Progressive Energy Policy: Too Much Sun, Too Little Sense

In the article, “Sierra Club slams Gov. McDonnell's Va. energy plan,” Associated Press, October 11, 2010, Steve Szotak writes that the Sierra Club is not happy with Governor McDonnell’s energy policy. In its report, entitled "Power Failure: How Virginia is Losing the Competition for Clean Energy Jobs," the Sierra Club states that the Governor has failed “to recognize and take advantage of abundant opportunities that exist with energy efficiency and renewable energy.” In addition to the criticism of McDonnell's proposed energy strategy, the Sierra Club report also recommends a series of proposals, among them:

• Utility rate structures that increase in price based on power consumption, and reduced rates for customers who use less power.

• Programs to help homeowners evaluate and retrofit their homes for energy efficiency.

• Adoption of a standard that requires at least 20 percent of electric demand be met by renewable energy by 2025.

• Rescinding tax credits paid to coal mining companies and utilities.

• Rebates or tax credits for investments in energy efficiency and renewable energy.

In effect, the Sierra Club wishes to replace market demand with political demand.

So how is the replacement of economic science (the law of supply and demand) by political science (the law of unintended consequences) working out so far in the real world? All we have to do is turn to two other recent reports.

In a July 31, 2010, Wall Street Journal Review & Outlook article, entitled “Peak Water,” it was reported that the state of Arizona has mandated that utilities produce 15% of their electricity from “green sources” by 2025. With more than 10 months of plentiful sunshine and vast tracts of desert, Arizona would appear to be ideal for solar. There is only one problem: because of solar’s low energy density, the steam turbine that drives the electrical generator requires twice as much water than a conventional coal plant. And that’s a big problem: there is limited water in the desert. In fact, in 2009, the Congressional Research Service examined the consequences of a solar expansion in the southwest, and reported that it could consume as much as 1% of the state's finite water resources within a few years. So, Arizona – which is currently a net exporter of conventional electricity to surrounding states (most notably California, the “greenest” of all states), is about to create a water shortage to meet some artificial environmental emergency.

How about electric vehicles (EVs)? In the Wall Street Journal article, “Bumpy road for electrics”, by Mike Ramsey, October 18, 2010, the Obama administration is spending more than $5B in tax credits, subsidized loans, and grants to automakers with the goal of getting one million EVs / hybrids on the road. Ford, Honda, Toyota, and various battery suppliers caution that this goal is too optimistic. According to Ramsey, “Many experts say the trade-offs and economics of the cars don’t make sense for most drivers – even with a $7,500 US tax credit to buyers.” Cars, like the Nissan Leaf and GM Volt will cost between $33,000 and $41,000: about twice the cost of similar conventional vehicles. Johnson Controls, which makes batteries for the cars, found that the pool of potential buyers, for which the cars make sense, is very small – about 3% of all drivers. What needs to occur to drive demand? According to Boston Consulting Group’s Xavier Mosquet, gas prices must rise to $8 to $9 dollars per gallon before electric cars will be cost effective.

Add to these unintended consequences, the fact that the Obama administration is promoting the idea of increasing the ethanol content of gasoline from 10% to 15%. Not only may such a move have a harmful effect on older automobile engines, but will provide additional incentives to agriculture to convert arable acreage from food production to fuel production. Based on various sources, one acre of land produces a paltry 12 to 20 gallons of gasoline per year or can feed 8 people.

So what can we conclude? In order to save the planet, we will have to make sure its inhabitants are living in poverty and hunger first. This is readily achieved by artificially raising the price of gasoline by taxing it so that electric vehicles are more “cost-effective.” In parallel, we can divert our water and agricultural resources to other uses, so that the price of food and water goes up. Not to worry, we can pay for it with the money we “save” from our now cost-effective transportation: that is, if we have enough food to eat or water to drink.

Maybe, just maybe, these folks should come in from the sun.

Fact Re-distribution: The Myth of Meritocracy

In a letter to the editor of the Washington Post on October 17, 2010, “The myth of meritocracy,” Philip Allen asserts, without facts, that “Wealth in America is more often accumulated by the already wealthy, privilege by the entitled, and impoverishment by the already poor.” “... risk-taking diligents who ‘make it’ are far outnumbered by the fortunate and privileged who start ‘ready-made.’” While I cannot speak to privilege and impoverishment, I can speak to the accumulation of wealth by the "risk-taking diligents" and support my argument with facts.

The “wealthy” I assume are the top income earners: the people who either own small businesses in America or receive employment from those businesses. The small businesses they own are recognizable in every town: gas stations, laundries, retail franchises, and other boutique family businesses. According to 10 Secrets that Millionaires Keep, by Daren Fonda of Smart Money, the financially successful, defined as those who have a net worth of $1M, are 90% more wealthy than other US households, earn on average $366,000 per year, and are in the top 1% of taxpayers. Their number has doubled since 2002, with half of them earning their wealth in their lifetime from small business, one-third from large corporations, and less than 3 percent through inheritance. Most come from families, which would not be classified as wealthy, and have enjoyed their financial success for less than 15 years. Their median grade-point average in college was 2.9, with an average SAT score of 1,190. Fifty-nine percent attended a state college or university.

What is a “wealthy” person’s secret to success? In their words, it is hard work, discipline, education, and treating others with respect. This seems to be borne out by the Year 2000 Census data. Of the 39 million people representing the bottom 20% of income earners only 8 million heads of household worked. Of the 64 million people representing the top 20% of income earners 19 million worked.

Other than their wealth, the “wealthy” seem to be a lot like the average American, except they have taken extraordinary risks, worked smarter and harder, and converted the opportunities presented to them into greater financial success.

Mr. Allen is entitled to his opinion; he is not entitled to his own facts.

November is Nye Upon Us

This weekend, I traveled to Richmond to hear the second congressional district candidates defend their positions before the Virginia Tea Party convention. I was surprised to learn that Congressman Glenn Nye had backed out at the last minute. This behavior was not totally unexpected: he has previously canceled breakfast meetings, scheduled town halls on military bases where civilians could not participate, and in general, deferred forming an opinion on controversial issues until the last minute so that he did not have to defend them.


However, I did get the answer to the question I wanted to ask him. In a posting on the Hampton Roads Tea Party Facebook page, announcing Congressman Nye’s withdrawal from the forum, he was asked if he would vote for Nancy Pelosi again as speaker of the house. “He said, he would ‘cast a vote for whoever the Democratic Caucus put forward.’ … and if Pelosi was put forward? Glen[n] Nye responded, ‘Yeah, I’d vote for her.’”

That is why I am voting for Scott Rigell. Not only is Mr. Rigell qualified, but a vote for Nye or Ken Golden – the unelectable independent in the race – is in effect nothing more than a vote for Nancy Pelosi. It is time for a return to smaller government, fiscal responsibility, and constitutional principles.

Another Mickey Mouse Idea: A Call to Preserve the Estate Tax

In an August 31, 2010 article in the USA Today (“Mickey Mouse, the estate tax and me”), Abigail Disney makes the case that the estate tax “is not the bogeyman you might think it is.” In the last paragraph of her article, she states her real premise: "the estate tax is the cornerstone of a progressive system that leaves wealthy heirs with ample funds while providing the government with the resources it needs to build an environment for the common good. By preserving it, we not only restore billions in revenue to the national treasury – we also restore our most cherished collective ideals as a nation." [emphasis mine] Restated: government is the source of the common good and must be amply funded by the “wealthy.” I think not. The source of the common good is individual, unalienable rights endowed by our Creator. Through exercise of each individual’s personal rights – among these, life, liberty, and the pursuit of happiness – comes the creation of individual wealth, which in turn benefits society, not vice versa, as Ms. Disney would lead one to believe. It is government’s role to protect those rights not redistribute wealth these rights produce, in the pursuit of the greater good.


Ms. Disney supports her argument with what she calls three “truths:”

• First, the estate tax is not a double tax. “People like me and, who inherit assets, such as Disney stock, can spend our lives watching [emphasis mine] those assets grow, and when we pass them along to our children, they have not been touched or diminished at all by the tax system. The only thing I have paid taxes on is the interest from these assets, not their increased value.”

• Second, “opponents of the estate tax claim family farms will have to be broken up to pay the tax, but good luck finding an example of this."

• Third, “the estate tax incentivizes people like me to do good [emphasis mine] with our wealth because there is no estate tax on donations to charity. My filmmaking and foundations rely [emphasis mine] on a tax code that supports a vigorous non-profit sector, a vital part of our society..."

