We must vote for those candidates of any party that reflect these values: hard work, self-determination, smaller government, fiscal responsibility and honesty. Look to the character of anyone you chose to support. Their past does matter if they haven't learned from it. Their personal life is as relevant as their public one. We must be able to trust those who will be advising and leading us on what our country must do next. -Glenn Beck

Thursday, April 23, 2009

I Want to be a Democrat

I have a confession to make: I am secretly considering becoming a Democrat. No, this isn't due to the fact that the Republican party nominated John McCain for President (although that is nearly reason enough.) I am a true conservative at heart, and that wouldn't change, but I just daydream sometimes about how much easier life would be if I were a Democrat. Let me give a few examples:

LOGIC

If I were a Democrat, I wouldn't have to spend all the time and effort researching facts and putting numbers together. For any argument that anybody presented contrary to my views, I would just say:

"It's because of the failed Bush policies!"

You may think I'm exaggerating, but watch any debate on CNN or Fox or MSNBC that involves a Republican strategist and a Democratic strategist. The Republican will always try to gear the argument toward logic. "How is Obama going to increase government spending by $1 trillion and keep his promise not to raise taxes on 95% of the people?" The Democrat will always respond by appealing to emotion and making a personal attack. "The people on main street are hurting! We have to make sacrifices to fix this economic crisis. George W. Bush got us into this mess while his rich oil buddies got richer."

If you doubt that, try me. Turn on the TV right now and watch any debate. Find one example where a Democratic strategist tries to debate an issue based on facts and logic. The Republican comment in this example is actually a logical question -- Where does the money come from? But if I were a Democrat, I wouldn't have to worry about answering. I would actually just claim that asking that question is a personal attack on Obama. Take that, Republicans!

CONSISTENCY

If I were a Democrat, I wouldn't have to worry about being consistent. For example, the same people who defended Bill Clinton during the Monica Lewinsky scandal, claming that his personal life has nothing to do with his private life, are the same people who ridiculed and called for the resignation of Senator Larry Craig for something he may or may not have actually done.

I'm sure most of us saw this clip from Susan Roesgan this week following the tea parties, and her different responses to which President had a Hitler moustache painted on his face:

Susan Roesgan - CNN

Whether it's David Axelrod calling the Tea Party protests unhealthy (while the Cindy Sheehan War in Iraq protests were a perfectly healthy expression of free speech) or Obama scoffing at notions that he's pushing socialism at the same time the government acquires common stock (meaning they are part-owners in a the company) in the nation's banks, the need for consistency is not a problem. That would take a lot of pressure off.

THE SANDBOX

If I were a Democrat, I wouldn't have to worry about playing fair. Liberal talk-radio shows have little demand, so they simply can't compete with conservative talk-shows. What do the Dems do? They talk about bringing back the Fairness Doctrine, so that people like Rush Limbaugh who has 13.5 million listeners per week would be forced to give opposing points of view on their show. That way, they get their point of view to 13.5 million people too.

Environmentally friendly energy solutions losing out in the free market? We all remember this statement from Obama on the campaign trail:

"So if somebody wants to build a coal-powered plant, they can. It's just that it will bankrupt them because they're going to be charged a huge sum [in proposed carbon taxes] for all that greenhouse gas that's being emitted."

We've always learned that kids need to play nice in the sandbox. In this case, if somebody won't share with us, we just go get our Dad to come take it from them. Problem solved.

THE EXCEPTION

If I were a Democrat, I could think that I'm the exception to the rule. For example, socialism has never worked to build prosperity. Here is a list of current countries that practice socialism:


  • China
  • Cuba
  • Laos
  • North Korea
  • Vietnam

Which of those countries would you want to move to? Even without complete socialism, let's look at some of the countries with only socialized medicine (a.k.a Universal Healthcare):


  • Canada
  • Finland
  • Israel
  • United Kingdom

These are the countries that people from around the world go to when they are in need of expert medical care, right?

But that's the great thing! It doesn't matter that socialism has never worked in the history of man -- I would simply believe that we are the exception. We are different. It would work in our case!

RULES

Along those same lines, if I were a Democrat, I would be able to define my own rules. For example, it is illegal to kill a 1 year-old son or daughter. It is also illegal to kill a 1-minute old son or daughter. It is not your choice.

The debate regarding abortion has nothing to do with choice, because we all know that murder is illegal. The argument has to do with when life begins. So we just claim that life doesn't begin until the third trimester (even though if we didn't interfere, a baby would be born), and that it's the mother's choice because the baby is part of her body. Viola! Not murder anymore.

