Beyond the Cusp

January 3, 2013

They Surrendered to President Obama and Passed on Promises

Well, as everybody who has functioning senses probably knows by now, the Congress has given President Obama a good measure of everything he desired without extracting even a single sacrifice from the White House. Alright, so they pared the salary up from $200,000.00 for singles and $250,000.00 for couples and families all the way to $400,000.00 for singles and $450,000.00 for couples and families to be punished for their success with higher taxes. The good news about this is now it will be only those making closing in on half a billion dollars who will now move the vast percentage of their investments overseas where they will be safe from the increased penalties from increasing taxes instead of those making around a quarter of a billion dollars. Even so, with estate taxes being raised significantly and capital gains taxes also being raised measurably, these will force the investor class to place their monies in safe havens and pass them on to their descendants in measured ways which work around the estate taxes. By increasing the capital gains and estate taxes the government will likely cause the opposite of what they have been peddling to the public and the government will actually receive less in revenues from these taxes than had they left them at the lower rate where it was not cost effective to play the avoidance games. They extended unemployment insurance for an additional year without bothering to figure out how to pay for it leaving it to be simply added to the deficit. It will not be that much money so it will hardly be noticed. But all of this is the least of the disappointments.

The depression many fiscal conservatives are feeling today has to do with the lack of spending cuts, not exactly lack as complete dearth of spending cuts or even reductions of increases. The vote to pass this legislation, which has laughably been referred to as a compromise, had one defining item, the kicking of budget cuts down the road, even the presumed ones that were to take effect as part of the fiscal cliff, making for another crisis now scheduled for around March 1, 2013. This is more serious than it will be reported as it will lead to another round of panic, screaming and insanity which will allow President Obama and his Democrat allies in Congress along with a compliant media to again assail the Republicans with charges of obstructionism. In the end there will be yet another compromise which will give mere lip service to spending cuts while gaining concessions from the Republicans which will bring them that much closer to their goals of tax increases back to the Clinton administration levels for those earning $200,000.00 to $250,000.00 annual incomes. The likelihood that even come March the compromise will once again kick the spending cuts can down the road is far too high. One has to realize that we are expecting a Congress in which the Senate is still under the direction of Harry Reid who has refused to even allow a budget to reach committee, let alone come to the floor for a vote, in over three years. Does anyone honestly believe that anything will change during the second term of President Obama? The President and his facilitators in the Congress have realized that by not passing a budget and instead voting for continuing resolutions to keep the government running they are able to increase spending in whatever department they feel favorably towards simply by giving it an increase every few months when it comes up for its turn for a continuing resolution. By this method they can actually increase spending beyond inflation and have done so already with the largest increases coming in the first eighteen months of President Obama’s first term when the Democrats had unopposable majorities in both Houses of Congress. This fiscal cliff so-called compromise is simply another of those continuing resolutions under a different name and the next few will all be called fiscal cliff compromises but a continuing resolution by any other name is just as damning to those Republicans who allow such to pass in the House of Representatives. This little fact leads me to what I find the most distressing of the maneuverings and sleight of hand going on in the Halls of Power.

There exists one thing which those who are still voting for responsible governance and honestly wish to gain control over spending and actually address deficit spending and the national debt can still do that will make those willing to go along rather than take a principled stand have to pay a price. Every time when the House of Representatives reach the critical vote on one of these boondoggles, we need to insist that the news sources publish lists in order to tie every Representative to their vote so when they stand for reelection in the next elections they have to explain their vote. This may not have much of an effect on the final vote taken now, but it has the potential to give the voters in the home district know if their Representative was voting as they had hoped they would. This opens up the possibility for candidates to be proffered to their constituents who is willing to take the hard principled stand and better represent the desires of the people. Making each member of the House of Representatives answer to their name with a Yes or Nay vote which can be recorded and played during the next campaign may be the best medicine to wake up some of the wayward Representatives and bring them back to walking the line. And if such does not convince some to vote to uphold their election promises, then so be it and may we find a brave and solid candidate to replace them. That is the way to make progress, make every member vote on the record and note where each stands when the chips are down and their backs are against the wall.