Ms. Disney, like most progressives starts her argument in the middle. She does not discuss the creation of wealth. Unlike most of America, she inherited her wealth: more than 80% of all Americans who have a net worth of more than $1 million, earned it in their lifetime. When I sold my first business, because I had no access to financial capacity, I had to liquidate 51% of the stock value I had created to pay the capital gains tax. I had worked for 12 years to build a very profitable business, and over a period of two years, wrote checks to the IRS that represented 51% of the value of the portion of the company I had built. It took 12 years to earn back this money through Ms. Disney’s “investment in the stock market” approach, while paying taxes on the interest, dividends, and capital gains earned (notice she conveniently left capital gains out as a tax). This is a triple tax: first on the wealth that is created, second on the earnings that flow from future investment, and last at death through the estate tax. So much for her argument on double taxation.

As for her second point, most small business persons have their fortunes inextricably tied up in their business. While I know little about farming, I know a lot about service-oriented small businesses. Most of them are “S” corporations, which are taxed at the personal income tax rate. So, each year, after deducting employee salaries, benefits, corporate payroll taxes, and legitimate operating expenses, the remaining income is taxed at the individual income rate. Retained cash – that which is left after paying taxes at the individual rate – is then used in the business to buy equipment and grow the business. If the small business person dies, his or her ownership in the business is included in his or her net worth and is subject to estate tax. If that tax cannot be paid with cash – not equipment or investment – then the business’s assets will be sold and the business closed. So much for her argument about losing the farm.

Last, I find it amusing that Ms. Disney believes a progressive tax code is both a necessary and sufficient condition for individuals, wealthy or otherwise, to “do good” in the world. In fact, she states her own “filmmaking and foundations rely on the tax code.” Implicit in her statement is that government must be funded because it is the principal agency through which “good” – as she defines it – is effected. Not necessarily: moral people do moral things, independent of the government and its tax code. Personally, I tithe because God, not government, has placed this burden on my heart. I only hope that the government allows me to keep enough of the wealth I created to meet the needs I find around me. So much for her argument about taxes as moral force for good.

Come Nye and Hear the Truth

On August 19th, Glenn Nye faced off in a debate against his 2nd Congressional District rivals for the first time. According to him, he has been: (1) fiscally conservative, (2) a leader in standing against issues that were not in the 2nd District’s best interest, and (3) a faithful provider who has brought home the bacon for his constituents. As is true of any good lie, there is an element of truth in each claim.

First, Nye did vote against the Health Care bill. Unfortunately, he then voted to fund the 10,000 IRS agents that must be hired and trained to ensure small business compliance with this monstrosity. According to the National Federation of Independent Businesses, the health care legislation will create 68 grant programs, 47 new bureaucracies, 29 pilot programs, six regulatory systems, six compliance standards, and two new entitlements. So, I guess he was against it, until he was for it.

Second, my experience with Nye’s voting record is that he never decides until the last minute. When I call his office, the night before a key vote, his position is reported by his staff to be “undecided.” I can only surmise that either he (a) is still diligently reading all 2,000 plus pages in order to form a conclusion OR (b) is waiting to be told by Nancy Pelosi if his yea vote will be required to push the bill forward. She certainly does not want to unnecessarily require a junior legislator on the House Armed Services Committee, facing a hotly contested re-election campaign, to explain his yea vote to his constituents if she does not have to. A real leader forms a reasoned opinion, communicates it to his constituency, and defends it in public forums.

Last, Nye has been supportive of his active duty and retired military constituents (he is on the Veterans Affairs Committee). Unfortunately, he has been ineffective in addressing the concerns of his small business constituents (he is on the Small Business Committee). According to the federal Bureau of Economic Analysis, as reported in the USA Today, August 17, 2010, “Military towns enjoy big booms,” military compensation (after adjusting for inflation) rose 84% from 2000 through 2009. Compensation grew 37% for federal civilian workers while only growing 9% for private sector employees. While I do not begrudge our average soldier, sailor, and marine the $122,263 in total individual compensation received in 2009, Nye and his fellow progressives need to figure out how stimulate the private sector economy to create jobs so that he can afford the public sector bill.

You cannot de-Nye it: if you want a closet progressive – who takes direction well from above, keeps all options open, and is only concerned about creating, growing, and protecting well paying government jobs – Glenn is your guy.

Alinsky, you Magnificent B******, I Read Your Book

The next government salvo has been fired by the Obama administration for the hearts and minds of voters in Hampton Roads: elimination of JFCOM’s 5,000 jobs. While this decision does represent a potentially grave personal and regional economic threat, there is a bigger lesson to be learned: what the government gives, the government can take away.

The larger story is that our elected representatives apparently did not know this was coming. The timing, speed, and targeting of this decision is circumspect. Its real objective is to cripple a state and region, whose voters have decidedly chosen to repudiate the Obama administration’s policies by overwhelming electing a republican governor, who has taken action to balance the state's budget, placed the state on a growth path, and legally confronted his health care and immigration policies.

The Obama administration's strategy is taken straight out of Obama's mentor's (Saul Alinsky’s) book  Rules for Radicals: the particular ends justify the particular means. The ends are to divide and defeat voters of the Commonwealth, in detail, by diverting our dialog and energies from opposing the abysmal failure of the Obama administration’s policies. Instead, they prefer we bicker among ourselves during campaign season and dedicate a larger portion of the news cycle to divining how to remain on the statist government’s form of crack cocaine: federal money. If we don’t play, they will give the crack to someone else.

Instead, we should come together and turn lemons into lemonade by: (1) publizing that we acknowlege and understand the tactic; (2) taking reasonable, coordinated action to delay JFCOM’s demise without diverting resources from our prinicipal mission -- defeating Obama's / Pelosi's / Reid's progressive policies; (3) re-deploying JFCOM's human resources, technology, and facilities to create private sector jobs in the high-tech global marketplace, and (4) firing every progressive representative in Washington in November.

If we think and act strategically, we will be able to say -- as George C. Scott said in the film "Patton," portraying Patton's defeat of forces under the command of Erwin Rommel -- "... you magnificent b******, I read your book!"








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So this is progress[ivisim]?

Two articles in the Pilot on August 9, 2010 illustrate how out of touch and out of control our current government is. "Optometrists say state’s Medicaid cuts lack vision” and asserts a new budget measure “barring them from Medicaid reimbursements limits eye-care access for the poor, harms their practices, and generally is an affront to the profession.” This dire state of affairs is attributable by this interest group to Governor McDonnell’s actions to balance the state budget. This page 1 story is followed by a page 5 story "Lackluster effort to combat Medicare fraud examined,” which discloses that out of $835 million in questionable Medicare payments, the government has only been able to recover $55 million. These two stories make the point: we have created a statist mentality that communicates everyone is entitled, enabled it with an incompetent government, and raised a generation of reporters who cannot draw a direct connection between the two.


Personally, I'm tired of funding out of control,inefficient, ineffective government that has lost any congruence with the intent of our founding documents. It's not government's job to meet our individual moral obligation to provide goods and services to the poor -  we should meet that directly, through our churches, our communities, and not-for-profit organizations.   The government's job is to protect our individual liberty not redistribute our wealth.  It is our responsibility to use our secured liberty in a morally responsible way to create wealth  and use that wealth to advance our personal and collective interests as a society. 

Nancy Pelosi Was Right

Nancy Pelosi was right about one thing: it is time to “drain the swamp.” This week we learned that Maxine Waters is under ethics investigation for abusing her position by asking regulators to help a bank in which her husband had a financial interest. This follows allegations that Charlie Rangle, the Chair of the House Ways and Means Committee, allegedly broke the laws his committee imposes on the rest of us.


While I can do nothing about Pelosi, Waters, and Rangle, I can help fire one person who was responsible for these alligators: Congressman Glenn Nye (D-VA2). Nye voted for Nancy Pelosi to serve as Speaker of the House. He voted for Charlie Rangle ( twice) to serve as chairman of the House Ways and Means Committee. Nye did oppose the health-care bill in the 11th hour (after making sure Pelosi had sufficient votes for passage), but later voted to fund the 10,000 IRS agents required to implement it. So, I am voting for Scott Rigell. A successful businessman and former Marine, he knows what it means to make commitments and to keep them. He has committed to let America’s founding documents guide his decisions, cut federal spending, impose fiscal restraint, and bring accountability back to Washington. This is what we used to call leading by example.