Using that same logic, I could rob the US Mint, and claim that those dollars weren't distributed into the system yet, and that I am a US Citizen, so it was my choice to take them.

As a Democrat, I would also have the ace in the hole, because I can also claim that anything is unconstitutional. I read an article today about how a law banning wearing saggy pants on a Florida beach was ruled unconstitutional. Here is a link to the Constitution:

The U.S. Constitution

Read through that, and try to find where our forefathers wrote that outlawing people who let their knickers hang out in public for all to see is unconstitutional. (You can actually save yourself the trouble -- It's not in there.) But that's the great thing: It doesn't matter! Here's what I would use:

"Amendment 1: Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances."

It doesn't matter that it doesn't say anything about saggy pants or abortion even. See, saggy pants are a form of speech! Abortion is a form of speech! All I would have to do is convince a judge that whatever inappropriate or illegal activity I want to do is a form of speech, and I'm golden!

BOTH WAYS

One of the major democratic platforms is that the government should not be allowed to limit the freedoms of the people. If they want to smoke marijuana, that's their own choice. But the good news is that I wouldn't have to extend the privilege to others.

For example, if students in my class want to say the Pledge of Allegiance, I would complain it was unconstitutional, and it's over. It wouldn't matter if I was only 1 in a class of 30! I know what you're thinking -- Isn't making saying the Pledge of Allegiance illegal a "rule" imposed by the government? Doesn't matter! Remember that First Amendment?

I could go on, but I'll stop there. Can you see why I daydream sometimes about being a Democrat? I honestly think it would be much easier.

TO ANY DEMOCRATS WHO MAY BE READING

Now I realize that I've spoken in general terms and a bit sarcastically, which I've tried to avoid in these posts, because my intention is not to be divisive. I'm taking the highly visible Democrats that I see on TV and those that I read in the news, and stereotyping based on that. I realize that.

The few Democrats that I know personally are great people. As I've mentioned in previous posts, I believe that they are good people with big hearts who just want to help others. But I believe the policies they support are like giving a child who is crying because he doesn't want to eat his vegetables some ice cream instead. It solves the immediate problem, but is it good for that child in the long run?

I realize this doesn't apply to all Democrats. But as with any stereotype, the stereotype comes from the majority. And I think if you'll pay attention to what you see on TV and read in the news, you'll see that the Democrats lead an envious life.

Wednesday, April 15, 2009

Inside the Mind of a Democratic Strategist

I don't mean to monopolize this blog. In fact, I think it would be great if we had enough people posting that we had a new post every day. But tonight I read something that made my blood boil, and I just can't help myself. The April 15th Tea Party protests around the country were too big to be suppressed by the media. The fact that these impromptu protests are happening all over the country has the Democrats worried.

That concern was very apparent when I read Paul Begala's commentary tonight. Paul Begala was a political consultant for Bill Clinton in 1992 and was a counselor to Clinton in the White House. He is now a well-known political commentator for CNN and Democratic Strategist. What does a Democratic Strategist do? They develop political strategies for the Democrats to make the Democrats look good (and the Republicans look bad.) Begala was in top form today in response to the Tea Parties.

Let's take a look into Begala's mind and we analyze his column entitled "April 15 is Patriots' Day" one paragraph at a time:

"Happy Patriots' Day. April 15 is the one day a year when our country asks something of us -- or at least the vast majority of us."

What is the significance of April 15? Obviously, it's tax day. Begala is attempting to make a link between paying taxes and being a patriotic. The idea is: The more taxes, the more patriotic. (I guess that means that the 40% of Americans who don't pay any income tax aren't patriotic.)

This is the one day a year we pay taxes... other than those days where we fill up our car with gas, pay into Social Security and Medicare and Unemployement out of our paycheck, buy a pack of cigarettes, pay a property tax, or buy anything.

(Note that it is okay for Begala to claim that "Paying Taxes" = "Patriotic", but it is not okay for Republicans to claim that "Funding the Troops" = "Patriotic.")

"For those who wear a military uniform, those who serve the rest of us as policemen and firefighters and teachers and other public servants, every day is patriots' day. They work hard for our country; many risk their lives -- and some lose their lives."

If you watch closely, you will notice that democratic strategists will always appeal to emotion and avoid logic. Begala is using these examples of true patriots who serve our country to strike up the strong feelings of patriotism in our minds.

"But for the rest of us, the civilian majority, our government asks very little. Except for April 15. On this day, our government asks that we pay our fair share of taxes to keep our beloved country strong and safe.
"Freedom isn't free. That's what the courageous World War II veterans of the American Legion taught me back in Texas Boys State decades ago. That phrase had special meaning for them. Those guys had seen buddies blown apart at Anzio or Guadalcanal."

