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

 

Our Sequestration Outage

Over the past few days all of our schedules here at BTC have been disrupted by a series of high intensity meetings and brain storming sessions all having to do with how we might be able to adjust to the state of things post sequestration with the serious cuts being made in all government programs, especially those which will affect the most numbers of Americans not part of the higher echelons of government, you know, Congrescriters, their staffers, the President, members of his family, and all attached to the Administration.  There had been numerous warning, actually more like threats, of how the sequestration cuts would be the end of life as we know it with the government forced to make draconian cuts to so many vital programs and this was the concern we addressed in our meetings. We went over our budget numerous times, it took so little time we thought we should do it repeatedly until it seemed larger than life, we never attained such levels. Then we reviewed the funding we receive from the government and that caused us great distress. Hard as it may believe, but our government subsidy was less of our budget than anyone could imagine. We checked and rechecked and even double-rechecked and to our complete surprise we were unable to track down one red cent we receive from the government at any level. We even contacted others we know who might be facing difficulties resulting from the sequestration budget cuts and all our fellow private enterprises also were having little problems with these cuts as they, surprise, surprise, also do not receive any funding from government sources. Empowered with this information we decided to review some of the warnings, or threats, your choice, as to which services would likely be curtailed or cut back due to sequestration. The results were nothing short of amazing.

 

Some of the services we found that were to be cut were absolutely astonishing. The TSA might not have sufficient numbers of screeners and security personnel on all shifts to facilitate safe travel conditions. The concierge services at Reagan National Airport and Dulles International Airport who provide services for Congressional and Presidential staffers and high government officials would remain at full staffing, after all, only the best for our best, or something like that. Another small inconvenience for travelers by air would be a possible deficiency in the number of Air Traffic Controllers to handle the full load of flights. There were some reports that as some locations receive Federal funding for some of their Police, Fire and Rescue personnel that in such areas there may be a reduction in force in order to meet the cuts. Don’t get too worried, security personnel and the Federal and Capital police will remain at their fully funded levels providing nothing but the best for our elected officials and their staff members.

 

Fortunately we did some further research and things will be far less dire than the predictions from the let’s shock the life out of the public newscasters and press personnel releasing these reports to the newswires in order to paint a picture of apocalyptic events being just on the horizon if the sequestration was allowed to befall the United States. Most of the cuts would amount to a small percentage of the Federal workforce having to take one day a week or even every two weeks furlough. This means they may use their personal leave and still be paid or they may simply forgo that one day of pay in the immediate future until a budget is finally formed. After a budget is approved, if these furloughs are treated as every previous furlough, these employees who were forced to take time off will receive back pay to cover every hour they missed of work. Yes, that’s right, at the end the furloughed employees will receive pay for the time they stayed home and did absolutely no work and may have even received pay as they took leave. So, if a furloughed Federal employee chooses to use leave time to receive pay for the furlough days, once the budget is passed they will be paid for those days a second time and still not have worked those hours. So, at a minimum, any Federal worker who does not receive any furlough days has to work those extra days while their coworkers stay home and in the end the ones who got to stay home will get as much if not more pay for the same period. The ones who take leave to cover furloughed days will be paid both leave and regular pay for taking a day off. Who wouldn’t want that deal? But there is a small catch.

 

That might be a problem as there has never been a budget passed since President Obama was first sworn in January of 2009. That year they finished out on the final budget approved and signed by President Bush but since then President Obama has never signed a single budget. Even during his first two years he did not sign an annual budget by only signing continuing resolutions and partial budgets for certain departments or programs. The theory behind this ploy was the President was able to push through numerous budgetary increases by using numerous continuing resolutions and including increases with each and every one leading to an annual increase larger than had one yearly budget been passed. The end result was by the end of eighteen months, a year and a half; President Obama had increased the baseline budget for numerous of his favored entitlement programs allotting significant new funds in order to greatly expand their benefit roles. One of the more notorious of these was the Food Stamp Program which has seen the most massive increase in enrollees in its history. Should the sequestration force spending cuts, it still will not force President Obama to actually sign a real budget. Of course when the President or his spokespeople are questioned as to why he has not signed any budget for a full year, they all answer with he has not received a budget from the Congress for him to sign.

 

Needless to point out, but the usual reason is he has never received a budget from the Republican Congress. This little bit of information is almost universally reported verbatim as if it were the gospel truth. The honest truth is that the Democrat controlled Senate, half of the Congress but who’s counting, has refused to even schedule the numerous House of Representatives passed budgets for committee hearings or a floor vote or debate. Senate Majority Leader Reid has announced from day one after the 2010 elections that no budget the House of Representatives would send to the Senate deserved even a minute of debate and were dead on arrival. This refusal to even debate and to never, ever, ever allow a vote on a full budget is actually a service provided by the Democrat Party to their Democrat President to relieve him of ever being held responsible for the budget and to have a ready-made excuse to beat like a drum whenever he is questioned by the press or anyone else. With Senate Majority Leader Reid following the President’s actual words given in countless speeches where he has said what amounted to the denial that President Obama was standing ready to sign any bipartisan and proper budget that the Congress could agree upon and send to his desk, oh, and he is waiting anxiously. Then comes the whispers from the White House into Senator Reid’s ear, no budget must ever pass the Senate without White House giving prior approval. Then the only budgets approved and sent to the President are kick the can down the road continuing resolutions. But why let such a trifling matter spoil a good thing. Eventually a budget or possibly one of the myriad of continuing resolutions that gets passed will include the back-pay for the furloughed workers and it will be excused as necessary as the unfortunate Federal workers who were furloughed cannot be made to suffer because the Republican Congress would not do their job and send a responsible budget to the President in time to avoid the sequestration. Also, you do realize that the whole idea for sequestration was a Republican one and the President had nothing to do with the idea, well, other than proposing it, defining it, demanding it, and then complaining how the Republicans forced it on the country. Oh to have an echo chamber anywhere as faithful and loyal as the fifth estate is to their leader, President Obama.

