Beyond the Cusp

August 22, 2012

America’s Choice; Pay Now or Pay Later

There was an old commercial for automotive lubricants where the mechanic holds up a can of oil with a car with smoke pouring from under the hood, up on the lift and says, “You can pay me now” (nodding to the can), “or you can pay me later,” (looking back at the car in the work-bay). Well, the same thing goes for America and her spiraling debt. The election will be a referendum on whether the people choose to take the necessary steps now to bring their budgets back into balance with a fair amount of pain and suffering or whether they prefer to continue blithely on until the financial emergency brings their entire economy and likely both their government and way of life crashing down around their ears. The first route will be uncomfortable until the economy grows sufficiently to allow for increasing spending, the next time hopefully wisely and with extreme caution showing that America had learned her lesson. The second route America will wake up one day with a splitting hangover and realize that the part is over as the creditors begin to claim whatever resources exist and just simply take them with no regard to people, the environment or whatever damage they do in extracting their money’s worth right out of the ground or by clear-cutting American forests. Along with this catastrophic collection on payment the American people will find that their dollar will be next to worthless beyond their shores and that they have little of anything with which to produce the products on the home-front. It will not be a pretty site and it will be from that bottoming-out that America will need to pull on their work boots and climb out of a deep and dreary hole of indebtedness.

Believe this or not, but this is not an advertisement for one side or the other for the Presidency as sufficient others will be making that argument. The Presidency is only one third of the problem, there are two other parts of government that are required to take the correct actions to try and salvage a solution from the critical crisis mode situation America faces. Those are the House of Representatives and the Senate. In the last session of Congress the House of Representatives passed at least three slightly different forms of a budget which actually did begin to address the problem and make a beginning point for responsible management of the budget. The Senate, on the other hand, figured that they had not passed a budget for over two years, why change now as everything is going so swimmingly. So, if the American voters can retain the level of sanity and sobriety in the House of Representatives as they have shown they are capable of committing, they will only have to find people to send to Washington to the Senate and bring about some fundamental changes in that body. The problem with this is that at any one election only one-third of the Senate is up for election so that limits the number of seats which can be changed to just over thirty. Since some of the Senators who are running for reelection are already on the correct side and have attempted to force the Senate to actually perform part of their Constitutionally ordained job, those Senators simply need reelecting. It will be the Senators who have joined with Harry Reid in blocking any attempts at making a budget and by such actually limiting and directing where government spending would be allowed. Instead, Harry Reid and his accomplices have been running the government on this item known as a continuing resolution which simply allows spending to continue at the current rate, often with a percentage increase, for a set period of time, usually a few months, and then repeating as necessary. The advantage for Harry Reid and his accomplices is that they can also pass other legislation to allow or even instigate other spending items which would normally have needed to be placed within a budget but without having a budget are each passed separately and thus debated completely out of any context to actual spending. This allows the conspirators to spend additional funds on those items they favor, usually vote buying types of spending better known as subsidies, without having to debate them in context of a comparison to previous spending levels thus making sneaking larger increases more easily hidden from direct scrutiny. This is especially true as they can add these extra spending allotments multiple times such that they do not appear to be as large as they end up becoming through a method of accumulation. The voters need to ask every Senator one simple question this election, “Will you vote to pass a budget or are you going to continue the deceitful practices of issuing continuing resolution to fund the government?” For any incumbent, just check their voting record and whether they voted in favor of any of the budgets passed by the house should become readily evident. If they opposed every budget vote, then do not give them your vote and send fresh blood to the Senate. And if the person you send does not support doing the hard work and crafting a budget in cooperation and debate with the House of Representatives, then when reelection time arrives, replace them. America cannot continue to proceed without an annual budget and simply voting to spend piecemeal which will always result in superfluous spending and dangerous deficits as we have seen of late.

There is one more place America needs to give careful scrutiny. Fortunately, not every American will find any disasters waiting to happen, already upon them, or potentially just down the road a bit. This problem is at every local level of government, the State, County, City, or Township. Even school boards may need to have a review to determine if they are using the funds well and what improvements may be made. Many States along with a fair number of Counties and Cities find themselves in deep debt or on the verge of large deficits. The American voter must take responsibility for these problems and elect responsible and adult people who will make the difficult choices and find the places where the budget can be cut, slashed in some places, and everything be brought back into a harmonious balance.