Here is where Begala lowers the boom as we are meant to feel guilty because there are troops and policemen and firefighters out there dying, and we are complaining about money! We're worried because we have to give a measly half of our income to the government. We are truly the scum of the earth.

What Begala doesn't seem to understand is that if it truly were a "fair share", none of these protests would be happening. Conservatives understand that the need for taxes in order to run a country, and we are more than happy to pay our fair share.

"I grew up in a different era. There was no draft, and while I have friends and family members who joined the military, most of my peers, like me, opted for the security and prosperity of the private sector.
"This country has showered me with the blessings of liberty. So what do I owe my country in return? Paying my fair share of taxes, it seems, is the least I can do. Thanks to President Obama and the Democratic Congress, 95 percent of Americans will get a tax cut this year. No one -- not even the wealthiest 1 percent -- will have to pay higher income taxes until 2011."


This is a strategy that Obama has been instructed to use as well. He will always say something like, "People like me (at a $2.7 million income) can afford to give a little more." This is a jab at the rich Republicans who are so greedy that they don't want to pay another 5% of their income to go to researching shooting pollution higher into the sky to reduce global warming. Obama and Begala are the true patriots because they are willing to give more.

Also, notice that he is very careful to say that no one will have to pay higher "income" taxes. Begala is a smart guy, and he knows as well as you and I do that this $1,000,000,000,000 in new spending has to be funded from somewhere. Income taxes may not increase (keep that promise in mind), but that leaves the capital gains tax, gas tax, sales tax, death tax, and whatever other taxes they choose to impose like they just did the cigarette tax wide open. The total taxes each individual pays each year will most definitely increase -- They have to. How else will be pay for the increase in spending?

"So why are a bunch of Fox News clowns and right-wing cranks hosting 'tea parties' all over the country? The Boston Tea Party, in case the clods at Fox didn't know it, protested 'taxation without representation.' Note the second word: without. The goofballs tossing tea bags today have representation. They voted in the election; they lost."

NOTE TO BEGALA: The Tea Party protests have little to do with the taxes we are currently paying; People are upset about the taxes that are inevitably coming. The spending is absolutely out of control, and that is the reason for the protest.

Begala uses the term "Fox News clowns" even though Fox News had nothing to do with the protests. He does so because he knows this term will conjure up feelings for Democrats and others who feel Fox News is right-wing. He emphasizes that by joining them with the inflammatory words "right-wing cranks", "clods", and "goofballs". I don't know about you, but I am not a right-wing crank, a clod, or a goofball. I didn't see a lot of right-wing cranks in the protests. What I saw was a lot of really normal people who are fed up. Begala can't have his readers think these were normal, level-headed people though.

He brings up the history of the Tea Party to try to make the conservatives look stupid, as if we don't know that the original Tea Party was because of taxation without representation. The term "Tea Party" is just a metaphor used because we're protesting about taxes. (I've got more news for you, Paul -- We aren't actually dumping tea bags over the side of ships either.)

And if Begala's logic that we voted and lost is correct, then what were all those protests about the War in Iraq? The Democrats voted in the 2000 and 2004 elections; they lost. They should have happily embraced the war.

"That a bunch of overpaid media millionaires would lead a faux-populist revolt is comical. They somehow held their populist instincts in check as George W. Bush and the Republicans cut taxes on the idle rich and put the screws to the working stiffs."

Again, Begala wants to mislead people to think that Fox News was somehow responsible for these protests. It would do great harm for people to know that this a grass-roots movement started by and organized by the people. Fox News had nothing to do with them. The only way I can see that he might justify his comment is because Hannity attended one of the Tea Party protests. (This actually was a populist revolt, Paul, and that's why you are so worried.)

Notice how he talks about George W. Bush cutting taxes on the "idle rich." He mentions Paris Hilton by name in the next paragraph. He tries to create an image of these rich folks sipping lemonade by the pool and watching their bank accounts grow. I don't know about you, but the rich people I know are the exact opposite of idle. They get more done in a day than I get done in a week. What percentage of the millionaires in the world do you suppose got that way by being idle? 1%? Less? Yet this is who he focuses his comments on.

Begala doesn't want you to think of individuals like Henry Ford, who started from scratch and worked tirelessly to create a company that now provides 213,000 jobs.

Bush's tax policies were a godsend to the Paris Hilton class, but they sent the country on the road to bankruptcy and helped ruin the economy. But now that we the people have decided to set things right, now that we've hired Obama to fix the mess conservatives created, now they're protesting?"