LOOKING FOR LOVE IN ALL THE WRONG PLACES

It’s an old, but familiar tune: big government in bed with big business giving birth to big problems.


In a USA Today article, dated July 21, 2010, inspection of oil wells has not been a priority. The number of federal inspectors at Deepwater oil facilities has not kept pace with the industry's growth. According to a House hearing on the BP oil spill, the federal agency regulating offshore drilling has just 60 inspectors in the Gulf of Mexico for nearly 4,000 facilities, just five more inspectors than it had in 1985, according to a memo prepared by the Democratic majority staff of a subcommittee to the Committee on Energy and Commerce. The number of producing Deepwater Wells has increased from 65 in1985 to 602 in 2009.

The memorandum, prepared for Henry Waxman, Democrat California, and other lawmakers alleges that the minerals service:

• approved changes to the BP wells design that may have increased the risk of a blowout.

• failed to act upon a series of reports prepared for the minerals service in 2001, 2002 and 2003 that recommended two blind shear rams on blowout preventers, the safety devices that are supposed to seal a well should a blowout occur.

• failed to require more stringent standards and the cementing of wells. In 2000 the MMS decided not to impose any cementing requirements.

This report is eerily reminiscent of the lack of oversight by the Security and Exchange Commission (SEC), during the decade 1990 to 2000. During this period, the fee on stock transactions was increased ostensibly to fund better oversight, and approximately $10 billion in revenue was generated by this fee. However, the SEC only retained $2 billion of this money. During the height of the Enron and WorldCom scandals, the SEC employed approximately 100 accounting and legal staff to regulate well over 15,000 publicly held firms. Of these 100 staff, only four were qualified to audit firms of WorldCom's size and complexity.

Now we have an understaffed, out of control MMS. This is one of the largest fee generating agencies in the US Government. Inspite of their large revenue base, MMS appears to be understaffed, and yet has enough time on its hands to fraternize with the industry they are supposed to be regulating. According to the New York Times (Interior Probe Finds Fraternizing, Porn and Drugs at MMS Office in La., by Noelle Straub, May 25, 2010), the MMS Inspector General report on the New Orleans MMS discloses:

• "E-mails for MMS inspectors from the Lake Charles [MMS] office revealed that in 2005, 2006, and 2007, various offshore companies invited MMS personnel to events such as skeet-shooting contests, hunting and fishing trips, golf tournaments, crawfish boils, and Christmas parties," the report says.

• One former MMS official wrote an e-mail saying he had "good friends" in the industry that he "wouldn't write up."

• "Prior to our investigation of [Don] Howard [,the former regional supervisor at the MMS office in New Orleans, who was fired in 2007 for accepting a gift], receiving gifts such as hunting trips, fishing trips, and meals from oil companies appears to have been a generally accepted practice by MMS inspectors and supervisors in the Gulf of Mexico region."

• The IG found numerous instances of pornography and other inappropriate material on the e-mail accounts of 13 employees, six of whom have resigned. There were 314 instances in which the seven remaining employees received or forwarded pornographic images and links from their government e-mail.

So much for regulation. One of these days we will learn that regulation does nothing more than inefficiently and ineffectively spend money that could be deployed in a free market to generate more wealth. Instead, we create rules and regulations that provide a burden on small business, while creating barriers to entry for them against much larger firms. Large business, on the other hand, has the economy of scale to comply with the regulation and build that cost into their pricing structure. So what we get is big government in bed with big business – literally.

Brother, Can You Spare a Fish?

Obama criticized Senate Republicans on Monday for blocking a $33.9 billion extension of jobless benefits and leaving more than 2.5 million Americans without jobs and no unemployment checks. Obama's position: "they finally decided to make their stand on the backs of the unemployed. They've got no problem spending money on tax breaks for folks at the top, but they object to helping folks laid off in this recession.”

Republicans are not against helping the jobless but they do want spending to be offset by budget cuts so that it does not increase the deficit. “The Democrat way is to insist we add to the national debt at the same time, while blocking Republican efforts to pass the same extension without the debt,” said Don Stewart, spokesman for Senate minority leader Mitch McConnell.

It is about time that this administration wake up and understand that the best path to economic growth is to teach people how to fish, not continue to fish for them. While fishing for others does assuage our personal inner need to believe we are helping others, it actually is inefficient, produces continued dependency, and prolongs the day of reckoning.

For people who need a history lesson, I refer you to a book by William Easterly, The White Man’s Burden. Easterly is a former senior research economist at the World Bank. His book quantitatively and qualitatively examines the efficacy of 50 years of the United States war on global poverty only to find that: (1) many people are fated to live horribly stunted miserable lives and die early deaths and (2) after 50 years and more than $2.3 trillion in aid from the West addressing the first tragedy there is shockingly little to show for it. Easterly’s conclusion: we will never start to solve the first tragedy, unless we figure out how to solve the second.

Throwing large amounts of money at the problem – especially from the top down – does nothing to solve the poverty problem. It only makes it worse. Why? Because when rules are imposed from the top and large amounts of money are involved, those at the top benefit first due to graft, corruption, and inefficiency, and the bureaucratic rules that come with the largesse destroy small business, who are unable to comply with all the red tape. Only businesses “too big to fail” have the economies of scale and capital structure to take advantage of this approach. So what you get is more of the same: failing societies.

For those of us who own small businesses, we understand this to be true, even in America. The Obama administration needs a lesson in creating wealth, not redistributing it. Until then, brother can you spare a fish?

Let’s Talk About Real Performance (TARP)

Every month I examine my financial statements to see how I am doing. I think most Americans do that, especially in these times. We compare where we were years ago to where we are now, and generally find that we have stayed even or lost money. Now, in a USA today article entitled “Banks receiving US assist[ance] cut loans,” (April 22, 2010) American University's (AU’s) Investigative Reporting Project studied the impact of the Toxic Asset Relief Program (TARP) on 940 United States banks, receiving those loans versus the 7,400 that did not. What did they find? Exactly what you would expect: rewarding bad behavior results in continued poor performance.

According to the AU report, during its first year of TARP, ending September 30, 2009, TARP distributed $247 billion to 940 banks. American University identified performance differences between TARP and non-TARP banks.

- Lending at TARP banks fell 9.2% versus a decline of 6.2% at non-TARP banks.
- Average employee pay at a TARP bank increased by 9.4%, whereas non-TARP banks raised their average pay by only 1.8%.
- TARP banks added 2.7% new branches, whereas non-TARP banks cut their number of branches by 1.2%.
- Expenses at TARP banks declined by 3.9%, whereas non-TARP banks cut expenses by 6%.

Contrast TARP bank performance with BBVA Compass Bank, a Spanish-owned bank, located in Birmingham, Alabama, that did not qualify for TARP funds. BBVA cut its workforce 10% (1,200 persons), while increasing its lending by 17% to profitable sectors of the market. The same was true at Hancock Bank. “… it was definitely a tale of two worlds: banks that took TARP, and those that did not," said Michael Achary, Chief Financial Officer. Hancock ($3.5 billion in assets) raised $175 million on its own during this period, acquired assets of a failed Florida bank, and increased lending.

What is true in everyday life is true in business: if you don’t expect much, you will not get much. Unfortunately, in this case it cost us $247B and created nothing more than 940 banks that are “too big to fail.”

Hare Today, Gone Tomorrow

When discussing ObamaCare with some of his constituents, Illinois Congressman Phil Hare said "I don't worry about the Constitution on this." Really. And it was all caught on video.

Hare today, gone tomorrow.

USA Today: Trust public sector more than private to spend your money

In a letter to the editor, USA Today, dated April 9, 2010, J.T. Brown asserts “ … I have to strongly disagree with his [Jonah Goldberg’s] supposition that the private sector is somehow inherently more wise and judicious with its resources than the public sector is.” The principal evidence given to support this thesis is: (1) the “common” workers (I assume the author means employees) did not get to democratically elect the company’s leaders; (2) the reason executive salaries are higher is that they set their own salary; and (3) executive compensation in private sector firms has grown at a faster rate than the average American worker’s salary. The author’s conclusion: “Now which sector is it that is taking money without representation again?”