Beyond the Cusp

December 31, 2012

The Looming Fiscal Cliff and Related Catastrophes Predicted by the Doomsayers

One has to ask the questions and check to make sure that all are properly strapped in and have assumed the proper crash position as the entire United States goes over the Fiscal Cliff and crashes to the bottom just beyond about the time you are singing Auld Lang Syne and the clock strikes midnight. Just like the end of the movie, Thelma and Louise, the citizens are all in a convertible and heading at great speed towards the Fiscal Cliff and accelerating with one exception, unlike the movie there are no smiles for those going over this cliff. But before you put on a forlorn face, let me give you some good news and helpful advice, both of which have been in short supply of late. Firstly, do not allow any fears or other worries over the looming crashing over the Fiscal Cliff dampen your New Year’s Eve this evening, tomorrow is going to bring whatever no matter your mood, so enjoy the party tonight and tomorrow you can deal with reality once again.

Now for some fun facts about this overly hyped Fiscal Cliff. It is not so much a cliff as it is a Fiscal Curb, and even then it is a small curb of merely three maybe four inches. Any of those dread predictions will eventually be erased and will quickly fade from memory as soon as the politicians are not being watched breathlessly and can do their jobs without anybody noticing. Having watched politics for quite some time, I have found that politicians are a peculiar breed; unlike normal people who will work more diligently when being observed, politicians tend to just make grandiose gestures and pontificate in a wild manner and not actually accomplish their jobs very well when being observed. Part of the reason for this I have found is that when watched politicians actually become rather timid and will go to great lengths to not make any wrong moves. This fear of being observed making a wrong move tends to prevent them from any real actions in fear of having to explain their reasons. Politicians rarely know what they are doing so explaining why they did something is the worst challenge one can face without first having research done to tell them how to explain what they had done in an acceptable manner. So, once we stop watching their every move regarding the Fiscal Cliff they can begin to address the problems and come up with a solution.

Then there is that big issue, who to blame for the United States going over the Fiscal Cliff. Well, actually everybody and nobody. Who you blame depends on which side you favor or voted for in the November elections. For those few who actually prefer to discern exactly who is attempting to apply principles to their votes and actions and who is simply playing politics, the Fiscal Cliff is a perfect storm to explain the different sides and exactly what caused such inaction which resulted in going over the Fiscal Cliff. The first item that must be understood is that going over the Fiscal Cliff was a result of both sides refusing to compromise on certain principles. President Obama refused to compromise and to allow for all of the Bush tax cuts to remain and instead insisted that the upper tax brackets have their taxes return to the rates from before the Bush tax cuts were enacted. Many of the so-called Tea Party Republicans who were elected during the 2010 Congressional elections refused to allow any taxes to be increased as this was one of their central promises they made when campaigning and when Speaker Boehner was unable to get spending cuts included in exchange for allowing the higher taxes on the upper brackets, they refused en masse refusing to allow Plan B. The Democrats in congress held the line as President Obama had insisted while Speaker Boehner was unable to coerce sufficient Republicans to vote for any manner of tax increase and break their promises. The fears many of the Republicans are suffering are legitimate and have been proven countless times in the past fifty plus years. Numerous times the Democrats have made promises to make spending cuts in the next year’s budget if the Republicans will allow their proposed tax increases, often on the higher brackets, to pass immediately and surprisingly the spending cuts simply never ever materialize. Many Republicans have taken the view of fool me once, shame on me but fool me twice and shame on me again but eventually I will awaken to these games and learn and then you will no longer play me for a fool. I had honestly thought that it might have been possible that thanks to Speaker Boehner and his compromise Plan B that the Republicans would cave and it would have been fool me for the umpteenth time. So, actual and honest blame is of sufficient amounts that it can be spread around to almost everybody but the most should go to those who gave the Fiscal Cliff overt hyperventilating that was passed off as reporting. The only thing the vast majority of us will need to do is sit back and simply wait for all this Fiscal Cliff insanity to pass and be rendered inconsequential when the Congress and the President finally stop grandstanding, as nobody will be watching any longer, and get down to doing their actual jobs and stop screaming while all standing in a circle and pointing back and forth needlessly.