One common strategy used by liberal commentators is to state something as a fact, expecting that nobody will take the time to investigate whether the facts are true or not. Begala expects that his readers will just take his word for it. Unfortunately, this is a very effective strategy as people do just that.

How did Bush's tax policies send the country on the road to bankruptcy? There is no information, no graphs, no evidence to back up his claim. If we trace back to the beginning of the current economic crisis, it all started with the housing market collapsing. What does that have to do with Bush? Absolutely nothing. This is not a hard one. Who would change regulations to make it so underprivileged people could buy houses they couldn't afford? You liberals know it wasn't the mean, cold-hearted conservatives.

How did Bush's tax policies affect what happened to AIG? How about GM? Let me ask you this, Paul: How would higher taxes have helped either of those companies or any of the banks that have been bailed out?

"Give me a break. Instead of tossing tea bags for the cameras, the Fox phonies ought to go to Walter Reed Army Medical Center. There they would find better, braver men who have truly sacrificed for their country. They deserve nothing but the best -- not the shameful and shoddy conditions they endured during the Bush administration."

Again, Begala has no facts, so he has to appeal to emotion. What shameful and shoddy conditions? It's true that the troops obviously face unpleasant conditions in war, but they don't blame the Bush administration. How do I know? Here is a little video of the troops showing their "disdain" and "disgust" for Bush as they send him off after his last visit to Iraq in December 2008:

Bush Sendoff From the Troops

"You want something to protest? How 'bout protesting how little we give back to our veterans? Or how 'bout protesting that the entire budget of the National Cancer Institute (where government researchers battle a disease that will strike half of all men and a third of all women) is 0.03 percent of what we gave the bandits at American International Group alone? Oh, but veterans benefits and cancer research might cost money. It might require -- dare I say it? -- paying taxes."

Begala again paints the picture that these Tea Party protests are an attempt to get out of paying taxes altogether. He wants the reader to believe that if we don't raise these taxes, veterans with cancer won't be treated. Again, an appeal to emotion. In reality, only $1 billion of the new stimulus goes to maintain and repair VA medical facilities. That's 1/10 of 1%.

We have no problem paying taxes, Paul. Obama likes to say, "We just are going to go back to the tax levels we paid under Bill Clinton." We would say, "We just want to go back to the tax levels we paid under Ronald Reagan." We are proud to pay taxes. (If you'll notice, it isn't the Republican nominees whose names keep needing to be withdrawn because of tax problems.) We don't even mind the progressive tax system, because we are "patriots" who don't mind shouldering a little more of the burden to help out those who are less fortunate. But the taxes should be fair.

If I work at McDonald's, you order a meal that costs $5, you hand me a $20 bill, and I hand you back $5 in change, I'm guessing even you, Paul, would have a problem with me taking 50% of your money.

"If the whiners at Fox News want to advertise their selfishness, they are free to do so. But please don't dress it up as patriotism. Patriotism is putting your country ahead of yourself -- which is the precise opposite of what the tea party plutocrats are doing."

Again, Fox News is referenced. Democratic strategists believe if you say something enough, people will believe it is true. "Fox News was responsible." "If you are protesting, you are selfish." "If you are protesting, you are putting your own interests ahead of your country."

Begala couldn't be more wrong. The point of these protests is that we are desperately trying to save our country before it's too late.

The most frustrating part is that Begala seems to be a smart guy. He has to realize all of this. He knows exactly what he is doing as he executes each strategy from his playbook. He knows that most of those who read his commentary will fall for it. And he is proud of his ability to talk so well that he can have this kind of influence on people. As he finishes the commentary, he chuckles and thinks to himself, "I could sell a ketchup popsicle to a woman with white gloves."

Unfortunately for Begala, this is too big. There are too many people who are upset. The wheels are set in motion, and it's only going to gain more momentum. Just like in Boston in 1773, the people of this nation will not stand to be treated unfairly.

Friday, April 10, 2009

The Solution

After I finished my last post, I realized that one thing I've heard a lot (especially from liberals) is, "Well, we don't like the bailouts either. But what else are we supposed to do? Let the economy collapse? We have no other choice."

One thing you'll notice if you pay attention to liberal commentators is that they will always condemn Republican ideas (no matter the issue or the position they take) without offering a better solution.

I am not a liberal, and I don't want to condemn Obama's plan without offering a better solution. There is another choice and a better solution.

