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Economy

Don’t Make These Simple Mistakes About Debt

Our present crisis is  the result of:

  • Too much borrowing
  • Too much spending
  • Too much government control
  • Too much taxing

Those who argue that America needs to borrow, spend, regulate, and tax more are simply wrong, wrong, wrong.  Their argument is absurd  on its face.

The way to increase revenue to government is to increase the economic activity of the people.  You do that by giving the people maximum control over their destinies.  They will pursue their dreams. In the process, they will fund a responsible and constrained government.

When the government borrows money, it determines for you how you will spend your future earnings.  That, too, is wrong.  Morally wrong.  Make them stop.

Write and tweet your senator and representative today.  Tell them “Stop spending my future. Balance the budget. #tcot”

NOTE:  Welcome to  Nice Deb, whom I met at Smart Girl Summit this weekend.  Please read her blog every day.

80 Percent of Americans Read This Blog Every Day

I’ll be honest with you: I’ve lied.

Usually out of desperation. I’ve lied to those closest to me—those most willing to forgive the thing I lied about. 

I’ve also told the truth to my own detriment.  In the long run, the latter works best. In fact, telling the truth works best in the short run, too.

So maybe Obama’s desperate. Maybe he knows that the debt ceiling debate is the beginning of the unraveling of Americum Sovieticum, his life-long dream. In desperation, then, he’s simply making stuff up.

How do I know Obama’s lying?

obama_big_lie-505x378The last time 80 percent of America agreed on something, the question was whether or not to get baby Jessica McClure out of the well. So when I hear that 80 percent of Americans support something, I assume it involves human life.

But somewhere, somehow, Barack Obama has found data revealing that 80 percent of Americans want—demand—a tax increase.

For the life of me, I cannot find these people.

I can find this Rasmussen poll indicating that 55 percent oppose a tax increase as part of a debt ceiling package.

I can also find a Gallup poll that finds only 32 percent would agree to tax increases as part of a deal.

Maybe the President saw this Quinnipiac University poll – with a questioned designed to elicit a particular response.  The question enticed 62 percent of 2,311 registered voters to accept some taxes on the wealthiest Americans. 

So, perhaps, Obama merely took that 62 and round up to the nearest . . . 80?

But there’s also the media defensive panic.

When conservative presidents are caught lying or being morons, conservatives tend to admit, well, maybe he shouldn’t have said “mission accomplished.” 

When leftists find their leftist president being a deceitful dolt, they obfuscate.  Huffington Post, New York Times—all the usual suspects—have scrubbed their sites of references to the President’s lie. (At least, my searches found nothing.  Then, again, I try to not to spend too much time on those sites.)

Instead, the left talks about this being the time to bring taxes into the equation.

Two people who get it . . . clearly:  Mark Steyn and Charles Krauthammer. 

Steyn, as usual, picks apart the stupid in “No Bargaining With Obluffer.”

Krauthammer destroys Obama’s credibility by pointing to Obama’s long and recent history of demanding more debt at any cost.

How about last December, when he ignored his own debt commission’s recommendations? How about February, when he presented a budget that increases debt by $10 trillion over the next decade? How about April, when he sought a debt-ceiling increase with zero debt reduction attached?

All of a sudden he’s a born-again budget balancer prepared to bravely take on his own party by making deep cuts in entitlements. Really? Name one.

So I lied again.  Eighty percent of Americans don’t read Hennessy’s View every day.  Not yet, anyway.

Simply Staggering

DRUDGE REPORT 2011® The federal budget deficit in the month of February 2011 exceeds the deficit for all of 2007 by 40 percent.

Simply staggering.

Yet Senate Democrats refuse to cut more than a paltry $6 billion. They refuse because they seem bent on collapsing the American system – the economy, the government, and the people themselves.

But at least the Obama administration stands by with its arms folded as gasoline prices skyrocket at the their fastest pace in history.

(h/t Drudge Report)

4 Ways Government Can Help Create Shared Value

Last week I wrote about Creating Shared Value. In that post, I pointed to a Harvard Business Review article by Michael Porter and Mark Kramer. If you haven’t read both my post and the Michael Porter piece, please do so now.  I’ll wait.

Now that you’re up to date, let me add the Tea Party angle to this. 

Though Porter did not dwell on government’s role in Creating Shared Value (CSV), he did point out that government must reform for CSV to succeed.  Here are a few of the Tea Party reforms necessary if Porter’s (and Whole Foods CEO John Mackey’s) vision is to succeed:

Stop Vilifying Business:  Both parties fail to defend business when business is unfairly attacked.  Instead, politicians tend to jump on the populist bandwagon, piling on companies and industries. One example:  the regulation of cable television in the early 1990s.  Responding to false claims that cable companies were gouging customers, Congress stepped in and imposed regulations that caused cable rates to increase faster and customer satisfaction to tumble. 

Stop Picking Winners:  General Motors, Chrysler, Bank of America, Citigroup, and dozens of other banks and businesses should have failed.  Only illegal and inappropriate government interference in the market saved these companies, transferring financial responsibility from the owners to the tax payers.  Regardless of future performance, our economy is worse off than it would have been had government stayed out of the mess.  Moreover, innovation and ideas that might have improved the world and increased sustainability are lost because government’s clunky hand manipulated the markets.