 

Beyond the Cusp

 

The Real Truth of the Fiscal Cliff

Polls have shown the influence of the media on public opinion as their results of polling on the fiscal cliff have become public. These polls universally trend showing that should no compromise be reached and the sequestration be imposed along with the Bush Tax Cuts, as they are called, being withdrawn, all consequences of hitting the deadline without making other arrangements, the Republicans are blamed by twice as many people as blame the Democrats. Much of this is due to the fact that the media has presented the Republican position as being simply demanding to retain the lower tax rates for the rich while the Democrat position has been reported as preserving government benefits programs. But what are the realities and which side is refusing to make any compromise? You just might be surprised how different the truth is to the reporting you have been fed consistently since the election ended.

The Republicans are standing to keep the current tax rates in place for every income while either placing monetary upper limits or elimination of some of the tax deductions and credits, many of which favor the upper income individuals but would not affect small business owners. The Republicans are calling for cuts to be made in numerous government programs in order to reduce spending to meet the requirements in place defining the fiscal cliff. The Democrats are proposing to simply raise taxes on people making over $250,000.00 a year who they define as millionaires or the rich as well as allowing Capital Gains Taxes to return to the previous higher level which will have a serious effect on anybody who sells their house or cashes in on investments. Neither the Republican nor the Democrat plans will come anywhere near solving the current fiscal problems faced by the United States. The main reason that no plan put forth thus far comes anywhere near solving the economic woes of the United States is simply because everybody is in denial and refuses to mention the real and honest reason for the economic problems facing the United States. Sure, they give some reference to spending and the recession and other economic weaknesses, but what is the root, the original sin, so to speak, that nobody is brave enough to speak that made the current economic difficulties an unavoidable inevitability?

The spawning of the United States economic ills is also the reason that under the Obama Presidency there has yet to be a budget passed by Congress. Initially, neither house of the Congress attempted to pass anything resembling a budget beyond continuing resolutions and department by department or individual program financing for those particular programs and social policy departments preferred by the Obama Administration and the liberals in Congress. After the Republicans took control of the House of Representatives in the 2010 elections they were able to pass budgets which addressed the obvious and growing deficit problem, the more well-known ones being the Ryan Budgets, but all these hit a brick wall of refusal in the Democrat controlled Senate. The truth be told, Democrat Majority Leader, President Pro Tempore Harry Reid simply refused to even place any of the Ryan budgets onto the Senate Schedule and thus they died without even reaching a committee or being discussed or acknowledged in any form. All of these peculiar actions which totally ignored the Constitutional responsibility of the Congress to pass a budget every year by a specific date had a reason, and that was in order to camouflage a devious plan instituted by President Obama that had it been done through the normal budget procedure would have raised outrage and condemnation of such actions from the people. So, what was this plan, this conspiracy of sorts?

In the first year of President Obama’s Administration he had complete freedom to pass any legislation he so desired with a majority in the House of Representatives and a super majority that precluded the possibility of a Republican filibuster in the Senate. President Obama, being one who would never allow such an advantage to go to waste, met with Senate Majority Leader Harry Reid and Speaker of the House Nancy Pelosi and carved out a plan to increase certain social programs and allotting them all the monies which would be necessary to greatly increase their scope and numbers of people qualified for payments. Some of these programs and their bloated beneficiaries have been reported, the most often criticized being Food Stamps which has had the numbers of people receiving them explode since President Obama was first sworn into office. Food Stamps are not the only program to have a dramatic increase in people receiving payments or increases in their budgets. Welfare, Social Security Disability, Medicaid, among other programs have led the list of programs to be given new floods of monies from the Federal Government. Similar increases were awarded to selected favorites among the Federal Departments including Education, the Environmental Protection Agency, Health and Human Services, and other social service, social welfare, and social support agencies. What was done in the first year under President Obama was as much as a doubling or even more of many of these budgets as well as the huge increases made with the stimulus bills. These budgetary increases were not intended as one time increases but were used to reset these budgetary levels permanently so that in every following budgetary vote any increases were made using the new and substantively increased levels as the new baseline. This is why the budget has mushroomed so completely out of control. This was a planned crisis designed to push the United States off a fiscal precipice and into a deep chasm from which it would be near impossible to climb out from. That is why even if we gave President Obama his demand of increasing taxes on the rich and restoring the higher rate on Capital Gains and also gave the Republicans even their most draconian spending cuts that they have ever proposed during discussions on this fiscal crisis, it would still not be sufficient to climb out of the hole the United States finds itself in. This is the dirty little secret that neither party wishes to acknowledge.

Beyond the Cusp