June  2011 -  The politically accepted definition of the word entitlement is another progressive creation. The progressive interpretation of the word entitlement, which liberals love to use freely, (no pun intended) can be stated in many ways but is best summarized as “…being free from not having something that someone else has just because the someone else worked for it.” WHERE HAS COMMON SENSE GONE?

The dictionary provides an accurate definition of the word’s real meaning.

Entitle: “…..to furnish with proper grounds for seeking or claiming something.”

It then follows when the true meaning is applied, an entitlement it means something that has met the “proper grounds” test. Therefore the real definition debate should actually center on “proper grounds” not merely “perceived need or desire”.

The progressive concept of entitlements is so pervasive in our society it is not possible to make the term go away completely. This being the case it is time to take a lesson learned from the liberal play book. Now is the time to create an attitude shift which will bring the correct dictionary meaning back to the word entitlement.

But how can this are done?  I have a simple proposal. In fact it is so simple it would certainly work and it might even go relatively unopposed by those politicians who have

so willingly corrupted the perceived meaning of entitlement.

But first I must make a disclaiming statement:  I am not a politician. I am not an economist. I am not an actuary, I am not a mathematician. I am merely a common, ordinary citizen who has become fed-up with the lack of leadership universally shown by elected officials and their liberally biased non-elected appointees. The need for my disclaimer arises from the subject matter I will be discussing in this essay. Even so, this subject matter requires only a minimum amount of mathematical ability to be understood. (After all we want the average politician to have a chance at understanding what is being proposed). I believe the facts supporting this proposal have all been obtained from reliable sources ( if one considers government sources reliable).

I will discuss a powerful way to put accurate meaning back into the term entitlement without attacking the concept head-on. By doing so I run the risk of making a proposal in which willing politicians, economists and actuaries can surely find some inconsistency.  An inconsistency is one of  the most widely used weapons of any politically motivated individual. They find an error in a proposal, no matter how trivial, and exploit it and magnify it until the entire proposal can be claimed as defective and thus not worthy of consideration; however, I believe the concerned public is now becoming too attentive to any longer let such demagoguery slide by unchallenged.

The present clash inWashingtoncenters around unsustainable entitlements yet neither major political party is willing to attack the entitlement issues directly. Both parties are trying to maintain their present political cover by claiming as a solution to the problem:

(1). Reduce government size and therefore spending on and by government. Reduce taxes and burdensome regulation, thereby boosting the economy and allowing economic growth help manage a burdensome sovereign debt sometime out in the distant future………

Or alternatively….

(2). Increase government size and government control over more aspects of the economy thereby bringing the knowledge and expertise of government into the private sector which is incapable of progressive activity on its own volition. Increase taxes and spending to fund the governments expanded activity which in turn will provide the economic stimulus needed to cause economic expansion and reduce future national debt obligations…….

WHERE HAS COMMON SENSE GONE? Either approach, applied to entitlements as presently envisioned has been tried before and failed and will surely fail again to achieve the claimed results.

What then must we do? One thing for sure is we must not try to “solve” the problem by adding to the byzantine regulatory and tax structure already in existence. Fine, so what do we do?

We must address head-on the present cost and benefit basis of Social Security and Medicare. At the same time we can address the issue of the national debt which is starting to severely constrain the Government’s ability to act in even a somewhat rational manner. We should also start to normalize the federal tax structure in order to provide some clarity to the way FICA functions from an employer and a worker point of view. BUT most of all we should revert all Social Security and Medicare functions to an earned benefit functionality.  Great if you can do it you may say, but this still leaves the large fiscal drain caused by Food Stamps and Medicaid and several other byzantine government programs. Therefore we must recognize that the readily available and consequently overused provisions, of both Medicaid and Food Stamps are  strong incentives for a significant part of the national population to not to seek work. These programs must be changed as part of a general restructuring of entitlements.

Let’s look at a few facts: The situation today is (2010 figures): The average person in theU.S.earns $40,584 annually. In some regions of the country average earnings are higher and in some regions the average is less. ForTexasthe average wage is $39,493. InConnecticutit is $56,001. FICA deductions from pay are: OSADI – 6.2% and H.I. – 1.45% for a total of 7.65%.

A like amount is also provided by a person’s employer and for a self-employed person the listed deduction amounts are doubled. In other words a self-employed person earning the average national wage will need to pay $6209 to the government even before federal and state income tax, property tax and other revenue generating fees are applied. Is it any wonder more and more people are finding it easier to revert to Medicaid and Food Stamps than to try to maintain a reasonable life style under a crushing tax burden when they can earn up to $22,000 per year and still have full access to all available government subsidies? Is it any wonder people find it burdensome to attempt self-employment when they are capable of making it a success? Is it any wonder employers are reluctant to hire more people or give wage increases when the cost of doing so ratchets ever upward and the rules are changed capriciously and often?  Is it any wonder people feel helpless in the face of ever increasing costs which result in part because of the government’s debasement of the dollar through overspending on unsustainable subsidies?

So what must be done?

Two things must happen. The existing Medicare and Social Security systems must be allocated to each individuals account on the basis of its present value calculated in accord with what has been previously promised.  For those under 65 any future contributions resulting from earned income must be allocated to individuals on the basis I will now describe.

For our average employee 7.65% of his wages will be deducted annually, converted into 30 year Treasury bonds and held in a government account that is identified to him personally as his property. The funds in this personal account will generate an additive amount based on compound interest derived from the average annual thirty year Treasury bond rate in effect for the year in which the funds are deposited. The employer, or the individual if self-employed, will deposit a similar amount in a 401-k account for the employee and the employee will have the option of matching the funds deposited in this account on an annual basis. Any employee matching contribution will be done on a pre-tax basis as is the case today. These funds will also be converted into 30 year Treasury bonds and placed into a 401-k account  where they will grow tax free until withdrawn, or remain tax free if rolled over into an IRA when the persons retires from the workforce. Existing IRA rules will apply. There will be no other special subsidies in the way of earned income credits or medical funding accounts.

What will these accounts provide for the individual?  Let’s look at one example.

Assume at age 35 a person who has not previously worked starts earning the  year 2010 average national wage and continues working steadily for 30 years until age 65. Furthermore assume his pay is increased by one percent annually and the government 30 year bond rate is increased annually by one percent from its initial rate of 4.35 percent in 2010. In other words 4.39 percent for 2011 and 4.44 percent for 2012, etc. At the end of 30 years this interest rate would be 5.81 percent. (A very low rate when compared to historical averages over the past 30 years). Further assume the FICA rate stays at 7.65% for the full 30 years (something not very likely under the present system).

Provided the individual has not drawn down his accounts, at the end of thirty years they will be worth: (1) FICA: $142,986, (2) IRA $142,986 and if matched by employee contribution $284,972. Thus the individual can have a grand total of up to $428,958 that can be drawn down on a taxable basis or rolled into a private source annuity that will continue to generate income while providing funds for retirement.

Notice that the individual did not start this plan until age 35 and retired at age 65 in the example (this was done to keep the 30 year bond interest calculation simple). In reality, an earlier start date is almost a certainty and a later retirement date is an individual’s option. A one percent average annual pay rate increase is also a very conservative figure. A review of the average annual national wage for the past 15 years indicates a 2.91 percent annual pay increase is the norm.  The average 30 year Treasury bond rate over the same 15 year period has averaged just over 7.31 percent, again making our maximum 5.81 percent look very conservative. But that has been my point; even with extremely conservative estimates the funds generated by the individual accounts can be substantial. If historical averages are applied the sample accounts used in our example would be valued at over one million dollars at age 65. All that is required for this result is the systematic application of FICA funds to individual accounts at the same interest rates the government seems perfectly willing to pay the Chinese or any other entity.

But what would happen if the individual became sick or was without employment for a period of time? The individual could draw out funds from the private, government account at any time, for medical or living expenses, should sufficient funds not be available from other sources such as savings or insurance. Even though funds withdrawn would be taxable, the medical expenses would offset the tax on withdrawn medical cost funds. Funds for living expense would get no special tax treatment but since the individual would in effect be spending his own money there would be every incentive to restart work in some capacity as soon as possible.

The government would also win big since the funds used to pay the interest on debt which is today going overseas would stay at home, as would the deb in our example. Bookkeeping wise this would be a double win for the government since interest paid on the accounts would be actually payment-in-kind (more debt) and the government would not  have to print more money to pay the interest on this debt. Only when the funds were withdrawn by the individual would the government be required to provide printed money and even then some of it would be returned to the government via the tax system So, to summarize the benefits of the proposed system:

(1). The individual would receive an annual statement of their accounts. They would always know what their status was. Should the account growth exceed their expectations they could consider retiring at age 60 or even 40 for that matter. The distribution of available funds would follow the same procedure in any case.

(2). The individual would be compelled to understand some basic elements of personal finance. This knowledge would serve him well on his life journey, and he would develop an increased regard for expenses that can only come from spending one’s own money. The incentive to remain unemployed would be eliminated.