We in America have had it fairly good for quite a long time and had sufficient wealth and growth that it often appeared that we could accomplish anything as long as all it required was throwing money at the problem. We have reached the end of the gravy train and in many cases our train ran out of tracks quite a few miles ago. Now we are forced to park the train until we can lay sufficient tracks for it to once again roll forward. The difficulty is so many of us at all levels of income have grown comfortable with receiving gifts from government whether we truly needed the help or not. The time has come where we now need to look at these government outlays and decide if they are still in our best collective interests. If anyone can continue without dire difficulties without the government subsidy or with a far smaller subsidy, then we need to make the appropriate adjustments. This is going to take an honest and mature approach inspired by selflessness in place of the selfishness which got us to where we currently find ourselves, between broke and destitute. Another place we are going to have to change our attitudes is towards what we define as the responsibility of the Government and what is our responsibility to our fellow men. It is not necessary for government to be the giver of all assistance. There was a time not all that long ago where churches, synagogues, temples and organizations ran the food banks, soup kitchens, holiday food drives for those who might not have enough for a special holiday meal, clothing drives, and virtually anything and everything else one can think of to help the needy. This is what is meant by repair the world and giving charity. Paying taxes is not charity despite what many appear to believe.

Charity is given freely and from the heart while taxes are paid while facing the potential of a gun in your face. Americans have a proud history of being the most giving people in this world but we have slowly slipped from that high and proud perch as we have ceded more and more responsibility to government to do for us instead of picking ourselves up and doing for ourselves. We need to return to that America. Doing so will have numerous benefits beyond relieving the financial pressures on governments which do not have the funds to continue in the fashion we have become accustomed. We will also find that by returning meeting this need to the people we will get another gift, the gift of pride and respect and a warm heart when we take the actions to assist those among us who are in need. We need to insist that government not only return this responsibility to we the people, but that they also strike away those regulations which were placed between the people and the free giving of charity. What went along with the government taking this responsibility from us was a series of regulations over the years that had the singular purpose of protecting the government’s ownership of charitable actions. This was not done out of altruism or anything even close to resembling honorable. This was a selfish act by our elected officials who saw that by forcing the needy into dependence on government they could lock up the vote of that section of the population and thus assure in certain districts that those who gave out the goodies would forever keep their seat of power. We need to take that power back as it properly belongs to we the people.

Taking back our responsibility for caring for our brother will have benefits beyond making balancing the budget a little easier to accomplish. Taking back this right to care for each other and to make the world better through our own actions will bring out the best in us and could potentially show the rest of the world how honest, righteous, generous, and good people act and live. Another advantage comes in that we will find that by returning charity to the local people we will also make the act of charity more efficient than having it come from Washington. What many do not realize is that no matter how efficient the government agency might think it is; it cannot break the 80% barrier. The reason behind this upper limit is the IRS which has to allocate one dollar out of every five it takes in from taxes to processing and taking in those very same taxes. A government study once reported, if my memory serves me, that for every five dollars spent by the government the best efficiency managed to get three dollars to the target recipient while the worst got a mere seventy-five cents and the overall average for government was just short of two dollars out of five. One must keep in mind; these efficiency numbers for the government are about funds after the IRS has already wasted one out of every five dollars, so their 100% would actually be 80%. This means these numbers need to be multiplied by 0.8 to get the real efficiency. Compare that to even some of the poorest functioning charities with large overheads such as the United Way which gets and efficiency rating of about 53% while the Salvation Army gets an impressive over 95% efficiency. Oh, if all charity had their efficiency, but then the Salvation Army is a unique and wonderful organization. The average charity has an efficiency rating somewhere between 66% and 80%, both a far cry better than the government even on a good day. So, higher efficiency, a warm feeling in one’s heart, and a closer and healthier community if only we demand to replace government as the proprietors of charity, as it should be. Given time and enough efforts, we could eventually take over virtually all entitlement spending by taking the responsibility onto ourselves. That would free the government to do only that which it was tasked to do by the Constitution. This would allow for tax rates to return to levels not seen for over one hundred years, possibly even do away with income taxes, definitely FICA, and likely all taxes on the people and even on business and run the government off of fees and import and export taxes, as was done, as I like to put it, in the beginning.

The aim, dream and inspired actions of the American voters should be to return to that period of, In the beginning we had a Declaration of Independence which defined that mankind was a noble and proud group of individuals who were endowed with rights which they could choose which ones the government could assist in implementing, but they would always belong to the individual and the individuals could reclaim them at their fancy. Then we drafted a Constitution which tasked the governments among the people with the responsibility of defending those individual rights and never to impinge upon those individuals for it was the individual who was empowered and the government was to be their servant, not their master. The sole problem was that from that point we elected men to high office and they became full of themselves and eventually begot themselves the fill of the individual’s monies. That was not their place and we should never have allowed such theft in the first place. When did we give away that right that was ours and not belonging to the government for an individual is entitled to every ounce of their labor and is free to use the fruits thereof as they see fit without the taxman taking a cut for the government for such is theft by power. We must reassert that we do not agree to permit government to take on the role of a thief and get away with such usury. The time is now for us to reclaim our full rights and place government on notice that their sole job is to protect our rights from the foreigner and from the usury of themselves and we will be watching with more attention this time, let them be forewarned.