Wow, this writer is factually inaccurate and his or her conclusions are empirically disprovable. The writer misrepresents how corporations work. First, shareholders (who may or may not be “common workers”) do elect directors, who in turn hire company officers, who manage the company. If J.T. Brown wants a vote, he or she can simply invest in company stock or contribute to the 401K plan rather than put his or her money into a flat screen TV. Second, the elected directors, not the officers themselves, set the officer’s salary, and in all organizations with which I am familiar review and approve all compensation policies in the company. Third, the rate at which executive compensation has grown relative to worker’s compensation is irrelevant to whether or not the corporation “judiciously or wisely” employs its resources. In a private corporation – either for-profit or not-for-profit – the marketplace makes that determination and the business either stays in business or goes out of business. If the business fails, its capital is redeployed in the marketplace. The same cannot be said for government, which has no competitors, enacts and enforces its own laws, and prints money when it has none.

So, let’s see: social security is bankrupt, Medicare is bankrupt, Medicaid is bankrupt, and our current levels of debt as a country are unsustainable. Does not sound like judicious and wise use of resources to me.

USA Today: Tax policy works well

The following is my response to a letter to the Editor, USA Today, April 9, 2010. I am tired of the factually inaccurate drival that passes through the pages of our media. Does anyone in the print media vet articles to determine if the facts are accurate or do they simply select those that support their editorial board's progressive view? I believe we need to stand up to this.

Dear Sir or Madam -

Rick Marcell asserts in his editorial “Tax policy works well” (USA Today April 9, 2010) that Jonah Goldberg fails to mention that “much of the debt happened under George W. Bush’s presidency. Bush left the debt at $10.6 trillion after inheriting a budget surplus.” This statement, while essentially factually correct, is intentionally misleading: there is not necessarily a connection between surpluses and deficits and overall debt nor is George W. Bush responsible for $10.6 trillion in debt, as the letter tries to imply.

An everyday example best illustrates the attempted obfuscation. If I buy a $200,000 house, my debt increases by $200,000. If my annual income is $50,000 and I have money left over at the end of the year after I pay off everything I owe, including the $18,000 per year mortgage on my $200,000 debt, I have a surplus. In other words you can run a surplus while still increasing your debt. So, according to Obama’s current Presidential Budget (Table 7.1, Federal Debt at the End of the Year) at the end of 1992 the debt was $4.002 trillion, at the end of 2000 it was $5.628 trillion, and at the end of 2008 it was $9.986 trillion. The debt under Clinton grew $1.626 trillion, and under Bush it grew $4.358 trillion. The difference? My opinion is that Clinton benefited from two things: (1) Newt Gingrich and the Contract with America, which imposed fiscal control on the President by limiting spending and forcing him to dramatically curtail welfare entitlement spending and (2) the dot.com bubble, which dramatically inflated stock prices on which capital gains taxes were paid, increasing tax revenue to the Treasury. Bush on the other hand faced: (1) two recessions (most of the spending to address both the dot.com bubble and housing bubble was incurred during his administration), (2) the cost of two wars, (3) the expansion of government to address terrorist threats, and (4) out of control social spending by both parties in congress.

While we can have an honest debate on the wisdom of the decisions that were made by various administrations, we should not have to debate the facts. However, in a socially progressive, post-modern world where the “truth” is eschewed and the ends-justify-the-means, we should expect nothing less than factual misrepresentation especially if such misrepresentation isolates, focuses on, and seeks to destroy the representation and credibility of the other person.

List of Rejected Republican Amendments to Health Care Bill

At various points during the passage of the recent health care legislation, Republicans offered a number of amendments that were rejected by the Democratic majority. The fact that these amendments were rejected gives insight into what the Democratic majority hopes to accomplish. The following summary of the proposed amendments was circulated by Randy Forbes (R-VA). Read them and then ask yourself: does this seem like a reasonable request, and if it is why was it rejected? As you see the consequences of the health care legislation play out over time, your questions will be answered!