Beyond the Cusp

December 29, 2012

What Actually Predicated the Fiscal Cliff?

The media, talking heads, politicians and presumed experts have been feeding the public the story that the Fiscal Cliff was made possible, if not inevitable, by the Congress and the President put on hold addressing the deficit spending and debt ceiling difficulties and all the rest of the economic woes by passing a resolution setting this New Year as the deadline where the Bush Tax Cuts would automatically be rescinded and sequestration would cut spending across the board with a significantly larger cut being imposed on the Military parts of the budget. Unfortunately, this simplistic view leaves untold the reason that we are running more than a trillion dollar per year deficit spending. The rush to blame the other party or the other branch or house of government has obscured the springboard that launched the budget into this predicament. The truth is there is more than enough discrediting blame to go around and cover both the Democrat and Republican Parties. The originating start that placed us on the path to eventually hit a wall where spending would outstrip any possibility of taxes and fees being able to cover the spending by the Federal Government once allowed to spend outside of the Constitutional limits began almost from the inception of the constitution replacing the Articles of Confederation. This diversion from the strict limitations placed by the Constitution began very early in the history of the United States but the egregious disregard for Constitutional limitations began with the legislations and Presidential executive orders implemented to address the Great Depression of the 1930s.

The three signature programs that got their start as part of the New Deal under the economic policies of President Franklin Delano Roosevelt were Social Security, Unemployment Insurance and the Minimum Wage. The next major damage done by the politicians in Washington were enacted as parts of the Great Society proposed by President Lyndon Baines Johnson with much of it touted as instrumental in the War on Poverty. After these two initial significant increases in the social spending by the Federal Government and the companion spending which was required or adopted by the individual States we have simply added additional coverage under these laws and programs with the occasional new program but as these existing programs had such an enormous cost that each addition seemed minor in comparison. Of course there were some programs which did add significant cost or set up situations which would eventually explode and destroying the societal economic wellbeing. One such program was the Community Reinvestment Act which was passed into law and signed by President Jimmy Carter. This law was used to intimidate banks and other mortgage lenders to make loans to marginally qualified buyers. Under President Clinton the CRA was expanded which set the housing market on the fast-track to forming a bubble which would crash in 2008. Under President George W. Bush we were given the Medicare Prescription Drug, Improvement, and Modernization Act which added excessively to the costs of Medicare. The latest major spending program is still being implemented and is the signature program put forth by President Barack Obama, called the Affordable Care Act. The full impact of this legislation will not be felt until later in this decade when it becomes fully implemented and all of its institutions and coverage have been instituted. These were just some of the most costly of the many new programs that have been instituted by the Federal government almost nonstop since the 1930s with the purpose of eradicating poverty in the United States or providing the social and financial safety net for all.

All of the above and the other items instituted over the years have had their individual and collective effect in pushing spending by the Federal Government beyond the ability of the economy to cover no matter what the tax rate. There is one last action which has to be discussed and is very likely the single most important contribution in causing the Fiscal Cliff yet has been overlooked by the majority of pundits, journalists and the rest of the coverage of the presumed coming disaster. This event was more of a procedure which was executed over the first eighteen months of President Barack Obama’s first term in office. It all is a part of the disregard for the financial, fiscal, and budgetary requirements of the Constitution by President Obama, his administration and the totally controlled Democrat Congress as they did not pass an actual budget during his first term. Instead of meeting this requirement the Congress in cooperation with President Obama passed individual spending bills which made allotments by department or program without forming an all-encompassing budget which covered and identified a budget for each department, program and other expenditures. This allowed for President Obama to stipulate a series of spending increases for those departments of the Federal Government which he favored large spending increases. Through this subterfuge that the President committed with the willing cooperation of a rubber-stamp Congress enabled for an increase of as much as thirty percent increase in the baseline budget of virtually every social program and their overseeing agencies. This forever increased spending in these selected departments and programs without ever needing to actually propose additional spending as the initial increase was used as the new baseline spending onto which the COLA annual increases would be applied as well as whatever the standard increase was applied to the entire budget if and when the Federal Government returns to actually passing budgets as required by the United States Constitution.

