dollars. In all honesty, could we possibly get by without hiring any more unessential Federal Government employees for say five years and then just cut those positions that went vacant through attrition and start from there?

 

The final lesson coming in October is actually the culmination of our budgetary woes. Once again we have hit the debt ceiling which means that there is simply no money, in theory, to continue government. This problem has grown to the point where it has become a dangerous threat to the future and well-being of the United States. Up until approximately four years ago when the Federal Government reached the debt ceiling the Congress, usually at the behest of the President, had raised the debt ceiling and then the United States borrowed cash by selling bonds to foreign governments, most often this meant China. China reached their tipping point where should they buy additional United States bonds they risked those purchases having a negative effect on their economy. As China was the buyer of last resort for any large issuance of United States bonds, this caused difficulty in marketing additional bond releases. This resulted in a new and riskier arrangement where the Federal Reserve purchased the bonds. This becomes a problem for a myriad of reasons, many are very complicated and difficult to explain. Thomas Sowell has written a number of articles which explain some of these difficulties and is able to explain them such that they are understandable, or at least more so than most textbooks’ explanations. The first problem is the makeup of the Federal Reserve. Despite the inference in their name, the Federal Reserve is not an arm of the government. The Federal Reserve is a board made up of leading international bankers or at least board members and significant people of holdings in the world’s major banks. When they buy the United States Treasury Bonds, they are using the money which they hold which was supplied by the United States Treasury. This results in basically the Treasury printing money that this cabal of the world’s leading bankers and money manipulators then utilize to buy the Treasury Bonds thus returning the money to the Treasury who now place that money into the supply for the banks and markets as well as financing the Federal Government. This is often simply referred to as monetizing one’s debt which has always led eventually to, at best, simple inflation, and at worst, hyper-inflation such as what destroyed the Weimar Republic and has ruined other national economies throughout history including Rome. The other side of the coin is that if the debt ceiling is not raised, then it is possible that the United States would default on our interest payment on the debt. Contrary to what many believe, the only payments that have been made on the United States national debt have been payments to cover only the interest, the principle continues to grow ever larger and has not been paid down since before World War II. Should the United States default on their interest payments on the national debt, the credit rating would instantly drop below anything imaginable and the United States would be facing demands of payment on the principle, the actual debt which we back with our natural resources. The ensuing chaos and destruction would inevitably lead to only one thing, a war where the United States stood alone against the rest of the world, or at least those nations to whom we owe gold, money, or whatever. There would be no full faith and credit of the United States and the dollar would become worthless on the international exchanges. The full ramifications of such an event are unthinkable which is why there is absolutely no possibility that the fight to raise the debt ceiling will go any further than just before the next debt payment comes due. October should be a good month for those journalists who have their degrees in economics. I know I for one will be following Thomas Sowell very closely.

 

Beyond the Cusp

 

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