Beyond the Cusp

August 21, 2012

Coming Election Will Not Affect Seniors Despite Claims

We have already heard the Grandma off a cliff in her wheelchair reference and will likely hear a lot more of that ilk between now and the election. Fortunately for Grandma and Grandpa, this election will have little effect on their comfort in their golden years. It is highly unlikely their Social Security will be drastically curtailed though they may not get as healthy an increase going forward, they will at least be guaranteed to get at least the same levels they currently receive. The biggest threat to their Medicare funding will not come from Paul Ryan as his plan leaves everything as it stands for those over fifty-five years of age. Unfortunately, the same cannot be said about President Obama’s signature Patient Protection and Affordable Care Act, Obama Care, which has already diverted (a political wording for stolen) approaching three-quarters of a trillion dollars from Medicare. Of course the administration has denied this even when confronted by Congress when Illinois Republican Congressman John Shimkus inquired of Health and Human Services Secretary Kathleen Sebelius during a House of Representatives hearing on March 3, 2011, “So, are you using it (the $716,000,000,000.00) to save Medicare, or are you using it to fund health-care reform? Which one?” To this question Secretary Sebelius remarkably replied, “Both!” Congressman John Shimkus then replied conclusively, “So, you’re double-counting.”

So, as things currently stand, no matter who wins the election, Medicare will start with their administration having to figure out how to fund it with it already short close to three-quarters of a trillion dollars, a significant amount in anybody’s proposed budget. The funding will be found even if it has to be printed, something that has apparently become the new American cure-all for budgetary problems. What will be decided in the upcoming election in the United States will be how the country will face the problems going forward. All the blame games over who made the mess, President George W. Bush, President Barack Obama, the Republican Congress obstruction, headwinds, speed-bumps or the alignment of the universe is irrelevant as whoever wins the election will be facing the same financial predicament. What will be decided is whether spending will be cut by choice now or by imposed necessity later. The main difference is if cuts are made as soon as possible, then the cuts can be made over time in a measured manner, while if we wait until economic conditions dictate the cuts, they will be drastic and beyond the control dictated by the creditors. This is the choice being placed to the American public and this November they will decide. What makes this election somewhat of a crisis is that many claim that this could be the last chance for the United States to exit the spending freeway of their own volition.

But, the question is whether this is reality or is this simply being used as a scare tactic? Those claiming that another four years of attempting to stimulate the economy through government spending to presumably invest in order to collect the funds back in future taxes will lead to the situation where sufficient numbers of voters will be receiving Government dole-outs and thus will create a permanent majority for continuing such programs. This is much like what we are witnessing in Greece and other places suffering in the Euro crisis in Europe. On the other side there is the claim that should we cut spending and wait for time to solve the economic slowdown, then the economy will continue to stagnate and funds through taxes will drop and the country will fall into a viscous cycle of Government cuts yielding less funds forcing more cuts etc. So, which prediction is correct we will find out about after the election and will be left to guess where the other path would have led. Where spending and tax cuts for the rich, the middle class or anyone who pays taxes will be the major discussion debated during the campaign, which is only half of the problem, much of the real problem with the stagnant economy will be left alone. So what is the other half and why will it escape debate?

The other half, what we believe will be the larger half (if there can be a larger and smaller halves), is regulations, particularly on businesses. What will spur the economy faster than tax cuts would be to simply take a laissez-faire attitude and simply make a promise not to add any more regulations or other requirements and keep Government from any further impinging on the daily operations of business. Just allowing business to know that the playing field will remain constant and the requirements are not going to change on a whim allows the business owners to make plans with some degree of certainty what the rules will be going forward. One of the quickest ways to kill economic growth is to keep fussing and adjusting the rules making for a high degree of uncertainty and unpredictability which makes planning difficult to impossible. This has been proven in a very easy historic lesson for people to research. In the United States they refer to the economic problems that resulted from the stock market crash of 1929 as the Great Depression. In Europe it was the economic crash of 1929 and they were in recovery by 1933 only to have it all destroyed by a small interruption best known as World War II. The difference was that Franklin Delano Roosevelt attempted one solution and within a few months impatiently tried his next approach on and on and on. In Europe their leadership could not agree on what they should do and what to enact to repair the problem, so the result was they did nothing and before they could agree their economies began to improve. That is the funny thing about economies; they are cyclic just like nature and just about everything else in the universe. Economies go hot then cool then simmer and repeat as needed. Often the best solution to any economic downturn is to simply be patient and wait, it will come back around. Unfortunately, doing nothing is directly against every impulse of humankind. So, the difficulty is to have the discipline to do nothing and rely that the cyclical nature of all things natural or manufactured is cyclical and the only thing that is constant is change. So, our advice to whoever wins in November, make your decisions on what regulations you like and which you wish to toss out and after enacting it in your first hundred days, just take your hands and sit on them. Do not do anything no matter how obviously correct it may appear. Can any politician actually have the mental discipline to leave things alone? Somehow it is doubtful.