1. Stop the government-run health plan. Rep. Paul Ryan (R-WI) offered an amendment to improve the legislation by taking out the section of the bill that would create a government-run health plan to compete with private sector health plans. Reps. Phil Roe (R-TN) and John Kline (R-MN) offered similar amendments in the Education & Labor Committee. The amendments were all killed in committee.
2. Prevent bureaucrats from making personal medical decisions for patients. Rep. Phil Gingrey, M.D. (R-GA) offered an amendment in the Energy & Commerce Committee to bar federal political appointees and bureaucrats from intervening in patient treatment decisions. The Gingrey amendment would have ensured patients and doctors remain as the sole individuals responsible for making these critical decisions. Chairman Henry Waxman (D-CA) led Democrats in opposition to the amendment, which was defeated.
3. Require all Members of Congress to get their health insurance through the proposed government-run plan. Rep. Dean Heller (R-NV) offered an amendment in the Ways & Means Committee that would have required Members of Congress to enroll immediately in the government-run health plan that would be established under the Democratic bill. Rep. Joe Wilson (R-SC) offered an amendment to put his committee on the record in support of enrolling Members of Congress in the government-run plan as well. While the Wilson amendment was approved by voice vote in the Education & Labor Committee, the Heller amendment was killed in the Ways & Means Committee.
4. Establish a $1 trillion deficit cap. During Energy & Commerce Committee consideration of the Democrats’ government-run health care plan, Rep. Lee Terry (R-NE) offered an amendment to delay “disease prevention” spending for items like municipal jungle gyms and bicycle trails until Washington’s budget deficit dips below $1 trillion. Democrats defeated the amendment, paving the way for more unchecked spending.
5. Keep the federal government out of health care decisions. Rep. Wally Herger (R-CA) offered an amendment to prohibit the federal government from conducting so-called comparative effectiveness research, in which the federal government would ultimately help determine which medical treatments are administered to whom in America – otherwise known as government rationing of health care. The Herger amendment was defeated. Days later, in a July 22 prime-time press conference, President Obama told the nation the health care bill “will keep government out of health care decisions,” despite the fact that the comparative effectiveness language remains in the bill.
6. Protect Americans from “hurry up and wait.” Rep. Kevin Brady (R-TX) offered an amendment that would repeal the government-run health plan if wait times exceed the average wait times in private plans. The Brady amendment was not passed.
7. Stop the job-killing employer mandate. Rep. Sam Johnson (R-TX) offered an amendment in the Committee on Ways & Means to improve the Democratic legislation by taking out the section of the bill that requires American employers to provide health coverage for all of their employees, and Reps. Brett Guthrie (R-KY) and Cathy McMorris Rodgers (R-WA) offered similar amendments in the Committee on Education & Labor. Independent analysts agree this Democratic mandate on employers is likely to result in the elimination of millions of American jobs, and it could hardly come at a worse moment for the nation’s economy. The GOP amendments were killed in committee.
8. Suspend the job-killing employer mandate if the national unemployment rate reaches 10 percent. Reps. Wally Herger (R-CA) and Pete Hoekstra (R-MI) offered amendments in their committees that would suspend the job-killing employer mandate in the bill if the national unemployment rate reaches or goes above 10 percent. (It is currently at 9.5 percent.) The Herger and Hoekstra amendments were killed in both the Ways & Means and Education & Labor Committees.
9. Waive the employer mandate if it will cause layoffs, worker salary cuts, or reductions in hiring. Rep. Dave Reichert (R-WA) offered an amendment that would waive the employer mandate in the Democrats’ health care bill for any employer who certifies, under procedures developed by the Secretary of the Treasury, that it would pose a financial hardship resulting in layoffs of existing workers, reductions in salary of existing workers, or the inability to expand via hiring new employees. Rep. Duncan Hunter (R-CA) offered a similar amendment in the Education & Labor Committee, and it was adopted by voice vote. However, the Reichert amendment was killed in the Ways & Means Committee.
10. Protect employers from unfair taxation. Under the Democratic bill as written, if an employer offers qualifying health care coverage but an employee rejects it for any reason, the employer can still be slapped with an 8 percent tax on the value of that employee’s wages as a result of the job-killing employer mandate in the bill. Rep. Geoff Davis (R-KY) offered an amendment to fix this problem and protect employers from such unfair penalization. The Davis amendment was killed in committee.
11. Protect employers who offer health care coverage to their workers. As written, the Democratic health care bill would gut ERISA (the Employee Retirement Income Security Act), the federal law that makes it possible for millions of American workers to receive quality health care benefits and other benefits through their employers. Rep. John Kline (R-MN) offered an amendment to fix this flaw and shield employers who offer health care coverage to their workers from being caught up in a web of legal liability systems that would vary from state to state. The Kline amendment was killed in committee.
12. Create small business health plans. Rep. Howard P. “Buck” McKeon (R-CA) offered an amendment that would modify the bill to allow the creation of small business health plans (also known as Association Health Plans) that allow trade, industry, professional, or other business associations to form and purchase health care coverage at a lower cost. The McKeon amendment was killed in committee.
13. Keep unnecessary lawsuits from driving up health costs. Under the Democratic bill, Americans would be required to obtain their health care through a “national health insurance exchange” that is limited to “qualified” providers. In the Ways & Means Committee, Rep. John Linder (R-GA) offered an amendment that would keep the so-called exchange from operating in states that do not have reasonable limits on lawsuits relating to medical care. Unnecessary lawsuits have long been identified as one of the primary factors in rising health costs nationwide. Rep. Glenn Thompson (R-PA) offered a similar amendment in the Education & Labor Committee that would prevent the creation of the so-called “exchange.” Both the Linder and Thompson amendments were voted down.
14. Prevent taxpayer-funded health benefits from going to illegal immigrants. Rep. Dean Heller (R-NV) offered an amendment that would increase safeguards to ensure taxpayer-funded benefits do not go to individuals who are not lawfully present in the United States. This amendment, too, was killed.
15. Prevent taxpayer funding of abortion. Reps. Sam Johnson (R-TX), Eric Cantor (R-VA) and Mark Souder (R-IN) offered amendments to remove language from the legislation that would result in American taxpayers subsidizing abortion-on-demand. A recent Zogby survey determined that more than 70 percent of Americans are opposed to taxpayer funding of abortion. The amendment did not pass.
16. Ensure states are not forced to provide abortion benefits. In the Energy & Commerce Committee, Rep. Nathan Deal (R-GA) offered an amendment to ensure that states are not required to provide coverage for abortion – or even procedures such as Botox injections and hair plugs. Under the Democrats’ legislation, the federal government could deny the states funding if such services are not provided. Rep. Deal’s amendment was rejected in a party-line vote.
17. Prevent health care providers from being forced into a government-run plan. Rep. Charles Boustany, M.D. (R-LA), a physician, offered an amendment to prevent American health care providers from being forced into the government-run plan established under the Democratic bill. The Boustany amendment was killed in committee.
18. Require the government-run plan to operate under the same rules as private health plans. Rep. Boustany offered an amendment to improve the Democratic legislation by requiring that the government-run plan established in the bill maintain reserves and other margins in amounts consistent with the standards that apply to private plans. Reserves would have to come from premiums, not federal subsidies. This amendment was not passed.
19. Specify that Congress should read the health care bill before voting on it. Rep. Kevin Brady (R-TX) offered an amendment expressing the sense of Congress that Members of Congress should read the health care bill before they vote on it. More than 80 House Republicans have signed a pledge vowing they will not vote to enact a health care bill they have not read and which has not been posted online publicly for at least 72 hours. The Brady amendment was defeated in committee.
20. Keep President Obama’s tax pledge not to raise taxes. Last year, in his campaign for the presidency, President Obama pledged he would not raise taxes on anyone making less than $200,000 ($250,000 for those filing jointly), but the health care legislation written by House Democrats would violate this pledge. Rep. Paul Ryan (R-WI) offered an amendment that would keep the new taxes proposed in the Democratic legislation from applying to those with incomes under $200,000 ($250,000 for those filing jointly). The Ryan amendment was killed in committee. Rep. Cathy McMorris Rodgers (R-WA) offered a similar amendment in the Education & Labor Committee. It was not even allowed to come to a vote.
21. Keep President Obama’s pledge that health care reform will not add to the deficit. Rep. Tom McClintock (R-CA) offered an amendment to prohibit the government-controlled health care system from taking effect unless the legislation is and remains “deficit neutral.” The Congressional Budget Office (CBO), the nonpartisan “scorekeeper” for Congress, has determined that the bill as drafted will add hundreds of billions of dollars to the deficit. The McClintock amendment was killed in committee.
22. Ensure that workers who like their current health plan can keep it. Reps. Judy Biggert (R-IL) and Tom Price (R-GA) offered an amendment to ensure that Americans who like their current employer-provided coverage can keep it by shielding such coverage from the costly and complex new mandates in the Democratic health care bill. Under the amendment, employer –based health plans that comply with ERISA (the Employee Retirement Income Security Act), the federal law that makes it possible for millions of American workers to receive quality health care benefits and other benefits through their employers, would be considered as having met all of the mandates specified in the bill. The Biggert-Price amendment was killed in committee.
23. Stop seniors from being stripped of their health care choices. Rep. Brown-Waite offered an amendment that would remove portions of the health care bill that would cut the Medicare Advantage program. Such cuts would impact millions of seniors nationwide, taking away their choices and forcing them into a government-run health care plan with fewer options. The Brown-Waite amendment was killed in committee.
24. Prohibit unfair advantages for government-run health plan. The Democratic health care bill would create a government-run health care plan to “compete” with private sector plans that currently provide health coverage for millions of Americans. House Republican Conference Chairman Mike Pence (R-IN) has warned that a government-run health care plan will compete with private sector health plans “the way an alligator competes with a duck,” and the legislation written by Democrats would allow the government-run health plan to have distinct advantages at the expense of taxpayers and private plan enrollees. Rep. Peter Roskam (R-IL) offered an amendment that would prohibit the Secretary of Health & Human Services from basing payment rates for the government-run health plan established under the Democratic bill on Medicare rates, and instead would require that they pay an average of what private plans in the market pay. The Roskam amendment was killed in committee.
25. Keep the federal government from choosing “favored” physicians. Rep. Tom Price (R-GA), a physician, offered an amendment to keep eliminate the flawed “tiered” payment structure in the health care bill, which would give preference to physicians who participate in the government-run health care plan. This provision would allow the government to reward physicians who play by its rules while financially harming those who do not. The Price amendment was defeated.
26. Allow states to opt out. Bipartisan opposition to the Democratic health care bill has been expressed by governors and state legislators throughout the country. Rep. Price offered an amendment to permit states that have crafted their own health plans to apply for waivers from the Democratic legislation’s requirements. The Price amendment was killed in committee.
27. Preserve Americans’ health care freedom and choice. Many Americans favor Health Savings Accounts (HSAs), which give individual Americans more direct control over their health care spending, but the Democratic bill as written would wreak havoc on HSAs and similar tools that empower individuals and consumers. Rep. Eric Cantor (R-VA) offered an amendment to improve the Democratic bill by ensuring that HSAs would not be shut down or gutted by federal mandates. Specifically, the Cantor amendment stated that HSAs tied to high deductible health plans are deemed to meet the “minimum benefit level requirements” under the Democratic bill, and struck changes to the bill’s “definition of allowable medical expenses” for HSAs and similar accounts. The Cantor amendment was defeated in committee. Rep. Tom Price (R-GA) offered an amendment to provide greater portability and individual control over health care by allowing employers to contribute to “defined contribution” health care plans, which workers could use to purchase the coverage and services of their choice. The Price amendment was defeated in the Education & Labor.
28. Allow Americans to continue to enroll in private individual market health plans. Rep. Dave Reichert (R-WA) offered an amendment to repeal the bill’s prohibition on new enrollees in private individual market plans. This amendment was killed.
29. Slow Medicare’s march toward bankruptcy. Concerned about the coming fiscal tsunami that will result from out-of-control spending on entitlement programs, the GOP-led Congress earlier this decade passed legislation specifying that if 45 percent or more of the Medicare program's funding came from general tax revenues for two consecutive years, the President had to submit to Congress legislation that would slow spending and make the program financially stable. Democrats gutted this rule as part of their rules package for the current Congress. Rep. Paul Ryan (R-WI) offered an amendment to restore it. The amendment was killed in committee. Prohibit new taxes until Medicare fraud rate is reduced to below 1 percent. Rep. Dave Camp (R-MI) offered an amendment to improve the bill by specifying that the new taxes that would be imposed on Americans under the bill could not take effect unless the fraud rate in Medicare is reduced to below 1 percent of the amount of taxpayer money spent on the program. The Camp amendment was killed in committee.

Stuck in the Middle Again: Money Ain’t for Nothing But the Checks are for Free

Have you ever noticed that progressives always start conversations “in the middle?” What I mean by that is their arguments are about “moral” inequities and the “grand funk” of the present: they never, ever want to document the efficacy of their “proven” solutions by citing historical fact nor are they willing to commit to metrics against which the consequences of “new” policies will be measured in the future. We need to hold them accountable for both.