(3). What if the individual became so chronically unemployed or ill they deplete their FICA account? Once their private government account was depleted they could start hardship withdrawal from their 401-k account . In the extreme case that the 401-k account also was depleted private charity and Medicaid from the states will come into effect. But the individual will have to share their government and 401-k account information to verify a true need exists before qualifying for Medicaid or public charity. The number of persons having themselves classified as disabled would be dramatically reduced since it would be in their interest to work in any capacity up to the limit of their ability.

(4). The “free lunch” which has been enjoyed for so long by so many at the expense of others would be over. There would be virtually no wards of the government and the era of politically inciting have-nots against haves would be over.

(5). The government would see an immediate reduction in actual direct annual interest payments on the internal national debt thus providing the ability to pay down existing external debt.

(6) The term entitlement would once again have factual meaning since the “proper grounds” for an entitlement would be self-proving.

(7). A government sponsored  Ponzi scheme that is much abused by some individuals would be ended. The government would no longer have an incentive to persist in the deceit and obscurantism prevalent in the FICA system at present.

(8). Best of all. The funds remaining in the accounts, at the death of the owner would really be entitlements. They would remain as property of the deceased’s estate to be distributed as planned by the individual prior to death, or in lieu of any plan, as by existing law.

This has not been a particularly easy subject to reduce to simple terms but I have tried and I ask for your forgiveness if it has still seemed weighty. The time is now right to dissolve a corrupt government system and replace it with a program that benefits all and is conducted in an open, straight-forward and honest manner by both government and individuals. The system being proposed will do exactly that. It will be free from constant government meddling and personal abuse.

Do I believe the example plan proposed is the only way forward? Of course not! But I do believe it contains some useful information and it can serve as an example of what could be achieved if the voters instill sufficient incentive in their elected representatives and then strongly support those same representatives in developing a creditable plan.

T.P. – 2011

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Click here to see supporting FICA spreadsheet.

 WHERE  HAS  COMMON  SENSE  GONE?  No. 20, Thomas Paine – May 2011-

In response to Where Has Common Sense Gone, No.19 “ Where are the Elephants” a very good friend of mine gave me a copy of an article that appeared in “Influential and Controversial Readings in American Politics”. It was extracted from The American Commonwealth  pp.58-64, authored by James Bryce and  published in 1899.

The gist of the article answers the question of the missing elephants by clearly stating there are none in American political circles today. By “today” the author meant The Year of OUR LORD – 1899. I was struck by the reasons given and the resulting recognition that many of the same reasons, persist to this day, along with a few new ones.  How is it that a lack of statesman-like, competent, moral, honest and God fearing politicians can persist when the evident need for them is so great?

Perhaps we as a nation expect too much of our politicians. It should be obvious to all that no matter how low we have allowed the presidential bar to settle, we still get even less than our reasonable expectations. Surely this does not have to be the case with the Office of the President, which is arguably the greatest and most powerful office in the world. I suppose it could be possible our original standards for the office, conditioned to a different time in history, were too rigorous to have any present application. Let’s try to address this proposition and then go on to determine what might have gone wrong and what, if any, possible solutions are available to us as a nation today.

America is one of the very few countries in which a bountiful career  and recognition in any field is open to even the most common of men, provided they have the ability, and the work ethic required to get them there.

What about our founding fathers? They, almost universally, started life as Englishmen living in the Colonies and ended life as proud and notable Americans. They were well educated to European standards which were the best in the world at that time. They were men of property or supreme talent, or both. They believed in America and were never hesitant to place the national interest before their own. They were able to ascertain correctly what the national interest should rightly be and they looked far beyond the next election. ‘”Down to the election of Andrew Jackson in 1828, all Presidents had been statesmen in the European sense of the word, men of education, of administrative experience, of a certain largeness of view and dignity of character. All except the first two had served in the great office of the Secretary of State and all were well known to the nation for the part they had played.’” They established the framework for the greatest nation the world has ever seen at a time when a diplomatic miscue could have given rise to disaster for the young nation.

What happened commencing with the election of Andrew Jackson?  Until the time of the Civil War all presidents were either career politicians such as Van Buren, Polk, Pierce,  and Buchanan or successful soldiers, such as Jackson, Harrison or Taylor whom their party found useful as figureheads. A couple of them, like Fillmore were accidental presidents, Fillmore ascending to the office after the death of Taylor. Fillmore has been given partial credit for the Compromise of 1850 which delayed the start of the Civil War, but did nothing to solve the underlying regional differences between the states, and in fact made the war more intense once it began. Jackson is the only one who had enough accomplishments to his credit to warrant his name being remembered today as anything but “one of the former Presidents” .Intellectually they were dwarfs compared to the real leaders of that generation, Clay, Calhoun and Webster.

Abraham Lincoln began a new day in the office of the presidency. He rose from the most humble of beginnings to the highest office in the land by diligent effort and impeccable moral character. The difficult decisions he made, while President , exemplified his desire to preserve the nation as opposed to preserving his personal popularity. This desire, which ultimately cost him his life, made him no stranger to danger. He was well aware there had been at least three previous attempts on his life, yet he never wavered when confronted with seemingly impossible decisions. He always tried to do what was best for the country even when a bad decision could lead to horrible consequences. He knew the best possible decision was always better than no decision at all during a time of crisis. He met crisis head on with an open mind instead of an open mouth as is the common practice today.

Today, diplomacy is largely a lost art among American political leaders. Their mainstay certainly appears to be jawboning and rhetoric. The list of twenty-seven Presidents following Lincoln contains at most only four or five examples of Presidential quality men, none of whom should be rated as highly as our initial lot of Presidents. What has happened ? Where are the elephants? Where has common sense gone?  Why does this country continue to elect Men like Hoover, Eisenhower, Johnson, Nixon, Ford, Carter, Clinton, Bush and Obama.

On the one hand, they are elected because of popular dissatisfaction with the immediately preceding President who was elected for the same reasons. This public perception of poor performance or ineptness in office, or faulty moral character, or open hostility towards significant components of the general population can explain why the  shift , at election time, is made from one political party’s candidate to the candidate of another party, but it does not account for the reasons the candidates put forward by the political parties are almost universally undistinguished. This fact, in turn, leads to the population making a selection based on the best of bad choices, even if the average voter does not see it that way at the time his vote is cast. However, by the end of a President’s tenure in office you can rest assured most of the population will hold a more critical view of the departing President. A view they would have done well to invoke before his election. Why is this so often the case? Where has common sense gone?

On the other hand, the reasons for a field of poor candidates are manifold. The list of reasons is long, but a few notable examples will help the reader understand why presidential quality candidates are seldom found and encouraged to campaign.

Firstly, the United States has a poorly organized civil service that does nothing to promote the development of statecraft. Those persons of quality education with a true desire to become national leaders are actively suppressed after attaining a somewhat respectable height in our politically charged civil service system. If those persons do not run afoul of civil service union activity early in their careers, they are all too often later discouraged by the pervasive appointment of political hacks to the senior foreign posts. Postings which could, if properly utilized, provide the best diplomatic training grounds for future national leaders. Today the universal custom is to award ambassadorships on the basis of political patronage. Ability or diplomatic skill and training are seldom even considered as attributes for the job. Some ambassadors have done a good job, but far too many ambassadors, while wealthy, educated  and successful either by way of commerce or inheritance, have also been completely lacking in the civil service training that would most help them make their assignment a success for our country. Even the great office of Secretary of State has often been awarded for political reasons as opposed to reasons of national interest. Presently our country suffers from the appointment of a Secretary who is clearly out of her depth, but was appointed for the sole reason of appeasing a competing presidential candidate.

Where has common sense gone?  How can a President appoint a Secretary of State candidate solely on the basis of his personal political ambitions instead of what is good for the country?  Think about this carefully. Why did our founding fathers once in the President’s office appoint only the best and most able individuals to high posts, even when those persons were of a different political persuasion? They did it because that  was best for the country. Now think about why our present President has surrounded himself with appointments that are a mixture of political ideologues, unskilled and even patently dishonest persons and some of questionable moral fiber. Try to think of any positive accomplishments any of them have made for our country. Try hard! Ready to give up yet?

Secondly, we should consider the methods and habits of Congress. Political life as structured today provides few opportunities for personal distinction. The news is dominated today by persons of the caliber of a Harry Reid or a Nancy Pelosi or a Barber Boxer or a John Bonner. Not a single one of these persons is willing to take a hard, well considered and appropriate decision that is good for the country. They are too engaged in a political popularity process to be able to recognize what is good and what is right for the country even though what is best may be unpopular with their constituents at the moment. They may give lip service to what is best for the country but in the final analysis they will always side with political expediency. This is the weakness of a republican form of government. It is a weakness exacerbated by the quality of persons elected to public office; but it does not have to be a fatal weakness, NOT UNLESS IT IS ALLOWED TO PROGRESS TO AN ABSOLUTE EXTREME, WHICH IS SOLELY THE CONSIDERATION OF HOW ONE’S CONSTITUANTS ARE LIKELY TO VOTE, RATHAR THAN WHAT IS NEEDED BY THE ENTIRE COUNTRY. Show me a leader who avoids taking a hard or unpopular decision and I will show you a leader in name only.

