An Open Letter to the Virginia Members of the United States Congress

As I have stated in other letters to you, correlation does not mean cause. So it is with the bailout of our economy. The democrats state that the root cause of the problem is principally attributable to an over emphasis on free market economics and a lack of regulation. Their answer: more government. In fact, the recent failure of the banking system is not principally a failure of the free market or lack of regulation, but is a prime example of the effect of socialism in a free market economy. Through the Community Reinvestment Act, the government provided economic incentive to provide loans to low income people who otherwise could not afford them. In fact, it was even worse than this: the government punished lenders who did not market these loans. As a result, demand was created that needed a supply. Homes were built that people could not afford. Sarbanes Oxley further exacerbated this situation through its “mark to market” requirements, in essence artificially overvaluing these assets and allowing lenders to lend even more money. Now that we are on the downside of this disaster, the government wants to interpose itself back into the equation, by thinking big government solutions can get us out of the mess. I do not believe it will work. As evidence I cite: failed energy policy over the past forty years, especially nuclear power; a failing social security system; a health care system that is broken; and an education system that spends more per capita than any other nation, but whose students rank first in only one category – “self confidence.”

Taking money out of the hands of “hard working” Americans and putting them in the hands of politicians has resulted in a 334% increase in Federal spending since 1965 (from $628 billion to $2.7 trillion in 2007 inflation adjusted dollars), while the median income of the average American has risen 35% ($28,346 to $38,386). Over this period, mandatory spending on entitlement programs has grown from 26.9% of the budget to 52.9% of the budget. When interest is considered (8.3%), only 38.8% of the budget is discretionary (within the control of the President). A better solution is to take the decision making out of the hands of a do-nothing, socially progressive government and let the average “hard working” American decide for himself or herself how to spend his or her income.

In my mind the decision is simple. Do we want a country in which individuals create and distribute wealth (equality of opportunity -- capitalism) or one in which the government taxes the successful and puts it in the hands of a few (the Government) who then redistributes it as it sees fit (equality of outcome – socialism)? We are rapidly moving from an economy where the medium of exchange is one of money to one of votes (47.3% of wage earners do not pay federal income tax, but receive benefits and tax credits). We would be well served to remember the advice of Thomas Jefferson: ““Every government degenerates when trusted to the rulers of the people alone. The people themselves, therefore, are its only safe depositories.” – Thomas Jefferson, Notes on the State of Virginia, Query 14, 1781.”