Stop Creating Entitlements: Welfare reform gave us a few years of federal budget surplus. With Barack Obama’s historical and dangerous deficits, the last thing we needed was a new entitlement. But Obama and the 111th Congress gave us just that with health control.  John Mackey of Whole Foods pointed out a system that many employers offer that reduces healthcare costs and makes good insurance affordable for everyone.  Were affordable health insurance Obama’s actual goal, he would have embraced the high deductible solution. Instead, he outlawed it.  Government must eliminate all entitlements, not make new ones, if CSV is to succeed.

Reform the Tax Code:  Most of the our favorite tax breaks—designed to change behavior—will go away in order to pay off massive deficits brought about by entitlements and political handouts.  It’s time, then, to flatten out the tax code.  That means establishing in a tax-free income level (say $20,000), and a tax rate (say 18 percent).  The new 1040 looks like this:

Income:________ – $20,000 = _____________ * 0.18 = Tax Due ______________

 

Creating Shared Value is a business strategy.  Fully embraced, it offers the possibility of remarkable growth for companies, communities, and economies.  It rejects the notion of trade-offs, like clean air or full employment. Instead, it means clean air because of  full employment.

Companies can reach CSV only if government gets out of their way.  And if companies get out of their own ways.  But Michael Porter has advanced a strong argument for the later.  Now it’s time for the Tea Party to encourage government to do its part.

How else can government help advance Creating Shared Value by reducing its size, scope, and cost?  Leave your thoughts below in the comments.

Jay Nixon Putting Party Ahead of Missouri? *UPDATE*

Last week, the Illinois legislature passed a massive income tax increase on individuals and businesses.  Overall, it represents about a 67 percent income tax increase.

In response, neighboring states of Wisconsin and Indiana have wisely mounted massive campaigns to suck businesses and people out of Illinois.  Even New Jersey’s fabulous governor, Chris Christie, plans to fish the Land o’ Lincoln for some business transplants.

One state bordering Illinois has been notoriously silent.  Missouri Governor Jay Nixon has done nothing to steal business and residents away from Illinois.

Is Nixon being lazy?  Or is he just being a good Democrat?

While we’re at it, why isn’t St. Louis Mayor Francis Slay beating the bushes on the East Side?  The city needs business and people desperately, but Slay has been as silent as Nixon.

Look, people, I realize that we have a lot of friends in Illinois.  My wife is from GC.  Most of her family lives in Madison County.  But businesses and workers are going to flee to the state.  Illinois dropped from the 23rd best tax state to the 36th in one step.  With Democrats in charge of the legislature and the governorship, this increase is only the beginning.  Illinois taxes will rise until the people in Illinois elect tax cutting budget hawks.

In the meantime, Jay Nixon has an obligation to put Missouri’s economy ahead of Democrat party loyalties.  Missouri needs to follow the leads of Indiana, Wisconsin, and New Jersey by campaigning for fleeing Illinois businesses and people.

*UPDATE* Over on United for Missouri, Emily Iles explains the extraordinary dangers to Illinois’ economy this tax hike poses.

Ideas Have Consequences—Even Stupid Ones

When Barack Obama became president in January 2009, he began a campaign to weaken America. I’m not talking about military cuts; I’m speaking of America’s stature.  Barack Obama famously refused to acknowledge American Exceptionalism in 2009. He bowed to kings and princes, then denied doing so, then bowed again and again. His White House has driven down the dollar. Timothy Geithner, Obama’s Secretary of the Treasury, warns that the world economy must “rebalance” with less reliance on America.

Barack Obama is short-selling America.

The results of a US President talking down his own country are stark.  America is losing prestige, and the office of our president loses prestige right along with the rest of us. 

Asian Embarrassment

In the last week, Barack Obama got a taste of the new, devalued USA.  In South Korea and Japan, Obama was no longer treated as first among equals, but us the kid at the far end of the table.  Having trashed America’s swagger and replaced it with a lilting prance, Obama learned that it’s not so fun to be a relatively young leader of relatively young nation whose prestige has taken a major blow.

From a Wall Street Journal editorial, we see just how far the USA has fallen under Obama’s presidency:

Has there ever been a major economic summit where a U.S. President and his Treasury Secretary were as thoroughly rebuffed as they were at this week’s G-20 meeting in Seoul? We can’t think of one. President Obama failed to achieve any of his main goals while getting pounded by other world leaders for failing U.S. policies and lagging growth.

For Obama, now, there is nowhere to turn.  American voters have rejected his domestic policy. His base has turned against his handling of Afghanistan. The world leaders, seeing him as weak, are planning world economic policy more or less over Obama’s head.

Stagflation

But there’s more. Obama’s economic policies promise to do two things: 1) perpetuate high unemployment and 2) increase inflation.  In fact, the Fed’s stated policy, which Obama defended twice in Asia last week, is to use Demand-Pull inflation to grow the US economy. 