JOHN MAYNARD KEYNES

One economic school of thought is Keynesian Economics. The basic idea is that, when an economy freezes up, the government can free up the economy by "greasing the wheels" with money. The projects they propose give dollars to workers that wouldn't have been there otherwise, and those workers then spend that money on bread. The bread makers have more money to spend to go out to eat. The restaurant workers have more money to go to the movies, and so on. So every dollar that is injected moves around and becomes more dollars. Demand for goods and services increases, and eventually supply shifts to meet demand. The economic wheel starts turning again.

This idea is good in theory. Thus, the current economic stimulus package. So what's the problem? First, banks and other businesses are doing what any smart company would do in the current economic climate: They're hoarding the cash the government is handing them to save their own bacon. So at least a portion of the money being injected is doing no greasing.

Second, and more importantly, what happens when to the big health care system created by the stimulus package when the money runs out in three years? This is why the smart Republican governors are rejecting the stimulus money. It isn't out of spite. It's because they realize that instead of just the one-time costs of repairing roads and building schools, this stimulus money is directed to build programs in their states that are going to need to be funded after the stimulus money runs out.

Third, and most importantly, if I open my front door and there's $20 sitting on the porch, and the next day there's $20 sitting on my porch, and the next day there's $20 sitting on my porch, the next day when I need $20, what do I do? (Remember Clark W. Griswald on Christmas Vacation and his pool? He'd gotten a Christmas bonus every year before...)

Keynesian Economics may work in the short run, but in the long run, it creates a dependent nation. Why work when I have money sitting on my porch each morning? And as taxes are raised to pay for more and more dependents, the producers ask themselves, why am I doing all this work to have half of my money taken away?

THE LITTLE RED HEN

To put what is happening today into context, let's revert back to our childhood. If the story of the Little Red Hen were rewritten today, the Little Red Hen would be forced by law to give 50% of her bread to the other "Not I" animals. Let me ask: How does doing that help Duck, Cat, and Dog in the long-run?

If that weren't bad enough, the Little Red Hen would also be disdained by the world because of all the wheat that she has. (Never mind that she planted the grain herself without the help of Duck, Cat, or Dog.) These principles are so easy, we teach them to our 2 year-olds.

Once again, the story changes completely if the Little Red Hen sees that Duck is in need and asks if he would like some bread. There are obviously people who are in need, but taking from one person and handing to the other does not fit within the proper role of government.

ARTHUR LAFFER

So what is the answer? How does an economy grow? How did The United States rise from its humble beginnings to the most powerful and prosperous nation in the world? The answer seems obvious that it happens by inspiring individuals to be Little Red Hens instead of Ducks, Cats, and Dogs.

Arthur Laffer came up with the idea of the Laffer Curve. The basic idea is that, if the tax rate is 0%, the government will collect $0 in taxes. And if the tax rate is 100%, the government will also collect $0 in taxes. Would you work if the government taxed you at 100%? How about 99%? How about 98%? Obviously, at those tax rates, your incentive to get out and put in a 16-hour day is significantly diminished? How about if the government taxed you at 10%?

The results form a nice looking curve that looks like the St. Louis arch. Government revenue goes up for a time as taxes are raised, and then it comes back down as taxes become too high. The idea of presented by Laffer is that you can cut taxes significantly from the right side of the arch, and doing so can actually cause a move to that same level on the left side of the arch. Government revenue stays the same, but tax rates are cut significantly.

If I told you that, for every time you run around the track, I'll give you $10, how many laps would you run? How about if I told you that I'll give you $50 per lap. How many laps now? A person runs more laps when it's worth more, which means that person produces more.

The reduction in taxes creates more money for Investment, which creates more supply, and demand shifts to meet supply (instead of supply shifting to meet demand.)

REAGANOMICS

When Ronald Regan took office in 1981, the United States was in a recession worse than what we face today. Unemployment was at 10.3%. Inflation was at 13.5%. The Prime Interest Rate was 21.5%!

Over the next 7 years, Reagan slashed taxes from an astounding 70% to 28%. One year later, the recession had ended. Unemployment dropped. Inflation was down to 3.2%. Corporate earnings rose 29% (meaning that 29% more money was going to be taxed at the new lower rate... Hmmmm... Maybe Laffer was onto something.) The economy grew at an annual rate of 3.4%.

Yet, people (particularly liberal commentators) scoff at Supply-Side economics. They use the term "Reaganomics" and "Voodoo Economics" and "Trickle-Down Economics" because of the negative connotation those terms carry in the media. If you listen to the criticism, they will always say, "It has never worked! Reagan cut taxes, and government revenue decreased. He created a deficit! You can't cut taxes and increase government revenue."

They are correct. Unless you are on the right side of the curve and cut taxes so that you don't cross the apex, you will not increase government revenues. That isn't the purpose or the point.