Social security is a good example. When an accountant quizzed Roosevelt about the Ponzi scheme-like economic issues with social security, he said “I guess you are right about the economics, but those taxes were never a problem of economics. They are politics all the way through … with those taxes in there, no damn politician can ever scrap my social security program.” [“Statements on Taxes by Members of this Administration in 1939,” in Morgenthau Diary, January 5, 1939]. Both the accountant’s and Roosevelt’s perspective proved to be correct. Seventy years later, Social security, Medicare, and Medicaid have an off-balance sheet liability of $50T to $55T. This is equivalent to the annual GDP of all the people on the planet (currently 6B) working for one year or approximately 4 years of the GDP of the United States. In fact, Social Security, like nationalized healthcare, was presented as insurance, when in fact the “revenue” received from current payees was never invested in a sinking fund, but instead was transferred to the treasury, in exchange for an IOU, to meet ongoing obligations. As of today, Social Security has just reported, for the first time in history, the system will pay out more in benefits than it receives in payroll taxes, an important threshold it was not expected to cross until at least 2016, according to the Congressional Budget Office. Stephen Goss, chief actuary of the Social Security Administration, has said that although the CBO projection will probably be borne out, the change will have no effect on benefits in 2010 and retirees will keep receiving their checks as usual. Perhaps we should adopt a variant of the Dire Straits’ song as our national anthem: money ain’t for nothing but the checks are for free!


Health care will be no different. Progressives are remiss to discuss the disastrous future financial implications of the bill. Instead, they stack the cards to get an “acceptable” Congressional Budget Office score, while leaving out the cost of the “doctor fix [$250B],” they raise taxes for four years before realizing most of the benefits and all of the annualized cost of the legislation, and they double count the cuts in Medicare [$500B]. To paraphrase Joe Biden, our erstwhile Vice President, “ you have to spend money to keep from going bankrupt.” Only one problem, Joe, the government is not a business that creates wealth, it is no more than corporate overhead, whose purpose is to redistribute created wealth.


Conservatives need to transform the debate from the progressive’s mantra that somehow the absence of present pain and suffering is the moral pinnacle of a civilized culture. Using this logic, providing crack to a heroin addict – with no regard for the long term personal, societal, or economic consequences – is a morally acceptable solution. In fact, morally correct choices many times come from pain and suffering. As the saying goes, “good judgment comes for experience and experience comes from bad judgment.” Bad judgment is minimized through an understanding of history and a healthy respect for measuring and comparing future performance against objective reality, which we used to call Truth.

Until then, we will continue to be "Stuck in the middle, again."

Beck's Rhetoric Fuels Anger

The following is my response to a letter to the USA Today editor (March 30, 2010), entitled Beck’s Rhetoric Fuels Anger. I think it is important that we stand up to obfuscation of fact, tortured logic, and hysteria coming from an uninformed public, all of which fuels vitriolic rhetoric from the left. The letter to the editor follows.

In her letter to the USA Today editor (March 30, 2010), entitled Beck’s Rhetoric Fuels Anger, Marilyn Mulvihill of Sewickley, PA, asserts that “Beck teaches revisionist history at best,” yet does not cite one example. Exactly what is he saying that is revisionist? Historical events to which he refers either occurred or did not occur. Second, she states “[the] recent ugly taunts toward members of Congress, the violence at congressional offices, and the yelling of ‘baby killer’ on the House floor are proof that his tactics are working.” I have two problems with this statement: (1) the quote is incorrect – “it’s a baby-killer” is the correct quote and was directed toward the legislation and not an individual – and (2) correlation does not imply cause – she provides no factual evidence these events were directly attributable to any actions by Glenn Beck. While, Ms. Mulvihill is entitled to her opinion, she is not entitled to her own facts nor is she entitled to twist logic beyond what the facts can support. I do acknowledge her First Amendment right to express her opinion, but I have carefully reviewed the Constitution, and cannot find her right not to be offended.

“Re-Peeling” Health Care Legislation

After “passing” health care reform – like passing a kidney stone – the Obama administration is hard at work re-framing the debate, much like a used car salesman following you home after buying a lemon to make sure you understand the car did come with new tires.

The reframing goes something like this: “can you believe those uncaring Republicans want to repeal free health care for all Americans …,” followed by a list of benefits with which any reasonable human being (including most Republicans) would agree. What they do not list is ALL the bad stuff, with which no person would agree, unless you were a Marxist. For example, a minimum of $2.5T in additional debt, 182 government agencies between you and your doctor, cuts in Medicare of $500B, 4 years of taxes before benefits really kick in, and a litany of other unintended (or possibly intended) consequences that are just starting to come out.

Within days of the bill’s passage, several major corporations, including AT&T, Caterpillar, Deere, and others are setting aside between $31M to $1B in one-time, current quarter charges to cover unfunded liabilities that they will incur because of loss of deductibility of certain pension related deductions. In all S&P 500 companies will take a combined hit of $4.5B to first quarter earnings, estimates David Zion, an analyst with Credit Suisse. Of course the administration says that these firms are exaggerating the impact of the loss of these deductions. Bottom line, companies will be less profitable and have less capital to invest in a market that is trying to find a bottom and put people back to work.

So, before the Obama administration has too much time to reframe the debate and repeat the lie for months, thereby moving it from opinion to truth, I want to do some reframing myself. My narrative goes like this: The benefits of Obamacare have much in common with crack cocaine: once you get on it, you’ll love the high, until your health fails and you run out of money. But not to worry, the administration is working on a clean needles program so that we can comfortably rest assured we will not catch a “bad” disease administering a fatal overdose.

The healthcare legislation needs to be “re-peeled:” common sense and market based approaches can achieve better benefits at lower cost.

A Show of Bigotry at Health Care Tea Party Rally

In a letter last week to the editor of the USA Today, Tom Geronimo, from Crystal River, FL, stated “Saturday, outside the U.S. Capitol, we saw people using the N-word and spitting on a black congressman. This demonstrated what we've known, and what the Tea Party has been denying, all along: this is not about policy; it's about race. Bigots control the conservative movement in this country, and the Republican Party panders to them.” Having framed the discussion as a racial one, Mr. Geronimo then went on to quote financial facts that he believes indicates the country is on right track.

While Mr. Geronimo is entitled to his own opinion, he is not entitled to his own facts. Subsequent news interviews and investigation by the Capitol police revealed no video evidence or audio evidence that supports his purported claim of racial epithet or spitting to be true. At best, we have one person’s word against another. Vitriolic, unsubstantiated attacks do little to advance the debate, which is not about race, but about smaller government, fiscal responsibility, personal accountability, and a return to constitutional principles.

So Much Money, So Little Time - Really?

You have heard the saying, "So much money and so little time." Well, when it comes to Hampton Roads and the Stimulus Bill money, this aphorism should more appropriately read "So little money and such a long time."

In a March 21 article entitled "Stimulus Money Mired in Red Tape," the editorial board of the Virginian Pilot reported "that a Chesapeake city audit indicated only 4 percent of $12 million in stimulus money awarded to the city was spent in 2009 ... so far, only two jobs have been created in Chesapeake ..." The article goes on to state that "even though audits have not been done in the region's other cities ... the results would have been similar. Norfolk, for instance, has spent only $836,000 out of $15.3 million. Most of the money allocated to Virginia Beach, Portsmouth, and Suffolk is also unspent, including funds to end [emphasis mine] homelessness, hire new police officers, and make city buildings more energy efficient." The article then goes on to explain that money is starting to flow to long-term, high tech investments that will make us more economically competitive in the world, like construction projects to fix pot holes, widening roads, pouring elementary school footings. The editorial board blames the delay on "City officials [who] were forced [emphasis mine] to expend too much time and energy to qualify for stimulus funding, and that's unacceptable [emphasis mine]." The article concludes "Whatever you think of the stimulus package [emphasis mine], the Chesapeake audit doesn't mean that money is being wasted or that it won't create jobs. It just confirms the old axiom that government bureaucracy can get in the way of progress [emphasis mine]."

My conclusion is different: the FACT is that the stimulus is not delivering and the progressive's choice of delivery systems -- statist government -- is incapable of efficiently and effectively allocating scarce resources that have alternative uses. When I was a child, I believed in the magnamity of the tooth fairy, but, as it turned out, the tooth fairy just could not deliver. At ten cents a tooth and a limited time horizon for tooth loss, I ran out of teeth, time, and money. I had to grow up and get a real job. It turned out, junior entrepreneurship won the day and bridged the gap between fantasy and reality.

Unfortunately, the editorial board's conclusion is that we need to believe centralized allocation of resources will work out, only if bureaucracy gets out of the way. Of course, centralization of allocation of resources requires larger bureaucracies: approximately 182 new ones for health care. So instead of "believing" in this new religion, perhaps we should examine how it has worked out in the real world.