Further more, in today’s world of multiple sources of instantaneous communication, eminent men make more enemies, and give those enemies more assailable points, than more obscure men do. This then seemingly makes them far less desirable candidates. While it is true their name is more widely known and they have made many friends, it is also true that they have made some errors during a long career, errors which are capable of being magnified into grievous offenses by those persons desiring to do so. No man is long in the public eye and plays a part in important affairs without giving the opportunity for intense criticism by his opponents. Intense indeed is the light that is cast upon a Presidential candidate, searching out all of the caprices of a past life. Hence, when the choice is between a brilliant and worthy man, and a safe man of whom very little is actually known, the safe man is somehow preferred. Public feeling, strong enough to support a man without conspicuous, positive merits, is seldom strong enough to support a man of great ability who possess some positive faults. Party loyalty in America is so ingrained any candidate put forward by a party will get the full party vote no matter how lacking in any demonstrable merit. The ordinary American voter does not object to mediocrity.

The average American voter has a low conception of the qualities required to make a statesman. The American voter likes a candidate to sound sensible, vigorous and above all magnetic. The voter does not value to the same degree originality, profundity or wide knowledge and superior ability demonstrated in some other arena. This is a mistake to the detriment of our country.

We should be encouraged however. A few strong persons have started to appear on the scene. They are willing to take decisions that are unpopular with the entrenched few in order to benefit the many who are less politically organized. We absolutely must continue to identify them and support them at every opportunity if we are ever going to rise above the political morass our country is experiencing today. We must let the traits of character, integrity, and national purpose dominate our future choices for candidates to high office. If we do not take a strong stand BEFORE the political process winnows out the most able candidates we will continue to suffer from poor and often incompetent representation.

We should be further encourages by a new class of voter who has begun to appear on the scene. A voter who is oriented towards good quality candidates rather that candidates favored by a political machine.  Voters who are not bound by the past but who are willing and able to determine the qualities requisite for a superior candidate. Voters who are not compelled to vote a straight party ticket just because they are opposed to the political principles of a different  political party. Voters who recognize the country needs good leaders of any persuasion. Leaders who will do what is best for the country as a whole even if differing with the voter on certain points. Our country deserves elected officials of the highest quality and merit. We should never settle for anything less and we should continue to make this point clear to all elected officials present and future.

Lastly, we should always remember the merits of a good President are one thing and those of a candidate another thing. At least one eminent American, when challenged to become a candidate for the highest office in the land, said….’”Gentlemen, let there be no mistake. I should make a good President, but a very bad candidate’” This was all the cronies of his political party needed to hear before they quickly focused their attentions on another far less able candidate.

Please do some serious homework before you vote in the next election. Study all claims both pro and con for each candidate. It will not take you long to begin to recognize political rhetoric from actual fact. Some pro claims will be found false on closer scrutiny. Some contrary claims will also be proved incorrect on careful observation. Then make your choice based on who is best for the Country, State or Community and not just for you personally, and do not forget to remove political hacks from office as quickly as possible. In this way you can demonstrate some statesmanship yourself.

Above all else, vote for a President of high moral character and great ability, a President who will be good for the Country, a President who will not tolerate poor performance by important and highly placed subordinates.  Vote for President who will leave a legacy of distinguished service long after he has faded from the political scene. If a political ruling class is standing in the way of superior candidates, get rid of them by voting them out. If the media is attacking superior candidates as a way of promoting their own choices of lesser ability, take the media to task. Make your well considered thoughts known. Be loud, clear, concise and accurate. You owe yourself and your Country nothing less.

T.P. – 2011

I see the Tent, I have seen the Clowns, ………..but where are the Elephants?

I have been watching the Federal Government Circus on television. I have no doubt many other concerned citizens have also been watching. We have been subjected to posturing, half-truths, outright lies and a pitiful display by Harry Reid the Senate Majority Whiner.

We have been a country without any actual leadership for over two years. The present administration has stumbled from mistake to confusion to outright deceit without providing any clear direction for the country along with the details of how to follow that direction until clearly articulated goals have been reached.

The present administration has not even presented a budget as is their obligation. Instead, they have perpetuated procrastination on budget issues since funding government operations by Continuing Resolution allows the government to keep spending at present levels while a budget is being developed.

I have no doubt that the Democrats hoped any actual approved budget would remain months, if not years, away to allow them to follow their reckless spending ways well into the future. There is a small problem though. The government (present administration) is going to bump up against the national debt limit more quickly than realized when the decision was made some months ago to follow the route of continuing resolutions. It seems as though the present administration has put out so much false information about the level of government spending that they lost sight of the real figures. Now they are in a box-trap of their own making.

They may yet get out of the box, but if so it will require an escape act even better than the one performed by the late great Houdini. Unfortunately there is an easier way out for them. The way out will be provided by the Republicans if no Elephant emerges quickly.

One Republican leader has proposed a budget that dramatically reduces government spending over the next decade. So far not one of the presumed Republican presidential hopefuls has stepped forward (Donald Trump not withstanding) to endorse the significant cuts proposed in the pro-forma budget. Where are the Elephants?

It is time for real leadership to be demonstrated. It is time for a strong leader to emerge and clearly state what the fiscal objectives for the country would be under their leadership and the pathway that would be followed to get there. If no strong Republican leader emerges quickly the Democratic candidate, President Obama, will appear more and more like the only likely president elect of choice against a listless and indecisive field of Republicans. The Democrats will have slipped out of the box.

Obama has confirmed his candidacy and has started fundraising. It is time for a potentially large field of presidential want-a-bees to weed out the hacks and get down to serious business. This time it is different. It is different because more citizens than ever before have started to understand what is at stake in our country’s future.  The next presidential election will see the largest number of voters by far go to the polls. Any Republican candidate afraid to take a clear stand right now, for fear of somehow being misjudged by voters, does not have the leadership quality required by the person who will out of necessity have to clean up the terrible state of affairs left behind by the Democrats.

WHERE HAS COMMON SENSE GONE?  ….WHERE ARE THE ELEPHANTS?

T.P. 2011

WHERE  HAS  COMMON  SENSE  GONE, No. 18, Thomas Paine – March  2011

Economists have a well recognized axiom used to describe one aspect of production activity. It is called the “Law of Diminishing Returns”.

The law states “that we will get less and less extra output when we add additional doses of an input while holding other inputs fixed. In other words, the marginal product of each unit of input will decline as the amount of that input increases holding other inputs constant.”

What does this axiom really mean? A simplified example can be used to illustrate what is meant.

Suppose a farmer has typically harvested 100 units of crop for every 100 pounds of seed he has planted in his field. This ratio has held steady for years with only minor variances due to generally benign weather conditions year to year. The 100 units of crop can be considered the economic production. The inputs are the amount of seed sown, the available amount of land, the amount of fertilizer applied, the number of days of sunshine and normal temperature and the amount of rain that falls.

Now suppose the farmer wants to increase his crop yield. Some of the inputs are under his control and some are not. It is pretty clear that fertilizer and seed are under his control while the amount of land is fixed and the weather is not under his control. He looks at the cost of additional seed and at the cost of additional fertilizer. Seed being by far the cheaper of the two, he decides to sow more seed without adding more fertilizer which is very expensive. The farmer then proceeds to double the amount of seed he sows. He does not really expect to get twice the crop yield but any increase in yield even close to double will have made a dramatic improvement in the units of crop he produces for negligible increase in cost.

Now suppose the weather remains unchanged from the norm. The farmer is delighted when he sees that all of his seed is growing and the weather is cooperating. Then somewhere between planting and harvesting things take a turn for the worse. It becomes clear the crop will be stunted. The seed is experiencing too much self-competition for the other available units of input. The farmer doesn’t like what he sees but there is no way to effectively remove every other plant in order to achieve normal crop density. He is not too worried though. If he only gets ten percent more yield the extra seed has been more than paid for. As the growing season progresses it becomes increasingly clear that the crop is not doing well at all. Over abundance of seed has increased the number of plants trying to occupy the same space and all plants suffer the consequence of poor decision making by the farmer who was looking for an easy way to prosper with minimum additional effort.

Alas, the crop is harvested and the farmer finds that his field has produced less crop yield than if he had not planted extra seed at all. Once again the law of diminishing returns has been validated!

Now let’s see if we can use the law of diminishing returns to construct a simplified version of what is going on in the economy. We will have to resort to a much simplified version since the factors of improved production (economic expansion) are manifold. These factors are numerous and they are complex. Complex enough to keep an army of economists occupied just in trying to understand what is going on in the economy. There seems as yet little consensus.

Let’s look at what we can now see as actual events following the bursting of the housing bubble. We might want to recall the term “seed money” while remembering what happened to the farmer in the previous example. We won’t refer to seed money again but the reader may wish to recall the term every time he sees money related terms in the following narrative……….

Initially, the economy started to feel the effects of the bursting of the housing bubble. The Federal Reserve reversed track and lowered interest rates and congress flooded billions of extra dollars into the economy.