What they always fail to mention is that the government revenue did not decrease by the amount of the tax cuts -- In other words, taxes were cut by 40%, but that didn't lead to a 40% reduction in government revenue. Not even close. It did work. While the government revenues may not have equaled what they had been before the massive tax cuts, they did not fall significantly either, just as the Laffer curve predicted. Most of the tax cuts had a neutral or small effect on tax revenues. By 1990, tax revenues had doubled since 1980.

So how do we close the gap for what increased productivity doesn't make up? We reduce all the frivolous government spending. Let's start with these types of things:

Top 10 Examples of Government Waste

Here are some facts about the effect Reagan's policies had on the economy from Wikipedia:


  • On 8 of the 10 key economic variables examined, the American economy performed better during the Reagan years than during the pre- and post-Reagan years.
  • Real median family income grew by $4,000 during the Reagan period after experiencing no growth in the pre-Reagan years; it experienced a loss of almost $1,500 in the post-Reagan years.
  • Interest rates, inflation, and unemployment fell faster under Reagan than they did immediately before or after his presidency.
  • The only economic variable that was worse in the Reagan period than in both the pre- and post-Reagan years was the savings rate, which fell rapidly in the 1980s.
  • The productivity rate was higher in the pre-Reagan years but much lower in the post-Reagan years.

    And my favorite...

  • The rich actually ended up paying a larger total percentage of the taxes, and the taxes on the poor got smaller and smaller with each year. (I thought the only way for that to happen was to force the rich to pay more, Obama.)

Critics claim that this all happened because of the deficit and the government spending. I claim that it is human nature to justify your position so that you appear to be right.

I am confident that there never would have been a deficit, had Reagan not needed to fight the Cold War and crush the Soviet Union (remember deficit spending for the purposes of war from the last post), which he did by ingeniously outspending them on weapons and his "Star Wars" project. In their attempt to keep up, they spent themselves into bankruptcy.

Supply-side economics may possibly lead to deficits in the short-run, but it leads to consistent and exceptional growth in the long-run as it gives incentive for more Little Red Hens to spring up.

GM

As Ronald Reagan stated so well:

"In this present crisis, government is not the solution to our problem; government is the problem."

As an example, take General Motors. This is a company that is on the verge of bankruptcy. Why is General Motors on the verge of bankruptcy when other automobile companies such as Toyota are managing to survive without any government loans?

The employees at GM are unionized. For years and years, the union has threatened the company with a strike in order to have higher wages. As a result, the Average Labor Cost per U.S. Hourly Worker at GM in 2005 was $73.73/hour.

The U.S. employees at Toyota are not unionized. Their average is $48.

If GM tried to cut wages, the union would strike. In 1935, F.D.R. signed into law the National Labor Relations act, which makes it illegal for a company to try to stop the formation of a union. It also specifies that GM cannot fire employees who strike over economic issues.

The solution for GM would be for the government to remove these bully regulations, let GM cut expenses to match the industry (Toyota), and fire anybody who strikes and replace them with some of the many Americans looking for jobs.

Soon after Ronald Reagan took over the presidency, the Federal Air Traffic Controllers went on strike seeking better working conditions, better pay, and a 32-hour workweek. Reagan held a press conference and stated that if the striking federal workers "do not report for work within 48 hours, they have forfeited their jobs and will be terminated." (Unlike GM, he could legally do that because they were federal employees.) 48 hours later, Reagan fired all 11,345 striking workers.

GM needs the government to get out of the way and let them do business the way it should be done.

BABY OBAMA

We need to get the scientists to work on cloning Ronald Reagan. (I should have snuck a few billion for that in the stimulus bill... Nobody read it, so they never would have known.) I came across this quote from Reagan from 1965:

"Government is like a baby. An alimentary canal with a big appetite at one end and no responsibility at the other."

That describes perfectly the current administration and their solution to the current economic problems. There is a better way.

Wednesday, April 1, 2009

I Feel Like I'm Taking Crazy Pills!

I'm an optimist, even in tough times. In September of last year, it was my opinion that we ought to let the market run its course, even if that meant credit freezing up and a rough couple years. But I wasn't violently opposed to the bailout either, because it was my understanding that we would buy up this bad debt because we have deep pockets as a nation, and that someday, as the market rebounded, this debt would be paid back.

At that time, I believed that the United States could never slip into economic collapse because of all the fail-safes we have now that we didn't have in 1929. There wouldn't be any runs on banks, because banks are now Federally Insured (FDIC) up to $250,000. We now have Automatic-Stabilizers built into the economy such as Unemployment, which means that if people lose their jobs, they still receive a check, which means they will still spend money, and the economy will keep moving. We have the Federal Reserve, which influences interest rates, and makes sure that we won't be bringing in wheelbarrows of money to buy a loaf of bread like the Germans did in 1923. I genuinely believed that either way, we would be fine.