We’ve seen this before.  In 1978 to 1982, America suffered a malaise brought about by bone-headed economic policies from a president who believed America had gotten too big for its breeches.  Jimmy Carter’s policies produced high unemployment, flat growth, and runaway inflation.  The term for this economic condition is “stagflation.”

True, Bernanke is a Bush appointee and the Fed is independent from the White House.  But Treasury Secretary Geithner and President Obama are full participants in an economic policy that threatens to revisit the disastrous years of 1978 through 1982.  Being unemployed, underemployed, or underpaid is bad enough. When the cost of necessary goods and services rise quickly, things get worse fast for the economically challenged.  And signs of stagflation are everywhere.

Alan Reynolds of the Cato Institute wrote in a WSJ op-ed that several inflationary signals surfaced in October:

Producer prices rose at an annual rate of 5.5% in September and 4.8% in August. The broad price index for GDP rose at an annual rate of 2.3% in the third quarter, up from 1.9% in the second quarter and 1% in the first.

For ordinary folks trying to make ends meet, the prospect of inflation is frightening.  Already the weak dollar has driven up the price of gasoline and food—the two things we all need to survive.  The two things the government omits from its consumer price index.  In the past week, gasoline prices in the St. Louis area jumped $0.25 overnight. 

The Next Congress

There is little the 112th Congress can do to repair the economic damage, but it can lay the foundation for the next president and the 113th Congress. I encourage all members of the next Congress to follow Arthur Laffer’s prescription of extending the Bush tax cuts, repealing Obamacare, eliminating incentives for idleness, and push free trade. 

3 Signs of Economic Disaster

Each day, more economists jump onto the Double-Dip bandwagon. Signs abound that the natural economic recovery that would normally follow a deep recession won’t happen. Instead, the economy is now saddled with so much debt, so many regulations, and such onerous new taxes that the Obama Administration tells us to be happy with 9.5 percent unemployment.

great-depression

Barack Obama is an economic disaster of the first order.

So why all the pessimism? 

Well, every week it seems we’re hit with wave after wave of bad news. At the same time, Biden and Obama tour the country telling the unemployed they never had it so good.  Here’s today’s top stories on Drudge:

 drudge25AUG10

Here’s a link to one of the stories—on CNBC—that says we have left recession and entered . . . economic DEPRESSION.

And that brings us to this week’s triple-play of disastrous economic news.

First, existing home sales fell by 27 percent in July to the lowest levels in 15 years. At the same time, inventories climbed and interest rates fell.  That means prices will have drop dramatically before the housing market can recover.

Second, durable goods orders, excluding transportation, fell by 3.8 percent in July. Economists and analysts expected a 12 percent rise.  That means businesses have abandoned hope of recovery.

Third, existing home sales plummeted 12 percent in July to the lowest level on record. 

Why can’t the economy find solid footing?  Because America can no longer afford the government in Washington.  With government workers earning twice as much as people who actually produce value in the economy, wage earners can afford only two things:  subsistence and taxes. Truly, the government has erected a multitude of New Offices and sent hither swarms of Officers to harass our people and eat out their substance.

Either we cut the cost of government or die.  That’s a stark choice.  But it’s the one we’ve been given.

2/3 Think Worst Is Yet to Come for USA

The Wall Street Journal headline is grim:

Grim Voter Mood Turns Grimmer

Underpinning the gloom: Nearly two-thirds of Americans believe the economy has yet to hit bottom, a sharply higher percentage than the 53% who felt that way in January.

Wow.  I think the barrage of terrible economic news this week has people realizing that you can’t borrow your way out of a debt problem.

So far this fiscal year, the US has paid more in interest on its rapidly rising debt than it’s taken in from all corporate taxes.  That’s just the service on the debt, people.  And interest rates are at all time lows.  From the WSJ.com:

Years of deficit spending by Washington have led to a mounting national debt. Interest payments so far in fiscal 2010 amount to $185.25 billion; by contrast, corporate taxes collected by the government during the same 10 months were $139.71 billion. Interest payments in July alone were $19.9 billion.

The Fed and Treasury officials admit they’re out of options for dealing with economic crisis.  As a nation, we are living paycheck to paycheck.  Yet we’re STILL maxing out every credit card we can get.

Soon, we won’t be able to get more credit cards. Then we’re totally screwed.

Barack Obama inherited a bad situation and made it orders of magnitude worse.  In July, he and the Democrat Congress spent twice as much as they took in.  You can’t make it up in volume, Nancy.

To be honest, I would hate to be a member of the next Congress.  They will face a crisis that few living Americans have ever seen. And it looks like Republicans have a better chance of controlling the House, at least, with each passing headline:

Republicans, meantime, are gaining ground on a number of issues that have traditionally been advantages for Democrats. More Americans now think the GOP would do a better job on the economy—an advantage the party last held briefly in 2004 but has not enjoyed consistently since the mid-1990s. On one of the Democrats’ core issues, Social Security, just 30% now think the party would do a better job than the GOP, compared to 26% who favor the Republicans. That margin was 28 points in 2006.

No matter how you spin it, business is being stifled by two things: debt and taxes. Obama campaigned on raising both. At least he kept that promise.

Now, will the American voter keep alive the promise of America?  We have 83 days to make it happen.