Unemployment started to increase!

The Government subsidized new homes through tax credits.

Builders kept building and the inventory of unsold homes increased even as house prices continuously decreased!  Economic productivity declined!

The Government launched a full suite of tax credits and subsidies.

Unemployment Increased!

The Government spent more billions keeping insolvent business afloat.

The gross domestic product declined!

The Government lent money to the large market center banks at almost zero interest rate to stimulate their lending and the resulting economic activity that lending would promote. The banks instead used the money to buy “risk free” Treasuries in order to improve their profit margins on a no risk basis! Besides, most business entities did not want to borrow their way into more debt. They were already too traumatized by the huge suite of Government regulations being promulgated by administrative decree.

People began to wonder, what is going on? The banks have lowered the interest rate on money they borrowed from me (my deposits) to the same rate they can borrow from a willing Federal Reserve, and they are using that money, conveniently multiplied by a fractional banking system, to buy even more Treasuries which further enhances their profits, at the same time giving the Government ready cash to spend on anything it wishes no matter how bizarre. This is a wonderful arrangement for the big banks, which by now also own the largest defaulted mortgage lenders. Why make any problematic loan to anyone in the housing sector when the Government is standing by with risk free Treasuries. But how did the banks, which were so recently in dire straits, initially come up with the money to start the Treasury buying process? Oh, I forgot the Government had already handed to banks billions of dollars and received mostly worthless paper in return, called TARP.

Unfortunately the economic units of production continued to decline. The Government decided to accelerate spending to stimulate the economy.

Now the banks started to worry. What if the Federal Reserve printed so much money the dollar would start to decrease in value causing commodity prices and most everything else to rise. If this price movement became acute enough, the Federal Reserve would be forced to raise interest rates on the money the Government had borrowed from it. But wait, if interest rates should rise the Treasuries the banks are holding will fall in price and the banks could lose much more than they have gained since that same fractional banking system which served them well on the way up, works against them on the way down. In fact they could lose so much money they once again might become insolvent. Diminishing returns one might say!

The banks started to lose their appetite for more Treasuries and actually started making a few conventional loans. This loss of appetite by the banks is not good for the Government since it is spending so much money it literally cannot stop the process. If it did stop spending, the thousands of newly hired government employees will have to be terminated and the unemployment rate will shoot up again. Besides, under the existing arrangement, it is mostly Government spending that sustains the economy.

The public has by now become wise to the sweetheart deal the Government has made with the Money Center Banks. The public now starts to understand the tax-paying public will be the ones who will have to pay the bill for excess spending no matter whether they pay for a Government bailout or a bank bailout.

Enter QE1.  The Federal Reserve ramps up printing money (electronically) and uses it to purchase notes directly from the Treasury. This is a good deal for both of them. The Government gets oodles of cash to spend and the Federal Reserve gets to keep interest rates low, which it hopes will stimulate economic activity sooner or later. At the same time the Federal Reserve does not have to rely on  those pesky banks which are more interested in making money than actually promoting increased economic activity.

What a great deal. The Government gets to do what it does best, spend money inefficiently for everything except the inputs to increased economic productivity. The Federal Reserve gets to inflate its balance sheet with unimaginable amounts of Treasury paper that everyone knows is “risk free”. Even better, the persons making the decisions at the Treasury and the Federal Reserve are not elected and therefore not answerable to the taxpayers. They serve at the whim of the person most needing the appearance of robust economic activity if he is to be re-elected, the President of the United States. The elected representatives of the public, the same public which will ultimately suffer the consequences of this corrupt arrangement, are not even allowed to audit the balance sheet of the Federal Reserve because they are so economically illiterate they might jump to the wrong conclusion. Also Congress is excluded from any Federal Reserve oversight, the reason given being Congress cannot be trusted to behave in a nonpolitical manner. (Some truth to this, but even biased oversight is better than none at all).

But wait, in our analogy everything was supposed to stay fixed in the rest of the world while we solved our own problem. However it starts to appear many other developed countries have been playing the same game the United States has played. They have also spent too much money. Money they had to borrow from somewhere.  Un oh!  Many of them cannot just ask their “federal reserve” to print them some more money, since much of Europe has gone to a common currency. This is a problem. In the absence of more revenue, or borrowed money, they must cut spending or default since their tax rates are so high it is literally impossible for them to be raised. This is not going to be fun for them.

“Fortunately” the United States does not have this constraint. It can still print money, and none of the other nations will object too much since the U.S. dollar is the reserve currency for the world. This is good for our Government since it allows the United States to continue spending in a way the rest of the world is unable to do. Besides no one knows for sure how many dollars are sloshing around out there since there is no way to accurately measure them. It might be good for Government but it is bad for the people. However, in a time of stress this doesn’t matter. After all the people are not the ones trying to get re-elected. Prices might go up in dollars on a global basis as the value of the dollar sinks but, what the heck, things will surely pick up soon. Besides the Federal Debt Limit is still relatively far away.

Enter QE2. One might think the Government is like a poker player trapped with a bad hand after having put too much money into the pot. But this isn’t poker; the Government can’t just fold its hand, because it would not be allowed to participate when the next hand is dealt. The Government has started this process and it will have to play the hand out.

Economically things may be getting a little better though. True the price of houses, that started all of this, has not quit falling, and the price of food is starting to move up strongly and most commodities are experiencing substantial price increases, but, hey, this could be the sign of an improving economy. When the cost of everything bought rises the Gross Domestic Product calculates out at a higher rate giving the Government something to point to and say its policies are working. Inflation could remain low, especially since the Government has caused food and fuel to be eliminated from the calculation. The slump in housing cost, while actually hurting the people helps the Government since it stays in the calculation. This gives the government another “positive” marker to point to. Isn’t it strange how the entity that gets to provide its own performance metrics always seems to have the best results? After all the Government has hired enough public sector workers to cause the unemployment rate to fall by 1/10 of one percent.

But wait; do these thousands of new government employees not want to be paid?  Doesn’t the Government not have to spend still more money to pay them? Not necessarily. The Government would be paying them extended unemployment benefits if they were not working, and if they had not previously been working the government would be giving many of them a myriad of support payments. Of course, the public has now learned that the average government worker earns thirty-four percent more than the average private sector worker while also enjoying substantially better benefits. The public may not like this but the public should take heart in knowing that much of their Government business will now be handled by persons unskilled and formerly chronically unemployed. And, oh yes, for the most part government employees are not engaged in any activity that enhances national economic productivity.

Not to worry, the Government can likely work all this out somehow if the other productivity inputs would just stand still and give all that Government spending a chance to work. But the value of the dollar keeps going down, just as the price of oil goes up. Surely this can’t be good for our current account deficit.

There must be some solution! Possibly the Government in a flash of inspiration will introduce QE3. After all QE2 is scheduled to end in June of this year. But wait the Government has reached the national debt spending limit much more quickly than originally anticipated when QE1 was introduced. The Government must find a way to increase its debt limit quickly or stop the unproductive spending. What if the Government was able to classify the Treasury borrowing as non-debt? Stranger things have happened! There must be some way for all of us to escape this debt trap without any pain or suffering.

Sorry to say folks, the answer is no. There is no painless way out. We are in too deep and it appears the Government is willing to go even deeper. Now is the time we really need some leadership in Washington. There are two basic options. Unfortunately they sound like a “Catch 22”. (1) accept some considerable pain now as the Government quits the wholesale printing of money, interest rates are allowed to rise and the government has to cut spending and raise taxes just to pay the increased interest due on our national debt, or: (2) keep printing and spending money to support  uneconomic activity until it is too late to avoid a general collapse of any remaining productive activity and the nation becomes totally divided into some haves but mostly have not’s, a much more painful and destructive option than the one proposed in (1).

So there you have it; a considerable amount of pain now, failing businesses, people out of work, or, an unbearable amount of pain later. This prospect is not what we have become used to and it is not going to be fun, but astute leadership can guide us through a very difficult few years so that we can come out on the other side bruised but not broken.  It would behoove us all to identify, empower and then work hand-in-hand with an astute leadership to promote only economically productive activity while eliminating government support to any vestige of uneconomic endeavor, letting the chips fall where they will. Really tough medicine, but consider the alternative.

Time to put a little Common Sense back into Government.  Remember this the next time you vote.

Where to start a discussion……..the Twilight Zone is the Twilight Zone no matter where you enter it. One might add….Common Sense is in short supply once inside the Twilight Zone.   I had a brief flashback to an old Rod Serling Twilight Zone episode when, a couple of nights ago, I watched Minnesota Representative Michele Bachman (RTP) try to discuss certain aspects of the Obama budget and Unfunded Liabilities.

I like Michele Bachman. She presents herself well and exudes civility and dignity to a degree not demonstrated by many of the other elected representatives we, as a nation, have sent to Washington. I think she has some future potential in politics, but that potential won’t last long if she continues to address issues on which she is woefully ignorant. This is doubly bad if it happens to be an issue she is likely to be involved in for most of her working days as an elected official. Her attempts to address certain issues in Obama’s budget must have been embarrassing to many viewers. My concern however is this…..Was this spectacle, where she kept repeating the same words even though it was obvious she was lost to any comprehension of the message she was trying to deliver, representative of the knowledge base most elected representatives have to draw from when they engage in budget solutions and government finances in general?