The past 70 days have changed my mind. I am still optimistic (*cough* 2012 *cough*), but I am genuinely fearful for the future of our country. The United States is the greatest nation ever, but that doesn't mean there are no limits. The same liberals who consistently complained about us being "stretched too thin" militarily in Iraq are now stretching us paper-thin economically.

What if we have another Hurricane Ike this season? What if North Korea launches a nuclear missile at Hawaii next week like some speculate they might? What if the fact that Russia is going to host bombers in Cuba and Venezuela means something? Could we fight a World War III today in our current financial situation? How deep are our pockets?

DEFICIT SPENDING

Obama's stimulus plan cost the nation $900 billion that was not originally in the budget. Where is the money coming from? When the government spends more than they "earn" through taxes, it is called deficit spending. To put it in personal terms, let's say I make $250,000/year. (Not true, but that is the line Obama has defined for excess.) If I bring in $250,000/year and I spend $350,000/year, I am deficit spending.

The question is, How can I spend $100,000 more than I make? That's impossible. Although anyone can see that this makes no logical sense, the government does it. But how do they fund it?

MONEY GROWS ON TREES

Option #1: Print more money. Easy enough, right? I described the problem with doing this a few posts ago when I talked about baseball cards and how something becomes more valuable with the less there are of that particular thing. Conversely, something becomes less valuable when there are more of that particular thing. So when we print more money, each dollar becomes worth less, which means we are able to buy less with each dollar, which is what we refer to as inflation. The question is: How much money can we print before we're bringing wheelbarrows of money to buy a loaf of bread like they were in Germany in 1923?

The Federal Reserve influences interest rates to control inflation. They raise interest rates to slow inflation, and lower interest rates to increase inflation. The problem, as you might be thinking, is that interest rates are currently at historic lows.

MADE IN CHINA

Option #2: We sell Treasury Bills, Bonds, etc. In essence, we raise money by telling people: You give us $900, we will give you this note, and then in one year, you give us the note back, and we will give you $1000.

The U.S. sells these in large volume to raise money to pay for the spending. The first obvious problem with this approach is, Ummmmmm.... Where are we getting the $100 for each note to pay for the note at the end of the year? Answer: Obama's team has projected that we will see only a slight decline in the economy this year, but that his stimulus plan will lead to slight growth in 2010, and then increased growth thereafter, and we will pay for it out of the increased tax revenues. (If there is an 10 year-old in the room, they are now saying, "Then why is President Obama constantly saying it's going to get worse before it gets better and that this recovery may take years?")

Second, who is going to buy $800 billion worth of treasuries? Answer: Nobody is sure. The largest holder of U.S. treasuries is China, holding about $740 billion worth as of January. (This fact is scary, because they already hold the power to devalue the dollar if they sold those treasuries en masse.) The problem is that China doesn't want to buy anymore, because they're scared they won't be paid back. Secretary Clinton recently visited to ask (beg) them to continue to buy the debt.

BIG BAD BUSH

I'm sure any liberal reading is now saying, "You conservatives are hypocrites! Clinton left Bush with a budget surplus, and he turned it into a record deficit!" I say, That is true.

When Bush took office, the country was sliding into a slight recession (which is normal after periods of growth.) But September 11, 2001 changed everything. First of all, it pushed the country further into recession. But more importantly, we had a new, unanticipated war to fight.

Deficit spending is obviously not ideal. It historically has been reserved for times of war. We never want to create a deficit, but sometimes it is necessary (World War II, the Cold War, the War on Terror) to spend more than we have on troops, weaponry, etc. in order to maintain our freedom.

The same liberals who have trashed Bush for helping to create a record $482 billion deficit (largely due to the War on Terrorism) support a president who will add an additional $1 trillion in deficit spending. More than two times Bush's "record" deficit in additional spending! You tell me: Who are the hypocrites?

FEAR

All of that is scary enough. But even if the economy collapsed, Americans would do what they did in 1929 -- We would band together and get through it. What scares me infinitely more than that is the news that Barack Obama fired the CEO of GM, Rick Wagoner.

Last month, another well-known world leader did something similar. This particular government had decided that rice prices were too high for their people, and they mandated that the rice companies lower their prices. The Cargill Rice Plant had not met those imposed prices, so the government expropriated (took over) the company. This government has now taken over airports, oil companies, sugar factories, and other businesses because they are not meeting the government's requirements. The government believes they can do it better. The country: Venezuela. The leader: Hugo Chavez.