Beyond the Cusp

March 27, 2012

Can the United States Debt be Conquered?

Most commentary pertaining to the exploding national debt of the United States at all levels of government; Cities, Counties, Townships, States, and the Federal Government, talk about managing the debt, slowing the increases in the debt or bringing the debt under control. The usual bromide proposed is that it is necessary to slow spending or, in the most radical solutions, actually cutting spending, actual cuts and not simply reducing the increases. Almost every study and proposal simply addresses the debt side of the problem and ignores what is actually an even bigger side of the problem, increasing the GDP of the United States. Much of the problem with government spending also lies with the flight of production overseas which has transformed our economy into a service oriented economy with little production of hard goods. No matter how much one provides in services and how much paper and data is managed, when push comes to shove it will be what we produce that will be the measure of the United States worth and will serve as real backing for the dollar. On the plus side is a small fact that has been ignored, namely that manufacturing in the United States has been slowly growing throughout American history including right into the present. The problem is that the increase has slowed when we could easily turn that around and bring much of the world’s newest manufacturing into the United States instead of overseas. The question we need to address is exactly how we can manage to make manufacturing more attractive to companies seeking to build new factories.

Currently the United States has one of the highest tax rates on manufacturing if not the absolute highest taxes. When taking this along with the plans to raise the taxes on capital gains, the suggesting that we need to incorporate a Value Added Tax (VAT) on top of the myriad of taxes we currently have, even suggestions of reducing or eliminating what are often referred to as tax loopholes including claiming depreciation of equipment which is a vital deduction for manufacturers to upgrade their factories, and generally high tax rates compared to other countries with whom we compete with in attracting businesses of all sorts to open their offices and manufacturing here, we are crippling our ability to compete in the world market of the modern global economy. What should be enacted is a straight across the board tax which treats all forms of businesses; manufacturing, service, retail, or any for profit operation with complete equality. We should grant equal deductions for both depreciation of equipment over a set period for newly purchased equipment and an equivalent deduction for research and development, both of which encourage upgrading facilities and exploring new products and methods of production which encourage companies to remain in the United States and upgrade facilities, keeping all future development and innovation within our borders. This is how a country builds their manufacturing base and makes a business friendly environment promoting growth and full employment. This is also the best and most assured avenue to increasing revenues through taxation as opposed to raising taxes which actually tends to chase businesses from our shores thus actually destroying revenue not enhancing it.

On another level, it would also be advantageous to improve our crumbling infrastructure. This should be accomplished in as efficient a manner as conceivable. What might be a good formula would be to allow the local governments at the city, county and state levels to set the priorities and simply have the Federal Government provide assistance where the majority of the improvements are to be performed on Federal infrastructure, thus allowing for the initial upgrades to serve larger areas and hopefully prompt inter-state cooperation. Some may claim that making infrastructure repairs is a luxury which is currently unaffordable. The argument against that view is most of the infrastructure in this country is in dire need of attention and the repairs will only cost more and the inconvenience will be greater the longer we delay. Also, should any of these infrastructures fail, the costs to repair and replace those items on an emergency situation will always come at a premium price. Planned upgrades would actually save money over time and would also cause the minimal inconvenience for the people living near the construction or using the infrastructure under repair. Let’s face it, repairing a bridge half of the lanes at a time are less of an interruption to traffic than having the same bridge collapse and need to be completely out of service while being replaced before allowing any traffic utilizing that crossing. Highway construction is never a joyous interruption if it is on your way to and from work, but it is still better than the route to and from work being completely impassable.

Our best solution to the debt comes from doing whatever we find is doable to slow or, better yet, reduce government spending in conjunction with growing business, commerce, industry, manufacturing, and maximizing employment by creating a tax and regulatory friendly environment. We cannot solve the economic problems which are partially a result of policies, regulations, taxations, and an unfriendly counter-business attitudes simply by reducing spending because without economic growth there will be little future revenues for spending at any level. Like it or not, the economy controls how much spending is even possible and thus economic growth is vital to the future every bit as much as reducing spending. It will take a combination of spending less and growing the economy through responsible budgets, taxes, regulations, and investment in infrastructure. It will take something that is seldom found in government and some would doubt that the politicians even know the word exists to bring the United States back from the cusp, back from the brink, it will take a balanced approach, a balance between regulation and independence, a balance between the different businesses such that we include manufacturing, service, retail, processing, large corporations, and small Mom and Pop shops, every stripe of enterprise. What we need is responsible leadership facilitating smart growth through business and people friendly attitudes and actions in government.

Beyond the Cusp

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