Based on most of the rhetoric I hear on the news the answer is likely yes. If so, this is not only shameful but very dangerous to our national future. It may also help explain why we find our nation in its present financial situation. I have been appalled at how quickly budget discussion seems to shift from record deficits to Social Security and Medicare.  Either our elected representatives are hopelessly innumerate or they are participating in an intentional monumental misdirection exercise on both sides of the isle. We citizens should not tolerate either case one day longer.

There is no useful purpose served in discussing the tens of trillions of dollars in future unfunded liabilities when we are today faced with a present deficit of 1.6 trillion dollars. To discuss the “off balance sheet” aspects of our future liabilities does nothing but obscure the lack of progress being made in curing the present problem. We the taxpayers need some serious spending reduction now and we should not be quiet till we get it. We should insist on dramatic spending reduction followed by longer term solutions later.

The reader is reminded of a closing statement in C.S. No. 3 of May 2009. “…..another example of the abuses fostered through a system of seemingly unlimited tax code manipulation by special interests and their government facilitators.”  Let’s tell it like it is……

The federal government will collect $1.75 trillion from individuals in income and payroll taxes in 2011. Corporations will pay $198 billion. The government will spend $3.8 trillion, $1.5 trillion (about 40%) of which will go to the people that paid the taxes, in the form of Social Security and Medicare. So before we skip right to cutting these benefits, let’s shed some light on what is hiding in plain sight: corporate welfare. The vast majority of the remaining $2.3 trillion in government spending will manifest on corporate balance sheets. (Review C.S. No. 11 Nov. 2010.)

Our political and economic systems are increasingly suffering from an atmosphere of risk-free profit. Do you wonder why anyone would pay a lobbyist up to $1,000/hr?  It is because getting your product or service written into legislation or an appropriation by a government agency results in risk free windfall profits. In recent years, lobbying dollars have provided a better return on investment than any other corporate allocation of capital. Thomas Sowell, a brilliant economist, stresses the need for the best undistorted application of capital as being the only sure way to provide long term benefits and profits in a free market system. The unholy alliance between government and business achieved through lobbying efforts is not what Sowell meant by undistorted application of capital.

It is an unfortunate reality that most of us know almost nothing about recent decisions made by the FCC (Federal Communication Commission), CMS (Center for Medicare & Medicaid Services), or the Federal Reserve, for example. The unelected officials that direct policy at these agencies determine how hundreds of billions of dollars are allocated in our economy, and, incidentally, the amount of money the public officials make from the companies they once regulated, after they transition to the private sector. This ongoing situation should call into question the integrity of the regulators decision-making. Certainly the potential and motivation to exploit one’s position exists, especially if loopholes in the Freedom of Information Act are used to prevent relevant disclosures from becoming public.

I don’t begrudge people making money, but if our leaders want to assure the populous that our government is serving “The People’s” interest rather than a “special interest,” they would be well advised to keep the number of public officials collecting paychecks from the industry they regulated to a minimum.

We have to recognize that every loophole, earmark, and tax credit is written to specifically serve a small constituency; yet, it is unwittingly connected to the broader economy. This means that every budget cut will cost someone a job. It is likely that job may never have existed without the subsidy anyway, but before we start slashing we should give a little clear thought to the way we proceed.

Our nation is looking for leadership. Leadership is about setting the goal, endorsing the plan, establishing the benchmarks to measure progress, and empowering the people to make the vision reality. Frankly, who designs and implements the plan is less important than the results that are achieved, but if we don’t take the time to think through where we want to go and the path we take to get there, we will end up lost. We are today a nation lacking a goal, a plan, and benchmarks. As a result, we are divided as a people, influenced more by extremists that say they will protect our special interest, even if that protection comes at the expense of those less politically organized. The truth is that the money has run out! Each group is fighting to protect their share of a fantasy.

There is a solution however, the government must rescind the present tax code in its entirety and provide a new simpler one along the lines suggested in C.S. No. 11. Every government subsidy must be eliminated. Most people will scream bloody murder at first until they realize the loss of their special interest subsidy will be more than offset by a new and lower tax rate that can be relied upon to encourage business and job creation.

We must act on these thoughts now. Repeating and reusing again and again the favorite instruments of government, manipulating interest rates and reshuffling the tax code cannot solve the problem. A major departure from the way government is presently run is the only solution. When interest rates are artificially low, capital is misappropriated to projects that are only productive if interest rates remain artificially low. Those projects prove unprofitable once the cost of capital (interest rates) increases. Further, any economist will tell you that a red flag, signaling unsustainability, goes up when nations start running debt/GDP levels greater than 4%. The US is running deficits that are nearly twice that level (8.9%, est. 10.9%, and est. 7.0% in 2010, 2011, and 2012 respectively). As you can see by the numbers, the government is not only engaging in unsustainable spending, it is also misappropriating trillions of dollars in this present near zero interest rate environment. Even with all of this spending, the economic response has not been adequate, in the view of the Federal Reserve, so they embarked on quantitative easing to further stimulate economic activity. At this point, so much of our economy is dependent on government appropriations and/or zero percent financing that any recovery strong enough to warrant an increase in interest rates, or withdrawal of government support, could also cause the economy to collapse again.

Eliminating government subsidies, overregulation and providing a simpler tax code can achieve economic stabilization and long term debt reduction. Taxes for the individual need not go up at all if they are spread more fairly and ending government spending on non self-sustaining causes will drive a focused economy that actually expands and improves.

Let your representative know that you will no longer tolerate their innumeracy with respect to fiscal issues.

T.P. – 2011

I have continued to wonder about the Federal moratorium on offshore oil drilling. The courts have found the moratorium to be illegal. This has been viewed by the present Administration as a setback and accordingly emphasis has shifted to dramatically extend the Permit to Drill process, in effect negating the findings of the court. Now it appears the Minerals Management Branch will issue an occasional permit so to avoid the appearance of total non-compliance with the court finding.  Is this bureaucratic chicanery or merely bureaucratic bungling and ineptitude? Sometimes it is pretty hard to tell the difference since the various levels of Government have such a poor track record in responding to major events in a timely and appropriate manner. One need only look back as far as Hurricane Katrina to find an example of even more death, damage and disruption than was caused by the April 2010 Deepwater Horizon disaster. The Government’s response to Katrina was subjected to justified criticism at the time. Even though the cause of the Katrina disaster was quickly diminished the significant after effects remain to this day.

We should not gloss-over the Deepwater Horizon oil spill. It was the largest oil spill in history in U.S. coastal waters. It did a very large amount of environmental damage and it killed eleven people in the process. It also took the Washington bureaucrats several days to even recognize it was going on and a further several weeks to mount any sort of coordinated action in the way of a response. Even then various Federal Agencies continued to pursue independently from one another oil spill related actions that were often detrimental to oil containment efforts. In short there was a complete lack of strong and effective leadership at any level in the Federal Government.

Where Has Common Sense Gone?

Hold on one might say! It is not really possible to accurately relate a natural disaster (Hurricane Katrina) to a man-made disaster (Deepwater Horizon). I am not at all sure this view is correct since both disasters required a pivotal action by Government and Government mostly failed to respond in an effective and timely manner.

However, to avoid comparing apples to oranges, we should stick to relating like kind occurrences. We could try to examine Government actions and motives in a more normalized arena. The energy extraction industry would make a good model, for example. Let’s do a little analytical comparison between hydrocarbons and coal, the two largest energy supplying resources in the United States and utilize that comparison to assess whether or not we believe the Government is hypocritical, biased, and possibly inept as opposed to being acute and actively engaged for the best interests of ALL the people.

Comparing some of the basic characteristics of the coal extraction industry to the hydrocarbon extraction industry, we find the following.

Now we should examine some of the historical details of coal and hydrocarbon extraction in the U.S. in order to further put the two activities into perspective.

Of the ten largest oil spills in U.S. history number one was the Deepwater Horizon disaster. The fourth largest spill was actually multiple spills over a very large area resulting from Hurricane Katrina. Most of these spills did not result from the extraction process but rather from the transportation, storage and refining processes. However, for simplicity sake, we will treat them all collectively since they did occur over a very close time interval and it is not always possible to distinguish the actual hydrocarbon source even though the cause of the spill is clear.

The remaining eight of ten largest U.S. oil spills had nothing to do with the extraction process but rather with the shipping industry, which within the US  is a closed shop by virtue of government decree and restrictive government competency licensing.

What about worker deaths? In this regard we should be very very clear. Death of a worker resulting from anything other than natural causes is a tragedy and must be recognized as such since all accidents are preventable if sufficient care is exercised.

I did however undertake to provide a short comparison between the coal and hydrocarbon extraction industries and therefore it is appropriate to look at worker deaths resulting from on the job events.