Obama's team is now together a recovery plan for GM. Phew! Obama's team are most certainly auto experts, and the government is the model for efficiency, right? What do you suppose Obama's team is going to force GM to do. Let me take a stab in the dark: Produce more "green" vechicles?

GO GREEN?

The only problem is, Americans don't buy the green vehicles. Here are the Top 10 selling cars of 2008:

#1: Ford F-Series: 515,513
#2: Chevy Silverado: 465,065
#3: Toyota Camry: 436,617
#4: Honda Accord: 372,789
#5: Toyota Corolla: 351,007
#6: Honda Civic: 339,289
#7: Nissan Altima: 269,668
#8: Chevy Impala: 265,840
#9: Dodge Ram: 245,840
#10: Honda CR-V: 197,279

Where is the Toyota Prius? Where are all the hybrids? Are you telling me that the #1, #2, & #9 top selling cars in the U.S. are all full-size trucks?

So tell me: How is producing more green vechicles going to help GM? Their least fuel efficient vehicle (with the exception of the Hummer) is their best-seller!

Why? People aren't dumb. First, Americans like to be able to fit their whole family and their gear in the car. They like to be able to tow their boats and trailers. They like to be safe in the snow. They like to feel safe.

Second, they can do basic math. They can see that a base Toyota Corolla costs $15,350 and gets 32 miles per gallon, and that the base Toyota Prius Hybrid costs $22,000 and gets 47 miles per gallon. An average person drives 12,000 miles per year. In a Corolla, that would require 375 gallons of gas. In a Prius, that would require 255 gallons of gas. That is a difference of 120 gallons. At $2.00/gallon, that means the Prius saves you $240/year. At that rate, it would take you 27 years to break even. Even at $4.00/gallon, it would still take you 13.5 years.

Honda built a Hybrid Accord starting in 2005, but they stopped manufacturing the Hybrid model in 2008, because there was not enough demand.

AIR AMERICA

This frustrates the liberals. They want people to go green to "save" the environment. So they have to resort to manipulating the market.

It's the same thing that happens with Liberal Talk Radio. Every time there is an attempt to start a Liberal radio program, it sputters out and dies almost immediately. Why? Because there is no demand. The majority of the Democrat voting base don't listen to talk radio. So what do the liberals do? They talk about Fairness Doctrine and forcing conservative talk show hosts to give equal time to the other side.

Once again, it is simple supply and demand. If there is a demand for something, somebody will manufacture a product to meet that demand. If there is no demand, the supplier will go away. If oil supply descreases to the point where gas is $50/gallon, there will be a demand for alternative energy sources, and a supply will be provided. The supply and demand curves have a natural balance, and when you manipulate the curves, they will fight to get back to their natural balance.

The goverment pays $1.3 billion of our taxpayer money to farmers each year to NOT grow corn. There are so many large companies that can grow corn much more efficiently than small farmers and sell it at a lower price that small farmers can't make ends meet. So the government pays $1.3 billion each year for farmers to not grow corn, which reduces the supply, which raises the price of corn for you and I so that the small farmers don't go out of business.

I am obviously sympathetic to the small farmers, but there is something not right about the government using taxpayer money to manipulate the market. Wouldn't it be better to create a "Small Farmer" brand, and sell it at an increased cost like is done with organic food or non-dolphin tuna fish. Or maybe to have benefit concerts, like Willie Nelson does each year at Farm Aid, to raise money to help these small farmers.

ACE IN THE HOLE

Obama cannot save GM by pushing his agenda onto them like he has everything else. But everything he is doing is agenda driven. To illustrate, the great Stimulus to "rebuild this nation" includes only $72.5 billion out of $787 billion (9.2%) to fix bridges, mass transit, and highways. Where is the other 91% going...? Here is a great figure of the breakdown:

Obama Stimulus Breakdown

Obama is attempting to move forward on every liberal agenda item that hasn't been able to be pushed through in the past.

I wondered how he planned to change GM and the auto industry to "green" when there is no demand. I thought he might offer more stimulus money to subsidize the purchase of green cars. But yesterday, Rush Limbaugh said something that sent chills up my spine.

Rush predicted that Obama will increase domestic oil drilling regulations to limit the supply of oil, which would increase the price of gasoline, which would create the demand Obama needs in order to sell the green cars.

Seventy days ago, I would have never believed such a thing was possible in our nation. Now, I'm not so sure. I fear for the next 1390 days. But I am optimistic that the American people will see what is happening and will not stand for this government to destroy everything we stand for.