These slyly placed spending increases are a major portion of the items which have pushed spending causing the United States Federal Government to be running over a trillion dollar per year deficit which also resulted in constantly crashing into the debt ceiling. The main reason that the taxation and spending consequences were put off in such a way that the time would eventually arrive where the Democrats would get everything they dreamed of and the blame would be placed on the Republicans, what could be better? What is interesting is if one inspects the previous times when similar fiscal difficulties have struck the Federal Government and where the blames have been placed. When there was a budgetary war fought between the Democrat Congress and Republican President Ronald Reagan the media laid the blame for the impasse on President Reagan and allowed the Democrat Congress to get a pass. The next conflict over a budget came as a disagreement between Speaker of the House Newt Gingrich and President Clinton. The entire fault was reportedly due to the intransigence of Republican Speaker of the House Gingrich and no blame fell upon Democrat President Clinton. Now we are facing the dreaded Fiscal Cliff and once again it is the Republicans in the House of Representatives who are to blame while Democrat President Obama along with a Democrat majority Senate are given a pass. There does appear to be a pattern here.

Meanwhile, back to the perfect situation the media is giving the Democrats and President Obama by placing all the blame for the lack of an agreement on the Republican House as if the President would approve any budget and solution the Republicans would send to him. In some manner that is a true statement but solely because even if Speaker of the House Boehner managed to marshal the votes to pass a budget, it would never even get heard in the Senate as per the promise of the Democrat Majority Leader of the Senate Harry Reid. Between the protective shield provided by Senator Reid and the Senate and the media and their favorable reporting gladly placing all blame for anything fiscal at any time squarely on the Republicans, the President can afford to take a vacation and grandstand claiming to return early to get serious when the only seriousness the President will demonstrate is rolling up his proverbial sleeves. Otherwise, the only actions that President Obama has taken has been to demand that he get everything he demands and anything in the way of a compromise is out of the question.

Looking at the situation which directly caused the Fiscal Cliff we get a far different picture than the media has laid out for us to consume. The initial steps on the path which has gotten us to the precipice of a cliff were made a long time ago. This extra-Constitutional spending by the Federal government started long ago even before President Theodore Roosevelt began purchasing lands placing them under Federal Government ownership as Federal Parks denying the sovereign States of their right to utilize the lands within their borders as they saw fit. The huge steps taken which was the base-work in establishing the concept of social spending being under the purview of the Federal Government were done under President Franklin Delano Roosevelt and subsequently by President Lyndon Baines Johnson. The problem has been further expanded and exasperated by virtually every President and Congress since LBJ. The Community Reinvestment Act was instrumental in setting up specific criteria which would be expanded eventually leading to massive failures to pay on loans leading to a run of foreclosures which resulted in a crash of the real estate market causing bank and other financial institutions to fail as they held what had become toxic mortgages where the properties were worth a mere percentage of the loan value. This difficulty was handled in what may prove to have been the worst possible manner by initiating a Federal Bailout which was the brainchild of President George W. Bush. Doubling down on this troublesome solution was reapplied to cover even larger sectors of the economy of the United States was initiated by President Obama. At the same time, President Obama used the existence of a super majority in the Congress which precluded any possible meaningful opposition by the Republican minorities in his plan to vastly increase social spending. President Obama managed to repeal all the reforms placed on welfare, food stamps and other Federally mandated social programs that had been passed in compromises between a Republican Congress largely led by Speaker of the House Newt Gingrich and President Clinton during his second term. President Obama then directed that these programs begin a special enlistment project to maximize their coverage rolls. This push became most noticeable in the increase in Food Stamp recipients. President Obama also pushed to increase spending in every program he favors and tasked others to perform some forms of social functions replacing their previous primary functions with these new priorities. The special additional investments in social programs led to an unusually large increase in the spending on these programs and subsequently on their parent departments. This set a new inflated base spending in these areas which has now led to the problem in balancing the new baseline budgets with the available funding. Procrastination was used to set a trap that is now about to be triggered. When facing this fiscal nightmare the Congress along with the President decided that it might be easier to address the new budget slowly and with greater care and thought and so the trap was set. The trap agreed to was that if the Congress and the President were unable to find a compromise by the end of the year, then the Bush tax cuts would be allowed to expire, a Democrat dream objective ever since these lower tax rates were passed, and sequestration cuts would be made across the board in every department with an extra measure to be taken from the Pentagon and military budgets. Now we are facing the consequence of this agreement and time is growing short. What to expect?