Since 2001 there have been 69 oil workers killed on the job in the US. Of these 69, thirteen were killed in offshore rig accidents, of which the Deepwater Horizon disaster accounted for eleven deaths. The remainder were killed in other activities incumbent on the hydrocarbon industry but not drilling related and in most of the cases not even while offshore.

Since 2001 there has been an average of over 60 deaths per year resulting from U S coal mine accidents inside the mines. The very same month of the Deepwater Horizon disaster 29 miners were killed in a single accident in West Virginia.

Now let’s look at some of the effects resulting from coal and hydrocarbon extraction activity. As of this date there are no known continuing offshore leaks from previously drilled or currently drilling oil or gas wells in US waters. At the same time there are estimated to be more than 200 underground fires burning in active or abandoned U S coal mines. Let’s look at some examples of these fires and their resulting effects.

The Red Ash Mine Fire

This fire started on the property of the Red Ash Coal Company in Laurel Run, PA. The fire was discovered around 1915. The coal company took measures to put it out, such as sealing openings and flushing tunnels. They thought it was out, until in 1922 when it was in fact found that the fire had spread to additional underground coal seams. It the 1960′s people along the border of Wilkes-Barre Township and Laurel Run had to leave homes, schools, shops, and churches because of the fire. Smoke and stream vent from pipes along several holes that connect to the mines. The fire is still burning today. Steam and smoke can be seen from the valley below in several spots.

The West Side Mine Fire

This fire has been burning in the vicinity of Dundaff Street in Carbondale, PA. since before the 1960′s. In the 60′s people got sick from the carbon monoxide gas and one person died. Close to 600 families had to move out of the neighborhood over the years because of this fire. It is still burning.

There are other places in Pennsylvania where underground coal fires burn. Pennsylvania has over 250,000 acres of abandoned mine lands and has more than one-third of the nations mine problems. There are 45 mine fires burning across Pennsylvania. There are five underground fires in Allegheny County, five in Percy County, one in Westmoreland, and others in more isolated areas. There are also fires in Findlay Trap, West Elizabeth, Plum, and Clinton. “In all, the Department of Environmental Protection  estimates about 1,300 acres across the state are on fire underground.” One particular town, Youngstown, is strongly affected by the Percy fire that has been burning for over 30 years. There are about 60 homes resting on top of this fire now. Youngstown is reaching the critical decision point that Centralia reached in 1983, either extinguish the fire or relocate the whole town. Estimates conclude that extinguishing the Percy fire will cost $30 to $40 million, and over $650 million to put out all coal fires nationwide . (How can the Government extract 20 billion dollars from B.P. for their large oil spill yet take no effective action with respect to coal mine fires?)

Where Has Common Sense Gone?

Does the Government believe it is too difficult to extinguish an underground coal fire? The deeper underground a coal fire is located the harder it becomes to extinguish. However, the Government has also done very little to help extinguish near surface coal fires either.

The Government was quick to state (and rightfully so) deep water oil spills are hard to control. This true statement has been utilized to craft the Government’s contention that  deep water drilling must not continue until all Government concerns, reasonable or unreasonable, have been satisfied. Does this not leave the Government in a hopelessly hypocritical position?

If underground coal fires are so hard to stop, then why has mining been allowed to continue before sufficient effort is made to find a solution to the fire problem?

If underground coal fires are not so hard to stop, then why has Government not helped  remediate the problem? The sheer number of fires burning is proof enough there is a serious problem.

You may have already heard the story of Centralia, PA, a coal mining town that had some 1,000 inhabitants at its peak. Now, that population is down to 9. It has become a ghost town for one of the most inept reasons imaginable–a fire, started in 1962, was largely ignored, and subsequently spread to a coal seam underground and has simply never stopped burning. All initial efforts failed to control the fire as government officials delayed taking any real action to save the village.  By the early 1980s the fire had affected approximately 200 acres and homes had to be abandoned as carbon monoxide levels reached life threatening levels. An engineering study concluded in 1983 that “the fire could burn for another century or even more and could conceivably spread over an area of approximately 3,700 acres.”

Why after so many years has the Government never ordered the coal mining industry to develop the equipment and technology that will effectively extinguish an underground coal fire?  This approach of complete control is the present approach used to curtail offshore drilling. Today, the administration is actively preventing offshore drilling, displacing thousands of workers and helping to diminish the supply of oil while driving up the cost of hydrocarbons and hydrocarbon related products. All this during a time of national financial stress and high unemployment. The Government even seems immune to any recognition that current strife in the Mid-East is helping raise the price of a barrel of oil to nearly $100. No mention has been made of the Strategic Petroleum Reserve and the millions of barrels of oil that have been bought with taxpayer money and sequestered for emergency use.

Does the Government recognize an emergency when it sees one? Safety for workers and safety for the environment is the stated reason for suspending all drilling offshore in deep water. These concerns are said to outweigh any other National consideration. If true, should not this same standard be applied to the coal mining industry which has a safety record not nearly so good as the drilling industry? With the exception of the Deepwater Horizon disaster the US offshore drilling industry has enjoyed a very remarkable record of safety. As shameful and harmful as the Deepwater Horizon event was, it was a single event, and it is beyond me why reaction to this event should be applied cart blanche to an entire industry while literally ignoring multiple serious events in an alternate industry .

Is this chicanery designed to help promote a flawed national green agenda?  Is it Government pandering to a voter base composed mainly of liberals and union supporters?  Is it complete ineptitude, or is it a result of genuine concern for the offshore workers? You choose!

In my case I believe it is all of the above are concerns and I have ranked them in descending order in accord with what I perceive the Government’s priorities to be.

Even though it is not part of our analysis, it is worth mentioning  there are many other underground coal fires in other countries. Underground coal fires  in China are estimated to contribute 3% of the annual carbon dioxide entering the earth’s atmosphere. This is more carbon dioxide than is produced by every automobile in the U.S in one year. I hope the EPA takes note of this.

So now I leave you to form your own conclusions. Does the Government really have an  interest in all Americans on an unbiased basis or does the Government, especially the present Administration, practice hypocrisy of the highest order? Is an environmental catastrophe on land any less important than an environmental catastrophe offshore? The US Department of the Interior has jurisdiction over both areas. Should we not recall that Secretary of the Interior, Ken Salazar, has a long and demonstrable record of particular animosity towards the drilling industry? Are these people really good for America?

Where has Common Sense Gone!?

T.P. 2011                                         

Now it seems as though global warming has been placed on a back burner along with the current administration’s Cap and Trade aspirations. This should not be taken to indicate climate change will never produce some troublesome effects in the coming decades. Common sense reminds us to beware of assigning a single causation to complex system reactions.

The University of Pennsylvania published a paper earlier this year pointing out that global temperatures have been flat or declining over the past decade, a decade in which CO2 emissions increased. Copious data also demonstrates global temperatures declined from 1940 to the late 1970’s. Back then today’s global warming experts were warning of global cooling. While it is quite true prolonged global cooling will have significant impact on crop yields, thus requiring a substantial increase in the amount of land under cultivation, this situation does not appear to be an immediate threat to world food supply which is today in excess of global needs. Hunger existing today results from inadequate global distribution of the available stocks and not from global cooling.

The late twentieth century experienced a period of major solar activity increase which has now virtually ended. The correlation between solar activity and earth temperature is acknowledged by scientists on both sides of the global warming issue. The University of Pennsylvania paper was not much publically acknowledged by global warming advocates, or by the news media, but it was very closely examined because of earlier misrepresentations of global warming data by the global warming community…. And the results of the close scrutiny(?)……..not a word in the television news or the press. This alone should tell us something about the veracity of the conclusions the paper reached. I hasten to point out that I have not read the full paper myself, but the silence it has generated tells me pretty much what I need to know about a subject I do not understand in depth.

Surely the global warming, cap and trade movement has been disarmed, at least for awhile. Do not bet on it! The high-level liberal thinkers have found a way to apply the old “bait and switch” technique to cap and trade. Global warming terminology is being rapidly displaced by “global climate disruption” terminology. What a great idea! Now any weather event can be claimed as “proof” of their desired claims. A weather event ranging from a hurricane to a heavy snowfall will be fair game. Common sense should warn us that “Old liars never die….they do not even fade away….they return in different guise”, but their objective never changes. How sad it is when members of the current administration and a highly visible portion of academia see no need for honesty and integrity if it gets in the way of their agenda.

This week saw the opening, in Cancun, Mexico, of the annual negotiating conference of the members of the 193 nation U.N. climate treaty. Suites of entire hotels have been reserved for two weeks so members can concentrate on global climate change issues without suffering the inconvenience of winter weather. I hope these hucksters enjoy themselves. It seems certain the United States will once again be strongly criticized for not taking action on self-punitive cap and trade legislation that, when implemented, would impose increased negative pressure on our economy. The Kyoto Treaty, which will terminate in 2012, will likely see some discussion also, as relates to any conservative administration in the United States, since the U.S. has not ratified the treaty and is unlikely to ratify any similar treaty so long as common sense prevails. The United States should maintain the fortitude required for self-determination and never hand-over such an important issue to a “global government”.  Let’s hope our present administration sees things the same way. In any event we should all continue to closely watch the global climate disruption crowd in order to see where they will strike next.  At the same time we should continue to try and determine fact from notion and act in a responsible manner with respect to any validated facts warranting action or inaction in the climate change arena.