Thomas Sowell in his book, "Basic Economics," page 17, reports that two soviet economists, Nikolai Smelev and Vladimir Popov described a situation that occured during an era of soviet directed economy "where prices were not set by supply and demand but by central planners who sent resources to their various uses by direct commands, supplemented by prices that the planners raised or lowered as they saw fit." In this situation, the planners raised prices on moleskin pelts:

"State purchases increased, and now all the distribution centers are filled with these pelts. Industry is unable to use them all, and they often rot in warehouses before they can be processed. The Ministry of Light Industry has already requested Gokomsten twice to lower purchasing prices, but the question has not be decided yet. And this is not surprising. Its members are too busy to decide. They have no time: besides setting prices on these pelts, they have to keep track of another 24 million prices." [Emphasis mine.]"

So, let's recap. We have thousands of trailers sitting in Mississippi and Lousiana that are toxic and were never delivered to "persons in need." It has cost the government $300 million to store these trailers. The government has obligated almost $800B to stimulus, 30% of which nationally has been spent, with few jobs created. The government has nationalized health care, increased the national debt by several trillion dollars, and created 182 new bureaucracies AND no one can adequately explain how any of this will work.

I think it is time we reject "progressive" religion -- belief in statist government -- and return to real religion -- a belief in God and the rights he has given to each individual. True "progress" is the product of free people, free markets, and limited government.

Open Letter to Congressman Glenn Nye March 22, 2010

Thank you for voting NO on passage of the health care legislation.

I hope that you will continue to vote in a manner that: (1) reaffirms constitutional principles (viz., the government's responsibility is to protect our individual rights, which come from God not government, and health care is not a right, it is a good or service); (2) precludes enactment of regulatory reforms that carry the force of law, while circumventing the congress and the will of the people; and (3) acting in a fiscally responsible manner that reduces the on-balance sheet and off-balance sheet liabilities of the Country.

To accomplish such an agenda will require moral courage and persistence. It will also require you to be honest with your constituents about what we can afford and what we cannot afford; what is a right and what is a privilege; and what you have authority to do and what you do not have authority to do under the Constitution. I know this will be difficult because Democrats think so much of the rule of law that they appointed Congressman Alcee Hastings to the rules committee. He was a Federal Judge for 10 years. Jimmy Carter appointed him a U.S. District judge in 1979 and, two years later, Hastings accepted a $150,000 bribe which led to his impeachment. Seven years later, House Democrats weighed in to add perjury to the charges against him and in 1989 he became "the sixth federal judge in the history of the United States to be removed from office by the Senate." He is also the congressman who recently stated " when the deal [health care] goes down, all this talk about rules, we make them up, as we go along."

We are in historic times and I really do appreciate your NO vote on health care. But if you think that it was simply good political calculus, voting NO because sufficient YEA votes were present to pass the bill and therefore voting in the negative would allow you to fight another day, rest assured, your constituents are far more actively engaged in this process now and will examine every vote you make. My pledge to you is that I will keep an open mind and judge your performance by your record and not the company you keep.

Do Not Confuse Me With the Facts on Health Care

A recent e-mail crossed by desk, which contained some facts that I found interesting and want to share with you. What follows is the e-mail, with facts confirmed, my redactions, and my personal thoughts.

To place the subject in context, I ask you to consider a quote by former Sen. Daniel Moynihan, a liberal democrat: “You’re entitled to your own opinion, but you’re not entitled to your own facts.” Or for those of us who love sports analogies: “It ain’t bragging if it is in the record book.” (Yogi Berra). So, as you consider a government takeover of health care and the actual business experience of those behind this monstrosity, you should consider the facts, which my liberal friends are remiss to do. Typically, all conversations with them start in the middle, with a lack of willingness on their part to judge the outcome of their actions against history or establish metrics against which their proposed policies will be judged. They are always in the moment: there is a moral crisis that needs to be solved and if we do not do it “people will be hurting.” If they were to consider the historic performance of their policies – social security is insolvent, medicare is insolvent, medicaid is insolvent, welfare is insolvent, the federal government is insolvent and most (but not all) of this is due PRINCIPALLY to PAST social engineering policies and entitlements which have not economically performed – they would find that their policies have caused more “people to hurt” and no basis for the average American to trust the future economic performance of any policy they might propose. And yes, Republicans and Democrats are at fault, but the root cause of this problem is traceable DIRECTLY to progressive thought in both parties. Progressives are the villains, as I see it.

So here are the facts. A recent "Investor's Business Daily" article provided very interesting statistics from a survey by the United Nations International Health Organization.

Percentage of men and women who survived a cancer five years after diagnosis:

U.S. 65%
England 46%
Canada 42%

Percentage of patients diagnosed with diabetes who received treatment within six months:

U.S. 93%
England 15%
Canada 43%

Percentage of seniors needing hip replacement who received it within six months:

U.S. 90%
England 15%
Canada 43%

Percentage referred to a medical specialist and see one within one month:

U.S. 77%
England 40%
Canada 43%

Number of MRI scanners (a prime diagnostic tool) per million people:

U.S. 71%
England 14%
Canada 18%

Percentage of seniors (65+), with low income, who say they are in "excellent health:”

U.S. 12%
England 2%
Canada 6%

These statistics speak for themselves!

Now consider the business experience of those persons who are responsible for advising the President on policy and administering the departments that will bring us an enlightened utopia. What follows is a listing, by President and party of the percentage of the president’s cabinet who had business experience prior to entering the administration in which they served.

Pre-1950 Presidents

T. Roosevelt (R) ........38%
Taft (R) ................... 40%
Wilson (D) ............... 52%
Harding (R) ............. 49%
Coolidge (R) .............48%
Hoover (R) ...............42%
F. Roosevelt (D) .......50%
Truman (D) ..............50%

Post-1950 Presidents:

Eisenhower (R) ..........57%
Kennedy (D) ............ 30%
Johnson (D) .............. 47%
Nixon (D)................ 53%
Ford (D).................. 42%
Carter (D)............... 32%
Reagan (R) .............. 56%
G H Bush (R) ............51%
Clinton (D) ............. 39%
G W Bush (D) ........... 55%
Obama (d) ................. 8% !!!

The Obama administration’s cabinet is filled with persons who are the least experienced by far of the last 19 presidents! And this administration is telling our big corporations how to run their business? They know what's best for GM, Chrysler, Wall Street, and you and me? How can the president of a major nation and society – the one with the most successful economic system in world history – talk about business when he's never worked for one? Or about jobs when he has never really had one or had the responsibility for making payroll? Neither have 92% of his senior staff and closest advisers.

I have never been hired by a poor man. I have never worked for anyone who did not have a track record of success and whom I thought incapable of successfully leading the organization to accomplish its mission. However, many Americans cannot see beyond the veneer of his eloquence and his physical attractiveness to discern his total lack of experience, incompetence, and ideological commitment to move our country toward socialism, which in the history of mankind and through the demonstrated insolvency of our own social entitlements, has consistently proved to be a failure. This is not high school, where the best looking gal or guy or the best athlete who has the best GSA poster should be elected to be leader of the free world. Unless good people become engaged in the political process, understand that it is not government’s role to provide us with goods and services, but to protect our rights – which come from God not the Government and therefore cannot be taken away – we will enter into a period of decline from which it will be difficult to overcome.

I urge each person to actively engage your political representatives and do what you can to stop this administration’s agenda in its tracks. Most importantly, I urge each person to: (1) understand the issues and the facts; (2) test proposed policies against what has historically worked or not worked; (3) vet political candidates running for office based on their moral character, business experience, and elected community service; and (4) take the necessary action to remove incumbents whose progressive views have no constitutional basis or have proved to be unworkable in the real world. What we need is smaller government, fiscal responsibility, and a return to the rule of law, as envisioned in our constitution. Underlying all of this is the need for each individual to be accountable for his or her own actions, within the context of moral code that abandons post-modern relativistic thought.

"All that is necessary for the triumph of evil is for a few good men to do nothing." Anonymous

Dangerous, Dysfunctional Intellectual Elitists

On December 21, 2009, Paul Krugman wrote in his NY Times Op Ed, Dangerous, dysfunctional government, “Unless some legislator pulls off a last-minute double-cross, health care reform will pass the senate this week. Count me among those who consider this an awesome achievement. It’s a seriously flawed bill, and we’ll spend years if not decades fixing it, but it’s nonetheless a huge step forward.” [Emphasis mine] Makes one wonder what he thinks is the “huge step forward.” The only thing that is seriously flawed is Paul Krugman’s world view and his fundamental understanding of the Constitution.