Either we will go over the Fiscal Cliff, a meaningless consequence that has been pumped up and made into a huge and scary monster, or the Republicans will compromise and be censured by the media for not giving in sooner and their constituents for compromising their principles. The question people need to remember the answer to is why would the Democrats compromise when what they really desire is for huge cuts to the military, NASA and other nonsocial budgets with minimal cuts to welfare, food stamps, and other social spending along with tax increases on everybody. The Democrats get their wildest dreams coming true simply by doing nothing but refusing to cooperate and they can count on a media which will absolve them of any blame while thoroughly scorning and condemning the Republicans as solely responsible for the refusal of a compromise being attained. After this pretend emergency has passed, just like the pretend disasters previously when shutting down the government because of lack of agreement on a budget was supposed to bring on the apocalypse, life will continue and the consequences of the miserable handling of the economy and spending will still not yet be evident. All the hoopla and grandstanding about the Fiscal Cliff is much ado about nothing and the consequences that led to this situation will continue unmentioned by the media because they are adverse to reporting the shortcomings and shenanigans committed by their hero, President Obama.

Eventually the consequences of the fiscal extravagances that have been the main fare of the Federal Government for much of the last century will come crashing down upon our heads and thin out our wallets. Thus far we have been spared by another group whose irresponsible actions have facilitated the extravagant overspending by the Federal Government simply by keeping the interest rates deceptively at their current low level. This charade cannot be kept up forever and eventually the rates will need to rise to their natural level. The only reason the Federal Reserve has escaped harm from their deceptive ploy keeping interest rates so low is because the Federal government has adjusted how inflation is measured in order to obscure their real levels. Why else did the measurement of inflation be adjusted in such a way that food, energy, and petroleum prices were not considered as essential elements of our lives and thus not included? I know I eat and use energy and have to feed my vehicle, but apparently the Government does not believe I have any need to purchase such things. This sin of forcing the interest rates to remain low is not only the fault of the United States as Europe and much of the rest of the world gladly goes along with the charade as they also get to enjoy cheap money due to low rates on their loans. When the future point is passed and the interest rates must rise or inflation will destroy every economy and there is no longer any choice, then everybody will pay for their sins. Whenever this event comes to fruition it will be best if you have absolutely no outstanding loans, especially credit cards. Long term loans such as car loans and mortgages which have fixed rates will be safe but any adjustable rate debt will become unaffordable as interest rates are very likely to become prohibitively high, possibly reaching or exceeding twenty percent. Let this be a wise warning that the day will soon arrive when adjustable debt will become an anchor that drags your finances into the deep and they will drown you. The governments of the world will pay for their excesses but there is no reason that we as individuals must be as irresponsible as our governments have been.

Beyond the Cusp

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