T.P. 2010

Obama has often been referred to as a socialist and sometimes even a communist. He probably is neither, but it is possible he could be something worse!  Obama could unwittingly be a fascist.

I say this even while believing that Obama is at best nothing more than an absentee president. He seems totally unable to take a firm position, based on reasoned thought, on any subject. He talks too much but says little of any value. He has surrounded himself with persons who have proved to be as inconsistent in constructive thought as he is. However, this should not be construed to mean that as a group they are not harmful.  They are likely very dangerous to our national interests. Their attention is focused mostly on a few select, self-serving  internal matters while not nearly  enough attention is given to the festering international situations facing our nation at present.

The administrations’ myopic focus on internal matters has also mostly avoided any demonstrated, constructive measures aimed at improving the economy. For the most part the implications resulting from the actions the current administration has taken have been poorly understood by the Congress, and often not understood at all by the Executive or the general public. It seems to the average citizen no apparent thought has been given to the unintended consequences resulting from legislation quickly passed and hastily signed by Obama with never a whiff of veto. For the most part any actions  taken by the Obama administration have either enhanced or perpetuated the very government meddling that helped create the current economic problems in the first place. This is the view most citizens now have of the present administration and it is correct so far as it goes. But this view is incomplete! These actions are no accident, engendered by inept politicians and a rudderless administration.

There is something far worse going on!  There has been an increasing amount of very dubious and dangerous regulation promulgated and enforced through decree  by unelected and unconfirmed members of the administration. Members who are acting well beyond any authority granted to them by our Constitution.  Members who are often nameless and faceless bureaucrats, sanctioned by Obama, and who remain aloof from any apparent willingness to adhere to the limitations placed on government by the Constitution.

Now it is time to review the definitions of certain political terms. Definitions which can become blurred  when they are applied in haste as a result of frustration and extreme concern over  the actions of political parties and/or specific politicians. It is easy to use one of these terms when its application is not correctly descriptive of the situation being addressed; therefore, it is incumbent on us to refresh our memory as to the appropriate terminology for a particular situation. Common sense requires that we be clear when we speak about important issues. Otherwise, the importance of what is being addressed will become diminished and political correctness may win out over fact.

The definitions of socialism, communism and fascism here-in  provided are brief, but, since clarity is often enhanced by brevity, that is the intent of this present synopsis.

Socialism: A system of social organization by which the major means of production and distribution are owned, managed and controlled by the government and by associations of workers.

Communism: A system in which most if not all property is owned by the State and is supposed to be shared by all. A political, social and economic system in which the State, governed by an elite group, controls production, labor and distribution and largely the social and cultural life and thought of the people.

Fascism: A system of government in which property is privately owned, but most industry, commerce and labor are regulated by a strong national government, while all opposition to government regulation and control is rigorously suppressed.

Now the reader is asked to reflect on the following and decide if some of the administrations’ actions are best defined by one or more of the above definitions. The reader is asked to determine which current trends in Government represent a threat to the liberty of the citizens if those same trends are allowed to persist and be amplified.

What political system enables a national government to require its citizens to buy certain products, even if they are unwanted or unneeded, and then subject the citizens to fines or incarceration if they do not consummate the purchase?

What political system threatens to ration services provided by the private sector in order to ensure they are well controlled and distributed in accord with the desire of the national government?

What political system enables its national government to require its citizens undergo potentially humiliating or invasive ad hoc personal search and then fine and incarcerate those who, faced with these unpleasant choices, elect to not even participate in the activity “requiring” the invasive search?

What political system expresses the need for a strong, internal, national army of dubious origin and allegiance; an army that would equal the nations’ professional military in size and equipment?

What political system seeks to organize and regulate labor at every juncture while providing financial support to its own public sector unions in order to have them always do the bidding of the government?

What political system establishes control over the pay of senior executives who are intimately involved in public sector financing of the productive capacity of the national economy?

What political system shuts down a major domestic energy resource development industry, dislocating thousands of workers, at the same time the country is being bled  financially dry by its pressing need for the same energy based resource currently derived from foreign sources?

The reader should think about these things carefully. The next time someone in power is referred to as a socialist or even a communist question whether the correct term is being applied. Look at the facts! The next time an elected representative, of either major political party, utters a totally absurd comment with respect to what the government should do or control be careful not to just ignore it based on its’ absurdity. It is entirely possible the correct terminology for the ideology being expressed is far worse than one might casually imagine.

T.P. 2010

Paul Simon covered a lot of ground in his highly popular song, but he left out probably the most important thing…..liberty and the freedom from tyranny. I have no idea what his political persuasion was at the time he wrote Slip Slidin’ Away, but in fairness to him I will say he had not yet seen some of the excesses of a derelict judiciary, none of us had.  Some of the excesses we have now been so adversely exposed to that have been detrimental to the national interest. The Earl Warren court was just then in the process of opening a new pathway that established as a precedent it was not always necessary to reach a high court decision based on constitutional grounds. “Social Fairness” should be given appropriate consideration.

Does this mean we should be opposed to the decision the court reached in landmark “Brown versus Board of Education”? No, not in principle, but certainly opposed to the logic by which it was reached. Even more so when we recognize there was ample constitutional ground to reach the same decision by following a purely constitutional pathway. But, of course, that would not have provided the precedence Justice Warren needed if he was to demonstrate it was not always necessary to follow the constitution explicitly. We should have heard the melancholy strains of “Slip Slidin’ Away” audible in the background, but we didn’t and we have paid a tremendous price. We had at that juncture crossed over onto the “slippery slope” of judicially supported socialism.

Now we have an opportunity to reverse the slippery slope and return to level ground. We now have the attention of the general citizenry, but we must decide how to best focus that attention and direct it toward reaffirmation of the sound governing principles our founders bequeathed to us.

The effort to reestablish these principals will be long and difficult and it must be conducted on two separate stages concurrently, the stage of federal government and the stage of state government.  It is not enough to send conservative minded representatives to Washington, D.C. or to send similarly minded persons to the statehouses. The players on both stages must be selected based on their willingness to work each with the other in their efforts to devolve unconstitutional federal government activity and return it to the states where it can be reformulated in ways beneficial to the state citizens equally, instead of to only a select few special interests chosen by the power brokers in Washington. And, these representatives on both stages must be in the majority concurrently. This is where the voters come in.

As an example we should promote the recognition by representatives sent to Washington, D.C. that they can be reelected if they eliminate the corrupt practice of earmarks and instead return to their voters, in their home state, the means to equally benefit the entire state citizenry in a way that promotes prosperity instead of wasteful practices beneficial to only a select few.

This and similar activity of devolution will not be easy but it is the best defense against socialism yet devised by man. Why were our founding fathers so mistrustful of a strong national central government? It was not only because of the injustices they had suffered at the hands of their own king, but because of the larger recognition that a strong central government cannot resist the urge to exert its power and thus co-opt intentionally or unintentionally the liberty of its citizens. Does anyone doubt the King of England was more favorably disposed towards his citizens in England than he was towards his citizens in the Colonies? Does anyone doubt the same thing happens in Washington when the most powerful few come from a few select states having mutually self-beneficial voting blocs?

One need merely look at the current state of affairs of nearly all national governments in the developed world to see that there has been an inexorable slide towards socialism over the past hundred plus years. This bias will always exist so long as the few can exert unconditional power over the many. The select few learned long ago the easiest way to keep a potentially unruly element of the population from becoming restive, and to preserve their own political power, is to give select groups of citizens (or even non-citizens)  something for little or nothing, something taken from the remaining many to appease the few. This is what our current administration does best.

But wait, haven’t we just sent to Washington some new faces that are going to solve these problems? Will we not send Washington even more like-minded representatives in the future? Probably so, but they will not solve the problem of socialistic bias on a permanent basis as there is a permanent ebb and flow of political tides. There will always be an Obama or a Pelosi or a Reed or a Barney Frank lurking in the shadows waiting for the opportunity to return to the path of “social justice”, imposed on the unwilling many by the select few. Our founding fathers provided us with precisely the right instrument to eliminate this bias, if we have the courage to use it, and this is precisely the right time to start returning to its use.

That instrument can best be summed up in the term “States Rights”.

WHERE HAS COMMON SENSE GONE?