In this moment of progressive (some would say socialist or Marxist) elation, Krugman, a Nobel prize winning economist (that may say it all), columnist, and author, gives us a rare glimpse into the “progressive” thinking that is going on behind the Wizard-of-Oz like curtain we call Washington, DC. Though thinly veiled, his comments suggest that passage of the most recent senate verison of the health care bill is not about improving health care: it is about promoting a socialist agenda in which individual rights flow from the state and individual freedom is replaced by economic slavery. It is about making the Constitution irrelevant.

Consider the following statements from Krugman’s article:

· “… the fact that it was such a close thing shows that the Senate – and, therefore, the US government as a whole – has become ominously dysfunctional.”
· “Democrats won big last year. In any other advanced democracy, this would have given them the mandate and the ability to make major changes. But the need for 60 votes to cut off Senate debate and end a filibuster – a requirement that appears nowhere in the Constitution … gave a handful of wavering senators extraordinary power to shape the bill.”
· “We need fundamental financial reform … climate change … long-term budget deficit [reduction]. What are the chances we can do all of that – or any of that – if doing anything requires 60 votes in a deeply polarized Senate?”

Krugman continues his blathering, quoting Barbara Sinclair – a professor of political science at the “ultra conservative” University of California Los Angeles -- that she finds extended-debate-related problems affected only 8% of major legislation in the 1960s, 27 % in the 1980s, and 70% after 2006. Wow! What about the 1970s, the 1990s, or all of the 2000s? Sounds like data cherry picking to me. But, you have to love his conclusion, and I quote “… Bush-era Democrats weren’t as nearly determined to frustrate the majority party, at any cost, as Obama-era Republicans. Certainly, Democrats never did anything like what Republicans did last week: GOP senators held up spending for the Defense Department in an attempt to delay action on health care.”

Actually, they did worse, according to my recollection of that period: as a minority party, the Democrats attempted to use this 60 vote majority rule to preclude George Bush from bringing his Supreme Court chief justice nomination to the floor. They effectively used their minority power to preclude enacting Bush era health care, immigration, and energy policies, which passed in the House, but were denied seeing the light of day in the Senate.

But let’s not dwell on this tit-for-tat childishness, even though I might remind Krugman his beloved Social Democrats hold a supermajority in the House, in the Senate, AND control the presidency. Instead let’s focus on his conclusion: “But if such legislation is itself blocked by a filibuster, reformers [emphasis mine] should turn to other means [emphasis mine]. Remember the constitution sets up the Senate as a body with majority – not supermajority – rule. So the rule of 60 can be changed.”

I guess Krugman has selective memory. When the Social Democrats tried to filibuster Bush’s nomination of John Roberts as Chief Justice, the Republican’s stated they were prepared to “go nuclear” [Democrats actually coined that phrase] – eliminate the 60 vote supermajority rule. The social Democrats howled – it took away the minority’s rights, they claimed. Cooler heads prevailed and the moderates came forward. What they realized – and apparently Krugman and his other socialist/ Marxist friends do not want to admit – is the United States is not a democracy, as he asserts, in which the majority necessarily rules. It is a republic that operates on the rule of law and, in many cases, requires supermajorities to get things done, like amend the constitution. Therefore, the senate 60 vote rule to move major legislation to the floor, even though it does not “appear in the Constitution,” is consistent with the founding fathers’ principle that in a republic – when 100 people are going to determine the fate of the republic – it is sometimes better to have legislation vetted by a supermajority before it is put to a majority vote. It gives the minority some leverage in decision making.

Similar thinking pervades our whole legal framework. Suppose you were a member of a posse and you captured a cattle rustler. In a democracy, a simple majority of the posse could vote to hang the rustler. In a republic, the majority has no such rights: the rustler is turned over to the sheriff who arrests him. The rustler has a right to a trial and jury of twelve peers. In a death penalty case, he must be found guilty unanimously by all twelve jurors not a simple majority. If the verdict is not unanimous, then he is let go.

Krugman’s argument rings hollow. However, it does clearly illustrate the Social Democrats’ strategy: legislate us into economic slavery through growing big government at the expense of personal liberty and the rule of law. The government currently controls 30% of the economy. With health care, no matter how bad the bill is, they will control an additional 17% of the economy’s spending – or a total of 47%. For them it is a tipping point. With fully 43% to 47% of all Americans currently not paying any federal income tax, the final nail in the coffin is to make us all dependent on the government for the most fundamental of all rights: our health. In effect, if they control our health and our wealth, they control everything.

To paraphrase Admiral Farragut at the battle of Mobile Bay, their battle cry is: “Damn the Constitution, full speed ahead.”

Unemployment: You Do the Math

In the Wall Street Journal article, Labor Market Shows Signs of Progress, by Luca Di Leo and Sarah N. Lynch, (Jan 2, 2010), the authors claim “The number of people filing new claims for unemployment benefits in the U.S. fell in the latest week to its lowest level in nearly 18 months, a sign the labor market may be turning the corner.” They illustrate their claim with a graph showing a steady state initial jobless claim rate in 2007 of 300,000, a peak in the rate in early 2009 of 650,000, and a current rate of 460,000. They also stated that 4.8M people had been collecting jobless benefits for more than a week.

I am not a research analyst, just a guy trying to find a job and feed my family, so my research resources and time are limited. However, even a person like me, with a government (public) high school education, can do the math.

According to Wikipedia, the United States employs a total of 155M workers. According to news reports, 10% of the workforce is unemployed or 15.5M. Assume in the best of times, 5% unemployment is the norm and monthly initial claims are 300,000 (WSJ data). That means approximately 7.5M people need to be put to work. According to the WSJ data, 4.8M are drawing unemployment for at least a week, which means that 2.7M are long term unemployed who have given up looking, an assumption we will come back to later.

According to the Bureau of Labor Statistics over the last decade (1999 – 2008), JOB CREATION has averaged approximately 65,000 jobs per month. This means that at historical job creation rates AND at a stable initial claims rate (300,000), it will take 115 months to regain the 7.5M jobs that represent 5% unemployment. The truth is that initial claims rates are still at 450,000 per month (we are losing jobs but at a lesser rate), two-thirds of the jobs CREATED OR SAVED (I love that term ... another Obama sleight of hand) are GOVERNMENT (read OVERHEAD) jobs, AND there is no guarantee that the jobs even exist to be filled because companies may choose not to rehire because they have realized PRODUCTIVITY INCREASES THROUGH AUTOMATION over the past 10 years and the future in an Obama world is extremely risky from a regulatory and tax perspective.

For those political hacks that believe I chose my data to help George Bush, note that I did include 1999, a Clinton year (average 264,000 jobs per month) AND I did not include 2009, a bad year for Obama (-340,000 jobs per month). I know, I know, political ideologists would claim 2009 was Bush’s fault. My rebuttal to that is to get a meaningful mathematical result, one must treat the data between presidencies consistently. Therefore, perhaps a better way to treat the data is to assume that the market discounts the jobless rate by ANTICIPATING changes in policies between administrations so that an administration’s impact actually starts in the year preceding its actual election or re- election. Under this theory, 1999 (264,000 jobs per month) was really Bush’s first year and not Clinton’s last year and 2008 (-265,000 jobs per month) was Obama’s first year and not Bush’s last year. As a laymen statistician, I can find some support for this argument by noting the inverse correlation between Obama’s popularity in the polls, starting in the April – May 2008 timeframe, and the gains and losses in the stock market. Another interesting analysis might be to focus on who controls congress rather than who is president. Ahhh, this is an analysis for a different day. As they say, so little time and so little money!

Assuming you and I disagree on the preceding analysis, let’s examine what happens if we split the difference. In that case the average job creation rate across the Bush and Clinton Administrations AND eliminating 2009 as an anomalous year, results in an average monthly job creation rate of 82,000. If we agree on the other numbers and relax all my prior assumptions and constraints, then the best we can expect from the economy is recovery in 91 months, assuming 7.5M unemployed or 58 months if you assume 4.8M unemployed.

No matter how you cut it, the picture is not as rosy as the social progressives (Social Democrats) want you to believe. The only way to stimulate the economy is to reduce the size of the government and its need for taxes and let American innovation in the free market do the rest.

Those who think the government is going to fix this are relying on a false god.