What about out-of-control entitlements that the federal government does not have the courage to address in a rational manner? An example of one such entitlement that can be argued till the end of the day is the one about whether social security is constitutional or not. It makes no present difference whether one believes or disbelieves social security is constitutional.  Social security is present and it is out of control. Since it is present and I have paid into it certain amounts of dollars for many years, I am not willing just to say it should disappear; however, I am much in favor of saying it should be devolved to State level where its’abuses and absurdities can be more easily recognized and eliminated. The closer the voters are to the application of their financial resources, the more likely they are to pay close attention to any state representatives who behave badly. The voters will know what to do at the next election.  It will not take the representatives long to recognize this and start behaving in a way that is of benefit to all of the citizens of each state. A huge and costly federal department would be eliminated, as would the ability of congress to relegate social security to the attributes of a crass Ponzi scheme, while placing a huge burden of national debt, on all of us. The states could then manage the social security of their respective citizens in a way the citizens approved, and the citizens of a fiscally irresponsible state could then choose in which state they preferred to live.

If California voters continued to drive themselves toward financial oblivion, so be it. The rest of us would not be required to bail out their irresponsible behavior. Also those in California with enough sense to recognize their federal cash machine had been eliminated would probably move to Texas and become productive citizens. If they opted to not be productive, but they relocated anyway, they would benefit only in proportion to what they had previously contributed, not in proportion to what some Washington politician decided they should get in order to ensure their vote at the next national election. The belief a strong and bloated national government will serve all of its citizens fairly has been proved patently false, but this does not mean a strong and rational application of limited government is not needed at the proper state level.

Returning power to the states will not be easy, but it can be accomplished if we have the courage to reduce the unconstitutional power of the national government, forego any unearned personal benefit and protect the truly needy by returning to the several states any activity constitutionally provided to the states to be exercised as the individual states see fit and necessary. This would provide the means for that activity to be reformed in a manner which will ensure application of the scarce resources to productive activity and thus reinvigorate a fair and balanced capitalistic environment. The capitalistic system in America is not irreparably broken. It has however been severely corrupted by an irresponsible and socialistically biased national government. It is time to make the national government quit doing the things it should not do and start doing the things it is required to do. Governmental subsidy of activity because it is not self-supporting must be stopped at once if our country is to return to sound and well balanced financial stability on a long term basis. Also, one cannot doubt that our national foreign policy and related international activity, for example, would be much better coordinated and more professionally exercised in an environment in which the federal government devoted sufficient attention and energy to matters enumerated to it by the constitution and quit devoting most of its energy and attention to matters it should not even be involved it.

WHERE HAS COMMON SENSE GONE                                               T.P. November  2010

Does perpetual motion exist?  Knowledgeable people have told us perpetual motion is a technical impossibility. Anyone making the “outlandish claim” perpetual motion is an impossibility has obviously never watched the political process very closely.

While it is true the political process does not meet the true standard of perpetual motion, a standard which requires no new energy being supplied to the process, the political process all too frequently continues indefinitely with no positive result. I am willing to discount hot air as an energy source and thus defend my analogy of the political process being strikingly like perpetual motion.

A mere one day after the recent election results were in, the perpetual motion machine was off and running. How can this be?

Did not the voters demand government to shrink in size and start managing the federal budget in a responsible manner? I believe the recent election results should have made this sentiment crystal clear.

How are the elected officials responding?  In a typically governmental way, the elected officials both current and soon to be installed have for the most part already reached bipartisan agreement conceptually when they say the only way to effectively reduce long term budget deficit implications is to fix the entitlement morass.  Fixing lesser items will do nothing to help. Even conservative news programs are parroting this statement and their expert guests are doing likewise.

This is a half-truth and a very devious spin. It appears to be an obvious statement, but those elected officials touting it already know that agreement in principle does not mean agreement in methodology. Lack of progress on entitlement issues will be blamed on the other political party having unwillingness to abandon their view of the way to go about cleaning up the budget entitlement mess. But this is not the only problem with lack of progress on the budget issues.

Another significant problem is the way the premise with respect to entitlements has been stated by the news media, a way completely discounting those budget issues on which immediate progress could be made. Potential budget progress that could be insisted upon if the voters realized politicians on both sides are conducting a stealth maneuver. There are plenty of wasteful programs and subsidies that could be eliminated tomorrow if politicians did not have a vested interest in preserving them in order to be able to claim largess for their constituents…..the rest of the country be damned. These politicians are almost certainly going to insist on looking at long term solutions to big problems rather than starting the process on what can be done now and growing the process into bigger and weightier things. Success by the politicians in diverting attention from that which they actually could immediately do will in effect be a moratorium on any constructive action at all. Unfortunately, even after an election in which the voters demonstrated recognition of the need for a more responsible government, it appears probable that the majority of voters still do not know how to tell the difference between a wish-bone and a back-bone. Do not expect the majority of our elected officials to do very much to improve understanding of the difference.

WHERE HAS COMMON SENSE GONE?

Only the voters can ensure politicians will direct sufficient attention to those things that can be done to start budget reductions while continuing work on entitlements with the expectation that even larger reductions will be made possible in the future. Voters must insist on some immediate and quantifiable results through the elimination of narrowly focused government programs that benefit only a select few while ignoring any adverse impact on the nation at large. Voters must insist that the federal government stop spending money on activity that benefits some special segment of the population rather than the population at large. The states are the entity that should consider any special interest group within their jurisdiction.  States can spend their own money on whatever their respective citizens wish. Spending special interest money closer to home provides much easier tracing of expenditures, and the state voters will have no trouble punishing those representatives who behave badly when spending tax dollars. Bringing federal tax revenue home to state level is a process practically designed for abuse and corruption.

It is long past time for the voters to insist the federal government stop doing what it is not constitutionally authorized to do and time for the voters to insist the states stand up for their rights with respect to what the states alone have the responsibility to do or not do as they individually see fit.

The voters must begin by arming themselves with the knowledge of what the constitution actually says. Article 1, Section 8 is a good place to start. This section of the constitution lists activities for which the congress has authorization to tax and spend. National defense and general welfare are included. The constitution also makes clear the federal government cannot expand the list without following a specific amendment path, as referenced in Article 5, which requires a substantial majority of the states to approve the change.  There are a number of activities in which the federal government has engaged that are not provided for by the list or subsequent constitutional amendments. Some examples are:

prescription drugs

social security

public education

farm subsidies

bank and business bailouts

foodstamps

and many of the other activities that collectively represent nearly two-thirds of the federal budget.

Likewise there is no congressional mandate and authority for the federal government to tell the states how they may use their land, the speed at which their citizens can drive, the type and mixture of gasoline they must use while driving, the need for all public buildings to have wheelchair access ramps and the gallons of water used to flush a toilet. Nor is there any federal authority allowing the government to tell you what you can and cannot eat. The overworked commerce clause is akin to black magic when one starts to realize how far its originally intended reach has been extended by liberal politicians and a derelict judiciary.

Do I believe all of the foregoing should be stopped in entirety? Of course not; however, I firmly believe much waste and abuse can be eliminated if these functions are handled by the states, as originally intended, not to mention downsizing a sorely bloated and increasingly irresponsible national government.  What if a state invokes some unreasonable activity? Hard as it may be, the voter has the right to reject it at the next opportunity and, failing that, move to a state with which they feel more aligned. A move between states is certainly more agreeable than leaving one’s national identity entirely. Most of us would suffer on before even daring to contemplate abandoning our country. Such an extreme thought will never even arise if appropriate authority is regained by the states and eliminated at national level.

There will still be plenty of things for the federal government to do under the general welfare clause and as provided for elsewhere in the constitution. Some examples are:

The National Weather Service

The Air Traffic Control System

The United States Patent Office

The National Bureau of Standards

The United States Postal Service

Regulation of the Military

The reader should note these particular things all have one common and striking feature. They generally do not provide the federal government a significant means to manipulate its financial activity in order to provide for special interests at the expense of all other citizens being taxed. This is why Social Security should not be considered under a general welfare clause. The social security system has provided the government a massive cookie jar that the government is incapable of keeping its fingers away from. The social security code has been manipulated nearly as much as the general tax code. It is difficult to understand and it is replete with nuances designed to trap the unwary. The system does not even come close to treating all citizens equally.

The first step for voters is simple. Start now to relentlessly pressure federal representatives to stop the federal government from doing those things the government is not authorized to do. The voters should equally pressure their state representatives to insist the states handle those activities protected to them by the constitution.

And last but not least is the hardest part. The voters must set an example their elected officials cannot ignore. We the voters must be willing to apply the same standards to ourselves that we seek for our government. We must be willing to shift the special benefits we enjoy from federal to state jurisdiction. Only when this is done will the federal government be dramatically reduced in size and cost. Resources will be shifted much closer to their point of application, substantial waste and extravagance reduced, and presently unproductive resources redirected to more efficient utilization.

Individual voters at the state level will be immeasurably more able to have meaningful input to and impact on the political process. Special deals favoring one segment of the population and ignoring or even harming other segments will be largely eliminated. An irresponsible federal administration will not be able to engage in class warfare and state representatives will no longer be able to avoid acting in a positive fashion favorable to all state citizens and excluding none.

All of this can be done if the voter has enough courage and conviction to set aside their wishbone in favor of a backbone and insist their representatives do the same. We must start now with the items most easily addressed to demonstrate early progress and to strengthen the resolve of the voters when more difficult tasks are then next addressed. Perpetual political motion need not exist unless the voters allow it to be so.

T.P. 2010